N-CSR 1 sticlinstmmcombar5_03.txt STI CLASSIC INSTITUTIONAL MM AR 5_03 COMBINED UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------- FORM N-CSR -------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES INVESTMENT COMPANY ACT FILE NUMBER 811-6557 STI CLASSIC FUNDS (Exact name of registrant as specified in charter) -------- 2 Oliver Street Boston, MA 02109 (Address of principal executive offices) (Zip code) Trusco Capital Management, Inc. 50 Hurt Plaza; Suite 1400 Atlanta, Georgia 30303 (Name and address of agent for service) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-428-6970 DATE OF FISCAL YEAR END: MAY 31, 2003 DATE OF REPORTING PERIOD: MAY 31, 2003 ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL -------------------------------------------------------------------------------- FINANCIAL REPORT -------------------------------------------------------------------------------- STI CLASSIC FUNDS -------------------------------------------------------------------------------- A Family of Mutual Funds -------------------------------------------------------------------------------- BOND FUNDS CLASSIC INSTITUTIONAL SHORT-TERM BOND FUND CLASSIC INSTITUTIONAL SUPER SHORT INCOME PLUS FUND CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND MONEY MARKET 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, 2003 [STI CLASSIC Funds Logo Omitted] Dear Valued STI Classic Funds' Shareholder: For investors, the year ending May 31, 2003 saw convergence in equity returns, and divergence of returns in stocks versus bonds. Specifically, while stocks continued to labor under the weight of the late 1990's technology stock bubble, various types of stocks had remarkably similar returns. The S&P 500 Index was down -8.1%, with its Growth and Value components similar at -7.6% and -8.7%, respectively. The Dow Jones Industrial Average was -8.7%. The S&P 400 Midcap Index was -9.1%, while the S&P 600 Smallcap fell -10.9%. This convergence followed two years in which value stocks had significantly outperformed growth, and small/midcaps were similarly better than large caps. One area of difference was the relatively weaker performance of international stocks, with the MSCI EAFE index of major country stocks -12.3%. This result was driven by poor returns from Japan (-24.6%), while the balance of industrialized countries had returns only slightly worse than the U.S. The benefits of asset diversification were clearly evident over the past year, as bond returns were quite exceptional relative to stocks and compared to longer term history. For example, the Lehman Aggregate Bond Index returned 11.6%, and similar returns were seen in the Lehman Intermediate Government/Credit (+11.9%) and High Yield (+10.5%) indices. Strong returns in bonds were driven by several factors, including: further reduction in short-term rates by the Federal Reserve; continued minimal price inflation; in the second half of the year, major improvement in corporate bond quality spreads vs. Treasuries; positive asset flows into bond mutual funds; and some aspects of flight to quality in the Treasury bond market. In terms of return, investors who stayed in short term money market instruments preserved capital with a positive return of about 1.1% per the iMoneyNet money market average, but this was meager relative to total returns available in longer maturities. The current investment environment appears to be one of moderation. The late 1990's equity bubble which led to excesses and ultimately suboptimal capital allocation on the part of both corporate managements and investors is long over. The ensuing bear market which purged those excesses also now seems to be finally over. The stock market has gained a better tone, after making three decisive lows in the 775-800 range on the S&P 500 Index in July and October 2002, and March 2003. Economic growth has been very slow to recover, since consumer spending did not fall much in the recession and capital spending is still limping along. However, ample monetary liquidity, the lowest interest rates in over 40 years, some tax incentives and fiscal stimulus, the eventual benefits from a lower dollar exchange rate and improving consumer/business confidence all argue for continued positive economic growth and not another recession. Stock prices ultimately track profits growth, and the trajectory of profits is now positive. Investors in stocks can reasonably anticipate moderate gains but need to be selective and price sensitive in security selection. A new stock market boom is unlikely, rather, we anticipate a gradual recovery. The outlook for bond investors in terms of absolute returns is a bit more challenging. Since bond prices move inversely to interest rates, the current low level of yields by definition reduces the opportunity for continued above average returns. Measured since January 1981, the Lehman Long-Term Treasury Index returned 12.0% annualized through May 31, 2003, while the S&P 500 Index total return was 12.6%. Such convergence is rare in capital markets, and needs to be understood in the context of 30-year Treasury bonds reaching yields of over 15% in 1981, versus only a little over 4% today. Similarly, we do not expect deflation, which would benefit Treasury bonds, but rather a gradual rise in inflation as economic stimulus takes hold. For those reasons, we currently favor stocks over bonds in terms of asset allocation, and within bonds, higher yielding corporates over Treasuries. However, adherence to investment disciplines and greater price sensitivity on stocks will be much more important in the next several years, particularly if there is a meaningful rise in interest rates. The cornerstone of our investment philosophy is diversification and execution of the disciplined investment process by experienced investment professionals. The balance of this Annual Report includes performance data for the STI Classic Institutional Funds as well as each portfolio manager's discussion of the 12-month results. We believe you will find this communication helpful and thank you for your continued confidence in the STI Classic Institutional Funds. Sincerely, /s/ Douglas S. Phillips Douglas S. Phillips, CFA Chief Investment Officer 1 Classic Institutional Short-Term Bond Fund ------------------------------------------ The Fund seeks to provide as high a level of current income relative to funds with like investment objectives as is consistent with the preservation of capital primarily through investment in short- to intermediate-term investment grade fixed income securities. The fund is suitable for investors seeking higher yields than other short-term investments with less share-price volatility than longer-term bond funds. With money market yields declining to decades low levels, the Classic Short-Term Bond Fund has been an ideal low risk bond fund alternative for money market investors. Over the past year, the dividend yield has been consistently higher than that of money market funds while the NAV has fluctuated $0.24 from high to low averaging $10.18 a share. The current NAV as of May 31 is $10.24 a share. The average maturity of the fund is 1.74 years with an average quality rating of AA. The STI Classic Institutional Short-Term Bond Fund was up 6.52% from May 14, 2002 (inception date of the fund) through May 31, 2003. Overall performance of the Fund has been helped by the drop in yields from May 2002 to May 2003. For example, the three-year Treasury note fell in yield over 200 basis points to 1.56%. Primary factors driving yields lower were a drop in economic activity due to the war with Iraq, lack of business spending, a weak labor market, a tepid consumer, waning consumer confidence, high debt levels, and concerns about deflation. Monetary policy has been accommodative, as the Fed funds rate ended the fiscal year at 1.25%. In comparison to 2001 when the Federal Reserve Open Market Committee aggressively eased monetary policy by 475 basis points, the Fed lowered rates only once in 2002 by 50 basis points. The prospect of the Fed buying longer dated U.S. treasury securities has also helped drive intermediate and long-term yields lower. Improvement in corporate bonds added to overall performance in the second half of the fiscal year as credit spreads narrowed after peaking in late October of 2002. The first half was difficult as corporate fraud and greed caused corporate bonds to under-perform Treasuries. In general, the Fund has maintained a higher corporate allocation throughout the year. /s/ Robert W. Corner /s/ H. Rick Nelson Robert W. Corner H. Rick Nelson Managing Director Managing Director 2 Institutional Shares(1) Average Annual Total Returns (periods ended May 31, 2003) ----------------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date ----------------------------------------------- 6.08% 6.23% 6.52% ----------------------------------------------- [Graphic Omitted] COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Institutional Short-Term Bond Fund, Salomon 1-3 Year Treasury/ Institutional Shares Government/Credit Index 5/31/02 $10,000 $10,000 5/03 $10,608 $10,649 Past performance is no indication of future performance. The Funds' comparative benchmark does not include the annual operating expenses incurred by the Fund. (1) Institutional Shares were offered beginning on May 14, 2002. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 3 Classic Institutional Super Short Income Plus Fund -------------------------------------------------- The investment goal of the Classic Institutional Super Short Income Plus Fund (the "Fund") is to generate high current income consistent with preserving capital and maintaining liquidity. The Fund focuses on investing in short duration investment grade fixed income and money market securities with the objective of generating a higher yield and better return potential than money market funds. With money market yields declining to decades low levels, the Classic Institutional Super Short Income Plus Fund has been an ideal low risk bond fund alternative for money market investors. Over the past year, the dividend yield has been consistently higher than that of money market funds while the NAV has fluctuated in a very narrow range. During this time, the Fund has maintained an average duration between 0.7 years and 0.9 years. The maximum permitted duration of the Fund is one year. Helping overall performance of the Fund has been the drop in yields from May, 2002 to May, 2003. For example, three month U.S. Treasury bills fell 63 basis points to 1.10% while the two year U.S. Treasury note fell an even greater 188 basis points to 1.33%. Primary factors driving yields lower were a drop in economic activity due to the war with Iraq, a lack of business spending, a weak labor market, a tepid consumer, waning consumer confidence, high debt levels, and concerns about deflation. Monetary policy has been accommodative, as the Fed Funds rate ended the fiscal year at 1.25%. In comparison to 2001 when the Federal Reserve Open Market Committee aggressively eased monetary policy by 475 basis points, the Fed lowered rates only once in 2002 by 50 basis points. The prospect of the Fed buying longer dated U.S. Treasury securities has also helped drive intermediate and long-term yields lower. Improvement in corporate bonds added to overall performance as credit spreads narrowed after peaking in late October of 2002. In general, the Fund has maintained a corporate bond allocation between 25% and 35%. Mortgage backed securities actually detracted from performance as prepayments accelerated due to record refinancing. MBS securities have averaged between 10% and 20% of the Fund. Initially opened with only Institutional class shares, the Fund has multiplied more than six fold in the last year as total net assets have grown from $34 million to its current $216 million. Adding to this growth was the launch of the Trust share class in October of 2002. /s/ Robert W. Corner Robert W. Corner Managing Director 4 Institutional Shares(1) Average Annual Total Returns (periods ended May 31, 2003) ----------------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date ----------------------------------------------- 3.16% 3.07% 3.46% ----------------------------------------------- [Graphic Omitted] COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic Institutional Super Short Income Plus Fund, iMoney Net First Tier Salomon 6 Month Lipper Ultra-Short Institutional Shares Institutional Average Treasury Bill Index Obligations Objective 5/31/02 $10,000 $10,000 $10,000 $10,000 5/02 $10,020 $10,013 $10,016 $10,027 5/03 $10,337 $10,138 $10,176 $10,264
Trust Shares(2) Average Annual Total Returns (periods ended May 31, 2003) ----------------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date ----------------------------------------------- 2.46% 2.45% 2.76% ----------------------------------------------- [Graphic Omitted] COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic Institutional Super Short Income Plus Fund, iMoney Net First Tier Salomon 6 Month Lipper Ultra-Short Trust Shares Institutional Average Treasury Bill Index Obligations Objective 5/31/02 $10,000 $10,000 $10,000 $10,000 5/02 $10,020 $10,013 $10,016 $10,027 5/03 $10,266 $10,138 $10,176 $10,264
