-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TTz4gv1YZgbq1l1Lz7vXmAH+HunNI1ZO/21MCFBokJPRofbJW7B4L4wHPEU86w1g UAr0jFHrznu7ISWtNP7z3Q== 0000935069-01-500294.txt : 20010730 0000935069-01-500294.hdr.sgml : 20010730 ACCESSION NUMBER: 0000935069-01-500294 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010531 FILED AS OF DATE: 20010727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STI CLASSIC FUNDS CENTRAL INDEX KEY: 0000883939 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06557 FILM NUMBER: 1691380 BUSINESS ADDRESS: STREET 1: 2 OLIVER STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6109896602 MAIL ADDRESS: STREET 1: 530 E SWEDESFORD ROAD CITY: WAYNE STATE: PA ZIP: 19087-1693 N-30D 1 stiinstitutional.txt STI CLASSIC INSTITUTIONAL ANNUAL - -------------------------------------------------------------------------------- FINANCIAL REPORT - -------------------------------------------------------------------------------- STI CLASSIC FUNDS - -------------------------------------------------------------------------------- A Family of Mutual 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 May 31, 2001 [Logo Omitted] Dear Valued STI Classic Funds' Shareholder: In last year's Annual Report letter, we noted several unusual features of the capital markets. Specifically, in equity securities, performance was narrowly concentrated in Technology related issues which rose to extraordinary valuations, while the typical stock in non-Tech sectors languished. This had the effect of penalizing investors who held diversified portfolios, as well as those who pursued strategies focused on valuation rather than price momentum. We also observed that while equity investors reached for high-risk stocks, bond investors did the opposite. In bonds, corporate issues lagged as the bond market correctly interpreted the negative impact of Federal Reserve ("Fed") tightening on company profits. Clearly there was a disconnect, with equity investors ignoring rising economic storm clouds and bond investors seeking shelter in the highest quality U.S. Treasury securities. These anomalies were changing even as we wrote last year, with a major inflection point unfolding in the markets last Spring. As a late Summer 2000 rally in Tech stocks ended, reality set in and the economy succumbed to the effect of multiple rate hikes by the Fed. Indeed, by November/December, it became reasonably clear the economy had come to an abrupt halt at least in Manufacturing, Technology and Telecommunications. Beginning in early January, the Fed had reduced interest rates very aggressively by a total of 2.5 percentage points in recognition of the slowdown in growth. Currently, the economy is muddling along, with weak corporate profits, modest inflation, and a general sense of unwinding in overbuilt sectors such as Tech/Telecomm. Importantly, the anomalies of 1999 through early 2000 reversed during the STI Classic Funds fiscal year ended May 31, 2001, with many large Tech stocks performing poorly, speculative Internet issues collapsing, and corporate bonds enjoying improved performance as investors shunned risk in equities but began to accept it in bonds. The performance of various asset categories over the fiscal year of the STI Classic Funds reflected these shifts in the markets. In bonds, returns for the 12 months ending May 31, 2001 were in a range of 5% to 13% depending on maturity, while money market instruments returned 5% to 6%. Thus, investors who utilized fixed income investments during this period of weakness in the equity markets (S&P 500 Composite Index down 10.6%, NASDAQ down 37.9%) were very well rewarded. A year ago we felt strongly that bonds and especially corporate bonds would provide good returns and significant competition for stocks. Now that this has evolved as expected, we are