AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 21, 2000
File No. 33-45671
File No. 811-6557
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 37 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 39 [X]
STI CLASSIC FUNDS
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
101 Federal Street
Boston, Massachusetts 02110
--------------------------------------------------------------------------------
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (800) 342-5734
Mark E. Nagle
C/o SEI Corporation
Oaks, Pennsylvania 19456
--------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Copies to:
Richard W. Grant, Esquire W. John McGuire
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
1701 Market Street 1800 M Street, N.W.
Philadelphia, PA 19103 Washington, DC 20036
It is proposed that this filing become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[X] On September 30, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On [date] pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On [date] pursuant to paragraph (a) of Rule 485.
<PAGE>
STI CLASSIC FUNDS-EQUITY FUNDS
TRUST SHARES
PROSPECTUS
OCTOBER 1, 2000
BALANCED FUND
CAPITAL APPRECIATION FUND
CORE EQUITY
E-COMMERCE OPPORTUNITY FUND
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
MID-CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
SMALL CAP VALUE EQUITY FUND
(FORMERLY SMALL CAP EQUITY FUND)
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
INVESTMENT ADVISER
TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(the "Adviser")
[STI LOGO OMITTED]
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>
PROSPECTUS
ABOUT 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 THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
2 BALANCED FUND
4 CAPITAL APPRECIATION FUND
6 CORE EQUITY FUND
8 E-COMMERCE OPPORTUNITY FUND
10 GROWTH AND INCOME FUND
12 INTERNATIONAL EQUITY FUND
14 INTERNATIONAL EQUITY INDEX FUND
16 MID-CAP EQUITY FUND
18 SMALL CAP GROWTH STOCK FUND
20 SMALL CAP VALUE EQUITY FUND
22 TAX SENSITIVE GROWTH STOCK FUND
24 VALUE INCOME STOCK FUND
26 MORE INFORMATION ABOUT RISK
27 MORE INFORMATION ABOUT FUND INVESTMENTS
27 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
29 PURCHASING AND SELLING FUND SHARES
30 DIVIDENDS AND DISTRIBUTIONS
31 TAXES
32 FINANCIAL HIGHLIGHTS
38 HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
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[BRIEFCASE GRAPHIC OMITTED] FUND SUMMARY
[TELESCOPE GRAPHIC OMITTED] INVESTMENT STRATEGY
[INNERTUBE GRAPHIC OMITTED] WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
[BULLSEYE GRAPHIC OMITTED] PERFORMANCE INFORMATION
[CHART GRAPHIC OMITTED] WHAT IS AN INDEX?
[COINS GRAPHIC OMITTED] FUND FEES AND EXPENSES
[MOUNTAINTOP GRAPHIC OMITTED] MORE INFORMATION ABOUT FUND INVESTMENTS
[MAGNIFIER GRAPHIC OMITTED] INVESTMENT ADVISER
[HANDSHAKE GRAPHIC OMITTED] PURCHASING AND SELLING FUND SHARES
--------------------------------------------------------------------------------
OCTOBER 1, 2000
<PAGE>
PROSPECTUS 1
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
Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser 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 prices 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>
2 PROSPECTUS
BALANCED FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS Capital appreciation and current income
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INVESTMENT FOCUS
PRIMARY U.S. common stocks
SECONDARY Bonds
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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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 above average 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.
[INNERTUBE GRAPHIC OMITTED]
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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points follows:
1995 25.51%
1996 12.13%
1997 21.14%
1998 19.55%
1999 4.66%
BEST QUARTER WORST QUARTER
12.57% -5.70%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.24%.
<PAGE>
PROSPECTUS 3
BALANCED FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX AND THE S&P 500 INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
Balanced Fund 4.66% 16.36% 12.63%*
-------------------------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 7.60% 5.67%**
-------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 23.55%**
-------------------------------------------------------------------------------
* SINCE 1/3/94
** SINCE 12/31/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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.
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.95%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 1.07%
--------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$109 $340 $590 $1,306
-------------------------------------------------------------------------------
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 0.92% and 1.04%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
4 PROSPECTUS
CAPITAL APPRECIATION FUND
[BRIEFCASE GRAPHIC OMITTED]
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
-------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Capital Appreciation Fund invests primarily in U.S. common stocks and other
equity securities that the Adviser believes have strong business fundamentals,
such as revenue growth, cash flows and earnings trends. In selecting investments
for the Fund, the Adviser chooses companies that it believes have above average
growth potential. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1993 9.89%
1994 -7.41%
1995 31.15%
1996 20.31%
1997 31.13%
1998 28.06%
1999 9.71%
BEST QUARTER WORST QUARTER
22.93% -11.16%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 5.91%.
<PAGE>
PROSPECTUS 5
CAPITAL APPRECIATION FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500 INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
Capital Appreciation
Fund 9.71% 23.79% 17.41%*
-------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 21.24%**
-------------------------------------------------------------------------------
* SINCE 7/1/92
** SINCE 6/30/92
[CHART GRAPHIC OMITTED]
-------------------------------------------------------------------------------
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.
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.26%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$128 $400 $692 $1,523
--------------------------------------------------------------------------------
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 1.13% and 1.24%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
6 PROSPECTUS
CORE EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
-------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 mid- to large-capitalization growth
stocks may underperform other segments of the equity market or the equity
markets as a whole.
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The Core Equity Fund commenced operations on September 30, 1999, and therefore
does not have a performance history for a full calendar year.
<PAGE>
PROSPECTUS 7
CORE EQUITY FUND
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.10%
Other Expenses 0.17%
-----
Total Annual Fund Operating Expenses 1.27%
--------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$129 $403 $697 $1,534
-------------------------------------------------------------------------------
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 Adviser."
<PAGE>
8 PROSPECTUS
E-COMMERCE OPPORTUNITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
[TELESCOPE GRAPHIC OMITTED]
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 corporations whose core line of business focuses
on an emerging e-commerce market. The second segment consists of established
technology companies that provide the infrastructure to support electronic
commerce. The third segment includes established, non-tech companies that are
expected to achieve substantial direct or indirect benefits from e-commerce. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
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 net asset value ("NAV") may be more
volatile than other, broadly diversified equity funds.
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The E-Commerce Opportunity Fund commenced operations on September 30, 1999, and
therefore does not have a performance history for a full calendar year.
<PAGE>
PROSPECTUS 9
E-COMMERCE OPPORTUNITY FUND
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.10%
Other Expenses 0.24%
-----
Total Annual Fund Operating Expenses 1.34%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$136 $425 $734 $1,613
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
10 PROSPECTUS
GROWTH AND INCOME FUND
[BRIEFCASE GRAPHIC OMITTED]
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 earnings potential 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
-------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in equity securities, including
common stock and listed American Depositary Receipts (ADRs), 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1993 10.20%
1994 -0.81%
1995 29.38%
1996 19.06%
1997 27.69%
1998 18.20%
1999 14.17%
BEST QUARTER WORST QUARTER
17.38% -10.36%
(6/30/97) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -0.35%.
<PAGE>
PROSPECTUS 11
GROWTH AND INCOME FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX. PREVIOUSLY,
THE FUND'S RETURNS HAD BEEN COMPARED TO THE S&P 500 INDEX, BUT THE ADVISER
BELIEVES THAT S&P 500/BARRA VALUE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
LARGE CAP VALUE STOCKS, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH
THE FUND INVESTS.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
Growth and Income
Fund 14.17% 21.56% 16.83%*
-------------------------------------------------------------------------------
S&P 500/BARRA
Value Index 12.72% 22.94% 18.54%**
-------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 21.52%**
-------------------------------------------------------------------------------
* SINCE 9/26/92
** SINCE 9/30/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 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 S&P 500/BARRA Value Index
is a widely-recognized index of the stocks in the S&P 500 Index that have lower
price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.90%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.01%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$103 $322 $558 $1,236
-------------------------------------------------------------------------------
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 Adviser."
<PAGE>
12 PROSPECTUS
INTERNATIONAL EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
-------------------------------------------------------------------------------
INVESTMENT FOCUS Foreign common stocks
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with good
fundamentals or a history of
consistent growth
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks and other
equity securities of foreign companies. 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,
or a history of consistent growth in cash flows, sales, operating profits,
returns on equity and returns on invested capital. In selecting investments for
the Fund, the Adviser diversifies the Fund's investments among at least three
foreign countries. 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.
[INNERTUBE GRAPHIC OMITTED]
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 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.
<PAGE>
PROSPECTUS 13
INTERNATIONAL EQUITY FUND
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES
FROM YEAR TO YEAR.*
[Bar Chart Omitted]
Plot points are as follows:
1996 22.08%
1997 13.35%
1998 11.22%
1999 9.47%
BEST QUARTER WORST QUARTER
16.88% -18.28%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.91%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA AND FAR EAST (MSCI EAFE) INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
International Equity Fund 9.47% 18.78%*
--------------------------------------------------------------------------------
MSCI EAFE Index 26.96% 13.97%*
--------------------------------------------------------------------------------
* SINCE 1/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 smaller market capitalizations) index of over 900 securities
listed on the stock exchanges in Europe, Australasia and the Far East. The
country weighting of the Index is calculated using the market capitalization of
each of the various countries, and then with respect to the market
capitalization of the various companies operating in each country.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.25%
Other Expenses 0.23%
-----
Total Annual Fund Operating Expenses 1.48%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$151 $468 $808 $1,768
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
14 PROSPECTUS
INTERNATIONAL EQUITY INDEX FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Investment results that correspond to the
performance of the MSCI EAFE-GDP Weighted
Index
-------------------------------------------------------------------------------
INVESTMENT FOCUS Foreign common stocks in MSCI EAFE-GDP
Weighted 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 Weighted 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.
[INNERTUBE GRAPHIC OMITTED]
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 foreign common stocks may underperform
other segments of the equity markets 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.
In addition to the above mentioned risks, the Adviser may not be able to match
the performance of the Fund's benchmark.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 10.73%
1996 6.04%
1997 8.99%
1998 30.02%
1999 30.66%
BEST QUARTER WORST QUARTER
21.26% -12.98%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -4.88%.
<PAGE>
PROSPECTUS 15
INTERNATIONAL EQUITY INDEX FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA AND FAR EAST - GROSS DOMESTIC PRODUCT (MSCI EAFE-GDP)
WEIGHTED INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
International Equity
Index Fund 30.66% 16.80% 14.43%*
-------------------------------------------------------------------------------
MSCI EAFE-GDP
Weighted Index
(Price Return) 29.49% 14.45% 12.59%**
-------------------------------------------------------------------------------
* SINCE 6/6/94
** SINCE 5/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 smaller market capitalizations) index
of over 900 securities listed on the stock exchanges in Europe, Australasia and
the Far East. The country weighting of the Index is calculated by the gross
domestic product of each of the various countries and then with respect to the
market capitalization of the various companies operating in each country.
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.90%
Other Expenses 0.28%
-----
Total Annual Fund Operating Expenses 1.18%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$120 $375 $649 $1,432
--------------------------------------------------------------------------------
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 0.81% and 1.09%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
16 PROSPECTUS
MID-CAP EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
-------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 400 Mid Cap 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.
[INNERTUBE GRAPHIC OMITTED]
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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 31.22%
1996 15.42%
1997 21.23%
1998 6.48%
1999 16.14%
BEST QUARTER WORST QUARTER
24.73% -19.96%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 9.78%.
<PAGE>
PROSPECTUS 17
MID-CAP EQUITY FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 400 MID CAP INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
Mid-Cap
Equity Fund 16.14% 17.82% 14.56%*
-------------------------------------------------------------------------------
S&P 400
Mid Cap Index 14.72% 23.04% 17.96%**
-------------------------------------------------------------------------------
* SINCE 2/2/94
** SINCE 1/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 400 Mid Cap 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.
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 1.25%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$127 $397 $686 $1,511
--------------------------------------------------------------------------------
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 1.12% and 1.22%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
18 PROSPECTUS
SMALL CAP GROWTH STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
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
-------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Small Cap Growth Stock Fund invests primarily in small U.S. companies with
market capitalizations between $50 million and $3 billion in size. The Fund's
investment philosophy is based on the premise that a portfolio of small cap
stocks with positive earnings trends, reasonable valuation, and strong
fundamentals will provide superior returns over time. The Adviser selects
companies with strong current earnings growth, improving profitability, a strong
balance sheet, strong current and projected business fundamentals, and priced at
reasonable valuations. The Adviser believes in executing a very disciplined and
objective investment process and in controlling risk through a broadly
diversified portfolio. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and the
potential for capital gains tax liabilities for taxable investors.
[INNERTUBE GRAPHIC OMITTED]
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 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.
[BULLSEYE GRAPHIC OMITTED]
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 THE PERFORMANCE OF THE FUND'S TRUST SHARES FOR ONE YEAR.*
[Bar Chart Omitted]
Plot points are as follows:
1999 20.55%
BEST QUARTER WORST QUARTER
20.77% -11.36%
(6/30/99) (3/31/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 16.26%.
<PAGE>
PROSPECTUS 19
SMALL CAP GROWTH STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 600 SMALL CAP INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
-------------------------------------------------------------------------------
Small Cap Growth
Stock Fund 20.55% 58.61%*
-------------------------------------------------------------------------------
S&P 600 Small Cap Index 12.41% 25.01%**
-------------------------------------------------------------------------------
* SINCE 10/8/98
** SINCE 9/30/98
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 600 Small Cap Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of 600 small cap
stocks.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.08%
-----
Total Annual Fund Operating Expenses 1.23%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$125 $390 $676 $1,489
-------------------------------------------------------------------------------
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 Adviser."
<PAGE>
20 PROSPECTUS
SMALL CAP VALUE EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
-------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Small Cap Value 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.
[INNERTUBE GRAPHIC OMITTED]
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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 30.99%
1996 34.25%
1997 32.59%
1998 -13.45%
1999 -2.72%
BEST QUARTER WORST QUARTER
19.82% -21.99%
(6/30/99) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 1.49%.
<PAGE>
PROSPECTUS 21
SMALL CAP VALUE EQUITY FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE RUSSELL 2000 VALUE INDEX. PREVIOUSLY,
THE FUND'S RETURNS HAD BEEN COMPARED TO THE RUSSELL 2000 INDEX, BUT THE ADVISER
BELIEVES THAT THE RUSSELL 2000 VALUE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
SMALL U.S. COMPANIES WITH LOWER GROWTH RATES AND PRICE-TO-BOOK RATIOS, MORE
ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH THE FUND INVESTS.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
Small Cap Value
Equity Fund -2.72% 14.44% 13.63%*
-------------------------------------------------------------------------------
Russell 2000
Value Index -1.49% 13.13% 11.41%*
-------------------------------------------------------------------------------
Russell 2000 Index 21.26% 16.69% 15.09%*
-------------------------------------------------------------------------------
* SINCE 8/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Russell 2000 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. The Russell 2000 Value Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of companies in
the Russell 2000 Index with lower growth rates and price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 1.25%
-------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$127 $397 $686 $1,511
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
22 PROSPECTUS
TAX SENSITIVE GROWTH STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
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
-------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 common stocks of U.S. growth companies
may underperform other segments of the equity market 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1996 21.04%
1997 28.76%
1998 31.73%
1999 24.74%
BEST QUARTER WORST QUARTER
27.74% -9.96%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.50%.
<PAGE>
PROSPECTUS 23
TAX SENSITIVE GROWTH STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF S&P 500 INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Tax Sensitive Growth Stock
Fund 24.74% 26.56%*
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 26.39%*
--------------------------------------------------------------------------------
* SINCE 12/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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.
[COINS GRAPHIC OMITTED]
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)
-------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.26%
--------------------------------------------------------------------------------
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
share at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$128 $400 $692 $1,523
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
24 PROSPECTUS
VALUE INCOME STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
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%
1999 -2.93%
BEST QUARTER WORST QUARTER
18.56% -14.86%
(3/31/91) (9/30/90)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -6.33%.
<PAGE>
PROSPECTUS 25
VALUE INCOME STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX.
TRUST SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
Value Income
Stock Fund -2.93% 17.24% 15.02% 15.06%*
-------------------------------------------------------------------------------
S&P 500/
BARRA Value
Index 12.72% 22.94% 15.37% 15.46%*
-------------------------------------------------------------------------------
* SINCE 10/31/89
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/BARRA Value Index is a widely-recognized
index of the stocks in the S&P 500 Index that have lower price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.80%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.89%
--------------------------------------------------------------------------------
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, Fund
expenses remain the same and you reinvest all dividends and distributions.
Although your actual costs and returns might be different, your approximate
costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$91 $284 $493 $1,096
-------------------------------------------------------------------------------
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 Adviser."
<PAGE>
26 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION
ABOUT RISK
EQUITY RISK
ALL FUNDS
Equity securities include public and privately 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
BALANCED FUND
The market value of fixed income 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 will be unable to make timely payments of
either principal or interest.
FOREIGN SECURITY RISKS
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
Investments in securities of foreign companies or governments can be more
volatile than 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
INTERNATIONAL EQUITY INDEX FUND
Factors such as 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
<PAGE>
PROSPECTUS 27
MORE INFORMATION ABOUT FUND INVESTMENTS
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.
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT FUND 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 the
Funds 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 that would not ordinarily be consistent with a Fund's
objectives. The Small Cap Value Equity Fund also may invest in investment grade
fixed income securities and mid- to large-cap common stocks. 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.
[MAGNIFIER GRAPHIC OMITTED]
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
BALANCED FUND 0.85%
CAPITAL APPRECIATION FUND 1.06%
CORE EQUITY FUND 1.03%
E-COMMERCE GROWTH OPPORTUNITY FUND 0.96%
GROWTH AND INCOME FUND 0.90%
INTERNATIONAL EQUITY FUND 1.25%
INTERNATIONAL EQUITY INDEX FUND 0.79%
MID-CAP EQUITY FUND 1.07%
SMALL CAP GROWTH STOCK FUND 1.12%
SMALL CAP VALUE EQUITY FUND 1.12%
TAX SENSITIVE GROWTH STOCK FUND 1.09%
VALUE INCOME STOCK FUND 0.80%
The Core Equity and E-Commerce Opportunity Funds had not completed a full fiscal
year as of May 31, 2000.
The Adviser may use its affiliates as brokers for Fund transactions.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as Investment Adviser to the Balanced
Fund, Capital Appreciation Fund, International Equity Fund, Mid-Cap Equity Fund,
Small Cap Value Equity Fund, and Value Income Stock Fund. On January 1, 2000,
SunTrust Bank (formerly SunTrust Bank, Atlanta), a subsidiary of SunTrust Banks,
Inc. succeeded STI as the Investment Adviser to those Funds. On July 1, 2000,
SunTrust Banks, Inc. reorganized its money management units, including those of
SunTrust Bank, into Trusco Capital Management, Inc. As a result, Trusco now
serves as the Investment Adviser to each STI Classic Fund.
<PAGE>
28 PROSPECTUS
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
PORTFOLIO MANAGERS
The Balanced Fund is co-managed by Mr. Robert J. Rhodes, CFA, Mr. Earl L.
Denney, CFA, and Mr. Dave E. West, CFA. Mr. Rhodes manages the equity portion of
the Fund. Mr. Denney and Mr. West co-manage the fixed-income portion of the
Fund. Mr. Rhodes has also managed the Core Equity Fund since it began operating
in September 1999 and the Capital Appreciation Fund since June 2000. Mr. Rhodes
is an Executive Vice President and head of the Equity Funds group at Trusco. Mr.
Rhodes has been employed by Trusco since 1973 and was Director of Research at
Trusco from 1980 to 2000. Mr. Rhodes has more than 27 years of investment
experience. Mr. West has served as a Managing Director of STI and has worked
there since 1985. In January 2000, Mr. West was named Managing Director of
SunTrust Bank and is now a Managing Director of Trusco. Mr. West has more than
14 years of investment experience. Mr. Denney has served as Managing Director of
STI since 1983. In January 2000 Mr. Denny was named Managing Director of
SunTrust Bank and is now a Managing Director of Trusco. Mr. Denney has more than
21 years of investment experience.
Mr. Alan S. Kelley has served as a Vice President of Trusco since July 2000. He
has managed the E-Commerce Opportunity Fund since it began operating in
September 1999. Prior to joining Trusco, Mr. Kelley served as a Portfolio
Manager with SunTrust Bank, Atlanta from 1995 to 1999. He has more than 7 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. From 1992 until July
2000, he 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 and Managing Director in July 2000. Mr.
Markunas has more than 17 years of investment experience.
The International Equity Index Fund is managed by Mr. Chad Deakins, CFA, and
co-managed Mr. Robert J. Rhodes, CFA. Mr. Deakins serves as a Vice President of
Trusco and has worked there since 1996. He has co-managed the International
Equity Index Fund since February 1999. Mr. Deakins has also managed the
International Equity Fund since May 2000. Prior to joining Trusco, Mr. Deakins
worked at SunTrust Bank. He has more than 6 years of investment experience. Mr.
Rhodes is an Executive Vice President and head of the Equity Funds group at
Trusco. Mr. Rhodes has been employed by Trusco since 1973 and was Director of
Research at Trusco from 1980 to 2000. Mr. Rhodes has co-managed the
International Equity Index Fund since it began operating in June 1994. Mr.
Rhodes has more than 27 years of investment experience.
Mr. John Hamlin has served as a Vice President of Trusco since July 2000, after
serving as a 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 11 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. He has more than 13 years of investment experience.
Mr. Brett Barner, CFA, has served as a Vice President of Trusco since July 2000,
after serving as a Managing Director of STI since 1994. He has managed the Small
Cap Value Equity Fund since it began operating in January 1997. He has more than
16 years of investment experience.
Mr. Jonathan Mote, CFA, CFP, has served as a 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 15 years of investment
experience.
<PAGE>
PROSPECTUS 29
PURCHASING AND SELLING FUND SHARES
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 Trusco since July 2000,
after serving as a Managing Director of STI since 1994. He has managed the Value
Income Stock Fund since April 1995. Mr. Riddick has more than 18 years of
investment experience. Mr. Lewis has served as a Portfolio Manager of Trusco
since July 2000, after serving as a Portfolio Manager for STI since 1993. He has
been an analyst of the Value Income Stock Fund since 1995. He has more than 9
years of investment experience.
[HANDS GRAPHIC OMITTED]
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase 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 Investor's Advantage 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.
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 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 generally values its investment portfolio at
market price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
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 of
the Fund.
<PAGE>
30 PROSPECTUS
DIVIDENDS AND DISTRIBUTIONS
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") 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.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after
the Funds receive 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 Fund's 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.
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
MID-CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
SMALL CAP VALUE EQUITY FUND
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
ANNUALLY
-------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
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
receives your written notice. To cancel your election, simply send the Funds
written notice.
<PAGE>
PROSPECTUS 31
TAXES
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 OF FUND SHARES 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>
32 PROSPECTUS
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Investor 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 Statement of Additional Information. You can obtain
the annual report, which contains more performance information, at no charge by
calling 1-800-428-6970.
For the Periods Ended May 31, (unless otherwise indicated)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- --------------- ------------- -------------- --------- ----------
-------------
BALANCED FUND
-------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ........ $13.26 $0.32 $0.33 $(0.30) $(0.24) $13.37 5.02%
1999 ........ 13.09 0.28 1.09 (0.28) (0.92) 13.26 10.98
1998 ........ 11.94 0.31 2.19 (0.32) (1.03) 13.09 22.15
1997 ........ 11.55 0.33 1.47 (0.32) (1.09) 11.94 16.66
1996 ........ 10.26 0.33 1.41 (0.34) (0.11) 11.55 17.26
1995 ........ 9.76 0.33 0.49 (0.32) -- 10.26 8.72
-------------------------
CAPITAL APPRECIATION FUND
-------------------------
Trust Shares
2000 ........ $16.62 $0.02 $1.40 $ -- $(0.92) $17.12 8.98%
1999 ........ 16.48 0.05 2.70 (0.06) (2.55) 16.62 17.83
1998 ........ 15.09 0.09 3.96 (0.09) (2.57) 16.48 29.51
1997 ........ 14.90 0.12 3.13 (0.12) (2.94) 15.09 24.66
1996 ........ 12.18 0.12 3.32 (0.13) (0.59) 14.90 28.97
----------------
CORE EQUITY FUND
----------------
Trust Shares
2000(1) ..... $10.00 $(0.02) $1.13 $ -- $ -- $11.11 11.10%
---------------------------
E-COMMERCE OPPORTUNITY FUND
---------------------------
Trust Shares
2000(1) ..... $10.00 $(0.04) $5.91 $ -- $ -- $15.87 58.70%
--------------------------
GROWTH AND INCOME FUND (A)
--------------------------
Trust Shares
2000 ........ $16.09 $0.11 $0.55 $(0.10) $(1.12) $15.53 4.11%
1999(2) ..... 15.10 0.04 1.97 (0.02) (1.00) 16.09 14.24
For the years ended November 30:
1998 ........ 16.55 0.09 1.64 (0.09) (3.09) 15.10 13.64
1997 ........ 13.39 0.14 3.24 (0.15) (0.07) 16.55 25.41
1996 ........ 11.60 0.17 2.38 (0.17) (0.59) 13.39 22.68
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ----------- ------------- ----------------- ----------------- ---------
-------------
BALANCED FUND
-------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ........ $223,634 0.97% 2.39% 1.07% 2.29% 182%
1999 ........ 251,752 0.97 2.19 1.06 2.10 179
1998 ........ 188,465 0.96 2.51 1.08 2.39 154
1997 ........ 151,358 0.95 2.89 1.08 2.76 197
1996 ........ 111,638 0.95 3.00 1.09 2.86 155
1995 ........ 89,051 0.95 3.44 1.11 3.28 157
-------------------------
CAPITAL APPRECIATION FUND
-------------------------
Trust Shares
2000 ........ $1,296,927 1.17% 0.10% 1.26% 0.01% 129%
1999 ........ 1,966,842 1.17 0.29 1.26 0.20 147
1998 ........ 1,532,587 1.16 0.61 1.27 0.50 194
1997 ........ 1,085,128 1.15 0.83 1.25 0.73 141
1996 ........ 981,498 1.15 0.90 1.27 0.78 156
----------------
CORE EQUITY FUND
----------------
Trust Shares
2000(1) ..... $151,421 1.20% (0.30)% 1.27% (0.37)% 44%
---------------------------
E-COMMERCE OPPORTUNITY FUND
---------------------------
Trust Shares
2000(1) ..... $106,425 1.20% (0.54)% 1.34% (0.68)% 250%
--------------------------
GROWTH AND INCOME FUND (A)
--------------------------
Trust Shares
2000 ........ $885,109 1.01% 0.76% 1.01% 0.76% 53%
1999(2) ..... 634,279 1.14 0.49 1.43 0.20 31
For the years ended November 30:
1998 ........ 577,042 1.03 0.63 1.21 0.45 71
1997 ........ 590,824 1.02 0.92 1.17 0.77 100
1996 ........ 553,648 1.02 1.38 1.17 1.23 82
<FN>
(+) 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 14, 1995. All ratios for the period have been annualized.
(2) 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 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.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 33
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- --------------- ------------- -------------- --------- ----------
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ........ $12.97 $(0.10) $1.42 $(0.07) $(1.66) $12.56 10.58%
1999 ........ 15.00 -- (1.14) (0.05) (0.84) 12.97 (7.43)
1998 ........ 13.63 0.04 2.69 (0.04) (1.32) 15.00 21.87
1997 ........ 11.40 0.03 2.57 (0.02) (0.35) 13.63 23.29
1996(3) ..... 10.00 0.05 1.35 -- -- 11.40 14.00
-------------------------------
INTERNATIONAL EQUITY INDEX FUND
-------------------------------
Trust Shares
2000 ........ $11.82 $ 0.16 $ 2.13 $(0.03) $(0.11) $13.97 19.36%
1999 ........ 13.31 0.09 0.85 (0.24) (2.19) 11.82 7.87
1998 ........ 11.34 0.11 2.65 (0.11) (0.68) 13.31 25.82
1997 ........ 10.96 0.10 0.69 (0.11) (0.30) 11.34 7.48
1996 ........ 10.24 0.10 0.84 (0.13) (0.09) 10.96 9.29
-------------------
MID-CAP EQUITY FUND
-------------------
Trust Shares
2000 ........ $12.68 $(0.04) $ 2.32 $ -- $(0.86) $14.10 19.10%
1999 ........ 13.79 0.01 0.07 -- (1.19) 12.68 1.61
1998 ........ 13.21 -- 2.54 -- (1.96) 13.79 21.14
1997 ........ 12.76 0.03 1.69 (0.05) (1.22) 13.21 14.23
1996 ........ 11.00 0.08 2.63 (0.08) (0.87) 12.76 25.54
---------------------------
SMALL CAP GROWTH STOCK FUND
---------------------------
Trust Shares
2000 ........ $14.55 $(0.08) $ 4.02 $ -- $(0.19) $18.30 27.24%
1999(4) ..... 10.00 (0.05) 4.62 -- (0.02) 14.55 45.70
---------------------------
SMALL CAP VALUE EQUITY FUND
---------------------------
Trust Shares
2000 ........ $ 9.70 $ 0.13 $(0.59) $(0.11) $ -- $ 9.13 (4.72)%
1999 ........ 12.88 0.13 (2.57) (0.13) (0.61) 9.70 (18.72)
1998 ........ 11.07 0.14 2.41 (0.12) (0.62) 12.88 23.59
1997(5) ..... 10.00 0.05 1.04 (0.02) -- 11.07 10.97
-------------------------------
TAX SENSITIVE GROWTH STOCK FUND
-------------------------------
Trust Shares
2000 ........ $29.96 $0.02 $3.12 $ -- $ -- $33.10 10.48%
1999(6) ..... 25.61 0.02 4.34 (0.01) -- 29.96 17.04
-----------------------
VALUE INCOME STOCK FUND
-----------------------
Trust Shares
2000 ........ $12.85 $ 0.23 $(1.49) $(0.22) $(0.99) $10.38 (10.52)%
1999 ........ 13.90 0.24 1.02 (0.24) (2.07) 12.85 11.13
1998 ........ 13.71 0.26 2.62 (0.27) (2.42) 13.90 23.10
1997 ........ 13.15 0.30 2.32 (0.30) (1.76) 13.71 22.18
1996 ........ 11.59 0.35 2.71 (0.34) (1.16) 13.15 27.91
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ----------- ------------- ----------------- ----------------- ---------
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ........ $ 299,100 1.48% 0.59% 1.48% 0.59% 179%
1999 ........ 573,255 1.48 0.68 1.53 0.63 161
1998 ........ 628,870 1.47 0.61 1.48 0.60 108
1997 ........ 489,325 1.46 0.51 1.51 0.46 139
1996(3) ..... 213,306 1.46 1.36 1.65 1.17 113
-------------------------------
INTERNATIONAL EQUITY INDEX FUND
-------------------------------
Trust Shares
2000 ........ $ 340,853 1.07% 0.83% 1.18% 0.72% 9%
1999 ........ 74,616 1.07 0.69 1.18 0.58 32
1998 ........ 56,200 1.06 0.88 1.18 0.76 1
1997 ........ 53,516 1.05 0.71 1.15 0.61 2
1996 ........ 90,980 1.05 0.84 1.19 0.70 30
-------------------
MID-CAP EQUITY FUND
-------------------
Trust Shares
2000 ........ $ 206,545 1.17% --% 1.25% (0.08)% 131%
1999 ........ 254,055 1.17 (0.47) 1.28 (0.58) 76
1998 ........ 337,825 1.16 (0.29) 1.27 (0.40) 129
1997 ........ 287,370 1.15 0.23 1.26 0.12 152
1996 ........ 253,905 1.15 0.70 1.29 0.56 116
---------------------------
SMALL CAP GROWTH STOCK FUND
---------------------------
Trust Shares
2000 ........ $ 431,478 1.20% (0.86)% 1.23% (0.89)% 110%
1999(4) ..... 152,290 1.20 (0.48) 1.49 (0.77) 75
---------------------------
SMALL CAP VALUE EQUITY FUND
---------------------------
Trust Shares
2000 ........ $ 212,074 1.22% 1.31% 1.25% 1.28% 65%
1999 ........ 301,984 1.22 1.27 1.27 1.22 63
1998 ........ 390,841 1.21 1.07 1.31 0.97 55
1997(5) ..... 131,049 1.20 1.86 1.37 1.69 27
-------------------------------
TAX SENSITIVE GROWTH STOCK FUND
-------------------------------
Trust Shares
2000 ........ $ 710,179 1.20% 0.13% 1.26% 0.07% 30%
1999(6) ..... 223,543 1.20 0.21 1.34 0.07 18
-----------------------
VALUE INCOME STOCK FUND
-----------------------
Trust Shares
2000 ........ $ 921,797 0.89% 2.02% 0.89% 2.02% 62%
1999 ........ 1,589,951 0.92 1.91 0.92 1.91 69
1998 ........ 1,725,418 0.92 1.85 0.92 1.85 99
1997 ........ 1,488,062 0.91 2.40 0.91 2.40 105
1996 ........ 1,244,399 0.92 2.86 0.92 2.86 134
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
(3) Commenced operations on December 1, 1995. All ratios for the period have
been annualized.
(4) Commenced operations on January 31, 1997. All ratios for the period have
been annualized.
(5) Commenced operations on October 8, 1998. All ratios for the period have
been annualized.
(6) Commenced operations on December 11, 1998. All ratios for the period have
been annualized.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
34 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 35
NOTES
<PAGE>
36 PROSPECTUS
NOTES
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
38 PROSPECTUS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, 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 and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
XXX-XX-XX
<PAGE>
XXXXXXXX
STI CLASSIC FUNDS-EQUITY FUNDS
FLEX AND INVESTOR SHARES
PROSPECTUS
OCTOBER 1, 2000
BALANCED FUND
CAPITAL APPRECIATION FUND
CORE EQUITY FUND
E-COMMERCE OPPORTUNITY FUND
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
MID-CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
SMALL CAP VALUE EQUITY FUND
(FORMERLY SMALL CAP EQUITY FUND)
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
INVESTMENT ADVISER
TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(the "Adviser")
[STI Logo Omitted]
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>
PROSPECTUS
ABOUT 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 Equity 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 FLEX SHARES
[bullet] Front-end sales charge [bullet] Contingent deferred sales charge
[bullet] 12b-1 fees [bullet] Higher 12b-1 fees
[bullet] $2,000 minimum initial [bullet] $5,000 minimum initial
investment investment
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 THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
2 BALANCED FUND
4 CAPITAL APPRECIATION FUND
6 CORE EQUITY FUND
8 E-COMMERCE OPPORTUNITY FUND
10 GROWTH AND INCOME FUND
12 INTERNATIONAL EQUITY FUND
14 INTERNATIONAL EQUITY INDEX FUND
16 MID-CAP EQUITY FUND
18 SMALL CAP GROWTH STOCK FUND
20 SMALL CAP VALUE EQUITY FUND
22 TAX SENSITIVE GROWTH STOCK FUND
24 VALUE INCOME STOCK FUND
26 MORE INFORMATION ABOUT RISK
27 MORE INFORMATION ABOUT FUND INVESTMENTS
27 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
29 PURCHASING, SELLING AND EXCHANGING FUND SHARES
34 DIVIDENDS, DISTRIBUTIONS AND TAXES
35 FINANCIAL HIGHLIGHTS
42 HOW TO OBTAIN MORE INFORMATION ABOUT
THE STI CLASSIC FUNDS
--------------------------------------------------------------------------------
[BRIEFCASE GRAPHIC OMITTED] FUND SUMMARY
[TELESCOPE GRAPHIC OMITTED] INVESTMENT STRATEGY
[INNERTUBE GRAPHIC OMITTED] WHAT ARE THE RISKS OF INVESTING?
[BULLSEYE GRAPHIC OMITTED] PERFORMANCE INFORMATION
[CHART GRAPHIC OMITTED] WHAT IS AN INDEX?
[COINS GRAPHIC OMITTED] FUND FEES AND EXPENSES
[MOUNTAINTOP GRAPHIC OMITTED] MORE INFORMATION ABOUT FUND INVESTMENTS
[MAGNIFIER GRAPHIC OMITTED] INVESTMENT ADVISER
[HANDSHAKE GRAPHIC OMITTED] PURCHASING, SELLING AND EXCHANGING FUND SHARES
[DOLLAR GRAPHIC OMITTED] SALES CHARGES
--------------------------------------------------------------------------------
OCTOBER 1, 2000
<PAGE>
PROSPECTUS 1
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
Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser does, you could
lose money on your investment in a 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 prices 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>
2 PROSPECTUS
BALANCED FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 above average 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
25.08% 11.85% 20.71% 19.21% 4.31%
1995 1996 1997 1998 1999
BEST QUARTER WORST QUARTER
12.52% -5.81%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.06%.
<PAGE>
PROSPECTUS 3
BALANCED FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX AND THE S&P 500 INDEX.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
-------------------------------------------------------------
Balanced Fund 4.31% 16.00% 12.23%*
-------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 7.60% 5.67%**
-------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 23.55%**
-------------------------------------------------------------
* SINCE 1/3/94
** SINCE 12/31/93
FLEX SHARES 1 YEAR SINCE INCEPTION
-------------------------------------------------------------
Balanced Fund 3.51% 13.88%*
-------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 5.90%**
-------------------------------------------------------------
S&P 500 Index 21.04% 26.98%**
-------------------------------------------------------------
* SINCE 6/14/95 ** SINCE 5/31/95
[CHART GRAPHIC OMITTTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.95% 0.95%
Distribution and Service (12b-1) Fees 0.28% 1.00%
Other Expenses 0.28% 0.23%
---- -----
Total Annual Fund Operating Expenses 1.51% 2.18%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $523 $834 $1,168 $2,109
Flex Shares $421 $682 $1,169 $2,513
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $523 $834 $1,168 $2,109
Flex Shares $221 $682 $1,169 $2,513
--------------------------------------------------------------------------------
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 0.92%, 0.13% and 1.33%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.92%, 0.94% and 2.09%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
4 PROSPECTUS
CAPITAL APPRECIATION FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Capital Appreciation Fund invests primarily in U.S. common stocks and other
equity securities that the Adviser believes have strong business fundamentals,
such as revenue growth, cash flows and earnings trends. In selecting investments
for the Fund, the Adviser chooses companies that it believes have above average
growth potential. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
9.27% -8.01% 30.33% 19.50% 30.34% 27.26% 9.06%
1993 1994 1995 1996 1997 1998 1999
BEST QUARTER WORST QUARTER
22.78% -11.26%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 5.55%.
<PAGE>
PROSPECTUS 5
CAPITAL APPRECIATION FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1999, TO THOSE OF THE S&P 500 INDEX.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Capital Appreciation Fund 9.06% 23.02% 17.09%*
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 20.74%**
--------------------------------------------------------------------------------
* SINCE 6/9/92
** SINCE 5/31/92
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Capital Appreciation Fund 8.53% 21.73%*
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 26.98%**
--------------------------------------------------------------------------------
* SINCE 6/1/95
** SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees 0.68% 1.00%
Other Expenses 0.15% 0.24%
----- -----
Total Annual Fund Operating Expenses 1.98% 2.39%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $568 $973 $1,402 $2,595
Flex Shares $442 $745 $1,275 $2,726
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $568 $973 $1,402 $2,595
Flex Shares $242 $745 $1,275 $2,726
--------------------------------------------------------------------------------
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 1.13%, 0.60% and 1.88%, respectively.
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 1.13%, 0.98% and 2.35%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
6 PROSPECTUS
CORE EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 mid- to large-capitalization
growth stocks may underperform other segments of the equity market or the equity
markets as a whole.
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The Core Equity Fund commenced operations on September 30, 1999, and therefore
does not have a performance history for a full calendar year.
<PAGE>
PROSPECTUS 7
CORE EQUITY FUND
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
FLEX SHARES
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%
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
FLEX SHARES
Investment Advisory Fees 1.10%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.60%
-----
Total Annual Fund Operating Expenses 2.70%
--------------------------------------------------------------------------------
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $473 $838 $1,430 $3,032
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $273 $838 $1,430 $3,032
--------------------------------------------------------------------------------
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, Distribution Fees and Total Operating Expenses are
1.10%, 0.55% and 2.25%, respectively. The Adviser could discontinue this
voluntary waiver at any time. For more information about these fees, see
"Investment Adviser."
<PAGE>
8 PROSPECTUS
E-COMMERCE OPPORTUNITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 corporations whose core line of business focuses
on an emerging e-commerce market. The second segment consists of established
technology companies that provide the infrastructure to support electronic
commerce. The third segment includes established, non-tech companies that are
expected to achieve substantial direct or indirect benefits from e-commerce. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
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.
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The E-Commerce Opportunity Fund commenced operations on September 30, 1999, and
therefore does not have a performance history for a full calendar year.
<PAGE>
PROSPECTUS 9
E-COMMERCE OPPORTUNITY FUND
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
FLEX SHARES
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%
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
FLEX SHARES
Investment Advisory Fees 1.10%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.30%
-----
Total Annual Fund Operating Expenses 2.40%
--------------------------------------------------------------------------------
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $443 $748 $1,280 $2,736
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $243 $748 $1,280 $2,736
--------------------------------------------------------------------------------
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, Distribution Fees and Total Operating Expenses are
1.10%, 0.85% and 2.25%, respectively. The Adviser could discontinue this
voluntary waiver at any time. For more information about these fees, see
"Investment Adviser."
<PAGE>
10 PROSPECTUS
GROWTH AND INCOME FUND
[BRIEFCASE GRAPHIC OMITTED]
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 earnings
potential 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in equity securities, including
common stock and listed American Depositary Receipts (ADRs), 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
-0.91% 29.45% 19.12% 27.58% 18.25% 14.10%
1994 1995 1996 1997 1998 1999
BEST QUARTER WORST QUARTER
17.35% -10.35%
(6/30/97) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -0.43%.
<PAGE>
PROSPECTUS 11
GROWTH AND INCOME FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX. PREVIOUSLY,
THE FUND'S RETURNS HAD BEEN COMPARED TO THE S&P 500 INDEX, BUT THE ADVISER
BELIEVES THAT S&P 500/BARRA VALUE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
LARGE CAP VALUE STOCKS, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH
THE FUND INVESTS.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Growth and
Income Fund 14.10% 21.56% 16.57%*
--------------------------------------------------------------------------------
S&P 500/
BARRA Value Index 12.72% 22.94% 18.16%**
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 22.37%**
--------------------------------------------------------------------------------
* SINCE 5/7/93 ** SINCE 4/30/93
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Growth and Income Fund 13.30% 19.73%*
--------------------------------------------------------------------------------
S&P 500/ BARRA Value Index 12.72% 21.89%**
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 27.74%**
--------------------------------------------------------------------------------
* SINCE 4/5/95 ** SINCE 3/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 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 S&P 500/BARRA Value Index
is a widely-recognized index of the stocks in the S&P 500 Index that have lower
price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.90% 0.90%
Distribution and Service (12b-1) Fees 0.25% 1.00%
Other Expenses 0.21% 0.25%
----- -----
Total Annual Fund Operating Expenses 1.36% 2.15%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $508 $790 $1,092 $1,949
Flex Shares $418 $673 $1,154 $2,483
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $508 $790 $1,092 $1,949
Flex Shares $218 $673 $1,154 $2,483
--------------------------------------------------------------------------------
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%, 0.07% and 1.18%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.90%, 0.78% and 1.93%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
12 PROSPECTUS
INTERNATIONAL EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
--------------------------------------------------------------------------------
INVESTMENT FOCUS Foreign common stocks
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with good
fundamentals or a history of consistent growth
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks and other
equity securities of foreign companies. 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,
or a history of consistent growth in cash flows, sales, operating profits,
returns on equity and returns on invested capital. In selecting investments for
the Fund, the Adviser diversifies the Fund's investments among at least three
foreign countries. Due to the Fund's investment strategy, the Fund may buy and
sell securities frequently. This may result in higher transaction costs and
additional capital gains tax liabilities.
[INNERTUBE GRAPHIC OMITTED]
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 foreign common stocks may underperform
other segments of the equity market 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
21.58% 13.01% 10.69% 9.05%
1996 1997 1998 1999
BEST QUARTER WORST QUARTER
16.74% -18.33%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.69%.
<PAGE>
PROSPECTUS 13
INTERNATIONAL EQUITY FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, AND FAR EAST (MSCI EAFE) INDEX.
INVESTOR SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
International Equity Fund 9.05% 18.40%*
--------------------------------------------------------------------------------
MSCI EAFE Index 26.96% 13.97%*
--------------------------------------------------------------------------------
* SINCE 1/31/95
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
International Equity Fund 8.27% 17.76%*
--------------------------------------------------------------------------------
MSCI EAFE Index 26.96% 13.97%*
--------------------------------------------------------------------------------
* SINCE 1/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 (larger market capitalizations have more influence than
smaller market capitalizations) index of over 900 securities listed on the stock
exchanges in Europe, Australasia and the Far East. The country weighting of the
Index is calculated using the market capitalization of each of the various
countries, and then with respect to the market capitalization of the various
companies operating in each country.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 1.25% 1.25%
Distribution and Service (12b-1) Fees 0.33% 1.00%
Other Expenses 0.37% 0.49%
----- -----
Total Annual Fund Operating Expenses 1.95% 2.74%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $566 $964 $1,388 $2,564
Flex Shares $477 $850 $1,450 $3,070
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $566 $964 $1,388 $2,564
Flex Shares $277 $850 $1,450 $3,070
--------------------------------------------------------------------------------
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 1.25%, 0.21% and 1.83%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 1.25%, 0.79% and 2.53%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
14 PROSPECTUS
INTERNATIONAL EQUITY INDEX FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Investment results that correspond to the
performance of the MSCI EAFE-GDP Weighted Index
--------------------------------------------------------------------------------
INVESTMENT FOCUS Foreign common stocks in the MSCI EAFE-GDP
Weighted 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 Weighted 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.
[INNERTUBE GRAPHIC OMITTED]
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 foreign common stocks may underperform
other segments of the equity market 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.
In addition to the above mentioned risks, the Adviser may not be able to match
the performance of the Fund's benchmark.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
10.20% 5.78% 8.44% 29.68% 29.97%
1995 1996 1997 1998 1999
BEST QUARTER WORST QUARTER
21.20% -13.09%
(12/13/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -5.07%.
<PAGE>
PROSPECTUS 15
INTERNATIONAL EQUITY INDEX FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, AND FAR EAST-GROSS DOMESTIC PRODUCT (MSCI EAFE-GDP)
WEIGHTED INDEX.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
International Equity
Index Fund 29.97% 16.33% 13.95%*
--------------------------------------------------------------------------------
MSCI EAFE-GDP
Weighted Index
(Price Return) 29.49% 14.45% 12.59%**
--------------------------------------------------------------------------------
* SINCE 6/6/94 ** SINCE 5/31/94
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
International Equity Index Fund 29.15% 15.99%*
--------------------------------------------------------------------------------
MSCI EAFE-GDP Weighted Index
(Price Return) 29.49% 14.74%**
--------------------------------------------------------------------------------
* SINCE 6/8/95 ** SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 country weighting of the Index is
calculated using the gross domestic product of each of the various countries and
then with respect to the market capitalization of the various companies
operating in each country.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.90% 0.90%
Distribution and Service (12b-1) Fees 0.38% 1.00%
Other Expenses 0.51% 0.71%
----- -----
Total Annual Fund Operating Expenses 1.79% 2.61%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $550 $917 $1,308 $2,401
Flex Shares $464 $811 $1,385 $2,944
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $550 $917 $1,308 $2,401
Flex Shares $264 $811 $1,385 $2,944
--------------------------------------------------------------------------------
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 0.81%, 0.17% and 1.49%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.81%, 0.62% and 2.14%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
16 PROSPECTUS
MID-CAP EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 400 Mid Cap 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.
[INNERTUBE GRAPHIC OMITTED]
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 mid-cap common stocks may underperform
other segments of the equity market 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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
30.57% 14.93% 20.67% 5.98% 15.69%
1995 1996 1997 1998 1999
BEST QUARTER WORST QUARTER
24.52% -20.00%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 9.50%.
<PAGE>
PROSPECTUS 17
MID-CAP EQUITY FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 400 MID CAP INDEX.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Mid-Cap Equity Fund 15.69% 17.29% 14.01%*
--------------------------------------------------------------------------------
S&P 400 Mid Cap Index 14.72% 23.04% 17.96%*
--------------------------------------------------------------------------------
* SINCE 1/31/94
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Mid-Cap Equity Fund 14.97% 15.04%*
--------------------------------------------------------------------------------
S&P 400 Mid Cap Index 14.72% 22.08%**
--------------------------------------------------------------------------------
* SINCE 6/5/95
** SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 400 Mid Cap 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees 0.43% 1.00%
Other Expenses 0.23% 0.29%
----- -----
Total Annual Fund Operating Expenses 1.81% 2.44%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $552 $923 $1,318 $2,422
Flex Shares $447 $761 $1,301 $2,776
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $552 $923 $1,318 $2,422
Flex Shares $247 $761 $1,301 $2,776
--------------------------------------------------------------------------------
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 1.12%, 0.33% and 1.68%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 1.12%, 0.87% and 2.28%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
18 PROSPECTUS
SMALL CAP GROWTH STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Small Cap Growth Stock Fund invests primarily in small U.S. companies with
market capitalizations between $50 million and $3 billion in size. The Fund's
investment philosophy is based on the premise that a portfolio of small cap
stocks with positive earnings trends, reasonable valuation, and strong
fundamentals will provide superior returns over time. The Adviser selects
companies with strong current earnings growth, improving profitability, a strong
balance sheet, strong current and projected business fundamentals, and priced at
reasonable valuations. The Adviser believes in executing a very disciplined and
objective investment process and in controlling risk through a broadly
diversified portfolio. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and the
potential for capital gains tax liabilities for taxable investors.
[INNERTUBE GRAPHIC OMITTED]
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 small capitalization growth stocks may
underperform other segments of the equity market 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.
[BULLSEYE GRAPHIC OMITTED]
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 THE PERFORMANCE OF THE FUND'S INVESTOR SHARES FOR ONE YEAR.
THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES HAD BEEN REFLECTED,
RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
[Bar Chart Omitted]
Plot point is as follows:
20.48%
1999
BEST QUARTER WORST QUARTER
20.77% -11.36%
(6/30/99) (3/31/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 16.09%.
<PAGE>
PROSPECTUS 19
SMALL CAP GROWTH STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 600 SMALL CAP INDEX.
INVESTOR SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Small Cap Growth Stock Fund 20.48% 58.53%*
--------------------------------------------------------------------------------
S&P 600 Small Cap Index 12.41% 25.01%**
--------------------------------------------------------------------------------
* SINCE 10/8/98
** SINCE 9/30/98
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Small Cap Growth Stock Fund 19.29% 56.97%*
--------------------------------------------------------------------------------
S&P 600 Small Cap Index 12.41% 25.01%**
--------------------------------------------------------------------------------
* SINCE 10/8/98
** SINCE 9/30/98
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 600 Small Cap Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of 600 domestic
small cap stocks.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees 0.50% 1.00%
Other Expenses 0.22% 0.27%
----- -----
Total Annual Fund Operating Expenses 1.87% 2.42%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $558 $941 $1,348 $2,483
Investor Shares $445 $755 $1,291 $2,756
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $558 $941 $1,348 $2,483
Investor Shares $245 $755 $1,291 $2,756
--------------------------------------------------------------------------------
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 1.15%, 0.24% and 1.61%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 1.15%, 0.89% and 2.31%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
20 PROSPECTUS
SMALL CAP VALUE EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Small Cap Value 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.
[INNERTUBE GRAPHIC OMITTED]
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 small capitalization common stocks may
underperform other segments of the equity market 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.
[BULLSEYE GRAPHIC OMITTED]
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 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.*
[Bar Chart Omitted]
Plot points are as follows:
30.99% 34.25% 31.79% -14.33% -3.67%
1995 1996 1997 1998 1999
BEST QUARTER WORST QUARTER
19.45% -22.14%
(6/30/99) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.90%.
<PAGE>
PROSPECTUS 21
SMALL CAP VALUE EQUITY FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE RUSSELL 2000 VALUE INDEX. PREVIOUSLY,
THE FUND'S RETURNS HAD BEEN COMPARED TO THE RUSSELL 2000 INDEX, BUT THE ADVISER
BELIEVES THAT THE RUSSELL 2000 VALUE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
SMALL U.S. COMPANIES WITH LOWER GROWTH RATES AND PRICE-TO-BOOK RATIOS, MORE
ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH THE FUND INVESTS.
FLEX SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Small Cap Value
Equity Fund -3.67% 13.85% 13.07%*
--------------------------------------------------------------------------------
Russell 2000
Value Index -1.49% 13.13% 11.41%*
--------------------------------------------------------------------------------
Russell 2000 Index 21.26% 16.69% 15.09%*
--------------------------------------------------------------------------------
* SINCE 8/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Russell 2000 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. The Russell 2000 Value Index is a widely-recognized,
capitalization weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of companies in
the Russell 2000 Index with lower growth rates and price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
FLEX SHARES
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%
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
FLEX SHARES
Investment Advisory Fees 1.15%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.41%
-----
Total Annual Fund Operating Expenses 2.56%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$459 $796 $1,360 $2,895
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$259 $796 $1,360 $2,895
--------------------------------------------------------------------------------
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 1.15%, 0.75% and 2.31%, respectively. The Adviser
and Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
22 PROSPECTUS
TAX SENSITIVE GROWTH STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 common stocks of U.S. growth companies
may underperform other segments of the equity market 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.
[BULLSEYE GRAPHIC OMITTED]
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 YEAR. THE CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES HAD
BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
[Bar Chart Omitted]
Plot points are as follows:
21.04% 28.76% 31.73% 23.52%
1996 1997 1998 1999
BEST QUARTER WORST QUARTER
27.74% -9.96%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.00%.
<PAGE>
PROSPECTUS 23
TAX SENSITIVE GROWTH STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500 INDEX.
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Tax Sensitive Growth
Stock Fund 23.52% 26.25%*
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 26.39%*
--------------------------------------------------------------------------------
* SINCE 12/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
FLEX SHARES
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%
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
FLEX SHARES
Investment Advisory Fees 1.15%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.20%
-----
Total Annual Fund Operating Expenses 2.35%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$438 $733 $1,255 $2,686
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$238 $733 $1,255 $2,686
--------------------------------------------------------------------------------
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 1.15%, 0.96% and 2.31%, respectively. The Adviser and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
<PAGE>
24 PROSPECTUS
VALUE INCOME STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
-4.93% 39.30% 20.05% 10.86% 2.87% 35.50% 19.06% 26.57% 10.16% -3.31%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
BEST QUARTER WORST QUARTER
18.56% -14.86%
(3/31/91) (9/30/90)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -6.48%.
<PAGE>
PROSPECTUS 25
VALUE INCOME STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
--------------------------------------------------------------------------------
Value Income
Stock Fund -3.31% 16.81% 14.71% 14.75%*
--------------------------------------------------------------------------------
S&P 500/BARRA
Value Index 12.72% 22.94% 15.37% 15.46%*
--------------------------------------------------------------------------------
* SINCE 10/31/89
SINCE
FLEX SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
--------------------------------------------------------------------------------
Value Income
Stock Fund -3.99% 16.07% 14.44% 14.49%*
--------------------------------------------------------------------------------
S&P 500/BARRA
Value Index 12.72% 22.94% 15.37% 15.46%*
--------------------------------------------------------------------------------
* SINCE 10/31/89
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/BARRA Value Index is a widely-recognized
index of the stocks in the S&P 500 Index that have lower price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $500 $766 $1,051 $1,862
Flex Shares $406 $637 $1,093 $2,358
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $500 $766 $1,051 $1,862
Flex Shares $206 $637 $1,093 $2,358
--------------------------------------------------------------------------------
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 Adviser" and "Distribution of Fund
Shares."
<PAGE>
26 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION ABOUT RISK
EQUITY RISK
ALL FUNDS
Equity securities include public and privately 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
BALANCED FUND
The market value of fixed income investments changes 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 will be unable to make timely payments of
either principal or interest.
FOREIGN SECURITY RISKS
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
Investments in securities of foreign companies or governments can be more
volatile than 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
INTERNATIONAL EQUITY INDEX FUND
Factors such as Fund expenses, imperfect correlation between the Funds'
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>
PROSPECTUS 27
MORE INFORMATION ABOUT FUND INVESTMENTS
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT FUND 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 Value 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.
[MAGNIFIER GRAPHIC OMITTED]
INVESTMENT ADVISER
The investment adviser (the "Adviser") makes investment decisions for the
Funds and continuously reviews, supervises and administers each Fund's
respective investment program. The Board of Trustees supervises the Adviser and
establishes policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
BALANCED FUND 0.85%
CAPITAL APPRECIATION FUND 1.06%
CORE EQUITY FUND 1.03%
E-COMMERCE OPPORTUNITY FUND 0.96%
GROWTH AND INCOME FUND 0.90%
INTERNATIONAL EQUITY FUND 1.25%
INTERNATIONAL EQUITY INDEX FUND 0.79%
MID-CAP EQUITY FUND 1.07%
SMALL CAP GROWTH STOCK FUND 1.12%
SMALL CAP VALUE EQUITY FUND 1.12%
TAX SENSITIVE GROWTH STOCK FUND 1.09%
VALUE INCOME STOCK FUND 0.80%
The Adviser may use its affiliates as brokers for Fund transactions.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as investment adviser to the Balanced
Fund, Capital Appreciation Fund, International Equity Fund, Mid-Cap Equity Fund,
Small Cap Value Equity Fund, and Value Income Stock Fund. On January 1, 2000,
SunTrust Bank (formerly SunTrust Bank, Atlanta), a subsidiary of SunTrust Banks,
Inc. succeeded STI as the investment adviser to those Funds. On July 1, 2000
SunTrust Banks, Inc. reorganized its money management units, including those of
SunTrust Bank, into Trusco Capital Management, Inc. As a result, Trusco now
serves as the investment adviser to each STI Classic Fund.
PORTFOLIO MANAGERS
The Balanced Fund is co-managed by Mr. Robert J. Rhodes, CFA, Mr. Earl L.
Denney, CFA, and Mr. Dave E. West, CFA. Mr. Rhodes manages the equity portion of
the Fund. Mr. Denney and Mr. West co-manage the fixed-income portion of the
Fund. Mr. Rhodes has also managed the Core Equity Fund since it began operating
in September 1999 and the Capital Appreciation Fund since June 2000. Mr. Rhodes
is an Executive Vice President and head of the Equity Funds group at Trusco. Mr.
Rhodes has been employed by Trusco since 1973 and was Director of Research at
Trusco from 1980 to 2000. Mr. Rhodes has more than 27 years of investment
experience. Mr. West has
<PAGE>
28 PROSPECTUS
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
served as a Managing Director of STI and has worked there since 1985. In January
2000 he was named Managing Director of SunTrust Bank, and is now a Managing
Director of Trusco. Mr. West has more than 14 years of investment experience.
Mr. Denney has served as Managing Director of STI since 1983. In January 2000,
he was named Managing Director of SunTrust Bank and is now a Managing Director
of Trusco. Mr. Denney has more than 21 years of investment experience.
Mr. Alan S. Kelley has served as a Vice President of Trusco since July 2000. He
has managed the E-Commerce Opportunity Fund since it began operating in
September 1999. Prior to joining Trusco, Mr. Kelley served as a Portfolio
Manager with SunTrust Bank, Atlanta from 1995 to 1999. He has more than 7 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. From 1992 until July
2000, he 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, and Managing Director in July 2000. Mr.
Markunas has more than 17 years of investment experience.
The International Equity Index Fund is managed by Mr. Chad Deakins, CFA, and
co-managed Mr. Robert J. Rhodes, CFA. Mr. Deakins serves as a Vice President of
Trusco and has worked there since 1996. He has co-managed the International
Equity Index Fund since February 1999. Mr. Deakins has also managed the
International Equity Fund since May 2000. Prior to joining Trusco, Mr. Deakins
worked at SunTrust Bank. He has more than 6 years of investment experience. Mr.
Rhodes is an Executive Vice President and head of the Equity Funds group at
Trusco. He has been employed by Trusco since 1973, and was Director of Research
at Trusco from 1980 to 2000. Mr. Rhodes has co-managed the International Equity
Index Fund since it began operating in June 1994. Mr. Rhodes has more than 27
years of investment experience.
Mr. John Hamlin has served as a Vice President of Trusco since July 2000, after
serving as a 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 11 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. He has more than 13 years of investment experience.
Mr. Brett Barner, CFA, has served as a Vice President of Trusco since July 2000,
after serving as a Managing Director of STI since 1994. He has managed the Small
Cap Value Equity Fund since it began operating in January 1997. He has more than
16 years of investment experience.
Mr. Jonathan Mote, CFA, CFP, has served as a 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 15 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 Trusco since July 2000,
after serving as a Managing Director of STI since 1994. He has managed the Value
Income Stock Fund since April 1995. Mr. Riddick has more than 18 years of
investment experience. Mr. Lewis has served as a Portfolio Manager of Trusco
since July 2000, after serving as a Portfolio Manager for STI since 1993. He has
been an analyst of the Value Income Stock Fund since 1995. He has more than 9
years of investment experience.
<PAGE>
PROSPECTUS 29
PURCHASING, SELLING AND EXCHANGING FUND SHARES
[HANDSHAKE GRAPHIC OMITTED]
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Investor Shares and Flex Shares of the Funds.
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 securities account is established, you may buy
shares of the Funds by:
[bullet] Mail
[bullet] Telephone (1-800-874-4770)
[bullet] Wire
[bullet] Automated Clearing House (ACH)
You may also buy shares through Investment Representatives of certain
correspondent banks of SunTrust Banks, Inc. (SunTrust) and other financial
institutions that are authorized to place transactions 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 a 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.
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 Funds' investments may change on
days when you cannot purchase or sell Fund shares.
<PAGE>
30 PROSPECTUS
PURCHASING, SELLING AND EXCHANGING FUND SHARES
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
MINIMUM PURCHASES
To purchase shares for the first time, you must invest in any Fund at least:
CLASS DOLLAR AMOUNT
--------------------------------------------------------------------------------
Investor Shares $2,000
--------------------------------------------------------------------------------
Flex Shares $5,000 ($2,000 for retirement plans)
--------------------------------------------------------------------------------
Your subsequent investments of shares of any Fund must be made in amounts of at
least $1,000 or, if you pay by a statement coupon, $100. The Funds 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
1-800-874-4770 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 investment 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.
[DOLLAR GRAPHIC OMITTED] 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.
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:
YOUR SALES CHARGE YOUR SALES CHARGE
AS A PERCENTAGE OF AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
--------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------
WAIVER OF FRONT-END SALES CHARGE --
INVESTOR SHARES
The front-end sales charge will be waived on Investor Shares purchased:
[bullet] through reinvestment of dividends and distributions;
[bullet] through a SunTrust Securities, Inc. asset allocation account;
[bullet] by persons repurchasing shares they redeemed within the last 60 days
(see Repurchase of Investor Shares);
[bullet] by employees, and members of their immediate family, of SunTrust and
its affiliates;
[bullet] 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;
[bullet] 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
[bullet] 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.
<PAGE>
PROSPECTUS 31
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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 us 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 and/or children (and provide the children's ages). The Fund 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 (CDSC) 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
<PAGE>
32 PROSPECTUS
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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:
[bullet] to make certain withdrawals from a retirement plan (not including
IRAs);
[bullet] because of death or disability;
[bullet] for certain payments under the Systematic Withdrawal Plan (which is
discussed later); or
[bullet] for exchanges from Trust or Investor Shares to Flex Shares where the
total accumulated period from the original date of purchase is at least
one year.
OFFERING PRICE OF FUND SHARES
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. Your broker or
institution may charge a fee for its services, in addition to the fees charged
by the Fund.
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 FROM YOUR DATE OF
PURCHASE).
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:
CLASS DOLLAR AMOUNT
--------------------------------------------------------------------------------
Investor Shares $2,000
--------------------------------------------------------------------------------
Flex Shares $5,000
--------------------------------------------------------------------------------
<PAGE>
PROSPECTUS 33
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with Fund management and may have an
adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where it is in the best interests of a Fund,
all Funds reserve the right to revise or terminate the exchange privilege, limit
the amount or number of exchanges or reject any exchange. Currently, 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 FROM YOUR DATE OF PURCHASE). 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 Fund receives your exchange requests.
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. For purposes of computing the CDSC
applicable to Flex Shares, the length of time you have owned your shares will be
measured from the original date of purchase and will not be affected by any
exchange.
FLEX SHARES
You may exchange Flex Shares of any Fund for Flex Shares of any other Fund.
Again, the CDSC will be computed as of the original date of purchase.
TELEPHONE TRANSACTIONS
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.
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.
<PAGE>
34 PROSPECTUS
DIVIDENDS, DISTRIBUTIONS AND TAXES
Distribution fees, as a percentage of average daily net assets are as follows:
FOR INVESTOR SHARES
--------------------------------------------------------------------------------
BALANCED FUND 0.28%
CAPITAL APPRECIATION FUND 0.68%
GROWTH AND INCOME FUND 0.25%
INTERNATIONAL EQUITY FUND 0.33%
INTERNATIONAL EQUITY INDEX FUND 0.38%
MID-CAP EQUITY FUND 0.43%
SMALL CAP GROWTH STOCK FUND 0.50%
VALUE INCOME STOCK FUND 0.33%
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 cash or non-cash
compensation as recognition for past sales or encouragement for future sales
that may include the following: merchandise, travel expenses, prizes, meals, and
lodgings, and gifts that do not exceed $100 per year, per individual.
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
MID-CAP EQUITY FUND
SMALL CAP GROWTH STOCK FUND
SMALL CAP VALUE EQUITY FUND
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
ANNUALLY
--------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
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 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 OF FUND SHARES 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>
PROSPECTUS 35
FINANCIAL HIGHLIGHTS
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, 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 1-800-428-6970.
For the Periods Ended May 31,
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
---------- ---------- --------------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
-------------
BALANCED FUND
-------------
Investor Shares
2000 .......... $13.32 $ 0.29 $ 0.31 $(0.25) $(0.24) $13.43 4.66%
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
Flex Shares
2000 .......... $13.17 $ 0.17 $ 0.33 $(0.16) $(0.24) $13.27 3.88%
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
2000 .......... $16.53 $(0.11) $ 1.41 $ -- $(0.92) $16.91 8.29%
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
Flex Shares
2000 .......... $16.18 $(0.24) $ 1.43 $ -- $(0.92) $16.45 7.77%
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
----------------
CORE EQUITY FUND
----------------
Flex Shares
2000(3) ....... $10.63 $(0.04) $ 0.47 $ -- $ -- $11.06 4.05%
---------------------------
E-COMMERCE OPPORTUNITY FUND
---------------------------
Flex Shares
2000(3) ....... $18.23 $(0.07) $(2.32) $ -- $ -- $15.81 (13.13)%
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- ----------- ------------- ----------------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C>
-------------
BALANCED FUND
-------------
Investor Shares
2000 .......... $ 9,627 1.27% 2.07% 1.51% 1.83% 182%
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
Flex Shares
2000 .......... $ 64,322 2.03% 1.33% 2.18% 1.18% 182%
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 FUND
-------------------------
Investor Shares
2000 .......... $251,421 1.82% (0.55)% 1.98% (0.71)% 129%
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
Flex Shares
2000 .......... $128,159 2.29% (1.03)% 2.39% (1.13)% 129%
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
----------------
CORE EQUITY FUND
----------------
Flex Shares
2000(3) ....... $ 4,347 2.25% (1.39)% 2.70% (1.84)% 44%
---------------------------
E-COMMERCE OPPORTUNITY FUND
---------------------------
Flex Shares
2000(3) ....... $ 20,201 2.25% (1.65)% 2.40% (1.80)% 250%
<FN>
(+) 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 24, 2000. All ratios for the period have
been annualized.
Amounts designated as "--" are either $0 or rounded to $0.
</FN>
</TABLE>
<PAGE>
36 PROSPECTUS
FINANCIAL HIGHLIGHTS
For the Periods Ended May 31, (unless otherwise indicated)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
---------- ---------- --------------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------
GROWTH AND INCOME FUND (A)
--------------------------
Investor Shares
2000 .......... $16.21 $ 0.09 $ 0.55 $(0.08) $(1.12) $15.65 3.92%
1999(5) ....... 15.21 0.04 1.99 (0.03) (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
Flex Shares
2000 .......... $16.10 $ -- $ 0.51 $ -- $(1.12) $15.49 3.11%
1999(5) ....... 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 (6) ...... 11.11 0.12 1.62 (0.14) (1.07) 11.64 15.78
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
Investor Shares
2000 .......... $12.89 $(0.11) $ 1.37 $(0.02) $(1.66) $12.47 10.15%
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(4) ....... 10.44 0.04 0.90 -- -- 11.38 9.00
Flex Shares
2000 .......... $12.58 $(0.32) $ 1.46 $ -- $(1.66) $12.06 9.38%
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(4) ....... 10.44 0.02 0.91 -- -- 11.37 8.91
-------------------------------
INTERNATIONAL EQUITY INDEX FUND
-------------------------------
Investor Shares
2000 .......... $11.70 $(0.11) $ 2.32 $ -- $(0.11) $13.80 18.86%
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
Flex Shares
2000 .......... $11.73 $ 0.08 $ 2.04 $ -- $(0.11) $13.74 18.04%
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(7) ....... 10.24 -- 0.82 (0.10) (0.09) 10.87 8.32
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- ----------- ------------- ----------------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C>
--------------------------
GROWTH AND INCOME FUND (A)
--------------------------
Investor Shares
2000 .......... $42,666 1.18% 0.58% 1.31% 0.45% 53%
1999(5) ....... 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
Flex Shares
2000 .......... $62,462 1.93% (0.14)% 2.18% (0.39)% 53%
1999(5) ....... 35,163 1.83 (0.21) 1.97 (0.35) 31
For the years ended November 30:
1998 .......... 25,656 1.78 (0.13) 2.03 (0.38) 71
1997 .......... 13,269 1.73 0.15 2.09 (0.20) 100
1996 .......... 5,131 1.68 0.71 2.03 0.36 82
1995 (6) ...... 2,086 1.68 1.13 2.03 0.78 175
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
Investor Shares
2000 .......... $10,462 1.83% 0.33% 1.95% 0.21% 179%
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(4) ....... 3,448 1.81 1.73 3.14 0.40 113
Flex Shares
2000 .......... $10,891 2.53% (0.38)% 2.74% (0.59)% 179%
1999 .......... 17,103 2.53 (0.40) 2.84 (0.71) 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(4) ....... 953 2.51 1.08 5.86 (2.27) 113
-------------------------------
INTERNATIONAL EQUITY INDEX FUND
-------------------------------
Investor Shares
2000 .......... $ 4,563 1.47% 0.07% 1.79% (0.25)% 9%
1999 .......... 4,909 1.47 0.25 1.66 0.06 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
Flex Shares
2000 .......... $ 5,853 2.12% (0.36)% 2.61% (0.85)% 9%
1999 .......... 1,465 2.12 (0.30) 2.57 (0.75) 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(7) ....... 917 2.10 (0.24) 4.14 (2.28) 30
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
(4) Commenced operations on January 2, 1996. All ratios for the period have been
annualized.
(5) Commenced operations on May 31, 1999. All ratios for the period have been
annualized.
(6) Commenced operations on April 19, 1995. All ratios for the period have been
annualized.
(7) Commenced operations on June 8, 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.
Amounts designated as "--" are either $0 or rounded to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 37
FINANCIAL HIGHLIGHTS
For the Periods Ended May 31, (unless otherwise indicated)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
---------- ---------- --------------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------
MID-CAP EQUITY FUND
--------------------
Investor Shares
2000 .......... $12.50 $(0.19) $ 2.37 $ -- $(0.86) $13.82 18.55%
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
Flex Shares
2000 .......... $12.17 $(0.22) $ 2.26 $ -- $(0.86) $13.35 17.87%
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(8) ....... 11.13 -- 2.45 (0.02) (0.87) 12.69 23.00
---------------------------
SMALL CAP GROWTH STOCK FUND
---------------------------
Investor Shares
2000(9) ....... $16.46 $(0.07) $ 1.88 $ -- $ -- $18.27 11.00%
Flex Shares
2000 .......... $14.46 $(0.04) $ 3.77 $ -- $(0.19) $18.00 25.95%
1999(10) ...... 10.00 (0.19) 4.67 -- (0.02) 14.46 44.78
---------------------------
SMALL CAP VALUE EQUITY FUND
---------------------------
Flex Shares
2000 .......... $ 9.65 $ -- $(0.54) $(0.01) $ -- $ 9.10 (5.65)%
1999 .......... 12.80 0.01 (2.53) (0.02) (0.61) 9.65 (19.52)
1998(11) ...... 11.28 0.03 2.17 (0.06) (0.62) 12.80 22.29
-------------------------------
TAX SENSITIVE GROWTH STOCK FUND
-------------------------------
Flex Shares
2000 .......... $29.85 $(0.16) $ 2.96 $ -- $ -- $32.65 9.38%
1999(12) ...... 25.52 (0.04) 4.37 -- -- 29.85 16.97
-----------------------
VALUE INCOME STOCK FUND
-----------------------
Investor Shares
2000 .......... $12.81 $ 0.19 $(1.48) $(0.18) $(0.99) $10.35 (10.83)%
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
Flex Shares
2000 .......... $12.68 $ 0.08 $(1.44) $(0.09) $(0.99) $10.24 (11.50)%
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(13) ...... 11.59 0.26 2.65 (0.26) (1.16) 13.08 26.52
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- ----------- ------------- ----------------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C>
-------------------
MID-CAP EQUITY FUND
--------------------
Investor Shares
2000 .......... $ 14,513 1.62% (0.43)% 1.81% (0.62)% 131%
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
Flex Shares
2000 .......... $ 14,588 2.22% (1.05)% 2.44% (1.27)% 131%
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(8) ....... 5,029 2.20 (0.37) 3.04 (1.21) 116
---------------------------
SMALL CAP GROWTH STOCK FUND
---------------------------
Investor Shares
2000(9) ....... $ 39,865 1.55% (1.26)% 1.79% (1.50)% 110%
Flex Shares
2000 .......... $ 23,228 2.25% (1.92)% 2.42% (2.09)% 110%
1999(10) ...... 6,158 2.25 (1.50) 3.19 (1.73) 75
---------------------------
SMALL CAP VALUE EQUITY FUND
---------------------------
Flex Shares
2000 .......... $ 8,596 2.27% 0.21% 2.56% (0.08)% 65%
1999 .......... 19,465 2.27 0.21 2.55 (0.07) 63
1998(11) ...... 40,613 2.06 0.01 2.35 (0.28) 55
-------------------------------
TAX SENSITIVE GROWTH STOCK FUND
-------------------------------
Flex Shares
2000 .......... $290,595 2.25% (0.91)% 2.35% (1.01)% 30%
1999(12) ...... 75,875 2.25 (0.80) 2.48 (1.03) 18
-----------------------
VALUE INCOME STOCK FUND
-----------------------
Investor Shares
2000 .......... $104,178 1.28% 1.64% 1.28% 1.64% 62%
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
Flex Shares
2000 .......... $ 84,563 2.02% 0.91% 2.03% 0.90% 62%
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(13) ...... 26,298 2.00 1.72 2.15 1.57 134
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
(8) Commenced operations on June 5, 1995. All ratios for the period have been
annualized.
(9) Commenced operations on December 12, 1999. All ratios for the period have
been annualized.
(10) Commenced operations on October 8, 1998. All ratios for the period have
been annualized.
(11) Commenced operations on June 5, 1997. All ratios for the period have been
annualized.
(12) Commenced operations on December 15, 1998. All ratios for the period have
been annualized.
(13) Commenced operations on June 1, 1995. All ratios for the period have been
annualized.
Amounts designated as "--" are either $0 or rounded to $0.
</FN>
</TABLE>
<PAGE>
38 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 39
NOTES
<PAGE>
40 PROSPECTUS
NOTES
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
42 PROSPECTUS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, 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 and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
<PAGE>
XXXXXX/XX-XX
STI CLASSIC FUNDS-BOND AND MONEY
MARKET FUNDS-TRUST SHARES
PROSPECTUS
OCTOBER 1, 2000
BOND FUNDS
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
INVESTMENT GRADE BOND FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
MARYLAND MUNICIPAL BOND FUND
SHORT-TERM BOND FUND
SHORT-TERM U.S. TREASURY SECURITIES FUND
U.S. GOVERNMENT SECURITIES FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
MONEY MARKET FUNDS
PRIME QUALITY MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
U.S.TREASURY MONEY MARKET FUND
VIRGINIA TAX-FREE MONEY MARKET FUND (FORMERLY TAX-FREE MONEY MARKET FUND)
INVESTMENT ADVISER
TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(the "Adviser")
[STI Logo Omitted]
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>
PROSPECTUS
ABOUT 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 Bond and Money Market 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 THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
2 FLORIDA TAX-EXEMPT BOND FUND
4 GEORGIA TAX-EXEMPT BOND FUND
6 INVESTMENT GRADE BOND FUND
8 INVESTMENT GRADE TAX-EXEMPT BOND FUND
10 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
12 MARYLAND MUNICIPAL BOND FUND
14 SHORT-TERM BOND FUND
16 SHORT-TERM U.S. TREASURY SECURITIES FUND
18 U.S. GOVERNMENT SECURITIES FUND
20 VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
22 VIRGINIA MUNICIPAL BOND FUND
24 PRIME QUALITY MONEY MARKET FUND
26 TAX-EXEMPT MONEY MARKET FUND
28 U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
30 U.S. TREASURY MONEY MARKET FUND
32 VIRGINIA TAX-FREE MONEY MARKET FUND
34 MORE INFORMATION ABOUT RISK
35 MORE INFORMATION ABOUT FUND INVESTMENTS
35 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
37 PURCHASING AND SELLING FUND SHARES
39 DIVIDENDS, DISTRIBUTIONS AND TAXES
40 FINANCIAL HIGHLIGHTS
46 HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
--------------------------------------------------------------------------------
[BRIEFCASE GRAPHIC OMITTED] FUND SUMMARY
[TELESCOPE GRAPHIC OMITTED] INVESTMENT STRATEGY
[INNERTUBE GRAPHIC OMITTED] WHAT ARE THE RISKS OF INVESTING?
[BULLSEYE GRAPHIC OMITTED] PERFORMANCE INFORMATION
[CHART GRAPHIC OMITTED] WHAT IS AN INDEX?
[COINS GRAPHIC OMITTED] FUND FEES AND EXPENSES
[MOUNTAINTOP GRAPHIC OMITTED] MORE INFORMATION ABOUT FUND INVESTMENTS
[MAGNIFIER GRAPHIC OMITTED] INVESTMENT ADVISER
[HANDSHAKE GRAPHIC OMITTED] PURCHASING AND SELLING FUND SHARES
--------------------------------------------------------------------------------
OCTOBER 1, 2000
<PAGE>
PROSPECTUS 1
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
Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser 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 prices 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>
2 PROSPECTUS
FLORIDA TAX-EXEMPT BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal income
taxes for Florida residents with shares
themselves expected to be exempt from the
Florida intangible personal property tax
--------------------------------------------------------------------------------
INVESTMENT FOCUS Florida municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest more Fund assets in
undervalued sectors and less in overvalued
ones
--------------------------------------------------------------------------------
INVESTOR PROFILE Florida residents who want income exempt
from federal income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Florida Tax-Exempt Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal income taxes, and the
shares themselves are expected to be exempt from the Florida intangible personal
property tax. Issuers of these securities can be located in Florida, Puerto Rico
and other U.S. territories and possessions. In addition, up to 20% of the Fund's
assets may be invested in securities subject to the alternative minimum tax or
in certain taxable debt securities. In selecting investments for the Fund, the
Adviser tries to limit risk as much as possible. Based on the Adviser's analysis
of municipalities, credit risk, market trends and investment cycles, the Adviser
attempts to invest more of the Fund's assets in undervalued market sectors and
less in overvalued sectors. The Adviser also tries to identify and invest in
municipal issuers with improving credit and avoid those with deteriorating
credit. The Adviser anticipates that the Fund's average weighted maturity will
range from 6 to 25 years. Under certain circumstances, such as a national
financial emergency or a temporary decline in availability of Florida
obligations, up to 20% of the Fund's assets may be invested in securities
subject to the Florida intangible personal property tax and/or securities that
generate income subject to federal personal income taxes. These securities may
include short-term municipal securities outside Florida or certain taxable fixed
income securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's concentration of investments in securities of issuers located in
Florida subjects the Fund to economic and government policies within Florida.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 15.85%
1996 3.94%
1997 7.82%
1998 6.24%
1999 -2.31%
BEST QUARTER WORST QUARTER
6.18% -2.30%
(3/31/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.20%.
<PAGE>
PROSPECTUS 3
FLORIDA TAX-EXEMPT BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX AND THE LIPPER FLORIDA MUNICIPAL DEBT FUNDS AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Florida Tax-Exempt
Bond Fund -2.31% 6.15% 4.92%*
--------------------------------------------------------------------------------
Lehman Brothers 10-Year
Municipal Bond Index -1.24% 7.12% 4.90%**
--------------------------------------------------------------------------------
Lipper Florida Municipal
Debt Funds Average -4.35% 5.90% 3.52%**
--------------------------------------------------------------------------------
* SINCE 1/25/94
** SINCE 1/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 10-Year Municipal Bond Index is
a widely-recognized index of long-term investment grade tax-exempt bonds. The
Index includes general obligation bonds, revenue bonds, insured bonds and
prefunded bonds with maturities between 8 and 12 years. The Index represents
various market sectors and geographic locations. The Lipper Florida Municipal
Debt Funds Average is a composite index of mutual funds with investment goals
similar to the Fund's goals. It reports the average return of the Florida
intermediate-term municipal bond mutual funds tracked by Lipper Analytical
Services, Inc. The number of funds in the Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.13%
-----
Total Annual Fund Operating Expenses 0.78%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$80 $249 $433 $966
--------------------------------------------------------------------------------
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 0.60% and 0.73%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
4 PROSPECTUS
GEORGIA TAX-EXEMPT BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal and state
income taxes for Georgia residents without
undue risk
--------------------------------------------------------------------------------
INVESTMENT FOCUS Georgia municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest more Fund assets in
undervalued sectors and less in overvalued
ones
--------------------------------------------------------------------------------
INVESTOR PROFILE Georgia residents who want income exempt from
federal and state income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Georgia Tax-Exempt Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Georgia income taxes.
Issuers of these securities can be located in Georgia, Puerto Rico and other
U.S. territories and possessions. In addition, up to 20% of the Fund's assets
may be invested in securities subject to the alternative minimum tax or in
certain taxable debt securities. In selecting investments for the Fund, the
Adviser tries to limit risk as much as possible. Based on the Adviser's analysis
of municipalities, credit risk, market trends and investment cycles, the Adviser
attempts to invest more of the Fund's assets in undervalued market sectors and
less in overvalued sectors. The Adviser tries to diversify the Fund's holdings
within Georgia. The Adviser also tries to identify and invest in municipal
issuers with improving credit and avoid those with deteriorating credit. The
Adviser anticipates that the Fund's average weighted maturity will range from 6
to 25 years.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's concentration of investments in securities of issuers located in
Georgia subjects the Fund to economic and government policies within Georgia.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 13.51%
1996 3.53%
1997 8.17%
1998 5.79%
1999 -2.26%
BEST QUARTER WORST QUARTER
5.02% -2.30%
(3/31/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.17%.
<PAGE>
PROSPECTUS 5
GEORGIA TAX-EXEMPT BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX AND THE LIPPER GEORGIA MUNICIPAL DEBT FUNDS AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Georgia Tax-Exempt
Bond Fund -2.26% 5.62% 3.80%*
--------------------------------------------------------------------------------
Lehman Brothers 10-Year
Municipal Bond Index -1.24% 7.12% 4.90%**
--------------------------------------------------------------------------------
Lipper Georgia Municipal
Debt Funds Average -4.51% 6.04% 3.39%**
--------------------------------------------------------------------------------
* SINCE 1/18/94
** SINCE 1/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 10-Year Municipal Bond Index is
a widely-recognized index of long-term investment grade tax-exempt bonds. The
Index includes general obligation bonds, revenue bonds, insured bonds and
prefunded bonds with maturities between 8 and 12 years. The Index represents
various market sectors and geographic locations. The Lipper Georgia Municipal
Debt Funds Average is a composite index of mutual funds with investment goals
similar to the Fund's goals. It reports the average return of the Georgia
intermediate-term municipal bond mutual funds tracked by Lipper Analytical
Services, Inc. The number of funds in the Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 0.77%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$79 $246 $428 $954
--------------------------------------------------------------------------------
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 0.60% and 0.72%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
6 PROSPECTUS
INVESTMENT GRADE BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 U.S. Government/Credit 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.
[INNERTUBE GRAPHIC OMITTED]
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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1993 10.84%
1994 -3.32%
1995 17.80%
1996 2.34%
1997 9.08%
1998 9.19%
1999 -1.53%
BEST QUARTER WORST QUARTER
6.11% -2.67%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.45%.
<PAGE>
PROSPECTUS 7
INVESTMENT GRADE BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX, LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND THE LIPPER INTERMEDIATE
INVESTMENT GRADE DEBT FUNDS AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Investment Grade
Bond Fund -1.53% 7.17% 6.07%*
--------------------------------------------------------------------------------
Lehman Brothers U.S.
Government/Credit
Index -2.15% 7.60% 6.38%**
--------------------------------------------------------------------------------
Lehman Brothers U.S.
Aggregate Bond Index -0.83% 7.73% 6.40%**
--------------------------------------------------------------------------------
Lipper Intermediate
Investment Grade
Debt Funds Average -1.31% 6.79% 5.81%**
--------------------------------------------------------------------------------
* SINCE 7/16/92
** SINCE 7/31/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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 Lehman Brothers U.S. Aggregate
Bond Index is a widely-recognized, market value-weighted (higher market value
stocks have more influence than lower market value stocks) index that combines
the Lehman Brothers U.S. Government/Credit Index and the Lehman Brothers
Mortgage-Backed Securities Index. The Lehman Brothers U.S. Government/ Credit
Index consists of U.S. government obligations and corporate debt securities. The
Lehman Brothers Mortgage-Backed Securities Index consists of mortgage-backed
securities rated AAA. The Lehman Brothers U.S. Aggregate Bond Index includes
fixed income securities rated investment grade (BBB) or higher, with maturities
of at least one year. The securities in the Index have outstanding par values of
at least $100 million for U. S. government obligations and $25 million for the
others. The Lipper Intermediate Investment Grade Debt Funds Average is a
composite of mutual funds with investment goals similar to the Fund's goals. It
reports the average return of the intermediate term investment grade bond mutual
funds tracked by Lipper Analytical Services, Inc. The number of funds in the
Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.74%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.84%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$86 $268 $466 $1,037
--------------------------------------------------------------------------------
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 0.72% and 0.82%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
8 PROSPECTUS
INVESTMENT GRADE TAX-EXEMPT BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High total return through (i) current income
that is exempt from federal income taxes and
(ii) capital appreciation, while preserving
the principal amount invested
--------------------------------------------------------------------------------
INVESTMENT FOCUS Investment grade municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest more Fund assets in
undervalued sectors and less in overvalued
ones
--------------------------------------------------------------------------------
INVESTOR PROFILE Investors who want to receive tax-free
current income and an increase in the value
of their investment
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Investment Grade Tax-Exempt Bond Fund invests primarily in investment grade
tax-exempt obligations, like municipal securities. The issuers of these
securities may be located in any U.S. state, territory or possession. In
addition, up to 20% of the Fund may be invested in securities subject to the
alternative minimum tax or in certain taxable debt securities. In selecting
investments for the Fund, the Adviser tries to limit risk as much as possible.
Based on the Adviser's analysis of municipalities, credit risk, market trends
and investment cycles, the Adviser attempts to invest more of the Fund's assets
in undervalued market sectors and less in overvalued sectors. The Adviser also
tries to identify and invest in municipal issuers with improving credit and
avoid those with deteriorating credit. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1994 -0.32%
1995 14.97%
1996 5.52%
1997 7.79%
1998 7.06%
1999 -0.26%
BEST QUARTER WORST QUARTER
6.07% -3.14%
(3/31/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.03%.
<PAGE>
PROSPECTUS 9
INVESTMENT GRADE TAX-EXEMPT BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL BOND INDEX
AND THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Investment Grade
Tax-Exempt Bond Fund -0.26% 6.91% 5.55%*
--------------------------------------------------------------------------------
Lehman Brothers
5-Year Municipal
Bond Index 0.74% 5.71% 4.50%**
--------------------------------------------------------------------------------
Lipper Intermediate
Municipal Debt Funds
Average -1.65% 5.55% 4.19%**
--------------------------------------------------------------------------------
* SINCE 10/21/93
** SINCE 10/31/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 5-Year Municipal Bond Index is a
widely-recognized index of intermediate investment grade tax-exempt bonds. The
Index includes general obligation bonds, revenue bonds, insured bonds and
prefunded bonds with maturities between 4 and 6 years. The Lipper Intermediate
Municipal Debt Funds Average is a composite of mutual funds with investment
goals similar to the Fund's goals. It reports the average return of intermediate
term municipal bond mutual funds tracked by Lipper Analytical Services, Inc. The
number of funds in the Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.74%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.83%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$85 $265 $460 $1,025
--------------------------------------------------------------------------------
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 0.71%% and 0.80%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
10 PROSPECTUS
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 it 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.
[INNERTUBE GRAPHIC OMITTED]
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 mortgage-backed securities may
underperform other segments of the fixed income market 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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 12.14%
1996 4.53%
1997 6.74%
1998 6.90%
1999 1.25%
BEST QUARTER WORST QUARTER
4.05% -0.29%
(3/31/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.61%.
<PAGE>
PROSPECTUS 11
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MERRILL LYNCH 1-5 YEAR U.S.
TREASURIES/AGENCIES INDEX AND THE MERRILL LYNCH 1-5 YEAR U.S. TREASURY INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Limited-Term Federal
Mortgage Securities
Fund 1.25% 6.26% 5.65%*
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasuries/Agencies
Index 2.11% 6.78% 6.22%**
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasury Index 2.04% 6.78% 6.22%**
--------------------------------------------------------------------------------
* SINCE 6/6/94
** SINCE 5/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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. Treasuries/ Agencies
Index includes U.S. government and agency bonds that have a minimum issue size
of $150 million. The current market value of the Index is $1.2 trillion with
duration of 2.1 years and yield to maturity of 6.4%. The Merrill Lynch 1-5 Year
U.S. Treasury Index is a widely-recognized, capitalization-weighted companies
with larger market capitalization have more influence than those with smaller
market capitalizations index of U.S. Treasury securities with maturities of
1 year or greater and no more than 5 years.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.14%
-----
Total Annual Fund Operating Expenses 0.79%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$81 $252 $439 $978
--------------------------------------------------------------------------------
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 0.60% and 0.74%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
12 PROSPECTUS
MARYLAND MUNICIPAL BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal and
Maryland income tax, consistent with
preservation of capital
--------------------------------------------------------------------------------
INVESTMENT FOCUS Maryland municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest in investment grade
municipal securities
--------------------------------------------------------------------------------
INVESTOR PROFILE Maryland residents who want income exempt
from federal and state income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Maryland Municipal Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Maryland income taxes.
Issuers of these securities can be located in Maryland, Puerto Rico and other
U.S. territories and possessions. In selecting investments for the Fund, the
Adviser tries to limit risk by buying investment grade securities. There are no
limits on the Fund's average weighted maturity or on the remaining maturities of
individual securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities. The Fund's
concentration of investments in securities of issuers located in Maryland
subjects the Fund to economic and government policies within Maryland.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1997 8.78%
1998 5.87%
1999 -3.33%
BEST QUARTER WORST QUARTER
3.58% -1.52%
(6/30/97) (9/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.26%.
<PAGE>
PROSPECTUS 13
MARYLAND MUNICIPAL BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS
GENERAL OBLIGATION BOND INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Maryland Municipal
Bond Fund -3.33% 2.84%*
--------------------------------------------------------------------------------
Lehman Brothers General
Obligation Bond Index -1.51% 4.67%**
--------------------------------------------------------------------------------
* SINCE 3/1/96
** SINCE 2/29/96
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 General Obligation Bond Index is
a widely-recognized index of general obligation securities issued in the last 5
years with maturities of over 1 year.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.15%
-----
Total Annual Fund Operating Expenses 0.80%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$82 $255 $444 $990
--------------------------------------------------------------------------------
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 0.57% and 0.72%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
14 PROSPECTUS
SHORT-TERM BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
Mortgage-backed and asset-backed securities 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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1994 -0.07%
1995 11.77%
1996 3.90%
1997 6.78%
1998 6.84%
1999 0.92%
BEST QUARTER WORST QUARTER
3.76% -0.58%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.83%.
<PAGE>
PROSPECTUS 15
SHORT-TERM BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY/GOVERNMENT
SPONSORED/CORPORATE INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Short-Term Bond Fund 0.92% 5.98% 4.97%*
--------------------------------------------------------------------------------
Salomon 1-3 Year
Treasury/Government
Sponsored/Corporate
Index 3.29% 6.56% 5.41%**
--------------------------------------------------------------------------------
* SINCE 3/15/93
** SINCE 2/28/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/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 of
1 year or greater and less than 3 years.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.76%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$78 $243 $422 $942
--------------------------------------------------------------------------------
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 0.60% and 0.71%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
16 PROSPECTUS
SHORT-TERM U.S. TREASURY SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 short-term U.S. Treasury securities
may underperform other segments of the fixed income market 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1994 1.41%
1995 8.58%
1996 4.52%
1997 5.86%
1998 6.24%
1999 2.71%
BEST QUARTER WORST QUARTER
2.61% -0.10%
(3/31/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.49%.
<PAGE>
PROSPECTUS 17
SHORT-TERM U.S. TREASURY SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY INDEX AND THE
SALOMON 6 MONTH TREASURY BILL INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Short-Term U.S. Treasury
Securities Fund 2.71% 5.56% 4.71%*
--------------------------------------------------------------------------------
Salomon 1-3 Year
Treasury Index 3.06% 6.48% 5.31%**
--------------------------------------------------------------------------------
Salomon 6 Month
Treasury Bill Index 4.80% 5.33% 4.93%**
--------------------------------------------------------------------------------
* SINCE 3/15/93
** SINCE 2/28/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 of one year
or greater and less than three years. The Salomon 6 Month Treasury Bill Index is
a widely-recognized index of the 6 month U.S. Treasury Bills.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.14%
-----
Total Annual Fund Operating Expenses 0.79%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$81 $252 $439 $978
--------------------------------------------------------------------------------
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 0.59% and 0.73%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
18 PROSPECTUS
U.S. GOVERNMENT SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 U.S. government debt securities may
underperform other segments of the fixed income market 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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 17.33%
1996 2.55%
1997 8.94%
1998 8.16%
1999 -0.97%
BEST QUARTER WORST QUARTER
5.89% -2.24%
(6/30/95) (3/31/96)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.82%.
<PAGE>
PROSPECTUS 19
U.S. GOVERNMENT SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999, TO THOSE OF THE MERRILL LYNCH GOVERNMENT/MORTGAGE INDEX AND
THE LEHMAN BROTHERS INTERMEDIATE U.S. GOVERNMENT BOND INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
U.S. Government
Securities Fund -0.97% 7.02% 6.14%*
--------------------------------------------------------------------------------
Merrill Lynch Government/
Mortgage Index -0.70% 7.67% 6.90%**
--------------------------------------------------------------------------------
Lehman Brothers Intermediate
U.S. Government Bond Index 0.50% 6.93% 6.26%**
--------------------------------------------------------------------------------
* SINCE 8/1/94
** SINCE 7/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 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-backed securities
including 15 and 30 year single family mortgages in addition to aggregated
pooled mortgages. The Lehman Brothers Intermediate U.S. Government 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, and 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.74%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.84%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$86 $268 $466 $1,037
--------------------------------------------------------------------------------
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 0.71% and 0.81%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
20 PROSPECTUS
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal and
Virginia income tax, consistent with
preservation of capital
--------------------------------------------------------------------------------
INVESTMENT FOCUS Virginia municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Low
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to limit risk by investing in
investment grade municipal securities with
an intermediate average maturity
--------------------------------------------------------------------------------
INVESTOR PROFILE Virginia residents who want income exempt
from federal and state income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Virginia Intermediate Municipal Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Virginia
income taxes. Issuers of these securities can be located in Virginia, Puerto
Rico and other U.S. territories and possessions. In selecting investments for
the Fund, the Adviser tries to limit risk by buying investment grade securities.
The Adviser also considers stability and growth of principal. The Adviser
expects that the Fund's average weighted maturity will range from 5 to 10 years
but there is no limit on the maturities of individual securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities. The Fund's concentration of investments in securities of issuers
located in Virginia subjects the Fund to economic and government policies within
Virginia.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1994 -6.45%
1995 14.25%
1996 2.95%
1997 7.25%
1998 5.22%
1999 -2.34%
BEST QUARTER WORST QUARTER
5.99% -6.80%
(3/31/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.18%.
<PAGE>
PROSPECTUS 21
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS 5-YEAR GENERAL
OBLIGATION BOND INDEX AND THE LEHMAN BROTHERS GENERAL OBLIGATION BOND INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Virginia Intermediate
Municipal Bond Fund -2.34% 5.33% 4.16%*
--------------------------------------------------------------------------------
Lehman Brothers
5-Year General
Obligation Bond Index 0.72% 5.80% 5.13%**
--------------------------------------------------------------------------------
Lehman Brothers
General Obligation
Bond Index -1.51% 6.82% 5.78%**
--------------------------------------------------------------------------------
* SINCE 1/11/93
** SINCE 12/31/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 5-Year General Obligation Bond
Index is a widely-recognized index of municipal bonds with maturities ranging
from 4 to 6 years. The Index represents various market sectors and geographic
locations. The Lehman Brothers General Obligation Bond Index is a
widely-recognized index of general obligation securities issued in the last 5
years with maturities of over 1 year.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.76%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$78 $243 $422 $942
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
22 PROSPECTUS
VIRGINIA MUNICIPAL BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal and
Virginia income taxes, consistent with
preservation of capital
--------------------------------------------------------------------------------
INVESTMENT FOCUS Virginia municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest in investment grade
municipal securities
--------------------------------------------------------------------------------
INVESTOR PROFILE Virginia residents who want income exempt
from federal and state income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Virginia Municipal Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Virginia income taxes.
Issuers of these securities can be located in Virginia, Puerto Rico and other
U.S. territories and possessions. In selecting investments for the Fund, the
Adviser tries to limit risk by buying investment grade securities. There are no
limits on the Fund's average weighted maturity or on the remaining maturities of
individual securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities. The Fund's concentration of investments in securities of issuers
located in Virginia subjects the Fund to economic and government policies within
Virginia.
[BULLSEYE GRAPHIC OMITTED]
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.
[Bar Chart Omitted]
Plot points are as follows:
1996 1.68%
1997 8.82%
1998 5.85%
1999 -4.86%
BEST QUARTER WORST QUARTER
3.41% -2.73%
(6/30/97) (3/31/96)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.41%.
<PAGE>
PROSPECTUS 23
VIRGINIA MUNICIPAL BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS GENERAL OBLIGATION
BOND INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Virginia Municipal Bond Fund -4.86% 4.15%*
--------------------------------------------------------------------------------
Lehman Brothers General
Obligation Bond Index -1.51% 5.79%**
--------------------------------------------------------------------------------
* SINCE 4/4/95
** SINCE 3/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 General Obligation Bond Index is
a widely-recognized index of general obligation securities issued in the last 5
years with maturities of over 1 year.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.14%
-----
Total Annual Fund Operating Expenses 0.79%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$81 $252 $439 $978
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
24 PROSPECTUS
PRIME QUALITY MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1993 2.77%
1994 3.77%
1995 5.47%
1996 4.99%
1997 5.15%
1998 5.10%
1999 4.74%
BEST QUARTER WORST QUARTER
1.37% 0.68%
(6/30/95) (6/30/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.83%.
<PAGE>
PROSPECTUS 25
PRIME QUALITY MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. FIRST TIER AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Prime Quality Money
Market Fund 4.74% 5.09% 4.45%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
First Tier Average 4.57% 4.97% 4.33%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. First Tier Average is a widely-recognized composite of money
market funds which invest in securities rated in the highest category by at
least two recognized rating agencies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.75%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$77 $240 $417 $930
--------------------------------------------------------------------------------
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 0.64%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
26 PROSPECTUS
TAX-EXEMPT MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current interest income exempt from
federal income taxes, while preserving
capital and liquidity
--------------------------------------------------------------------------------
INVESTMENT FOCUS Municipal money market instruments
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without added
risk by analyzing credit quality
--------------------------------------------------------------------------------
INVESTOR PROFILE Conservative investors who want to receive
current tax-exempt income from their
investment
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Tax-Exempt Money Market Fund invests substantially all of its assets in
money market instruments issued by municipalities and issuers that pay income
exempt from federal income taxes. In selecting investments for the Fund, the
Adviser analyzes the credit quality and structure of each security to minimize
risk. The Adviser actively manages the Fund's average maturity based on current
interest rates and the Adviser's outlook of the market. As a money market fund,
the Fund follows strict rules about credit risk, maturity and diversification of
its investments.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1993 2.02%
1994 2.47%
1995 3.48%
1996 3.06%
1997 3.23%
1998 3.02%
1999 2.80%
BEST QUARTER WORST QUARTER
0.92% 0.45%
(6/30/95) (3/31/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 1.76%.
<PAGE>
PROSPECTUS 27
TAX-EXEMPT MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Tax-Exempt Money
Market Fund 2.80% 3.12% 2.82%*
--------------------------------------------------------------------------------
iMoneyNet Inc.
Tax-Free Stockbroker
& General Purpose
Average 2.70% 3.00% 2.71%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. Tax-Free Stockbroker & General Purpose Average is a
widely-recognized composite of money market funds which invest in short-term
municipal securities, the income of which is exempt from federal taxation.
[GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.55%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.66%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$67 $211 $368 $822
--------------------------------------------------------------------------------
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 0.45% and 0.56%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
28 PROSPECTUS
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively in U.S.
Treasury obligations, obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. government, and repurchase
agreements involving these securities, and shares of registered money market
funds that invest in the foregoing. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1993 2.67%
1994 3.64%
1995 5.39%
1996 4.81%
1997 4.99%
1998 4.88%
1999 4.41%
BEST QUARTER WORST QUARTER
1.36% 0.65%
(6/30/95) (6/30/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.65%.
<PAGE>
PROSPECTUS 29
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. U.S. GOVERNMENT &
AGENCY AVERAGE. PREVIOUSLY, THE FUND'S RETURNS HAD BEEN COMPARED TO THE
IMONEYNET, INC. U.S. TREASURY & REPO AVERAGE, BUT THE ADVISER BELIEVES THAT THE
IMONEYNET, INC. U.S. GOVERNMENT & AGENCY AVERAGE, BECAUSE OF ITS INCLUSION OF
MONEY MARKET FUNDS THAT INVEST IN SECURITIES OF GOVERNMENT AGENCIES AND
INSTRUMENTALITIES, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH THE
FUND INVESTS.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
U.S. Government
Securities Money
Market Fund 4.41% 4.90% 4.28%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Government
& Agency Average 4.52% 4.89% 4.26%**
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Treasury
& Repo Average 4.36% 4.82% 4.20%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
previous index, the iMoneyNet, Inc. 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. The iMoneyNet,
Inc. U.S. Government & Agency Average is a widely-recognized composite of all
money market funds which invest in U.S. Treasury Bills, repurchase agreements or
securities issued by agencies of the U.S. government.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.74%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$76 $237 $411 $918
--------------------------------------------------------------------------------
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 0.56% and 0.65%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
30 PROSPECTUS
U.S. TREASURY MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
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%
1999 4.38%
BEST QUARTER WORST QUARTER
1.92% 0.61%
(6/30/90) (12/31/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.60%.
<PAGE>
PROSPECTUS 31
U.S. TREASURY MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. U.S. TREASURY & REPO
AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
U.S. Treasury
Money Market
Fund 4.38% 4.85% 4.71% 5.30%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Treasury &
Repo Average 4.36% 4.82% N/A N/A
--------------------------------------------------------------------------------
* SINCE 2/18/87
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.74%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$76 $237 $411 $918
--------------------------------------------------------------------------------
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 0.56% and 0.65%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
32 PROSPECTUS
VIRGINIA TAX-FREE MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal and
Virginia income taxes, while preserving
capital and liquidity
--------------------------------------------------------------------------------
INVESTMENT FOCUS Virginia municipal money market instruments
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without added
risk by analyzing credit quality
--------------------------------------------------------------------------------
INVESTOR PROFILE Virginia residents who want to receive
current income exempt from federal and state
income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Virginia Tax-Free Money Market Fund invests substantially all of its assets
in money market instruments issued by municipalities and issuers that pay income
exempt from federal and Virginia income taxes. Issuers of these securities can
be located in Virginia, Puerto Rico and other U.S. territories and possessions.
In selecting investments for the Fund, the Adviser analyzes the credit quality
and structure of each security to minimize risk. The Adviser actively manages
the Fund's average maturity based on current interest rates and the Adviser's
outlook of the market. As a money market fund, the Fund follows strict rules
about credit risk, maturity and diversification of its investments.
[INNERTUBE GRAPHIC OMITTED]
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.
The Fund's concentration of investments in securities of issuers located in
Virginia subjects the Fund to economic and government policies within Virginia.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1990 5.86%
1991 4.55%
1992 2.86%
1993 1.84%
1994 2.18%
1995 3.28%
1996 3.11%
1997 3.08%
1998 2.93%
1999 2.81%
BEST QUARTER WORST QUARTER
1.47% 0.43%
(6/30/90) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 1.77%.
<PAGE>
PROSPECTUS 33
VIRGINIA TAX-FREE MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Virginia Tax-Free
Money Market
Fund 2.81% 3.04% 3.24% 3.39%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
Tax-Free Stockbroker &
General Purpose
Average 2.70% 3.00% 3.14% 3.29%**
--------------------------------------------------------------------------------
* SINCE 6/15/89
** SINCE 5/31/89
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. Tax-Free Stockbroker & General Purpose Average is a
widely-recognized composite of money market funds which invest in short-term
municipal securities, the income of which is exempt from federal taxation.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.40%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.51%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$52 $164 $285 $640
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
34 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION
ABOUT RISK
FIXED INCOME RISK
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
INVESTMENT GRADE BOND FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
MARYLAND MUNICIPAL BOND FUND
SHORT-TERM BOND FUND
SHORT-TERM U.S. TREASURY SECURITIES FUND
U.S. GOVERNMENT SECURITIES FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
TAX EXEMPT MONEY MARKET FUND
VIRGINIA TAX-FREE MONEY MARKET FUND
The market value of fixed income investments changes 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 risks:
CREDIT RISK
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
INVESTMENT GRADE BOND FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
MARYLAND MUNICIPAL BOND FUND
SHORT-TERM BOND FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
TAX EXEMPT MONEY MARKET FUND
VIRGINIA TAX-FREE MONEY MARKET FUND
The possibility that an issuer will be unable to make timely payments of either
principal or interest.
MUNICIPAL ISSUER RISK
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
MARYLAND MUNICIPAL BOND FUND
TAX-EXEMPT MONEY MARKET FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
VIRGINIA TAX-FREE MONEY MARKET FUND
There may be economic or political changes that impact the ability of
municipal issuers to repay principal and to make interest payments on
municipal securities. Changes to the financial condition or credit rating of
municipal issuers may also adversely affect the value of the Fund's
municipal securities. Constitutional or legislative limits on borrowing by
municipal issuers may result in reduced supplies of municipal securities.
Moreover, certain municipal securities are backed only by a municipal
issuer's ability to levy and collect taxes.
In addition, the Fund's concentration of investments in issuers located in a
single state makes the Fund more susceptible to adverse political or
economic developments affecting that state. The Fund also may be riskier
than mutual funds that buy securities of issuers in numerous states.
REGIONAL RISK
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
MARYLAND MUNICIPAL BOND FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
VIRGINIA TAX-FREE MONEY MARKET FUND
To the extent that the Fund's investments are concentrated in a specific
geographic region, the Fund may be subject to the political and other
developments affecting that region. Regional economies are often closely
interrelated, and political and economic developments affecting one region,
country or state often affect other regions, countries or states, thus
subjecting a Fund to additional risks.
<PAGE>
PROSPECTUS 35
MORE INFORMATION ABOUT FUND INVESTMENTS
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT FUND 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 the
Funds use under normal conditions. During unusual economic or market conditions,
or for temporary defensive or liquidity purposes, each Bond Fund 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 Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt
Bond Fund, Investment Grade Bond Fund, Investment Grade Tax-Exempt Bond Fund,
Limited-Term Federal Mortgage Securities Fund, Short-Term Bond Fund, Short-Term
U.S. Treasury Securities Bond Fund, Virginia Intermediate Municipal Bond Fund
and the U.S. Government Securities Fund each may shorten its average weighted
maturity to as little as 90 days. A Bond Fund will do so only if the Adviser
believes that the risk of loss outweighs the opportunity for higher income. In
addition, each Fund may change its investment goal without shareholder approval.
Of course, a Fund cannot guarantee that it will achieve its investment goal.
[MAGNIFYER GRAPHIC OMITTED]
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
FLORIDA TAX-EXEMPT BOND FUND 0.54%
GEORGIA TAX-EXEMPT BOND FUND 0.54%
INVESTMENT GRADE BOND FUND 0.67%
INVESTMENT GRADE TAX-EXEMPT BOND FUND 0.68%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND 0.53%
MARYLAND MUNICIPAL BOND FUND 0.53%
SHORT-TERM BOND FUND 0.56%
SHORT-TERM U.S. TREASURY SECURITIES FUND 0.53%
U.S. GOVERNMENT SECURITIES FUND 0.67%
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND 0.65%
VIRGINIA MUNICIPAL BOND FUND 0.60%
PRIME QUALITY MONEY MARKET FUND 0.50%
TAX-EXEMPT MONEY MARKET FUND 0.41%
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND 0.54%
U.S. TREASURY MONEY MARKET FUND 0.54%
VIRGINIA TAX-FREE MONEY MARKET FUND 0.40%
The Adviser may use its affiliates as brokers for fund transactions.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as Investment Adviser to the Florida
Tax-Exempt Bond Fund, Investment Grade Bond Fund, Investment Grade Tax-Exempt
Bond Fund and the Limited-Term Federal Mortgage Securities Fund. On January 1,
2000, SunTrust Bank (formerly SunTrust Bank, Atlanta), a subsidiary of SunTrust
Banks, Inc. and the investment adviser of the Georgia Tax-Exempt Bond Fund,
succeeded STI as the Investment Adviser to those Funds. On July 1, 2000,
SunTrust Banks, Inc. reorganized its money management units, including those of
SunTrust Bank, into Trusco Capital Management, Inc. As a result, Trusco now
serves as the Investment Adviser to each STI Classic Fund.
<PAGE>
36 PROSPECTUS
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
PORTFOLIO MANAGERS
Mr. Ronald Schwartz, CFA, has served as a Managing Director of Trusco since July
2000, after serving as a Managing Director of STI since 1988. He has managed the
Florida Tax-Exempt Bond Fund since it began operating in January 1994, and the
Investment Grade Tax-Exempt Bond Fund since it began operating in June 1992. He
has had more than 19 years of investment experience.
Ms. Gay Cash has served as a Vice President of Trusco since July 2000. She has
managed the Georgia Tax-Exempt Bond Fund since it began operating in January
1994. Previously, she had served as First Vice President of SunTrust Bank,
Atlanta since 1998, and had worked there since 1987. She has more than 21 years
of experience.
The Investment Grade Bond Fund and the Limited-Term Federal Mortgage Securities
Fund are co-managed by Mr. L. Earl Denney, CFA, and Mr. Dave E. West, CFA. Mr.
Denney has served as Managing Director of STI since 1983. In January 2000, Mr.
Denney was named Managing Director of SunTrust Bank and is now Managing Director
of Trusco. Mr. Denney has co-managed the Investment Grade Bond Fund since it
began operating in June 1992 and has co-managed the Limited-Term Mortgage
Securities Fund since it began operating in June 1994. Mr. Denney has more than
21 years of investment experience. Mr. West has served as a Managing Director of
STI and has worked there since 1985. In January 2000, Mr. West was named
Managing Director of SunTrust Bank and is now a Managing Director of Trusco. Mr.
West has co-managed the Investment Grade Bond Fund since it began operating in
June 1992 and has co-managed the Limited-Term Federal Mortgage Securities Fund
since it began operating in June 1994. Mr. West has more than 14 years of
investment experience.
Mr. George E. Calvert, Jr. has served as Vice President of Trusco since 2000. He
has managed the Maryland Municipal Bond Fund since 2000, the Virginia Municipal
Bond Fund since 2000, and the Virginia Intermediate Municipal Bond Fund since
2000. Prior to joining Trusco, Mr. Calvert served as a fixed income trader from
1998 to 2000 for Tredegar Trust Company. He also served as Vice President,
Investment Division, of Central Fidelity Bank from 1988 to 1998. Mr. Calvert has
more than 27 years of investment experience.
Ms. Agnes G. Pampush, CFA, has served as a Managing Director of Trusco since
July 2000, after serving as a Vice President of Trusco since 1998. Ms. Pampush
was employed by Trusco from 1988 to 1996, and rejoined the firm in 1998. She has
managed the Short-Term Bond Fund since February 1999. She has more than 18 years
of investment experience.
Mr. David S. Yealy has served as a Managing Director of Trusco since July 2000.
He has managed the Prime Quality Money Market Fund since it began operating in
June 1992, the Short-Term U.S. Treasury Securities Fund since July 1996, and the
U.S Treasury Money Market Fund since October 2000. Prior to July 2000, Mr. Yealy
was a First Vice President of Trusco and has worked there since 1991. He has
more than 15 years of investment experience.
Mr. Neil J. Powers, CFA, joined Trusco in 1997 and serves as a Managing
Director. He has managed the U.S. Government Securities Fund since 2000. Prior
to joining Trusco, Mr. Powers worked at Putnam Investments, from 1986 to 1997,
where he managed multi-sector bond funds and separately managed institutional
accounts. He has more than 16 years of investment experience.
Mr. Robert S. Bowman, CFA, has served as a Vice President of Trusco since
January 1999. He has managed the Virginia Tax-Free Money Market Fund since May
1995, the Tax-Exempt Money Market Fund since July 2000 and the U.S. Government
Securities Money Market Fund since October 2000. Prior to joining Trusco, Mr.
Bowman served as an assistant trader from 1994 to 1995 and Vice President of
Crestar Asset Management Company since 1995. He has more than 6 years of
investment experience.
<PAGE>
PROSPECTUS 37
PURCHASING AND SELLING FUND SHARES
[HANDSHAKE GRAPHIC OMITTED]
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase 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 Investor's Advantage 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 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). But you may not purchase 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 11:00 a.m. Eastern time for the
Tax-Exempt Money Market Fund, before 12:00 p.m. Eastern time for the Virginia
Tax-Free Money Market Fund or before 3:00 p.m. Eastern time for the Prime
Quality Money Market and U.S. Government Securities Money Market Funds. Also
each Money Market Fund must 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.
<PAGE>
38 PROSPECTUS
PURCHASING AND SELLING FUND SHARES
HOW THE FUNDS CALCULATE NAV
In calculating NAV, a 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 during certain market conditions or for other
reasons, 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.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") 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 11:00 a.m. Eastern time for the Tax-Exempt Money Market Fund, 12:00 p.m.
Eastern Time for the Virginia Tax-Free Money Market Fund or 3:00 p.m. Eastern
time for the Prime Quality, U.S. Treasury and U.S. Government Securities Money
Market Funds. Orders received after these times will be executed the following
Business Day.
RECEIVING YOUR MONEY
Normally, the Funds will send your sales proceeds within five Business Days
after the Funds receive 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 Fund's 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 Funds have certain safeguards and procedures
to confirm the identity of callers and the authenticity of instructions, the
Funds are not responsible for any losses or costs incurred by following
telephone instructions the Fund reasonably believe 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>
PROSPECTUS 39
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Each Fund declares dividends daily and pays 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 OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
The Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund, Investment Grade
Tax-Exempt Bond Fund, Maryland Municipal Bond Fund, Tax-Exempt Money Market
Fund, Virginia Intermediate Municipal Bond Fund, Virginia Municipal Bond Fund
and Virginia Tax-Free Money Market Fund intend to distribute federally
tax-exempt income. Each Fund may invest a portion of its assets in securities
that generate taxable income for federal or state income taxes. Income exempt
from federal tax may be subject to state and local taxes. Any capital gains
distributed by these Funds may be taxable.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
40 PROSPECTUS
FINANCIAL HIGHLIGHTS
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. This information for each Fund, except
the Maryland Municipal Bond Fund, Virginia Tax-Free Money Market Fund, U.S.
Treasury Money Market Fund, Virginia Intermediate Municipal Bond Fund and
Virginia Municipal Bond Fund for the periods ended prior to May 31, 1999, has
been audited by Arthur Andersen LLP, independent public accountants. The
financial highlights for the Maryland Municipal Bond Fund, Virginia Tax-Free
Money Market Fund, U.S. Treasury Money Market Fund, Virginia Intermediate
Municipal Bond Fund, and Virginia Municipal Bond Fund for the periods ended
prior to May 31, 1999 have been audited by Deloitte & Touche LLP, independent
public accountants. The report 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 1-800-428-6970.
For the Periods Ended May 31, (unless otherwise noted)
For a Share Outstanding Throughout the Periods.
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET AND DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- -------------- ------------- ------------- --------- ----------
----------------------------
FLORIDA TAX-EXEMPT BOND FUND
----------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $10.59 $ 0.44 $(0.49) $(0.44) $(0.04) $10.06 (0.48)%
1999 10.72 0.42 (0.02) (0.42) (0.11) 10.59 3.72
1998 10.28 0.44 0.45 (0.44) (0.01) 10.72 8.77
1997 10.06 0.46 0.25 (0.46) (0.03) 10.28 7.22
1996 10.18 0.46 (0.07) (0.46) (0.05) 10.06 3.87
----------------------------
GEORGIA TAX-EXEMPT BOND FUND
----------------------------
Trust Shares
2000 $10.03 $ 0.40 $(0.49) $(0.40) $(0.04) $ 9.50 (0.90)%
1999 10.11 0.39 (0.06) (0.39) (0.02) 10.03 3.33
1998 9.73 0.41 0.39 (0.41) (0.01) 10.11 8.37
1997 9.56 0.42 0.22 (0.42) (0.05) 9.73 6.79
1996 9.63 0.43 (0.05) (0.43) (0.02) 9.56 3.89
--------------------------
INVESTMENT GRADE BOND FUND
--------------------------
Trust Shares
2000 $10.36 $ 0.61 $(0.78) $(0.61) $ -- $ 9.58 (1.76)%
1999 10.65 0.56 (0.11) (0.56) (0.18) 10.36 4.25
1998 10.16 0.60 0.49 (0.60) -- 10.65 10.92
1997 10.07 0.60 0.09 (0.60) -- 10.16 6.99
1996 10.26 0.60 (0.19) (0.60) -- 10.07 4.02
-------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
-------------------------------------
Trust Shares
2000 $11.10 $ 0.43 $(0.29) $(0.43) $(0.14) $10.67 1.41%
1999 11.40 0.43 0.10 (0.43) (0.40) 11.10 4.67
1998 11.22 0.44 0.50 (0.44) (0.32) 11.40 8.57
1997 11.10 0.44 0.33 (0.44) (0.21) 11.22 7.13
1996 11.28 0.45 0.19 (0.45) (0.37) 11.10 5.82
----------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
---------------------------------------------
Trust Shares
2000 $ 9.94 $ 0.55 $(0.32) $(0.55) $ -- $ 9.62 2.33%
1999 10.12 0.54 (0.06) (0.54) (0.12) 9.94 4.75
1998 10.02 0.58 0.11 (0.58) (0.01) 10.12 7.12
1997 9.99 0.58 0.04 (0.58) (0.01) 10.02 6.43
1996 10.11 0.62 (0.14) (0.60) -- 9.99 4.84
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- ----------- ------------- ----------------- ----------------- ---------
----------------------------
FLORIDA TAX-EXEMPT BOND FUND
----------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 $ 93,040 0.67% 4.25% 0.78% 4.14% 88%
1999 118,609 0.67 3.90 0.77 3.80 72
1998 93,939 0.66 4.16 0.80 4.02 69
1997 50,487 0.65 4.48 0.80 4.33 135
1996 30,790 0.65 4.49 0.88 4.26 63
----------------------------
GEORGIA TAX-EXEMPT BOND FUND
----------------------------
Trust Shares
2000 $ 81,160 0.67% 4.13% 0.77% 4.03% 19%
1999 87,452 0.67 3.87 0.78 3.76 12
1998 62,363 0.66 4.09 0.81 3.94 7
1997 39,732 0.65 4.31 0.81 4.15 15
1996 22,950 0.65 4.36 0.89 4.12 60
--------------------------
INVESTMENT GRADE BOND FUND
--------------------------
Trust Shares
2000 $ 998,596 0.77% 6.05% 0.84% 5.98% 202%
1999 1,149,068 0.77 5.25 0.85 5.17 221
1998 793,488 0.76 5.67 0.86 5.57 109
1997 633,646 0.75 5.89 0.85 5.79 298
1996 599,514 0.75 5.81 0.87 5.69 184
-------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
-------------------------------------
Trust Shares
2000 $ 117,384 0.77% 3.98% 0.83% 3.92% 226%
1999 154,123 0.77 3.75 0.87 3.65 224
1998 146,606 0.76 3.83 0.88 3.71 378
1997 139,144 0.75 3.96 0.86 3.85 489
1996 124,507 0.75 4.01 0.89 3.87 514
----------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
---------------------------------------------
Trust Shares
2000 $ 125,355 0.67% 5.60% 0.79% 5.48% 384%
1999 135,256 0.67 5.28 0.77 5.18 379
1998 137,488 0.66 5.75 0.77 5.64 163
1997 123,903 0.65 5.81 0.78 5.68 133
1996 73,370 0.65 6.04 0.84 5.85 83
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 41
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET AND DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- -------------- ------------- ------------- --------- ----------
--------------------------------
MARYLAND MUNICIPAL BOND FUND (A)
--------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Trust Shares
2000 $10.06 $ 0.42 $(0.60) $(0.42) $ -- $ 9.46 (1.78)%
1999(1) 10.22 0.20 (0.15) (0.20) (0.01) 10.06 0.48
For the years ended November 30:
1998 9.95 0.42 0.27 (0.42) -- 10.22 7.03
1997 9.76 0.43 0.19 (0.43) -- 9.95 6.50
1996(2) 10.00 0.31 (0.24) (0.31) -- 9.76 1.07
--------------------
SHORT-TERM BOND FUND
--------------------
Trust Shares
2000 $ 9.91 $ 0.53 $(0.25) $(0.53) $(0.01) $ 9.65 2.87%
1999 10.05 0.51 (0.10) (0.52) (0.03) 9.91 4.06
1998 9.90 0.55 0.16 (0.55) (0.01) 10.05 7.31
1997 9.86 0.53 0.07 (0.53) (0.03) 9.90 6.30
1996 9.98 0.54 (0.10) (0.54) (0.02) 9.86 4.45
----------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
----------------------------------------
Trust Shares
2000 $ 9.95 $ 0.46 $(0.10) $(0.46) $ -- $ 9.85 3.75%
1999 9.97 0.47 (0.02) (0.47) -- 9.95 4.59
1998 9.88 0.51 0.10 (0.52) -- 9.97 6.30
1997 9.84 0.51 0.04 (0.51) -- 9.88 5.76
1996 9.93 0.55 (0.09) (0.55) -- 9.84 4.73
-------------------------------
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
Trust Shares
2000 $10.28 $ 0.58 $(0.42) $(0.58) $ -- $ 9.86 1.63%
1999 10.46 0.59 (0.18) (0.59) -- 10.28 3.90
1998 10.02 0.61 0.44 (0.61) -- 10.46 10.76
1997 9.91 0.62 0.11 (0.62) -- 10.02 7.54
1996 10.27 0.62 (0.33) (0.62) (0.03) 9.91 2.77
---------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (A)
---------------------------------------------
Trust Shares
2000 $10.20 $ 0.43 $(0.57) $(0.43) $(0.05) $ 9.58 (1.31)%
1999(1) 10.44 0.21 (0.17) (0.21) (0.07) 10.20 0.42
For years ended November 30:
1998 10.31 0.45 0.17 (0.45) (0.04) 10.44 6.10
1997 10.22 0.46 0.09 (0.46) -- 10.31 5.55
1996 10.24 0.42 (0.02) (0.42) -- 10.22 4.01
--------------------------------
VIRGINIA MUNICIPAL BOND FUND (A)
--------------------------------
Trust Shares
2000 $10.43 $ 0.45 $(0.78) $(0.45) $(0.01) $ 9.64 (3.18)%
1999(1) 10.68 0.22 (0.19) (0.22) (0.06) 10.43 0.27
For years ended November 30:
1998 10.44 0.47 0.27 (0.47) (0.03) 10.68 7.19
1997 10.28 0.48 0.17 (0.48) (0.01) 10.44 6.46
1996 10.40 0.47 (0.12) (0.47) -- 10.28 3.48
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- ----------- ------------- ----------------- ----------------- ---------
--------------------------------
MARYLAND MUNICIPAL BOND FUND (A)
--------------------------------
<S> <C> <C> <C> <C> <C> <C>
Trust Shares
2000 $ 26,176 0.68% 4.24% 0.80% 4.12% 14%
1999(1) 29,658 0.70 3.83 1.37 3.16 19
For the years ended November 30:
1998 19,115 0.62 4.11 1.15 3.58 12
1997 11,461 0.63 4.38 1.16 3.85 5
1996(2) 5,808 0.71 4.30 1.36 3.65 9
--------------------
SHORT-TERM BOND FUND
--------------------
Trust Shares
2000 $ 180,402 0.67% 5.40% 0.76% 5.31% 70%
1999 209,904 0.67 5.12 0.77 5.02 108
1998 120,422 0.66 5.47 0.79 5.34 87
1997 89,701 0.65 5.37 0.78 5.24 118
1996 91,156 0.65 5.39 0.81 5.23 163
----------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
----------------------------------------
Trust Shares
2000 $ 72,570 0.67% 4.70% 0.79% 4.58% 50%
1999 56,027 0.67 4.69 0.78 4.58 57
1998 46,920 0.66 5.19 0.84 5.01 39
1997 21,988 0.65 5.23 0.92 4.96 93
1996 10,149 0.65 5.56 1.00 5.21 94
-------------------------------
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
Trust Shares
2000 $ 85,420 0.77% 5.77% 0.84% 5.70% 29%
1999 102,167 0.77 5.58 0.88 5.47 19
1998 34,899 0.76 5.93 0.92 5.77 14
1997 19,471 0.75 6.19 1.02 5.92 21
1996 10,277 0.75 6.05 1.25 5.55 83
---------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (A)
---------------------------------------------
Trust Shares
2000 $ 202,209 0.76% 4.35% 0.76% 4.35% 18%
1999(1) 240,083 0.84 4.12 1.18 3.78 19
For years ended November 30:
1998 243,606 0.79 4.33 0.97 4.15 24
1997 237,096 0.78 4.57 0.93 4.42 30
1996 243,137 0.78 4.35 0.93 4.20 25
--------------------------------
VIRGINIA MUNICIPAL BOND FUND (A)
--------------------------------
Trust Shares
2000 $ 48,980 0.74% 4.53% 0.79% 4.48% 19%
1999(1) 31,939 0.76 4.20 1.30 3.66 7
For years ended November 30:
1998 29,252 0.69 4.41 1.10 4.00 28
1997 20,044 0.69 4.65 1.09 4.25 39
1996 15,911 0.71 4.61 1.11 4.21 24
<FN>
(+) 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.
(2) Commenced operations on March 1, 1996. All ratios for the period have been
annualized.
(A) On May 24, 1999, the CrestFunds Maryland Municipal Bond, CrestFunds Virginia
Intermediate Municipal Bond and CrestFunds Virginia Municipal Bond Funds
exchanged all of their assets and certain liabilities for shares of the
Maryland Municipal Bond, Virginia Intermediate Municipal Bond and Virginia
Municipal Bond Funds, respectively. The CrestFunds Maryland Municipal Bond,
CrestFunds Virginia Intermediate Municipal Bond and CrestFunds 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.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
42 PROSPECTUS
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS
VALUE NET FROM NET NET ASSET
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL
OF PERIOD INCOME INCOME OF PERIOD RETURN (+)
------------- ------------ ------------- --------- ----------
--------------------------------
PRIME QUALITY MONEY MARKET FUND
---------------------------------
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 $1.00 $ 0.05 $(0.05) $1.00 5.20%
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
----------------------------
TAX-EXEMPT MONEY MARKET FUND
----------------------------
Trust Shares
2000 $1.00 $ 0.03 $(0.03) $1.00 3.19%
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
--------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
--------------------------------------------
Trust Shares
2000 $1.00 $ 0.05 $(0.05) $1.00 4.86%
1999 1.00 0.04 (0.04) 1.00 4.57
1998 1.00 0.05 (0.05) 1.00 5.04
1997 1.00 0.05 (0.05) 1.00 4.83
1996 1.00 0.05 (0.05) 1.00 5.14
-----------------------------------
U.S. TREASURY MONEY MARKET FUND (B)
-----------------------------------
Trust Shares
2000 $1.00 $0.05 $(0.05) $1.00 4.81%
1999(1) 1.00 0.02 (0.02) 1.00 2.08
For the Year Ended November 30:
1998 1.00 0.05 (0.05) 1.00 4.89
1997 1.00 0.05 (0.05) 1.00 4.91
1996 1.00 0.05 (0.05) 1.00 4.80
---------------------------------------
VIRGINIA TAX-FREE MONEY MARKET FUND (B)
---------------------------------------
Trust Shares
2000 $1.00 $ 0.03 $(0.03) $1.00 3.23%
1999(1) 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
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME ASSETS (EXCLUDING ASSETS (EXCLUDING
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS)
------------ ----------- ----------- ----------------- ----------------
--------------------------------
PRIME QUALITY MONEY MARKET FUND
---------------------------------
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 $3,311,229 0.60% 5.06% 0.75% 4.91%
1999 3,903,232 0.60 4.69 0.77 4.52
1998 1,880,229 0.59 5.10 0.77 4.92
1997 1,086,555 0.58 4.90 0.76 4.72
1996 1,050,800 0.58 5.11 0.78 4.91
----------------------------
TAX-EXEMPT MONEY MARKET FUND
----------------------------
Trust Shares
2000 $ 755,858 0.52% 3.16% 0.66% 3.02%
1999 641,640 0.52 2.75 0.66 2.61
1998 448,023 0.51 3.14 0.67 2.98
1997 333,006 0.50 3.04 0.66 2.88
1996 273,613 0.50 3.23 0.68 3.05
--------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
--------------------------------------------
Trust Shares
2000 $ 468,568 0.63% 4.80% 0.74% 4.69%
1999 404,459 0.63 4.47 0.76 4.34
1998 377,490 0.62 4.92 0.78 4.76
1997 344,350 0.61 4.73 0.76 4.58
1996 325,493 0.61 5.02 0.78 4.85
-----------------------------------
U.S. TREASURY MONEY MARKET FUND (B)
-----------------------------------
Trust Shares
2000 $ 723,277 0.63% 4.71% 0.74% 4.60%
1999(1) 760,833 0.68 4.10 0.83 3.95
For the Year Ended November 30:
1998 699,923 0.66 4.77 0.81 4.62
1997 632,381 0.65 4.82 0.80 4.67
1996 389,051 0.66 4.69 0.81 4.54
---------------------------------------
VIRGINIA TAX-FREE MONEY MARKET FUND (B)
---------------------------------------
Trust Shares
2000 $ 245,243 0.51% 3.19% 0.51% 3.19%
1999(1) 270,431 0.67 2.51 0.82 2.36
For the Year Ended November 30:
1998 270,899 0.66% 2.92% 0.81% 2.77
1997 226,837 0.66 3.02 0.81 2.87
1996 182,320 0.66 2.88 0.81 2.73
<FN>
(+) 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.