Past performance is no indication of future performance. The Funds' comparative benchmark does not include the annual operating expenses incurred by the Fund. (1) Institutional Shares were offered beginning on April 15, 2002. (2) Trust Shares were offered beginning on October 3, 2002. Trust Shares' performance for the period prior to October 3, 2002 reflects the performance of the Fund's Institutional Shares. The performance of the Institutional Shares has not been adjusted to reflect the higher internal operating expenses of the Trust Shares. If it had, performance would have been lower than that shown. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 5 Classic Institutional U.S. Government Securities Super Short Income Plus Fund ----------------------------------------------------------------------------- The investment goal of the Classic Institutional U.S. Government Securities Super Short Income Plus Fund (the "Fund") is to generate high current income consistent with preserving capital and maintaining liquidity. The Fund focuses on investing in short duration U.S. Government securities with the objective of generating a higher yield and better return potential than money market funds. With money market yields declining to decades low levels, the Classic Institutional U.S. Government Securities Super Short Income Plus Fund has been an ideal low risk bond fund alternative for money market investors. Over the past year, the dividend yield has been consistently higher than that of money market funds while the NAV has fluctuated in a very narrow range. During this time, the Fund has maintained an average duration between 0.7 years and 0.9 years. The maximum permitted duration of the Fund is one year. Helping overall performance of the Fund has been the drop in yields from May, 2002 to May, 2003. For example, three month U.S. Treasury bills fell 63 basis points to 1.10% while the two year U.S. Treasury note fell an even greater 188 basis points to 1.33%. Primary factors driving yields lower were a drop in economic activity due to the war with Iraq, a lack of business spending, a weak labor market, a tepid consumer, waning consumer confidence, high debt levels, and concerns about deflation. Monetary policy has been accommodative, as the Fed Funds rate ended the fiscal year at 1.25%. In comparison to 2001 when the Federal Reserve Open Market Committee aggressively eased monetary policy by 475 basis points, the Fed lowered rates only once in 2002 by 50 basis points. The prospect of the Fed buying longer dated U.S. Treasury securities has also helped drive intermediate and long-term yields lower. The general drop in yields and improvement in spreads of U.S. Government Agency bonds (i.e. Fannie Mae, Freddie Mac) added to overall performance of the Fund. The Fund has maintained an allocation to U.S. Government Agency bonds of 30% to 45%. Mortgage backed securities actually detracted from performance as prepayments accelerated due to record refinancing. MBS securities have averaged between 25% and 45% of the Fund. The remaining portion of the Fund was invested in cash and equivalent securities such has U.S. Government money market funds, U.S. Government repurchase agreements, U.S. Agency discount notes, and U.S. Treasury bills. Initially opened with only Institutional class shares, the Fund has multiplied more than four fold in the last year as total net assets have grown from $28 million to its current $119 million. Adding to this growth was the launch of the Flex share class in April of 2003. /s/ Robert W. Corner Robert W. Corner Managing Director 6 Institutional Shares(1) Average Annual Total Returns (periods ended May 31, 2003) ---------------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date ---------------------------------------------- 2.80% 2.75% 3.13% ---------------------------------------------- [Graphic Omitted] COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic Institutional U.S. Government Securities Super Short Income Plus Fund, iMoney Net Government Salomon 6 Month Lipper Ultra-Short Institutional Shares Institutional Average Treasury Bill Index Obligations Objective 5/31/02 $10,000 $10,000 $10,000 $10,000 5/02 $10,020 $10,012 $10,016 $10,027 5/03 $10,301 $10,127 $10,176 $10,264
Flex Shares(2) Average Annual Total Returns (periods ended May 31, 2003) ---------------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date ---------------------------------------------- 2.85% 2.79% 3.18% ---------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic Institutional U.S. Government Securities Super Short Income Plus Fund, iMoney Net Government Salomon 6 Month Lipper Ultra-Short Flex Shares Institutional Average Treasury Bill Index Obligations Objective 5/31/02 $10,000 $10,000 $10,000 $10,000 5/02 $10,020 $10,012 $10,016 $10,027 5/03 $10,306 $10,127 $10,176 $10,264
Past performance is no indication of future performance. The Funds' comparative benchmark does not include the annual operating expenses incurred by the Fund. (1) Institutional Shares were offered beginning on April 11, 2002. (2) Flex Shares were offered beginning on April 16, 2003. Flex Shares' performance for the period prior to April 16, 2003 reflects the performance of the Fund's Institutional Shares. The performance of the Institutional Shares has not been adjusted to reflect the higher internal operating expenses of the Flex Shares. If it had, performance would have been lower than that shown. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 7 Classic Institutional Cash Management Money Market Fund ------------------------------------------------------- The investment objective of the Classic Institutional Cash Management Money Market Fund (the "Fund") is to provide as high a level of current income as is consistent with the preservation of capital and liquidity by investing exclusively in high quality money market instruments. The investment discipline used in managing the Fund, emphasizes adding incremental value through yield curve, sector and credit analysis. Investments are made in those sectors, credits and segments of the yield curve within the universe of money market eligible securities, which offer the most attractive risk/reward trade-off and current yield. The maturity structure and average maturity of the Fund are actively managed to maximize the yield of the Fund based on the current market rates and conditions and our market outlook. The Federal Reserve Open Market Committee is expected to lower interest rates at its upcoming June 25th meeting. In anticipation of this action interest rates have recently fallen to a fifty-year low. Over the last two years the Federal Reserve has lowered the Funds Rate a total of twelve times bringing it to a 45 year low of 1.25%. Our outlook is that the Federal Reserve will lower interest rates at the upcoming meeting as insurance against further declines in inflation. After that we expect the Federal Reserve to leave interest rates unchanged for the foreseeable future. With this in mind the portfolio has been structured to benefit from a steady rate policy by the Federal Reserve. The Fund was able to meet its objective and was able to provide a very competitive return and yield as compared to its peer money market funds during the year ending May 31, 2003. /s/ Robert S. Bowman Robert S. Bowman, CFA Managing Director 8 Classic Institutional U.S. Government Securities Money Market Fund ------------------------------------------------------------------ The investment objective of the Classic Institutional U.S. Government Securities Money Market Fund (the "Fund") is to provide as high a level of current income as is consistent with the preservation of capital and liquidity by investing exclusively in money market eligible securities. Eligible securities include U.S. Government Agency securities and repurchase agreements collateralized by U.S. Government Agency obligations. The investment discipline, which we use in managing the Fund, emphasizes adding incremental value through yield curve analysis. The maturity structure and average maturity of the Fund are actively managed to maximize the yield of the Fund based on the current market rates and conditions and our market outlook. The Federal Reserve Open Market Committee is expected to lower interest rates at its upcoming June 25th meeting. In anticipation of this action interest rates have recently fallen to a fifty-year low. Over the last two years the Federal Reserve has lowered the Funds Rate a total of twelve times bringing it to a 45 year low of 1.25%. Our outlook is that the Federal Reserve will lower interest rates at the upcoming meeting as insurance against further declines in inflation. After that we expect the Federal Reserve to leave interest rates unchanged for the foreseeable future. With this in mind the portfolio has been structured to benefit from a steady rate policy by the Federal Reserve. The Fund was able to meet its objective and was able to provide a very competitive return and yield as compared to its peer money market funds during the year ending May 31, 2003. /s/ Robert S. Bowman Robert S. Bowman, CFA Managing Director 9 Classic Institutional U.S. Treasury Securities Money Market Fund ---------------------------------------------------------------- The investment objective of the Classic Institutional U.S. Treasury Securities Money Market Fund (the "Fund") is to provide as high a level of current income as is consistent with the preservation of capital and liquidity by investing exclusively in money market eligible securities. Eligible securities include U.S. Treasury securities and repurchase agreements collateralized by U.S. Treasury obligations. The investment discipline, which we use in managing the Fund, emphasizes adding incremental value through yield curve analysis. The maturity structure and average maturity of the Fund are actively managed to maximize the yield of the Fund based on the current market rates and conditions and our market outlook. The Federal Reserve Open Market Committee maintained the Federal Funds rate at 1.75% for most of the second half of 2002. They then lowered the rate to 1.25% in November as the prospects for a normal economic recovery diminished in light of the pending military action in Iraq. The Federal Reserve has been able to hold the Federal Funds rate at 1.25% as the war in Iraq concluded extremely quickly and the hope for a post war recovery remained optimistic. As of the end of May, it appears that the post war economic recovery has been slower to develop than the Federal Reserve had anticipated. Our outlook is for Federal Reserve to cut rates again at the end of June in order to stimulate the economy and to protect against the possibility of deflation. Longer-term, our outlook is that the Federal stimulus will lead to a modest economy recovery and eventually to higher interest rates. The Fund is positioned accordingly. The Fund was able to meet its objective and was able to provide a competitive return and yield as compared to its peer money market funds during the year ending May 31, 2003. The Fund's Institutional Shares had a one-year return of 1.30% and the Fund's Corporate Trust Shares had a return of 1.10% as compared to the iMoneyNet, Inc. U.S. Treasury & Repo Average of 1.79%. /s/ David S. Yealy David S. Yealy Managing Director 10 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS May 31, 2003 CLASSIC INSTITUTIONAL SHORT-TERM BOND FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS (10.1%) U.S. Treasury Notes 5.750%, 11/15/05 $ 200 $ 221 6.500%, 05/15/05 250 275 5.875%, 11/15/04 500 534 3.500%, 11/15/06 300 317 3.000%, 11/30/03 250 252 2.125%, 08/31/04 500 506 ------- Total U.S. Treasury Obligations (Cost $2,050) 2,105 ------- U.S. GOVERNMENT AGENCY OBLIGATIONS (36.0%) FHLB 3.875%, 12/15/04 300 312 3.250%, 08/15/05 450 467 FHLMC 4.250%, 06/15/05 375 396 3.875%, 06/27/05 275 275 3.250%, 11/15/04 500 514 3.000%, 07/15/04 500 510 FHLMC, Ser 2558 Cl BA 5.000%, 05/15/11 301 310 2.250%, 07/06/05 200 201 FNMA 4.500%, 10/17/06 300 303 3.500%, 09/15/04 1,000 1,029 1.875%, 12/15/04 1,000 1,009 FNMA, Ser 2003-9 Cl UA 5.500%, 07/15/06 275 306 4.000%, 11/25/16 275 280 FNMA, Ser 273 5.625%, 05/14/04 1,000 1,042 FNMA, Ser 322 3.875%, 03/15/05 500 523 ------- Total U.S. Government Agency Obligations (Cost $7,403) 7,477 ------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS (39.2%) AEROSPACE & DEFENSE (0.5%) General Dynamics 2.125%, 05/15/06 $ 105 $ 106 ------- AUTOMOTIVE (1.3%) DaimlerChrysler 7.750%, 06/15/05 250 276 ------- BANKING (5.5%) Bank of America 6.625%, 06/15/04 300 317 6.500%, 03/15/06 150 168 Bank One 5.500%, 03/26/07 280 311 Wachovia 6.800%, 06/01/05 100 110 Wells Fargo 6.625%, 07/15/04 225 238 ------- 1,144 ------- BUILDING & CONSTRUCTION (0.5%) Masco (E) 6.750%, 03/15/06 100 112 ------- CABLE (0.4%) TCI Communications 8.650%, 09/15/04 85 91 ------- CAPITAL GOODS (0.7%) Alcoa 4.250%, 08/15/07 125 133 ------- COMPUTER SERVICES (0.6%) Electronic Data Systems (E) 6.850%, 10/15/04 125 130 ------- 11 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS May 31, 2003 CLASSIC INSTITUTIONAL SHORT-TERM BOND FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- FINANCE (8.2%) American General 6.750%, 06/15/05 $ 250 $ 275 Boeing Capital (E) 5.650%, 05/15/06 200 216 CIT Group 4.125%, 02/21/06 300 311 Ford Motor Credit 7.500%, 03/15/05 100 106 6.875%, 02/01/06 100 105 General Electric Capital 2.850%, 01/30/06 300 307 GMAC 6.750%, 01/15/06 50 53 6.380%, 01/30/04 100 103 National Rural Utilities 3.000%, 02/15/06 225 232 ------- 1,708 ------- FOOD, BEVERAGE & TOBACCO (1.5%) ConAgra Foods 7.500%, 09/15/05 90 100 Diageo Capital PLC 3.375%, 03/20/08 200 206 ------- 306 ------- HEALTH CARE (1.2%) Cardinal Health 6.500%, 02/15/04 250 259 ------- INSURANCE (2.3%) Allstate 7.875%, 05/01/05 260 289 MetLife 3.911%, 05/15/05 115 119 Safeco 4.200%, 02/01/08 65 68 ------- 476 ------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- INVESTMENT BANKERS/BROKER DEALERS (8.7%) Bear Stearns 3.000%, 03/30/06 $ 185 $ 190 Credit Suisse First Boston (E) 5.875%, 08/01/06 250 276 Goldman Sachs Group 7.625%, 08/17/05 250 283 Lehman Brothers Holdings 7.750%, 01/15/05 225 247 Merrill Lynch 2.940%, 01/30/06 285 291 Morgan Stanley 7.750%, 06/15/05 225 251 Paine Webber Group 6.375%, 05/15/04 250 262 ------- 1,800 ------- MULTIMEDIA (1.4%) Viacom 7.750%, 06/01/05 250 280 ------- PETROLEUM & FUEL PRODUCTS (1.7%) Anadarko Petroleum 3.250%, 05/01/08 115 115 Conoco 5.900%, 04/15/04 125 130 Kerr-McGee 5.375%, 04/15/05 100 105 ------- 350 ------- REAL ESTATE (0.5%) EOP Operating LP 8.375%, 03/15/06 95 109 ------- 12 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- RETAIL (1.0%) Kroger 7.375%, 03/01/05 $ 100 $ 108 Nordstrom 8.950%, 10/15/05 85 97 ------- 205 ------- TELEPHONE & TELECOMMUNICATIONS (2.4%) British Telecom PLC 7.875%, 12/15/05 250 284 Vodafone Group PLC (A) 7.625%, 02/15/05 200 220 ------- 504 ------- UTILITIES (0.8%) Alabama Power 3.125%, 05/01/08 50 51 PacifiCorp 6.750%, 04/01/05 100 108 ------- 159 ------- Total Corporate Obligations (Cost $7,981) 8,148 ------- ASSET-BACKED SECURITIES (7.5%) Bank One Issuance Trust, Ser 2002-A4, Cl A4 2.940%, 06/16/08 500 514 Capital Auto Receivables Asset Trust, Series 2002-4, Cl A4 2.640%, 03/17/08 500 511 Honda Automobile Receivables Owner Trust, Ser 2002-3, Cl A4 3.610%, 12/18/07 500 522 ------- Total Asset-Backed Securities (Cost $1,500) 1,547 ------- -------------------------------------------------------------------------------- SHARES VALUE (000) -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT (3.2%) Boston Global Investment Trust -- Enhanced Portfolio (F) 668,505 $ 669 ------- Total Short-Term Investment (Cost $669) 669 ------- Cash Equivalents (6.4%) Federated Prime Obligation Money Market Fund 969,669 970 SEI Daily Income Trust Prime Obligation Fund 352,722 353 ------- Total Cash Equivalents (Cost $1,323) 1,323 ------- Total Investments (102.4%) (Cost $20,926) 21,269 ------- Other Assets and Liabilities (-2.4%) Payable Upon Return of Securities Loaned (669) Investment Advisory Fees Payable (6) Administration Fees Payable (1) Other Assets and Liabilities, Net 184 ------- Total Other Assets and Liabilities (492) ------- NET ASSETS: Fund Shares of the Institutional Shares (unlimited authorization -- no par value) based on 2,028,770 outstanding shares of beneficial interest 20,310 Accumulated net realized gain on investments 124 Net unrealized appreciation on investments 343 ------- Total Net Assets (100.0%) $20,777 ======= Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares ($20,777,133 / 2,028,770 shares) $10.24 ======= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 30. 13 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS May 31, 2003 CLASSIC INSTITUTIONAL SUPER SHORT INCOME PLUS FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS (10.0%) FHLB 4.125%, 08/15/03 $ 2,500 $ 2,516 FHLMC 3.875%, 06/27/05 1,325 1,327 2.500%, 04/21/06 3,225 3,260 FNMA 5.500%, 02/15/06 1,000 1,101 3.125%, 08/15/05 875 878 2.000%, 03/24/05 1,125 1,125 FNMA Discount Note (C) 1.170%, 06/05/03 10,000 9,999 SLMA (B) 1.571%, 08/27/04 1,400 1,406 -------- Total U.S. Government Agency Obligations (Cost $21,568) 21,612 -------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (14.3%) FHLMC, Ser 1520 Cl H 6.250%, 11/15/07 1,414 1,450 FHLMC, Ser 1629 Cl HA 3.500%, 12/15/21 272 275 FHLMC, Ser 2368 Cl OB 5.000%, 09/15/07 550 550 FHLMC, Ser 2447 Cl BA 5.500%, 05/15/07 290 293 FHLMC, Ser 2453 Cl BA 5.000%, 07/15/11 379 382 FHLMC, Ser 2485 Cl AF 5.500%, 12/15/15 682 705 FHLMC, Ser 2485 Cl AH 5.500%, 12/15/13 586 594 FHLMC, Ser 2497 Cl NM 4.500%, 05/15/14 577 592 FHLMC, Ser 2497 Cl PA 6.000%, 05/15/06 671 671 -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS--CONTINUED FHLMC, Ser 2508 Cl MF 5.000%, 04/15/13 $ 810 $ 834 FHLMC, Ser 2542 Cl AG 4.000%, 11/15/11 2,956 3,033 FHLMC, Ser 2542 Cl DA 5.500%, 03/15/05 1,204 1,214 FHLMC, Ser 2542 Cl DL 4.500%, 05/15/11 500 515 FHLMC, Ser 2558 Cl BA 5.000%, 05/15/11 1,159 1,192 FHLMC, Ser 2572 Cl LB 5.000%, 04/15/16 1,000 1,034 FHLMC, Ser 2595 Cl AB 5.000%, 02/15/14 2,480 2,565 FHLMC, Ser 2595 Cl BM 3.500%, 12/15/17 3,213 3,246 FHLMC, Ser M80812 4.500%, 04/01/10 2,494 2,567 FHLMC, Ser M90803 4.500%, 03/01/08 2,428 2,522 FHLMC, Ser M90814 4.000%, 05/01/08 2,625 2,700 FNMA, Ser 2002-78 Cl QA 5.500%, 12/25/05 443 447 FNMA, Ser 2003-9 Cl UA 4.000%, 11/25/16 1,500 1,528 FNMA, Ser 701045 3.532%, 04/01/33 1,996 2,056 -------- Total U.S. Government Agency Mortgage-Backed Obligations (Cost $30,883) 30,965 -------- CORPORATE OBLIGATIONS (33.5%) AEROSPACE & Defense (0.2%) United Technologies 6.625%, 11/15/04 500 535 -------- 14 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- AIR TRANSPORTATION (0.3%) FedEx 6.625%, 02/12/04 $ 650 $ 672 -------- AUTOMOTIVE (0.7%) DaimlerChrysler 6.400%, 05/15/06 1,125 1,247 1.509%, 08/21/03 (B) 300 300 -------- 1,547 -------- BANKING (3.4%) Bank of America 6.625%, 06/15/04 725 766 Bank of New York 6.625%, 06/15/03 775 776 Bank One 7.625%, 08/01/05 1,250 1,404 National City Bank 7.200%, 05/15/05 1,000 1,101 US Bancorp 2.750%, 03/30/06 1,000 1,022 Wachovia 6.950%, 11/01/04 500 539 Wells Fargo 6.625%, 07/15/04 650 687 1.439%, 03/03/06 (B) 1,000 1,001 -------- 7,296 -------- BUILDING & CONSTRUCTION (0.4%) Masco 6.000%, 05/03/04 885 919 -------- CABLE (0.3%) TCI Communications 8.650%, 09/15/04 675 725 -------- CONSUMER STAPLES (0.2%) Procter & Gamble 6.600%, 12/15/04 500 538 -------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- ELECTRICAL SERVICES (1.8%) Alabama Power 4.875%, 09/01/04 $ 501 $ 520 1.410%, 12/29/03 (B) 1,500 1,501 Progress Energy 6.550%, 03/01/04 825 853 Virginia Electric & Power 5.750%, 03/31/06 875 953 -------- 3,827 -------- FINANCE (9.4%) Caterpillar Financial Service 2.650%, 01/30/06 500 508 CIT Group 7.500%, 11/14/03 950 974 4.125%, 02/21/06 1,000 1,037 Citigroup 6.750%, 12/01/05 2,000 2,240 Countrywide Home Loan 6.850%, 06/15/04 1,000 1,055 3.500%, 12/19/05 1,250 1,290 Diageo Capital PLC 6.625%, 06/24/04 500 528 6.125%, 08/15/05 500 548 Ford Motor Credit 7.500%, 03/15/05 750 792 General Electric Capital, Ser A, MTN 6.750%, 09/11/03 1,000 1,015 4.250%, 01/28/05 (E) 975 1,021 1.438%, 05/20/04 (B) 1,000 1,001 GMAC 7.500%, 07/15/05(E) 1,000 1,078 5.750%, 11/10/03 1,000 1,016 John Deere Capital 4.125%, 12/05/03 800 811 SLM (B) 1.520%, 01/25/06 2,000 1,999 15 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS May 31, 2003 CLASSIC INSTITUTIONAL SUPER SHORT INCOME PLUS FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- FINANCE--CONTINUED Unilever Capital 6.875%, 11/01/05 $ 500 $ 560 Verizon Global Funding 6.750%, 12/01/05 2,000 2,238 Washington Mutual Financial 8.250%, 06/15/05 600 672 -------- 20,383 -------- FOOD, BEVERAGE & TOBACCO (1.5%) ConAgra Foods 7.500%, 09/15/05 825 921 Kellogg 4.875%, 10/15/05 750 800 Safeway 3.625%, 11/05/03 1,500 1,506 -------- 3,227 -------- FORESTRY (0.4%) Weyerhaeuser 5.500%, 03/15/05 825 873 -------- HEALTHCARE (0.4%) Cardinal Health 6.000%, 01/15/06 825 911 -------- INDUSTRIAL (0.2%) IBM 5.250%, 12/01/03 450 459 -------- INSURANCE (1.7%) Allstate 7.875%, 05/01/05 1,000 1,113 ASIF Global (A) (B) 1.430%, 05/30/06 2,500 2,498 -------- 3,611 -------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- INVESTMENT BANKERS/BROKER DEALERS (3.4%) Bear Stearns 3.000%, 03/30/06 $ 1,500 $ 1,543 Credit Suisse First Boston, MTN (B) 1.540%, 02/22/05 2,000 2,001 Lehman Brothers Holdings 7.750%, 01/15/05 750 823 6.625%, 04/01/04 500 522 Morgan Stanley 7.750%, 06/15/05 1,250 1,398 5.625%, 01/20/04 500 513 Paine Webber Group 6.375%, 05/15/04 500 524 -------- 7,324 -------- METALS & MINING (0.2%) 3M 4.250%, 09/01/04 500 518 -------- MULTIMEDIA (1.0%) Viacom 7.750%, 06/01/05 700 782 7.150%, 05/20/05 300 331 Walt Disney (E) 3.900%, 09/15/03 1,000 1,006 -------- 2,119 -------- PETROLEUM & FUEL PRODUCTS (1.5%) BP Capital Markets PLC 4.000%, 04/29/05 500 523 Conoco 5.900%, 04/15/04 2,000 2,075 Texaco Capital 6.000%, 06/15/05 500 545 -------- 3,143 -------- 16 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REAL ESTATE (1.0%) EOP Operating LP 6.500%, 06/15/04 $ 1,025 $ 1,075 Simon Property Group LP 6.625%, 06/15/03 1,000 1,001 -------- 2,076 -------- REGIONAL GOVERNMENT AGENCY (0.5%) Province of Ontario 7.000%, 08/04/05 900 1,004 -------- RETAIL (2.3%) Federated Department Store 8.500%, 06/15/03 1,000 1,003 Kroger 7.375%, 03/01/05 755 816 Target 7.500%, 02/15/05 675 741 Wal-Mart Stores 4.150%, 06/15/05 500 525 1.238%, 02/22/05 (B) 1,875 1,873 -------- 4,958 -------- RUBBER & PLASTIC (0.5%) PPG Industries 6.750%, 08/15/04 1,000 1,050 -------- TELEPHONE & TELECOMMUNICATIONS (2.2%) BellSouth Telecommunications 6.500%, 06/15/05 700 766 GTE North 6.000%, 01/15/04 750 771 Vodafone Group PLC (A) 7.625%, 02/15/05 1,000 1,099 7.000%, 10/01/03 2,000 2,035 -------- 4,671 -------- Total Corporate Obligations (Cost $71,594) 72,386 -------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- COMMERCIAL PAPER (15.3%) ASSET-BACKED (1.5%) Ciesco (C) 1.240%, 06/19/03 $ 3,250 $ 3,248 -------- BASIC MATERIALS (1.8%) EI du Pont de Nemours (C) 1.180%, 07/16/03 4,000 3,994 -------- FINANCE (7.7%) American Express Card (C) 1.240%, 07/10/03 3,250 3,246 American Honda Finance (C) 1.190%, 07/08/03 3,500 3,496 BMW US Capital (C) 1.170%, 08/11/03 3,500 3,491 ING America Insurance Holdings (C) 1.220%, 06/19/03 3,250 3,248 USAA Capital (C) 1.155%, 08/12/03 3,225 3,217 -------- 16,698 -------- INSURANCE (0.9%) Marsh & McLennan (C) 1.210%, 06/24/03 2,000 1,999 -------- MEDICAL (1.5%) Merck (C) 1.220%, 06/20/03 3,250 3,248 -------- PRINTING & PUBLISHING (1.9%) New York Times (C) 1.250%, 06/03/03 4,000 4,000 -------- Total Commercial Paper (Cost $33,187) 33,187 -------- 17 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS May 31, 2003 CLASSIC INSTITUTIONAL SUPER SHORT INCOME PLUS FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES (12.2%) American Express Credit Account, Master Trust Ser 1999-1 5.600%, 11/15/06 $ 2,500 $ 2,594 BMW Vehicle Owner Trust 1.450%, 11/25/05 1,000 1,002 Capital Auto Receivables Asset Trust 2.270%, 01/17/06 575 583 Capital Auto Receivables Asset Trust, Ser 2002-5, Cl A2B 1.710%, 01/18/05 926 927 Chase Manhattan Auto Owner Trust, Ser 2000-A, Cl A3 6.210%, 12/15/04 53 53 CIT Group Home Loan Equity Trust (B) 1.408%, 08/20/18 929 928 Citibank Credit Card Master Trust I 5.300%, 01/09/06 2,000 2,048 Citibank Credit Card Master Trust, Ser 1999-7, Cl A 6.650%, 11/15/06 500 538 DaimlerChrysler Auto Trust, Ser 2001-D, Cl A4 3.780%, 02/06/07 500 520 DaimlerChrysler Master Owner Trust 1.360%, 02/15/08 1,875 1,875 Discover Card Master Trust, Ser 1998-6, Cl A 5.850%, 01/17/06 600 603 -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- ASSET-BACKED SECURITIES--CONTINUED Discover Card Master Trust, Ser 2001-4, Cl A 1.400%, 10/16/06 $ 725 $ 725 Ford Credit Owner Trust 4.830%, 02/15/05 1,540 1,555 GMAC Mortgage Corporation Loan Trust 1.410%, 04/25/33 1,000 1,000 Honda Auto Receivables Owners Trust 3.400%, 02/18/05 1,495 1,505 1.340%, 12/21/05 2,500 2,498 MBNA Master Credit Card Trust 5.250%, 02/15/06 1,350 1,366 Mellon Residential Funding, Ser 2001-HEIL, Cl A3 5.945%, 02/25/11 763 770 Money Store Home Equity Trust, Ser 1996-D, Cl A9 7.000%, 04/15/28 915 923 Nissan Auto Receivables Owner Trust 1.300%, 03/15/04 1,229 1,229 Toyota Auto Receivables Owner Trust 1.330%, 03/15/05 1,215 1,215 Toyota Auto Receivables Owner Trust, Ser 2000-B, Cl A3 6.760%, 08/15/04 51 51 Washington Mutual, Ser 2003-AR5, Cl A1 (B) 1.590%, 06/25/33 1,940 1,940 -------- Total Asset-Backed Securities (Cost $26,407) 26,448 -------- 18 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SHARES/FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT (1.5%) Boston Global Investment Trust -- Enhanced Portfolio (F) 3,197,980 $ 3,198 -------- Total Short-Term Investment (Cost $3,198) 3,198 -------- CASH EQUIVALENTS (6.9%) Dreyfus Government Cash Management Fund 7,425,000 7,425 Federated Prime Value Money Market