less bullish on bonds in the face of a likely stronger economy in 2002, but believe absolute returns will continue to be attractive for conservative investors. On the equity side, there was a substantial reversal of fortunes. The best performing categories were midsize and smaller stocks, and value stocks in all capitalization ranges. For example, the Russell 2000 Value Index was up 29.4%, the S&P Small Cap 600 Index rose 13.5%, the S&P MidCap 400 Index gained 10.9%, while the S&P 500/Barra Value Index, which captures larger value stocks, returned 7.1%. These favorable returns were caused by investors responding to compelling valuations created in smaller stocks and monetary easing. On the other side of the coin, large cap stocks and international stocks in the industrialized world had weak returns. The NASDAQ fell 37.9% for the year ended May 31, 2001, the S&P 500/Barra Growth Index was down 26.0%, the Morgan Stanley EAFE Index declined 17.5%, and the S&P 500 Composite Index dropped 10.6%. In short, the equity market has shown a split personality for quite some time and while very visible large companies in Tech and Telecomm were weak, many other sectors of the market did quite well indeed. The STI Classic Fixed Income Funds provided competitive returns over the last twelve months. The STI Classic Equity Funds coped with dramatic change in the equity markets quite well due to a diversified approach that did not concentrate primarily on technology stocks. Standouts on the equity fund side were the funds focusing on pure value as well as the diversified stock funds. Each of the Fund managers has provided a recap of the fiscal year's results in the following pages as additional information. Looking ahead to the upcoming year, we are more optimistic than a year ago as many excesses have been significantly corrected. Given time, easing by the Fed has almost always been a powerful tonic for the economy and stock market. That said, the heady returns of the 1995-99 period are not coming back any time soon; investors are encouraged to adopt more reasonable return expectations for stocks over the next five years. As always, we are grateful for the continued confidence of all shareholders in the STI Classic Fund Family, and look forward to another successful year of growth. Sincerely /s/ Douglas S. Phillips Douglas S. Phillips, CFA Chief Investment Officer 1 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2001 CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS (21.5%) FFCB (B) 4.138%, 05/28/02 $140,000 $ 140,000 FHLB 4.300%, 05/23/02 50,000 50,000 FHLB, Ser U301 (B) 4.258%, 10/11/01 50,000 50,000 FHLB, Ser X101 (B) 4.248%, 11/08/01 45,000 45,000 FHLMC 4.150%, 05/15/02 100,000 100,000 4.320%, 05/29/02 100,000 100,000 FNMA 6.230%, 06/14/01 20,000 19,956 6.540%, 10/05/01 35,000 34,248 4.093%, 02/12/02 55,000 55,000 SLMA (B) 4.128%, 05/08/02 100,000 99,945 --------- Total U.S. Government Agency Obligations (Cost $694,149) 694,149 --------- COMMERCIAL PAPER (10.8%) COMPUTERS (2.2%) IBM 4.260%, 06/22/01 70,000 69,826 --------- FINANCE (5.3%) ANZ Bank Delaware 4.200%, 07/23/01 50,000 49,697 Beta Finance 7.240%, 06/19/01 40,000 40,000 Toronto Dominion Bank 5.930%, 06/21/01 40,000 39,868 UBS Finance 6.240%, 06/04/01 40,000 39,979 --------- 169,544 --------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- INVESTMENT BANKERS/BROKER DEALERS (3.3%) Credit Suisse First Boston 7.010%, 07/13/01 $ 45,000 $ 45,000 Morgan Stanley Dean Witter (B) 4.170%, 07/16/01 30,000 30,000 4.170%, 10/12/01 30,000 30,000 --------- 105,000 --------- Total Commercial Paper (Cost $344,370) 344,370 --------- CORPORATE OBLIGATIONS (28.8%) BANKS (10.8%) AmSouth Bank (B) 4.210%, 08/07/01 25,000 24,999 First Tennessee Bank (B) 4.175%, 01/29/02 75,000 75,000 4.182%, 05/20/02 40,000 40,000 First Union National