(B) On May 24, 1999, the CrestFunds U.S Treasury Money and CrestFunds Tax-Free
Money Funds exchanged all of their assets and certain liabilities for
shares of the U.S. Treasury Money Market and Virginia Tax Free Money
Market Funds. The CrestFunds U.S Treasury Money and CrestFunds
Tax Free Money 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.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 43
NOTES
<PAGE>
44 PROSPECTUS
NOTES
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
46 PROSPECTUS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, 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 Funds'
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
XXX-XXXX
<PAGE>
XXXXXX/XX-XX
STI CLASSIC FUNDS-BOND FUNDS
FLEX AND INVESTOR SHARES
PROSPECTUS
OCTOBER 1, 2000
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
HIGH INCOME FUND
INVESTMENT GRADE BOND FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
MARYLAND MUNICIPAL BOND FUND
SHORT-TERM BOND FUND
SHORT-TERM U.S. TREASURY SECURITIES FUND
U.S. GOVERNMENT SECURITIES FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
INVESTMENT ADVISER
TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(the "Adviser")
[STI Logo Omitted]
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>
PROSPECTUS
ABOUT THIS PROSPECTUS
CHOOSING INVESTOR OR FLEX SHARES
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 Bond 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
[bullet] Front-end sales charge
[bullet] 12b-1 fees
[bullet] $2,000 minimum initial investment
FLEX SHARES
[bullet] Contingent deferred sales charge
[bullet] Higher 12b-1 fees
[bullet] $5,000 minimum initial investment
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 THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
2 FLORIDA TAX-EXEMPT BOND FUND
4 GEORGIA TAX-EXEMPT BOND FUND
6 HIGH INCOME FUND
8 INVESTMENT GRADE BOND FUND
10 INVESTMENT GRADE TAX-EXEMPT BOND FUND
12 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
14 MARYLAND MUNICIPAL BOND FUND
16 SHORT-TERM BOND FUND
18 SHORT-TERM U.S. TREASURY SECURITIES FUND
20 U.S. GOVERNMENT SECURITIES FUND
22 VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
24 VIRGINIA MUNICIPAL BOND FUND
26 MORE INFORMATION ABOUT RISK
27 MORE INFORMATION ABOUT FUND INVESTMENTS
28 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
29 PURCHASING, SELLING AND EXCHANGING FUND SHARES
34 DIVIDENDS, DISTRIBUTIONS AND TAXES
35 FINANCIAL HIGHLIGHTS
38 HOW TO OBTAIN MORE INFORMATION ABOUT
THE STI CLASSIC FUNDS
--------------------------------------------------------------------------------
[BRIEFCASE GRAPHIC OMITTED] FUND SUMMARY
[TELESCOPE GRAPHIC OMITTED] INVESTMENT STRATEGY
[INNERTUBE GRAPHIC OMITTED] WHAT ARE THE RISKS OF INVESTING?
[ARROW GRAPHIC OMITTED] PERFORMANCE INFORMATION
[CHART GRAPHIC OMITTED] WHAT IS AN INDEX?
[COINS GRAPHIC OMITTED] FUND FEES AND EXPENSES
[MOUNTAINTOP GRAPHIC OMITTED] MORE INFORMATION ABOUT FUND INVESTMENTS
[MAGNIFIER GRAPHIC OMITTED] INVESTMENT ADVISER
[HANDSHAKE GRAPHIC OMITTED] PURCHASING, SELLING AND EXCHANGING FUND SHARES
[DOLLAR GRAPHIC OMITTED] SALES CHARGES
--------------------------------------------------------------------------------
OCTOBER 1, 2000
<PAGE>
PROSPECTUS 1
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
Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser 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 prices 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>
2 PROSPECTUS
FLORIDA TAX-EXEMPT BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal
income taxes for Florida residents with
shares themselves expected to be exempt
from the Florida intangible personal
property tax
--------------------------------------------------------------------------------
INVESTMENT FOCUS Florida municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest more Fund assets in
undervalued sectors and less in
overvalued ones
--------------------------------------------------------------------------------
INVESTOR PROFILE Florida residents who want income exempt
from federal income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Florida Tax-Exempt Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal income taxes, and the
shares themselves are expected to be exempt from the Florida intangible personal
property tax. Issuers of these securities can be located in Florida, Puerto Rico
and other U.S. territories and possessions. In addition, up to 20% of the Fund's
assets may be invested in securities subject to the alternative minimum tax or
in certain taxable debt securities. In selecting investments for the Fund, the
Adviser tries to limit risk as much as possible. Based on the Adviser's analysis
of municipalities, credit risk, market trends and investment cycles, the Adviser
attempts to invest more of the Fund's assets in undervalued market sectors and
less in overvalued sectors. The Adviser also tries to identify and invest in
municipal issuers with improving credit and avoid those with deteriorating
credit. The Adviser anticipates that the Fund's average weighted maturity will
range from 6 to 25 years. Under certain circumstances, such as a national
financial emergency or a temporary decline in availability of Florida
obligations, up to 20% of the Fund's assets may be invested in securities
subject to the Florida intangible personal property tax and/or securities that
generate income subject to federal personal income taxes. These securities may
include short-term municipal securities outside Florida or certain taxable fixed
income securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's concentration of investments in securities of issuers located in
Florida subjects the Fund to economic and government policies within Florida.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 15.70%
1996 3.73%
1997 7.60%
1998 5.94%
1999 -2.41%
BEST QUARTER WORST QUARTER
6.13% -2.35%
(3/31/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.09%.
<PAGE>
PROSPECTUS 3
FLORIDA TAX-EXEMPT BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX AND THE LIPPER FLORIDA MUNICIPAL DEBT FUNDS AVERAGE.
INVESTOR SHARES 1 YEAR 5 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Florida Tax-Exempt
Bond Fund -2.41% 5.95%* 4.72%*
--------------------------------------------------------------------------------
Lehman Brothers 10-Year
Municipal Bond Index -1.24% 7.12% 4.90%**
--------------------------------------------------------------------------------
Lipper Florida Municipal
Dept Funds Average -4.35% 5.90% 3.52%**
--------------------------------------------------------------------------------
* SINCE 1/18/94 ** SINCE 1/31/94
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund -2.97% 3.98%*
--------------------------------------------------------------------------------
Lehman Brothers 10-Year
Municipal Bond Index -1.24% 5.48%**
--------------------------------------------------------------------------------
Lipper Florida Municipal
Dept Funds Average -4.35% 4.05%**
--------------------------------------------------------------------------------
* SINCE 6/1/95 ** SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 10-Year Municipal Bond Index is
a widely-recognized index of long-term investment grade tax-exempt bonds. The
Index includes general obligation bonds, revenue bonds, insured bonds and
prefunded bonds with maturities between 8 and 12 years, and represents various
market sectors and geographic locations. The Lipper Florida Municipal Debt Funds
Average is a composite index of mutual funds with investment goals similar to
the Fund's goals. It reports the average return of the Florida intermediate-term
municipal bond mutual funds tracked by Lipper Analytical Services, Inc. The
number of funds in the Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.65% 0.65%
Distribution and Service (12b-1) Fees 0.18% 1.00%
Other Expenses 0.53% 0.24%
----- -----
Total Annual Fund Operating Expenses 1.36% 1.89%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $508 $790 $1,092 $1,949
Flex Shares $398 $594 $1,024 $2,212
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $508 $790 $1,092 $1,949
Flex Shares $198 $594 $1,021 $2,212
--------------------------------------------------------------------------------
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 0.60%, 0.13% and 0.92%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.60%, 0.58% and 1.42%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
4 PROSPECTUS
GEORGIA TAX-EXEMPT BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Current income exempt from federal and
state income taxes for Georgia residents
without undue risk
--------------------------------------------------------------------------------
INVESTMENT FOCUS Georgia municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest more Fund assets in
undervalued sectors and less in
overvalued ones
--------------------------------------------------------------------------------
INVESTOR PROFILE Georgia residents who want income exempt
from federal and state income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Georgia Tax-Exempt Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Georgia income taxes.
Issuers of these securities can be located in Georgia, Puerto Rico and other
U.S. territories and possessions. In addition, up to 20% of the Fund's assets
may be invested in securities subject to the alternative minimum tax or in
certain taxable debt securities. In selecting investments for the Fund, the
Adviser tries to limit risk as much as possible. Based on the Adviser's analysis
of municipalities, credit risk, market trends and investment cycles, the Adviser
attempts to invest more of the Fund's assets in undervalued market sectors and
less in overvalued sectors. The Adviser tries to diversify the Fund's holdings
within Georgia. The Adviser also tries to identify and invest in municipal
issuers with improving credit and avoid those with deteriorating credit. The
Adviser anticipates that the Fund's average weighted maturity will range from 6
to 25 years.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's concentration of investments in securities of issuers located in
Georgia subjects the Fund to economic and government policies within Georgia.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 13.13%
1996 3.43%
1997 7.96%
1998 5.47%
1999 -2.49%
BEST QUARTER WORST QUARTER
4.84% -2.35%
(3/31/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.06%.
<PAGE>
PROSPECTUS 5
GEORGIA TAX-EXEMPT BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX AND THE LIPPER GEORGIA MUNICIPAL DEBT FUNDS AVERAGE.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Georgia Tax-Exempt
Bond Fund -2.49% 5.37%* 3.60%*
--------------------------------------------------------------------------------
Lehman Brothers 10-Year
Municipal Bond Index -1.24% 7.12% 4.90%**
--------------------------------------------------------------------------------
Lipper Georgia Municipal
Dept Funds Average -4.51% 6.04% 3.39%**
--------------------------------------------------------------------------------
* SINCE 1/19/94 ** SINCE 1/31/94
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund -2.93% 3.55%*
--------------------------------------------------------------------------------
Lehman Brothers 10-Year
Municipal Bond Index -1.24% 5.48%**
--------------------------------------------------------------------------------
Lipper Georgia Municipal
Dept Funds Average -4.51% 4.22%**
--------------------------------------------------------------------------------
* SINCE 6/6/95 ** SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 10-Year Municipal Bond Index is
a widely-recognized index of long-term investment grade tax-exempt bonds. The
Index includes general obligation bonds, revenue bonds, insured bonds and
prefunded bonds with maturities between 8 and 12 years. The Index represents
various market sectors and geographic locations. The Lipper Georgia Municipal
Debt Funds Average is a composite index of mutual funds with investment goals
similar to the Fund's goals. It reports the average return of the Georgia
intermediate-term municipal bond mutual funds tracked by Lipper Analytical
Services, Inc. The number of funds in the Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.65% 0.65%
Distribution and Service (12b-1) Fees 0.18% 1.00%
Other Expenses 0.57% 0.30%
----- -----
Total Annual Fund Operating Expenses 1.40% 1.95%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $510 $796 $1,102 $1,970
Flex Shares $399 $597 $1,026 $2,222
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $510 $796 $1,102 $1,970
Flex Shares $199 $597 $1,026 $2,222
--------------------------------------------------------------------------------
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 0.60%, 0.00% and 0.92%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.60%, 0.52% and 1.42%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
6 PROSPECTUS
HIGH INCOME FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS
PRIMARY High current income
SECONDARY Total return
--------------------------------------------------------------------------------
INVESTMENT FOCUS High yield corporate, government, and
other debt instruments of U.S. and non
U.S. issuers
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to identify lower-rated
securities offering high current income
of issuers generating adequate cash flow
to meet their obligations
--------------------------------------------------------------------------------
INVESTOR PROFILE Investors who seek high current income
and who are willing to accept greater
share price volatility through
investment in high yield, below
investment grade debt instruments
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The High Income Fund invests primarily in a diversified portfolio of higher
yielding, lower rated income producing securities of U.S. and non-U.S. issuers.
The Fund will invest at least 65%, and may invest up to 100%, of its assets in
securities rated as "non-investment grade" by Moody's Investor Services, Inc. or
by Standard & Poor's Rating Services or in unrated securities if, in the
Adviser's opinion, they are of comparable quality. Such securities are commonly
known as "junk bonds" and offer greater risks than investment grade bonds (i.e.
rated BBB- or above by S&P or Baa3 or above by Moody's). In selecting debt
securities for the Fund the Adviser seeks out companies with good fundamentals
and performing prospects that are currently out of favor with investors. The
primary basis for security selection is the potential income offered by the
security relative to the Adviser's assessment of the issuer's ability to
generate the cash flow required to meet its obligation. The Adviser employs a
"bottom-up" approach, identifying investment opportunities based on the
underlying financial and economic fundamentals of the specific issuer.
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.
[INNERTUBE GRAPHIC OMITTED]
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.
High yield securities involve greater risks of default or downgrade and are more
volatile than investment grade securities. Junk bonds involve greater risk of
default or price declines than investment grade securities due to actual or
perceived changes in an issuer's creditworthiness. In addition, issuers of junk
bonds may be more susceptible than other issuers to economic downturns. Junk
bonds are subject to the risk that the issuer may not be able to pay interest or
dividends and ultimately to repay principal upon maturity.
Discontinuation of these payments could substantially adversely affect the
market value of the security.
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. These
various risks will be even greater for investments in emerging market countries
since political turmoil and rapid changes in economic conditions are more likely
to occur in these countries.
[BULLSEYE GRAPHIC OMITTED]
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 March 28, 2000 represent the performance of the ESC Strategic
Income Fund, the Fund's predecessor.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S 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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 14.91%
1996 5.84%
1997 5.05%
1998 4.43%
1999 1.28%
BEST QUARTER WORST QUARTER
6.79% -2.24%
(3/31/95) (9/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -8.49%.
<PAGE>
PROSPECTUS 7
HIGH INCOME FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. CORPORATE HIGH
YIELD BOND INDEX.
FLEX SHARES 1 YEAR 5 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
High Income Fund 1.28% 6.21% 5.20%*
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Corporate High
Yield Bond Index 2.40% 9.31% 8.49%**
--------------------------------------------------------------------------------
*SINCE 5/4/94 **SINCE 4/30/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Corporate High Yield Bond
Index is a widely-recognized, market value-weighted (higher market value bonds
have more influence than lower market value bonds) index which covers the
universe of fixed rate, non-investment grade debt.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
FLEX SHARES
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%
* 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)*
--------------------------------------------------------------------------------
FLEX SHARES
Investment Advisory Fees 0.80%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.44%
----
Total Annual Fund Operating Expenses 2.24%
* ANNUAL FUND OPERATING EXPENSES HAVE BEEN RESTATED TO REFLECT CURRENT FEES OF
THE FUND.
--------------------------------------------------------------------------------
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $427 $700 $1,200 $2,575
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $227 $700 $1,200 $2,575
--------------------------------------------------------------------------------
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 0.65%, 0.31% and 1.40%, respectively. The Adviser and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
<PAGE>
8 PROSPECTUS
INVESTMENT GRADE BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 U.S. Government/Credit 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.
[INNERTUBE GRAPHIC OMITTED]
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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 10.42%
1994 -3.57%
1995 17.26%
1996 1.93%
1997 8.64%
1998 8.79%
1999 -1.93%
BEST QUARTER WORST QUARTER
6.02% -2.67%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.24%.
<PAGE>
PROSPECTUS 9
INVESTMENT GRADE BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX, THE LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND THE LIPPER INTERMEDIATE
INVESTMENT GRADE DEBT FUNDS AVERAGE.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Investment Grade Bond Fund -1.93% 6.74% 5.76%*
--------------------------------------------------------------------------------
Lehman Brothers U.S.
Government/Credit Index -2.15% 7.60% 6.79%**
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Aggregate Bond Index -0.83% 7.73% 6.73%**
--------------------------------------------------------------------------------
Lipper Intermediate Investment
Grade Debt Funds Average -1.31% 6.79% 6.26%**
--------------------------------------------------------------------------------
*SINCE 6/11/92 **SINCE 5/31/92
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Investment Grade Bond Fund -2.38% 4.62%*
--------------------------------------------------------------------------------
Lehman Brothers U.S.
Government/Credit Index -2.15% 5.90%**
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Aggregate Bond Index -0.83% 6.10%**
--------------------------------------------------------------------------------
Lipper Intermediate Investment
Grade Debt Funds Average -1.31% 5.31%**
--------------------------------------------------------------------------------
*SINCE 6/7/95 **SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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 Lehman Brothers U.S. Aggregate
Bond Index is a widely-recognized, market value-weighted (higher market value
stocks have more influence than lower market value stocks) index that combines
the Lehman Brothers U.S. Government/Credit Index and the Lehman Brothers
Mortgage-Backed Securities Index. The Lehman Brothers U.S. Government/Credit
Index consists of U.S. government obligations and corporate debt securities. The
Lehman Brothers Mortgage-Backed Securities Index consists of mortgage-backed
securities rated AAA. The Lehman Brothers U.S. Aggregate Bond Index includes
fixed income securities rated investment grade (BBB) or higher, with maturities
of at least one year. The securities in the Index have outstanding par values of
at least $100 million for U.S. government obligations and $25 million for the
others. The Lipper Intermediate Investment Grade Debt Funds Average is a
composite of mutual funds with investment goals similar to the Fund's goals. It
reports the average return of the intermediate term investment grade bond mutual
funds tracked by Lipper Analytical Services, Inc. The number of funds in the
Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.74% 0.74%
Distribution and Service (12b-1) Fees 0.43% 1.00%
Other Expenses 0.20% 0.25%
----- -----
Total Annual Fund Operating Expenses 1.37% 1.99%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $509 $793 $1,097 $1,960
Flex Shares $402 $624 $1,073 $2,317
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $509 $793 $1,097 $1,960
Flex Shares $202 $624 $1,073 $2,317
--------------------------------------------------------------------------------
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 0.72%, 0.30% and 1.22%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.72%, 0.74% and 1.71%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
10 PROSPECTUS
INVESTMENT GRADE TAX-EXEMPT BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High total return through (i) current
income that is exempt from federal
income taxes and (ii) capital
appreciation, while preserving the
principal amount invested
--------------------------------------------------------------------------------
INVESTMENT FOCUS Investment grade municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest more Fund assets in
undervalued sectors and less in
overvalued ones
--------------------------------------------------------------------------------
INVESTOR PROFILE Investors who want to receive tax-free
current income and an increase in the
value of their investment
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Investment Grade Tax-Exempt Bond Fund invests primarily in investment grade
tax-exempt obligations, like municipal securities. The issuers of these
securities may be located in any U.S. state, territory or possession. In
addition, up to 20% of the Fund may be invested in securities subject to the
alternative minimum tax or in certain taxable debt securities. In selecting
investments for the Fund, the Adviser tries to limit risk as much as possible.
Based on the Adviser's analysis of municipalities, credit risk, market trends
and investment cycles, the Adviser attempts to invest more of the Fund's assets
in undervalued market sectors and less in overvalued sectors. The Adviser also
tries to identify and invest in municipal issuers with improving credit and
avoid those with deteriorating credit. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability
of municipal issuers to repay principal and to make interest payments on
municipal securities. Changes in the financial condition or credit rating of
municipal issuers also may adversely affect the value of the Fund's securities.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 14.35%
1994 -0.60%
1995 14.51%
1996 4.99%
1997 7.36%
1998 6.73%
1999 -0.75%
BEST QUARTER WORST QUARTER
5.87% -3.14%
(3/31/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.81%.
<PAGE>
PROSPECTUS 11
INVESTMENT GRADE TAX-EXEMPT BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS 5-YEAR MUNICIPAL BOND INDEX
AND THE LIPPER INTERMEDIATE MUNICIPAL DEBT FUNDS AVERAGE.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Investment Grade
Tax-Exempt Bond Fund -0.75% 6.46% 6.64%*
--------------------------------------------------------------------------------
Lehman Brothers 5-Year
Municipal Bond Index 0.74% 5.71% 5.42%**
--------------------------------------------------------------------------------
Lipper Intermediate Municipal
Debt Funds Average -1.65% 5.55% 5.32%**
--------------------------------------------------------------------------------
*SINCE 6/9/92 **SINCE 5/31/92
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Investment Grade Tax-
Exempt Bond Fund -1.20% 4.65%*
--------------------------------------------------------------------------------
Lehman Brothers 5-Year
Municipal Bond Index 0.74% 4.76%**
--------------------------------------------------------------------------------
Lipper Intermediate Municipal
Debt Funds Average -1.65% 4.35%**
--------------------------------------------------------------------------------
*SINCE 6/1/95 **SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 5-Year Municipal bond Index is a
widely-recognized index of intermediate investment grade tax-exempt bonds. The
Index includes general obligation bonds, revenue bonds, insured bonds and
prefunded bonds with maturities between 4 and 6 years. The Lipper Intermediate
Municipal Debt Funds Average is a composite of mutual funds with investment
goals similar to the Fund's goals. It reports the average return of the
intermediate term municipal bond mutual funds tracked by Lipper Analytical
Services, Inc. The number of funds in the Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.74% 0.74%
Distribution and Service (12b-1) Fees 0.43% 1.00%
Other Expenses 0.16% 0.21%
----- -----
Total Annual Fund Operating Expenses 1.33% 1.95%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $505 $781 $1,076 $1,916
Flex Shares $398 $612 $1,052 $2,225
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $505 $781 $1,076 $1,916
Flex Shares $198 $612 $1,052 $2,225
--------------------------------------------------------------------------------
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 0.71%, 0.35% and 1.22%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.71%, 0.78% and 1.70%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
12 PROSPECTUS
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 attempt to reduce the risk that the
underlying mortgages are prepaid by focusing on securities that it 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.
[INNERTUBE GRAPHIC OMITTED]
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 mortgage-backed securities may
underperform other segments of the fixed income market 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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 12.02%
1996 4.29%
1997 6.37%
1998 6.73%
1999 0.96%
BEST QUARTER WORST QUARTER
4.01% -0.26%
(3/31/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.36%.
<PAGE>
PROSPECTUS 13
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MERRILL LYNCH 1-5 YEAR U.S.
TREASURIES/AGENCIES INDEX AND THE MERRILL LYNCH 1-5 YEAR U.S. TREASURY INDEX.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Limited-Term Federal
Mortgage Securities Fund 0.96% 6.01% 5.56%*
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasuries/Agencies
Index 2.11% 6.78% 6.18%**
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasury Index 2.04% 6.78% 6.17%**
--------------------------------------------------------------------------------
* SINCE 7/18/94 ** SINCE 7/31/94
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Limited-Term Federal
Mortgage Securities Fund 0.66% 4.60%*
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasuries/Agencies Index 2.11% 5.78%**
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasury Index 2.04% 5.77%**
--------------------------------------------------------------------------------
* SINCE 6/7/95 ** SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Treasuries/Agencies
Index includes U.S. government and agency bonds that have a minimum issue size
of $150 million. The current market value of the Index is $1.29 trillion with
duration of 2.1 years and yield to maturity of 6.4%. The Merrill Lynch 1-5 Year
U.S. Treasury Index is a widely-recognized, capitalization-weighted (companies
with larger market capitalizations have more influence than those with smaller
market capitalizations) index of U.S. Treasury securities
with maturities of 1 year or greater and no more than 5 years.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 2.50% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.65% 0.65%
Distribution and Service (12b-1) Fees 0.23% 1.00%
Other Expenses 0.81% 0.73%
----- -----
Total Annual Fund Operating Expenses 1.69% 2.38%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $418 $769 $1,145 $2,198
Flex Shares $441 $742 $1,270 $2,716
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $418 $769 $1,145 $2,198
Flex Shares $241 $742 $1,270 $2,716
--------------------------------------------------------------------------------
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 0.60%, 0.00% and 0.96%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.60%, 0.00% and 1.31%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
14 PROSPECTUS
MARYLAND MUNICIPAL BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal
and Maryland income tax, consistent with
preservation of capital
--------------------------------------------------------------------------------
INVESTMENT FOCUS Maryland municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest in investment grade
municipal securities
--------------------------------------------------------------------------------
INVESTOR PROFILE Maryland residents who want income
exempt from federal and state income
taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Maryland Municipal Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Maryland income taxes.
Issuers of these securities can be located in Maryland, Puerto Rico and other
U.S. territories and possessions. In selecting investments for the Fund, the
Adviser tries to limit risk by buying investment grade securities. There are no
limits on the Fund's average weighted maturity or on the remaining maturities of
individual securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities. The Fund's
concentration of investments in securities of issuers located in Maryland
subjects the Fund to economic and government policies of Maryland.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities.
[BULLSEYE GRAPHIC OMITTED]
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 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.*
[Bar Chart Omitted]
Plot points are as follows:
1997 7.90%
1998 4.91%
1999 -4.17%
BEST QUARTER WORST QUARTER
3.35% -1.74%
(6/30/97) (9/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.78%.
<PAGE>
PROSPECTUS 15
MARYLAND MUNICIPAL BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS GENERAL OBLIGATION BOND
INDEX.
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Maryland Municipal Bond Fund -4.17% 3.28%*
--------------------------------------------------------------------------------
Lehman Brothers General
Obligation Bond Index -1.51% 5.31%**
--------------------------------------------------------------------------------
* SINCE 4/25/96 ** SINCE 4/30/96
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 General Obligation Bond Index is
a widely-recognized index of general obligation securities issued in the last 5
years with maturities of over 1 year.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
FLEX SHARES
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%
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
FLEX SHARES
Investment Advisory Fees 0.65%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.30%
-----
Total Annual Fund Operating Expenses 1.95%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $398 $612 $1,052 $2,275
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $198 $612 $1,052 $2,275
--------------------------------------------------------------------------------
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 0.57%, 0.77% and 1.64%, respectively. The Adviser
and Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
16 PROSPECTUS
SHORT-TERM BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
Mortgage-backed and asset-backed securities 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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1994 -0.33%
1995 11.68%
1996 3.66%
1997 6.46%
1998 6.73%
1999 0.76%
BEST QUARTER WORST QUARTER
3.81% -0.63%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.72%.
<PAGE>
PROSPECTUS 17
SHORT-TERM BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY/GOVERNMENT
SPONSORED/CORPORATE INDEX.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Short-Term Bond Fund 0.76% 5.80% 4.70%*
--------------------------------------------------------------------------------
Salomon 1-3 Year Treasury/
Government Sponsored/
Corporate Index 3.29% 6.56% 5.42%**
--------------------------------------------------------------------------------
*SINCE 3/22/93 **SINCE 3/31/93
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Short-Term Bond Fund 0.47% 4.50%*
--------------------------------------------------------------------------------
Salomon 1-3 Year Treasury/
Government Sponsored/
Corporate Index 3.29% 5.80%**
--------------------------------------------------------------------------------
*SINCE 6/20/95 **SINCE 6/30/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/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 of
1 year or greater and less than 3 years.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 2.00% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.65% 0.65%
Distribution and Service (12b-1) Fees 0.23% 1.00%
Other Expenses 0.87% 0.76%
----- -----
Total Annual Fund Operating Expenses 1.75% 2.41%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $374 $740 $1,130 $2,221
Flex Shares $444 $751 $1,285 $2,746
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $374 $740 $1,130 $2,221
Flex Shares $244 $751 $1,285 $2,746
--------------------------------------------------------------------------------
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 0.60%, 0.00% and 0.91%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.60%, 0.00% and 1.26%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
18 PROSPECTUS
SHORT-TERM U.S. TREASURY SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 short-term U.S. Treasury securities
may underperform other segments of the fixed income market 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1994 1.28%
1995 8.39%
1996 4.38%
1997 5.70%
1998 6.09%
1999 2.55%
BEST QUARTER WORST QUARTER
2.60% -0.13%
(3/31/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.40%.
<PAGE>
PROSPECTUS 19
SHORT-TERM U.S. TREASURY SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY INDEX AND THE
SALOMON 6 MONTH TREASURY BILL INDEX.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Short-Term U.S. Treasury
Securities Fund 2.55% 5.40% 4.55%*
--------------------------------------------------------------------------------
Salomon 1-3 Year Treasury Index 3.06% 6.48% 5.33%**
--------------------------------------------------------------------------------
Salomon 6 Month Treasury
Bill Index 4.80% 5.33% 4.95%**
--------------------------------------------------------------------------------
*SINCE 3/18/93 **SINCE 3/31/93
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Short-Term U.S. Treasury
Securities Fund 2.33% 4.57%*
--------------------------------------------------------------------------------
Salomon 1-3 Year Treasury Index 3.06% 5.72%**
--------------------------------------------------------------------------------
Salomon 6 Month Treasury
Bill Index 4.80% 5.26%**
--------------------------------------------------------------------------------
*SINCE 6/22/95 **SINCE 6/30/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 of 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 1.00% None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)** None 2.00%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.65% 0.65%
Distribution and Service (12b-1) Fees 0.18% 1.00%
Other Expenses 0.61% 0.39%
----- -----
Total Annual Fund Operating Expenses 1.44% 2.04%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $245 $551 $879 $1,807
Flex Shares $407 $640 $1,098 $2,369
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $245 $551 $879 $1,807
Flex Shares $207 $640 $1,098 $2,369
--------------------------------------------------------------------------------
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 0.59%, 0.00% and 0.86%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.59%, 0.13% and 1.11%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
20 PROSPECTUS
U.S. GOVERNMENT SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 U.S. government debt securities may
underperform other segments of the fixed income market 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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1995 16.95%
1996 2.08%
1997 8.60%
1998 7.74%
1999 -1.49%
BEST QUARTER WORST QUARTER
5.81% -2.31%
(6/30/95) (3/31/96)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.59%.
<PAGE>
PROSPECTUS 21
U.S. GOVERNMENT SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999, TO THOSE OF THE MERRILL LYNCH GOVERNMENT/MORTGAGE INDEX AND
THE LEHMAN BROTHERS INTERMEDIATE U.S. GOVERNMENT BOND INDEX.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
U.S. Government
Securities Fund -1.49% 6.59% 5.63%*
--------------------------------------------------------------------------------
Merrill Lynch Government/
Mortgage Index -0.70% 7.67% 6.90%**
--------------------------------------------------------------------------------
Lehman Brothers Intermediate
U.S. Government Bond Index 0.50% 6.93% 6.32%**
--------------------------------------------------------------------------------
* SINCE 6/6/94 ** SINCE 5/31/94
SINCE
FLEX SHARES 1 YEAR INCEPTION
--------------------------------------------------------------------------------
U.S. Government Securities Fund -1.94% 4.36%*
--------------------------------------------------------------------------------
Merrill Lynch Government/
Mortgage Index -0.70% 6.10%**
--------------------------------------------------------------------------------
Lehman Brothers Intermediate
U.S. Government Bond Index 0.50% 5.72%**
--------------------------------------------------------------------------------
* SINCE 6/7/95 ** SINCE 5/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 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 Master Mortgage Index
which is a widely-recognized index comprised of mortgage-backed securities
including 15 and 30 year single family mortgages in addition to aggregated
pooled mortgages. The Lehman Brothers Intermediate U.S. Government 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, and 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
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%
* 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 ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.74% 0.74%
Distribution and Service (12b-1) Fees 0.38% 1.00%
Other Expenses 0.78% 0.33%
----- -----
Total Annual Fund Operating Expenses 1.90% 2.07%
--------------------------------------------------------------------------------
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, Fund operating expenses remain the same and you reinvest all dividends
and distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $561 $950 $1,363 $2,514
Flex Shares $410 $649 $1,114 $2,400
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $561 $950 $1,363 $2,514
Flex Shares $210 $649 $1,114 $2,400
--------------------------------------------------------------------------------
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 0.71%, 0.00% and 1.22%, respectively. Actual
Investment Advisory Fees, Distribution Fees and Total Operating Expenses for
Flex Shares are 0.71%, 0.69% and 1.73%, respectively. The Adviser and
Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
22 PROSPECTUS
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal
and Virginia income tax, consistent
with preservation of capital
--------------------------------------------------------------------------------
INVESTMENT FOCUS Virginia municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Low
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to limit risk by investing in
investment grade municipal securities
with an intermediate average maturity
--------------------------------------------------------------------------------
INVESTOR PROFILE Virginia residents who want income
exempt from federal and state income
taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Virginia Intermediate Municipal Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Virginia
income taxes. Issuers of these securities can be located in Virginia, Puerto
Rico and other U.S. territories and possessions. In selecting investments for
the Fund, the Adviser tries to limit risk by buying investment grade securities.
The Adviser also considers stability and growth of principal. The Adviser
expects that the Fund's average weighted maturity will range from 5 to 10 years
but there is no limit on the maturities of individual securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities. The Fund's concentration of investments in securities of issuers
located in Virginia subjects the Fund to economic and government policies of
Virginia.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
1994 -6.47%
1995 14.37%
1996 2.94%
1997 7.24%
1998 5.32%
1999 -2.43%
BEST QUARTER WORST QUARTER
6.10% -6.72%
(3/31/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.27%.
<PAGE>
PROSPECTUS 23
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS 5-YEAR GOVERNMENT
OBLIGATION BOND INDEX AND THE LEHMAN BROTHERS GENERAL OBLIGATION BOND INDEX.
SINCE
INVESTOR SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Virginia Intermediate
Municipal Bond Fund -2.43% 5.34% 3.79%*
--------------------------------------------------------------------------------
Lehman Brothers 5-Year
Government Obligation
Bond Index 0.72% 5.80% 4.89%**
--------------------------------------------------------------------------------
Lehman Brothers General
Obligation Bond Index -1.51% 6.82% 5.39%**
--------------------------------------------------------------------------------
*SINCE 5/5/93
**SINCE 4/30/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 5-Year Government Obligation
Bond Index is a widely-recognized index of municipal bonds with maturities
ranging from 4 to 6 years. The Index represents various market sectors and
geographic locations. The Lehman Brothers General Obligation Bond Index is a
widely-recognized index of general obligation securities issued in the last 5
years with maturities of over 1 year.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)* 3.75%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
INVESTOR SHARES
Investment Advisory Fees 0.65%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses 0.29%
-----
Total Annual Fund Operating Expenses 1.09%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$482 $709 $953 $1,654
--------------------------------------------------------------------------------
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 0.65%, 0.00% and 0.79%, respectively. The
Adviser and Distributor could discontinue these voluntary waivers at any time.
For more information about these fees, see "Investment Adviser" and
"Distribution of Fund Shares."
<PAGE>
24 PROSPECTUS
VIRGINIA MUNICIPAL BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal
and Virginia income taxes, consistent
with preservation of capital
--------------------------------------------------------------------------------
INVESTMENT FOCUS Virginia municipal securities
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Moderate
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to invest in investment grade
municipal securities
--------------------------------------------------------------------------------
INVESTOR PROFILE Virginia residents who want income
exempt from federal and state income
taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Virginia Municipal Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Virginia income taxes.
Issuers of these securities can be located in Virginia, Puerto Rico and other
U.S. territories and possessions. In selecting investments for the Fund, the
Adviser tries to limit risk by buying investment grade securities. There are no
limits on the Fund's average weighted maturity or on the remaining maturities of
individual securities.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities. The Fund's concentration of investments in securities of issuers
located in Virginia subjects the Fund to economic and government policies of
Virginia.
[BULLSEYE GRAPHIC OMITTED]
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 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.*
[Bar Chart Omitted]
Plot points are as follows:
1996 0.81%
1997 7.91%
1998 4.83%
1999 -5.68%
BEST QUARTER WORST QUARTER
3.18% -2.93%
(6/30/97) (3/31/96)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.03%.
<PAGE>
PROSPECTUS 25
VIRGINIA MUNICIPAL BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS GENERAL OBLIGATION BOND
INDEX.
FLEX SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Virginia Municipal Bond Fund -5.68% 3.14%*
--------------------------------------------------------------------------------
Lehman Brothers General
Obligation Bond Index -1.51% 5.79%**
--------------------------------------------------------------------------------
* SINCE 4/14/95 ** SINCE 3/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 General Obligation Bond Index is
a widely-recognized index of general obligation securities issued in the last 5
years with maturities of over 1 year.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
FLEX SHARES
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%
* THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE AND DECREASES OVER TIME, DEPENDING ON HOW LONG YOU OWN YOUR SHARES.
SEE "SELLING FUND SHARES."
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
--------------------------------------------------------------------------------
FLEX SHARES
Investment Advisory Fees 0.65%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses 0.43%
-----
Total Annual Fund Operating Expenses 2.08%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $411 $652 $1,119 $2,410
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Flex Shares $211 $652 $1,119 $2,410
--------------------------------------------------------------------------------
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 0.65%, 0.62% and 1.70%, respectively. The Adviser
and Distributor could discontinue these voluntary waivers at any time. For more
information about these fees, see "Investment Adviser" and "Distribution of Fund
Shares."
<PAGE>
26 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION ABOUT RISK
FIXED INCOME RISK
ALL FUNDS
The market value of fixed income investments changes 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 risks:
CREDIT RISK
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
INVESTMENT GRADE BOND FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
MARYLAND MUNICIPAL BOND FUND
SHORT-TERM BOND FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
The possibility that an issuer will be unable to make timely payments
of either principal or interest.
MUNICIPAL ISSUER RISK
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
MARYLAND MUNICIPAL BOND FUND
SHORT-TERM BOND FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
There may be economic or political changes that impact the ability of
municipal issuers to repay principal and to make interest payments on
municipal securities. Changes to the financial condition or credit
rating of municipal issuers may also adversely affect the value of the
Fund's municipal securities. Constitutional or legislative limits on
borrowing by municipal issuers may result in reduced supplies of
municipal securities. Moreover, certain municipal securities are backed
only by a municipal issuer's ability to levy and collect taxes.
In addition, the Fund's concentration of investments in issuers located
in a single state makes the Fund more susceptible to adverse political
or economic developments affecting that state. The Fund also may be
riskier than mutual funds that buy securities of issuers in numerous
states.
FOREIGN SECURITY RISKS
HIGH INCOME FUND
Investments in securities of foreign companies or governments can be more
volatile than 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.
<PAGE>
PROSPECTUS 27
MORE INFORMATION ABOUT FUND INVESTMENTS
REGIONAL RISK
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
MARYLAND MUNICIPAL BOND FUND
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
VIRGINIA MUNICIPAL BOND FUND
To the extent that the Fund's investments are concentrated in a specific
geographic region, the Fund may be subject to the political and other
developments affecting that region. Regional economies are often closely
interrelated, and political and economic developments affecting one region,
country or state often affect other regions, countries or states, thus
subjecting a Fund to additional risks.
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT FUND 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 the
Funds 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 that would not ordinarily be consistent with a Fund's
objectives. In addition, the Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt
Bond Fund, Investment Grade Bond Fund, Investment Grade Tax-Exempt Bond Fund,
Limited-Term Federal Mortgage Securities Fund, Short-Term Bond Fund, Short-Term
U.S. Treasury Securities Fund, Virginia Intermediate Municipal Bond Fund and the
U.S. Government Securities Fund each may shorten its average weighted maturity
to as little as 90 days. A Fund will do so only if the Adviser believes that the
risk of loss outweighs the opportunity for higher income. Of course, a Fund
cannot guarantee that it will achieve its investment goal.
[MAGNIFIER GRAPHIC OMITTED]
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
FLORIDA TAX-EXEMPT BOND FUND 0.54%
GEORGIA TAX-EXEMPT BOND FUND 0.54%
HIGH INCOME FUND 0.00%
INVESTMENT GRADE BOND FUND 0.67%
INVESTMENT GRADE TAX-EXEMPT BOND FUND 0.68%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND 0.53%
MARYLAND MUNICIPAL BOND FUND 0.53%
SHORT-TERM BOND FUND 0.56%
SHORT-TERM U.S. TREASURY SECURITIES FUND 0.53%
U.S. GOVERNMENT SECURITIES FUND 0.67%
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND 0.65%
VIRGINIA MUNICIPAL BOND FUND 0.60%
The Adviser may use its affiliates as brokers for Fund transactions.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as Investment Adviser to the Florida
Tax-Exempt Bond Fund, Investment Grade Bond Fund, Investment Grade Tax-Exempt
Bond Fund and the Limited-Term Federal Mortgage Securities Fund. On January 1,
2000, SunTrust Bank (formerly SunTrust Bank, Atlanta), a subsidiary of SunTrust
Banks, Inc. and the Investment Adviser of the Georgia Tax-Exempt Bond Fund,
succeeded STI as the Investment Adviser to those Funds. On July 1, 2000,
SunTrust Banks, Inc. reorganized its money management units, including those of
SunTrust Bank, into Trusco Capital Management, Inc. As a result, Trusco now
serves as the Investment Adviser to each STI Classic Fund.
<PAGE>
28 PROSPECTUS
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
PORTFOLIO MANAGERS
Mr. Ronald Schwartz, CFA, has served as a Managing Director of Trusco since July
2000, after serving as a Managing Director of STI since 1988. He has managed the
Florida Tax-Exempt Bond Fund since it began operating in January 1994, and the
Investment Grade Tax-Exempt Bond Fund since it began operating in June 1992. He
has more than 19 years of investment experience.
Ms. Gay Cash has served as a Vice President of Trusco since July 2000. She has
managed the Georgia Tax-Exempt Bond Fund since it began operating in January
1994. Previously, she had served as First Vice President of SunTrust Bank,
Atlanta since 1998, and had worked there since 1987. She has more than 21 years
of experience.
Ms. Agnes G. Pampush, CFA, has served as a Managing Director of Trusco since
July 2000, after serving as a Vice President of Trusco since 1998. Ms. Pampush
was employed by Trusco from 1988 to 1996, and rejoined the firm in 1998. She has
managed the Short-Term Bond Fund since February 1999, and the High Income Fund
since April 2000. She has more than 18 years of investment experience.
The Investment Grade Bond Fund and the Limited-Term Federal Mortgage Securities
Fund are co-managed by Mr. L. Earl Denney, CFA, and Mr. Dave E. West, CFA. Mr.
Denney has served as Managing Director of STI since 1983. In January 2000 he was
named Managing Director of SunTrust Bank and is now Managing Director of Trusco.
Mr. Denney has co-managed the Investment Grade Bond Fund since it began
operating in June 1992 and has co-managed the Limited-Term Mortgage Securities
Fund since it began operating in June 1994. Mr. Denney has more than 21 years of
investment experience. Mr. West has served as a Managing Director of STI and has
worked there since 1985. In January 2000, Mr. West was named Managing Director
of SunTrust Bank, and is now a Managing Director of Trusco. Mr. West has co-
managed the Investment Grade Bond Fund since it began operating in June 1992 and
has co-managed the Limited-Term Federal Mortgage Securities Fund since it began
operating in June 1994. Mr. West has more than 14 years of investment
experience.
Mr. George E. Calvert, Jr. has served as Vice President of Trusco since 2000. He
has managed the Maryland Municipal Bond Fund since 2000, the Virginia Municipal
Bond Fund since 2000, and the Virginia Intermediate Municipal Bond Fund since
2000. Prior to joining Trusco, Mr. Calvert served as a fixed income trader from
1998 to 2000 for Tredegar Trust Company. He also served as Vice President,
Investment Division, of Central Fidelity Bank from 1988 to 1998. Mr. Calvert has
more than 27 years of investment experience.
Mr. David S. Yealy has served as a Managing Director of Trusco since July 2000.
He has managed the Short-Term U.S. Treasury Securities Fund since July 1996.
Prior to July 2000, Mr. Yealy was a First Vice President of Trusco and has
worked there since 1991. He has more than 15 years of investment experience.
Mr. Neil J. Powers, CFA, joined Trusco in 1997 and serves as a Managing
Director. He has managed the U.S. Government Securities Fund since 2000. Prior
to joining Trusco, Mr. Powers worked at Putnam Investments, from 1986 to 1997,
where he managed multi-sector bond funds and separately managed institutional
accounts. He has more than 16 years of investment experience.
[HANDSHAKE GRAPHIC OMITTED]
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") or
exchange Investor Shares and Flex Shares of the Funds.
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:
[bullet] Mail
[bullet] Telephone (1-800-874-4770)
[bullet] Wire
[bullet] Automated Clearing House (ACH)
<PAGE>
PROSPECTUS 29
PURCHASING, SELLING AND EXCHANGING FUND SHARES
You may also buy shares through investment representatives of certain
correspondent banks of SunTrust Banks, Inc. (SunTrust) and other financial
institutions that are authorized to place transactions in Fund shares for their
customers. Please contact your financial institution directly and follow its
procedures for Fund share transactions. Your broker or institution may charge a
fee for its services, in addition to the fees charged by a 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, a Fund generally values its investment portfolio at market
price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
MINIMUM PURCHASES
To purchase shares for the first time, you must invest in any Fund at least:
CLASS DOLLAR AMOUNT
--------------------------------------------------------------------------------
Investor Shares $2,000
Flex Shares $5,000 ($2,000 for retirement plans)
--------------------------------------------------------------------------------
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
1-800-874-4770 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
<PAGE>
30 PROSPECTUS
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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.
[DOLLAR GRAPHIC OMITTED]
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.
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:
Florida Tax-Exempt Bond Fund
Georgia Tax-Exempt Bond Fund
Investment Grade Bond Fund
Investment Grade Tax-Exempt Bond Fund
U.S. Government Securities Fund
Virginia Intermediate Municipal Bond Fund
YOUR SALES CHARGE YOUR SALES CHARGE
AS A PERCENTAGE OF AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
--------------------------------------------------------------------------------
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%
--------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund
YOUR SALES CHARGE YOUR SALES CHARGE
AS A PERCENTAGE OF AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
--------------------------------------------------------------------------------
Less than $100,000 2.50% 2.50%
--------------------------------------------------------------------------------
$100,000 but less than $250,000 1.75% 1.78%
--------------------------------------------------------------------------------
$250,000 but less than $1,000,000 1.25% 1.27%
--------------------------------------------------------------------------------
$1,000,000 and over None None
--------------------------------------------------------------------------------
Short-Term Bond Fund
YOUR SALES CHARGE YOUR SALES CHARGE
AS A PERCENTAGE OF AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
--------------------------------------------------------------------------------
Less than $100,000 2.00% 2.04%
--------------------------------------------------------------------------------
$100,000 but less than $250,000 1.50% 1.52%
--------------------------------------------------------------------------------
$250,000 but less than $1,000,000 1.00% 1.01%
--------------------------------------------------------------------------------
$1,000,000 and over None None
--------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund
YOUR SALES CHARGE YOUR SALES CHARGE
AS A PERCENTAGE OF AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
--------------------------------------------------------------------------------
Less than $100,000 1.00% 1.01%
--------------------------------------------------------------------------------
$100,000 but less than $250,000 0.79% 0.76%
--------------------------------------------------------------------------------
$250,000 but less than $1,000,000 0.50% 0.50%
--------------------------------------------------------------------------------
$1,000,000 and over None None
--------------------------------------------------------------------------------
WAIVER OF FRONT-END SALES CHARGE - INVESTOR SHARES
The front-end sales charge will be waived on Investor Shares purchased:
[bullet] through reinvestment of dividends and distributions;
[bullet] through a SunTrust Securities, Inc. asset allocation account;
[bullet] by persons repurchasing shares they redeemed within the last 60 days
(see Repurchase of Investor Shares);
[bullet] by employees, and members of their immediate family, of SunTrust and
its affiliates;
[bullet] 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;
<PAGE>
PROSPECTUS 31
PURCHASING, SELLING AND EXCHANGING FUND SHARES
[bullet] 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
[bullet] 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 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.
<PAGE>
32 PROSPECTUS
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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 (CDSC) 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:
[bullet] to make certain withdrawals from a retirement plan (not including
IRAs);
[bullet] because of death or disability;
[bullet] for certain payments under the Systematic Withdrawal Plan (which is
discussed later); or
[bullet] for exchanges from Trust or Investor Shares to Flex Shares where the
total accumulated period from the original date of purchase is at least
one year.
OFFERING PRICE OF FUND SHARES
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, 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 BUSINESS 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.
<PAGE>
PROSPECTUS 33
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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:
CLASS DOLLAR AMOUNT
--------------------------------------------------------------------------------
Investor Shares $2,000
Flex Shares $5,000
--------------------------------------------------------------------------------
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.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with Fund management and may have an
adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where it is in the best interests of a Fund,
all Funds reserve the right to revise or terminate the exchange privilege, limit
the amount or number of exchanges or reject any exchange. Currently, 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
BUSINESS 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 Fund(s) receives 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. For purposes of computing the CDSC
applicable to Flex Shares, the length of time you have owned your shares will be
measured from the original date of purchase and will not be affected by any
exchange.
FLEX SHARES
You may exchange Flex Shares of any Fund for Flex Shares of any other Fund.
Again, the CDSC will be computed as of the original date of purchase.
TELEPHONE TRANSACTIONS
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>
34 PROSPECTUS
DIVIDENDS, DISTRIBUTIONS AND TAXES
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
FLORIDA TAX-EXEMPT BOND FUND 0.18%
GEORGIA TAX-EXEMPT BOND FUND 0.18%
INVESTMENT GRADE BOND FUND 0.43%
INVESTMENT GRADE TAX-EXEMPT BOND FUND 0.43%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND 0.23%
SHORT-TERM BOND FUND 0.23%
SHORT-TERM U.S. TREASURY SECURITIES FUND 0.18%
U.S. GOVERNMENT SECURITIES FUND 0.38%
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND 0.15%
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 cash or non-cash
compensation as recognition for past sales or encouragement for future sales
that may include the following: merchandise, travel expenses, prizes, meals, and
lodgings, and gifts that do not exceed $100 per year, per individual.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income dividends daily and pays 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 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 OF FUND SHARES IS A TAXABLE EVENT.
The Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund, Maryland
Municipal Bond Fund, Virginia Intermediate Municipal Bond Fund and Virginia
Municipal Bond Fund intend to distribute federally tax-exempt income. Each Fund
may invest a portion of its assets in securities that generate taxable income
for federal or state income taxes. Income exempt from federal tax may be subject
to state and local taxes. Any capital gains distributed by these Funds may be
taxable.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
PROSPECTUS 35
FINANCIAL HIGHLIGHTS
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. The information
for each Fund, except the Maryland Municipal Bond Fund, Virginia Intermediate
Municipal Bond Fund and Virginia Municipal Bond Fund for the periods ended prior
to May 31, 1999, and the High Income Fund for periods prior to March 31, 2000,
has been audited by Arthur Andersen LLP, independent public accountants. The
financial highlights for the Maryland Municipal Bond Fund, Virginia Intermediate
Municipal Bond Fund, and Virginia Municipal Bond Fund for the periods ended
prior to May 31, 1999 have been audited by Deloitte & Touche LLP, independent
public accountants. The financial highlights for the High Income Fund for the
periods prior to March 31, 2000 have been audited by PricewaterhouseCooper LLP,
independent public accountants. The report 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 1-800-428-6970.
For the Periods Ended May 31, (Unless Otherwise Indicated)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS TAX
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTION RETURN NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED OF VALUE END TOTAL
PERIOD (000) (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS CAPITAL OF PERIOD RETURN (+)
----------- ---------- -------------- ------------- ------------- ------- --------- ---------
----------------------------
FLORIDA TAX-EXEMPT BOND FUND
----------------------------
Investor Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 ... $10.60 $0.42 $(0.49) $(0.42) $(0.04) $ -- $10.07 (0.68)%
1999 ... 10.72 0.40 (0.01) (0.40) (0.11) -- 10.60 3.62
1998 ... 10.29 0.42 0.44 (0.42) (0.01) -- 10.72 8.46
1997 ... 10.07 0.44 0.25 (0.44) (0.03) -- 10.29 7.00
1996 ... 10.18 0.44 (0.06) (0.44) (0.05) -- 10.07 3.76
Flex Shares
2000 ... $10.62 $0.36 $(0.49) $(0.36) $(0.04) $ -- $10.09 (1.17)%
1999 ... 10.74 0.35 (0.01) (0.35) (0.11) -- 10.62 3.13
1998 ... 10.30 0.37 0.45 (0.37) (0.01) -- 10.74 8.04
1997 ... 10.08 0.39 0.25 (0.39) (0.03) -- 10.30 6.48
1996(1) 10.19 0.39 (0.06) (0.39) (0.05) -- 10.08 3.27
----------------------------
GEORGIA TAX-EXEMPT BOND FUND
----------------------------
Investor Shares
2000 ... $10.05 $0.38 $(0.50) $(0.38) $(0.04) $ -- $ 9.51 (1.26)%
1999 ... 10.13 0.37 (0.06) (0.37) (0.02) -- 10.05 3.13
1998 ... 9.74 0.39 0.40 (0.39) (0.01) -- 10.13 8.26
1997 ... 9.58 0.40 0.21 (0.40) (0.05) -- 9.74 6.47
1996 ... 9.65 0.41 (0.05) (0.41) (0.02) -- 9.58 3.69
Flex Shares
2000 ... $10.04 $0.33 $(0.49) $(0.33) $(0.04) $ -- $ 9.51 (1.59)%
1999 ... 10.12 0.32 (0.06) (0.32) (0.02) -- 10.04 2.63
1998 ... 9.73 0.34 0.40 (0.34) (0.01) -- 10.12 7.74
1997 ... 9.56 0.35 0.22 (0.35) (0.05) -- 9.73 6.06
1996(2) 9.72 0.36 (0.14) (0.36) (0.02) -- 9.56 2.25*
--------------------
HIGH INCOME FUND (A)
--------------------
Flex Shares
2000 ... $7.98 $0.09 $(0.10) $(0.09) $ -- $ -- $ 7.88 (0.13)%
For the years ended March 31:
2000 ... $9.77 $0.87 $(1.85) $(0.81) $ -- $ -- $ 7.98 (10.84)%
1999 ... 9.99 0.51(++) 0.04 (0.57) (0.15) (0.05) 9.77 5.64
1998 ... 9.73 0.34 0.44 (0.52) -- -- 9.99 8.18
1997 ... 9.89 0.60 (0.16) (0.60) -- -- 9.73 3.91
1996 ... 9.94 0.59 0.16 (0.59) (0.21) -- 9.89 7.67
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
NET ASSETS RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
END OF EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
PERIOD AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
(000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
--------- ---------- -------------- ----------------- ----------------- ---------
----------------------------
FLORIDA TAX-EXEMPT BOND FUND
----------------------------
Investor Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ....... $ 2,875 0.87% 4.05% 1.36% 3.56% 88%
1999 ....... 3,799 0.87 3.71 1.31 3.27 72
1998 ....... 3,381 0.86 3.98 1.34 3.50 69
1997 ....... 3,226 0.85 4.28 1.31 3.82 135
1996 ....... 4,025 0.85 4.28 1.36 3.77 63
Flex Shares
2000 ....... $ 9,791 1.37% 3.54% 1.89% 3.02% 88%
1999 ....... 14,762 1.37 3.21 1.88 2.70 72
1998 ....... 8,160 1.36 3.45 2.01 2.80 69
1997 ....... 3,000 1.35 3.78 2.28 2.85 135
1996(1) .... 2,692 1.35 3.79 2.54 2.60 63
----------------------------
GEORGIA TAX-EXEMPT BOND FUND
----------------------------
Investor Shares
2000 ....... $ 2,458 0.87% 3.93% 1.40% 3.40% 19%
1999 ....... 3,676 0.87 3.67 1.25 3.29 12
1998 ....... 3,975 0.86 3.89 1.30 3.45 7
1997 ....... 3,511 0.85 4.10 1.33 3.62 15
1996 ....... 3,418 0.85 4.17 1.41 3.61 60
Flex Shares
2000 ....... $ 8,827 1.37% 3.43% 1.95% 2.85% 19%
1999 ....... 13,358 1.37 3.19 1.89 2.67 12
1998 ....... 8,264 1.36 3.39 2.02 2.73 7
1997 ....... 4,662 1.35 3.60 2.07 2.88 15
1996(2)..... 4,207 1.35 3.66 2.35 2.66 60
--------------------
HIGH INCOME FUND (A)
--------------------
Flex Shares
2000 ....... $ 3,075 1.40%* 6.57%* 2.83%* 5.14%* --%
For the years ended March 31:
2000 ....... $ 2,032 1.73% 8.94% 2.95% 7.72% 24%
1999 ....... 7,230 1.91 5.09 2.22 4.78 95
1998 ....... 24,413 1.87 5.27 1.87 5.27 130
1997 ....... 32,506 1.65 5.49 1.70 5.44 123
1996 ....... 36,891 1.70 5.87 1.75 5.82 138
<FN>
(+) Return is for the period indicated and has not been annualized. Total return
figures do not reflect applicable sales loads.
(++) Calculated using the average share method.
(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.
(A) On March 27, 2000, the ESC Strategic Income Fund exchanged all of its
assets and certain liabilities for shares of the High Income Fund. The
ESC Strategic Income 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 March 27, 2000 have been
carried forward in these financial highlights. Subsequent to the merger,
the High Income Fund changed its fiscal year end to May 31.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
36 PROSPECTUS
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 REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTION NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
PERIOD (000) (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
----------- ---------- -------------- ------------- ------------- --------- ---------
--------------------------
INVESTMENT GRADE BOND FUND
--------------------------
Investor Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 ........ $10.36 $0.57 $(0.78) $(0.57) $ -- $ 9.58 (2.17)%
1999 ........ 10.65 0.52 (0.11) (0.52) (0.18) 10.36 3.86
1998 ........ 10.16 0.55 0.49 (0.55) -- 10.65 10.49
1997 ........ 10.06 0.56 0.10 (0.56) -- 10.16 6.66
1996 ........ 10.26 0.56 (0.20) (0.56) -- 10.06 3.50
Flex Shares
2000 ........ $10.37 $0.52 $(0.78) $(0.52) $ -- $ 9.59 (2.63)%
1999 ........ 10.66 0.47 (0.11) (0.47) (0.18) 10.37 3.35
1998 ........ 10.17 0.51 0.49 (0.51) -- 10.66 9.99
1997 ........ 10.07 0.51 0.10 (0.51) -- 10.17 6.16
1996 (4) .... 10.33 0.52 (0.26) (0.52) -- 10.07 2.50
-------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
-------------------------------------
Investor Shares
2000 ........ $11.12 $0.39 $(0.30) $(0.39) $(0.14) $10.68 0.90%
1999 ........ 11.41 0.38 0.11 (0.38) (0.40) 11.12 4.35
1998 ........ 11.24 0.39 0.49 (0.39) (0.32) 11.41 8.05
1997 ........ 11.12 0.40 0.33 (0.40) (0.21) 11.24 6.69
1996 ........ 11.30 0.41 0.19 (0.41) (0.37) 11.12 5.40
Flex Shares
2000 ........ $11.10 $0.34 $(0.29) $(0.34) $(0.14) $10.67 0.52%
1999 ........ 11.40 0.33 0.10 (0.33) (0.40) 11.10 3.78
1998 ........ 11.23 0.33 0.49 (0.33) (0.32) 11.40 7.50
1997 ........ 11.11 0.35 0.33 (0.35) (0.21) 11.23 6.19
1996(5) ..... 11.30 0.37 0.18 (0.37) (0.37) 11.11 4.91
---------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
---------------------------------------------
Investor Shares
2000 ........ $ 9.93 $0.52 $(0.33) $(0.52) $ -- $ 9.60 1.93%
1999 ........ 10.11 0.51 (0.06) (0.51) (0.12) 9.93 4.47
1998 ........ 10.00 0.56 0.12 (0.56) (0.01) 10.11 6.95
1997 ........ 9.97 0.56 0.04 (0.56) (0.01) 10.00 6.17
1996 ........ 10.11 0.60 (0.14) (0.60) -- 9.97 4.59
Flex Shares
2000 ........ $ 9.94 $0.49 $(0.32) $(0.49) $ -- $ 9.62 1.71%
1999 ........ 10.12 0.48 (0.06) (0.48) (0.12) 9.94 4.14
1998 ........ 10.02 0.52 0.11 (0.52) (0.01) 10.12 6.49
1997 ........ 9.99 0.52 0.04 (0.52) (0.01) 10.02 5.80
1996(6) ..... 10.14 0.55 (0.15) (0.55) -- 9.99 4.10
--------------------------------
MARYLAND MUNICIPAL BOND FUND (B)
--------------------------------
Flex Shares
2000 ........ $10.08 $0.32 $(0.60) $(0.33) $ -- $ 9.48 (2.66%)
1999 ........ 10.24 0.15 (0.15) (0.15) (0.01) 10.08 0.05
For the years ended November 30:
1998 ........ 9.96 0.33 0.28 (0.33) -- 10.24 6.17
1997 ........ 9.76 0.34 0.20 (0.34) -- 9.96 5.64
1996(7) ..... 9.53 0.20 0.23 (0.20) -- 9.76 7.67
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
NET ASSETS RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
END OF EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
PERIOD AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
(000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
--------- ---------- -------------- ----------------- ----------------- ---------
--------------------------
INVESTMENT GRADE BOND FUND
--------------------------
Investor Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ....... $22,553 1.17% 5.60% 1.37% 5.40% 202%
1999 ....... 34,913 1.17 4.87 1.36 4.68 221
1998 ....... 33,269 1.14 5.29 1.38 5.05 109
1997 ....... 33,165 1.15 5.48 1.41 5.22 298
1996 ....... 36,155 1.15 5.40 1.44 5.11 184
Flex Shares
2000 ....... $20,056 1.66% 5.14% 1.99% 4.81% 202%
1999 ....... 26,020 1.66 4.40 2.00 4.06 221
1998 ....... 13,111 1.65 4.76 2.11 4.30 109
1997 ....... 5,763 1.64 5.00 2.20 4.44 298
1996 (4) ... 4,621 1.64 4.84 2.49 3.99 184
-------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
-------------------------------------
Investor Shares
2000 ....... $19,443 1.17% 3.59% 1.33% 3.43% 226%
1999 ....... 25,195 1.17 3.36 1.32 3.21 224
1998 ....... 28,159 1.16 3.43 1.43 3.16 378
1997 ....... 31,857 1.15 3.56 1.38 3.33 489
1996 ....... 37,427 1.15 3.61 1.42 3.34 514
Flex Shares
2000 ....... $14,678 1.65% 3.11% 1.95% 2.81% 226%
1999 ....... 16,518 1.65 2.86 2.03 2.48 224
1998 ....... 8,399 1.64 2.95 2.10 2.49 378
1997 ....... 4,681 1.63 3.08 2.15 2.56 489
1996(5) .... 5,536 1.63 3.12 2.25 2.50 514
---------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
---------------------------------------------
Investor Shares
2000 ....... $ 1,194 0.92% 5.31% 1.09% 5.14% 384%
1999 ....... 2,214 0.92 5.03 1.52 4.43 379
1998 ....... 2,705 0.91 5.50 1.51 4.90 163
1997 ....... 2,426 0.90 5.55 1.48 4.97 133
1996 ....... 2,512 0.90 5.75 2.25 4.40 83
Flex Shares
2000 ....... $ 1,706 1.27% 4.97% 2.38% 3.86% 384%
1999 ....... 2,119 1.27 4.69 2.42 3.54 379
1998 ....... 1,543 1.26 5.16 2.72 3.70 163
1997 ....... 1,409 1.25 5.20 2.66 3.79 133
1996(6) .... 1,349 1.25 5.38 3.59 3.04 83
--------------------------------
MARYLAND MUNICIPAL BOND FUND (B)
--------------------------------
Flex Shares
2000 ....... $ 6,212 1.59% 3.34% 1.95% 2.98% 14%
1999 ....... 7,723 1.59 2.94 1.98 2.55 19
For the years ended November 30:
1998 ....... 3,246 1.57 3.16 1.96 2.77 12
1997 ....... 561 1.54 3.43 2.00 2.97 5
1996(7) .... 113 1.55 3.42 2.20 2.77 9
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(4) Commended operations on June 7, 1995. All ratios for the period have
been annualized
(5) Commenced operations on June 1, 1995. All ratios for the period have
been annualized.
(6) Commended operations on June 7, 1995. All ratios for the period have
been annualized.
(7) Commenced operations on April 25, 1996. All ratios for the period have
been annualized.
(B) On May 24, 1999, the CrestFund Maryland Municipal Bond, CrestFund Virginia
Intermediate Municipal Bond, and CrestFund Virginia Municipal Bond Funds
exchanged all of their assets and certain liabilities for shares of the
Maryland Municipal Bond, Virginia Intermediate Municipal Bond, and
Virginia Municipal Bond Funds, respectively. The CrestFund Maryland
Municipal Bond, CrestFund Virginia Intermediate Municipal Bond, and
CrestFund 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.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 37
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTION NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
PERIOD (000) (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
----------- ---------- -------------- ------------- ------------- --------- ---------
--------------------
SHORT-TERM BOND FUND
--------------------
Investor Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ........ $ 9.93 $ 0.51 $(0.25) $(0.51) $(0.01) $ 9.67 2.67%
1999 ........ 10.07 0.49 (0.10) (0.50) (0.03) 9.93 3.88
1998 ........ 9.91 0.53 0.17 (0.53) (0.01) 10.07 7.19
1997 ........ 9.88 0.51 0.06 (0.51) (0.03) 9.91 5.97
1996 ........ 10.01 0.52 (0.10) (0.53) (0.02) 9.88 4.23
Flex Shares
2000 ........ $ 9.93 $ 0.48 $(0.25) $(0.48) $(0.01) $ 9.67 2.31%
1999 ........ 10.07 0.47 (0.11) (0.47) (0.03) 9.93 3.50
1998 ........ 9.91 0.50 0.17 (0.50) (0.01) 10.07 6.84
1997 ........ 9.88 0.48 0.06 (0.48) (0.03) 9.91 5.62
1996(8) ..... 10.02 0.47 (0.12) (0.47) (0.02) 9.88 3.73
----------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
----------------------------------------
Investor Shares
2000 ........ $ 9.95 $ 0.45 $(0.10) $(0.45) $ -- $ 9.85 3.58%
1999 ........ 9.96 0.46 (0.01) (0.46) -- 9.95 4.54
1998 ........ 9.88 0.49 0.09 (0.50) -- 9.96 6.04
1997 ........ 9.84 0.50 0.04 (0.50) -- 9.88 5.59
1996 ........ 9.94 0.54 (0.10) (0.54) -- 9.84 4.52
Flex Shares
2000 ........ $ 9.93 $ 0.42 $(0.10) $(0.42) $-- $ 9.83 3.34%
1999 ........ 9.94 0.44 (0.02) (0.43) -- 9.93 4.32
1998 ........ 9.85 0.47 0.10 (0.48) -- 9.94 5.90
1997 ........ 9.82 0.47 0.03 (0.47) -- 9.85 5.19
1996(9) ..... 9.96 0.48 (0.14) (0.48) -- 9.82 3.72
-------------------------------
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
Investor Shares
2000 ........ $10.28 $ 0.54 $(0.42) $(0.54) $-- $ 9.86 1.19%
1999 ........ 10.45 0.54 (0.17) (0.54) -- 10.28 3.56
1998 ........ 10.02 0.57 0.43 (0.57) -- 10.45 10.23
1997 ........ 9.90 0.58 0.12 (0.58) -- 10.02 7.21
1996 ........ 10.26 0.59 (0.33) (0.59) (0.03) 9.90 2.47
Flex Shares
2000 ........ $10.28 $ 0.49 $(0.42) $(0.49) $-- $ 9.86 0.70%
1999 ........ 10.46 0.49 (0.18) (0.49) -- 10.28 2.99
1998 ........ 10.02 0.52 0.44 (0.52) -- 10.46 9.78
1997 ........ 9.91 0.53 0.11 (0.53) -- 10.02 6.57
1996(10) .... 10.31 0.52 (0.37) (0.52) (0.03) 9.91 1.42
--------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (B)
---------------------------------------------
Investor Shares
2000 ........ $10.20 $0.42 $(0.56) $(0.42) $(0.05) $ 9.59 (1.24)%
1999(11) .... 10.45 0.22 (0.18) (0.22) (0.07) 10.20 0.35
For years ended November 30:
1998 ........ 10.31 0.46 0.17 (0.45) (0.04) 10.45 6.19
1997 ........ 10.21 0.47 0.09 (0.46) -- 10.31 5.65
1996 ........ 10.23 0.42 (0.02) (0.42) -- 10.21 4.01
--------------------------------
VIRGINIA MUNICIPAL BOND FUND (B)
--------------------------------
Flex Shares
2000 ........ $10.48 $ 0.36 $(0.79) $(0.36) $(0.01) $9.68 (4.13)%
1999(11) .... 10.73 0.17 (0.18) (0.18) (0.06) 10.48 (0.16)
For years ended November 30:
1998 ........ 10.48 0.37 0.28 (0.37) (0.03) 10.73 6.24
1997 ........ 10.31 0.39 0.18 (0.39) (0.01) 10.48 5.58
1996 ........ 10.43 0.38 (0.12) (0.38) -- 10.31 2.58
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
NET ASSETS RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
END OF EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
PERIOD AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
(000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
--------- ---------- -------------- ----------------- ----------------- ---------
--------------------
SHORT-TERM BOND FUND
--------------------
Investor Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ........$ 1,446 0.87% 5.20% 1.75% 4.32% 70%
1999 ........ 1,825 0.87 4.92 1.59 4.20 108
1998 ........ 1,949 0.86 5.27 1.71 4.42 87
1997 ........ 2,182 0.85 5.16 1.58 4.43 118
1996 ........ 2,700 0.85 5.20 1.72 4.33 163
Flex Shares
2000 ........$ 2,065 1.22% 4.85% 2.41% 3.66% 70%
1999 ........ 2,341 1.22 4.55 2.33 3.44 108
1998 ........ 2,110 1.21 4.93 2.85 3.29 87
1997 ........ 1,073 1.20 4.82 3.02 3.00 118
1996(8) ..... 966 1.20 4.77 4.06 1.91 163
----------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
----------------------------------------
Investor Shares
2000 ........$ 2,066 0.82% 4.50% 1.44% 3.88% 50%
1999 ........ 2,799 0.82 4.54 1.34 4.02 57
1998 ........ 3,277 0.81 5.07 1.33 4.55 39
1997 ........ 3,921 0.80 5.05 1.35 4.50 93
1996 ........ 4,192 0.80 5.43 1.32 4.91 94
Flex Shares
2000 ........$ 5,391 1.07% 4.26% 2.04% 3.29% 50%
1999 ........ 4,931 1.07 4.22 2.25 3.04 57
1998 ........ 1,413 1.06 4.81 2.87 3.00 39
1997 ........ 1,091 1.05 4.75 2.51 3.29 93
1996(9) ..... 2,423 1.05 5.03 2.97 3.11 94
-------------------------------
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
Investor Shares
2000 ........$ 1,407 1.17% 5.34% 2.14% 4.37% 29%
1999 ........ 2,534 1.17 5.17 1.60 4.74 19
1998 ........ 3,225 1.16 5.53 1.76 4.93 14
1997 ........ 2,243 1.15 5.76 1.79 5.12 21
1996 ........ 2,396 1.15 5.68 2.50 4.33 83
Flex Shares
2000 ........$ 7,750 1.68% 4.85% 2.28% 4.25% 29%
1999 ........ 11,520 1.68 4.66 2.08 4.26 19
1998 ........ 4,022 1.67 5.02 2.32 4.37 14
1997 ........ 2,801 1.66 5.26 2.42 4.50 21
1996(10) .... 2,826 1.66 5.18 2.86 3.98 83
--------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (B)
--------------------------------------------
Investor Shares
2000 ........$ 6,808 0.79% 4.33% 0.94% 4.18% 18%
1999(11) .... 7,706 0.79 4.17 0.93 4.03 19
For years ended November 30:
1998 ........ 7,899 0.79 4.33 0.94 4.18 24
1997 ........ 7,826 0.79 4.56 0.94 4.41 30
1996 ........ 8,185 0.79 4.12 0.94 3.97 25
--------------------------------
VIRGINIA MUNICIPAL BOND FUND (B)
--------------------------------
Flex Shares
2000 ........$ 5,367 1.65% 3.61% 2.08% 3.18% 19%
1999(11) .... 6,939 1.65 3.32 1.91 3.06 7
For years ended
1998 ........ 3,697 1.64 3.46 1.92 3.18 28
1997 ........ 1,476 1.60 3.73 2.00 3.33 39
1996 ........ 787 1.57 3.73 1.97 3.33 24
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(8) Commenced operations on June 20, 1995. All ratios for the period have
been annualized.
(9) Commenced operations on June 22, 1995. All ratios for the period have
been annualized.
(10) Commenced operations on June 7, 1995. All ratios for the period have
been annualized.
(11) For the six month period ended May 31, 1999. All ratios for the period
have been annualized.
(B) On May 24, 1999, the CrestFund Maryland Municipal Bond, CrestFund Virginia
Intermediate Municipal Bond, and CrestFund Virginia Municipal Bond Funds
exchanged all of their assets and certain liabilities for shares of the
Maryland Municipal Bond, Virginia Intermediate Municipal Bond, and
Virginia Municipal Bond Funds, respectively. The CrestFund Maryland
Municipal Bond, CrestFund Virginia Intermediate Municipal Bond, and
CrestFund 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.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
38 PROSPECTUS
HOW TO OBTAIN MORE INFORMATION ABOU THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, 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 and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by emailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
<PAGE>
[SUNDIAL GRAPHIC OMITTED
STI CLASSIC FUNDS-MONEY MARKET
FUNDS-FLEX AND INVESTOR SHARES
PROSPECTUS
October 1, 2000
PRIME QUALITY MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
VIRGINIA TAX-FREE MONEY MARKET FUND
(FORMERLY TAX-FREE MONEY MARKET FUND)
INVESTMENT ADVISER
TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(the "Adviser")
[STI Logo Omitted]
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>
PROSPECTUS
ABOUT 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
and Flex Shares of the Money Market 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 THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
2 PRIME QUALITY MONEY MARKET FUND
4 TAX-EXEMPT MONEY MARKET FUND
6 U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
8 VIRGINIA TAX-FREE MONEY MARKET FUND
10 MORE INFORMATION ABOUT RISK
10 MORE INFORMATION ABOUT FUND INVESTMENTS
11 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
11 PURCHASING, SELLING AND EXCHANGING FUND SHARES
16 DIVIDENDS, DISTRIBUTIONS AND TAXES
17 FINANCIAL HIGHLIGHTS
22 HOW TO OBTAIN MORE INFORMATION
ABOUT THE STI CLASSIC FUNDS
--------------------------------------------------------------------------------
[BRIEFCASE GRAPHIC OMITTED] Fund Summary
[TELESCOPE GRAPHIC OMITTED] Investment Strategy
[INNERTUBE GRAPHIC OMITTED] What are the risks of investing?
[BULLSEYE GRAPHIC OMITTED] Performance Information
[CHART GRAPHIC OMITTED] What is an Index?
[COINS GRAPHIC OMITTED] Fund Fees and Expenses
[MOUNTAINTOPGRAPHIC OMITTED] More Information About Fund Investments
[MAGNIFIER GRAPHIC OMITTED] Investment Adviser
[HANDSHAKE GRAPHIC OMITTED] Purchasing, Selling and Exchanging Fund Shares
[DOLLAR GRAPHIC OMITTED] Sales Charges
--------------------------------------------------------------------------------
October 1, 2000
<PAGE>
PROSPECTUS 1
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
Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser 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.
<PAGE>
2 PROSPECTUS
PRIME QUALITY MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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 from their
investment
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 2.60%
1994 3.60%
1995 5.30%
1996 4.82%
1997 4.97%
1998 4.92%
1999 4.56%
BEST QUARTER WORST QUARTER
1.33% 0.64%
(6/30/95) (6/30/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.74%.
<PAGE>
PROSPECTUS 3
PRIME QUALITY MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. FIRST TIER AVERAGE.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Prime Quality Money
Market Fund 4.56% 4.91% 4.27%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
First Tier Average 4.57% 4.97% 4.33%**
--------------------------------------------------------------------------------
* SINCE 6/8/92 ** SINCE 5/31/92
FLEX SHARES SINCE INCEPTION
--------------------------------------------------------------------------------
Prime Quality Money Market Fund 0.99%*
--------------------------------------------------------------------------------
iMoneyNet, Inc. First Tier Average 1.24%**
--------------------------------------------------------------------------------
* CUMULATIVE SINCE 10/4/99 ** CUMULATIVE SINCE 9/30/99
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. First Tier Average is a widely-recognized composite of money
market funds which invest in securities rated in the highest category by at
least two recognized rating agencies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)* None 2.00%
* 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)
--------------------------------------------------------------------------------
INVESTOR SHARES FLEX SHARES
Investment Advisory Fees 0.65% 0.65%
Distribution and Service (12b-1) Fees 0.20% 0.75%
Other Expenses 0.10% 0.59%
----- -----
Total Annual Fund Operating Expenses 0.95% 1.99%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. 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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $97 $303 $526 $1,166
Flex Shares $402 $624 $1,073 $2,317
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Investor Shares $97 $303 $526 $1,166
Flex Shares $202 $624 $1,073 $2,317
--------------------------------------------------------------------------------
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 0.54%, 0.17% and 0.81%, respectively. Actual Investment Advisory
Fees, Distribution Fees and Total Operating Expenses for Flex Shares are 0.54%,
0.41% and 1.54%, respectively. The Adviser and Distributor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Adviser" and "Distribution of Fund Shares."
<PAGE>
4 PROSPECTUS
TAX-EXEMPT MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current interest income exempt
from federal income taxes, while
preserving capital and liquidity
--------------------------------------------------------------------------------
INVESTMENT FOCUS Municipal money market instruments
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without
added risk by analyzing credit quality
--------------------------------------------------------------------------------
INVESTOR PROFILE Conservative investors who want to
receive current tax-exempt income from
their investment
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Tax-Exempt Money Market Fund invests substantially all of its assets in
money market instruments issued by municipalities and issuers that pay income
exempt from federal income taxes. In selecting investments for the Fund, the
Adviser analyzes the credit quality and structure of each security to minimize
risk. The Adviser actively manages the Fund's average maturity based on current
interest rates and the Adviser's outlook of the market. As a money market fund,
the Fund follows strict rules about credit risk, maturity and diversification of
its investments.
[INNERTUBE GRAPHIC OMITTED]
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.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 1.90%
1994 2.37%
1995 3.36%
1996 2.94%
1997 3.11%
1998 2.90%
1999 2.69%
BEST QUARTER WORST QUARTER
0.89% 0.42%
(6/30/95) (3/31/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 1.70%.
<PAGE>
PROSPECTUS 5
TAX-EXEMPT MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Tax-Exempt Money
Market Fund 2.69% 3.00% 2.71%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
Tax-Free Stockbroker
& General Purpose
Average 2.70% 3.00% 2.71%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. Tax-Free Stockbroker & General Purpose Average is a
widely-recognized composite of money market funds which invest in short-term
municipal securities, the income of which is exempt from federal taxation.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES
Investment Advisory Fees 0.55%
Distribution and Service (12b-1) Fees 0.15%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.81%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$83 $259 $450 $1,002
--------------------------------------------------------------------------------
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 0.45%, 0.11% and 0.67%, respectively. The Adviser and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
<PAGE>
6 PROSPECTUS
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively in U.S.
Treasury obligations, obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. government, repurchase
agreements involving these securities, and shares of registered money market
funds that invest in the foregoing. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 2.52%
1994 3.48%
1995 5.25%
1996 4.66%
1997 4.85%
1998 4.73%
1999 4.26%
BEST QUARTER WORST QUARTER
1.32% 0.61%
(6/30/95) (6/30/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.58%.
<PAGE>
PROSPECTUS 7
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. U.S. GOVERNMENT &
AGENCY AVERAGE. PREVIOUSLY, THE FUND'S RETURNS HAD BEEN COMPARED TO THE
IMONEYNET, INC. U.S. TREASURY & REPO AVERAGE, BUT THE ADVISER BELIEVES THAT THE
IMONEYNET, INC. U.S. GOVERNMENT & AGENCY AVERAGE, BECAUSE OF ITS INCLUSION OF
MONEY MARKET FUNDS THAT INVEST IN SECURITIES OF GOVERNMENT AGENCIES AND
INSTRUMENTALITIES, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH THE
FUND INVESTS.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
U.S. Government
Securities Money
Market Fund 4.26% 4.75% 4.13%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Government
& Agency Average 4.52% 4.89% 4.26%**
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Treasury
& Repo Average 4.36% 4.82% 4.20%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
previous index, the iMoneyNet, Inc. 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. The iMoneyNet,
Inc. U.S. Government & Agency Average is a widely-recognized composite of money
market funds which invest in U.S. Treasury Bills, repurchase agreements or
securities issued by agencies of the U.S. government.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES
Investment Advisory Fees 0.65%
Distribution and Service (12b-1) Fees 0.17%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.93%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$95 $296 $515 $1,143
--------------------------------------------------------------------------------
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 0.56%, 0.13% and 0.80%, respectively. The Adviser and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
<PAGE>
8 PROSPECTUS
VIRGINIA TAX-FREE MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal
and Virginia income taxes, while
preserving capital and liquidity
--------------------------------------------------------------------------------
INVESTMENT FOCUS Virginia municipal money market
instruments
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without
added risk by analyzing credit quality
--------------------------------------------------------------------------------
INVESTOR PROFILE Virginia residents who want to receive
current income exempt from federal and
state income taxes
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Virginia Tax-Free Money Market Fund invests substantially all of its assets
in money market instruments issued by municipalities and issuers that pay income
exempt from federal and Virginia income taxes. Issuers of these securities can
be located in Virginia, Puerto Rico and other U.S. territories and possessions.
In selecting investments for the Fund, the Adviser analyzes the credit quality
and structure of each security to minimize risk. The Adviser actively manages
the Fund's average maturity based on current interest rates and the Adviser's
outlook of the market. As a money market fund, the Fund follows strict rules
about credit risk, maturity and diversification of its investments.
[INNERTUBE GRAPHIC OMITTED]
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.
The Fund's concentration of investments in securities of issuers located in
Virginia subjects the Fund to economic and government policies within Virginia.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1994 2.11%
1995 3.27%
1996 3.10%
1997 3.07%
1998 2.92%
1999 2.71%
BEST QUARTER WORST QUARTER
0.91% 0.37%
(3/31/96) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 1.69%.
<PAGE>
PROSPECTUS 9
VIRGINIA TAX-FREE MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE.
INVESTOR SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Virginia Tax-Free
Money Market Fund 2.71% 3.01% 2.73%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
Tax-Free Stockbroker &
General Purpose Average 2.70% 3.00% 2.79%**
--------------------------------------------------------------------------------
* SINCE 5/5/93
** SINCE 4/30/93
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. Tax-Free Stockbroker & General Purpose Average is a
widely-recognized composite of money market funds which invest in short-term
municipal securities, the income of which is exempt from federal taxation.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
INVESTOR SHARES
Investment Advisory Fees 0.40%
Distribution and Service (12b-1) Fees 0.40%
Other Expenses 0.19%
-----
Total Annual Fund Operating Expenses 0.99%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$101 $315 $547 $1,213
--------------------------------------------------------------------------------
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 0.40%, 0.08% and 0.67%, respectively. The Adviser and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Adviser" and "Distribution of Fund Shares."
<PAGE>
10 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION ABOUT RISK
FIXED INCOME RISK
TAX-EXEMPT MONEY MARKET FUND
VIRGINIA TAX-FREE MONEY MARKET FUND
The market value of fixed income investments changes 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 risks.
MUNICIPAL ISSUER RISK
TAX-EXEMPT MONEY MARKET FUND
VIRGINIA TAX-FREE MONEY MARKET FUND
There may be economic or political changes that impact the ability of
municipal issuers to repay principal and to make interest payments on
municipal securities. Changes to the financial condition or credit
rating of municipal issuers may also adversely affect the value of the
Fund's municipal securities. Constitutional or legislative limits on
borrowing by municipal issuers may result in reduced supplies of
municipal securities. Moreover, certain municipal securities are
backed only by a municipal issuer's ability to levy and collect taxes.
In addition, the Fund's concentration of investments in issuers
located in a single state makes the Fund more susceptible to adverse
political or economic developments affecting that state. The Fund also
may be riskier than mutual funds that buy securities of issuers in
numerous states.
REGIONAL RISK
VIRGINIA TAX-FREE MONEY MARKET FUND
To the extent that the Fund's investments are concentrated in a specific
geographic region, the Fund may be subject to the political and other
developments affecting that region. Regional economies are often closely
interrelated, and political and economic developments affecting one region,
country or state often affect other regions, countries or states, thus
subjecting a Fund to additional risks.
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT FUND 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). Of course, a Fund cannot guarantee
that it will achieve its investment goal.
<PAGE>
PROSPECTUS 11
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
[MAGNIFIER GRAPHIC OMITTED]
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
PRIME QUALITY MONEY MARKET FUND 0.50%
TAX-EXEMPT MONEY MARKET FUND 0.41%
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND 0.54%
VIRGINIA TAX-FREE MONEY MARKET FUND 0.40%
The Adviser may use its affiliates as brokers for Fund transactions.
PORTFOLIO MANAGERS
Mr. David S. Yealy has served as a Managing Director of Trusco since July 2000.
He has managed the Prime Quality Money Market Fund since it began operating in
June 1992. Prior to July 2000, Mr. Yealy was a First Vice President of Trusco
and has worked there since 1991. He has more than 15 years of investment
experience.
Mr. Robert S. Bowman, CFA, has served as a Vice President of Trusco since
January 1999. He has managed the Virginia Tax-Free Money Market Fund since May
1995, the Tax-Exempt Money Market Fund since July 2000 and the U.S. Government
Securities Money Market Fund since October 2000. Prior to joining Trusco, Mr.
Bowman served as an assistant trader from 1994 to 1995 and Vice President of
Crestar Asset Management Company since 1995. He has more than 6 years of
investment experience.
[HANDSHAKE GRAPHIC OMITTED]
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Investor Shares and Flex Shares of the Funds. Flex Shares of the Prime
Quality Money Market Fund are available only through exchanges of Flex Shares of
other STI Classic Funds or, potentially, in the future, Flex Shares of the Prime
Quality Money Market Fund may be used to set up a systematic exchange program to
purchase Flex Shares of other STI Classic Funds. Currently no such exchange
program is available. Flex Shares of the Prime Quality Money Market Fund (i) are
subject to a 2% contingent deferred sales charge (CDSC) if you redeem your
shares within one year of the date you purchased the original STI Classic Fund
Flex Shares; and (ii) have higher annual expenses than Investor Shares of the
Prime Quality Money Market Fund.
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:
[bullet] Mail
[bullet] Telephone (1-800-874-4770)
[bullet] Wire
[bullet] Automated Clearing House (ACH)
You may also buy shares through investment representatives of certain
correspondent banks of SunTrust Banks, Inc. (SunTrust) and other financial
institutions that are authorized to place transactions in Fund 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 a Fund. You will also generally
have to address your correspondence or questions regarding a Fund to your
institution.
<PAGE>
12 PROSPECTUS
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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 and the
Federal Reserve are 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 be
eligible to receive dividends declared on the day you submit your purchase
order, the Funds must generally receive your order before 11:00 a.m. Eastern
time for the Tax-Exempt Money Market Fund, before 12:00 p.m. Eastern time for
the Virginia Tax-Free Money Market Fund or before 3:00 p.m. Eastern time for the
Prime Quality Money Market Fund and U.S. Government Securities Money Market
Fund. Also each Fund must 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 Fund receives federal funds before the
Funds calculate their NAV the following day.
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, a Fund generally values its investment portfolio using the
amortized cost valuation method, which is described in detail in the SAI. If
this method is determined to be unreliable during certain market conditions or
for other reasons, a Fund may value its portfolio at market price or fair value
prices may be determined in good faith using methods approved by the Board of
Trustees.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
MINIMUM PURCHASES
To purchase Investor shares for the first time, you must invest at least $2,000
in any Fund.
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 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 the Funds at
1-800-874-4770 to complete all of your purchase and redemption transactions.
<PAGE>
PROSPECTUS 13
PURCHASING, SELLING AND EXCHANGING FUND SHARES
SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a SunTrust affiliate bank, you
may purchase Investor Shares automatically through regular deductions from your
account. With a $500 minimum initial investment, you may begin regularly-
scheduled investments from $50 up to $100,000 once or twice a month. The
Distributor may close your account if you do not meet this minimum investment
requirement at the end of two years.
[DOLLAR GRAPHIC OMITTED]
SALES CHARGES
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:
[bullet] to make certain withdrawals from a retirement plan (not including
IRAs);
[bullet] because of death or disability;
[bullet] for certain payments under the Systematic Withdrawal Plan (which is
discussed later); or
[bullet] for exchanges from Trust or Investor Shares to Flex Shares when the
total accumulated period from the original date of purchase is at least
one year.
OFFERING PRICE OF FUND SHARES
The offering price of Investor and Flex Shares is the NAV next calculated after
the transfer agent receives your request.
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 of the Prime Quality
Money Market Fund, any applicable deferred sales charge.
Redemption orders must be received by the Funds on a Business Day before 11:00
a.m. Eastern Time for the Tax-Exempt Money Market Fund, 12:00 p.m. Eastern Time
for the Virginia Tax-Free Money Market Fund or 3:00 p.m. Eastern time for the
Prime Quality Money Market Fund and U.S. Government Securities Money Market
Fund. Orders received after these times will be executed the following Business
Day.
<PAGE>
14 PROSPECTUS
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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 bank, electronically transferred to your account.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after
the Fund receives 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 FROM YOUR DATE OF
PURCHASE).
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 $2,000 because of redemptions
you may be required to sell your shares. 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.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with Fund management and may have an
adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where it is in the best interests of a Fund,
all Funds reserve the right to revise or terminate the exchange privilege, limit
the amount or number of exchanges or reject any exchange. Currently, 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 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
FROM YOUR DATE OF PURCHASE). This exchange privilege may be changed or canceled
at any time upon 60 days notice.
<PAGE>
PROSPECTUS 15
PURCHASING, SELLING AND EXCHANGING FUND SHARES
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 Fund receives 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. For purposes of computing the CDSC
applicable to Flex Shares, the length of time you have owned your shares will be
measured from the original date of purchase and will not be affected by any
exchange.
FLEX SHARES
You may exchange Flex Shares of any Fund for Flex Shares of any other Fund.
Again, the CDSC will be computed as of the original date of purchase.
TELEPHONE TRANSACTIONS
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.
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
PRIME QUALITY MONEY MARKET FUND 0.20%
TAX-EXEMPT MONEY MARKET FUND 0.15%
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND 0.17%
VIRGINIA TAX-FREE MONEY MARKET FUND 0.40%
For Flex Shares of the Prime Quality Money Market Fund, the maximum distribution
fee is 1.00% of the average daily net assets of the 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 cash or non-cash
compensation as recognition for past sales or encouragement for future sales
that may include the following: merchandise, travel expenses, prizes, meals, and
lodgings, and gifts that do not exceed $100 per year, per individual.
<PAGE>
16 PROSPECTUS
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Each Fund declares dividends daily and pays 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 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 the 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 OF FUND SHARES IS A TAXABLE EVENT.
The Tax-Exempt Money Market Fund and Virginia Tax-Free Money Market Fund intend
to distribute federally tax-exempt income. Both of these Funds may invest a
portion of their assets in securities that generate taxable income for federal
or state income taxes. Income exempt from federal tax may be subject to state
and local taxes. Any capital gains distributed by the Funds may be taxable.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
PROSPECTUS 17
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Investor 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 Virginia Tax-Free Money Market 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 Virginia Tax-Free Money Market Fund for the
periods ended prior to May 31, 1999 have been audited by Deloitte & Touche LLP,
independent public accountants. The report 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 1-800-428-6970.
For the Periods Ended May 31, (unless otherwise noted)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET ASSET DISTRIBUTIONS
VALUE NET FROM NET NET ASSET
BEGINNING INVESTMENT INVESTMENT VALUE END TOTAL
OF PERIOD INCOME INCOME OF PERIOD RETURN (+)
--------- ---------- ------------- --------- ----------
-------------------------------
PRIME QUALITY MONEY MARKET FUND
-------------------------------
Investor Shares
<S> <C> <C> <C> <C> <C>
2000 ..... $1.00 $ 0.05 $(0.05) $1.00 5.02%
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
Flex Shares
2000(A) $1.00 $0.03 $(0.03) $1.00 2.93%
----------------------------
TAX-EXEMPT MONEY MARKET FUND
----------------------------
Investor Shares
2000 ..... $1.00 $ 0.03 $(0.03) $1.00 3.07%
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
--------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
--------------------------------------------
Investor Shares
2000 ..... $1.00 $0.05 $(0.05) $1.00 4.71%
1999 ..... 1.00 0.04 (0.04) 1.00 4.41
1998 ..... 1.00 0.05 (0.05) 1.00 4.90
1997 ..... 1.00 0.05 (0.05) 1.00 4.69
1996 ..... 1.00 0.05 (0.05) 1.00 4.99
---------------------------------------------------------------------------------
VIRGINIA TAX-FREE MONEY MARKET FUND (FORMERLY THE TAX-FREE MONEY MARKET FUND) (B)
---------------------------------------------------------------------------------
Investor Shares
2000 ..... $1.00 $0.03 $(0.03) $1.00 3.07%
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
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME ASSETS (EXCLUDING ASSETS (EXCLUDING
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS)
------------ ----------- ---------- ----------------- -----------------
-------------------------------
PRIME QUALITY MONEY MARKET FUND
-------------------------------
Investor Shares
<S> <C> <C> <C> <C> <C>
2000 ..... $1,312,653 0.77% 4.94% 0.95% 4.76%
1999 ..... 918,100 0.77 4.52 0.97 4.32
1998 ..... 411,821 0.76 4.93 0.98 4.71
1997 ..... 283,544 0.75 4.74 0.97 4.52
1996 ..... 215,696 0.75 4.94 1.00 4.69
Flex Shares
2000(A) .. $3,445 1.50%* 4.46%* 1.99%* 3.97%*
----------------------------
TAX-EXEMPT MONEY MARKET FUND
----------------------------
Investor Shares
2000 ..... $125,500 0.64% 3.01% 0.82% 2.83%
1999 ..... 128,854 0.64 2.66 0.83 2.48
1998 ..... 134,538 0.62 3.04 0.83 2.83
1997 ..... 102,013 0.62 2.92 0.83 2.71
1996 ..... 95,223 0.62 3.10 0.85 2.87
--------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
--------------------------------------------
Investor Shares
2000 ..... $79,311 0.77% 4.62% 0.93% 4.46%
1999 ..... 61,472 0.77 4.32 0.98 4.11
1998 ..... 58,753 0.76 4.79 0.96 4.59
1997 ..... 63,178 0.75 4.59 0.96 4.38
1996 ..... 58,608 0.75 4.88 0.99 4.64
---------------------------------------------------------------------------------
VIRGINIA TAX-FREE MONEY MARKET FUND (FORMERLY THE TAX-FREE MONEY MARKET FUND) (B)
---------------------------------------------------------------------------------
Investor Shares
2000 ..... $62,878 0.67% 3.17% 0.99% 2.85%
1999** ... 5,955 0.67 2.52 1.06 2.13
For the Year Ended November 30:
1998 ..... 8,851 0.67 2.92 1.07 2.52
1997 ..... 7,634 0.68 3.42 1.08 3.02
1996 ..... 2,994 0.67 2.86 1.07 2.46
</TABLE>
* 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) Commenced operations on October 4, 1999.
(B) On May 24, 1999, the CrestFunds Tax Free Money Fund exchanged all of its
assets and certain liabilities for shares of the Virginia Tax-Free Money
Market Fund (formerly the Tax-Free Money Market Fund). The CrestFunds
Tax Free Money Fund was 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>
18 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 19
NOTES
<PAGE>
20 PROSPECTUS
NOTES
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
22 PROSPECTUS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, 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 and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
<PAGE>
[SUNDIAL GRAPHIC OMITTED]
XXXXXXXX
STI CLASSIC FUNDS
FOR PARTICIPANTS OF SUNTRUST BANKS
SPONSORED RETIREMENT PLANS
PROSPECTUS
OCTOBER 1, 2000
BALANCED FUND
CAPITAL APPRECIATION 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 GROWTH STOCK FUND
SMALL CAP VALUE EQUITY FUND
(FORMERLY SMALL CAP EQUITY 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 AGGRESSIVE GROWTH FUND
(FORMERLY LIFE VISION MAXIMUM GROWTH PORTFOLIO)
LIFE VISION GROWTH AND INCOME FUND
(FORMERLY LIFE VISION GROWTH AND INCOME PORTFOLIO)
LIFE VISION MODERATE GROWTH FUND
(FORMERLY LIFE VISION BALANCED PORTFOLIO)
INVESTMENT ADVISER
TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(the "Adviser")
[STI LOGO OMITTED]
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>
PROSPECTUS
ABOUT 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 each Fund 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 THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
2 BALANCED FUND
4 CAPITAL APPRECIATION FUND
6 CORE EQUITY FUND
8 E-COMMERCE OPPORTUNITY FUND
10 GROWTH AND INCOME FUND
12 INTERNATIONAL EQUITY FUND
14 INTERNATIONAL EQUITY INDEX FUND
16 INVESTMENT GRADE BOND FUND
18 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
20 MID-CAP EQUITY FUND
22 SHORT-TERM BOND FUND
24 SHORT-TERM U.S. TREASURY SECURITIES FUND
26 SMALL CAP GROWTH STOCK FUND
28 SMALL CAP VALUE EQUITY FUND
30 TAX SENSITIVE GROWTH STOCK FUND
32 U.S. GOVERNMENT SECURITIES FUND
34 VALUE INCOME STOCK FUND
36 PRIME QUALITY MONEY MARKET FUND
38 U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
40 U.S. TREASURY MONEY MARKET FUND
44 LIFE VISION AGGRESSIVE GROWTH FUND
46 LIFE VISION GROWTH AND INCOME FUND
48 LIFE VISION MODERATE GROWTH FUND
50 MORE INFORMATION ABOUT RISK
51 MORE INFORMATION ABOUT FUND INVESTMENTS
51 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
54 PURCHASING AND SELLING FUND SHARES
56 DIVIDENDS, DISTRIBUTIONS AND TAXES
57 FINANCIAL HIGHLIGHTS
66 HOW TO OBTAIN MORE INFORMATION ABOUT
THE STI CLASSIC FUNDS
--------------------------------------------------------------------------------
[BRIEFCASE GRAPHIC OMITTED] FUND SUMMARY
[TELESCOPE GRAPHIC OMITTED] INVESTMENT STRATEGY
[INNERTUBE GRAPHIC OMITTED] WHAT ARE THE RISKS OF INVESTING?
[BULLSEYE GRAPHIC OMITTED] PERFORMANCE INFORMATION
[CHART GRAPHIC OMITTED] WHAT IS AN INDEX?
[COINS GRAPHIC OMITTED] FUND FEES AND EXPENSES
[MOUNTAINTOP GRAPHIC OMITTED] MORE INFORMATION ABOUT FUND INVESTMENTS
[MAGNIFIER GRAPHIC OMITTED] INVESTMENT ADVISER
[HANDSHAKE GRAPHIC OMITTED] PURCHASING AND SELLING FUND SHARES
--------------------------------------------------------------------------------
OCTOBER 1, 2000
<PAGE>
PROSPECTUS 1
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
Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser 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 prices 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>
2 PROSPECTUS
BALANCED FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 above average 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.
[INNERTUBE GRAPHIC OMITTED]
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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted] Plot points are as follows:
1995 25.51%
1996 12.13%
1997 21.14%
1998 19.55%
1999 4.66%
BEST QUARTER WORST QUARTER
12.57% -5.70%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.24%.
<PAGE>
PROSPECTUS 3
BALANCED FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX AND THE S&P 500 INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Balanced Fund 4.66% 16.36% 12.63%*
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 7.60% 5.67%**
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 23.55%**
--------------------------------------------------------------------------------
* SINCE 1/3/94
** SINCE 12/31/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.95%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 1.07%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$109 $340 $590 $1,306
--------------------------------------------------------------------------------
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 0.92% and 1.04%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
4 PROSPECTUS
CAPITAL APPRECIATION FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Capital Appreciation Fund invests primarily in U.S. common stocks and other
equity securities that the Adviser believes have strong business fundamentals,
such as revenue growth, cash flows and earning trends. In selecting investments
for the Fund, the Adviser chooses companies that it believes have above average
growth potential. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 9.89%
1994 -7.41%
1995 31.15%
1996 20.31%
1997 31.13%
1998 28.06%
1999 9.71%
BEST QUARTER WORST QUARTER
22.93% -11.16%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 5.91%.
<PAGE>
PROSPECTUS 5
CAPITAL APPRECIATION FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1999 TO THOSE OF THE S&P 500 INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Capital Appreciation Fund 9.71% 23.79% 17.41%*
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 21.24%**
--------------------------------------------------------------------------------
* SINCE 7/1/92
** SINCE 6/30/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.26%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$128 $400 $692 $1,523
--------------------------------------------------------------------------------
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 1.13% and 1.24%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
6 PROSPECTUS
CORE EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 mid- to large-capitalization
growth stocks may underperform other segments of the equity market or the equity
markets as a whole.
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The Core Equity Fund commenced operations on September 30, 1999, and therefore
does not have a performance history for a full calendar year.
<PAGE>
PROSPECTUS 7
CORE EQUITY FUND
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.10%
Other Expenses 0.17%
-----
Total Annual Fund Operating Expenses 1.27%
--------------------------------------------------------------------------------
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$129 $403 $697 $1,534
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
8 PROSPECTUS
E-COMMERCE OPPORTUNITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 corporations whose core line of business focuses
on an emerging e-commerce market. The second segment consists of established
technology companies that provide the infrastructure to support electronic
commerce. The third segment includes established, non-tech companies that are
expected to achieve substantial direct or indirect benefits from e-commerce. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
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.
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The E-Commerce Opportunity Fund commenced operations on September 30, 1999, and
therefore does not have a performance history for a full calendar year.
<PAGE>
PROSPECTUS 9
E-COMMERCE OPPORTUNITY FUND
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.10%
Other Expenses 0.24%
-----
Total Annual Fund Operating Expenses 1.34%
--------------------------------------------------------------------------------
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$136 $425 $734 $1,613
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
10 PROSPECTUS
GROWTH AND INCOME FUND
[BRIEFCASE GRAPHIC OMITTED]
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 earnings
potential 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in equity securities, including
common stock and listed American Depositary Receipts (ADRs), 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 10.20%
1994 -0.81%
1995 29.38%
1996 19.06%
1997 27.69%
1998 18.20%
1999 14.17%
BEST QUARTER WORST QUARTER
17.38% -10.36%
(6/30/97) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -0.35%.
<PAGE>
PROSPECTUS 11
GROWTH AND INCOME FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX. PREVIOUSLY,
THE FUND'S RETURNS HAD BEEN COMPARED TO THE S&P 500 INDEX, BUT THE ADVISER
BELIEVES THAT THE S&P 500/BARRA VALUE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
LARGE CAP VALUE STOCKS, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH
THE FUND INVESTS.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Growth and Income Fund 14.17% 21.56% 16.83%*
--------------------------------------------------------------------------------
S&P 500/BARRA
Value Index 12.72% 22.94% 18.54%**
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 21.52%**
--------------------------------------------------------------------------------
* SINCE 9/26/92
** SINCE 9/30/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 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 S&P 500/BARRA Value Index
is a widely-recognized index of stocks in the S&P 500 Index that have lower
price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.90%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.01%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$103 $322 $558 $1,236
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
12 PROSPECTUS
INTERNATIONAL EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
--------------------------------------------------------------------------------
INVESTMENT FOCUS Foreign common stocks
--------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies with good
fundamentals or a history of consistent
growth
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks and other
equity securities of foreign companies. 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,
or a history of consistent growth in cash flows, sales, operating profits,
returns on equity and returns on invested capital. In selecting investments for
the Fund, The Adviser diversifies the Fund's investments among at least three
foreign countries. The Adviser diversifies the Fund's investment strategy, the
Fund may buy and sell securities frequently. This may result in higher
transaction costs and additional capital gains tax liabilities.
[INNERTUBE GRAPHIC OMITTED]
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 foreign common stocks may underperform
other segments of the equity market 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.
<PAGE>
PROSPECTUS 13
INTERNATIONAL EQUITY FUND
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
[Bar Graph Omitted]
Plot points are as follows:
1996 22.08%
1997 13.35%
1998 11.22%
1999 9.47%
BEST QUARTER WORST QUARTER
16.88% -18.28%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.91%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA, AND FAR EAST (MSCI EAFE) INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
International Equity Fund 9.47% 18.78%*
--------------------------------------------------------------------------------
MSCI EAFE Index 26.96% 13.97%*
--------------------------------------------------------------------------------
* SINCE 1/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 smaller market capitalizations) index of over 900 securities
listed on the stock exchanges in Europe, Australasia and the Far East. The
country weighting of the Index is calculated using the market capitalization of
each of the various countries, and then with respect to the market
capitalization of the various companies operating in each country.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.25%
Other Expenses 0.23%
-----
Total Annual Fund Operating Expenses 1.48%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$151 $468 $808 $1,768
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
14 PROSPECTUS
INTERNATIONAL EQUITY INDEX FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOAL Investment results that correspond to the
performance of the MSCI EAFE-GDP Weighted
Index
--------------------------------------------------------------------------------
INVESTMENT FOCUS Foreign common stocks in MSCI EAFE-GDP
Weighted 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 Weighted 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.
[INNERTUBE GRAPHIC OMITTED]
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 foreign common stocks may underperform
other segments of the equity markets 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.
In addition to the above mentioned risks, the Adviser may not be able to match
the performance of the Fund's benchmark.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 10.73%
1996 6.04%
1997 8.99%
1998 30.02%
1999 30.66%
BEST QUARTER WORST QUARTER
21.26% -12.98%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -4.88%.
<PAGE>
PROSPECTUS 15
INTERNATIONAL EQUITY INDEX FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA AND FAR EAST-GROSS DOMESTIC PRODUCT (MSCI EAFE-GDP) WEIGHTED
INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
International Equity
Index Fund 30.66% 16.80% 14.43%*
--------------------------------------------------------------------------------
MSCI EAFE-GDP
Weighted Index
(Price Return) 29.49% 14.45% 12.59%**
--------------------------------------------------------------------------------
* SINCE 6/6/94
** SINCE 5/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 smaller market capitalizations) index
of over 900 securities listed on the stock exchanges in Europe, Australasia and
the Far East. The country weighting of the Index is calculated using the gross
domestic product of each of the various countries and then with respect to the
market capitalization of the various companies operating in each country.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.90%
Other Expenses 0.28%
-----
Total Annual Fund Operating Expenses 1.18%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$120 $375 $649 $1,432
--------------------------------------------------------------------------------
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 0.81% and 1.09%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
16 PROSPECTUS
INVESTMENT GRADE BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 U.S. Government/Credit 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.
[INNERTUBE GRAPHIC OMITTED]
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. Mortgage backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 10.84%
1994 -3.32%
1995 17.80%
1996 2.34%
1997 9.08%
1998 9.19%
1999 -1.53%
BEST QUARTER WORST QUARTER
6.11% -2.67%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.45%.
<PAGE>
PROSPECTUS 17
INVESTMENT GRADE BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX, LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND THE LIPPER INTERMEDIATE
INVESTMENT GRADE DEBT FUNDS AVERAGE.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Investment Grade Bond Fund -1.53% 7.17% 6.07%*
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 7.60% 6.38%**
--------------------------------------------------------------------------------
Lehman Brothers U.S.
Aggregate Bond Index -0.83% 7.73% 6.40%**
--------------------------------------------------------------------------------
Lipper Intermediate
Investment Grade
Debt Funds Average -1.31% 6.79% 5.81%**
--------------------------------------------------------------------------------
* SINCE 7/16/92
** SINCE 7/31/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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 Lehman Brothers U.S. Aggregate
Bond Index is a widely-recognized, market value-weighted (higher market value
stocks have more influence than lower market value stocks) index that combines
the Lehman Brothers U.S. Government/Credit Index and the Lehman Brothers
Mortgage-Backed Securities Index. The Lehman Brothers Mortgage-Backed Securities
Index consists of mortgage-backed securities rated AAA. The Lipper Intermediate
Investment Grade Debt Funds Average is a composite of mutual funds with
investment goals similar to the Fund's goals. It reports the average return of
the intermediate term investment grade bond mutual funds tracked by Lipper
Analytical Services, Inc. The number of funds in the Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.74%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.84%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$86 $268 $466 $1,037
--------------------------------------------------------------------------------
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 0.72% and 0.82%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
18 PROSPECTUS
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 mortgage-backed securities may
underperform other segments of the fixed income market 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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 12.14%
1996 4.53%
1997 6.74%
1998 6.90%
1999 1.25%
BEST QUARTER WORST QUARTER
4.05% -0.29%
(3/31/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.61%.
<PAGE>
PROSPECTUS 19
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE MERRILL LYNCH 1-5 YEAR U.S.
TREASURIES/AGENCIES INDEX AND THE MERRILL LYNCH 1-5 YEAR U.S TREASURY INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Limited-Term Federal
Mortgage Securities Fund 1.25% 6.26% 5.65%*
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasuries/
Agencies Index 2.11% 6.78% 6.22%**
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Treasury Index 2.04% 6.78% 6.22%**
--------------------------------------------------------------------------------
* SINCE 6/6/94
** SINCE 5/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Treasuries/ Agencies
Index includes U.S. Government Treasury and Agency Bonds that have a minimum
issue size of $150 million. The current market value of the index is $1.29
trillion with duration of 2.1 years and yield to maturity of 6.4%. The Merrill
Lynch 1-5 Year U.S Treasury Index is a widely-recognized, capitalization-
weighted index of U.S. Treasury securities with maturities 1 year or greater
and no more than 5 years.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.14%
-----
Total Annual Fund Operating Expenses 0.79%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$81 $252 $439 $978
--------------------------------------------------------------------------------
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 0.60% and 0.74%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
20 PROSPECTUS
MID-CAP EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 400 Mid Cap 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.
[INNERTUBE GRAPHIC OMITTED]
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 mid-cap common stocks may underperform
other segments of the equity market 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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 31.22%
1996 15.42%
1997 21.23%
1998 6.48%
1999 16.14%
BEST QUARTER WORST QUARTER
24.73% -19.96%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 9.78%.
<PAGE>
PROSPECTUS 21
MID-CAP EQUITY FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 400 MID CAP INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Mid-Cap Equity Fund 16.14% 17.82% 14.56%*
--------------------------------------------------------------------------------
S&P 400 Mid Cap Index 14.72% 23.04% 17.96%**
--------------------------------------------------------------------------------
* SINCE 2/2/94
** SINCE 1/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 400 Mid Cap 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 1.25%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$127 $397 $686 $1,511
--------------------------------------------------------------------------------
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 1.12% and 1.22%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
22 PROSPECTUS
SHORT-TERM BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
Mortgage-backed and asset-backed securities 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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1994 -0.07%
1995 11.77%
1996 3.90%
1997 6.78%
1998 6.84%
1999 0.92%
BEST QUARTER WORST QUARTER
3.76% -0.58%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.83%.
<PAGE>
PROSPECTUS 23
SHORT-TERM BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY/GOVERNMENT
SPONSORED/CORPORATE INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Short-Term Bond Fund 0.92% 5.98% 4.97%*
--------------------------------------------------------------------------------
Salomon 1-3 Year
Treasury/Government
Sponsored/Corporate Index 3.29% 6.56% 5.41%**
--------------------------------------------------------------------------------
* SINCE 3/15/93
** SINCE 2/28/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/ 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 of
1 year or greater and less than 3 years.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.76%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$78 $243 $422 $942
--------------------------------------------------------------------------------
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 0.60% and 0.71%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
24 PROSPECTUS
SHORT-TERM U.S. TREASURY SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 short-term U.S. Treasury securities
may underperform other segments of the fixed income market 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1994 1.41%
1995 8.58%
1996 4.52%
1997 5.86%
1998 6.24%
1999 2.71%
BEST QUARTER WORST QUARTER
2.61% -0.10%
(3/31/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.49%.
<PAGE>
PROSPECTUS 25
SHORT-TERM U.S. TREASURY SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY INDEX AND THE
SALOMON 6 MONTH TREASURY BILL INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Short-Term U.S. Treasury
Securities Fund 2.71% 5.56% 4.71%*
--------------------------------------------------------------------------------
Salomon 1-3 Year
Treasury Index 3.06% 6.48% 5.31%**
--------------------------------------------------------------------------------
Salomon 6 Month
Treasury Bill Index 4.80% 5.33% 4.93%**
--------------------------------------------------------------------------------
* SINCE 3/15/93
** SINCE 2/28/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 of one year
or greater and less than three years. The Salomon 6 Month Treasury Bill Index is
a widely-recognized index of the 6 month U.S. Treasury Bills.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.14%
-----
Total Annual Fund Operating Expenses 0.79%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$81 $252 $439 $978
--------------------------------------------------------------------------------
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 0.59% and 0.73%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
26 PROSPECTUS
SMALL CAP GROWTH STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Small Cap Growth Stock Fund invests primarily in small U.S. companies with
market capitalizations between $50 million and $3 billion in size. The Fund's
investment philosophy is based on the premise that a portfolio of small cap
stocks with positive earnings trends, reasonable valuation, and strong
fundamentals will provide superior returns over time. The Adviser selects
companies with strong current earnings growth, improving profitability, a strong
balance sheet, strong current and projected business fundamentals, and priced at
reasonable valuations. The Adviser believes in executing a very disciplined and
objective investment process and in controlling risk through a broadly
diversified portfolio. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and the
potential for capital gains tax liabilities for taxable investors.
[INNERTUBE GRAPHIC OMITTED]
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 small capitalization growth stocks may
underperform other segments of the equity market 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.
[BULLSEYE GRAPHIC OMITTED]
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 THE PERFORMANCE OF THE FUND'S TRUST SHARES FOR ONE YEAR.*
[Bar Graph Omitted]
Plot point is as follows:
1999 20.55%
BEST QUARTER WORST QUARTER
20.77% -11.36%
(6/30/99) (3/31/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 16.26%.
<PAGE>
PROSPECTUS 27
SMALL CAP GROWTH STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 600 SMALL CAP INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Small Cap Growth
Stock Fund 20.55% 58.61%*
--------------------------------------------------------------------------------
S&P 600 Small Cap Index 12.41% 25.01%**
--------------------------------------------------------------------------------
* SINCE 10/8/98
** SINCE 9/30/98
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 600 Small Cap Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of 600 domestic
small cap stocks.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.08%
-----
Total Annual Fund Operating Expenses 1.23%
--------------------------------------------------------------------------------
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 are the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$125 $390 $676 $1,489
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
28 PROSPECTUS
SMALL CAP VALUE EQUITY FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Small Cap Value 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.
[INNERTUBE GRAPHIC OMITTED]
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 small capitalization common stocks may
underperform other segments of equity market 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 30.99%
1996 34.25%
1997 32.59%
1998 -13.45%
1999 -2.72%
BEST QUARTER WORST QUARTER
19.82% -21.99%
(6/30/99) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 1.49%.
<PAGE>
PROSPECTUS 29
SMALL CAP VALUE EQUITY FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE RUSSELL 2000 VALUE INDEX. PREVIOUSLY,
THE FUND'S RETURNS HAD BEEN COMPARED TO THE RUSSELL 2000 INDEX, BUT THE ADVISER
BELIEVES THAT THE RUSSELL 2000 VALUE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
SMALL U.S. COMPANIES WITH LOWER GROWTH RATES AND PRICE-TO-BOOK RATIOS, MORE
ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH THE FUND INVESTS.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Small Cap Value
Equity Fund -2.72% 14.44% 13.63%*
--------------------------------------------------------------------------------
Russell 2000
Value Index -1.49% 13.13% 11.41%*
--------------------------------------------------------------------------------
Russell 2000 Index 21.26% 16.69% 15.09%*
--------------------------------------------------------------------------------
* SINCE 8/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Russell 2000 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. The Russell 2000 Value Index is a widely-recognized,
capitalization weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of companies in
the Russell 2000 Index with lower growth rates and price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 1.25%
--------------------------------------------------------------------------------
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 are the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$127 $397 $686 $1,511
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
30 PROSPECTUS
TAX SENSITIVE GROWTH STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 common stocks of U.S. growth companies
may underperform other segments of the equity market 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1996 21.04%
1997 28.76%
1998 31.73%
1999 24.74%
BEST QUARTER WORST QUARTER
27.74% -9.96%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.50%.
<PAGE>
PROSPECTUS 31
TAX SENSITIVE GROWTH STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500 INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Tax Sensitive Growth
Stock Fund 24.74% 26.56%*
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 26.39%*
--------------------------------------------------------------------------------
* SINCE 12/31/95
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.26%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$128 $400 $692 $1,523
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
32 PROSPECTUS
U.S. GOVERNMENT SECURITIES FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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 U.S. government debt securities may
underperform other segments of the fixed income market 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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1995 17.33%
1996 2.55%
1997 8.94%
1998 8.16%
1999 -0.97%
BEST QUARTER WORST QUARTER
5.89% -2.24%
(6/30/95) (3/31/96)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.82%.
<PAGE>
PROSPECTUS 33
U.S. GOVERNMENT SECURITIES FUND
THIS TABLE COMPARES THE FUND'S AVERAGE TOTAL RETURNS FOR THE PERIODS ENDED
DECEMBER 31, 1999, TO THOSE OF THE MERRILL LYNCH GOVERNMENT/MORTGAGE INDEX AND
THE LEHMAN BROTHERS INTERMEDIATE U.S. GOVERNMENT BOND INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
U.S. Government
Securities Fund -0.97% 7.02% 6.14%*
--------------------------------------------------------------------------------
Merrill Lynch
Government/
Mortgage Index -0.70% 7.67% 6.90%**
--------------------------------------------------------------------------------
Lehman Brothers
Intermediate
U.S. Government
Bond Index 0.50% 6.93% 6.26%**
--------------------------------------------------------------------------------
* SINCE 8/1/94
** SINCE 7/31/94
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 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-backed securities
including 15 and 30 year single family mortgages in addition to aggregated
pooled mortgages. The Lehman Brothers Intermediate U.S. Government 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, and 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.74%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.84%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$86 $268 $466 $1,037
--------------------------------------------------------------------------------
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 0.71% and 0.81%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
34 PROSPECTUS
VALUE INCOME STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
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%
1999 -2.93%
BEST QUARTER WORST QUARTER
18.56% -14.86%
(3/31/91) (9/30/90)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -6.33%.
<PAGE>
PROSPECTUS 35
VALUE INCOME STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
--------------------------------------------------------------------------------
Value Income
Stock Fund -2.93% 17.24% 15.02% 15.06%*
--------------------------------------------------------------------------------
S&P 500/BARRA
Value Index* 12.72% 22.94% 15.37% 15.46%*
--------------------------------------------------------------------------------
* SINCE 10/31/89
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/BARRA Value Index is a widely-recognized
index of the stocks in the S&P 500 Index that have lower price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.80%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.89%
--------------------------------------------------------------------------------
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:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$91 $284 $493 $1,096
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
36 PROSPECTUS
PRIME QUALITY MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 2.77%
1994 3.77%
1995 5.47%
1996 4.99%
1997 5.15%
1998 5.10%
1999 4.74%
BEST QUARTER WORST QUARTER
1.37% 0.68%
(6/30/95) (6/30/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.83%.
<PAGE>
PROSPECTUS 37
PRIME QUALITY MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. FIRST TIER AVERAGE.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Prime Quality
Money Market Fund 4.74% 5.09% 4.45%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
First Tier Average 4.57% 4.97% 4.33%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. First Tier Average is a widely-recognized composite of money
market funds which invest in securities rated in the highest category by at
least two recognized rating agencies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.75%
--------------------------------------------------------------------------------
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 are the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$77 $240 $417 $930
--------------------------------------------------------------------------------
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 0.64%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
38 PROSPECTUS
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively in U.S.
Treasury obligations, obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. government, repurchase
agreements involving these securities, and shares of registered money market
funds that invest in the foregoing. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Graph Omitted]
Plot points are as follows:
1993 2.67%
1994 3.64%
1995 5.39%
1996 4.81%
1997 4.99%
1998 4.88%
1999 4.41%
BEST QUARTER WORST QUARTER
1.36% 0.65%
(6/30/95) (6/30/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.65%.
<PAGE>
PROSPECTUS 39
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. U.S. GOVERNMENT &
AGENCY AVERAGE. PREVIOUSLY, THE FUND'S RETURNS HAD BEEN COMPARED TO THE
IMONEYNET, INC. U.S. TREASURY & REPO AVERAGE, BUT THE ADVISER BELIEVES THAT THE
IMONEYNET, INC. U.S. GOVERNMENT & AGENCY AVERAGE, BECAUSE OF ITS INCLUSION OF
MONEY MARKET FUNDS THAT INVEST IN SECURITIES OF GOVERNMENT AGENCIES AND
INSTRUMENTALITIES, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH THE
FUND INVESTS.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
U.S. Government
Securities Money
Market Fund 4.41% 4.90% 4.28%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Government
& Agency Average 4.52% 4.89% 4.26%**
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Treasury
& Repo Average 4.36% 4.82% 4.20%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
previous index, the iMoneyNet, Inc. 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. The iMoneyNet,
Inc. U.S. Government & Agency Average is a widely-recognized composite of all
money market funds which invest in U.S. Treasury Bills, repurchase agreements or
securities issued by agencies of the U.S. government.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.74%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$76 $237 $411 $918
--------------------------------------------------------------------------------
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 0.56% and 0.65%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
40 PROSPECTUS
U.S. TREASURY MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
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%
1999 4.38%
BEST QUARTER WORST QUARTER
1.92% 0.61%
(6/30/90) (12/31/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.60%.
<PAGE>
PROSPECTUS 41
U.S. TREASURY MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. U.S. TREASURY & REPO
AVERAGE.
SINCE
TRUST SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
--------------------------------------------------------------------------------
U.S. Treasury
Money Market
Fund 4.38% 4.85% 4.71% 5.30%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Treasury &
Repo Average 4.36% 4.82% N/A N/A
--------------------------------------------------------------------------------
* SINCE 2/18/87
To obtain more information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.74%
--------------------------------------------------------------------------------
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 are the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$76 $237 $411 $918
--------------------------------------------------------------------------------
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 0.56% and 0.65%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
42 PROSPECTUS
RISK/RETURN INFORMATION COMMON TO THE LIFE VISION FUNDS
The Life Vision Aggressive Growth Fund, Life Vision Growth and Income Fund and
the Life Vision Moderate Growth Fund (each a "Life Vision Fund," and
collectively, the "Life Vision Funds"), and each underlying STI Classic Fund in
which they invest are mutual funds. 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 Life Vision Fund is based on the market prices
of the securities the underlying STI Classic 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 STI Classic Fund owns and
the markets where these securities trade. The effect on a Life Vision Fund of a
change in the value of a single security will depend on how widely the Life
Vision Fund and the underlying STI Classic Funds diversify their holdings.
Like other investments, you could lose money on your investment in a Life Vision
Fund. Your investment in a Life Vision Fund is not a bank deposit. It is not
insured or guaranteed by the FDIC or any government agency.
The Life Vision Funds provide investors with the opportunity to purchase three
distinct asset allocations strategies implemented through investments in Trust
Class Shares of selected STI Classic Funds. By investing in the Life Vision
Funds, investors have the opportunity to diversify and allocate their assets
among the broad range of Funds in the STI Classic Funds.
The assets of each Life Vision Fund 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 Life Vision Fund 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 different investment objectives,
policies and risk characteristics. Although the Life Vision Funds currently
expect to invest in one or more of the underlying STI Classic Funds, the Adviser
has the discretion to change the particular STI Classic Funds used as underlying
investments for the Life Vision Funds. If determined to be in the best interest
of the Life Vision Funds, the Adviser reserves the right to substitute or
include other underlying STI Classic Funds, including STI Classic Funds that do
not currently exist. A Life Vision Fund's goal may be changed without
shareholder approval. Before investing, make sure that the Life Vision Fund's
goal matches your own.
<PAGE>
PROSPECTUS 43
LIFE VISION AGGRESSIVE GROWTH FUND
[BRIEFCASE GRAPHIC OMITTED]
LIFE VISION 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 Life Vision
Fund'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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Life Vision Aggressive Growth Fund invests at least 80% of its total assets
in STI Classic Funds that invest primarily in equity securities. The Fund'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 Fund currently plans to invest in shares of the following underlying STI
Classic Funds within the percentage ranges indicated:
INVESTMENT RANGE
(PERCENTAGE OF THE LIFE
VISION AGGRESSIVE
ASSET CLASS GROWTH FUND'S ASSETS)
--------------------------------------------------------------------------------
Equity Funds 80-100%
Core Equity Fund
Growth and Income Fund
International Equity Index Fund
Mid-Cap Equity Fund
Small Cap Value Equity Fund
Small Cap Growth Stock Fund
Value Income Stock Fund
--------------------------------------------------------------------------------
Money Market Funds 0-20%
Prime Quality Money Market Fund
--------------------------------------------------------------------------------
Other STI Classic Funds may be utilized in the future.
Due to its investment strategy, this Life Vision Fund holds STI Classic Funds
that buy and sell securities frequently. This may result in higher transaction
costs and additional capital gains taxes.
[INNERTUBE GRAPHIC OMITTED]
WHAT ARE THE RISKS OF INVESTING IN THIS LIFE VISION FUND?
The value of an investment in this Life Vision Fund is based primarily on the
performance of the underlying STI Classic Funds and the allocation of this Life
Vision Fund's assets among them. Since it purchases equity securities, this Life
Vision 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 STI Classic 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 this Life Vision Fund.
This Life Vision Fund 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 this Life Vision
Fund will vary depending upon how the assets are allocated among the underlying
STI Classic Funds.
<PAGE>
44 PROSPECTUS
LIFE VISION AGGRESSIVE GROWTH FUND
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in this Life Vision Fund. Of course, the Life Vision
Fund's past performance does not necessarily indicate how this Life Vision Fund
will perform in the future. The periods prior to June 1997, when the Life Vision
Fund began operating, represent the performance of the Adviser's similarly
managed asset allocation program. This past performance has been adjusted to
reflect current expenses for Trust Shares of the Fund. The Adviser's asset
allocation program 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 asset
allocation program's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THIS LIFE VISION FUND'S TRUST
SHARES FROM YEAR TO YEAR.*
[Bar Graph Omitted]
Plot points are as follows:
1993 12.14%
1994 -4.30%
1995 25.12%
1996 16.62%
1997 22.53%
1998 12.31%
1999 10.31%
BEST QUARTER WORST QUARTER
18.72% -15.23%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THIS LIFE
VISION FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.38%.
THIS TABLE COMPARES THIS LIFE VISION FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDING DECEMBER 31, 1999, TO THOSE OF A HYBRID 61/15/12/10/2 BLEND OF
THE FOLLOWING BENCHMARKS: THE RUSSELL 1000 INDEX, MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST (MSCI EAFE) INDEX, RUSSELL 2000
INDEX, SALOMON 3-MONTH TREASURY BILL INDEX AND THE RUSSELL MID-CAP INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Life Vision Aggressive
Growth Fund 10.31% 17.24% 13.16%*
--------------------------------------------------------------------------------
Hybrid 61/15/12/10/2
Blend of the Following
Market Indices 19.76% 21.39% 17.16%*
--------------------------------------------------------------------------------
Russell 1000 Index 20.91% 28.04% 21.04%*
--------------------------------------------------------------------------------
MSCI EAFE Index 26.96% 12.83% 14.71%*
--------------------------------------------------------------------------------
Russell 2000 Index 21.26% 16.69% 14.15%*
--------------------------------------------------------------------------------
Salomon 3-Month
Treasury Bill Index 4.73% 5.20% 4.75%*
--------------------------------------------------------------------------------
Russell Mid-Cap Index 18.23% 21.86% 17.03%*
--------------------------------------------------------------------------------
* SINCE 12/31/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Russell 1000 Index measures the performance of
the 1,000 largest companies in the Russell 3000 Index, which represents
approximately 90% of the total market capitalization of the Russell 3000 Index.
The MSCI EAFE Index is a widely-recognized, capitalization-weighted larger
market capitalizations have more influence than smaller market capitalizations)
index of over 900 securities listed on the stock exchanges in Europe,
Australasia and the Far East. The country weighting of the Index is calculated
using the market capitalization of each of the various countries, and then with
respect to the market capitalization of the various companies operating in each
country. The Russell 2000 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. The Salomon 3-Month Treasury Bill Index is a
widely recognized index of the 3 month U.S. Treasury Bills. The Russell Mid-Cap
Index measures the performance of those Frank Russell Mid-Cap companies with
higher price-to-book ratios and higher forecasted growth values. The stocks are
also members of the Russell 1000 Index.
<PAGE>
PROSPECTUS 45
LIFE VISION AGGRESSIVE GROWTH FUND
[COINS GRAPHIC OMITTED]
FUND FEES AND EXPENSES
This table describes this Life Vision Fund's fees and expenses that you may pay
if you buy and hold this Life Vision Fund's shares. The table does not reflect
any of the operating costs and investment advisory fees of the underlying STI
Classic Funds. This Life Vision Fund and its shareholders will indirectly bear a
pro rata share of the expenses of the underlying STI Classic Funds.