Fund 7,425,000 7,425 -------- Total Cash Equivalents (Cost $14,850) 14,850 -------- REPURCHASE AGREEMENTS (7.3%) Merrill Lynch 1.295% dated 05/30/03, matures 06/02/03, repurchase price $7,865,899 (collateralized by FNMA obligations: total market value $8,025,365) (D) $ 7,865 $ 7,865 UBS Paine Webber 1.295% dated 05/30/03, matures 06/02/03, repurchase price of $7,993,739 (collateralized by FNMA obligations: total market value $8,155,930) (D) 7,993 7,993 -------- Total Repurchase Agreements (Cost $15,858) 15,858 -------- Total Investments (101.0%) (Cost $217,545) 218,504 -------- -------------------------------------------------------------------------------- VALUE (000) -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (-1.0%) Payable Upon Return of Securities Loaned $ (3,198) Investment Advisory Fees Payable (33) Administration Fees Payable (11) Shareholder Servicing Fees Payable (10) Custodian Fees Payable (2) Other Assets and Liabilities, Net 1,137 -------- Total Other Assets and Liabilities (2,117) -------- NET ASSETS: Fund Shares of the Institutional Shares (unlimited authorization -- no par value) based on 72,517,273 outstanding shares of beneficial interest 145,861 Fund Shares of the Trust Shares (unlimited authorization -- no par value) based on 34,687,618 outstanding shares of beneficial interest 69,722 Distributions in excess of net investment income (4) Accumulated net realized loss on investment (151) Net unrealized appreciation on investments 959 -------- Total Net Assets (100.0%) $216,387 ======== Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares ($146,590,180 / 72,517,273 shares) $2.02 ======== Net Asset Value, Offering and Redemption Price Per Share -- Trust Shares ($69,797,030 / 34,687,618 shares) $2.01 ======== THE FUND INVESTS IN SECURITIES WHOSE VALUE IS DERIVED FROM AN UNDERLYING POOL OF MORTGAGES OR CONSUMER LOANS. PREPAYMENT OF THESE LOANS SHORTENS THE STATED MATURITY OF THESE RESPECTIVE OBLIGATIONS AND MAY RESULT IN A LOSS OF PREMIUM, IF ANY HAS BEEN PAID. ESTIMATES OF SUCH PREPAYMENTS ARE USED TO CALCULATE EXPECTED MATURITY DATES AND THE FUND'S AVERAGE DURATION. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 30. 19 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATION (10.1%) U.S. Treasury Bill (C) 1.146%, 06/19/03 $12,000 $ 11,994 -------- Total U.S. Treasury Obligation (Cost $11,994) 11,994 -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (54.2%) FFCB 1.230%, 04/29/05 2,000 2,000 2.625%, 12/15/05 1,500 1,537 FHLB 3.125%, 11/14/03 2,000 2,017 3.625%, 10/15/04 1,250 1,290 2.250%, 05/15/06 1,250 1,268 1.875%, 06/15/06 2,500 2,505 FHLB Discount Note (C) 1.170%, 06/06/03 2,000 2,000 1.720%, 06/18/03 5,000 4,997 FHLMC 3.000%, 07/15/04 1,250 1,275 4.250%, 06/15/05 2,000 2,112 3.875%, 06/27/05 2,000 2,004 2.250%, 07/06/05 950 956 2.500%, 04/21/06 3,725 3,765 FHLMC Discount Note (C) 1.190%, 06/12/03 2,000 2,000 1.160%, 07/10/03 5,000 4,994 1.150%, 08/14/03 7,000 6,983 1.150%, 08/18/03 2,000 1,995 1.140%, 09/12/03 3,000 2,990 FNMA 3.250%, 12/15/03 1,500 1,517 3.875%, 03/15/05 (E) 1,250 1,306 2.000%, 03/24/05 875 875 3.125%, 08/15/05 1,500 1,506 5.500%, 02/15/06 1,000 1,101 -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS--CONTINUED FNMA Discount Note (C) 1.220%, 06/04/03 $ 2,000 $ 2,000 1.170%, 06/05/03 5,000 5,000 1.190%, 07/16/03 2,000 1,997 SLMA, MTN (B) 1.571%, 08/27/04 2,500 2,511 -------- Total U.S. Government Agency Obligations (Cost $64,199) 64,501 -------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (28.0%) FHLMC, Ser 1520 Cl H 6.250%, 11/15/07 2,122 2,175 FHLMC, Ser 1629 Cl HA 3.500%, 12/15/21 181 183 FHLMC, Ser 2368 Cl OB 5.000%, 09/15/07 543 543 FHLMC, Ser 2435 Cl CA 5.750%, 12/15/16 26 26 FHLMC, Ser 2447 Cl BA 5.500%, 05/15/07 290 293 FHLMC, Ser 2453 Cl BA 5.000%, 07/15/11 379 381 FHLMC, Ser 2485 Cl AF 5.500%, 12/15/15 1,535 1,585 FHLMC, Ser 2485 Cl AH 5.500%, 12/15/13 1,172 1,189 FHLMC, Ser 2497 Cl NM 4.500%, 05/15/14 961 987 FHLMC, Ser 2497 Cl PA 6.000%, 05/15/06 820 820 FHLMC, Ser 2508 Cl MF 5.000%, 04/15/13 1,619 1,669 FHLMC, Ser 2542 Cl AG 4.000%, 11/15/11 1,865 1,913 20 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS--CONTINUED FHLMC, Ser 2542 Cl AP 5.500%, 09/15/06 $ 248 $ 248 FHLMC, Ser 2542 CL DA 5.500%, 03/15/05 1,259 1,269 FHLMC, Ser 2542 Cl DL 4.500%, 05/15/11 2,000 2,059 FHLMC, Ser 2558 Cl BA 5.000%, 05/15/11 1,391 1,430 FHLMC, Ser 2572 Cl LB 5.000%, 04/15/16 1,000 1,034 FHLMC, Ser 2595 Cl AB 5.000%, 02/15/14 1,522 1,575 FHLMC, Ser 2595 Cl BM 3.500%, 12/15/17 2,126 2,147 FHLMC, Ser M80812 4.500%, 04/01/10 2,494 2,567 FHLMC, Ser M90803 4.500%, 03/01/08 2,428 2,522 FHLMC, Ser M90814 4.000%, 05/01/08 2,375 2,442 FNMA, Ser 43 Cl H 6.500%, 12/25/07 442 455 FNMA, Ser 701045 3.532%, 04/01/33 1,996 2,056 FNMA, Ser 9 Cl UA 4.000%, 11/25/16 1,750 1,783 -------- Total U.S. Government Agency Mortgage-Backed Obligations (Cost $33,237) 33,351 -------- -------------------------------------------------------------------------------- SHARES/FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT (1.1%) Boston Global Investment Trust -- Enhanced Portfolio (F) 1,293,000 $ 1,293 -------- Total Short-Term Investment (Cost $1,293) 1,293 -------- CASH EQUIVALENTS (4.2%) Dreyfus Government Cash Management Fund 2,500,000 2,500 Federated U.S. Government Fund 2,500,000 2,500 -------- Total Cash Equivalents (Cost $5,000) 5,000 -------- REPURCHASE AGREEMENTS (7.9%) Merrill Lynch 1.295% dated 05/30/03, matures 06/02/03, repurchase price $4,616,700 (collateralized by U.S. Government obligations: total market value $4,709,114) (D) $ 4,616 4,616 UBS Paine Webber 1.295% dated 05/30/03, mature 06/02/03, repurchase price $4,826,106 (collateralized by U.S. Government obligations: total market value $4,922,903) (D) 4,826 4,826 -------- Total Repurchase Agreements (Cost $9,442) 9,442 -------- Total Investments (105.5%) (Cost $125,165) 125,581 -------- 21 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND -------------------------------------------------------------------------------- VALUE (000) -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (-5.5%) Payable Upon Return of Securities Loaned $ (1,293) Investment Advisory Fees Payable (10) Administration Fees Payable (6) Custodian Fees Payable (1) Distribution Fees Payable (3) Other Assets and Liabilities, Net (5,233) -------- Total Other Assets and Liabilities (6,546) -------- NET ASSETS: Fund Shares of the Institutional Shares (unlimited authorization -- no par value) based on 47,304,951 outstanding shares of beneficial interest 95,026 Fund Shares of the Flex Shares (unlimited authorization -- no par value) based on 2,373,143 outstanding shares of beneficial interest 23,754 Distributions in excess of net investment income (3) Accumulated net realized loss on investment (158) Net unrealized appreciation on investment 416 -------- Total Net Assets (100.0%) $119,035 ======== Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares ($95,276,823 / 47,304,951 shares) $2.01 ======== Net Asset Value, Offering and Redemption Price Per Share -- Flex Shares ($23,758,584 / 2,373,143 shares) $10.01 ======== THE FUND INVESTS IN SECURITIES WHOSE VALUE IS DERIVED FROM AN UNDERLYING POOL OF MORTGAGES OR CONSUMER LOANS. PREPAYMENT OF THESE LOANS SHORTENS THE STATED MATURITY OF THESE RESPECTIVE OBLIGATIONS AND MAY RESULT IN A LOSS OF PREMIUM, IF ANY HAS BEEN PAID. ESTIMATES OF SUCH PREPAYMENTS ARE USED TO CALCULATE EXPECTED MATURITY DATES AND THE FUND'S AVERAGE DURATION. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 30. 22 -------------------------------------------------------------------------------- CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS (19.9%) FHLB 1.650%, 01/02/04 $125,000 $ 125,000 1.400%, 03/05/04 35,000 35,000 1.400%, 04/02/04 35,000 35,000 1.400%, 05/10/04 50,000 50,000 1.290%, 04/13/04 50,000 50,000 FHLB, Ser J803 1.650%, 06/03/03 45,000 45,000 FHLMC Discount Notes (C) 1.990%, 06/30/03 35,000 34,944 1.200%, 12/29/03 55,000 54,584 1.200%, 03/25/04 25,000 24,752 FNMA Discount Notes (C) 1.220%, 08/01/03 35,000 34,927 1.230%, 08/20/03 35,000 34,904 1.270%, 12/18/03 40,000 39,718 1.220%, 01/23/04 30,000 29,760 ---------- Total U.S. Government Agency Obligations (Cost $593,589) 593,589 ---------- COMMERCIAL PAPER (18.2%) ASSET-BACKED (7.7%) Atlantis One Funding (C) 1.200%, 08/22/03 35,000 34,904 Ciesco (C) 1.240%, 06/18/03 30,000 29,982 1.230%, 07/11/03 25,000 24,966 Dorada Finance, MTN (C) 1.200%, 08/26/03 20,000 19,943 Edison Asset (C) 1.200%, 08/22/03 25,000 24,932 Sigma Finance, MTN (C) 1.200%, 08/29/03 20,000 19,941 Starfish Global (C) 1.240%, 06/11/03 55,000 54,981 1.260%, 07/21/03 20,000 19,965 ---------- 229,614 ---------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- COMMERCIAL BANKS (3.3%) UBS Finance (C) 1.225%, 06/10/03 $100,000 $ 99,969 ---------- CONSUMER PRODUCTS (1.3%) Johnson & Johnson (C) 1.200%, 07/24/03 40,000 39,929 ---------- FINANCE (5.9%) Diageo Capital PLC (C) 2.080%, 07/07/03 75,000 74,847 Exxon Imperial (C) 1.200%, 06/10/03 50,000 49,985 General Electric Capital (C) 1.230%, 06/05/03 50,000 49,993 ---------- 174,825 ---------- Total Commercial Paper (Cost $544,337) 544,337 ---------- CORPORATE OBLIGATIONS (9.3%) COMMERCIAL BANKS (3.5%) Branch Banking & Trust (B) 1.260%, 01/26/04 55,000 55,000 First Tennessee Bank, Ser CD (B) 1.240%, 01/14/04 50,000 50,000 ---------- 105,000 ---------- FINANCE (5.0%) Beta Finance, MTN (A) (B) 1.236%, 01/07/04 50,000 50,000 Dorada Finance, MTN (A) (B) 1.241%, 11/28/03 50,000 50,000 Sigma Finance, MTN (A) (B) 1.256%, 12/03/03 50,000 50,000 ---------- 150,000 ---------- 23 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- INVESTMENT BANKERS/BROKER DEALERS (0.8%) Bear Stearns, Ser B, MTN (B) 1.775%, 04/16/04 $ 25,000 $ 25,058 ---------- Total Corporate Obligations (Cost $280,058) 280,058 ---------- CERTIFICATES OF DEPOSIT (4.0%) Branch Banking & Trust 1.240%, 06/06/03 55,000 55,000 First Tennessee Bank, Ser CD 1.250%, 06/04/03 35,000 35,000 1.210%, 08/06/03 30,000 30,000 ---------- Total Certificates of Deposit (Cost $120,000) 120,000 ---------- TAXABLE MUNICIPAL BONDS (10.5%) Alaska State, Housing Finance Agency, Ser C, RB, MBIA (B) 1.300%, 12/01/32 48,700 48,700 California State, Housing Finance Agency, Home Mortgage, Ser H, RB, FSA (B) 1.450%, 02/01/17 54,400 54,400 California State, Housing Finance Agency, Home Mortgage, Ser H, RB, MBIA (B) 1.280%, 08/01/19 13,820 13,820 California State, Housing Finance Agency, Home Mortgage, Ser P, RB, FSA (B) 1.300%, 08/01/29 36,500 36,500 Illinois State, Student Assistance Community, Ser B, RB (LOC: Bank One) (B) 1.330%, 05/01/10 22,900 22,900 -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) -------------------------------------------------------------------------------- TAXABLE MUNICIPAL BONDS--CONTINUED Illinois State, Student Assistance Community, Ser D, RB (LOC: Bank of America) (B) 1.330%, 09/01/23 $ 40,000 $ 40,000 New Jersey, Economic Development Pension Funding 1.310%, 02/15/29 40,000 40,000 New York City, Housing Development, Chelsea Centro Project, RB (LOC: Bayerische Landesbank) (B) 1.310%, 06/01/33 28,500 28,500 Newport News, Virginia, Economic Development Authority, Shipbuilding Project, Ser A, RB (LOC: First Union National Bank) (B) 1.370%, 07/01/31 4,720 4,720 Newport News, Virginia, Economic Development Authority, Shipbuilding Project, Ser B, RB (LOC: First Union National Bank) (B) 1.320%, 07/01/31 23,780 23,780 ---------- Total Taxable Municipal Bonds (Cost $313,320) 313,320 ---------- CASH EQUIVALENTS (9.4%) Dreyfus Cash Management Plus Fund 140,000,000 140,000 Federated Prime Value Money Market Fund 140,000,000 140,000 ---------- Total Cash Equivalents (Cost $280,000) 280,000 ---------- 24 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS (28.6%) ABN Amro 1.285% dated 05/30/03, matures 06/02/03, repurchase price $200,983,367 (collateralized by U.S. Government obligations: total market value $204,981,085) $200,962 $ 200,962 Bear Stearns 1.285% dated 05/30/03, matures 06/02/03, repurchase price $53,809,614 (collateralized by U.S. Government obligations: total market value $54,880,921) 53,804 53,804 Banque Nationale de Paris 1.285% dated 05/30/03, matures 06/02/03, repurchase price $123,472,996 (collateralized by U.S. Government obligations: total market value $125,929,204) 123,460 123,460 Lehman Brothers 1.265% dated 05/30/03, matures 06/02/03, repurchase price $75,450,622 (collateralized by U.S. Government obligations: total market value $76,953,809) 75,443 75,443 Merrill Lynch 1.295% dated 05/30/03, matures 06/02/03, repurchase price $124,227,494 (collateralized by U.S. Government obligations: total market value $126,700,651) 124,214 124,214 -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--CONTINUED UBS Paine Webber 1.295% dated 05/30/03, matures 06/02/03, repurchase price $275,090,701 (collateralized by U.S. Government obligations: total market value $280,562,456) $275,061 $ 275,061 ---------- Total Repurchase Agreements (Cost $852,944) 852,944 ---------- Total Investments (99.9%) (Cost $2,984,248) 2,984,248 ---------- OTHER ASSETS AND LIABILITIES (0.1%) Investment Advisory Fees Payable (442) Administration Fees Payable (155) Custodian Fees Payable (22) Transfer Agent Shareholder Servicing Fees Payable (7) Other Assets and Liabilities, Net 2,128 ---------- Total Other Assets and Liabilities 1,502 ---------- NET ASSETS: Fund Shares of the Institutional Shares (unlimited authorization -- no par value) based on 2,985,737,090 outstanding shares of beneficial interest 2,985,737 Accumulated net realized gain on investments 13 ---------- Total Net Assets (100.0%) $2,985,750 ========== Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares ($2,985,749,744 / 2,985,737,090 shares) $1.00 ========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 30. 