-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A6XXrs43EjkHYrUoa69v+tj/EA0YljRwy1ltvUmhGt+JVep/4cR0FhJJA2G8RjjN Xfq4bbMKGYB/ftOFTfZETQ== 0000935069-04-001043.txt : 20040809 0000935069-04-001043.hdr.sgml : 20040809 20040809130927 ACCESSION NUMBER: 0000935069-04-001043 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040531 FILED AS OF DATE: 20040809 EFFECTIVENESS DATE: 20040809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STI CLASSIC FUNDS CENTRAL INDEX KEY: 0000883939 IRS NUMBER: 232678674 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06557 FILM NUMBER: 04960373 BUSINESS ADDRESS: STREET 1: 2 OLIVER STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6109896602 MAIL ADDRESS: STREET 1: 530 E SWEDESFORD ROAD CITY: WAYNE STATE: PA ZIP: 19087-1693 N-CSR 1 stifixincomear5_04.txt STI CLASSIC FIXED INCOME AR 5_04 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 811-06557 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, 2004 DATE OF REPORTING PERIOD: MAY 31, 2004 ITEM 1. REPORTS TO STOCKHOLDERS. [GRAPHIC OMITTED] ANNUAL --------------------------------------- FINANCIAL REPORT --------------------------------------- STI CLASSIC FIXED INCOME FUNDS --------------------------------------- A Family of Mutual Funds --------------------------------------- May 31, 2004 [STI CLASSIC FUNDS LOGO OMITTED] BACKED BY TRADITION. STRENGTHENED BY EXPERIENCE.(SM) Dear Valued STI Classic Funds Shareholder: For investors, the year ending May 31, 2004 was decidedly brighter and a welcome change from the post-bubble weakness that began in early 2000. The economy grew at an above-average pace, helped significantly by lower interest rates and tax rebates. This in turn lifted corporate profits and equity prices, both domestic and international. However, bond yields bottomed during the year in response to the risks associated with a strengthening economy. I will expand on these developments in the following paragraphs and share Trusco Capital's outlook. Generally, after a period of vulnerability, the character of the economic expansion and the markets appear poised to shift to a more "traditional," sustained, cyclical nature, which historically has been favorable for the equity markets. Economic growth during the past year was very strong, statistically speaking. Available data showed inflation-adjusted growth of nearly 5% on a year-over-year basis, matching the best periods of the record expansion of the 1990s. However, much of the growth could be traced directly to the massive and simultaneous stimulus from Federal tax cuts/rebates and low mortgage/bond yields. While this stimulus was an essential element to increased spending, the expansion was not yet self-sustaining, and so was viewed as vulnerable to setbacks. Sales growth improved as did corporate profits, but the rebound in earnings was due in large part to corporate self-help measures that were manifested in improved productivity. A resumption of job growth was seen as the litmus test to sustainability. This potential vulnerability, combined with low core inflation, kept the Federal Reserve interest rate policy accommodative during the year, with the key Fed Funds rate holding at 1%; the lowest level since 1958. The S&P 500 rose 18.33% on a total return basis in the year ended May 31, 2004, with the bulk of the rise concentrated in the third and fourth quarters of last year. Mid-cap and small-cap stocks were even stronger, with the S&P 400 MidCap index posting a 26.73% gain and the Russell 2000 Value index rising 30.29%. On the international front, the MSCI EAFE index gained 33.17%. Cyclically sensitive sectors led the market as did those closely linked to commodities. The materials, energy, industrials, and information technology sectors each rose more than 20% during the twelve months ended May 31, 2004, while consumer discretionary and financial stocks also posted above market returns. The above average gains in the commodity price sensitive sectors helped the Value style generally outperform Growth style for the period. A final theme that dominated market performance during the year was a sharp rebound in stocks with no earnings and/or weak financial quality. This frustrated investors investing in higher quality companies with strong balance sheets and visible earnings growth. In the fixed-income markets bond yields moved higher over the course of the twelve months, though intra-year volatility was significant. The yield on the 10-year Treasury note fell to as low as 3.11% in June 2003 and rose as high