--------------------------------------------------------------------------------
ANNUAL LIFE VISION FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM LIFE VISION FUND ASSETS)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.25%
Other Expenses 0.19%
-----
Total Annual Life Vision Fund Operating Expenses 0.44%
--------------------------------------------------------------------------------
EXAMPLE
--------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in this Life
Vision Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the this Life Vision 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, this
Life Vision Fund's operating expenses remain the same and you reinvest all
dividends and distributions. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$45 $141 $246 $555
--------------------------------------------------------------------------------
FUND EXPENSES
--------------------------------------------------------------------------------
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Life Vision
Fund expenses in the table above are shown as a percentage of the Life Vision
Fund's net assets. These expenses are deducted from Life Vision Fund assets. The
table shows the highest expenses that could be currently charged to the Life
Vision 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 0.06% and 0.25%, respectively. The Adviser could
discontinue this voluntary waiver at any time. For more information about these
fees, see "Investment Adviser."
<PAGE>
46 PROSPECTUS
LIFE VISION GROWTH AND INCOME FUND
[BRIEFCASE GRAPHIC OMITTED]
LIFE VISION FUND 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Life Vision Growth and Income Fund invests at least 70% to 80% of its total
assets in STI Classic Funds that invest primarily in either equity securities or
fixed income securities. The Fund'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 returns, volatility and expenses.
The Fund currently plans to invest in shares of the following underlying STI
Classic Funds within the percentage ranges indicated:
INVESTMENT RANGE (PERCENTAGE OF THE LIFE
ASSET CLASS VISION GROWTH AND INCOME FUND'S ASSETS)
--------------------------------------------------------------------------------
Equity Funds 50-80%
Core Equity Fund
Growth and Income Fund
International Equity Index Fund
Mid-Cap Equity Fund
Small Cap Value Equity Fund
Small Cap Growth Stock Fund
Value Income Stock Fund
--------------------------------------------------------------------------------
Bond Funds 20-50%
Short-Term Bond Fund
Investment Grade Bond Fund
Limited-Term Federal Mortgage
Securities Fund
--------------------------------------------------------------------------------
Money Market Funds 0-20%
Prime Quality Money Market Fund
--------------------------------------------------------------------------------
Other STI Classic Funds may be utilized in the future.
Due to its investment strategy, this Life Vision Fund holds STI Classic Funds
that buy and sell securities frequently. This may result in higher transaction
costs and additional capital gains tax liabilities.
[INNERTUBE GRAPHIC OMITTED]
WHAT ARE THE RISKS OF INVESTING IN THIS LIFE VISION FUND?
The value of an investment in this Life Vision Fund is based primarily on the
performance of the underlying STI Classic Funds and the allocation of this Life
Vision Fund's assets among them. Since it purchases equity funds, this Life
Vision 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 an underlying STI Classic 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 this Life Vision Fund.
The prices of an underlying STI Classic 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 STI Classic 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.
This Life Vision Fund 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 this Life Vision
Fund will vary depending upon how the assets are allocated among the underlying
STI Classic Funds.
<PAGE>
PROSPECTUS 47
LIFE VISION GROWTH AND INCOME FUND
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in this Life Vision Fund. Of course, this Life
Vision Fund's past performance does not necessarily indicate how this Life
Vision Fund will perform in the future. The periods prior to June 1997, when the
Life Vision Fund began operating, represent the performance of the Adviser's
similarly managed asset allocation program. This past performance has been
adjusted to reflect current expenses for Trust Shares of the Fund. The Adviser's
asset allocation program 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
asset allocation program's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THIS LIFE VISION FUND'S TRUST
SHARES FROM YEAR TO YEAR.*
[Bar Graph Omitted]
Plot points are as follows:
1993 10.02%
1994 -3.52%
1995 22.68%
1996 12.16%
1997 18.08%
1998 11.16%
1999 7.95%
BEST QUARTER WORST QUARTER
13.65% -10.20%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THIS LIFE
VISION FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 3.19%.
THIS TABLE COMPARES THIS LIFE VISION FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDING DECEMBER 31, 1999 TO THOSE OF THE HYBRID 40/17/16/13/12/2 BLEND
OF THE FOLLOWING MARKET INDICES: THE RUSSELL 1000 INDEX, MERRILL LYNCH 1-5 YEAR
U.S. CORPORATE/ GOVERNMENT INDEX, LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT INDEX,
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST (MSCI
EAFE) INDEX, RUSSELL 2000 INDEX AND THE RUSSELL MID-CAP INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Life Vision Growth
and Income Fund 7.95% 14.29% 10.94%*
--------------------------------------------------------------------------------
Hybrid 40/17/16/13/12/2
Blend of the Following
Market Indices 15.34% 17.98% 14.84%*
--------------------------------------------------------------------------------
Russell 1000 Index 20.91% 28.04% 21.04%*
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Corporate/
Government Index 2.19% 6.86% 5.81%*
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 7.60% 6.42%*
--------------------------------------------------------------------------------
MSCI EAFE Index 26.96% 12.83% 14.71%*
--------------------------------------------------------------------------------
Russell 2000 Index 21.26% 16.69% 14.15%*
--------------------------------------------------------------------------------
Russell Mid-Cap Index 18.23% 21.86% 17.03%*
--------------------------------------------------------------------------------
* SINCE 12/31/92
<PAGE>
48 PROSPECTUS
LIFE VISION GROWTH AND INCOME FUND
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Russell 1000 Index measures the performance of
the 1,000 largest companies in the Russell 3000 Index, which represents
approximately 90% of the total market capitalization of the Russell 3000 Index.
The Merrill Lynch 1-5 Year U.S. Corporate/Government Index is a widely-
recognized, capitalization-weighted index including all U.S. Corporate
securities and U.S. Government securities with maturities of 1 year or greater
but less than 5 years from maturity. The Lehman Brothers U.S. Government/Credit
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 MSCI EAFE Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than smaller market capitalizations) index
of over 900 securities listed on the stock exchanges in Europe, Australasia and
the Far East. The country weighting of the Index is calculated using the market
capitalization of each of the various countries, and then with respect to the
market capitalization of the various companies operating in each country. The
Russell 2000 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. The Russell Mid-Cap Index measures the performance of
those Frank Russell Mid-Cap companies with higher price-to-book ratios and
higher forecasted growth values. The stocks are also members of the Russell 1000
Index.
[COINS GRAPHIC OMITTED]
FUND FEES AND EXPENSES
This table describes the Life Vision Fund's fees and expenses that you may pay
if you buy and hold this Life Vision Fund's shares. The table does not reflect
any of the operating costs and investment advisory fees of the underlying STI
Classic Funds. This Life Vision Fund and its shareholders will indirectly bear a
pro rata share of the expenses of the underlying STI Classic Funds.
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM LIFE VISION FUND ASSETS)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.25%
Other Expenses 0.17%
-----
Total Annual Portfolio Operating Expenses 0.42%
--------------------------------------------------------------------------------
EXAMPLE
--------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in this Life
Vision Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in this Life Vision 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, the
Life Vision Fund's operating expenses remain the same and you reinvest all
dividends and distributions. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$43 $135 $235 $530
--------------------------------------------------------------------------------
FUND EXPENSES
--------------------------------------------------------------------------------
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Life Vision
Fund expenses in the table above are shown as a percentage of the Life Vision
Fund's net assets. These expenses are deducted from Life Vision Fund assets. The
table shows the highest expenses that could be currently charged to the Life
Vision 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 0.08% and 0.25%, respectively. The Adviser could
discontinue this voluntary waiver at any time. For more information about
these fees, see "Investment Adviser."
<PAGE>
PROSPECTUS 49
LIFE VISION MODERATE GROWTH FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Life Vision Moderate Growth Fund principally invests in STI Classic Funds
that invest primarily in equity securities and fixed income securities. The
Fund'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 returns, volatility and expenses.
The Fund currently plans to invest in shares of the following underlying STI
Classic Funds within the percentage ranges indicated:
INVESTMENT RANGE (PERCENTAGE OF THE LIFE
ASSET CLASS VISION MODERATE GROWTH FUND'S ASSETS)
--------------------------------------------------------------------------------
Equity Funds 35-65%
Core Equity Fund
Growth and Income Fund
International Equity Index Fund
Mid-Cap Equity Fund
Small Cap Value Equity Fund
Small Cap Growth Stock Fund
Value Income Stock Fund
--------------------------------------------------------------------------------
Bond Funds 35-65%
Short-Term Bond Fund
Investment Grade Bond Fund
Limited-Term Federal Mortgage
Securities Fund
--------------------------------------------------------------------------------
Money Market Funds 0-20%
Prime Quality Money Market Fund
--------------------------------------------------------------------------------
Other STI Class Funds may be utilized in the future.
Due to its investment strategy, this Life Vision Fund holds STI Classic Funds
that buy and sell securities frequently. This may result in higher transaction
costs and additional capital gains taxes.
[INNERTUBE GRAPHIC OMITTED]
WHAT ARE THE RISKS OF INVESTING IN THIS LIFE VISION FUND?
The value of an investment in this Life Vision Fund is based primarily on the
performance of the underlying STI Classic Funds and the allocation of this Life
Vision Fund's assets among them. Since it purchases equity funds, this Life
Vision 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 an underlying STI Classic 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 this Life Vision Fund.
The prices of an underlying STI Classic 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 STI Classic 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.
This Life Vision Fund 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 this Life Vision
Fund will vary depending upon how the assets are allocated among the underlying
STI Classic Funds.
<PAGE>
50 PROSPECTUS
LIFE VISION MODERATE GROWTH FUND
[BULLSEYE GRAPHIC OMITTED]
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in this Life Vision Fund. Of course, this Life
Vision Fund's past performance does not necessarily indicate how this Life
Vision Fund will perform in the future. The periods prior to June 1997, when the
Life Vision Fund began operating, represent the performance of the Adviser's
similarly managed asset allocation program. This past performance has been
adjusted to reflect current expenses for Trust Shares of the Fund. The Adviser's
asset allocation program 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
asset allocation program's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THIS LIFE VISION FUND'S TRUST
SHARES FROM YEAR TO YEAR.*
[Bar Graph Omitted]
Plot points are as follows:
1993 9.26%
1994 -2.97%
1995 20.52%
1996 10.51%
1997 16.41%
1998 11.15%
1999 6.19%
BEST QUARTER WORST QUARTER
11.24% -7.99%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THIS LIFE
VISION FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.97%.
THIS TABLE COMPARES THIS LIFE VISION FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDED DECEMBER 31, 1999, TO THOSE OF A HYBRID 27/26/22/14/10/1 BLEND OF
THE FOLLOWING BENCHMARKS: THE RUSSELL 1000 INDEX, MERRILL LYNCH 1-5 YEAR U.S.
CORPORATE/ GOVERNMENT INDEX, LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT INDEX,
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND FAR EAST (MSCI
EAFE) INDEX, RUSSELL 2000 INDEX AND THE RUSSELL MID-CAP INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Life Vision Moderate
Growth Fund 6.19% 12.85% 9.93%*
--------------------------------------------------------------------------------
Hybrid 27/26/22/14/10/1
Blend of the Following
Benchmarks 11.58% 14.81% 12.42%*
--------------------------------------------------------------------------------
Russell 1000 Index 20.91% 28.04% 21.04%*
--------------------------------------------------------------------------------
Merrill Lynch 1-5 Year
U.S. Corporate/
Government Index 2.19% 6.86% 5.81%*
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 7.60% 6.42%*
--------------------------------------------------------------------------------
MSCI EAFE Index 26.96% 12.83% 14.71%*
--------------------------------------------------------------------------------
Russell 2000 Index 21.26% 16.69% 14.15%*
--------------------------------------------------------------------------------
Russell Mid-Cap Index 18.23% 21.86% 17.03%*
--------------------------------------------------------------------------------
* SINCE 12/31/92
<PAGE>
PROSPECTUS 51
LIFE VISION MODERATE GROWTH FUND
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 Russell 1000 Index measures the performance of
the 1,000 largest companies in the Russell 3000 Index, which represents
approximately 90% of the total market capitalization of the Russell 3000 Index.
The Merrill Lynch 1-5 Year U.S. Corporate/Government Index is a
widely-recognized, capitalization-weighted index including all U.S. Corporate
securities and U.S. Government securities with maturities of 1 year or greater
but less than 5 years from maturity. The Lehman Brothers U.S. Government/Credit
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 MSCI EAFE Index is a
widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than smaller market capitalizations) index
of over 900 securities listed on the stock exchanges in Europe, Australasia and
the Far East. The country weighting of the Index is calculated using the market
capitalization of each of the various countries, and then with respect to the
market capitalization of the various companies operating in each country. The
Russell 2000 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. The Russell Mid-Cap Index measures the performance of
those Frank Russell Mid-Cap companies with higher price-to-book ratios and
higher forecasted growth values. The stocks are also members of the Russell 1000
Index.
[COINS GRAPHIC OMITTED]
FUND FEES AND EXPENSES
This table describes this Life Vision Fund's fees and expenses that you may pay
if you buy and hold this Life Vision Fund's shares. The table does not reflect
any of the operating costs and investment advisory fees of the underlying STI
Classic Funds. This Life Vision Fund and its shareholders will indirectly bear a
pro rata share of the expenses of the underlying STI Classic Funds.
--------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM LIFE VISION FUND ASSETS)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.25%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 0.37%
--------------------------------------------------------------------------------
EXAMPLE
--------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in this Life
Vision Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in this Life Vision 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, the
Life Vision Fund's operating expenses remain the same and you reinvest all
dividends and distributions. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$38 $119 $208 $468
--------------------------------------------------------------------------------
FUND EXPENSES
--------------------------------------------------------------------------------
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Life Vision
Fund expenses in the table above are shown as a percentage of the Life Vision
Fund's net assets. These expenses are deducted from Life Vision Fund assets. The
table shows the highest expenses that could be currently charged to the Life
Vision 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 0.13% and 0.25%, respectively. The Adviser could
discontinue this voluntary waiver at any time. For more information about these
fees, see "Investment Adviser."
<PAGE>
52 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION ABOUT RISK
EQUITY RISK
BALANCED FUND
CAPITAL APPRECIATION FUND
CORE EQUITY FUND
E-COMMERCE OPPORTUNITY FUND
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
MID-CAP EQUITY FUND
SMALL CAP VALUE EQUITY FUND
SMALL CAP GROWTH STOCK FUND
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
LIFE VISION AGGRESSIVE GROWTH FUND
LIFE VISION GROWTH AND INCOME FUND
LIFE VISION MODERATE GROWTH FUND
Equity securities include public and privately 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
BALANCED FUND
INVESTMENT GRADE BOND FUND
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
SHORT-TERM BOND FUND
SHORT-TERM U.S. TREASURY SECURITIES FUND
LIFE VISION AGGRESSIVE GROWTH FUND
LIFE VISION GROWTH AND INCOME FUND
LIFE VISION MODERATE GROWTH FUND
The market value of fixed income 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
BALANCED FUND
INVESTMENT GRADE BOND FUND
SHORT-TERM BOND FUND
The possibility that an issuer will be unable to make timely payments of
either principal or interest.
FOREIGN SECURITY RISKS
GROWTH AND INCOME FUND
INTERNATIONAL EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
Investments in securities of foreign companies or governments can be more
volatile than 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
<PAGE>
PROSPECTUS 53
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
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
INTERNATIONAL EQUITY INDEX FUND
Factors such as 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.
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT FUND INVESTMENTS
This prospectus describes the Fund's primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, 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. The Small Cap Value Equity
Fund may invest in investment grade fixed income securities and mid to large cap
common stocks. 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.
[MAGNIFIER GRAPHIC OMITTED]
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
BALANCED FUND 0.85%
CAPITAL APPRECIATION FUND 1.06%
CORE EQUITY FUND 1.03%
E-COMMERCE OPPORTUNITY FUND 0.96%
GROWTH AND INCOME FUND 0.90%
INTERNATIONAL EQUITY FUND 1.25%
INTERNATIONAL EQUITY INDEX FUND 0.79%
INVESTMENT GRADE BOND FUND 0.67%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND 0.53%
MID-CAP EQUITY FUND 1.07%
SHORT-TERM BOND FUND 0.56%
SHORT-TERM U.S. TREASURY SECURITIES FUND 0.53%
SMALL CAP GROWTH STOCK FUND 1.10%
SMALL CAP VALUE EQUITY FUND 1.12%
TAX SENSITIVE GROWTH STOCK FUND 1.09%
U.S. GOVERNMENT SECURITIES FUND 0.67%
VALUE INCOME STOCK FUND 0.80%
<PAGE>
54 PROSPECTUS
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
PRIME QUALITY MONEY MARKET FUND 0.50%
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND 0.54%
U.S. TREASURY MONEY MARKET FUND 0.54%
LIFE VISION AGGRESSIVE GROWTH FUND 0.06%
LIFE VISION GROWTH AND INCOME FUND 0.08%
LIFE VISION MODERATE GROWTH FUND 0.13%
The Core Equity and E-Commerce Opportunity Funds had not completed a full fiscal
year as of May 31, 2000.
The Adviser may use its affiliates as brokers for Fund transactions.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as Investment 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 Value Equity Fund, and Value Income Stock Fund. On January 1, 2000,
SunTrust Bank (formerly SunTrust Bank, Atlanta), a subsidiary of SunTrust Banks,
Inc. succeeded STI as the Investment Adviser to those Funds. On July 1, 2000,
SunTrust Banks, Inc. reorganized its money management units, including those of
SunTrust Bank, into Trusco Capital Management, Inc. As a result, Trusco now
serves as the Investment Adviser to each STI Classic Fund including the Life
Vision Funds.
THE INVESTMENT TEAM
The Life Vision Moderate Growth Fund, Life Vision Growth and Income Fund and
Life Vision Aggressive Growth Fund 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. Robert J. Rhodes, CFA, Mr. Earl L.
Denney, CFA, and Mr. Dave E. West, CFA. Mr. Rhodes manages the equity portion of
the Fund. Mr. Denney and Mr. West co-manage the fixed-income portion of the
Fund. Mr. Rhodes has also managed the Core Equity Fund since it began operating
in September 1999 and the Capital Appreciation Fund since June 2000. Mr. Rhodes
is an Executive Vice President and head of the Equity Funds group at Trusco. Mr.
Rhodes has been employed by Trusco since 1973 and was Director of Research at
Trusco from 1980 to 2000. Mr. Rhodes has more than 27 years of investment
experience. Mr. West has served as a Managing Director of STI and has worked
there since 1985. In January 2000, he was named Managing Director of SunTrust
Bank and is now a Managing Director of Trusco. Mr. West has more than 14 years
of investment experience. Mr. Denney has served as Managing Director of STI
since 1983. In January 2000 he was named Managing Director of SunTrust Bank and
is now a Managing Director of Trusco. Mr. Denney has more than 21 years of
investment experience.
Mr. Alan S. Kelley has served as a Vice President of Trusco since July 2000. He
has managed the E-Commerce Opportunity Fund since it began operating in
September 1999. Prior to joining Trusco, Mr. Kelley served as a Portfolio
Manager with SunTrust Bank, Atlanta from 1995 to 1999. He has more than 7 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. From 1992 until July
2000, he 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, and Managing Director in July 2000. Mr.
Markunas has more than 17 years of investment experience.
The International Equity Index Fund is managed by Mr. Chad Deakins, CFA, and
co-managed by Mr. Robert J. Rhodes, CFA. Mr. Deakins serves as a Vice President
of Trusco and has worked there since 1996. He has co-managed the International
Equity Index Fund since February 1999. Mr. Deakins has also managed the
International Equity Fund since May 2000. Prior to joining Trusco, Mr. Deakins
worked at SunTrust Bank. He has more than 6 years of investment experience. Mr.
Rhodes is an Executive Vice President and head of the Equity Funds group at
Trusco. He has been employed by Trusco since 1973
<PAGE>
PROSPECTUS 55
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
and was Director of Research at Trusco from 1980 to 2000. Mr. Rhodes has
co-managed the International Equity Index Fund since it began operating in June
1994. Mr. Rhodes has more than 27 years of investment experience.
The Investment Grade Bond Fund and the Limited-Term Federal Mortgage Securities
Fund are co-managed by Mr. L. Earl Denney, CFA, and Mr. Dave E. West, CFA. Mr.
Denney has served as Managing Director of STI since 1983. In January 2000, he
was named Managing Director of SunTrust Bank and is now Managing Director of
Trusco. He has co-managed the Investment Grade Bond Fund since it began
operating in June 1992 and has co-managed the Limited-Term Mortgage Securities
Fund since it began operating in June 1994. He has more than 21 years of
investment experience. Mr. West has served as a Managing Director of STI and has
worked there since 1985. In January 2000, he was named Managing Director of
SunTrust Bank and is now a Managing Director of Trusco. He has co-managed the
Investment Grade Bond Fund since it began operating in June 1992 and has
co-managed the Limited-Term Federal Mortgage Securities Fund since it began
operating in June 1994. Mr. West has more than 14 years of investment
experience.
Mr. John Hamlin has served as a Vice President of Trusco since July 2000, after
serving as a 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 11 years of investment experience.
Ms. Agnes G. Pampush, CFA, has served as a Managing Director of Trusco since
July 2000, after serving as a Vice President of Trusco since 1998. Ms. Pampush
was employed by Trusco from 1988 to 1996, and rejoined the firm in 1998. She has
managed the Short-Term Bond Fund since February 1999. She has more than 18 years
of investment experience.
Mr. David S. Yealy has served as a Managing Director of Trusco since July 2000.
He has managed the Prime Quality Money Market Fund since it began operating in
June 1992, the Short-Term U.S. Treasury Securities Fund since July 1996, and the
U.S Treasury Money Market Fund since October 2000. Prior to July 2000, Mr. Yealy
was a First Vice President of Trusco and has worked there since 1991. 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. He has more than 13 years of investment experience.
Mr. Brett Barner, CFA, has served as a Vice President of Trusco since July 2000,
after serving as a Managing Director of STI since 1994. He has managed the Small
Cap Value Equity Fund since it began operating in January 1997. He has more than
16 years of investment experience.
Mr. Jonathan Mote, CFA, CFP, has served as a 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 15 years of investment
experience.
Mr. Neil J. Powers, CFA, joined Trusco in 1997 and serves as a Managing
Director. He has managed the U.S. Government Securities Fund since 2000. Prior
to joining Trusco, Mr. Powers worked at Putnam Investments, from 1986 to 1997,
where he managed multi-sector bond funds and separately managed institutional
accounts. He has more than 16 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 Trusco since July 2000,
after serving as a Managing Director of STI since 1994. He has managed the Value
Income Stock Fund since April 1995. Mr. Riddick has more than 18 years of
investment experience. Mr. Lewis has served as a Portfolio Manager of Trusco
since July 2000, after serving as a Portfolio Manager for STI since 1993. He has
been an analyst of the Value Income Stock Fund since 1995. He has more than 9
years of investment experience.
<PAGE>
56 PROSPECTUS
PURCHASING AND SELLING FUND SHARES
Mr. Robert S. Bowman, CFA, has served as a Vice President of Trusco since
January 1999. He has managed the U.S. Government Securities Money Market Fund
since October 2000. Prior to joining Trusco, Mr. Bowman served as an assistant
trader from 1994 to 1995 and Vice President of Crestar Asset Management Company
since 1995. He has more than 6 years of investment experience.
[HANDSHAKE GRAPHIC OMITTED]
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase 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. 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 Fund on your behalf, you may exchange those shares for Investor
Shares of the underlying Funds held by that Life Vision Fund. 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
<PAGE>
PROSPECTUS 57
PURCHASING AND SELLING FUND SHARES
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 of
the Fund.
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") 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>
58 PROSPECTUS
DIVIDENDS, DISTRIBUTIONS AND TAXES
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
MID-CAP EQUITY FUND
SMALL CAP VALUE EQUITY FUND
SMALL CAP GROWTH STOCK FUND
TAX SENSITIVE GROWTH STOCK FUND
VALUE INCOME STOCK FUND
LIFE VISION AGGRESSIVE GROWTH FUND
LIFE VISION GROWTH AND INCOME FUND
LIFE VISION MODERATE GROWTH FUND
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.
Dividends and distributions will accumulate on a tax-deferred basis if you are
investing through an employer-sponsored retirement or savings plan that
qualifies for tax-exempt treatment under federal income tax laws. Generally, you
will not owe taxes on these distributions until you begin withdrawals from the
plan. Withdrawals from the plan are subject to special tax rules and may be
subject to a penalty tax in the case of premature withdrawals. You should
consult your plan administrator, your plan's Summary Plan Description, and/or
your tax advisor about the tax consequences of plan withdrawals.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
PROSPECTUS 59
FINANCIAL HIGHLIGHTS
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, U.S. Treasury Money Market Fund, Life Vision
Aggressive Growth Fund, Life Vision Growth and Income Fund, and Life Vision
Moderate Growth 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 and U.S. Treasury Money Market Fund,
and the Life Vision Moderate Growth Fund, Life Vision Growth and Income Fund,
and Life Vision Aggressive Growth Fund 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
1-800-428-6970.
For the Periods Ended May 31, (unless otherwise indicated)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- -------------- -------------- ------------- --------- ----------
-------------
BALANCED FUND
-------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ................. $13.26 $0.32 $0.33 $(0.30) $(0.24) $13.37 5.02%
1999 ................. 13.09 0.28 1.09 (0.28) (0.92) 13.26 10.98
1998 ................. 11.94 0.31 2.19 (0.32) (1.03) 13.09 22.15
1997 ................. 11.55 0.33 1.47 (0.32) (1.09) 11.94 16.66
1996 ................. 10.26 0.33 1.41 (0.34) (0.11) 11.55 17.26
-------------------------
CAPITAL APPRECIATION FUND
-------------------------
Trust Shares
2000 ................. $16.62 $0.02 $1.40 $ -- $(0.92) $17.12 8.98%
1999 ................. 16.48 0.05 2.70 (0.06) (2.55) 16.62 17.83
1998 ................. 15.09 0.09 3.96 (0.09) (2.57) 16.48 29.51
1997 ................. 14.90 0.12 3.13 (0.12) (2.94) 15.09 24.66
1996 ................. 12.18 0.12 3.32 (0.13) (0.59) 14.90 28.97
--------------------------
GROWTH AND INCOME FUND (A)
--------------------------
Trust Shares
2000 ................. $16.09 $0.11 $0.55 $(0.10) $(1.12) $15.53 4.11%
1999(1) .............. 15.10 0.04 1.97 (0.02) (1.00) 16.09 14.24
For the years ended November 30:
1998 ................. 16.55 0.09 1.64 (0.09) (3.09) 15.10 13.64
1997 ................. 13.39 0.14 3.24 (0.15) (0.07) 16.55 25.41
1996 ................. 11.60 0.17 2.38 (0.17) (0.59) 13.39 22.68
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ----------- ---------- ----------------- --------------- ---------
-------------
BALANCED FUND
-------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 .............. $ 223,634 0.97% 2.39% 1.07% 2.29% 182%
1999 .............. 251,752 0.97 2.19 1.06 2.10 179
1998 .............. 188,465 0.96 2.51 1.08 2.39 154
1997 .............. 151,358 0.95 2.89 1.08 2.76 197
1996 .............. 111,638 0.95 3.00 1.09 2.86 155
-------------------------
CAPITAL APPRECIATION FUND
-------------------------
Trust Shares
2000 ............. $1,296,927 1.17% 0.10% 1.26% 0.01% 129%
1999 ............. 1,966,842 1.17 0.29 1.26 0.20 147
1998 ............. 1,532,587 1.16 0.61 1.27 0.50 194
1997 ............. 1,085,128 1.15 0.83 1.25 0.73 141
1996 ............. 981,498 1.15 0.90 1.27 0.78 156
--------------------------
GROWTH AND INCOME FUND (A)
--------------------------
Trust Shares
2000 ............. $ 885,109 1.01% 0.76% 1.01% 0.76% 53%
1999(1) .......... 634,279 1.14 0.49 1.43 0.20% 31
For the years ended November 30:
1998 ............. 577,042 1.03 0.63 1.21 0.45 71
1997 ............. 590,824 1.02 0.92 1.17 0.77 100
1996 ............. 553,648 1.02 1.38 1.17 1.23 82
<FN>
(+) 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 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.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
60 PROSPECTUS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- --------------- ------------- -------------- --------- ----------
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ............. $12.97 $(0.10) $ 1.42 $(0.07) $(1.66) $12.56 10.58%
1999 ............. 15.00 -- (1.14) (0.05) (0.84) 12.97 (7.43)
1998 ............. 13.63 0.04 2.69 (0.04) (1.32) 15.00 21.87
1997 ............. 11.40 0.03 2.57 (0.02) (0.35) 13.63 23.29
1996(1) .......... 10.00 0.05 1.35 -- -- 11.40 14.00
-------------------------------
INTERNATIONAL EQUITY INDEX FUND
-------------------------------
Trust Shares
2000 ............. $11.82 $ 0.16 $ 2.13 $(0.03) $(0.11) $13.97 19.36%
1999 ............. 13.31 0.09 0.85 (0.24) (2.19) 11.82 7.87
1998 ............. 11.34 0.11 2.65 (0.11) (0.68) 13.31 25.82
1997 ............. 10.96 0.10 0.69 (0.11) (0.30) 11.34 7.48
1996 ............. 10.24 0.10 0.84 (0.13) (0.09) 10.96 9.29
--------------------------
INVESTMENT GRADE BOND FUND
--------------------------
Trust Shares
2000 ............. $10.36 $ 0.61 $(0.78) $(0.61) $ -- $ 9.58 (1.76)%
1999 ............. 10.65 0.56 (0.11) (0.56) (0.18) 10.36 4.25
1998 ............. 10.16 0.60 0.49 (0.60) -- 10.65 10.92
1997 ............. 10.07 0.60 0.09 (0.60) -- 10.16 6.99
1996 ............. 10.26 0.60 (0.19) (0.60) -- 10.07 4.02
---------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
---------------------------------------------
Trust Shares
2000 ............. $ 9.94 $ 0.55 $(0.32) $(0.55) $ -- $ 9.62 2.33%
1999 ............. 10.12 0.54 (0.06) (0.54) (0.12) 9.94 4.75
1998 ............. 10.02 0.58 0.11 (0.58) (0.01) 10.12 7.12
1997 ............. 9.99 0.58 0.04 (0.58) (0.01) 10.02 6.43
1996 ............. 10.11 0.62 (0.14) (0.60) -- 9.99 4.84
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- --------- ------------ ----------------- --------------- ---------
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ............. $ 299,100 1.48% 0.59% 1.48% 0.59% 179%
1999 ............. 573,255 1.47 0.68 1.53 0.63 161
1998 ............. 628,870 1.47 0.61 1.48 0.60 108
1997 ............. 489,325 1.46 0.51 1.51 0.46 139
1996(1) .......... 213,306 1.46 1.36 1.65 1.17 113
--------------------
INTERNATIONAL EQUITY
--------------------
INDEX FUND
Trust Shares
2000 ............. $ 340,853 1.07% 0.83% 1.18% 0.72% 9%
1999 ............. 74,616 1.07 0.69 1.18 0.58 32
1998 ............. 56,200 1.06 0.88 1.18 0.76 1
1997 ............. 53,516 1.05 0.71 1.15 0.61 2
1996 ............. 90,980 1.05 0.84 1.19 0.70 30
--------------------------
INVESTMENT GRADE BOND FUND
--------------------------
Trust Shares
2000 ............. $ 998,596 0.77% 6.05% 0.84% 5.98% 202%
1999 ............. 1,149,068 0.77 5.25 0.85 5.17 221
1998 ............. 793,488 0.76 5.67 0.86 5.57 109
1997 ............. 633,646 0.75 5.89 0.85 5.79 298
1996 ............. 599,514 0.75 5.81 0.87 5.69 184
--------------------
LIMITED-TERM FEDERAL
--------------------
MORTGAGE SECURITIES FUND
Trust Shares
2000 ............. $ 125,355 0.67% 5.60% 0.79% 5.48% 384%
1999 ............. 135,256 0.67 5.28 0.77 5.18 379
1998 ............. 137,488 0.66 5.75 0.77 5.64 163
1997 ............. 123,903 0.65 5.81 0.78 5.68 133
1996 ............. 73,370 0.65 6.04 0.84 5.85 83
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on December 1, 1995. All ratios for the period have
been annualized.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 61
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- --------------- ------------- -------------- --------- ----------
-------------------
MID-CAP EQUITY FUND
-------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ............. $12.68 $(0.04) $ 2.32 $ -- $(0.86) $14.10 19.10%
1999 ............. 13.79 0.01 0.07 -- (1.19) 12.68 1.61
1998 ............. 13.21 -- 2.54 -- (1.96) 13.79 21.14
1997 ............. 12.76 0.03 1.69 (0.05) (1.22) 13.21 14.23
1996 ............. 11.00 0.08 2.63 (0.08) (0.87) 12.76 25.54
--------------------
SHORT-TERM BOND FUND
--------------------
Trust Shares
2000 ............. $ 9.91 $ 0.53 $(0.25) $(0.53) $(0.01) $ 9.65 2.87%
1999 ............. 10.05 0.51 (0.10) (0.52) (0.03) 9.91 4.06
1998 ............. 9.90 0.55 0.16 (0.55) (0.01) 10.05 7.31
1997 ............. 9.86 0.53 0.07 (0.53) (0.03) 9.90 6.30
1996 ............. 9.98 0.54 (0.10) (0.54) (0.02) 9.86 4.45
----------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
----------------------------------------
Trust Shares
2000 ............. $ 9.95 $ 0.46 $(0.10) $(0.46) $ -- $ 9.85 3.75%
1999 ............. 9.97 0.47 (0.02) (0.47) -- 9.95 4.59
1998 ............. 9.88 0.51 0.10 (0.52) -- 9.97 6.30
1997 ............. 9.84 0.51 0.04 (0.51) -- 9.88 5.76
1996 ............. 9.93 0.55 (0.09) (0.55) -- 9.84 4.73
---------------------------
SMALL CAP GROWTH STOCK FUND
---------------------------
Trust Shares
2000 ............. $14.55 $(0.08) $ 4.02 $ -- $(0.19) $18.30 27.24%
1999(1) .......... 10.00 (0.05) 4.62 -- (0.02) 14.55 45.70
---------------------------
SMALL CAP VALUE EQUITY FUND
---------------------------
Trust Shares
2000 ............. $ 9.70 $ 0.13 $(0.59) $(0.11) $ -- $ 9.13 (4.72)%
1999 ............. 12.88 0.13 (2.57) (0.13) (0.61) 9.70 (18.72)
1998 ............. 11.07 0.14 2.41 (0.12) (0.62) 12.88 23.59
1997(2) .......... 10.00 0.05 1.04 (0.02) -- 11.07 10.97
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- --------- ------------ ----------------- --------------- ---------
-------------------
MID-CAP EQUITY FUND
-------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ............. $206,545 1.17% $ -- 1.25% (0.08)% 131%
1999 ............. 254,055 1.17 (0.47) 1.28 (0.58) 76
1998 ............. 337,825 1.16 (0.29) 1.27 (0.40) 129
1997 ............. 287,370 1.15 0.23 1.26 0.12 152
1996 ............. 253,905 1.15 0.70 1.29 0.56 116
--------------------
SHORT-TERM BOND FUND
--------------------
Trust Shares
2000 ............. $180,402 0.67% 5.40% 0.76% 5.31% 70%
1999 ............. 209,904 0.67 5.12 0.77 5.02 108
1998 ............. 120,422 0.66 5.47 0.79 5.34 87
1997 ............. 89,701 0.65 5.37 0.78 5.24 118
1996 ............. 91,156 0.65 5.39 0.81 5.23 163
----------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
----------------------------------------
Trust Shares
2000 ............. $ 72,570 0.67% 4.70% 0.79% 4.58% 50%
1999 ............. 56,027 0.67 4.69 0.78 4.58 57
1998 ............. 46,920 0.66 5.19 0.84 5.01 39
1997 ............. 21,988 0.65 5.23 0.92 4.96 93
1996 ............. 10,149 0.65 5.56 1.00 5.21 94
---------------------------
SMALL CAP GROWTH STOCK FUND
---------------------------
Trust Shares
2000 ............. $431,478 1.20% (0.86)% 1.23% (0.89)% 110%
1999(1) .......... 152,290 1.20 (0.48) 1.49 (0.77) 75
---------------------------
SMALL CAP VALUE EQUITY FUND
---------------------------
Trust Shares
2000 ............. $212,074 1.22% 1.31% 1.25% 1.28% 65%
1999 ............. 301,984 1.22 1.27 1.27 1.22 63
1998 ............. 390,841 1.21 1.07 1.31 0.97 55
1997(2) .......... 131,049 1.20 1.86 1.37 1.69 27
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on October 8, 1998. All ratios for this period have
been annualized.
(2) Commenced operations on January 31, 1997. All ratios for the period have
been annualized.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
62 PROSPECTUS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- --------------- ------------- -------------- --------- ----------
-------------------------------
TAX SENSITIVE GROWTH STOCK FUND
-------------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ............. $29.96 $0.02 $3.12 $ -- $ -- $33.10 10.48%
1999(1) .......... 25.61 0.02 4.34 (0.01) -- 29.96 17.04
-------------------------------
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
Trust Shares
2000 ............. $10.28 $0.58 $(0.42) $(0.58) $ -- $ 9.86 1.63%
1999 ............. 10.46 0.59 (0.18) (0.59) -- 10.28 3.90
1998 ............. 10.02 0.61 0.44 (0.61) -- 10.46 10.76
1997 ............. 9.91 0.62 0.11 (0.62) -- 10.02 7.54
1996 ............. 10.27 0.62 (0.33) (0.62) (0.03) 9.91 2.77
-----------------------
VALUE INCOME STOCK FUND
-----------------------
Trust Shares
2000 ............. $12.85 $0.23 $(1.49) $(0.22) $(0.99) $10.38 (10.52)%
1999 ............. 13.90 0.24 1.02 (0.24) (2.07) 12.85 11.13
1998 ............. 13.71 0.26 2.62 (0.27) (2.42) 13.90 23.10
1997 ............. 13.15 0.30 2.32 (0.30) (1.76) 13.71 22.18
1996 ............. 11.59 0.35 2.71 (0.34) (1.16) 13.15 27.91
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- --------- ------------ ----------------- --------------- ---------
--------------------
TAX SENSITIVE GROWTH
--------------------
STOCK FUND
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ............. $ 710,179 1.20% 0.13% 1.26% 0.07% 30%
1999(1) .......... 223,543 1.20 0.21 1.34 0.07 18
--------------------------
U.S. GOVERNMENT SECURITIES
--------------------------
FUND
Trust Shares
2000 ............. $ 85,420 0.77% 5.77% 0.84% 5.70% 29%
1999 ............. 102,167 0.77 5.58 0.88 5.47 19
1998 ............. 34,899 0.76 5.93 0.92 5.77 14
1997 ............. 19,471 0.75 6.19 1.02 5.92 21
1996 ............. 10,277 0.75 6.05 1.25 5.55 83
-----------------------
VALUE INCOME STOCK FUND
-----------------------
Trust Shares
2000 ............. $ 921,797 0.89% 2.02% 0.89% 2.02% 62%
1999 ............. 1,589,951 0.92 1.91 0.92 1.91 69
1998 ............. 1,725,418 0.92 1.85 0.92 1.85 99
1997 ............. 1,488,062 0.91 2.40 0.91 2.40 105
1996 ............. 1,244,399 0.92 2.86 0.92 2.86 134
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on December 11, 1998. All ratios for the period have
been annualized.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 63
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET ASSET NET DISTRIBUTIONS
VALUE INVESTMENT FROM NET NET ASSET
BEGINNING INCOME INVESTMENT VALUE END TOTAL
OF PERIOD (LOSS) INCOME OF PERIOD RETURN (+)
--------- ---------- ------------- --------- ----------
-------------------------------
PRIME QUALITY MONEY MARKET FUND
-------------------------------
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 ............. $1.00 $0.05 $(0.05) $1.00 5.20%
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
--------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
--------------------------------------------
Trust Shares
2000 ............. $1.00 $0.05 $(0.05) $1.00 4.86%
1999 ............. 1.00 0.04 (0.04) 1.00 4.57
1998 ............. 1.00 0.05 (0.05) 1.00 5.04
1997 ............. 1.00 0.05 (0.05) 1.00 4.83
1996 ............. 1.00 0.05 (0.05) 1.00 5.14
----------------------------------
U.S. TREASURY MONEY MARKET FUND (A)
----------------------------------
Trust Shares
2000 ............. $1.00 $0.05 $(0.05) $1.00 4.81%
1999* ............ 1.00 0.02 (0.02) 1.00 2.08
For the Year Ended November 30:
1998 ............. 1.00 0.05 (0.05) 1.00 4.89
1997 ............. 1.00 0.05 (0.05) 1.00 4.91
1996 ............. 1.00 0.05 (0.05) 1.00 4.80
</TABLE>
<TABLE>
<CAPTION>
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS
----------- ----------- ------------ ----------------- -----------------
-------------------------------
PRIME QUALITY MONEY MARKET FUND
-------------------------------
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 ............. $3,311,229 0.60% 5.06% 0.75% 4.91%
1999 ............. 3,903,232 0.60 4.69 0.77 4.52
1998 ............ 1,880,229 0.59 5.10 0.77 4.92
1997 ............ 1,086,555 0.58 4.90 0.76 4.72
1996 ............ 1,050,800 0.58 5.11 0.78 4.91
--------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
--------------------------------------------
Trust Shares
2000 ............. $ 468,568 0.63% 4.80% 0.74% 4.69%
1999 ............. 404,459 0.63 4.47 0.76 4.34
1998 ............. 377,490 0.62 4.92 0.78 4.76
1997 ............. 344,350 0.61 4.73 0.76 4.58
1996 ............. 325,493 0.61 5.02 0.78 4.85
-----------------------------------
U.S. TREASURY MONEY MARKET FUND (A)
-----------------------------------
Trust Shares
2000 ............. $ 723,277 0.63% 4.71% 0.74% 4.60%
1999* ............ 760,833 0.68 4.10 0.83 3.95
For the Year Ended
November 30:
1998 ............. 699,923 0.66 4.77 0.81 4.62
1997 ............. 632,381 0.65 4.82 0.80 4.67
1996 ............. 389,051 0.66 4.69 0.81 4.54
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
* For the period December 1, 1998 to May 31, 1999. All ratios have not been
annualized.
(A) On May 24, 1999, the CrestFunds U.S. Treasury Money Fund exchanged all of
its assets and certain liabilities for shares of the U.S. Treasury Money
Market Fund. The CrestFunds 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.
</FN>
</TABLE>
<PAGE>
64 PROSPECTUS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET NET AND DISTRIBUTIONS
VALUE INVESTMENT UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- --------------- ------------- -------------- --------- ----------
-------------------------------------
LIFE VISION AGGRESSIVE GROWTH FUND (A)
-------------------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ............. $11.31 $0.05 $0.74 $(0.05) $(0.40) $11.61 7.25%
1999(1) .......... 11.32 0.02 1.13 (0.01) (1.15) 11.31 10.99
For the years ended November 30:
1998 ............. 10.65 0.03 0.67 (0.03) -- 11.32 6.53
1997(2) .......... 10.00 0.03 0.65 (0.03) -- 10.65 6.82
-------------------------------------
LIFE VISION GROWTH AND INCOME FUND (A)
-------------------------------------
Trust Shares
2000 ............. $10.33 $0.07 $0.52 $(0.17) $(0.25) $10.50 5.81%
1999(1) .......... 11.06 0.08 0.69 (0.06) (1.44) 10.33 7.75
For the years ended November 30:
1998 ............. 10.51 0.18 0.56 (0.18) (0.01) 11.06 7.12
1997(2) .......... 10.00 0.09 0.51 (0.09) -- 10.51 5.97
------------------------------------
LIFE VISION MODERATE GROWTH FUND (A)
------------------------------------
Trust Shares
2000 ............. $10.80 $0.33 $0.13 $(0.21) $(0.44) $10.61 4.46%
1999(1) .......... 11.01 0.11 0.56 (0.09) (0.79) 10.80 6.35
For the years ended November 30:
1998 ............. 10.46 0.24 0.58 (0.24) (0.03) 11.01 7.90
1997(2) .......... 10.00 0.12 0.45 (0.11) -- 10.46 5.70
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ----------- ------------ ----------------- ----------------- ---------
-------------------------------------
LIFE VISION AGGRESSIVE GROWTH FUND (A)
-------------------------------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 ............. $18,412 0.25% 0.48% 0.44% 0.29% 183%
1999(1) .......... 18,699 0.27 0.28 0.63 (0.08) 33
For the years ended November 30:
1998 ............. 16,230 0.25 0.23 0.66 (0.18) 75
1997(2) .......... 13,712 0.25 0.72 0.73 0.24 34
--------------------------------------
LIFE VISION GROWTH AND INCOME FUND (A)
--------------------------------------
Trust Shares
2000 ............. $30,473 0.25% 1.77% 0.42% 1.60% 189%
1999(1) .......... 21,950 0.27 1.38 0.60 1.05 40
For the years ended November 30:
1998 ............. 19,042 0.25 1.68 0.59 1.34 57
1997(2) .......... 22,521 0.25 2.11 0.59 1.77 25
-----------------------------------
LIFE VISION MODERATE GROWTH FUND (A)
-----------------------------------
Trust Shares
2000 ............. $69,622 0.25% 2.19% 0.37% 2.07% 151%
1999(1) .......... 88,188 0.27 1.90 0.42 1.75 48
For the years ended November 30:
1998 ............. 93,211 0.25 2.21 0.42 2.04 52
1997(2) .......... 89,442 0.25 2.66 0.42 2.49 43
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
(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.
(A) May 24, 1999, the CrestFunds Life Vision Balanced, CrestFunds Life Vision
Growth and Income, and CrestFunds Life Vision Maximum Growth portfolios
exchanged all of their assets and certain liabilities for shares of the Life
Vision Moderate Growth, Life Vision Growth and Income, and Life Vision
Aggressive Growth Funds, respectively. The CrestFunds Life Vision Balanced,
CrestFunds Life Vision Growth and Income, and CrestFunds 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.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 65
NOTES
<PAGE>
66 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 67
NOTES
<PAGE>
68 PROSPECTUS
NOTES
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
70 PROSPECTUS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, 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 and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by emailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
XXX-XXXX
<PAGE>
[401K Logo Omitted]
PROSPECTUS
October 1, 2000
STI CLASSIC FUNDS
FOR THE SUNTRUST
401(K) PLAN
Capital Appreciation Fund
Growth and Income Fund
Investment Grade Bond Fund
Prime Quality Money Market Fund
Short-Term Bond Fund
Small Cap Growth Stock Fund
Value Income Stock Fund
[401K Plan Logo Omitted]
Investment Adviser
to the Funds:
Trusco Capital
Management, Inc.
("The Adviser")
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>
PROSPECTUS
ABOUT 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 each Fund 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 THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
2 CAPITAL APPRECIATION FUND
4 GROWTH AND INCOME FUND
6 INVESTMENT GRADE BOND FUND
8 PRIME QUALITY MONEY MARKET FUND
10 SHORT-TERM BOND FUND
12 SMALL CAP GROWTH STOCK FUND
14 VALUE INCOME STOCK FUND
16 MORE INFORMATION ABOUT RISK
16 MORE INFORMATION ABOUT FUND INVESTMENTS
17 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
18 PURCHASING AND SELLING FUND SHARES
20 DIVIDENDS, DISTRIBUTIONS AND TAXES
21 FINANCIAL HIGHLIGHTS
29 HOW TO OBTAIN MORE INFORMATION ABOUT
THE STI CLASSIC FUNDS
--------------------------------------------------------------------------------
[BRIEFCASE GRAPHIC OMITTED] FUND SUMMARY
[TELESCOPE GRAPHIC OMITTED] INVESTMENT STRATEGY
[INNERTUBE GRAPHIC OMITTED] WHAT ARE THE RISKS OF INVESTING?
[BULLSEYE GRAPHIC OMITTED] PERFORMANCE INFORMATION
[CHART GRAPHIC OMITTED] WHAT IS AN INDEX?
[COINS GRAPHIC OMITTED] FUND FEES AND EXPENSES
[MOUNTAINTOP GRAPHIC OMITTED] MORE INFORMATION ABOUT FUND INVESTMENTS
[MAGNIFIER GRAPHIC OMITTED] INVESTMENT ADVISER
[HANDSHAKE GRAPHIC OMITTED] PURCHASING AND SELLING FUND SHARES
--------------------------------------------------------------------------------
OCTOBER 1, 2000
<PAGE>
PROSPECTUS 1
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
Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser 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 prices of the securities a 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>
2 PROSPECTUS
CAPITAL APPRECIATION FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Capital Appreciation Fund invests primarily in U.S. common stocks and other
equity securities that the Adviser believes have strong business fundamentals,
such as revenue growth, cash flows and earnings trends. In selecting investments
for the Fund, the Adviser chooses companies that it believes have above average
growth potential. 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
plot points are as follows:
1993 9.89%
1994 -7.41%
1995 31.15%
1996 20.31%
1997 31.13%
1998 28.06%
1999 9.71%
BEST QUARTER WORST QUARTER
22.93% -11.16%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 5.91%.
<PAGE>
PROSPECTUS 3
CAPITAL APPRECIATION FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500 INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Capital Appreciation
Fund 9.71% 23.79% 17.41%*
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 21.24%**
--------------------------------------------------------------------------------
* SINCE 7/1/92
** SINCE 6/30/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.26%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5YEARS 10 YEARS
$128 $400 $692 $1,523
--------------------------------------------------------------------------------
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 1.13% and 1.24%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
4 PROSPECTUS
GROWTH AND INCOME FUND
[BRIEFCASE GRAPHIC OMITTED]
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 earnings
potential 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in equity securities, including
common stock and listed American Depositary Receipts (ADRs), 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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
plot points are as follows:
1993 10.20%
1994 -0.81%
1995 29.38%
1996 19.06%
1997 27.69%
1998 18.20%
1999 14.17%
BEST QUARTER WORST QUARTER
17.38% -10.36%
(6/30/97) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -0.35%.
<PAGE>
PROSPECTUS 5
GROWTH AND INCOME FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX. PREVIOUSLY,
THE FUND'S RETURNS HAD BEEN COMPARED TO THE S&P 500 INDEX, BUT THE ADVISER
BELIEVES THAT S&P 500/BARRA VALUE INDEX, BECAUSE OF ITS GREATER EMPHASIS ON
LARGE CAP VALUE STOCKS, MORE ACCURATELY REFLECTS THE TYPE OF SECURITIES IN WHICH
THE FUND INVESTS.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Growth and Income
Fund 14.17% 21.56% 16.83%*
--------------------------------------------------------------------------------
S&P 500/
BARRA Value Index 12.72% 22.94% 18.54%**
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 21.52%**
--------------------------------------------------------------------------------
* SINCE 9/26/92
** SINCE 9/30/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 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 S&P 500/BARRA Value Index
is a widely-recognized index of the stocks in the S&P 500 Index that have lower
price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.90%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 1.01%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$103 $322 $558 $1,236
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
6 PROSPECTUS
INVESTMENT GRADE BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 U.S. Government/Credit 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.
[INNERTUBE GRAPHIC OMITTED]
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. Mortgage-backed securities 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.
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.
[BULLSEYE GRAPHIC OMITTED]
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 BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
[Bar Chart Omitted]
plot points are as follows:
1993 10.84%
1994 -3.32%
1995 17.80%
1996 2.34%
1997 9.08%
1998 9.19%
1999 -1.53%
BEST QUARTER WORST QUARTER
6.11% -2.67%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 0.45%.
<PAGE>
PROSPECTUS 7
INVESTMENT GRADE BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX, LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND THE LIPPER INTERMEDIATE
INVESTMENT GRADE DEBT FUNDS AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Investment Grade
Bond Fund -1.53% 7.17% 6.07%*
--------------------------------------------------------------------------------
Lehman Brothers
U.S. Government/
Credit Index -2.15% 7.60% 6.38%**
--------------------------------------------------------------------------------
Lehman Brothers U.S.
Aggregate Bond Index -0.83% 7.73% 6.40%**
--------------------------------------------------------------------------------
Lipper Intermediate
Investment Grade
Debt Funds Average -1.31% 6.79% 5.81%**
--------------------------------------------------------------------------------
* SINCE 7/16/92
** SINCE 7/31/92
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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 Lehman Brothers U.S. Aggregate
Bond Index is a widely-recognized, market value-weighted (higher market value
stocks have more influence than lower market value stocks) index that combines
the Lehman Brothers U.S. Government/Credit Index and the Lehman Brothers
Mortgage-Backed Securities Index. The Lehman Brothers U.S. Government/Credit
Index consists of U.S. government obligations and corporate debt securities. The
Lehman Brothers Mortgage-Backed Securities Index consists of mortgage-backed
securities rated AAA. The Lehman Brothers U.S. Aggregate Bond Index includes
fixed income securities rated investment grade (BBB) or higher, with maturities
of at least one-year. The securities in the Index have outstanding par values of
at least $100 million for U.S. government obligations and $25 million for the
others. The Lipper Intermediate Investment Grade Debt Funds Average is a
composite of mutual funds with investment goals similar to the Fund's goals. It
reports the average return of the intermediate term investment grade bond mutual
funds tracked by Lipper Analytical Services, Inc. The number of funds in the
Average varies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.74%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.84%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$86 $268 $466 $1,037
--------------------------------------------------------------------------------
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 0.72% and 0.82%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
8 PROSPECTUS
PRIME QUALITY MONEY MARKET FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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 BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
[Bar Chart Omitted]
plot points are as follows:
1993 2.77%
1994 3.77%
1995 5.47%
1996 4.99%
1997 5.15%
1998 5.10%
1999 4.74%
BEST QUARTER WORST QUARTER
1.37% 0.68%
(6/30/95) (6/30/93)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.83%.
<PAGE>
PROSPECTUS 9
PRIME QUALITY MONEY MARKET FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. FIRST TIER AVERAGE.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Prime Quality Money
Market Fund 4.74% 5.09% 4.45%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
First Tier Average 4.57% 4.97% 4.33%**
--------------------------------------------------------------------------------
* SINCE 6/8/92
** SINCE 5/31/92
To obtain information about the Fund's yield, call 1-800-814-3397.
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
WHAT IS AN AVERAGE?
--------------------------------------------------------------------------------
An average is a composite of mutual funds with similar investment goals. The
iMoneyNet, Inc. First Tier Average is a widely-recognized composite of money
market funds which invest in securities rated in the highest category by at
least two recognized rating agencies.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.10%
-----
Total Annual Fund Operating Expenses 0.75%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$77 $240 $417 $930
--------------------------------------------------------------------------------
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 0.64%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
10 PROSPECTUS
SHORT-TERM BOND FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
Mortgage-backed and asset-backed securities 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 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 the
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.
[BULLSEYE GRAPHIC OMITTED]
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 BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
[Bar Chart Omitted]
plot points are as follows:
1994 -0.07%
1995 11.77%
1996 3.90%
1997 6.78%
1998 6.84%
1999 0.92%
BEST QUARTER WORST QUARTER
3.76% -0.58%
(6/30/95) (3/31/94)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.83%.
<PAGE>
PROSPECTUS 11
SHORT-TERM BOND FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE SALOMON 1-3 YEAR TREASURY/GOVERNMENT
SPONSORED/CORPORATE INDEX.
TRUST SHARES 1 YEAR 5 YEARS SINCE INCEPTION
--------------------------------------------------------------------------------
Short-Term Bond Fund 0.92% 5.98% 4.97%*
--------------------------------------------------------------------------------
Salomon 1-3 Year
Treasury/Government
Sponsored/Corporate
Index 3.29% 6.56% 5.41%**
--------------------------------------------------------------------------------
* SINCE 3/15/93
** SINCE 2/28/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/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
of 1 year or greater and less than 3 years.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.65%
Other Expenses 0.11%
-----
Total Annual Fund Operating Expenses 0.76%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$78 $243 $422 $942
--------------------------------------------------------------------------------
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 0.60% and 0.71%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
12 PROSPECTUS
SMALL CAP GROWTH STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
INVESTMENT STRATEGY
The Small Cap Growth Stock Fund invests primarily in small U.S. companies with
market capitalizations between $50 million and $3 billion in size. The Fund's
investment philosophy is based on the premise that a portfolio of small cap
stocks with positive earnings trends, reasonable valuation, and strong
fundamentals will provide superior returns over time. The Adviser selects
companies with strong current earnings growth, improving profitability, a strong
balance sheet, strong current and projected business fundamentals, and priced at
reasonable valuations. The Adviser believes in executing a very disciplined and
objective investment process and in controlling risk through a broadly
diversified portfolio. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and the
potential for capital gains tax liabilities for taxable investors.
[INNERTUBE GRAPHIC OMITTED]
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 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.
[BULLSEYE GRAPHIC OMITTED]
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 THE PERFORMANCE OF THE FUND'S TRUST SHARES FOR ONE YEAR.*
[Bar Chart Omitted]
Plot points are as follows:
1999 20.55%
BEST QUARTER WORST QUARTER
20.77% -11.36%
(6/30/99) (3/31/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 16.26%.
<PAGE>
PROSPECTUS 13
SMALL CAP GROWTH STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 600 SMALL CAP INDEX.
TRUST SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Small Cap Growth Stock Fund 20.55% 58.61%*
--------------------------------------------------------------------------------
S&P 600 Small Cap Index 12.41% 25.01%**
--------------------------------------------------------------------------------
* SINCE 10/8/98
** SINCE 9/30/98
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 600 Small Cap Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of 600 domestic
small cap stocks.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 1.15%
Other Expenses 0.08%
-----
Total Annual Fund Operating Expenses 1.23%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$125 $390 $676 $1,489
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
14 PROSPECTUS
VALUE INCOME STOCK FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS
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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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.
[INNERTUBE GRAPHIC OMITTED]
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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[Bar Chart Omitted]
Plot points are as follows:
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%
1999 -2.93%
BEST QUARTER WORST QUARTER
18.56% -14.86%
(3/31/91) (9/30/90)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS -6.33%.
<PAGE>
PROSPECTUS 15
VALUE INCOME STOCK FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE S&P 500/BARRA VALUE INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
--------------------------------------------------------------------------------
Value Income
Stock Fund -2.93% 17.24% 15.02% 15.06%*
--------------------------------------------------------------------------------
S&P 500/BARRA
Value Index 12.72% 22.94% 15.37% 15.46%*
--------------------------------------------------------------------------------
* SINCE 10/31/89
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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/BARRA Value Index is a widely-recognized
index of the stocks in the S&P 500 Index that have lower price-to-book ratios.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.80%
Other Expenses 0.09%
-----
Total Annual Fund Operating Expenses 0.89%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$91 $284 $493 $1,096
--------------------------------------------------------------------------------
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 Adviser."
<PAGE>
16 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION ABOUT RISK
EQUITY RISK
CAPITAL APPRECIATION FUND
GROWTH AND INCOME FUND
SMALL CAP GROWTH STOCK FUND
VALUE INCOME STOCK FUND
Equity securities include public and privately 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
INVESTMENT GRADE BOND FUND
SHORT-TERM BOND FUND
The market value of fixed income investments changes 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 will be unable to make timely payments of
either principal or interest.
FOREIGN SECURITY RISKS
GROWTH AND INCOME FUND
Investments in securities of foreign companies or governments can be more
volatile than 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.
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT FUND 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 the
Adviser uses under normal conditions. During unusual economic or
<PAGE>
PROSPECTUS 17
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
market conditions, or for temporary defensive or liquidity purposes, each Fund
(except the Prime Quality Money Market Fund) 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 the
Prime Quality 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.
[MAGNIFIER GRAPHIC OMITTED]
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
CAPITAL APPRECIATION FUND 1.06%
GROWTH AND INCOME FUND 0.90%
INVESTMENT GRADE BOND FUND 0.67%
PRIME QUALITY MONEY MARKET FUND 0.50%
SHORT-TERM BOND FUND 0.56%
SMALL CAP GROWTH STOCK FUND 1.12%
VALUE INCOME STOCK FUND 0.80%
The Adviser may use its affiliates as brokers for Fund transactions.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as investment adviser to the Capital
Appreciation Fund, Investment Grade Bond Fund and Value Income Stock Fund. On
January 1, 2000, SunTrust Bank (formerly SunTrust Bank, Atlanta), a subsidiary
of SunTrust Banks, Inc., succeeded STI as the Investment Adviser to those Funds.
On July 1, 2000, SunTrust Banks, Inc. reorganized its money management units,
including those of SunTrust Bank, into Trusco Capital Management, Inc. As a
result, Trusco now serves as the Investment Adviser to each STI Classic Fund.
PORTFOLIO MANAGERS
The Capital Appreciation Fund is managed by Mr. Robert J. Rhodes, CFA. Mr.
Rhodes is an Executive Vice President and head of the Equity Funds group at
Trusco. He has been employed by Trusco since 1973 and was Director of Research
at Trusco from 1980 to 2000. Mr. Rhodes has more than 27 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. From 1992 until July
2000, he 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 and Managing Director in July 2000. Mr.
Markunas has more than 17 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 has served as Managing Director of STI since 1983.
In January 2000, Mr. Denney was named Managing Director of SunTrust Bank and is
now Managing Director of Trusco. Mr. Denney has co-managed the Investment Grade
Bond Fund since it began operating in June 1992. Mr. Denney has more than 21
years of investment experience. Mr. West has served as a Managing Director of
STI and has worked there since 1985. In January 2000, Mr. West was named
Managing Director of SunTrust Bank and is now a Managing Director of Trusco. Mr.
West has co-managed the Investment Grade Bond Fund since it began operating in
June 1992. Mr. West has more than 14 years of investment experience.
Mr. David S. Yealy has served as a Managing Director of Trusco since July 2000.
He has managed
<PAGE>
18 PROSPECTUS
PURCHASING AND SELLING FUND SHARES
the Prime Quality Money Market Fund since it began operating in June 1992. Prior
to July 2000, Mr. Yealy was a First Vice President of Trusco and has worked
there since 1991. He has more than 15 years of investment experience
Ms. Agnes G. Pampush, CFA, has served as a Managing Director of Trusco since
July 2000, after serving as a Vice President of Trusco since 1998. Ms. Pampush
was employed by Trusco from 1988 to 1996, and rejoined the firm in 1998. She has
managed the Short-Term Bond Fund since February 1999. She has more than 18 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. 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 Trusco since July 2000,
after serving as a Managing Director of STI since 1994. He has managed the Value
Income Stock Fund since April 1995. Mr. Riddick has more than 18 years of
investment experience. Mr. Lewis has served as a Portfolio Manager of Trusco
since July 2000, after serving as a Portfolio Manager for STI since 1993. He has
been an analyst of the Value Income Stock Fund since 1995. He has more than 9
years of investment experience.
[HANDSHAKE GRAPHIC OMITTED]
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase or 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. 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.
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 Prime Quality
Money Market Fund 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 Prime Quality Money Market Fund), generally the Funds must receive
your purchase order before 4:00 p.m. Eastern time. The Prime Quality 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 Prime Quality Money Market Fund must
generally receive your order before 3:00 p.m. Eastern time and 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 the
Prime Quality 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
<PAGE>
PROSPECTUS 19
PURCHASING AND SELLING FUND SHARES
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, a Fund (except the Prime Quality Money Market Fund)
generally values its investment portfolio at market price. In calculating NAV
for the Prime Quality Money Market Fund, the 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. The Prime Quality Money Market Fund expects its NAV to remain
constant at $1.00 per share, although the Fund cannot guarantee this.
The Growth and Income Fund holds securities that are listed on foreign
exchanges. These securities may trade on weekends or other days when the Fund
does not calculate NAV. As a result, the market value of the Fund's 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 of
the Fund.
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") 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 Prime Quality Money Market Fund on a
Business Day before 3:00 p.m. Eastern time. Orders received after 3:00 p.m.
Eastern 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 Funds receive 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
The 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>
20 PROSPECTUS
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income as follows:
DECLARED DAILY AND DISTRIBUTED MONTHLY
--------------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND
PRIME QUALITY MONEY MARKET FUND
SHORT-TERM BOND FUND
QUARTERLY
--------------------------------------------------------------------------------
CAPITAL APPRECIATION
GROWTH AND INCOME FUND
SMALL CAP GROWTH STOCK FUND
VALUE INCOME STOCK FUND
Each Fund makes distributions of capital gains, if any, at least annually. If
the SunTrust 401(k) Plan owns Fund shares on a Fund's record date, the Plan is
entitled to receive the distribution.
As Plan participants, you will receive dividends and distributions in the form
of additional Fund shares if you own shares of the Fund on the date the dividend
or distribution is allocated by the Plan. You will, therefore, not receive a
dividend or distribution if you do not own shares of the Fund on the date the
dividend or distribution is allocated.
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.
Dividends and distributions will accumulate on a tax-deferred basis if you are
investing through the SunTrust 401(k) Plan. Generally, you will not owe taxes on
these distributions until you begin withdrawals from the Plan. Withdrawals from
the Plan are subject to special tax rules and may be subject to a penalty in the
case of premature withdrawals. If you have questions about the tax consequences
of Plan withdrawals, you should consult your tax adviser; the Plan's Summary
Plan Description in the SunTrust Employee Handbook; BENE, the SunTrust Benefits
Service Center, at 1-800-818-2363; or the Plan Administrator, SunTrust Human
Resources, P.O. Box 4418, Center 636, Atlanta, Georgia 30302.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
PROSPECTUS 21
FINANCIAL HIGHLIGHTS
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. 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 report 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 reports, which contains more performance information, at no
charge by calling 1-800-428-6970.
For the Periods Ended May 31, (unless otherwise indicated)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET AND DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- -------------- ------------- ------------- --------- ----------
CAPITAL APPRECIATION FUND
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ........ $16.62 $0.02 $ 1.40 $ -- $(0.92) $17.12 8.98%
1999 ........ 16.48 0.05 2.70 (0.06) (2.55) 16.62 17.83
1998 ........ 15.09 0.09 3.96 (0.09) (2.57) 16.48 29.51
1997 ........ 14.90 0.12 3.13 (0.12) (2.94) 15.09 24.66
1996 ........ 12.18 0.12 3.32 (0.13) (0.59) 14.90 28.97
GROWTH AND INCOME FUND (A)
Trust Shares
2000 ........ $16.09 $0.11 $ 0.55 $(0.10) $(1.12) $15.53 4.11%
1999(1) ..... 15.10 0.04 1.97 (0.02) (1.00) 16.09 14.24
For the years ended November 30:
1998 ........ $16.55 0.09 1.64 (0.09) (3.09) 15.10 13.64
1997 ........ 13.39 0.14 3.24 (0.15) (0.07) 16.55 25.41
1996 ........ 11.60 0.17 2.38 (0.17) (0.59) 13.39 22.68
INVESTMENT GRADE BOND FUND
Trust Shares
2000 ........ $10.36 $0.61 $(0.78) $(0.61) $ -- $ 9.58 (1.76)%
1999 ........ 10.65 0.56 (0.11) (0.56) (0.18) 10.36 4.25
1998 ........ 10.16 0.60 0.49 (0.60) -- 10.65 10.92
1997 ........ 10.07 0.60 0.09 (0.60) -- 10.16 6.99
1996 ........ 10.26 0.60 (0.19) (0.60) -- 10.07 4.02
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ------------ ------------ ----------------- ----------------- --------
CAPITAL APPRECIATION FUND
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C>
2000 ........ $1,296,927 1.17% 0.10% 1.26% 0.01% 129%
1999 ........ 1,966,842 1.17 0.29 1.26 0.20 147
1998 ........ 1,532,587 1.16 0.61 1.27 0.50 194
1997 ........ 1,085,128 1.15 0.83 1.25 0.73 141
1996 ........ 981,498 1.15 0.90 1.27 0.78 156
GROWTH AND INCOME FUND (A)
Trust Shares
2000 ........ $ 885,109 1.01% 0.76% 1.01% 0.76% 53%
1999(1) ..... 634,279 1.14 0.49 1.43 0.20 31
FOR THE YEARS ENDED NOVEMBER 30:
1998 ........ $ 577,042 1.03 0.63 1.21 0.45 71
1997 ........ 590,824 1.02 0.92 1.17 0.77 100
1996 ........ 553,648 1.02 1.38 1.17 1.23 82
INVESTMENT GRADE BOND FUND
Trust Shares
2000 ........ $ 998,596 0.77% 6.05% 0.84% 5.98% 202%
1999 ........ 1,149,068 0.77 5.25 0.85 5.17 221
1998 ........ 793,488 0.76 5.67 0.86 5.57 109
1997 ........ 633,646 0.75 5.89 0.85 5.79 298
1996 ........ 599,514 0.75 5.81 0.87 5.69 184
<FN>
(+) 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 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.
Amounts designated as "--" are either 0 or round to $0.
</FN>
</TABLE>
<PAGE>
22 PROSPECTUS
FINANCIAL HIGHLIGHTS
For the Periods Ended May 31, (unless otherwise indicated)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET AND DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ------------ -------------- ------------- ------------- --------- ----------
PRIME QUALITY MONEY MARKET FUND
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 ........ $ 1.00 $ 0.05 $ -- $(0.05) $ -- $ 1.00 5.20%
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
SHORT-TERM BOND FUND
Trust Shares
2000 ........ $ 9.91 $ 0.53 $(0.25) $(0.53) $(0.01) $ 9.65 2.87%
1999 ........ 10.05 0.51 (0.10) (0.52) (0.03) 9.91 4.06
1998 ........ 9.90 0.55 0.16 (0.55) (0.01) 10.05 7.31
1997 ........ 9.86 0.53 0.07 (0.53) (0.03) 9.90 6.30
1996 ........ 9.98 0.54 (0.10) (0.54) (0.02) 9.86 4.45
SMALL CAP GROWTH STOCK FUND
Trust Shares
2000 ........ $14.55 $(0.08) $ 4.02 $ -- $(0.19) $18.30 27.24%
1999(1) ..... 10.00 (0.05) 4.62 -- (0.02) 14.55 45.70
VALUE INCOME STOCK FUND
Trust Shares
2000 ........ $12.85 $ 0.23 $(1.49) $(0.22) $(0.99) $10.38 (10.52)%
1999 ........ 13.90 0.24 1.02 (0.24) (2.07) 12.85 11.13
1998 ........ 13.71 0.26 2.62 (0.27) (2.42) 13.90 23.10
1997 ........ 13.15 0.30 2.32 (0.30) (1.76) 13.71 22.18
1996 ........ 11.59 0.35 2.71 (0.34) (1.16) 13.15 27.91
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS) TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME (LOSS) ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ------------ ------------ ----------------- ----------------- --------
PRIME QUALITY MONEY MARKET FUND
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 ........ $3,311,229 0.60% 5.06% 0.75% 4.91% --%
1999 ........ 3,903,232 0.60 4.69 0.77 4.52 --
1998 ........ 1,880,229 0.59 5.10 0.77 4.92 --
1997 ........ 1,086,555 0.58 4.90 0.76 4.72 --
1996 ........ 1,050,800 0.58 5.11 0.78 4.91 --
SHORT-TERM BOND FUND
Trust Shares
2000 ........ $ 180,402 0.67% 5.40% 0.76% 5.31% 70%
1999 ........ 209,904 0.67 5.12 0.77 5.02 108
1998 ........ 120,422 0.66 5.47 0.79 5.34 87
1997 ........ 89,701 0.65 5.37 0.78 5.24 118
1996 ........ 91,156 0.65 5.39 0.81 5.23 163
SMALL CAP GROWTH STOCK FUND
Trust Shares
2000 ........ $ 431,478 1.20% (0.86)% 1.23% (0.89)% 110%
1999(1) ..... 152,290 1.20 (0.48) 1.49 (0.77) 75
VALUE INCOME STOCK FUND
Trust Shares
2000 ........ $ 921,797 0.89% 2.02% 0.89% 2.02% 62%
1999 ........ 1,589,951 0.92 1.91 0.92 1.91 69
1998 ........ 1,725,418 0.92 1.85 0.92 1.85 99
1997 ........ 1,488,062 0.91 2.40 0.91 2.40 105
1996 ........ 1,244,399 0.92 2.86 0.92 2.86 134
<FN>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not reflect applicable sales loads.
(1) Commenced operations on October 8, 1998. All ratios for the period have
been annualized.
Amounts designated as "--" are either 0 or round to $0.
</FN>
</TABLE>
<PAGE>
PROSPECTUS 23
NOTES
<PAGE>
24 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 25
NOTES
<PAGE>
26 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 27
NOTES
<PAGE>
28 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 29
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, 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 and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
<PAGE>
[SunTrust Logo Omitted]
[copyright] 2000 SunTrust is a registered service mark belonging exclusively to
SunTrust Banks, Inc.
[401K Logo Omitted]
<PAGE>
STI CLASSIC FUNDS-BALANCED FUND
TRUST SHARES
PROSPECTUS
OCTOBER 1, 2000
BALANCED FUND
FOR PARTICIPANTS OF THE DEKALB
COUNTY, GEORGIA BOARD OF
EDUCATION TAX SHELTERED
ANNUITY PLAN
INVESTMENT ADVISER
TO THE FUND:
TRUSCO CAPITAL MANAGEMENT, INC.
(the "Adviser")
[STI Logo Omitted]
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>
PROSPECTUS
ABOUT 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 Balanced Fund 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. FOR MORE DETAILED INFORMATION
ABOUT THE FUND, PLEASE SEE:
2 PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES
4 MORE INFORMATION ABOUT RISK
4 MORE INFORMATION ABOUT FUND INVESTMENTS
4 INVESTMENT ADVISER AND PORTFOLIO MANAGERS
5 PURCHASING AND SELLING FUND SHARES
7 DIVIDENDS, DISTRIBUTIONS AND TAXES
8 FINANCIAL HIGHLIGHTS
14 HOW TO OBTAIN MORE INFORMATION ABOUT
THE STI CLASSIC FUNDS
--------------------------------------------------------------------------------
[BRIEFCASE GRAPHIC OMITTED] FUND SUMMARY
[TELESCOPE GRAPHIC OMITTED] INVESTMENT STRATEGY
[INNERTUBE GRAPHIC OMITTED] WHAT ARE THE RISKS OF INVESTING?
[BULLSEYE GRAPHIC OMITTED] PERFORMANCE INFORMATION
[CHART GRAPHIC OMITTED] WHAT IS AN INDEX?
[COINS GRAPHIC OMITTED] FUND FEES AND EXPENSES
[MOUNTAINTOP GRAPHIC OMITTED] MORE INFORMATION ABOUT FUND INVESTMENTS
[MAGNIFIER GRAPHIC OMITTED] INVESTMENT ADVISER
[HANDSHAKE GRAPHIC OMITTED] PURCHASING AND SELLING FUND SHARES
--------------------------------------------------------------------------------
OCTOBER 1, 2000
<PAGE>
PROSPECTUS 1
RISK/RETURN INFORMATION
The Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
The Fund has its own investment goal and strategies for reaching that goal. The
Adviser invests Fund assets in a way that it believes will help the Fund achieve
its goal. Still, investing in the Fund involves risks and there is no guarantee
that the Fund will achieve its goal. The Adviser'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 the Adviser 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 the Fund is based on the market prices 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 the Fund owns and the markets in which it trades. The
effect on the Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
<PAGE>
2 PROSPECTUS
BALANCED FUND
[BRIEFCASE GRAPHIC OMITTED]
FUND SUMMARY
INVESTMENT GOALS 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
--------------------------------------------------------------------------------
[TELESCOPE GRAPHIC OMITTED]
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 above average 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.
[INNERTUBE GRAPHIC OMITTED]
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 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.
[BULLSEYE GRAPHIC OMITTED]
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.*
[BAR CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
1995 25.51%
1996 12.13%
1997 21.14%
1998 19.55%
1999 4.66%
BEST QUARTER WORST QUARTER
12.57% -5.70%
(12/31/98) (9/30/98)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 4.24%.
<PAGE>
PROSPECTUS 3
BALANCED FUND
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE LEHMAN BROTHERS U.S. GOVERNMENT/CREDIT
INDEX AND THE S&P 500 INDEX.
SINCE
TRUST SHARES 1 YEAR 5 YEAR INCEPTION
--------------------------------------------------------------------------------
Balanced Fund 4.66% 16.36% 12.63%*
--------------------------------------------------------------------------------
Lehman Brothers U.S.
Government/Credit Index -2.15% 7.60% 5.67%**
--------------------------------------------------------------------------------
S&P 500 Index 21.04% 28.55% 23.55%**
--------------------------------------------------------------------------------
* SINCE 1/3/94
** SINCE 12/31/93
[CHART GRAPHIC OMITTED]
--------------------------------------------------------------------------------
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 U.S. Government/Credit 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 this 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.
[COINS GRAPHIC OMITTED]
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)
--------------------------------------------------------------------------------
TRUST SHARES
Investment Advisory Fees 0.95%
Other Expenses 0.12%
-----
Total Annual Fund Operating Expenses 1.07%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$109 $340 $590 $1,306
--------------------------------------------------------------------------------
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 0.92% and 1.04%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
4 PROSPECTUS
MORE INFORMATION ABOUT RISK
[INNERTUBE GRAPHIC OMITTED]
MORE INFORMATION
ABOUT RISK
EQUITY RISK
Equity securities include public and privately 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 investments changes 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 will be unable to make timely payments of
either principal or interest.
[MOUNTAINTOP GRAPHIC OMITTED]
MORE INFORMATION ABOUT
FUND INVESTMENTS
This prospectus describes the Fund's primary strategies, and the Fund will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, the 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
Fund uses under normal conditions. During unusual economic or market conditions,
or for temporary defensive or liquidity purposes, the Fund 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. The 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,
the Fund cannot guarantee that it will achieve its investment goal.
[MAGNIFIER GRAPHIC OMITTED]
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Fund
and continuously reviews, supervises and administers the Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Fund. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
BALANCED FUND 0.85%
<PAGE>
PROSPECTUS 5
PURCHASING AND SELLING FUND SHARES
The Adviser may use its affiliates as brokers for Fund transactions.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as the Investment Adviser to the
Balanced Fund. On January 1, 2000, SunTrust Bank (formerly SunTrust Bank,
Atlanta), a subsidiary of SunTrust Banks, Inc. succeeded STI as the Investment
Adviser to the Fund. On July 1, 2000, SunTrust Banks, Inc. reorganized its money
management units, including those of SunTrust Bank, into Trusco Capital
Management, Inc. As a result, Trusco now serves as the Investment Adviser to
each STI Classic Fund.
PORTFOLIO MANAGERS
The Balanced Fund is co-managed by Mr. Robert J. Rhodes, CFA, Mr. Earl L.
Denney, CFA, and Mr. Dave E. West, CFA. Mr. Rhodes manages the equity portion of
the Fund. Mr. Denney and Mr. West co-manage the fixed-income portion of the
Fund. Mr. Rhodes is an Executive Vice President and head of the Equity Funds
group at Trusco. Mr. Rhodes has been employed by Trusco since 1973 and was
Director of Research at Trusco from 1980 to 2000. Mr. Rhodes has more than 27
years of investment experience. Mr. West has served as a Managing Director of
STI and has worked there since 1985. In January 2000, Mr. West was named
Managing Director of SunTrust Bank and is now a Managing Director of Trusco. Mr.
West has more than 14 years of investment experience. Mr. Denney has served as
Managing Director of STI since 1983. In January 2000, Mr. Denney was named
Managing Director of SunTrust Bank and is now a Managing Director of Trusco. Mr.
Denney has more than 21 years of investment experience.
[HANDSHAKE GRAPHIC OMITTED]
PURCHASING AND SELLING
FUND SHARES
This section tells you how to purchase and sell (sometimes called "redeem")
Trust Shares of the Fund.
HOW TO PURCHASE FUND SHARES
The Fund offers 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. 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 Fund 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.
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 Fund receives your purchase order. The 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 the Fund,
generally the Fund must receive your purchase order before 4:00 p.m. Eastern
time.
<PAGE>
6 PROSPECTUS
PURCHASING AND SELLING FUND SHARES
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 FUND CALCULATES NAV
In calculating NAV, the Fund generally values its investment portfolio at market
price. If market prices are unavailable or the Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") 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 Fund or with their financial
institution or intermediary. The sale price of each share will be the next NAV
determined after the Fund receives your request.
RECEIVING YOUR MONEY
Normally, the Fund will send your sale proceeds within five Business Days after
the Fund receives your request, but it may take up to seven days.
REDEMPTIONS IN KIND
The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Fund 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
The 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>
PROSPECTUS 7
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Balanced Fund distributes its income quarterly and makes distributions of
capital gains, if any, at least annually. If you own Fund shares on the 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.
TAXES
PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below the Fund has summarized some important tax
issues that affect the Fund and its shareholders. This summary is based on
current tax laws, which may change.
Your dividend and capital gains distributions will be reinvested in additional
Fund shares and accumulate on a tax-deferred basis if you are investing through
a qualified tax sheltered annuity plan. Generally, you will not owe taxes on
these distributions until you begin withdrawals from the plan. Withdrawals from
the plan are subject to special tax rules and may be subject to a penalty tax in
the case of premature withdrawals. You should consult your tax adviser about the
tax consequences of plan withdrawals.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
8 PROSPECTUS
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
The table that follows presents performance information about Trust Shares of
the Fund. This information is intended to help you understand the 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 the Fund, assuming you
reinvested all of your dividends and distributions. This information for the
Fund has been audited by Arthur Andersen LLP, independent public accountants.
Their report, along with the Fund's financial statements, appears in the annual
report that accompanies the Statement of Additional Information. You can obtain
the annual report, which contains more performance information, at no charge by
calling 1-800-428-6970.
For the Periods Ended May 31,
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET AND DISTRIBUTIONS
VALUE NET UNREALIZED FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT GAINS INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (+)
--------- ---------- -------------- ------------- ------------- --------- ----------
-------------
BALANCED FUND
-------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $13.26 $ 0.32 $0.33 $(0.30) $(0.24) $13.37 5.02%
1999 13.09 0.28 1.09 (0.28) (0.92) 13.26 10.98
1998 11.94 0.31 2.19 (0.32) (1.03) 13.09 22.15
1997 11.55 0.33 1.47 (0.32) (1.09) 11.94 16.66
1996 10.26 0.33 1.41 (0.34) (0.11) 11.55 17.26
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME TO
RATIO OF INVESTMENT AVERAGE NET AVERAGE NET
NET ASSETS EXPENSES TO INCOME ASSETS (EXCLUDING ASSETS (EXCLUDING PORTFOLIO
END OF AVERAGE TO AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
----------- ----------- ------------- ----------------- ----------------- ---------
-------------
BALANCED FUND
-------------
Trust Shares
<S> <C> <C> <C> <C> <C> <C>
2000 $223,634 0.97% 2.39% 1.07% 2.29% 182%
1999 251,752 0.97 2.19 1.06 2.10 179
1998 188,465 0.96 2.51 1.08 2.39 154
1997 151,358 0.95 2.89 1.08 2.76 197
1996 111,638 0.95 3.00 1.09 2.86 155
</TABLE>
(+) Returns are for the period indicated and have not been annualized. Total
return figures do not include applicable sales loads.
Amounts designated as "--" are either $0 or round to $0.
<PAGE>
PROSPECTUS 9
NOTES
<PAGE>
10 PROSPECTUS
NOTES
<PAGE>
PROSPECTUS 11
NOTES
<PAGE>
12 PROSPECTUS
NOTES
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
14 PROSPECTUS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 30303
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Fund is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated October 1, 2000, 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 the Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Fund.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
<PAGE>
PROSPECTUS
INSTITUTIONAL SHARES
CLASSIC INSTITUTIONAL CASH MANAGEMENT
MONEY MARKET FUND
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES
MONEY MARKET FUND
October 1, 2000
Investment Adviser to the Funds:
Trusco Capital Management, Inc.
(THE "ADVISER")
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>
(THIS PAGE LEFT INTENTIONALLY BLANK)
<PAGE>
ABOUT 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
Institutional Shares of the Classic Institutional Money Market 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. FOLLOWING THE TABLE OF CONTENTS, THERE IS
SOME GENERAL INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO
EACH OF THE FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
Page
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND ............... 2
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND .... 4
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND ...... 6
MORE INFORMATION ABOUT FUND INVESTMENTS ............................... 8
INVESTMENT ADVISER AND PORTFOLIO MANAGERS ............................. 8
PURCHASING AND SELLING FUND SHARES .................................... 8
DIVIDENDS AND DISTRIBUTIONS ........................................... 10
TAXES ................................................................. 10
FINANCIAL HIGHLIGHTS .................................................. 11
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS .... Back Cover
--------------------------------------------------------------------------------
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 Adviser invests Fund assets in a way that it believes 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. The Adviser'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 the Adviser 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.
--------------------------------------------------------------------------------
<PAGE>
2
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
--------------------------------------------------------------------------------
FUND SUMMARY
--------------------------------------------------------------------------------
INVESTMENT GOAL As high a level of current income as is
consistent with preservation of capital and
liquidity
--------------------------------------------------------------------------------
INVESTMENT FOCUS Money market instruments
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without adding
undue risk
--------------------------------------------------------------------------------
INVESTOR PROFILE Conservative investors seeking current income
through a liquid investment
--------------------------------------------------------------------------------
INVESTMENT STRATEGY
The Classic Institutional Cash Management Money Market Fund invests in high
quality U.S. dollar-denominated money market instruments. The Fund invests in
obligations of (i) the U.S. Treasury, (ii) agencies and instrumentalities of
U.S. and foreign governments, (iii) domestic and foreign banks, (iv) domestic
and foreign corporate issuers, and (v) supranational entities, as well as
repurchase agreements. In selecting investments for the Fund, the Adviser tries
to increase income without adding undue risk by analyzing maturity, yields,
market sectors and credit risk. 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. 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 the agency's own resources.
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.
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 INSTITUTIONAL
SHARES FROM YEAR TO YEAR.*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
1996 5.47%
1997 5.63%
1998 5.52%
1999 5.12%
BEST QUARTER WORST QUARTER
1.41% 1.19%
(12/31/97) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.97%.
<PAGE>
3
--------------------------------------------------------------------------------
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. FIRST TIER
INSTITUTIONS-ONLY AVERAGE.
INSTITUTIONAL SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Classic Institutional
Cash Management
Money Market Fund 5.12% 5.46%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
First Tier Institutions-Only
Average 4.94% 5.24%**
--------------------------------------------------------------------------------
* SINCE 10/25/95
** SINCE 10/31/95
TO OBTAIN 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
iMoneyNet, Inc. First Tier Institutions-Only Average is a widely-recognized
composite of money market funds which invest in securities rated Prime-1 by
Moody's or A-1 by Standard & Poor's.
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)
--------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Investment Advisory Fees 0.20%
Other Expenses 0.10%
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.30%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$31 $97 $169 $381
--------------------------------------------------------------------------------
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 0.17% and 0.25%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
4
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
--------------------------------------------------------------------------------
FUND SUMMARY
--------------------------------------------------------------------------------
INVESTMENT GOAL High current income to the extent consistent
with the preservation of capital and the
maintenance of 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 seeking current income
through a liquid investment
--------------------------------------------------------------------------------
INVESTMENT STRATEGY
The Classic Institutional U.S. Government Securities Money Market Fund
invests exclusively in U.S. Treasury obligations, obligations issued or
guaranteed as to principal and interest by agencies or instrumentalities of the
U.S. government, repurchase agreements involving these securities, and shares of
registered money market funds that invest in the foregoing. 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.
Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. Mortgage-backed securities 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 a
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 following bar chart and the performance table 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.
<PAGE>
5
--------------------------------------------------------------------------------
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INSTITUTIONAL
SHARES FROM YEAR TO YEAR.*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
1995 5.89%
1996 5.31%
1997 5.50%
1998 5.36%
1999 4.99%
BEST QUARTER WORST QUARTER
1.49% 1.17%
(6/30/95) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.88%.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. GOVERNMENT-ONLY
INSTITUTIONS-ONLY AVERAGE.
SINCE
INSTITUTIONAL SHARES 1 YEAR 5 YEARS INCEPTION
--------------------------------------------------------------------------------
Classic Institutional
U.S. Government
Securities Money
Market Fund 4.99% 5.41% 5.37%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
Government-Only
Institutions-Only Average 4.68% 5.13% 5.10%**
--------------------------------------------------------------------------------
* SINCE 8/1/94
** SINCE 7/31/94
TO OBTAIN 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
iMoneyNet, Inc. Government-Only Institutions-Only Average is a widely-recognized
composite of money market funds which invest in U.S. Treasury Bills, repurchase
agreements, or securities issued by agencies of the U.S. government.
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)
--------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Investment Advisory Fees 0.20%
Other Expenses 0.10%
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.30%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$31 $97 $169 $381
--------------------------------------------------------------------------------
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 0.19% and 0.27%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
6
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
--------------------------------------------------------------------------------
FUND SUMMARY
--------------------------------------------------------------------------------
INVESTMENT GOAL As high a level of current income as is
consistent with preservation of capital and
liquidity
--------------------------------------------------------------------------------
INVESTMENT FOCUS U.S. Treasury securities and repurchase
agreements
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without adding
undue risk by analyzing yields
--------------------------------------------------------------------------------
INVESTOR PROFILE Conservative investors seeking current income
through a liquid investment
--------------------------------------------------------------------------------
INVESTMENT STRATEGY
The Classic Institutional U.S. Treasury Securities Money Market Fund invests
exclusively in U.S. Treasury Bills, Notes, Bonds and components of these
securities, and repurchase agreements collateralized by these securities. The
Fund limits its investments so as to obtain the highest investment quality
rating by a nationally recognized statistical rating organization (AAA by
Standard & Poor's). In selecting investments for the Fund, the Adviser tries to
increase income without adding undue risk by analyzing yields for various
maturities. 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. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.
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 INSTITUTIONAL
SHARES FROM YEAR TO YEAR.*
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
1997 5.44%
1998 5.30%
1999 4.83%
BEST QUARTER WORST QUARTER
1.37% 1.13%
(9/30/97) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.82%.
<PAGE>
7
--------------------------------------------------------------------------------
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999, TO THOSE OF THE IMONEYNET, INC. U.S. TREASURY & REPO
AVERAGE.
INSTITUTIONAL SHARES 1 YEAR SINCE INCEPTION
--------------------------------------------------------------------------------
Classic Institutional
U.S. Treasury Securities
Money Market Fund 4.83% 5.19%*
--------------------------------------------------------------------------------
iMoneyNet, Inc.
U.S. Treasury and
Repo Average 4.36% 4.69%**
--------------------------------------------------------------------------------
* SINCE 12/12/96
** SINCE 11/30/96
TO OBTAIN 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
iMoneyNet, Inc. 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.
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)
--------------------------------------------------------------------------------
INSTITUTIONAL SHARES
Investment Advisory Fees 0.20%
Other Expenses 0.10%
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 0.30%
--------------------------------------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$31 $97 $169 $381
--------------------------------------------------------------------------------
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 0.19% and 0.27%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
8
--------------------------------------------------------------------------------
MORE INFORMATION ABOUT FUND 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 INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Funds
and continuously reviews, supervises and administers each Fund's respective
investment program. The Board of Trustees supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Funds. As of July 1, 2000, Trusco
had approximately $47 billion in assets under management. For the fiscal period
ended May 31, 2000, the Adviser received advisory fees of:
CLASSIC INSTITUTIONAL CASH MANAGEMENT
MONEY MARKET FUND 0.17%
CLASSIC INSTITUTIONAL U.S. GOVERNMENT
SECURITIES MONEY MARKET FUND 0.17%
CLASSIC INSTITUTIONAL U.S. TREASURY
SECURITIES MONEY MARKET FUND 0.16%
The Adviser may use its affiliates as brokers for Fund transactions.
PORTFOLIO MANAGERS
Mr. Robert S. Bowman, CFA, has served as a Vice President of Trusco since
January 1999. He has managed the Classic Institutional Cash Management Money
Market Fund since it began operating in October 1995, and has managed the
Classic Institutional U.S. Government Securities Money Market Fund since 1995.
Prior to joining Trusco, Mr. Bowman served as an assistant trader from 1994 to
1995 and Vice President of Crestar Asset Management Company since 1995. He has
more than 6 years of investment experience.
Mr. David S. Yealy has served as a Managing Director of Trusco since July 2000.
He has managed the Classic Institutional U.S. Treasury Securities Money Market
Fund since it began operating in December 1996. Prior to July 2000, Mr. Yealy
was a First Vice President of Trusco and has worked there since 1991. He has
more than 15 years of investment experience.
PURCHASING AND SELLING
FUND SHARES
This section tells you how to purchase and sell (sometimes called "redeem")
Institutional Shares of the Funds.
HOW TO PURCHASE FUND SHARES
The Funds offer Institutional Shares primarily to various institutional
investors, 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. Shares are sold without a sales charge,
although institutions may charge their customers for services provided in
connection with the purchase of shares. Institutional shares will be held of
record by (in the name of) your institution. Depending upon the terms of your
account, however, you may have, or be given, the right to vote your
Institutional Shares. The Funds may reject any purchase order if it is
determined that accepting the order would not be in the best interest of the STI
Classic Funds or its shareholders.
<PAGE>
9
--------------------------------------------------------------------------------
WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange and the
Federal Reserve are 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 be eligible to receive dividends declared on the day you
submit your purchase order, the Funds must generally receive your order before
3:00 p.m. Eastern time and federal funds (readily available funds) before 4:00
p.m. Eastern time.
FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES AND OTHER INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE REQUESTS TO YOUR INSTITUTION,
INCLUDING SUBSIDIARIES OF SUNTRUST AND ITS AFFILIATES, AT AN EARLIER TIME FOR
YOUR TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS YOUR 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 ORDER ENTRY CUT-OFF
TIMES, PLEASE CONTACT YOUR INSTITUTION DIRECTLY.
HOW THE FUNDS CALCULATE NAV
In calculating NAV, the Funds generally value their investment portfolio using
the amortized cost valuation method, which is described in detail in the SAI. If
this method is determined to be unreliable during certain market conditions or
for other reasons, a Fund may value its portfolio at market price or fair value
prices may be determined in good faith using methods approved by the Board of
Trustees.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
MINIMUM PURCHASES
To purchase shares for the first time, you must invest at least $10,000,000.
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting the Funds. If you are a customer of SunTrust or another institution,
you must contact that institution directly for information about how to sell
your shares including any specific cut-off times required.
Redemption orders must be sent to the Funds by the institutional investor as the
record owner of shares. If you own Institutional Shares through an institution,
you may sell shares by following the procedures established when you opened your
account or accounts with your institution.
Redemption orders must be received by the Funds on a Business Day before 3:00
p.m. Eastern time. Orders received after 3:00 p.m. Eastern 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 Funds receive 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 Fund's remaining shareholders) a Fund might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price
<PAGE>
10
--------------------------------------------------------------------------------
(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 transact with
the Fund over the telephone, you will generally bear the risk of any loss.
DIVIDENDS AND DISTRIBUTIONS
Each Fund declares dividends daily and distributes its income 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 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 OF FUND SHARES IS A TAXABLE EVENT.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
11
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Institutional
Shares of each Classic Institutional Money Market 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 financial highlights for each Fund, except the Classic
Institutional Cash Management Money Market Fund and Classic Institutional U.S.
Government Securities Money Market Fund for periods prior to May 31, 1999, have
been audited by Arthur Andersen LLP, independent public accountants. The
financial highlights for the Classic Institutional Cash Management Money Market
Fund and the Classic Institutional U.S. Government Securities Money Market Fund
for the periods from inception through January 31, 1999 have been audited by
PricewaterhouseCoopers LLP, independent public accountants. The report of Arthur
Andersen LLP, along with each Fund's financial statements, appears in the annual
reports that accompanies the SAI. You can obtain the annual report, which
contains more performance information, at no charge by calling 1-800-428-6970.
<PAGE>
12
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Periods Ended May 31, (unless otherwise noted)
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Ratio of Expenses to Income to
Ratio of Net Average Net Average Net
Net Asset Distributions Expenses Investment Assets Assets
Value Net from Net Net Asset Net Assets to Average Income to (Excluding (Excluding
Beginning Investment Investment Value End Total End of Net Average Waivers and Waivers and
of Period Income Income of Period Return(+) Period (000) Assets Net Assets Reimbursements) Reimbursements)
--------- ---------- ------------- --------- --------- ------------ ---------- ---------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND (A)
-----------------------------------------------------------
Institutional Shares
2000 $1.00 $0.05 $(0.05) $1.00 5.56% $2,311,685 0.25% 5.42% 0.30% 5.37%
1999* 1.00 0.02 (0.02) 1.00 1.58 1,888,483 0.25 4.79 0.35 4.69
For the years ended January 31:
1999 1.00 0.05 (0.05) 1.00 5.46 884,490 0.23 5.31 0.35 5.19
1998 1.00 0.06 (0.06) 1.00 5.66 740,837 0.20 5.52 0.36 5.36
1997 1.00 0.05 (0.05) 1.00 5.45 477,435 0.20 5.33 0.38 5.15
1996(B) 1.00 0.02 (0.02) 1.00 5.82 382,632 0.20 5.61 0.40 5.41
----------------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (C)
----------------------------------------------------------------------
Institutional Shares
2000 $1.00 $0.05 $(0.05) $1.00 5.39% $ 650,626 0.25% 5.27% 0.29% 5.23%
1999* 1.00 0.02 (0.02) 1.00 1.56 617,089 0.25 4.73 0.36 4.62
For the years ended January 31:
1999 1.00 0.05 (0.05) 1.00 5.30 688,031 0.23 5.18 0.36 5.05%
1998 1.00 0.05 (0.05) 1.00 5.52 789,410 0.20 5.39 0.37 5.22%
1997 1.00 0.05 (0.05) 1.00 5.29 586,731 0.20 5.17 0.37 5.00%
1996 1.00 0.06 (0.06) 1.00 5.88 514,870 0.20 5.72 0.37 5.55%
----------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
----------------------------------------------------------------
Institutional Shares
2000 $1.00 $0.05 $(0.05) $1.00 5.25% $ 329,725 0.25% 5.17% 0.31% 5.11%
1999 1.00 0.05 (0.05) 1.00 4.97 283,525 0.20 4.83 0.47 4.56
1998 1.00 0.05 (0.05) 1.00 5.50 140,334 0.18 5.34 0.38 5.14
1997(D) 1.00 0.02 (0.02) 1.00 2.46 20,238 0.09 5.27 0.51 4.85
</TABLE>
(A) On May 17, 1999, the Arbor Prime Obligations Fund exchanged all of its
assets and certain liabilities for shares of the Classic Institutional Cash
Management Money Market Fund. The Arbor Prime Obligations 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 17, 1999 have been carried forward in these financial
highlights.
(B) Commenced operations on October 25, 1995. All ratios for the period have
been annualized.
(C) On May 24, 1999, the Arbor U.S. Government Securities Money Fund exchanged
all of its assets and certain liabilities for shares of the Classic
Institutional U.S. Government Securities Money Market Fund. The Arbor U.S.
Government Securities 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.
(D) Commenced operations on December 12, 1996. All ratios for the period have
been annualized.
(+) Returns are for the period indicated and have not been annualized.
* For the period February 1, 1999 to May 31, 1999. All ratios for the period
have been annualized.
<PAGE>
--------------------------------------------------------------------------------
NOTES
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 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, 2000, includes detailed information about the STI
Classic Institutional Money Market 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 and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
XXX-XXXX
<PAGE>
PROSPECTUS
CORPORATE TRUST SHARES
CLASSIC INSTITUTIONAL
U.S. TREASURY SECURITIES
MONEY MARKET FUND
October 1, 2000
Investment Adviser to the Fund:
Trusco Capital Management, Inc.
(THE "ADVISER")
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>
(THIS PAGE LEFT INTENTIONALLY BLANK)
<PAGE>
ABOUT 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
Corporate Trust Shares of the Classic Institutional U.S. Treasury Securities
Money Market Fund 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. FOLLOWING THE TABLE OF CONTENTS, THERE IS
SOME GENERAL INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN. FOR MORE
DETAILED INFORMATION ABOUT THE FUND, PLEASE SEE:
Page
PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES ........................... 2
MORE INFORMATION ABOUT FUND INVESTMENTS ........................ 4
INVESTMENT ADVISER AND PORTFOLIO MANAGER ....................... 4
PURCHASING AND SELLING FUND SHARES ............................. 4
DIVIDENDS AND DISTRIBUTIONS .................................... 6
TAXES .......................................................... 6
FINANCIAL HIGHLIGHTS ........................................... 7
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS .....Back Cover
--------------------------------------------------------------------------------
RISK/RETURN INFORMATION
The Fund is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.
The Fund has an investment goal and strategies for reaching that goal. The
Adviser invests Fund assets in a way that it believes will help the Fund
achieve its goal. Still, investing in the Fund involves risk and there is
no guarantee that the Fund will achieve its goal. The Adviser'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 the Adviser 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.
--------------------------------------------------------------------------------
<PAGE>
2
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
--------------------------------------------------------------------------------
FUND SUMMARY
--------------------------------------------------------------------------------
INVESTMENT GOAL As high a level of current income as is
consistent with preservation of capital and
liquidity
--------------------------------------------------------------------------------
INVESTMENT FOCUS U.S. Treasury securities and repurchase
agreements
--------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income without adding
undue risk by analyzing yields
--------------------------------------------------------------------------------
INVESTOR PROFILE Conservative investors seeking current income
through a liquid investment
--------------------------------------------------------------------------------
INVESTMENT STRATEGY
The Classic Institutional U.S. Treasury Securities Money Market Fund invests
exclusively in U.S. Treasury Bills, Notes, Bonds and components of these
securities and repurchase agreements collateralized by these securities. The
Fund limits its investments so as to obtain the highest investment quality
rating by a nationally recognized statistical rating organization (AAA by
Standard & Poor's). In selecting investments for the Fund, the Adviser tries to
increase income without adding undue risk by analyzing yields for various
maturities. 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. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.
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 INSTITUTIONAL
SHARES FROM YEAR TO YEAR FOR THE PAST THREE YEARS. SINCE INSTITUTIONAL SHARES
ARE INVESTED IN THE SAME PORTFOLIO OF SECURITIES, RETURNS FOR CORPORATE TRUST
SHARES WILL BE SUBSTANTIALLY SIMILAR TO THOSE OF THE INSTITUTIONAL SHARES, SHOWN
HERE, AND WILL DIFFER ONLY TO THE EXTENT THAT EACH CLASS HAS DIFFERENT
EXPENSES.*
[BAR GRAPH OMITTED]
Points are as follows: 1997 5.44%
1998 5.30%
1999 4.83%
BEST QUARTER WORST QUARTER
1.37% 1.13%
(9/30/97) (6/30/99)
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/00 TO 6/30/00 WAS 2.82%.
<PAGE>
3
--------------------------------------------------------------------------------
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE IMONEYNET, INC. U.S. TREASURY & REPO
AVERAGE.
INSTITUTIONAL SHARES 1 YEAR SINCE INCEPTION
-----------------------------------------------------
Classic Institutional
U.S. Treasury Securities
Money Market Fund 4.83% 5.19%*
-----------------------------------------------------
iMoneyNet, Inc.
U.S. Treasury &
Repo Average 4.36% 4.69%**
-----------------------------------------------------
* SINCE 12/12/96
** SINCE 11/30/96
TO OBTAIN 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
iMoneyNet, Inc. 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.
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)
-----------------------------------------------------
CORPORATE TRUST SHARES
Investment Advisory Fees 0.20%
Other Expenses 0.30%
-----------------------------------------------------
Total Annual Fund Operating Expenses 0.50%
-----------------------------------------------------
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, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$51 $160 $280 $628
-----------------------------------------------------
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 will be
lower because the Adviser is voluntarily waiving a portion of its fees. Actual
Investment Advisory Fees and Total Operating Expenses are 0.19% and 0.47%,
respectively. The Adviser could discontinue this voluntary waiver at any time.
For more information about these fees, see "Investment Adviser."
<PAGE>
4
--------------------------------------------------------------------------------
MORE INFORMATION ABOUT
FUND INVESTMENTS
This prospectus describes the Fund's primary strategies, and the Fund will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, the 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).
INVESTMENT ADVISER
The Investment Adviser (the "Adviser") makes investment decisions for the Fund
and continuously reviews, supervises and administers its Fund's investment
program. The Board of Trustees supervises the Adviser and establishes policies
that the Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco) 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Adviser to the Fund. As of July 1, 2000, Trusco had
approximately $47 billion in assets under management.
For the period ended May 31, 2000, the Adviser received advisory fees of 0.16%
for the Fund.
The Adviser may use its affiliates as brokers for Fund transactions.
PORTFOLIO MANAGER
Mr. David S. Yealy has served as a Managing Director of Trusco since July 2000.
He has managed the Classic Institutional U.S. Treasury Securities Money Market
Fund since it began operating in December 1996. Prior to July 2000, Mr. Yealy
was a First Vice President of Trusco and has worked there since 1991. He has
more than 15 years of investment experience.
PURCHASING AND SELLING
FUND SHARES
This section tells you how to purchase and sell (sometimes called "redeem")
Corporate Trust Shares of the Fund.
HOW TO PURCHASE FUND SHARES
The Fund offers Corporate Trust Shares only to accounts of various banking
subsidiaries of SunTrust Banks, Inc. which are administered by the Corporate
Trust Division (SunTrust). Shares are sold without a sales charge. Corporate
Trust Shares will be held of record by (in the name of) SunTrust. Depending upon
the terms of your account, however, you may have, or be given, the right to vote
your Corporate Trust Shares. The Fund may reject any purchase order if it is
determined that accepting the order would not be in the best interest of the STI
Classic Funds or its shareholders.
WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange and the
Federal Reserve are 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 Fund receives the purchase order. The 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 that
purchase order is submitted, the Fund must generally receive that order before
3:00 p.m. Eastern time and federal funds (readily available funds) before 4:00
p.m. Eastern time.
<PAGE>
5
--------------------------------------------------------------------------------
FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES AND
OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE REQUESTS TO SUNTRUST AT AN
EARLIER TIME THAN THOSE LISTED ABOVE FOR YOUR TRANSACTION TO BE BECOME EFFECTIVE
THAT DAY. THIS ALLOWS SUNTRUST TIME TO PROCESS YOUR REQUEST AND TRANSMIT IT TO
THE ADMINISTRATOR OR THE TRANSFER AGENT IN TIME TO MEET THE ABOVE STATED FUND
CUT-OFF TIMES. FOR MORE INFORMATION ABOVE HOW TO PURCHASE OR SELL FUND SHARES
THROUGH YOUR ACCOUNT, INCLUDING SPECIFIC INTERNAL ORDER ENTRY CUT-OFF TIMES,
PLEASE CONTACT SUNTRUST DIRECTLY.
HOW THE FUND CALCULATES NAV
In calculating NAV, the Fund generally values its investment portfolio using the
amortized cost valuation method, which is described in detail in the SAI. If
this method is determined to be unreliable during certain market conditions or
for other reasons, the Fund may value its portfolio at market price or fair
value prices may be determined in good faith using methods approved by the Board
of Trustees.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting SunTrust. SunTrust will provide information about how to sell your
shares including any specific cut-off times required.
Redemption orders must be sent to the Fund by SunTrust as the record owner of
shares. If you own Corporate Trust Shares through a subsidiary of SunTrust you
may sell shares by following the procedures established when you opened your
account or accounts.
Redemption orders must be received by the Fund on a Business Day before 3:00
p.m. Eastern time. Orders received after 3:00 p.m. Eastern time will be executed
the following Business Day.
RECEIVING YOUR MONEY
Normally, the Fund will send your sale proceeds within five Business Days after
the Fund receives your request, but it may take up to seven days.
REDEMPTIONS IN KIND
The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Fund 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
The 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 transact with
the Fund over the telephone, you will generally bear the risk of any loss.
<PAGE>
6
--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
The Fund declares dividends daily and distributes its income monthly. The 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 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 Fund has summarized some important tax
issues that affect the Fund and its shareholders. This summary is based on
current tax laws, which may change.
The 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 the 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 OF FUND SHARES IS A TAXABLE EVENT.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
<PAGE>
7
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table that follows presents performance information about Corporate Trust
Shares of the Classic Institutional U.S. Treasury Securities Money Market Fund.
This information is intended to help you understand the Fund's financial
performance for 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
financial highlights for this Fund have been audited by Arthur Andersen LLP,
independent public accountants. The report of Arthur Andersen LLP, along with
the Fund's financial statements, appears in the annual reports that accompanies
the SAI. You can obtain the annual report, which contains more performance
information, at no charge by calling 1-800-428-6970.
<PAGE>
8
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For the Periods Ended May 31,
For a Share Outstanding Throughout the Periods
<TABLE>
<CAPTION>
Ratio of Net
Ratio of Investment
Ratio of Expenses to Income to
Ratio of Net Average Net Average Net
Net Asset Net Distributions Expenses Investment Assets Assets
Value Investment from Net Net Asset Net Assets to Average Income to (Excluding (Excluding
Beginning Income Investment Value End Total End of Net Average Waivers and Waivers and
of Period (Loss) Income of Period Return(+) Period (000) Assets Net Assets Reimbursements) Reimbursements)
--------- ---------- ------------- --------- --------- ------------ ---------- ---------- --------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
------------------------------------------------------------------------------------------------------------------------------------
Corporate Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000* $1.00 $0.05 $(0.05) $1.00 5.02% $1,138,541 0.45% 4.93% 0.49% 4.89%
<FN>
(+) Returns are for the period indicated and have not been annualized.
* Commenced operations on June 3, 1999. All ratios for the period have been annualized.
</FN>
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
NOTES
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 30303
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Fund is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated October 1, 2000, includes detailed information about the STI
Classic Institutional Money Market 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 the Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Fund.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Funds
c/o SEI Investments Distribution Co.
Oaks, Pennsylvania 19456
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 EDGAR
Database on 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 on
the operation of the Public Reference Room, call 202-942-8090). 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
20549-0102. You may also obtain this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following address: [email protected]. The STI
Classic Funds' Investment Company Act registration number is 811-06557.
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISER:
TRUSCO CAPITAL MANAGEMENT, INC.
This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
STI Classic Funds (the "Trust") and should be read in conjunction with the
Trust's prospectuses dated October 1, 2000. 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-18
INVESTMENT POLICIES........................................................B-34
PROPOSED FUNDAMENTAL INVESTMENT POLICIES...................................B-37
INVESTMENT ADVISER.........................................................B-38
THE ADMINISTRATOR..........................................................B-41
THE DISTRIBUTOR............................................................B-43
THE TRANSFER AGENT.........................................................B-49
THE CUSTODIAN..............................................................B-49
CODES OF ETHICS............................................................B-50
INDEPENDENT PUBLIC ACCOUNTANTS.............................................B-50
LEGAL COUNSEL..............................................................B-50
TRUSTEES AND OFFICERS OF THE TRUST.........................................B-50
PERFORMANCE INFORMATION....................................................B-53
COMPUTATION OF YIELD.......................................................B-53
CALCULATION OF TOTAL RETURN................................................B-58
PURCHASING SHARES..........................................................B-63
REDEEMING SHARES...........................................................B-63
DETERMINATION OF NET ASSET VALUE...........................................B-64
TAXES ..................................................................B-65
FUND TRANSACTIONS..........................................................B-67
TRADING PRACTICES AND BROKERAGE............................................B-68
DESCRIPTION OF SHARES......................................................B-73
SHAREHOLDER LIABILITY......................................................B-73
LIMITATION OF TRUSTEES' LIABILITY..........................................B-74
5% AND 25% SHAREHOLDERS....................................................B-74
APPENDIX ...................................................................A-1
FINANCIAL STATEMENTS........................................................F-1
B-1
<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 (each a "Fund" and collectively, the
"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 Fund.
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 [check mark omitted] [check mark omitted] [check mark omitted]
Core Equity Fund [check mark omitted] [check mark omitted]
E-Commerce Opportunity Fund [check mark omitted] [check mark omitted]
Growth and Income Fund [check mark omitted] [check mark omitted] [check mark omitted]
International Equity Fund [check mark omitted] [check mark omitted] [check mark omitted]
International Equity Index Fund [check mark omitted] [check mark omitted] [check mark omitted]
Mid-Cap Equity Fund [check mark omitted] [check mark omitted] [check mark omitted]
Small Cap Value Equity Fund [check mark omitted] [check mark omitted]
Small Cap Growth Stock Fund [check mark omitted] [check mark omitted] [check mark omitted]
Tax Sensitive Growth Stock Fund [check mark omitted] [check mark omitted]
Value Income Stock Fund [check mark omitted] [check mark omitted] [check mark omitted]
BALANCED FUND
-------------
Balanced Fund [check mark omitted] [check mark omitted] [check mark omitted]
BOND FUNDS
----------
High Income Fund [check mark omitted]
Investment Grade Bond Fund [check mark omitted] [check mark omitted] [check mark omitted]
Limited-Term Federal Mortgage Securities Fund [check mark omitted] [check mark omitted] [check mark omitted]
Short-Term Bond Fund [check mark omitted] [check mark omitted] [check mark omitted]
Short-Term U.S. Treasury Securities Fund [check mark omitted] [check mark omitted] [check mark omitted]
U.S. Government Securities Fund [check mark omitted] [check mark omitted] [check mark omitted]
TAX-EXEMPT BOND FUNDS
---------------------
Florida Tax-Exempt Bond Fund [check mark omitted] [check mark omitted] [check mark omitted]
Georgia Tax-Exempt Bond Fund [check mark omitted] [check mark omitted] [check mark omitted]
Investment Grade Tax-Exempt Bond Fund [check mark omitted] [check mark omitted] [check mark omitted]
Maryland Municipal Bond Fund [check mark omitted] [check mark omitted]
Virginia Intermediate Municipal Bond Fund [check mark omitted] [check mark omitted]
Virginia Municipal Bond Fund [check mark omitted] [check mark omitted]
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
TRUST SHARES INVESTOR SHARES FLEX SHARES
------------ --------------- -----------
MONEY MARKET FUNDS
------------------
<S> <C> <C> <C>
Prime Quality Money Market Fund [check mark omitted] [check mark omitted] [check mark omitted]
Tax-Exempt Money Market Fund [check mark omitted] [check mark omitted]
U.S. Government Securities Money Market Fund [check mark omitted] [check mark omitted]
U.S. Treasury Money Market Fund [check mark omitted]
Virginia Tax-Free Money Market Fund [check mark omitted] [check mark omitted]
LIFE VISION FUNDS
-----------------
Life Vision Moderate Growth Fund [check mark omitted]
Life Vision Growth and Income Fund [check mark omitted]
Life Vision Aggressive Growth Fund [check mark omitted]
</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 (at least 65% of its assets) in
a diversified portfolio of common stocks, warrants, and securities convertible
into common stocks of companies which the Adviser believes have strong business
fundamentals, such as revenue growth, cash flows and earnings trends. In
selecting securities for the Fund, the 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. Under normal conditions, at least 65% of the total assets of the
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
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 Association of Securities Dealers Automated Quotations ("NASDAQ");
securities issued by money market mutual funds; pay-in-kind securities; and
bonds. 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 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.
B-3
<PAGE>
GROWTH AND INCOME FUND
The Growth and Income Fund's primary objective is 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 potential, 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 (at least 65% of its assets) 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 Investment Grade Bond Fund or the Short
Term Bond Fund may invest. As a non-fundamental investment policy, the Fund may
also invest up to 10% of its assets in the U.S. Treasury obligations.
Although the 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.
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
B-4
<PAGE>
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 (i) is
organized under the laws of a specific country, or for which the principal
securities trading market is in a specific country or (ii) derives a significant
proportion (at least 50%) 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% 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 "Index"). The Fund will invest
only in the over 900 companies included in the Index. However, 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 Index. The Fund will invest in a statistically selected
sample of the securities included in the 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 in the Fund's portfolio because of changes in the
composition of the 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 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 Index. The correlation between the Fund and the Index is expected to be over
0.95 on an annual basis. The Fund's ability to track the Index, however, may be
affected by, among other things, transaction costs, changes in either the
composition of the Index or number of shares outstanding for the component
companies of the 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 try 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.
B-5
<PAGE>
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 Adviser will evaluate factors such as the issuer's background, industry
position, historical returns on equity, and the 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 any variable or floating rate instruments, must be rated B
or better by S&P or Moody's. This requirement shall not apply to (i) the Fund's
purchase of bonds issued by the government of Canada or by various supranational
entities; and (ii) 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 invest up to 10% of its assets
in restricted securities.
SMALL CAP VALUE EQUITY FUND
The Small Cap Value 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 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.
VALUE INCOME STOCK FUND
The Value Income Stock Fund seeks to provide current income by attempting to
identify high dividend-paying, undervalued stocks. The Adviser primarily chooses
companies that have a market capitalization of at least $500
B-6
<PAGE>
million and have a history of paying regular dividends. 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 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 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 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. In selecting stocks for the Fund, the
Adviser attempts to identify high-quality companies with a history of above
average earnings growth. 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.
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 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
Adviser.
B-7
<PAGE>
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
HIGH INCOME FUND
The High Income Fund's primary investment objective is a high level of current
income, with a secondary objective of total return.
The Fund invests primarily in corporate, government and other debt instruments
of U.S. and non-U.S. issuers. Under normal market conditions, at least 65% of
the Fund's total assets will be invested in income-producing debt securities.
Investments in foreign securities will be limited to 35% of its total assets. Up
to 100% of the Fund's assets may be invested in "junk bonds." Junk bonds are
securities that are rated below investment grade - I.E., that are rated below
BBB by Moody's or below Baa by S&P - or that, if unrated, are deemed of
comparable quality. Junk bonds also include securities that are in default
(rated D by S&P), although such holdings by the Fund are expected to be minimal.
The Adviser will take a value-oriented approach in choosing the Fund's
investments, seeking out companies with good fundamentals and potentially strong
future prospects that are currently out of favor with investors. The Adviser
employs a bottom-up approach of research to identify investment opportunities
that represent the most attractive value and that have strong prospects for
consistent income and growth. Potential and current investments are also subject
to continual research, which includes regular, vigorous analysis to identify
issues that are overvalued and those that should be sold to reinvest in better
opportunities. The Adviser strives to preserve capital in attempting to achieve
the Fund's investment objective. The Adviser's investing discipline focuses on
total return over a full market/economic cycle. The Adviser prefers to invest in
full-coupon, interest-paying securities for their cash flow advantage and
usually lower volatility than deferred interest or zero coupon bonds.
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 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 market conditions, 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 Adviser.
B-8
<PAGE>
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 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, and may engage in
futures and options.
Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from four to ten 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 Limited-Term Federal Mortgage Securities
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
only by the respective agency. 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 normally
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 Adviser to be of comparable
quality, including: 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.
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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 market conditions, 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 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 market
conditions, 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 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, including: 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 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 Adviser feels it is consistent with the Fund's investment
objective. The Fund will not invest in municipal securities unless the 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, 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, 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 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 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 in restricted securities, including
Rule 144A securities, that the 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 7
1/2 years. Under normal market conditions, it is anticipated that the Fund's
dollar-weighted average maturity will range from two to four 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
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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 1 to 2 years. Furthermore, for temporary defensive
purposes during periods when the 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 primarily (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 normally
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 seven 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 Adviser to be of comparable
quality, including: 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.
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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 on 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 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 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 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
purposes other than hedging.
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 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 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-mentioned 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 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 Adviser,
repurchase agreements,
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<PAGE>
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 purposes other
than hedging.
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 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-mentioned 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 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 Adviser, repurchase agreements, and
securities subject to the alternative minimum tax. The Fund may also invest up
to 10% of its assets in restricted securities that the 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 four to ten 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.
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.
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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 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 to ten years. The Fund may hold individual securities with
remaining maturities of more than ten years, as long as the dollar-weighted
average maturity is no more than ten years. Stability and growth of principal
will also 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.
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 market conditions, produce income that is
exempt from Virginia income tax.
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.
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 obligations; (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
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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 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 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 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.
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 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 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.
VIRGINIA TAX-FREE MONEY MARKET FUND
Virginia 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. At least 80% of the Fund's income will, under normal
market conditions, be exempt from federal income including the federal
alternative minimum tax.
As a non-fundamental policy, at least 65% of the Fund's assets will be invested
in bonds that will, under normal market conditions, produce income that is
exempt from Virginia income tax.
The 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
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in municipal bonds within the maturity limitations discussed above and may enter
into commitments to purchase these securities on a delayed-delivery basis.
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.
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 FUNDS
The Life Vision Funds 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 Life Vision Funds, 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 Life Vision Fund's holdings of STI Classic
Funds for investors.
The assets of each Life Vision Fund 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 Life Vision Fund 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 Life
Vision Fund 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
Life Vision Funds 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 Life Vision
Funds. If the Adviser determines in the future that it is in a Life Vision
Fund's best interest, the Adviser may substitute or include other underlying STI
Classic Funds, including STI Classic Funds that do not currently exist.
Core Equity 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
Prime Quality Money Market Fund
Short-Term Bond Fund
Small Cap Growth Stock Fund
Small Cap Value Equity Fund
Value Income Stock Fund
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The investment objective of each Life Vision Fund is set forth below. Each Life
Vision Fund'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 Trust's Board of Trustees
without shareholder approval. A Life Vision Fund's investment policies
identified as fundamental may not be changed except by approval of the majority
of the outstanding shares of that Life Vision Fund. The Adviser will manage each
Life Vision Fund in a manner consistent with that Life Vision Fund's investment
objective and policies. There is no assurance that a Life Vision Fund will
achieve its investment objective.
LIFE VISION AGGRESSIVE GROWTH FUND
The Life Vision Aggressive Growth Fund seeks to provide a high level of capital
appreciation, without regard to current income. Under normal market conditions,
at least 80% of the Fund's total assets will be invested in shares of underlying
STI Classic Funds that invest primarily in equity securities that seek capital
appreciation. The Fund'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 Life Vision Funds, the Life Vision Aggressive
Growth Fund 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.
LIFE VISION GROWTH AND INCOME FUND
The Life Vision Growth and Income Fund seeks to provide long-term capital
appreciation, with current income as a secondary objective. Under normal market
conditions, at least 50% of the Fund's total assets will be invested in shares
of underlying STI Classic Funds that invest primarily in equity securities that
seek capital appreciation, but at least 25% of the Fund's total assets will be
invested in shares of underlying STI Classic Funds that invest primarily in
fixed-income securities that seek income (20%-50%). The Fund'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 Life Vision Funds, the Life Vision Growth and
Income Fund 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.
LIFE VISION MODERATE GROWTH FUND
The Life Vision Moderate Growth Fund seeks both capital appreciation and current
income. Under normal market conditions, the Fund will invest primarily in shares
of underlying STI Classic Funds that invest primarily in equity securities
(35%-65%), but at least 35% of the Fund's total assets will be invested in
shares of underlying STI Classic Funds that invest primarily in fixed-income
securities (35%-65%). The Fund'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 (0%-20%).
In general, relative to the other Life Vision Funds, the Life Vision Moderate
Growth Fund should offer investors a balanced level of income and capital
appreciation, while subjecting investors to a lower level of principal risk.
GENERAL INVESTMENT POLICIES OF THE LIFE VISION FUNDS
To achieve each Life Vision Fund'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 Life
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Vision Fund invests a percentage of its assets, within percentage ranges the
Adviser believes appropriate, in select underlying STI Classic Funds, which are
separately-managed series of the Trust. The percentages will reflect the extent
to which each Life Vision Fund invests in the particular market segment
represented by each underlying STI Classic Funds, and the varying degrees of
potential investment risk and reward represented by each Life Vision Fund's
investments in those corresponding underlying STI Classic Funds. These
percentage ranges may change when it is appropriate in light of each Life Vision
Fund's investment objective. Each Life Vision Fund 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 Life Vision
Fund 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 Life Vision Fund is engaged in temporary defensive
investing, it will not be pursuing its investment objective.
The following risk factors are associated with the Life Vision Funds'
investments in underlying STI Classic Funds:
- When a Life Vision Fund invests in underlying STI Classic Funds, those
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 Life Vision Funds and the underlying STI Classic Funds have the
same officers, Trustees and Adviser, which may give rise to certain
conflicts of interest.
- Each Life Vision Fund'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 Life Vision Fund invests in
underlying STI Classic Funds, shareholders bear not only that Life
Vision Fund'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 DEPOSITARY 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 deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities.
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 pay down characteristics of the underlying financial
assets which are passed through to the security holder.
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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.
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.
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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 a Fund sells the security becomes insolvent, the
Fund's right to repurchase the security may be restricted. Other risks involved
in entering into dollar rolls include the risk that the value of the security
may change adversely over the term of the dollar roll and that the security the
Fund is required to repurchase may be worth less than the security that the Fund
originally held. To avoid any leveraging concerns, the Fund will place U.S.
government or other liquid, high grade assets in a segregated account in an
amount sufficient to cover its repurchase obligation.
EURO-DENOMINATED SECURITIES
Effective January 1, 1999, 11 of the 15 member states of the European Union
introduced the "euro" as a common currency. During a three-year transitional
period, the euro will coexist with each member state's currency. By July 1,
2002, the euro will have replaced the national currencies of the following
member countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal and Spain. During the transition period,
each Fund will treat the euro as a separate currency from that of any member
state.
Currently, the exchange rate of the currencies of each of these countries is
fixed to the euro. The euro trades on currency exchanges and is available for
non-cash transactions. The participating countries currently issue sovereign
debt exclusively in euro. By July 1, 2002, euro-denominated bills and coins will
replace the bills and coins of the participating countries.
The new European Central Bank has control over each country's monetary policies.
Therefore, the participating countries no longer control their own monetary
policies by directing independent interest rates for their currencies.
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The national governments of the participating countries, however, have retained
the authority to set tax and spending policies and public debt levels.
The conversion may impact the trading in securities of issuers located in, or
denominated in the currencies of, the member states, as well as foreign
exchanges, payments, the settlement process, custody of assets and accounting.
The introduction of the euro is also expected to affect derivative and other
financial contracts in which a Fund may invest insofar as price sources based
upon current currencies of the member states will be replaced, and market
conventions, such as day-count fractions or settlement dates applicable to
underlying instruments may be changed to conform to the conventions applicable
to euro currency.
The overall impact of the transition of the member states' currencies to the
euro cannot be determined with certainty at this time. In addition to the
effects described above, it is likely that more general short- and long-term
consequences can be expected, such as changes in economic environment and change
in behavior of investors, all of which will impact each Fund's euro-denominated
investments.
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.
In making investment decisions for the Funds, 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.
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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
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 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 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.
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.
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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 Adviser do not believe that the Funds will generally be subject to
the risks of loss frequently associated with futures transactions. The Funds
presumably would have sustained comparable losses if, instead of the futures
contract, they had invested in the underlying financial instrument and sold it
after the decline. The risk of loss from the purchase of options is less as
compared with the purchase or sale of futures contracts because the maximum
amount at risk is the premium paid for the option.
Utilization of futures transactions by the Funds does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the fund securities being hedged. It is also
possible that the Funds could both lose money on futures contracts and
experience a decline in value of its fund securities. There is also the risk of
loss by the Funds of margin deposits in the event of the bankruptcy of a broker
with whom the Funds have an open position in a futures contract or related
option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some futures
traders to substantial losses.
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:
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(i) 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.
(ii) 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.
(iii) 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.
(iv) The market for high risk, high yield securities may be
adversely affected by legislative and regulatory developments.
HEDGING TECHNIQUES
Hedging is 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: (i) 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;
(ii) 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; (iii) there may not be a liquid secondary market for a futures contract
or option; and (iv) 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.
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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
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 30-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 U.S.
government. Obligations of Fannie Mae and FHLMC are not backed by the full faith
and credit of the U.S. 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.
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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, 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.
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
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life. The Adviser believes 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 the 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 the 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 of investment by S&P, or (iv) which,
if not rated by S&P or Moody's, are in the Adviser's judgment, 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
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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 Fund's 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 the 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 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
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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 Adviser.
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 Adviser monitors
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
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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 Virginia 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 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. The Funds may invest in 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 the
Adviser pursuant to guidelines adopted by the Trust's Board of Trustees. Under
these guidelines, the 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, the Adviser intends to purchase securities that are exempt from
registration under Rule 144A under the 1933 Act.
SECURITIES LENDING
All Funds may lend securities pursuant to agreements which require that the
loans be continuously secured by collateral at all times equal to 100% of the
market value of the loaned securities which consists of cash, securities of the
U.S. government or its agencies, or any combination of cash and such securities.
Such loans will not be made if, as a result, the aggregate amount of all
outstanding securities loans for a Fund exceed one-third of the value of the
Fund's total assets taken at fair market value. A Fund will continue to receive
interest on the loaned securities while simultaneously earning interest on the
investment of the collateral. However, a Fund will normally pay
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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. Further, loans are made only to borrowers deemed by the Adviser to
be of good standing and when, in the judgment of the 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
the 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.
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 one-half 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
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or, if illiquid, do not violate the affected Fund's investment policy concerning
investments in illiquid securities. Consistent with Rule 2a-7 under the
Investment Company Act of 1940, as amended, (the "1940 Act"), the 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 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
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 Union, European Investment Bank, and the Nordic
Investment Bank.
SWAPS, CAPS, FLOORS, COLLARS
Swaps, caps, floors and collars are hedging tools designed to permit a Fund 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 a 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. A Fund may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. A obligation a Fund may have under these types of arrangements
will be covered by setting aside liquid high-grade securities in a segregated
account. The Funds 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 U.S.
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 U.S.
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 U.S. Postal Service as well as
government trust certificates. Some of these securities are supported by the
full faith and credit of the U.S. Treasury, others are supported by the right of
the issuer to borrow from the U.S. 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.
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U.S. TREASURY OBLIGATIONS
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 STRIPS or
CUBES.
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 Adviser, be equivalent to the ratings applicable to
permitted investments for the particular Fund. The Adviser 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.
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
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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 POLICIES
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.
FUNDAMENTAL POLICIES
No Fund (except the Life Vision Funds) may:
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, International Equity Fund,
International Equity Index Fund, Limited- Term Federal
Mortgage Securities Fund, U.S. Government Securities Fund,
Small Cap Value Equity Fund and Value Income Stock Fund, may
engage in securities lending as described in the Prospectuses
and in this Statement of Additional Information.
B-34
<PAGE>
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, 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 Value 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 U.S. 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 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.
B-35
<PAGE>
LIFE VISION FUNDS
No Life Vision Fund may:
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 Life Vision Fund would be invested in the
securities of such issuer; provided, however, that a Life
Vision Fund may invest more than 25% of its assets without
regard to this restrictions permitted by applicable law;
2. Borrow money, except that a Life Vision Fund (a) may borrow
money for temporary or emergency purposes in an amount not
exceeding 5% of the Life Vision Fund'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 Life Vision Fund 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 Life Vision Fund 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
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 25% of the
Life Vision Fund's total assets would be invested in the
securities of companies whose principal business activities
are in the same industry. In addition, each Life Vision Fund
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 Life Vision Fund may
indirectly invest more than 25% of its total assets in one
industry through its investments in the underlying STI Classic
Funds. Each Life Vision Fund 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 Life Vision Fund 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
8. Lend any security or make any other loan, except as permitted
by the 1940 Act.