25 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS (37.4%) FFCB 1.161%, 06/10/03 $ 60,000 $ 60,000 FHLB Discount Notes (C) 1.220%, 06/17/03 20,000 19,989 1.230%, 08/08/03 20,000 19,954 1.230%, 04/16/04 10,000 9,892 FHLB, Ser AK04 1.650%, 01/02/04 35,000 35,000 FHLB, Ser J803 1.650%, 06/03/03 25,000 25,000 FHLB, Ser KF04 1.300%, 04/12/04 25,000 25,000 FHLB, Ser NI04 1.400%, 05/10/04 25,000 25,000 FHLB, Ser QD04 1.300%, 06/07/04 15,000 15,000 FHLMC Discount Notes (C) 1.840%, 07/17/03 20,000 19,953 1.300%, 11/14/03 15,000 14,910 1.380%, 12/04/03 25,000 24,826 1.210%, 01/26/04 10,000 9,920 1.217%, 02/26/04 10,000 9,906 FNMA Discount Notes (C) 1.900%, 06/27/03 25,000 24,966 1.120%, 10/01/03 25,000 24,905 SLMA 1.191%, 11/20/03 25,000 25,000 ---------- Total U.S. Government Agency Obligations (Cost $389,221) 389,221 ---------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS (62.6%) ABN Amro 1.285% dated 05/30/03, matures 06/02/03, repurchase price $207,357,922 (collateralized by U.S. Government obligations: total market value $211,482,805) $207,336 $ 207,336 Bear Stearns 1.285% dated 05/30/03, matures 06/02/03, repurchase price $41,487,813 (collateralized by U.S. Government obligations: total market value $42,314,681) 41,483 41,483 Banque Nationale de Paris 1.285% dated 05/30/03, matures 06/02/03, repurchase price $50,378,090 (collateralized by U.S. Government obligations: total market value $51,381,237) 50,373 50,373 Lehman Brothers 1.265% dated 05/30/03, matures 06/02/03, repurchase price $41,562,438 (collateralized by U.S. Government obligations: total market value $42,391,641) 41,558 41,558 Merrill Lynch 1.295% dated 05/30/03, matures 06/02/03, repurchase price $49,847,867 (collateralized by U.S. Government obligations: total market value $50,840,644) 49,842 49,842 26 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--CONTINUED Morgan Stanley 1.295% dated 05/30/03, matures 06/02/03, repurchase price $35,016,691 (collateralized by U.S. Government obligations: total market value $35,714,237) $ 35,013 $ 35,013 UBS Paine Webber 1.295% dated 05/30/03, matures 06/02/03, repurchase price $225,276,681 (collateralized by U.S. Government obligations: total market value $229,761,791) 225,252 225,252 ---------- Total Repurchase Agreements (Cost $650,857) 650,857 ---------- Total Investments (100.0%) (Cost $1,040,078) 1,040,078 ---------- OTHER ASSETS AND LIABILITIES (0.0%) Investment Advisory Fees Payable (163) Administration Fees Payable (45) Custodian Fees Payable (7) Transfer Agent Shareholder Servicing Fees Payable (2) Other Assets and Liabilities, Net 205 ---------- Total Other Assets and Liabilities (12) ---------- -------------------------------------------------------------------------------- VALUE (000) -------------------------------------------------------------------------------- NET ASSETS: Fund Shares of the Institutional Shares (unlimited authorization -- no par value) based on 1,040,066,300 outstanding shares of beneficial interest $1,040,066 ---------- Total Net Assets (100.0%) $1,040,066 ========== Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares ($1,040,066,226 / 1,040,066,300 shares) $1.00 ========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 30. 27 STATEMENT OF NET ASSETS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS (30.3%) U.S. Treasury Bills (C) 1.140%, 06/19/03 $175,000 $ 174,900 1.190%, 06/26/03 250,000 249,795 U.S. Treasury Notes 4.250%, 11/15/03 150,000 151,862 3.000%, 11/30/03 15,000 15,109 ---------- Total U.S. Treasury Obligations (Cost $591,666) 591,666 ---------- REPURCHASE AGREEMENTS (69.8%) ABN Amro 1.205% dated 05/30/03, matures 06/02/03, repurchase price $373,675,448 (collateralized by U.S. Treasury obligations: total market value $381,111,423) (D) 373,638 373,638 Bear Stearns 1.205% dated 05/30/03, matures 06/02/03, repurchase price $58,833,073 (collateralized by U.S. Treasury obligations: total market value $62,699,431) (D) 58,827 58,827 Banque Nationale de Paris 1.205% dated 05/30/03, matures 06/02/03, repurchase price $87,556,026 (collateralized by U.S. Treasury obligations: total market value $89,298,855) (D) 87,547 87,547 CitiGroup 1.175% dated 05/30/03, matures 06/02/03, repurchase price $80,470,531 (collateralized by U.S. Treasury obligations: total market value $82,108,879) (D) 80,463 80,463 -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--CONTINUED Deutsche Bank 1.205% dated 05/30/03, matures 06/02/03, repurchase price $73,951,933 (collateralized by U.S. Treasury obligations: total market value $75,423,660) (D) $ 73,945 $ 73,945 Dresdner Bank 1.185% dated 05/30/03, matures 06/02/03, repurchase price $76,966,136 (collateralized by U.S. Treasury obligations: total market value $78,502,258) (D) 76,959 76,959 Greenwich Capital 1.205% dated 05/30/03, matures 06/02/03, repurchase price $58,763,901 (collateralized by U.S. Treasury obligations: total market value $59,938,282) (D) 58,758 58,758 JP Morgan Chase 1.185% dated 05/30/03, matures 06/02/03, repurchase price $31,652,564 (collateralized by U.S. Treasury obligations: total market value $32,286,066) (D) 31,649 31,649 Lehman Brothers 1.175% dated 05/30/03, matures 06/02/03, repurchase price $73,148,894 (collateralized by U.S. Treasury obligations: total market value $74,605,308) (D) 73,142 73,142 Merrill Lynch 1.155% dated 05/30/03, matures 06/02/03, repurchase price $35,023,813 (collateralized by U.S. Treasury obligations: total market value $35,721,097) (D) 35,020 35,020 28 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--CONTINUED Morgan Stanley 1.175% dated 05/30/03, matures 06/02/03, repurchase price $37,190,754 (collateralized by U.S. Treasury obligations: total market value $37,931,072) (D) $ 37,187 $ 37,187 UBS Paine Webber 1.205% dated 05/30/03, matures 06/02/03, repurchase price $374,724,119 (collateralized by U.S. Treasury obligations: total market value $382,182,602) (D) 374,686 374,686 ---------- Total Repurchase Agreements (Cost $1,361,821) 1,361,821 ---------- Total Investments (100.1%) (Cost $1,953,487) 1,953,487 ---------- OTHER ASSETS AND LIABILITIES (-0.1%) Investment Advisory Fees Payable (306) Administration Fees Payable (88) Custodian Fees Payable (14) Shareholder Servicing Fees Payable (230) Transfer Agent Shareholder Servicing Fees Payable (4) Other Assets and Liabilities, Net (595) ---------- Total Other Assets and Liabilities (1,237) ---------- -------------------------------------------------------------------------------- VALUE (000) -------------------------------------------------------------------------------- NET ASSETS: Fund Shares of the Institutional Shares (unlimited authorization -- no par value) based on 653,174,000 outstanding shares of beneficial interest $ 653,174 Fund Shares of the Corporate Trust Shares (unlimited authorization -- no par value) based on 1,298,447,406 outstanding shares of beneficial interest 1,298,447 Undistributed net investment income 4 Accumulated net realized gain on investments 625 ---------- Total Net Assets (100.0%) $1,952,250 ========== Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares ($653,340,356 / 653,174,000 shares) $1.00 ========== Net Asset Value, Offering and Redemption Price Per Share -- Corporate Trust Shares ($1,298,909,388 / 1,298,447,406 shares) $1.00 ========== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 30. 29 -------------------------------------------------------------------------------- KEY TO ABBREVIATIONS AND FOOTNOTES USED IN THE STATEMENTS OF NET ASSETS Cl Class 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 LOC Letter of Credit LP Limited Partnership MBIA Security insured by the Municipal Bond Insurance Association MTN Medium Term Note PLC Public Limited Company RB Revenue Bond Ser Series SLMA Student Loan Marketing Association (A) Securities sold within terms of a private placement memorandum, exempt from registration under section 144a of the Securities Act of 1993, as amended, and may be sold only to dealers in that program or other "accredited investors". (B) Adjustable Rate Security. The rate reported on the Statement of Net Assets is the rate in effect on May 31, 2003. Demand and interest rate reset features give these securities a shorter effective maturity date. (C) Rate shown is the effective yield at the date of purchase. (D) Tri-Party Repurchase Agreement (E) This security or a partial position of this security is on loan at May 31, 2003 (See Note 8 in the Notes to Financial Statements). The total value of securities on loan at May 31, 2003 was $646,680, $3,070,935, $1,254,226 for the Institutional Short-Term Bond Fund, Institutional Super Short Income Plus Fund and Institutional U.S. Government Super Short Income Plus Fund, respectively. (F) This security was purchased with cash collateral held from securities lending (See Note 8 in the Notes to Financial Statements). 30 STATEMENTS OF OPERATIONS (000) -------------------------------------------------------------------------------- STI CLASSIC FUNDS FOR THE YEAR ENDED MAY 31, 2003
CLASSIC CLASSIC CLASSIC INSTITUTIONAL CLASSIC CLASSIC INSTITUTIONAL CLASSIC INSTITUTIONAL U.S. GOVERNMENT INSTITUTIONAL INSTITUTIONAL U.S. TREASURY INSTITUTIONAL SUPER SHORT SECURITIES SUPER CASH MANAGEMENT U.S. GOVERNMENT SECURITIES SHORT-TERM INCOME SHORT INCOME MONEY MARKET SECURITIES MONEY MONEY BOND FUND PLUS FUND PLUS FUND FUND MARKET FUND MARKET FUND ------------- ------------- ---------------- --------------- ----------------- ----------- Income: Interest Income $ 537 $2,294 $1,404 $53,871 $17,325 $30,265 Net Income from Securities Lending 14 6 4 -- -- -- ------ ------ ------ ------- ------- ------- Total Income 551 2,300 1,408 53,871 17,325 30,265 ------ ------ ------ ------- ------- ------- Expenses: Investment Advisory Fees 116 541 284 6,350 2,100 4,027 Administration Fees 13 75 49 2,188 723 1,388 Shareholder Service Fees - Institutional Shares 48 230 174 -- -- -- Shareholder Service Fees - Corporate Trust Shares -- -- -- -- -- 2,928 Shareholder Service Fees - Trust Shares -- 41 -- -- -- -- Distribution Fees - Flex Shares -- -- 5 -- -- -- Custody Fees 1 4 2 71 24 45 Transfer Agent Shareholder Servicing Fees 1 3 2 86 28 55 Transfer Agent Fees - Institutional Shares 15 15 15 16 16 16 Transfer Agent Fees - Corporate Trust Shares -- -- -- -- -- 16 Transfer Agent Fees - Trust Shares -- 11 -- -- -- -- Transfer Agent Fees - Flex Shares -- -- 2 -- -- -- Transfer Agent Out of Pocket Expenses -- 3 2 82 15 60 Printing Fees 1 6 3 73 27 48 Professional Fees 1 5 3 95 32 61 Trustee Fees -- 1 -- 31 10 20 Registration Fees -- 1 2 111 33 68 Insurance and Other Fees 1 3 2 -- -- 17 ------ ------ ------ ------- ------- ------- Total Expenses 197 939 545 9,103 3,008 8,749 ------ ------ ------ ------- ------- ------- Less: Investment Advisory Fees Waived (48) (325) (198) (857) (92) (282) Administration Fees Waived -- -- -- (328) (177) (324) Shareholder Service Fees Waived - Institutional Shares (48) (230) (174) -- -- -- Shareholder Service Fees Waived - Trust Shares -- (8) -- -- -- -- Distribution Fees Waived - Flex Shares -- -- (2) -- -- -- Transfer Agent Fees Waived - Flex Shares -- -- (2) -- -- -- ------ ------ ------ ------- ------- ------- Net Expenses 101 376 169 7,918 2,739 8,143 ------ ------ ------ ------- ------- ------- Net Investment Income 450 1,924 1,239 45,953 14,586 22,122 ------ ------ ------ ------- ------- ------- Net Realized Gain on Securities Sold 392 73 192 13 -- 900 Net Change in Unrealized Appreciation on Investments 291 929 356 -- -- -- ------ ------ ------ ------- ------- ------- Increase in Net Assets Resulting from Operations $1,133 $2,926 $1,787 $45,966 $14,586 $23,022 ====== ====== ====== ======= ======= =======
Amounts designated as "--" are either $0 or round to $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 31 STATEMENTS OF CHANGES IN NET ASSETS (000) -------------------------------------------------------------------------------- STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31,