as 4.86% just before the close of the fiscal year in May. However, the steady Federal Reserve policy kept short-term rates constant causing the yield differential between long and short maturity bonds to rise to near record levels. The Lehman Aggregate Bond Index fell a modest 0.44% during the year ending May 31, 2004, though longer-term bonds such as the 10-year Treasury note were considerably weaker falling over 5%. The stronger economy helped credit-sensitive sectors such as High Yield perform well, while Treasury securities generally underperformed. As we look ahead the economic expansion looks both solid and sustainable, and is capable of supporting further gains in corporate profits and in equity prices. A key reason for this was the resumption of job growth in 2004, following an uncomfortably long drought which kept interest rate policy stimulative. However the pace of growth is likely to slow as the stimulative benefits of tax rebates and mortgage financing subside. Inflation pressures will increase from their historically low level, putting pressure on the Federal Reserve to begin raising interest rates following a protracted period of stimulus. Bond yields are likely to rise further as the Fed starts to apply monetary restraint, but the pace of rate hikes is expected to be gradual as long as inflation pressures do not escalate sharply. We remain cyclically overweight in stocks within our asset allocation mix, but recognize volatility could increase once the Fed begins raising interest rates. Adherence to investment disciplines and greater price sensitivity on stocks will be much more important in the years ahead, as I have mentioned before, 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. I encourage you to read through the remainder of the report, as it contains comments from our fund managers on specific investment sectors and styles. Trusco has excellent fund managers and I am sure you will find their insights valuable. In closing, I want to take this opportunity to thank you for investing in the STI Classic Funds. We value the relationship we have with you and look forward to expanding it in the coming year through continued investment excellence and a broader array of investment alternatives. Sincerely, /s/ Douglas S. Phillips Douglas S. Phillips, CFA Chief Investment Officer 1 STI CLASSIC FLORIDA TAX-EXEMPT BOND FUND ---------------------------------------- The STI Classic Florida Tax-Exempt Bond Fund (the "Fund") seeks to provide high total return through (i) current income exempt from federal income taxes and (ii) capital appreciation, while preserving the principal amount invested by investing in investment grade tax-exempt obligations. In the municipal bond funds we try to limit risk as much as possible. We do not make major maturity shifts. We will bias the Fund based upon our near term fundamental and technical analysis, however, these will be moderate maturity shifts. Our style of investing enables us to enhance performance by utilizing various techniques. One such technique is to emphasize cheap sectors of the yield curve. Also, we take advantage of changes in yield spread. We buy specific bonds when spreads are trading historically wide and sell when spreads are trading historically narrow. Credit analysis is an important technique especially in today's market. We try to identify and invest in improving credit and avoid those credits that are deteriorating. The underlying concept to all these techniques is to enhance total return without adding risk. The Fund's T Shares return from June 2003 to May 2004 was -2.07% versus the Lipper Florida Municipal Debt Average return of -0.65% and the Lehman 10-year Municipal Bond Index return of -0.39%. Our commitment to a barbell maturity structure, which included representation in the 3 to 5 year area of the curve and the 10 to 15 year area of the curve, was a detriment to the portfolio during this period. Rates continued to decline through 2003 and a modest flattening of the overall yield curve ensued, however the 5 year rose nearly two basis points for every one in the long end. Our lack of exposure to 20 years and longer combined with our overweighting in the intermediate area of the curve resulted in significant underperformance versus our peers. The state of Florida, its counties, municipalities, and regional issuers remained stable in the early stages of an improving economy. By the end of 2003 the 2-30 year AAA municipal spread, as reported by Municipal Market Dataline, was 322 basis points. The 