B-36
<PAGE>
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
On August 15, 2000, the Board of Trustees recommended that shareholders of each
Fund approve certain revisions to each Fund's fundamental investment policies.
These revised policies, which are listed below, if approved, would replace each
of the fundamental policies listed above. Shareholders of record on August 16,
2000 will be asked to approve the revised policies at shareholders meeting
scheduled for October 27, 2000. If these revised policies are approved, they
will take effect immediately. The Fund will update this SAI if the revised
policies are not approved by the shareholders of each Fund.
No Fund may:
1. With respect to 75% of each Fund's total assets, invest more
than 5% of the value of the total assets of a Fund in the
securities of any one issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, repurchase agreements involving such
securities, and securities issued by investment companies), or
purchase the securities of any one issuer if such purchase
would cause more than 10% of the voting securities of such
issuer to be held by a Fund.
2. Borrow money in an amount exceeding 33 1/3% of the value of
its total assets, provided that, for the purposes of this
limitation, investment strategies that either obligate a Fund
to purchase securities or require a Fund to segregate assets
are not considered to be borrowing. Asset coverage of at least
300% is required for all borrowing, except where the Fund has
borrowed money for temporary purposes (less than 60 days), and
in an amount not exceeding 5% of its total assets.
3. Underwrite securities issued by others, except to the extent
that the Fund may be considered an underwriter within the
meaning of the Securities Act of 1933 in the sale of portfolio
securities.
4. Issue senior securities (as defined in the Investment Company
Act of 1940 (the "1940 Act")), except as permitted by rule,
regulation or order of the Securities and Exchange Commission.
5. Purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities and securities issued by
investment companies) if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of
companies who principal business activities are in the same
industry.
5.1 With respect to the money market funds, this
limitation does not apply to 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.
5.2 No Life Vision Fund may 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 Life Vision Fund may indirectly
invest more than 25% of its total assets in one
industry through its investments in the underlying
STI Classic Funds. Each Life Vision Fund 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 Fund 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.
8. Make loans, except that a Fund may: (i) purchase or hold debt
instruments in accordance with its investment objectives and
policies; (ii) enter into repurchase agreements; and (iii)
lend its portfolio securities.
B-37
<PAGE>
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.
No Life Vision Fund currently intends to purchase securities on margin, except
that a Life Vision Fund may obtain such short-term credits as are necessary for
the clearance of transactions.
No Life Vision Fund currently intends to sell securities short.
No Life Vision Fund currently intends to purchase or sell futures contracts or
put or call options.
No Life Vision Fund may 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 ADVISER
The investment adviser makes investment decisions for the STI Classic Funds
(hereon, the "Funds") and continuously reviews, supervises and administers each
Fund's respective investment program. The Board of Trustees supervises the
Adviser and establishes policies that the Adviser must follow in its management
activities. Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400,
Atlanta, Georgia 30303, serves as the investment adviser ("Adviser") to the
Funds. As of July 1, 2000, Trusco had approximately $47 billion in assets under
management.
For periods prior to January 1, 2000, STI Capital Management, N.A. ("STI"), a
subsidiary of SunTrust Banks, Inc. served as investment adviser to the Balanced
Fund, Capital Appreciation Fund, Florida Tax-Exempt Bond Fund, International
Equity Fund, Investment Grade Bond Fund, Investment Grade Tax-Exempt Bond Fund,
Limited-Term Federal Mortgage Securities Fund, Mid-Cap Equity Fund, Small Cap
Value Equity Fund and Value Income Stock Fund. On January 1, 2000, SunTrust Bank
(formerly SunTrust Bank, Atlanta), a subsidiary of SunTrust Banks, Inc. and the
investment adviser of the Georgia Tax-Exempt Bond Fund, succeeded STI as the
investment adviser to those Funds. On July 1, 2000 SunTrust Banks, Inc.
reorganized its money management units, including those of SunTrust Bank, into
Trusco. As a result, Trusco now serves as the investment adviser to each Fund
pursuant to three separate agreements. The Advisory Agreements provide that the
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.
The Advisory Agreements provide that if, for any fiscal year, the ratio of
expenses of any Fund (including amounts payable to the 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 the Advisory Agreements, 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 the
Agreements or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreements will terminate automatically in the event of its assignment, and each
B-38
<PAGE>
is terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Funds, by a majority of the outstanding shares of the Funds, on
not less than 30 days' nor more than 60 days' written notice to the Adviser, or
by the Adviser on 90 days' written notice to the Trust.
For its advisory services, Trusco is entitled to a fee, which is calculated
daily and paid monthly, at the annual rate of: 0.95% of the average daily net
assets of the Balanced Fund, 1.15% of the average daily net assets of the
Capital Appreciation Fund, 1.10% of the average daily net assets of the Core
Equity Fund, 1.10% of the average daily net assets of the E-Commerce Opportunity
Fund, 0.65% of the average daily net assets of the Florida Tax-Exempt Bond Fund,
0.65% of the average daily net assets of the Georgia Tax-Exempt Bond Fund, 0.90%
of the average daily net assets of the Growth and Income Fund, 0.80% of the
average daily net assets of the High Income Fund, 0.90% of the average daily net
assets of the International Equity Index Fund, 1.25% of the average daily net
assets of the International Equity Fund, 0.74% of the average daily net assets
of the Investment Grade Bond Fund, 0.74% of the average daily net assets of the
Investment Grade Tax-Exempt Bond Fund, 0.65% of the average daily net assets of
the Limited-Term Federal Mortgage Securities Fund, 0.65% of the average daily
net assets of the Maryland Municipal Bond Fund, 1.15% of the average daily net
assets of the Mid-Cap Equity Fund, 0.65% of the average daily net assets of the
Prime Quality Money Market Fund, 0.65% of the average daily net assets of the
Short-Term Bond Fund, 0.65% of the average daily net assets of the Short-Term
U.S. Treasury Securities Fund, 1.15% of the average daily net assets of the
Small Cap Growth Stock Fund, 1.15% of the average daily net assets of the Small
Cap Value Equity Fund, 1.15% of the average daily net assets of the Tax
Sensitive Growth Stock Fund, 0.55% of the average daily net assets of the
Tax-Exempt Money Market Fund, 0.40% of the average daily net assets of the
Virginia Tax-Free Money Market Fund, 0.65% of the average daily net assets of
the U.S. Government Securities Money Market Fund, 0.65% of the average daily net
assets of the U.S. Treasury Money Market Fund, 0.74% of the average daily net
assets of the U.S. Government Securities Fund, 0.80% of the average daily net
assets of the Value Income Stock Fund, 0.65% of the average daily net assets of
the Virginia Municipal Bond Fund, 0.65% of the average daily net assets of the
Virginia Intermediate Municipal Bond Fund, 0.25% of the average daily net assets
of the Life Vision Aggressive Growth Fund, 0.25% of the average daily net assets
of the Life Vision Growth and Income Fund, and 0.25% of the average daily net
assets of the Life Vision Moderate Growth Fund.
For the fiscal years ended May 31, 2000, 1999, and 1998, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
------------------------------- -------------------------------------------- ----------------------------------------
Fees Paid Fees Waived or Reimbursed
(Net After Waivers or Reimbursements)
FUND
------------------------------ -------------------------------------------- ----------------------------------------
2000 1999 1998 2000 1999 1998
------------------------------ -------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $2,779,000 $2,546,000 $1,561,000 $335,000 $248,000 $226,000
------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $21,951,000 $23,291,000 $17,608,000 $1,750,000 $1,878,000 $1,818,000
------------------------------------------------------------------------------------------------------------------------
Core Equity Fund $857,000 * * $63,000 * *
------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund $469,000 * * $69,000 * *
------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $650,000 $804,000 $419,000 $130,000 $133,000 $121,000
------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $524,000 $575,000 $330,000 $113,000 $96,000 $94,000
------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund $7,269,000 $2,558,000 $4,337,000 $1,000 $0 $0
------------------------------------------------------------------------------------------------------------------------
High Income Fund # $3,000 $60,000 $285,164 $3,000 $74,000 $0
------------------------------------------------------------------------------------------------------------------------
International Equity Fund $6,533,000 $7,655,000 $7,210,000 $18,000 $308,000 $70,000
------------------------------------------------------------------------------------------------------------------------
International Equity Index $1,359,000 $563,000 $543,000 $190,000 $70,000 $77,000
Fund
------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund $7,739,000 $6,499,000 $4,853,000 $798,000 $743,000 $794,000
------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt $1,176,000 $1,381,000 $1,118,000 $109,000 $191,000 $208,000
Bond Fund
------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-39
<PAGE>
<TABLE>
<CAPTION>
----------------------------- --------------------------------------------- ----------------------------------------
Fees Paid Fees Waived or Reimbursed
(Net After Waivers or Reimbursements)
FUND
----------------------------- --------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Limited-Term Federal $742,000 $955,000 $740,000 $162,000 $153,000 $159,000
Mortgage Securities Fund
------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Fund $186,000 $84,000 $50,000 $42,000 $49,000 $61,000
------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $2,763,000 $3,717,000 $3,847,000 $191,000 $355,000 $422,000
------------------------------------------------------------------------------------------------------------------------
Prime Quality Money Market $21,362,000 $17,530,000 $9,511,000 $6,310,000 $4,356,000 $2,700,000
Fund
------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $1,110,000 $90,000 $544,000 $185,000 $139,000 $165,000
------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury $347,000 $352,000 $151,000 $88,000 $62,000 $78,000
Securities Fund
------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund $3,384,000 $314,000 * $84,000 $79,000 *
------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity Fund $3,363,000 $3,701,000 $3,350,000 $76,000 $161,000 $329,000
------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $3,098,000 $4,122,000 $2,219,000 $1,060,000 $1,057,000 $882,000
------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock $6,855,000 $1,008,000 * $399,000 $124,000 *
Fund
------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $670,000 $380,000 $187,000 $88,000 $58,000 $54,000
Fund
------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $2,564,000 $2,992,000 $1,984,000 $537,000 $607,000 $580,000
Money Market Fund
------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market $4,236,000 $1,486,000 $2,412,000 $855,000 $21,000 $0
Fund
------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $13,106,000 $15,302,000 $15,826,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate $1,551,000 $641,000 $1,248,000 $0 $0 $0
Municipal Bond Fund
------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund $280,000 $110,000 $167,000 $20,000 $20,000 $28,000
------------------------------------------------------------------------------------------------------------------------
Virginia Tax-Free Money $1,184,000 $607,000 $963,000 $4,000 $3,000 $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 Crestar
Asset Management Company for the fiscal years ended November 30, 1999
and November 30, 1998, respectively.
B-40
<PAGE>
# Prior to March 28, 2000, advisory fees were paid by the predecessor to this
Fund pursuant to an agreement between the ESC Strategic Funds and SunTrust
Equitable Securities Corporation. The amounts listed for 1999 and 1998 represent
the advisory fees paid to and/or waived by Equitable Securities Corporation for
the fiscal years ending March 28, 2000 and March 31, 1999, respectively.
For the fiscal years ended May 31, 2000, 1999, and 1998, the Life Vision Funds
paid the following advisory fees:
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED OR REIMBURSED
----------------------------------------------- ----------------------------------------------
FUND 2000 1999 1998 2000 1999 1998
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Life Vision Aggressive Growth $ 11,000 $ 21,986 $ 39,508 $ 31,000 $13,352 $ 25,574
Fund+
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Life Vision Growth and Income $ 18,000 $ 25,358 $ 53,342 $ 40,000 $15,141 $ 32,109
Fund+
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Life Vision Moderate Growth $111,000 $114,314 $233,180 $102,000 $54,595 $119,987
Fund+
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
</TABLE>
+Prior to May 24, 1999, advisory fees were paid by the predecessor to
this Fund pursuant to an agreement between The CrestFunds and Crestar
Asset Management Company for the fiscal years ended November 30, 1999
and November 30, 1998, respectively.
The Adviser has agreed to waive a portion of its fees or reimburse expenses in
order to limit Fund expenses.
THE ADMINISTRATOR
The Trust and SEI Investments Mutual Funds Services (the "Administrator") are
parties an to administration agreement (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 90 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 including, but without
limitation: The Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha
Select Funds, Amerindo Funds Inc., The Arbor Fund, ARK Funds, Armada Funds, The
Armada Advantage Fund, Bishop Street Funds, CNI Charter Funds, CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., Friends Ivory Funds, HighMark Funds,
Huntington Funds, Huntington VA Funds, The Nevis Fund, Inc., Oak Associates
Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds,
SEI Asset Allocation Trust, Pitcairn Funds, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional International Trust, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI Insurance Products Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Variable Trust, TIP Funds, UAM
Funds Trust, UAM Funds, Inc. and UAM Funds, Inc. II.
B-41
<PAGE>
Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI
Classic Variable Trust, TIP Funds, UAM Funds Trust, UAM Funds, Inc. 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.
For the fiscal years ended May 31, 2000, 1999, and 1998, the Funds paid the
following administration fees:
<TABLE>
<CAPTION>
------------------------------ --------------------------------------------- ------------------------------------
Fees Paid Fees Waived
FUND
------------------------------ ---------------------------------------------- -------------------------------------
2000 1999 1998 2000 1999 1998
----------------------------- ---------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $232,000 $208,000 $136,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $1,458,000 $1,575,000 $1,218,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Core Equity Fund $59,000 * * $0 * *
------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund $35,000 * * $0 * *
------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $85,000 $96,000 $61,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $69,000 $69,000 $44,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund $572,000 $493,000 $950,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
High Income Fund $0 $9,000 $42,775 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund $817,000 $683,000 $550,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt $123,000 $146,000 $128,000 $0 $0 $0
Bond Fund
------------------------------------------------------------------------------------------------------------------------
International Equity Fund $371,000 $477,000 $416,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
International Equity Index $122,000 $49,000 $43,000 $0 $0 $0
Fund
------------------------------------------------------------------------------------------------------------------------
Life Vision Aggressive $18,000 $20,000 N/A $0 $19,000 N/A
Growth Fund
------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and $17,000 $20,000 N/A $0 $18,000 N/A
Income Fund
------------------------------------------------------------------------------------------------------------------------
Life Vision Moderate Growth $56,000 $20,000 N/A $0 $13,000 N/A
Fund
------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal $98,000 $115,000 $99,000 $0 $0 $0
Mortgage Securities Fund
------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Fund $25,000 $33,000 $26,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $181,000 $253,000 $267,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Prime Quality Money Market $3,012,000 $2,092,000 $785,000 $0 $250,000 $571,000
Fund
------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $141,000 $106,000 $80,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury $47,000 $42,000 $26,000 $0 $0 $0
Securities Fund
------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity Fund $212,000 $251,000 $230,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-42
<PAGE>
<TABLE>
<CAPTION>
------------------------------ --------------------------------------------- ------------------------------------
Fees Paid Fees Waived
FUND
------------------------------ ---------------------------------------------- -------------------------------------
2000 1999 1998 2000 1999 1998
----------------------------- ---------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Stock Fund $218,000 $21,000 * $0 $0 *
------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $535,000 $583,000 $398,000 $0 $0 $10,000
------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock $446,000 $67,000 * $0 $0 *
Fund
------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $73,000 $40,000 $24,000 $0 $0 $0
Fund
------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities $337,000 $359,000 $236,000 $0 $3,000 $47,000
Money Market Fund
------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market $579,000 $550,000 $927,000 $0 $0 $0
Fund
------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $1,154,000 $1,498,000 $1,428,000 $0 $0 $0
------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate $170,000 $185,000 $375,000 $0 $0 $0
Municipal Bond
------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund $36,000 $27,000 $46,000 $0 $20,000 $36,000
------------------------------------------------------------------------------------------------------------------------
Virginia Tax-Free Money $212,000 $222,000 $366,000 $0 $0 $0
Market Fund
------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not in operation during the period.
+ Prior to May 24, 1999, administration 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 and November 30, 1998,
respectively.
# Prior to March 28, 2000, administration fees were paid by the predecessor to
this Fund pursuant to an agreement between the ESC Strategic Funds, Inc. and
BISYS Fund Services. The amounts listed for 1999 and 1998 represent the
administration fees paid to and/or waived by Equitable Securities Corporation
for the fiscal years ending March 28, 2000 and March 31, 1999, respectively.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust have entered into a distribution agreement
(the "Distribution Agreement") dated May 29, 1992. 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-43
<PAGE>
For the fiscal years ended May 31, 2000, 1999, and 1998, 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 2000 1999 1998 2000 1999 1998
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $ 36,000 $ 32,000 $ 48,373 $ 17,000 $ 7,780 $ 0
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Capital Appreciation Fund $1,984,000 $1,916,000 $560,435 $298,000 $127,525 $ 312
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Florida Tax-Exempt Bond Fund $ 6,000 $ 7,000 $ 7,296 $ 6,000 $ 2,173 $ 0
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Georgia Tax-Exempt Bond Fund $ 6,000 $ 6,000 $ 7,871 $ 6,000 $ 6,260 $ 0
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Growth and Income Fund + $ 100,000 $ 26,000 $ 50,000 $ 50,000 $ 16,000 $ 50,000
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
International Equity Fund $ 41,000 $ 51,756 $ 93,755 $ 13,000 $ 8,000 $ 16
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
International Equity Index Fund $ 19,000 $ 22,000 $ 5,285 $ 12,000 $ 5,000 $ 16
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Investment Grade Bond Fund $ 129,000 $ 115,000 $ 54,658 $ 38,000 $ 36,642 $ 0
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Investment Grade Tax-Exempt $ 96,000 $ 6,000 $ 10,402 $ 22,000 $ 11,683 $ 36
Bond Fund
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Limited-Term Federal Mortgage $ 4,000 $ 4,000 $ 485 $ 3,000 $ 1,486 $ 0
Securities Fund
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Mid-Cap Equity Fund $ 72,000 $ 90,000 $ 93,073 $ 19,000 $ 6,975 $ 26
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Prime Quality Money Market $1,973,000 $1,157,000 $716,000 $320,000 $188,000 $251,000
Fund
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Small Cap Growth Stock Fund $ 56,000 $ 97,000 $ 57,613 $ 24,000 $ 6,801 $ 0
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Short-Term Bond Fund $ 4,000 $ 5,000 $ 1,056 $ 4,000 $ 4,278 $ 10
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Short-Term U.S. Treasury $ 5,000 $ 4,000 $ 547 $ 5,000 $ 5,266 $ 4
Securities Fund
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Tax-Exempt Money Market Fund $ 194,000 $ 214,000 $190,000 $ 49,000 $ 58,000 $ 4,000
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
U.S. Government Securities Fund $ 8,000 $ 11,000 $ 23,873 $ 8,000 $ 1,771 $ 0
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
U.S. Government Securities $ 108,000 $ 104,000 $ 97,000 $ 31,000 $ 49,000 $ 27,000
Money Market Fund
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Value Income Stock Fund $ 504,000 $ 638,471 $576,856 $ 2,000 $ 0 $ 361
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Virginia Intermediate Municipal $ 11,000 $ 6,000 $ 13,000 $ 11,000 $ 5,894 $ 13,000
Bond Fund +
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
Virginia Tax-Free Money Market $ 51,000 $ 14,000 $ 33,000 $ 25,000 $ 14,000 $ 33,000
Fund
-------------------------------- -------------- --------------- ---------------- --------------- --------------- --------------
</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 and November 30, 1998,
respectively.
B-44
<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
--------------------------------------------------------------------------
$100,000 $250,000
Less than but less than but less than $1,000,000
FUND(S) $100,000 $250,000 $1,000,000 and over
----------------------------------------------------- ----------------- ----------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Balanced, Capital Appreciation, Core Equity, E- 3.75% 3.25% 2.5% 1.50%
Commerce Opportunity, Florida Tax-Exempt Bond,
Georgia Tax-Exempt Bond, Growth and Income Fund,
International Equity, International Equity Index,
Investment Grade Bond, Investment Grade Tax-Exempt
Bond, Mid-Cap Equity, Small Cap Value Equity, Small
Cap Growth Stock, U.S. Government Securities, Value
Income Stock, and Virginia Intermediate Municipal
Bond Funds
----------------------------------------------------- ----------------- ----------------- ------------------ ----------------
Limited-Term Federal Mortgage Securities Fund 2.5% 1.75% 1.25% 0%
----------------------------------------------------- ----------------- ----------------- ------------------ ----------------
Short-Term Bond Fund 2.00% 1.50% 1.00% 0%
----------------------------------------------------- ----------------- ----------------- ------------------ ----------------
Short-Term U.S. Treasury Securities Fund 1.00% 0.79% 0.5% 0%
----------------------------------------------------- ----------------- ----------------- ------------------ ----------------
For the fiscal years ended May 31, 2000, 1999 and 1998, the aggregate sales
charges payable to the Distributor with respect to the Flex Shares of the Funds
were as follows:
</TABLE>
<TABLE>
<CAPTION>
--------------------------------- -------------------------------------------------- --------------------------------------
AGGREGATE SALES CHARGE PAYABLE TO AMOUNT RETAINED BY DISTRIBUTOR
FUND DISTRIBUTOR
-------------------------------- -------------------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund $ 765,000 $ 441,000 $ 11,758 $ 38,000 $ 14,028 $ 0
--------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund 1,528,000 1,276,420 60,500 45,000 0 0
--------------------------------------------------------------------------------------------------------------------------------
Core Equity Fund 11,000 * * 3,000 * *
--------------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Fund 52,000 * * 1,000 * *
--------------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund 127,000 115,000 2,556 53,000 47,200 0
--------------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund 113,000 100,000 3,920 47,000 41,114 0
--------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund 497,000 136,000 203,000 126,000 21,000 51,000
--------------------------------------------------------------------------------------------------------------------------------
High Income Fund # 4,000 N/A N/A 2,000 N/A N/A
--------------------------------------------------------------------------------------------------------------------------------
International Equity Fund 146,000 193,720 23,393 28,000 51,229 0
--------------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund 32,000 12,000 12,866 12,000 4,000 4,378
--------------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Fund 249,000 183,000 10,040 65,000 47,023 0
--------------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt 163,000 107,000 2,900 38,000 29,696 0
Bond Fund
--------------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage 22,000 18,000 2,805 22,000 17,676 0
Securities Fund
--------------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Fund 75,000 24,464 0 18,000 0 1,000
--------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund 139,000 275,000 8,666 23,000 25,502 0
--------------------------------------------------------------------------------------------------------------------------------
* Not in operation during the period.
</TABLE>
B-45
<PAGE>
<TABLE>
<CAPTION>
--------------------------------- -------------------------------------------------- --------------------------------------
AGGREGATE SALES CHARGE PAYABLE TO AMOUNT RETAINED BY DISTRIBUTOR
FUND DISTRIBUTOR
-------------------------------- -------------------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------------
Prime Quality MM Fund $ 14,000 N/A N/A 6,000 N/A N/A
--------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund 21,000 $ 21,000 $ 1,395 $21,000 $20,743 $ 0
--------------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury 56,000 27,000 2,377 47,000 26,536 0
Securities Fund
--------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity Fund 139,000 275,000 0 36,000 63,824 0
--------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund 112,000 12,000 * 17,000 8,257 *
--------------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Fund 1,867,000 144,000 * 71,000 8,880 *
--------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund 104,000 54,000 2,014 48,000 21,800 0
--------------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund 1,321,000 1,171,000 112,674 23,000 9,021 0
--------------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Fund 62,000 25,146 26,000 26,000 0 16,061
--------------------------------------------------------------------------------------------------------------------------------
* Not in operation during the period.
</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.
# Prior to March 28, 2000 sales charges were paid by the predecessor to this
Fund pursuant to an agreement between the ESC Strategic Funds, Inc. and BISYS
Fund Services. The amounts listed for 1999 and 1998 represent the sales
charges paid to and/or retained by BISYS Fund Services for the fiscal years
ending March 28, 2000 and March 31, 1999, 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;.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; .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-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 Virginia Tax-Free Money
Market Fund and .17% of the average daily net assets of the U.S. Government
Securities Money Market Fund.
B-46
<PAGE>
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', 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, 2000, 1999, and 1998, the Funds paid the
following amounts pursuant to the Investor Plan:
<TABLE>
<CAPTION>
DISTRIBUTION FEES - AMOUNT PAID
--------------------------------------------------------------
FUND
2000 1999 1998
------------------------------- ----------------- ---------------- --------------
<S> <C> <C> <C>
Balanced Fund $ 19,000 $ 25,000 $ 5,000
------------------------------- ----------------- ---------------- --------------
Capital Appreciation Fund $1,686,000 $1,789,000 $1,442,000
------------------------------- ----------------- ---------------- --------------
</TABLE>
B-47
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION FEES - AMOUNT PAID
--------------------------------------------------------------
FUND
2000 1999 1998
--------------------------------------------------- ----------------- ---------------- --------------
<S> <C> <C> <C>
Core Equity Fund $ 0 * *
--------------------------------------------------- ----------------- ---------------- --------------
E-Commerce Opportunity Fund $ 0 * *
--------------------------------------------------- ----------------- ---------------- --------------
Florida Tax-Exempt Bond Fund $ 0 $ 5,000 $ 0
--------------------------------------------------- ----------------- ---------------- --------------
Georgia Tax-Exempt Bond Fund $ 0 $ 0 $ 0
--------------------------------------------------- ----------------- ---------------- --------------
Growth and Income Fund $ 50,000 $ 10,000 $ 0
--------------------------------------------------- ----------------- ---------------- --------------
International Equity Fund $ 28,000 $ 44,000 $ 34,000
--------------------------------------------------- ----------------- ---------------- --------------
International Equity Index Fund $ 7,000 $ 17,000 $ 8,000
--------------------------------------------------- ----------------- ---------------- --------------
Investment Grade Bond Fund $ 91,000 $106,000 $ 97,000
--------------------------------------------------- ----------------- ---------------- --------------
Investment Grade Tax-Exempt Bond Fund $ 74,000 $103,000 $ 77,000
--------------------------------------------------- ----------------- ---------------- --------------
Limited-Term Federal Mortgage Securities Fund $ 1,000 $ 5,000 $ 1,000
--------------------------------------------------- ----------------- ---------------- --------------
Mid-Cap Equity Fund $ 53,000 $ 83,000 $ 71,000
--------------------------------------------------- ----------------- ---------------- --------------
Prime Quality Money Market Fund $1,653,000 $969,000 $465,000
--------------------------------------------------- ----------------- ---------------- --------------
Short-Term Bond Fund $ 0 $ 0 $ 0
--------------------------------------------------- ----------------- ---------------- --------------
Short-Term U.S. Treasury Securities Fund $ 0 $ 0 $ 0
--------------------------------------------------- ----------------- ---------------- --------------
Small Cap Growth Stock $ 32,000 * *
--------------------------------------------------- ----------------- ---------------- --------------
Tax-Exempt Money Market Fund $ 145,000 $156,000 $126,000
--------------------------------------------------- ----------------- ---------------- --------------
U.S. Government Securities Fund $ 0 $ 9,000 $ 1,000
--------------------------------------------------- ----------------- ---------------- --------------
U.S. Government Securities Money Market Fund $ 77,000 $ 55,000 $ 70,000
--------------------------------------------------- ----------------- ---------------- --------------
Value Income Stock Fund $ 502,000 $638,000 $631,000
--------------------------------------------------- ----------------- ---------------- --------------
Virginia Intermediate Municipal Bond Fund $ 0 $ 0 $ 0
--------------------------------------------------- ----------------- ---------------- --------------
Virginia Tax-Free Money Market Fund $ 26,000 $ 14,000 $ 0
--------------------------------------------------- ----------------- ---------------- --------------
<FN>
For the fiscal years ended May 31, 2000, 1999 and 1998, the Funds paid the
following amounts pursuant to the Flex Plan:
</FN>
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION FEES - AMOUNT PAID
--------------------------------------------------------------
FUND
2000 1999 1998
------------------------------- ----------------- ---------------- --------------
<S> <C> <C> <C>
Balanced Fund $ 727,000 $ 427,000 $126,000
------------------------------- ----------------- ---------------- --------------
Capital Appreciation Fund $1,483,000 $1,276,000 $673,000
------------------------------- ----------------- ---------------- --------------
Core Equity Fund $ 8,000 * *
------------------------------- ----------------- ---------------- --------------
</TABLE>
B-48
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION FEES - AMOUNT PAID
--------------------------------------------------------------
FUND
2000 1999 1998
---------------------------------------------- ----------------- ---------------- --------------
<S> <C> <C> <C>
E-Commerce Opportunity Fund $ 51,000 * *
---------------------------------------------- ----------------- ---------------- --------------
Florida Tax-Exempt Bond Fund $ 74,000 $ 67,000 $ 30,000
---------------------------------------------- ----------------- ---------------- --------------
Georgia Tax-Exempt Bond Fund $ 66,000 $ 58,000 $ 30,000
---------------------------------------------- ----------------- ---------------- --------------
Growth and Income Fund $ 371,000 $ 115,000 $ 152,000
---------------------------------------------- ----------------- ---------------- --------------
High Income Fund $ 2,000 N/A N/A
---------------------------------------------- ----------------- ---------------- --------------
International Equity Fund $ 118,000 $ 143,000 $ 149,000
---------------------------------------------- ----------------- ---------------- --------------
International Equity Index Fund $ 20,000 $ 8,000 $ 2,000
---------------------------------------------- ----------------- ---------------- --------------
Investment Grade Bond Fund $ 184,000 $ 136,000 $ 56,000
---------------------------------------------- ----------------- ---------------- --------------
Investment Grade Tax-Exempt Bond Fund $ 125,000 $ 77,000 $ 39,000
---------------------------------------------- ----------------- ---------------- --------------
Limited-Term Federal Mortgage Securities Fund $ 0 $ 0 $ 1,000
---------------------------------------------- ----------------- ---------------- --------------
Maryland Municipal Bond Fund $ 57,000 $ 24,000 $ 17,000
---------------------------------------------- ----------------- ---------------- --------------
Mid-Cap Equity Fund $ 127,000 $ 147,000 $ 124,000
---------------------------------------------- ----------------- ---------------- --------------
Prime Quality Money Market Fund $ 8,000 * *
---------------------------------------------- ----------------- ---------------- --------------
Short-Term Bond Fund $ 0 $ 0 $ 0
---------------------------------------------- ----------------- ---------------- --------------
Short-Term U.S. Treasury Securities Fund $ 9,000 $ 0 $ 0
---------------------------------------------- ----------------- ---------------- --------------
Small Cap Growth Stock Fund $ 95,000 $ 4,000 *
---------------------------------------------- ----------------- ---------------- --------------
Small Cap Value Equity Fund $ 103,000 $ 211,000 $ 156,000
---------------------------------------------- ----------------- ---------------- --------------
Tax Sensitive Growth Stock Fund $1,796,000 $ 135,000 *
---------------------------------------------- ----------------- ---------------- --------------
U.S. Government Securities Fund $ 56,000 $ 32,000 $ 17,000
---------------------------------------------- ----------------- ---------------- --------------
Value Income Stock Fund $1,298,000 $1,662,000 $1,234,000
---------------------------------------------- ----------------- ---------------- --------------
Virginia Intermediate Municipal Bond Fund $ 36,000 $ 25,000 $ 25,000
---------------------------------------------- ----------------- ---------------- --------------
</TABLE>
* Not in operation during the period.
THE TRANSFER AGENT
Federated Services Company, Federated Investors Tower, Pittsburgh, PA 15222-3779
serves as the Trust's transfer agent.
THE CUSTODIAN
SunTrust Bank, 303 Peachtree Street N.E., 14th Floor, Atlanta, GA 30308 serves
as the custodian for all of the Funds except for the International Equity and
International Equity Index Funds. The Bank of New York,
B-49
<PAGE>
One Wall Street, New York, NY 10286 serves as custodian for the International
Equity and International Equity Index Funds.
CODES OF ETHICS
The Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule
17j-1 under the Investment Company Act of 1940. In addition, the Adviser and
Distributor have adopted Codes of Ethics pursuant to Rule 17j-1. These Codes of
Ethics (each a "Code" and together the "Codes") apply to the personal investing
activities of trustees, officers and certain employees ("access persons"). Rule
17j-1 and the Codes are designed to prevent unlawful practices in connection
with the purchase or sale of securities by access persons. Under each Code,
access persons are permitted to engage in personal securities transactions, but
are required to report their personal securities transactions for monitoring
purposes. In addition, certain access persons of the Trust and the Adviser are
prohibited from acquiring beneficial ownership of securities offered in
connection with initial public offerings. Certain access persons of the Adviser
are further prohibited from acquiring beneficial ownership of securities offered
in connection with a limited offering. The Distributor's Code requires certain
access persons to obtain approval before investing in initial public offerings
and limited offerings. Copies of these Code of Ethics are on file with the
Securities and Exchange Commission, and are available to the public.
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. Unless otherwise noted, 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 to one
or more mutual funds for which SEI Investments Company or its affiliates act as
investment manager, administrator or distributor.
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. Unless otherwise noted, 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 to one
or more mutual funds for which SEI Investments Company or its affiliates act as
investment manager, administrator or distributor.
THOMAS GALLAGHER (11/25/47) - Trustee* - President, Genuine Parts Company
Wholesale Distribution, 1970 present; Director, National Service Industries;
Director, Oxford Industries.
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.
B-50
<PAGE>
WILTON LOONEY (4/18/19) - Trustee* - President of Genuine Parts Company,
1961-1964; Chairman of the Board, 1964-1990; Honorary Chairman of the Board,
1990 to present. Director, Rollins, Inc.; Director, RPC Energy Services, Inc.
CHAMPNEY A. MCNAIR (10/30/24) - Trustee* - Director and Chairman of Investment
Committee and member of Executive Committee, Cotton States Life and Health
Insurance Company; Director and Chairman of Investment Committee and member of
Executive Committee, Cotton States Mutual Insurance Company; Chairman, Trust
Company of Georgia Advisory Council.
F. WENDELL GOOCH (12/3/32) - Trustee - Retired. President, Orange County
Publishing Co., Inc., 1981-1997, publisher of the Paoli News and the Paoli
Republican and Editor of the Paoli Republican, 1981-1997, President, H & W
Distribution, Inc., 1984-1997. Current Trustee on the Board of Trustees for the
SEI Family of Funds and The Capitol Mutual Funds. Executive Vice President,
Trust Department, Harris Trust and Savings Bank and Chairman of the Board of
Directors of The Harris Trust Company of Arizona before January 1981.
T. GORDY GERMANY (11/28/25) -Trustee - Retired President, Chairman, and CEO of
Crawford & Company; held these positions, 1973-1987. Member of the Board of
Directors, 1970-1990, joined company in 1948; spent entire career at Crawford,
currently serves on Boards of Norrell Corporation and Mercy Health Services, the
latter being the holding company of St. Joseph's Hospitals.
JAMES O. ROBBINS (7/4/42) - Trustee - President and Chief Executive Officer, Cox
Communications, Inc., 1983 - present; Director, NCR; Director, Cox
Communications.
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.
MARK NAGLE (10/20/59) - President - 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.
JENNIFER E. SPRATLEY, CPA (2/13/69) - Treasurer and Chief Financial Officer -
Director, SEI Funds Accounting since November 1999. Audit Manager at Ernst &
Young LLP, 1991-1999.
JAMES R. FOGGO (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-51
<PAGE>
TIMOTHY D. BARTO (3/28/68) - Vice President and Assistant Secretary - Employed
by SEI Investments since October 1999. Vice President and Assistant Secretary of
the Administrator and Distributor since December 1999. Associate at Dechert
Price & Rhoads 1997-1999. Associate at Richter, Miller & Finn 1994-1997.
TODD B. CIPPERMAN (2/14/66) - Vice President and Assistant Secretary - Senior
Vice President and General Cousel of SEI Investments since 2000. Senior Vice
President, General Counsel and Secretary of the Administrator and the
Distributor since 2000. Vice President and Assistant Secretary of SEI
Investments, the Administator and the Distributor, 1995-2000. Associate, Dewey
Ballantine (law firm), 1994-1995. Associate, Winston & Strawn (law firm),
1991-1994.
CHRISTINE M. MCCULLOUGH (12/2/60) - Vice President and Assistant Secretary -
Employed by SEI Investments since November 1, 1999. Vice President and Assistant
Secretary of the Administrator and the Distributor since December 1999.
Associate at White and Williams LLP, 1991-1999. Associate at Montgomery,
McCracken, Walker & Rhoads, 1990-1991.
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), Associate at Morgan, Lewis & Bockius LLP (law firm) since 1993. Counsel
to the Trust, Administrator and Distributor since 1995.
-----------------------------
* Messrs. Gallagher, Goodrum, Looney and McNair 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 ended May 31, 2000, the Trust paid the following amounts to
Trustees and Officers of the Trust:
<TABLE>
<CAPTION>
AGGREGATE PENSION OR ESTIMATED TOTAL COMPENSATION
NAME OF PERSON, COMPENSATION RETIREMENT BENEFITS ANNUAL FROM FUND AND FUND
POSITION FROM FUND ACCRUED AS PART OF BENEFITS UPON COMPLEX PAID TO
FUND EXPENSES RETIREMENT TRUSTEES
============================ ====================== =========================== =================== ============================
<S> <C> <C> <C> <C>
Thomas Gallagher, $ 6,000 N/A N/A $6,500 for service on
Trustee# two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Daniel S. Goodrum, $16,500 N/A N/A $18,000 for service on
Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Wilton Looney, $26,000 N/A N/A $28,000 for service on
Trustee two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Champney A. McNair, $24,000 N/A N/A $26,000 for service on
Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
F. Wendell Gooch, $25,500 N/A N/A $27,500 for service on
Trustee two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
T. Gordy Germany, $25,500 N/A N/A $27,500 for service on
Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
</TABLE>
B-52
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE PENSION OR ESTIMATED TOTAL COMPENSATION
NAME OF PERSON, COMPENSATION RETIREMENT BENEFITS ANNUAL FROM FUND AND FUND
POSITION FROM FUND ACCRUED AS PART OF BENEFITS UPON COMPLEX PAID TO
FUND EXPENSES RETIREMENT TRUSTEES
============================ ====================== =========================== =================== ============================
<S> <C> <C> <C> <C>
James O. Robbins, $ 4,500 N/A N/A $4,500 for service on
Trustee# two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Dr. Bernard F. Sliger, $25,500 N/A N/A $27,500 for service on
Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Jonathan T. Walton, $25,500 N/A N/A $27,500 for service on
Trustee two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
William H. Cammack, $ 0 N/A N/A $0 for service on two
Trustee* boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
</TABLE>
* Mr. Cammack resigned as a Trustee of the Trust on May 16, 2000.
# Messrs. Robbins and Gallagher did not serve as Trustees for a full year during
the most recent fiscal year.
+ Pursuant to the Board's retirement policy, Messrs. Germany, Goodrum, McNair
and Dr. Sliger will retire on November 18, 2000. Immediately thereafter,
the five remaining Trustees will constitute the entire Board of Trustees.
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,
B-53
<PAGE>
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 Period Return +
1)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 seven-day period ended May 31, 2000, the Money Market Funds' current
effective and tax equivalent yields were as follows:
<TABLE>
<CAPTION>
7-DAY TAX 7-DAY TAX
CLASS OF 7-DAY EQUIVALENT EQUIVALENT
FUND SHARES 7-DAY YIELD EFFECTIVE YIELD YIELD EFFECTIVE YIELD
======================= ================ =========== =============== ========== ===============
<S> <C> <C> <C> <C>
Prime Quality Money Trust 6.03% 6.22% 6.03% 6.03%
Market Fund ---------------- ----------- --------------- ---------- ---------------
Investor 5.87 6.04 5.87 5.87
----------------------- ---------------- ----------- --------------- ---------- ---------------
Tax-Exempt Money Trust 3.79 3.86 6.26 6.38
Market Fund ---------------- ----------- --------------- ---------- ---------------
Investor 3.67 3.74 6.07 6.18
----------------------- ---------------- ----------- --------------- ---------- ---------------
U.S. Government Trust 5.65 5.81 5.65 5.81
Securities Money ---------------- ----------- --------------- ---------- ---------------
Market Fund Investor 5.51 5.66 5.51 5.66
----------------------- ---------------- ----------- --------------- ---------- ---------------
U.S. Treasury Money Trust 5.60 5.75 5.60 5.75
Market Fund
----------------------- ---------------- ----------- --------------- ---------- ---------------
Virginia Tax-Free Trust 3.70 3.77 6.12 6.23
Money Market Fund ---------------- ----------- --------------- ---------- ---------------
Investor 3.53 3.60 5.83 5.95
----------------------- ---------------- ----------- --------------- ---------- ---------------
</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
B-54
<PAGE>
as asset quality, average asset maturity, the type of instruments a Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.
Yields are one basis upon which investors may compare the Funds with other money
market funds; however, yields of other money market funds and other investment
vehicles may not be comparable because of the factors set forth above and
differences in the methods used in valuing portfolio instruments.
30-DAY YIELD
The Bond, Short-Term U.S. Treasury, Tax-Exempt Bond, Equity Funds and Life
Vision Funds may advertise a 30- day yield. In particular, yield will be
calculated according to the following formula:
Yield = (2 (a-b/cd + 1)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, 2000, yields on the Funds other than the
money market funds were as follows:
FUND CLASS OF SHARES YIELD
-------------------------------------------------------------------
Balanced Fund Trust Shares 2.92%
------------------------------
Investor Shares 2.51%
------------------------------
Flex Shares 1.87%
-------------------------------------------------------------------
Capital Appreciation Fund Trust Shares 0.12%
------------------------------
Investor Shares --
------------------------------
Flex Shares --
-------------------------------------------------------------------
Core Equity Fund Flex Shares --
-------------------------------------------------------------------
E-Commerce Opportunity Fund Flex Shares --
-------------------------------------------------------------------
Florida Tax-Exempt Bond Fund Trust Shares 4.80%
------------------------------
Investor Shares 4.42%
------------------------------
Flex Shares 4.08%
-------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund Trust Shares 4.71%
------------------------------
Investor Shares 4.35%
------------------------------
Flex Shares 4.02%
-------------------------------------------------------------------
Growth and Income Fund Trust Shares 0.58%
------------------------------
Investor Shares 0.40%
------------------------------
Flex Shares --
-------------------------------------------------------------------
High Income Fund Flex Shares 7.47%
-------------------------------------------------------------------
B-55
<PAGE>
FUND CLASS OF SHARES YIELD
-------------------------------------------------------------------
International Equity Fund Trust Shares --
------------------------------
Investor Shares --
------------------------------
Flex Shares --
-------------------------------------------------------------------
International Equity Index Fund Trust Shares --
------------------------------
Investor Shares --
------------------------------
Flex Shares --
-------------------------------------------------------------------
Investment Grade Bond Fund Trust Shares 7.82%
------------------------------
Investor Shares 7.11%
------------------------------
Flex Shares 6.90%
-------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Trust Shares 4.61%
Fund ------------------------------
Investor Shares 4.05%
------------------------------
Flex Shares 3.74%
-------------------------------------------------------------------
Limited-Term Federal Mortgage Trust Shares 5.87%
Securities Fund ------------------------------
Investor Shares 5.46%
------------------------------
Flex Shares 5.24%
-------------------------------------------------------------------
Maryland Municipal Bond Fund Trust Shares 4.89%
------------------------------
Flex Shares 3.95%
-------------------------------------------------------------------
Mid-Cap Equity Fund Trust Shares 0.26%
------------------------------
Investor Shares --
------------------------------
Flex Shares --
-------------------------------------------------------------------
Short-Term Bond Fund Trust Shares 6.83%
------------------------------
Investor Shares 6.42%
------------------------------
Flex Shares 6.27%
-------------------------------------------------------------------
Short-Term U.S. Treasury Securities Trust Shares 6.09%
Fund ------------------------------
Investor Shares 5.84%
------------------------------
Flex Shares 5.68%
-------------------------------------------------------------------
Small Cap Growth Stock Fund Trust Shares --
------------------------------
Investor Shares --
------------------------------
Flex Shares --
-------------------------------------------------------------------
B-56
<PAGE>
FUND CLASS OF SHARES YIELD
-------------------------------------------------------------------
Small Cap Value Equity Fund Trust Shares --
------------------------------
Flex Shares --
-------------------------------------------------------------------
Tax Sensitive Growth Stock Fund Trust Shares --
------------------------------
Flex Shares --
-------------------------------------------------------------------
U.S. Government Securities Fund Trust Shares 6.26%
------------------------------
Investor Shares 5.55%
------------------------------
Flex Shares 5.31%
-------------------------------------------------------------------
Value Income Stock Fund Trust Shares 2.21%
------------------------------
Investor Shares 1.74%
------------------------------
Flex Shares 1.12%
-------------------------------------------------------------------
Virginia Intermediate Municipal Trust Shares 4.66%
Bond Fund ------------------------------
Investor Shares 4.45%
-------------------------------------------------------------------
Virginia Municipal Bond Fund Trust Shares 4.95%
------------------------------
Flex Shares 4.04%
-------------------------------------------------------------------
LIFE VISION FUND CLASS OF SHARES YIELD
-------------------------------------------------------------------
Life Vision Aggressive Growth Fund Trust Shares --
-------------------------------------------------------------------
Life Vision Growth and Income Fund Trust Shares 1.49%
-------------------------------------------------------------------
Life Vision Moderate Growth Fund Trust Shares 2.03%
-------------------------------------------------------------------
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
B-57
<PAGE>
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, 2000, 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, 2000, 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, 1999, 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%.
CALCULATION OF TOTAL RETURN
From time to time, the Bond, Short-Term U.S. Treasury, Tax-Exempt Bond, Balanced
and Equity Funds may advertise total return. In particular, total return will be
calculated according to the following formula: P (1 + T)n = ERV, where P = a
hypothetical initial payment of $1,000; T = average annual total return; n =
number of years; and ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the designated time period as of the end of
such period.
Based on the foregoing, the average annual total returns for the Funds from
inception through May 31, 2000 and for the one-year, five-year and ten-year
periods ended May 31, 2000 were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
----------------- ----------------------------------------- -------------------------------------------------------------
FIVE TEN SINCE
CLASS OF SHARES ONE-YEAR YEARS YEARS INCEPTION
----------------- ----------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balanced Trust Shares 1 5.02% 14.26% -- 12.10%
Fund Investor Shares--With Sales Load 47 0.73 13.03 -- 11.05
Investor Shares--Without Sales Load 47 4.66 13.89 -- 11.69
Flex Share--With Sales Load 2 1.88 N/A -- 12.98
Flex Shares--Without Sales Load 2 3.88 N/A -- 12.98
----------------- ----------------------------------------- -------------------------------------------------------------
Capital Trust Shares 3 8.98 21.74 -- 16.91
Appreciation Investor Shares--With Sales Load 4 4.25 20.06 -- 16.01
Fund Investor Shares--Without Sales Load 4 8.29 20.97 -- 16.56
Flex Shares--With Sales Load 5 5.88 -- -- 20.42
Flex Shares--Without Sales Load 5 7.77 -- -- 20.42
----------------- ----------------------------------------- -------------------------------------------------------------
Core Equity Trust Shares 53 -- -- -- 17.05
Fund* Flex Shares-- With Load 54 -- -- -- --
Flex Shares-- Without Load 54 -- -- -- 11.97
----------------- ----------------------------------------- -------------------------------------------------------------
E-Commerce Trust Shares 53 -- -- -- 99.55
Opportunity Flex Shares-- With Load 54 -- -- -- -36.81
Fund* Flex Shares-- Without Load 54 -- -- -- -33.06
----------------- ----------------------------------------- -------------------------------------------------------------
Florida Tax- Trust Shares 19 -0.48 4.57 -- 4.84
Exempt Bond Investor Shares--With Sales Load 20 -4.38 3.58 -- 4.01
Fund Investor Shares--Without Sales Load 20 -0.68 4.38 -- 4.64
Flex Shares--With Sales Load 5 -3.07 -- -- 3.91
Flex Shares--Without Sales Load 5 -1.17 -- -- 3.91
----------------- ----------------------------------------- -------------------------------------------------------------
Georgia Tax- Trust Shares 20 -.90 4.25 -- 3.69
Exempt Bond Investor Shares--With Sales Load 21 -4.95 3.21 -- 2.85
Fund Investor Shares--Without Sales Load 21 1.26 4.01 -- 3.47
Flex Shares--With Sales Load 22 -3.49 -- -- 3.38
Flex Shares--Without Sales Load 22 -1.59 -- -- 3.38
----------------- ----------------------------------------- -------------------------------------------------------------
</TABLE>
B-58
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
----------------- ----------------------------------------- -------------------------------------------------------------
FIVE TEN SINCE
CLASS OF SHARES ONE-YEAR YEARS YEARS INCEPTION
----------------- ----------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth and Trust Shares 6 4.11% 18.28% -- 15.81%
Income Fund Investor Shares-- With Load 7 0.03 17.33 -- 14.84
Investor Shares-- Without Load 7 3.92 18.23 -- 15.46
Flex Shares-- With Load 8 1.19 17.40 -- 17.84
Flex Shares-- Without Load 8 3.11 17.40 -- 17.84
----------------- ----------------------------------------- -------------------------------------------------------------
High Income Flex Shares--With Sales Load 55 -11.86 1.72 -- 3.03
Fund Flex Shares--Without Sales Load 55 -10.21 1.72 -- 17.23
----------------- ----------------------------------------- -------------------------------------------------------------
International Trust Shares 9 10.58 14.94 -- 17.23
Equity Investor Shares-- With Sales Load 49 6.04 13.67 -- 16.02
Fund** Investor Shares-- Without Sales Load 49 10.15 14.54 -- 16.85
Flex Shares-- With Sales Load 49 7.46 13.87 -- 16.21
Flex Shares-- Without Sales Load 49 9.38 13.87 -- 16.21
----------------- ----------------------------------------- -------------------------------------------------------------
International Trust Shares 50 19.36 13.73 -- 11.83
Equity Index Investor Shares-- With Sales Load 50 14.36 12.39 -- 11.83
Fund Investor Shares-- Without Sales Load 50 18.86 13.26 -- 11.36
Flex Shares-- With Sales Load 11 16.04 N/A -- 12.60
Flex Shares-- Without Sales Load 11 18.04 N/A -- 12.60
----------------- ----------------------------------------- -------------------------------------------------------------
Investment Trust Shares 23 -1.76 4.80 -- 5.52
Grade Bond Investor Shares--With Sales Load 24 -5.81 3.59 -- 4.70
Fund Investor Shares--Without Sales Load 24 -2.17 4.39 -- 5.21
Flex Shares--With Sales Load 25 -4.48 4.12 -- 3.80
Flex Shares--Without Sales Load 25 -2.63 4.12 -- 3.80
----------------- ----------------------------------------- -------------------------------------------------------------
Investment Trust Shares 26 1.41 5.49 -- 5.29
Grade Tax- Investor Shares--With Sales Load 27 -2.86 4.25 -- 5.99
Exempt Bond Investor Shares--Without Sales Load 27 0.90 5.05 -- 6.50
Fund Flex Shares--With Sales Load 5 -1.40 -- -- 4.55
Flex Shares--Without Sales Load 5 0.57 -- -- 4.56
----------------- ----------------------------------------- -------------------------------------------------------------
</TABLE>
B-59
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
----------------- ----------------------------------------- -------------------------------------------------------------
FIVE TEN SINCE
CLASS OF SHARES ONE-YEAR YEARS YEARS INCEPTION
----------------- ----------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Limited- Trust Shares 48 2.33% 5.08% -- 5.49%
Term Federal Investor Shares--With Sales Load 28 -0.57 4.28 -- 4.90
Mortgage Investor Shares--Without Sales Load 28 1.93 4.81 -- 5.36
Securities Flex Shares--With Sales Load 25 -0.22 N/A -- 4.44
Fund Flex Shares--Without Sales Load 25 1.71 N/A -- 4.44
----------------- ----------------------------------------- -------------------------------------------------------------
Maryland Trust Shares 29 -1.78 -- -- 3.00
Municipal Flex Shares-- With Sales Load 30 -4.54 -- -- 3.29
Bond Fund Flex Shares--Without Sales Load 30 -2.66 -- -- 3.29
----------------- ----------------------------------------- -------------------------------------------------------------
Mid-Cap Trust Shares 12 19.10 16.02 -- 14.33
Equity Fund Investor Shares--With Sales Load 44 14.08 14.61 -- 13.0810
Investor Shares--Without Sales Load 44 18.55 15.50 -- 13.77
----------------- ----------------------------------------- -------------------------------------------------------------
Prime Trust Shares 45 5.20 5.10 -- 4.51
Quality Investor Shares 45 5.02 4.94 -- 4.34
Money Flex Shares 52 --
Market Fund
----------------- ----------------------------------------- -------------------------------------------------------------
Short-Term Trust Shares 31 2.87 4.98 -- 4.91
Bond Fund Investor Shares-- With Sales Load 32 0.65 4.36 -- 4.34
Investor Shares-- Without Sales Load 32 2.67 4.78 -- 4.64
Flex Shares-- With Sales Load 33 0.36 -- -- 4.41
Flex Shares-- Without Sales Load 33 2.31 -- -- 4.41
----------------- ----------------------------------------- -------------------------------------------------------------
Short-Term Trust Shares 31 3.75 5.02 -- 4.69
U.S. Treasury Investor Shares--With Sales Load 34 2.55 4.64 -- 4.38
Securities Investor Shares--Without Sales Load 34 3.58 4.85 -- 4.53
Fund Flex Shares--With Sales Load 51 1.36 -- -- 4.50
Flex Shares--Without Sales Load 51 3.34 -- -- 4.51
----------------- ----------------------------------------- -------------------------------------------------------------
</TABLE>
B-60
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
----------------- ----------------------------------------- -------------------------------------------------------------
FIVE TEN SINCE
CLASS OF SHARES ONE-YEAR YEARS YEARS INCEPTION
----------------- ----------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Small Cap Trust Shares 43 -4.72% -- -- 1.82%
Value Equity Flex Shares--With Sales Load 14 -7.53 -- -- -3.29
Fund Flex Shares--Without Sales Load 14 -5.65 -- -- -3.29
----------------- ----------------------------------------- -------------------------------------------------------------
Small Cap Trust Shares 15 27.24 -- -- --
Growth Stock Flex Shares--With Sales Load 15 23.95 -- -- 44.11
Fund Flex Shares--Without Sales Load 15 25.95 -- -- -44.11
Investor Shares--With Sales Load 51 -- -- -- --
Investor Shares--Without Sales Load 51 -- -- -- --
----------------- ----------------------------------------- -------------------------------------------------------------
Tax-Exempt Trust Shares 45 3.19 3.12% -- 2.86
Money Investor Shares 45 3.07 3.00 -- 2.74
Market Fund
----------------- ----------------------------------------- -------------------------------------------------------------
Tax Sensitive Trust Shares 16 10.48 -- -- 19.43
Growth Stock Flex Shares--With Sales Load 13 7.38 -- -- 18.42
Fund Flex Shares--Without Sales Load 13 9.38 -- -- 18.42
----------------- ----------------------------------------- -------------------------------------------------------------
U.S. Trust Shares 45 4.86 4.89 -- 4.33
Government Investor Shares 45 4.71 4.74 -- 4.19
Securities
Money
Market Fund
----------------- ----------------------------------------- -------------------------------------------------------------
U.S. Trust Shares 35 1.63 5.26 -- 5.99
Government Investor Shares--With Sales Load 10 -2.60 4.08 -- 4.83
Securities Investor Shares--Without Sales Load 10 1.19 4.88 -- 5.50
Fund Flex Shares-With Sales Load 25 -1.22 N/A -- 4.24
Flex Shares--Without Sales Load 25 .70 N/A -- 4.25
----------------- ----------------------------------------- -------------------------------------------------------------
U.S. Treasury Trust Shares 42 4.81 4.83 -- 5.30
Money
Market Fund
----------------- ----------------------------------------- -------------------------------------------------------------
Value Trust Shares 41 -10.52 13.85 -- 13.83
Income Stock Investor Shares--With Sales Load 18 -14.18 12.57 -- 13.24
Fund** Investor Shares--Without Sales Load 18 -10.83 13.43 -- 13.84
Flex Shares--With Sales Load 5 -13.11 N/A -- 12.62
Flex Shares--Without Sales Load 5 -11.50 N/A -- 12.62
----------------- ----------------------------------------- -------------------------------------------------------------
</TABLE>
B-61
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
----------------- ----------------------------------------- -------------------------------------------------------------
FIVE TEN SINCE
CLASS OF SHARES ONE-YEAR YEARS YEARS INCEPTION
----------------- ----------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Virginia Trust Shares 36 -1.31% 3.79% -- 4.08%
Intermediate Investor Shares--With Sales Load 37 -4.97 3.03 -- 3.17
Municipal Investor Shares--Without Sales Load 37 -1.24 3.82 -- 3.73
Bond Fund
----------------- ----------------------------------------- -------------------------------------------------------------
Virginia Trust Shares 38 -3.18 3.73 -- 4.17
Municipal Flex Shares-- With Sales Load 39 -5.98 2.84 -- 3.16
Bond Fund Flex Shares-- Without Sales Load 39 -4.13 2.84 -- 3.17
----------------- ----------------------------------------- -------------------------------------------------------------
Virginia Tax- Trust Shares 40 3.23 3.06 -- 3.40
Free Money Investor Shares 37 3.07 3.02 -- 2.72
Market Fund
----------------- ----------------------------------------- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------- -------------------------------------------------------------
LIFE VISION FUND 1-YEAR 5 YEARS 10 YEARS
-------------------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C>
Life Vision Aggressive Growth Fund 46 7.25% -- --
Life Vision Growth and Income Fund 46 5.81 -- --
Life Vision Moderate Growth Fund 46 4.46 -- --
-------------------------------------------------------- -------------------------------------------------------------
</TABLE>
B-62
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1 Commenced operations 1/3/94 35 Commenced operations 7/31/94
2 Commenced operations 6/14/95 19 Commenced operations 1/25/94 36 Commenced operations 5/5/93
3 Commenced operations 7/1/92 20 Commenced operations 1/18/94 37 Commenced operations 5/5/93
4 Commenced operations 6/9/92 21 Commenced operations 1/19/94 38 Commenced operations 4/5/95
5 Commenced operations 6/1/95 22 Commenced operations 6/6/95 39 Commenced operations 4/17/95
6 Commenced operations 9/28/92 23 Commenced operations 7/16/92 40 Commenced operations 6/15/89
7 Commenced operations 5/7/93 24 Commenced operations 6/11/92 41 Commenced operations 2/12/93
8 Commenced operations 4/19/95 25 Commenced operations 6/7/95 42 Commenced operations 2/18/87
9 Commenced operations 12/1/95 26 Commenced operations 10/21/93 43 Commenced operations 1/31/97
10 Commenced operations 6/9/94 27 Commenced operations 6/9/92 44 Commenced operations 2/1/94
11 Commenced operations 6/8/95 28 Commenced operations 7/17/94 45 Commended operations 6/8/92
12 Commenced operations 2/2/94 29 Commenced operations 3/1/96 46 Commenced operations 6/30/97
13 Commenced operations 6/5/95 30 Commenced operations 4/25/96 47 Commenced operations 1/4/94
14 Commenced operations 6/5/97 31 Commenced operations 3/15/93 48 Commenced operations 6/7/94
15 Commenced operations 10/8/98 32 Commenced operations 3/22/93 49 Commenced operations 1/2/96
16 Commenced operations 12/11/98 33 Commenced operations 6/20/95 50 Commenced operations 6/6/94
17 Commenced operations 12/15/98 34 Commenced operations 3/18/93 51 Commenced operations 12/12/99
52 Commenced operations 10/4/99
53 Commenced operations 9/30/99
54 Commenced operations 1/24/00
55 Commenced operations 5/4/94
</TABLE>
* Fund not in operation for entire period.
** The performance for the periods prior to December 1995 for the International
Equity Fund and February 1993 for the Value Income Stock Fund represent the
performance of a common trust fund managed by the Adviser.
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.
B-63
<PAGE>
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 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 one-half 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,
B-64
<PAGE>
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' prospectuses. 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' prospectuses 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 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
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 RICs 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 total 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 total assets may be invested in securities
(other than U.S. government securities or the securities of other RICs) 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
RICs.
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, such Fund may pay "exempt-interest dividends," as
defined in Section 852(b)(5) of the Code, to its shareholders.
As noted in their prospectuses, the Tax-Exempt Money Market Fund, the Virginia
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. 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
B-65
<PAGE>
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 U. S. will be
subject to a "branch profits tax" on their "dividend equivalent amount" for the
taxable year, which will include exempt-interest dividends. Certain Subchapter S
corporations may also be subject to taxes on their "passive investment income,"
which could include exempt-interest dividends. Up to 85% of the Social Security
benefits or railroad retirement benefits received by an individual during any
taxable year will be included in the gross income of such individual if the
individual's "modified adjusted gross income" (which includes exempt-interest
dividends) plus one-half of the Social Security benefits or railroad retirement
benefits received by such individual during that taxable year exceeds the base
amount described in Section 86 of the Code.
A tax-exempt fund may not be an appropriate investment for persons (including
corporations and other business entities) who are "substantial users" (or
persons related to such users) of facilities financed by industrial development
or private activity bonds. A "substantial user" is defined generally to include
certain persons who regularly use in a trade or business a facility financed
from the proceeds of industrial development bonds or private activity bonds.
Such entities or persons should consult their tax adviser 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 one
year, 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
B-66
<PAGE>
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 the International Equity Index and International Equity Funds meet the
Distribution Requirement, and if more than 50% of the value of each such Fund's
total assets at the close of their respective taxable years consist of stocks or
securities of foreign corporations, each 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 Funds.
Pursuant to the election, each Fund will treat those taxes as dividends paid to
its shareholders. Each such shareholder will be required to include a
proportionate share of those taxes in gross income as income received from a
foreign source and must treat the amount so included as if the shareholder had
paid the foreign tax directly. The shareholder may then either deduct the taxes
deemed paid by him or her in computing his or her taxable income or,
alternatively, use the foregoing information in calculating the foreign tax
credit against the shareholders' federal income tax. In no event shall a
shareholder be allowed a foreign tax credit with respect to shares in a Fund if
such shares are held by the shareholder for 15 days or less during the 30-day
period beginning on the date which is 15 days before the date on which such
shares become ex-dividend with respect to such dividend. If either of the two
above-mentioned Funds make the election, such Fund will report annually to its
shareholders the respective amounts per share of the Fund's income from sources
within, and taxes paid to, foreign countries and U.S. possessions.
The International Equity Index 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 the by Funds (I.E., may affect whether
gains or losses are ordinary or capital), accelerate recognition of income to
the Funds and defer 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 their
portfolios (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
the 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, the 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.
B-67
<PAGE>
TRADING PRACTICES AND BROKERAGE
The Trust selects brokers or dealers to execute transactions for the purchase or
sale of portfolio securities on the basis of its judgment of their professional
capability to provide the service. The primary consideration is to have brokers
or dealers provide transactions at best price and execution for the Trust. Best
price and execution includes many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Trust's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is a
spread (the difference between the buy and sell price) which is the equivalent
of a commission.
The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by the 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 the 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.
The 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 the 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 the 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 the Adviser
B-68
<PAGE>
is permitted to receive and retain compensation for effecting portfolio
transactions for the Trust on an exchange if a written contract is in effect
between the Distributor and the Trust expressly permitting the Distributor or an
affiliate of the 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 remuneration
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, 2000, the Funds paid the following brokerage
commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
% of Total % of Total
Total $ Amount Total $ Amount of Brokerage Brokered
of Brokerage Brokerage Commissions Paid Transactions
Commissions Commissions Paid to Affiliated Effected Through
Paid in FYE to Affiliates in FYE Brokers in FYE Affiliated Brokers
Fund 5/31/00 5/31/00 (1) 5/31/00 FYE 5/31/00
------------------------------- ------------------ ---------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 721,707 $10,348 1.4% 8.6%
------------------------------- ------------------ ---------------------- ------------------- ------------------
Capital Appreciation Fund $ 6,562,103 $48,837 0.7% 4.4%
------------------------------- ------------------ ---------------------- ------------------- ------------------
Core Equity Fund $ 187,840 $ 1,419 0.8% 26.6%
------------------------------- ------------------ ---------------------- ------------------- ------------------
E-Commerce Opportunity $ 191,269 $ 2,203 1.2% 3.4%
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Florida Tax-Exempt Bond $ 1,800 $ 1,800 100% 100%
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Georgia Tax-Exempt Bond $ 3 $ 3 100% 100%
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Growth and Income Fund + $ 1,520,932 $ 623 0.4% 33.5%
------------------------------- ------------------ ---------------------- ------------------- ------------------
High Income Fund $ 5 $ 5 100% 100%
------------------------------- ------------------ ---------------------- ------------------- ------------------
International Equity Index $ 606,700 $ 0 0% 0%
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
International Equity Fund $ 5,076,703 $ 0 0% 0%
------------------------------- ------------------ ---------------------- ------------------- ------------------
Investment Grade Bond $ 19,989 $19,989 100% 100%
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Investment Grade Tax- $ 6,409 $ 6,409 100% 100%
Exempt Bond Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Limited-Term Federal $ 3,623 $ 3,623 100% 100%
Mortgage Securities Fund
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-69
<PAGE>
<TABLE>
<CAPTION>
% of Total % of Total
Total $ Amount Total $ Amount of Brokerage Brokered
of Brokerage Brokerage Commissions Paid Transactions
Commissions Commissions Paid to Affiliated Effected Through
Paid in FYE to Affiliates in FYE Brokers in FYE Affiliated Brokers
Fund 5/31/00 5/31/001 5/31/00 FYE 5/31/00
------------------------------- ------------------ ---------------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Maryland Municipal Bond $ 0 $ 0 0% 0%
Fund +
------------------------------- ------------------ ---------------------- ------------------- ------------------
Mid-Cap Equity Fund $ 826,022 $ 4,278 0.5% 28.6%
------------------------------- ------------------ ---------------------- ------------------- ------------------
Prime Quality Money $ 226,376 $226,376 100% 100%
Market Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Short-Term Bond Fund $ 0 $ 0 0% 0%
------------------------------- ------------------ ---------------------- ------------------- ------------------
Short-Term U.S. Treasury $ 0 $ 0 0% 0%
Securities Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Small Cap Value Equity $1,007,234 $ 4,817 0.5% 7.5%
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Small Cap Growth Stock $ 879,037 $ 1,927 0.2% 12.1%
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Tax-Exempt Money $ 0 $ 0 0% 0%
Market Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
Tax Sensitive Growth $ 778,609 $ 17,943 2.3% 4.7%
Stock Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
U.S. Government $ 0 $ 0 0% 0%
Securities Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
U.S. Government $ 188,047 $188,047 100% 100%
Securities Money Market
Fund
------------------------------- ------------------ ---------------------- ------------------- ------------------
U.S. Treasury Money $ 331,610 $331,610 100% 100%
Market Fund +
------------------------------- ------------------ ---------------------- ------------------- ------------------
Value Income Stock Fund $3,356,918 $ 60,581 1.8% 43.2%
------------------------------- ------------------ ---------------------- ------------------- ------------------
Virginia Intermediate $ 0 $ 0 0% 0%
Municipal Bond Fund +
------------------------------- ------------------ ---------------------- ------------------- ------------------
Virginia Municipal Bond $ 0 $ 0 0% 0%
Fund +
------------------------------- ------------------ ---------------------- ------------------- ------------------
Virginia Tax-Free Money $ 0 $ 0 0% 0%
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 and November 30, 1998, respectively.
B-70
<PAGE>
For the fiscal years ended May 31, 1999 and 1998, 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
1999 1998 1999 1998
--------------------------------- ------------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 489,522 $ 169,222 N/A $ 4,280
--------------------------------- ------------------- ------------------- -------------------- -------------------
Capital Appreciation Fund $5,657,513 $ 3,339,393 N/A $ 34,827
--------------------------------- ------------------- ------------------- -------------------- -------------------
Core Equity Fund $ 0 * N/A *
--------------------------------- ------------------- ------------------- -------------------- -------------------
E-Commerce Opportunity Fund $ 0 * N/A *
--------------------------------- ------------------- ------------------- -------------------- -------------------
Florida Tax-Exempt Bond Fund $ 0 $ 0 N/A $ 200
--------------------------------- ------------------- ------------------- -------------------- -------------------
Georgia Tax-Exempt Bond Fund $ 0 $ 0 N/A $ 135
--------------------------------- ------------------- ------------------- -------------------- -------------------
Growth and Income Fund + $1,026,236 $ 1,031,949 N/A $ 0
--------------------------------- ------------------- ------------------- -------------------- -------------------
High Income Fund $ 0 $ N/A N/A N/A
--------------------------------- ------------------- ------------------- -------------------- -------------------
International Equity Index Fund $ 103,312 $ 21,288 $ 0 $ 71
--------------------------------- ------------------- ------------------- -------------------- -------------------
International Equity Fund $4,701,955 $ 3,098,063 $ 0 $ 0
--------------------------------- ------------------- ------------------- -------------------- -------------------
Investment Grade Bond Fund $ 0 $ 0 N/A $ 0
--------------------------------- ------------------- ------------------- -------------------- -------------------
Investment Grade Tax-Exempt $ 0 $ 0 N/A $ 0
Bond Fund
--------------------------------- ------------------- ------------------- -------------------- -------------------
Limited-Term Federal Mortgage $ 0 $ 0 N/A $ 73
Securities Fund
--------------------------------- ------------------- ------------------- -------------------- -------------------
Maryland Municipal Bond Fund $ 0 N/A N/A N/A
--------------------------------- ------------------- ------------------- -------------------- -------------------
Mid-Cap Equity Fund $ 612,170 $ 191,298 N/A $ 18,224
--------------------------------- ------------------- ------------------- -------------------- -------------------
Prime Quality Money Market $ 0 $ 0 $ 0 $ 0
Fund
--------------------------------- ------------------- ------------------- -------------------- -------------------
Short-Term Bond Fund $ 0 $ 0 $ 0 $ 0
--------------------------------- ------------------- ------------------- -------------------- -------------------
Short-Term U.S. Treasury $ 0 $ 0 $ 0 $ 0
Securities Fund
--------------------------------- ------------------- ------------------- -------------------- -------------------
Small Cap Value Equity Fund $ 986,430 * N/A *
--------------------------------- ------------------- ------------------- -------------------- -------------------
Small Cap Growth Stock Fund $ 141,859 * N/A *
--------------------------------- ------------------- ------------------- -------------------- -------------------
Tax-Exempt Money Market $ 0 $ 0 $ 0 $ 0
Fund
--------------------------------- ------------------- ------------------- -------------------- -------------------
Tax Sensitive Growth Stock $ 203,827 * N/A *
Fund
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-71
<PAGE>
<TABLE>
<CAPTION>
TOTAL $ AMOUNT OF BROKERAGE TOTAL $ AMOUNT OF BROKERED
COMMISSIONS PAID COMMISSIONS PAID TO AFFILIATES
----------------------------------------- -------------------------------------------
FUND
1999 1998 1999 1998
--------------------------------- ------------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
U.S. Government Securities $ 0 N/A $ 0 N/A
Fund
--------------------------------- ------------------- ------------------- -------------------- -------------------
U.S. Government Securities $ 0 N/A $ 0 N/A
Money Market Fund
--------------------------------- ------------------- ------------------- -------------------- -------------------
U.S. Treasury Money Market $ 0 N/A $ 0 N/A
Fund +
--------------------------------- ------------------- ------------------- -------------------- -------------------
Value Income Stock Fund $ 3,804,108 $ 4,325,977 N/A $ 37,379
--------------------------------- ------------------- ------------------- -------------------- -------------------
Virginia Intermediate Municipal $ 0 N/A $ 0 N/A
Bond Fund +
--------------------------------- ------------------- ------------------- -------------------- -------------------
Virginia Municipal Bond Fund + $ 0 N/A $ 0 N/A
--------------------------------- ------------------- ------------------- -------------------- -------------------
Virginia Tax-Free Money $ 0 N/A $ 0 N/A
Market Fund +
---------------------------------------------------------------------------------------------------------------------------------
</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, 1999 and November 30, 1998, respectively.
For the fiscal years ended May 31, 2000, 1999, and 1998, the portfolio turnover
rate for each of the non-money market funds was as follows:
<TABLE>
<CAPTION>
TURNOVER RATE
----------------------------------------------
FUND
2000 1999 1998
----------------------------------------------------------------------- ----------- ----------- ----------
<S> <C> <C> <C>
Balanced Fund 182% 179% 154%
----------------------------------------------------------------------- ----------- ----------- ----------
Capital Appreciation Fund 129% 147% 194%
----------------------------------------------------------------------- ----------- ----------- ----------
Core Equity Fund 44% * *
----------------------------------------------------------------------- ----------- ----------- ----------
E-Commerce Opportunity Fund 250% * *
----------------------------------------------------------------------- ----------- ----------- ----------
Florida Tax-Exempt Bond Fund 88% 72% 69%
----------------------------------------------------------------------- ----------- ----------- ----------
Georgia Tax-Exempt Bond Fund 19% 12% 7%
----------------------------------------------------------------------- ----------- ----------- ----------
Growth and Income Fund 53% 71% 100%
----------------------------------------------------------------------- ----------- ----------- ----------
High Income Fund 0% N/A N/A
----------------------------------------------------------------------- ----------- ----------- ----------
International Equity Fund 179% 161% 108%
----------------------------------------------------------------------- ----------- ----------- ----------
International Equity Index Fund 9% 32% 1%
----------------------------------------------------------------------- ----------- ----------- ----------
Investment Grade Bond Fund 202% 221% 109%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-72
<PAGE>
<TABLE>
<CAPTION>
TURNOVER RATE
----------------------------------------------
FUND
2000 1999 1998
----------------------------------------------------------------------- ----------- ----------- ----------
<S> <C> <C> <C>
Investment Grade Tax-Exempt Bond Fund 226% 224% 378%
----------------------------------------------------------------------- ----------- ----------- ----------
Limited-Term Federal Mortgage Securities Fund 384% 379% 163%
----------------------------------------------------------------------- ----------- ----------- ----------
Maryland Municipal Bond Fund 14% 19% 12%
----------------------------------------------------------------------- ----------- ----------- ----------
Mid-Cap Equity Fund 131% 76% 129%
----------------------------------------------------------------------- ----------- ----------- ----------
Short-Term Bond Fund 69% 108% 87%
----------------------------------------------------------------------- ----------- ----------- ----------
Short-Term U.S. Treasury Securities Fund 50% 57% 39%
----------------------------------------------------------------------- ----------- ----------- ----------
Small Cap Value Equity Fund 65% 63% 55%
----------------------------------------------------------------------- ----------- ----------- ----------
Small Cap Growth Stock Fund 110% * *
----------------------------------------------------------------------- ----------- ----------- ----------
Tax Sensitive Growth Stock Fund 30% * *
----------------------------------------------------------------------- ----------- ----------- ----------
U.S. Government Securities Fund 29% 19% 14%
----------------------------------------------------------------------- ----------- ----------- ----------
Value Income Stock Fund 62% 69% 99%
----------------------------------------------------------------------- ----------- ----------- ----------
Virginia Intermediate Municipal Bond Fund 18% 19% 30%
----------------------------------------------------------------------- ----------- ----------- ----------
Virginia Municipal Bond Fund 19% 28% 39%
----------------------------------------------------------------------------------------------------------------------------
</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-73
<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.
5% AND 25% SHAREHOLDERS
As of August 23, 2000, 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.
5% SHAREHOLDERS
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
High Income Fund Homesure of America Inc. 74,180.4930 Flex 13.79%
P.O. Box 551510
Ft. Lauderdale, FL 33355-1510
---------------------------------------------------------------------------------------------------------------------------
High Income Fund NFSC FEBO 37,827.4820 Flex 7.03%
NFSC/FMTC IRA
FBO Marius J. Herrin
151 Ashland Way
Gray, GA 31032-6333
---------------------------------------------------------------------------------------------------------------------------
Core Equity Fund Trustman 7,214,837.4120 Trust 46.25%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Core Equity Fund Trustman 5,532,802.7740 Trust 35.47%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Core Equity Fund Trustman 1,698,244.2470 Trust 10.89%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-74
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Core Equity Fund HAMAC & CO 919,206.7450 Trust 5.89%
Attn. Barbara Holloway
P.O. Box 26665 HDQ 5706
Richmond, VA 23261-6665
---------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Vanguard Group 103,990.9640 Investor 5.66%
Fund FBO Lockwood Greene
401K and Profit Sharing Plan
92477
P.O. Box 2600 VM 613
Valley Forge, PA 19482-2600
---------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Trustman 2,446,890.3920 Trust 35.49%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Trustman 2,759,590.0360 Trust 40.03%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Trustman 1,519,455.2740 Trust 22.04%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Prime Quality Money SunTrust Bank 3,319,523,002.5500 Trust 94.42%
Market Fund Attn. Susan Grider
Mail Center 3133
PO Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Prime Quality Money National Financial Services Corp. 1,453,732,522.6000 Investor 95.73%
Market Fund For Exclusive Benefit of our Cust.
Attn. Mutual Funds Dept.
One World Financial Center
200 Liberty Street, FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities SunTrust Bank 399,468,347.3200 Trust 76.43%
Money Market Fund Attn. Susan Grider
Mail Center 3133
PO Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-75
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Securities SunTrust Bank Central Florida 91,739,218.3800 Trust 17.55%
Money Market Fund TTEE
FBO Sawtek Inc.
ESOP & Profit Sharing Plan
c/o FASCORP
8515 E. Orchard Rd. #2T2
Englewood, CO 80111-5037
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Akerman, Senterfitt & Eidson 5,511,239.000 Investor 6.41%
Money Market Fund Attorney Account
P.O. Box 231
Orlando, FL 32802-0231
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities National Financial Services Corp. 60,932,005.3900 Investor 70.82%
Money Market Fund for Exclusive Bene. of our Cust.
Attn: Mutual Funds Department
One World Financial Center
200 Liberty St., FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market SunTrust Bank 900,357,587.7800 Trust 99.95%
Fund Attn. Susan Grider
Mail Center 3133
PO Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market National Financial Services Corp. 134,980,310.7000 Investor 91.29%
Fund for Exclusive Benefit of our Cust.
Attn. Mutual Funds Dept.
One World Financial Center
200 Liberty Street, FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Trustman 27,992,689.0040 Trust 30.84%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Trustman 16,653,086.4780 Trust 18.35%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Trustman 31,187,371.0410 Trust 34.36%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-76
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Investment Grade Tax- Trustman 2,151,679.1060 Trust 20.84%
Exempt Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax- Trustman 2,654,481.6810 Trust 25.71%
Exempt Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax- Trustman 5,517,437.3330 Trust 53.44%
Exempt Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax- Marion G. Nelson 100,000.0000 Investor 5.64%
Exempt Bond Fund P.O. Box 2531
Panama City, FL 32402-2531
---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund Trustman 17,185,918.7750 Trust 25.69%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund Trustman 4,632,216.6710 Trust 6.92%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund Trustman 12,017,275.8480 Trust 17.96%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund Trustman 10,853,503.2440 Trust 16.22%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-77
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Capital Appreciation Fund Trustman 5,186,305.2820 Trust 7.75%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund Trustman 44,612,224.7340 Trust 58.00%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund Trustman 6,518,875.4900 Trust 8.47%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund Nissan Motor Corp-USA 401K 4,471,158.5010 Trust 5.81%
Plan RH03
State Street Bank TTEE
P.O. Box 1992
Attn: Cathie Noyes
Boston, MA 02105-1992
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Trustman 1,755,888.4890 Trust 19.87%
Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Trustman 2,603,683.2140 Trust 29.46%
Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Trustman 2,301,864.1110 Trust 26.04%
Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury CENCO 1,819,658.6460 Trust 20.59%
Securities Fund AMG 7th Floor
P.O. Box 10566
Birmingham, AL 35296-0001
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-78
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Short-Term U.S. Treasury Clarence A. Rittenhouse 70,601.9160 Investor 34.48%
Securities Fund Margaret S. Rittenhouse Jt Wros
12993 Lampadaire Drive
Creve Coeur, MO 63141-7361
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury NFSC FEBO 12,049.4280 Investor 5.89%
Securities Fund NFSC/FMTC IRA
FBO James H. Gordon
P.O. Box 1858
Umatilla, FL 32784-1858
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury NFSC FEBO 11,797.3110 Investor 5.76%
Securities Fund Bill Lovett TTEE
Hussey Gay Bell & DeYoung Inc.
PS
P.O. Box 14247
Savannah, GA 31416-1247
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury NFSC FEBO 10,891.6780 Investor 5.32%
Securities Fund Poucher Sexton Spitzer TTEE
A Randys Electric 401K
P.O. Box 42577
St. Petersburg, FL 33742-4577
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund Trustman 5,511,633.9490 Trust 26.83%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund Trustman 7,604,921.5280 Trust 37.02%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund Trustman 4,983,888.3070 Trust 24.26%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund Trustman 1,106,663.5470 Trust 5.39%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-79
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Short-Term Bond Fund SunTrust Bank Atlanta 11,663.9630 Investor 8.10%
Custodian for the Sep of Charles I.
Schwartz Sep
c/o Avanti Properties Group
431 E. Horatio Ave. #210
Maitland, FL 32751-4560
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund Barton Memorial Hospital 14,227.9290 Investor 9.88%
Foundation Inc.
P.O. Box 877
Bartow, FL 33831-0877
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund NFSC FEBO 14,743.4060 Investor 10.24%
NFSC/FMTC IRA Rollover
FBO Dewey L. Haggard
549 Hollydale Ct NW
Atlanta, GA 30342-3633
---------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund Trustman 6,794,705.5660 Trust 48.51%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund Trustman 1,284,465.2840 Trust 9.17%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund Trustman 4,565,476.0350 Trust 32.59%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund Anthony R. Gray 64,026.2820 Investor 6.35%
460 Virginia Dr.
Winter Park, FL 32789-5805
---------------------------------------------------------------------------------------------------------------------------
Balanced Fund Trustman 2,346,996.2120 Trust 14.11%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-80
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Balanced Fund SunTrust Bank Atlanta Trustee 975,197.5620 Trust 5.86%
FBO Genuine Partnership Plan
c/o FASCORP
8515 E. Orchard Rd. # 2T2
Englewood, CO 80111-5037
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Trustman 1,072,484.2110 Trust 11.75%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Trustman 2,326,846.3530 Trust 25.49%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Trustman 5,729,017.7820 Trust 62.76%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Albert B. Marshall Trustee 15,667.4240 Investor 5.87%
Fund Albert B. Marshall Family Trust
Dated 4/7/87
P.O. Box 25
Umatilla, FL 32784-0025
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Mary C. Marshall Trustee of the 15,667.4240 Investor 5.87%
Fund Mary C. Marshall Family Trust
DTD 4/7/87
P.O. Box 25
Umatilla, FL 32784-0025
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Mildred Meinhart Rast 34,302.1730 Investor 12.85%
Fund 821 Lake Port Blvd.
Apt. #A404
Leesburg, FL 34748-7698
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Trustman 2,211,631.0820 Trust 26.26%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-81
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Georgia Tax-Exempt Bond Trustman 5,331,918.9320 Trust 63.31%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Trustman 878,787.2850 Trust 10.43%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Patrick J. Doran & Norma R. 33,279.4590 Investor 12.70%
Fund Doran Jtten
2024 Fisher Trail NE
Atlanta, GA
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond John L. Conyers 14,524.8920 Investor 5.54%
Fund 124 Etowah Drive
Cartersville, GA 30120-3730
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond NFSC FEBO 54,153.2930 Investor 20.66%
Fund M C Tatro
5360 Deer Run Dr.
Conyers, GA 30094-4706
---------------------------------------------------------------------------------------------------------------------------
International Equity Index Trustman 15,109,097.8320 Trust 60.97%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
International Equity Index Trustman 4,935,317.9160 Trust 19.92%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
International Equity Index Trustman 3,720,555.5950 Trust 15.01%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-82
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
International Equity Index NFSC FEBO 26,126.7150 Investor 7.96%
Fund David E. Couk TTEE
Blue Ridge Orthopaedic Assn.
U/A 9/15/78
328 Hospital Drive
Warrenton, VA 20186-3006
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Trustman 2,478,762.6230 Trust 22.53%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Trustman 4,036,236.2030 Trust 36.68%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Trustman 3,719,131.0610 Trust 33.80%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities SunTrust Bank Atlanta 10,679.1030 Investor 7.86%
Fund Custodian for the IRA of
Jim P. Demos
618 Palisade Drive
Murfreesboro, TN 37129-1254
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities SunTrust Bank Atlanta 8,650.0750 Investor 6.37%
Fund Custodian for the IRA of
Doris S. Demos
618 Palisade Drive
Murfreesboro, TN 37129-1254
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities NFSC FEBO 8,108.7240 Investor 5.97%
Fund Lillian M. Schwartz
7108 Purdue Place
McLean, VA 22101-5065
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities NFSC FEBO 21,878.0140 Investor 16.10%
Fund NFSC/FMTC IRA
FBO Dona M. Bray
22 Little John Lane
Rockledge, FL 32955-2411
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-83
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
U.S. Government Securities NFSC FEBO 7,326.4070 Investor 5.39%
Fund Faye A. Waldo TTEE
Faye A. Waldo Trust
U/A 4/30/91
5759 Arvine Ct.
Ft. Myers, FL 33919-2719
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Trustman 7,428,502.9700 Trust 56.83%
Mortgage Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Trustman 1,522,384.0120 Trust 11.65%
Mortgage Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Trustman 3,695,419.3350 Trust 28.27%
Mortgage Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal International Brotherhood of 5,727.2330 Investor 5.13%
Mortgage Securities Fund Electrical Workers Local Union
756 General Fund
5901 Airport Rd.
Daytona Beach, FL 32124-6703
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal SunTrust Bank Central Florida NA 11,278.4150 Investor 10.11%
Mortgage Securities Fund Collateral Account
Greater Orlando Assoc. of
Realtors
P.O. Box 587
Orlando, FL 32802-0587
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal NFSC FEBO 5,750.7660 Investor 5.15%
Mortgage Securities Fund Robert P. Bohmeier TTEE
Robert P. Bohmeier Rev Trust
U/A 11/7/91
3050 Ringwood Meadow
Sarasota, FL 34235-7122
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-84
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
International Equity Fund Trustman 10,980,664.0760 Trust 50.79%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
International Equity Fund Trustman 2,028,990.7160 Trust 9.39%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
International Equity Fund Trustman 6,455,759.3300 Trust 29.86%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity NFSC FEBO 81,217.7800 Flex 10.01%
Fund Gordon L. Dickens, III
11545 Wills Road, Suite 102
Alpharetta, GA 30004-2073
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax- NFSC FEBO 92,506.9210 Flex 7.25%
Exempt Bond Fund BSC Tres Investment
P.O. Box 6447
Knoxville, TN 37914-0447
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury NFSC FEBO 32,077.9150 Flex 5.90%
Securities. Fund Dennis Murphy TTEE
Olympian Tape Sales Inc. DBA
United Tape Co PSP
2545 Ivy Street East
Cumming, GA 30041-6459
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund NFSC FEBO 13,553.6330 Flex 6.42%
James Hunnicutt
Pamela Hunnicutt
3764 Prairie Dunes Drive
Sarasota, FL 34238-2853
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund NFSC FEBO 10,999.6550 Flex 5.21%
BJ Cole, Jr.
Brenda W. Cole TTEE
Cole Electric Co. 401K/PSP
1669 Westview Dr. SW
Atlanta, GA 30310-1264
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-85
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Short-Term Bond Fund NFSC FEBO 10,603.4090 Flex 5.02%
Aslam Khatri TTEE
Trimble House Corp PS
1605 Indian Brook Way
#100
Norcross, GA 30093-2663
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond NFSC FEBO 54,348.8360 Flex 5.87%
Fund Joseph Pellegrino TR
Joseph Pellegrino
U/A 7/8/94
506 Oleander Drive
Hallandale, FL 33009-6530
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond NFSC FEBO 67,673.4290 Flex 7.49%
Fund Francis E. Cook
1210 Peachtree Rd.
Augusta, GA 30909-3822
---------------------------------------------------------------------------------------------------------------------------
International Equity Index NFSC FEBO 28,077.8180 Flex 6.28%
Fund Darrell F. Ellison
SunTrust Bank Atlanta
Collateral Acct.
308 Brim Drive
Macon, GA 31220-5402
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal NFSC FEBO 13,218.1470 Flex 8.89%
Mortgage Securities Fund John E. Fitzharris
Barbara H. Fitzharris
5236 Pounds Drive South
Stone Mountain, GA 30087-3668
---------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity Trustman 15,725,433.2370 Trust 73.62%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity Trustman 2,032,622.2540 Trust 9.52%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Trustman 11,719,479.4060 Trust 49.08%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-86
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Small Cap Growth Stock Trustman 2,759,980.7850 Trust 11.56%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Trustman 4,199,043.4160 Trust 17.58%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Trustman 2,556,728.3150 Trust 10.71%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Trustman 6,161,669.9170 Trust 29.00%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Trustman 7,304,709.2930 Trust 34.38%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Trustman 6,767,990.8170 Trust 31.85%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Life Vision Moderate Trustman 4,711,753.0440 Trust 66.46%
Growth Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-87
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Life Vision Moderate HAMIC & Co TTEE 386,327.5710 Trust 5.45%
Growth Fund Various Expediter 401K Plans
SunTrust Bank - Mail Center 3144
Mutual Fund Reconciliation Unit
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Life Vision Moderate SunTrust Bank Trustee FBO 457,399.8800 Trust 6.45%
Growth Fund RBI Corporation
Profit Sharing Plan
c/o FASCORP
8515 E. Orchard Rd. # 2T2
Englewood, CO 80111-5037
---------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and Trustman 2,049,491.3530 Trust 61.82%
Income Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and SunTrust Bank Trustee FBO 269,179.3520 Trust 8.12%
Income Fund Dodson Brothers Extermination
Co
Profit Sharing Plan
c/o FASCORP
8515 E. Orchard Rd. # 2T2
Englewood, CO 80111-5037
---------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and SunTrust Bank Trustee FBO 272,309.6040 Trust 8.21%
Income Fund Dye Vanmol & Lawrence Inc.
Profit Sharing Plan
c/o FASCORP
8515 E. Orchard Rd. # 2T2
Englewood, CO 80111-5037
---------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and SunTrust Bank Trustee FBO 281,690.5010 Trust 8.50%
Income Fund Hartman & Associates Inc.
401(K) Plan
c/o FASCORP
8515 E. Orchard Rd. # 2T2
Englewood, CO 80111-5037
---------------------------------------------------------------------------------------------------------------------------
Life Vision Aggressive Trustman 991,743.9030 Trust 61.01%
Growth Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-88
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Life Vision Aggressive Hamic & Co TTEE 111,490.2110 Trust 6.86%
Growth Fund Various Expediter 401K Plans
SunTrust Bank - Mail Center 3144
Mutual Fund Reconciliation Unit
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities SunTrust Bank 725,143,736.9700 Trust 99.90%
Money Market Fund Attn. Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Virginia Tax-Free Money SunTrust Bank 174,691,035.6600 Trust 97.62%
Market Fund Attn. Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Virginia Tax-Free Money National Financial Services Corp. 55,959,626.9600 Investor 100.00%
Market Fund for Exclusive Bene of our Cust.
Attn: Mutual Fund Department
One World Financial Center
200 Liberty St., FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate Trustman 5,528,606.0990 Trust 27.11%
Municipal Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate Trustman 14,304,446.0250 Trust 70.16%
Municipal Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate NFSC FEBO 49,101.0690 Investor 6.88%
Municipal Bond Fund Wilburn LC
Attn: Linda Kline
459 Eagle Lane
Harrisonburg, VA 22802-8710
---------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Trustman 657,290.0300 Trust 23.06%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-89
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Maryland Municipal Bond Trustman 1,389,870.2260 Trust 48.76%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Trustman 181,109.7690 Trust 6.35%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond HAMAC & Co. 622,118.8660 Trust 21.83%
Fund Attn: Barbara Holloway
P.O. Box 26665 HDQ 5706
Richmond, VA 23261-6665
---------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond NFSC FEBO 32,371.7910 Flex 5.16%
Fund Roberta R. Hunt TTEE
Roberta R. Hunt Trust
5722 Tennyson St.
Riverdale, MD 20737-1327
---------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Trustman 1,011,088.8750 Trust 19.76%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Trustman 2,290,147.7440 Trust 44.75%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Trustman 1,482,213.5750 Trust 28.96%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond HAMAC & Co. 334,458.2920 Trust 6.54%
Fund Attn: Barbara Holloway
P.O. Box 26665 HDQ 5706
Richmond, VA 23261-6665
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-90
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Virginia Municipal Bond NFSC FEBO [# H3E-050865] 48,771.7930 Flex 9.34%
Fund Virginia E. White
311 Desota Drive
Richmond, VA 23229-7112
---------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Trustman 12,940,042.1530 Trust 22.85%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Trustman 10,253,165.7590 Trust 18.10%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Trustman 22,396,006.5630 Trust 39.54%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Trustman 6,130,305.7160 Trust 10.82%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Prime Quality Money NFSC FEBO 162,060.6300 Flex 5.78%
Market Fund John Beiser
Maureen Beiser
PMB 504
1266 W. Paces Ferry Road
Atlanta, GA 30327-2306
---------------------------------------------------------------------------------------------------------------------------
Prime Quality Money NFSC FEBO 169,783.4200 Flex 6.06%
Market Fund Paula E. Kelly
10970 Woodland Falls Drive
Great Falls, VA 22066-1536
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
25% SHAREHOLDERS
B-91
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Core Equity Fund Trustman 7,214,837.4120 Trust 46.25%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Core Equity Fund Trustman 5,532,802.7740 Trust 35.47%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Trustman 2,446,890.3920 Trust 35.49%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
E-Commerce Opportunity Trustman 2,759,590.0360 Trust 40.03%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Prime Quality Money SunTrust Bank 3,319,523,002.5500 Trust 94.42%
Market Fund Attn. Susan Grider
Mail Center 3133
PO Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Prime Quality Money National Financial Services Corp. 1,453,732,522.6000 Investor 95.73%
Market Fund For Exclusive Benefit of our
Cust.
Attn. Mutual Funds Dept.
One World Financial Center
200 Liberty Street, FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities SunTrust Bank 399,468,347.3200 Trust 76.43%
Money Market Fund Attn. Susan Grider
Mail Center 3133
PO Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities National Financial Services Corp. 60,932,005.3900 Investor 70.82%
Money Market Fund For Exclusive Benefit of our
Cust.
Attn. Mutual Funds Dept.
One World Financial Center
200 Liberty Street, FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-92
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Tax-Exempt Money Market SunTrust Bank 900,357,587.7800 Trust 99.95%
Fund Attn. Susan Grider
Mail Center 3133
PO Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market National Financial Services Corp. 134,980,310.7000 Investor 91.29%
Fund For Exclusive Benefit of our
Cust.
Attn. Mutual Funds Dept.
One World Financial Center
200 Liberty Street, FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Trustman 27,992,689.0040 Trust 30.84%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Trustman 31,187,371.0410 Trust 34.36%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax- Trustman 2,654,481.6810 Trust 25.71%
Exempt Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax- Trustman 5,517,437.3330 Trust 53.44%
Exempt Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund Trustman 17,185,918.7750 Trust 25.69%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund Trustman 44,612,224.7340 Trust 58.00%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-93
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Short-Term U.S. Treasury Trustman 2,603,683.2140 Trust 29.46%
Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Trustman 2,301,864.1110 Trust 26.04%
Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Clarence A. Rittenhouse 70,601.9160 Investor 34.48%
Securities Fund Margaret S. Rittenhouse Jt Wros
12993 Lampadaire Drive
Creve Coeur, MO 63141-7361
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund Trustman 5,511,633.9490 Trust 26.83%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund Trustman 7,604,921.5280 Trust 37.02%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund Trustman 6,794,705.5660 Trust 48.51%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund Trustman 4,565,476.0350 Trust 32.59%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Trustman 2,326,846.3530 Trust 25.49%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-94
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Florida Tax-Exempt Bond Trustman 5,729,017.7820 Trust 62.76%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Trustman 2,211,631.0820 Trust 26.26%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Trustman 5,331,918.9320 Trust 63.31%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
International Equity Index Trustman 15,109,097.8320 Trust 60.97%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Trustman 4,036,236.2030 Trust 36.68%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Trustman 3,719,131.0610 Trust 33.80%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Trustman 7,428,502.9700 Trust 56.83%
Mortgage Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Trustman 3,695,419.3350 Trust 28.27%
Mortgage Securities Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-95
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
International Equity Fund Trustman 10,980,664.0760 Trust 50.79%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
International Equity Fund Trustman 6,455,759.3300 Trust 29.86%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Small Cap Value Equity Trustman 15,725,433.2370 Trust 73.62%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
PO Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Trustman 11,719,479.4060 Trust 49.08%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Trustman 6,161,669.9170 Trust 29.00%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Trustman 7,304,709.2930 Trust 34.38%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Tax Sensitive Growth Stock Trustman 6,767,990.8170 Trust 31.85%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Life Vision Moderate Trustman 4,711,753.0440 Trust 66.46%
Growth Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-96
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Life Vision Growth & Trustman 2,049,491.3530 Trust 61.82%
Income Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Life Vision Aggressive Trustman 991,743.9030 Trust 61.01%
Growth Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities SunTrust Bank 725,143,736.9700 Trust 99.90%
Money Market Attn. Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Virginia Tax-Free Money SunTrust Bank 174,691,035.6600 Trust 97.62%
Market Attn. Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
---------------------------------------------------------------------------------------------------------------------------
Virginia Tax-Free Money National Financial Services Corp. 55,959,626.9600 Investor 100.00%
Market for Exclusive Bene of our Cust.
Attn: Mutual Fund Department
One World Financial Center
200 Liberty St., FL 5
New York, NY 10281-5500
---------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate Trustman 5,528,606.0990 Trust 27.11%
Municipal Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Virginia Intermediate Trustman 14,304,446.0250 Trust 70.16%
Municipal Bond Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Maryland Municipal Bond Trustman 1,389,870.2260 Trust 48.76%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-97
<PAGE>
<TABLE>
<CAPTION>
% OF
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS CLASS
===========================================================================================================================
<S> <C> <C> <C> <C>
Virginia Municipal Bond Trustman 2,290,147.7440 Trust 44.75%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Virginia Municipal Bond Trustman 1,482,213.5750 Trust 28.96%
Fund SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Trustman 22,396,006.5630 Trust 39.54%
SunTrust Banks
Mutual Fund Reconciliation Unit
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-98
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
A-1 This is the highest category by Standard and Poor's (S&P) and indicates
that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics
are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory and the obligation is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
than obligations in higher rating categories.
PRIME-1 Issues rated Prime-1 (or supporting institutions) by Moody's
have a superiorability for repayment of senior short-term debt
obligations. Prime-1 repaymentability will often be evidenced
by many of the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
The rating F1 (Highest Credit Quality) is the highest commercial rating assigned
by Fitch. Paper rated F1 is regarded as having the strongest capacity for timely
payment of financial commitments. The rating F2 (Good Credit Quality) is the
second highest commercial paper rating assigned by Fitch which reflects a
satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.
The rating TBW-1 by Thomson BankWatch (Thomson) indicates a very high likelihood
that principal and interest will be paid on a timely basis.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
Moody's highest rating for state and municipal and other short-term notes is
MIG-1 and VMIG-l. Short-term municipal securities rated MIG-1 or VMIG-1 are of
the best quality. They have strong protection from established cash flows,
superior liquidity support, or demonstrated broad-based access to the market for
refinancing or both. Short-tenn municipal securities rated MIG-2 or VMIG-2 are
of high quality. Margins of protection are ample although not so large as in the
MIG- 1/VMIG-2 group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
A-1
<PAGE>
- Amortization Schedule - the larger the final maturity relative
to other maturities, the more likely it will be treated as a
note, and
- Source of Payment - the more dependent the issue is on the
market for its refinancing, the more likely it will be treated
as a note.
S&P note rating symbols are as follows:
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess a very strong capacity to pay a debt service is given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term
of the votes.
DESCRIPTION OF CORPORATE BOND RATINGS
S&P
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. Debt rated A has a strong capacity
to pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories. Debt rated BB and B is regarded as
having predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and C
the highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions. Debt rated BB has less near-term
vulnerability to default than other speculative grade debt. However, it faces
major ongoing uncertainties or exposure to adverse business, financial, or
economic conditions that could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BBB- rating.
Debt rate B has greater vulnerability to default but presently has the capacity
to meet interest payments and principal repayments. Adverse business, financial,
or economic conditions would likely impair capacity or willingness to pay
interest and repay principal. The B rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
MOODY'S
Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than the Aaa securities. Bonds which
are rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and
A-2
<PAGE>
interest are considered adequate, but elements may be present which suggest a
susceptibility to impainnent sometime in the future.
Bonds which are rated Baa are considered as medium-grade obligations (I.E., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Moody's bond ratings, where specified, are applied to financial contracts,
senior bank obligations and insurance company senior policyholder and claims
obligations with an original maturity in excess of one-year. Obligations relying
upon support mechanisms such as letters-of-credit and bonds of indemnity are
excluded unless explicitly rated.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's sovereign rating. Such branch obligations are
rated at the lower of the bank's rating or Moody's sovereign rating for the bank
deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.
Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.
FITCH
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions
liable to but slight market fluctuation other than through changes in the money
rate. The prime feature of an AAA bond is a showing of earnings several times or
many times interest requirements, with such stability of applicable earnings
that safety is beyond reasonable question whatever changes occur in conditions.
Bonds rated AA by Fitch are judged by Fitch to be of safety virtually beyond
question and are readily salable, whose merits are not unlike those of the AAA
class, but whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to rating by
the lesser financial power of the enterprise and more local type market.
Bonds rated A are considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings. Bonds rated BBB are considered to
be investment
A-3
<PAGE>
grade and of satisfactory credit quality. The obligor's ability to pay interest
and repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse impact on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings. Bonds rated BB are considered speculative. The obligor's
ability to pay interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service requirements.
Bonds rated B are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
THOMSON
Bonds rated AAA by Thomson BankWatch indicate that the ability to repay
principal and interest on a timely basis is extremely high. Bonds rated AA
indicate a very strong ability to repay principal and interest on a timely
basis, with limited incremental risk compared to issues rated in the highest
category. Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse developments (both
internal and external) than obligations with higher ratings.
Bonds rated BBB (the lowest investment-grade category) indicate an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.
While not investment grade, the BB rating suggests that the likelihood of
default is considerably less than for lower- rated issues. However, there are
significant uncertainties that could affect the ability to adequately service
debt obligations. Issues rated B show a higher degree of uncertainty and
therefore greater likelihood of default than higher-rated issues. Adverse
developments could negatively affect the payment of interest and principal on a
timely basis.
A-4
<PAGE>
FINANCIAL STATEMENTS
Following are the audited financial statements for the fiscal year ended May 31,
2000 and the reports of Arthur Andersen LLP, independent public accountants,
dated July 18, 2000, relating to the financial statements and financial
highlights.
F-1
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
BALANCED FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (59.8%)
BASIC MATERIALS (0.7%)
Air Products & Chemicals 42,000 $ 1,454
Alcoa 9,500 555
--------
2,009
--------
CAPITAL GOODS (8.1%)
Danaher 3,900 188
Eastman Kodak 9,900 592
Energizer Holdings* 7,433 126
Fortune Brands 7,700 205
General Electric 138,600 7,294
Honeywell International 43,425 2,375
Illinois Tool Works 16,400 952
Minnesota Mining & Manufacturing 8,300 712
Republic Services* 38,400 634
Teradyne* 6,000 516
Textron 44,100 2,767
Tyco International 139,818 6,580
United Technologies 17,200 1,040
WW Grainger 6,000 240
--------
24,221
--------
COMMUNICATION SERVICES (4.6%)
ADC Telecommunications* 40,900 2,748
AT&T 11,300 392
AT&T Wireless Group* 2,000 57
CenturyTel 52,300 1,412
Charter Communications* 39,400 480
Comverse Technology* 8,900 813
Fox Entertainment Group* 600 16
Lucent Technologies 29,588 1,698
Motorola 12,401 1,163
Nortel Networks 20,600 1,119
Sprint (FON Group) 31,300 1,894
US West 19,300 1,390
Worldcom* 14,264 537
--------
13,719
--------
CONSUMER CYCLICALS (12.7%)
Bed Bath & Beyond* 3,800 140
Brinker International* 47,700 1,351
Carnival 32,400 879
Cendant* 174,741 2,315
Costco Wholesale* 43,100 1,377
CVS 86,700 3,771
Ecolab 26,900 1,029
Family Dollar Stores 33,300 658
Federated Department Stores* 4,500 173
Gannett 15,800 1,023
Gap 14,800 519
Interpublic Group 45,100 1,936
Knight Ridder 9,300 493
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
CONSUMER CYCLICALS--CONTINUED
Kroger* 171,400 $ 3,407
Linens 'N Things* 39,000 1,036
Lowe's 65,600 3,054
Masco 99,450 1,958
McGraw-Hill 19,000 977
MediaOne Group* 30,800 2,058
New York Times, Cl A 25,300 971
Office Depot* 16,350 115
RadioShack 83,200 3,531
Royal Caribbean Cruises 31,100 766
Saks* 32,300 373
SFX Entertainment* 22,600 986
SPX* 5,200 548
Time Warner 16,900 1,334
United Rentals* 31,200 507
Young & Rubicam 10,500 501
--------
37,786
--------
CONSUMER STAPLES (3.4%)
Avon Products 13,900 574
Bestfoods 22,100 1,425
Dial 9,300 133
Flowers Industries 32,000 578
McDonald's 8,600 308
Nabisco Group Holdings 64,900 1,416
Nabisco Holdings 10,000 462
Pepsico 38,800 1,579
Ralston-Ralston Purina Group 70,100 1,301
Viacom, Cl B* 39,372 2,441
--------
10,217
--------
ENERGY (3.3%)
Burlington Resources 29,200 1,336
Conoco 100,600 2,867
Halliburton 15,900 811
Kerr-McGee 29,900 1,785
Texaco 27,600 1,585
Unocal 43,300 1,664
--------
10,048
--------
FINANCE (5.8%)
ACE 44,200 1,185
American International Group 10,128 1,140
AmSouth Bancorporation 9,603 173
Associates First Capital 21,400 587
AXA Financial 14,000 545
Bank of America 33,531 1,863
Chase Manhattan 22,800 1,703
Cigna 21,000 1,865
Comerica 20,400 1,033
Conseco 34,100 213
Freddie Mac 11,300 503
32
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
FINANCE--CONTINUED
Mellon Financial 50,000 $ 1,928
Metlife* 37,300 765
PNC Financial Services Group 6,700 338
Radian Group 1,700 93
U.S. Bancorp 68,300 1,776
UnumProvident 11,700 265
Washington Mutual 40,676 1,169
--------
17,144
--------
HEALTH CARE (7.9%)
American Home Products 29,000 1,562
Baxter International 22,400 1,490
Bristol-Myers Squibb 40,100 2,208
Cardinal Health 33,465 2,171
Eli Lilly 7,050 537
HCA 4,400 119
Health Management
Associates, Cl A* 66,800 789
Johnson & Johnson 20,300 1,817
Merck 43,900 3,276
Mylan Laboratories 1,800 48
Pharmacia 30,000 1,558
Schering-Plough 59,700 2,888
Tenet Healthcare* 56,900 1,458
Warner-Lambert 29,800 3,639
--------
23,560
--------
TECHNOLOGY (12.7%)
Analog Devices* 20,000 1,540
BMC Software* 27,100 1,192
Ceridian* 53,500 1,291
Cisco Systems* 98,400 5,603
Computer Associates International 9,100 469
Computer Sciences* 7,500 720
Dell Computer* 16,500 712
EMC* 15,800 1,838
Hewlett-Packard 21,500 2,583
Intel 35,400 4,414
International Business Machines 48,200 5,172
Microsoft* 88,500 5,537
Novellus Systems* 4,100 198
Sun Microsystems* 49,800 3,816
Texas Instruments 36,200 2,615
--------
37,700
--------
TRANSPORTATION (0.6%)
Sabre Holdings* 14,674 422
United Parcel Service 20,300 1,215
--------
1,637
--------
Total Common Stocks
(Cost $133,495) 178,041
--------
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
RIGHTS (0.0%)
Cendant, Expires 02/14/01 8,000 $ 61
--------
Total Rights
(Cost $0) 61
--------
PREFERRED STOCKS (0.3%)
COMMUNICATION SERVICES (0.3%)
Cox Communication,
CV to 0.8621 Shares* 7,300 752
--------
FINANCE (0.0%)
Conseco Financing Trust, Ser F,
CV to 0.9363 Shares 10,000 92
--------
Total Preferred Stocks
(Cost $1,146) 844
--------
CORPORATE OBLIGATIONS (17.5%)
CONSUMER STAPLES (1.0%)
Avon Products
7.150%, 11/15/09 $ 850 792
Cooper Tire & Rubber
7.750%, 12/15/09 2,350 2,225
--------
3,017
--------
FINANCE (13.8%)
AON
6.900%, 07/01/04 3,400 3,272
Aristar
7.250%, 06/15/06 2,600 2,483
Associates of North America
6.250%, 11/01/08 3,650 3,221
Conseco
8.750%, 02/09/04 4,250 2,911
6.800%, 06/15/05 2,500 1,650
Conseco (C)
6.400%, 06/15/11 950 712
Countrywide Home Loan
6.850%, 06/15/04 1,750 1,656
Countrywide Home Loan, MTN
6.510%, 02/11/05 2,300 2,110
Donaldson Lufkin Jenrette, MTN
6.150%, 05/04/04 1,250 1,169
Finova Capital
7.250%, 11/08/04 1,425 1,190
7.250%, 07/12/06 2,200 1,763
Finova Capital, MTN
7.300%, 09/22/03 3,000 2,591
Household Finance
7.200%, 07/15/06 2,250 2,126
Morgan Stanley Dean Witter, MTN
7.375%, 04/15/03 1,800 1,779
Paine Webber Group
6.020%, 04/22/02 3,000 2,884
33
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
BALANCED FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FINANCE--CONTINUED
Provident
7.000%, 07/15/18 $2,550 $ 1,979
Reliastar Financial
8.000%, 10/30/06 1,540 1,525
6.500%, 11/15/08 2,000 1,822
Wachovia
5.625%, 12/15/08 1,300 1,102
Washington Mutual
8.600%, 02/01/02 1,750 1,761
7.500%, 08/15/06 1,425 1,368
--------
41,074
--------
INDUSTRIAL (1.8%)
Dillards
6.430%, 08/01/04 2,350 2,018
Marriott International
7.875%, 09/15/09 2,100 2,013
Philip Morris
7.500%, 04/01/04 500 480
Times Mirror
7.450%, 10/15/09 1,000 962
--------
5,473
--------
UTILITIES (0.9%)
Florida Power & Light
5.875%, 04/01/09 3,000 2,659
--------
Total Corporate Obligations
(Cost $58,297) 52,223
--------
CONVERTIBLE BONDS (1.5%)
Bell Atlantic Financial Services,
CV to 178.0369 Shares,
Callable 04/01/01 @ 102.3
5.750%, 04/01/03 650 635
Elan Finance,
CV to 13.7500 Shares (A)
0.000%, 12/14/18 800 501
Network Associates,
CV to 8.5380 Shares (A)
0.000%, 02/13/18 1,000 352
NTL,
CV to 9.2435 Shares
5.750%, 12/15/09 300 234
Potomac Electric Power,
CV to 29.5000 Shares
5.000%, 09/01/02 2,100 1,974
Solectron,
CV to 12.3309 Shares (A)
0.000%, 05/05/20 1,400 786
--------
Total Convertible Bonds
(Cost $4,650) 4,482
--------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-
BACKED OBLIGATIONS (1.9%)
FHLMC
7.375%, 05/15/03 $4,250 $ 4,251
FNMA
7.125%, 01/15/30 1,400 1,361
--------
Total U.S. Agency Mortgage-
Backed Obligations
(Cost $5,643) 5,612
--------
ASSET-BACKED OBLIGATIONS (1.4%)
Commercial, Ser 1999-1, Cl A2
6.455%, 06/15/08 4,450 4,050
--------
Total Asset-Backed Obligations
(Cost $4,117) 4,050
--------
U.S. TREASURY OBLIGATIONS (8.6%)
U.S. Treasury Notes
6.500%, 08/31/01 4,950 4,934
6.500%, 02/15/10 2,600 2,637
7.500%, 11/15/16 6,550 7,244
8.750%, 08/15/20 8,500 10,718
--------
Total U.S. Treasury Obligations
(Cost $25,180) 25,533
--------
REPURCHASE AGREEMENT (9.5%)
Greenwich Capital
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$28,246,331 (collateralized by
various GNMA obligations: total
market value $28,807,230) (D) 28,241 28,241
--------
Total Repurchase Agreement
(Cost $28,241) 28,241
--------
Total Investments (100.5%)
(Cost $260,769) 299,087
--------
OTHER ASSETS AND LIABILITIES, NET (-0.5%) (1,504)
--------
34
<PAGE>
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Shares
(unlimited authorization-- no par value)
based on 16,728,349 outstanding
shares of beneficial interest $183,902
Fund shares of the Investor Shares
(unlimited authorization -- no par value)
based on 716,879 outstanding shares
of beneficial interest 7,976
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 4,848,311 outstanding shares
of beneficial interest 62,104
Undistributed net investment income 1,359
Accumulated net realized gain
on investments 3,924
Net unrealized appreciation on investments 38,318
--------
Total Net Assets (100.0%) $297,583
========
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $13.37
========
Net Asset Value, Offering and Redemption
Price Per Share -- Investor Shares $13.43
========
Maximum Offering Price Per Share --
Investor Shares ($13.43 / 96.25%) $13.95
========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $13.27
========
(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 68.
35
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
CAPITAL APPRECIATION FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (90.8%)
BASIC MATERIALS (0.9%)
Air Products & Chemicals 357,100 $ 12,365
Alcoa 40,800 2,384
----------
14,749
----------
CAPITAL GOODS (12.4%)
Danaher 33,900 1,634
Eastman Kodak 84,000 5,019
Energizer Holdings* 63,033 1,072
Fortune Brands 31,500 839
General Electric 1,176,700 61,924
Honeywell International 370,262 20,249
Illinois Tool Works 139,200 8,082
Minnesota Mining &
Manufacturing 71,100 6,097
Republic Services* 366,600 6,049
Teradyne* 50,800 4,369
Textron 377,900 23,713
Tyco International 1,225,004 57,652
United Technologies 146,200 8,836
WW Grainger 49,300 1,969
----------
207,504
----------
COMMUNICATION SERVICES (7.6%)
ADC Telecommunications* 347,200 23,327
AT&T 95,900 3,327
AT&T Wireless Group* 16,900 483
CenturyTel 451,050 12,178
Charter Communications* 381,700 4,652
Comverse Technology* 75,900 6,935
Lucent Technologies 287,351 16,487
Motorola 106,200 9,956
Nortel Networks 277,800 15,088
Sprint (FON Group) 265,900 16,087
US West 172,300 12,406
Worldcom* 162,453 6,112
----------
127,038
----------
CONSUMER CYCLICALS (19.0%)
Bed Bath & Beyond* 44,100 1,623
Brinker International* 405,200 11,472
Carnival 378,500 10,267
Cendant* 1,341,015 17,768
Costco Wholesale* 366,400 11,702
CVS 672,300 29,245
Ecolab 228,500 8,740
Family Dollar Stores 301,600 5,957
Federated Department Stores* 38,200 1,471
Gannett 114,600 7,420
Gap 68,200 2,391
Interpublic Group 384,000 16,488
Knight Ridder 79,100 4,192
Kroger* 1,454,200 28,902
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
CONSUMER CYCLICALS--CONTINUED
Linens 'N Things* 332,400 $ 8,829
Lowe's 715,100 33,297
Masco 891,100 17,544
McGraw-Hill 164,582 8,466
MediaOne Group* 263,500 17,605
New York Times, Cl A 146,700 5,630
Office Depot* 244,850 1,729
RadioShack 708,400 30,063
Royal Caribbean Cruises 275,300 6,779
Saks* 274,400 3,173
SFX Entertainment* 98,000 4,275
SPX* 44,500 4,686
Time Warner 158,000 12,472
United Rentals* 282,600 4,592
Young & Rubicam 44,200 2,111
----------
318,889
----------
CONSUMER STAPLES (4.8%)
Avon Products 117,800 4,867
Bestfoods 188,000 12,126
Dial 78,800 1,123
Flowers Industries 314,200 5,675
McDonald's 72,800 2,607
Nabisco Group Holdings 557,900 11,847
Nabisco Holdings 84,900 3,921
Pepsico 329,700 13,415
Ralston-Ralston Purina Group 255,600 4,745
Viacom, Cl B* 334,591 20,745
----------
81,071
----------
ENERGY (4.4%)
Burlington Resources 276,000 12,627
Conoco 708,100 20,181
Halliburton 140,000 7,140
Kerr-McGee 122,700 7,324
Texaco 208,800 11,993
Unocal 367,300 14,118
----------
73,383
----------
FINANCE (8.9%)
ACE 378,500 10,149
American International Group 89,895 10,119
AmSouth Bancorporation 105,001 1,897
Associates First Capital 183,800 5,043
AXA Financial 118,700 4,622
Bank of America 283,238 15,737
Chase Manhattan 194,700 14,542
Cigna 178,800 15,880
Comerica 173,700 8,794
Conseco 399,100 2,494
Freddie Mac 95,600 4,254
Mellon Financial 427,500 16,485
36
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
FINANCE--CONTINUED
Metlife* 316,300 $ 6,484
PNC Financial Services Group 76,100 3,834
Radian Group 14,600 803
U.S. Bancorp 581,400 15,116
UnumProvident 99,700 2,262
Washington Mutual 372,524 10,710
----------
149,225
----------
HEALTH CARE (11.6%)
American Home Products 246,800 13,296
Baxter International 190,800 12,688
Bristol-Myers Squibb 341,300 18,793
Cardinal Health 284,053 18,428
Eli Lilly 59,850 4,556
HCA 37,200 1,004
Health Management Associates,
Cl A* 565,800 6,684
Johnson & Johnson 172,400 15,430
Merck 377,564 28,176
Mylan Laboratories 15,100 405
Pharmacia 255,500 13,270
Schering-Plough 506,900 24,521
Tenet Healthcare* 482,900 12,374
Warner-Lambert 207,900 25,390
----------
195,015
----------
TECHNOLOGY (20.3%)
Analog Devices* 169,500 13,051
BMC Software* 230,600 10,146
Ceridian* 468,900 11,312
Cisco Systems* 1,002,300 57,068
Computer Associates
International 76,700 3,950
Computer Sciences* 63,600 6,102
Dell Computer* 141,100 6,085
EMC* 134,800 15,679
Hewlett-Packard 182,000 21,863
Intel 353,400 44,065
International Business Machines 409,500 43,944
Microsoft* 767,350 48,007
Novellus Systems* 35,300 1,701
Sun Microsystems* 453,000 34,711
Texas Instruments 308,600 22,296
----------
339,980
----------
TRANSPORTATION (0.9%)
Sabre Holdings* 128,309 3,689
United Parcel Service 190,100 11,382
----------
15,071
----------
Total Common Stocks
(Cost $1,053,202) 1,521,925
----------
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
RIGHTS (0.1%)
Cendant, Expires 02/14/01 188,000 $ 1,445
----------
Total Rights
(Cost $0) 1,445
----------
PREFERRED STOCKS (0.4%)
COMMUNICATION SERVICES (0.1%)
Cox Communication,
CV to 0.8621 Shares* 9,500 978
Global Crossing,
CV to 4.6948 Shares 12,000 21
----------
999
----------
FINANCE (0.0%)
Conseco Financing Trust, Ser F,
CV to 0.9363 Shares 5,500 51
----------
HEALTH CARE (0.3%)
Biovail,
CV to 0.8241 Shares 125,000 5,820
----------
Total Preferred Stocks
(Cost $10,308) 6,870
----------
CONVERTIBLE BONDS (2.9%)
America Online,
CV to 5.8338 Shares (A)
0.000%, 12/06/19 $ 7,000 3,482
At Home,
CV to 17.6940 Shares
4.750%, 12/15/06 2,000 1,350
Bell Atlantic Financial Services,
CV To 178.0369 Shares
Callable 04/01/01 @ 102.3
5.750%, 04/01/03 6,150 6,012
Clear Channel Communications,
CV to 9.4535 Shares
1.500%, 12/01/02 800 783
Devon Energy,
CV to 9.3283 Shares
4.900%, 08/15/08 4,200 4,169
Echostar Communications,
CV to 22.0070 Shares
4.875%, 01/01/07 2,500 2,663
Elan Finance,
CV to 13.7500 Shares (A)
0.000%, 12/14/18 3,600 2,255
Molten Metal Technology,
CV to 25.8065 Shares (B)
5.500%, 05/01/06 10,000 50
Network Associates,
CV to 8.5380 Shares
Callable 02/13/03 @ 49.452
(A) (B)
0.000%, 02/13/18 10,000 3,525
37
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
CAPITAL APPRECIATION FUND--CONCLUDED
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
CONVERTIBLE BONDS--CONTINUED
Network Associates,
CV to 8.5380 Shares (A)
0.000%, 02/13/18 $ 2,000 $ 705
NTL,
CV to 9.2435 Shares
5.750%, 12/15/09 5,500 4,290
Potomac Electric Power,
CV to 29.5000 Shares
5.000%, 09/01/02 8,150 7,661
Solectron,
CV to 12.3309 Shares (A)
0.000%, 05/05/20 11,700 6,567
Tower Automotive,
CV to 38.6399 Shares
5.000%, 08/01/04 4,200 3,386
Waste Management,
CV to 22.9590 Shares
4.000%, 02/01/02 3,000 2,696
----------
Total Convertible Bonds
(Cost $59,682) 49,594
----------
REPURCHASE AGREEMENTS (4.7%)
Deutsche Bank
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$39,557,152 (collateralized by
FNMA obligation: total market
value $40,341,068) (D) 39,550 39,550
Greenwich Capital
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$39,856,294 (collateralized by
various GNMA obligations: total
market value $40,647,043) (D) 39,849 39,849
----------
Total Repurchase Agreements
(Cost $79,399) 79,399
----------
CASH EQUIVALENT (0.5%)
AIM Liquid Assets Portfolio 7,941,822 7,942
----------
Total Cash Equivalent
(Cost $7,942) 7,942
----------
Total Investments (99.4% )
(Cost $1,210,533) 1,667,175
----------
OTHER ASSETS AND LIABILITIES, NET (0.6%) 9,332
----------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Shares
(unlimited authorization -- no par value)
based on 75,722,473 outstanding shares
of beneficial interest $ 785,444
Fund shares of the Investor Shares
(unlimited authorization -- no par value)
based on 14,890,558 outstanding shares
of beneficial interest 163,471
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 7,795,252 outstanding shares
of beneficial interest 118,340
Accumulated net investment loss (1)
Accumulated net realized gain
on investments 152,611
Net unrealized appreciation
on investments 456,642
----------
Total Net Assets (100.0%) $1,676,507
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $17.12
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Investor Shares $16.91
==========
Maximum Offering Price Per Share --
Investor Shares ($16.91 / 96.25%) $17.57
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $16.45
==========
(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 68.
38
<PAGE>
--------------------------------------------------------------------------------
CORE EQUITY FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (98.5%)
BASIC MATERIALS (1.0%)
Avery Dennison 26,400 $ 1,617
--------
CAPITAL GOODS (8.5%)
Dover 51,000 2,371
Honeywell International 51,500 2,816
Praxair 48,800 2,050
Sherwin-Williams 61,500 1,430
Tyco International 68,400 3,219
Weatherford International* 30,000 1,292
--------
13,178
--------
COMMUNICATION SERVICES (4.4%)
Bellsouth 46,000 2,148
Motorola 21,000 1,969
Worldcom* 72,200 2,717
--------
6,834
--------
CONSUMER CYCLICALS (23.8%)
Bed Bath & Beyond* 44,400 1,634
Brinker International* 68,800 1,948
CDW Computer Centers* 26,700 3,123
Circuit City 60,000 2,989
Costco Wholesale* 70,000 2,236
CVS 36,200 1,575
Ecolab 38,500 1,473
Family Dollar Stores 77,400 1,529
Gannett 30,700 1,988
Home Depot 51,450 2,511
Interpublic Group 54,000 2,319
Limited 140,400 3,387
LIZ Claiborne 66,500 2,614
Lowe's 46,500 2,165
McGraw-Hill 50,000 2,572
Omnicom Group 13,800 1,158
Walt Disney 45,600 1,924
--------
37,145
--------
CONSUMER STAPLES (4.5%)
Anheuser-Busch 28,800 2,232
Paychex 47,250 1,654
Sysco 75,100 3,149
--------
7,035
--------
ENERGY (6.5%)
Exxon Mobil 38,100 3,174
Halliburton 60,800 3,101
Schlumberger 32,000 2,354
Transocean Sedco Forex 31,200 1,535
--------
10,164
--------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
FINANCE (18.3%)
Aflac 56,000 $ 2,894
AMBAC Financial Group 35,000 1,763
American Express 28,800 1,550
Capital One Financial 34,700 1,640
Chase Manhattan 30,700 2,293
Citigroup 46,800 2,910
Freddie Mac 37,000 1,646
Golden West Financial 50,700 2,117
MBNA 75,200 2,096
Metlife* 180,800 3,706
MGIC Investment 38,800 1,923
Providian Financial 44,900 3,993
--------
28,531
--------
HEALTH CARE (7.9%)
Biomet 54,600 1,969
Eli Lilly 11,400 868
Health Management Associates,
Cl A* 112,700 1,331
Schering-Plough 69,800 3,377
Warner-Lambert 39,200 4,787
--------
12,332
--------
SERVICES (1.0%)
Catalina Marketing* 15,500 1,497
--------
TECHNOLOGY (22.6%)
BMC Software* 54,000 2,376
Cisco Systems* 49,200 2,801
Dell Computer* 39,000 1,682
Electronic Data Systems 50,400 3,241
Electronics for Imaging* 44,700 1,646
EMC* 19,000 2,210
Gateway* 63,500 3,143
Intel 37,600 4,688
Jabil Circuit* 87,800 3,205
Microchip Technology* 45,400 2,577
Microsoft* 24,600 1,539
Sun Microsystems* 20,500 1,571
Texas Instruments 47,400 3,425
Zebra Technologies* 21,300 1,022
--------
35,126
--------
Total Common Stocks
(Cost $141,847) 153,459
--------
39
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
CORE EQUITY FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT (1.4%)
Morgan Stanley Dean Witter
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$2,108,423, (collateralized by
FNMA obligation: total market
value $2,150,848) $2,108 $ 2,108
--------
Total Repurchase Agreement
(Cost $2,108) 2,108
--------
Total Investments (99.9%)
(Cost $143,955) 155,567
--------
OTHER ASSETS AND LIABILITIES, NET (0.1%) 201
--------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 13,633,156 outstanding shares
of beneficial interest 139,820
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 393,098 outstanding shares
of beneficial interest 4,215
Accumulated net realized gain
on investments 121
Net unrealized appreciation on investments 11,612
--------
Total Net Assets (100.0%) $155,768
========
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $11.11
========
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $11.06
========
(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 68.
40
<PAGE>
SCHEDULEOFINVESTMENTS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
E-COMMERCE OPPORTUNITY FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (96.8%)
CAPITAL GOODS (2.1%)
Applied Materials* 20,000 $ 1,670
Spectrasite Holdings* 61,700 1,045
--------
2,715
--------
COMMUNICATION SERVICES (12.4%)
Akamai Technologies* 26,000 1,736
America Online* 84,200 4,463
American Power Conversion* 60,000 2,126
AT&T - Liberty Media Group* 26,200 1,161
EarthLink* 30,000 444
Gemstar International Group* 11,500 488
ITXC* 32,500 1,089
Net2Phone* 28,200 832
VeriSign* 9,200 1,245
Yahoo* 19,100 2,160
--------
15,744
--------
COMPUTER SOFTWARE (21.5%)
Amdocs* 84,200 5,215
Business Objects* 18,200 1,456
Check Point Software Technologies* 11,600 2,179
Harbinger* 137,900 2,060
ISS Group* 24,600 1,820
Micromuse* 16,000 1,593
Network Appliance* 19,600 1,265
Novell* 42,700 355
Oracle* 54,000 3,881
RealNetworks* 41,800 1,518
Siebel Systems* 17,300 2,024
Tibco Software* 38,600 2,147
Vignette* 48,610 1,340
Visual Networks* 8,000 397
--------
27,250
--------
CONSUMER CYCLICALS (12.1%)
Copart* 79,800 1,416
eBay* 22,000 1,376
First Data 25,000 1,402
Interpublic Group 99,700 4,281
Omnicom Group 17,400 1,461
Time Warner 12,500 987
TMP Worldwide* 61,600 3,403
Wal-Mart Stores 16,300 939
--------
15,265
--------
ENERGY (7.0%)
AES* 28,000 2,443
Dynegy, Cl A 35,000 2,699
Enron 50,300 3,666
--------
8,808
--------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
FINANCE (2.2%)
Knight Trading Group* 63,500 $ 1,845
Morgan Stanley Dean Witter 12,300 885
--------
2,730
--------
SERVICES (6.1%)
BroadVision* 23,000 824
Checkfree Holdings* 33,600 1,405
Devry* 58,600 1,637
Exodus Communications* 25,000 1,764
Infospace* 30,700 1,332
Viant* 30,000 750
--------
7,712
--------
TECHNOLOGY (32.6%)
Applied Micro Circuits* 19,600 1,945
AudioCodes* 37,500 2,740
Ciena* 13,300 1,592
Cisco Systems* 34,800 1,981
Clarent* 15,000 636
E-Tek Dynamics* 5,500 1,011
EMC* 27,600 3,210
Intel 24,700 3,080
Jabil Circuit* 41,000 1,497
JDS Uniphase* 8,800 774
LSI Logic* 55,300 2,914
Micron Technology* 57,600 4,028
National Semiconductor* 31,700 1,704
Oni Systems* 5,000 125
SDL* 4,100 929
Solectron* 101,700 3,362
STMicroelectronics ADR 10,000 599
Sonus Networks* 2,300 168
Sun Microsystems* 34,700 2,659
Texas Instruments 34,400 2,485
Xilinx* 50,900 3,875
--------
41,314
--------
TRANSPORTATION (0.8%)
United Parcel Service 16,700 1,000
--------
Total Common Stocks
(Cost $125,976) 122,538
--------
Total Investments (96.8%)
(Cost $125,976) $122,538
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 68.