CLASSIC INSTITUTIONAL CLASSIC INSTITUTIONAL U.S. GOVERNMENT CLASSIC INSTITUTIONAL SUPER SHORT SECURITIES SUPER SHORT SHORT-TERM BOND FUND INCOME PLUS FUND INCOME PLUS FUND ---------------------------- ---------------------------- -------------------------- 06/01/02- 05/14/02*- 06/01/02- 04/15/02**- 06/01/02- 04/11/02***- 05/31/03 05/31/02 05/31/03 05/31/02 05/31/03 05/31/02 ---------- ------------ ----------- ------------- ---------- ------------- Operations: Net Investment Income $ 450 $ 18 $ 1,924 $ 68 $ 1,239 $ 56 Net Realized Gain (Loss) on Investments 392 -- 73 -- 192 (5) Net Change in Unrealized Appreciation on Investments 291 52 929 30 356 60 ------- ------- -------- -------- -------- ------- Increase in Net Assets from Operations 1,133 70 2,926 98 1,787 111 ------- ------- -------- -------- -------- ------- Dividends and Distributions to Shareholders: Net Investment Income: Institutional Shares (450) (18) (1,869) (72) (1,504) (62) Corporate Trust Shares -- -- -- -- -- -- Trust Shares -- -- (264) -- -- -- Flex Shares -- -- -- -- (16) -- Capital Gains: Institutional Shares (268) -- (14) -- (61) -- Corporate Trust Shares -- -- -- -- -- -- Trust Shares -- -- (1) -- -- -- ------- ------- -------- -------- -------- ------- Total Dividends and Distributions (718) (18) (2,148) (72) (1,581) (62) ------- ------- -------- -------- -------- ------- Capital Transactions (1): Institutional Shares: Proceeds from Shares Issued 11,283 16,107 190,846 55,308 123,870 32,057 Reinvestment of Cash Distributions 450 18 125 8 919 32 Cost of Shares Repurchased (7,547) (1) (78,814) (21,612) (57,852) (4,000) ------- ------- -------- -------- -------- ------- Increase (Decrease) in Net Assets from Institutional Share Transactions 4,186 16,124 112,157 33,704 66,937 28,089 ------- ------- -------- -------- -------- ------- Corporate Trust Shares: Proceeds from Shares Issued -- -- -- -- -- -- Cost of Shares Repurchased -- -- -- -- -- -- ------- ------- -------- -------- -------- ------- Increase (Decrease) in Net Assets from Corporate Trust Share Transactions -- -- -- -- -- -- ------- ------- -------- -------- -------- ------- Trust Shares (2): Proceeds from Shares Issued -- -- 76,338 -- -- -- Reinvestment of Cash Distributions -- -- 35 -- -- -- Cost of Shares Repurchased -- -- (6,651) -- -- -- ------- ------- -------- -------- -------- ------- Increase in Net Assets from Trust Share Transactions -- -- 69,722 -- -- -- ------- ------- -------- -------- -------- ------- Flex Shares (3): Proceeds from Shares Issued -- -- -- -- 25,108 -- Reinvestment of Cash Distributions -- -- -- -- 14 -- Cost of Shares Repurchased -- -- -- -- (1,368) -- ------- ------- -------- -------- -------- ------- Increase in Net Assets from Flex Share Transactions -- -- -- -- 23,754 -- ------- ------- -------- -------- -------- ------- Increase (Decrease) in Net Assets from Share Transactions 4,186 16,124 181,879 33,704 90,691 28,089 ------- ------- -------- -------- -------- ------- Total Increase (Decrease) in Net Assets 4,601 16,176 182,657 33,730 90,897 28,138 ------- ------- -------- -------- -------- ------- Net Assets: Beginning of Period 16,176 -- 33,730 -- 28,138 -- ------- ------- -------- -------- -------- ------- End of Period $20,777 $16,176 $216,387 $ 33,730 $119,035 $28,138 ======= ======= ======== ======== ======== ======= * Commenced operations on May 14, 2002. ** Commenced operations on April 15, 2002. *** Commenced operations on April 11, 2002. (1) See Note 6 in the Notes to Financial Statements for additional information. (2) The STI Classic Institutional Super Short Income Plus Fund Trust Shares commenced operations on October 3, 2002. (3) The STI Classic Institutional U.S. Government Securities Super Short Income Plus Flex Shares commenced operations on April 16, 2003. Amounts designated as "--" are either $0 or round to $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32 --------------------------------------------------------------------------------
CLASSIC INSTITUTIONAL CLASSIC INSTITUTIONAL CLASSIC INSTITUTIONAL CASH MANAGEMENT U.S. GOVERNMENT U.S. TREASURY MONEY MARKET FUND SECURITIES MONEY MARKET FUND SECURITIES MONEY MARKET FUND -------------------------- ----------------------------- ----------------------------- 06/01/02- 06/01/01- 06/01/02- 06/01/01- 06/01/02- 06/01/01- 05/31/03 05/31/02 05/31/03 05/31/02 05/31/03 05/31/02 ------------ ------------ ------------ ------------ ------------ ------------ Operations: Net Investment Income $ 45,953 $ 89,408 $ 14,586 $ 24,827 $ 22,122 $ 48,439 Net Realized Gain (Loss) on Investments 13 3 -- -- 900 870 Net Change in Unrealized Appreciation on Investments -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Increase in Net Assets from Operations 45,966 89,411 14,586 24,827 23,022 49,309 ------------ ------------ ------------ ------------ ------------ ------------ Dividends and Distributions to Shareholders: Net Investment Income: Institutional Shares (45,956) (89,408) (14,586) (24,874) (6,751) (11,535) Corporate Trust Shares -- -- -- -- (15,371) (36,903) Trust Shares -- -- -- -- -- -- Flex Shares -- -- -- -- -- -- Capital Gains: Institutional Shares -- -- -- -- (290) -- Corporate Trust Shares -- -- -- -- (844) -- Trust Shares -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Total Dividends and Distributions (45,956) (89,408) (14,586) (24,874) (23,256) (48,438) ------------ ------------ ------------ ------------ ------------ ------------ Capital Transactions (1): Institutional Shares: Proceeds from Shares Issued 8,275,886 8,269,151 2,229,173 3,594,311 3,267,354 2,490,341 Reinvestment of Cash Distributions 28,135 58,908 4,993 8,617 5,216 8,459 Cost of Shares Repurchased (8,727,887) (8,147,856) (2,219,814) (3,473,356) (3,170,785) (2,527,626) ------------ ------------ ------------ ------------ ------------ ------------ Increase (Decrease) in Net Assets from Institutional Share Transactions (423,866) 180,203 14,352 129,572 101,785 (28,826) ------------ ------------ ------------ ------------ ------------ ------------ Corporate Trust Shares: Proceeds from Shares Issued -- -- -- -- 3,516,733 3,633,178 Cost of Shares Repurchased -- -- -- -- (4,022,699) (3,132,415) ------------ ------------ ------------ ------------ ------------ ------------ Increase (Decrease) in Net Assets from Corporate Trust Share Transactions -- -- -- -- (505,966) 500,763 ------------ ------------ ------------ ------------ ------------ ------------ Trust Shares (2): Proceeds from Shares Issued -- -- -- -- -- -- Reinvestment of Cash Distributions -- -- -- -- -- -- Cost of Shares Repurchased -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Increase in Net Assets from Trust Share Transactions -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Flex Shares (3): Proceeds from Shares Issued -- -- -- -- -- -- Reinvestment of Cash Distributions -- -- -- -- -- -- Cost of Shares Repurchased -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Increase in Net Assets from Flex Share Transactions -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Increase (Decrease) in Net Assets from Share Transactions (423,866) 180,203 14,352 129,572 (404,181) 471,937 ------------ ------------ ------------ ------------ ------------ ------------ Total Increase (Decrease) in Net Assets (423,856) 180,206 14,352 129,525 (404,415) 472,808 ------------ ------------ ------------ ------------ ------------ ------------ Net Assets: Beginning of Period 3,409,606 3,229,400 1,025,714 896,189 2,356,665 1,883,857 ------------ ------------ ------------ ------------ ------------ ------------ End of Period $ 2,985,750 $ 3,409,606 $ 1,040,066 $ 1,025,714 $ 1,952,250 $ 2,356,665 ============ ============ ============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 33 FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS VALUE, NET AND UNREALIZED FROM FROM TOTAL BEGINNING OF INVESTMENT GAINS (LOSSES) TOTAL FROM NET INVESTMENT REALIZED DIVIDENDS AND PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS ------------ ---------- -------------- ---------- -------------- -------------- ------------- CLASSIC INSTITUTIONAL SHORT-TERM BOND FUND Institutional Shares 2003 $10.03 $0.24 $ 0.36 $0.60 $(0.24) $(0.15) $(0.39) 2002 (A) 10.00 0.01 0.03 0.04 (0.01) -- (0.01) CLASSIC INSTITUTIONAL SUPER SHORT INCOME PLUS FUND Institutional Shares 2003 $ 2.00 $0.04 $ 0.02 $0.06 $(0.04) --* $(0.04) 2002 (B) 2.00 0.01 -- 0.01 (0.01) -- (0.01) Trust Shares 2003 (C) $ 2.02 $0.02 $(0.01) $0.01 $(0.02) --* $(0.02) CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND Institutional Shares 2003 $ 2.00 $0.04 $ 0.01 $0.05 $(0.04) --* $(0.04) 2002 (D) 2.00 0.01 -- 0.01 (0.01) -- (0.01) Flex Shares 2003 (E) $10.00 $0.02 $ 0.01 $0.03 $(0.02) -- $(0.02)
+ Returns are for the period indicated and have not been annualized. * Amount represents less than $0.01 per share. (A) Commenced operations on May 14, 2002. All ratios have been annualized. (B) Commenced operations on April 15, 2002. All ratios have been annualized. (C) Commenced operations on October 3, 2002. All ratios have been annualized. (D) Commenced operations on April 11, 2002. All ratios have been annualized. (E) Commenced operations on April 16, 2003. All ratios have been annualized. Amounts designated as "--" are either $0 or round to $0. 34 --------------------------------------------------------------------------------
RATIO OF NET ASSET NET ASSETS, RATIO OF NET NET INVESTMENT VALUE, END TOTAL END OF EXPENSES TO INCOME TO OF PERIOD RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS ---------- ------- ------------ ------------------ ------------------ CLASSIC INSTITUTIONAL SHORT-TERM BOND FUND Institutional Shares 2003 $10.24 6.08% $ 20,777 0.52% 2.32% 2002 (A) 10.03 0.41 16,176 0.57 2.60 CLASSIC INSTITUTIONAL SUPER SHORT INCOME PLUS FUND Institutional Shares 2003 $ 2.02 3.16% $146,590 0.31% 1.84% 2002 (B) 2.00 0.30 33,730 0.36 2.44 Trust Shares 2003 (C) $ 2.01 0.64% $ 69,797 0.57% 1.43% CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND Institutional Shares 2003 $ 2.01 2.80% $ 95,277 0.23% 1.76% 2002 (D) 2.00 0.32 28,138 0.30 2.42 Flex Shares 2003 (E) $10.01 0.27% $ 23,758 0.47% 0.99%
RATIO OF RATIO OF NET INVESTMENT EXPENSES TO INCOME TO PORTFOLIO VAVERAGE NET ASSETS AVERAGE NET ASSETS TURNOVER (EXCLUDING WAIVERS) (EXCLUDING WAIVERS) RATE -------------------- ------------------- --------- CLASSIC INSTITUTIONAL SHORT-TERM BOND FUND Institutional Shares 2003 1.02% 1.82% 146% 2002 (A) 1.07 2.10 -- CLASSIC INSTITUTIONAL SUPER SHORT INCOME PLUS FUND Institutional Shares 2003 0.86% 1.29% 56% 2002 (B) 0.91 1.89 30 Trust Shares 2003 (C) 0.92% 1.08% 56% CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND Institutional Shares 2003 0.76% 1.23% 87% 2002 (D) 0.83 1.89 34 Flex Shares 2003 (E) 1.06% 0.40% 87% THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 35 FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- STI CLASSIC FUNDS FOR THE PERIODS ENDED MAY 31, (UNLESS OTHERWISE NOTED) FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
DISTRIBUTIONS TOTAL NET FROM DIVIDENDS NET ASSET VALUE, INVESTMENT TOTAL FROM DIVIDENDS FROM REALIZED AND BEGINNING OF PERIOD INCOME OPERATIONS NET INVESTMENT INCOME CAPITAL GAINS DISTRIBUTIONS ------------------- ---------- ---------- --------------------- ------------- ------------- CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND (A) Institutional Shares 2003 $1.00 $0.01 $0.01 $(0.01) $-- $(0.01) 2002 1.00 0.03 0.03 (0.03) -- (0.03) 2001 1.00 0.06 0.06 (0.06) -- (0.06) 2000 1.00 0.05 0.05 (0.05) -- (0.05) 1999* 1.00 0.02 0.02 (0.02) -- (0.02) For the years ended January 31: 1999 1.00 0.05 0.05 (0.05) -- (0.05) CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (B) Institutional Shares 2003 $1.00 $0.01 $0.01 $(0.01) $-- $(0.01) 2002 1.00 0.03 0.03 (0.03) -- (0.03) 2001 1.00 0.06 0.06 (0.06) -- (0.06) 2000 1.00 0.05 0.05 (0.05) -- (0.05) 1999* 1.00 0.02 0.02 (0.02) -- (0.02) For the years ended January 31: 1999 1.00 0.05 0.05 (0.05) -- (0.05) CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND Institutional Shares 2003 $1.00 $0.01 $0.01 $(0.01) $--++ $(0.01) 2002 1.00 0.02 0.02 (0.02) -- (0.02) 2001 1.00 0.06 0.06 (0.06) -- (0.06) 2000 1.00 0.05 0.05 (0.05) -- (0.05) 1999 1.00 0.05 0.05 (0.05) -- (0.05) Corporate Trust Shares 2003 $1.00 $0.01 $0.01 $(0.01) $--++ $(0.01) 2002 1.00 0.02 0.02 (0.02) -- (0.02) 2001 1.00 0.05 0.05 (0.05) -- (0.05) 2000 (C) 1.00 0.05 0.05 (0.05) -- (0.05)
+ Returns are for the period indicated and have not been annualized. (The performance in the above table does not reflect the deduction of taxes the shareholder would pay on fund distributions or redemption of fund shares.) ++ Amount represents less than $0.01 per share. * For the period February 1, 1999 to May 31, 1999. All ratios for the period have been annualized. (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. 36 --------------------------------------------------------------------------------