Bank (B) 4.230%, 07/25/01 50,000 50,000 Key Bank (B) 4.270%, 01/07/02 60,000 60,037 National City Bank (B) 4.188%, 05/21/02 60,000 60,000 Wachovia Bank, MTN (B) 5.089%, 06/04/01 40,000 40,000 --------- 350,036 --------- CONSUMER STAPLES (1.2%) Philip Morris (B) 5.339%, 12/04/01 40,000 40,000 --------- FINANCE (10.8%) Associates (B) 4.156%, 08/27/01 25,000 25,005 Beta Finance, MTN 6.935%, 08/21/01 25,000 25,000 Beta Finance, MTN (A) (B) 4.588%, 05/03/02 35,000 35,000 2 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- FINANCE--CONTINUED Ford Motor Credit, MTN (B) 4.370%, 10/01/01 $20,000 $ 20,010 Ford Motor Credit, MTN (B) 4.206%, 11/23/01 23,000 23,025 General Motors Acceptance 6.375%, 12/01/01 12,000 11,982 General Motors Acceptance (B) 4.860%, 01/15/02 23,000 23,001 Goldman Sachs Group, MTN (B) 4.350%, 05/01/02 65,000 65,085 Morgan Stanley Dean Witter (B) 4.170%, 12/07/01 30,000 30,000 Sigma Finance 7.050%, 07/17/01 30,000 30,000 Sigma Finance (A) (B) 4.180%, 04/10/02 35,000 35,000 Sigma Finance (B) 4.238%, 05/28/02 25,000 25,000 --------- 348,108 --------- INVESTMENT BANKERS/BROKER DEALERS (5.3%) Bear Stearns, MTN (B) 4.240%, 06/01/01 40,000 40,000 4.270%, 06/20/01 40,000 40,000 Credit Suisse First Boston, MTN (B) 4.180%, 10/04/01 60,000 60,000 Merrill Lynch, MTN, Ser B 6.750%, 09/19/01 30,000 30,000 --------- 170,000 --------- SPECIAL PURPOSE ENTITY (0.7%) Assisted Living Funding, Ser 1999 (B) 4.150%, 09/01/19 23,200 23,200 --------- Total Corporate Obligations (Cost $931,344) 931,344 --------- CERTIFICATES OF DEPOSIT (2.3%) Regions Bank 5.250%, 11/16/01 50,000 50,000 Royal Bank of Canada 6.685%, 10/09/01 25,000 25,002 --------- Total Certificates of Deposit (Cost $75,002) 75,002 --------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- TAXABLE MUNICIPAL BONDS (6.9%) California, Housing Finance Agency, Ser H, RB, MBIA (B) 4.300%, 08/01/19 $25,700 $ 25,700 California, Housing Finance Agency, RB, FSA (B) 4.100%, 02/01/17 68,100 68,100 4.150%, 08/01/29 36,500 36,500 Mt. Vernon, Virginia, Multi-Family Housing Notes, RB (B) 4.120%, 01/01/10 23,000 23,000 New York City, Multi-Family Housing Development Authority, West 26th St. Development Project, Ser A, RB, (B) 4.090%, 06/01/33 22,755 22,755 Newport News, Virginia, Economic Development Authority, Shipbuilding Project, Ser B, RB, (B) 4.150%, 07/01/31 5,000 5,000 4.100%, 07/01/31 27,000 27,000 Pittsburgh & Allegheny County, Sports & Exhibit Authority, RB, AMBAC (B) 4.257%, 07/01/30 14,720 14,720 --------- Total Taxable Municipal Bonds (Cost $222,775) 222,775 --------- CASH EQUIVALENTS (9.6%) AIM Liquid Assets Fund 155,000,000 155,000 SEI Daily Income Trust Prime Obligation Fund 155,000,000 155,000 --------- Total Cash Equivalents (Cost $310,000) 310,000 --------- 3 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2001 CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS (19.5%) ABN Amro 4.100% dated 05/31/01, matures 06/01/01, repurchase price $115,961,233 (collateralized by FNMA obligation: total market value $118,268,434) (C) $115,949 $ 115,949 Barclays Capital 4.100% dated 05/31/01, matures 06/01/01, repurchase price $129,757,286 (collateralized by FNMA obligation: total market value $132,338,443) (C) 129,743 129,743 Deutsche Bank 4.100% dated 05/31/01, matures 06/01/01, repurchase price $73,364,642 (collateralized by FNMA and FHLMC obligations: total market value $74,823,870) (C) 73,357 73,357 Greenwich Capital 4.100% dated 05/31/01, matures 06/01/01, repurchase price $45,761,389 (collateralized by FNMA obligations:total market value $46,672,592) (C) 45,757 45,757 Merrill Lynch 4.100% dated 05/31/01, matures 06/01/01, repurchase price $103,097,101 (collateralized by GNMA obligations: total market value $105,147,723) (C) 103,086 103,086 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--CONTINUED