41
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
GROWTH AND INCOME FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (98.6%)
BASIC MATERIALS (3.0%)
International Paper 650,000 $ 22,628
Nucor 175,000 6,803
--------
29,431
--------
CAPITAL GOODS (8.1%)
Boeing 500,000 19,531
Deere 450,000 18,703
General Electric 300,570 15,817
Illinois Tool Works 100,000 5,806
Ingersoll-Rand 450,000 20,503
SCI Systems* 960 43
--------
80,403
--------
COMMUNICATION SERVICES (5.0%)
ADC Telecommunications* 950 64
AT&T 400,000 13,875
AT&T - Liberty Media Group* 430 19
GTE 200,000 12,650
SBC Communications 225,000 9,830
Worldcom* 350,000 13,169
--------
49,607
--------
CONSUMER CYCLICALS (7.9%)
Albertson's 87,400 3,201
Gannett 75,000 4,856
Lowe's 80,000 3,725
Office Depot* 1,800,000 12,712
Sears Roebuck 250,000 9,234
Target 275,000 17,239
Time Warner 220 17
Wal-Mart Stores 440 25
Walt Disney 650,000 27,422
Viacom, Cl B* 477 30
--------
78,461
--------
CONSUMER STAPLES (11.7%)
Coca-Cola 350,000 18,681
Hershey Foods 325,000 16,859
Kellogg 450,000 13,669
Philip Morris 600,000 15,675
Procter & Gamble 330 22
Quaker Oats 400,000 29,425
Sara Lee 1,200,000 21,600
Sysco 700 29
--------
115,960
--------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
ENERGY (10.2%)
AES* 400 $ 35
Baker Hughes 1,100 40
Duke Energy 450,000 26,213
Exxon Mobil 325,000 27,077
Patterson Energy* 6,000 145
Royal Dutch Petroleum ADR 240,000 14,985
Schlumberger 200,000 14,712
Texaco 300,000 17,231
Williams 840 35
--------
100,473
--------
FINANCE (17.5%)
American International Group 180,317 20,297
Bank of America 290,130 16,120
Berkshire Hathaway* 12,000 22,632
Chubb 910 64
Citigroup 225,440 14,020
Fannie Mae 400,000 24,050
Fleet Boston Financial 500,000 18,906
KeyCorp 700,000 14,700
Morgan Stanley Dean Witter 125,000 8,992
PFF Bancorp 1,700 23
Safeco 1,790 44
St. Paul 1,960 73
Washington Mutual 400,000 11,500
Wells Fargo 475,470 21,515
--------
172,936
--------
HEALTH CARE (10.8%)
Allergan 470 32
Amgen* 265,000 16,861
HCA 500,000 13,500
Johnson & Johnson 225,000 20,137
Jones Pharma 1,500 55
Merck 265,000 19,776
Priority Healthcare* 1,000 51
Schering-Plough 300,000 14,512
Watson Pharmaceutical* 500,000 22,063
--------
106,987
--------
TECHNOLOGY (24.0%)
3Com* 500,000 20,906
Adaptec* 1,000,000 19,688
America Online* 225,000 11,925
BMC Software* 400,000 17,600
Cisco Systems* 250,460 14,261
Compaq Computer 1,200,000 31,500
Computer Sciences* 275,000 26,383
Hewlett-Packard 125,000 15,016
Intel 200,000 24,938
International Business Machines 75,320 8,083
Lucent Technologies 175,000 10,041
Microsoft* 300,000 18,769
Southern 350,000 9,078
Sun Microsystems* 125,000 9,578
Titan* 3,800 136
--------
237,902
--------
42
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
TRANSPORTATION (0.4%)
UAL 75,000 $ 3,863
--------
Total Common Stocks
(Cost $796,185) 976,023
--------
CASH EQUIVALENT (0.9%)
SEI Daily Income Trust Prime
Obligation Fund 9,499,988 9,500
--------
Total Cash Equivalent
(Cost $9,500) 9,500
--------
Total Investments (99.5%)
(Cost $805,685) 985,523
--------
OTHER ASSETS AND LIABILITIES, NET (0.5%) 4,714
--------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 57,007,793 outstanding shares
of beneficial interest 688,038
Fund shares of the Investor Shares (unlimited
authorization -- no par value)
based on 2,726,169 outstanding shares
of beneficial interest 32,136
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 4,031,949 outstanding shares
of beneficial interest 62,396
Undistributed net investment income 1,444
Accumulated net realized gain
on investments 26,385
Net unrealized appreciation on investments 179,838
--------
Total Net Assets (100.0%) $990,237
========
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $15.53
========
Net Asset Value, Offering and Redemption
Price Per Share-- Investor Shares $15.65
========
Maximum Offering Price Per Share--
Investor Shares ($15.65 / 96.25%) $16.26
========
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $15.49
========
(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 68.
43
<PAGE>
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS (93.7%)
AUSTRALIA (2.1%)
National Australia Bank 372,481 $ 5,570
Pasminco* 2,208,400 1,152
--------
6,722
--------
BELGIUM (0.0%)
Dexia VVPR Strips* 54,714 1
--------
DENMARK (1.1%)
Danisco 97,200 3,528
--------
FRANCE (10.6%)
Coflexip Stena Offshore 53,400 6,276
Elf Aquitaine 12 2
ISIS 33,000 2,097
Lafarge 80,700 6,278
Suez Lyonnaise des Eaux 12,000 2,025
Technip 61,610 6,456
Total Fina Elf 56,344 8,920
Vivendi 19,700 2,123
--------
34,177
--------
GERMANY (4.3%)
BASF 46,500 1,892
Bayer 51,000 1,977
Bayerische Vereinsbank 31,300 2,045
MG Technologies 381,700 5,671
Siemens 13,800 2,054
--------
13,639
--------
HONG KONG (0.6%)
Li & Fung 470,000 1,948
--------
IRELAND (0.0%)
Bank of Ireland 17,306 102
--------
ISRAEL (0.8%)
ECI Telecommunications ADR 98,380 2,669
--------
ITALY (5.6%)
Banca Intesa* 689,385 2,733
ENI 1,203,500 6,520
Parmalat Finanziaria 2,640,500 3,302
Saipem 1,050,400 5,277
--------
17,832
--------
JAPAN (23.5%)
Canon 48,000 2,209
Daiwa House Industry 270,000 2,002
Daiwa Securities 170,000 2,067
Fuji Heavy Industry 1,256,000 9,324
Hirose Electric 12,600 1,764
Hitachi 194,000 2,402
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
JAPAN--CONTINUED
Japan Tobacco 456 $ 3,491
Kao 129,000 3,915
Kirin Brewery 237,400 2,864
Kyocera 13,400 2,223
Matsushita Electric 304,000 7,180
Minebea 158,000 1,866
Murata Manufacturing 12,000 2,071
Olympus Optical 200,000 3,434
Onward Kashiyama 172,000 2,298
Promise 24,200 2,032
Sharp 294,000 5,293
Sumitomo Heavy Industries 1,221,000 3,161
Tokio Marine & Fire Insurance 296,000 3,228
Toshiba 428,000 4,131
Yamada Denki 42,000 3,352
Yasuda Fire & Marine Insurance 543,000 2,797
Yokowo 83,000 2,326
--------
75,430
--------
MEXICO (1.3%)
Cemex ADR* 82,200 1,742
Fomento ADR 49,400 1,880
Kimberly, Ser A 223,800 692
--------
4,314
--------
NETHERLANDS (5.9%)
Fortis 170,000 4,493
IHC Caland 116,712 5,289
Randstad Holdings 58,000 2,365
Unique International 260,565 6,680
--------
18,827
--------
NEW ZEALAND (1.0%)
Fletcher Challenge Building 3,228,459 3,194
--------
NORWAY (7.2%)
Kvaerner* 169,700 1,972
Petroleum Geo Services* 568,490 10,231
Petroleum Geo Services ADR* 564,400 10,759
--------
22,962
--------
SOUTH AFRICA (1.3%)
Gold Fields 442,000 1,602
Gold Fields ADR 221,000 870
Harmony Gold Mining 133,000 650
Harmony Gold Mining ADR 184,100 903
--------
4,025
--------
SOUTH KOREA (1.1%)
Hite Brewery 82,200 2,657
Pohang Iron & Steel ADR 45,000 922
--------
3,579
--------
44
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
SPAIN (5.2%)
Altadis 1,130,500 $ 16,657
--------
SWEDEN (1.9%)
Sandvik 224,300 4,932
Swedish Match 358,200 1,118
--------
6,050
--------
UNITED KINGDOM (20.2%)
Allied Zurich 858,950 9,667
Diageo 1,713,405 14,705
Hanson 785,800 5,594
IMI 197,100 807
Imperial Tobacco Group 1,220,100 10,755
Prudential 167,000 2,534
Reckitt Benckiser 678,200 7,459
Rolls-Royce 1,554,369 5,737
Stagecoach Holdings 3,733,215 3,361
Unilever 619,100 4,099
--------
64,718
--------
Total Foreign Common Stocks
(Cost $294,340) 300,374
--------
FOREIGN COUPON (0.1%)
NETHERLANDS (0.1%)
Unique International 328,356 203
--------
Total Foreign Coupon
(Cost $0) 203
--------
FOREIGN RIGHTS (0.0%)
ITALY (0.0%)
Banca Intesa* 20 --
--------
Total Foreign Rights
(Cost $0) --
--------
FOREIGN WARRANT (0.0%)
FRANCE (0.0%)
Lafarge, Expires 03/20/01 18,732 67
--------
Total Foreign Warrant
(Cost $0) 67
--------
Total Investments (93.8%)
(Cost $294,340) $300,644
========
At May 31, 2000, sector diversification of the Portfolio was as follows:
% OF VALUE
SECTOR DIVERSIFICATION NET ASSETS (000)
---------------------- ---------- -------
FOREIGN COMMON STOCK
Food, Beverage and Tobacco 20.4% $65,200
Oil & Gas 15.7 50,083
Construction Material 7.9 25,236
Electronics 6.9 22,077
Insurance 5.7 18,224
Services 4.5 14,334
Consumer Products 4.1 13,102
Diversified Operations 3.9 12,536
Banking 3.3 10,451
Automotive 2.9 9,324
Financial Services 2.7 8,592
Machinery 2.5 8,093
Audio/Video 2.2 7,180
Metals 1.9 6,100
Aerospace 1.8 5,737
Cosmetics & Toiletries 1.2 3,915
Chemicals 1.2 3,868
Transportation 1.0 3,361
Retail 1.0 3,352
Telecommunications 0.8 2,669
Manufacturing 0.7 2,298
Real Estate 0.6 2,002
Distribution 0.6 1,948
Paper Products 0.2 692
---- ------
TOTAL FOREIGN
COMMON STOCK 93.7 300,374
FOREIGN COUPON 0.1 203
FOREIGN WARRANT -- 67
----- --------
TOTAL INVESTMENTS 93.8% $300,644
===== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 68.
45
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
INTERNATIONAL EQUITY INDEX FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS (98.1%)
AUSTRALIA (1.7%)
Amcor 31,691 $ 92
AMP 36,999 323
Brambles Industries 9,286 255
Broken Hill Proprietary 58,570 598
Coles Myer 51,191 185
Colonial 33,865 183
CSR 63,354 147
Fosters Brewing Group 86,505 211
Lend Lease 23,858 272
National Australia Bank 57,815 865
News Corporation 58,659 666
Pacific Dunlop 78,743 75
PaperlinX* 24,530 43
Rio Tinto 16,506 237
Telstra 272,518 1,062
Westpac Banking 60,264 413
WMC 67,758 279
Woolworths 65,622 218
--------
6,124
--------
AUSTRIA (1.1%)
Austria Tabakwerke 7,130 244
Bank Austria 22,627 1,079
Flughafen Wien 6,206 209
Generali Holding Vienna 2,034 315
Mayr-Melnhof Karton 2,566 123
Oest Elektrizatswirts, Cl A 7,144 743
OMV 5,889 508
VA Technologie 3,630 200
Wienerberger Baustoffindustrie 16,020 365
--------
3,786
--------
BELGIUM (1.0%)
Bekaert 1,481 77
D'ieteren 498 127
Delhaize Freres 2,627 154
Electrabel 2,804 648
Fortis, Cl B 37,053 967
Groupe Bruxelles Lambert 1,253 303
KBC Bancassurance Holding 15,078 649
Solvay, Cl A 5,017 339
UCB 7,754 291
Union Miniere 1,483 53
--------
3,608
--------
DENMARK (1.5%)
D/S 1912, Cl B 77 846
D/S Svendborg, Cl B 47 741
Danisco 5,310 193
Den Danske Bank 3,600 420
Falck 800 122
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
DENMARK--CONTINUED
ISS* 3,200 $ 233
Navision Software* 2,600 97
Nordic Baltic Holding* 62,248 403
Novo-Nordisk, Cl B 5,070 844
Tele Danmark, Cl B 14,416 1,023
Vestas Wind Systems 7,000 258
William Demant Holdings 6,000 169
--------
5,349
--------
FINLAND (1.7%)
Merita* 12,800 69
Metso Oyj 1,600 21
Nokia Oyj 89,400 4,676
Outokumpu, Cl A 4,600 50
Sampo Insurance, Ser A 2,300 97
Sonera Group 12,700 646
Tietoenator Oyj, Cl B 1,800 71
UPM-Kymmene 6,200 158
--------
5,788
--------
FRANCE (12.6%)
Accor 8,004 326
Air Liquide 3,670 518
Alcatel Alsthom 41,000 2,279
Aventis 31,473 2,056
Axa 15,370 2,276
Banque National Paris, Cl A 21,864 1,983
BIC 3,540 158
Bouygues 1,369 852
Canal Plus 5,242 1,002
Cap Gemini 3,763 709
Carrefour 27,996 1,990
Casino Guichard-Perrachon 3,510 314
Cie de Saint Gobain 3,521 493
Dassault Systemes 5,636 431
Eridania Beghin-Say 1,250 115
Essilor International 623 184
France Telecom 41,035 6,019
Groupe Danone* 3,031 713
L'Oreal 2,747 1,901
Lafarge 4,501 350
Lagardere 5,922 416
Louis Vuitton-Moet Hennessy 3,889 1,594
Michelin, Cl B 5,743 191
Pechiney, Ser A 3,748 155
Pernod-Ricard 2,745 145
Peugeot 1,945 401
Pinault-Printemps-Redoute 4,874 1,054
Publicis 512 212
Sadexho Alliance 1,192 193
Sagem 500 590
Sanofi-Synthelabo 28,905 1,267
46
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
FRANCE--CONTINUED
Schneider 6,929 $ 464
Sidel 1,108 75
Societe Eurafrance 157 68
Societe Generale 15,162 879
STMicroelectronics 34,404 2,061
Suez Lyonnaise des Eaux 7,750 1,308
Thomson CSF* 6,237 243
Total Fina Elf 30,771 4,871
Total Fina Elf-Strip VVPR 1,314 --
Unibail 1,572 204
Usinor 15,197 184
Valeo 4,043 206
Vivendi 24,348 2,624
--------
44,074
--------
GERMANY (14.1%)
Adidas-Salomon 2,800 168
Allianz 14,380 5,216
BASF 36,800 1,497
Bayer 43,860 1,700
Bayerische Vereinsbank 24,922 1,628
Beiersdorf 5,290 412
Continental 9,150 171
DaimlerChrysler 59,916 3,263
Deutsche Bank 37,270 2,892
Deutsche Telekom 182,050 11,433
Douglas Holding 2,550 77
Dresdner Bank 31,500 1,290
EM.TV & Merchandising 7,000 472
Fresenius Medical 5,200 434
Gehe 4,800 161
Heidelberger Zement 4,074 239
Hochtief 5,110 163
Kamps 5,400 145
Karstadt Quelle 9,300 314
Linde 6,860 283
Lufthansa 22,980 566
Man Muenchen 6,310 221
Merck 10,600 342
Metro 16,301 535
Muenchener Rueckvers,
Registered 10,560 3,118
Preussag 9,760 348
RWE 28,640 1,058
SGL Carbon* 1,150 80
SAP 3,650 1,522
Schering 4,060 612
Siemens 35,590 5,297
ThyssenKrupp 31,160 534
Veba 30,260 1,560
Viag 42,158 867
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
GERMANY--CONTINUED
Volkswagen 18,460 $ 753
WCM Beteiligungs 10,850 306
--------
49,677
--------
HONG KONG (0.9%)
Bank of East Asia 17,400 31
Cable & Wireless HKT 205,200 469
Cathay Pacific Airways 46,000 83
Cheung Kong Holdings 40,000 366
CLP Holdings 52,500 244
Hang Seng Bank 32,200 273
Hong Kong & China Gas 95,700 103
Hutchison Whampoa 69,080 798
Johnson Electric Holdings 16,000 119
New World Development 61,000 61
Sun Hung Kai Properties 36,600 223
Swire Pacific 36,500 210
Television Broadcasts 6,000 39
Wharf Holdings 42,000 75
--------
3,094
--------
IRELAND (0.5%)
Allied Irish Bank 43,700 405
CRH 16,100 281
Eircom 112,600 327
Independent News & Media (GB) 6,500 52
Independent News & Media 26,200 206
Jefferson Smurfit 125,100 246
Ryanair Holdings* 29,300 240
--------
1,757
--------
ITALY (8.6%)
Alitalia 112,439 220
Assicurazioni Generali 95,000 2,876
Autogrill 17,000 178
Banca di Roma* 377,500 410
Banca Intesa* 360,603 1,430
Banca Intesa RNC 51,000 107
Banca Popolare di Milano 18,500 121
Benetton Group 140,000 281
Bulgari 22,000 276
CartiereBurgo 10,500 100
Enel* 535,272 2,398
ENI 592,500 3,210
Fiat 26,400 674
Fiat RNC 6,700 92
Italcementi 23,400 213
Italgas 49,000 202
Magneti Marelli 25,000 128
Mediaset 87,000 1,354
Mediobanca 44,250 375
47
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
INTERNATIONAL EQUITY INDEX FUND--CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
ITALY--CONTINUED
Mondadori Editore 8,734 $ 202
Olivetti 360,000 1,228
Parmalat Finanziaria 125,000 156
Pirelli 147,000 379
Reno de Medici 9,000 19
Rinascente 17,500 101
Riunione Adriatica di Sicurta 52,362 495
San Paolo-IMI 102,736 1,512
Sirti 38,000 70
Telecom Italia Mobile 488,000 5,109
Telecom Italia Mobile RNC 110,500 468
Telecom Italia 270,500 3,752
Telecom Italia RNC 65,000 405
UniCredito Italiano* 367,000 1,630
--------
30,171
--------
JAPAN (33.3%)
77 Bank 16,000 146
Acom 7,000 514
Advantest 4,800 1,011
Ajinomoto 33,000 399
Amada 16,000 138
Aoyamma Trading 4,100 49
Asahi Bank 135,000 600
Asahi Breweries 24,000 298
Asahi Chemical Industry 73,000 454
Asahi Glass 59,000 547
Asatsu-DK 2,000 65
Autobacs Seven 1,600 46
Bank of Fukuoka 29,000 191
Bank of Tokyo Mitsubishi 223,000 2,794
Bank of Yokohama 50,000 213
Benesse 5,000 331
Bridgestone 42,000 959
Canon 42,000 1,933
Casio Computer 13,000 124
Central Japan Railway 108 601
Chiyoda* 18,000 18
Chugai Pharmaceutical 12,000 205
Chuo Mitsui Trust & Banking 45,000 181
Citizen Watch 17,000 146
Cosmo Oil 61,000 85
Credit Saison 7,800 157
CSK 2,800 86
Dai Nippon Printing 36,000 614
Daicel Chemical Industries 23,000 68
Daiei* 31,000 94
Daiichi Pharmaceutical 14,000 259
Daikin Industries 13,000 259
Daikyo* 4,000 9
Daimaru 18,000 51
Dainippon Ink & Chemicals 42,000 187
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
JAPAN--CONTINUED
Daito Trust Construction 6,400 $ 122
Daiwa Bank 87,000 220
Daiwa House Industry 26,000 193
Daiwa Kosho Lease 28,000 75
Daiwa Securities 64,000 778
Denso 44,000 998
East Japan Railway 191 1,088
Ebara 16,000 165
Eisai 14,000 301
Fanuc 11,500 1,002
Fuji Bank 163,000 1,260
Fuji Machine 2,000 97
Fuji Photo Film 24,000 837
Fujita* 17,000 7
Fujitsu 94,000 2,661
Furukawa Electric 29,000 414
Gunma Bank 26,000 142
Gunze 22,000 66
Hankyu Department Stores 11,000 54
Haseko* 89,000 34
Hirose Electric 1,900 266
Hitachi 160,000 1,981
Hokuriko Bank* 26,000 60
Honda Motor 46,000 1,515
Hoya 6,000 556
Industrial Bank of Japan 125,000 974
Isetan 11,000 108
Ito Yokado 20,000 1,186
Itochu* 65,000 262
Japan Airlines 89,000 268
Japan Energy* 97,000 90
Japan Steel Works* 34,000 32
Japan Tobacco 103 789
Joyo Bank 41,300 161
Jusco 16,000 274
Kadokawa Shoten Publishing 500 50
Kajima 59,000 147
Kaken Pharmaceutical 7,000 43
Kamigumi 23,000 110
Kanebo 34,000 72
Kaneka 17,000 175
Kansai Electric Power 50,700 873
Kao 30,000 910
Kawasaki Heavy Industries 75,000 98
Kawasaki Kisen Kaisha 27,000 42
Kawasaki Steel 169,000 256
Kinki Nippon Railway 82,000 327
Kirin Brewery 51,000 615
Komatsu 48,000 295
Konami 7,200 381
Koyo Seiko 8,000 56
Kubota 68,000 240
48
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
JAPAN--CONTINUED
Kumagai Gumi 57,000 $ 26
Kuraray 22,000 229
Kurita Water Industries 7,000 147
Kyocera 9,100 1,510
Kyowa Hakko Kogyo 21,000 191
Maeda Road Contruction 18,000 72
Marubeni 57,000 151
Marui 18,000 330
Matsushita Electric 98,000 2,314
Meiji Seika 23,000 149
Minebea 19,000 224
Mitsubishi 77,000 639
Mitsubishi Chemical 106,000 414
Mitsubishi Electric 103,000 1,011
Mitsubishi Estate 68,000 800
Mitsubishi Heavy Industries 172,000 597
Mitsubishi Materials 56,000 186
Mitsubishi Trust & Banking 60,000 484
Mitsui 75,000 527
Mitsui Fudosan 41,000 423
Mitsui Marine & Fire Insurance 37,000 196
Mitsui Mining & Smelting 26,000 172
Mitsui-Soko 15,000 31
Mitsukoshi 22,000 82
Murata Manufacturing 11,000 1,899
Mycal 16,000 48
Namco 2,300 58
NEC 77,000 1,951
NGK Insulators 19,000 197
NGK Spark Plug 13,000 152
Nidec 4,300 330
Nikon 18,000 496
Nintendo 6,700 995
Nippon Express 57,000 317
Nippon Mitsubishi Oil 71,000 291
Nippon Paper Industries 50,000 329
Nippon Sharyo 7,000 13
Nippon Sheet Glass 21,000 190
Nippon Shinpan 17,000 35
Nippon Steel 378,000 828
Nippon Suisan Kaisha 24,000 39
Nippon Telegraph & Telephone 607 7,210
Nippon Yusen 58,000 250
Nishimatsu Construction 25,000 90
Nissan Motor 191,000 1,001
Nissin Food Products 6,300 158
Nitto Denko 8,000 338
Nomura Securities 95,000 2,178
Noritake 18,000 82
NSK 27,000 208
NTN 29,000 95
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
JAPAN--CONTINUED
Obayashi 42,000 $ 160
Oji Paper 55,000 354
Okumura 21,000 63
Olympus Optical 13,000 223
Omron 13,000 335
Orient 24,000 109
Oriental Land 4,800 478
Orix 3,620 536
Osaka Gas 130,000 331
Oyo 1,700 19
Penta-Ocean Construction 12,000 14
Pioneer Electronics 9,000 275
Promise 5,800 487
Renown 8,000 9
Rohm 5,500 1,715
Sakura Bank 193,000 1,427
Sanden 12,000 71
Sankyo 23,000 530
Sanrio 4,000 107
Sanyo Electric 93,000 687
Secom 11,000 745
Sega Enterprises 5,200 78
Seino Transportation 15,000 68
Seiyu 16,000 65
Sekisui Chemical 35,000 120
Sekisui House 35,000 340
Sharp 53,000 954
Shimachu 3,400 57
Shimamura 2,700 282
Shimano 6,700 146
Shimizu 66,000 156
Shin-Etsu Chemical 21,000 1,029
Shionogi 16,000 254
Shiseido 19,000 261
Shizuoka Bank 36,000 340
Skylark 7,000 245
SMC 3,300 578
Snow Brand Milk Products 23,000 115
Softbank 5,800 888
Softbank - New* 10,000 1,499
Sony 42,600 3,854
Sumitomo 52,000 483
Sumitomo Bank 149,000 1,952
Sumitomo Chemical 83,000 401
Sumitomo Electric 44,000 641
Sumitomo Marine & Fire Insurance 35,000 219
Sumitomo Metal 174,000 119
Taisei 79,000 108
Taisho Pharmaceutical 17,000 519
Taiyo Yuden 6,000 455
Takara Shuzo 11,000 245
49
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
INTERNATIONAL EQUITY INDEX FUND--CONTINUED
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
JAPAN--CONTINUED
Takashimaya 17,000 $ 153
Takeda Chemical 43,000 2,933
Takefuji 7,100 751
Teijin 53,000 221
Terumo 10,000 319
Toa 10,000 11
Tobu Railway 54,000 144
Toei 10,000 66
Toho 1,000 168
Tohoku Electric Power 32,600 408
Tokai Bank 109,000 531
Tokio Marine & Fire Insurance 87,000 949
Tokyo Broadcasting System 8,000 297
Tokyo Dome 16,000 70
Tokyo Electric Power 62,800 1,568
Tokyo Electron 8,000 1,091
Tokyo Gas 145,000 355
Tokyo Tatemono 7,000 13
Tokyotokeiba 30,000 37
Tokyu 56,000 246
Toppan Printing 35,000 371
Toray 87,000 331
Toshiba 155,000 1,496
Tosho 29,000 144
Tostem 11,000 181
Toto 24,700 166
Toyo Information Systems 2,000 108
Toyo Seikan Kaisha 11,300 200
Toyota Motor 180,000 8,168
Trans Cosmos 1,100 160
Ube Industries 43,000 97
Uni-Charm 3,500 205
UNY 11,000 136
World 3,150 125
Yamaha 12,000 109
Yamaichi Securities 15,000 --
Yamanouchi Pharmaceutical 17,000 775
Yamato Transport 21,000 490
Yokogawa Electric 13,000 109
--------
117,089
--------
NETHERLANDS (2.7%)
ABN Amro Holding 28,288 650
Aegon 24,860 901
Ahold 11,892 338
Akzo Nobel 5,815 223
ASM Lithography Holdings* 7,380 273
Buhrmann 1,884 58
Elsevier 11,463 108
Getronics 6,174 104
Hagemeyer 1,541 37
Heineken 5,659 292
ING Groep 18,120 1,089
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
NETHERLANDS--CONTINUED
Koninklijke KPN 8,825 $ 801
Philips Electronics 25,264 1,133
Royal Dutch Petroleum 39,837 2,466
TNT Post Group 8,445 205
Unilever 10,839 553
Wolters Kluwer 4,951 122
--------
9,353
--------
NEW ZEALAND (0.2%)
Carter Holt Harvey 189,600 153
Telecom of New Zealand 128,900 453
--------
606
--------
NORWAY (0.8%)
Bergesen, Cl A 8,750 183
Christiana Bank 48,300 251
Den Norske Bank 81,300 292
Kvaerner* 7,100 83
Merkantildata* 14,600 94
Norsk Hydro 27,225 1,052
Orkla, Cl A 21,500 357
Petroleum Geo Services* 8,800 158
Schibsted 7,200 141
Tomra Systems 8,200 174
Uni Storebrand 29,287 190
--------
2,975
--------
PORTUGAL (0.7%)
Banco Comercial Portugues 75,035 371
Banco Espirito Santo 7,861 185
BPI-SGPS 37,962 126
Brisa Auto Estradas 19,938 147
Cimpor Cimentos de Portugal 10,652 164
Electricidade de Portugal 35,629 623
Portugal Telecom 61,814 678
Sonae Investimentos 4,376 192
--------
2,486
--------
SINGAPORE (0.5%)
DBS Group Holdings 38,467 384
Overseas - Chinese Banking 36,350 205
Singapore Airlines 49,000 427
Singapore Press Holdings 11,000 166
Singapore Telecommunications 152,000 206
United Overseas Bank 49,000 266
--------
1,654
--------
SPAIN (3.7%)
Acerinox 3,658 125
ACS 4,343 119
Aguas de Barcelona 10,489 143
Altadis 18,619 274
Autopistas CESA 19,441 186
50
<PAGE>
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
SPAIN--CONTINUED
Banco Bilbao Vizcaya 146,965 $ 2,066
Banco Santander Central Hispano 221,457 2,182
Endesa 56,206 1,171
Financiera Alba 4,655 117
Fomento de Construcciones y
Contratas 7,248 163
Gas Natural 22,957 408
Grupo Dragados 15,311 114
Iberdrola 45,835 589
Repsol 63,594 1,363
Sol Melia 10,211 123
Telefonica 168,762 3,480
Telepizza* 10,883 63
Union Electrica Fenosa 15,032 315
Zardoya-Otis 14,347 129
--------
13,130
--------
SWEDEN (2.3%)
AstraZeneca 3,817 161
Atlas Copco, Ser A 4,200 94
Electrolux 9,100 155
Ericsson, Cl B 202,000 4,125
ForeningsSparbaken, Cl A 15,100 226
Hennes & Mauritz, Cl B 22,400 569
NetCom* 2,500 178
Nordic Baltic Holding 21,200 141
OM Gruppen 2,400 97
Sandvik 7,600 167
Securitas, Cl B 9,600 225
Skandia Forsakrings 26,700 687
Skandinaviska Enskilda Banken 19,200 211
Skanska, Cl B 4,100 153
Svenska Cellulosa, Cl B 11,900 240
Svenska Handlesbanken, Cl A 18,100 257
Swedish Match 26,700 83
Volvo, Cl B 8,150 195
WM-Data, Cl B 9,500 72
--------
8,036
--------
SWITZERLAND (1.7%)
ABB 3,483 434
Adecco 200 159
Credit Suisse Group 2,830 530
Holderbank Financiere Glarus 190 224
Nestle 472 904
Novartis, Registered 744 1,102
Roche Holdings, Bearer 17 199
Roche Holdings, Genusschein 74 784
Swiss Re 155 299
Swisscom 910 321
UBS, Registered 4,618 626
Zurich Allied 500 247
--------
5,829
--------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
UNITED KINGDOM (8.5%)
3I Group 16,316 $ 310
Abbey National 15,265 204
Allied Zurich 20,122 226
Amvescap 12,522 165
Arm Holdings* 13,410 119
AstraZeneca Group 27,508 1,163
BAE Systems 72,176 454
Barclays Bank 24,277 633
Bass 23,059 253
BG Group 58,682 353
BOG Group 14,814 209
Boots 17,492 146
BP Amoco 382,338 3,491
British American Tobacco 37,531 220
British Sky Broadcasting 32,629 600
British Telecommunications 101,301 1,473
Cadbury Schweppes 44,428 297
Centrica 77,479 281
CGU 22,979 350
Compass Group 9,507 107
Diageo 62,732 538
Dixons Group* 28,205 134
EMI Group 25,845 221
GKN 25,291 350
GKN, Cl B* 25,291 4
Glaxo Wellcome 57,540 1,632
Granada Group 40,310 359
Great Universal Stores 22,837 142
Halifax 36,788 363
Hanson 26,996 192
Hays 27,333 154
HSBC Holdings 141,774 1,570
Imperial Chemical 21,428 172
Invensys 118,700 410
J Sainsbury 37,069 170
Jefferson Smurfit Group 45,700 91
Kingfisher 30,179 280
Legal & General Group 79,697 201
Lloyds TSB Group 90,236 980
Logica 6,763 182
Marconi 45,098 545
Marks & Spencer 73,299 274
Misys 11,686 101
National Grid Holdings 14,929 115
National Power 35,430 195
Ocean Group 8,806 161
Pearson 10,281 311
Prudential 24,728 375
Psion 3,830 31
Reed International 19,002 126
Rentokil Group 51,181 115
Reuters Group 23,047 344
51
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
INTERNATIONAL EQUITY INDEX FUND--CONCLUDED
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
UNITED KINGDOM--CONTINUED
Rio Tinto 26,555 $ 393
Royal Bank of Scotland Group 43,452 717
Sage Group 21,355 208
Scottish Power 27,661 220
SEMA Group 6,173 86
Smithkline Beecham 90,671 1,162
Tesco 109,977 333
Unilever 54,746 362
Vodafone AirTouch Group 977,249 4,472
WPP Group 13,385 163
--------
30,008
--------
Total Foreign Common Stocks
(Cost $329,906) 344,594
--------
FOREIGN PREFERRED STOCKS (0.7%)
AUSTRALIA (0.2%)
News Corporation* 62,656 604
--------
GERMANY (0.5%)
RWE* 5,480 163
SAP* 2,580 1,374
Volkswagen* 6,470 168
--------
1,705
--------
ITALY (0.0%)
Fiat* 7,200 117
--------
Total Foreign Preferred Stocks
(Cost $2,692) 2,426
--------
FOREIGN RIGHTS (0.0%)
ITALY (0.0%)
Banca Intesa* 380,603 7
--------
SWEDEN (0.0%)
Volvo* 815 5
--------
Total Foreign Rights
(Cost $0) 12
--------
CASH EQUIVALENT (0.0%)
HighMark Diversified
Money Market Fund 1,836 2
--------
Total Cash Equivalent
(Cost $2) 2
--------
Total Investments (98.8%)
(Cost $332,600) 347,034
--------
OTHER ASSETS AND LIABILITIES, NET (1.2%) 4,235
--------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 24,406,806 outstanding shares
of beneficial interest $326,418
Fund shares of the Investor Shares (unlimited
authorization -- no par value)
based on 330,602 outstanding shares
of beneficial interest 2,649
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 425,991 outstanding shares
of beneficial interest 5,655
Undistributed net investment income 171
Accumulated net realized gain
on investments 1,919
Net unrealized appreciation on investments 14,434
Net unrealized appreciation on foreign currency
and translation of other assets and liabilities
in foreign currency investments 23
--------
Total Net Assets (100.0%) $351,269
========
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $13.97
========
Net Asset Value, Offering Price and Redemption
Price Per Share-- Investor Shares $13.80
========
Maximum Offering Price Per Share--
Investor Shares ($13.80 / 96.25%) $14.34
========
Net Asset Value, Offering Price and Redemption
Price Per Share-- Flex Shares (1) $13.74
========
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
52
<PAGE>
--------------------------------------------------------------------------------
At May 31, 2000, sector diversification of the Portfolio was as follows:
% OF VALUE
SECTOR DIVERSIFICATION NET ASSETS (000)
---------------------- ---------- --------
FOREIGN COMMON STOCK
Banking 12.6% $44,566
Electronics 9.6 33,932
Telecommunications 9.3 33,138
Telephone 8.8 30,903
Automotive 6.2 21,846
Insurance 5.5 19,206
Oil & Gas 5.3 18,565
Pharmaceuticals 5.1 17,931
Food, Beverage, & Tobacco 4.5 15,672
Diversified Operations 4.2 14,775
Financial Services 2.6 9,069
Chemicals 2.3 8,219
Computers 2.3 8,076
Retail 2.1 7,514
Construction Materials 2.0 7,086
Transportation 1.7 6,029
Consumer Products 1.2 4,245
Leisure 1.2 4,169
Services 1.2 4,118
Audio/Video 1.1 3,854
Cosmetics & Toiletries 1.0 3,556
Computer Software 1.0 2,164
Metals 1.0 3,463
Real Estate 0.7 2,532
News Media 0.7 2,300
Manufacturing 0.7 2,291
Paper Products 0.6 2,152
Distribution 0.6 2,120
Machinery 0.5 1,900
Communications 0.5 1,865
Airlines 0.5 1,805
Publishing 0.5 1,778
Television 0.4 1,299
Medical Products 0.3 1,106
Textiles 0.2 781
Aerospace 0.1 454
Agriculture 0.0 115
-------- --------
TOTAL FOREIGN
COMMON STOCK 98.1 344,594
TOTAL FOREIGN
PREFERREED STOCK 0.7 2,426
TOTAL FOREIGN RIGHTS -- 12
CASH EQUIVALENT -- 2
-------- --------
TOTAL INVESTMENTS 98.8 347,034
OTHER ASSETS AND
LIABILITIES, NET 1.2 4,235
-------- --------
NET ASSETS 100.0% $351,269
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 68.
53
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
LIFE VISION AGGRESSIVE GROWTH FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
EQUITY FUNDS (95.0%)
STI Classic Capital Appreciation
Fund, Trust Shares* 322,878 $ 5,528
STI Classic Growth & Income
Fund, Trust Shares 472,865 7,343
STI Classic Small Cap Growth
Stock Fund, Trust Shares* 131,408 2,405
STI Classic Small Cap Value
Equity Fund, Trust Shares 243,424 2,222
-------
Total Equity Funds
(Cost $15,194) 17,498
-------
MONEY MARKET FUND (5.3%)
STI Classic Prime Quality Money
Market Fund, Trust Shares 973,766 974
-------
Total Money Market Fund
(Cost $974) 974
-------
Total Investments (100.3%)
(Cost $16,168) 18,472
-------
OTHER ASSETS AND LIABILITIES, NET (-0.3%) (60)
-------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 1,586,214 outstanding shares
of beneficial interest 15,911
Undistributed net investment income 4
Accumulated net realized gain
on investments 193
Net unrealized appreciation on investments 2,304
-------
Total Net Assets (100.0%) $18,412
=======
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $11.61
=======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 68.
54
<PAGE>
--------------------------------------------------------------------------------
LIFE VISION GROWTH AND INCOME FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
EQUITY FUNDS (69.8%)
STI Classic Capital Appreciation
Fund, Trust Shares* 355,369 $ 6,084
STI Classic Growth & Income
Fund, Trust Shares 683,092 10,609
STI Classic Small Cap Growth
Stock Fund, Trust Shares* 133,505 2,443
STI Classic Small Cap Value
Equity Fund, Trust Shares 234,428 2,140
-------
Total Equity Funds
(Cost $19,247) 21,276
-------
FIXED INCOME FUNDS (27.3%)
STI Classic Investment Grade
Bond Fund, Trust Shares 483,313 4,630
STI Classic Short-Term Bond
Fund, Trust Shares 158,979 1,534
STI Classic U.S. Government
Securities Fund, Trust Shares 218,356 2,153
-------
Total Fixed Income Funds
(Cost $8,593) 8,317
-------
MONEY MARKET FUND (3.0%)
STI Classic Prime Quality Money
Market Fund, Trust Shares 908,970 909
-------
Total Money Market Fund
(Cost $909) 909
-------
Total Investments (100.1%)
(Cost $28,749) 30,502
-------
OTHER ASSETS AND LIABILITIES, NET (-0.1%) (29)
-------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 2,902,964 outstanding shares
of beneficial interest 28,888
Undistributed net investment income 88
Accumulated net realized loss
on investments (256)
Net unrealized appreciation on investments 1,753
-------
Total Net Assets (100.0%) $30,473
=======
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $10.50
=======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 68.
55
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
LIFE VISION MODERATE GROWTH FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
EQUITY FUNDS (60.8%)
STI Classic Capital Appreciation
Fund, Trust Shares* 810,665 $13,879
STI Classic Growth & Income
Fund, Trust Shares 1,291,131 20,051
STI Classic Small Cap Growth
Stock Fund, Trust Shares* 266,480 4,877
STI Classic Small Cap Value
Equity Fund, Trust Shares 381,983 3,487
-------
Total Equity Funds
(Cost $35,909) 42,294
-------
FIXED INCOME FUNDS (36.3%)
STI Classic Investment Grade
Bond Fund, Trust Shares 1,470,375 14,086
STI Classic Short-Term Bond
Fund, Trust Shares 435,287 4,200
STI Classic U.S. Government
Securities Fund, Trust Shares 711,754 7,018
-------
Total Fixed Income Funds
(Cost $26,381) 25,304
-------
MONEY MARKET FUND (3.0%)
STI Classic Prime Quality Money
Market Fund, Trust Shares 2,074,655 2,075
-------
Total Money Market Fund
(Cost $2,075) 2,075
-------
Total Investments (100.1%)
(Cost $64,365) 69,673
-------
OTHER ASSETS AND LIABILITIES, NET (-0.1%) (51)
-------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 6,562,141 outstanding shares
of beneficial interest 63,958
Undistributed net investment income 339
Accumulated net realized gain
on investments 17
Net unrealized appreciation on investments 5,308
-------
Total Net Assets (100.0%) $69,622
=======
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $10.61
=======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 68.
56
<PAGE>
--------------------------------------------------------------------------------
MID-CAP EQUITY FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (82.9%)
BASIC MATERIALS (4.8%)
Georgia-Pacific Group 62,700 $ 2,053
Potash of Saskatchewan 73,100 4,231
Stillwater Mining* 176,500 4,953
--------
11,237
--------
CAPITAL GOODS (5.4%)
ACT Manufacturing* 91,300 2,876
Antec* 94,100 4,729
Optimal Robotics* 33,650 1,131
Seachange International* 107,700 2,760
Weatherford International* 30,600 1,318
--------
12,814
--------
COMMUNICATION SERVICES (4.6%)
Commscope* 29,500 1,139
Harris 50,700 1,550
Western Wireless* 169,700 8,114
WinStar Communications* 669 19
--------
10,822
--------
CONSUMER CYCLICALS (8.8%)
BJ's Wholesale Club* 66,700 2,068
Men's Wearhouse* 492,450 9,818
Outback Steakhouse* 104,700 3,174
Polaroid 236,000 4,528
SPX* 12,200 1,285
--------
20,873
--------
CONSUMER STAPLES (6.7%)
Bowater 62,000 3,205
Imax* 410,100 8,920
Nordstrom 90,600 2,276
Universal Foods 79,300 1,368
--------
15,769
--------
ENERGY (17.2%)
Apache 86,300 5,254
Barrett Resources* 118,100 4,672
BJ Services* 17,900 1,282
Bouygues Offshore 81,400 1,913
Burlington Resources 58,500 2,676
Coflexip Stena Offshore 10,300 600
Cooper Cameron* 21,400 1,493
Ensco International 50,900 1,778
Equitable Resources 63,100 3,139
Global Marine* 64,000 1,812
Grant Prideco* 30,600 711
Nabors Industries* 38,600 1,660
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
ENERGY--CONTINUED
Noble Drilling* 20,300 $ 881
Precision Drilling* 215,400 8,293
Smith International* 15,900 1,257
Stone Energy* 49,900 3,072
--------
40,493
--------
FINANCE (7.4%)
Bank United 74,000 2,655
Colonial Bancgroup 97,900 936
Hibernia 233,200 3,002
North Fork Bancorporation 177,500 2,940
Nova* 144,030 4,231
SouthTrust 131,700 3,564
--------
17,328
--------
HEALTH CARE (10.5%)
Forest Laboratories, Cl A* 31,400 2,779
Health Management Associates,
Cl A* 371,800 4,392
Jones Pharma 196,300 7,153
Mylan Laboratories 192,200 5,153
Renal Care Group* 219,100 5,231
--------
24,708
--------
TECHNOLOGY (14.5%)
Concurrent Computer* 338,900 2,881
Cypress Semiconductor* 57,200 2,406
Flextronics International* 114,400 6,228
Integrated Device Technology* 46,700 2,215
Jabil Circuit* 30,800 1,124
Sawtek* 109,300 7,029
Scientific-Atlanta 38,900 2,193
Symbol Technologies 76,950 3,391
Vitesse Semiconductor* 18,500 937
Zoran* 147,500 5,789
--------
34,193
--------
TRANSPORTATION (3.0%)
CNF Transportation 267,800 7,046
--------
Total Common Stocks
(Cost $163,937) 195,283
--------
PREFERRED STOCK (0.7%)
WinStar Communications,
CV to 24.2072 Shares 18,000 1,597
--------
Total Preferred Stock
(Cost $1,751) 1,597
--------
57
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
MID-CAP EQUITY FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
CONVERTIBLE BONDS (7.6%)
Affymetrix,
CV to 3.1153 Shares,
Callable 02/20/2003 @ 100
4.750%, 02/15/07 $ 1,790 $ 1,222
American Tower,
CV to 19.4175 Shares,
Callable 02/15/2003 @ 102.5
5.000%, 02/15/10 900 836
Chiron,
CV to 34.5900 Shares,
Callable 08/04/2000 @ 97.48 (B)
1.900%, 11/17/00 815 1,123
Human Genome Sciences,
CV to 8.8888 Shares,
Callable 02/06/2003 @ 100.5
5.000%, 02/01/07 1,415 1,364
Human Genome Sciences,
CV to 4.5662 Shares,
Callable 03/21/2003 @ 101.88
3.750%, 03/15/07 2,220 1,404
Millennium Pharmaceuticals,
CV to 11.8848 Shares,
Callable 01/15/2003 @ 103.14
5.500%, 01/15/07 1,240 1,435
Sanmina,
CV to 22.5561 Shares,
Callable 05/06/2002 @ 101.7
4.250%, 05/01/04 1,750 2,723
Sanmina,
CV to 22.5561 Shares,
Callable 05/06/2002 @ 101.8 (B)
4.250%, 05/01/04 1,825 2,840
Sepracor,
CV to 21.1110 Shares,
Callable 02/18/2001 @ 103.57
6.250%, 02/15/05 395 1,622
Sepracor,
CV to 10.8249 Shares
5.000%, 02/15/07 2,675 3,237
--------
Total Convertible Bonds
(Cost $15,833) 17,806
--------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT (11.5%)
Deutsche Bank
6.440%, dated 05/31/00, matures
06/01/00, repurchase price
$27,218,299 (collateralized by
U.S. Treasury Note: total market
value $27,758,590) (D) $27,213 $ 27,213
--------
Total Repurchase Agreement
(Cost $27,213) 27,213
--------
Total Investments (102.7%)
(Cost $208,734) 241,899
--------
OTHER ASSETS AND LIABILITIES, NET (-2.7%) (6,253)
--------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 14,651,852 outstanding shares
of beneficial interest 144,841
Fund shares of the Investor Shares (unlimited
authorization -- no par value)
based on 1,050,102 outstanding shares
of beneficial interest 10,632
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 1,093,101 outstanding shares
of beneficial interest 14,014
Accumulated net realized gain
on investments 32,994
Net unrealized appreciation on investments 33,165
--------
Total Net Assets (100.0%) $235,646
========
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $14.10
========
Net Asset Value, Offering and Redemption
Price Per Share -- Investor Shares $13.82
========
Maximum Offering Price Per Share--
Investor Shares ($13.82 / 96.25%) $14.36
========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $13.35
========
(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 68.
58
<PAGE>
--------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (98.6%)
BASIC MATERIALS (3.7%)
Bel Fuse, Cl A* 55,000 $ 983
Bel Fuse, Cl B 40,000 718
Centex Construction Products 29,845 895
Fairfield Communities* 120,000 1,013
Florida Rock Industries 28,000 1,108
Granite Construction 60,000 1,564
Kaufman & Broad Home 100,000 1,731
Maverick Tube* 130,000 4,574
NVR* 20,000 1,100
Simpson Manufacturing* 60,000 2,857
Stillwater Mining* 65,000 1,824
--------
18,367
--------
CAPITAL GOODS (12.7%)
Ade* 13,200 201
A.O. Smith 20,000 420
Astec Industries* 164,360 4,253
Asyst Technologies* 50,000 2,019
Ball 40,000 1,188
Black Box* 19,000 1,491
Copart* 150,000 2,662
Craftmade International 25,000 125
CTS 33,000 1,821
Dycom Industries* 92,000 4,456
Elcor 40,000 762
Electroglas* 50,000 1,325
Gasonics International* 80,000 2,190
Kent Electronics* 100,000 2,775
Kulicke & Soffa Industries* 45,000 2,264
Manitowoc 100,000 3,269
Measurement Specialties* 55,000 1,402
Mercury Computer Systems* 107,500 3,373
Mobile Mini* 90,000 1,901
Mueller Industries* 110,000 3,231
Nanometrics* 39,300 943
National-Oilwell* 120,000 3,120
Orbotech* 30,000 2,535
Photon Dynamics* 45,000 2,714
Stericycle* 95,000 1,924
Telcom Semiconductor* 153,000 3,787
Trimble Navigation* 12,800 566
UNIFAB International* 282,533 2,013
United Stationers* 125,000 4,000
--------
62,730
--------
COMMUNICATION SERVICES (6.9%)
Anaren Microwave* 25,000 2,537
Commscope* 100,000 3,863
Comtech Telecommunications* 45,000 568
Corsair Communications* 105,000 2,376
Ditech Communications* 45,000 3,690
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMUNICATION SERVICES--CONTINUED
Gentner Communications* 170,000 $ 2,125
Gilat Communications* 75,900 1,442
InterVoice-Brite* 90,000 1,282
L-3 Communications* 50,000 2,800
Lightbridge* 120,000 2,602
Mastec* 28,000 1,914
Polycom* 46,500 3,909
Tollgrade Communications* 50,000 3,316
Xeta Technologies* 53,000 1,626
--------
34,050
--------
CONSUMER CYCLICALS (19.9%)
American Management Systems* 50,000 1,872
Barnes & Noble* 140,000 2,651
BJ's Wholesale Club* 92,000 2,852
Brauns Fashions* 155,000 3,468
Brinker International* 50,000 1,416
CEC Entertainment* 101,000 2,323
Chico's FAS* 205,000 3,703
Claire's Stores 90,000 1,822
Concord Camera* 180,000 3,049
Cost Plus* 107,000 3,123
Cutter & Buck* 84,252 853
EMCOR Group* 95,000 2,096
Fossil* 162,000 3,260
Gildan Activewear* 75,000 2,475
HOT Topic* 130,400 3,325
Insituform Technologies* 110,000 3,802
Jack in the Box* 135,630 3,365
Jakks Pacific* 130,000 1,885
K-Swiss 64,740 850
La-Z-Boy 78,200 1,256
Linens 'N Things* 95,000 2,523
Men's Wearhouse* 95,000 1,894
Monaco Coach* 74,293 1,068
Neiman Marcus Group, Cl A* 116,000 3,045
O'Charleys* 112,000 1,561
Pacific Sunwear of California* 70,000 1,124
Petco Animal Supplies* 150,000 2,841
Pulte 50,000 1,109
Quanta Services* 105,000 5,145
Rare Hospitality International* 146,000 3,997
Salton* 135,000 4,278
Sonic* 88,000 2,436
Station Casinos* 170,000 4,611
Steven Madden* 215,100 3,468
Superior Industries International 90,000 2,514
Toll Brothers* 70,000 1,356
Ultimate Electronics* 65,000 1,609
Wabash National 57,200 733
Zale* 95,000 3,610
--------
98,368
--------
59
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
SMALL CAP GROWTH STOCK FUND--CONCLUDED
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
CONSUMER STAPLES (0.7%)
Canandaigua Brands* 55,000 $ 2,881
Pope & Talbot 24,400 453
--------
3,334
--------
ENERGY (9.5%)
Cal Dive International* 60,000 2,764
Carbo Ceramics 57,000 1,781
Core Laboratories* 147,000 3,822
Eagle Geophysical* 1,285 --
Global Industries* 420,000 7,403
Marine Drilling* 15,000 431
Newfield Exploration* 93,000 3,894
Newport 5,000 853
Newpark Resources* 43,400 363
Patterson Energy* 150,000 3,619
Quicksilver Resources* 40,000 255
Rowan* 116,000 3,603
Shaw Group 145,000 6,326
Stone Energy* 35,000 2,155
Triton Energy* 80,000 2,670
Veritas DGC* 95,000 2,624
Vintage Petroleum 185,000 4,394
--------
46,957
--------
FINANCE (9.9%)
CCB Financial 45,388 2,088
City National 85,000 3,315
Cullen/Frost Bankers 70,237 1,861
Dime Community Bancshares 20,000 326
Doral Financial 250,000 2,781
Gainsco 130,000 683
GBC Bancorp 93,500 2,671
Greater Bay Bancorp 68,000 3,107
In Focus Systems* 150,000 4,191
Kemet* 53,000 3,561
Metris 105,000 3,885
Nova* 90,000 2,644
OceanFirst Financial 87,000 1,474
Radian Group 84,999 4,675
Rainbow Technologies* 80,000 2,550
Rogers* 96,000 2,970
Southwest Securities Group 75,500 2,190
Texas Regional Bancshares 35,000 943
Triad Guaranty* 96,338 1,782
Trustmark 52,760 1,039
--------
48,736
--------
HEALTH CARE (13.2%)
Andrx* 68,000 4,055
Arthrocare* 41,000 3,495
Barr Laboratories* 77,000 4,168
Candela* 142,500 1,442
Cryolife* 210,000 3,609
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
Cytyc* 80,000 $ 4,015
Datascope 40,000 1,505
Elan* 73,150 2,912
Ivax* 140,000 5,268
Jones Pharma 90,000 3,279
Meade Instruments* 55,000 2,740
MedQuist* 105,000 4,344
Mid Atlantic Medical Services* 63,800 789
North American Scientific* 152,500 2,573
Noven Pharmaceuticals* 210,200 3,915
Oxford Health Plans* 120,000 2,550
Pharmacopeia* 99,700 2,168
PolyMedica* 136,600 3,637
Priority Healthcare* 80,000 4,080
Resmed* 85,000 2,040
Twinlab* 37,000 264
Zoll Medical* 50,000 2,500
--------
65,348
--------
SERVICES (3.4%)
F5 Networks* 50,000 1,613
Filenet* 150,000 3,150
Harbinger* 61,417 917
Herley Industries* 65,000 1,044
Informix* 80,000 580
Opus360* 850 4
Orthodontic Centers of America* 49,849 1,143
Pfsweb* 40,000 235
Prepaid Legal Services* 100,000 3,019
Profit Recovery Group
International* 191,000 3,462
Quest Education* 125,000 1,188
SCB Computer Technology* 640,000 680
--------
17,035
--------
TECHNOLOGY (16.2%)
Actel* 87,000 2,534
Advanced Digital Information* 230,000 2,933
Alliance Semiconductor* 185,000 4,590
Alpha Industries* 50,000 2,303
Anixter International* 100,000 2,825
Barra* 72,500 3,195
C-COR.net* 120,400 2,649
Cybex Computer Products* 148,500 4,975
Dallas Semiconductor 60,000 2,400
Insight Enterprises* 91,000 4,129
International Rectifier* 50,000 2,063
Lattice Semiconductor* 35,000 2,076
Micros Systems* 37,730 1,193
Performance Technologies* 141,000 1,428
Pericom Semiconductor* 40,000 1,625
60
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
Plexus* 20,000 $ 1,670
Power-One* 20,000 1,753
Progress Software* 200,800 3,037
Semtech* 40,000 2,230
Sensormatic Electronics* 180,000 2,824
Silicon Valley Bancshares* 80,000 2,625
SonicWall* 37,000 2,229
Sunquest Information Systems* 74,000 539
Sybase* 218,000 4,156
Technitrol 60,000 4,140
Tecnomatix Technologies* 45,000 1,215
Three-Five Systems* 60,000 3,765
Unify* 175,000 2,352
Xircom* 62,000 2,558
Zebra Technologies* 40,000 1,920
Zomax* 136,000 2,423
--------
80,354
--------
TRANSPORTATION (2.5%)
American Freightways* 205,000 3,049
Atlas Air* 67,500 2,185
Forward Air* 120,000 3,825
Frontier Airlines* 90,000 1,187
Skywest 53,000 2,021
--------
12,267
--------
Total Common Stocks
(Cost $394,911) 487,546
--------
RIGHTS (0.0%)
Elan* 190,000 95
--------
Total Rights
(Cost $0) 95
--------
WARRANTS (0.0%)
Per-Se Technologies*,
Expires 07/08/03 3,664 --
--------
Total Warrants
(Cost $0) --
--------
REPURCHASE AGREEMENT (0.2%)
Morgan Stanley Dean Witter
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$1,059,291 (collateralized by
FHLMC obligation: total market
value $1,181,109) (D) $1,059 1,059
--------
Total Repurchase Agreement
(Cost $1,059) 1,059
--------
Total Investments (98.8%)
(Cost $395,970) 488,700
--------
OTHER ASSETS AND LIABILITIES, NET (1.2%) 5,871
--------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 23,597,985 outstanding shares
of beneficial interest $336,399
Fund shares of the Investor Shares (unlimited
authorization -- no par value)
based on 2,172,221 outstanding shares
of beneficial interest 33,089
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 1,286,349 outstanding shares
of beneficial interest 21,473
Accumulated net realized gain
on investments 10,880
Net unrealized appreciation on investments 92,730
--------
Total Net Assets (100.0%) $494,571
========
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $18.30
========
Net Asset Value, Offering and Redemption
Price Per Share-- Investor Shares $18.27
========
Maximum Offering Price Per Share--
Investor Shares ($18.27 / 96.25%) $18.98
========
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $18.00
========
(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 68.
61
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
SMALL CAP VALUE EQUITY FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (99.6%)
BASIC MATERIALS (16.0%)
Carpenter Technology 239,200 $ 4,949
Lilly Industries, Cl A 741,000 10,698
Pennzoil-Quaker State 598,600 6,585
Quixote 295,600 4,212
Texas Industries 251,700 7,221
Wausau-Mosinee Paper 171,500 1,586
--------
35,251
--------
CAPITAL GOODS (19.0%)
ABM Industries 126,300 2,929
American Woodmark 123,400 2,329
A.O. Smith 150,500 3,161
BHA Group Holdings 174,200 1,742
Fedders, Cl A 233,000 1,311
Fedders, Cl B 62,100 377
Gerber Scientific 227,600 2,731
Interface 2,085,400 8,993
Kaman 238,300 2,383
Lennox International 262,789 3,088
Lindberg 247,800 1,921
LSI Industries 229,000 3,893
Milacron 79,200 1,252
Pep Boys 429,800 3,062
Precision Castparts 25,300 1,233
York Group* 370,600 1,297
--------
41,702
--------
CONSUMER CYCLICALS (22.6%)
Bowne 185,600 1,868
Bush Industries 248,400 4,238
CBRL Group 290,300 4,209
Chemed 98,000 2,971
Federal Signal 162,800 3,144
Grey Advertising 7,300 3,435
Harman International Industries 214,200 12,397
Midas 92,200 2,392
Phillips-Van Heusen 405,100 3,519
Polaroid 560,700 10,758
Stride Rite 145,200 953
--------
49,884
--------
CONSUMER STAPLES (16.2%)
Ingles Markets 249,700 2,450
J.M. Smucker 227,800 3,830
Pittston Brink's Group 819,100 12,440
Standard Register 135,600 1,839
Universal Foods 650,100 11,214
Wolverine World Wide 348,800 3,924
--------
35,697
--------
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
ENERGY (1.8%)
Fletcher Challenge Energy ADR 152,900 $ 4,052
--------
FINANCE (9.7%)
Annuity and Life Re 76,900 1,855
Downey Financial 56,200 1,672
Klamath First Bancorp 203,600 2,265
PXRE Group Limited 161,100 2,396
Scottish Annuity & Life Holdings 286,500 2,256
Seacoast Banking of Florida 86,500 2,249
Student Loan 56,900 2,173
Washington Federal 109,300 2,234
West Coast Bancorp 174,730 1,900
Westerfed Financial 164,200 2,319
--------
21,319
--------
HEALTH CARE (5.2%)
Interim Services* 301,120 6,060
Mentor 167,100 4,010
Vital Signs 69,600 1,470
--------
11,540
--------
TECHNOLOGY (0.4%)
Pioneer Standard Electronics 74,400 893
--------
TRANSPORTATION (4.7%)
Knightsbridge Tankers 94,000 1,774
Sea Containers 393,700 8,637
--------
10,411
--------
UTILITIES (4.0%)
Midcoast Energy Resources 151,500 2,424
NUI 153,500 4,298
UGI 99,800 2,208
--------
8,930
--------
Total Common Stocks
(Cost $256,011) 219,679
--------
REPURCHASE AGREEMENT (0.4%)
Morgan Stanley Dean Witter
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$989,921 (collateralized by a
FHLMC obligation: market
value $1,009,682) $ 990 990
--------
Total Repurchase Agreement
(Cost $990) 990
--------
Total Investments (100.0%)
(Cost $257,001) 220,669
--------
OTHER ASSETS AND LIABILITIES, NET (0.0%) 1
--------
62
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 23,220,959 outstanding shares
of beneficial interest $289,178
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 945,026 outstanding shares
of beneficial interest 19,159
Undistributed net investment income 832
Accumulated net realized loss
on investments (52,167)
Net unrealized depreciation on investments (36,332)
--------
Total Net Assets (100.0%) $220,670
========
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $9.13
========
Net Asset Value, Offering and Redemption
Price Per Share--Flex Shares (1) $9.10
========
(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 68.
63
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
TAX SENSITIVE GROWTH STOCK FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (97.1%)
BASIC MATERIALS (2.1%)
Alcoa 188,955 $ 11,042
E.I. Du Pont de Nemours 211,782 10,377
----------
21,419
----------
CAPITAL GOODS (11.3%)
Agilent Technologies* 50,000 3,681
Applied Materials* 118,855 9,924
Caterpillar 290,970 11,130
General Electric 604,344 31,804
Honeywell International 233,038 12,744
JDS Uniphase* 150,263 13,223
Minnesota Mining &
Manufacturing 137,566 11,796
Tyco International 125,102 5,888
United Technologies 208,080 12,576
----------
112,766
----------
COMMUNICATION SERVICES (11.5%)
America Online* 190,167 10,079
AT&T 338,896 11,755
AT&T Wireless Group* 19,000 543
Bell Atlantic 83,305 4,405
Bellsouth 102,443 4,783
GTE 150,716 9,533
Lucent Technologies 148,785 8,537
Network Appliance* 214,059 13,820
Nortel Networks 348,410 18,923
Qualcomm* 134,177 8,906
SBC Communications 127,743 5,581
Sprint (FON Group) 143,789 8,699
Yahoo* 84,069 9,505
----------
115,069
----------
CONSUMER CYCLICALS (7.2%)
Dollar General 561,977 9,835
Ford Motor 114,688 5,569
Gap 352,802 12,370
General Motors 71,458 5,047
Home Depot 282,813 13,805
Wal-Mart Stores 355,881 20,508
Walt Disney 115,936 4,891
----------
72,025
----------
CONSUMER STAPLES (6.5%)
Coca-Cola 238,246 12,716
Gillette 163,579 5,459
McDonald's 139,670 5,002
Paychex 416,427 14,575
Pepsico 228,539 9,299
Philip Morris 364,774 9,530
Walgreen 311,339 8,834
----------
65,415
----------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
ENERGY (6.3%)
Chevron 95,632 $ 8,840
Exxon Mobil 311,809 25,978
Halliburton 229,120 11,685
Royal Dutch Petroleum ADR 109,975 6,867
Schlumberger 125,814 9,255
----------
62,625
----------
FINANCE (15.5%)
American Express 351,180 18,898
American International Group 171,518 19,306
Bank of America 112,371 6,244
Charles Schwab 665,770 19,141
Chase Manhattan 167,034 12,475
Citigroup 278,210 17,301
Fannie Mae 247,521 14,882
Household International 349,495 16,426
JP Morgan 128,441 16,537
Wells Fargo 308,269 13,949
----------
155,159
----------
HEALTH CARE (12.0%)
Abbott Laboratories 127,294 5,179
American Home Products 127,640 6,877
Bristol-Myers Squibb 92,495 5,093
Eli Lilly 85,028 6,473
Johnson & Johnson 125,866 11,265
Medtronic 221,963 11,459
Merck 274,572 20,490
Pfizer 621,610 27,700
Schering-Plough 121,383 5,872
Warner-Lambert 159,703 19,504
----------
119,912
----------
TECHNOLOGY (24.7%)
Brocade Communications System* 61,826 7,292
Cisco Systems* 486,910 27,723
Computer Associates
International 222,214 11,444
Dell Computer* 428,983 18,500
EMC* 187,360 21,792
Hewlett-Packard 96,174 11,553
Intel 287,967 35,906
International Business Machines 164,885 17,694
Linear Technology 306,527 18,104
Microsoft* 363,773 22,759
Oracle* 234,509 16,855
Sun Microsystems* 278,596 21,347
Texas Instruments 229,618 16,590
----------
247,559
----------
Total Common Stocks
(Cost $853,573) 971,949
----------
64
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT (2.7%)
JP Morgan
6.405%, dated 05/31/00, matures
06/01/00, repurchase price
$26,536,754 (collateralized by
various FNMA and FHLMC
obligations: total market
value $27,103,742) (D) $26,532 $ 26,532
----------
Total Repurchase Agreement
(Cost $26,532) 26,532
----------
Total Investments (99.8%)
(Cost $880,105) 998,481
----------
OTHER ASSETS AND LIABILITIES, NET (0.2%) 2,293
----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 21,456,690 outstanding shares
of beneficial interest 620,079
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 8,900,491 outstanding shares
of beneficial interest 281,995
Accumulated net investment loss (876)
Accumulated net realized loss
on investments (18,800)
Net unrealized appreciation on investments 118,376
----------
Total Net Assets (100.0%) $1,000,774
==========
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $33.10
==========
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $32.65
==========
(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 68.
65
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
VALUE INCOME STOCK FUND
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
COMMON STOCKS (89.7%)
BASIC MATERIALS (4.3%)
Allegheny Technologies 264,750 $ 5,973
Boise Cascade 413,600 12,046
Fort James 422,300 9,555
Northrop Grumman 65,300 5,004
Rohm & Haas 441,500 15,066
----------
47,644
----------
CAPITAL GOODS (22.7%)
Cooper Industries 591,100 19,802
Emerson Electric 758,300 44,740
Fortune Brands 572,600 15,245
General Dynamics 361,000 21,322
Honeywell International 814,800 44,559
Hubbell, Cl B 601,000 15,851
Ingersoll-Rand 254,900 11,614
International Flavors &
Fragrances 419,400 14,260
Minnesota Mining &
Manufacturing 199,300 17,090
National Service Industries 471,400 10,253
Pall 271,400 5,699
Sonoco Products 609,830 13,454
Stanley Works 283,400 7,616
Thomas & Betts 89,800 2,548
W.W. Grainger 190,300 7,600
----------
251,653
----------
COMMUNICATION SERVICES (10.1%)
Alltel 178,700 11,694
AT&T 297,300 10,313
CenturyTel 212,300 5,732
GTE 480,300 30,379
Harris 286,800 8,765
SBC Communications 729,600 31,874
Sprint (FON Group) 215,500 13,038
----------
111,795
----------
CONSUMER CYCLICALS (8.7%)
Albertson's 631,700 23,136
Dana 259,400 6,696
Ford Motor 217,925 10,583
Genuine Parts 328,700 7,848
H & R Block 287,300 8,870
Masco 1,212,400 23,869
J.C. Penney 252,100 4,569
Rockwell International 271,900 11,148
----------
96,719
----------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
CONSUMER STAPLES (9.1%)
Bestfoods 361,500 $ 23,317
Conagra 637,300 14,698
Flowers Industries 356,900 6,446
H.J. Heinz 280,800 11,004
Kimberly-Clark 459,500 27,800
Pitney Bowes 288,600 12,554
Ryder System 307,100 5,892
----------
101,711
----------
ENERGY (9.8%)
Coastal 267,900 16,442
Conoco 1,412,484 40,256
Exxon Mobil 218,600 18,212
Texaco 391,800 22,504
Unocal 285,000 10,955
----------
108,369
----------
FINANCE (17.5%)
Allstate 753,300 19,962
American Financial Group 139,900 3,908
American General 214,000 13,709
AmSouth Bancorporation 950,468 17,168
Bank of America 323,900 17,997
Chase Manhattan 115,550 8,630
Chubb 195,000 13,650
Fleet Boston Financial 624,147 23,601
KeyCorp 367,700 7,722
Paine Webber Group 180,200 8,098
PNC Financial Services Group 496,200 24,996
Reliastar Financial 162,900 8,389
Summit Bancorp 601,500 17,256
Torchmark 347,200 9,439
----------
194,525
----------
HEALTH CARE (4.2%)
Baxter International 532,700 35,425
Pharmacia 212,594 11,042
----------
46,467
----------
TECHNOLOGY (1.8%)
International Business Machines 104,700 11,236
Scana 352,617 9,124
----------
20,360
----------
UTILITIES (1.5%)
GPU 282,400 7,978
Questar 447,000 9,080
----------
17,058
----------
Total Common Stocks
(Cost $1,006,261) 996,301
----------
66
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (10.1%)
Deutsche Bank
6.440%, dated 05/31/00, matures
06/01/00, repurchase price
$56,987,201 (collateralized by
FHLMC obligation: total market
value $58,116,549) (D) $56,977 $ 56,977
Greenwich Capital
5.670%, dated 05/31/00, matures
06/01/00, repurchase price
$55,504,760 (collateralized by
various GNMA obligations: total
market value $56,606,827) (D) 55,495 55,495
----------
Total Repurchase Agreements
(Cost $112,472) 112,472
----------
Total Investments (99.8%)
(Cost $1,118,733) 1,108,773
----------
OTHER ASSETS AND LIABILITIES, NET (0.2%) 1,765
----------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 88,766,289 outstanding shares
of beneficial interest 1,036,615
Fund shares of the Investor Shares (unlimited
authorization -- no par value)
based on 10,066,266 outstanding shares
of beneficial interest 121,924
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 8,255,429 outstanding shares
of beneficial interest 127,712
Undistributed net investment income 4,316
Accumulated net realized loss
on investments (170,069)
Net unrealized depreciation on investments (9,960)
----------
Total Net Assets (100.0%) $1,110,538
==========
Net Asset Value, Offering and Redemption
Price Per Share-- Trust Shares $10.38
==========
Net Asset Value, Offering and Redemption
Price Per Share-- Investor Shares $10.35
==========
Maximum Offering Price Per Share--
Investor Shares ($10.35 / 96.25%) $10.75
==========
Net Asset Value, Offering and Redemption
Price Per Share-- Flex Shares (1) $10.24
==========
(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 68.
67
<PAGE>
--------------------------------------------------------------------------------
KEY TO ABBREVIATIONS USED IN
THE STATEMENT OF NET ASSETS AND
SCHEDULE OF INVESTMENTS
ADR American Depository Receipt
Cl Class
CV Convertible Security
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
MTN Medium Term Note
RNC Risparmio Non-Convertible
Ser Series
* Non-income producing security
(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, 2000.
(D) Tri-Party Repurchase Agreement
(GB) Great British Pound
Amounts designated as "--" are either $0 or have been rounded to $0.
68
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (000)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIOD ENDED MAY 31, 2000
------------ -------------
E-COMMERCE INTERNATIONAL
OPPORTUNITY EQUITY
FUND FUND
----------- -------------
Assets:
<S> <C> <C>
Investments at Market Value (Cost $125,976 and $294,340, respectively) ................ $122,538 $300,644
Cash .................................................................................. -- 17,640
Foreign Currency (Cost $--and $14,861, respectively) .................................. -- 15,507
Accrued Income ........................................................................ 49 2,354
Receivable for Investment Securities Sold ............................................. 16,334 12,667
Receivable for Foreign Currency Contracts ............................................ -- 2,688
Receivable for Portfolio Shares Purchased ............................................. 364 44
Other Assets .......................................................................... 3 18
-------- --------
Total Assets .......................................................................... 139,288 351,562
-------- --------
Liabilities:
Payable for Investment Securities Purchased ........................................... 12,187 27,447
Payable for Foreign Currency Contracts ................................................ -- 2,688
Payable for Portfolio Shares Redeemed ................................................. 188 87
Unrealized Foreign Exchange Loss ...................................................... -- 223
Accrued Expenses ...................................................................... 186 641
Other Liabilities ..................................................................... 101 23
-------- --------
Total Liabilities ..................................................................... 12,662 31,109
-------- --------
Total Net Assets ...................................................................... $126,626 $320,453
======== ========
Net Assets:
Fund shares of the Trust Shares (unlimited authorization -- no par value)
based on 6,706,451 and 23,811,370, respectively, outstanding
shares of beneficial interest ....................................................... $114,096 $278,001
Fund shares of the Investor Shares (unlimited authorization-- no par value)
based on 838,701 outstanding shares of beneficial interest .......................... -- 9,925
Fund shares of the Flex Shares (unlimited authorization -- no par value) based
on 1,277,762 and 903,013, respectively, outstanding shares of beneficial interest ... 24,769 13,186
Distributions in excess of net investment income ...................................... -- (3,841)
Accumulated net realized gain (loss) on investments ................................... (8,801) 16,424
Net unrealized appreciation (depreciation) on investments ............................. (3,438) 6,304
Net unrealized appreciation on foreign currency and translation of other assets
and liabilities in foreign currency investments ..................................... -- 454
-------- --------
Total Net Assets ...................................................................... $126,626 $320,453
======== ========
Net Asset Value, Offering and Redemption Price Per Share -- Trust Shares ................. $15.87 $12.56
======== ========
Net Asset Value, Offering and Redemption Price Per Share -- Investor Shares .............. -- $12.47
======== ========
Maximum Offering Price Per Share -- Investor Shares ($12.47 / 96.25%) .................... -- $12.96
======== ========
Net Asset Value, Offering and Redemption Price Per Share -- Flex Shares (1) .............. $15.81 $12.06
======== ========
<FN>
(1) THE FLEX SHARES HAVE A CONTINGENT SALES CHARGE. FOR A DESCRIPTION OF A
POSSIBLE SALES CHARGE, SEE NOTES TO THE FINANCIAL STATEMENTS.
Amounts designated as "--" are either $0 or round to $0.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
69
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (000)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIOD ENDED MAY 31, 2000
CAPITAL CORE E-COMMERCE
BALANCED APPRECIATION EQUITY OPPORTUNITY
FUND FUND FUND FUND
---------- ------------ ---------- -----------
06/01/99- 06/01/99- 09/30/99*- 09/30/99*-
05/31/00 05/31/00 05/31/00 05/31/00
---------- ------------ ---------- -----------
Income:
<S> <C> <C> <C> <C>
Interest Income .................................................... $ 9,029 $ 6,998 $ 154 $ 248
Dividend Income .................................................... 1,992 19,043 597 72
Less: Foreign Taxes Withheld ....................................... -- -- -- --
------- -------- ------- --------
Total Income ....................................................... 11,021 26,041 751 320
------- -------- ------- --------
Expenses:
Investment Advisory Fees ........................................... 3,114 23,701 920 538
Less: Investment Advisory Fees Waived .............................. (335) (1,750) (63) (69)
Administrator Fees ................................................. 232 1,458 59 35
Transfer Agent Fees -- Trust Shares ................................ 19 18 11 11
Transfer Agent Fees -- Investor Shares ............................. 21 93 -- --
Transfer Agent Fees -- Flex Shares ................................. 90 203 5 8
Transfer Agent Out of Pocket Expenses .............................. 23 142 6 3
Printing Fees ...................................................... 21 104 7 4
Custody Fees ....................................................... 19 102 3 2
Professional Fees .................................................. 24 132 6 4
Trustee Fees ....................................................... 3 16 1 1
Registration Fees .................................................. 46 135 18 17
Distribution Fees -- Investor Shares ............................... 36 1,984 -- --
Less: Distribution Fees Waived -- Investor Shares .................. (17) (298) -- --
Distribution Fees -- Flex Shares ................................... 765 1,528 11 52
Less: Distribution Fees Waived -- Flex Shares ...................... (38) (45) (3) (1)
Insurance and Other Fees ........................................... 17 78 35 38
------- -------- ------- --------
Total Expenses ..................................................... 4,040 27,601 1,016 643
------- -------- ------- --------
Net Investment Income (Loss) ....................................... 6,981 (1,560) (265) (323)
------- -------- ------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Capital Gain Received from Investments ............................. -- -- -- --
Net Realized Gain (Loss) on Securities Sold ........................ 5,831 240,075 386 (8,801)
Net Realized Loss on Foreign Currency Transactions ................. -- -- -- --
Net Change in Unrealized Appreciation on Foreign Currency and ......
Translation of Other Assets and Liabilities in Foreign Currency .. -- -- -- --
Net Change in Unrealized Appreciation (Depreciation) on Investments 755 (89,037) 11,612 (3,438)
------- -------- ------- --------
Total Net Realized and Unrealized Gain (Loss) on Investments ....... 6,586 151,038 11,998 (12,239)
------- -------- ------- --------
Net Increase (Decrease) in Net Assets from Operations .............. $13,567 $149,478 $11,733 $(12,562)
======= ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL INTERNATIONAL LIFE VISION
INCOME EQUITY EQUITY AGGRESSIVE GROWTH
FUND FUND INDEX FUND FUND
--------- ------------- ------------- -----------------
06/01/99- 06/01/99- 06/01/99- 06/01/99-
05/31/00 05/31/00 05/31/00 05/31/00
--------- ------------- ------------- -----------------
Income:
<S> <C> <C> <C> <C>
Interest Income .................................................... $ 1,155 $ 943 $ 396 $ --
Dividend Income .................................................... 13,185 10,625 3,141 133
Less: Foreign Taxes Withheld ....................................... -- (692) (289) --
------- ------- ------ ------
Total Income ....................................................... 14,340 10,876 3,248 133
------- ------- ------ ------
Expenses:
Investment Advisory Fees ........................................... 7,270 6,551 1,549 42
Less: Investment Advisory Fees Waived .............................. (1) (18) (190) (31)
Administrator Fees ................................................. 572 371 122 13
Transfer Agent Fees -- Trust Shares ................................ 10 18 15 16
Transfer Agent Fees -- Investor Shares ............................. 40 20 14 --
Transfer Agent Fees -- Flex Shares ................................. 68 40 14 --
Transfer Agent Out of Pocket Expenses .............................. 53 47 7 1
Printing Fees ...................................................... 43 6 10 1
Custody Fees ....................................................... 33 659 245 1
Professional Fees .................................................. 75 39 15 2
Trustee Fees ....................................................... 2 5 1 --
Registration Fees .................................................. 26 29 51 1
Distribution Fees -- Investor Shares ............................... 100 41 19 --
Less: Distribution Fees Waived -- Investor Shares .................. (50) (13) (12) --
Distribution Fees -- Flex Shares ................................... 497 146 32 --
Less: Distribution Fees Waived -- Flex Shares ...................... (126) (28) (12) --
Insurance and Other Fees ........................................... 81 27 22 --
------- ------- ------ ------
Total Expenses ..................................................... 8,693 7,940 1,902 46
------- ------- ------ ------
Net Investment Income (Loss) ....................................... 5,647 2,936 1,346 87
------- ------- ------ ------
Net Realized and Unrealized Gain (Loss) on Investments:
Capital Gain Received from Investments ............................. -- -- -- 780
Net Realized Gain (Loss) on Securities Sold ........................ 28,329 76,552 2,725 158
Net Realized Loss on Foreign Currency Transactions ................. -- (5,581) (534) --
Net Change in Unrealized Appreciation on Foreign Currency and ......
Translation of Other Assets and Liabilities in Foreign Currency .. -- 565 116 --
Net Change in Unrealized Appreciation (Depreciation) on Investments 1,238 (31,341) 37 461
------- ------- ------ ------
Total Net Realized and Unrealized Gain (Loss) on Investments ....... 29,567 40,195 2,344 1,399
------- ------- ------ ------
Net Increase (Decrease) in Net Assets from Operations .............. $35,214 $43,131 $3,690 $1,486
======= ======= ====== ======
</TABLE>
*Commencement of operations.
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
70 & 71
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (000)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIOD ENDED MAY 31, 2000
LIFE VISION LIFE VISION MID-CAP SMALL CAP
GROWTH AND INCOME MODERATE EQUITY GROWTH STOCK
FUND GROWTH FUND FUND FUND
----------------- ------------ ---------- ------------
06/01/99- 06/01/99- 06/01/99- 06/01/99-
05/31/00 05/31/00 05/31/00 05/31/00
----------------- ------------ ---------- ------------
Income:
<S> <C> <C> <C> <C>
Interest Income .................................................... $ -- $-- $ 816 $ 846
Dividend Income .................................................... 472 2,048 2,182 211
------ ------ ------- -------
Total Income ....................................................... 472 2,048 2,998 1,057
------ ------ ------- -------
Investment Advisory Fees ........................................... 58 213 2,954 3,468
Less: Investment Advisory Fees Waived .............................. (40) (102) (191) (84)
Administrator Fees ................................................. 17 56 181 218
Transfer Agent Fees -- Trust Shares ................................ 17 18 17 26
Transfer Agent Fees -- Investor Shares ............................. -- -- 19 13
Transfer Agent Fees -- Flex Shares ................................. -- -- 31 28
Transfer Agent Out of Pocket Expenses .............................. 1 5 3 10
Printing Fees ...................................................... 1 4 11 15
Custody Fees ....................................................... 1 4 6 10
Professional Fees .................................................. 1 7 6 10
Trustee Fees ....................................................... -- -- -- 2
Registration Fees .................................................. 1 2 17 27
Distribution Fees -- Investor Shares ............................... -- -- 72 56
Less: Distribution Fees Waived -- Investor Shares ................... -- -- (19) (24)
Distribution Fees -- Flex Shares ................................... -- -- 150 112
Less: Distribution Fees Waived -- Flex Shares ....................... -- -- (23) (17)
Insurance and Other Fees ........................................... 1 4 3 --
Amortization of Deferred Organization Costs ........................ -- -- -- --
------ ------ ------- -------
Total Expenses ..................................................... 58 211 3,237 3,870
------ ------ ------- -------
Net Investment Income (Loss) ....................................... 414 1,837 (239) (2,813)
------ ------ ------- -------
Net Realized and Unrealized Gain (Loss) on Investments:
Capital Gain Received from Investments ............................. 832 2,705 -- --
Net Realized Gain (Loss) on Securities Sold ........................ (524) (979) 39,061 22,517
Net Change in Unrealized Appreciation (Depreciation) on Investments 408 264 4,067 40,570
------ ------ ------- -------
Total Net Realized and Unrealized Gain (Loss) on Investments ....... 716 1,990 43,128 63,087
------ ------ ------- -------
Net Increase (Decrease) in Net Assets from Operations .............. $1,130 $3,827 $42,889 $60,274
====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP TAX SENSITIVE VALUE
VALUE EQUITY GROWTH STOCK INCOME STOCK
FUND FUND FUND
------------ ------------- ------------
06/01/99- 06/01/99- 06/01/99-
05/31/00 05/31/00 05/31/00
------------ ------------- ------------
Income:
<S> <C> <C> <C>
Interest Income .................................................... $ 483 $ 1,956 $ 6,430
Dividend Income .................................................... 7,070 6,456 41,252
-------- ------- ---------
Total Income ....................................................... 7,553 8,412 47,682
-------- ------- ---------
Investment Advisory Fees ........................................... 3,439 7,254 13,106
Less: Investment Advisory Fees Waived .............................. (76) (399) --
Administrator Fees ................................................. 212 446 1,154
Transfer Agent Fees -- Trust Shares ................................ 18 16 20
Transfer Agent Fees -- Investor Shares ............................. -- -- 92
Transfer Agent Fees -- Flex Shares ................................. 44 160 177
Transfer Agent Out of Pocket Expenses .............................. 6 43 66
Printing Fees ...................................................... 2 44 3
Custody Fees ....................................................... 4 29 58
Professional Fees .................................................. 10 41 55
Trustee Fees ....................................................... 1 6 --
Registration Fees .................................................. 11 86 149
Distribution Fees -- Investor Shares ............................... -- -- 504
Less: Distribution Fees Waived -- Investor Shares .................. -- -- (2)
Distribution Fees -- Flex Shares ................................... 139 1,867 1,321
Less: Distribution Fees Waived -- Flex Shares ...................... (36) (71) (23)
Insurance and Other Fees ........................................... 11 16 6
Amortization of Deferred Organization Costs ........................ 12 -- --
-------- ------- ---------
Total Expenses ..................................................... 3,797 9,538 16,686
-------- ------- ---------
Net Investment Income (Loss) ....................................... 3,756 (1,126) 30,996
-------- ------- ---------
Net Realized and Unrealized Gain (Loss) on Investments:
Capital Gain Received from Investments ............................. -- -- --
Net Realized Gain (Loss) on Securities Sold ........................ (3,553) (23,743) (147,760)
Net Change in Unrealized Appreciation (Depreciation) on Investments (20,563) 58,045 (137,601)
-------- ------- ---------
Total Net Realized and Unrealized Gain (Loss) on Investments ....... (24,116) 34,302 (285,361)
-------- ------- ---------
Net Increase (Decrease) in Net Assets from Operations .............. $(20,360) $33,176 $(254,365)
======== ======= =========
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
72 & 73
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (000)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
E-COMMERCE
CAPITAL CORE OPPORTUNITY
BALANCED FUND APPRECIATION FUND EQUITY FUND FUND
------------------- --------------------- ----------- -----------
06/01/99 06/01/98- 06/01/99- 06/01/98- 09/30/99*- 09/30/99*-
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/00
-------- -------- --------- --------- ---------- -----------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income (Loss) ....................... $ 6,981 $ 5,369 $ (1,560)$ 3,087 $ (265) $ (323)
Capital Gain Received from Investments ............. -- -- -- -- -- --
Net Realized Gain (Loss) on Investments ............ 5,831 9,690 240,075 166,440 386 (8,801)
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 ................................... 755 11,063 (89,037) 151,103 11,612 (3,438)
-------- -------- ---------- ---------- -------- --------
Increase (Decrease) in Net Assets from Operations 13,567 26,122 149,478 320,630 11,733 (12,562)
-------- -------- ---------- ---------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ..................................... (5,433) (4,438) -- (5,572) -- --
Investor Shares .................................. (248) (200) -- (36) -- --
Flex Shares ...................................... (950) (506) -- -- -- --
Capital Gains:
Trust Shares ..................................... (4,291) (13,593) (88,647) (240,608) -- --
Investor Shares .................................. (233) (771) (16,187) (41,767) -- --
Flex Shares ...................................... (1,444) (2,745) (8,873) (19,498) -- --
-------- -------- ---------- ---------- -------- --------
Total Distributions ................................ (12,599) (22,253) (113,707) (307,481) -- --
-------- -------- ---------- ---------- -------- --------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ...................... 93,109 146,574 313,347 673,116 159,873 140,662
Shares Issued in Connection with Crestar Merger .. -- -- -- 139,648 -- --
Shares Issued in Connection with Fund
Reorganizations .............................. -- -- -- -- -- --
Reinvestment of Cash Distributions ............... 9,575 17,886 83,171 234,593 -- --
Cost of Shares Repurchased ....................... (131,695) (104,280) (1,096,316) (623,912) (20,053) (26,252)
-------- -------- ---------- ---------- -------- --------
Increase (Decrease) in Net Assets From Trust Share
Transactions ..................................... (29,011) 60,180 (699,798) 423,445 139,820 114,410
-------- -------- ---------- ---------- -------- --------
Investor Shares:
Proceeds from Shares Issued ...................... 1,969 7,551 12,858 32,561 -- --
Shares Issued in Connection with Crestar Merger .. -- -- -- 12,499 -- --
Shares Issued in Connection with ESC Merger ...... -- -- -- -- -- --
Reinvestment of Cash Distributions ............... 477 966 15,949 41,544 -- --
Cost of Shares Repurchased ....................... (7,771) (2,023) (93,208) (49,083) -- --
-------- -------- ---------- ---------- -------- --------
Increase (Decrease) in Net Assets From Investor
Share Transactions ............................... (5,325) 6,494 (64,401) 37,521 -- --
-------- -------- ---------- ---------- -------- --------
Flex Shares:
Proceeds from Shares Issued ...................... 26,174 54,572 29,168 68,098 4,336 25,730
Shares Issued in Connection with Crestar Merger .. -- -- -- -- 7,867 --
Shares Issued in Connection with ESC Merger ..... -- -- -- -- -- --
Reinvestment of Cash Distributions .............. 2,328 3,206 8,732 19,257 -- --
Cost of Shares Repurchased ...................... (37,791) (12,484) (73,027) (39,576) (121) (952)
-------- -------- ---------- ---------- -------- --------
Increase (Decrease) in Net Assets From
Flex Share Transactions ......................... (9,289) 45,294 (35,127) 55,646 4,215 24,778
-------- -------- ---------- ---------- -------- --------
Increase (Decrease) in Net Assets From Share
Transactions .................................. (43,625) 111,968 (799,326) 516,612 144,035 139,188
-------- -------- ---------- ---------- -------- --------
Total Increase (Decrease) in Net Assets ....... (42,657) 115,837 (763,555) 529,761 155,768 126,626
-------- -------- ---------- ---------- -------- --------
Net Assets:
Beginning of Period ............................... 340,240 224,403 2,440,062 1,910,301 -- --
-------- -------- ---------- ---------- -------- --------
End of Period ...................................... $297,583 $340,240 $1,676,507 $2,440,062 $155,768 $126,626
======== ======== ========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL INTERNATIONAL
GROWTH AND EQUITY EQUITY
INCOME FUND FUND INDEX FUND
----------------------------- ------------------- ------------------
06/01/99- 12/01/98- 12/01/97- 06/01/99- 06/01/98- 06/01/99- 06/01/98-
05/31/00 05/31/99 11/30/98 05/31/00 05/31/99 05/31/00 05/31/99
--------- --------- --------- --------- --------- --------- ---------
Operations:
<S> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income (Loss) ....................... $ 5,647 $ 1,547 $ 3,859 $ 2,936 $ 3,923 $ 1,346 $ 392
Capital Gain Received from Investments ............. -- -- -- -- -- -- --
Net Realized Gain (Loss) on Investments ............ 28,329 48,404 42,161 76,552 21,269 2,725 7,583
Net Realized Loss on Foreign Currency Transactions . -- -- -- (5,581) (811) (534) (40)
Net Change in Unrealized Appreciation (Depreciation)
on Foreign Currency and Translation of Other Assets
and Liabilities in Foreign Currency .............. -- -- -- 565 (10) 116 (88)
Net Change in Unrealized Appreciation (Depreciation)
on Investments ................................... 1,238 39,898 33,416 (31,341) (78,440) 37 (3,971)
-------- -------- -------- -------- -------- -------- -------
Increase (Decrease) in Net Assets from Operations 35,214 89,849 79,436 43,131 (54,069) 3,690 3,876
-------- -------- -------- -------- -------- -------- -------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ..................................... (4,628) (935) (3,768) (2,937) (2,385) (276) (1,136)
Investor Shares .................................. (188) (66) (212) (22) (6) -- (83)
Flex Shares ...................................... -- (7) -- -- -- -- (4)
Capital Gains:
Trust Shares ..................................... (44,093) (38,443) (110,281) (70,119) (33,895) (863) (8,431)
Investor Shares .................................. (2,546) (2,259) (5,275) (1,670) (965) (41) (877)
Flex Shares ...................................... (2,921) (1,704) (2,562) (2,014) (1,189) (21) (172)
-------- -------- -------- -------- -------- -------- -------
Total Distributions ................................ (54,376) (43,414) (122,098) (76,762) (38,440) (1,201) (10,703)
-------- -------- -------- -------- -------- -------- -------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ...................... 367,032 77,854 92,390 66,686 172,988 297,168 34,363
Shares Issued in Connection with Crestar Merger .. -- -- -- -- -- -- --
Shares Issued in Connection with Fund
Reorganizations .............................. -- -- -- 21,915 -- -- --
Reinvestment of Cash Distributions ............... 34,372 11,972 88,294 66,001 33,324 1,011 8,985
Cost of Shares Repurchased ....................... (134,326) (74,302) (153,783) (396,524) (175,047) (33,456) (18,882)
-------- -------- -------- -------- -------- ------- -------
Increase (Decrease) in Net Assets From Trust Share
Transactions ..................................... 267,078 15,524 26,901 (241,922) 31,265 264,723 24,466
-------- -------- -------- -------- -------- -------- -------
Investor Shares:
Proceeds from Shares Issued ...................... 17,046 2,099 11,222 1,176 2,728 2,934 1,083
Shares Issued in Connection with Crestar Merger .. -- -- -- -- -- -- --
Shares Issued in Connection with ESC Merger ...... 7,989 -- -- 1,242 -- -- --
Reinvestment of Cash Distributions ............... 2,496 2,157 5,277 1,683 965 40 959
Cost of Shares Repurchased ....................... (20,339) (4,209) (8,617) (7,206) (4,566) (4,152) (3,668)
-------- -------- -------- -------- -------- -------- -------
Increase (Decrease) in Net Assets From Investor
Share Transactions ............................... 7,192 47 7,882 (3,105) (873) (1,178) (1,626)
-------- -------- -------- -------- -------- -------- -------
Flex Shares:
Proceeds from Shares Issued ...................... 37,577 8,350 12,797 2,028 6,324 5,107 980
Shares Issued in Connection with Crestar Merger .. -- -- -- -- -- -- --
Shares Issued in Connection with ESC Merger ..... 1,536 -- -- 666 -- -- --
Reinvestment of Cash Distributions .............. 2,843 1,675 2,504 1,975 1,174 21 174
Cost of Shares Repurchased ...................... (13,227) (2,763) (2,494) (10,061) (8,295) (883) (987)
-------- -------- -------- -------- -------- -------- -------
Increase (Decrease) in Net Assets From
Flex Share Transactions ......................... 28,729 7,262 12,807 (5,392) (797) 4,245 167
-------- -------- -------- -------- -------- -------- -------
Increase (Decrease) in Net Assets From Share
Transactions .................................. 302,999 22,833 47,590 (250,419) 29,595 267,790 23,007
-------- -------- -------- -------- -------- ------- -------
Total Increase (Decrease) in Net Assets ....... 283,837 69,268 4,928 (284,050) (62,914) 270,279 16,180
-------- -------- -------- -------- -------- -------- -------
Net Assets:
Beginning of Period ............................... 706,400 637,132 632,204 604,503 667,417 80,990 64,810
-------- -------- -------- -------- -------- -------- -------
End of Period ...................................... $990,237 $706,400 $637,132 $320,453 $604,503 $351,269 $80,990
======== ======== ======== ======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
LIFE VISION
AGGRESSIVE
GROWTH FUND
-----------------------------
06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 11/30/98
--------- --------- ---------
Operations:
<S> <C> <C> <C>
Net Investment Income (Loss) ....................... $ 87 $ 25 $ 36
Capital Gain Received from Investments ............. 780 499 1,739
Net Realized Gain (Loss) on Investments ............ 158 (42) (463)
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 ................................... 461 1,329 (226)
------- ------- -------
Increase (Decrease) in Net Assets from Operations 1,486 1,811 1,086
------- ------- -------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ..................................... (88) (24) (35)
Investor Shares .................................. -- -- --
Flex Shares ...................................... -- -- --
Capital Gains:
Trust Shares ..................................... (807) (1,670) --
Investor Shares .................................. -- -- --
Flex Shares ...................................... -- -- --
------- ------- -------
Total Distributions ................................ (895) (1,694) (35)
------- ------- -------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ...................... 11,078 2,114 5,852
Shares Issued in Connection with Crestar Merger .. -- -- --
Shares Issued in Connection with Fund
Reorganizations .............................. -- -- --
Reinvestment of Cash Distributions ............... 894 1,694 36
Cost of Shares Repurchased ....................... (12,850) (1,456) (4,421)
------- ------- -------
Increase (Decrease) in Net Assets From Trust Share
Transactions ..................................... (878) 2,352 1,467
------- ------- -------
Investor Shares:
Proceeds from Shares Issued ...................... -- -- --
Shares Issued in Connection with Crestar Merger .. -- -- --
Shares Issued in Connection with ESC 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 .. -- -- --
Shares Issued in Connection with ESC 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 .................................. (878) 2,352 1,467
------- ------- -------
Total Increase (Decrease) in Net Assets ....... (287) 2,469 2,518
------- ------- -------
Net Assets:
Beginning of Period ............................... 18,699 16,230 13,712
------- ------- -------
End of Period ...................................... $18,412 $18,699 $16,230
======= ======= =======
</TABLE>
*Commencement of operations.
(1) See Note 6 in the notes to the financial statements for additional
information. 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>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (000)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
LIFE VISION LIFE VISION
GROWTH AND INCOME FUND MODERATE GROWTH FUND
------------------------------- -----------------------------
06/01/99- 12/01/98- 12/01/97- 06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 11/30/98 05/31/00 05/31/99 11/30/98
--------- --------- --------- --------- --------- ---------
Operations
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income (Loss) ............................... $ 414 $ 138 $ 357 $ 1,837 $ 867 $ 2,062
Capital Gain Received from Investments ..................... 832 490 2,121 2,705 2,204 6,921
Net Realized Gain (Loss) on Investments .................... (524) (82) (45) (979) 317 (1,004)
Net Change in Unrealized Appreciation (Depreciation)
on Investments ........................................... 408 922 (580) 264 2,338 (1,024)
------- ------- ------- ------- ------- -------
Increase (Decrease) in Net Assets from Operations .......... 1,130 1,468 1,853 3,827 5,726 6,955
------- ------- ------- ------- ------- -------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ............................................. (359) (114) (360) (1,683) (735) (2,072)
Investor Shares .......................................... -- -- -- -- -- --
Flex Shares .............................................. -- -- -- -- -- --
Capital Gains:
Trust Shares ............................................. (571) (2,475) (22) (3,458) (6,686) (238)
Investor Shares .......................................... -- -- -- -- -- --
Flex Shares .............................................. -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Distributions ........................................ (930) (2,589) (382) (5,141) (7,421) (2,310)
------- ------- ------- ------- ------- -------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued .............................. 18,854 2,679 2,591 33,036 5,124 15,849
Shares Issued in Connection with Common Trust Fund
Conversion ............................................. -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger .......... -- -- -- -- -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- -- -- -- --
Reinvestment of Cash Distributions ....................... 928 2,589 382 5,141 7,421 2,310
Cost of Shares Repurchased ............................... (11,459) (1,239) (7,923) (55,429) (15,873) (19,035)
------- ------- ------- ------- ------- -------
Increase (Decrease) in Net Assets From Trust Share
Transactions ............................................. 8,323 4,029 (4,950) (17,252) (3,328) (876)
------- ------- ------- ------- ------- -------
Investor Shares:
Proceeds from Shares Issued .............................. -- -- -- -- -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- -- -- -- --
Shares Issued in Connection with ESC Merger .............. -- -- -- -- -- --
Reinvestment of Cash Distributions ....................... -- -- -- -- -- --
Cost of Shares Repurchased ............................... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Increase (Decrease) in Net Assets From Investor
Share Transactions ....................................... -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Proceeds from Shares Issued .............................. -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger .......... -- -- -- -- -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- -- -- -- --
Shares Issued in Connection with ESC 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 ........................................... 8,323 4,029 (4,950) (17,252) (3,328) (876)
------- ------- ------- ------- ------- -------
Total Increase (Decrease) in Net Assets ................ 8,523 2,908 (3,479) (18,566) (5,023) 3,769
------- ------- ------- ------- ------- -------
Net Assets:
Beginning of Period ........................................ 21,950 19,042 22,521 88,188 93,211 89,442
------- ------- ------- ------- ------- -------
End of Period .............................................. $30,473 $21,950 $19,042 $69,622 $88,188 $93,211
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP
MID-CAP EQUITY GROWTH SMALL CAP VALUE
FUND STOCK FUND EQUITY FUND
-------------------- -------------------- --------- ---------
06/01/99- 06/01/98- 06/01/99- 10/08/98*- 06/01/99- 06/01/98-
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99
--------- --------- --------- --------- --------- ---------
Operations
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income (Loss) ............................... $ (239) $ (1,779) $ (2,813) $ (141) $ 3,756 $ 3,797
Capital Gain Received from Investments ..................... -- -- -- -- -- --
Net Realized Gain (Loss) on Investments .................... 39,061 12,419 22,517 2,335 (3,553) (48,614)
Net Change in Unrealized Appreciation (Depreciation)
on Investments ........................................... 4,067 (10,771) 40,570 4,550 (20,563) (39,458)
-------- -------- -------- ------- -------- --------
Increase (Decrease) in Net Assets from Operations .......... 42,889 (131) 60,274 6,744 (20,360) (84,275)
-------- -------- -------- ------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ............................................. -- -- -- (4) (3,505) (3,830)
Investor Shares .......................................... -- (3) -- -- -- --
Flex Shares .............................................. -- -- -- -- (6) (46)
Capital Gains:
Trust Shares ............................................. (15,785) (26,541) (2,438) (24) -- (17,401)
Investor Shares .......................................... (1,189) (1,970) -- -- -- --
Flex Shares .............................................. (1,047) (1,677) (83) (1) -- (1,638)
-------- -------- -------- ------- -------- --------
Total Distributions ........................................ ( 18,021) (30,191) (2,521) (29) (3,511) (22,915)
-------- -------- -------- ------- -------- --------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued .............................. 155,090 197,227 191,895 69,418 103,359 159,166
Shares Issued in Connection with Common Trust Fund
Conversion ............................................. -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger .......... -- -- -- 88,940 -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- 93,889 -- -- --
Reinvestment of Cash Distributions ....................... 14,649 25,335 2,092 28 2,725 19,237
Cost of Shares Repurchased ............................... (239,058) (280,036) (68,278) (12,528) (173,187) (170,356)
-------- -------- -------- ------- -------- --------
Increase (Decrease) in Net Assets From Trust Share
Transactions ............................................. (69,319) (57,474) 219,598 145,858 (67,103) 8,047
-------- -------- -------- ------- -------- --------
Investor Shares:
Proceeds from Shares Issued .............................. 1,381 3,015 2,463 -- -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- 12,481 -- -- --
Shares Issued in Connection with ESC Merger .............. -- -- 34,455 -- -- --
Reinvestment of Cash Distributions ....................... 1,183 1,967 -- -- -- --
Cost of Shares Repurchased ............................... (8,975) (8,523) (7,316) -- -- --
-------- -------- -------- ------- -------- --------
Increase (Decrease) in Net Assets From Investor
Share Transactions ....................................... (6,411) (3,541) 42,083 -- -- --
-------- -------- -------- ------- -------- --------
Proceeds from Shares Issued .............................. 3,480 4,866 4,518 3,553 1,802 2,579
Shares Issued in Connection with Crestar Merger .......... -- -- -- 2,699 -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- 2,772 -- -- --
Shares Issued in Connection with ESC Merger .............. -- -- 14,435 -- -- --
Reinvestment of Cash Distributions ....................... 1,037 1,671 83 1 5 1,669
Cost of Shares Repurchased ............................... (7,098) (7,908) (5,119) (378) (11,612) (15,110)
-------- -------- -------- ------- -------- --------
Increase (Decrease) in Net Assets From
Flex Share Transactions .................................. (2,581) (1,371) 16,689 5,875 (9,805) (10,862)
-------- -------- -------- ------- -------- --------
Increase (Decrease) in Net Assets From Share
Transactions ........................................... (78,311) (62,386) 278,370 151,733 (76,908) (2,815)
-------- -------- -------- ------- -------- --------
Total Increase (Decrease) in Net Assets ................ (53,443) (92,708) 336,123 158,448 (100,779) (110,005)
-------- -------- -------- ------- -------- --------
Net Assets:
Beginning of Period ........................................ 289,089 381,797 158,448 -- 321,449 431,454
-------- -------- -------- ------- -------- --------
End of Period .............................................. $235,646 $289,089 $494,571 $158,448 $220,670 $321,449
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
TAX SENSITIVE
GROWTH VALUE INCOME
STOCK FUND STOCK FUND
--------- --------- --------- ---------
06/01/99- 12/11/98*- 06/01/99- 06/01/98-
05/31/00 05/31/99 05/31/00 05/31/99
--------- --------- --------- ---------
Operations
<S> <C> <C> <C> <C>
Net Investment Income (Loss) ............................... $ (1,126) $ 38 $ 30,996 $ 33,942
Capital Gain Received from Investments ..................... -- -- -- --
Net Realized Gain (Loss) on Investments .................... (23,743) 4,943 (147,760) 219,408
Net Change in Unrealized Appreciation (Depreciation)
on Investments ........................................... 58,045 14,808 (137,601) (71,294)
---------- -------- ---------- ----------
Increase (Decrease) in Net Assets from Operations .......... 33,176 19,789 (254,365) 182,056
---------- -------- ---------- ----------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ............................................. -- (87) (27,678) (30,625)
Investor Shares .......................................... -- -- (2,514) (3,178)
Flex Shares .............................................. -- -- (1,129) (1,535)
Capital Gains:
Trust Shares ............................................. -- -- (131,535) (229,623)
Investor Shares .......................................... -- -- (14,565) (29,331)
Flex Shares .............................................. -- -- (13,032) (25,364)
---------- -------- ---------- ----------
Total Distributions ........................................ -- (87) (190,453) (319,656)
---------- -------- ---------- ----------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued .............................. 556,671 121,119 383,909 354,278
Shares Issued in Connection with Common Trust Fund
Conversion ............................................. -- 99,222 -- --
Shares Issued in Connection with Crestar Merger .......... -- -- -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- -- --
Reinvestment of Cash Distributions ....................... -- 87 146,588 241,723
Cost of Shares Repurchased ............................... (95,363) (15,922) (831,377) (621,009)
---------- -------- ---------- ----------
Increase (Decrease) in Net Assets From Trust Share
Transactions ............................................. 461,308 204,506 (300,880) (25,008)
---------- -------- ---------- ----------
Investor Shares:
Proceeds from Shares Issued .............................. -- -- 6,784 17,566
Shares Issued in Connection with Fund Reorganizations .... -- -- -- --
Shares Issued in Connection with ESC Merger .............. -- -- -- --
Reinvestment of Cash Distributions ....................... -- -- 16,876 32,240
Cost of Shares Repurchased ............................... -- -- (72,831) (51,945)
---------- -------- ---------- ----------
Increase (Decrease) in Net Assets From Investor
Share Transactions ....................................... -- -- (49,171) (2,139)
Proceeds from Shares Issued .............................. 242,949 77,327 18,991 38,150
Shares Issued in Connection with Crestar Merger .......... -- -- -- --
Shares Issued in Connection with Fund Reorganizations .... -- -- -- --
Shares Issued in Connection with ESC Merger .............. -- -- -- --
Reinvestment of Cash Distributions ....................... -- -- 13,741 26,492
Cost of Shares Repurchased ............................... (36,077) (2,117) (78,588) (65,171)
---------- -------- ---------- ----------
Increase (Decrease) in Net Assets From
Flex Share Transactions .................................. 206,872 75,210 (45,856) (529)
---------- -------- ---------- ----------
Increase (Decrease) in Net Assets From Share
Transactions ........................................... 668,180 279,716 (395,907) (27,676)
---------- -------- ---------- ----------
Total Increase (Decrease) in Net Assets ................ 701,356 299,418 (840,725) (165,276)
---------- -------- ---------- ----------
Net Assets:
Beginning of Period ........................................ 299,418 -- 1,951,263 2,116,539
---------- -------- ---------- ----------
End of Period .............................................. $1,000,774 $299,418 $1,110,538 $1,951,263
========== ======== ========== ==========
</TABLE>
*Commencement of Operations.
(1) See Note 6 in the financial statements for additional information 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>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIODS 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 NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
------------ --------------- ----------------- ------------- ------------- ---------
BALANCED FUND
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $13.26 $ 0.32 $ 0.33 $(0.30) $ (0.24) $13.37
1999 13.09 0.28 1.09 (0.28) (0.92) 13.26
1998 11.94 0.31 2.19 (0.32) (1.03) 13.09
1997 11.55 0.33 1.47 (0.32) (1.09) 11.94
1996 10.26 0.33 1.41 (0.34) (0.11) 11.55
Investor Shares
2000 $13.32 $ 0.29 $ 0.31 $(0.25) $ (0.24) $13.43
1999 13.14 0.24 1.10 (0.24) (0.92) 13.32
1998 11.99 0.28 2.19 (0.29) (1.03) 13.14
1997 11.60 0.29 1.48 (0.29) (1.09) 11.99
1996 10.30 0.30 1.41 (0.30) (0.11) 11.60
Flex Shares
2000 $13.17 $ 0.17 $ 0.33 $(0.16) $ (0.24) $13.27
1999 13.02 0.16 1.07 (0.16) (0.92) 13.17
1998 11.90 0.20 2.16 (0.21) (1.03) 13.02
1997 11.53 0.22 1.45 (0.21) (1.09) 11.90
1996(1) 10.36 0.24 1.29 (0.25) (0.11) 11.53
CAPITAL APPRECIATION FUND
Trust Shares
2000 $16.62 $ 0.02 $ 1.40 $ -- $ (0.92) $17.12
1999 16.48 0.05 2.70 (0.06) (2.55) 16.62
1998 15.09 0.09 3.96 (0.09) (2.57) 16.48
1997 14.90 0.12 3.13 (0.12) (2.94) 15.09
1996 12.18 0.12 3.32 (0.13) (0.59) 14.90
Investor Shares
2000 $16.53 $(0.11) $ 1.41 $ -- $ (0.92) $16.91
1999 16.43 (0.05) 2.70 -- (2.55) 16.53
1998 15.06 (0.01) 3.95 -- (2.57) 16.43
1997 14.89 0.03 3.10 (0.02) (2.94) 15.06
1996 12.17 0.03 3.32 (0.04) (0.59) 14.89
Flex Shares
2000 $16.18 $(0.24) $ 1.43 $ -- $ (0.92) $16.45
1999 16.22 (0.09) 2.60 -- (2.55) 16.18
1998 14.96 (0.04) 3.87 -- (2.57) 16.22
1997 14.84 (0.01) 3.07 -- (2.94) 14.96
1996(2) 12.20 0.02 3.26 (0.05) (0.59) 14.84
CORE EQUITY FUND
Trust Shares
2000(3) $10.00 $(0.02) $ 1.13 $ -- $ -- $11.11
Flex Shares
2000(4) $10.63 $(0.04) $ 0.47 $ -- $ -- $11.06
E-COMMERCE OPPORTUNITY FUND
Trust Shares
2000(3) $10.00 $(0.04) $ 5.91 $ -- $ -- $15.87
Flex Shares
2000(4) $18.20 $(0.07) $(2.32) $ -- $ -- $15.81
GROWTH AND INCOME FUND (A)
Trust Shares
2000 $16.09 $ 0.11 $ 0.55 $(0.10) $ (1.12) $15.53
1999(5) 15.10 0.04 1.97 (0.02) (1.00) 16.09
For the years ended November 30:
1998 16.55 0.09 1.64 (0.09) (3.09) 15.10
1997 13.39 0.14 3.24 (0.15) (0.07) 16.55
1996 11.60 0.17 2.38 (0.17) (0.59) 13.39
1995 10.73 0.24 2.62 (0.26) (1.73) 11.60
Investor Shares
2000 $16.21 $ 0.09 $ 0.55 $(0.08) $ (1.12) $15.65
1999(5) 15.21 0.04 1.99 (0.03) (1.00) 16.21
For the years ended November 30:
1998 16.64 0.10 1.66 (0.10) (3.09) 15.21
1997 13.47 0.13 3.25 (0.14) (0.07) 16.64
1996 11.66 0.17 2.39 (0.16) (0.59) 13.47
1995 10.78 0.25 2.62 (0.26) (1.73) 11.66
Flex Shares
2000 $16.10 $ -- $ 0.51 $ -- $ (1.12) $15.49
1999(5) 15.14 (0.01) 1.97 -- (1.00) 16.10
For the years ended November 30:
1998 16.59 (0.01) 1.64 -- (3.08) 15.14
1997 13.44 0.04 3.23 (0.05) (0.07) 16.59
1996 11.64 0.09 2.38 (0.08) (0.59) 13.44
1995(6) 11.11 0.12 1.62 (1.14) (1.07) 11.64
</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
--------- ------------- ------------------ ------------------
BALANCED FUND
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 5.02% $ 223,634 0.97% 2.39%
1999 10.98 251,752 0.97 2.19
1998 22.15 188,465 0.96 2.51
1997 16.66 151,358 0.95 2.89
1996 17.26 111,638 0.95 3.00
Investor Shares
2000 4.66% $ 9,627 1.27% 2.07%
1999 10.70 14,962 1.27 1.89
1998 21.72 8,313 1.26 2.21
1997 16.27 6,012 1.25 2.58
1996 16.88 4,896 1.25 2.70
Flex Shares
2000 3.88% $ 64,322 2.03% 1.33%
1999 9.84 73,526 2.03 1.13
1998 20.85 27,625 2.02 1.41
1997 15.40 6,067 2.01 1.84
1996(1) 15.58 3,131 2.00 1.85
CAPITAL APPRECIATION FUND
Trust Shares
2000 8.98% $1,296,927 1.17% 0.10%
1999 17.83 1,966,842 1.17 0.29
1998 29.51 1,532,587 1.16 0.61
1997 24.66 1,085,128 1.15 0.83
1996 28.97 981,498 1.15 0.90
Investor Shares
2000 8.29% $ 251,421 1.82% (0.55)%
1999 17.20 311,120 1.82 (0.30)
1998 28.71 271,044 1.81 (0.03)
1997 23.74 218,660 1.80 0.19
1996 28.18 191,078 1.80 0.24
Flex Shares
2000 7.77% $ 128,159 2.29% (1.03)%
1999 16.50 162,100 2.29 (0.86)
1998 28.12 106,670 2.26 (0.46)
1997 23.24 36,753 2.27 (0.29)
1996(2) 27.48 10,969 2.27 (0.29)
CORE EQUITY FUND
Trust Shares
2000(3) 11.10% $ 151,421 1.20% (0.30)%
Flex Shares
2000(4) 4.05% $ 4,347 2.25% (1.39)%
E-COMMERCE OPPORTUNITY FUND
Trust Shares
2000(3) 58.70% $ 106,425 1.20% (0.54)%
Flex Shares
2000(4) (13.13)% $ 20,201 2.25% (1.65)%
GROWTH AND INCOME FUND (A)
Trust Shares
2000 4.11% $ 885,109 1.01% 0.76%
1999(5) 14.24 634,279 1.14 0.49
For the years ended November 30:
1998 13.64 577,042 1.03 0.63
1997 25.41 590,824 1.02 0.92
1996 22.68 553,648 1.02 1.38
1995 28.76 220,386 1.02 2.16
Investor Shares
2000 3.92% $ 42,666 1.18% 0.58%
1999(5) 14.31 36,958 1.08 0.54
For the years ended November 30:
1998 13.69 34,434 1.03 0.63
1997 25.42 28,112 1.03 0.89
1996 22.63 17,997 1.03 1.35
1995 28.71 12,633 1.03 2.14
Flex Shares
2000 3.11% $ 62,462 1.93% (0.14)%
1999(5) 13.85 35,163 1.83 (0.21)
For the years ended November 30:
1998 12.78 25,656 1.78 (0.13)
1997 24.63 13,269 1.73 0.15
1996 21.81 5,131 1.68 0.71
1995(6) 15.78 2,086 1.68 1.13
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
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
------------------- ------------------- ---------
BALANCED FUND
Trust Shares
<S> <C> <C> <C> <C>
2000 1.07% 2.29% 182%
1999 1.06 2.10 179
1998 1.08 2.39 154
1997 1.08 2.76 197
1996 1.09 2.86 155
Investor Shares
2000 1.51% 1.83% 182%
1999 1.43 1.73 179
1998 1.59 1.88 154
1997 1.64 2.19 197
1996 1.89 2.06 155
Flex Shares
2000 2.18% 1.18% 182%
1999 2.15 1.01 179
1998 2.23 1.20 154
1997 2.45 1.40 197
1996(1) 2.97 0.88 155
CAPITAL APPRECIATION FUND
Trust Shares
2000 1.26% 0.01% 129%
1999 1.26 0.20 147
1998 1.27 0.50 194
1997 1.25 0.73 141
1996 1.27 0.78 156
Investor Shares
2000 1.98% (0.71)% 129%
1999 1.96 (0.44) 147
1998 2.01 (0.23) 194
1997 2.02 (0.03) 141
1996 2.08 (0.04) 156
Flex Shares
2000 2.39% (1.13)% 129%
1999 2.38 (0.95) 147
1998 2.37 (0.57) 194
1997 2.43 (0.45) 141
1996(2) 2.68 (0.70) 156
CORE EQUITY FUND
Trust Shares
2000(3) 1.27% (0.37)% 44%
Flex Shares
2000(4) 2.70% (1.84)% 44%
E-COMMERCE OPPORTUNITY FUND
Trust Shares
2000(3) 1.34% (0.68)% 250%
Flex Shares
2000(4) 2.40% (1.80)% 250%
GROWTH AND INCOME FUND (A)
Trust Shares
2000 1.01% 0.76% 53%
1999(5) 1.43 0.20 31
For the years ended November 30:
1998 1.21 0.45 71
1997 1.17 0.77 100
1996 1.17 1.23 82
1995 1.17 2.01 175
Investor Shares
2000 1.31% 0.45% 53%
1999(5) 1.17 0.45 31
For the years ended November 30:
1998 1.18 0.48 71
1997 1.18 0.74 100
1996 1.18 1.20 82
1995 1.18 1.99 175
Flex Shares
2000 2.18% (0.39)% 53%
1999(5) 1.97 (0.35) 31
For the years ended November 30:
1998 2.03 (0.38) 71
1997 2.09 (0.20) 100
1996 2.03 0.36 82
1995(6) 2.03 0.78 175
<FN>
+ 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 September 30, 1999. All ratios for the period have been annualized.
(4) Commenced operations on January 24, 2000. 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 19, 1995. All ratios for the period ended November 30, 1995 have been annualized.
(A) On May 24, 1999, the CrestFund Value Fund exchanged all of its assets and certain liabilities for
shares of the Growth and Income Fund. The CrestFund 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.
Amounts designated as "--" are either $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
</FN>
</TABLE>
78 & 79
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------------
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 NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME (LOSS) ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
------------ --------------- ----------------- ------------- ------------- ---------
INTERNATIONAL EQUITY FUND
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $12.97 $ (0.10) $ 1.42 $(0.07) $(1.66) $12.56
1999 15.00 -- (1.14) (0.05) (0.84) 12.97
1998 13.63 0.04 2.69 (0.04) (1.32) 15.00
1997 11.40 0.03 2.57 (0.02) (0.35) 13.63
1996(1) 10.00 0.05 1.35 -- -- 11.40
Investor Shares
2000 $12.89 $ (0.11) $ 1.37 $(0.02) $(1.66) $12.47
1999 14.92 (0.09) (1.10) -- (0.84) 12.89
1998 13.58 0.02 2.64 -- (1.32) 14.92
1997 11.38 (0.01) 2.56 -- (0.35) 13.58
1996(2) 10.44 0.04 0.90 -- -- 11.38
Flex Shares
2000 $12.58 $ (0.32) $ 1.46 $ -- $(1.66) $12.06
1999 14.68 (0.29) (0.97) -- (0.84) 12.58
1998 13.47 0.07 2.46 -- (1.32) 14.68
1997 11.37 (0.04) 2.49 -- (0.35) 13.47
1996(2) 10.44 0.02 0.91 -- -- 11.37
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
2000 $11.82 $ 0.16 $ 2.13 $(0.03) $(0.11) $13.97
1999 13.31 0.09 0.85 (0.24) (2.19) 11.82
1998 11.34 0.11 2.65 (0.11) (0.68) 13.31
1997 10.96 0.10 0.69 (0.11) (0.30) 11.34
1996 10.24 0.10 0.84 (0.13) (0.09) 10.96
Investor Shares
2000 $11.70 $ (0.11) $ 2.32 $ -- $(0.11) $13.80
1999 13.20 (0.11) 0.98 (0.18) (2.19) 11.70
1998 11.26 0.16 2.53 (0.07) (0.68) 13.20
1997 10.88 0.03 0.72 (0.07) (0.30) 11.26
1996 10.20 0.05 0.85 (0.13) (0.09) 10.88
Flex Shares
2000 $11.73 $ 0.08 $ 2.04 $ -- $(0.11) $13.74
1999 13.17 (0.15) 0.94 (0.04) (2.19) 11.73
1998 11.24 0.17 2.44 -- (0.68) 13.17
1997 10.87 (0.05) 0.72 -- (0.30) 11.24
1996(3) 10.24 -- 0.82 (0.10) (0.09) 10.87
LIFE VISION AGGRESSIVE GROWTH FUND (A)
Trust Shares
2000 $11.31 $ 0.05 $ 0.74 $(0.05) $(0.44) $11.61
1999(4) 11.32 0.02 1.13 (0.01) (1.15) 11.31
For the years ended November 30:
1998 10.65 0.03 0.67 (0.03) -- 11.32
1997(5) 10.00 0.03 0.65 (0.03) -- 10.65
LIFE VISION GROWTH AND INCOME FUND (A)
Trust Shares
2000 $10.33 $ 0.07 $ 0.52 $(0.17) $(0.25) $10.50
1999(4) 11.06 0.08 0.69 (0.06) (1.44) 10.33
For the years ended November 30:
1998 10.51 0.18 0.56 (0.18) (0.01) 11.06
1997(5) 10.00 0.09 0.51 (0.09) -- 10.51
LIFE VISION MODERATE GROWTH FUND (A)
Trust Shares
2000 $10.80 $ 0.33 $ 0.13 $(0.21) $(0.44) $10.61
1999(4) 11.01 0.11 0.56 (0.09) (0.79) 10.80
For the years ended November 30:
1998 10.46 0.24 0.58 (0.24) (0.03) 11.01
1997(5) 10.00 0.12 0.45 (0.11) -- 10.46
MID-CAP EQUITY FUND
Trust Shares
2000 $12.68 $ (0.04) $ 2.32 $ -- $(0.86) $14.10
1999 13.79 0.01 0.07 -- (1.19) 12.68
1998 13.21 -- 2.54 -- (1.96) 13.79
1997 12.76 0.03 1.69 (0.05) (1.22) 13.21
1996 11.00 0.08 2.63 (0.08) (0.87) 12.76
Investor Shares
2000 $12.50 $ (0.19) $ 2.37 $ -- $(0.86) $13.82
1999 13.67 (0.06) 0.08 -- (1.19) 12.50
1998 13.17 (0.03) 2.49 -- (1.96) 13.67
1997 12.74 (0.03) 1.69 (0.01) (1.22) 13.17
1996 10.99 0.03 2.62 (0.03) (0.87) 12.74
Flex Shares
2000 $12.17 $ (0.22) $ 2.26 $ -- $(0.86) $13.35
1999 13.42 (0.14) 0.08 -- (1.19) 12.17
1998 13.04 (0.04) 2.38 -- (1.96) 13.42
1997 12.69 (0.07) 1.64 -- (1.22) 13.04
1996(6) 11.13 -- 2.45 (0.02) (0.87) 12.69
</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
--------- ------------- ------------------ ------------------
INTERNATIONAL EQUITY FUND
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 10.58% $299,100 1.48% 0.59%
1999 (7.43) 573,255 1.47 0.68
1998 21.87 628,870 1.47 0.61
1997 23.29 489,325 1.46 0.51
1996(1) 14.00 213,306 1.46 1.36
Investor Shares
2000 10.15% $ 10,462 1.83% 0.33%
1999 (7.82) 14,145 1.83 0.30
1998 21.39 17,383 1.82 0.24
1997 22.85 10,674 1.81 0.18
1996(2) 9.00 3,448 1.81 1.73
Flex Shares
2000 9.38% $ 10,891 2.53% (0.38)%
1999 (8.48) 17,103 2.53 (0.40)
1998 20.54 21,164 2.52 (0.46)
1997 21.98 8,375 2.51 (0.27)
1996(2) 8.91 953 2.51 1.08
INTERNATIONAL EQUITY INDEX FUND
Trust Shares
2000 19.36% $340,853 1.07% 0.83%
1999 7.87 74,616 1.07 0.69
1998 25.82 56,200 1.06 0.88
1997 7.48 53,516 1.05 0.71
1996 9.29 90,980 1.05 0.84
Investor Shares
2000 18.86% $ 4,563 1.47% 0.07%
1999 7.33 4,909 1.47 0.25
1998 25.25 7,141 1.46 0.50
1997 7.12 5,592 1.45 0.28
1996 8.90 5,597 1.45 0.48
Flex Shares
2000 18.04% $ 5,853 2.12% (0.36)%
1999 6.68 1,465 2.12 (0.30)
1998 24.50 1,469 2.11 (0.03)
1997 6.41 900 2.10 (0.39)
1996(3) 8.32 917 2.10 (0.24)
LIFE VISION AGGRESSIVE GROWTH FUND (A)
Trust Shares
2000 7.25% $ 18,412 0.25% 0.48%
1999(4) 10.99 18,699 0.27 0.28
For the years ended November 30:
1998 6.53 16,230 0.25 0.23
1997(5) 6.82 13,712 0.25 0.72
LIFE VISION GROWTH AND INCOME FUND (A)
Trust Shares
2000 5.81% $ 30,473 0.25% 1.77%
1999(4) 7.75 21,950 0.27 1.38
For the years ended November 30:
1998 7.12 19,042 0.25 1.68
1997(5) 5.97 22,521 0.25 2.11
LIFE VISION MODERATE GROWTH FUND (A)
Trust Shares
2000 4.46% $ 69,622 0.25% 2.19%
1999(4) 6.35 88,188 0.27 1.90
For the years ended November 30:
1998 7.90 93,211 0.25 2.21
1997(5) 5.70 89,442 0.25 2.66
MID-CAP EQUITY FUND
Trust Shares
2000 19.10% $206,545 1.17% --%
1999 1.61 254,055 1.17 (0.47)
1998 21.14 337,825 1.16 (0.29)
1997 14.23 287,370 1.15 0.23
1996 25.54 253,905 1.15 0.70
Investor Shares
2000 18.55% $ 14,513 1.62% (0.43)%
1999 1.17 19,230 1.62 (0.90)
1998 20.56 24,930 1.61 (0.75)
1997 13.76 20,245 1.60 (0.21)
1996 24.93 17,971 1.60 0.25
Flex Shares
2000 17.87% $ 14,588 2.22% (1.05)%
1999 0.56 15,804 2.22 (1.52)
1998 19.80 19,042 2.21 (1.37)
1997 13.06 10,120 2.20 (0.85)
1996(6) 23.00 5,029 2.20 (0.37)
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
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
------------------- ------------------- ---------
INTERNATIONAL EQUITY FUND
Trust Shares
<S> <C> <C> <C> <C>
2000 1.48% 0.59% 179%
1999 1.52 0.63 161
1998 1.48 0.60 108
1997 1.51 0.46 139
1996(1) 1.65 1.17 113
Investor Shares
2000 1.95% 0.21% 179%
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
2000 2.74% (0.59)% 179%
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
2000 1.18% 0.72% 9%
1999 1.17 0.59 32
1998 1.18 0.76 1
1997 1.15 0.61 2
1996 1.19 0.70 30
Investor Shares
2000 1.79% (0.25)% 9%
1999 1.71 0.01 32
1998 1.84 0.12 1
1997 1.88 (0.15) 2
1996 2.06 (0.13) 30
Flex Shares
2000 2.61% (0.85)% 9%
1999 2.92 (1.10) 32
1998 3.52 (1.44) 1
1997 3.69 (1.98) 2
1996(3) 4.14 (2.28) 30
LIFE VISION AGGRESSIVE GROWTH FUND (A)
Trust Shares
2000 0.44% 0.29% 183%
1999(4) 0.63 (0.08) 33
For the years ended November 30:
1998 0.66 (0.18) 75
1997(5) 0.73 0.24 34
LIFE VISION GROWTH AND INCOME FUND (A)
Trust Shares
2000 0.42% 1.60% 189%
1999(4) 0.60 1.05 40
For the years ended November 30:
1998 0.59 1.34 57
1997(5) 0.59 1.77 25
LIFE VISION MODERATE GROWTH FUND (A)
Trust Shares
2000 0.37% 2.07% 151%
1999(4) 0.42 1.75 48
For the years ended November 30:
1998 0.42 2.04 52
1997(5) 0.42 2.49 43
MID-CAP EQUITY FUND
Trust Shares
2000 1.25% (0.08)% 131%
1999 1.28 (0.58) 76
1998 1.27 (0.40) 129
1997 1.26 0.12 152
1996 1.29 0.56 116
Investor Shares
2000 1.81% (0.62)% 131%
1999 1.76 (1.04) 76
1998 1.84 (0.98) 129
1997 1.85 (0.46) 152
1996 1.96 (0.11) 116
Flex Shares
2000 2.44% (1.27)% 131%
1999 2.48 (1.78) 76
1998 2.47 (1.63) 129
1997 2.58 (1.23) 152
1996(6) 3.04 (1.21) 116
<FN>
+ 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 been annualized.
(3) Commenced operations on June 8, 1995. 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 June 30, 1997. All ratios for the period have been annualized.
(6) Commenced operations on June 5, 1995. All ratios for the period have been annualized.
(A) On May 24, 1999, the CrestFund Life Vision Balanced, CrestFund Life Vision
Growth and Income, and CrestFund Life Vision Maximum Growth Portfolios exchanged
all of their assets and certain liabilities for shares of the Life Vision
Balanced, Life Vision Growth and Income, and Life Vision Maximum Growth
Portfolios, respectively. The CrestFund Life Vision Balanced, CrestFund Life
Vision Growth and Income, and CrestFund 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.