RATIO OF NET ASSET NET ASSETS, RATIO OF NET NET INVESTMENT VALUE, END TOTAL END OF EXPENSES TO INCOME TO OF PERIOD RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS ---------- ------- ------------ ------------------ ------------------ CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND (A) Institutional Shares 2003 $1.00 1.46% $2,985,750 0.25% 1.45% 2002 1.00 2.68 3,409,606 0.25 2.61 2001 1.00 6.13 3,229,400 0.25 5.91 2000 1.00 5.56 2,311,685 0.25 5.42 1999* 1.00 1.58 1,888,483 0.25 4.79 For the years ended January 31: 1999 1.00 5.46 884,490 0.23 5.31 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (B) Institutional Shares 2003 $1.00 1.40% $1,040,066 0.26% 1.39% 2002 1.00 2.61 1,025,714 0.27 2.49 2001 1.00 5.98 896,189 0.26 5.72 2000 1.00 5.39 650,626 0.25 5.27 1999* 1.00 1.56 617,089 0.25 4.73 For the years ended January 31: 1999 1.00 5.30 688,031 0.23 5.18 CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND Institutional Shares 2003 $1.00 1.30% $ 653,340 0.26% 1.23% 2002 1.00 2.28 551,599 0.26 2.25 2001 1.00 5.74 580,227 0.27 5.44 2000 1.00 5.25 329,725 0.25 5.17 1999 1.00 4.97 283,525 0.20 4.83 Corporate Trust Shares 2003 $1.00 1.10% $1,298,910 0.46% 1.05% 2002 1.00 2.08 1,805,066 0.46 2.11 2001 1.00 5.53 1,303,630 0.46 5.38 2000 (C) 1.00 5.02 1,138,541 0.45 4.93
RATIO OF RATIO OF NET INVESTMENT EXPENSES TO INCOME TO AVERAGE NET ASSETS AVERAGE NET ASSETS (EXCLUDING WAIVERS) (EXCLUDING WAIVERS) ------------------- ------------------- CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND (A) Institutional Shares 2003 0.29% 1.41% 2002 0.29 2.57 2001 0.30 5.86 2000 0.30 5.37 1999* 0.35 4.69 For the years ended January 31: 1999 0.35 5.19 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND (B) Institutional Shares 2003 0.29% 1.36% 2002 0.30 2.46 2001 0.29 5.69 2000 0.29 5.23 1999* 0.36 4.62 For the years ended January 31: 1999 0.36 5.05 CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND Institutional Shares 2003 0.29% 1.20% 2002 0.30 2.21 2001 0.30 5.41 2000 0.31 5.11 1999 0.47 4.56 Corporate Trust Shares 2003 0.49% 1.02% 2002 0.50 2.07 2001 0.50 5.34 2000 (C) 0.49 4.89 (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. (C) Commenced operations on June 3, 1999. All ratios for the period have been annualized. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 37 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 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 offering 41 funds as of May 31, 2003. The financial statements presented herein are those of the Classic Institutional Short-Term Bond Fund, the Classic Institutional Super Short Income Plus Fund, the Classic Institutional U.S. Government Securities Super Short Income Plus Fund, 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 (each a "Fund" and collectively the "Funds"). The financial statements of the remaining funds are presented separately. The assets of each Fund are segregated, and a shareholder's interest is limited to the Fund in which shares are held. The Funds' prospectus provides a description of the Funds' investment objectives, policies and strategies. 2. Significant Accounting Policies: The following is a summary of significant accounting policies followed by the Trust: USE OF ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect 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. SECURITY VALUATION -- If available, debt securities are priced based upon valuations provided by independent, third-party pricing agents. Such values generally reflect the last reported sales price if the security is actively traded. The third-party pricing agents may also value debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, or other methodologies designed to identify the market value for such securities. Debt obligations with remaining maturities of sixty days or less may be valued at their amortized cost, which approximates market value. 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. 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 the next interest readjustment date, the date that the principal owned can be recovered through demand, or the maturity of the security and are included in interest income. 38 -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS -- In connection with transactions involving repurchase agreements, a third party custodian bank takes possession of the underlying securities ("collateral"), the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. In the event of default on the obligation to repurchase, each Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. EXPENSES -- 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 -- Dividends 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. 3. Agreements and Other Transactions with Affiliates: INVESTMENT ADVISORY AGREEMENT -- The Trust and Trusco Capital Management, Inc. (the "Investment Adviser"), a wholly owned subsidiary of SunTrust Banks, Inc., have entered into advisory agreements dated June 15, 1993, and last amended March 10, 2003. Under terms of the agreement, the Funds are charged the following annual fees based upon average daily net assets: MAXIMUM ANNUAL ADVISORY FEE -------------- Classic Institutional Short-Term Bond Fund 0.60% Classic Institutional Super Short Income Plus Fund 0.50 Classic Institutional U.S. Government Securities Super Short Income Plus Fund 0.40 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 The Investment Adviser has voluntarily agreed to waive all or a portion of its fees (and to reimburse Fund expenses) in order to limit operating expenses. Fee waivers and expense reimbursements are voluntary and may be terminated at any time. ADMINISTRATION AGREEMENT -- The Trust and SEI Investments Global Funds Services (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 on the next $3 billion, 0.065% on the next $2 billion and 0.06% for over $10 billion. The Administrator has voluntarily agreed to waive all or a portion of their fees (and to reimburse Fund expenses) in order to limit operating expenses. Fee waivers and expense reimbursements are voluntary and may be terminated at any time. 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 DISTRIBUTION AGREEMENT -- The Trust and SEI Investments Distribution Co. (the "Distributor") are parties to a Distribution and Service Agreement dated November 21, 1995. The Distributor will receive no fees for its distribution services under this agreement for the Institutional, Corporate Trust, and Trust Shares of any Fund. With respect to the Flex Shares of the Classic Institutional U.S. Government Securities Super Short Income Plus Fund the Distributor receives 0.40%, pursuant to a Distribution and Service Plan. The Distributor has voluntarily agreed to waive all or a portion of its fees (and to reimburse Fund expenses) in order to limit operating expenses. Fee waivers and expense reimbursements are voluntary and may be terminated at any time. SHAREHOLDER SERVICING AGREEMENT -- The Classic Institutional U.S. Treasury Securities Money Market Fund has adopted a Shareholder Services Plan for the Corporate Trust Shares. The Fund pays SunTrust Bank ("SunTrust") a monthly shareholder services fee at an annual rate of up to 0.25% of the average daily net assets of the average daily net assets of the Fund's Corporate Trust Shares, which may be used by SunTrust to provide compensation to service providers that have agreed to provide shareholder support services for their customers who own Corporate Trust Shares of the Funds. The Fund is currently paying the SunTrust an annual rate of 0.20%. The Classic Institutional Short-Term Bond, Classic Institutional Super Short Income Plus, and Classic Institutional U.S. Government Securities Super Short Income Plus Funds have adopted a Shareholder Services Plan whereby each Fund pays SunTrust a monthly shareholder services fee at an annual rate of 0.25% of the average daily net assets of the Funds, which may be used by SunTrust to provide compensation to service providers that have agreed to provide shareholder support services for their customers who own shares of the Fund. Currently SunTrust is waiving its entire fee for the Institutional Shares, and a portion of the fee for the Trust Shares. These fee waivers are voluntary and may be terminated at any time. TRANSFER AGENCY AGREEMENTS -- The Trust and Federated Services Company are parties to a Transfer Agency servicing agreement dated May 14, 1994, as amended April 16, 2003, under which Federated Services Company provides transfer agency services to the Trust. The Trust and SunTrust Securities Inc. ("STS"), a wholly-owned subsidiary of SunTrust Banks, Inc., are parties to an agreement under which STS provides certain transfer agency account activity processing and servicing. The transfer agent shareholder service fees are based upon a monthly per account charge for the total shareholder accounts at the Trust's transfer agent. CUSTODIAN AGREEMENT -- SunTrust Bank (the "Custodian") acts as custodian for the Funds. The custodian is paid on the basis of the net assets and transaction costs 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. OTHER -- Certain officers of the Trust are also officers of the Administrator and/or the Distributor. Such officers are paid no fees by the Trust for serving as officers of the Trust. 40 -------------------------------------------------------------------------------- The Trust has entered into an agreement with SunTrust Robinson Humphrey, a division of SunTrust Capital Markets, Inc. which is a direct non-bank subsidiary of SunTrust Banks, Inc. to act as an agent in placing repurchase agreements for the Trust. For the year ended May 31, 2003, the following Funds paid SunTrust Robinson Humphrey through a reduction in the yield earned by the Funds on those repurchase agreements: FEES ---------- Classic Institutional Super Short Income Plus Fund $ 6,802 Classic Institutional U.S. Government Securities Super Short Income Plus Fund 4,929 Classic Institutional Cash Management Money Market Fund 272,480 Classic Institutional U.S. Government Securities Money Market Fund 156,978 Classic Institutional U.S. Treasury Securities Money Market Fund 719,903 The Trust has entered into an agreement with the Distributor to act as an agent in placing repurchase agreements for the Trust. For the year ended May 31, 2003, the following Funds paid the Distributor through a reduction in the yield earned by the Funds on those repurchase agreements: FEES ---------- Classic Institutional Cash Management Money Market Fund $ 196 Classic Institutional U.S. Government Securities Money Market Fund 1,019 4. 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, 2003, were as follows: PURCHASES SALES (000) (000) ---------- ---------- Classic Institutional Short-Term Bond Fund $12,982 $2,097 Classic Institutional Super Short Income Plus Fund 54,335 6,307 Classic Institutional U.S. Government Super Short Income Plus Fund 2,498 -- The cost of purchases and proceeds from sales of U.S. Government securities were as follows: PURCHASES SALES (000) (000) ---------- ---------- Classic Institutional Short-Term Bond Fund $18,561 $21,722 Classic Institutional Super Short Income Plus Fund 41,750 17,174 Classic Institutional U.S. Government Securities Super Short Income Plus Fund 51,460 22,255 5. Federal Tax Policies and Information: 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. 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 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 of America. 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. To the extent theses differences are permanent in nature, 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, the classification of short-term capital gains and ordinary income for tax purposes, and paydowns on mortgage-backed securities have been reclassified to/from the following accounts: UNDISTRIBUTED ACCUMULATED NET INVESTMENT REALIZED INCOME/(LOSS) GAIN/(LOSS) (000) (000) ----------- ----------- Classic Institutional Super Short Income Plus Fund $ 205 $ (205) Classic Institutional U.S. Government Securities Super Short Income Plus Fund 278 (278) Classic Institutional Cash Management Money Market Fund 3 (3) The tax character of dividends and distributions paid during the periods ended May 31, 2003 and May 31, 2002 were as follows (000): ORDINARY INCOME TOTALS 2003 2002 2003 2002 -------- -------- -------- -------- Classic Institutional Short-Term Bond Fund $ 718 $ 18 $ 718 $ 18 Classic Institutional Super Short Income Plus Fund 2,148 72 2,148 72 Classic Institutional U.S. Government Securities Super Short Income Plus Fund 1,581 62 1,581 62 Classic Institutional Cash Management Money Market Fund 45,956 89,408 45,956 89,408 Classic Institutional U.S. Government Securities Money Market Fund 14,586 24,874 14,586 24,874 Classic Institutional U.S. Treasury Securities Money Market Fund 23,256 48,438 23,256 48,438 42 -------------------------------------------------------------------------------- As of May 31, 2003, the components of Distributable Earnings/(Accumulated Losses) on a tax basis were as follows (000):
UNDISTRIBUTED UNDISTRIBUTED UNREALIZED POST ORDINARY LONG-TERM APPRECIATION OCTOBER INCOME CAPITAL GAIN (DEPRECIATION) LOSSES ------------- ------------- -------------- ------- Classic Institutional Short-Term Bond Fund $ 124 $-- $343 $-- Classic Institutional Super Short Income Plus Fund (4) -- 959 (151) Classic Institutional U.S. Government Securities Super Short Income Plus Fund (3) -- 416 (158) Classic Institutional Cash Management Money Market Fund 13 -- -- -- Classic Institutional U.S. Treasury Securities Money Market Fund 593 36 -- -- Amounts designated as "--" are either $0 or have been rounded to $0.