Salomon Smith Barney 4.100% dated 05/31/01, matures 06/01/01, repurchase price $132,065,143 (collateralized by FNMA and FHLMC obligations: total market value $134,726,984) (C) $132,051 $ 132,051 UBS Warburg 4.100% dated 05/31/01, matures 06/01/01, repurchase price $31,404,396 (collateralized by FNMA obligation: total market value $32,031,253) (C) 31,401 31,401 ---------- Total Repurchase Agreements (Cost $631,344) 631,344 ---------- Total Investments (99.4%) (Cost $3,208,984) 3,208,984 ---------- OTHER ASSETS AND LIABILITIES, NET (0.6%) 20,416 ---------- NET ASSETS: Fund shares of the Institutional Shares (unlimited authorization -- no par value) based on 3,229,400,112 outstanding shares of beneficial interest 3,229,400 ---------- Total Net Assets (100.0%) $3,229,400 ========== 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. 4 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS (58.9%) FFCB 4.138%, 05/28/02 $20,000 $ 20,000 FFCB (B) 4.128%, 05/16/02 50,000 49,998 FHLB 5.780%, 06/22/01 35,000 34,915 4.108%, 02/14/02 25,000 25,000 4.300%, 05/23/02 25,000 25,000 FHLB, Ser U301 (B) 4.258%, 10/11/01 25,000 25,000 FHLMC 6.440%, 07/19/01 20,000 19,828 6.320%, 08/16/01 10,000 9,867 6.603%, 09/13/01 10,000 9,821 4.320%, 05/29/02 25,000 25,000 FHLMC, MTN 4.370%, 05/02/02 35,000 35,000 FNMA 6.470%, 06/06/01 15,000 14,987 6.230%, 06/14/01 30,000 29,936 6.870%, 07/27/01 15,000 14,850 6.290%, 08/01/01 15,000 14,840 6.540%, 10/05/01 20,000 19,570 6.500%, 11/14/01 15,000 15,005 FNMA (B) 4.093%, 02/12/02 35,000 35,000 3.900%, 03/05/02 20,000 19,400 4.050%, 05/13/02 20,000 20,000 SLMA (B) 4.128%, 05/08/02 30,000 29,984 SLMA, MTN 4.042%, 09/05/01 35,000 34,998 -------- Total U.S. Government Agency Obligations (Cost $527,999) 527,999 -------- - -------------------------------------------------------------------------------- SHARES/FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- CASH EQUIVALENTS (8.9%) Financial Square Government Portfolio 40,000,000 $ 40,000 SEI Daily Income Trust Government Fund 40,000,000 40,000 -------- Total Cash Equivalents (Cost $80,000) 80,000 -------- REPURCHASE AGREEMENTS (32.3%) ABN Amro 4.100% dated 05/31/01, matures 06/01/01, repurchase price $110,683,852 (collateralized by FNMA obligation: total market value $112,885,547) (C) $110,671 110,671 Deutsche Bank 4.100% dated 05/31/01, matures 06/01/01, repurchase price $100,529,689 (collateralized by FNMA obligations: total market value $102,528,607) (C) 100,518 100,518 Greenwich Capital 4.100% dated 05/31/01, matures 06/01/01, repurchase price $39,161,776 (collateralized by FNMA obligation: total market value $39,941,916) (C) 39,157 39,157 JP Morgan 4.100% dated 05/31/01, matures 06/01/01, repurchase price $38,460,531 (collateralized by FNMA obligation: total market value $39,229,608) (C) 38,456 38,456 -------- Total Repurchase Agreements (Cost $288,802) 288,802 -------- Total Investments (100.1%) (Cost $896,801) 896,801 -------- OTHER ASSETS AND LIABILITIES, NET (-0.1%) (612) -------- 5 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2001 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND--CONCLUDED - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Fund shares of the Institutional Shares (unlimited authorization-- no par value) based on 896,141,379 outstanding shares of beneficial interest $896,141 Accumulated net realized gain on investments 48 -------- Total Net Assets (100.0%) $896,189 ======== 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 INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND - -------------------------------------------------------------------------------- SHARES/FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS (20.3%) U.S. Treasury Bill (D) 3.937%, 06/14/01 $280,000 $ 279,602 U.S. Treasury Note 6.625%, 05/31/02 100,000 102,468 ---------- Total