Amounts designated as "--" are either $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
</FN>
</TABLE>
80 & 81
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS FOR THE PERIODS ENDED MAY 31,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
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 GROWTH STOCK FUND
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $14.55 $(0.08) $ 4.02 $ -- $(0.19) $18.30
1999(3) 10.00 (0.05) 4.62 -- (0.02) 14.55
Investor Shares
2000(4) $16.46 $(0.07) $ 1.88 $ -- $ -- $18.27
Flex Shares
2000 $14.46 $(0.04) $ 3.77 $ -- $(0.19) $18.00
1999(3) 10.00 (0.19) 4.67 -- (0.02) 14.46
SMALL CAP VALUE EQUITY FUND
Trust Shares
2000 $ 9.70 $ 0.13 $(0.59) $(0.11) $ -- $ 9.13
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
2000 $ 9.65 $ -- $(0.54) $(0.01) $ -- $ 9.10
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
TAX SENSITIVE GROWTH STOCK FUND
Trust Shares
2000 $29.96 $ 0.02 $ 3.12 $ -- $ -- $33.10
1999(5) 25.61 0.02 4.34 (0.01) -- 29.96
Flex Shares
2000 $29.85 $(0.16) $ 2.96 $ -- $ -- $32.65
1999(6) 25.52 (0.04) 4.37 -- -- 29.85
VALUE INCOME STOCK FUND
Trust Shares
2000 $12.85 $ 0.23 $(1.49) $(0.22) $(0.99) $10.38
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
Investor Shares
2000 $12.81 $ 0.19 $(1.48) $(0.18) $(0.99) $10.35
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
Flex Shares
2000 $12.68 $ 0.08 $(1.44) $(0.09) $(0.99) $10.24
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
NET ASSETS RATIO OF NET INVESTMENT
TOTAL END OF EXPENSES TO INCOME (LOSS) TO
RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS
--------- ------------- ------------------ ------------------
SMALL CAP GROWTH STOCK FUND
Trust Shares
<S> <C> <C> <C> <C> <C>
2000 27.24% $ 431,478 1.20% (0.86)%
1999(3) 45.70 152,290 1.20 (0.48)
Investor Shares
2000(4) 11.00% $ 39,865 1.55% (1.26)%
Flex Shares
2000 25.95% $ 23,228 2.25% (1.92)%
1999(3) 44.78 6,158 2.25 (1.50)
SMALL CAP VALUE EQUITY FUND
Trust Shares
2000 (4.72)% $ 212,074 1.22% 1.31%
1999 (18.72) 301,984 1.22 1.27
1998 23.59 390,841 1.21 1.07
1997(1) 10.97 131,049 1.20 1.86
Flex Shares
2000 (5.65)% $ 8,596 2.27% 0.21%
1999 (19.52) 19,465 2.27 0.21
1998(2) 22.29 40,613 2.06 0.01
TAX SENSITIVE GROWTH STOCK FUND
Trust Shares
2000 10.48% $ 710,179 1.20% 0.13%
1999(5) 17.04 223,543 1.20 0.21
Flex Shares
2000 9.38% $ 290,595 2.25% (0.91)%
1999(6) 16.97 75,875 2.25 (0.80)
VALUE INCOME STOCK FUND
Trust Shares
2000 (10.52)% $ 921,797 0.89% 2.02%
1999 11.13 1,589,951 0.92 1.91
1998 23.10 1,725,418 0.92 1.85
1997 22.18 1,488,062 0.91 2.40
1996 27.91 1,244,399 0.92 2.86
Investor Shares
2000 (10.83)% $ 104,178 1.28% 1.64%
1999 10.71 194,312 1.28 1.55
1998 22.71 210,591 1.27 1.47
1997 21.69 165,999 1.30 2.01
1996 27.39 130,597 1.30 2.47
Flex Shares
2000 (11.50)% $ 84,563 2.02% 0.91%
1999 9.91 167,000 2.02 0.81
1998 21.76 180,530 2.01 0.78
1997 20.91 73,466 2.00 1.33
1996(7) 26.52 26,298 2.00 1.72
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
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
------------------- ------------------- ---------
SMALL CAP GROWTH STOCK FUND
Trust Shares
<S> <C> <C> <C> <C>
2000 1.23% (0.89)% 110%
1999(3) 1.49 (0.77) 75
Investor Shares
2000(4) 1.79% (1.50)% 110%
Flex Shares
2000 2.42% (2.09)% 110%
1999(3) 3.19 (1.73) 75
SMALL CAP VALUE EQUITY FUND
Trust Shares
2000 1.25% 1.28% 65%
1999 1.27 1.22 63
1998 1.31 0.97 55
1997(1) 1.37 1.69 27
Flex Shares
2000 2.56% (0.08)% 65%
1999 2.55 (0.07) 63
1998(2) 2.35 (0.28) 55
TAX SENSITIVE GROWTH STOCK FUND
Trust Shares
2000 1.26% 0.07% 30%
1999(5) 1.34 0.07 18
Flex Shares
2000 2.35% (1.01)% 30%
1999(6) 2.48 (1.03) 18
VALUE INCOME STOCK FUND
Trust Shares
2000 0.89% 2.02% 62%
1999 0.92 1.91 69
1998 0.92 1.85 99
1997 0.91 2.40 105
1996 0.92 2.86 134
Investor Shares
2000 1.28% 1.64% 62%
1999 1.28 1.55 69
1998 1.27 1.47 99
1997 1.31 2.00 105
1996 1.37 2.40 134
Flex Shares
2000 2.03% 0.90% 62%
1999 2.03 0.80 69
1998 2.01 0.78 99
1997 2.03 1.30 105
1996(7) 2.15 1.57 134
<FN>
+ 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 December 12, 1999. 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.
Amounts designated as "--" are either $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
</FN>
</TABLE>
82 & 83
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
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-five funds as of May 31, 2000: the
Balanced Fund, the Capital Appreciation Fund (formerly Capital Growth Fund), the
Core Equity Fund, the E-Commerce Opportunity Fund, the Growth and Income Fund,
the International Equity Fund, the International Equity Index Fund, the Life
Vision Aggressive Growth Fund (formerly Life Vision Maximum Growth Portfolio),
Life Vision Growth and Income Fund (formerly Life Vision Growth and Income
Portfolio), the Life Vision Moderate Growth Fund (formerly Life Vision Balanced
Portfolio), the Mid-Cap Equity Fund, the Small Cap Growth Stock Fund, the Small
Cap Value Equity Fund (formerly Small Cap Equity Fund), the Tax Sensitive Growth
Stock Fund, the Value Income Stock Fund, (collectively the "Equity Funds" or the
"Funds"), the Florida Tax-Exempt Bond Fund, the Georgia Tax-Exempt Bond Fund,
the High Income Fund, the 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 Money Market Fund, 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 fund 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.
Effective May 1999, 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 certain stated liabilities of the CrestFunds in exchange for the
issuance of shares in the Funds in a tax-free reorganization (see Note 10).
On August 17, 1999 and May 18, 1999, respectively, the Board of Trustees of the
STI Classic Funds approved an Agreement and Plan of Reorganization (the
"Reorganization Agreement") providing for the transfer of all the assets and
liabilities of the Emerging Markets Equity Fund and the Sunbelt Equity Fund in
exchange for the issuance of shares in the International Equity Fund and Small
Cap Growth Stock Fund, respectively, in a tax-free reorganization (see Note 11).
On February 15, 2000 and November 10, 1999 respectively, the Board of Trustees
of the STI Classic Funds and the Board of Directors of the ESC Strategic Funds
approved an Agreement and Plan of Reorganization (the "Reorganization
Agreement") providing for the transfer of all assets and certain stated
liabilities of the ESC Strategic Funds in exchange for the issuance of shares in
the Funds in a tax-free reorganization (see Note 12).
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 10,
the STI Classic Funds acquired certain CrestFunds 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 CrestFunds. In accordance
with generally accepted accounting principles, the financial statements
presented herein represent those of accounting survivors. Accordingly, the
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 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. Securities for which current market quotations are
not readily available, of which there are none as of May 31, 2000, are
valued at their fair value as determined in good faith by, or in accordance
with procedures adopted by, the Board of Trustees.
84
<PAGE>
--------------------------------------------------------------------------------
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 agreements
mature. Provisions of the repurchase agreements ensure that the market
value of the collateral, including accrued interest thereon, is sufficient
in the event of default of the counterparty. If the counterparty defaults
and the value of the collateral declines or if the counterparty enters into
an insolvency proceeding, realization of the collateral by the funds may be
delayed or limited.
NET ASSET VALUE PER SHARE -- The net asset value per share of each fund is
calculated each business day, by dividing the total value of each fund's
assets, less liabilities, by the number of shares outstanding. The maximum
offering price per share for Investor shares of the Balanced, the Capital
Appreciation, the Growth and Income, the International Equity, the
International Equity Index, the Mid-Cap Equity, the Small Cap Growth Stock,
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% for either the net
asset value of the shares at the time of purchase or the net asset value of
the shares next calculated after the Fund receives the sale request,
whichever is less. The CDSC will not apply to shares redeemed after such
time.
FOREIGN CURRENCY TRANSLATION -- The books and records of 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; and
(II) Purchases and sales of investment securities, income and expenses
at the relavent rates of exchange prevailing on the respective
dates of such transactions.
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 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. 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.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net
investment income are declared and paid each calendar quarter by the Equity
Funds, except for 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
attribut-
85
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
able 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:
UNDISTRIBUTED
ACCUMULATEDNET INVESTMENT
PAID-IN-CAPITAL REALIZED GAIN/ INCOME/(LOSS)
(000) (LOSS)(000) (000)
--------------------------------------------------
Capital Appreciation
Fund............. $ -- $(352) $ 352
Core Equity Fund... -- (265) 265
E-Commerce
Opportunity Fund. (323) -- 323
Growth and Income
Fund............. 1,659 (1,916) 257
International Equity
Fund............ 976 (1,061) 85
Life Vision Growth and
Income Fund..... -- (31) 31
Mid-Cap Equity Fund -- (236) 236
Small Cap Growth
Stock Fund....... 2,831 (7,654) 4,823
Tax Sensitive Growth
Stock Fund....... (299) 49 250
Value Income
Stock Fund....... -- 13 (13)
These reclassification 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 SEI Investments Mutual Funds
Services (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.
The Fund has entered into an agreement with the Distributor to manage the
investments of repurchase agreements for the Funds. For its services the
Distributor received $1,846,277 for the year ended May 31, 2000.
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 Funds.
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 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 except for the Value
Fund Investors Class A for which after April 15, 1999, eliminated the waiver.
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
86
<PAGE>
--------------------------------------------------------------------------------
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 1999, the
limit was .75% for the Value Fund.
Prior to May 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%.
5. Investment Advisory and Custodian Agreements:
The Trust, 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:
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
------ ------- ---------- -------- -------- -------
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%
Core Equity Fund ... 1.10% 1.20% -- -- 1.00% 2.25%
E-Commerce
Opportunity
Fund .............. 1.10% 1.20% -- -- 1.00% 2.25%
Growth and Income
Fund .............. .90% 1.01% .25% 1.18% 1.00% 1.93%
International Equity
Fund .............. 1.25% 1.48% .33% 1.83% 1.00% 2.53%
International Equity
Index Fund ........ .90% 1.07% .38% 1.47% 1.00% 2.12%
Life Vision
Aggressive
Growth Fund ....... .25% .25% -- -- -- --
Life Vision Growth
and Income Fund ... .25% .25% -- -- -- --
Life Vision
Moderate .......... .25% .25% -- -- -- --
Mid-Cap Equity
Fund .............. 1.15% 1.17% .43% 1.62% 1.00% 2.22%
Small Cap Growth
Stock Fund ........ 1.15% 1.20% .50% 1.55% 1.00% 2.25%
Small Cap Value
Equity Fund ....... 1.15% 1.22% -- -- 1.00% 2.27%
Tax Sensitive
Growth Stock
Fund .............. 1.15% 1.20% -- -- 1.00% 2.25%
Value Income
Stock Fund ........ .80% .92% .33% 1.28% 1.00% 2.02%
The Investment Advisers 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 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, acts as custodian for all the funds except, 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
87
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
6. Capital Share Transactions:
Capital Share Transactions for the funds were as follows (000):
<TABLE>
<CAPTION>
CAPITAL CORE
BALANCED FUND APPRECIATION FUND EQUITY FUND
--------------------- ------------------- -----------
06/01/99- 06/01/98- 06/01/99- 06/01/98- 09/30/99*-
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00
--------- --------- --------- --------- -----------
Trust Shares:
<S> <C> <C> <C> <C> <C>
Shares Issued ......................................... 7,060 11,211 18,930 40,224 15,465
Shares Issued in Connection with Crestar Merger ....... -- -- -- 8,202 --
Shares Issued in Connection with Fund Reorganizations . -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... 734 1,393 5,218 14,645 --
Shares Redeemed ....................................... (10,050) (8,020) (66,755) (37,763) (1,832)
-------- ------- -------- -------- -------
Net Trust Share Transactions ............................ (2,256) 4,584 (42,607) 25,308 13,633
-------- ------- -------- -------- -------
Investor Shares:
Shares Issued ......................................... 149 570 782 1,967 --
Shares Issued in Connection with Crestar Merger ....... -- -- -- 738 --
Shares Issued in Connection with ESC Merger ........... -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... 36 75 1,010 2,607 --
Shares Redeemed ....................................... (591) (154) (5,728) (2,983) --
-------- ------- -------- -------- -------
Net Investor Share Transactions ......................... (406) 491 (3,936) 2,329 --
-------- ------- -------- -------- -------
Flex Shares:
Shares Issued ......................................... 1,989 4,165 1,804 4,176 404
Shares Issued in Connection with Crestar Merger ....... -- -- -- 474 --
Shares Issued in Connection with ESC Merger ........... -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... 180 252 567 1,228 --
Shares Redeemed ....................................... (2,903) (956) (4,592) (2,440) (11)
-------- ------- -------- -------- -------
Net Flex Share Transactions ............................. (734) 3,461 (2,221) 3,438 393
======== ======= ======== ======== =======
Net Change in Capital Shares ............................ (3,396) 8,536 (48,764) 31,075 14,026
-------- ------- -------- -------- -------
</TABLE>
<TABLE>
<CAPTION>
E-COMMERCE GROWTH AND INTERNATIONAL
OPPORTUNITY FUND INCOME FUND EQUITY FUND
---------------- ----------------------------- --------------------
09/30/99*- 06/01/99- 12/01/98- 12/01/97- 06/01/99- 06/01/98-
05/31/00 05/31/00 05/31/99 11/30/98 05/31/00 05/31/99
---------- ----------------------------- -------------------
Trust Shares:
<S> <C> <C> <C> <C> <C> <C>
Shares Issued ......................................... 8,128 24,090 5,206 10,513 5,136 12,883
Shares Issued in Connection with Crestar Merger ....... -- -- -- -- -- --
Shares Issued in Connection with Fund Reorganizations . -- -- -- -- 1,794 --
Shares Issued in Lieu of Cash Distributions ........... -- 2,200 840 6,789 5,244 2,626
Shares Redeemed ....................................... (1,422) (8,699) (4,849) (14,789) (32,574) (13,225)
------- ------- ------- -------- -------- --------
Net Trust Share Transactions ............................ 6,706 17,591 1,197 2,513 (20,400) 2,284
------- ------- ------- -------- -------- --------
Investor Shares:
Shares Issued ......................................... -- 1,108 137 764 91 203
Shares Issued in Connection with Crestar Merger ....... -- -- -- -- -- --
Shares Issued in Connection with ESC Merger ........... -- 502 -- -- 103 --
Shares Issued in Lieu of Cash Distributions ........... -- 159 150 402 135 77
Shares Redeemed ....................................... -- (1,321) (272) (591) (585) (350)
------- ------- ------- -------- -------- --------
Net Investor Share Transactions ......................... -- 448 15 575 (256) (70)
------- ------- ------- -------- -------- --------
Flex Shares:
Shares Issued ......................................... 1,330 2,436 550 874 165 468
Shares Issued in Connection with Crestar Merger ....... -- -- -- -- -- --
Shares Issued in Connection with ESC Merger ........... -- 97 -- -- 57 --
Shares Issued in Lieu of Cash Distributions ........... -- 182 117 192 163 95
Shares Redeemed ....................................... (52) (867) (178) (171) (839) (648)
------- ------- ------- -------- -------- --------
Net Flex Share Transactions ............................. 1,278 1,848 489 895 (454) (85)
======= ======= ======= ======== ======== ========
Net Change in Capital Shares ............................ 7,984 19,887 1,701 3,983 (21,110) 2,129
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL LIFE VISION
EQUITY INDEX AGGRESSIVE
FUND GROWTH FUND
---------------------------------------------------
06/01/99- 06/01/98- 06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 05/31/99 05/31/99 11/30/98
------------------- -----------------------------
Trust Shares:
<S> <C> <C> <C> <C> <C>
Shares Issued ......................................... 20,423 2,851 983 192 599
Shares Issued in Connection with Crestar Merger ....... -- -- -- -- --
Shares Issued in Connection with Fund Reorganizations . -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... 70 779 81 161 3
Shares Redeemed ....................................... (2,401) (1,537) (1,132) (133) (456)
------- ------- ------- ------ ------
Net Trust Share Transactions ............................ 18,092 2,093 (68) 220 146
------- ------- ------- ------ ------
Investor Shares:
Shares Issued ......................................... 211 88 -- -- --
Shares Issued in Connection with Crestar Merger ....... -- -- -- -- --
Shares Issued in Connection with ESC Merger ........... -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... 3 84 -- -- --
Shares Redeemed ....................................... (302) (294) -- -- --
------- ------- ------- ------ ------
Net Investor Share Transactions ......................... (88) (122) -- -- --
------- ------- ------- ------ ------
Flex Shares:
Shares Issued ......................................... 363 80 -- -- --
Shares Issued in Connection with Crestar Merger ....... -- -- -- -- --
Shares Issued in Connection with ESC Merger ........... -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... 1 15 -- -- --
Shares Redeemed ....................................... (63) (82) -- -- --
------- ------- ------- ------ ------
Net Flex Share Transactions ............................. 301 13 -- -- --
======= ======= ======= ====== ======
Net Change in Capital Shares ............................ 18,305 1,984 (68) 220 146
</TABLE>
<TABLE>
<CAPTION>
LIFE VISION LIFE VISION
GROWTH AND INCOME FUND MODERATE GROWTH FUND
----------------------------- -----------------------------
06/01/99- 12/01/98- 12/01/97- 06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 11/30/98 05/31/00 05/31/99 11/30/98
--------- -------- --------- --------- --------- ---------
Trust Shares:
<S> <C> <C> <C> <C> <C> <C>
Shares Issued ......................................... 1,802 259 239 3,097 476 1,449
Shares Issued in Connection with Common Trust Fund
Conversion .......................................... -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger ....... -- -- -- -- -- --
Shares Issued in Connection with Fund Reorganizations -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... 90 264 35 491 712 214
Shares Redeemed ....................................... (1,113) (120) (695) (5,194) (1,486) (1,743)
------- ----- ----- ------- ----- -------
Net Trust Share Transactions ............................ 779 403 (421) (1,606) (298) (80)
------- ----- ----- ------- ----- -------
Investor Shares:
Shares Issued ......................................... -- -- -- -- -- --
Shares Issued in Connection with Fund Reorganizations . -- -- -- -- --
Shares Issued in Connection with ESC 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 Connection with Fund Reorganizations . -- -- -- -- --
Shares Issued in Connection with ESC Merger ........... -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- --
------- ----- ----- ------- ----- -------
Net Flex Share Transactions ............................. -- -- -- -- -- --
======= ===== ===== ======= ===== =======
Net Change in Capital Shares .......................... 779 403 (421) (1,606) (298) (80)
------- ----- ----- ------- ----- -------
</TABLE>
<TABLE>
<CAPTION>
MID-CAP EQUITY SMALL CAP GROWTH SMALL CAP VALUE
FUND STOCK FUND STOCK FUND
-------------------- -------------------- -------------------
06/01/99- 06/01/98- 06/01/99- 10/08/98*- 06/01/99- 06/01/98-
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99
--------- --------- --------- --------- --------- ---------
Trust Shares:
<S> <C> <C> <C> <C> <C> <C>
Shares Issued ......................................... 11,917 16,168 11,362 5,174 10,968 16,078
Shares Issued in Connection with Common Trust Fund
Conversion .......................................... -- -- -- -- -- --
Shares Issued in Connection with Crestar Merger ....... -- -- 6,174 -- -- --
Shares Issued in Connection with Fund Reorganizations -- -- 5,705 -- -- --
Shares Issued in Lieu of Cash Distributions ........... 1,197 2,230 127 2 294 2,040
Shares Redeemed ....................................... (18,496) (22,862) (4,061) (886) (19,166) (17,349)
-------- -------- ------- ------- -------- --------
Net Trust Share Transactions ............................ (5,382) (4,464) 13,133 10,464 (7,904) 769
-------- -------- ------- ------- -------- --------
Investor Shares:
Shares Issued ......................................... 108 247 127 -- -- --
Shares Issued in Connection with Fund Reorganizations . -- -- 758 -- -- --
Shares Issued in Connection with ESC Merger ........... -- -- 1,677 -- -- --
Shares Issued in Lieu of Cash Distributions ........... 98 175 -- -- -- --
Shares Redeemed ....................................... (695) (707) (390) -- -- --
-------- -------- ------- ------- -------- --------
Net Investor Share Transactions ......................... (489) (285) 2,172 -- -- --
-------- -------- ------- ------- -------- --------
Flex Shares:
Shares Issued ......................................... 273 403 261 266 194 245
Shares Issued in Connection with Crestar Merger ....... -- -- -- 188 -- --
Shares Issued in Connection with Fund Reorganizations . -- -- 170 -- -- --
Shares Issued in Connection with ESC Merger ........... -- -- 712 -- -- --
Shares Issued in Lieu of Cash Distributions ........... 89 152 5 -- 1 179
Shares Redeemed (567) (676) (288) (28) (1,266) (1,580)
-------- -------- ------- ------- -------- --------
Net Flex Share Transactions ............................. (205) (121) 860 426 (1,071) (1,156)
======== ======== ======= ======= ======== ========
Net Change in Capital Shares .......................... (6,076) (4,870) 16,165 10,890 (8,975) (387)
-------- -------- ------- ------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
TAX SENSITIVE GROWTH VALUE INCOME
STOCK FUND STOCK FUND
--------------------- -------------------
06/01/99- 12/11/98*- 06/01/99- 06/01/98-
05/31/00 05/31/99 05/31/00 05/31/99
--------- ---------- --------- ---------
Trust Shares:
<S> <C> <C> <C> <C>
Shares Issued ......................................... 16,874 4,133 32,686 28,099
Shares Issued in Connection with Common Trust Fund
Conversion .......................................... -- 3,875 -- --
Shares Issued in Connection with Crestar Merger ....... -- -- -- --
Shares Issued in Connection with Fund Reorganizations -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... -- 3 12,665 20,747
Shares Redeemed ....................................... (2,879) (549) (80,311) (49,236)
------- ------- -------- --------
Net Trust Share Transactions ............................ 13,995 7,462 (34,960) (390)
------- ------- -------- --------
Investor Shares:
Shares Issued ......................................... -- -- 596 1,391
Shares Issued in Connection with Fund Reorganizations . -- -- -- --
Shares Issued in Connection with ESC Merger ........... -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... -- -- 1,463 2,775
Shares Redeemed ....................................... -- -- (7,163) (4,182)
------- ------- -------- --------
Net Investor Share Transactions ......................... -- -- (5,104) (16)
------- ------- -------- --------
Flex Shares:
Shares Issued ......................................... 7,452 2,612 1,626 3,029
Shares Issued in Connection with Crestar Merger ....... -- -- -- --
Shares Issued in Connection with Fund Reorganizations . -- -- -- --
Shares Issued in Connection with ESC Merger ........... -- -- -- --
Shares Issued in Lieu of Cash Distributions ........... -- -- 1,198 2,310
Shares Redeemed (1,094) (70) (7,736) (5,298)
------- ------- -------- --------
Net Flex Share Transactions ............................. 6,358 2,542 (4,912) 41
======= ======= ======== ========
Net Change in Capital Shares .......................... 20,353 10,004 (44,976) (365)
------- ------- -------- --------
</TABLE>
*Commencement of operations.
Amounts designated as "--" are either $0 or have been rounded to $0.
88 & 89
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
policies of the Trust or which securities are to be purchased or sold in the
funds.
7. 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, 2000, were as follows:
PURCHASES SALES
(000) (000)
---------- -------
Balanced Fund ....................... $ 401,747 $ 415,843
Capital Appreciation Fund ........... 2,501,819 3,380,053
Core Equity Fund .................... 197,528 56,067
E-Commerce Opportunity Fund ......... 327,161 192,385
Growth and Income Fund .............. 690,029 421,330
International Equity Fund ........... 826,079 1,151,751
International Equity Index Fund ..... 279,797 15,490
Life Vision Aggressive Growth Fund .. 33,183 34,007
Life Vision Growth and Income Fund .. 52,356 43,754
Life Vision Moderate Growth Fund .... 125,270 143,249
Mid-Cap Equity Fund ................. 325,395 431,246
Small Cap Growth Stock Fund ......... 571,525 340,046
Small Cap Value Equity Fund ......... 186,805 230,394
Tax Sensitive Growth Stock Fund ..... 840,238 183,201
Value Income Stock Fund ............. 933,611 1,447,331
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,
2000, were $149,169,460 and $174,240,675, respectively.
Subsequent to October 31, 1999, the Funds recognized net capital losses for tax
purposes that have been deferred to 2000 and can be used to offset future
capital gains at May 31, 2000. The Funds also had capital loss carryforwards at
May 31, 2000 as follows:
CAPITAL POST
LOSS POST 10/31
CARRY- 10/31 CURRENCY
OVER EXPIRES EXPIRES EXPIRES DEFERRED LOSS
5/31/00 2006 2007 2008 LOSS DEFERRED
FUND (000) (000) (000) (000) (000) (000)
---- ------ ------ ------- ------- -------- -------
E-Commerce Opportunity Fund $ 18 $ -- $ -- $ 18 $ 4,381 $ --
International Equity Fund 5,954 1,506 4,448 -- -- 4,826
International Equity Index Fund -- -- -- -- -- 431
Small Cap Growth Stock Fund 5,520 1,239 4,281 -- -- --
Small Cap Value Equity Fund 45,722 -- 16,348 29,374 5,503 --
Tax Sensitive Growth Stock Fund 142 -- 142 -- -- --
Value Income Stock Fund -- -- -- -- 169,653 --
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 following Funds had cumulative wash sales for the fiscal year ended May 31,
2000:
FUND AMOUNT
---- ------------
Balanced Fund ............................... $ 2,569,034
Capital Appreciation Fund ................... 29,286,766
E-Commerce Opportunity Fund ................. 4,401,554
Growth and Income Fund ...................... 886,323
International Equity Fund ................... 3,300,504
International Equity Index Fund ............. 338,922
Life Vision Aggressive Growth Fund .......... 173,123
Life Vision Growth and Income Fund .......... 471,968
Life Vision Moderate Growth Fund ............ 940,008
Mid-Cap Equity Fund ......................... 257,489
Small Cap Growth Stock Fund ................. 2,983,811
Small Cap Value Equity Fund ................. 942,118
Tax Sensitive Growth Stock Fund ............. 281,014
Value Income Stock Fund ..................... 416,425
At May 31, 2000, 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, 2000, were as follows:
AGGREGATE AGGREGATE NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
FUND (000) (000) (000)
---- ------------ ------------ ------------
Balanced Fund ................ $ 54,250 $ (15,932) $ 38,318
Capital Appreciation Fund .... 529,690 (73,048) 456,642
Core Equity Fund ............. 18,936 (7,324) 11,612
E-Commerce Opportunity Fund .. 12,506 (15,944) (3,438)
Growth and Income Fund ....... 221,637 (41,799) 179,838
International Equity Fund .... 21,481 (15,177) 6,304
International Equity Index
Fund ...................... 33,364 (18,930) 14,434
Life Vision Aggressive
Growth Fund ............... 2,380 (76) 2,304
Life Vision Growth and
Income Fund ............... 2,115 (362) 1,753
Life Vision Moderate Growth
Fund ...................... 6,417 (1,109) 5,308
Mid-Cap Equity Fund .......... 46,653 (13,488) 33,165
Small Cap Growth Stock Fund .. 117,284 (24,554) 92,730
Small Cap Value Equity Fund .. 16,389 (52,721) (36,332)
Tax Sensitive Growth Stock
Fund ...................... 185,203 (66,827) 118,376
Value Income Stock Fund ...... 109,891 (119,851) (9,960)
8. Concentration of Credit Risk
The E-Commerce Opportunity Fund invests a substantial portion of its assets in
securities in the technology industry. Therefore, it may be more affected by
economic and political developments in that industry than would be comparable
general equity fund.
90
<PAGE>
--------------------------------------------------------------------------------
Each International Fund invests in securities of foreign issuers in various
countries. These investments may involve certain considerations and risks not
typically associated with investments in the United States, as a result of,
among other factors, the possibility of future political and economic
developments and the level of governmental supervision and regulation of
securities markets in the respective countries.
9. Common Trust Fund Conversion
On December 11, 1998, the SunTrust Quality Growth Stock Common Trust 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 Common Trust Fund
immediately before the conversion were $99,222,180, which included unrealized
appreciation of $45,523,361.
10. CrestFunds Merger
The Board of Directors and shareholders of the CrestFunds approved a
reorganization of the CrestFunds into STI Classic Funds which took place in May
1999. The following table summarizes certain relevant information of the Funds
prior to and immediately after the business combinations in May 1999 and is
unaudited:
SHARES
OUTSTANDING UNREALIZED
ON MERGER APPRECIATION
CRESTFUNDS DATE (DEPRECIATION)
---------- ------------------ -----------------
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
* 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.
SHARES ISSUED NET ASSETS NAV
IN BUSINESS AFTER PER
STI CLASSIC FUNDS COMBINATION COMBINATION SHARE
----------------- --------------- ---------------- --------
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 ............... 39,426,216 649,230,675 16.47
Investor Shares ............ 2,284,756 37,909,335 16.59
Flex Shares ................ 2,164,932 35,677,567 16.48
Life Vision Moderate Growth
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 Aggressive Growth
Trust Shares ............... 1,650,909 19,002,404 11.51
11. Fund Reorganizations
On December 10, 1999 the Small Cap Growth Stock Fund and the International
Equity Fund acquired all of the assets of the Sunbelt Equity Fund and Emerging
Markets Equity Fund, respectively, pursuant to the plan of reorganization
approved by Sunbelt Equity Fund and Emerging Markets Equity Fund on December 10,
1999. The following table summarizes certain relevant information of these funds
prior to and immediately after the business combination on December 10, 1999 and
is unaudited.
SHARES
OUTSTANDING UNREALIZED
ON MERGER APPRECIATION
STI CLASSIC FUNDS DATE (DEPRECIATION)
----------------- ------------------ -----------------
Emerging Markets Equity
Trust Shares .................... 2,393,361 $ 55,572*
Sunbelt Equity
Trust Shares .................... 9,176,663 25,562,904
Investor Shares ................. 1,261,749 1,907,642
Flex Shares ..................... 287,227 (1,283,351)
* Includes unrealized gain on investments and unrealized loss on foreign
currency
(1) Represents the accounting survivor in this business combination.
SHARES ISSUED NET ASSETS NAV
IN BUSINESS AFTER PER
STI CLASSIC FUNDS COMBINATION COMBINATION SHARE
----------------- --------------- ---------------- --------
International Equity (1)
Trust Shares ............... 1,794,029 $575,635,094 $12.22
Small Cap Growth Stock (1)
Trust Shares ............... 5,705,132 305,649,316 16.46
Investor Shares ............ 758,425 12,481,372 16.46
Flex Shares ................ 170,464 9,892,809 16.26
91
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
12. ESC Strategic Funds Merger
The Board of Directors and shareholders of the ESC Funds approved a
reorganization of the ESC Funds into STI Classic Funds which took place at the
close of business on March 24, 2000. The following table summarizes certain
relevant information of the Funds prior to and immediately after the business
combinations on March 24, 2000 and is unaudited.
SHARES
OUTSTANDING UNREALIZED
ON MERGER APPRECIATION
ESC FUNDS DATE (DEPRECIATION)
----------------- ------------------ -----------------
Appreciation Fund
Class A ......................... 870,690 $ 2,501,314
Class D ......................... 175,438 (1,297,012)
Small Cap Fund
Class A ......................... 1,275,432 6,276,446
Class D ......................... 480,442 2,865,501
Small Cap II Fund
Class A ......................... 500,936 2,188,506
Class D ......................... 317,826 1,262,314
International Equity
Class A ......................... 170,094 315,475*
Class D ......................... 96,927 (22,816)*
* Includes unrealized gain on investments and unrealized loss on foreign
currency
(1) Represents the accounting survivor in this business combination.
SHARES ISSUED NET ASSETS NAV
IN BUSINESS AFTER PER
STI CLASSIC FUNDS COMBINATION COMBINATION SHARE
----------------- --------------- ---------------- --------
Growth and Income Fund(1)
Investor Shares ............. 502,426 50,200,825 15.90
Flex Shares ................. 97,459 62,797,756 15.76
Small Cap Growth Stock Fund(1)
Investor Shares ............. 1,335,449 47,582,016 20.55
Flex Shares ................. 495,872 27,591,623 20.27
Small Cap Growth Stock Fund(1)
Investor Shares ............. 341,148 47,582,016 20.55
Flex Shares ................. 216,285 27,591,623 20.27
International Equity(1)
Investor Shares ............. 103,172 11,187,283 12.04
Flex Shares ................. 57,124 12,018,530 11.65
13. Subsequent Event
Effective June 30, 2000, SunTrustBanks, Inc. reorganized all of the investment
management functions of its three institutional money management units,
including SunTrust Bank, into Trusco Capital Management, Inc.
92
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000
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, Core Equity, Growth & Income, International Equity Index,
Life Vision Aggressive Growth, Life Vision Growth & Income, and Life Vision
Moderate Growth, Mid-Cap Equity, Small Cap Growth Stock, Small Cap Value Equity,
Tax Sensitive Growth Stock, and Value Income Stock Funds of STI Classic Funds,
and the statements of assets and liabilities, including the schedule of
investments, of the E-Commerce Opportunity and International Equity Funds of STI
Classic Funds (the "Trust") as of May 31, 2000, and the related statements of
operations, changes in net assets, and financial highlights for the periods
presented, excluding the periods indicated below. 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 changes for the year
ended November 30, 1998 and financial highlights for the periods prior to May
31, 1999, for the Growth & Income Fund and the Life Vision Aggressive Growth,
Life Vision Growth & Income, and Life Vision Moderate 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of May 31, 2000, 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 audited by us
present fairly, in all material respects, the financial position of the
Balanced, Capital Appreciation, Core Equity, E-Commerce Opportunity, Growth &
Income, International Equity, International Equity Index, Life Vision Aggressive
Growth, Life Vision Growth & Income, and Life Vision Moderate Growth, Mid-Cap
Equity, Small Cap Growth Stock, Small Cap Value Equity, Tax Sensitive Growth
Stock, and Value Income Stock Funds of STI Classic Funds as of May 31, 2000, 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 accounting principles generally accepted in the United States..
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
July 18, 2000
93
<PAGE>
NOTICE TO SHAREHOLDERS
--------------------------------------------------------------------------------
STI CLASSIC EQUITY FUNDS MAY 31, 2000 UNAUDITED
For shareholders that do not have a May 31, 2000 tax year end, this notice is
for informational purposes only. For shareholders with a May 31, 2000, please
consult your tax advisor as to the pertinence of this notice. For the fiscal
year ended May 31, 2000, each portfolio is designating the following items with
regard to distributions paid during the year:
<TABLE>
<CAPTION>
LONG TERM FOREIGN
(20% RATE) ORDINARY TAX
CAPITAL GAIN INCOME TAX-EXEMPT TOTAL QUALIFYING WITHHOLDING
FUND DISTRIBUTION DISTRIBUTIONS INTEREST DISTRIBUTIONS DIVIDENDS (1) PASS THROUGH (2)
-------- ------------ ------------- ---------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Balanced Fund 36.71% 63.29% --% 100.00% 22.87% --%
Capital Appreciation Fund 65.94% 34.06% --% 100.00% 27.41% --%
Core Equity Fund --% --% --% --% --% --%
E-Commerce Opportunity Fund --% --% --% --% --% --%
Growth and Income Fund 74.02% 25.98% --% 100.00% 92.63% --%
International Equity Fund 58.24% 41.76% --% 100.00% --% 2.80%
International Equity Index Fund 48.14% 51.86% --% 100.00% --% 40.47%
Life Vision Aggressive Growth Fund 59.38% 40.62% --% 100.00% --% --%
Life Vision Growth and Income Fund 43.51% 56.49% --% 100.00% --% --%
Life Vision Moderate Growth Fund 50.19% 49.81% --% 100.00% --% --%
Mid-Cap Equity Fund 100.00% --% --% 100.00% --% --%
Small Cap Growth Stock Fund 52.22% 47.78% --% 100.00% 11.73% --%
Small Cap Value Equity Fund --% 100.00% --% 100.00% 89.39% --%
Value Income Stock Fund 35.76% 64.24% --% 100.00% 71.38% --%
<FN>
--------------------------
(1) Qualifying dividends represent dividends which qualify for the corporate dividends received
deduction and is reflected as a percentage of "Ordinary Income Distributions".
(2) Foreign tax credit pass through represents the amount eligible for the foreign tax credit
and is reflected as a percentage of "Ordinary Income Distributions".
</FN>
</TABLE>
94
<PAGE>
INVESTMENT ADVISER
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 Fundsinvolves 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 FIXED INCOME FUNDS MAY 31, 2000
FLORIDA TAX-EXEMPT BOND FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS (89.2%)
FLORIDA (79.5%)
Brevard County, Health Facilities
Authority, Holmes Regional
Medical Center Project, RB, MBIA
Callable 10/01/03 @ 102
5.700%, 10/01/08 $3,000 $ 3,038
Broward County, Port Facilities
Authority, Ser C, RB, AMT, MBIA
5.375%, 09/01/08 3,360 3,339
Citrus County, Pollution Control
Authority, Florida Power, Crystal
River, Ser B, RB Callable
08/01/02 @ 102
6.350%, 02/01/22 335 337
Dade County, Aviation, Ser A, RB,
AMBAC Callable 10/01/05 @ 102
6.000%, 10/01/09 500 520
Dade County, Aviation Revenue,
Ser B, RB, AMT, MBIA Callable
10/01/02 @ 102
6.600%, 10/01/22 825 844
Dade County, Educational Facilities
Authority, University of Miami,
Ser A, RB, MBIA
6.000%, 04/01/08 505 527
Dade County, Seaport, GO, MBIA
6.500%, 10/01/09 1,000 1,084
Dade County, Ser CC, GO, AMBAC
7.125%, 10/01/15 1,000 1,149
Daytona Beach, Water & Sewer
Authority, Ser 1978, RB, ETM
Callable 11/15/00 @ 101.75
6.750%, 11/15/07 1,000 1,050
Deerfield Beach, Water & Sewer
Authority, RB, FGIC
6.125%, 10/01/06 250 259
Florida State, Board of Education,
Capital Outlay, Public Education,
Ser B, GO Prerefunded @ 101(F)
6.000%, 06/01/01 1,000 1,022
Florida State, Board of Education,
Capital Outlay, Public Education,
GO Callable 06/01/02 @ 101
6.400%, 06/01/19 1,300 1,340
Florida State, Board of Education,
Capital Outlay, Ser A, GO
Callable 01/01/09 @ 101
4.750%, 01/01/19 1,860 1,579
Florida State, Board of Education,
Capital Outlay, Ser A, GO
6.100%, 06/01/00 125 125
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FLORIDA--CONTINUED
Florida State, Board of Education,
Capital Outlay, Ser C, ETM, GO
Callable 06/22/00 @ 100
7.100%, 06/01/07 $ 190 $ 192
Florida State, Department of
Transportation, Right of Way,
Ser A, GO Callable 07/01/07 @ 101
5.000%, 07/01/22 500 434
Florida State, Finance Department
of General Services,
Environmental Preservation 2000,
Ser A, RB, AMBAC Callable
07/01/07 @ 101
5.000%, 07/01/13 1,200 1,138
Florida State, Finance Department
of General Services, Environmental
Protection, Ser B, RB, AMBAC
6.000%, 07/01/12 2,000 2,093
Florida State, Finance Department of
General Services, Save Our Coast,
Department of National Resources,
RB, MBIA Prerefunded @ 101 (F)
6.500%, 07/01/01 720 740
Florida State, Finance Department of
General Services, Department of
Natural Resources, Preservation
2000, Ser A, RB, AMBAC
Prerefunded @ 102 (F)
6.750%, 07/01/01 80 83
Florida State, Housing Financing
Authority, Homeowner Mortgage,
Ser 7, RB, AMT, FSA Callable
07/01/09 @ 100
5.200%, 01/01/31 1,000 977
Florida State, Ports Financing
Commission, Transportation
Trust Fund, RB, AMT, FGIC
Callable 10/01/09 @ 101
5.250%, 10/01/13 1,305 1,244
5.375%, 10/01/15 1,000 951
Florida State, Turnpike Authority,
Ser A, RB, FSA Callable
07/01/09 @ 101
5.000%, 07/01/22 3,545 3,083
Gainesville, Utility Systems,
Ser A, RB
5.750%, 10/01/04 1,000 1,026
Hillsborough County, Industrial
Development Authority,
University Community Hospital,
RB, MBIA
6.500%, 08/15/19 145 157
26
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FLORIDA--CONTINUED
Indian, Trace Community, Community
Development District, Water
Management Split Benefit,
Ser A-1, RB, MBIA Callable
05/01/05 @ 102
5.500%, 05/01/07 $ 330 $ 335
Jacksonville, Excise Tax, Ser B, RB,
AMT, FGIC Callable
10/01/01 @ 101
5.200%, 10/01/04 1,500 1,499
Jacksonville, Sales Tax Authority,
River City Renaissance Project,
RB, FGIC
6.000%, 10/01/04 2,430 2,517
Keys, Aqueduct Authority, RB,
AMBAC Prerefunded @ 101(F)
6.750%, 09/01/01 170 176
Lakeland, Electric & Water Authority,
First Lien, Ser B, RB, FSA
6.550%, 10/01/05 2,590 2,753
Lakeland, Electric & Water Authority,
First Lien, Ser C, RB, FSA
6.050%, 10/01/07 1,000 1,050
Lee County, Industrial Development
Authority, Bonita Springs Utilities
Project, RB, AMT, MBIA Callable
11/01/06 @ 101
5.750%, 11/01/10 1,480 1,498
Lee County, Water & Sewer
Authority, Ser A, RB, AMBAC
Callable 10/01/09 @ 101
4.750%, 10/01/19 1,720 1,460
Miami, Parking Facilities Authority,
RB, MBIA
5.250%, 10/01/15 1,000 959
Miami-Dade County, Educational
Authority, Ser A, RB, AMBAC
Callable 04/01/10 @ 101
5.500%, 04/01/19 1,405 1,346
North Broward, Hospital District,
RB, ETM, MBIA
5.950%, 01/01/01 1,000 1,008
Orange County, Health Facilities
Authority, Ser A, RB, ETM, MBIA
6.250%, 10/01/07 2,120 2,245
Orlando, Aviation Authority, Airport
Facilities, RB, AMT, FGIC
5.250%, 10/01/13 725 692
5.500%, 10/01/17 1,810 1,755
Orlando, Aviation Authority, Airport
Facilities, Ser A, RB, AMT, AMBAC
Callable 10/01/03 @ 102
5.400%, 10/01/06 1,340 1,344
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FLORIDA--CONTINUED
Orlando, Utilities Commission
Water & Sewer Authority,
Sub-Ser D, RB
6.750%, 10/01/17 $5,385 $ 5,991
Osceola County, School Board
Certificates Authority, Ser A,
COP, AMBAC
6.250%, 06/01/01 1,080 1,097
Palm Beach County, Acquisitions
Program Authority, Ser B, GO
Callable 08/01/09 @101
5.375%, 08/01/15 1,000 968
Palm Beach County, Apartment
System Authority, RB, MBIA
Callable 10/01/01 @ 102
7.625%, 10/01/04 1,410 1,482
Palm Beach County, Solid Waste
Authority, Ser A, RB, ETM, AMBAC
6.000%, 10/01/09 300 315
Pensacola, Airport Authority,
Ser A, RB, AMT, MBIA
6.250%, 10/01/09 505 532
Pensacola, Airport Authority,
Ser A, RB, AMT, MBIA
Callable 10/01/08 @ 102
6.000%, 10/01/12 1,075 1,102
Pinellas County, Health Facilities
Authority, Morton Plant Health
Systems Project, RB, MBIA
Callable 11/15/03 @ 102
5.500%, 11/15/08 1,500 1,506
Plant City, Utility System, RB, MBIA
6.000%, 10/01/15 400 418
Polk County, Utility System,
RB, ETM, FGIC
6.000%, 10/01/08 2,250 2,329
Reedy Creek, Improvement District,
Ser 1991-1, RB, MBIA
Prerefunded @ 101(F)
6.250%, 10/01/01 405 416
South Broward, Hospital District
Authority, RB, AMBAC Callable
05/01/03 @ 102
7.500%, 05/01/08 1,000 1,078
Sunrise, Utility System Authority,
RB, AMBAC Callable
10/01/18 @ 100
5.000%, 10/01/28 1,500 1,292
Tallahassee, Energy Systems
Authority, Ser A, RB, FSA
Callable 10/01/08 @ 101
5.000%, 10/01/28 5,040 4,286
27
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
FLORIDA TAX-EXEMPT BOND FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FLORIDA--CONTINUED
Tampa, Allegany Health Systems
Authority, St Mary's Hospital,
RB, ETM, MBIA Callable
12/01/03 @ 102
5.000%, 12/01/12 $7,280 $ 6,960
Tampa, Guaranteed Entitlement, RB,
AMBAC Callable 10/01/01 @ 102
7.050%, 10/01/07 1,000 1,045
Tampa, Special Utility, TA, AMBAC
Callable 10/01/01 @ 102
6.900%, 10/01/09 1,500 1,564
Tampa, Sports Authority, Local
Option Sales Tax, Stadium Project,
RB, MBIA Callable 01/01/07 @ 101
5.250%, 01/01/27 3,000 2,688
--------
84,037
--------
PUERTO RICO (9.7%)
Commonwealth, Aqueduct & Sewer
Authority, RB, MBIA
6.250%, 07/01/12 1,000 1,076
Commonwealth, Electric Power
Authority, Ser S, RB
5.500%, 07/01/00 200 200
Commonwealth, Electric Power
Authority, Ser X, RB
Prerefunded @ 102 (F)
6.125%, 07/01/05 240 258
Commonwealth, Highway &
Transportation Authority,
Ser Z, RB, MBIA
6.250%, 07/01/14 3,000 3,228
Commonwealth, Municipal Financing
Agency, Ser A, GO, FSA
Callable 08/01/09 @ 101
5.500%, 08/01/23 2,340 2,231
Commonwealth, Public Buildings
Authority, Government Facilities,
Ser A, RB, AMBAC
6.250%, 07/01/13 1,000 1,077
6.250%, 07/01/14 750 807
Commonwealth, Public
Improvements, GO, MBIA
Callable 07/01/07 @ 100
5.375%, 07/01/25 1,500 1,390
--------
10,267
--------
Total Municipal Bonds
(Cost $96,770) 94,304
--------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
CASH EQUIVALENTS (8.6%)
AIM Management Institutional
Tax Free Fund 4,512,541 $ 4,513
SEI Institutional Tax Free Fund 4,576,465 4,576
--------
Total Cash Equivalents
(Cost $9,089) 9,089
--------
Total Investments (97.8%)
(Cost $105,859) 103,393
--------
OTHER ASSETS AND LIABILITIES, NET (2.2%) 2,313
--------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 9,244,819 outstanding shares of
beneficial interest 97,121
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 285,455 outstanding shares of
beneficial interest 2,838
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 970,788 outstanding shares of
beneficial interest 10,500
Distributions in excess of net
investment income (5)
Accumulated net realized loss
on investments (2,282)
Net unrealized depreciation
on investments (2,466)
--------
Total Net Assets (100.0%) $105,706
========
Net Asset Value and Redemption
Price Per Share -- Trust Shares $ 10.06
========
Net Asset Value and Redemption
Price Per Share -- Investor Shares $ 10.07
========
Maximum Offering Price Per Share --
Investor Shares ($10.07 / 96.25%) $ 10.46
========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 10.09
========
(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.
28
<PAGE>
--------------------------------------------------------------------------------
GEORGIA TAX-EXEMPT BOND FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS (93.5%)
GEORGIA (93.5%)
Albany-Dougherty County, State
Hospital Authority, Ser B, RB,
AMBAC Prerefunded @ 102 (F)
7.500%, 09/01/00 $ 255 $ 262
Athens, Water & Sewer
Authority, RB, ETM
5.700%, 07/01/00 165 165
Atlanta, Airport Facilities
Authority, RB, AMBAC
6.000%, 01/01/03 1,000 1,021
6.000%, 01/01/04 500 514
6.500%, 01/01/06 1,000 1,058
Atlanta, Water & Sewer
Authority, RB, ETM
6.000%, 01/01/11 1,000 1,044
Augusta, Water & Sewer
Authority, RB Prerefunded
@ 102 (F)
6.200%, 05/01/02 130 135
Bibb County, GO
7.000%, 01/01/04 985 1,043
Brunswick, Water & Sewer
Authority, RB, MBIA
6.100%, 10/01/14 1,000 1,051
Carroll County, Water Authority,
RB, AMBAC Callable
07/01/09 @ 102
5.000%, 07/01/10 720 693
Catoosa, Utility District Authority,
RB, MBIA Callable
04/01/09 @ 102
5.000%, 04/01/12 710 670
Cherokee County, School System, GO
5.000%, 02/01/12 1,690 1,611
5.000%, 02/01/13 1,370 1,297
Clarke County, Hospital Authority,
Athens Regional Medical Center
Project, RB, MBIA
5.375%, 01/01/07 1,425 1,431
Clayton County, Water & Sewer
Authority, RB, AMBAC Callable
05/01/06 @ 102
5.350%, 05/01/09 800 800
Cobb County, Water & Sewer
Authority, RB Callable
07/01/04 @102
5.125%, 07/01/06 1,000 998
Cobb-Marietta County, Coliseum
& Expo Project, RB, MBIA
5.500%, 10/01/12 940 939
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
GEORGIA--CONTINUED
Cobb-Marietta County, Water
Authority, RB
5.000%, 11/01/03 $ 1,255 $ 1,252
5.100%, 11/01/04 1,000 1,000
Columbia County, Courthouse/
Detention Center Projects, GO
Callable 02/01/08 @ 102
5.000%, 02/01/10 720 690
Dalton, Utilities Authority, RB, MBIA
6.000%, 01/01/08 3,240 3,380
Dalton-Whitfield County, Hospital
Authority, RB Prerefunded
@ 102 (F)
7.000%, 07/01/00 355 363
DeKalb County, Development
Authority, Emory University
Project, Ser A, RB
5.375%, 11/01/05 1,650 1,669
DeKalb County, Development
Authority, Emory University
Project, Ser A, RB Callable
11/01/05 @ 101
5.200%, 11/01/08 500 498
DeKalb County, School District,
Ser A, GO
6.250%, 07/01/11 1,500 1,609
Douglasville - Douglas County,
Water & Sewer Authority, RB,
AMBAC
5.625%, 06/01/15 1,370 1,381
Fayette County, School District,
GO, ETM
6.250%, 03/01/07 450 474
Fayette County, Water Authority,
Ser 1985-A, RB, ETM, MBIA
Callable 10/01/00 @ 100
8.550%, 10/01/01 300 314
Forsyth County, Water & Sewer
Authority, RB
5.000%, 04/01/04 1,000 996
Forsyth County, Water & Sewer
Authority, RB, Callable
04/01/08 @ 101
5.000%, 04/01/09 1,000 971
Forsyth County, School District,
GO Callable 02/01/10 @ 102
5.750%, 02/01/11 3,000 3,062
6.000%, 02/01/15 1,000 1,024
Forsyth County, School District, GO
6.400%, 07/01/05 750 790
6.500%, 07/01/06 1,000 1,064
29
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
GEORGIA TAX-EXEMPT BOND FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
GEORGIA--CONTINUED
Forsyth County, School District,
GO, MBIA Prerefunded @ 102 (F)
5.350%, 07/01/05 $ 780 $ 800
Fulton County, Hospital Authority,
Northside Hospital Project, Ser B,
RB, MBIA Prerefunded @ 102 (F)
6.600%, 10/01/02 2,000 2,104
Fulton County, School District, GO
5.250%, 01/01/12 1,000 981
6.375%, 05/01/17 500 538
Fulton County, Water & Sewer
Authority, RB, ETM, FGIC
6.375%, 01/01/14 1,000 1,075
Georgia State, Ser A, GO
6.250%, 04/01/11 1,000 1,074
Georgia State, Ser C, GO
6.500%, 04/01/08 1,000 1,077
6.250%, 08/01/08 1,360 1,447
6.250%, 08/01/13 650 699
6.250%, 08/01/13 1,000 1,075
Georgia State, Ser D, GO
6.700%, 08/01/10 2,250 2,484
Georgia State, Housing & Financial
Authority, Single-Family Mortgage,
Sub-Ser B-1, RB Callable
06/01/05 @ 102
5.550%, 12/01/07 550 550
Georgia State, Housing & Financial
Authority, Single-Family Mortgage,
Sub-Ser B-1, RB, FHA
Callable 06/01/06 @ 102
5.550%, 12/01/10 325 324
5.600%, 12/01/11 450 448
Georgia State, Housing & Financial
Authority, Single-Family Mortgage,
Sub-Ser C-1, RB Callable
12/01/07 @ 101.50
5.550%, 12/01/16 500 481
Georgia State, Municipal Electric
Authority, RB, ETM Callable
06/22/00 @ 100
8.000%, 01/01/15 1,900 2,320
Gwinnett County, Recreation
Authority, RB
5.800%, 02/01/06 785 808
5.875%, 02/01/07 500 517
Gwinnett County, School District,
Ser B, GO
6.400%, 02/01/06 500 529
6.400%, 02/01/07 1,500 1,594
Hall County, School District,
Ser B, GO
6.300%, 12/01/05 675 710
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
GEORGIA--CONTINUED
Henry County, Henry Medical
Center Project, RB, AMBAC
Prerefunded @ 102 (F)
5.500%, 07/01/07 $ 1,640 $ 1,683
Henry County, Henry Medical
Center Project, RB, AMBAC
Callable 07/01/07 @ 102
5.500%, 07/01/08 545 550
Henry County, School District,
Ser A, GO
6.150%, 08/01/06 150 157
6.300%, 08/01/08 300 319
6.450%, 08/01/11 500 537
Henry County, School District,
Ser A, GO, MBIA
5.500%, 08/01/01 350 353
Henry County, Water & Sewer
Authority, RB, AMBAC
6.150%, 02/01/20 2,250 2,339
Houston County, School District,
Intergovernmental Contract,
COP, MBIA Prerefunded @ 102 (F)
6.000%, 03/01/04 2,000 2,094
Jackson County, School District,
GO Callable 07/01/08 @ 101
5.000%, 07/01/10 1,020 982
Medical Center Hospital Authority,
Columbus Regional Health Care
System, RB, MBIA
Prerefunded @ 102 (F)
6.000%, 08/01/05 1,340 1,410
Meriwether County, School District,
GO, FSA
7.000%, 02/01/06 740 802
Metropolitan Atlanta, Rapid
Transportation Authority,
Ser A, RB, MBIA
6.250%, 07/01/07 500 528
Metropolitan Atlanta, Rapid
Transportation Authority, Ser N, RB
6.000%, 07/01/07 1,000 1,035
Metropolitan Atlanta, Rapid
Transportation Authority,
Ser P, RB, AMBAC
6.250%, 07/01/08 1,000 1,060
Milledgeville, Water & Sewer
Authority, RB, FSA
6.000%, 12/01/16 1,000 1,032
6.000%, 12/01/21 1,000 1,013
30
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
GEORGIA--CONTINUED
Newton County, Hospital Authority,
Newton Health Systems Project,
RB, AMBAC Callable
02/01/10 @ 101
5.750%, 02/01/11 $ 780 $ 787
5.750%, 02/01/12 825 828
Paulding County, School District,
GO, MBIA
6.000%, 02/01/10 1,000 1,043
Paulding County, School District,
Ser A, GO
6.625%, 02/01/07 1,000 1,073
6.625%, 02/01/08 525 566
Private Colleges & Universities,
Agnes Scott College Project, RB,
MBIA Callable 06/01/09 @ 101
5.250%, 06/01/10 1,360 1,344
Private Colleges & Universities,
Emory University Project, Ser A,
RB, Callable 11/01/07 @ 101
5.000%, 11/01/10 1,000 962
Private Colleges & Universities,
Mercer University Project, RB,
ETM, MBIA
6.400%, 11/01/11 1,675 1,816
Private Colleges & Universities,
Mercer University Project, Ser A,
RB Callable 10/01/09 @ 101
5.250%, 10/01/13 1,000 915
Rome, Water & Sewer Authority,
RB, AMBAC
5.250%, 01/01/09 775 769
Savannah, Water & Sewer Authority,
RB, ETM Callable 12/01/00
6.450%, 12/01/04 1,000 1,054
Upper Oconee, Basin Water
Authority, RB, FGIC Callable
07/01/08 @ 102
5.000%, 07/01/12 500 469
Vidalia, Water & Sewer Authority,
RB, ETM Callable 07/01/00 @ 101
6.000%, 07/01/07 605 632
Walker, Dade & Catoosa Counties,
Hutchinson Medical, Ser A, RB,
FSA Callable 10/01/07 @ 102
5.500%, 10/01/08 1,370 1,374
--------
86,430
--------
Total Municipal Bonds
(Cost $89,672) 86,430
--------
--------------------------------------------------------------------------------
SHARES VALUE (000)
--------------------------------------------------------------------------------
CASH EQUIVALENTS (5.1%)
AIM Management Institutional
Tax Free Portfolio 2,010,202 $ 2,010
SEI Institutional Tax Free Fund 2,682,922 2,683
--------
Total Cash Equivalents
(Cost $4,693) 4,693
--------
Total Investments (98.6%)
(Cost $94,365) 91,123
--------
OTHER ASSETS AND LIABILITIES, NET (1.4%) 1,322
--------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 8,544,266 outstanding shares of
beneficial interest 84,551
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 258,359 outstanding shares of
beneficial interest 2,529
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 928,499 outstanding shares of
beneficial interest 9,444
Distributions in excess of net
investment income (1)
Accumulated net realized loss on
investments (836)
Net unrealized depreciation on investments (3,242)
--------
Total Net Assets (100.0%) $92,445
========
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $ 9.50
========
Net Asset Value and Redemption
Price Per Share -- Investor Shares $ 9.51
========
Maximum Offering Price Per Share --
Investor Shares ($9.51 / 96.25%) $ 9.88
========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.51
========
(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, 2000
HIGH INCOME FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATION (47.2%)
U.S. Treasury Bill
5.866%, 09/07/00 $1,475 $1,452
------
Total U.S. Treasury Obligation
(Cost $1,452) 1,452
------
CORPORATE BONDS (49.4%)
INDUSTRIAL (34.1%)
Canandaigua Brands
Callable 03/01/04 @ 104.25
8.500%, 03/01/09 100 91
Echostar DBS
Callable 02/01/04 @ 104.689
9.375%, 02/01/09 100 94
Finlay Fine Jewelry
Callable 05/01/03 @ 104.188
8.375%, 05/01/08 100 89
Hollywood Park, Ser B
Callable 08/01/02 @ 104.75
9.500%, 08/01/07 100 99
Lyondell Chemical
9.625%, 05/01/07 100 97
NBTY, Ser B
Callable 09/15/02 @ 104.313
8.625%, 09/15/07 100 87
Playtex Family Products
Callable 08/16/00 @ 103
9.000%, 12/15/03 100 96
Polaroid
11.500%, 02/15/06 100 101
Primedia Callable 04/01/03 @ 103.813
7.625%, 04/01/08 100 89
R&B Falcon
9.500%, 12/15/08 100 98
Waste Management
6.625%, 07/15/02 115 108
------
1,049
------
TELEPHONE (6.2%)
Nextel Communications
Callable 11/15/04 @ 104.688
9.375%, 11/15/09 100 94
Rural Cellular
Callable 05/15/03 @ 104.813
9.625%, 05/15/08 100 97
------
191
------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
TRANSPORTATION (NON-RAIL--9.1%)
Continental Airlines
8.000%, 12/15/05 $100 $ 89
Greyhound Lines
Callable 04/15/02 @ 105.75
11.500%, 04/15/07 290 191
------
280
------
Total Corporate Bonds
(Cost $1,682) 1,520
------
REPURCHASE AGREEMENT (4.1%)
JP Morgan
6.250%, dated 05/31/00, matures
06/01/00, repurchase price
$124,620 (collateralized by a
U.S. Treasury Note: total market
value $127,124) (G) 125 $ 125
------
Total Repurchase Agreement
(Cost $125) 125
------
Total Investments (100.7%)
(Cost $3,259) 3,097
------
OTHER ASSETS AND LIABILITIES, NET (-0.7%) (22)
------
NET ASSETS:
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 390,031 outstanding shares of
beneficial interest 4,006
Accumulated net realized loss on
investments (769)
Net unrealized depreciation on investments (162)
------
Total Net Assets (100.0%) $3,075
======
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 7.88
======
(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.
32
<PAGE>
--------------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (26.3%)
U.S. Treasury Bonds
7.500%, 11/15/16 $56,050 $ 61,986
8.750%, 08/15/20 77,250 97,405
U.S. Treasury Notes
6.500%, 08/31/01 88,000 87,708
6.500%, 02/15/10 26,350 26,728
--------
Total U.S. Treasury Obligations
(Cost $269,854) 273,827
--------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (10.2%)
FHLMC
7.375%, 05/15/03 51,250 51,266
5.750%, 03/15/09 16,375 14,512
FNMA
7.125%, 01/15/30 41,900 40,719
--------
Total U.S. Agency Mortgage-Backed
Obligations
(Cost $107,560) 106,497
--------
CORPORATE OBLIGATIONS (48.4%)
BANKS (4.1%)
Wachovia
5.625%, 12/15/08 13,150 11,145
Washington Mutual
8.600%, 02/01/02 18,000 18,113
7.500%, 08/15/06 13,525 12,984
--------
42,242
--------
FINANCE (19.7%)
Aristar
7.250%, 06/15/06 26,800 25,594
Associates
6.250%, 11/01/08 24,500 21,621
Countrywide Home Loan
6.850%, 06/15/04 17,750 16,796
Countrywide Home Loan,
MTN, Ser F
6.510%, 02/11/05 23,300 21,378
Donaldson Lufkin Jenrette, MTN
6.150%, 05/04/04 8,400 7,854
Finova Capital
7.250%, 11/08/04 13,400 11,189
7.250%, 07/12/06 21,500 17,227
Finova Capital, MTN, Ser E
7.300%, 09/22/03 28,850 24,919
Household Finance
7.200%, 07/15/06 21,000 19,845
Morgan Stanley Dean Witter
MTN, Ser C
7.375%, 04/15/03 20,000 19,772
Paine Webber Group, MTN, Ser C
6.020%, 04/22/02 20,250 19,465
--------
205,660
--------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
INDUSTRIAL (11.4%)
Avon Products
7.150%, 11/15/09 $ 8,650 $ 8,055
Cooper Tire & Rubber
7.750%, 12/15/09 22,700 21,494
Dillards
6.430%, 08/01/04 24,550 21,082
Florida Power & Light
5.875%, 04/01/09 30,500 27,031
Marriot International, Ser C
7.875%, 09/15/09 24,600 23,585
Philip Morris
7.500%, 04/01/04 8,700 8,352
Times Mirror
7.450%, 10/15/09 9,500 9,144
--------
118,743
--------
LIFE/HEALTH INSURANCE (13.2%)
Aon
6.900%, 07/01/04 35,000 33,687
Conseco
8.750%, 02/09/04 41,600 28,496
6.800%, 06/15/05 22,700 14,982
6.400%, 06/15/11 8,800 6,600
Provident
7.000%, 07/15/18 30,600 23,753
Reliastar Financial
8.000%, 10/30/06 14,600 14,454
6.500%, 11/15/08 16,750 15,263
--------
137,235
--------
Total Corporate Obligations
(Cost $563,100) 503,880
--------
ASSET-BACKED OBLIGATION (3.6%)
Commercial, Series 1999-1, Cl A2
6.455%, 06/15/08 41,750 37,998
--------
Total Asset-Backed Obligation
(Cost $38,627) 37,998
--------
REPURCHASE AGREEMENTS (15.9%)
Greenwich
6.330%, dated 05/31/00, matures
06/01/00, repurchase price
$114,786,061 (collateralized by U.S.
Treasury Note: total market
value $117,062,258) (G) 114,766 114,766
33
<PAGE>
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
INVESTMENT GRADE BONDFUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
Warburg Dillion
6.330%, dated 05/31/00, matures
06/01/00, repurchase price
$30,811,734 (collateralized by U.S.
Treasury Notes: total market
value $31,425,526) (G) $ 30,806 $ 30,806
Salomon Smith Barney
6.330%, dated 05/31/00, matures
06/01/00, repurchase price
$20,005,261 (collateralized by U.S.
Treasury STRIPS: total market
value $20,427,914) (G) 20,002 20,002
----------
Total Repurchase Agreements
(Cost $165,574) 165,574
----------
Total Investments (104.4%)
(Cost $1,144,715) 1,087,776
----------
SECURITIES PURCHASED PAYABLE (-5.9%) (61,806)
----------
OTHER ASSETS AND LIABILITIES, NET (1.5%) 15,235
----------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 104,192,073 outstanding shares of
beneficial interest 1,093,168
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 2,353,329 outstanding shares of
beneficial interest 25,310
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 2,091,237 outstanding shares of
beneficial interest 22,416
Distributions in excess of net
investment income (3)
Accumulated net realized loss
on investments (42,747)
Net unrealized depreciation on investments (56,939)
----------
Total Net Assets (100.0%) $1,041,205
==========
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
Net Asset Value and Redemption
Price Per Share -- Trust Shares $ 9.58
==========
Net Asset Value and Redemption
Price Per Share -- Investor Shares $ 9.58
==========
Maximum Offering Price Per Share --
Investor Shares ($9.58 / 96.25%) $ 9.95
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.59
==========
(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
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS (98.9%)
ALABAMA (2.1%)
Birmingham, Ser A, GO Callable
04/01/08 @ 102
5.000%, 04/01/19 $ 2,000 $ 1,753
Huntsville, Ser B, GO
4.000%, 11/01/01 1,410 1,389
-------
3,142
-------
ARIZONA (9.5%)
Arizona State, Highway
Transportation Board, RB
Callable 07/01/09 @ 100
6.125%, 07/01/14 6,020 6,240
Maricopa County, Community
College Project, Ser C, GO
5.250%, 07/01/01 5,000 5,030
Maricopa County, Unified School
District, GO, FGIC Callable
07/01/01 @ 101
6.400%, 07/01/10 3,050 3,123
-------
14,393
-------
CALIFORNIA (1.4%)
Orange County, Loma Ridge/Data
Center Project, COP, AMBAC
Callable 12/01/00 @ 101.5
6.000%, 06/01/21 2,075 2,147
-------
DISTRICT OF COLUMBIA (1.3%)
District of Columbia, American
College Obstetricians, RB,
AMBAC Prerefunded @ 102 (F)
6.500%, 08/15/01 1,930 2,005
-------
FLORIDA (7.1%)
Florida State, Department of
Transportation, Right of Way,
GO Prerefunded @101 (F)
5.800%, 07/01/05 1,400 1,454
Orange County, Health Facilities
Authority, Ser A, RB, MBIA
6.250%, 10/01/12 1,170 1,241
Tampa, Occupational License Tax,
Ser A, RB, FGIC (C)
3.850%, 10/01/18 4,500 4,500
Tampa, Sports Authority, Local
Option Sales Tax-Stadium Project,
RB, MBIA Callable 01/01/07 @ 101
5.250%, 01/01/27 4,000 3,584
-------
10,779
-------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
GEORGIA (1.4%)
Georgia, Municipal Electric Power
Authority, Ser Y, RB, MBIA
6.500%, 01/01/17 $ 1,985 $ 2,147
-------
ILLINOIS (8.8%)
Chicago, School Finance Authority,
Ser A, GO, FGIC Callable
6/01/02 @102
6.250%, 06/01/09 6,000 6,217
Cook County, Ser A, GO, FGIC
Callable 11/15/08 @ 101
5.000%, 11/15/15 2,000 1,798
Illinois State, Health Facilities
Authority, Trinity Medical Center,
RB, FSA Prerefunded @ 102 (F)
7.000%, 07/01/02 5,000 5,280
-------
13,295
-------
IOWA (1.4%)
Des Moines, Public Parking System,
Ser A, RB, FGIC Callable
06/01/10 @ 100
6.375%, 06/01/18 2,005 2,076
-------
KENTUCKY (5.1%)
Kentucky State, Economic
Development Finance Authority,
Health Alliance Project,
Ser C, RB, MBIA (C)
3.950%, 01/01/22 7,800 7,800
-------
MARYLAND (2.4%)
Washington, Suburban Sanitation
District, 2nd Ser, GO Callable
01/01/02 @ 102
6.400%, 01/01/08 3,500 3,625
-------
MASSACHUSETTS (0.8%)
Boston, Finance Housing Authority,
City Hospital Project, Ser A, RB
Callable 08/15/00 @ 102
7.650%, 02/15/10 1,260 1,293
-------
MICHIGAN (5.7%)
Detroit, Sewer Disposal, Ser B, RB,
MBIA (C)
3.950%, 07/01/23 5,500 5,500
Michigan State, Building Authority,
Ser II, RB Callable 10/01/01 @ 102
6.750%, 10/01/11 2,950 3,067
-------
8,567
-------
35
<PAGE>
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
INVESTMENT GRADE TAX-EXEMPT BOND FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MISSOURI (6.6%)
Missouri State, Third Street Building
Project, Ser A, GO Callable
08/01/03 @102
4.900%, 08/01/05 $ 8,500 $ 8,426
Missouri State, Health &
Educational Facilities Authority,
SSM Health Care Projects,
Ser B, RB, ETM, MBIA Callable
06/26/00 @ 102
7.000%, 06/01/05 1,500 1,533
-------
9,959
-------
NEW JERSEY (4.9%)
New Jersey State, Transportation
System, Ser A, RB
5.625%, 06/15/13 1,000 1,007
5.750%, 06/15/15 1,250 1,262
New Jersey State, Transportation
System, Ser A, RB, FSA Callable
06/15/08 @ 100
5.000%, 06/15/18 1,000 892
New Jersey State, Turnpike
Authority, Ser C, RB, FSA
6.500%, 01/01/16 1,000 1,085
New Jersey State, Turnpike
Authority, Ser C, RB, MBIA
6.500%, 01/01/16 3,000 3,255
-------
7,501
-------
NEW YORK (8.4%)
Metropolitan Transportation
Authority, Service Contract,
Ser Q, RB, MBIA Callable
07/01/07 @ 101
5.250%, 07/01/14 3,345 3,182
New York State, Dormitory
Authority, City University
System, Ser A, RB, FSA
5.750%, 07/01/13 1,250 1,275
New York State, Dormitory
Authority, City University
System, 3rd Ser, RB, FGIC
Callable 07/01/08 @101
5.000%, 07/01/18 1,750 1,557
New York State, Dormitory
Authority, City University
System, 2nd Ser, RB, FSA
5.750%, 07/01/18 3,175 3,178
Triborough Bridge & Tunnel
Authority, Ser V, RB, FGIC
Callable 01/01/01 @ 102
6.875%, 01/01/05 3,500 3,609
-------
12,801
-------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
NORTH CAROLINA (0.7%)
North Carolina State, Medical
Care Community Hospital, Mercy
Hospital Project, RB, ETM
Callable 08/01/02 @ 102
6.500%, 08/01/15 $ 1,000 $ 1,047
-------
OHIO (1.1%)
Cleveland, City School District,
Ser A, GO, FGIC Callable
12/01/02 @ 102
5.875%, 12/01/11 1,650 1,678
-------
SOUTH DAKOTA (4.6%)
South Dakota State, Health &
Educational Facility Authority,
St. Lukes Midland Regional
Medical, RB, MBIA Callable
07/01/01 @ 102
6.625%, 07/01/11 6,675 6,906
-------
TENNESSEE (2.7%)
Metropolitan Nashville, Airport
Authority, Ser C, RB, FGIC
Callable 07/01/01 @ 102
6.600%, 07/01/15 3,900 4,039
-------
TEXAS (19.4%)
Dallas, GO Callable 02/15/08 @ 100
5.000%, 02/15/13 4,500 4,175
Ennis, Independent School District,
GO Callable 08/15/10 @ 40.4318 (A)
0.000%, 08/15/24 3,265 682
Harris County, Toll Road, Sub Lien,
RB, FGIC
6.000%, 08/01/14 10,000 10,193
Houston, Independent School
District, Ser A, GO Callable
02/15/09 @ 100
5.000%, 02/15/24 4,000 3,403
Irving, Independent School District,
GO Callable 02/15/07 @ 100
5.000%, 02/15/21 2,500 2,171
McAllen, Independent School
District, GO Callable
10/01/09 @100
5.250%, 04/01/16 1,600 1,502
5.250%, 04/01/17 1,695 1,577
5.250%, 04/01/18 1,795 1,654
University of Texas, Ser B, RB
Callable 08/15/01 @ 102
6.750%, 08/15/13 1,475 1,533
36
<PAGE>
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
TEXAS--CONTINUED
Waxahachie, Independent School
District, GO Callable 08/15/10
@ 39.372 (A)
0.000%, 08/15/24 $ 6,385 $ 1,288
Waxahachie, Independent School
District, GO Callable
08/15/10 @ 45.084 (A)
0.000%, 08/15/22 5,000 1,157
--------
29,335
--------
VERMONT (1.4%)
Burlington, Electric Authority,
Ser A, RB, MBIA Callable
07/01/02 @102
6.250%, 07/01/14 2,000 2,061
--------
VIRGINIA (0.2%)
Virginia State, Public Building
Authority, RB Callable
08/01/10 @100
5.750%, 08/01/20 250 245
--------
WASHINGTON (1.9%)
Clark County, Public Utility District,
RB, AMBAC Callable
01/01/03 @ 102
5.100%, 01/01/08 3,000 2,929
--------
Total Municipal Bonds
(Cost $150,636) 149,770
--------
CASH EQUIVALENTS (9.8%)
AIM Management Institutional
Tax Free Portfolio 7,381,127 7,381
SEI Institutional Tax Free Fund 7,461,934 7,462
--------
Total Cash Equivalents
(Cost $14,843) 14,843
--------
Total Investments (108.7%)
(Cost $165,479) 164,613
--------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 56.
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATION (15.5%)
U.S. Treasury Note
6.500%, 08/31/01 $20,000 $ 19,934
--------
Total U.S. Treasury Obligation
(Cost $19,920) 19,934
--------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (67.5%)
FHLMC
8.000%, 12/01/02 664 664
FHLMC REMIC, Ser 1614, Cl H
6.000%, 06/15/20 4,550 4,495
FHLMC REMIC, Ser 1624, Cl KC
6.000%, 06/15/08 11,084 10,576
FHLMC REMIC, Ser 1666, Cl E
6.000%, 12/15/19 5,000 4,909
FHLMC REMIC, Ser 29, Cl Q
7.500%, 06/25/20 15,000 14,952
FNMA
6.500%, 06/01/13 8,334 7,912
6.000%, 09/01/13 9,691 9,024
5.500%, 06/01/14 18,783 17,081
8.500%, 04/01/17 414 418
FNMA REMIC, Ser 206, Cl G
6.000%, 04/25/19 11,000 10,793
FNMA REMIC, Ser 223, Cl PH
6.050%, 10/25/22 5,375 5,125
GNMA
9.000%, 11/15/17 566 589
--------
Total U.S. Agency Mortgage-Backed
Obligations
(Cost $89,158) 86,538
--------
REPURCHASE AGREEMENT (17.0%)
Morgan Stanley Dean Witter
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$21,795 (collateralized by
FNMA obligation: total market
value $22,675) (G) 21,791 21,791
--------
Total Repurchase Agreement
(Cost $21,791) 21,791
--------
Total Investments (100.0%)
(Cost $130,869) 128,263
--------
OTHER ASSETS AND LIABILITIES, NET (0.0%) (8)
--------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 13,035,532 outstanding shares of
beneficial interest $131,248
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 124,256 outstanding shares of
beneficial interest 1,281
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 177,386 outstanding shares of
beneficial interest 1,817
Distributions in excess of net investment
income (7)
Accumulated net realized loss on
investments (3,478)
Net unrealized depreciation on investments (2,606)
--------
Total Net Assets (100.0%) $128,255
========
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $ 9.62
========
Net Asset Value and Redemption
Price Per Share -- Investor Shares $ 9.60
========
Maximum Offering Price Per Share --
Investor Shares ($9.60 / 97.50%) $ 9.85
========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.62
========
(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.
38
<PAGE>
--------------------------------------------------------------------------------
MARYLAND MUNICIPAL BOND FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS (94.9%)
MARYLAND (81.2%)
Anne Arundel County, GO
Callable 02/01/08 @ 101
5.125%, 02/01/24 $ 750 $ 666
Baltimore County, Consolidated
Public Improvement, GO
Callable 06/01/06 @ 101
5.500%, 06/01/16 250 246
Baltimore County, Consolidated
Public Improvement, GO
Callable 07/01/08 @101
4.750%, 07/01/09 500 475
Baltimore, Emergency
Telecommunication Facilities,
Ser A, COP, AMBAC Callable
10/01/07 @ 102
5.000%, 10/01/17 400 364
Baltimore, Pollution Control
Authority, General Motors
Project, RB
5.350%, 04/01/08 250 251
Calvert County, Economic
Development Authority,
Asbury-Solomons Project, RB,
MBIA Callable 01/01/08 @ 102
5.000%, 01/01/17 250 226
Calvert County, Pollution Control
Authority, Baltimore Gas &
Electric Project, RB Callable
07/15/04 @ 102
5.550%, 07/15/14 250 246
Carroll County, Consolidated
Public Improvement, GO
Callable 12/01/06 @ 101
5.125%, 12/01/14 500 475
Maryland State, Aviation
Administration Facilities, COP,
AMT Callable 05/01/09 @101
4.750%, 05/01/13 1,500 1,341
Maryland State, GO (C)
4.380%, 08/01/12 700 700
Maryland State, Community
Development Administration,
Ser B, RB, AMT, FHA Callable
03/01/07 @ 101.50
5.875%, 09/01/25 500 475
Maryland State, Community
Development Administration,
Ser D, RB, AMT Callable
03/01/09 @ 101
5.250%, 09/01/19 1,000 893
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MARYLAND--CONTINUED
Maryland State, Community
Development Administration,
Ser E, RB, FHA Callable
09/01/09 @ 100
5.700%, 09/01/17 $1,000 $ 960
Maryland State, Community
Development Administration,
Ser F, RB, AMT Callable
09/01/09 @ 100
5.900%, 09/01/19 1,000 951
Maryland State, Community
Development Administration,
Single-Family Housing, 1st Ser,
RB Callable 04/01/07 @ 101.50
5.600%, 04/01/18 375 355
Maryland State, Community
Development Administration,
Single-Family Program, 2nd Ser,
RB Callable 04/01/09 @ 101
5.000%, 04/01/17 1,000 884
Maryland State, Economic
Development Authority,
Chesapeake Bay Foundation,
RB (C) (E)
4.350%, 11/01/23 500 500
Maryland State, Health & Higher
Educational Facilities Authority,
Anne Arundel Medical Center
Project, RB, FSA Callable
7/01/08 @ 101
5.125%, 07/01/28 1,250 1,089
Maryland State, Health & Higher
Educational Facilities Authority,
Broadmead Project, RB Callable
07/01/07 @ 102
5.500%, 07/01/17 300 265
Maryland State, Health & Higher
Educational Facilities Authority,
Calvert Memorial Hospital Project,
RB Callable 07/01/08 @ 102
5.000%, 07/01/13 400 349
Maryland State, Health & Higher
Educational Facilities Authority,
Catholic Health Initiatives, Ser A,
RB Callable 06/01/10 @ 101
6.000%, 12/01/24 250 243
Maryland State, Health & Higher
Educational Facilities Authority,
Greater Baltimore Medical
Center, RB
4.350%, 07/01/25 1,000 1,000
39
<PAGE>
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
MARYLAND MUNICIPAL BOND FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MARYLAND--CONTINUED
Maryland State, Health & Higher
Educational Facilities Authority,
Johns Hopkins Health System
Project, RB, AMBAC Callable
07/01/07 @ 102
5.250%, 07/01/17 $ 350 $ 326
Maryland State, Health & Higher
Educational Facilities Authority,
Loyola College Project, RB
Callable 10/01/09 @ 101
5.250%, 10/01/29 1,250 1,101
Maryland State, Health & Higher
Educational Facilities Authority,
Loyola College Project, Ser A,
RB, MBIA Callable 10/01/06 @ 102
5.500%, 10/01/16 250 242
Maryland State, Health & Higher
Educational Facilities Authority,
Pickersgill Project, Ser A, RB
Callable 01/01/07 @ 102
6.000%, 01/01/15 350 333
Maryland State, Health & Higher
Educational Facilities Authority,
University of Maryland Medical
Systems Project, Ser A, RB, FGIC
Prerefunded @ 100 (F)
6.500%, 07/01/01 200 204
Maryland State, Health & Higher
Educational Facilities Authority,
Upper Chesapeake Hospital
Project, Ser A, RB, FSA Callable
01/01/08 @ 101
5.125%, 01/01/33 1,250 1,078
Maryland State, Industrial
Development Financing Authority,
Holy Cross Health System, RB
Callable 12/01/03 @ 102
5.500%, 12/01/15 100 96
Maryland State, State & Local
Facilities Loan, First Ser, GO
Callable 02/15/06 @ 101.50
4.700%, 02/15/10 300 281
Maryland State, State & Local
Facilities Loan, Third Ser, GO
5.500%, 10/15/04 500 510
Maryland State, Stadium Authority,
Sports Facility Project, RB, AMBAC
Callable 03/01/06 @ 101
5.800%, 03/01/26 250 243
Maryland State, Transportation
Authority, RB, ETM
6.800%, 07/01/16 120 132
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MARYLAND--CONTINUED
Montgomery County, Economic
Development Authority, Genomic
Research Facility, RB (C) (E)
Callable 06/02/00 @ 100
4.400%, 03/01/09 $ 700 $ 700
Montgomery County, Housing
Opportunity, Kensington Park
Project, RB, MBIA
3.950%, 07/01/28 1,600 1,600
Montgomery County, Housing
Opportunity, The Grande Project
Issue I, RB, AMT (C)
3.950%, 06/01/30 1,300 1,300
Montgomery County, Human
Services Headquarters Project, RB
5.400%, 08/01/06 200 203
Montgomery County, Pollution
Control Authority, Potomac
Electric Power Project, RB, MBIA
Callable 02/15/04 @ 102
5.375%, 02/15/24 1,700 1,556
Montgomery County, Pollution
Control Authority, Potomac
Electric Power Project, RB
Callable 02/15/04 @ 102
5.375%, 02/15/24 100 90
Montgomery County, Consolidated
Public Improvement, Ser A, GO
5.800%, 07/01/07 500 519
Northeast Maryland, Waste Disposal
Authority, Montgomery County
Resource Project, RB Callable
07/01/03 @ 102
6.200%, 07/01/10 275 278
Prince Georges County, Consolidated
Public Improvements, Ser A, GO,
MBIA Callable 03/01/02 @ 102
5.625%, 09/01/04 250 255
Queen Annes County, Public
Facilities, GO, FGIC
5.125%, 11/15/06 350 350
Saint Mary's County, Public
Facilities, GO, AMBAC Callable
11/01/03 @ 102
5.500%, 11/01/07 150 152
Saint Mary's County, Consolidated
Public Improvements, GO, MBIA
4.500%, 09/01/00 500 500
University of Maryland, Ser A, RB
Callable 04/01/08 @ 100
5.000%, 04/01/19 500 446
40
<PAGE>
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
MARYLAND--CONTINUED
University of Maryland, Ser A, RB
5.000%, 04/01/05 $ 400 $ 398
University of Maryland, Ser A, RB
Callable 04/01/06 @ 101
5.500%, 04/01/08 100 101
Washington County, Consolidated
Public Improvement, GO, FGIC
Callable 01/01/03 @ 102
5.250%, 01/01/07 100 100
Washington County, Suburban
Sanitation District, GO Callable
06/01/06 @ 100
5.600%, 06/01/19 250 243
-------
26,291
-------
Puerto Rico (13.7%)
Puerto Rico Commonwealth,
Highway & Transportation
Authority, Ser Y, RB Callable
07/01/06 @ 101.50
5.500%, 07/01/26 1,700 1,576
Puerto Rico Commonwealth,
Housing, Bank & Finance Agency,
Affordable Housing Mortgage
Porfolio, Ser I, RB, AMT, GNMA
Callable 04/01/05 @ 102
6.250%, 04/01/29 660 650
Puerto Rico Commonwealth, Medical
& Environmental Control Facilities,
San Lucas & Cristo Project, Ser A,
RB Callable 06/01/09 @ 101
5.750%, 06/01/29 740 604
Puerto Rico Commonwealth, Public
Finance, Ser PA 502, RB (C)
3.900%, 06/01/19 1,600 1,600
-------
4,430
-------
Total Municipal Bonds
(Cost $32,457) 30,721
-------
Cash Equivalents (5.0%)
AIM Tax Free Institutional Cash
Reserve 808,589 809
Federated Maryland
Municipal Cash Trust 808,236 808
-------
Total Cash Equivalents
(Cost $1,617) 1,617
-------
Total Investments (99.9%)
(Cost $34,074) 32,338
-------
Other Assets and Liabilities, Net (0.1%) 50
-------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 2,767,603 outstanding shares of
beneficial interest $27,677
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 655,599 outstanding shares of
beneficial interest 6,738
Distributions in excess of net investment
income (35)
Accumulated net realized loss
on investments (256)
Net unrealized depreciation on investments (1,736)
-------
Total Net Assets (100.0%) $32,388
=======
Net Asset Value and Redemption
Price Per Share-- Trust Shares $ 9.46
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.48
=======
(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.
41
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
SHORT-TERM BOND FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (18.9%)
U.S. Treasury Notes
5.000%, 04/30/01 $11,000 $ 10,833
5.250%, 05/31/01 1,500 1,478
6.500%, 08/31/01 7,000 6,977
5.625%, 09/30/01 1,000 985
6.375%, 09/30/01 6,000 5,969
6.250%, 10/31/01 1,750 1,738
7.500%, 11/15/01 2,500 2,524
6.250%, 06/30/02 1,250 1,237
6.000%, 07/31/02 2,000 1,970
U.S. Treasury STRIPS
0.000%, 08/15/03 1,250 1,013
--------
Total U.S. Treasury Obligations
(Cost $35,373) 34,724
--------
U.S. GOVERNMENT AGENCY OBLIGATION (0.5%)
FFCB
7.125%, 06/01/01 1,000 999
--------
Total U.S. Government Agency
Obligation
(Cost $1,001) 999
--------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (7.4%)
FHLMC
6.500%, 12/01/00 660 655
6.000%, 07/01/06 8,422 7,900
FNMA
7.000%, 01/01/27 1,531 1,453
FNMA REMIC, Ser 1996-30, Cl PC
7.000%, 11/25/20 2,600 2,559
GNMA
8.000%, 11/15/09 1,071 1,081
--------
Total U.S. Agency Mortgage-Backed
Obligations
(Cost $14,155) 13,648
--------
CORPORATE OBLIGATIONS (63.4%)
BANKS (2.4%)
Banc One
6.400%, 08/01/02 3,000 2,921
Key Bank
5.800%, 04/01/04 1,675 1,562
--------
4,483
--------
FINANCE (26.0%)
American General
6.250%, 03/15/03 1,100 1,057
American General Finance
5.900%, 01/15/03 2,000 1,908
Associates, Ser H, MTN
7.080%, 04/15/03 1,500 1,470
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FINANCE--CONTINUED
CIT Group Holdings, MTN
6.500%, 06/14/02 $ 3,000 $ 2,918
Commercial Credit
6.375%, 09/15/02 2,500 2,434
Diageo Capital PLC
6.625%, 06/24/04 2,500 2,406
Daimler Chrysler NA Holdings,
Ser B, MTN
6.460%, 12/01/01 2,500 2,454
Ford Capital
10.125%, 11/15/00 2,000 2,024
Ford Motor Credit
6.000%, 01/14/03 3,500 3,356
General Electric Capital, Ser A, MTN
6.330%, 09/17/01 3,000 2,963
General Motors Acceptance
5.950%, 03/14/03 1,000 955
Household Finance
8.000%, 05/09/05 2,500 2,475
Household Finance, MTN
7.080%, 06/03/02 2,500 2,459
International Lease Finance,
Ser J, MTN
5.500%, 09/29/03 2,000 1,873
Merrill Lynch, Ser B, MTN
5.640%, 01/27/03 3,750 3,563
Morgan Stanley Dean Witter,
Ser C, MTN
5.625%, 04/12/02 1,750 1,689
PNC Funding
6.950%, 09/01/02 3,000 2,955
Salomon Smith Barney Holdings
6.750%, 02/15/03 3,000 2,921
Transamerica Finance, Ser F, MTN
6.800%, 12/14/01 3,000 2,954
US West Capital Funding
6.875%, 08/15/01 3,000 2,973
--------
47,807
--------
INDUSTRIAL (21.7%)
American Home Products
7.900%, 02/15/05 2,000 2,015
Clark Equipment
9.750%, 03/01/01 1,750 1,774
Computer Associates
International, Ser B
6.375%, 04/15/05 2,300 2,105
Conoco
5.900%, 04/15/04 1,150 1,084
Cox Communications
7.000%, 08/15/01 3,000 2,966
Daimler Chrysler NA Holdings
7.400%, 01/20/05 2,000 1,965
42
<PAGE>
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
Industrial--continued
Dayton Hudson (C)
5.950%, 06/15/00 $ 500 $ 499
Eastman Kodak, Ser A, MTN
6.500%, 08/15/01 4,000 3,945
General Foods
Callable 08/16/00 @ 100
6.000%, 06/15/01 500 488
Hasbro
7.950%, 03/15/03 3,000 2,982
Nabisco
6.800%, 09/01/01 1,500 1,457
Norfolk Southern
7.875%, 02/15/04 1,500 1,494
Philip Morris
7.500%, 01/15/02 500 493
Procter & Gamble
5.250%, 09/15/03 3,000 2,828
Raytheon
6.450%, 08/15/02 2,900 2,828
Safeway Stores
7.000%, 09/15/02 3,000 2,944
TCI Communications
6.375%, 05/01/03 2,250 2,168
TRW
6.500%, 06/01/02 3,000 2,910
TRW, Ser A, MTN
9.000%, 02/09/01 1,000 1,005
Tyco International Group SA(C)
6.250%, 06/15/03 2,000 1,885
--------
39,835
--------
UTILITIES (13.3%)
Alabama Power
7.850%, 05/15/03 3,250 3,245
Baltimore Gas and Electric
6.125%, 07/01/03 1,750 1,682
Northern States Power
6.125%, 12/01/05 5,000 4,644
Pacific Gas and Electric, Ser 93-E
5.875%, 10/01/05 3,500 3,203
Philadelphia Electric
7.125%, 09/01/02 2,000 1,975
Scottish Power PLC, Ser H, MTN
6.750%, 07/15/04 2,500 2,393
Southern New England Telephone,
Ser C, MTN
6.125%, 12/15/03 3,000 2,861
Sprint Capital
5.700%, 11/15/03 2,000 1,875
Vodaphone Airtouch PLC (B)
6.698%, 12/19/01 2,500 2,497
--------
24,375
--------
Total Corporate Obligations
(Cost $119,792) 116,500
--------
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REGIONAL GOVERNMENT AGENCY (1.4%)
Province of Quebec
8.800%, 04/15/03 $ 2,500 $ 2,584
--------
Total Regional Government Agency
(Cost $2,655) 2,584
--------
ASSET-BACKED OBLIGATIONS (6.6%)
CoreStates Home Equity Trust,
Ser 1994-1, Cl A
6.650%, 05/15/09 455 449
Discover Card Master Trust I,
Ser 1998-4, Cl A
5.750%, 10/16/03 1,990 1,960
Discover Card Master Trust I,
Ser 1999-2, Cl A
5.900%, 10/15/04 3,000 2,918
EQCC Home Equity Loan Trust,
Ser 1994-1, Cl A
5.800%, 03/15/09 386 373
Equivantage Home Equity Loan
Trust, Ser 1996-1, Cl A
6.550%, 10/25/25 452 440
Metris Master Trust,
Ser 1997-1, Cl A
6.870%, 10/20/05 2,000 1,980
Premier Auto Trust,
Ser 1998-5, Cl A-4
5.190%, 04/08/03 3,500 3,373
Spiegel Master Trust,
Ser 1995-A, Cl A
7.500%, 09/15/04 333 334
Union Acceptance,
Ser 2000-A, Cl A1
5.993%, 02/08/01 337 337
--------
Total Asset-Backed Obligations
(Cost $12,412) 12,164
--------
CASH EQUIVALENTS (0.6%)
AIM Liquid Assets Portfolio 968,315 968
SEI Daily Income Trust Prime
Obligation Fund 54,190 54
--------
Total Cash Equivalents
(Cost $1,022) 1,022
--------
Total Investments (98.8%)
(Cost $186,410) 181,641
--------
OTHER ASSETS AND LIABILITIES, NET (1.2%) 2,272
--------
43
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
SHORT-TERM BOND FUND--CONCLUDED
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 18,701,923 outstanding shares of
beneficial interest $189,921
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 149,580 outstanding shares of
beneficial interest 1,506
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 213,649 outstanding shares of
beneficial interest 2,159
Distributions in excess of net investment
income (4)
Accumulated net realized loss
on investments (4,900)
Net unrealized depreciation on investments (4,769)
--------
Total Net Assets (100.0%) $183,913
========
Net Asset Value and Redemption
Price Per Share -- Trust Shares $ 9.65
========
Net Asset Value and Redemption
Price Per Share -- Investor Shares $ 9.67
========
Maximum Offering Price Per Share --
Investor Shares ($9.67 / 98.00%) $ 9.87
========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.67
========
(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.
44
<PAGE>
SHORT-TERM U.S. TREASURY SECURITIES FUND
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (97.0%)
U. S. Treasury Bills
6.081%, 08/17/00 $ 5,000 $ 4,942
5.605%, 10/12/00 6,000 5,872
U.S. Treasury Notes
5.750%, 10/31/00 2,000 1,995
5.375%, 02/15/01 12,800 12,681
4.875%, 03/31/01 4,000 3,940
6.375%, 03/31/01 11,500 11,464
6.250%, 10/31/01 3,000 2,979
7.500%, 11/15/01 7,500 7,573
6.250%, 01/31/02 4,500 4,463
6.625%, 03/31/02 10,500 10,471
6.250%, 06/30/02 2,000 1,980
5.875%, 09/30/02 4,500 4,417
5.500%, 03/31/03 5,000 4,845
-------
Total U.S. Treasury Obligations
(Cost $78,450) 77,622
-------
CASH EQUIVALENT (2.4%)
SEI Daily Income Trust Treasury
II Fund 1,903,850 1,904
-------
Total Cash Equivalent
(Cost $1,904) 1,904
-------
Total Investments (99.4%)
(Cost $80,354) 79,526
-------
Other Assets and Liabilities, Net (0.6%) 501
-------
Net Assets:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 7,368,421 outstanding shares of
beneficial interest 73,271
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 209,753 outstanding shares of
beneficial interest 2,137
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 548,512 outstanding shares of
beneficial interest 5,484
Distributions in excess of net
investment income (21)
Accumulated net realized loss
on investments (16)
Net unrealized depreciation on investments (828)
-------
Total Net Assets (100.0%) $80,027
=======
--------------------------------------------------------------------------------
VALUE
--------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $ 9.85
=======
Net Asset Value and Redemption
Price Per Share-- Investor Shares $ 9.85
=======
Maximum Offering Price Per Share --
Investor Shares ($9.85 / 99.00%) $ 9.95
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.83
=======
(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, 2000
U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (12.8%)
U.S. Treasury Bonds
7.250%, 05/15/16 $ 1,000 $ 1,080
7.625%, 02/15/25 400 463
6.125%, 11/15/27 2,220 2,171
5.250%, 11/15/28 2,350 2,038
U.S. Treasury Notes
6.250%, 04/30/01 510 508
8.000%, 05/15/01 90 91
6.625%, 06/30/01 580 579
7.500%, 05/15/02 750 760
6.250%, 06/30/02 550 544
7.250%, 05/15/04 500 510
7.875%, 11/15/04 275 288
7.500%, 02/15/05 500 517
6.500%, 10/15/06 2,000 1,991
6.625%, 05/15/07 550 552
-------
Total U.S. Treasury Obligations
(Cost $12,531) 12,092
-------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (86.2%)
FHLMC
6.000%, 02/01/01 42 40
7.000%, 01/01/09 65 63
7.000%, 04/01/09 198 191
7.000%, 08/01/10 390 377
7.000%, 01/01/11 227 220
7.000%, 02/01/12 799 774
6.500%, 03/01/12 2,391 2,273
7.000%, 05/01/12 472 457
6.500%, 12/01/12 1,152 1,095
7.000%, 06/01/17 4,699 4,465
FHLMC REMIC, Ser 2039, Cl PC
6.000%, 05/15/09 1,000 945
FNMA
6.000%, 11/01/07 600 565
7.500%, 06/01/11 288 283
7.000%, 09/01/11 509 493
7.000%, 05/01/12 518 501
7.000%, 06/01/12 408 395
7.000%, 07/01/12 484 468
6.500%, 06/01/13 1,414 1,344
6.500%, 09/01/13 165 157
7.000%, 11/01/14 4,890 4,732
7.000%, 10/25/16 482 457
6.500%, 07/01/18 875 814
6.290%, 08/01/18 1,441 1,340
6.500%, 08/01/18 855 791
6.000%, 12/01/18 1,844 1,655
7.000%, 01/01/27 766 726
7.500%, 04/01/27 418 406
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FNMA--CONTINUED
6.000%, 03/01/28 $ 822 $ 737
6.500%, 03/02/28 780 721
6.500%, 03/01/29 3,738 3,458
6.250%, 05/15/29 10,000 8,687
FNMA REMIC, Ser 143, Cl J
8.750%, 12/25/20 45 46
FNMA REMIC, Ser 156, Cl B
6.500%, 04/25/18 100 98
FNMA REMIC, Ser 30, Cl PC
7.000%, 11/25/20 2,000 1,969
FNMA REMIC, Ser 34, Cl VC
7.500%, 05/01/12 1,000 979
FNMA REMIC, Ser 40, Cl VC
6.500%, 08/25/10 261 241
FNMA REMIC, Ser 6, Cl H
7.000%, 08/18/08 1,058 1,010
FNMA REMIC, Ser 63, Cl PC
6.500%, 03/18/26 1,140 1,082
FNMA REMIC, Ser 68, Cl C
6.500%, 08/18/18 1,000 969
FNMA REMIC, Ser 9, Cl H
6.500%, 11/25/13 1,337 1,232
GNMA
7.500%, 10/20/09 32 32
8.000%, 11/15/09 693 699
8.250%, 01/15/12 55 55
6.000%, 07/15/13 875 817
6.000%, 01/15/14 1,708 1,595
9.000%, 04/15/17 163 168
8.500%, 05/15/17 561 571
10.000%, 06/15/19 2 2
7.500%, 05/15/22 194 190
7.000%, 11/15/22 310 297
8.000%, 02/15/23 14 14
8.500%, 03/15/23 30 31
7.500%, 04/15/23 84 83
7.500%, 09/15/23 605 594
6.500%, 10/15/23 739 691
6.500%, 11/15/23 994 930
7.000%, 01/15/24 92 89
7.500%, 04/15/24 492 483
7.000%, 06/15/24 571 548
8.000%, 08/15/24 36 36
8.000%, 09/15/24 11 11
8.000%, 10/15/24 18 18
8.000%, 11/15/24 14 14
8.500%, 12/15/24 32 33
8.500%, 02/15/25 5 5
7.000%, 12/15/25 308 296
7.500%, 01/15/26 332 326
46
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
GNMA--CONTINUED
7.500%, 09/15/26 $ 496 $ 487
7.000%, 03/15/27 211 203
7.000%, 04/15/27 703 674
7.500%, 07/15/27 296 291
7.000%, 09/15/27 62 60
7.000%, 10/15/27 694 667
7.500%, 10/15/27 36 35
7.000%, 11/15/27 964 925
7.000%, 12/15/27 833 799
7.000%, 01/15/28 1,121 1,075
7.500%, 01/15/28 282 277
6.500%, 02/15/28 868 812
6.500%, 03/15/28 107 100
6.500%, 04/15/28 78 73
6.500%, 05/20/28 1,747 1,626
6.500%, 06/15/28 38 35
6.500%, 09/15/28 2,794 2,614
6.250%, 10/15/28 1,866 1,720
6.500%, 02/15/29 658 616
7.500%, 10/15/29 10,801 10,606
GNMA REMIC, Ser 6, Cl E
7.500%, 05/20/23 1,000 985
GNMA REMIC, Ser 9, Cl D
6.500%, 08/20/24 1,000 897
-------
Total U.S. Agency Mortgage-Backed
Obligations
(Cost $84,961) 81,461
-------
ASSET-BACKED OBLIGATION (0.0%)
EQCC Home Equity Loan Trust,
Ser 1, Cl A
5.800%, 03/15/09 40 38
-------
Total Asset-Backed Obligation
(Cost $40) 38
-------
CASH EQUIVALENT (1.0%)
AIM Liquid Assets Portfolio 970,967 971
-------
Total Cash Equivalent
(Cost $971) 971
-------
Total Investments (100.0%)
(Cost $98,503) 94,562
-------
OTHER ASSETS AND LIABILITIES, NET (0.0%) 15
-------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 8,659,920 outstanding shares of
beneficial interest $91,170
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 142,703 outstanding shares of
beneficial interest 1,456
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 785,689 outstanding shares of
beneficial interest 8,432
Undistributed net investment income 4
Accumulated net realized loss
on investments (2,544)
Net unrealized depreciation on investments (3,941)
-------
Total Net Assets (100.0%) $94,577
=======
Net Asset Value and Redemption
Price Per Share -- Trust Shares $ 9.86
=======
Net Asset Value and Redemption
Price Per Share -- Investor Shares $ 9.86
=======
Maximum Offering Price Per Share --
Investor Shares ($9.86 / 96.25%) $ 10.24
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.86
=======
(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.
47
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS (96.2%)
VIRGINIA (96.2%)
Alexandria, Consolidated Public
Improvement, GO
4.500%, 01/01/15 $ 2,000 $ 1,729
Alexandria, Redevelopment &
Housing Authority, Residential
Care Facilities, Goodwin House
Project, Ser B, RB Callable
06/02/00 @ 100
4.450%, 10/01/06 2,650 2,650
Arlington County, GO
5.400%, 08/01/01 1,000 1,008
Arlington County, Industrial
Development Authority,
Alexandria/Arlington Project,
Ser A, RB, FSA
5.250%, 01/01/05 4,000 4,011
Arlington County, Industrial
Development Authority,
Alexandria/Arlington Waste
Project, Ser B, RB, AMT, FSA
Callable 07/01/08 @ 101
5.375%, 01/01/11 3,000 2,909
Arlington County, GO Callable
10/01/08 @ 101
5.000%, 10/01/11 3,220 3,104
Chesapeake Bay, Bridge & Tunnel
Authority, General Resolution,
RB, MBIA Prerefunded @ 102 (F)
6.375%, 07/01/01 7,000 7,257
Chesapeake, GO
5.400%, 12/01/08 2,500 2,522
Chesapeake, Hospital Authority,
General Hospital Project, RB,
Callable 07/01/00 @ 102
8.200%, 07/01/05 1,000 1,022
Chesterfield County, Public
Improvements, Ser A, GO
Callable 01/01/08 @ 100
4.700%, 01/01/12 3,215 2,946
Danville, Industrial Development
Authority, Danville Regional
Medical Center Project,
RB, AMBAC
5.250%, 10/01/28 4,250 3,788
Dinwiddie County, Industrial
Development Authority,
Ser A, RB Callable
07/03/00 @ 100
4.750%, 07/15/01 3,150 3,127
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Fairfax County, Industrial
Development Authority, Health
Care Inova Health System Project,
RB Callable 08/15/06 @ 102
5.300%, 08/15/07 $ 1,500 $ 1,475
Fairfax County, Industrial
Development Authority, Health
Care Inova Health System
Project, Ser A, RB Callable
02/15/08 @ 101
5.000%, 08/15/10 2,890 2,672
Fairfax County, Public
Improvement, Ser A, GO
Callable 06/01/07 @ 102
4.500%, 06/01/10 3,000 2,731
Fairfax County, Ser B, GO
Prerefunded @ 102 (F)
5.200%, 06/01/01 5,000 5,121
Fairfax County, Sewer Authority,
RB, AMBAC Callable
11/15/03 @ 102
5.500%, 11/15/09 3,000 3,020
Fairfax County, Water Authority,
RB Callable 04/01/07 @ 102
6.000%, 04/01/22 5,000 5,016
Fredericksburg, Industrial
Development Authority,
Medicorp Health System, RB,
AMBAC Callable 06/15/07 @ 102
5.250%, 06/15/16 5,000 4,583
Hanover County, Industrial
Development Authority, Covenant
Woods Project, RB Callable
07/03/00 @ 100 (C) (D) (E)
4.450%, 07/01/29 3,000 3,000
Harrisonburg, Industrial
Development Authority,
Rockingham Memorial Hospital
Project, RB, MBIA Callable
12/01/02 @ 102
5.750%, 12/01/13 3,000 2,994
Henrico County, Industrial
Development Authority,
Educational Facilities, Collegiate
Schools, RB Callable
10/15/08 @ 102
5.000%, 10/15/19 2,250 1,950
Henrico County, Industrial
Development Authority, Bon
Secours Health System Project,
RB, FSA
4.950%, 08/15/03 1,000 992
48
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Henrico County, Industrial
Development Authority,
Governmental Projects, RB
Callable 06/01/06 @ 102
5.150%, 06/01/07 $ 2,500 $ 2,485
Henrico County, Industrial
Development Authority, Solid
Waste Facility, Browning Ferris
Project, RB, AMT
5.300%, 12/01/11 1,000 904
Henrico County, Industrial
Development Authority,
Westminster-Canterbury Project,
RB Callable 10/1/09 @ 101
5.700%, 10/01/23 1,610 1,428
Henrico County, Water & Sewer
Authority, RB Callable
05/01/09 @ 102
4.625%, 05/01/17 1,900 1,601
Henry County, GO Callable
07/15/04 @ 102
6.000%, 07/15/14 1,000 1,012
Loudoun County, Sanitation
Authority, Water & Sewer, RB,
FGIC Callable 01/01/03 @ 102
6.100%, 01/01/04 1,250 1,290
Louisa, Industrial Development
Authority, Virginia Electric &
Power Project, Ser A, RB, AMT
5.150%, 04/01/02 2,500 2,480
Lynchburg, GO Callable
04/01/03 @ 102
5.250%, 04/01/08 2,000 1,995
Lynchburg, Industrial Development
Authority, Centra Health Project,
RB Callable 01/01/08 @ 101
5.200%, 01/01/23 500 419
Martinsville, GO Callable
06/19/00 @ 100
3.600%, 01/15/01 1,500 1,490
Medical College, Hospital Authority,
RB, MBIA Callable 07/01/08 @102
4.900%, 07/01/12 1,500 1,381
Montgomery County, Industrial
Development Authority, Ser A,
RB, MBIA Callable 07/03/00 @ 100
3.850%, 01/15/01 1,250 1,242
Newport News, Ser A, GO
4.000%, 07/01/07 2,000 1,798
Norfolk, Ser A, GO
5.250%, 02/01/01 2,200 2,209
Norfolk, GO Callable 06/01/04 @ 101
5.250%, 06/01/08 5,000 4,965
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Norfolk, Industrial Development
Authority, Childrens Hospital
Kings Group, RB, AMBAC
6.900%, 06/01/06 $ 1,000 $ 1,075
Norfolk, Industrial Development
Authority, Health Care Bon
Secours Health Project, RB,
MBIA Callable 08/15/07 @ 102
5.250%, 08/15/26 4,200 3,662
Norfolk, Industrial Development
Authority, Sentara Hospital
Project, Ser A, RB Callable
11/01/04 @ 102
4.900%, 11/01/07 2,500 2,398
5.000%, 11/01/08 2,500 2,408
Norfolk, Redevelopment &
Housing Authority, Educational
Facilities Revenue, Tidewater
Community College Campus
Project, RB Callable 11/01/05 @ 102
5.800%, 11/01/08 700 719
Poquoson, Sewer System, RB
4.250%, 11/01/00 3,000 2,993
Portsmouth, GO Callable
08/01/03 @ 102
5.450%, 08/01/07 2,000 2,014
Prince William County, Park
Authority, RB, ETM
5.800%, 10/15/01 500 506
Prince William County, Park
Authority, RB Prerefunded @ 102 (F)
6.200%, 10/15/04 500 527
Richmond, Metropolitan Expressway
Authority, Ser A, RB, FGIC
Callable 07/15/02 @ 102
5.900%, 07/15/03 1,500 1,534
Roanoke, Industrial Development
Authority, Roanoke Memorial
Hospital Project, Ser B, RB
Callable 07/01/02 @ 102
5.900%, 07/01/06 2,500 2,530
Roanoke County, Industrial
Development Authority, Roanoke
Memorial Hospital Project,
Ser C, RB Callable 06/02/00 @ 100
4.300%, 07/01/19 200 200
Roanoke Valley, Resources
Authority, RB
5.400%, 09/01/02 1,450 1,454
Roanoke Valley, Resources
Authority, RB Prerefunded @102 (F)
5.750%, 09/01/02 500 516
49
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Suffolk, GO
5.200%, 08/01/02 $ 1,500 $ 1,506
Suffolk, GO Callable 08/01/03 @ 102
5.600%, 08/01/06 2,000 2,033
5.700%, 08/01/07 2,000 2,036
University of Virginia, Ser A, RB
Callable 06/01/08 @ 101
5.000%, 06/01/24 4,000 3,449
Virginia Beach, GO
5.450%, 07/15/11 1,000 997
Virginia Beach, Development
Authority, Residential & Health
Care Facility Project, 1st Mortgage,
Our Lady of Perpetual Hope
Project, RB Callable 07/01/07 @102
6.050%, 07/01/20 1,500 1,336
Virginia Beach, Development
Authority, Sentara Bayside
Hospital Project, RB Prerefunded
@ 102 (F)
6.300%, 11/01/01 1,750 1,818
Virginia Beach, Development
Authority, Sentra Health System,
RB Callable 11/01/08 @ 101
5.250%, 11/01/11 1,000 956
Virginia Beach, Public Improvements,
GO Prerefunded @ 102 (F)
5.750%, 11/01/04 3,500 3,641
Virginia State, GO
5.600%, 06/01/02 4,750 4,814
Virginia State, College Building
Authority, 21st Century College
Program, RB Callable
08/01/06 @ 102
5.400%, 08/01/16 1,000 941
Virginia State, College Building
Authority, Public Higher Education
Financing Program, Ser A, RB
Callable 09/01/08 @ 100
4.625%, 09/01/15 3,080 2,654
Virginia State, College Building
Authority, University of Richmond
Project, RB Callable 11/01/02 @ 102
6.250%, 11/01/12 2,000 2,065
Virginia State, College Building
Authority, University of
Richmond Project, RB Callable
11/01/04 @ 100
5.550%, 11/01/19 6,500 6,487
Virginia State, Education Loan
Authority, Guaranteed Student
Loan Program, Ser B, RB, AMT
5.550%, 09/01/10 1,800 1,825
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Virginia State, Education Loan
Authority, Guaranteed Student
Loan Program, Ser B, RB,
AMT, ETM
4.850%, 09/01/01 $ 520 $ 520
Virginia State, Education Loan
Authority, Guaranteed Student
Loan Program, Ser D, RB,
AMT, ETM
5.600%, 03/01/03 2,500 2,525
Virginia State, Housing
Development Authority,
Commonwealth Mortgage,
Sub-Ser B-3, RB Callable
01/01/06 @ 102
6.350%, 01/01/15 3,000 3,036
Virginia State, Housing
Development Authority,
Commonwealth Mortgage,
Sub-Ser E-1, RB Callable
07/01/08 @ 101
4.950%, 01/01/11 1,250 1,174
Virginia State, Housing
Development Authority,
Multi-Family Housing, Ser E, RB
Callable 01/01/08 @ 102
5.350%, 11/01/11 1,250 1,204
Virginia State, Housing Development
Authority, Multi-Family Housing,
Ser B, RB Callable 07/03/00 @ 102
7.375%, 05/01/05 1,000 1,021
Virginia State, Housing Development
Authority, Multi-Family Housing,
Ser I, RB, AMT Callable
01/01/09 @ 101
4.875%, 11/01/12 1,950 1,773
Virginia State, Housing Development
Authority, Rental Housing,
Ser H, RB, AMT Callable
11/01/09 @ 100
5.625%, 11/01/18 3,500 3,281
Virginia State, Housing Development
Authority, Single-Family Housing,
Sub-Ser C-4, RB Callable
01/01/02 @ 102
5.550%, 01/01/11 3,000 2,968
Virginia State, Housing Development
Authority, Sub-Ser B-1, RB, AMT
Callable 07/01/06 @ 102
6.375%, 07/01/26 2,500 2,513
50
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Virginia State, Housing Development
Authority, Sub-Ser C-8, RB
Callable 01/01/02 @ 102
6.000%, 07/01/06 $ 2,000 $ 2,025
Virginia State, Housing
Development Authority,
Sub-Ser C-1, RB Callable
01/01/08 @ 102
4.850%, 07/01/09 1,600 1,515
Virginia State, Polytechnic Institute
& University, Ser A, RB Callable
06/01/06 @ 102
5.350%, 06/01/09 2,000 1,993
5.450%, 06/01/13 2,500 2,448
5.500%, 06/01/16 4,435 4,289
Virginia State, Port Authority, RB,
AMT
4.400%, 07/01/00 2,815 2,814
Virginia State, Public School
Authority, RB Callable
01/01/02 @ 102
6.250%, 01/01/08 2,000 2,062
Virginia State, Public School
Authority, School Financing,
Ser I, RB
5.250%, 08/01/09 5,000 4,960
Virginia State, Public School
Authority, Ser B, RB Callable
07/03/00 @ 101.5
5.850%, 01/01/02 1,500 1,520
Virginia State, Transportation Board,
Northern Virginia Tranportation
District, Ser A, RB Callable
05/15/06 @ 101
5.125%, 05/15/12 2,000 1,902
--------
200,963
--------
Total Municipal Bonds
(Cost $207,345) 200,963
--------
CASH EQUIVALENTS (2.6%)
AIM Tax Free Institutional
Cash Reserve 2,758,671 2,759
Federated Virginia Municipal
Cash Trust 2,759,482 2,759
--------
Total Cash Equivalents
(Cost $5,518) 5,518
--------
Total Investments (98.8%)
(Cost $212,863) 206,481
--------
OTHER ASSETS AND LIABILITIES, NET (1.2%) 2,536
--------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 21,099,614 outstanding shares of
beneficial interest $210,191
Fund shares of Investor Shares (unlimited
authorization -- no par value) based
on 710,206 outstanding shares of
beneficial interest 7,315
Distribution in excess of net investment
income (42)
Accumulated net realized loss
on investments (2,065)
Net unrealized depreciation on investments (6,382)
--------
Total Net Assets (100.0%) $209,017
========
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $ 9.58
========
Net Asset Value and Redemption
Price Per Share -- Investor Shares $ 9.59
========
Maximum Offering Price Per Share --
Investor Shares ($9.59 / 96.25%) $ 9.96
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 56.
51
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
VIRGINIA MUNICIPAL BOND FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS (94.7%)
VIRGINIA (93.6%)
Albemarle County, Industrial
Development Authority, Martha
Jefferson Hospital Project, RB
Callable 10/01/03 @ 102
5.800%, 10/01/09 $ 500 $ 503
Alexandria, Industrial
Development Authority,
Episcopal High School Project,
RB Callable 01/01/06 @ 102
5.300%, 01/01/11 500 490
Alexandria, Industrial Development
Authority, Potomac Electric
Project, Ser A, RB, MBIA Callable
02/15/04 @ 102
5.375%, 02/15/24 400 365
Alexandria, Redevelopment &
Housing Authority, Buckingham
Village Apartments Project, Ser A,
RB, AMT Callable 01/01/06 @ 102
6.050%, 07/01/16 250 249
Alexandria, Redevelopment &
Housing Authority, Essex House
Project, Ser A, RB, AMT Callable
01/01/08 @ 102
5.550%, 07/01/28 1,000 892
Arlington County, Industrial
Development Authority, Nature
Conservancy, Ser A, RB Callable
07/01/07 @ 102
5.250%, 07/01/12 300 290
Arlington County, GO Callable
06/01/05 @ 101.50
5.400%, 06/01/12 250 249
Arlington County, Industrial
Development Authority,
Alexandria/Arlington Waste
Project, Ser B, RB, AMT Callable
07/01/08 @ 101
5.375%, 01/01/13 1,000 953
Brunswick County, Industrial
Development Authority, RB,
MBIA Callable 07/01/06 @ 102
5.700%, 07/01/10 1,000 1,017
5.500%, 07/01/17 400 384
Chesapeake Bay, Bridge & Tunnel
Commission, RB, MBIA Callable
07/01/05 @ 102
5.000%, 07/01/22 1,000 865
Chesterfield County, GO
Callable 01/15/10
5.750%, 01/15/15 1,315 1,328
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Culpeper County,
4.250%, 09/01/00 $ 1,325 $ 1,325
Fairfax County, Industrial
Development Authority, Fairfax
Hospital, Ser C, RB (C)
4.250%, 10/01/25 500 500
Fairfax County, Economic
Development Authority, National
Wildlife Federation, RB, MBIA
Callable 09/01/09 @ 101
5.375%, 09/01/29 1,000 908
Fairfax County, Industrial
Development Authority, Fairfax
Hospital, Ser A, RB (C)
3.900%, 10/01/25 800 800
Fairfax County, Industrial
Development Authority, Inova
Health System Project, RB, FSA
5.250%, 08/15/19 500 460
Fairfax County, Public Improvements,
Ser A, GO Callable 06/01/03 @ 102
5.000%, 06/01/07 500 494
Fairfax County, Redevelopment &
Housing Authority, Mott & Gum
Springs Community Centers, RB
Callable 06/01/06 @ 102
5.500%, 06/01/12 425 415
Fairfax County, Redevelopment &
Housing Authority, Paul Spring
Center Project, Ser A, RB, FHA
Callable 12/01/06 @ 103
5.900%, 06/15/17 250 242
Fairfax County, Sewer Improvement
Authority, RB, MBIA Callable
07/15/06 @ 102
5.800%, 07/15/22 1,000 979
Fairfax County, Water Authority, RB
Callable 04/01/07 @ 102
6.000%, 04/01/22 315 316
Fredericksburg, Industrial
Development Authority, Medicorp
Health System Obligation, RB,
AMBAC Callable 06/15/07 @ 102
5.300%, 06/15/10 500 488
5.250%, 06/15/23 300 265
Giles County, Industrial Development
Authority, Hoechst Celanese, RB,
AMT Callable 05/01/06 @ 102
6.450%, 05/01/26 500 472
52
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Greater Richmond, Convention Center
Authority, Convention Center
Expansion Project, RB
Callable 06/15/10 @ 101
5.900%, 06/15/16 $ 835 $ 830
Greater Richmond, Convention
Center Hotel, Convention Center
Expansion Project, RB Callable
6/15/10 @ 101
6.125%, 06/15/25 1,200 1,193
Hampton, Golf Course Project, RB
6.000%, 12/01/12 1,410 1,394
Henrico County, Economic
Development Authority, Beth
Sholom Assisted Living,
Ser A, RB, GNMA Callable
07/20/09 @ 102
5.850%, 07/20/19 400 387
5.900%, 07/20/29 500 477
Henrico County, Industrial
Development Authority, Educational
Facility, Collegiate Schools, RB
Callable 10/15/08 @ 102
5.000%, 10/15/19 1,000 867
Henrico County, Industrial
Development Authority,
Westminster-Canterbury Project,
RB Callable 10/1/09 @ 101
5.700%, 10/01/23 1,000 887
5.700%, 10/01/29 800 698
Henry County, Industrial
Development Authority, Memorial
Hospital, Martinsville & Henry
Hospital Project, RB Callable
01/01/07 @ 101
6.000%, 01/01/17 500 492
James City County, GO, FGIC
Callable 12/15/05 @ 102
5.250%, 12/15/14 250 241
Loudoun County, Sanitation
Authority, Water & Sewer Project,
RB, FGIC Callable 01/01/07 @ 102
5.125%, 01/01/26 500 435
Loudoun County, Public
Improvement Project, Ser C,
GO Callable 12/01/09 @ 101
5.750%, 12/01/19 1,050 1,035
Lynchburg, Industrial Development
Authority, Health Care Facility,
Centra Health Project, RB
Callable 01/01/08 @ 101
5.200%, 01/01/23 500 419
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Lynchburg, Public Improvements,
GO Callable 05/01/06 @ 102
5.100%, 05/01/11 $ 500 $ 484
Manassas Park, GO, FSA Callable
04/01/09 @ 101
5.100%, 04/01/22 500 442
Manassas, Ser A, GO Callable
01/01/08 @ 102
5.000%, 01/01/18 500 447
Newport News, BAN
4.500%, 06/15/00 1,500 1,500
Newport News, Ser A, GO, MBIA
Callable 07/01/05 @ 102
5.625%, 07/01/14 1,500 1,500
Newport News, Redevelopment &
Housing Authority, Ser A, RB,
GNMA Callable 08/20/07 @102
5.850%, 12/20/30 500 475
Norfolk, Water Authority, RB,
AMBAC Callable 11/01/03 @ 102
5.625%, 11/01/23 690 631
Norfolk, Industrial Development
Authority, Health Care, Bon
Secours Health System Project,
RB, MBIA Callable 08/15/07 @ 102
5.250%, 08/15/17 750 686
Norfork, GO Callable 02/01/03 @ 102
5.500%, 02/01/13 475 468
Portsmouth, GO, FGIC Callable
08/01/06 @ 101
5.250%, 08/01/21 500 453
Richmond, Public Improvements,
Ser B, GO, Callable 01/15/01 @ 102
6.250%, 01/15/18 1,000 1,028
Riverside, Regional Jail Authority,
Correctional Facility Improvements
Project, RB, MBIA Callable
07/01/05 @ 102
5.875%, 07/01/14 2,000 2,019
Roanoke County, Industrial
Development Authority, Roanoke
Memorial Hospital Project,
Ser C, RB Callable 06/09/00 @ 100
4.300%, 07/01/19 965 965
Roanoke, Public Improvements, GO
Callable 08/01/04 @ 102
5.150%, 08/01/12 250 240
Spotsylvania County, GO, FSA
5.000%, 07/15/14 1,000 941
Spotsylvania County, Water & Sewer
System, RB, MBIA Callable
06/01/07 @ 102
5.250%, 06/01/12 500 484
53
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
VIRGINIA MUNICIPAL BOND FUND--CONCLUDED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Spotsylvania County, Water
& Sewer System Authority, RB,
MBIA Callable 06/01/07 @ 102
5.400%, 06/01/27 $ 1,000 $ 915
Virginia Beach, GO
5.450%, 07/15/11 200 199
Virginia State, Biotechnology
Research Park Authority, Biotech
Two Project, RB Callable
09/01/06 @ 101
5.250%, 09/01/18 500 461
Virginia State, College Building
Authority, Educational Facilities,
Marymount University Project, RB,
Callable 07/01/08 @ 102
5.100%, 07/01/18 1,000 881
Virginia State, College Building
Authority, Washington & Lee
University Project, RB, MBIA
5.250%, 01/01/31 1,100 989
Virginia State, Housing Development
Authority, Commonwealth
Mortgage Project, Sub-Ser E-3,
RB Callable 07/01/08 @ 101
5.125%, 07/01/17 2,000 1,795
Virginia State, Housing
Development Authority,
Commonwealth Mortgage Project,
Sub-Ser A-4, RB, AMT,
MBIA Callable 01/01/06 @ 102
6.350%, 07/01/18 150 151
Virginia State, Housing Development
Authority, Commonwealth
Mortgage Project, Sub-Ser A-1,
RB Callable 01/01/03 @ 102
6.400%, 07/01/17 875 886
Virginia State, Housing Development
Authority, Commonwealth
Mortgage Project, Sub-Ser E-2,
RB Callable 07/01/08 @101
5.250%, 07/01/17 1,000 912
Virginia State, Polytechnic Institute
& State University, University
Service Systems, Ser C, RB
Callable 06/01/06 @ 102
5.500%, 06/01/16 200 193
Virginia State, Public Building
Authority, Public Improvements,
RB Callable 08/01/05 @ 101
5.200%, 08/01/16 300 279
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Virgina State, Public Building
Authority, Ser A, Callable
08/01/10 @ 100
5.750%, 08/01/16 $ 1,500 $ 1,494
Virginia State, Public School
Authority, School Financing,
Ser A, RB Callable 08/01/07 @ 102
5.375%, 08/01/18 500 470
Virginia State, Resource Authority,
RB, MBIA Callable 05/01/11 @ 101
5.800%, 05/01/30 1,500 1,456
Virginia State, University of
Virginia, Ser A, RB Callable
05/01/06 @ 102
5.625%, 05/01/16 1,000 981
West Point, Industrial Development
Authority, Chesapeake Project,
Ser B, RB Callable 03/01/04 @ 102
6.250%, 03/01/19 165 151
Williamsburg, Industrial
Development Authority,
Williamsburg Community
Hospital, RB Callable
10/01/03 @ 102
5.750%, 10/01/22 1,450 1,302
-------
50,882
-------
PUERTO RICO (1.1%)
Commonwealth, San Lucas & Cristo
Project, Ser A , RB Callable
06/01/09 @ 101
5.750%, 06/01/29 740 604
-------
Total Municipal Bonds
(Cost $53,737) 51,486
-------
CASH EQUIVALENTS (2.2%)
AIM Tax Free Institutional
Cash Reserve 602,404 602
Federated Virginia Municipal
Cash Trust 601,758 602
-------
Total Cash Equivalents
(Cost $1,204) 1,204
-------
Total Investments (96.9%)
(Cost $54,941) 52,690
-------
OTHER ASSETS AND LIABILITIES, NET (3.1%) 1,657
-------
54
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
VALUE (000)
--------------------------------------------------------------------------------
NET ASSETS:
Fund shares of Trust Shares (unlimited
authorization -- no par value) based
on 5,080,916 outstanding shares of
beneficial interest $51,256
Fund shares of Flex Shares (unlimited
authorization -- no par value) based
on 554,190 outstanding shares of
beneficial interest 5,910
Distribution in excess of net investment
income (24)
Accumulated net realized loss
on investments (544)
Net unrealized depreciation on investments (2,251)
-------
Total Net Assets (100.0%) $54,347
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Trust Shares $ 9.64
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares (1) $ 9.68
=======
(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, 2000
KEY TO ABBREVIATIONS USED IN
THE STATEMENT OF NET ASSETS
AMBAC Security insured by the American Municipal
Bond Assurance Corporation
AMT Alternative Minimum Tax
BAN Bond Anticipation Note
Cl Class
COP Certificate of Participation
ETM Escrowed to Maturity
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 Security
Assurance
GNMA Government National Mortgage Association
GO General Obligation
MBIA Security insured by the Municipal Bond
Insurance Association
MTN Medium Term Note
PLC Public Limited Company
RB Revenue Bond
REMIC Real Estate Mortgage Investment Conduit
Ser Series
STRIPS Separately Traded Registered Interest and
Principal Security
TA Tax Allocation
(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, 2000.
(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) Prerefunded Security. The maturity date shown
is the prerefunded date.
(G) Tri-Party Repurchase Agreement
56
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (000)
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
<TABLE>
<CAPTION>
Investment Grade
Tax-Exempt
Bond Fund
----------------
ASSETS:
<S> <C>
Investments at value (Cost $165,479) ............................................. $164,613
Cash ............................................................................. 182
Accrued income ................................................................... 2,952
Receivable for investment securities sold ........................................ 10,273
Receivable for portfolio shares purchased ........................................ 184
--------
Total Assets ..................................................................... 178,204
--------
LIABILITIES:
Payable for investment securities purchased ...................................... 25,883
Accrued expenses ................................................................. 146
Payable for portfolio shares redeemed ............................................ 134
Distributions payable ............................................................ 536
--------
Total liabilities ................................................................... 26,699
--------
Net Assets .......................................................................... $151,505
========
NET ASSETS:
Fund shares of Trust Shares (unlimited authorization -- no par value) based on
10,998,329 outstanding shares of beneficial interest ............................. $122,291
Fund shares of Investor Shares (unlimited authorization -- no par value) based on
1,820,120 outstanding shares of beneficial interest .............................. 19,153
Fund shares of Flex Shares (unlimited authorization -- no par value) based on
1,375,312 outstanding shares of beneficial interest .............................. 15,610
Distribution in excess of net investment income ..................................... (5)
Accumulated net realized loss on investments ........................................ (4,678)
Net unrealized depreciation on investments .......................................... (866)
--------
Total Net Assets (100.0%) ........................................................... $151,505
========
Net Asset Value, Offering and Redemption Price Per Share -- Trust Shares ............ $ 10.67
========
Net Asset Value and Redemption Price Per Share -- Investor Shares ................... $ 10.68
========
Maximum Offering Price Per Share -- Investor Shares ($10.68 / 96.25%) ............... $ 11.10
========
Net Asset Value, Offering and Redemption Price Per Share -- Flex Shares (1) ......... $ 10.67
========
</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.