Post-October losses represent losses realized on investment transactions from November 1, 2002 through May 31, 2003, that in accordance with Federal income tax regulations the Funds may elect to defer and treat as having arisen in the following fiscal year. At May 31, 2003, the total cost of securities and the net realized gains or losses on securities sold for Federal income tax purposes was not different from amounts reported for financial reporting purposes. The aggregate gross unrealized appreciation and depreciation for securities held by the funds at May 31, 2003, were as follows:
AGGREGATE AGGREGATE FEDERAL GROSS GROSS NET TAX UNREALIZED UNREALIZED UNREALIZED COST APPRECIATION DEPRECIATION APPRECIATION (000) (000) (000) (000) ---------- ------------ ------------ ------------ Classic Institutional Short-Term Bond Fund $ 20,926 $ 346 $ (3) $ 343 Classic Institutional Super Short Income Plus Fund 217,545 1,031 (72) 959 Classic Institutional U.S. Government Securities Super Short Income Plus Fund 125,165 450 (34) 416
43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 6. Capital Share Transactions: Capital share transactions for the Funds were as follows (000):
CLASSIC CLASSIC CLASSIC INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL SHORT-TERM SUPER SHORT U.S. GOVERNMENT SECURITIES BOND INCOME PLUS SUPER SHORT INCOME PLUS FUND FUND FUND --------------------------- ---------------------------- ----------------------------- 06/01/02 - 05/14/02*- 06/01/02 - 04/15/02**- 06/01/02 - 04/11/02***- 05/31/03 05/31/02 05/31/03 05/31/02 05/31/03 05/31/02 ---------- ---------- ---------- ----------- ---------- ------------ Shares Issued and Redeemed: Institutional Shares: Shares Issued 1,113 1,610 94,687 27,654 61,485 16,028 Shares Issued in Lieu of Cash Distributions 44 2 62 4 455 16 Shares Redeemed (741) -- (39,084) (10,806) (28,680) (2,000) ---------- ---------- ---------- ----------- ---------- ----------- Net Institutional Share Transactions 416 1,612 55,665 16,852 33,260 14,044 ---------- ---------- ---------- ----------- ---------- ----------- Trust Shares: Shares Issued -- -- 37,979 -- -- -- Shares Issued in Lieu of Cash Distributions -- -- 18 -- -- -- Shares Redeemed -- -- (3,309) -- -- -- ---------- ---------- ---------- ----------- ---------- ----------- Net Trust Share Transactions -- -- 34,688 -- -- -- ---------- ---------- ---------- ----------- ---------- ----------- Flex Shares: Shares Issued -- -- -- -- 2,509 -- Shares Issued in Lieu of Cash Distributions -- -- -- -- 1 -- Shares Redeemed -- -- -- -- (137) -- ---------- ---------- ---------- ----------- ---------- ----------- Net Flex Share Transactions -- -- -- -- 2,373 -- ---------- ---------- ---------- ----------- ---------- ----------- Net Change in Capital Shares 416 1,612 90,353 16,852 35,633 14,044 ========== ========== ========== =========== ========== ===========
* Commenced operations on May 14, 2002. ** Commenced operations on April 15, 2002. *** Commenced operations on April 11, 2002. 44 --------------------------------------------------------------------------------
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 ------------------------- ------------------------- --------------------------- 06/01/02 - 06/01/01 - 06/01/02 - 06/01/01 - 06/01/02 - 06/01/01 - 05/31/03 05/31/02 05/31/03 05/31/02 05/31/03 05/31/02 ---------- ---------- ---------- ---------- ---------- ---------- Shares Issued and Redeemed: Institutional Shares: Shares Issued 8,275,886 8,269,151 2,229,173 3,594,312 3,267,354 2,490,341 Shares Issued in Lieu of Cash Distributions 28,135 58,908 4,993 8,616 5,216 8,459 Shares Redeemed (8,727,887) (8,147,856) (2,219,814) (3,473,356) (3,170,785) (2,527,626) ---------- ---------- ---------- ---------- ---------- ---------- Net Institutional Share Transactions (423,866) 180,203 14,352 129,572 101,785 (28,826) ---------- ---------- ---------- ---------- ---------- ---------- Corporate Trust Shares: Shares Issued -- -- -- -- 3,516,733 3,633,178 Shares Redeemed -- -- -- -- (4,022,699) (3,132,415) ---------- ---------- ---------- ---------- ---------- ---------- Net Corporate Trust Share Transactions -- -- -- -- (505,966) 500,763 ---------- ---------- ---------- ---------- ---------- ---------- Net Change in Capital Shares (423,866) 180,203 14,352 129,572 (404,181) 471,937 ========== ========== ========== ========== ========== ==========
7. Concentrations/Risk: 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 invest primarily in money market instruments maturing in 397 days or less whose ratings are within one of the two highest ratings categories assigned by a nationally recognized statistical rating agency, or, if not rated, are believed to be of comparable quality. The ability of the issuers of the securities held by the Fund to meet their obligations may be affected by economic developments in a specific industry, state or region. Certain securities are backed by letters of credit from various financial institutions and financial guaranty assurance agencies. These letters of credit enhance the credit quality of the individual securities; however, if any of the financial institutions or financial guaranty assurance agencies' credit quality should deteriorate, it could cause the individual security's credit quality to change. Additionally, if any of the Funds concentrate their letters of credit in any one financial institution, the risk of credit quality deterioration increases. 45 NOTES TO FINANCIAL STATEMENTS (concluded) -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 8. Securities Lending Each Fund may lend portfolio securities to brokers, dealers and other financial organizations that meet capital and other credit requirements or other criteria established by the Trust's Board of Trustees. These loans may not exceed 33 1/3% of the total asset value of the Fund (including the loan collateral). No Fund will lend portfolio securities to its investment adviser or its affiliates unless it has applied for and received specific authority to do so from the Securities and Exchange Commission. Loans of portfolio securities will be fully collateralized by cash. The value of the collateral is at least equal to the market value of the securities loaned. However, due to market fluctuations during the day, the value of securities loaned on a particular day may, during the course of the day, exceed the value of collateral. On each business day, the amount of collateral is adjusted based on the prior day's market fluctuations and the current day's lending activity. Income from lending activity is determined by the amount of interest earned on collateral, less any amounts payable to the borrowers of the securities and the lending agent. Lending securities involves certain risks, including the risk that the Fund may be delayed or prevented from recovering the collateral if the borrower fails to return the securities. Cash collateral received in connection with securities lending is invested in the Boston Global Investment Trust -- Enhanced Portfolio. This investment consists of money market instruments including money market mutual funds registered under the Investment Company Act of 1940, commercial paper, repurchase agreements, U.S. Treasury Bills and U.S. Agency Obligations. 46 REPORT OF INDEPENDENT AUDITORS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 To the Shareholders and Board of Trustees of STI Classic Funds: In our opinion, the accompanying statements of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Classic Institutional Short-Term Bond Fund, Classic Institutional Super Short Income Plus Fund, Classic Institutional U.S. Government Securities Super Short Income Plus Fund, Classic Institutional Cash Management Money Market Fund, Classic Institutional U.S. Government Securities Money Market Fund and Classic Institutional U.S. Treasury Securities Money Market Fund (six of the funds constituting STI Classic Funds, hereafter referred to as the "Funds") at May 31, 2003, the results of each of their operations for the year then ended, the changes in each of their net assets and the financial highlights for each of the two years (or periods) then ended and the financial highlights of the Classic Institutional Cash Management Money Market Fund and Classic Institutional U.S. Government Securities Money Market Fund for the year ended January 31, 1999, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included physical inspection of securities at May 31, 2003, provide a reasonable basis for our opinion. The financial highlights for each of the three years (or periods) ended May 31, 2001 were audited by other independent accountants who have ceased operations. Those independent accountants expressed an unqualified opinion on those financial statements in their report dated July 18, 2001. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania July 24, 2003 47 TRUSTEES AND OFFICERS OF THE STI CLASSIC FUNDS -------------------------------------------------------------------------------- Information pertaining to the trustees and officers of the Trust is set forth below. Trustees who are not deemed to be "interested persons" of the Trust as defined in the 1940 Act are referred to as "Independent Trustees." Trustees who are deemed to be "interested persons" of the Trust are referred to as "Interested Trustees." Messrs. Courts and Ridley are Trustees who may be deemed to be "interested" persons of the Trust.
------------------------------------------------------------------------------------------------------------------------------------ TERM OF NUMBER OF OFFICE PORTFOLIOS AND PRINCIPAL IN STI CLASSIC NAME POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX OTHER DIRECTORSHIPS ADDRESS, HELD WITH TIME DURING PAST OVERSEEN BY HELD BY AND AGE1 THE TRUST SERVED2 5 YEARS BOARD MEMBER3 BOARD MEMBER4 ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED BOARD MEMBERS5 ------------- Richard W. Courts, II, Trustee Since Chairman of the Board, Atlantic 48 Current Trustee of STI 67 November, Investment Company, 1970 to the Classic Variable Trust. 2001 present. ------------------------------------------------------------------------------------------------------------------------------------ Clarence H. Ridley, 61 Trustee Since Chairman of the Board; Haverty 48 Current Trustee of STI November, Furniture Companies, 2001 to the Classic Variable Trust. 2001 present; Partner, King and Spaulding LLP (law firm), 1971 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ INDEPENDENT BOARD MEMBERS ------------- Thomas Gallagher, 55 Trustee Since President, Genuine Parts Company 48 Director, National Service May, 2000 Wholesale Distribution, 1970 to the Industries; Director, Oxford present. Industries. Current Trustee of STI Classic Variable Trust. ------------------------------------------------------------------------------------------------------------------------------------ F. Wendell Gooch, 70 Trustee Since Retired. 48 Current Trustee on the Board May, 1992 Board of Trustees for the SEI Family of Funds, The Capitol Mutual Funds and STI Classic Variable Trust. ------------------------------------------------------------------------------------------------------------------------------------ James O. Robbins, 60 Trustee Since President and Chief Executive 48 Director, NCR; Director, May, 2000 Officer, Cox Communications, Inc., Cox Communications, 1983 to the present. Current Trustee of STI Classic Variable Trust. ------------------------------------------------------------------------------------------------------------------------------------ Jonathan T. Walton, 73 Trustee Since Retired. 48 Trustee, W.K. Kellogg Trust. February, Current Trustee of STI 1998 Classic Variable Trust. ------------------------------------------------------------------------------------------------------------------------------------
48 -------------------------------------------------------------------------------- (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ TERM OF NUMBER OF OFFICE PORTFOLIOS AND PRINCIPAL IN STI CLASSIC NAME POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX OTHER DIRECTORSHIPS ADDRESS, HELD WITH TIME DURING PAST OVERSEEN BY HELD BY AND AGE1 THE TRUST SERVED2 5 YEARS BOARD MEMBER BOARD MEMBER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS -------- James R. Foggo, 38 President Since Vice President and Assistant N/A N/A November, Secretary of SEI Investments since 2000 1998. Associate, Paul Weiss, Rifkind, Wharton & Garrison, 1998; Associate, Baker & McKenzie 1995-1998. ------------------------------------------------------------------------------------------------------------------------------------ Timothy D. Barto, 35 Vice Since Employed by SEI Investments since N/A N/A President November, October 1999. Vice President and and 2001 Assistant Secretary of the Adviser, Secretary Administrator and Distributor since December 1999. Associate at Dechert, Price & Rhoads (1997-1999). ------------------------------------------------------------------------------------------------------------------------------------ Todd B. Cipperman, 37 Vice Since Senior Vice President and General N/A N/A President May, 2000 Counsel of SEI Investments; Senior and Vice President, General Counsel and Assistant Secretary of the Adviser, the Secretary Administrator and the Distributor since 2000.Vice President and Assistant Secretary of SEI Investments, the Adviser, the Administrator and the Distributor, 1995-2000. ------------------------------------------------------------------------------------------------------------------------------------ Lydia A. Gavalis, 38 Vice Since Vice President and Assistant N/A N/A President May, 1998 Secretary of SEI Investments, the and Adviser, the Administrator and the Assistant Distributor since 1998. Assistant Secretary General Counsel and Director of Arbitration, Philadelphia Stock Exchange (1989-1998). ------------------------------------------------------------------------------------------------------------------------------------ Christine M. Vice Since Employed by SEI Investments N/A N/A McCullough, 42 President May, 2000 since November 1, 1999. Vice and President and Assistant Secretary of Assistant the Adviser, the Administrator and Secretary the Distributor since December 1999. Associate at White and Williams LLP, 1991-1999. ------------------------------------------------------------------------------------------------------------------------------------ 1 Each trustee and officer may be contacted by writing to c/o STI Classic Funds, SEI Investments Company, Oaks, PA 19456. 2 Each trustee shall hold office during the lifetime of this Trust until the election and qualification of his or her successor, or until he or she sooner dies, resigns or is removed in accordance with the Trust's Declaration of Trust. 3 The "STI Classic Complex" consists of all registered investment companies for which Trusco Capital Management, Inc. serves as investment adviser. As of May 31, 2003, the STI Classic Complex consisted of 48 Funds. 4 Directorships of companies required to report to the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e., "public companies") or other investment companies registered under the 1940 Act. 5 Mr. Courts is deemed an interested trustee because of his directorships with affiliates of the Adviser. Mr. Ridley is deemed an interested trustee because of his material business relationships with the parent to the Adviser.
49 TRUSTEES AND OFFICERS OF THE STI CLASSIC FUNDS (concluded) -------------------------------------------------------------------------------- (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ TERM OF NUMBER OF OFFICE PORTFOLIOS AND PRINCIPAL IN STI CLASSIC NAME POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX OTHER DIRECTORSHIPS ADDRESS, HELD WITH TIME DURING PAST OVERSEEN BY HELD BY AND AGE1 THE TRUST SERVED2 5 YEARS BOARD MEMBER BOARD MEMBER ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS (CONTINUED) -------- Sherry Kajdan Vice Since Vice President and Assistant N/A N/A Vetterlein, 40 President February, Secretary of SEI Investments since and 2000 January 2001. Shareholder/Partner, Assistant Buchanan Ingersoll Professional Secretary Corporation (law firm) (1992-2000). ------------------------------------------------------------------------------------------------------------------------------------ William E. Vice Since Vice President and Assistant N/A N/A Zitelli, Jr., 34 President November, Secretary of the Administrator and and 2000 Distributor since August 2000. Vice Assistant President, Merrill Lynch & Co. Asset Secretary Management Group (1998 - 2000). Associate at Pepper Hamilton LLP (1997 - 1998). ------------------------------------------------------------------------------------------------------------------------------------ Jennifer Spratley, 34 Treasurer Since Funds Accounting Director, SEI N/A N/A and May, 2000 Investments, 1999 - present; Audit CFO Manager, Ernst & Young LLP (1991-1999). ------------------------------------------------------------------------------------------------------------------------------------ 1 Each trustee and officer may be contacted by writing to c/o STI Classic Funds, SEI Investments Company, Oaks, PA 19456.
50 NOTICE TO SHAREHOLDERS -------------------------------------------------------------------------------- STI CLASSIC FUNDS MAY 31, 2003 (UNAUDITED) For shareholders that do not have a May 31, 2003 tax year end, this notice is for informational purposes only. For shareholders with a May 31, 2003 tax year end, please consult your tax adviser as to the pertinence of this notice. For the fiscal period ended May 31, 2003, 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 Short-Term Bond Fund 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Classic Institutional Super Short Income Plus Fund 0.00% 0.00% 100.00% 0.00% 100.00% 0.00% Classic Institutional U.S. Government Securities Super Short Income Plus Fund 0.00% 0.00% 100.00% 0.00% 100.00% 0.00% Classic Institutional Cash Management Money Market Fund 0.00% 0.00% 100.00% 0.00% 100.00% 0.00% Classic Institutional U.S. Government Securities Money Market Fund 0.00% 0.00% 100.00% 0.00% 100.00% 0.00% Classic Institutional U.S. Treasury Securities Money Market Fund 0.00% 0.00% 100.00% 0.00% 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".
51 NOTES -------------------------------------------------------------------------------- NOTES -------------------------------------------------------------------------------- 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-004-0300 ITEM 2. CODE OF ETHICS. Not applicable - only effective for annual reports for periods ending on or after July 15, 2003. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable - only effective for annual reports for periods ending on or after July 15, 2003. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable - only effective for annual reports for periods ending on or after December 15, 2003. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. (RESERVED) ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. (RESERVED) ITEM 9. CONTROLS AND PROCEDURES. (a) The certifying officers, whose certifications are included herewith, have evaluated the registrant's disclosure controls and procedures within 90 days of the filing date of this report. In their opinion, based on their evaluation, the registrant's disclosure controls and procedures are adequately designed, and are operating effectively to ensure, that information required to be disclosed by the registrant in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of our evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEMS 10. EXHIBITS. (a)(1) Not applicable. (a)(2) A separate certification for the principal executive officer and the principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed herewith. (b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing as an Exhibit. -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) STI Classic Funds By (Signature and Title)* /s/ James R. Foggo ------------------ James R. Foggo, President Date July 25, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ James R. Foggo ------------------ James R. Foggo, President Date July 25, 2003 By (Signature and Title)* /s/ Jennifer E. Spratley ------------------------ Jennifer E. Spratley, CFO Date July 25, 2003 * Print the name and title of each signing officer under his or her signature.