U.S. Treasury Obligations (Cost $382,070) 382,070 ---------- CASH EQUIVALENTS (8.3%) AIM Institutional Treasury Fund 78,000,000 78,000 Federated Treasury Obligation Fund 78,000,000 78,000 ---------- Total Cash Equivalents (Cost $156,000) 156,000 ---------- REPURCHASE AGREEMENTS (71.6%) ABN Amro 3.950% dated 05/31/01, matures 06/01/01, repurchase price $65,762,081 (collateralized by U.S. Treasury obligations: total market value $67,070,812) (C) 65,755 65,755 Barclays Capital 3.950% dated 05/31/01, matures 06/01/01, repurchase price $75,016,176 (collateralized by U.S. Treasury STRIPS: total market value $76,508,901) (C) 75,008 75,008 Deutsche Bank 3.950% dated 05/31/01, matures 06/01/01, repurchase price $80,697,637 (collateralized by U.S. Treasury Bonds and Notes: total market value $82,303,535) (C) 80,689 80,689 Greenwich Capital 3.950% dated 05/31/01, matures 06/01/01, repurchase price $75,699,302 (collateralized by U.S. Treasury STRIPS: total market value $77,204,877) (C) 75,691 75,691 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--CONTINUED JP Morgan 3.950% dated 05/31/01, matures 06/01/01, repurchase price $75,296,443 (collateralized by U.S. Treasury STRIPS: total market value $76,795,748) (C) $75,288 $ 75,288 Merrill Lynch 3.950% dated 05/31/01, matures 06/01/01, repurchase price $75,888,985 (collateralized by U.S. Treasury obligations: total market value $77,398,847) (C) 75,880 75,880 Morgan Stanley 3.950% dated 05/31/01, matures 06/01/01, repurchase price $404,525,081 (collateralized by U.S. Treasury Notes: total market value $412,650,661) (C) 404,481 404,481 Salomon Smith Barney 3.950% dated 05/31/01, matures 06/01/01, repurchase price $429,326,000 (collateralized by U.S. Treasury Note: total market value $437,973,568) (C) 429,279 429,279 UBS Warburg 3.950% dated 05/31/01, matures 06/01/01, repurchase price $67,821,280 (collateralized by U.S. Treasury STRIPS: total market value $69,170,722) (C) 67,814 67,814 ---------- Total Repurchase Agreements (Cost $1,349,885) 1,349,885 ---------- Total Investments (100.2%) (Cost $1,887,955) 1,887,955 ---------- OTHER ASSETS AND LIABILITIES, NET (-0.2%) (4,098) ---------- 7 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2001 CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND--CONCLUDED - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Fund shares of the Institutional Shares (unlimited authorization-- no par value) based on 580,214,812 outstanding shares of beneficial interest $ 580,215 Fund shares of the Corporate Trust Shares (unlimited authorization -- no par value) based on 1,303,650,385 outstanding shares of beneficial interest 1,303,650 Undistributed net investment income 3 Accumulated net realized loss on investments (11) ---------- Total Net Assets (100.0%) $1,883,857 ========== 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 - -------------------------------------------------------------------------------- KEY TO ABBREVIATIONS USED IN THE STATEMENTS OF NET ASSETS AMBAC Security insured by the American Municipal Bond Assurance Corporation FFCB Federal Farm Credit Bank FHLB Federal Home Loan Bank FHLMC Federal Home Loan Mortgage Corporation FNMA Federal National Mortgage Association FSA Security insured by Financial Security Assurance GNMA Government National Mortgage Association MBIA Security insured by the Municipal Bond Investors Assurance Corporation MTN Medium Term Note RB Revenue Bond Ser Series SLMA Student Loan Marketing Association STRIPS Separate Trading of Registered Interest and Principal of Securities (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, 2001. Optional tender features give these securities a shorter effective maturity date. (C) Tri-Party Repurchase Agreement (D) The rate shown is the effective yield at the date of purchase. 9 This page intentionally left blank.