57
<PAGE>
STATEMENTS OF OPERATIONS (000)
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, 2000 AND MARCH 31,
2000
<TABLE>
<CAPTION>
INVESTMENT
FLORIDA GEORGIA HIGH INVESTMENT GRADE
TAX-EXEMPT TAX-EXEMPT INCOME GRADE BOND TAX-EXEMPT
BOND FUND BOND FUND FUND (1) FUND BOND FUND
---------- ---------- -------------------- ----------- -----------
06/01/99- 06/01/99 - 04/01/00 04/01/99 - 06/01/99 - 06/01/99 -
05/31/00 05/31/00 05/31/00 03/31/00 05/31/00 05/31/00
---------- ---------- -------------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest Income ....................................... $ 5,916 $ 4,720 $ 35 $ 643 $ 78,585 $8,255
------- ------- ---- ----- -------- ------
Expenses:
Investment Advisory Fees ........................... 780 637 3 60 8,537 1,285
Less: Investment Advisory Fees
Waived (Reimbursed) ............................ (130) (113) (3) (74) (798) (109)
Administrator Fees ................................. 85 69 -- 9 817 123
Transfer Agent Fees-- Trust Shares ................. 17 16 -- -- 21 16
Transfer Agent Fees-- Investor Shares .............. 13 15 -- -- 31 17
Transfer Agent Fees-- Flex Shares .................. 17 16 3 -- 39 21
Transfer Agent Out of Pocket Expenses .............. 9 7 -- 19 28 4
Printing Expenses .................................. 8 7 -- -- 35 --
Custody Fees ....................................... 7 5 -- 9 42 --
Professional Fees .................................. 8 7 -- 14 65 --
Trustee Fees ....................................... 1 1 -- -- 12 --
Registration Fees .................................. 7 11 -- 16 62 13
Distribution Fees-- Investor Shares ................ 6 6 -- -- 129 96
Less: Distribution Fees Waived-- Investor Shares ... (6) (6) -- -- (38) (22)
Distribution Fees-- Flex Shares .................... 127 113 4 18 249 163
Less: Distribution Fees Waived-- Flex Shares ....... (53) (47) (2) -- (65) (38)
Insurance and Other Fees ........................... 7 1 1 36 53 2
------- ------- ---- ----- -------- ------
Total Expenses ..................................... 903 745 6 107 9,219 1,571
------- ------- ---- ----- -------- ------
Net Investment Income ................................. 5,013 3,975 29 536 69,366 6,684
------- ------- ---- ----- -------- ------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net Realized Loss on Securities Sold ............... (2,256) (836) -- (768) (37,713) (4,664)
Net Change in Unrealized Depreciation
on Investments ...................................... (3,755) (4,265) (30) (130) (50,059) (287)
------- ------- ---- ----- -------- ------
Total Net Realized and Unrealized Loss
on Investments ...................................... (6,011) (5,101) (30) (898) (87,772) (4,951)
------- ------- ---- ----- -------- ------
Net Increase (Decrease) in Net Assets
from Operations ................................ $ (998) $(1,126) $ (1) $(362) $(18,406) $1,733
======= ======= ==== ===== ======== ======
Amounts designated as "--" are either $0 or round to $0.
(1) ON MARCH 27, 2000, THE ESC STRATEGIC INCOME FUND EXCHANGED ALL OF ITS ASSETS
AND CERTAIN LIABILITIES FOR SHARES OF THE HIGH INCOME FUND. THE ESC STRATEGIC
INCOME 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 MARCH 27, 2000 HAVE BEEN CARRIED FORWARD IN THESE FINANCIAL
HIGHLIGHTS. SUBSEQUENT TO THE MERGER, THE HIGH INCOME FUND CHANGED ITS FISCAL
YEAR-END TO MAY 31.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
58
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED-
TERM FEDERAL SHORT-TERM VIRGINIA
MORTGAGE MARYLAND U.S. TREASURY U.S. INTERMEDIATE VIRGINIA
SECURITIES MUNICIPAL SHORT-TERM SECURITIES GOVERNMENT MUNICIPAL MUNICIPAL
FUND BOND FUND BOND FUND FUND SECURITIES FUND BOND FUND BOND FUND
------------ ---------- ---------- ------------- --------------- ------------ -----------
06/01/99 - 06/01/99 - 06/01/99 - 06/01/99 - 06/01/99 - 06/01/99 - 06/01/99 -
05/31/00 05/31/00 05/31/00 05/31/00 05/31/00 05/31/00 05/31/00
------------ ---------- ---------- ------------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
$ 8,706 $ 1,726 $12,129 $3,593 $ 6,711 $ 11,824 $ 2,433
------- ------- ------- ------ ------- -------- -------
904 228 1,295 435 758 1,551 300
(162) (42) (185) (88) (88) -- (20)
98 25 141 47 73 170 36
13 16 17 15 16 7 16
12 -- 14 14 14 13 --
14 15 14 16 22 -- 13
14 2 14 6 7 -- 2
10 2 13 5 8 4 3
8 1 8 4 6 4 3
13 2 10 4 7 20 5
1 -- 3 1 1 -- --
17 -- 9 7 11 -- 2
4 -- 4 5 8 11 --
(3) -- (4) (5) (8) (11) --
22 75 21 56 104 -- 62
(22) (18) (21) (47) (48) -- (26)
9 2 2 2 4 -- 3
------- ------- ------- ------ ------- -------- -------
952 308 1,355 477 895 1,769 399
------- ------- ------- ------ ------- -------- -------
7,754 1,418 10,774 3,116 5,816 10,055 2,034
------- ------- ------- ------ ------- -------- -------
(2,174) (237) (2,130) (8) (1,586) (1,940) (544)
(2,454) (1,990) (3,306) (621) (2,873) (11,451) (2,611)
------- ------- ------- ------ ------- -------- -------
(4,628) (2,227) (5,436) (629) (4,459) (13,391) (3,155)
------- ------- ------- ------ ------- -------- -------
$ 3,126 $ (809) $ 5,338 $2,487 $ 1,357 $ (3,336) $(1,121)
======= ======= ======= ====== ======= ======== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
59
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
--------------------------------------------------------------------------------
<TABLE>
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, MARCH 31, AND
NOVEMBER 30,
FLORIDA TAX-EXEMPT GEORGIA TAX-EXEMPT
BOND FUND BOND FUND HIGH INCOME FUND
---------------------- ----------------------- ------------------------------
06/01/99- 06/01/98- 06/01/99- 06/01/98- 04/01/00- 04/01/99 04/01/98
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 03/31/00 03/31/99
---------------------- ----------------------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net Investment Income ....................... $ 5,013 $ 4,737 $ 3,975 $ 3,344 $ 29 $ 536 $ 852
Net Realized Gain (Loss) on Investments ..... (2,256) 1,160 (836) 414 -- (768) 57
Net Change in Unrealized Appreciation
(Depreciation) on Investments ............. (3,755) (1,845) (4,265) (1,241) (30) (130) (194)
-------- -------- --------- -------- ------ ------- --------
Increase (Decrease) in Net Assets
from Operations ......................... (998) 4,052 (1,126) 2,517 (1) (362) 715
-------- -------- --------- -------- ------ ------- --------
Distributions to Shareholders:
Net Investment Income:
Trust Shares .............................. (4,437) (4,235) (3,459) (2,897) -- -- --
Investor Shares ........................... (127) (134) (129) (128) -- -- --
Flex Shares ............................... (449) (369) (388) (318) (29) (479)* (759)
Class D Shares ............................ -- -- -- -- -- (39) (33)
Tax Return of Capital:
Class D Shares ............................ -- -- -- -- -- -- (77)
Flex Shares ............................... -- -- -- -- -- -- (3)*
Capital Gains:
Trust Shares .............................. (400) (1,037) (301) (162) -- -- --
Investor Shares ........................... (12) (37) (13) (8) -- -- --
Flex Shares ............................... (46) (122) (42) (20) -- -- (105)*
Class D Shares ............................ -- -- -- -- -- -- (9)
-------- -------- --------- -------- ------ ------- --------
Total Distributions ......................... (5,471) (5,934) (4,332) (3,533) (29) (518) (986)
-------- -------- --------- -------- ------ ------- --------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ............... 28,674 51,929 26,583 36,255 -- -- --
Shares Issued in Connection with
Crestar Merger .......................... -- -- -- -- -- -- --
Reinvestment of Cash Distributions 889 1,663 1,355 1,180 -- -- --
Cost of Shares Repurchased (49,546) (27,307) (29,630) (11,514) -- -- --
-------- -------- --------- -------- ------ ------- --------
Increase (Decrease) in Net Assets From Trust
Share Transactions (19,983) 26,285 (1,692) 25,921 -- -- --
-------- -------- --------- -------- ------ ------- --------
Investor Shares:
Proceeds from Shares Issued 165 1,105 557 1,195 -- -- --
Shares Issued in Connection with
Crestar Merger .......................... -- -- -- -- -- -- --
Reinvestment of Cash Distributions ........ 120 143 108 118 -- -- --
Cost of Shares Repurchased ................ (1,034) (780) (1,698) (1,586) -- -- --
-------- -------- --------- -------- ------ ------- --------
Increase (Decrease) in Net Assets From Investor
Share Transactions ........................ (749) 468 (1,033) (273) -- -- --
-------- -------- --------- -------- ------ ------- --------
Flex Shares:
Proceeds from Shares Issued ............... 2,953 11,906 1,933 5,982 1,165 851 926
Shares Issued in Connection with ESC Merger -- -- -- -- -- 352 --
Shares Issued in Connection with
Crestar Merger ......................... -- -- -- -- -- -- --
Reinvestment of Cash Distributions ....... 427 433 410 304 21 463 894
Cost of Shares Repurchased ............... (7,643) (5,520) (6,201) (1,034) (113) (6,073) (18,743)
-------- -------- --------- -------- ------ ------- --------
Increase (Decrease) in Net Assets From Flex
Share Transactions ....................... (4,263) 6,819 (3,858) 5,252 1,073 (4,407) (16,923)
-------- -------- --------- -------- ------ ------- --------
Class D:
Proceeds from Shares Issued .............. -- -- -- -- -- 42 156
Reinvestment of Cash Distributions ....... -- -- -- -- -- 42 41
Value of Shares Exchanged in Connection
with Merger ...................... -- -- -- -- -- (352) --
Cost of Shares Repurchased ............... -- -- -- -- -- (191) (461)
-------- -------- --------- -------- ------ ------- --------
Increase (Decrease) in Net Assets From
Class D Share Transactions ............... -- -- -- -- -- (459) (264)
-------- -------- --------- -------- ------ ------- --------
Increase (Decrease) in Net Assets From
Share Transactions ....................... (24,995) 33,572 (6,583) 30,900 1,073 (4,866) (17,187)
-------- -------- --------- -------- ------ ------- --------
Total Increase (Decrease) in Net Assets (31,464) 31,690 (12,041) 29,884 1,043 (5,746) (17,458)
-------- -------- --------- -------- ------ ------- --------
Net Assets:
Beginning of Period ........................ 137,170 105,480 104,486 74,602 2,032 7,778 25,236
-------- -------- --------- -------- ------ ------- --------
End of Period .............................. $105,706 $137,170 $ 92,445 $104,486 $3,075 $ 2,032 $ 7,778
======== ======== ========= ======== ====== ======= ========
* Formerly Class A Shares
(1) See Note 6 in the notes to the financial statements for additional
information.
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
60
<PAGE>
-----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE INVESTMENT GRADE TAX- LIMITED-TERM FEDERAL MARYLAND MUNICIPAL
BOND FUND EXEMPT BOND FUND MORTGAGE SECURITIES FUND BOND FUND
-------------------- -------------------- ------------------------ ------------------------------
06/01/99- 06/01/98- 06/01/99- 06/01/98- 06/01/99- 06/01/98- 06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99 11/30/98
--------- --------- --------- --------- --------- ---------- --------- --------- ---------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 69,366 $ 45,781 $ 6,684 $ 6,793 $ 7,754 $ 7,741 $ 1,418 $ 497 $ 701
(37,713) 15,248 (4,664) 4,833 (2,174) 88 (237) (19) 58
(50,059) (27,720) (287) (3,278) (2,454) (1,037) (1,990) (437) 406
---------- --------- ------- ------- ------- --------- ------- ------- -------
(18,406) 33,309 1,733 8,348 3,126 6,792 (809) 41 1,165
---------- --------- ------- ------- ------- --------- ------- ------- -------
(66,271) (43,474) (5,389) (5,587) (7,518) (7,568) (1,195) (425) (645)
(1,676) (1,621) (798) (901) (93) (125) -- -- --
(1,277) (807) (504) (305) (110) (83) (257) (77) (56)
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- (13,468) (1,805) (4,790) -- (1,611) -- (24) --
-- (547) (295) (914) -- (28) -- -- --
-- (306) (216) (323) -- (19) -- (4) --
-- -- -- -- -- -- -- -- --
---------- --------- ------- ------- ------- --------- ------- ------- -------
(69,224) (60,223) (9,007) (12,820) (7,721) (9,434) (1,452) (530) (701)
---------- --------- ------- ------- ------- --------- ------- ------- -------
254,865 310,338 29,272 58,516 52,959 54,404 18,759 15,770 13,041
-- 314,362 -- -- -- -- -- -- --
36,906 42,773 2,726 5,421 4,795 6,287 200 14 11
(358,628) (286,648) (63,059) (52,929) (63,196) (60,354) (20,670) (4,854) (5,813)
---------- --------- ------- ------- ------- --------- ------- ------- -------
(66,857) 380,825 (31,061) 11,008 (5,442) 337 (1,711) 10,930 7,239
---------- --------- ------- ------- ------- --------- ------- ------- -------
3,327 8,100 686 2,158 307 853 -- -- --
-- 2,385 -- -- -- -- -- -- --
1,676 2,052 980 1,627 93 151 -- -- --
(15,192) (9,990) (6,471) (6,100) (1,359) (1,458) -- -- --
---------- --------- ------- ------- ------- --------- ------- ------- -------
(10,189) 2,547 (4,805) (2,315) (959) (454) -- -- --
---------- --------- ------- ------- ------- --------- ------- ------- -------
9,687 19,438 7,055 10,543 792 1,082 2,326 4,739 2,772
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
1,235 1,002 670 551 103 96 216 66 41
(15,042) (6,765) (8,916) (2,643) (1,233) (566) (3,563) (226) (177)
---------- --------- ------- ------- ------- --------- ------- ------- -------
(4,120) 13,675 (1,191) 8,451 (338) 612 (1,021) 4,579 2,636
---------- --------- ------- ------- ------- --------- ------- ------- -------
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
---------- ---------- ------- ------- ------- --------- ------- ------- -------
-- -- -- -- -- -- -- -- --
---------- ---------- ------- ------- ------- --------- ------- ------- -------
(81,166) 397,047 (37,057) 17,144 (6,739) 495 (2,732) 15,509 9,875
---------- ---------- ------- ------- ------- --------- ------- ------- -------
(168,796) 370,133 (44,331) 12,672 (11,334) (2,147) (4,993) 15,020 10,339
---------- ---------- ------- ------- ------- --------- ------- ------- -------
1,210,001 839,868 195,836 183,164 139,589 141,736 37,381 22,361 12,022
---------- ---------- -------- ------- ------- --------- ------- ------- -------
$1,041,205 $1,210,001 $151,505 $195,836 $128,255 $139,589 $32,388 $37,381 $22,361
========== ========== ======== ======== ======== ======== ======= ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
61
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
-----------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
SHORT-TERM SHORT-TERM U.S. TREASURY
BOND FUND SECURITIES FUND
------------------------- --------------------------
06/01/99- 06/01/98- 06/01/99- 06/01/98-
05/31/00 05/31/99 05/31/00 05/31/99
---------- ---------- ---------- -----------
Operations:
<S> <C> <C> <C> <C>
Net Investment Income ................................ $ 10,774 $ 6,990 $ 3,116 $ 2,525
Net Realized Gain (Loss) on Investments .............. (2,130) 414 (8) 243
Net Change in Unrealized Appreciation
(Depreciation) on Investments .................. (3,306) (2,357) (621) (388)
-------- -------- ------- -------
Increase (Decrease) in Net Assets from Operations .. 5,338 5,047 2,487 2,380
-------- -------- ------- -------
Distributions to Shareholders:
Net Investment Income:
Trust Shares ....................................... (10,579) (6,805) (2,756) (2,281)
Investor Shares .................................... (91) (92) (122) (133)
Flex Shares ........................................ (103) (95) (238) (111)
Capital Gains:
Trust Shares ....................................... (139) (356) (7) --
Investor Shares .................................... (1) (4) -- --
Flex Shares ........................................ (2) (5) (1) --
-------- -------- ------- -------
Total Distributions .................................. (10,915) (7,357) (3,124) (2,525)
-------- -------- ------- -------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares Issued ........................ 51,792 57,981 31,143 17,499
Shares Issued in Connection with Crestar Merger .... -- 72,757 -- --
Reinvestment of Cash Distributions ................. 4,667 3,614 1,435 951
Cost of Shares Repurchased ......................... (80,493) (42,626) (15,480) (9,243)
-------- -------- ------- -------
Increase (Decrease) in Net Assets From Trust Share
Transactions ....................................... (24,034) 91,726 17,098 9,207
-------- -------- ------- -------
Investor Shares:
Proceeds from Shares Issued ........................ 402 589 738 1,382
Reinvestment of Cash Distributions ................. 88 94 122 133
Cost of Shares Repurchased ......................... (821) (781) (1,566) (1,983)
-------- -------- ------- -------
Increase (Decrease) in Net Assets From Investor
Share Transactions ................................. (331) (98) (706) (468)
-------- -------- ------- -------
Flex Shares:
Proceeds from Shares Issued ........................ 1,164 2,540 3,365 5,314
Shares Issued in Connection with Crestar Merger .... -- -- -- --
Reinvestment of Cash Distributions ................. 107 96 218 94
Cost of Shares Repurchased ......................... (1,486) (2,365) (3,068) (1,855)
-------- -------- ------- -------
Increase (Decrease) in Net Assets From Flex
Share Transactions .............................. (215) 271 515 3,553
-------- -------- ------- -------
Increase (Decrease) in Net Assets From Share
Transactions .................................... (24,580) 91,899 16,907 12,292
-------- -------- ------- -------
Total Increase (Decrease) in Net Assets .......... (30,157) 89,589 16,270 12,147
-------- -------- ------- -------
Net Assets:
Beginning of Period .................................. 214,070 124,481 63,757 51,610
-------- -------- ------- -------
End of Period ........................................ $183,913 $214,070 $ 80,027 $63,757
======== ======== ======== =======
(1) See Note 6 in the notes to the financial statements for additional
information.
Amounts designated as "--" are either $0 or round to $0.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
62
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
U. S. GOVERNMENT
SECURITIES FUND VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND VIRGINIA MUNICIPAL BOND FUND
----------------------- ----------------------------------------- ----------------------------------
06/01/99- 06/01/98- 06/01/99- 12/01/98- 12/01/97- 06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 05/31/00 05/31/99 11/30/98 05/31/00 05/31/99 11/30/98
--------- --------- ----------- ---------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 5,816 $ 2,793 $ 10,055 $ 5,222 $ 10,809 $ 2,034 $ 734 $ 1,203
(1,586) 15 (1,940) 1,177 1,725 (544) 31 175
(2,873) (1,299) (11,451) (5,509) 2,380 (2,611) (722) 507
------- ------- -------- -------- -------- -------- ------ -------
1,357 1,509 (3,336) 890 14,914 (1,121) 43 1,885
------- ------- -------- -------- -------- -------- ------ -------
(5,199) (2,385) (9,828) (5,069) (10,471) (1,835) (650) (1,116)
(111) (153) (320) (166) (364) -- -- --
(506) (252) -- -- -- (223) (88) (87)
-- -- (1,262) (1,670) (793) (27) (155) (50)
-- -- (39) (56) (28) -- -- --
-- -- -- -- -- (4) (20) (4)
------- ------- -------- -------- -------- -------- ------ -------
(5,816) (2,790) (11,449) (6,961) (11,656) (2,089) (913) (1,257)
------- ------- -------- -------- -------- -------- ------ -------
27,984 23,161 26,550 26,357 36,891 32,391 7,281 13,751
-- 56,128 -- -- -- -- -- --
1,272 520 952 43 629 262 29 60
(42,103) (11,462) (51,050) (24,041) (34,155) (12,912) (3,890) (5,172)
------- ------- -------- -------- -------- -------- ------ -------
(12,847) 68,347 (23,548) 2,359 3,365 19,741 3,420 8,639
------- ------- -------- -------- -------- -------- ------ -------
416 956 1,441 653 2,174 -- -- --
111 152 275 164 289 -- -- --
(1,560) (1,762) (2,155) (821) (2,503) -- -- --
------- ------- -------- -------- -------- -------- ------ -------
(1,033) (654) (439) (4) (40) -- -- --
------- ------- -------- -------- -------- -------- ------ -------
2,396 5,920 -- -- -- 1,607 3,816 2,474
-- 3,174 -- -- -- -- -- --
443 206 -- -- -- 153 77 64
(6,144) (1,637) -- -- -- (2,822) (514) (376)
------- ------- -------- -------- -------- -------- ------ -------
(3,305) 7,663 -- -- -- (1,062) 3,379 2,162
------- ------- -------- -------- -------- -------- ------ -------
(17,185) 75,356 (23,987) 2,355 3,325 18,679 6,799 10,801
------- ------- -------- -------- -------- -------- ------ -------
(21,644) 74,075 (38,772) (3,716) 6,583 15,469 5,929 11,429
------- ------- -------- -------- -------- -------- ------ -------
116,221 42,146 247,789 251,505 244,922 38,878 32,949 21,520
------- ------- -------- -------- -------- -------- ------ -------
$ 94,577 $116,221 $209,017 $247,789 $251,505 $ 54,347 $38,878 $32,949
======== ======== ======== ======== ======== ======== ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
63
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE
INDICATED) FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
NET ASSET NET REALIZED AND DISTRIBUTIONS DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS FROM TAX NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED RETURN OF VALUE END
OF PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS CAPITAL OF PERIOD
---------- ----------- ---------------- ------------- ------------- ------------- ---------
Florida Tax-Exempt Bond Fund
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $10.59 $ 0.44 $(0.49) $(0.44) $(0.04) $ -- $10.06
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
Investor Shares
2000 $10.60 $ 0.42 $(0.49) $(0.42) $(0.04) $ -- $10.07
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
Flex Shares
2000 $10.62 $ 0.36 $(0.49) $(0.36) $(0.04) $ -- $10.09
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
2000 $10.03 $ 0.40 $(0.49) $(0.40) $(0.04) $ -- $ 9.50
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
Investor Shares
2000 $10.05 $ 0.38 $(0.50) $(0.38) $(0.04) $ -- $ 9.51
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
Flex Shares
2000 $10.04 $ 0.33 $(0.49) $(0.33) $(0.04) $ -- $ 9.51
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
High Income Fund (A)
Flex Shares
2000(4) $ 7.98 $ 0.09 $(0.10) $(0.09) $ -- $ -- $ 7.88
For the years ended March 31:
2000 9.77 0.87 (1.85) (0.81) -- -- 7.98
1999 9.99 0.51 0.04 (0.57) (0.15) (0.05) 9.77
1998 9.73 0.34 0.44 (0.52) -- -- 9.99
1997 9.89 0.60 (0.16) (0.60) -- -- 9.73
1996 9.94 0.59 0.16 (0.59) (0.21) -- 9.89
Investment Grade Bond Fund
Trust Shares
2000 $10.36 $ 0.61 $(0.78) $(0.61) $ -- $ -- $ 9.58
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
Investor Shares
2000 $10.36 $ 0.57 $(0.78) $(0.57) $ -- $ -- $ 9.58
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
Flex Shares
2000 $10.37 $ 0.52 $(0.78) $(0.52) $ -- $ -- $ 9.59
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
* Annualized.
+ 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.
(4) Commenced operations on April 1, 2000. All ratios for the period have been annualized.
</TABLE>
64
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------------------------------
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF RATIO OF EXPENSES TO INCOME TO
NET ASSETS EXPENSES TO NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
TOTAL END OF AVERAGE INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
RETURN(+) PERIOD(000 NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
---------- ----------- ------------ ------------------ ------------------- ------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.48)% $ 93,040 0.67% 4.25% 0.78% 4.14% 88%
3.72 118,609 0.67 3.90 0.77 3.80 72
8.77 93,939 0.66 4.16 0.80 4.02 69
7.22 50,487 0.65 4.48 0.80 4.33 135
3.87 30,790 0.65 4.49 0.88 4.26 63
(0.68)% $ 2,875 0.87% 4.05% 1.36% 3.56% 88%
3.62 3,799 0.87 3.71 1.31 3.27 72
8.46 3,381 0.86 3.98 1.34 3.50 69
7.00 3,226 0.85 4.28 1.31 3.82 135
3.76 4,025 0.85 4.28 1.36 3.77 63
(1.17)% $ 9,791 1.37% 3.54% 1.89% 3.02% 88%
3.13 14,762 1.37 3.21 1.88 2.70 72
8.04 8,160 1.36 3.45 2.01 2.80 69
6.48 3,000 1.35 3.78 2.28 2.85 135
3.27 2,692 1.35 3.79 2.54 2.60 63
(0.90)% $ 81,160 0.67% 4.13% 0.77% 4.03% 19%
3.33 87,452 0.67 3.87 0.78 3.76 12
8.37 62,363 0.66 4.09 0.81 3.94 7
6.79 39,732 0.65 4.31 0.81 4.15 15
3.89 22,950 0.65 4.36 0.89 4.12 60
(1.26)% $ 2,458 0.87% 3.93% 1.40% 3.40% 19%
3.13 3,676 0.87 3.67 1.25 3.29 12
8.26 3,975 0.86 3.89 1.30 3.45 7
6.47 3,511 0.85 4.10 1.33 3.62 15
3.69 3,418 0.85 4.17 1.41 3.61 60
(1.59)% $ 8,827 1.37% 3.43% 1.95% 2.85% 19%
2.63 13,358 1.37 3.19 1.89 2.67 12
7.74 8,264 1.36 3.39 2.02 2.73 7
6.06 4,662 1.35 3.60 2.07 2.88 15
2.25 4,207 1.35 3.66 2.35 2.66 60
(0.13)% $ 3,075 1.40%* 6.57%* 2.83%* 5.14%* --%
(10.84) 2,032 1.73 8.94 2.95 7.72 24
5.64 7,230 1.91 5.09 2.22 4.78 95
8.18 24,413 1.87 5.27 1.87 5.27 130
3.91 32,506 1.65 5.49 1.70 5.44 123
7.67 36,891 1.70 5.87 1.75 5.82 138
(1.76)% $ 998,596 0.77% 6.05% 0.84% 5.98% 202%
4.25 1,149,068 0.77 5.25 0.85 5.17 221
10.92 793,488 0.76 5.67 0.86 5.57 109
6.99 633,646 0.75 5.89 0.85 5.79 298
4.02 599,514 0.75 5.81 0.87 5.69 184
(2.17)% $ 22,553 1.17% 5.60% 1.37% 5.40% 202%
3.86 34,913 1.17 4.87 1.36 4.68 221
10.49 33,269 1.14 5.29 1.38 5.05 109
6.66 33,165 1.15 5.48 1.41 5.22 298
3.50 36,155 1.15 5.40 1.44 5.11 184
(2.63)% $ 20,056 1.66% 5.14% 1.99% 4.81% 202%
3.35 26,020 1.66 4.40 2.00 4.06 221
9.99 13,111 1.65 4.76 2.11 4.30 109
6.16 5,763 1.64 5.00 2.20 4.44 298
2.50 4,621 1.64 4.84 2.49 3.99 184
(A) On March 27, 2000, the ESC Strategic Income Fund exchanged all of its asset
and certain liabilities for shares of the High Income Fund. The ESC Strategic
Income Fund is the accounting survivor in this transaction, and as a result, it
basis of accounting for assets and liabilities and its operating results for th
periods prior to March 27, 2000 have been carried forward in these financia
highlights. Subsequent to the merger, the High Income Fund changed its fisca
year end to May 31.
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
</TABLE>
65
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME 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 NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
----------- ----------- ---------------- ------------- ------------- ----------
Investment Grade Tax-Exempt Bond Fund
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $11.10 $ 0.43 $(0.29) $(0.43) $(0.14) $10.67
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
Investor Shares
2000 $11.12 $ 0.39 $(0.30) $(0.39) $(0.14) $10.68
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
Flex Shares
2000 $11.10 $ 0.34 $(0.29) $(0.34) $(0.14) $10.67
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
2000 $ 9.94 $ 0.55 $(0.32) $(0.55) $ -- $ 9.62
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
Investor Shares
2000 $ 9.93 $ 0.52 $(0.33) $(0.52) $ -- $ 9.60
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
Flex Shares
2000 $ 9.94 $ 0.49 $(0.32) $(0.49) $ -- $ 9.62
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(2) 10.14 0.55 (0.15) (0.55) -- 9.99
Maryland Municipal Bond Fund (A)
Trust Shares
2000 $10.06 $ 0.42 $(0.60) $(0.42) $ -- $ 9.46
1999(3) 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(4) 10.00 0.31 (0.24) (0.31) -- 9.76
Flex Shares
2000 $10.08 $ 0.33 $(0.60) $(0.33) $ -- $ 9.48
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(5) 9.53 0.20 0.23 (0.20) -- 9.76
Short-Term Bond Fund
Trust Shares
2000 $ 9.91 $ 0.53 $(0.25) $(0.53) $(0.01) $ 9.65
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
Investor Shares
2000 $ 9.93 $ 0.51 $(0.25) $(0.51) $(0.01) $ 9.67
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
Flex Shares
2000 $ 9.93 $ 0.48 $(0.25) $(0.48) $(0.01) $ 9.67
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(6) 10.02 0.47 (0.12) (0.47) (0.02) 9.88
+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)Commended operations on June 7, 1995. All ratios for the period have been annualized.
(3)For the six month period ended May 31, 1999. All ratios for the period have been annualized.
(4)Commenced operations on March 1, 1996. All ratios for the period have been annualized.
(5)Commenced operations on April 25, 1996. All ratios for the period have been annualized.
</TABLE>
66
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------------
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF RATIO OF EXPENSES TO INCOME TO
NET ASSETS EXPENSES TO NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
TOTAL END OF AVERAGE INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
RETURN(+) PERIOD(000 NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
---------- ----------- ------------ ------------------ ------------------- ------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1.41% $ 117,384 0.77% 3.98% 0.83% 3.92% 226%
4.67 154,123 0.77 3.75 0.87 3.65 224
8.57 146,606 0.76 3.83 0.88 3.71 378
7.13 139,144 0.75 3.96 0.86 3.85 489
5.82 124,507 0.75 4.01 0.89 3.87 514
0.90% $ 19,443 1.17% 3.59% 1.33% 3.43% 226%
4.35 25,195 1.17 3.36 1.32 3.21 224
8.05 28,159 1.16 3.43 1.43 3.16 378
6.69 31,857 1.15 3.56 1.38 3.33 489
5.40 37,427 1.15 3.61 1.42 3.34 514
0.52% $ 14,678 1.65% 3.11% 1.95% 2.81% 226%
3.78 16,518 1.65 2.86 2.03 2.48 224
7.50 8,399 1.64 2.95 2.10 2.49 378
6.19 4,681 1.63 3.08 2.15 2.56 489
4.91 5,536 1.63 3.12 2.25 2.50 514
2.33% $ 125,355 0.67% 5.60% 0.79% 5.48% 384%
4.75 135,256 0.67 5.28 0.77 5.18 379
7.12 137,488 0.66 5.75 0.77 5.64 163
6.43 123,903 0.65 5.81 0.78 5.68 133
4.84 73,370 0.65 6.04 0.84 5.85 83
1.93% $ 1,194 0.92% 5.31% 1.09% 5.14% 384%
4.47 2,214 0.92 5.03 1.52 4.43 379
6.95 2,705 0.91 5.50 1.51 4.90 163
6.17 2,426 0.90 5.55 1.48 4.97 133
4.59 2,512 0.90 5.75 2.25 4.40 83
1.71% $ 1,706 1.27% 4.97% 2.38% 3.86% 384%
4.14 2,119 1.27 4.69 2.42 3.54 379
6.49 1,543 1.26 5.16 2.72 3.70 163
5.80 1,409 1.25 5.20 2.66 3.79 133
4.10 1,349 1.25 5.38 3.59 3.04 83
(1.78)% $ 26,176 0.68% 4.24% 0.80% 4.12% 14%
0.48 29,658 0.70 3.83 1.37 3.16 19
7.03 19,115 0.62 4.11 1.15 3.58 12
6.50 11,461 0.63 4.38 1.16 3.85 5
1.07 5,808 0.71 4.30 1.36 3.65 9
(2.66)% $ 6,212 1.59% 3.34% 1.95% 2.98% 14%
0.05 7,723 1.59 2.94 1.98 2.55 19
6.17 3,246 1.57 3.16 1.96 2.77 12
5.64 561 1.54 3.43 2.00 2.97 5
7.67 113 1.55 3.42 2.20 2.77 9
2.87% $ 180,402 0.67% 5.40% 0.76% 5.31% 70%
4.06 209,904 0.67 5.12 0.77 5.02 108
7.31 120,422 0.66 5.47 0.79 5.34 87
6.30 89,701 0.65 5.37 0.78 5.24 118
4.45 91,156 0.65 5.39 0.81 5.23 163
2.67% $ 1,446 0.87% 5.20% 1.75% 4.32% 70%
3.88 1,825 0.87 4.92 1.59 4.20 108
7.19 1,949 0.86 5.27 1.71 4.42 87
5.97 2,182 0.85 5.16 1.58 4.43 118
4.23 2,700 0.85 5.20 1.72 4.33 163
2.31% $ 2,065 1.22% 4.85% 2.41% 3.66% 70%
3.50 2,341 1.22 4.55 2.33 3.44 108
6.84 2,110 1.21 4.93 2.85 3.29 87
5.62 1,073 1.20 4.82 3.02 3.00 118
3.73 966 1.20 4.77 4.06 1.91 163
(6) Commenced operations on June 20, 1995. All ratios for the period have been annualized.
(A) On May 24, 1999, the CrestFund Maryland Municipal Bond Fund exchanged all of
its assets and certain liabilities for shares of the Maryland Municipal Bond
Fund. The CrestFund 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.
Amounts designated as "--" are either $0 or have been rounded to $0.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
67
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME 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 NET ASSET
BEGINNING INVESTMENT (LOSSES) INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME ON INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
------------- ----------- --------------- ------------- -------------- ----------
Short-Term U.S. Treasury Securities Fund
Trust Shares
<S> <C> <C> <C> <C> <C> <C> <C>
2000 $ 9.95 $ 0.46 $(0.10) $(0.46) $ -- $ 9.85
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
Investor Shares
2000 $ 9.95 $ 0.45 $(0.10) $(0.45) $ -- $ 9.85
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
Flex Shares
2000 $ 9.93 $ 0.42 $(0.10) $(0.42) $ -- $ 9.83
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
2000 $10.28 $ 0.58 $(0.42) $(0.58) $ -- $ 9.86
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
Investor Shares
2000 $10.28 $ 0.54 $(0.42) $(0.54) $ -- $ 9.86
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
Flex Shares
2000 $10.28 $ 0.49 $(0.42) $(0.49) $ -- $ 9.86
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(2) 10.31 0.52 (0.37) (0.52) (0.03) 9.91
Virginia Intermediate Municipal Bond Fund (A)
Trust Shares
2000 $10.20 $ 0.43 $(0.57) $(0.43) $(0.05) $ 9.58
1999(3) 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
Investor Shares
2000 $10.20 $ 0.42 $(0.56) $(0.42) $(0.05) $ 9.59
1999(3) 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
Virginia Municipal Bond Fund (A)
Trust Shares
2000 $10.43 $ 0.45 $(0.78) $(0.45) $(0.01) $ 9.64
1999(3) 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(4) 10.00 0.31 0.44 (0.31) (0.04) 10.40
Flex Shares
2000 $10.48 $ 0.36 $(0.79) $(0.36) $(0.01) $ 9.68
1999(3) 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(5) 10.06 0.24 0.41 (0.24) (0.04) 10.43
+ 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 June 7, 1995. All ratios for the period have been annualized.
(3) For the six month period ended May 31, 1999. All ratios for the period have been annualized.
(4) Commenced operations on April 5, 1995. All ratios for the period have been annualized.
(5) Commenced operations on April 17, 1995. All ratios for the period have been annualized.
68
<PAGE>
-----------------------------------------------------------------------------------------------------------------------------------
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF RATIO OF EXPENSES TO INCOME TO
NET ASSETS EXPENSES TO NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
TOTAL END OF AVERAGE INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS TURNOVER
RETURN(+) PERIOD(000 NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS) RATE
---------- ---------- ----------- ------------------ --------------------- ------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
3.75% $ 72,570 0.67% 4.70% 0.79% 4.58% 50%
4.59 56,027 0.67 4.69 0.78 4.58 57
6.30 46,920 0.66 5.19 0.84 5.01 39
5.76 21,988 0.65 5.23 0.92 4.96 93
4.73 10,149 0.65 5.56 1.00 5.21 94
3.58%$ 2,066 0.82% 4.50% 1.44% 3.88% 50%
4.54 2,799 0.82 4.54 1.34 4.02 57
6.04 3,277 0.81 5.07 1.33 4.55 39
5.59 3,921 0.80 5.05 1.35 4.50 93
4.52 4,192 0.80 5.43 1.32 4.91 94
3.34%$ 5,391 1.07% 4.26% 2.04% 3.29% 50%
4.32 4,931 1.07 4.22 2.25 3.04 57
5.90 1,413 1.06 4.81 2.87 3.00 39
5.19 1,091 1.05 4.75 2.51 3.29 93
3.72 2,423 1.05 5.03 2.97 3.11 94
1.63%$ 85,420 0.77% 5.77% 0.84% 5.70% 29%
3.90 102,167 0.77 5.58 0.88 5.47 19
10.76 34,899 0.76 5.93 0.92 5.77 14
7.54 19,471 0.75 6.19 1.02 5.92 21
2.77 10,277 0.75 6.05 1.25 5.55 83
1.19%$ 1,407 1.17% 5.34% 2.14% 4.37% 29%
3.56 2,534 1.17 5.17 1.60 4.74 19
10.23 3,225 1.16 5.53 1.76 4.93 14
7.21 2,243 1.15 5.76 1.79 5.12 21
2.47 2,396 1.15 5.68 2.50 4.33 83
0.70%$ 7,750 1.68% 4.85% 2.28% 4.25% 29%
2.99 11,520 1.68 4.66 2.08 4.26 19
9.78 4,022 1.67 5.02 2.32 4.37 14
6.57 2,801 1.66 5.26 2.42 4.50 21
1.42 2,826 1.66 5.18 2.86 3.98 83
(1.31)%$202,209 0.76% 4.35% 0.76% 4.35% 18%
0.42 240,083 0.84 4.12 1.18 3.78 19
6.10 243,606 0.79 4.33 0.97 4.15 24
5.55 237,096 0.78 4.57 0.93 4.42 30
4.01 243,137 0.78 4.35 0.93 4.20 25
16.09 43,373 0.72 4.34 0.94 4.12 28
(1.24)%$ 6,808 0.79% 4.33% 0.94% 4.18% 18%
0.35 7,706 0.79 4.17 0.93 4.03 19
6.19 7,899 0.79 4.33 0.94 4.18 24
5.65 7,826 0.79 4.56 0.94 4.41 30
4.01 8,185 0.79 4.12 0.94 3.97 25
16.10 8,649 0.73 4.33 0.95 4.11 28
(3.18)%$ 48,980 0.74% 4.53% 0.79% 4.48% 19%
0.27 31,939 0.76 4.20 1.30 3.66 7
7.19 29,252 0.69 4.41 1.10 4.00 28
6.46 20,044 0.69 4.65 1.09 4.25 39
3.48 15,911 0.71 4.61 1.11 4.21 24
7.67 6,247 0.71 4.61 1.11 4.21 35
(4.13)%$ 5,367 1.65% 3.61% 2.08% 3.18% 19%
(0.16) 6,939 1.65 3.32 1.91 3.06 7
6.24 3,697 1.64 3.46 1.92 3.18 28
5.58 1,476 1.60 3.73 2.00 3.33 39
2.58 787 1.57 3.73 1.97 3.33 24
6.51 628 1.57 3.76 1.97 3.36 35
(A) On May 24, 1999, the CrestFund Virginia Intermediate Municipal Bond and the
CrestFund Virginia Municipal Bond Funds exchanged all of their assets and
certain liabilities for shares of the Virginia Intermediate Municipal Bond and
the Virginia Municipal Bond Funds, respectively. The CrestFund Virginia
Intermediate Municipal Bond and the CrestFund 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.
Amounts designated as "--" are either $0 or have been rounded to $0.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
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-five funds as of May 31, 2000: the
Balanced Fund, the Capital Appreciation Fund (formerly Capital Growth Fund), the
Core Equity Fund, the E-Commerce Opportunity Fund, the Growth and Income Fund,
the International Equity Fund, the International Equity Index Fund, the Life
Vision Moderate Growth Fund (formerly Life Vision Balanced Portfolio), the Life
Vision Growth and Income Fund (formerly Life Vision Growth and Income
Portfolio), the Life Vision Aggressive Growth Fund (formerly Life Vision Maximum
Growth Portfolio), the Mid-Cap Equity Fund, the Small Cap Value Equity Fund, the
Small Cap Growth Stock 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, the High Income Fund, the
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, the U.S.
Government Securities Fund, the Virginia Intermediate Municipal Bond Fund, and
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 Money Market
Fund, 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 Fund 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. During February 1999,
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 certain stated liabilities of the CrestFunds in exchange for the
issuance of shares in the Funds in a tax-free reorganization (see Note 9).
On February 15, 2000 and December 9, 1999, respectively, theBoard ofTrustees of
the STIClassic Funds Inc. and Board of Directors of the ESCStrategic Funds Inc.
approved an Agreement and Plan of Reorganization (the "Reorganization
Agreement") providing for the transfer of all assets and liabilities of the
ESCStrategic Income Fund in exchange for the issuance of shares in the
STIClassic High Income Fund in a tax-free reorganization that took place at the
close of business on March 27, 2000. The STI Classic High Income Fund had not
commenced operations prior to this merger.
Subsequent to March, 31, 2000, the High Income Fund's fiscal year end was
changed to May 31, in order to be consistent with the year end of each of the
other STI Classic Funds.
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 9,
the STI Classic Funds acquired certain CrestFunds in a tax-free business
combination. While each Fund now exists as a STI Classic Fund, three of the
surviving funds for accounting purposes are CrestFunds. In accordance with
generally accepted accounting principles, the financial statements
presented herein represent those of accounting survivors. Accordingly, the
Statements of Changes in Net Assets and Financial Highlights presented for
periods prior to and ending on May 31, 1999 reflect activity beginning on
the first day of the accounting survivor's fiscal year.
As more fully described above, the STI Classic High Income Fund acquired
the ESCStrategic Income Fund in a tax-free business combination. While this
Fund now exists as a STIClassic Fund, the surviving fund for accounting
purposes is the ESCStrategic Income Fund. In accordance with generally
accepted accounting principles, the financial statements presented herein
represent those of the accounting survivor. Accordingly, the Statements of
Changes in Net Assets and Financial Highlights presented for the periods
prior to and ending on May 31, 2000 reflect activity 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
70
<PAGE>
-------------------------------------------------------------------------------
or less remaining until maturity may be valued at their amortized cost.
Securities for which current market quotations are not readily available
are valued at their fair value as determined in good faith by, or in
accordance with procedures adopted by, the Board of Trustees.
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 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 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% for either the net
asset value of the shares at the time of purchase or the net asset value of
the shares next calculated after the Fund receives the sale request,
whichever is less. 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 TO SHAREHOLDERS -- 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
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
-------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
gains and ordinary income for tax purposes related to the other funds, has
been reclassified to/from the following accounts:
ACCUMULATED UNDISTRIBUTED
PAID-IN REALIZED NET INVESTMENT
CAPITAL GAIN (LOSS) INCOME (LOSS)
(000) (000) (000)
------- ----------- ---------------
Georgia Tax-Exempt Bond Fund $-- $ 1 $(1)
Investment Grade Tax-Exempt
Bond Fund 8 (6) (2)
Maryland Municipal Bond Fund (3) -- 3
Short-Term Bond Fund -- 2 (2)
Short-Term U.S. Treasury
Securities Fund -- (32) 32
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. Transactions with Affiliates:
Certain officers of the Trust are also officers of SEI Investments Mutual Funds
Services (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.
The Fund has entered into an agreement with the Distributor to manage the
investments of repurchase agreements for the Funds. For its services the
Distributor received $1,846,277 for the year ended May 31, 2000.
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 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.
Prior to March 27, 2000, administrative and accounting services were provided to
the ESC Strategic Income Fund by BISYS Fund Services Limited Partnership who was
entitled to receive a fee at an annual rate of .15% of the average daily net
assets of the ESC Strategic Income Fund.
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.
Prior to March 27, 2000, transfer and dividend disbursing agent services were
provided to the ESC Strategic Income Fund by BISYS Fund Services Inc. for which
it received a fee of $15 per account per year subject to a minimum fee of
$15,000.
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 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.
72
<PAGE>
-------------------------------------------------------------------------------
Prior to May 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%.
Prior to March 27, 2000, BISYS Fund Services served as distributor pursuant to
an agreement with the ESC Strategic Income Fund.
5. Investment Advisory and Custodian Agreements:
The Trust, 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:
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
------ ------ ------ ------- ----------- --------
Trusco:
Florida Tax-Exempt
Bond Fund .65% .67% .18% .87% 1.00% 1.37%
Georgia Tax-Exempt
Bond Fund .65% .67% .18% .87% 1.00% 1.37%
HighIncome Fund .80% -- -- -- 1.00% 1.40%
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%
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%
The investment advisers 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 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.
Prior to March 27, 2000 SunTrust Equitable Securities Corporation ("STES")
provided investment advisory services to the ESC Strategic Income Fund. STES was
paid for advisory services at an annual rate of 1.00% of average daily net
assets of the Fund, and agreed to waive and reimburse their fee in order to
limit operating expenses to a maximum of 2.00% of average daily net assets of
the Class A shares, and 2.50% of the Class D shares.
SunTrust Bank, Atlanta, an affiliate of the investment adviser, 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.
73
<PAGE>
<TABLE>
NOTES TO FINANCIAL STATEMENTS (continued)
-----------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
6. Capital Share Transactions:
Capital Share Transactions for the funds were as follows: (000)
FLORIDA TAX-EXEMPT GEORGIA TAX-EXEMPT
BOND FUND BOND FUND HIGH INCOME FUND
-------------------- ------------------------ -------------------------------
06/01/99- 06/01/98- 06/01/99- 06/01/98- 04/01/00- 04/01/99 04/01/98-
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 03/31/00 03/31/99
-------- ---------- ----------- --------- --------- -------- ---------
Trust Shares:
<S> <C> <C> <C> <C> <C> <C> <C>
Shares Issued 2,797 4,807 2,757 3,562 -- -- --
Shares Issued in Connection with Crestar Merger -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 87 154 140 116 -- -- --
Shares Redeemed (4,835) (2,530) (3,069) (1,128) -- -- --
------ ----- ----- ----- --- ---- ------
Net Trust Share Transactions (1,951) 2,431 (172) 2,550 -- -- --
------ ----- ----- ----- --- ---- ------
Investor Shares:
Shares Issued 16 102 58 117 -- -- --
Shares Issued in Connection with Crestar Merger -- -- -- -- -- --
Shares Issued in Lieu of Cash Distributions 12 13 11 12 -- -- --
Shares Redeemed (101) (72) (177) (155) -- -- --
------ ----- ----- ----- --- ---- ------
Net Investor Share Transactions (73) 43 (108) (26) -- -- --
------ ----- ----- ----- --- ---- ------
Flex Shares:
Shares Issued 287 1,102 196 586 147 99 94
Shares Issued in Connection with ESC Merger -- -- -- -- -- 44 --
Shares Issued in Lieu of Cash Distributions 42 40 42 30 2 50 90
Shares Redeemed (748) (512) (641) (102) (14) (678) (1,888)
------ ----- ----- ----- --- ---- ------
Net Flex Share Transactions (419) 630 (403) 514 135 (485) (1,704)
------ ----- ----- ----- --- ---- ------
Class D:
Shares Issued -- -- -- -- -- 5 16
Shares Issued in Connection with Merger -- -- -- -- -- (44) --
Shares Issued in Lieu of Cash Distributions -- -- -- -- -- 4 4
Shares Redeemed -- -- -- -- -- (21) (46)
------ ----- ----- ----- --- ---- ------
Net Class D Transactions -- -- -- -- -- (56) (26)
------ ----- ----- ----- --- ---- ------
Net Change in Capital Shares (2,443) 3,104 (683) 3,038 135 (541) (1,730)
====== ===== ==== ===== === ==== ======
SHORT-TERM SHORT-TERM U.S. TREASURY
BOND FUND SECURITIES FUND
---------------------------- -------------------------
06/01/99- 06/01/98- 06/01/99- 06/01/98-
05/31/00 05/31/99 05/31/00 05/31/99
---------- --------- --------- ---------
Trust Shares:
Shares Issued 5,302 5,746 3,158 1,750
Shares Issued in Connection with Crestar Merger -- 7,308 -- --
Shares Issued in Lieu of Cash Distributions 478 357 145 95
Shares Redeemed (8,249) (4,219) (1,567) (921)
------ ------ ------ -----
Net Trust Share Transactions (2,469) 9,192 1,736 924
------ ------ ------ -----
Investor Shares:
Shares Issued 41 58 75 138
Shares Issued in Lieu of Cash Distributions 9 9 13 13
Shares Redeemed (84) (77) (159) (198)
------ ------ ------ -----
Net Investor Share Transactions (34) (10) (71) (47)
------ ------ ------ -----
Flex Shares:
Shares Issued 119 251 341 531
Shares Issued in Connection with Crestar Merger -- -- -- --
Shares Issued in Lieu of Cash Distributions 11 10 22 9
Shares Redeemed (152) (235) (311) (185)
------ ------ ------ -----
Net Flex Share Transactions (22) 26 52 355
------ ------ ------ -----
Net Change in Capital Shares (2,525) 9,208 1,717 1,232
====== ====== ====== =====
</TABLE>
74
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------------------------
INVESTMENT GRADE INVESTMENT GRADE TAX- LIMITED-TERM FEDERAL MARYLAND MUNICIPAL
BOND FUND EXEMPT BOND FUND MORTGAGE SECURITIES FUND BOND FUND
-------------------- ----------------------- ------------------------ ------------------------------
06/01/99- 06/01/98- 06/01/99- 06/01/98- 06/01/99- 06/01/98- 06/01/99- 12/01/98- 12/01/97
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99 11/30/98
--------- --------- --------- ---------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25,331 28,937 2,710 5,150 5,423 5,379 1,921 1,556 1,292
-- 30,233 -- -- -- -- -- -- --
3,675 3,979 254 479 492 620 21 2 1
(35,746) (26,711) (5,846) (4,614) (6,485) (5,979) (2,122) (479) (575
------- ------- ------ ------ ------ ------ ------ ------ ------
(6,740) 36,438 (2,882) 1,015 (570) 20 (180) 1,079 718
------- ------- ------ ------ ------ ------ ------ ------ ------
331 758 63 190 31 84 -- -- --
-- 229 -- -- -- -- -- -- --
167 191 91 143 10 15 -- -- --
(1,516) (931) (600) (535) (140) (144) -- -- --
------- ------- ------ ------ ------ ------ ------ ------ ------
(1,018) 247 (446) (202) (99) (45) -- -- --
------- ------- ------ ------ ------ ------ ------ ------ ------
958 1,821 650 936 81 107 237 464 274
-- -- -- -- -- -- -- --
123 93 62 49 10 10 23 7 4
(1,500) (634) (825) (234) (127) (56) (370) (22) (17)
------- ------- ------ ------ ------ ------ ------ ------ ------
(419) 1,280 (113) 751 (36) 61 (110) 449 261
------- ------- ------ ------ ------ ------ ------ ------ ------
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
------- ------- ------ ------ ------ ------ ------ ------ ------
-- -- -- -- -- -- -- -- --
------- ------- ------ ------ ------ ------ ------ ------ ------
(8,177) 37,965 (3,441) 1,564 (705) 36 (290) 1,528 979
======= ======= ====== ====== ====== ====== ====== ====== ======
U. S. GOVERNMENT
SECURITIES FUND VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND VIRGINIA MUNICIPAL BOND FUND
--------------------- -------------------------------------------- -----------------------------
06/01/99- 06/01/98- 06/01/99- 12/01/98- 12/01/97- 06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 05/31/00 05/31/99 11/30/98 05/31/00 05/31/99 11/30/98
--------- ---------- ---------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2,790 2,197 2,693 2,543 3,557 3,311 688 1,302
-- 5,439 -- -- -- -- -- --
127 49 98 4 61 26 3 6
(4,192) (1,087) (5,235) (2,327) (3,293) (1,318) (368) (488)
------ ------ ------ ------ ------ ------ ---- -----
(1,275) 6,598 (2,444) 220 325 2,019 323 820
------ ------ ------ ------ ------ ------ ---- -----
41 91 147 62 210 -- -- --
11 15 29 16 28 -- -- --
(156) (167) (221) (79) (241) -- -- --
------ ------ ------ ------ ------ ------ ---- -----
(104) (61) (45) (1) (3) -- -- --
------ ------ ------ ------ ------ ------ ---- -----
238 564 -- -- -- 161 359 233
-- 308 -- -- -- -- -- --
44 19 -- -- -- 15 7 6
(616) (156) -- -- -- (284) (49) (35)
------ ------ ------ ------ ------ ------ ---- -----
(334) 735 -- -- -- (108) 317 204
------ ------ ------ ------ ------ ------ ---- -----
(1,713) 7,272 (2,489) 219 322 1,911 640 1,024
====== ===== ====== ====== ====== ====== ==== =====
</TABLE>
75
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
-------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
7. 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, 2000, were as follows:
PURCHASES SALES
(000) (000)
--------------------
Florida Tax-Exempt Bond Fund $ 98,307 $124,813
Georgia Tax-Exempt Bond Fund 17,157 23,587
High Income Fund 944 --
Investment Grade Bond Fund 1,048,744 931,682
Investment Grade Tax-Exempt Bond Fund 340,143 375,260
Limited-Term Federal Mortgage
Securities Fund -- --
Maryland Municipal Bond Fund 9,607 3,570
Short-Term Bond Fund 92,425 58,221
Short-Term U.S. Treasury Securities Fund -- --
U.S. Government Securities Fund -- 29
Virginia Intermediate Municipal Bond Fund 38,212 76,328
Virginia Municipal Bond Fund 24,485 9,157
The cost of purchases and proceeds from sales of U.S. Government securities
were:
PURCHASES SALES
(000) (000)
--------------------
Florida Tax-Exempt Bond Fund $ -- $ --
Georgia Tax-Exempt Bond Fund -- --
High Income Fund -- --
Investment Grade Bond Fund 1,143,261 1,417,469
Investment Grade Tax-Exempt Bond Fund -- --
Limited-Term Federal Mortgage
Securities Fund 507,100 531,796
Maryland Municipal Bond Fund -- --
Short-Term Bond Fund 35,838 84,195
Short-Term U.S. Treasury Securities Fund 32,856 23,767
U.S. Government Securities Fund 29,378 41,373
Virginia Intermediate Municipal Bond Fund -- --
Virginia Municipal Bond Fund -- --
At May 31, 2000, 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, 2000, were as follows:
AGGREGATE AGGREGATE NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
(000) (000) (000)
------------------------- --------------
Florida Tax-Exempt Bond Fund $ 257 $(2,723) $ (2,466)
Georgia Tax-Exempt Bond Fund 93 (3,335) (3,242)
High Income Fund -- (162) (162)
Investment Grade Bond Fund 5,160 (62,099) (56,939)
Investment Grade Tax-Exempt
Bond Fund 602 (1,468) (866)
Limited-Term Federal Mortgage
Securities Fund 31 (2,637) (2,606)
Maryland Municipal Bond Fund 40 (1,776) (1,736)
Short-Term Bond Fund 24 (4,793) (4,769)
Short-Term U.S. Treasury
Securities Fund 9 (837) (828)
U.S. Government Securities Fund 104 (4,045) (3,941)
Virginia Intermediate Municipal
Bond Fund 1,289 (7,671) (6,382)
Virginia Municipal Bond Fund 108 (2,359) (2,251)
Subsequent to October 31, 1999, the Funds recognized net capital losses for tax
purposes that have been deferred to 2000 and can be used to offset future
capital gains after May 31, 2000. The Funds also had capital loss carryforwards
at May 31, 2000 as follows:
<TABLE>
POST
10/31
CARRYOVER EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES DEFERRED
5/31/00 2002 2003 2004 2005 2006 2007 2008 LOSS
(000) (000) (000 (000) (000) (000 (000) (000) (000)
-------- -------- ------- -------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Florida
Tax-Exempt
Bond
Fund $ 1,224 $ -- $ -- $ -- $ -- $ -- $ -- $ 1,224 $1,039
Georgia
Tax-Exempt
Bond
Fund 398 -- -- -- -- -- -- 398 438
High Income
Fund 768 -- -- -- -- -- 61 707 --
Investment
Grade Bond
Fund 14,208 -- -- -- -- 3,029 -- 11,179 27,768
Investment
Grade
Tax-Exempt
Bond
Fund 2,622 -- -- -- -- -- -- 2,622 2,053
Limited-Term
Federal
Mortgage
Securities
Fund 2,189 -- -- -- -- -- -- 2,189 1,288
Maryland
Municipal
Bond
Fund 22 -- -- -- -- -- 19 3 233
Short-Term
Bond Fund 3,701 528 254 555 284 1,134 -- 946 1,178
Short-Term
U.S. Treasury
Securities
Fund -- -- -- -- -- -- -- -- 15
U.S. Government
Securities
Fund 1,636 -- -- -- -- 792 -- 844 911
Virginia
Intermediate
Municipal
Bond
Fund -- -- -- -- -- -- -- -- 2,062
Virginia
Municipal
Bond
Fund 53 -- -- -- -- -- -- 53 490
</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.
8. 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 adviser 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.
76
<PAGE>
-------------------------------------------------------------------------------
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.
The High Income Fund that invests in high yield instruments is subject to
certain credit and market risks. The yields of high debt obligations reflect,
among other things, perceived credit risk. The Funds' investment in securities
rated below investment grade typically involves risks not associated with higher
rated securities including, among others, greater risks of timely and ultimate
payment of interest and principal, greater market price volatility and less
liquid secondary marketing trading.
9. CrestFunds Merger
The Board of Directors and shareholders of the CrestFunds approved a
reorganization of the CrestFunds into STI Classic Funds which took place during
May 1999.
The following table summarizes certain relevant information of the Funds prior
to and immediately after the business combinations in May 1999 and is unaudited:
OUTSTANDING UNREALIZED
ON MERGER APPRECIATION
CRESTFUNDS DATE (DEPRECIATION)
------------------------------------ ---------- ------------
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 315,993 61,930
Maryland Municipal Bond (1)
Trust Shares 2,941,190 305,068
Investor Class B 764,740 (31,446)
Virginia Intermediate Municipal
Bond (1)
Trust Shares 23,538,137 5,880,351
Investor Class A 753,539 76,972
Virginia Municipal Bond (1)
Trust Shares 3,019,996 511,586
Investor Class B 647,089 (13,152)
<PAGE>
SHARES ISSUED NET ASSETS NAV
IN BUSINESS AFTER PER
STI CLASSIC FUNDS COMBINATION COMBINATION SHARE
------------------------- -------------- ---------- ------
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 307,517 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
(1) Represents the accounting survivor in this business combination.
10. ESC Strategic Funds Merger
The Board of Directors and shareholders of the ESC Strategic Funds approved a
reorganization of the ESC Strategic Income Fund into STI Classic High Income
Fund which took place during March 2000.
The following table summarizes certain relevant information of the Funds prior
to and immediately after the business combinations in March 2000 and is
unaudited:
OUTSTANDING UNREALIZED
ON MERGER APPRECIATION
ESC STRATEGIC FUNDS DATE (DEPRECIATION)
----------------------- ------------ ------------
ESC Strategic Income
Class D 213,037 $(133,549)
SHARES ISSUE NET ASSETS NAV
IN BUSINESS AFTER PER
STI CLASSIC FUNDS COMBINATION COMBINATION SHARE
------------------ ------------- ----------- ------
High Income
Flex Shares 213,037 $1,697,825 $7.97
11. Subsequent Event
Effective June 30, 2000, SunTrustBanks, Inc. reorganized all of the investment
management functions of its three institutional money management units,
including SunTrust Bank, into Trusco Capital Management, Inc.
77
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000
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, High Income, 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, 2000, and the related statements of operations, changes in net assets,
and financial highlights for the periods presented, excluding the periods
indicated below. 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 changes for the year ended November 30, 1998, 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. The statement of changes
for the year ended March 31, 1999, and financial highlights for the periods
prior to March 31, 2000, for the High Income Fund, were audited by other
auditors whose report dated May 14, 1999, expressed an unqualified opinion on
this information.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of May 31, 2000, 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 audited by us
present fairly, in all material respects, the financial position of the Florida
Tax-Exempt Bond, Georgia Tax-Exempt Bond, High Income, 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, 2000, 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
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
July 18, 2000
78
<PAGE>
NOTICE TO SHAREHOLDERS
--------------------------------------------------------------------------------
STI CLASSIC FIXED INCOME FUNDS MAY 31, 2000 UNAUDITED
For shareholders that do not have a May 31, 2000 tax year end, this notice is
for informational purposes only. For shareholders with a May 31, 2000, please
consult your tax adviser as to the pertinence of this notice. For the fiscal
year ended May 31, 2000, each portfolio is designating the following items with
regard to distributions paid during the year:
<TABLE>
LONG TERM
(20% RATE) ORDINARY
CAPITAL GAIN INCOME TAX-EXEMPT TOTAL QUALIFYING
FUND DISTRIBUTION DISTRIBUTIONS INTEREST INTEREST DIVIDENDS (1)
-------------------------------------------- ------------- ------------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Florida Tax-Exempt Bond Fund 8.30% 2.93% 88.77% 100.00% 0.00%
Georgia Tax-Exempt Bond Fund 7.06% 1.56% 91.38% 100.00% 0.00%
High Income Fund 0.00% 100.00% 0.00% 100.00% 0.00%
Investment Grade Bond Fund 0.00% 100.00% 0.00% 100.00% 0.00%
Investment Grade Tax-Exempt Bond Fund 10.08% 21.54% 68.38% 100.00% 0.00%
Limited-Term Federal Mortgage Securities Fund 0.00% 100.00% 0.00% 100.00% 0.00%
Maryland Municipal Bond Fund 0.00% 0.59% 99.41% 100.00% 0.00%
Short-Term Bond Fund 1.29% 98.71% 0.00% 100.00% 0.00%
Short-Term U.S. Treasury Securities Fund 0.25% 99.75% 0.00% 100.00% 0.00%
U.S. Government Securities 0.00% 100.00% 0.00% 100.00% 0.00%
Virginia Intermediate Municipal Bond Fund 10.95% 0.92% 88.13% 100.00% 0.00%
Virginia Municipal Bond Fund 1.00% 0.75% 98.25% 100.00% 0.00%
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE
DIVIDENDS RECEIVED DEDUCTION AND IS REFLECTED AS A PERCENTAGE OF "ORDINARY
INCOME DISTRIBUTIONS".
</TABLE>
79
<PAGE>
INVESTMENT ADVISER
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.
<PAGE>
STATEMENT OF NET ASSETS
------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
PRIME QUALITY MONEY MARKET FUND
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
COMMERCIAL PAPER (30.4%)
AEROSPACE/DEFENSE EQUIPMENT (0.2%)
United Technologies
6.350%, 06/01/00 $ 10,000 $ 10,000
---------
ELECTRIC PRODUCTS (0.6%)
Emerson Electric
6.770%, 06/01/00 27,000 27,000
---------
FINANCIAL SERVICES (16.3%)
American Express
6.750%, 06/02/00 9,222 9,220
Associates First Capital
6.770%, 06/01/00 170,000 170,000
Bell Atlantic Funding
6.400%, 06/13/00 11,300 11,276
Bell Atlantic Net Funding
6.400%, 06/14/00 30,000 29,931
6.440%, 06/20/00 21,500 21,427
BellSouth Capital
6.800%, 06/01/00 12,000 12,000
Cargill Global
6.790%, 06/01/00 36,610 36,610
KFW International Finance
6.750%, 06/02/00 2,550 2,550
Paccar Financial
6.390%, 06/02/00 4,140 4,139
Progress Capital
6.520%, 06/05/00 13,400 13,390
6.550%, 06/08/00 29,300 29,263
6.550%, 06/08/00 6,400 6,392
6.530%, 06/15/00 12,800 12,768
6.570%, 06/22/00 16,600 16,536
Prudential Funding
6.790%, 06/01/00 175,000 175,000
Teco Finance
6.370%, 06/12/00 60,000 59,883
6.490%, 06/21/00 18,750 18,682
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FINANCIAL SERVICES--CONTINUED
UBS Finance
6.790%, 06/01/00 $125,000 $ 125,000
---------
754,067
---------
HOUSEHOLD PRODUCTS (0.1%)
Procter & Gamble
6.400%, 06/01/00 4,000 4,000
6.400%, 06/02/00 2,000 2,000
---------
6,000
---------
INSURANCE (0.8%)
Allstate
6.770%, 06/01/00 35,000 35,000
---------
INVESTMENT BANKERS/BROKER DEALERS (3.9%)
Deutsche Bank
6.350%, 06/01/00 1,500 1,500
6.370%, 06/07/00 10,486 10,475
6.500%, 06/09/00 20,000 19,971
Merrill Lynch
6.520%, 06/13/00 4,000 3,991
Morgan Stanley Dean Witter
6.780%, 06/01/00 70,000 70,000
6.880%, 08/24/00 (C) 75,000 75,000
---------
180,937
---------
LEASING EQUIPMENT (0.5%)
Pitney Bowes
6.750%, 06/01/00 24,700 24,700
---------
RETAIL (3.9%)
Albertson's
6.500%, 06/05/00 19,000 18,986
American Greetings
6.340%, 06/06/00 20,000 19,982
Eastman Kodak
6.350%, 06/05/00 2,627 2,625
6
<PAGE>
--------------------------------------------------------------------------------
FACE AMOUNT
(000 VALUE (000)
-------------------------------------------------------------------------------
RETAIL--CONTINUED
Fortune Brands
6.770%, 06/01/00 $ 22,800 $ 22,800
6.400%, 06/08/00 42,000 41,948
Gap
6.550%, 06/26/00 3,100 3,086
Wal-Mart
6.450%, 06/05/00 70,000 69,950
---------
179,377
---------
TELEPHONE & TELECOMMUNICATIONS (0.2%)
BellSouth Telecomm
6.340%, 06/01/00 7,100 7,100
SBC Communications
6.420%, 06/14/00 400 399
---------
7,499
---------
UTILITIES (3.9%)
Consolidated Edison
6.780%, 06/01/00 27,000 27,000
Edison International
6.520%, 06/16/00 29,000 28,921
6.520%, 06/22/00 17,000 16,935
Georgia Power
6.400%, 06/05/00 17,646 17,633
Kansas City P&L
6.420%, 06/12/00 10,700 10,679
Pacific Gas & Electric
6.550%, 06/07/00 2,780 2,777
South Carolina Electric & Gas
6.530%, 06/21/00 12,450 12,405
Southern California Edison
6.520%, 06/22/00 12,000 11,954
Tampa Electric
6.760%, 06/01/00 51,400 51,400
---------
179,704
---------
Total Commercial Paper
(Cost $1,404,284) 1,404,284
---------
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (47.5%)
BANKS (15.6%)
Amsouth Bank (C)
6.659%, 06/22/00 $ 50,000 $ 49,995
6.900%, 07/25/00 50,000 49,990
Bank One, MTN (C)
6.200%, 06/13/00 40,000 39,995
6.241%, 06/23/00 33,945 33,944
6.781%, 08/18/00 500 500
Bankers Trust, MTN (C)
6.240%, 06/16/00 2,400 2,401
Beneficial, MTN (C)
6.181%, 06/01/00 40,000 40,000
Branch Banking & Trust (C)
6.830%, 06/09/00 50,000 49,981
7.030%, 06/15/00 25,000 24,994
6.880%, 08/01/00 65,000 64,978
Comerica Bank (C)
6.563%, 08/30/00 121,000 121,000
Fleet Boston, MTN (C)
6.445%, 07/28/00 40,000 39,999
Fleet National Bank (C)
7.010%, 07/28/00 5,000 5,004
Huntington National Bank (C)
6.360%, 07/21/00 80,000 80,003
Key Bank (C)
7.010%, 07/26/00 20,000 20,016
Keycorp, Ser C, MTN (C)
6.641%, 06/23/00 5,000 5,001
Keycorp, MTN (C)
6.833%, 08/07/00 2,000 2,001
PNC Bank (C)
6.445%, 06/12/00 90,000 89,989
Wachovia Bank (C)
6.255%, 06/28/00 1,500 1,500
---------
721,291
---------
7
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
PRIME QUALITY MONEY MARKET FUND--CONTINUED
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
ENTERTAINMENT (1.4%)
Walt Disney
6.375%, 03/30/01 $ 17,325 $ 17,266
Walt Disney (A)
4.200%, 03/15/01 50,000 49,050
---------
66,316
---------
FINANCE (16.4%)
American Express Centurion (C)
6.730%, 06/19/00 1,000 1,000
6.720%, 06/08/00 35,000 35,000
American General Financial, MTN
5.840%, 01/29/01 6,000 5,961
Associates (A)
6.450%, 09/15/00 5,290 5,288
AT&T Capital, MTN
6.875%, 01/16/01 3,700 3,700
AT&T Capital, MTN (C)
7.594%, 06/14/00 50,000 50,025
6.971%, 07/07/00 30,000 30,103
Bell Atlantic Network Funding
6.550%, 06/27/00 45,000 45,000
Beta Finance (C)
6.430%, 07/25/00 50,000 49,998
Beta Finance, MTN (C)
6.418%, 07/05/00 25,000 25,000
Beta Finance, MTN (A)
6.800%, 02/15/01 25,000 25,000
Caterpillar Finance, MTN (C)
6.680%, 06/26/00 25,000 24,997
6.818%, 07/10/00 18,000 18,000
Caterpillar Financial Services,
MTN (C)
6.281%, 07/17/00 2,000 2,000
Chrysler Financial
5.875%, 02/07/01 1,000 994
Chrysler Financial, MTN
6.080%, 03/09/01 5,000 4,959
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
FINANCE--CONTINUED
Diageo Capital PLC
6.815%, 08/24/00 $ 80,000 $ 80,001
Ford Motor Credit
5.750%, 01/25/01 1,500 1,489
Ford Motor Credit, MTN (C)
6.870%, 08/07/00 5,000 5,000
GMAC, MTN
7.500%, 06/09/00 1,650 1,651
GMAC, MTN (C)
6.390%, 07/24/00 3,000 3,002
GMAC, MTN
6.800%, 05/22/01 3,250 3,240
GMAC, MTN (C)
6.960%, 08/23/00 2,000 2,002
6.375%, 07/31/00 2,500 2,500
GTE California
5.625%, 02/01/01 13,000 12,881
Household Finance, MTN (C)
7.050%, 06/14/00 50,000 49,991
Paccar Financial, MTN (C)
6.219%, 06/05/00 20,000 20,010
Sigma Finance, MTN (A) (C)
6.440%, 08/01/00 50,000 50,000
Sigma Finance, MTN
6.970%, 04/03/01 50,000 50,000
Toyota Motor Credit, MTN (C)
6.460%, 07/25/00 50,000 50,028
6.523%, 08/30/00 100,000 100,000
---------
758,820
---------
FOOD, BEVERAGE & TOBACCO (2.4%)
Sara Lee
6.180%, 06/01/00 11,000 11,000
6.420%, 06/08/00 50,000 50,000
6.550%, 06/19/00 50,000 50,000
---------
111,000
---------
REGIONAL GOVERNMENT AGENCY (0.0%)
Quebec Providence, MTN (C)
8.690%, 02/22/01 1,000 1,012
---------
8
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
INVESTMENT BANKERS/BROKER DEALERS (7.4%)
Bear Stearns (C)
6.710%, 06/26/00 $ 15,000 $ 14,996
Bear Stearns, Euro MTN, (C)
6.765%, 06/30/00 21,600 21,621
Bear Stearns, MTN, (C)
6.275%, 06/07/00 2,500 2,502
6.714%, 06/19/00 13,000 13,005
Bear Stearns, MTN, (C)
6.398%, 06/02/00 12,450 12,465
Bear Stearns, Ser B, MTN (C)
6.331%, 07/10/00 5,450 5,448
6.380%, 06/15/00 5,000 5,001
7.223%, 07/05/00 50,000 50,000
Credit Suisse First Boston
Guernsey, MTN (C)
6.980%, 07/03/00 40,000 40,006
Goldman Sachs Group, MTN (C)
7.060%, 08/23/00 50,000 50,000
JP Morgan, MTN (C)
6.530%, 03/16/01 50,000 50,000
Merrill Lynch
6.500%, 04/01/01 3,438 3,426
Merrill Lynch, MTN (C)
5.920%, 06/07/00 50,000 49,996
Morgan Stanley Dean Witter,
MTN
6.890%, 06/16/00 (C) 5,000 5,000
5.625%, 02/28/01 20,000 19,821
---------
343,287
---------
LEASING EQUIPMENT (2.2%)
International Lease Finance
6.520%, 06/02/00 56,500 56,500
5.875%, 01/15/01 23,000 22,836
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
LEASING EQUIPMENT--CONTINUED
Xerox, MTN (C)
6.633%, 08/08/00 $ 20,000 $ 19,996
---------
99,332
---------
TELEPHONE & TELECOMMUNICATIONS (2.1%)
AT&T (C)
6.683%, 08/07/00 71,000 71,000
AT&T, MTN (C)
6.900%, 06/21/00 26,875 26,982
---------
97,982
---------
Total Corporate Obligations
(Cost $2,199,040) 2,199,040
---------
ASSET BACKED SECURITIES (0.6%)
Navistar Financial Owner Trust,
Ser 2000-A, Cl A1 (C)
6.080%, 03/15/01 3,427 3,426
Nissan Auto Receivables Owner
Trust, Ser 2000-A, Cl A1
6.125%, 02/15/01 19,905 19,904
Union Acceptance, Ser 2000-A,
Cl A1
5.993%, 02/08/01 2,809 2,809
---------
Total Asset Backed Securities
(Cost $26,139) 26,139
---------
BANK NOTES (1.0%)
Fleet National Bank (C)
6.318%, 07/26/00 40,000 39,994
Key Bank (C)
6.331%, 07/17/00 8,000 8,001
---------
Total Bank Notes
(Cost $47,995) 47,995
---------
CERTIFICATES OF DEPOSIT (1.3%)
Bank of America (C)
6.100%, 06/12/00 8,000 8,000
9
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
PRIME QUALITY MONEY MARKET FUND--CONCLUDED
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--CONTINUED
Citicorp (C)
6.510%, 08/10/00 $ 11,585 $ 11,589
Regions Bank
6.700%, 02/02/01 40,000 39,987
---------
Total Certificates of Deposit
(Cost $59,576) 59,576
---------
CERTIFICATES OF DEPOSIT -- YANKEE (13.3%)
Bayerische Landesbank NY (C)
6.543%, 08/30/00 120,000 120,000
Canadian Imperial Bank NY
7.090%, 05/04/01 50,000 49,991
Commerzbank AG NY
6.860%, 04/04/01 25,000 24,994
Deutsche Bank NY
6.660%, 08/30/00 47,000 47,000
6.695%, 02/05/01 50,000 49,894
Landesbank Hessen-Thueringen
7.143%, 05/08/01 75,000 74,995
National Westminster Bank NY
7.260%, 05/09/01 47,000 46,996
Rabobank NY
7.160%, 05/10/01 25,000 24,998
Societe Generale NY (C)
6.573%, 08/29/00 125,000 125,000
UBS AG Stamford
6.850%, 03/28/01 50,000 49,984
---------
Total Certificates of Deposit -- Yankee
(Cost $613,852) 613,852
---------
U.S. GOVERNMENT AGENCY OBLIGATIONS (2.9%)
SLMA, MTN (C)
6.343%, 08/01/00 130,000 130,056
SLMA, Ser 1996-3, Cl A1 (C)
6.383%, 07/25/00 1,717 1,708
SLMA, Ser 1996-4, Cl A1 (C)
6.373%, 07/25/00 600 599
---------
-------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
-------------------------------------------------------------------------------
Total U.S. Government Agency
Obligations
(Cost $132,363) $ 132,363
---------
CASH EQUIVALENT (0.5%)
AIM Liquid Assets
Portfolio 25,000,000 25,000
---------
Total Cash Equivalent
(Cost $25,000) 25,000
---------
REPURCHASE AGREEMENTS (2.4%)
ABN-Amro
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$16,636,510 (collateralized
by FHLMC obligations: total
market value $35,326,201) (B) $ 16,634 16,634
Barclays
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$15,020,276 (collateralized by
FHLMC obligations: total
market value $15,318,468) (B) 15,018 15,018
Deutsche Bank
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$14,005,913 (collateralized
by FNMA obligations: total
market value $14,283,472) (B) 14,003 14,003
JP Morgan
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$4,597,567 (collateralized
by GNMA: total market
value $4,688,678) (B) 4,597 4,597
10
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
Merrill Lynch
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$48,484,327 (collateralized
by various FNMA obligations:
total market value
$49,449,162) (B) $ 48,476 $ 48,476
Morgan Stanley Dean Witter
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$5,004,469 (collateralized by
FHLMC obligations: total
market value $5,211,226) (B) 5,004 5,004
Warburg Dillion
6.450%, dated 05/31/00, matures
06/01/00, repurchase price
$8,565,644 (collateralized
by a U.S. Treasury Note: total
market value $8,736,468) (B) 8,564 8,564
---------
Total Repurchase Agreements
(Cost $112,296) 112,296
---------
Total Investments (99.9%)
(Cost $4,620,545) 4,620,545
---------
OTHER ASSETS AND LIABILITIES, NET (0.1%) 6,782
---------
-------------------------------------------------------------------------------
VALUE (000)
-------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 3,311,671,156 outstanding shares
of beneficial interest $3,311,595
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based
on 1,312,667,868 outstanding shares
of beneficial interest 1,312,668
Fund shares of the Flex Shares (unlimited
authorization -- no par value) based
on 3,445,570 outstanding shares of
beneficial interest 3,445
Undistributed net investment income 1
Accumulated net realized loss
on investments (382)
----------
Total Net Assets (100.0%) $4,627,327
==========
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
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Flex Shares $1.00
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE FINANCIAL STATEMENTS. FOR
DESCRIPTIONS OF ABBREVIATIONS, PLEASE
SEE PAGE 33.
11
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-EXEMPT MONEY MARKET FUND
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MUNICIPAL BONDS (98.0%)
ALABAMA (2.3%)
Alabama, Special Care Facilities
Financing Authority,
Depreciable Assets, RB,
FGIC (C) (D)
3.950%, 06/07/00 $ 985 $ 985
Alabama State, Public School
& College Authority,
Putters, Ser 101, RB (C) (D)
5.000%, 06/01/00 9,975 9,975
Cherokee, Industrial
Development Board, BOC
Group Project, RB (C) (D) (E)
4.350%, 06/01/00 3,500 3,500
Lauderdale County, Health
Care Authority, Coffee Health
Group, Ser A, RB, MBIA
3.700%, 07/01/00 1,265 1,265
Mobile, Industrial Development,
Board Dock & Wharf Holnam
Project, Ser A, RB (C) (D) (E)
4.050%, 06/07/00 4,900 4,900
---------
20,625
---------
ARIZONA (1.3%)
Arizona State, Educational Loan
Marketing, Ser A, RB,
AMT (C) (D) (E)
4.150%, 06/07/00 2,500 2,500
Arizona State, Transportation
Board Excise, Maricopa County
Regional Area, Ser A, RB
4.500%, 07/01/00 1,000 1,000
-------------------------------------------------------------------------------
FACE AMOUNT
(000 VALUE (000)
-------------------------------------------------------------------------------
ARIZONA--CONTINUED
Salt River Project, Agricultural
Improvement & Power District,
Electric System, Ser SG-10, RB (C) (D)
4.380%, 06/01/00 $ 7,570 $ 7,570
---------
11,070
---------
CALIFORNIA (0.6%)
California, Higher Education
Authority, Senior Lien,
Ser A-4, RB, AMT (C) (D)
4.350%, 04/01/01 5,000 5,000
---------
COLORADO (1.0%)
Cherry Creek, South Metropolitan
District Number 1, GO (C) (D) (E)
4.400%, 06/01/00 1,250 1,250
Colorado State, Multi-Family
Housing Finance Authority,
St. Moritz Project, Ser H,
RB, FNMA (C) (D)
4.300%, 06/07/00 5,915 5,915
Lowry, Economic Redevelopment
Authority, Ser B, RB (C) (D) (E)
4.100%, 06/07/00 2,000 2,000
---------
9,165
---------
DELAWARE (0.2%)
Delaware State, Educational
Development Authority, RB
(C) (D) (E)
4.725%, 06/01/00 1,875 1,875
---------
DISTRICT OF COLUMBIA (1.7%)
District of Columbia, George
Washington University,
Ser C, RB, MBIA (C) (D)
4.300%, 06/07/00 7,500 7,500
12
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--CONTINUED
District of Columbia, Planned
Parenthood, RB (C) (D) (E)
4.400%, 06/01/00 $ 7,250 $ 7,250
----------
14,750
----------
FLORIDA (7.6%)
Dade County, Water & Sewer
System, RB, FGIC (C) (D)
4.050%, 06/07/00 10,700 10,700
Florida State, Board of Education
Capital Outlay,
Ser 223, GO (C) (D)
4.420%, 06/01/00 5,000 5,000
Florida State, Board of Education,
Eagle Trust, RB Prerefunded
@ 100 (C) (D) (F)
4.400%, 06/01/00 13,315 13,315
Florida State, Board of Education,
Eagle Trust, Ser 94901, RB (C) (D)
4.400%, 06/01/00 16,900 16,900
Jacksonville, Health Facilities,
Taxable Charity OB Group,
Ser C, RB, MBIA (C) (D)
4.100%, 06/07/00 7,000 7,000
St. Lucie County, Pollution
Control Authority, Power
and Light, RB (C) (D)
4.000%, 07/18/00 1,500 1,500
University of North Florida,
Parking System, RB (C) (D) (E)
4.400%, 06/01/00 6,000 6,000
University South Florida, Research
Foundation, University
Technology Center, RB (C) (D) (E)
4.450%, 06/01/00 7,000 7,000
----------
67,415
----------
-------------------------------------------------------------------------------
FACE AMOUNT
(000 VALUE (000)
-------------------------------------------------------------------------------
GEORGIA (5.0%)
Atlanta, Airport Authority,
Ser 313, RB (C) (D)
4.450%, 06/01/00 $ 3,335 $ 3,335
Atlanta, Ser SG-123, GO (C) (D)
4.380%, 06/01/00 9,845 9,845
Cobb County, Development
Authority, Educational
Facilities, Kennesaw State
University Project,
RB, AMBAC (C) (D)
4.350%, 06/01/00 6,290 6,290
Fulton County, Development
Authority, American National
Red Cross Project, RB (C) (D) (E)
4.350%, 06/01/00 1,100 1,100
Fulton County, Development
Authority, Metropolitan YMCA
Project, RB (C) (D) (E)
4.300%, 06/01/00 8,500 8,500
Gordon County, Development
Authority, Sara Lee Project,
RB (C) (D)
4.400%, 06/01/00 1,400 1,400
Gwinnett County, Solid Waste
Disposal Facilities,
Lucent Technology Project,
RB, AMT (C) (D)
4.250%, 06/07/00 3,000 3,000
Lafayette, Industrial Development,
Blue-Bird Project, RB (C) (D)
4.350%, 06/01/00 1,000 1,000
Mitchell County, Industrial
Development Authority,
City of Camille Project, RB
(C) (D) (E)
4.350%, 06/01/00 3,600 3,600
13
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
GEORGIA--CONTINUED
Municipal Electric Authority,
Project One, Sub-Ser E,
RB (C) (D) (E)
4.250%, 06/07/00 $ 4,000 $ 4,000
Summerville, Development
Authority, Exempt Facility,
Image Industries, RB,
AMT (C) (D) (E)
4.500%, 07/06/00 2,000 2,000
---------
44,070
---------
HAWAII (2.2%)
Hawaii State, Highway Authority,
Ser PT 1058, RB (C) (D)
4.380%, 06/01/00 19,790 19,790
---------
IDAHO (0.6%)
Idaho, Housing and Finance
Association, Ser PA-115,
RB (C) (D)
4.430%, 06/01/00 5,401 5,401
---------
ILLINOIS (8.8%)
Bloomington, Airport Authority,
GO (C) (D)
4.350%, 06/07/00 1,200 1,200
Chicago, Airport Special
Facilities,
Centerpoint O'Hare,
RB, AMT (C) (D) (E)
4.350%, 06/07/00 3,500 3,500
Chicago, O'Hare International
Airport, 2nd Lien,
Ser A, RB (C) (D) (E)
3.950%, 06/07/00 2,300 2,300
Chicago, O'Hare International
Airport, 2nd Lien, Ser B, RB
(C) (D) (E)
3.950%, 07/01/00 1,790 1,790
Illinois State, Development
Authority, Pollution Control,
Aces-Illinois Power Company,
Ser C, RB, AMT (C) (D) (E)
4.500%, 06/06/00 3,000 3,000
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
ILLINOIS--CONTINUED
Illinois State, Development
Finance Authority, Derby
Industrial Project,
RB, AMT (C) (D) (E)
4.450%, 06/07/00 $ 800 $ 800
Illinois State, Development
Finance Authority, Pollution
Control, Power Project,
Ser A, RB (C) (D) (E)
4.050%, 06/07/00 5,000 5,000
Illinois State, Development
Finance Authority, Pollution
Control, Power Project,
Ser C, RB (C) (D) (E)
4.050%, 06/22/00 8,000 8,000
Illinois State, Development
Finance Authority,
PT 321, RB (C) (D)
4.500%, 06/01/00 10,000 10,000
Illinois State, Educational
Facilities Authority, Chicago
Childrens Museum, RB (C) (D) (E)
4.300%, 06/07/00 1,600 1,600
Illinois State, Educational Facilities
Authority, Museum of Science
& Industry, RB (C) (D) (E)
4.250%, 06/07/00 5,400 5,400
Illinois State, Health Facilities
Authority, Advocate Health
Care, Ser B, RB (C) (D)
4.250%, 06/07/00 2,900 2,900
Illinois State, Health Facilities
Authority, Proctor Hospital,
RB (C) (D) (E)
4.300%, 06/07/00 5,100 5,100
Illinois State, Health Facilities
Authority, The Streeterville
Project, RB (C) (D) (E)
4.300%, 06/07/00 2,000 2,000
14
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
ILLINOIS--CONTINUED
Illinois State, Housing Development
Authority, Center Apartments,
RB (C) (D) (E)
3.800%, 06/07/00 $10,600 $ 10,600
Illinois State, Pollution Control
Finance Authority, Public
Service, Ser C-1, RB
4.150%, 06/07/00 5,000 5,000
Illinois State, GO
4.250%, 06/01/00 2,500 2,500
Lockport, Industrial Development
Authority, Panduit Project,
RB, AMT (C) (D) (E)
4.350%, 06/07/00 2,000 2,000
Savanna, Industrial Development
Authority, Metform Project,
Ser A, RB, AMT (C) (D) (E)
4.350%, 06/07/00 500 500
Savanna, Industrial Development
Authority, Metform Project,
Ser B, RB, AMT (C) (D) (E)
4.350%, 06/07/00 1,400 1,400
Wheeling, Industrial Development
Authority, Circuit Service Project,
RB, AMT (C) (D) (E)
4.450%, 06/01/00 2,600 2,600
---------
77,190
---------
INDIANA (3.7%)
Elkhart, Industrial Economic
Development Authority,
Godfrey Conveyor Project,
RB, AMT (C) (D) (E)
4.450%, 06/07/00 1,800 1,800
Elkhart, Industrial Economic
Development Authority,
Holly Park, RB, AMT (C) (D) (E)
4.450%, 06/07/00 2,000 2,000
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
INDIANA--CONTINUED
Development Authority, Tech
Project, RB, AMT (C) (D)
4.350%, 06/07/00 $ 1,000 $ 1,000
Indianapolis, Industrial Economic
Development Authority,
Allied Signal Project, RB (C) (D)
4.400%, 06/07/00 3,500 3,500
Indianapolis, Local Public
Improvements, Ser B, RB, MBIA
3.350%, 06/01/00 1,550 1,550
Indiana State, Development
Finance Authority, Educational
Facility, Indiana Historical
Society, RB (C) (D) (E)
4.300%, 06/07/00 1,200 1,200
Indiana State, Educational Facilities
Authority, Educational Facility,
Indiana Wesleyan Project,
Ser B, RB (C) (D) (E)
4.350%, 06/07/00 2,500 2,500
Indiana State, Health Facility
Financing Authority, Clarian
Health Partners, Ser B, RB (C) (D)
4.100%, 06/07/00 2,000 2,000
Indiana State, Transportation
Financing Authority Highway,
Ser PT-1159, RB (C) (D)
4.300%, 02/22/01 9,710 9,710
Jasper, Industrial Economic
Development Authority,
Wabash Valley Produce Project,
RB, AMT (C) (D) (E)
4.450%, 06/01/00 2,000 2,000
La Porte County, Economic
Development Authority, Pedcor
Investments-Woodland,
RB, AMT (C) (D) (E)
4.420%, 06/01/00 2,000 2,000
15
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
INDIANA--CONTINUED
Michigan City, Economic
Development Authority,
Performance Packaging,
RB, AMT (C) (D) (E)
4.500%, 06/07/00 $ 700 $ 700
Muncie, Industrial Development
Authority, Diamond Plastics
Project, RB (C) (D) (E)
4.550%, 06/01/00 1,900 1,900
Munster, School Building,
Ser 269, RB, FSA (C) (D)
4.550%, 06/01/00 1,000 1,000
---------
32,860
---------
IOWA (0.7%)
Sac County, Industrial Authority,
Evapco Project, RB,
AMT (C) (D) (E)
4.550%, 06/01/00 3,500 3,500
West Des Moines, Commercial
Development, Greyhound
Lines Project, RB (C) (D) (E)
4.050%, 06/07/00 2,500 2,500
---------
6,000
---------
KANSAS (1.0%)
Sedgewick & Shawnee Counties,
Ser PT 227, RB (C) (D) (E)
4.500%, 06/01/00 9,000 9,000
---------
KENTUCKY (1.2%)
Jefferson County, Industrial
Building, Fisher-Klosterman
Project, RB, AMT (C) (D) (E)
4.450%, 06/01/00 2,005 2,005
Pulaski County, Solid Waste
Disposal, National Rural
Utility-East Kentucky Power,
Ser B, RB, AMT (C) (D)
4.050%, 08/15/00 3,700 3,700
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
KENTUCKY--CONTINUED
Kentucky State, Economic
Development Finance
Authority, Health Alliance
Project, Ser C, RB,
MBIA (C) (D)
3.950%, 06/07/00 $ 5,000 $ 5,000
---------
10,705
---------
LOUISIANA (1.8%)
Calcasieu Parish, Industrial
Development Board,
Hydroserve Westlake,
RB, AMT (C) (D) (E)
4.250%, 06/07/00 5,000 5,000
Louisiana State, Public Facilites
Authority, Pollution Control,
Ciba-Geigy Project,
RB (C) (D) (E)
4.050%, 06/07/00 2,400 2,400
Loiusiana State, Eagle Trust,
Ser 94180, RB (C) (D)
4.400%, 06/01/00 8,000 8,000
---------
15,400
---------
MAINE (0.6%)
Maine, Housing Authority Mortgage,
Ser 295, RB, AMT (C) (D)
4.650%, 06/01/00 4,893 4,892
---------
MARYLAND (1.9%)
Baltimore County, Industrial
Development Authority,
Allied Signal Project, RB (C) (D)
4.350%, 06/07/00 1,000 1,000
Maryland State, Community
Development Administration,
Ser PA 629R, RB (C) (D)
4.430%, 06/01/00 4,800 4,800
16
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
MARYLAND--CONTINUED
Maryland State, Community
Development Administration,
Ser 170, RB (C) (D)
4.380%, 06/01/00 $ 6,000 $ 6,000
Maryland State, Community
Development Administration,
Ser PT-256, RB, AMT, FHA
(C) (D) (E)
4.430%, 06/01/00 4,590 4,590
---------
16,390
---------
MICHIGAN (2.2%)
Michigan State, Hospital
Finance Authority, Ser A,
RB (C) (D) (E)
4.000%, 06/07/00 9,400 9,400
Michigan State, Housing
Development Authority,
Woodland Meadows Project,
RB, AMT (C) (D) (E)
4.150%, 06/07/00 1,000 1,000
Michigan State, Strategic Fund,
Industrial Development
Authority, Norcor Manufacturing
Project, RB (C) (D) (E)
4.250%, 06/06/00 3,000 3,000
Michigan State, Strategic Fund,
Consolidated Industrial Project,
RB, AMT (C) (D) (E)
4.450%, 06/07/00 2,400 2,400
Oakland County, Economic
Development Authority, Moody
Family Limited Project,
RB, AMT (C) (D) (E)
4.450%, 06/07/00 900 900
Okemos, Public School District,
Ser I, GO Prerefunded @ 102 (F)
6.900%, 05/01/01 3,000 3,126
---------
19,826
---------
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
MINNESOTA (0.3%)
Bloomington, Independent
School District, Ser B, GO
5.000%, 02/01/01 $ 2,490 $ 2,502
---------
MISSISSIPPI (0.3%)
Mississippi State, Business
Finance Authority, Choctaw
Generation, RB, AMT (C) (D) (E)
4.150%, 06/07/00 3,000 3,000
---------
MISSOURI (2.0%)
Carthage, Industrial
Development Authority,
Schrieber Project, RB,
AMT (C) (D) (E)
4.350%, 06/07/00 3,100 3,100
Saint Charles County, Industrial
Development Authority,
Casalon Apartment Project,
RB (C) (D) (E)
4.250%, 06/01/00 5,670 5,670
Saint Charles County, Industrial
Development Authority,
Remington Apartments
Project, RB (C) (D) (E)
4.250%, 06/01/00 4,800 4,800
Missouri State, Environmental
Improvement & Energy Resource
Authority, Utilicorp United
Project, RB, AMT (C) (D) (E)
4.350%, 06/07/00 700 700
Missouri State, Health &
Educational Facilities, Christian
Health, Ser A, RB, FGIC
Prerefunded @ 102 (F)
6.875%, 02/15/01 3,400 3,527
---------
17,797
---------
17
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
NEVADA (2.1%)
Clark County, Airport Improvement
Authority, Sub-Lien Ser A-2, RB,
AMT (C) (D) (E)
4.100%, 06/07/00 $ 4,955 $ 4,955
Clark County, School District,
GO (C) (D)
4.400%, 06/01/00 8,345 8,345
Nevada State, Ser SG-114, RB (C) (D)
4.380%, 06/01/00 5,000 5,000
---------
18,300
---------
NEW HAMPSHIRE (1.2%)
New Hampshire State, Housing
Finance Authority, Multi-Family
Housing, Fairways Project,
Ser 1, RB, AMT (C) (D) (E)
4.100%, 06/07/00 5,000 5,000
New Hampshire State, Housing
Finance Authority, Ser PT-348,
RB (C) (D) (E)
4.430%, 06/01/00 5,195 5,195
---------
10,195
---------
NEW YORK (3.8%)
New York City, Municipal Water
Financing Authority,
Ser SGB-27, RB, FSA
4.370%, 06/01/00 9,000 9,000
New York City, Sub-Ser A-7,
GO (C) (D) (E)
4.300%, 06/01/00 9,600 9,600
New York City, Sub-Ser E5,
GO (C) (D) (E)
4.300%, 06/01/00 7,600 7,600
New York State, Dormitory
Authority, Ser PA-541,
RB (C) (D)
4.350%, 06/01/00 4,000 4,000
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
NEW YORK--CONTINUED
Southeast New York, Industrial
Development Agency, Unilock
New York Project, RB,
AMT (C) (D) (E)
4.350%, 06/07/00 $ 2,200 $ 2,200
Syracuse, Ser 207, RB, AMT,
FGIC (C) (D)
4.420%, 06/01/00 1,425 1,425
---------
33,825
---------
NORTH CAROLINA (6.5%)
Charlotte, Airport Authority,
Ser A, RB, AMT, MBIA (C) (D)
4.150%, 06/07/00 1,000 1,000
Cleveland County, Family
YMCA, RB (C) (D) (E)
4.400%, 06/01/00 2,840 2,840
Johnston County, Industrial
Development Authority,
Pollution Control,
Mebane Parking Project, RB
(C) (D) (E)
4.500%, 06/01/00 2,175 2,175
Mecklenburg County, Industrial
Facilities & Pollution Control,
Sterigenics International Project,
RB, AMT (C) (D) (E)
4.300%, 06/07/00 1,700 1,700
Mecklenburg County, Public
Improvement, Ser C, GO
(C) (D) (E)
4.100%, 06/07/00 5,000 5,000
Mecklenburg County,
Ser C, GO (C) (D)
4.300%, 06/01/00 8,850 8,850
North Carolina State, Educational
Facilities Finance Agency,
Charlotte Latin, RB (C) (D) (E)
4.300%, 06/01/00 5,000 5,000
18
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
North Carolina State,
Educational Facilities Finance
Agency, Guilford College,
RB, MBIA (C) (D)
4.300%, 06/07/00 $ 2,200 $ 2,200
North Carolina State, Educational
Facilities Finance Agency,
Johnson Smith University,
RB (C) (D) (E)
4.300%, 06/01/00 5,100 5,100
North Carolina State, Medical
Care Community Hospital,
Angel Medical Center,
RB (C) (D) (E)
4.300%, 06/01/00 3,900 3,900
North Carolina State, Medical
Care Community Hospital,
Carolina Medicorp Project,
RB Prerefunded @ 100 (F)
6.000%, 05/01/01 6,000 6,089
North Carolina State, Medical
Care Community Hospital,
Lutheran Services For The
Aging Project, RB (C) (D) (E)
4.200%, 06/07/00 8,135 8,135
North Carolina State,
Ser PA 342, RB (C) (D)
4.380%, 06/01/00 5,340 5,340
---------
57,329
---------
OHIO (4.8%)
Cuyahoga County, Hospital
Facilities Authority, Cleveland
Clinic Foundation,
Ser A, RB (C) (D)
4.150%, 06/07/00 6,000 6,000
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
OHIO--CONTINUED
Hamilton County, Hospital
Faciltity, Health Alliance,
Ser A, RB, MBIA (C) (D)
3.900%, 06/07/00 $ 7,600 $ 7,600
Ohio State, Air Quality
Development Authority,
Cincinnati Gas & Electric
Project, Ser B, RB (C) (D) (E)
4.300%, 06/01/00 4,400 4,400
Ohio State, Air Quality
Development Authority, JMG
Limited Partnership,
Ser A, RB, AMT (C) (D) (E)
4.000%, 06/07/00 3,000 3,000
Ohio State, Environmental
Improvement Authority,
Newark Group Industries
Project, RB, AMT (C) (D) (E)
4.400%, 06/01/00 4,600 4,600
Ohio State, Higher Education
Facility Commission, Pooled
Financing, RB (C) (D) (E)
4.350%, 06/01/00 4,835 4,835
Ohio State, Public Facilities
Commission, Higher Education
Capital Facilities, Ser II-A, RB
4.500%, 12/01/00 2,405 2,409
Warrren County, Health Care
Improvement, Otterbein Project,
Ser A, RB (C) (D) (E)
4.350%, 06/01/00 9,340 9,340
---------
42,184
---------
OREGON (0.2%)
Oregon State, Housing & Community
Services, Single-Family Mortgage
Project, Ser H, RB, AMT (C) (D)
3.480%, 06/29/00 1,895 1,895
---------
19
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-EXEMPT MONEY MARKET FUND--CONTINUED
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
PENNSYLVANIA (4.5%)
Bethlehem, Area School District,
GO, FGIC Prerefunded @ 100 (F)
5.600%, 03/01/01 $ 9,065 $ 9,154
Delaware County, Hospital
Authority, Crozer-Chester
Medical Center, RB, MBIA
Prerefunded @ 102 (F)
7.150%, 12/15/00 2,550 2,639
Delaware Valley, Regional Finance
Authority, Ser B, RB (C) (D) (E)
4.100%, 06/07/00 8,100 8,100
Pennsylvania State, Higher
Educational Facilities Authority,
Temple University Project,
RB, ETM (C) (D) (E)
4.300%, 06/01/00 4,700 4,700
Pennsylvania State, Intergovern-
mental Cooperation Authority,
Special Tax Revenue,
Ser SG-67, RB (C) (D)
4.350%, 06/01/00 9,630 9,630
Philadelphia, Ser A, TRAN
4.250%, 06/30/00 5,000 5,003
---------
39,226
---------
RHODE ISLAND (1.0%)
Rhode Island State, Health &
Educational Board, Women &
Infants Hospital, RB, FSA (C) (D)
3.850%, 09/01/00 3,365 3,365
Rhode Island State, Multi-Modal,
GO (C) (D)
4.100%, 06/07/00 5,400 5,400
---------
8,765
---------
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
SOUTH CAROLINA (1.1%)
South Carolina State, Jobs
Economic Development
Authority, Anderson Area
YMCA Project, RB (C) (D) (E)
4.450%, 06/01/00 $ 7,100 $ 7,100
South Carolina State, Economic
Development Authority, Kiswire
Project, RB, AMT (C) (D) (E)
4.550%, 06/01/00 3,000 3,000
---------
10,100
---------
TENNESSEE (4.2%)
Covington, Industrial Development
Board, Charms Project,
RB, AMT (C) (D) (E)
4.350%, 06/07/00 3,000 3,000
Memphis-Shelby County,
Industrial Development Board,
Ponderosa Fibres American
Project, RB, AMT (C) (D) (E)
4.500%, 06/01/00 1,000 1,000
Metropolitan Government
Nashville & Davidson County,
Eagle Trust, GO (C) (D)
4.400%, 06/01/00 10,000 10,000
Metropolitan Government
Nashville & Davidson County,
Health & Education Facilities
Board, Vanderbilt University,
Ser B, RB (C) (D)
4.300%, 06/01/00 4,000 4,000
Metropolitan Government
Nashville & Davidson County,
Multi-Family Chimneytop II
Project, RB (C) (D) (E)
4.300%, 06/07/00 1,325 1,325
20
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
TENNESSEE--CONTINUED
Metropolitan Government
Nashville & Davidson County,
Ser 251, GO (C) (D)
4.550%, 06/01/00 $ 3,400 $ 3,400
Rutherford County, Industrial
Development Authority,
Farmers Cooperative Project,
RB, AMT (C) (D) (E)
4.500%, 06/01/00 4,500 4,500
Tennessee State, Housing
Development Agency, Ser 281,
RB, AMT (C) (D)
4.650%, 06/01/00 2,553 2,552
Tennessee State, Ser 108,
GO (C) (D)
5.000%, 06/01/00 2,495 2,495
Sumner County, Health &
Educational Authority, Hospital
Alliance Pooled,
Ser PG-A, RB (C) (D)
4.425%, 06/01/00 5,000 5,000
---------
37,272
---------
TEXAS (9.2%)
Dallas-Fort Worth, International
Airport, RB, MBIA
4.700%, 11/01/00 4,025 4,035
Georgetown, Higher Education
Finance Authority, Southwestern
University Project, RB (C) (D) (E)
4.100%, 06/07/00 2,000 2,000
Harris County, Industrial
Development Authority, Lubrizol
Project, RB (C) (D)
4.050%, 06/07/00 1,600 1,600
Hockley County, Industrial
Development Authority, Amoco
Project, RB (C) (D)
4.300%, 11/01/00 2,500 2,500
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
TEXAS--CONTINUED
Houston, Water & Sewer System
Authority, Ser SG-78, RB (C) (D)
4.380%, 06/01/00 $ 8,835 $ 8,835
Pearland, Independent School
District, Ser SG-106, RB (C) (D)
4.380%, 06/01/00 6,245 6,245
Texas State, Public Facilities,
Eagle Trust, RB (C) (D)
4.400%, 06/01/00 7,180 7,180
4.100%, 06/01/00, TECP 10,000 10,000
Texas State, Eagle Trust,
Ser 991301, GO (C) (D)
4.400%, 06/01/00 9,900 9,900
Texas State, Ser A, TRAN
4.500%, 08/31/00 20,000 20,038
Trinity, River Authority,
Pollution Control, General
Motors Project, RB (C) (D)
4.300%, 06/06/00 8,400 8,400
---------
80,733
---------
UTAH (1.5%)
Morgan County, Solid Waste
Disposal, Holman Project,
RB, AMT (C) (D) (E)
4.150%, 06/01/00 2,200 2,200
Utah State, Housing Finance
Agency, Ser PT-209, RB (C) (D)
4.430%, 06/01/00 10,750 10,750
---------
12,950
---------
VIRGINIA (0.8%)
Front Royal & Warren County,
Industrial Development
Authority, Pen Tab Industries
Project, RB, AMT (C) (D) (E)
4.500%, 06/01/00 2,600 2,600
21
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-EXEMPT MONEY MARKET FUND--CONCLUDED
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Virginia State, Housing
Development Authority,
Ser 301, RB (C) (D)
4.550%, 06/01/00 $ 4,360 $ 4,360
---------
6,960
---------
WASHINGTON (4.5%)
Port Seattle Passenger Facility,
Ser 299, RB, AMT,
AMBAC (C) (D)
4.650%, 06/01/00 2,358 2,357
Port Seattle, GO (C) (D)
3.950%, 06/07/00 1,000 1,000
Seattle, Water Systems Authority,
RB (C) (D) (E)
3.950%, 06/07/00 4,200 4,200
Washington State, Health Care
Facilities, Sunnyside Community
Hospital, RB (C) (D) (E)
4.300%, 06/07/00 3,200 3,200
Washington State, Public Power
Supply System, Nuclear Project
No. 1, Ser 1A-1, RB (C) (D) (E)
3.950%, 06/07/00 4,535 4,535
Washington State, Public Power
Supply System, Nuclear Project
No. 1, Ser 1A-3, RB (C) (D) (E)
3.950%, 06/07/00 3,200 3,200
Washington State, Public Power
Supply System, Nuclear Project
No. 2, Ser 2A-1, RB, MBIA (C) (D)
4.050%, 06/07/00 5,200 5,200
Washington State, Public Power
Supply System, Nuclear Project
No. 3, Ser 3A-3, RB (C) (D) (E)
4.050%, 06/07/00 11,720 11,720
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
WASHINGTON--CONTINUED
Washington State, Ser B, GO
Prerefunded @ 100 (F)
6.700%, 06/01/01 $ 4,000 $ 4,077
---------
39,489
---------
WEST VIRGINIA (2.1%)
Braxton County, Solid Waste
Disposal, Weyerhaeuser
Project, RB, AMT (C) (D)
4.350%, 06/07/00 7,650 7,650
Marshall County, Pollution
Control Authority, AlliedSignal
Project, RB (C) (D)
4.400%, 06/07/00 8,630 8,630
Marshall County, Pollution
Control Authority, PPG
Industries Project, RB (C) (D)
4.600%, 06/01/00 2,000 2,000
---------
18,280
---------
WISCONSIN (2.2%)
Appleton, Industrial Development
Authority, Pro Lable Project,
RB, AMT (C) (D) (E)
4.550%, 06/01/00 870 870
Germantown, Industrial
Development Authority, Speaker
Project, RB, AMT (C) (D) (E)
4.550%, 06/01/00 855 855
Holland, Industrial Development
Authority, White Clover Dairy
Project, RB, AMT (C) (D) (E)
4.450%, 06/01/00 1,500 1,500
Milwaukee, GO
5.000%, 02/01/01 2,000 2,010
Milwaukee, Metropolitan Sewer
District, Ser 288, GO (C) (D)
4.600%, 06/01/00 1,763 1,763
22
<PAGE>
--------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
WISCONSIN--CONTINUED
Oconomowoc, Industrial
Development Authority, Quest
Technologies Project,
RB, AMT (C) (D) (E)
4.450%, 06/01/00 $ 1,495 $ 1,495
Wisconsin State, Health Facilities
Authorities, Franciscan Health
Care, Ser A-1, RB (C) (D) (E)
3.950%, 06/07/00 6,105 6,105
Wisconsin State, Ser PT 1137,
RB (C) (D)
4.300%, 02/15/01 4,515 4,515
---------
19,113
---------
WYOMING (0.5%)
Sweetwater County, Pollution
Control, Pacificorp Project,
Ser A, RB (C) (D) (E)
4.050%, 06/07/00 4,600 4,600
---------
MULTI-STATE (0.8%)
Tax-Exempt Grantor Trust, IBM,
Ser 1999-A, RB (C) (D)
4.550%, 06/01/00 7,200 7,200
---------
Total Municipal Bonds
(Cost $863,139) 863,139
---------
CASH EQUIVALENTS (1.5%)
Financial Square Tax Free
Portfolio 3,537,267 3,537
SEI Institutional Tax Free
Fund 9,904,203 9,904
---------
-------------------------------------------------------------------------------
VALUE (000)
-------------------------------------------------------------------------------
Total Cash Equivalents
(Cost $13,441) $ 13,441
---------
Total Investments (99.5%)
(Cost $876,580) 876,580
---------
OTHER ASSETS AND LIABILITIES, NET (0.5%) 4,778
---------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 755,887,410 outstanding shares of
beneficial interest 755,887
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based
on 125,512,381 outstanding shares
of beneficial interest 125,512
Distributions in excess of net investment
income (6)
Accumulated net realized loss
on investments (35)
---------
Total Net Assets (100.0%) $881,358
=========
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
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 33.
23
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-FREE MONEY MARKET FUND
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
MUNICIPAL BONDS (98.5%)
FLORIDA (2.3%)
Dade County, Water & Sewer
Systems Project, RB (C) (D)
4.380%, 06/07/00 $ 7,000 $ 7,000
---------
ILLINOIS (3.3%)
Illinois State, Health Facility
Authority, Swedish Covenant
Hospital Project, RB,
AMBAC (C) (D)
3.900%, 06/07/00 10,170 10,170
---------
LOUISIANA (3.6%)
Ascension Parish, Pollution
Control Authority, Borden
Project, RB (C) (D) (E)
3.950%, 06/05/00 11,200 11,200
---------
VIRGINIA (88.2%)
Albemarle County, Industrial
Development Authority,
University of Virginia Health
Services Project, RB (C) (D) (E)
4.150%, 06/07/00 4,400 4,400
Alexandria, Industrial
Development Authority,
American Red Cross Project,
RB (C) (D) (E)
4.150%, 06/07/00 4,100 4,100
Alexandria, Industrial
Development Authority,
Pooled Loan Program,
Ser A, RB (C) (D) (E)
4.400%, 06/01/00 6,900 6,900
Alexandria, Industrial
Development Authority,
Pooled Loan Program,
Sub-Ser A, RB (C) (D) (E)
4.400%, 06/01/00 3,500 3,500
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Alexandria, Industrial
Development Authority,
Resource Recovery Project,
RB, AMT (C) (D) (E)
4.550%, 06/01/00 $11,400 $ 11,400
Amelia County, Industrial
Development Authority,
Chambers Waste Systems
Project, RB, AMT (C) (D) (E)
4.250%, 06/07/00 750 750
Arlington County, Industrial
Development Authority,
Multi-Family Housing Authority,
Arna Valley View Apartments
Project, RB (C) (D) (E)
4.400%, 06/01/00 1,350 1,350
Arlington County, Ballston
Public Parking Project,
RB (C) (D) (E)
4.250%, 06/06/00 8,100 8,100
Ashland, Industrial Development
Authority, Interflex Group
Project, RB, AMT (C) (D) (E)
4.500%, 06/01/00 7,000 7,000
Chesapeake Bay, Bridge & Tunnel
Community District Authority,
General Resolution Project,
RB, MBIA (C) (D)
4.400%, 06/01/00 6,755 6,755
Chesterfield County, Industrial
Development Authority,
AlliedSignal Project, RB (C) (D)
4.400%, 06/07/00 3,000 3,000
Chesterfield County, GO
5.500%, 01/15/01 1,905 1,922
Culpeper, Industrial Development
Authority, Baptist Homes
Project, RB (C) (D) (E)
4.400%, 06/01/00 1,495 1,495
24
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Fairfax County, Economic
Development Authority, Flint
Hill School Project,
RB (C) (D) (E)
4.150%, 06/07/00 $ 4,340 $ 4,340
Fairfax County, Industrial
Development Authority,
Fairfax Hospital Project,
Ser A, RB (C) (D)
3.900%, 06/07/00 1,660 1,660
Fairfax County, Industrial
Development Authority,
Fairfax Hospital Project,
Ser B, RB (C) (D)
3.900%, 06/07/00 9,600 9,600
Fairfax County, Industrial
Development Authority,
Fairfax Hospital Project,
Ser D, RB (C) (D)
3.900%, 06/07/00 3,700 3,700
Fairfax County, Ser C, GO
4.600%, 05/01/01 2,800 2,809
Fairfax County,
Ser PA 149, RB (C) (D)
4.350%, 06/01/00 9,890 9,890
Hampton, Redevelopment &
Multi-Family Housing
Authority, Avalon at Hampton
Project, Ser I-A, RB (C) (D) (E)
3.950%, 06/07/00 6,360 6,360
Hampton, Redevelopment &
Multi-Family Housing Authority,
Avalon Pointe Project,
Ser I-A, RB, AMT (C) (D) (E)
4.000%, 06/07/00 5,037 5,037
Hanover County, Industiral
Development Authority,
Covenent Woods Project,
RB (C) (D) (E)
4.450%, 06/01/00 15,000 15,000
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
King George County, Industrial
Development Authority,
Birchwood Power Partners
Project, Ser A, RB,
AMT (C) (D) (E)
4.550%, 06/01/00 $1,500 $ 1,500
Louisa County, Industrial
Development Authority,
Pooled Financing,
RB (C) (D) (E)
4.400%, 06/01/00 2,975 2,975
Norfolk, Industrial Development
Authority, Children's Hospital
Facilities Project, RB (C) (D) (E)
4.400%, 06/01/00 15,300 15,300
Norfolk, Redevelopment &
Housing Authority,
East Ocean View Property
Project, RB (C) (D) (E)
4.400%, 06/01/00 3,890 3,890
Norfolk, Water Authority, RB FSA
4.000%, 11/01/00 785 785
Peninsula Port Authority,
Dominion Terminal Project,
Ser C, RB (C) (D) (E)
4.350%, 06/01/00 1,450 1,450
Portsmouth, Industrial
Development Authority,
Fairwood Homes Project,
Ser A, RB (C) (D) (E)
4.150%, 06/01/00 1,605 1,605
Prince George County, Industrial
Development Authority,
Metropolitian Span Project,
RB, AMT (C) (D) (E)
4.450%, 06/01/00 4,800 4,800
Prince William County, Public
Improvements, Ser B, GO
5.000%, 08/01/00 1,000 1,002
25
<PAGE>
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-FREE MONEY MARKET FUND--CONTINUED
--------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
--------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Pulaski County, Industrial
Development Authority, Pulaski
Furniture Project, RB (C) (D) (E)
4.400%, 06/01/00 $ 1,800 $ 1,800
Richmond, Public Utility
Authority, Ser A, RB (C) (D)
4.450%, 06/01/00 3,500 3,500
Richmond, Redevelopment &
Multi-Family Housing Authority,
Ser PT-1022, RB (C) (D)
4.450%, 06/01/00 14,490 14,490
Richmond, Redevelopment &
Multi-Family Housing
Authority, Stony Point Project,
RB (C) (D) (E)
4.400%, 06/01/00 1,660 1,660
Richmond, Public Improvement,
Ser A, GO Prerefunded @ 102 (F)
6.250%, 01/15/01 9,110 9,408
Roanoke, Industrial Development
Authority, Hollins University
Project, RB (C) (D) (E)
4.150%, 06/07/00 4,500 4,500
Roanoke, Industrial Development
Authority, Carilion Health
System Project, Ser B,
RB (C) (D)
4.450%, 06/01/00 1,000 1,000
Roanoke, Industrial Development
Authority, Roanoke Memorial
Hospital Project, Ser C,
RB (C) (D)
4.300%, 06/01/00 1,935 1,935
Roanoke, Industrial Development
Authority, Roanoke Memorial
Hospital Project, RB, MBIA
Prerefunded @100 (F)
6.500%, 07/01/00 5,000 5,012
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Roanoke Public Improvements, GO
4.000%, 08/01/00 $ 2,165 $ 2,165
Roanoke Public Improvements,
Ser B, GO
5.800%, 08/01/00 1,000 1,003
Roanoke, Redevelopment &
Multi-Family Housing Authority,
Stepping Stone Apartments
Project, RB (C) (D)
4.625%, 06/25/00 2,000 2,000
Virginia State, Transportation
Authority, Eagle Trust,
Ser 994601, RB (C) (D)
4.400%, 06/01/00 5,000 5,000
Virginia State Port Authority,
Ser SG 111, RB (C) (D)
4.400%, 06/01/00 10,100 10,100
Virginia State, Public School
Authority, School Financing,
Ser B, GO
5.000%, 08/01/00 4,665 4,674
Virginia State, Public School
Authority, Ser C, RB
5.000%, 08/01/00 4,335 4,346
Virginia State, GO
5.000%, 06/01/00 2,000 2,000
Staunton, Industrial Development
Authority, Diebold-Staunton
Project, RB (C) (D) (E)
4.450%, 06/01/00 530 530
Suffolk, Redevelopment & Multi-
Family Housing Authority,
Windsor Potomac Project,
RB (C) (D)
4.700%, 06/07/00 410 410
Suffolk, Redevelopment & Multi-
Family Housing Authority,
Windsor Fieldstone Project, RB
(C) (D)
4.700%, 06/07/00 4,718 4,718
26
<PAGE>
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Virginia Beach, Industrial
Development Authority, Ocean
Ranch Project, RB (C) (D) (E)
4.400%, 06/01/00 $ 626 $ 626
Virginia Beach, Industrial
Development Authority,
LA Quinta Inns Project,
RB (C) (D) (E)
4.450%, 06/01/00 1,125 1,125
Virginia Beach, Development &
Multi-Family Authority,
Ser PT 1213, RB (C) (D)
4.580%, 06/01/00 1,000 1,000
Virginia Beach, Development
Authority, Westminster-
Canterbury Project,
Ser B, RB (C) (D) (E)
4.350%, 06/07/00 3,000 3,000
Virginia Beach, Public
Improvement, GO
5.000%, 03/01/01 3,805 3,828
Virginia College, Building
Authority, 21st Century College
Program, RB
4.125%, 02/01/01 8,185 8,185
Virginia College, Building
Authority, Equipment Leasing
Program, RB
4.250%, 02/01/01 750 750
Virginia State, Housing
Development Authority,
Commonwealth Mortgage
Project, Sub-Ser A, RB
4.150%, 09/12/00 2,500 2,500
Virginia State, Housing
Development Authority,
Commonwealth Mortgage
Project, Sub-Ser A, RB
4.150%, 10/19/00 8,000 8,000
-------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
-------------------------------------------------------------------------------
VIRGINIA--CONTINUED
Virginia State, Housing
Devolopment Authority,
Commonwealth Merlots
Project, Ser CC,
RB (C) (D) (E)
4.350%, 06/07/00 $ 4,500 $ 4,500
Virginia State, Public School
Authority, Ser B, RB
4.700%, 01/01/01 5,000 5,021
Williamsburg, Industrial
Development Authority,
Colonial Williamsburg
Museum Foundation
Project, RB (C) (D) (E
4.700%, 06/07/00 600 600
---------
271,761
---------
PUERTO RICO (1.1%)
Puerto Rico, Commonwealth
Highway & Transportation
Authority, Ser PA 472, RB (C) (D)
3.900%, 06/01/00 3,260 3,260
---------
Total Municipal Bonds
(Cost $303,391) 303,391
---------
CASH EQUIVALENTS (1.0%)
Financial Square Tax Free
Portfolio 2,129,301 2,129
SEI Institutional Tax
Free Fund 1,000,000 1,000
---------
Total Cash Equivalents
(Cost $3,129) 3,129
---------
Total Investments (99.5%)
(Cost $306,520) 306,520
---------
27
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
TAX-FREE MONEY MARKET FUND--CONCLUDED
-------------------------------------------------------------------------------
VALUE (000)
-------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (0.5%) $ 1,601
---------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 245,305,124 outstanding shares
of beneficial interest 245,281
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based
on 62,877,446 outstanding shares of
beneficial interest 62,878
Distributions in excess of net investment
income (11)
Accumulated net realized loss
on investments (27)
---------
Total Net Assets (100.0%) $ 308,121
=========
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
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE
SEE PAGE 33.
28
<PAGE>
-------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
-------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
-------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (17.9%)
U.S. Treasury Bill
5.605%, 10/12/00 $80,000 $ 78,345
U.S. Treasury Note
5.000%, 02/28/01 20,000 19,803
--------
Total U.S. Treasury Obligations
(Cost $98,148) 98,148
--------
CASH EQUIVALENT (4.6%)
AIM Institutional Treasury
Portfolio 25,000,000 25,000
--------
Total Cash Equivalent
(Cost $25,000) 25,000
--------
REPURCHASE AGREEMENTS (77.8%)
ABN-Amro
6.390%, dated 05/31/00, matures
06/01/00, repurchse price $22,345,614
(collateralized by a U.S. Treasury
Note: total market value
$22,788,927) (B) 22,342 22,342
Barclays
6.390%, dated 05/31/00, matures
06/01/00, repurchase price
$21,003,728 (collateralized by
various U.S. Treasury
obligations: total market
value $21,420,900) (B) 21,000 21,000
Deutsche Bank
6.390%, dated 05/31/00, matures
06/01/00, repurchase price
$21,003,728 (collateralized by a
U.S. Treasury Note: total market
value $21,420,214) (B) 21,000 21,000
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
Greenwich Capital
6.390%, dated 05/31/00, matures
06/01/00, repurchase price
$21,377,648 (collateralized by a
U.S. Treasury Note: total market
value $21,803,293) (B) $ 21,374 $ 21,374
JP Morgan
6.390%, dated 05/31/00, matures
06/01/00, repurchase price
$149,287,464 (collateralized by
various GNMA and U.S. Treasury
obligations: total market value
$152,247,104) (B) 149,261 149,261
Merrill Lynch
6.390%, dated 05/31/00, matures
06/01/00, repurchase price
$21,119,076.35 (collateralized
by various GNMA obligations:
total market value
$21,539,555) (B) 21,115 21,115
Morgan Stanley Dean Witter 6.390%,
dated 05/31/00, matures 06/01/00,
repurchase price $127,208,619
(collateralized by various GNMA
obligations: total market value
$131,883,074) (B) 127,186 127,186
29
<PAGE>
STI CLASSIC FUNDS MAY 31, 2000
-------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND--CONCLUDED
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
Salomon Smith Barney
6.390%, dated 05/31/00, matures
06/01/00, repurchase price
$22,015,463 (collateralized by
various U.S. Treasury
obligations: total market value
$22,548,567) (B) $ 22,012 $ 22,012
Warburg Dillion
6.390%, dated 05/31/00, matures
06/01/00, repurchase price
$21,258,309 (collateralized by a
U.S. Treasury Note: total market
value $21,682,944) (B) 21,254 21,254
--------
Total Repurchase Agreements
(Cost $426,544) 426,544
--------
Total Investments (100.3%)
(Cost $549,692) 549,692
--------
OTHER ASSETS AND LIABILITIES, NET (-0.3%) (1,813)
--------
-------------------------------------------------------------------------------
VALUE (000)
-------------------------------------------------------------------------------
NET ASSETS:
Fund shares of the Trust Shares
(unlimited authorization -- no par
value) based on 468,324,485 outstanding
shares of beneficial interest $468,325
Fund shares of the Investor Shares (unlimited
authorization -- no par value) based
on 79,281,537 outstanding shares
of beneficial interest 79,281
Undistributed net investment income 301
Accumulated net realized loss
on investments (28)
--------
Total Net Assets (100.0%) $547,879
========
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
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 33.
30
<PAGE>
U.S. TREASURY MONEY MARKET FUND
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (22.7%)
U.S. Treasury Bill
5.840%, 02/01/01 $15,000 $ 14,404
U.S. Treasury Notes
5.875%, 06/30/00 30,000 30,027
5.375%, 07/31/00 15,000 14,999
5.125%, 08/31/00 15,000 14,990
5.625%, 11/30/00 25,000 24,952
5.250%, 01/31/01 30,000 29,832
5.625%, 02/28/01 15,000 14,917
6.500%, 05/31/01 20,000 19,960
--------
Total U.S. Treasury Obligations
(Cost $164,081) 164,081
--------
REPURCHASE AGREEMENTS (77.5%)
ABN-Amro
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$32,875,013 (collateralized by
various U.S. Treasury
obligations: total market value
$33,527,298) (B) 32,869 32,869
Barclays
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$31,873,466 (collateralized by a
U.S. Treasury Note: total
market value $32,506,103) (B) 31,868 31,868
Deutsche Bank
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$25,165,255 (collateralized by a
U.S. Treasury Bond: total
market value $25,664,368) (B) 25,161 25,161
-------------------------------------------------------------------------------
FACE AMOUNT
(000) VALUE (000)
-------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
Greenwich Capital
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$176,109,211 (collateralized
by U.S. Treasury obligations:
total market value
$179,602,834) (B) $176,078 $176,078
JP Morgan
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$24,001,317 (collateralized by
U.S. Treasury Note: total
market value $24,477,482) (B) 23,997 23,997
Merrill Lynch
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$31,643,624 (collateralized by
U.S. Treasury Notes: total
market value $32,272,994) (B) 31,638 31,638
Morgan Stanley Dean Witter
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$31,498,071 (collateralized by
a U.S. Treasury Bond: total
market value $32,209,876) (B) 31,493 31,493
Salomon Smith Barney
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$31,832,560 (collateralized by
a U.S. Treasury Note: total
market value $32,934,696) (B) 31,827 31,827
Warburg Dillion
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$176,047,517 (collateralized by
a U.S. Treasury Note: total
market value $179,541,003) (B) 176,017 176,017
--------
31
<PAGE>
STATEMENTS OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
U.S. TREASURY MONEY MARKET FUND--CONCLUDED
-------------------------------------------------------------------------------
VALUE (000)
-------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $560,948) $560,948
--------
Total Investments (100.2%)
(Cost $725,029) 725,029
--------
OTHER ASSETS AND LIABILITIES, NET (-0.2%) (1,752)
--------
NET ASSETS:
Fund shares of the Trust Shares (unlimited
authorization -- no par value) based
on 723,365,117 outstanding shares
of beneficial interest 723,280
Distributions in excess of net investment
income (3)
--------
Total Net Assets (100.0%) $723,277
========
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 33.
32
<PAGE>
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
ETM Escrowed to Maturity
FGIC Security insured by the Financial Guaranty Insurance Company
FHA Federal Housing Authority
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Security insured by Financial
Securities 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
Ser Series
SLMA Student Loan Marketing Association
TECP Tax Exempt Commercial Paper
TRAN Tax and Revenue Anticipation Note
(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, 2000. 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 a major
bank.
(F) Prerefunded Security. The maturity date shown is the prerefunded date.
33
<PAGE>
This page left intentionally blank.