STATEMENTS OF OPERATIONS (000) - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FUNDS FOR THE YEAR ENDED MAY 31, 2001 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 ---------------- ----------------- ----------------- Income: Interest Income .......................................... $162,651 $45,948 $97,058 -------- ------- ------- Expenses: Investment Advisory Fees ................................. 5,264 1,533 3,334 Administrator Fees ....................................... 1,841 536 1,166 Transfer Agent Fees-- Institutional Shares ............... 16 16 16 Transfer Agent Fees-- Corporate Trust Shares ............. -- -- 16 Transfer Agent Out of Pocket Expenses .................... 156 46 101 Printing Fees ............................................ 148 33 89 Custodian Fees ........................................... 69 20 43 Professional Fees ........................................ 121 24 74 Trustee Fees ............................................. 24 7 16 Registration Fees ........................................ 192 47 102 Shareholder Service Fees ................................. -- -- 2,546 Insurance and Other Fees ................................. 8 -- 40 -------- ------- ------- Total Expenses ............................................ 7,839 2,262 7,543 -------- ------- ------- Less: Investment Advisory Fees Waived ..................... (718) (91) (251) Administrator Fees Waived ........................ (526) (153) (333) -------- ------- ------- Net Expenses ................................................. 6,595 2,018 6,959 -------- ------- ------- Net Investment Income ........................................ 156,056 43,930 90,099 -------- ------- ------- Net Realized Gain (Loss) on Securities Sold .................. (1) 73 (8) -------- ------- ------- Increase in Net Assets Resulting from Operations ............. $156,055 $44,003 $90,091 ========= ======= ======= Amounts designated as "--" are either $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 11 STATEMENTS OF CHANGES IN NET ASSETS (000) - -------------------------------------------------------------------------------- STI CLASSIC FUNDS FOR THE YEARS ENDED MAY 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 -------------------------- -------------------------- --------------------------- 06/01/00- 06/01/99- 06/01/00- 06/01/99- 06/01/00- 06/01/99- 05/31/01 05/31/00 05/31/01 05/31/00 05/31/01 05/31/00 ---------- ----------- ---------- ---------- ---------- ---------- Operations: Net Investment Income ........... $ 156,056 $ 118,955 $ 43,930 $ 35,721 $ 90,099 $ 68,545 Net Realized Gain (Loss) on Investments .............. (1) -- 73 -- (8) 3 ----------- ----------- ----------- ----------- ----------- ----------- Increase in Net Assets from Operations ............. 156,055 118,955 44,003 35,721 90,091 68,548 ----------- ----------- ----------- ----------- ----------- ----------- Distributions to Shareholders: Net Investment Income: Institutional Shares .......... (155,491) (119,528) (43,930) (35,721) (21,487) (14,676) Corporate Trust Shares ........ -- -- -- -- (68,648) (53,866) ----------- ----------- ----------- ----------- ----------- ----------- Total Distributions (155,491) (119,528) (43,930) (35,721) (90,135) (68,542) ----------- ----------- ----------- ----------- ----------- ----------- Capital Transactions (1): Institutional Shares: Proceeds from Shares Issued ............... 7,960,103 7,310,322 2,104,691 1,986,992 2,215,790 1,631,329 Reinvestments of Cash Distributions .............. 109,209 76,132 12,179 12,023 19,897 14,668 Cost of Shares Repurchased .... (7,152,161) (6,962,679) (1,871,380) (1,965,478) (1,985,171) (1,599,793) ----------- ----------- ----------- ----------- ----------- ----------- Increase in Net Assets from Institutional Share Transactions .................. 917,151 423,775 245,490 33,537 250,516 46,204 ----------- ----------- ----------- ----------- ----------- ----------- Corporate Trust Shares: Proceeds from Shares Issued ............... -- -- -- -- 2,678,255 3,577,647 Cost of Shares Repurchased .... -- -- -- -- (2,513,136) (2,439,116) ----------- ----------- ----------- ----------- ----------- ----------- Increase in Net Assets from Corporate Trust Share Transactions .................. -- -- -- -- 165,119 1,138,531 ----------- ----------- ----------- ----------- ----------- ----------- Increase in Net Assets from Share Transactions ..... 917,151 423,775 245,490 33,537 415,635 1,184,735 ----------- ----------- ----------- ----------- ----------- ----------- Total Increase in Net Assets .............. 917,715 423,202 245,563 33,537 415,591 1,184,741 ----------- ----------- ----------- ----------- ----------- ----------- Net Assets: Beginning of Period ........... 2,311,685 1,888,483 650,626 617,089 1,468,266 283,525 ----------- ----------- ----------- ----------- ----------- ----------- End of Period ................ $ 3,229,400 $ 2,311,685 $ 896,189 $ 650,626 $ 1,883,857 $ 1,468,266 =========== =========== =========== =========== =========== ===========