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS (000)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIOD ENDED MAY 31, 2000
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
------------- ---------- ---------- ------------- --------------
06/01/99- 06/01/99- 06/01/99- 06/01/99- 06/01/99-
05/31/00 05/31/00 05/31/00 05/31/00 05/31/00
---------- -------- -------- -------- ---------
Interest Income $241,262 $27,734 $10,990 $25,872 $41,783
-------- ------- ------- ------- -------
Expenses:
<S> <C> <C> <C> <C> <C>
Investment Advisory Fees 27,672 4,158 1,188 3,101 5,091
Less: Investment Advisory
Fees Waived (6,310) (1,060) (4) (537) (855)
Administrator Fees 3,012 535 212 337 579
Transfer Agent Fees-- Trust Shares 20 15 5 16 15
Transfer Agent Fees-- Investor Shares 31 7 10 14 --
Transfer Agent Fees-- Flex Shares 9 -- -- -- --
Transfer Agent Out of Pocket Expenses 160 52 17 3 30
Printing Expenses 278 46 18 4 53
Custody Fees 213 41 16 16 1
Professional Fees 277 49 32 27 14
Trustee Fees 56 5 1 4 1
Registration Fees 146 74 8 28 8
Distribution Fees-- Investor Shares 1,973 194 51 108 --
Less: Distribution Fees Waived--
Investor Shares (320) (49) (25) (31) --
Distribution Fees-- Flex Shares 14 -- -- -- --
Less: Distribution Fees Waived--
Flex Shares (6) -- -- -- --
Insurance and Other Fees 10 15 7 6 --
-------- ------- ------- ------- -------
Total Expenses 27,235 4,082 1,536 3,096 4,937
-------- ------- ------- ------- -------
Net Investment Income 214,027 23,652 9,454 22,776 36,846
-------- ------- ------- ------- -------
Net Realized Loss on
Securities Sold (34) (30) (20) (28) --
-------- ------- ------- ------- -------
Net Increase in Net Assets
from Operations $213,993 $23,622 $ 9,434 $22,748 $36,846
======== ======= ======= ======= =======
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
35
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
U.S. GOVERNMENT
PRIME QUALITY TAX-EXEMPT TAX-FREE SECURITIES
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
------------------- --------------------- ---------------------------------- -----------------
06/01/99 06/01/98- 06/01/99- 06/01/98- 06/01/99- 12/01/98 12/01/97- 06/01/99- 06/01/98-
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99 11/30/98 05/31/00 05/31/99
-------- -------- -------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net Investment Income .$ 214,027 $ 125,543 $ 23,652 $ 20,454 $ 9,454 $ 3,806 $ 7,024 $ 22,776 $ 20,487
Net Realized Gain
(Loss) on Investments (34) (19) (30) (1) (20) 2 (9) (28) 191
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
Increase in Net
Assets from
Operations 213,993 125,524 23,622 20,453 9,434 3,808 7,015 22,748 20,678
---------- ---------- --------- ---------- --------- -------- --------- -------- ---------
Trust Shares ......... (165,267) (99,427) (19,775 (16,665) (9,064 (3,739) (6,778 (19,825) (17,844)
Investor Shares ........(48,632) (26,132) (3,883) (3,788) (400) (91) (239) (2,927) (2,641)
Flex Shares............... (84) -- -- -- -- -- -- --
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
Total Distributions ..(213,983) (125,559) (23,658) (20,453) (9,464) (3,830) (7,017) (22,752) (20,485)
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares
Issued 6,299,753 4,698,805 1,113,796 984,432 460,442 246,896 369,536 905,352 739,766
Shares Issued in
Connection
with Crestar Merger .. -- 1,179,761 -- -- -- -- -- -- --
Reinvestment of Cash
Distributions 9,263 4,306 -- -- -- -- -- 3,025 1,170
Cost of Shares
Redeemed .. (6,901,000)(3,859,828) (999,548) (790,815) (485,600)(247,343) (325,471) (844,261) (714,135)
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
Increase (Decrease) in
Net Assets From
Trust Share
Transactions (591,984) 2,023,044 114,248 193,617 (25,158) (447) 44,065 64,116 26,801
--------- ---------- --------- ---------- --------- -------- --------- -------- --------
Investor Shares:
Proceeds from Shares
Issued 1,401,995 1,199,739 334,145 356,214 97,834 5,749 22,060 290,823 294,871
Shares Issued in
Connection with
Crestar Merger .. -- 187,089 -- -- -- -- -- -- --
Reinvestment of Cash
Distributions 51,455 24,846 4,155 3,497 415 110 237 3,062 2,578
Cost of Shares
Redeemed .. (1,058,926) (905,401) (341,648) (365,395) (41,326) (8,754) (21,081) (276,049) (294,755)
--------- ---------- --------- ---------- --------- -------- --------- -------- --------
Increase (Decrease) in
Net Assets From
Investor Share
Transactions 394,524 506,273 (3,348) (5,684) 56,923 (2,895) 1,216 17,836 2,694
--------- ---------- --------- ---------- --------- -------- --------- -------- --------
Flex Shares:
Proceeds from Shares Is 6,126 -- -- -- -- -- -- -- --
Reinvestment of Cash
Distributions 70 -- -- -- -- -- -- -- --
Cost of Shares Redeemed ..(2,751) -- -- -- -- -- -- -- --
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
Increase in Net Assets
From Flex Share
Transactions 3,445 -- -- -- -- -- -- -- --
---------- ---------- --------- ---------- --------- -------- --------- -------- ---------
Increase (Decrease) in
Net Assets From Share
Transactions (194,015) 2,529,317 110,900 187,933 31,765 (3,342) 45,281 81,952 29,495
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
Total Increase
(Decrease) in
Net Assets........ (194,005 2,529,282 110,864 187,933 31,735 (3,364) 45,279 81,948 29,688
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
Net Assets:
Beginning of Period ....4,821,332 2,292,050 770,494 582,561 276,386 279,750 234,471 465,931 436,243
---------- ---------- --------- ---------- --------- -------- --------- -------- --------
End of Period .........$4,627,327 $4,821,332 $ 881,358 $ 770,494 $ 308,121 $276,386 $ 279,750 $547,879 $465,931
========== ========== ========= ========== ========= ======== ========= ======== ========
</TABLE>
STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, AND NOVEMBER 30,
<TABLE>
<CAPTION>
U.S. TREASURY
MONEY MARKET FUND
------------------------------------
06/01/99- 12/01/98- 12/01/97-
05/31/00 05/31/99 11/30/98
--------- --------- ---------
Operations:
<S> <C> <C> <C>
Net Investment Income . $ 36,846 $ 15,437 $ 29,481
Net Realized Gain
(Loss) on Investments -- -- --
---------- -------- --------
Increase in Net
Assets from
Operations 36,846 15,437 29,481
---------- -------- --------
Trust Shares ........ (36,849) (15,522) (29,476)
Investor Shares ..... -- -- --
Flex Shares.......... -- -- --
---------- --------- ----------
Total Distributions (36,849) (15,522) (29,476)
---------- --------- ---------
Capital Transactions (1):
Trust Shares:
Proceeds from Shares
Issued 1,480,905 681,589 1,131,937
Shares Issued in
Connection
with Crestar Merger . -- -- --
Reinvestment of Cash
Distributions 23 1 4
Cost of Shares
Redeemed .. (1,518,481) (620,595) (1,064,404)
---------- --------- ----------
Increase (Decrease) in
Net Assets From
Trust Share
Transactions (37,553) 60,995 67,537
---------- --------- ----------
Investor Shares:
Proceeds from Shares
Issued -- -- --
Shares Issued in
Connection with
Crestar Merger .. -- -- --
Reinvestment of Cash
Distributions -- -- --
Cost of Shares
Redeemed .. -- -- --
---------- --------- ----------
Increase (Decrease) in
Net Assets From
Investor Share
Transactions -- -- --
---------- --------- ----------
Flex Shares:
Proceeds from Shares I -- -- --
Reinvestment of Cash
Distributions -- -- --
Cost of Shares Redeemde -- -- --
---------- --------- ----------
Increase in Net Assets
From Flex Share
Transactions -- -- --
---------- --------- ----------
Increase (Decrease) in
Net Assets From Share
Transactions (37,553) 60,995 67,537
---------- --------- ----------
Total Increase
(Decrease) in
Net Assets........ (37,556 60,910 67,542
---------- --------- ----------
Net Assets:
Beginning of Period ... 760,833 699,923 632,381
---------- --------- ----------
End of Period ......... $ 723,277 $ 760,833 $ 699,923
========== ========= ==========
</TABLE>
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
PRIME QUALITY TAX-EXEMPT TAX-FREE SECURITIES
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
------------------- --------------------- ---------------------------------- -------------------
06/01/99 06/01/98- 06/01/99- 06/01/98- 06/01/99- 12/01/98 12/01/97- 06/01/99- 06/01/98
05/31/00 05/31/99 05/31/00 05/31/99 05/31/00 05/31/99 11/30/98 05/31/00 05/31/99
-------- -------- -------- --------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) Shares Issued and Redeemed:
Trust Shares:
Shares Issued ............ 6,299,749 4,698,805 1,113,795 984,432 460,442 246,896 369,536 905,352 739,766
Shares Issued in
Connection with
Crestar Merger .. -- 1,179,840 -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions 9,263 4,306 -- -- -- -- -- 3,024 1,170
Shares Redeemed ..........(6,901,000)(3,859,828) (999,547) (790,815) (485,599) (247,343) (325,471) (844,261) (714,135)
--------- ----------- -------- -------- -------- -------- -------- -------- --------
Net Trust Share
Transactions (591,988) 2,023,123 114,248 193,617 (25,157) (447) 44,065 64,115 26,801
--------- ----------- -------- -------- -------- -------- -------- -------- --------
Investor Shares:
Shares Issued ........... 1,401,995 1,199,740 334,146 356,214 97,834 5,749 22,060 290,823 294,871
Shares Issued in
Connection with
Crestar Merger .. -- 187,089 -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions 51,455 24,846 4,155 3,497 415 110 237 3,063 2,578
Shares Redeemed ..........(1,058,894) (905,433 (341,648) (365,395) (41,327) (8,754) (21,081) (276,049) (294,755)
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Net Investor Share
Transactions 394,556 506,242 (3,347 (5,684) 56,922 (2,895) 1,216 17,837 2,694
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Flex Shares
Shares Issued........... 6,126 -- -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions 71 -- -- -- -- -- -- -- --
Shares Redeemed......... (2,751) -- -- -- -- -- -- -- --
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Net Flex Share
Transactions 3,446 -- -- -- -- -- -- -- --
---------- ---------- -------- -------- -------- -------- -------- -------- --------
Net Change in Capital
Shares (193,986) 2,529,365 110,901 187,933 31,765 (3,342) 45,281 81,952 29,495
---------- ---------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
--------------------------------------------------------------------------------
U.S. TRESAURY
MONEY MARKET FUND
-------------------------------
06/01/99- 12/01/98 12/01/97-
05/31/00 05/31/99 11/30/98
---------- -------- ---------
(1) Shares Issued and Redeeme
Trust Shares:
Shares Issued ........... 1,480,906 681,589 1,131,937
Shares Issued in
Connection with
Crestar Merger .. -- -- --
Shares Issued in Lieu
of Cash Distributions 23 1 4
Shares Redeemed ......... (1,518,481) (620,595) (1,064,404)
---------- -------- ----------
Net Trust Share
Transactions (37,552) 60,995 65,537
---------- -------- ---------
Investor Shares:
Shares Issued ........... -- -- --
Shares Issued in
Connection with
Crestar Merger .. -- -- --
Shares Issued in Lieu
of Cash Distribution -- -- --
Shares Redeemed ......... -- -- --
---------- -------- ---------
Net Investor Share
Transactions -- -- --
---------- -------- ---------
Flex Shares:
Shares Issued........... -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- --
Shares Redeemed......... -- -- --
---------- -------- ---------
Net Flex Share
Transactions -- -- --
---------- -------- ---------
Net Change in Capital
Shares (37,552) 60,995 67,537
---------- -------- ---------
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
37
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE NOTED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
NET NET ASSET
NET ASSET VALUE INVESTMENT DISTRIBUTIONS FROM VALUE END
BEGINNING OF PERIOD INCOME NET INVESTMENT INCOME OF PERIOD
------------------- ---------- --------------------- ---------
PRIME QUALITY MONEY MARKET FUND
Trust Shares
<S> <C> <C> <C> <C>
2000 $1.00 $ 0.05 $(0.05) $1.00
1999 1.00 0.05 (0.05) 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
Investor Shares
2000 $1.00 $ 0.05 $(0.05) $1.00
1999 1.00 0.05 (0.05) 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
Flex Shares
2000 (A) $1.00 $ 0.03 $(0.03) $1.00
TAX-EXEMPT MONEY MARKET FUND
Trust Shares
2000 $1.00 $ 0.03 $(0.03) $1.00
1999 1.00 0.03 (0.03) 1.00
1998 1.00 0.03 (0.03) 1.00
1997 1.00 0.03 (0.03) 1.00
1996 1.00 0.03 (0.03) 1.00
Investor Shares
2000 $1.00 $ 0.03 $(0.03) $1.00
1999 1.00 0.03 (0.03) 1.00
1998 1.00 0.03 (0.03) 1.00
1997 1.00 0.03 (0.03) 1.00
1996 1.00 0.03 (0.03) 1.00
TAX-FREE MONEY MARKET FUND (B)
Trust Shares
2000 $1.00 $ 0.03 $(0.03) $1.00
1999** 1.00 0.01 (0.01) 1.00
For the Year Ended November 30:
1998 1.00 0.03 (0.03) 1.00
1997 1.00 0.03 (0.03) 1.00
1996 1.00 0.03 (0.03) 1.00
1995 1.00 0.03 (0.03) 1.00
Investor Shares
2000 $1.00 $ 0.03 $(0.03) $1.00
1999** 1.00 0.01 (0.01) 1.00
For the Year Ended November 30:
1998 1.00 0.03 (0.03) 1.00
1997 1.00 0.03 (0.03) 1.00
1996 1.00 0.03 (0.03) 1.00
1995 1.00 0.03 (0.03) 1.00
<FN>
(DAGGER)Total return is for the period indicated and has not been annualized.
* Annualized
** For the period December 1, 1998 to May 31, 1999. All ratios for the period
have been annualized. (A) Commenced operations on October 4, 1999.
(B) On May 24, 1999, the CrestFund Tax-Free Money Fund exchanged all of its
assets and certain liabilities for shares of the Tax-Free Money Market Fund.
The CrestFund 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.
</FN>
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET ASSETS RATIO OF NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS
TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS
RETURN PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS)
-------- ----------- ------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C>
5.20% $3,311,229 0.60% 5.06% 0.75% 4.91%
4.83 3,903,232 0.60 4.69 0.77 4.52
5.22 1,880,229 0.59 5.10 0.77 4.92
5.01 1,086,555 0.58 4.90 0.76 4.72
5.25 1,050,800 0.58 5.11 0.78 4.91
5.02% $1,312,653 0.77% 4.94% 0.95% 4.76%
4.66 918,100 0.77 4.52 0.97 4.32
5.04 411,821 0.76 4.93 0.98 4.71
4.84 283,544 0.75 4.74 0.97 4.52
5.08 215,696 0.75 4.94 1.00 4.69
2.93% $ 3,445 1.50%* 4.46%* 1.99%* 3.97%*
3.19% $ 755,858 0.52% 3.16% 0.66% 3.02%
2.81 641,640 0.52 2.75 0.66 2.61
3.21 448,023 0.51 3.14 0.67 2.98
3.09 333,006 0.50 3.04 0.66 2.88
3.28 273,613 0.50 3.23 0.68 3.05
3.07% $ 125,500 0.64% 3.01% 0.82% 2.83%
2.69 128,854 0.64 2.66 0.82 2.48
3.09 134,538 0.62 3.04 0.83 2.83
2.97 102,013 0.62 2.92 0.83 2.71
3.16 95,223 0.62 3.10 0.85 2.87
3.23% $ 245,243 0.51% 3.19% 0.51% 3.19%
1.27 270,431 0.67 2.51 0.82 2.36
2.97 270,899 0.66 2.92 0.81 2.77
3.06 226,837 0.66 3.02 0.81 2.87
3.14 182,320 0.66 2.88 0.81 2.73
3.26 202,333 0.66 3.19 0.81 3.04
3.07% $ 62,878 0.67% 3.17% 0.73% 3.11%
1.27 5,955 0.67 2.52 1.06 2.13
2.96 8,851 0.67 2.92 1.07 2.52
3.05 7,634 0.68 3.42 1.08 3.02
3.13 2,994 0.67 2.86 1.07 2.46
3.25 1,627 0.67 3.16 1.07 2.76
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
39
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (concluded)
------------------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE NOTED) FOR A
SHARE OUTSTANDING THROUGHOUT THE PERIOD
NET NET ASSET
NET ASSET VALUE INVESTMENT DISTRIBUTIONS FROM VALUE END
BEGINNING OF PERIOD INCOME NET INVESTMENT INCOME OF PERIOD
------------------- ---------- --------------------- ---------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
Trust Shares
<S> <C> <C> <C> <C>
2000 $1.00 $ 0.05 $(0.05) $1.00
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
Investor Shares
2000 $1.00 $ 0.05 $(0.05) $1.00
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
U.S. TREASURY MONEY MARKET FUND (A)
Trust Shares
2000 $1.00 $ 0.05 $(0.05) $1.00
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
<FN>
* For the period December 1, 1998 to May 31, 1999. All ratios for the period have been annualized.
(DAGGER)Total return is for the period indicated and has not 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 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.
</FN>
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET ASSETS RATIO OF NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS
TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS
RETURN PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS)
-------- ----------- ------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C>
4.86% $ 468,568 0.63% 4.80% 0.74% 4.69%
4.57 404,459 0.63 4.47 0.76 4.34
5.04 377,490 0.62 4.92 0.78 4.76
4.83 344,350 0.61 4.73 0.76 4.58
5.14 325,493 0.61 5.02 0.78 4.85
4.71% $ 79,311 0.77% 4.62% 0.93% 4.46%
4.41 61,472 0.77 4.32 0.98 4.11
4.90 58,753 0.76 4.79 0.96 4.59
4.69 63,178 0.75 4.59 0.96 4.38
4.99 58,608 0.75 4.88 0.99 4.64
4.81% $ 723,277 0.63% 4.71% 0.74% 4.60%
2.08 760,833 0.68 4.10 0.83 3.95
4.89 699,923 0.66 4.77 0.81 4.62
4.91 632,381 0.65 4.82 0.80 4.67
4.80 389,051 0.66 4.69 0.81 4.54
5.29 370,454 0.66 5.16 0.81 5.01
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
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-five funds as of May 31, 2000: the
Balanced Fund, the Capital Appreciation Fund (formerly Capital Growth Fund), the
Core Equity Fund, the E-Commerce Opportunity Fund, the Growth and Income Fund,
the International Equity Fund, the International Equity Index Fund, the Life
Vision Moderate Growth Fund (formerly Life Vision Balanced Portfolio), the Life
Vision Growth and Income Fund (formerly Life Vision Growth and Income
Portfolio), the Life Vision Aggressive Growth Fund (formerly Life Vision Maximum
Growth Portfolio), the Mid-Cap Equity Fund, the Small Cap Value Equity Fund
(formerly Small Cap Equity Fund), the Small Cap Growth Stock 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, the High Income Fund, the 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, 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 Money Market Fund, 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 Fund 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.
Effective May 1999, 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 certain stated 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 CrestFunds in a tax-free business
combination. While each Fund now exists as a STI Classic Fund, two of the
surviving funds for accounting purposes are CrestFunds. In accordance with
generally accepted accounting principles, the financial statements
presented herein represent those of accounting survivors. Accordingly, the
Statements of Changes in Net Assets and Financial Highlights presented for
the periods prior to and ending on May 31, 1999 reflect activity beginning
on the first day of the accounting survivor's fiscal year.
42
<PAGE>
--------------------------------------------------------------------------------
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.
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 TO SHAREHOLDERS -- 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. 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:
ACCUMULATED UNDISTRIBUTED
REALIZED NET INVESTMENT
GAIN (LOSS) INCOME (LOSS)
(000) (000)
------------ --------------
U.S. Government Securities
Money Market Fund ......... (191) 191
This reclassification has no effect on net assets or net asset values per
share.
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
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 SEI Investments Mutual Funds
Services (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.
The Fund has entered into an agreement with the Distributor to manage the
investments of repurchase agreements for the Funds. For its services the
Distributor received $1,846,277 for the year ended May 31, 2000.
The Trust and the Distributor are parties to a Distribution Agreement dated
November 21, 1995. The Distributor does not receive any fees for its
distribution services provided under this agreement.
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 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 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 Adviser"), a
subsidiary of SunTrust Bank, 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:
MAXIMUM MAXIMUM
MAXIMUM TRUST INVESTOR INVESTOR FLEX FLEX
ANNUAL SHARE SHARE SHARE SHARE SHARE
ADVISORY MAXIMUM DISTRIBUTION MAXIMUM DISTRIBUTION MAXIMUM
FEE EXPENSE FEE EXPENSE FEE EXPENSE
-------- -------- ------------ ---------- ------------ -------
Prime
Quality
Money
Market
Fund .65% .60% .20% .77% .75% 1.50%
Tax-Exempt
Money
Market
Fund .55 .52 .15 .64 -- --
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 -- -- -- --
44
<PAGE>
--------------------------------------------------------------------------------
The Investment Adviser has 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 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, 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:
Subsequent to October 31, 1999, the Funds recognized net capital losses for tax
purposes that have been deferred to 2000 and can be used to offset future
capital gains after May 31, 2000. The Funds had capital loss carryforwards at
May 31, 2000 as follows:
<TABLE>
<CAPTION>
POST 10/31
CARRYOVER EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES DEFERRED
05/31/00 2003 2004 2005 2006 2007 2008 LOSS
(000) (000) (000) (000) (000) (000) (000) (000)
---------- -------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Prime Quality Money
Market Fund $367 $110 $14 $223 $-- $-- $20 $15
Tax-Exempt Money
Market Fund 32 -- 4 -- -- -- 28 3
Tax-Free Money
Market Fund -- -- -- -- -- -- -- 20
U.S. Government Securities
Money Market Fund -- -- -- -- -- -- -- 27
</TABLE>
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
7. CrestFunds Merger:
The Board of Directors and shareholders of the CrestFunds approved a
reorganization of the CrestFunds into the STI Classic Funds which took place
during May 1999.
The following table summarizes certain relevant information of the Funds prior
to and immediately after the business combination in May 1999 and is unaudited:
<TABLE>
<CAPTION>
SHARES
OUTSTANDING SHARES ISSUED NET ASSETS NAV
ON MERGER IN BUSINESS AFTER PER
CRESTFUND DATE STICLASSIC FUND COMBINATION COMBINATION SHARE
------------ ----------- --------------- ------------ ----------- -----
Cash Reserve Prime Quality Money Market (2)
<S> <C> <C> <C> <C> <C>
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
Investor 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
<FN>
(1) Investor Class B Shares of the CrestFunds Cash Reserve Fund were exchanged
for Investor Shares of the STI Classic Prime Quality Money Market Fund.
(2) Represents the accounting survivor in this business combination.
</FN>
</TABLE>
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 Adviser 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 Adviser 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.
9. Subsequent Events:
Effective June 30, 2000, SunTrustBanks, Inc. reorganized all of the investment
management functions of its three institutional money management units,
including SunTrust Bank, into Trusco Capital Management, Inc.
On May 16, 2000, the Board of Trustees of the STI Classic Funds approved the
name change of the Tax-Free Money Market Fund to the Virginia Tax-Free Money
Market Fund.
46
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
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, 2000, and the related statements of
operations, changes in net assets, and financial highlights for the periods
presented, excluding the periods indicated below. 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 changes for the year
ended November 30, 1998 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of May 31, 2000, 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 audited by us
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, 2000, 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 accounting principles generally
accepted in the United States.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
July 18, 2000
47
<PAGE>
NOTICE TO SHAREHOLDERS
--------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000 UNAUDITED
For shareholders that do not have a May 31, 2000 tax year end, this notice is
for informational purposes only. For shareholders with a May 31, 2000, please
consult your tax adviser as to the pertinence of this notice. For the fiscal
year ended May 31, 2000, each portfolio is designating the following items with
regard to distributions paid during the year:
<TABLE>
<CAPTION>
LONG TERM
(20% RATE) ORDINARY
CAPITAL GAIN INCOME TAX-EXEMPT TOTAL QUALIFYING
FUND DISTRIBUTION 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% 0.04% 99.96% 100.00% 0.00%
Tax Free 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%
<FN>
-----------------
(1) Qualifying dividends represent dividends which qualify for the corporate dividends received deduction and is reflected as a
percentage of "Ordinary Income Distributions".
</FN>
</TABLE>
48
<PAGE>
INVESTMENT ADVISER
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.
<PAGE>
STI CLASSIC FUNDS
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
INSTITUTIONAL SHARES
INVESTMENT ADVISER:
TRUSCO CAPITAL MANAGEMENT, INC.
This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
Classic Institutional Money Market Funds of the STI Classic Funds (the "Trust")
and should be read in conjunction with the prospectus dated October 1, 2000 for
the Institutional Shares of the Trust's Classic Institutional Cash Management,
Classic Institutional U.S. Government Securities, and Classic Institutional U.S.
Treasury Securities Money Market Funds and the prospectus dated October 1, 2000
for the Corporate Trust Shares of the Classic Institutional U.S. Treasury
Securities Money Market Fund. The prospectus may be obtained from the Trust's
distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456.
TABLE OF CONTENTS
PAGE
THE TRUST...................................................................B-2
ADDITIONAL INFORMATION ABOUT EACH FUND......................................B-2
DESCRIPTION OF PERMITTED INVESTMENTS........................................B-3
INVESTMENT POLICIES........................................................B-12
PROPOSED FUNDAMENTAL INVESTMENT POLICIES...................................B-14
INVESTMENT ADVISER.........................................................B-15
THE ADMINISTRATOR..........................................................B-16
THE DISTRIBUTOR............................................................B-17
THE TRANSFER AGENT.........................................................B-17
THE CUSTODIAN..............................................................B-17
CODES OF ETHICS............................................................B-17
INDEPENDENT PUBLIC ACCOUNTANTS.............................................B-17
LEGAL COUNSEL..............................................................B-18
TRUSTEES AND OFFICERS OF THE TRUST.........................................B-18
PERFORMANCE INFORMATION....................................................B-20
COMPUTATION OF YIELD.......................................................B-21
CALCULATION OF TOTAL RETURN................................................B-21
ADVERTISING................................................................B-22
PURCHASING SHARES..........................................................B-22
REDEEMING SHARES...........................................................B-22
DETERMINATION OF NET ASSET VALUE...........................................B-23
TAXES......................................................................B-23
FUND TRANSACTIONS..........................................................B-24
TRADING PRACTICES AND BROKERAGE............................................B-25
DESCRIPTION OF SHARES......................................................B-27
SHAREHOLDER LIABILITY......................................................B-27
LIMITATION OF TRUSTEES' LIABILITY..........................................B-28
5% AND 25% SHAREHOLDERS....................................................B-28
EXPERTS....................................................................B-29
APPENDIX....................................................................A-1
FINANCIAL STATEMENTS........................................................F-1
B-1
<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. Each share of
each Fund represents an equal proportionate interest in that portfolio. See
"Description of Shares." This Statement of Additional Information relates to
shares of the Classic Institutional U.S. Treasury Money Market Fund which are
offered through two separate classes (Institutional Shares and Corporate Trust
Shares) and shares of the Classic Institutional Cash Management Money Market
Fund and the Classic Institutional U.S. Government Securities Money Market Fund
which are offered through a single class (Institutional Shares).
ADDITIONAL INFORMATION ABOUT EACH FUND
Each Classic Institutional Money Market Fund (each a "Fund," collectively, the
"Funds") intends to comply with federal regulations applicable to money market
funds using the amortized cost method for calculating net asset value, which
require each Fund to invest only in U.S. dollar denominated obligations, to
maintain an average maturity on a dollar-weighted basis of 90 days or less and
to acquire eligible securities that present minimal credit risk and have a
maturity of 397 days or less. The Classic Institutional U.S. Treasury Securities
Money Market Fund seeks to manage its investments in a manner consistent with
the criteria for obtaining an Aaa rating by Moody's Investors Service
("Moody's") and/or an AAA rating by Standard & Poor's Corporation ("S&P"). These
requirements will also limit the Classic Institutional U.S. Treasury Securities
Money Market Fund's ability to generate high current income. For a further
discussion of these rules, see "Description of Permitted Investments."
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
The Classic Institutional Cash Management Money Market Fund will invest in money
market instruments denominated in U.S. dollars consisting of: (i) U.S. Treasury
obligations; (ii) receipts; (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 nationally recognized
statistical rating organizations (an "NRSRO") (as described in the "Appendix")
or, if not rated, determined by the 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
savings and loan associations; (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 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 Adviser to
be of comparable quality; (ix) high quality medium term notes; (x) municipal
securities; (xi) mortgage-backed securities; and (xii) asset-backed securities.
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. The Fund may also
purchase restricted securities. 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.
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
The Classic Institutional U.S. Government Securities Money Market Fund will
invest solely in (i) U.S. Treasury obligations; (ii) obligations issued or
guaranteed as to principal and interest by agencies or instrumentalities of the
U.S. government; (iii) repurchase agreements involving and of the foregoing
obligations; and (iv) shares of registered money market funds that invest in the
foregoing.
B-2
<PAGE>
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
The Classic U.S. Treasury Securities Money Market Fund will invest exclusively
in U.S. Treasury obligations and any repurchase agreements with dealers will be
selected pursuant to guidelines adopted by the Trust's Board of Trustees and
collateralized by U.S. Treasury obligations.
The Fund, however, seeks to invest exclusively in securities that would qualify
to be rated in the highest ratings category of an NRSRO, such as S&P or Moody's.
As a result, the Fund's ability to maintain an average dollar-weighted portfolio
maturity to the maximum extent permitted by Rule 2a-7 under the Investment
Company Act of 1940 (the "1940") will be limited, and the Fund's performance may
be affected adversely.
DESCRIPTION OF PERMITTED INVESTMENTS
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 pay-down 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 is also the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on those securities.
Asset-backed securities entail pre-payment risk, which may vary depending on the
type of asset, but is generally less than the pre-payment 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.
BANK INVESTMENT CONTRACTS ("BICs")
BICs are contracts issued by U.S. banks and savings and loans institutions.
Pursuant to such contracts, the Institutional Cash Management Money Market Fund
makes cash contributions to a deposit fund of the general account of the bank or
savings and loan institution. The bank or savings and loan institution then
credits to the Fund on a monthly basis guaranteed interest at either a fixed,
variable or floating rate. A BIC provides that this guaranteed interest will not
be less than a certain minimum rate. A BIC is a general obligation of the
issuing bank or savings and loan institution and not a separate account. The
purchase price paid for a BIC becomes part of the general assets of the issuer,
and the contract is paid at maturity from the general assets of the issuer.
BICs are generally not assignable or transferable without the permission of the
issuing bank or savings and loan institution. For this reason, an active
secondary market in BICs currently does not exist. Therefore, BICs are
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considered to be illiquid investments. The Fund may invest up to an aggregate
amount of 5% of its total assets in BICs.
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.
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 the maturity. Certificates of deposit with penalties for early withdrawal
will be considered liquid.
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.
FOREIGN SECURITIES
Foreign securities may include U.S. dollar denominated obligations or securities
of foreign issuers. Possible investments include equity securities of foreign
entities, obligations of foreign branches of U.S. banks and of foreign banks,
including, without limitation, European Certificates of Deposit, European Time
Deposits, European Bankers' Acceptances, Canadian Time Deposits and Yankee
Certificates of Deposit, and investments in Canadian Commercial Paper, Europaper
and foreign securities. These instruments may subject the Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to changes
in exchange rates, or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. Such investments may also entail higher custodial fees and sales
commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.
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.
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GUARANTEED INVESTMENT CONTRACTS ("GICs")
GICs are contracts issued by U.S. insurance companies. Pursuant to such
contracts, the Institutional Cash Management Money Market Fund makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Fund on a monthly basis guaranteed
interest at either a fixed, variable or floating rate. A GIC provides that this
guaranteed interest will not be less than a certain minimum rate. 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 generally considered to be illiquid
investments. However, the Fund will treat GICs with seven-day unconditional
demand features as liquid investments.
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.
Rule 144A securities and Section 4(2) commercial paper that meet the criteria
established by the Board of Trustees of the Trust may be considered liquid. See
"Restricted Securities".
INVESTMENT COMPANY SHARES
Investment companies typically incur fees that are separate from those fees
incurred directly by the Funds. A Fund's purchase of such investment company
securities results in the layering of expenses, such that Shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.
MEDIUM NOTES
Medium term notes are periodically or continuously offered corporate or agency
debt that differs from traditionally underwritten corporate bonds only in the
process by which they are issued.
MORTGAGE-BACKED SECURITIES
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.
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Obligations of GNMA are backed by the full faith and credit of the U.S.
government. Obligations of Fannie Mae and FHLMC are not backed by the full faith
and credit of the U.S. 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 pre-payments 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 pre-payment 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
pre-payments 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
pre-payment 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 pre-payment feature. In addition, these pre-payments 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, 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 pre-payments 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
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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, pre-payment rates tend to
increase, which tends to reduce prices of IOs and increase prices of POs. Rising
interest rates can have the opposite effect.
DETERMINING MATURITIES OF MORTGAGE-BACKED SECURITIES
Due to pre-payments 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
Adviser believes 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
the Adviser. An average life estimate is a function of an assumption regarding
anticipated pre-payment 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 the
Adviser will be the actual average life.
MUNICIPAL SECURITIES
The Institutional Cash Management Money Market Fund may invest in municipal
securities. The two principal classifications of municipal securities are
"general obligation" and "revenue" issues. General obligation issues are issues
involving the credit of an issuer possessing taxing power and are payable from
the issuer's general unrestricted revenues, although the characteristics and
method of enforcement of general obligation issues may vary according to the law
applicable to the particular issue. Revenue issues are payable only from the
revenues derived from a particular facility or class of facilities or other
specific revenue source. A Fund may also invest in "moral obligation" issues,
which are normally issued by special purpose authorities. Moral obligation
issues are not backed by the full faith and credit of the state and are
generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public facilities,
the refunding of outstanding obligations, the payment of general operating
expenses, and the extension of loans to other public institutions and
facilities. Certain private activity bonds that are issued by or on behalf of
public authorities to finance various privately-owned or operated facilities are
included within the term "Municipal Securities." Private activity bonds are
generally revenue bonds, the credit and quality of which are directly related to
the credit of the private user of the facilities.
Municipal securities may also include general obligation notes, tax anticipation
notes, bond anticipation notes, revenue anticipation notes, project notes,
certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are sold by the Department of
Housing and Urban Development. While the issuing agency has the primary
obligation with respect to its project notes, they are also secured by the full
faith and credit of the United States through agreements with the issuing
authority which provide
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that, if required, the federal government will send the issuer an amount equal
to the principal of and interest on the project notes.
The quality of municipal securities, both within a particular classification and
between classifications, will vary, and the yields on municipal securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating(s)
of the issue. In this regard, it should be emphasized that the ratings of any
NRSRO are general and are not absolute standards of quality. Municipal
securities with the same maturity, interest rate and rating(s) may have
different yields, while municipal securities of the same maturity and interest
rate with different rating(s) may have the same yield.
An issuer's obligations under its municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its municipal securities may be
materially adversely affected by litigation or other conditions.
MUNICIPAL NOTE RATINGS: Moody's highest rating for state and municipal and other
short-term notes is MIG-1 and VMIG-1. Short-term municipal securities rated
MIG-1 or VMIG-1 are of the best quality. They have strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing or both. Short-term municipal
securities rated MIG-2 and VMIG-2 are of high quality. Margins of protection are
ample although not so large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a long-term
debt rating. The following criteria will be used in making that assessment.
- Amortization schedule (the larger the final maturity relative
to other maturities the more likely it will be treated as a
note).
- Source of payment (the more dependent the issue is on the
market for its refinancing, the more likely it will be treated
as a note).
Note rate symbols are as follows:
SP-1. Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
OTHER INVESTMENTS
The Funds are not prohibited from investing in obligations of banks that are
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Trust's administrator and the distributor. The purchase of shares of a Fund
by such banks or by their customers will not be a consideration in determining
which bank obligations a Fund may purchase. However, the Funds will not purchase
obligations issued by the Adviser.
RECEIPTS
Receipts are interests in separately traded interest and principal component
parts of U.S. Treasury obligations that are issued by banks and brokerage firms
and are created by depositing U.S. Treasury obligations into a special account
at a custodian bank. The custodian holds the interest and principal payments for
the benefit of the registered
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owners of the certificates or receipts. The custodian arranges for the issuance
of the certificates or receipts evidencing ownership and maintains the register.
Receipts are sold as zero coupon securities which means that they are sold at a
substantial discount and redeemed at face value at their maturity date without
interim cash payments of interest or principal. This discount is amortized over
the life of the security and such amortization will constitute the income earned
on the security for both accounting and tax purposes. Because of these features,
receipts may be subject to greater price volatility than interest paying U.S.
Treasury obligations. See also "Taxes."
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements. Repurchase agreements are
agreements by which a person (E.G., a Fund) obtains a security and
simultaneously commits to return the security to the seller (a primary
securities dealer as recognized by the Federal Reserve Bank of New York or a
national member bank as defined in Section 3(d)(1) of the Federal Deposit
Insurance Act, as amended) at an agreed-upon price (including principal and
interest) on an agreed-upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is, in
effect, secured by the value of the underlying security.
Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the custodian or its agent must take possession of the underlying
collateral. However, if the seller defaults, a Fund could realize a loss on the
sale of the underlying security to the extent that the proceeds of the sale
including accrued interest are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if a Fund is treated as an unsecured creditor and required to return
the underlying security to the seller's estate.
RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS
Investments by a money market fund are subject to limitations imposed under
regulations adopted by the U.S. Securities and Exchange Commission. Under these
regulations, money market funds may only acquire 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"). A security is not considered to be unrated if its issuer has
outstanding obligations of comparable priority and securities that have a
short-term rating. In the case of taxable money market funds, investments in
second tier securities are subject to the further constrains in that (i) no more
than 5% of a Fund's assets may be invested in second tier securities and (ii)
any investment in the securities of any one such issuer is limited to the
greater of 1% of the Fund's total assets or $1 million. A taxable money market
fund may also hold more than 5% of its assets in first tier secretes of a single
issuer for three "business days" (that is, any day other than a Saturday, Sunday
or customary business holiday). In the event that the security owned by a Fund
is downgraded below the stated rating categories, the Adviser will review and
take appropriate action with regard to the security.
RESTRICTED SECURITIES
Restricted securities are securities that may not be sold to the public without
registration under the Securities Act of 1933 (the "1933 Act") absent an
exemption from registration. The Funds may invest in restricted securities, and
each Fund may invest up to 10% of its net assets in illiquid securities, subject
to each Fund's investment limitations on the purchase of illiquid securities.
Restricted securities, including securities eligible for re-sale under 1933 Act
Rule 144A, that are determined to be liquid are not subject to this limitation.
This determination is to be made by the
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Fund's Adviser pursuant to guidelines adopted by the Board of Trustees. Under
these guidelines, the 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, the Adviser intends to purchase securities that are exempt from
registration under Rule 144A under the 1933 Act.
SECURITIES LENDING
The Funds may lend securities pursuant to agreements which require that the
loans be continuously secured by collateral at all times equal to 100% of the
market value of the loaned securities which consists of cash, securities of the
U.S. government or its agencies, or any combination of cash and such securities.
Such loans will not be made if, as a result, the aggregate amount of all
outstanding securities loans for a Fund exceed one-third of the value of the
Fund's total assets taken at fair market value. A Fund will continue to receive
interest on the securities lent while simultaneously earning interest on the
investment of the cash collateral in U.S. government securities. However, a Fund
will normally pay lending fees to such broker-dealers and related expenses from
the interest earned on invested collateral. There may be risks of delay in
receiving additional collateral or risks of delay in recovery of the securities
or even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans are made only to borrowers deemed by the
Adviser to be of good standing and when, in the judgment of the 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 the Adviser as a broker in these transactions.
STANDBY COMMITMENTS AND PUTS
The Institutional Cash Management Money Market Fund may purchase securities at a
price which would result in a yield-to-maturity lower than that generally
offered by the seller at the time of purchase when it can simultaneously acquire
the right to sell the securities back to the seller, the issuer, or a third
party (the "writer") at an agreed-upon price at any time during a stated period
or on a certain date. Such a right is generally denoted as a "standby
commitment" or a "put." The purpose of engaging in transactions involving puts
is to maintain flexibility and liquidity to permit the Fund to meet redemptions
and remain as fully invested as possible in municipal securities. The Fund
reserves the right to engage in put transactions. The right to put the
securities depends on the writer's ability to pay for the securities at the time
the put is exercised. The Institutional Cash Management Money Market Fund would
limit its put transactions to institutions which the 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, the Fund would be a general creditor (I.E., on a parity with
all other unsecured creditors) of the writer. Furthermore, particular provisions
of the contract between the Fund and the writer may excuse the writer from
repurchasing the securities; for example, a change in the published rating of
the underlying securities or any similar event that has an adverse effect on the
issuer's credit or a provision in the contract that the put will not be
exercised except in certain special cases, for example, to maintain portfolio
liquidity. The Fund could, however, at any time sell the underlying portfolio
security in the open market or wait until the portfolio security matures, at
which time it should realize the full par value of the security.
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
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or indirectly for all standby commitments or puts which are not integral parts
of the security as originally issued held in the Fund will not exceed 1/2 of 1%
of the value of its total assets of such Fund calculated immediately after any
such put is acquired.
STRIPS
Each Fund may invest in Separately Traded Interest and Principal Securities
("STRIPS"), which are component parts of U.S. Treasury securities traded through
the Federal Book-Entry System. The Adviser will only purchase STRIPS that it
determines are liquid or, if illiquid, do not violate each Fund's investment
policy concerning investments in illiquid securities. Consistent with Rule 2a-7
under the Investment Company Act of 1940, as amended, the Adviser will only
purchase STRIPS for the Funds that have a remaining maturity of 397 days or
less; therefore, the Funds currently may only purchase interest component parts
of U.S. Treasury securities. While there is no limitation on the percentage of a
Fund's assets that may be comprised of STRIPS, the 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 Funds.
SUPRANATIONAL AGENCY OBLIGATIONS
The Institutional Cash Management Money Market Fund may purchase obligations of
supranational agencies. Currently the Fund intends to invest only in obligations
issued or guaranteed by the Asian Development Bank, Inter-American Development
Bank, International Bank for Reconstruction and Development (World Bank),
African Development Bank, European Coal and Steel Community, European Economic
Community, European Investment Bank and the Nordic Investment Bank.
TAXABLE MUNICIPAL SECURITIES
The Institutional Cash Management Money Market Fund may invest in taxable
municipal securities. Taxable municipal securities are municipal securities the
interest on which is not exempt from federal income tax. Taxable municipal
securities include "private activity bond" that are issued by or on behalf of
states or political subdivisions thereof to finance privately-owned or operated
facilities for business and manufacturing, housing, sports, and pollution
control and to finance activities of and facilities for charitable institutions.
Private activity bonds are also used to finance public facilities such as
airports, mass transit systems, ports, parking lots, and low income housing. The
payment of the principal and interest on private activity bonds is not backed by
a pledge of tax revenues, and is dependent solely on the ability of the
facility's user to meet its financial obligations, and may be secured by a
pledge of real and personal property so financed. Interest on these bonds may
not be exempt from federal income tax.
U.S. GOVERNMENT AGENCY SECURITIES
Certain investments of the Institutional Cash Management Money Market Fund and
the U.S. Government Securities Money Market Fund may include U.S. Government
Agency Securities. Agencies of the U.S. 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 U.S. government include securities issued by, among
others, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Fannie Mae, and the U.S. Postal
Service as well as government trust certificates. Some of these securities are
supported by the full faith and credit of the U.S. 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.
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U.S. TREASURY OBLIGATIONS
U.S. Treasury obligations consist of bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Coupon Under Book Entry Safekeeping ("CUBES") or STRIPS.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain obligations 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 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
The Institutional Cash Management Money Market Fund may invest in variable rate
master demand notes which may or may not be backed by bank letters of credit.
These notes permit the investment of fluctuating amounts at varying market rates
of interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. Such notes provide that the interest rate on the amount outstanding
varies on a daily, weekly or monthly basis depending upon a stated short-term
interest rate index. Both the lender and the borrower have the right to reduce
the amount of outstanding indebtedness at any time. There is no secondary market
for the notes and it is not generally contemplated that such instruments will be
traded. The quality of the note or the underlying credit must, in the opinion of
the Adviser, be equivalent to the ratings applicable to permitted investments
for the Fund. The Adviser 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.
ZERO COUPON OBLIGATIONS
Zero coupon obligations are debt securities that do not bear any interest, but
instead are issued at a deep discount from par. The value of a zero coupon
obligations increases over time to reflect the interest accrued. 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 par and
pay interest periodically.
INVESTMENT POLICIES
FUNDAMENTAL POLICIES
The following are fundamental policies of each Fund and cannot be changed with
respect to a Fund without the consent of the holders of a majority of a Fund's
outstanding shares.
The terms "a majority of the outstanding shares" of a Fund means the vote of the
lesser of (i) 67% or more of the shares of such Fund present at a meeting, if
the holders of more than 50% of the outstanding shares of such Fund are present
or represented by proxy or (ii) more than 50% of the outstanding shares of such
Fund.
A Fund may not:
1. Acquire more than 10% of the voting securities of any one issuer.
2. Invest in companies for the purpose of exercising control.
B-12
<PAGE>
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 ("SEC") 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) a Fund may
engage in securities lending as described in the prospectus and in this
Statement of Additional Information.
5. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by paragraph 3 above in aggregate amounts not to
exceed 10% of the Fund's total assets, taken at current value at the
time of the incurrence of such loan, except as permitted with respect
to securities lending.
6. Purchase or sell real estate, real estate limited partnership
interests, commodities or commodities contracts and interests in a pool
of securities that are secured by interests in real estate. However,
subject to their permitted investment spectrum, any Fund may invest in
companies which invest in real estate commodities or commodities
contracts.
7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term
credits as necessary for the clearance of security transactions.
8. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a security.
9. Purchase securities of other investment companies except for money
market funds and CMOs and REMICs deemed to be investment companies and
then only as permitted by the 1940 Act and the rules and regulations
thereunder. Under these rules and regulations, a Fund is prohibited
from acquiring the securities of other investment companies if, as a
result of such acquisition, the Fund owns more than 3% of the total
voting stock of the company; securities issued by any one investment
company represent more than 5% of the total assets of a Fund; or
securities (other than treasury stock) issued by all investment
companies represent more than 10% of the total assets of the Fund.
10. Issue senior securities (as defined in the 1940 Act) except in
connection with permitted borrowings as described above or as permitted
by rule, regulation or order of the SEC.
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 to only the Classic
Institutional Cash Management Money Market Fund, 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.
B-13
<PAGE>
For purposes of this limitation, (i) utility companies will be divided
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.
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
On August 15, 2000, the Board of Trustees recommended that shareholders of each
Fund approve certain revisions to each Fund's fundamental investment policies.
These revised policies, which are listed below, if approved, would replace each
of the fundamental policies listed above. Shareholders of record on August 16,
2000 will be asked to approve the revised policies at shareholders meeting
scheduled for October 27, 2000. If these revised policies are approved, they
will take effect immediately. The Fund will update this SAI if the revised
policies are not approved by the shareholders of each Fund.
No Fund may:
1. With respect to 75% of each Fund's total assets, invest more
than 5% of the value of the total assets of a Fund in the
securities of any one issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, repurchase agreements involving such
securities, and securities issued by investment companies), or
purchase the securities of any one issuer if such purchase
would cause more than 10% of the voting securities of such
issuer to be held by a Fund.
2. Borrow money in an amount exceeding 33 1/3% of the value of
its total assets, provided that, for the purposes of this
limitation, investment strategies that either obligate a Fund
to purchase securities or require a Fund to segregate assets
are not considered to be borrowing. Asset coverage of at least
300% is required for all borrowing, except where the Fund has
borrowed money for temporary purposes (less than 60 days), and
in an amount not exceeding 5% of its total assets.
3. Underwrite securities issued by others, except to the extent
that the Fund may be considered an underwriter within the
meaning of the Securities Act of 1933 in the sale of portfolio
securities.
4. Issue senior securities (as defined in the Investment Company
Act of 1940 (the "1940 Act")), except as permitted by rule,
regulation or order of the Securities and Exchange Commission.
5. Purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities and securities issued by
investment companies) if, as a result, more than 25% of the
Fund's total assets would be invested in the securities of
companies who principal business activities are in the same
industry.
5.1 With respect to the money market funds, this
limitation does not apply to 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.
B-14
<PAGE>
6. Purchase or sell real estate, unless acquired as a result of
ownership of securities or other instruments (but this shall
not prevent a Fund 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.
8. Make loans, except that a Fund may: (i) purchase or hold debt
instruments in accordance with its investment objectives and
policies; (ii) enter into repurchase agreements; and (iii)
lend its portfolio securities.
NON-FUNDAMENTAL POLICIES
No Fund may purchase or hold illiquid securities, I.E., securities that cannot
be disposed of for their approximate carrying value in seven days or less (which
term includes repurchase agreements and time deposits maturing in more than
seven days) if, in the aggregate, more than 10% of its net assets would be
invested in illiquid securities.
The foregoing percentages, except with respect to holding illiquid securities,
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess occurs or exists immediately after and as a result of
a purchase of such security.
INVESTMENT ADVISER
The Trust and Trusco Capital Management, Inc. (the "Adviser") have entered into
an advisory agreement (the "Advisory Agreement"). As of July 1, 2000, the
Adviser had $47 billion in assets. The Adviser is an indirect wholly-owned
subsidiary of SunTrust Banks, Inc. ("SunTrust"), a bank holding company. The
Advisory Agreement provides that the Adviser shall be liable to the Trust and/or
its shareholders, for willful misconduct, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of a Fund (including amounts payable to the 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 the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Advisory Agreement or "interested persons" of any party thereto, cast in person
at a meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Funds, by a majority of the outstanding shares of the Funds, on
not less than 30 days' nor more than 60 days' written notice to the Adviser, or
by the Adviser on 90 days' written notice to the Trust.
Prior to May 17, 1999, Crestar Asset Management Company served as the investment
adviser to the predecessor of the Classic Institutional Cash Management Money
Market Fund. Prior to May 24, 1999, Crestar Asset Management Company served as
the investment adviser to the predecessor of the Classic Institutional U.S.
Government Money Market Fund.
B-15
<PAGE>
For the fiscal years ended May 31, 2000, 1999, and 1998, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED OR REIMBURSED
FUND ----------------------------------------- --------------------------------------
2000 1999 1998 2000 1999 1998
------------------------------------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Classic Institutional Cash $4,393,000 $1,377,839 $444,000 $679,000 $799,660 $704,000
Management Money Market
Fund*
------------------------------------- ---------- ---------- -------- -------- -------- --------
Classic Institutional U.S. $1,355,000 $ 265,960 $476,000 $181,000 $166,261 $906,000
Government Securities Money
Market Fund*
------------------------------------- ---------- ---------- -------- -------- -------- --------
Classic Institutional U.S. $2,746,000 $ 0** $11,328 $305,000 $560,506 $197,908
Treasury Securities Money
Market Fund
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Prior to May 17, 1999, advisory fees were paid by the predecessor to this
Fund pursuant to an agreement between The Arbor Fund and Crestar Asset
Management Company for the fiscal years ended January 31, 1999 and January
31, 1998, respectively.
** The Adviser voluntarily waived all of its advisory fees to keep the total
expense ratio of the Fund at 0.25%.
THE ADMINISTRATOR
The Trust and SEI Investments Mutual Funds Services (the "Administrator"), are
parties to an administration agreement (the "Administration Agreement") dated
May 29, 1992. The Administration Agreement provides that the Administrator shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Administrator in the performance of its
duties or from reckless disregard by it of its duties and obligations
thereunder.
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 other mutual funds including, but without
limitation: The Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha
Select Funds, Amerindo Funds Inc., The Arbor Fund, ARK Funds, Armada Funds, The
Armada Advantage Fund, Bishop Street Funds, CNI Charter Funds, CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., Friends Ivory Funds, HighMark Funds,
Huntington Funds, Huntington VA Funds, The Nevis Fund, Inc., Oak Associates
Funds, 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 Inter-national Trust, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Insurance Products Trust, SEI Liquid Asset
Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable Trust, TIP
Funds, UAM Funds Trust, UAM Funds, Inc. 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 $1 to $4 billion of
average aggregate net assets, .07% of the next $4 to $7 billion of average
aggregate net assets, .065% of the next $7 to $9 billion of average aggregate
net assets, and .06% after $9 billion of average aggregate net assets.
B-16
<PAGE>
For the fiscal years ended May 31, 2000, May 31, 1999 and May 31, 1998, the
Funds paid the following administration fees:
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED
FUND ------------------------------------------ ---------------------------------------
2000 1999 1998 2000 1999 1998
------------------------------------- ---------- ---------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Classic Institutional Cash $1,554,000 $ 530,802 $ 251,000 $439,000 $ 138,021 $ 210,000
Management Money Market
Fund*
------------------------------------- ---------- ---------- --------- -------- --------- ---------
Classic Institutional U.S. $ 486,000 $ 168,000 $ 310,000 $121,000 $ 268,476 $ 243,000
Government Securities Money
Market Fund*
------------------------------------- ---------- ---------- --------- -------- --------- ---------
Classic Institutional U.S. $ 972,000 $ 175,125 $ 61,988 $275,000 $ 45,029 $ 13,823
Treasury Securities Money
Market Fund
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Prior to May 17, 1999, administration fees were paid by the predecessor to
this Fund pursuant to an agreement between The Arbor Fund and the
Administrator for the fiscal years ended January 31, 1999 and January 31,
1998, respectively.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust have entered into a distribution agreement
(the "Distribution Agreement") dated May 29, 1992. The Distributor will not
receive any compensation for distribution of shares.
The Distribution Agreement is renewable annually and may be terminated by the
Distributor, the Qualified Trustees (as defined in the Distribution Agreement),
or by a majority vote of the outstanding securities of the Trust upon not more
than 60 days' written notice by either party.
THE TRANSFER AGENT
Federated Services Company, Federated Investors Tower, Pittsburgh, PA 15222-3779
serves as the Trust's transfer agent.
THE CUSTODIAN
SunTrust Bank, 303 Peachtree Street N.E., 14th Floor, Atlanta, GA 30308 serves
as the custodian for the Funds.
CODES OF ETHICS
The Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule
17j-1 under the Investment Company Act of 1940. In addition, the Adviser and
Distributor have adopted Codes of Ethics pursuant to Rule 17j-1. These Codes of
Ethics (each a "Code" and together the "Codes") apply to the personal investment
activities of trustees, officers and certain employees (together, "access
persons"). Rule 17j-1 and the Codes are designed to prevent unlawful practices
in connection with the purchase or sale of securities by access persons. Under
each Code, access persons are permitted to engage in personal securities
transactions, but are required to report their personal securities transactions
for monitoring purposes. In addition, certain access persons of the Trust and
the Adviser are
B-17
<PAGE>
prohibited from acquiring beneficial ownership of securities offered in
connection with initial public offerings. Certain access persons of the Adviser
are further prohibited from acquiring beneficial ownership of securities offered
in connection with a limited offering. The Distributor's Code requires certain
access persons to obtain approval before investing in initial public offerings
and limited offerings. Copies of these Code of Ethics are on file with the U.S.
Securities and Exchange Commission, and are available to the public.
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. Unless otherwise noted, 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 to one
or more mutual funds for which SEI Investments Company or its affiliates act as
investment manager, administrator or distributor.
THOMAS GALLAGHER (11/25/47) - Trustee* - President, Genuine Parts Company
Wholesale Distribution, 1970 present; Director, National Service Industries;
Director, Oxford Industries.
DANIEL S. GOODRUM (7/11/26) - Trustee* - Chairman & CEO, SunBank/South Florida,
N.A., 1985-1991; Chairman Audit Committee and Director, Holy Cross Hospital;
Executive Committee Member and Director, Honda Classic Foundation; Director,
Broward Community College Foundation.
WILTON LOONEY (4/18/19) - Trustee* - President of Genuine Parts Company,
1961-1964; Chairman of the Board, 1964-1990; Honorary Chairman of the Board,
1990 to present. Director, Rollins, Inc.; Director, RPC Energy Services, Inc.
CHAMPNEY A. MCNAIR (10/30/24) - Trustee* - Director and Chairman of Investment
Committee and member of Executive Committee, Cotton States Life and Health
Insurance Company; Director and Chairman of Investment Committee and member of
Executive Committee, Cotton States Mutual Insurance Company; Chairman, Trust
Company of Georgia Advisory Council.
F. WENDELL GOOCH (12/3/32) - Trustee - Retired. President, Orange County
Publishing Co., Inc., 1981-1997, publisher of the Paoli News and the Paoli
Republican and Editor of the Paoli Republican, 1981-1997, President, H & W
Distribution, Inc., 1984-1997. Current Trustee on the Board of Trustees for the
SEI Family of Funds and The Capitol Mutual Funds. Executive Vice President,
Trust Department, Harris Trust and Savings Bank and Chairman of the Board of
Directors of The Harris Trust Company of Arizona before January 1981.
T. GORDY GERMANY (11/28/25) -Trustee - Retired President, Chairman, and CEO of
Crawford & Company; held these positions, 1973-1987. Member of the Board of
Directors, 1970-1990, joined company in 1948; spent entire career at Crawford,
currently serves on Boards of Norrell Corporation and Mercy Health Services, the
latter being the holding company of St. Joseph's Hospitals.
JAMES O. ROBBINS (7/4/42) - Trustee - President and Chief Executive Officer, Cox
Communications, Inc., 1983 - present; Director, NCR; Director, Cox
Communications.
B-18
<PAGE>
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.
MARK NAGLE (10/20/59) - President - 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.
JENNIFER E. SPRATLEY, CPA (2/13/69) - Treasurer and Chief Financial Officer -
Director, SEI Funds Accounting since November 1999. Audit Manager at Ernst &
Young LLP, 1991-1999.
JAMES R. FOGGO (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.
TIMOTHY D. BARTO (3/28/68) - Vice President and Assistant Secretary - Employed
by SEI Investments since October 1999. Vice President and Assistant Secretary of
the Administrator and Distributor since December 1999. Associate at Dechert
Price & Rhoads 1997-1999. Associate at Richter, Miller & Finn 1994-1997.
TODD B. CIPPERMAN (2/14/66) - Vice President and Assistant Secretary - Senior
Vice President and General Cousel of SEI Investments; Senior Vice President,
General Counsel and Secretary of the Administrator and the Distributor since
2000. Vice President and Assistant Secretary of SEI Investments, the
Administator and the Distributor, 1995-2000. Associate, Dewey Ballantine (law
firm), 1994-1995. Associate, Winston & Strawn (law firm), 1991-1994.
CHRISTINE M. MCCULLOUGH (12/2/60) - Vice President and Assistant Secretary -
Employed by SEI Investments since November 1, 1999. Vice President and Assistant
Secretary of the Administrator and the Distributor since December 1999.
Associate at White and Williams LLP, 1991-1999. Associate at Montgomery,
McCracken, Walker & Rhoads, 1990-1991.
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 1995.
------------------------
* Messrs. Gallagher, Goodrum, Looney and McNair 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.
B-19
<PAGE>
For the fiscal year ended May 31, 2000, the Trust paid the following amounts to
Trustees and Officers of the Trust:
<TABLE>
<CAPTION>
============================ ====================== =========================== =================== ============================
AGGREGATE PENSION OR ESTIMATED TOTAL COMPENSATION
NAME OF PERSON, COMPENSATION RETIREMENT BENEFITS ANNUAL FROM FUND AND FUND
POSITION FROM FUND ACCRUED AS PART OF BENEFITS COMPLEX PAID TO
FUND EXPENSES UPON TRUSTEES
RETIREMENT
============================ ====================== =========================== =================== ============================
<S> <C> <C> <C> <C>
Thomas Gallagher, $ 6,000 N/A N/A $6,500 for service on
Trustee# two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Daniel S. Goodrum, $16,500 N/A N/A $18,000 for service on
Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Wilton Looney, $26,000 N/A N/A $28,000 for service on
Trustee two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Champney A. $24,000 N/A N/A $26,000 for service on
McNair, Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
F. Wendell Gooch, $25,500 N/A N/A $27,500 for service on
Trustee two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
T. Gordy Germany, $25,500 N/A N/A $27,500 for service on
Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
James O. Robbins, $ 4,500 N/A N/A $4,500 for service on
Trustee# two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Dr. Bernard F. Sliger, $25,500 N/A N/A $27,500 for service on
Trustee+ two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
Jonathan T. Walton, $25,500 N/A N/A $27,500 for service on
Trustee two boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
William H. $ 0 N/A N/A $0 for service on two
Cammack, Trustee* boards
---------------------------- ---------------------- --------------------------- ------------------- ----------------------------
</TABLE>
* Mr. Cammack resigned as a Trustee of the Trust on May 16, 2000.
# Messrs. Robbins and Gallagher did not serve as Trustees for a full year during
the most recent fiscal year.
+ Pursuant to the Board's retirement policy, Messrs. Germany, Goodrum, McNair
and Dr. Sliger will retire on November 18, 2000. Immediately thereafter, the
five remaining Trustees will constitute the entire Board of Trustees.
PERFORMANCE INFORMATION
From time to time a Fund may advertise its performance. Performance figures are
based on historical earnings and are not intended to indicate future
performance.
PERFORMANCE COMPARISONS
Each Fund may periodically compare its performance to other mutual funds tracked
by mutual fund rating services, to broad groups of comparable mutual funds, or
to unmanaged indices. These comparisons may assume reinvestment
B-20
<PAGE>
of dividends but generally do not reflect deductions for administrative and
management costs.
COMPUTATION OF YIELD
The current yield of the Funds will be calculated daily based upon the seven
days ending on the date of calculation (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
Period Return + 1)365/7] - 1. The current and the effective yields reflect the
reinvestment of net income earned daily on portfolio assets.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
FUND 7-DAY YIELD 7-DAY EFFECTIVE
YIELD
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Classic Institutional Cash Management Money Market Fund - 6.29% 6.49%
Institutional Shares 1
------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Government Securities Money Market Fund - 6.05% 6.24%
Institutional Shares 2
------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Treasury Securities Money Market Fund - 5.98% 6.15%
Institutional Shares 3
------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Treasury Securities Money Market 5.78% 5.95%
Fund - Corporate Trust Shares 4
------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Commenced operations 10/25/95 3 Commenced operations 12/12/96
2 Commenced operations 8/1/94 4 Commenced operations 6/3/99
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 the Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.
Yield is 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
Total return will be calculated according to the following formula: P (1 + T)n =
ERV, where P = a hypothetical initial payment of $1,000; T = average annual
total return; n = number of years; and ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the designated time period
as of the end of such period.
From time to time, the Trust may include the names of clients of the Adviser in
advertisements and/or sales literature for the Trust. The SEI Funds Evaluation
database tracks the total return of numerous tax-exempt pension accounts.
B-21
<PAGE>
The range of returns in these accounts determines the percentile rankings.
SunTrust Bank's investment advisory affiliate, Trusco Capital Management, Inc.,
has been in the top 1% of the SEI Funds Evaluation database for equity managers
over the past ten years. SEI Investment's database includes research data on
over 1,000 investment managers responsible for over $[XXX] billion in assets.
Based on the foregoing, the average annual total returns for the Funds from
inception through May 31, 2000 and for one-year periods ended May 31, 2000 were
as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
-------------------------------------
ONE-YEAR SINCE INCEPTION
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Classic Institutional Cash Management Money Market Fund - 5.56% 5.50%
Institutional Shares 1
------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Government Securities Money Market 5.39% 5.41%
Fund - Institutional Shares 2
------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Treasury Securities Money Market 5.25% 5.26%
Fund - Institutional Shares 3
------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Treasury Securities Money Market N/A 5.05%
Fund - Corporate Trust Shares 4
------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Commenced operations 10/25/95 3 Commenced operations 12/12/96
2 Commenced operations 8/1/94 4 Commenced operations 6/3/99
ADVERTISING
From time to time, the Trust may include the names of clients of the Adviser in
advertisements and/or sales literature for the Trust.
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.
B-22
<PAGE>
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").
Certain state securities laws may require those financial institutions providing
certain distribution services to the Trust to register as dealers pursuant to
state law.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Funds is calculated daily by the
Administrator by adding the value of securities and other assets, subtracting
liabilities and dividing by the number of outstanding shares. Securities will be
valued by the amortized cost method which involves valuing a security at its
cost on the date of purchase and thereafter (absent unusual circumstances)
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuations in general market rates of interest on
the value of the instrument. While this method provides certainty in valuation,
it may result in periods during which a security's value, as determined by this
method, is higher or lower than the price a Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield of a
Fund may tend to be higher than a like computation made by a company with
identical investments utilizing a method of valuation based upon market prices
and estimates of market prices for all of its portfolio securities. Thus, if the
use of amortized cost by a Fund resulted in a lower aggregate portfolio value on
a particular day, a prospective investor in a Fund would be able to obtain a
somewhat higher yield than would result from investment in a company utilizing
solely market values, and existing investors in a Fund would experience a lower
yield. The converse would apply in a period of rising interest rates.
A Fund's use of amortized cost and the maintenance of a Fund's net asset value
at $1.00 are permitted by regulations promulgated by Rule 2a-7 under the 1940
Act, provided that certain conditions are met. The regulations also require the
Trustees to establish procedures which are reasonably designed to stabilize the
net asset value per share at $1.00 for the Funds. Such procedures include the
determination of the extent of deviation, if any, of the Funds' current net
asset value per share calculated using available market quotations from the
Funds amortized cost price per share at such intervals as the Trustees deem
appropriate and reasonable in light of market conditions and periodic reviews of
the amount of the deviation and the methods used to calculate such deviation. In
the event that such deviation exceeds 1/2 of 1%, the Trustees are required to
consider promptly what action, if any, should be initiated, and, if the Trustees
believe that the extent of any deviation may result in material dilution or
other unfair results to Shareholders, the Trustees are required to take such
corrective action as they deem appropriate to eliminate or reduce such dilution
or unfair results to the extent reasonably practicable. Such actions may include
the sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; or establishing a net asset value per share by using
available market quotations. In addition, if the Funds incur a significant loss
or liability, the Trustees have the authority to reduce pro rata the number of
shares of the Funds in each Shareholder's account and to offset each
Shareholder's pro rata portion of such loss or liability from the Shareholder's
accrued but unpaid dividends or from future dividends while each other Fund must
annually distribute at least 90% of its investment company taxable income.
TAXES
The following is a summary of certain federal income tax considerations
generally affecting the Funds and their shareholders that are not described in
the Funds' prospectus. No attempt is made to 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,
B-23
<PAGE>
and may have a retroactive effect with respect to the transactions contemplated
herein.
FEDERAL INCOME TAX
In order to qualify for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended ("Code"), each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of a
Fund's gross income each taxable year must be derived from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities, or certain other income; (ii) 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 31st 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.
Any gain or loss recognized on a sale or redemption of Shares of a Fund by a
Shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than twelve
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 the Classic Institutional Cash Management
Money Market 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. The Fund will not be able to
treat shareholders as having paid their proportionate share of such taxes for
foreign tax credit purposes. Foreign countries generally do not impose taxes on
capital gains with respect to investments by foreign investors.
FUND TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser is responsible for placing the orders
to execute
B-24
<PAGE>
transactions for a Fund. In placing orders, it is the policy of the Trust to
seek to obtain the best net results taking into account such factors as price
(including the applicable dealer spread), the size, type and difficulty of the
transaction involved, the firm's general execution and operational facilities,
and the firm's risk in positioning the securities involved. While the 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, the 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 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
B-25
<PAGE>
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 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, 2000, the Funds paid the following brokerage
commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
====================================================================================================================================
% of Total Total Brokerage
% of Total Brokered Commissions Paid to
Total $ Amount of Total $ Amount of Brokerage Transactions SFS in Connection
Brokerage Brokerage Commissions Commissions Effected Through with Repurchase
Commissions Paid to Paid to Affiliated Affiliated Agreement
Paid in FYE Affiliates for Brokers in Brokers in Transactions for FYE
Portfolio 5/31/00 FYE 5/31/00 FYE 5/31/00 FYE 5/31/00 5/31/00
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Classic Institutional Cash $169,140 $169,140 100% 100% $169,140
Management Money
Market Fund
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. $ 99,268 $ 99,268 100% 100% $ 99,268
Government Securities
Money Market Fund
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. $641,816 $641,816 100% 100% $641,816
Treasury Securities Money
Market Fund
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-26
<PAGE>
For the fiscal year ended May 31, 1999, the Funds paid the following brokerage
commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
====================================================================================================================================
Total Brokerage
% of Total % of Total Brokered Commissions Paid to
Total $ Amount of Total $ Amount of Brokerage Transactions SFS in Connection
Brokered Brokered Commissions Commissions Effected Through with Repurchase
Portfolio Commissions Paid to Paid to Affiliated Affiliated Agreement
Paid in FYE Affiliates for Brokers in Brokers in Transactions for FYE
5/31/99 FYE 5/31/99 FYE 5/31/99 FYE 5/31/99 5/31/99
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Classic Institutional Cash $ 77,975 $ 77,975 100 % 100 % $77,975
Management Money
Market Fund (1)
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. $ 67 $ 67 100 % 100 % $ 67
Government Securities
Money Market Fund (1)
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. $ 25,484 $ 25,484 100 % 100 % $25,484
Treasury Securities Money
Market Fund
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Prior to May 17, 1999, the fiscal year of the predecessor to this Fund ended
on November 30 of each year.
For the fiscal year ended May 31, 1998, the Funds paid the following brokerage
commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
====================================================================================================================================
Total $ Amount of % of Total Brokerage Total Brokerage
Total $ Amount of Brokerage Commissions Commissions Paid to SFS in
Brokerage Commissions Commissions Paid to Affiliated Connection with Repurchase
Paid in Paid to Affiliates in Brokers in Agreement Transactions for
Portfolio FYE 5/31/98 FYE 5/31/98 FYE 5/31/98 FYE 5/31/98
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Classic Institutional Cash $142,350 $142,350 100 % $142,350
Management Money Market
Fund (1)
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. $ 60,314 $ 60,314 100 % $ 60,314
Government Securities Money
Market Fund (1)
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Treasury $ 51,533 $ 51,533 100 % $ 51,533
Securities Money Market Fund
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Prior to May 17, 1999, fiscal year of the predecessor to this fund ended on
November 30 of each year.
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
B-27
<PAGE>
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the Shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of Shareholder liability for obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any Shareholder held personally liable for the
obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment 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.
5% AND 25% SHAREHOLDERS
As of August 23, 2000, 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 Institutional Class of the Funds were held for the record
owner's fiduciary, agency or custodial customers.
<TABLE>
<CAPTION>
====================================================================================================================================
FUND NAME AND ADDRESS NUMBER OF SHARES CLASS % OF CLASS
====================================================================================================================================
<S> <C> <C> <C> <C>
Classic Institutional SunTrust Banks 818,649,492.2600 Institutional 32.52%
Cash Management Attn: Susan Grider
Money Market Mail Center 3133
Fund P.O. Box 105504
Atlanta, GA 30348-5504
------------------------------------------------------------------------------------------------------------------------------------
SunTrust Capital Markets ACH Acct. 1,669,537,247.1200 Institutional 66.31%
Attn: Anita Woods Ctr 3910
303 Peachtree Street, 24th FL
Atlanta, GA 30308-3503
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional SunTrust Banks 18,443,554.6200 Institutional 6.38%
U.S. Treasury Attn: Susan Grider
Securities Money Mail Center 3133
Market Fund P.O. Box 105504
Atlanta, GA 30348-5504
------------------------------------------------------------------------------------------------------------------------------------
SunTrust Capital Markets ACH Acct. 270,860,803.4000 Institutional 93.62%
Attn: Anita Woods Ctr 3910
303 Peachtree Street, 24th FL
Atlanta, GA 30308-3503
------------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank 1,289,407,609.5600 Corporate Trust 100%
Attn: Susan Grider
Mail Center 3133
P.O. Box 105504
Atlanta, GA 30348-5504
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-28
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Classic Institutional SunTrust Banks 818,649,492.2600 Institutional 32.52%
Cash Management Attn. Susan Grider
Money Market Mail Center 3133
Fund PO Box 105504
Atlanta, GA 30348-5504
------------------------------------------------------------------------------------------------------------------------------------
SunTrust Capital Markets ACH Acct. 1,669,537,247.1200 Institutional 66.31%
Attn. Anita Woods Ctr 3910
303 Peachtree Street, 24th FL
Atlanta, GA 30308-3503
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional SunTrust Capital Markets ACH Acct. 270,860,803.4000 Institutional 93.62%
U.S. Treasury Attn. Anita Woods Ctr 3910
Securities Money 303 Peachtree Street, 24th FL
Market Fund Atlanta, GA 30308-3503
------------------------------------------------------------------------------------------------------------------------------------
Classic Institutional. SunTrust Bank 1,289,407,609.5600 Institutional 100.00%
U.S. Treasury Attn. Susan Grider
Securities Money Mail Center 3133
Market Fund P.O. Box 105504
Atlanta, GA 30348-5504
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXPERTS
The financial statements as of May 31, 2000 have been audited by Arthur Andersen
LLP, Independent Public Accountants, as indicated in their report dated July
18th, 2000 with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
B-29
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
A-1 This is the highest category by Standard and Poor's (S&P) and indicates
that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics
are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory and the obligation is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
than obligations in higher rating categories.
PRIME-1 Issues rated Prime-1 (or supporting institutions) by Moody's have
a superiorability for repayment of senior short-term debt
obligations. Prime-1 repaymentability will often be evidenced by
many of the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
The rating F1 (Highest Credit Quality) is the highest commercial rating assigned
by Fitch. Paper rated F1 is regarded as having the strongest capacity for timely
payment of financial commitments. The rating F2 (Good Credit Quality) is the
second highest commercial paper rating assigned by Fitch which reflects a
satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.
The rating TBW-1 by Thomson BankWatch ("Thomson") indicates a very high
likelihood that principal and interest will be paid on a timely basis.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
Moody's highest rating for state and municipal and other short-term notes is
MIG-1 and VMIG-l. Short-term municipal securities rated MIG-1 or VMIG-1 are of
the best quality. They have strong protection from established cash flows,
superior liquidity support, or demonstrated broad-based access to the market for
refinancing or both. Short-tenn municipal securities rated MIG-2 or VMIG-2 are
of high quality. Margins of protection are ample although not so large as in the
MIG-I/VMIG-2 group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment:
- Amortization Schedule - the larger the final maturity relative to
other maturities, the more likely it will be treated as a note,
and
A-1
<PAGE>
- Source of Payment - the more dependent the issue is on the market
for its refinancing, the more likely it will be treated as a
note.
S&P note rating symbols are as follows:
SP-1 Strong capacity to pay principal and interest. Those issues determined
to possess a very strong capacity to pay a debt service is given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term
of the votes.
DESCRIPTION OF CORPORATE BOND RATINGS
S&P
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. Debt rated A has a strong capacity
to pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories. Debt rated BB and B is regarded as
having predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation and C
the highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions. Debt rated BB has less near-term
vulnerability to default than other speculative grade debt. However, it faces
major ongoing uncertainties or exposure to adverse business, financial, or
economic conditions that could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BBB- rating.
Debt rate B has greater vulnerability to default but presently has the capacity
to meet interest payments and principal repayments. Adverse business, financial,
or economic conditions would likely impair capacity or willingness to pay
interest and repay principal. The B rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
MOODY'S
Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than the Aaa securities. Bonds which
are rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa are considered as medium-grade obligations (I.E., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may
A-2
<PAGE>
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well. Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well-assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. Bonds which are rated
B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
Moody's bond ratings, where specified, are applied to financial contracts,
senior bank obligations and insurance company senior policyholder and claims
obligations with an original maturity in excess of one-year. Obligations relying
upon support mechanisms such as letters-of-credit and bonds of indemnity are
excluded unless explicitly rated.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's sovereign rating. Such branch obligations are
rated at the lower of the bank's rating or Moody's sovereign rating for the bank
deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.
Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.
FITCH
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions
liable to but slight market fluctuation other than through changes in the money
rate. The prime feature of an AAA bond is a showing of earnings several times or
many times interest requirements, with such stability of applicable earnings
that safety is beyond reasonable question whatever changes occur in conditions.
Bonds rated AA by Fitch are judged by Fitch to be of safety virtually beyond
question and are readily salable, whose merits are not unlike those of the AAA
class, but whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to rating by
the lesser financial power of the enterprise and more local type market.
Bonds rated A are considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Bonds rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings. Bonds rated
BB are considered speculative. The obligor's ability to pay interest and repay
principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor
A-3
<PAGE>
in satisfying its debt service requirements. Bonds rated B are considered highly
speculative. While bonds in this class are currently meeting debt service
requirements, the probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of the issue.
THOMSON
Bonds rated AAA by Thomson BankWatch indicate that the ability to repay
principal and interest on a timely basis is extremely high. Bonds rated AA
indicate a very strong ability to repay principal and interest on a timely
basis, with limited incremental risk compared to issues rated in the highest
category. Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse developments (both
internal and external) than obligations with higher ratings.
Bonds rated BBB (the lowest investment-grade category) indicate an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.
While not investment grade, the BB rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there are
significant uncertainties that could affect the ability to adequately service
debt obligations. Issues rated B show a higher degree of uncertainty and
therefore greater likelihood of default than higher-rated issues. Adverse
developments could negatively affect the payment of interest and principal on a
timely basis.
A-4
<PAGE>
FINANCIAL STATEMENTS
Following are the audited financial statements for the fiscal year ended May 31,
2000 and the reports of Arthur Andersen LLP, independent public accountants,
dated July 18, 2000, relating to the financial statements and financial
highlights.
F-1
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
-------------------------------------------------------------------------------
FACE
AMOUNT (000)VALUE (000)
-------------------------------------------------------------------------------
COMMERCIAL PAPER (22.0%)
FINANCE (2.2%)
Sigma Finance
5.750%, 07/20/00 $25,000 $ 25,000
7.400%, 05/25/01 25,000 25,000
----------
50,000
----------
INDUSTRIAL (2.8%)
DaimlerChrysler
6.040%, 06/21/00 30,000 29,899
General Electric Capital
5.730%, 08/01/00 35,000 34,660
----------
64,559
----------
INVESTMENT BANKERS/BROKER DEALERS (8.4%)
Bear Stearns
6.100%, 06/01/00 40,000 40,000
Credit Suisse First Boston
5.750%, 07/14/00 25,000 25,000
6.200%, 07/25/00 30,000 29,721
Morgan Stanley Dean Witter (B)
6.880%, 06/01/00 50,000 50,000
6.880%, 06/01/00 50,000 50,000
----------
194,721
----------
PERSONAL CREDIT INSTITUTIONS (8.6%)
Ford Motor Credit
6.410%, 06/28/00 100,000 99,519
GMAC
6.070%, 06/28/00 30,000 29,863
6.150%, 07/12/00 70,000 69,510
----------
198,892
----------
Total Commercial Paper
(Cost $508,172) 508,172
----------
CORPORATE OBLIGATIONS (44.7%)
BANKS (13.8%)
AmSouth Bank (B)
6.850%, 06/01/00 50,000 49,986
------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------
BANKS--CONTINUED
Branch Banking & Trust (B)
6.870%, 06/01/00 $40,000 $ 40,000
6.880%, 06/01/00 35,000 34,989
Canadian Imperial Bank
7.070%, 05/03/01 40,000 39,997
First Union (B)
6.870%, 06/01/00 50,000 50,000
6.910%, 06/01/00 25,000 25,000
Key Bank (B)
6.910%, 06/01/00 39,000 38,998
Wachovia Bank, MTN (B)
6.119%, 06/05/00 40,000 39,997
----------
318,967
----------
ENTERTAINMENT (3.2%)
Tampa Bay Devil Rays (A) (B)
6.710%, 06/01/00 50,745 50,745
Walt Disney (A)
4.200%, 03/15/01 25,000 24,525
----------
75,270
----------
FINANCE (8.9%)
Beneficial, MTN (B)
6.181%, 06/01/00 10,000 10,000
Beta Finance, MTN
5.520%, 06/12/00 25,000 25,000
Beta Finance, MTN (B)
6.805%, 06/07/00 30,000 30,000
7.010%, 08/16/00 30,000 30,000
Household Finance, MTN (B)
7.050%, 06/01/00 30,000 29,995
Sigma Finance (A)
6.570%, 01/10/01 20,000 20,000
Sigma Finance, MTN
6.800%, 03/30/01 30,000 30,000
UBS Finance
6.475%, 01/08/01 30,000 29,994
----------
204,989
----------
2
<PAGE>
-----------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
-----------------------------------------------------------------------------
INDUSTRIAL (1.7%)
Anheuser Busch (B)
6.440%, 06/16/00 $40,000 $ 39,999
----------
INVESTMENT BANKERS/BROKER DEALERS (15.8%)
Bear Stearns
6.500%, 07/05/00 25,000 25,008
Bear Stearns, MTN (B)
6.900%, 06/01/00 40,000 40,000
6.910%, 06/01/00 35,000 35,000
Credit Suisse First Boston,
MTN (A)
5.590%, 06/08/00 10,000 10,000
Credit Suisse First Boston,
MTN (A) (B)
6.900%, 06/01/00 35,000 35,000
Goldman Sachs, MTN,
Ser B (B)
7.080%, 06/01/00 30,000 30,013
Goldman Sachs, MTN
6.100%, 09/25/00 30,000 30,000
6.500%, 12/22/00 20,000 20,000
JP Morgan, MTN (B)
6.281%, 06/03/00 40,000 40,000
Merrill Lynch, MTN
6.735%, 02/28/01 25,000 24,997
7.260%, 05/15/01 50,000 49,995
Merrill Lynch, MTN (B)
6.985%, 06/01/00 25,000 24,999
----------
365,012
----------
LEASING COMPANY (1.3%)
Xerox Credit, MTN
5.635%, 07/14/00 30,000 29,999
----------
Total Corporate Obligations
(Cost $1,034,236) 1,034,236
----------
-------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
-------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (8.4%)
Albertson's (A) (B)
6.503%, 06/14/00 $40,000 $ 39,998
Canadian Imperial Bank
6.670%, 02/12/01 40,000 39,987
First USA Bank
6.040%, 08/04/00 40,000 40,000
Royal Bank of Canada
6.180%, 10/25/00 35,000 34,991
6.470%, 01/10/01 40,000 39,988
----------
Total Certificates of Deposit
(Cost $194,964) 194,964
----------
TAXABLE MUNICIPAL BONDS (2.4%)
California Housing Finance Agency,
MBIA (B)
6.650%, 08/01/00 31,715 31,715
Mt. Vernon Multi-Family
Housing Notes (B)
6.700%, 07/01/00 23,000 23,000
----------
Total Taxable Municipal Bonds
(Cost $54,715) 54,715
----------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (5.2%)
FHLB (B)
6.168%, 06/07/00 50,000 50,000
FHLMC, MTN
6.255%, 01/12/01 20,000 19,983
FNMA, MTN, Ser B
6.320%, 02/02/01 50,000 49,968
----------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $119,951) 119,951
----------
3
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND--CONCLUDED
------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------
BANK NOTES (3.5%)
American Express Centurion (B)
6.910%, 06/01/00 $35,000 $ 35,000
Branch Banking and Trust (B)
7.010%, 06/05/00 20,000 20,000
FCC National Bank
6.065%, 08/14/00 25,000 24,998
----------
Total Bank Notes
(Cost $79,998) 79,998
----------
REPURCHASE AGREEMENTS (10.2%)
ABN-Amro
6.440%, dated 05/31/00, matures
06/01/00, repurchase price
$63,011,270 (collateralized by
various FHLMC obligations: total
market value $64,260,000) (C) 63,000 63,000
Barclays
6.440%, dated 05/31/00, matures
06/01/00, repurchase price
$62,705,360 (collateralized by a
FNMA and SLMA obligations: total
market value $63,948,043) (C) 62,694 62,694
Deutsche Bank
6.440%, dated 05/31/00, matures
06/01/00, repurchase price
$42,016,473 (collateralized by a
FNMA obligation: total market
value $42,849,138) (C) 42,009 42,009
Merrill Lynch
6.440%, dated 05/31/00, matures
06/01/00, repurchase price
$30,618,206 (collateralized by
various FNMA obligations: total
market value $31,227,271) (C) 30,613 30,613
-------------------------------------------------------------------------------
SHARES/FACE
AMOUNT (000) VALUE (000)
-------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
Warburg Dillon
6.440%, dated 05/31/00, matures
06/01/00, repurchase price
$37,487,902 (collateralized by a
U.S. Treasury Note: total market
value 38,233,442) (C) $37,481 $ 37,481
----------
Total Repurchase Agreements
(Cost $235,797) 235,797
----------
CASH EQUIVALENT (4.3%)
Aim Liquid Assets Fund 100,000,000 100,000
----------
Total Cash Equivalent
(Cost $100,000) 100,000
----------
Total Investments (100.7%)
(Cost $2,327,833) 2,327,833
----------
OTHER ASSETS AND LIABILITIES, NET (-0.7%) (16,148)
----------
NET ASSETS:
Fund shares of Institutional Shares
(unlimited authorization -- no par value
based on 2,312,249,074 outstanding
shares of beneficial interest 2,312,249
Distributions in excess of net
investment income (565)
Accumulated net realized gain
on investments 1
----------
Total Net Assets (100.0%) $2,311,685
==========
Net Asset Value, Offering Redemption
Price Per Share -- Institutional Shares $ 1.00
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 9.
4
<PAGE>
-------------------------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
-------------------------------------------------------------------------------
FACE
AMOUNT (000 VALUE (000)
-------------------------------------------------------------------------------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS (77.8%)
FHLB
5.810%, 09/15/00 $20,000 $ 19,677
5.965%, 12/01/00 20,000 19,982
4.950%, 12/04/00 20,000 19,868
6.580%, 02/09/01 15,000 15,000
FHLB (B)
6.083%, 09/01/00 35,000 35,000
6.750%, 09/22/00 40,000 39,996
6.168%, 12/20/00 50,000 50,000
FHLMCDN
6.090%, 07/13/00 35,000 34,751
6.115%, 03/16/01 15,000 14,266
6.730%, 05/24/01 15,000 13,999
FNMA
7.000%, 05/17/01 15,000 15,004
FNMA, MTN
5.460%, 06/21/00 30,000 29,999
6.445%, 02/23/01 10,00 09,989
6.625%, 03/01/01 15,000 14,999
FNMA, MTN (B)
6.770%, 09/29/00 50,000 49,995
6.735%, 11/06/00 25,000 24,990
6.449%, 11/22/00 30,000 29,989
FNMADN
5.785%, 07/07/00 20,000 19,890
5.485%, 08/11/00 20,000 19,785
5.900%, 10/06/00 20,000 19,606
6.700%, 05/10/01 10,000 9,362
-------
Total U.S. Agency Mortgage-Backed Obligations
(Cost $506,147) 506,147
--------
------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (21.8%)
ABN-Amro
6.470%, dated 05/31/00, matures
06/01/00, repurchase price
$106,987,008 (collateralized by
various FNMA and FHLMC
obligations: total market value
$109,107,139) (C) $106,968 $106,968
Deutsche Bank 6.470%, dated
05/31/00, matures 06/01/00,
repurchase price $12,019,620
(collateralized by a FNMA
obligation: total market value
$12,257,810) (C) 12,017 12,017
Greenwich Capital
6.470%, dated 05/31/00, matures
06/01/00, repurchase price
$18,760,082 (collateralized by
various GNMA obligations: total
market value $19,132,971) (C) 18,757 18,757
JP Morgan
6.470%, dated 05/31/00, matures
06/01/00, repurchase price
$4,232,698 (collateralized by a
GNMA obligation: total market
value $4,316,577) (C) 4,232 4,232
-------
Total Repurchase Agreements
(Cost $141,974) 141,974
--------
Total Investments (99.6%)
(Cost $648,121) 648,121
--------
OTHER ASSETS AND LIABILITIES, NET (0.4%) 2,505
--------
5
<PAGE>
STATEMENT OF NET ASSETS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND--CONCLUDED
-------------------------------------------------------------------------------
VALUE (000)
-------------------------------------------------------------------------------
NET ASSETS:
Fund shares of Institutional Shares (unlimited
authorization -- no par value) based on
650,651,141 outstanding shares of beneficial
interest $650,651
Accumulated net realized loss
on investments (25)
--------
Total Net Assets (100.0%) $650,626
========
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Shares $ 1.00
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF
ABBREVIATIONS, PLEASE SEE PAGE 9.
6
<PAGE>
-------------------------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
-------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
-------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS (19.8%)
U.S. Treasury Bills
5.980%, 08/10/00 $ 75,000 $ 74,216
5.605%, 10/12/00 190,000 186,051
U.S. Treasury Note
5.000%, 02/28/0 30,000 29,704
---------
Total U.S. Treasury Obligations
(Cost $289,971 289,971
---------
REPURCHASE AGREEMENTS (76.2%)
ABN-Amro
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$340,530,770 (collateralized by
various U.S. Treasury Notes and
U.S. Treasury Bonds: total market
value $347,289,622) (C) 340,471 340,471
Barclays
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$64,893,233 (collateralized by a
U.S. Treasury Bond: total market
value $66,180,031) (C) 64,882 64,882
Duetsche Bank
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$64,418,025 (collateralized by
various U.S. Treasury Bonds:
total market value
$65,695,776) (C) 64,407 64,407
Greenwich Capital
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$340,553,316 (collateralized by
various U.S. Treasury Notes and
U.S. Treasury Bonds: total market
value $347,305,585) (C) 340,494 340,494
--------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--CONTINUED
JP Morgan
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$49,842,397 (collateralized
by a U.S. Treasury Note: total
market value $50,830,553) (C) $49,834 $ 49,834
Merrill Lynch
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$64,975,703 (collateralized by a
U.S. Treasury Bond: total market
value $66,263,648) (C) 64,964 64,964
Morgan Stanley Dean Witter
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$64,267,065 (collateralized by
various U.S. Treasury Notes
and U.S. Treasury Bonds: total
market value $65,659,713) (C) 64,256 64,256
Salomon Smith Barney
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$64,772,503 (collateralized by
various U.S. Treasury Bonds: total
market value $66,064,316) (C) 64,761 64,761
Warburg Dillon
6.310%, dated 05/31/00, matures
06/01/00, repurchase price
$64,487,731 (collateralized by a
U.S. Treasury Note: total market
value $65,768,430) (C) 64,476 64,476
---------
Total Repurchase Agreements
(Cost $1,118,545) 1,118,545
---------
7
<PAGE>
STATEMENT OF NET ASSETS
---------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES
MONEY MARKET FUND--CONCLUDED
---------------------------------------------------------
SHARES VALUE (000)
---------------------------------------------------------
CASH EQUIVALENT (4.4%)
AIM Institutional Treasury
Fund 65,000,000 $ 65,000
----------
Total Cash Equivalent
(Cost $65,000) 65,000
----------
Total Investments (100.4%)
(Cost $1,473,516) 1,473,516
----------
OTHER ASSETS AND LIABILITIES, NET (-0.4%) (5,250)
----------
NET ASSETS:
Fund shares of Institutional Shares
(unlimited authorization -- no par value)
based on 329,699,333 outstanding shares of
beneficial interest 329,699
Fund shares of Corporate Trust Shares
(unlimited authorization -- no par value)
based on 1,138,531,073 outstanding shares
of beneficial interest 1,138,531
Undistributed net investment income 36
----------
Total Net Assets (100.0%) $1,468,266
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Institutional Shares $ 1.00
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Corporate Trust Shares $ 1.00
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
FOR DESCRIPTIONS OF ABBREVIATIONS, PLEASE SEE PAGE 9.
8
<PAGE>
-------------------------------------------------------------------------------
KEY TO ABBREVIATIONS USED IN THE
STATEMENT OF NET ASSETS
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FHLMCDN Federal Home Loan Mortgage Corporation Discount Note
FNMA Federal National Mortgage Association
FNMADN Federal National Mortgage Association Discount Note
GNMA Government National Mortgage Association
MBIA Security insured by the Municipal Bond Investors Assurance
Corporation
MTN Medium Term Note
Ser Series
SLMA Student Loan Marketing Association
(A) Private Placement Security
(B) Adjustable Rate Security. The rate reported on the Statement of Net
Assets is the rate in effect on May 31,2000. The date shown is the
next scheduled reset date.
(C) Tri-Party Repurchase Agreement
9
This page intentionally left blank.
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS (000)
---------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE YEAR ENDED MAY 31, 2000
CLASSIC CLASSIC CLASSIC
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
CASH MANAGEMENT U.S. GOVERNMENT U.S. TREASURY
MONEY MARKET SECURITIES MONEY SECURITIES MONEY
FUND MARKET FUND MARKET FUND
-------------- ----------------------------------
06/01/99- 06/01/99- 06/01/99-
05/31/00 05/31/00 05/31/00
---------- --------- ----------
<S> <C> <C> <C>
Income:
Interest Income $124,453 $37,419 $74,129
-------- ------- -------
Expenses:
Investment Advisory Fees ............................. 4,393 1,355 2,746
Less: Investment Advisory Fees Waived ................ (679) (181 (305)
Administrator Fees ................................... 1,554 486 972
Less: Administrator Fees Waived ...................... (439) (121) (275)
Transfer Agent Fees - Institutional Shares ........... 5 16 14
Transfer Agent Fees - Corporate Trust Shares ......... -- -- 15
Transfer Agent Out of Pocket Expenses ................ 156 40 1
Printing Fees ........................................ 153 43 39
Custody Fees ......................................... 102 10 7
Professional Fees .................................... 134 30 35
Trustee Fees ......................................... 21 6 5
Registration Fees .................................... 58 14 145
Shareholder Service Fee .............................. -- -- 2,182
Insurance and Other Fees ............................. 40 -- 3
--------- ------- -------
Total Expenses ....................................... 5,498 1,698 5,584
--------- ------- -------
Net Investment Income ................................ 118,955 35,721 68,545
--------- ------- -------
Net Realized Gain on Securities Sold ................. -- -- 3
--------- ------- -------
Increase in Net Assets Resulting from Operation ...... $118,955 $35,721 $68,548
========= ======= =======
Amounts designated as "--" are either $0 or round to $0.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
11
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
---------------------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, AND JANUARY 31,
CLASSIC CLASSIC CLASSIC
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
CASH MANAGEMENT U.S. GOVERNMENT U.S. TREASURY
MONEY MARKET SECURITIES MONEY SECURITIES MONEY
FUND MARKET FUND MARKET FUND
-------------------------------- ----------------------------- ---------------------
06/01/99- 02/01/99- 02/01/98- 06/01/99- 02/01/99- 02/01/98- 06/01/99- 06/01/98-
05/31/00 05/31/99 01/31/99 05/31/00 05/31/99 01/31/99 05/31/00 05/31/99
--------- --------- --------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net Investment Income $ 118,955 $ 15,177 $ 42,861 $ 35,721 $ 10,264 $ 34,235 $ 68,545 $ 10,844
Net Realized Gain
on Investments -- 1 -- -- -- -- 3 25
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Increase in Net Assets
from Operations 118,955 15,178 42,861 35,721 10,264 34,235 68,548 10,869
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Distributions to Shareholders:
Net Investment Income:
Institutional Shares (119,528) (15,172) (42,874) (35,721) (10,249) (34,250) (14,676) (10,842)
Corporate Trust Shares -- -- -- -- -- -- (53,866) --
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Total Distributions (119,528) (15,172) (42,874) (35,721) (10,249) (34,250) (68,542) (10,842)
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Capital Transactions (1):
Institutional Shares:
Proceeds from
Shares Issued 7,310,322 2,243,802 7,764,540 1,986,992 1,958,641 6,897,369 1,631,329 1,267,762
Shares Issued in
Connection with Crestar
Arbor Merger -- 1,072,229 -- -- -- -- -- --
Reinvestments of
Cash Distributions 76,132 7,086 10,074 12,023 3,113 13,467 14,668 7,876
Cost of Shares
Repurchased (6,962,679)(2,319,130)(7,630,948) (1,965,478)(2,032,711)(7,012,200)(1,599,793)(1,132,474)
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Increase (Decrease) in
Net Assets from
Institutional Share
Transactions 423,775 1,003,987 143,666 33,537 (70,957) (101,364) 46,204 143,164
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Corporate Trust Shares:
Proceeds from
Shares Issued -- -- -- -- -- -- 3,577,647 --
Cost of Shares Repurchased -- -- -- -- -- (2,439,116) --
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Increase in Net Assets
from Corporate
Trust Share
Transactions -- -- -- -- -- -- 1,138,531 --
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Increase (Decrease) in
Net Assets from Share
Transactions 423,775 1,003,987 143,666 33,537 (70,957) (101,364) 1,184,735 143,164
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Total Increase (Decrease)
in Net Assets 423,202 1,003,993 143,653 33,537 (70,942) (101,379) 1,184,741 143,191
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
Net Assets:
Beginning of Period 1,888,483 884,490 740,837 617,089 688,031 789,410 283,525 140,334
---------- ---------- ---------- ---------- ---------- --------- ---------- ----------
End of Period $2,311,685 $1,888,483 $ 884,490 $ 650,626 $ 617,089 $ 688,031 $1,468,266 $ 283,525
========== ========== ========== ========== ========== ========= ========== ==========
</TABLE>
12
<PAGE>
<TABLE>
-----------------------------------------------------------------------------------------------------------------------
CLASSIC CLASSIC CLASSIC
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
CASH MANAGEMENT U.S. GOVERNMENT U.S. TREASURY
MONEY MARKET SECURITIES MONEY SECURITIES MONEY
FUND MARKET FUND MARKET FUND
------------------------------- ------------------------------ ---------------------
06/01/99- 02/01/99- 02/01/98- 06/01/99- 02/01/99- 02/01/98- 06/01/99- 06/01/98-
05/31/00 05/31/99 01/31/99 05/31/00 05/31/99 01/31/99 05/31/00 05/31/99
---------- --------- --------- --------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(1) Shares Issued and Redeemed:
Institutional Shares:
Shares Issued 7,310,322 2,243,802 7,764,540 1,986,991 1,958,641 6,897,369 1,631,329 1,267,762
Shares Issued in
Connection with
Crestar Arbor Merger -- 1,072,211 -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions 76,132 7,086 10,074 12,023 3,113 13,467 14,668 7,876
Shares Redeemed (6,962,679)(2,319,131)(7,630,948) (1,965,478)(2,032,711)(7,012,200)(1,599,793) (1,132,474)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Institutional
Share Transactions 423,775 1,003,968 143,666 33,536 (70,957) (101,364) 46,204 143,164
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Corporate Trust Shares:
Shares Issued -- -- -- -- -- -- 3,577,647 --
Shares Redeemed -- -- -- -- -- -- (2,439,116) --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Corporate Trust
Share Transactions -- -- -- -- -- -- 1,138,531 --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Change in Capita
Shares 423,775 1,003,968 143,666 33,536 (70,957) (101,364) 1,184,735 143,164
========== ========== ========== ========== ========== ========== ========== ==========
Amounts designated as "--" are either $0 or round to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
</TABLE>
13
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------------------------------------------------
STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE NOTED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
NET NET ASSET
NET ASSET VALUE INVESTMENT DISTRIBUTIONS FROM VALUE END TOTAL
BEGINNING OF PERIOD INCOME NET INVESTMENT INCOME OF PERIOD RETURN+
---------------------- ----------- ---------------------- ----------- ---------
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND (A)
Institutional Shares
<S> <C> <C> <C> <C> <C>
2000 $1.00 $0.05 $(0.05) $1.00 5.56%
1999* 1.00 0.02 (0.02) 1.00 1.58
For the years ended January 31:
1999 1.00 0.05 (0.05) 1.00 5.46
1998 1.00 0.06 (0.06 1.00 5.66
1997 1.00 0.05 (0.05) 1.00 5.45
1996(B) 1.00 0.02 (0.02) 1.00 1.42
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (C)
Institutional Shares
2000 $1.00 $0.05 $(0.05) $1.00 5.39%
1999 1.00 0.02 (0.02 1.00 1.56
For the years ended January 31:
1999 1.00 0.05 (0.05) 1.00 5.30
1998 1.00 0.05 (0.05) 1.00 5.52
1997 1.00 0.05 (0.05) 1.00 5.29
199 1.00 0.05 (0.06) 1.00 5.88
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
Institutional Shares
2000 $1.00 $0.05 $(0.05) $1.00 5.25%
1999 1.00 0.05 (0.05) 1.00 4.97
1998 1.00 0.05 (0.05) 1.00 5.50
1997(D) 1.00 0.02 (0.02) 1.00 2.46
Corporate Trust Shares
2000 (E) $1.00 $0.05 $(0.05) $1.00 5.02%
(A) On May 17, 1999, the Arbor Prime Obligations Fund exchanged all of its
assets and certain liabilities for shares of the Classic Institutional Cash
Management Money Market Fund. The Arbor Prime Obligations 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
17, 1999 have been carried forward in these financial highlights.
(B) Commenced operations on October 25, 1995. All ratios for the period have been annualized.
(C) On May 24, 1999, the Arbor U.S. Government Securities Money Fund exchanged
all of its assets and certain liabilities for shares of the Classic
Institutional U.S. Government Securities Money Market Fund. The Arbor U.S.
Government Securities 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.
</TABLE>
14
<PAGE>
<TABLE>
------------------------------------------------------------------------------------------------
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET ASSETS RATIO OF NET INVESTMENT AVERAGE NET ASSETS AVERAGE NET ASSETS
END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS (EXCLUDING WAIVERS
PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) AND REIMBURSEMENTS)
------------ ------------------ ------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C>
$2,311,685 0.25% 5.42% 0.30% 5.37%
1,888,483 0.25 4.79 0.35 4.69
884,490 0.23 5.31 0.35 5.19
740,837 0.20 5.52 0.36 5.36
477,435 0.20 5.33 0.38 5.15
382,632 0.20 5.61 0.40 5.41
$ 650,626 0.25% 5.27% 0.29% 5.23%
617,089 0.25 4.73 0.36 4.62
688,031 0.23 5.18 0.36 5.05
789,410 0.20 5.39 0.37 5.22
586,731 0.20 5.17 0.37 5.00
514,870 0.20 5.72 0.37 5.55
$ 329,725 0.25% 5.17% 0.31% 5.11%
283,525 0.20 4.83 0.47 4.56
140,334 0.18 5.34 0.38 5.14
20,238 0.09 5.27 0.51 4.85
$1,138,541 0.45% 4.93% 0.49% 4.89%
(D) Commenced operations on December 12, 1996. All ratios for the period have
been annualized.
(E) Commenced operations on June 3, 1999. All ratios for the
period have been annualized.
+ Returns are for the period indicated and have not been annualized.
* For the period February 1, 1999 to May 31, 1999. All ratios for the period have been annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
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-five funds as of May 31, 2000: the
Balanced Fund, the Capital Appreciation Fund (formerly the Capital Growth Fund),
the Core Equity Fund, the E-Commerce Opportunity Fund, the Growth and Income
Fund, the International Equity Fund, the International Equity Index Fund, the
Life Vision Aggressive Growth Fund (formerly Life Vision Maximum Growth
Portfolio), the Life Vision Growth and Income Fund (formerly Life Vision Growth
and Income Portfolio), the Life Vision Moderate Growth Fund (formerly Life
Vision Balanced Portfolio), the Mid-Cap Equity Fund, the Small Cap Growth Stock
Fund, the Small Cap Value Equity Fund (formerly Small Cap 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, the High Income Fund, the 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 Money Market Fund, 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" or the "Funds"). The assets of each Fund 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 Institutional Money Market Funds. The financial statements of the Equity
Funds, the Fixed Income Funds and the Retail Money Market Funds are not
presented herein, but are presented separately.
Effective May 1999, the Board of Trustees of the STI Classic Funds and Board of
Trustees of the Arbor Funds approved an Agreement and Plan of Reorganization
(the "Reorganization Agreement") providing for the transfer of all assets and
certain stated liabilities of the Arbor Funds 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 Arbor Funds in a tax-free business
combination. While each Fund now exists as a STI Classic Fund, both the
surviving funds for accounting purposes are Arbor Funds. In accordance with
generally accepted accounting principles, the financial statements
presented herein represent those of accounting survivors. Accordingly, the
Statements of Changes in Net Assets and Financial Highlights presented for
the periods prior to and ending on May 31, 1999 reflect activity beginning
on the first day of the accounting survivor's fiscal year.
16
<PAGE>
-------------------------------------------------------------------------------
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.
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 TO SHAREHOLDERS -- 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. Accordingly, the Institutional Cash Management Money Market Fund and
the Institutional U.S. Treasury Securities Money Market Fund have
reclassified $9,970 and $26,668, respectively, from Undistributed Net
Investment Income to Accumulated Net Realized Gain. These reclassifications
are attributable to the classification of short-term capital gains and
ordinary income treatment for tax purposes. These reclassifications have no
effect on net assets or net asset value per share.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
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 SEI Investments Mutual
Funds Services ("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.
The Trust and the Distributor are parties to a Distribution Agreement dated
November 21, 1995. The Distributor does not receive any fees for its
distribution services provided under this agreement.
The Fund has entered into an agreement with the Distributor to manage the
investments of repurchase agreements for the Funds. For its services the
Distributor received $1,846,277 for the year ended May 31, 2000.
4. Administration, Shareholder, 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 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 1999, administrative and accounting services were provided to
the Arbor U.S. Government Securities Money Fund and Arbor Prime Obligations Fund
by SEI Investments Mutual Funds Services who was entitled to receive a fee at an
annual rate of .08% of the average daily net assets of these funds. A portion of
these fees were voluntarily waived.
The Institutional U.S. Treasury Money Market Fund has adopted a Shareholder
Services Plan (the "Plan") for the Corporate Trust Shares. The Fund pays the
Distributor a monthly shareholder services fee at an annual rate of 0.20% of the
average daily net assets of the Fund's Corporate Trust Shares, which may be used
by the Distributor to provide compensation to service providers that have agreed
to provide shareholder support services for their customers who own Corporate
Trust Shares of the Fund.
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 Adviser") 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:
18
<PAGE>
-------------------------------------------------------------------------------
MAXIMUM INSTITUTIONAL CORPORATE
ANNUAL SHARE TRUST SHARE
ADVISORY MAXIMUM MAXIMUM
FEE EXPENSE EXPENSE
--------- ------------ ------------
Classic Institutional
Cash Management
Money Market Fund .20% .25% --
Classic Institutional
U.S. Government
Securities Money
Market Fund .20% .25% --
Classic Institutional
U.S. Treasury
Money Market Fund .20% .25% .45%
The Investment Adviser 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 1999, Crestar Asset Management Company ("CAMCO") provided
Investment Advisory services to certain Arbor Funds. CAMCO was paid for advisory
services to each Fund at an annual rate of .10% and .11% of the average daily
net assets for Arbor U.S. Government Securities Money and Arbor Prime
Obligations Funds, respectively.
SunTrust Bank, Atlanta, 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, are determined by the Adviser to be of comparable quality. The
Classic Institutional U.S. Government Securities Money Market Fund invests in
U.S. Treasury obligations, U.S. Government subsidiary corporation securities
which are backed by the full faith and credit of the U.S. government and
repurchase agreements with approved dealers collateralized by U.S. Treasury
securities and U.S. Government subsidiary corporation securities. The Classic
Institutional 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. Investment Transactions:
Subsequent to October 31, 1999, the Funds recognized net capital losses for tax
purposes that have been deferred to 2000 and can be used to offset future
capital gains at May 31, 2000. The Funds also had capital loss carryforwards at
May 31, 2000 as follows:
CAPITAL LOSS POST 10/31
CARRYOVER EXPIRES EXPIRES DEFERRED
5/31/00 2003 2004 LOSS
FUND (000) 000) (000) (000)
------ ---------- ------- ------- ----------
Classic Institutional
U.S. Government
Securities Money
Market Fund $25 $11 $14 $--
Classic Institutional
U.S. Treasury Securities
Money Market Fund -- -- -- 3
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.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
8. Arbor Funds Merger:
The Board of Trustees and shareholders of certain of the Arbor Funds approved a
reorganization of certain of the Arbor Funds into the STI Classic Funds which
took place during May 1999.
The following table summarizes certain relevant information of the funds prior
to and immediately after the business combinations in May 1999 and is unaudited:
<TABLE>
SHARES
OUTSTANDING SHARES ISSUED NET ASSETS NAV
ON MERGER IN BUSINESS AFTER PER
ARBOR FUND DATE STI CLASSIC FUND COMBINATION COMBINATION SHARE
-------------------------- -------------- ----------------------------------- -------------- ------------ ---------
U.S. Government Securities 684,672,707 Classic Institutional U.S. Government 684,672,707 684,647,218 $1.00
Money Fund (1) Securities Money Market Fund
Prime Obligations Fund (1) 711,747,295 Classic Institutional Cash Management 711,747,295 1,783,974,148 1.00
Money Market Fund
(1) Represents the accounting survivor in this business combination.
9. Subsequent Event:
Effective June 30, 2000, SunTrustBanks, Inc. reorganized all of the investment
management functions of its three institutional money management units,
including SunTrust Bank, into Trusco Capital Management, Inc.
20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000
To the Shareholders and Board of Trustees of
STI Classic Funds:
We have audited the accompanying statements of net assets of the Classic
Institutional Cash Management Money Market, Classic Institutional U.S.
Government Securities Money Market, and Classic Institutional U.S. Treasury
Securities Money Market Funds of STI Classic Funds (the "Trust") as of May 31,
2000, and the related statements of operations, changes in net assets, and
financial highlights for the periods presented, excluding the periods indicated
below. 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 changes for the year ended January 31, 1999 and
financial highlights for the periods presented prior to May 31, 1999, for the
Classic Institutional Cash Management Money Market and Classic Institutional
U.S. Government Securities Money Market Funds, were audited by other auditors
whose report, dated March 15, 1999, expressed an unqualified opinion on this
information.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whe-ther 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, 2000, 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 audited by us
present fairly, in all material respects, the financial position of the Classic
Institutional Cash Management Money Market, Classic Institutional U.S.
Government Securities Money Market, and Classic Institutional U.S. Treasury
Securities Money Market Funds, of STI Classic Funds as of May 31, 2000, 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 accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
July 18, 2000
21
<PAGE>
NOTICE TO SHAREHOLDERS
------------------------------------------------------------------------------
STI CLASSIC FUNDS MAY 31, 2000UNAUDITED
For shareholders that do not have a May 31, 2000 tax year end, this notice is
for informational purposes only. For shareholders with a May 31, 2000, please
consult your tax adviser as to the pertinence of this notice. For the fiscal
year ended May 31, 2000, each portfolio is designating the following items with
regard to distributions paid during the year.
LONG TERM
(20% RATE) ORDINARY
CAPITAL GAIN INCOME TAX-EXEMPT TOTAL QUALIFYING
FUND DISTRIBUTIONS DISTRIBUTIONS INTEREST DISTRIBUTIONS DIVIDENDS (1)
-------------------------------------- --------------- -------------- ---------- -------------- --------------
Classic Institutional Cash Management
<S> <C> <C> <C> <C> <C>
Money Market Fund --% 100.00% --% 100.00% --%
Classic Institutional U.S. Treasury
Securities Money Market Fund --% 100.00% --% 100.00% --%
Classic Institutional U.S. Government
Money Market Fund --% 100.00% --% 100.00% --%
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "OrdinaryIncome
Distributions".
</TABLE>
22
<PAGE>
INVESTMENT ADVISER
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.
<PAGE>
STI CLASSIC FUNDS
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 37
Item 23. Exhibits:
(a) Declaration of Trust - originally filed with Registrant's Registration
Statement on Form N-1A filed February 12, 1992 and incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(b) Amended and Restated By-Laws, as approved by the Board of Trustees on
August 15, 2000, are filed herewith.
(c) Not applicable.
(d)(1) Revised Investment Advisory Agreement with Trusco Capital Management,
Inc. as originally filed with Registrant's Post-Effective Amendment
No. 5 filed August 2, 1993 and incorporated by reference to Exhibit
5(c) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(d)(2) Investment Advisory Agreement with American National Bank and Trust
Company as originally filed with Registrant's Post-Effective Amendment
No. 6 filed October 22, 1993 and as Exhibit 5(d) of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement filed with
the SEC via EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
(d)(3) Investment Advisory Agreement with Sun Bank Capital Management,
National Association (now Trusco Capital Management, Inc.) as
originally filed with Registrant's Post-Effective Amendment No. 6
filed October 22, 1993 and incorporated by reference to Exhibit 5(e)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(d)(4) Investment Advisory Agreement with Trust Company Bank (now Trusco
Capital Management, Inc.) as originally filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and incorporated
by reference to Exhibit D(4) of Post-Effective Amendment No. 24 to the
Registrant's Statement filed with the SEC via EDGAR Accession No.
0001047469-98-028802 on July 30, 1998.
(d)(5) Revised Schedule A to the Revised Investment Advisory Agreement with
Trusco Capital Management, Inc. dated May 24, 1999 - incorporated by
reference to the Registrant's Post-Effective Amendment No. 32 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0001047469-99-037088 on September 28, 1999.
(d)(6) Revised Schedule A to the Revised Investment Advisory Agreement with
Trusco Capital Management, Inc. dated October 1, 1999 - incorporated
by reference to the Registrant's Post-Effective Amendment No. 33 to
the Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-99-007899 on December 1, 1999.
(d)(7) Revised Schedule A to the Revised Investment Advisory Agreement with
Trusco Capital Management, Inc. dated March 27, 2000 - incorporated by
reference to the Registrant's Post-Effective Amendment No. 35 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000916641-00-000365 on March 28, 2000.
(e) Distribution Agreement dated May 26, 1992 - incorporated by reference
to Exhibit 6 of Post-Effective Amendment No. 16 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.
(f) Not applicable.
(g)(1) Custodian Agreement with Trust Company Bank dated February 1, 1994
originally filed with Registrant's Post-Effective Amendment No. 13
filed September 28, 1995 and incorporated by reference to Exhibit 8(b)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(g)(2) Custodian Agreement with the Bank of California incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
C-2
<PAGE>
(g)(3) Fourth Amendment to Custodian Agreement by and between STI Trust &
Investment Operations, Inc. and The Bank of New York dated May 6, 1997
incorporated by reference to Exhibit 8(d) of Post-Effective Amendment
No. 21 to the Registrant's Registration Statement filed with the SEC
via EDGAR Accession No. 0000912057-97-032207 on September 30, 1997.
(h)(1) Transfer Agent Agreement with Federated Services Company dated May 14,
1994 originally filed with Post-Effective Amendment No. 9 filed
September 22, 1994 and incorporated by reference to Exhibit 8(c) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(h)(2) Administration Agreement with SEI Financial Management Corporation
dated May 29, 1995 - incorporated by reference to the Registrant's
Post-Effective Amendment No. 32 to the Registrant's Registration
Statement filed the SEC via EDGAR Accession No. 0001047469-99-037088
on September 28, 1999.
(h)(3) Consent to Assignment and Assumption of the Administration Agreement
between STI Classic Funds and SEI Financial Management Corporation -
incorporated by reference to Exhibit 9(b) of Post-Effective Amendment
No. 21 to the Registrant's Registration Statement filed with the SEC
via EDGAR Accession No. 0000912057-97-032207 on September 30, 1997.
(i) Opinion and Consent of Counsel is filed herewith.
(j)(1) Consent of Arthur Andersen LLP, independent public accountants, is
filed herewith.
(j)(2) Consent of Deloitte & Touche LLP, independent public accountants, is
filed herewith.
(j)(3) Consent of PricewaterhouseCoopers LLP, independent public accountants,
is filed herewith.
(j)(4) Consent of PricewaterhouseCoopers LLP, independent public accountants,
is filed herewith.
(k) Not applicable.
(l) Not applicable.
(m)(1) Distribution Plan - Investor Class - incorporated by reference to
Exhibit 15 of Post-Effective Amendment No. 16 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.
(m)(2) Distribution and Service Agreement relating to Flex Shares dated May
29, 1995 - originally filed with Post-Effective Amendment No. 12 filed
August 17, 1995 and incorporated by reference to Exhibit 15(a) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(n)(1) Rule 18f-3 Plan - incorporated by reference to Exhibit (o) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.
(n)(2) Certificate of Class Designation - incorporated by reference to
Exhibit (o)(1) of Post-Effective Amendment No. 27 to the Registrant's
Statement filed with the SEC via EDGAR Accession No.
0001047469-99-009731 on April 15, 1999.
(o) Powers of Attorney are filed herewith.
(p)(1) Code of Ethics for STI Classic Funds - incorporated by reference to
Exhibit (p)(1) of Post-Effective Amendment No. 35 to the Registrant's
Statement filed with the SEC via EDGAR Accession No.
0000916641-00-000365 on March 28, 2000.
(p)(2) Code of SEI Investments Company - incorporated by reference to Exhibit
(p)(2) of Post-Effective Amendment No. 35 to the Registrant's
Statement filed with the SEC via EDGAR Accession No.
0000916641-00-000365 on March 28, 2000.
(p)(3) Code of Ethics for Trusco Capital Management, Inc. - incorporated by
reference to Exhibit (p)(3) of Post-Effective Amendment No. 35 to the
Registrant's Statement filed with the SEC via EDGAR Accession No.
0000916641-00-000365 on March 28, 2000.
(p)(4) Code of Ethics for Trusco Capital Management, Inc., as approved by the
Board of Trustees on August 15, 2000, is filed herewith.
Item 24. Persons Controlled by or under Common Control with Registrant:
See the Prospectus and Statement of Additional Information regarding the Trust's
control relationships. The Administrator is a subsidiary of SEI Investments
which also controls the distributor of the Registrant, SEI Investments
Distribution Co., and other corporations engaged in providing various financial
and record keeping services, primarily to bank trust departments, pension plan
sponsors, and investment managers.
C-3
<PAGE>
Item 25. Indemnification:
Article VIII of the Agreement of Declaration of Trust filed as Exhibit (a) to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 26. Business and Other Connections of Investment Advisors:
Other business, profession, vocation, or employment of a substantial nature in
which each director or principal officer of each Advisor is or has been, at any
time during the last two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee are as follows:
<TABLE>
<CAPTION>
--------------------------------------------- -------------------------------- -------------------------
Name of Connection with
Name Other Company Other Company
--------------------------------------------- -------------------------------- -------------------------
TRUSCO CAPITAL MANAGEMENT, INC.
<S> <C> <C>
E. Jenner Wood, III
Director SunTrust Banks, Inc. Executive Vice President
Donald W. Thurmond
Director SunTrust Bank, Atlanta Executive Vice President
Douglas S. Phillips
President/CEO/Director --
Paul L. Robertson, III
Executive Vice President/Secretary/Treasurer --
Andrew J. Muldoon, III
Executive Vice President --
Robert J. Rhodes
Executive Vice President --
--------------------------------------------- -------------------------------- -------------------------
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------- -------------------------------- -------------------------
Name of Connection with
Name Other Company Other Company
--------------------------------------------- -------------------------------- -------------------------
<S> <C> <C>
Bob M. Farmer
Managing Director --
Alan M. Gayle
Managing Director --
Gay B. Cash
Vice President SunTrust Bank, Atlanta First Vice President
C. William Cherry, Jr.
Vice President --
Eunice Gillespie
Vice President --
Wayne G. Larochelle
Managing Director --
Stuart L. Oglesby
Vice President --
Josie C. Rosson
Vice President --
John H. Stebbins
Vice President --
--------------------------------------------- -------------------------------- -------------------------
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------- -------------------------------- -------------------------
Name of Connection with
Name Other Company Other Company
--------------------------------------------- -------------------------------- -------------------------
<S> <C>
J. Kurt Wood
Vice President --
Charles B. Arrington
Vice President --
Brett L. Barner
Vice President --
Shane Coldren
Vice President --
Larry M. Cole
Managing Director --
J. Chadwick Deakins
Vice President --
James R. Dillon, Jr.
Managing Director --
Martin J. Duffy
Vice President --
James P. Foster
Vice President --
Mark D. Garfinkel
Vice President --
John M. Hamlin
Vice President --
Peter P. Hardy
Vice President --
Christopher A. Jones
Managing Director --
Alan S. Kelley
Vice President --
Jeffrey E. Markunas
Managing Director --
Kurt T. Momand
Managing Director --
Peter T. Montgomery
Vice President --
Jonathan C. Mote
Vice President --
Steven A. Noone
Managing Director --
Sheri L. Paquette
Vice President --
Elliott A. Perny
Managing Director --
--------------------------------------------- -------------------------------- -------------------------
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------- -------------------------------- -------------------------
Name of Connection with
Name Other Company Other Company
--------------------------------------------- -------------------------------- -------------------------
<S> <C>
Joe E. Ransom
Managing Director --
Mills A. Riddick
Managing Director --
Marc H. Schneidau
Vice President --
George D. Smith, Jr.
Vice President --
William L. Wilson, Jr.
Vice President --
Jennifer M. Constine
Vice President --
L. Earl Denney
Managing Director --
Charles B. Leonard
Managing Director --
--------------------------------------------- -------------------------------- -------------------------
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------- -------------------------------- -------------------------
Name of Connection with
Name Other Company Other Company
--------------------------------------------- -------------------------------- -------------------------
<S> <C>
Agnes G. Pampush
Managing Director --
Neil J. Powers
Managing Director --
Boyce G. Reid
Vice President --
J. Buist Richardson
Vice President --
Ronald H. Schwartz
Managing Director --
Garrett P. Smith
Managing Director --
David E. West
Managing Director --
Robert S. Bowman
Vice President --
Casey C. Brogdon
Managing Director --
Robert W. Corner
Vice President --
James E. Kofron
Vice President --
--------------------------------------------- -------------------------------- -------------------------
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------- -------------------------------- -------------------------
Name of Connection with
Name Other Company Other Company
--------------------------------------------- -------------------------------- -------------------------
<S> <C>
Kimberly C. Maichle
Vice President --
Teresa W. Phillips
Vice President --
E. Sonny Surkin
Vice President --
David S. Yealy
Managing Director --
Frances J. Aylor
Vice President --
Edward E. Best
Managing Director --
Neil L. Halpert
Vice President --
Christian G. Koch
Vice President --
Kar Ming Leong
Vice President --
Daniel J. Lewis
Vice President --
R. Douglas Mitchell
Vice President --
Elizabeth G. Pola
Managing Director --
Glenn H. Shaw
Vice President --
Rebekah R. Alley
Vice President --
Charles Guilfoyle
Vice President --
Celia S. Stanley
Vice President --
Natalie Wright
Vice President --
Stephen M. Yarbrough
Managing Director --
</TABLE>
Item 27. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment adviser.
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
The PBHG Funds, Inc. July 16, 1993
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Fund, Inc. June 29, 1998
CNI Charter Funds April 1, 1999
The Armada Advantage Fund May 1, 1999
Amerindo Funds Inc. July 13, 1999
Huntington VA Funds October 15, 1999
Friends Ivory Funds December 16, 1999
SEI Insurance Products Trust March 29, 2000
Pitcairn Funds August 1, 2000
C-9
<PAGE>
The Distributor provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These
services include portfolio evaluation, performance measurement and
consulting services ("Funds Evaluation") and automated execution,
clearing and settlement of securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named
in the answer to Item 21 of Part B. Unless otherwise noted, the
business address of each director or officer is Oaks, PA 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
---- ------------------- ---------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Richard B. Lieb Director, Executive Vice President --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Todd Cipperman Senior Vice President & General Counsel Vice President & Assistant Secretary
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Kevin P. Robins Senior Vice President --
Patrick K. Walsh Senior Vice President --
Wayne M. Withrow Senior Vice President --
Robert Aller Vice President --
John D. Anderson Vice President & Managing Director --
Timothy D. Barto Vice President & Assistant Secretary Vice President & Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Richard A. Deak Vice President & Assistant Secretary --
Scott W. Dellorfano Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Scott C. Fanatico Vice President & Managing Director --
James R. Foggo Vice President & Assistant Secretary Vice President & Assistant Secretary
Vic Galef Vice President & Managing Director --
Steven A. Gardner Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President & Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President --
Jeff Jacobs Vice President --
Samuel King Vice President --
John Kirk Vice President & Managing Director --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Paul Lonergan Vice President & Managing Director --
Ellen Marquis Vice President --
Christine M. McCullough Vice President & Assistant Secretary Vice President & Assistant Secretary
Carolyn McLaurin Vice President & Managing Director --
Mark Nagle Vice President President
Joanne Nelson Vice President --
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
---- ------------------- ---------------------
<S> <C> <C>
Cynthia M. Parrish Vice President & Secretary --
Rob Redican Vice President --
Maria Rinehart Vice President --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President --
Lori L. White Vice President & Assistant Secretary --
</TABLE>
Item 28. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records are maintained
at the offices of Registrant's Custodians:
Trust Company Bank
Park Place
P.O. Box 105504
Atlanta, Georgia 30348
Bank of New York
One Wall Street
New York, New York
(International Equity Index Fund and International Equity Fund)
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D); (4);
(5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Administrator:
SEI Investments Mutual Funds Services
One Freedom Valley Road
Oaks, Pennsylvania 19456
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of
the Registrant's Advisors:
Trusco Capital Management
P.O. Box 3808
Orlando, Florida 32802
Trusco Capital Management
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303
Trusco Capital Management
25 Park Place
Atlanta, Georgia 30303
Item 29. Management Services: None.
Item 30. Undertakings: None.
C-11
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust for STI Classic Funds is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this Registration Statement has been executed on behalf of
the Trust by an officer of the Trust as an officer and by its Trustees as
trustees and not individually and the obligations of or arising out of this
Registration Statement are not binding upon any of the Trustees, officers, or
Shareholders individually but are binding only upon the assets and property of
the Trust.
C-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the "Securities
Act") and the Investment Company Act of 1940, as amended, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 37 to Registration
Statement No. 33-45671 to be signed on its behalf by the undersigned, duly
authorized, in the City of Oaks, Commonwealth of Pennsylvania on the 21st day of
September, 2000.
By: /s/ Mark E. Nagle
Mark Nagle, President
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed below by the following persons in the capacity on the dates
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
* Trustee September 21, 2000
--------------------------------------------------
F. Wendell Gooch
* Trustee September 21, 2000
--------------------------------------------------
Daniel S. Goodrum
* Trustee September 21, 2000
--------------------------------------------------
Wilton Looney
* Trustee September 21, 2000
--------------------------------------------------
Champney A. McNair
* Trustee September 21, 2000
--------------------------------------------------
T. Gordy Germany
* Trustee September 21, 2000
--------------------------------------------------
Bernard F. Sliger
* Trustee September 21, 2000
--------------------------------------------------
Jonathan T. Walton
* Trustee September 21, 2000
--------------------------------------------------
James O. Robbins
* Trustee September 21, 2000
--------------------------------------------------
Thomas Gallagher
/s/ Mark E. Nagle President September 21, 2000
--------------------------------------------------
Mark Nagle
* Treasurer & Chief September 21, 2000
-------------------------------------------------- Financial Officer
Jennifer Spratley
* By: /s/ Mark E. Nagle
Mark Nagle, With Power of Attorney
</TABLE>
C-13
<PAGE>
EXHIBIT INDEX
NUMBER EXHIBIT
EX-99.A Declaration of Trust - originally filed with Registrant's
Registration Statement on Form N-1A filed February 12, 1992
and incorporated by reference to Exhibit 1 of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement
filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.B Amended and Restated By-Laws, as approved by the Board of
Trustees on August 15, 2000, are filed herewith.
EX-99.C Not applicable.
EX-99.D1 Revised Investment Advisory Agreement with Trusco Capital
Management, Inc. as originally filed with Registrant's
Post-Effective Amendment No. 5 filed August 2, 1993 and
incorporated by reference to Exhibit 5(c) of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement
filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.D2 Investment Advisory Agreement with American National Bank and
Trust Company as originally filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and as
Exhibit 5(d) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via
EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
EX-99.D3 Investment Advisory Agreement with Sun Bank Capital
Management, National Association (now Trusco Capital
Management, Inc.) as originally filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and
incorporated by reference to Exhibit 5(e) of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement
filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.D4 Investment Advisory Agreement with Trust Company Bank (now
Trusco Capital Management, Inc.) as originally filed with
Registrant's Post-Effective Amendment No. 6 filed October 22,
1993 and incorporated by reference to Exhibit D(4) of
Post-Effective Amendment No. 24 to the Registrant's Statement
filed with the SEC via EDGAR Accession No.
0001047469-98-028802 on July 30, 1998.
EX-99.D5 Revised Schedule A to the Revised Investment Advisory
Agreement with Trusco Capital Management, Inc. dated May 24,
1999 - incorporated by reference to the Registrant's
Post-Effective Amendment No. 32 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession
No. 0001047469-99-037088 on September 28, 1999.
EX-99.D6 Revised Schedule A to the Revised Investment Advisory
Agreement with Trusco Capital Management, Inc. dated October
1, 1999 - incorporated by reference to the Registrant's
Post-Effective Amendment No. 33 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession
No. 0000912057-99-007899 on December 1, 1999.
EX-99.D7 Revised Schedule A to the Revised Investment Advisory
Agreement with Trusco Capital Management, Inc. dated March 27,
2000 - incorporated by reference to the Registrant's
Post-Effective Amendment No. 35 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession
No. 0000916641-00-000365 on March 28, 2000.
EX-99.E Distribution Agreement dated May 26, 1992 - incorporated by
reference to Exhibit 6 of Post-Effective Amendment No. 16 to
the Registrant's Registration Statement filed with the SEC via
EDGAR Accession No. 0000912057-96-021336 on September 27,
1996.
EX-99.F Not applicable.
EX-99.G1 Custodian Agreement with Trust Company Bank dated February 1,
1994 originally filed with Registrant's Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Exhibit 8(b) of Post-Effective Amendment No. 15
to the Registrant's Registration Statement filed with the SEC
via EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
EX-99.G2 Custodian Agreement with the Bank of California incorporated
by reference to Exhibit 8(a) of Post-Effective Amendment No.
15 to the Registrant's Registration Statement filed with the
SEC via EDGAR Accession No. 0000912057-96-015938 on July 31,
1996.
EX-99.G3 Fourth Amendment to Custodian Agreement by and between STI
Trust & Investment Operations, Inc. and The Bank of New York
dated May 6, 1997 incorporated by reference to Exhibit 8(d) of
Post-Effective Amendment No. 21 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession
No. 0000912057-97-032207 on September 30, 1997.
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EX-99.H1 Transfer Agent Agreement with Federated Services Company dated
May 14, 1994 originally filed with Post-Effective Amendment
No. 9 filed September 22, 1994 and incorporated by reference
to Exhibit 8(c) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via
EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
EX-99.H2 Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 - Incorporated by reference to
the Registrant's Post-Effective Amendment No. 32 to the
Registrant's Registration Statement filed the SEC via EDGAR
Accession No. 0001047469-99-037088 on September 28, 1999.
EX-99.H3 Consent to Assignment and Assumption of the Administration
Agreement between STI Classic Funds and SEI Financial
Management Corporation - incorporated by reference to Exhibit
9(b) of Post-Effective Amendment No. 21 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession
No. 0000912057-97-032207 on September 30, 1997.
EX-99.I Opinion and Consent of Counsel is filed herewith.
EX-99.J1 Consent of Arthur Andersen LLP, independent public
accountants, is filed herewith.
EX-99.J2 Consent of Deloitte & Touche LLP, independent public
accountants, is filed herewith.
EX-99.J3 Consent of PricewaterhouseCoopers LLP, independent public
accountants, is filed herewith.
EX-99.J4 Consent of PricewaterhouseCoopers LLP, independent public
accountants, is filed herewith.
EX-99.K Not applicable.
EX-99.L Not applicable.
EX-99.M1 Distribution Plan - Investor Class - incorporated by reference
to Exhibit 15 of Post-Effective Amendment No. 16 to the
Registrant's Registration Statement filed with the SEC via
EDGAR Accession No. 0000912057-96-021336 on September 27,
1996.
EX-99.M2 Distribution and Service Agreement relating to Flex Shares
dated May 29, 1995 - originally filed with Post-Effective
Amendment No. 12 filed August 17, 1995 and incorporated by
reference to Exhibit 15(a) of Post-Effective Amendment No. 15
to the Registrant's Registration Statement filed with the SEC
via EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
EX-99.N1 Rule 18f-3 Plan - incorporated by reference to Exhibit (o) of
Post-Effective Amendment No. 23 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession
No. 0001047469-98-027407 on July 15, 1998.
EX-99.N2 Certificate of Class Designation - incorporated by reference
to Exhibit (o)(1) of Post-Effective Amendment No. 27 to the
Registrant's Statement filed with the SEC via EDGAR Accession
No. 0001047469-99-009731 on April 15, 1999.
EX-99.O Powers of Attorney are filed herewith.
EX-99.P1 Code of Ethics for STI Classic Funds - incorporated by
reference to Exhibit (p)(1) of Post-Effective Amendment No. 35
to the Registrant's Statement filed with the SEC via EDGAR
Accession No. 0000916641-00-000365 on March 28, 2000.
EX-99.P2 Code of SEI Investments Company - incorporated by reference to
Exhibit (p)(2) of Post-Effective Amendment No. 35 to the
Registrant's Statement filed with the SEC via EDGAR Accession
No. 0000916641-00-000365 on March 28, 2000.
EX-99.P3 Code of Ethics for Trusco Capital Management, Inc. -
incorporated by reference to Exhibit (p)(3) of Post-Effective
Amendment No. 35 to the Registrant's Statement filed with the
SEC via EDGAR Accession No. 0000916641-00-000365 on March 28,
2000.
EX-99.P4 Code of Ethics for Trusco Capital Management, Inc., as
approved by the Board of Trustees on August 15, 2000, is
filed herewith.
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