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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 ------------------------- -------------------------- -------------------------- 06/01/00- 06/01/99- 06/01/00- 06/01/99- 06/01/00- 06/01/99- 05/31/01 05/31/00 05/31/01 05/31/00 05/31/01 05/31/00 ---------- ---------- ---------- ---------- ---------- ---------- (1) Shares Issued and Redeemed: Institutional Shares: Shares Issued ................. 7,960,103 7,310,322 2,104,691 1,986,991 2,215,790 1,631,329 Shares Issued in Lieu of Cash Distributions ... 109,209 76,132 12,179 12,023 19,897 14,668 Shares Redeemed ............... (7,152,161) (6,962,679) (1,871,380) (1,965,478) (1,985,171) (1,599,793) ---------- ---------- ---------- ---------- ---------- ---------- Net Institutional Share Transactions ............. 917,151 423,775 245,490 33,536 250,516 46,204 ---------- ---------- ---------- ---------- ---------- ---------- Corporate Trust Shares: Shares Issued ................. -- -- -- -- 2,678,255 3,577,647 Shares Redeemed ............... -- -- -- -- (2,513,136) (2,439,116) ---------- ---------- ---------- ---------- ---------- ---------- Net Corporate Trust Share Transactions .......... -- -- -- -- 165,119 1,138,531 ---------- ---------- ---------- ---------- ---------- ---------- Net Change in Capital Shares ...................... 917,151 423,775 245,490 33,536 415,635 1,184,735 ========== ========== ========== ========== ========== ==========
Amounts designated as "--" are either $0 or have been rounded to $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 13 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE NOTED) FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
NET DISTRIBUTIONS NET ASSET NET ASSET VALUE INVESTMENT FROM NET VALUE END TOTAL BEGINNING OF PERIOD INCOME INVESTMENT INCOME OF PERIOD RETURN+ ------------------- ---------- -------------------- -------------- --------- CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND (A) Institutional Shares 2001 $1.00 $0.06 $(0.06) $1.00 6.13% 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 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (B) Institutional Shares 2001 $1.00 $0.06 $(0.06) $1.00 5.98% 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 CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND Institutional Shares 2001 $1.00 $0.06 $(0.06) $1.00 5.74% 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(C) 1.00 0.02 (0.02) 1.00 2.46 Corporate Trust Shares 2001 $1.00 $0.05 $(0.05) $1.00 5.53% 2000(D) 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) 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.
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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) ------------ ------------------ ------------------ ------------------- ------------------- CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND (A) Institutional Shares 2001 $3,229,400 0.25% 5.91% 0.30% 5.86% 2000 2,311,685 0.25 5.42 0.30 5.37 1999* 1,888,483 0.25 4.79 0.35 4.69 For the years ended January 31: 1999 884,490 0.23 5.31 0.35 5.19 1998 740,837 0.20 5.52 0.36 5.36 1997 477,435 0.20 5.33 0.38 5.15 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (B) Institutional Shares 2001 $ 896,189 0.26% 5.72% 0.29% 5.69% 2000 650,626 0.25 5.27 0.29 5.23 1999* 617,089 0.25 4.73 0.36 4.62 For the years ended January 31: 1999 688,031 0.23 5.18 0.36 5.05 1998 789,410 0.20 5.39 0.37 5.22 1997 586,731 0.20 5.17 0.37 5.00 CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND Institutional Shares 2001 $ 580,227 0.27% 5.44% 0.30% 5.41% 2000 329,725 0.25 5.17 0.31 5.11 1999 283,525 0.20 4.83 0.47 4.56 1998 140,334 0.18 5.34 0.38 5.14 1997(C) 20,238 0.09 5.27 0.51 4.85 Corporate Trust Shares 2001 $1,303,630 0.46% 5.38% 0.50% 5.34% 2000(D) 1,138,541 0.45 4.93 0.49 4.89 (C) Commenced operations on December 12, 1996. All ratios for the period have been annualized. (D) 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. 15 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2001 1. Organization: The STI Classic Funds (the "Trust") was organized as a Massachusetts business trust under a Declaration of Trust dated January 15, 1992. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company with thirty-four funds as of May 31, 2001: the Balanced Fund, the Capital Appreciation 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, the Life Vision Growth and Income Fund, the Life Vision Moderate Growth Fund, the Mid-Cap Equity Fund, the Small Cap Growth Stock Fund, the Small Cap Value 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, 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 U.S. Government Securities Money Market Fund, the U.S. Treasury Money Market Fund, the Virginia Tax-Free 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. 2. Significant Accounting Policies: The following is a summary of significant accounting policies followed by the Trust: SECURITY VALUATION -- Investment securities held by the Funds are stated at amortized cost, which approximates market value. FEDERAL INCOME TAXES -- It is each Fund's intention to continue 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 agree- 16 ments 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 accounting principles generally accepted in the United States. 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 U.S. Treasury Securities Money Market Fund has reclassified $2,966 from Accumulated Net Realized Loss to Undistributed Net Investment Income. 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. USE OF ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. AUDIT GUIDE IMPLEMENTATION -- On November 21, 2000, the American Institute of Certified Public Accountants ("AICPA") issued the AICPA Audit and Accounting Guide "Audits of Investment Companies" (the "Guide"), effective for annual financial statements issued for fiscal years beginning after December 15, 2000. Management of the Funds do not expect any material impact on results of operations or financial condition of the Funds upon adoption of the provisions of the Guide. 17 NOTES TO FINANCIAL STATEMENTS (concluded) - ------------------------------------------------------------------------------- STI CLASSIC FUNDS May 31, 2001 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 Trust has entered into an agreement with the Distributor to act as an agent in placing repurchase agreements for the Trust. For its services the Distributor received $2,017,314 for the year ended May 31, 2001. 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: 0.12% up to $1 billion, 0.09% on the next $4 billion, 0.07% on the next $3 billion, 0.065% on the next $2 billion and 0.06% for over $10 billion. The Institutional U.S. Treasury Securities 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 .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 June 15, 1993, and last amended as of August 15, 2000. Effective June 30, 2000, SunTrust Banks, Inc. reorganized all of the investment management functions of its three institutional money management units, including SunTrust Bank, Atlanta into Trusco Capital Management, Inc. (the "Investment Adviser"). Under terms of the respective agreements, the Funds are charged the following annual fees based upon average daily net assets: MAXIMUM ANNUAL ADVISORY FEE ------------ Classic Institutional Cash Management Money Market Fund 0.20% Classic Institutional U.S. Government Securities Money Market Fund 0.20% Classic Institutional U.S. Treasury Securities Money Market Fund 0.20% 18 - ------------------------------------------------------------------------------- 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. Fee waivers and expense reimbursements are voluntary and may be terminated at any time. SunTrust Bank acts as custodian for the Funds. Fees of the Custodian are paid on the basis of the net assets of the Funds. The Custodian plays no role in determining the investment policies of the Trust or which securities are to be purchased or sold in the Funds. 6. Concentration of Credit Risk: The Classic Institutional Cash Management Money Market Fund invests in high quality money market instruments issued by corporations and the U.S. Government and rated by one or more nationally recognized statistical rating organizations, or, if not rated, are determined by the Investment 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: The Funds had capital loss carryforwards at May 31, 2001 as follows: CAPITAL LOSS CARRYOVER EXPIRES 5/31/01 2009 FUND (000) (000) - ------ ---------- ---------- Classic Institutional U.S. Treasury Securities Money Market Fund $11 $11 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 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2001 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, 2001, 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 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 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, 2001, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Classic Institutional Cash Management Money Market, 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, 2001, 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, 2001 20 NOTICE TO SHAREHOLDERS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2001 UNAUDITED For shareholders that do not have a May 31, 2001 tax year end, this notice is for informational purposes only. For shareholders with a May 31, 2001 tax year end, please consult your tax adviser as to the pertinence of this notice. For the fiscal year ended May 31, 2001, each portfolio is designating the following items with regard to distributions paid during the year.
LONG TERM (20% RATE) QUALIFIED ORDINARY CAPITAL GAIN 5-YEAR GAIN INCOME TAX-EXEMPT TOTAL QUALIFYING FUND DISTRIBUTIONS DISTRIBUTION DISTRIBUTIONS INTEREST DISTRIBUTIONS DIVIDENDS (1) - ------------------------------------ -------------- ------------ ------------- ---------- ------------- ------------- Classic Institutional Cash Management Money Market Fund --% --% 100.00% --% 100.00% --% Classic Institutional U.S. Government Money Market Fund --% --% 100.00% --% 100.00% --% Classic Institutional U.S. Treasury Securities 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 "Ordinary Income Distributions".
21 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 an affiliate of SunTrust Banks, Inc. DISTRIBUTOR SEI Investments Distribution Co. This information must be preceded or accompanied by a current prospectus for each Fund described. STI-AR-004-0100 -----END PRIVACY-ENHANCED MESSAGE-----