2-10 year spread was 212 basis points, the 10-20 year spread 95 basis points and the 20-30 year spread at 15 basis points. The first quarter of 2004 saw issuance on a similar pace as 2003 however strong employment gains and greater optimism that the Federal Reserve would increase overnight rates dominated April's news sending municipal yields higher, ultimately erasing any gains for the year. At the end of May 2004, the spread between the 2-30 year AAA municipal bond, as reported by Municipal Market Dataline, was 299 basis points. The 2-10 year spread was 193 basis points; the 10-20 year was 87 basis points; and the 20-30 year spread actually widened to 19 basis points. Supply continues to find placement with either non-traditional buyers or the individual investor. The perceived safety of municipal credits continues to lure the disenchanted equity and taxable investors. We continue to emphasize high quality, intermediate bonds and prefer cushions to non-callable in the intermediate range. The fund has maintained its barbell distribution and overall average high quality. /s/ Ronald H Schwartz Ronald H Schwartz, CFA Managing Director 2 T Shares Average Annual Total Returns (periods ended May 31, 2004)
- --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -2.07% 4.84% 5.10% 5.82% 5.50% 73.96% - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman 10-Year Lipper Florida Florida Tax-Exempt Municipal Bond Municipal Debt Bond Fund, T Shares Index Funds Objective 5/31/94 $10,000 $10,000 $10,000 5/95 $10,926 $10,899 $10,915 5/96 $11,349 $11,415 $11,296 5/97 $12,168 $12,347 $12,133 5/98 $13,235 $13,493 $13,230 5/99 $13,728 $14,115 $13,673 5/00 $13,662 $14,090 $13,245 5/01 $15,279 $15,752 $14,719 5/02 $16,178 $16,785 $15,532 5/03 $17,978 $18,645 $16,933 5/04 $17,606 $18,573 $16,823 A Shares Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -2.28% 4.62% 4.86% 5.60% 5.28% 70.40% Without load - --------------------------------------------------------------------------------------------- - -5.98% 3.29% 4.07% 5.20% 4.89% 64.01% With load - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman 10-Year Lipper Florida Florida Tax-Exempt Municipal Bond Municipal Debt Bond Fund, A Shares Index Funds Objective 5/31/94 $ 9,625 $10,000 $10,000 5/95 $10,495 $10,899 $10,915 5/96 $10,890 $11,415 $11,296 5/97 $11,652 $12,347 $12,133 5/98 $12,638 $13,493 $13,230 5/99 $13,095 $14,115 $13,673 5/00 $13,006 $14,090 $13,245 5/01 $14,502 $15,752 $14,719 5/02 $15,323 $16,785 $15,532 5/03 $16,991 $18,645 $16,933 5/04 $16,604 $18,573 $16,823 L Shares Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - --------------------------------------------------------------------------------------------- - -2.68% 4.13% 4.36% 4.74% 51.68% Without CDSC - --------------------------------------------------------------------------------------------- - -4.55% With CDSC - ------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman 10-Year Lipper Florida Florida Tax-Exempt Municipal Bond Municipal Debt Bond Fund, L Shares Index Funds Objective 6/30/95 $10,000 $10,000 $10,000 5/96 $10,424 $10,539 $10,486 5/97 $11,099 $11,400 $11,263 5/98 $11,991 $12,458 $12,281 5/99 $12,367 $13,032 $12,692 5/00 $12,222 $13,008 $12,295 5/01 $13,560 $14,543 $13,663 5/02 $14,259 $15,497 $14,418 5/03 $15,730 $17,214 $15,718 5/04 $15,309 $17,147 $15,616 Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3 STI CLASSIC GEORGIA TAX-EXEMPT BOND FUND ---------------------------------------- The STI Classic Georgia Tax-Exempt Bond Fund (the "Fund") seeks to provide a high level of total return through current income and capital appreciation or depreciation of the Fund's assets while preserving the principal amount invested, through investment in investment grade tax-exempt obligations. For the year ended May 31, 2004, the Fund's T Shares had a total return of -2.18% versus an average return of -0.96% for the Lipper Georgia Municipal Debt Objective. For the same period the Lehman Brothers 10-Year Municipal Bond Index, which has no fees deducted, had a total return of -0.39%. During the period, the landscape for fixed-income investors changed dramatically. The first half of the period saw investors shift their focus from a Federal Reserve potentially fighting deflation through unconventional monetary policy actions (the outright purchase of securities), to the secular implications of closing the output gap and increased budget deficits. Net payroll growth emerged late in the first half and it became clear that robust corporate profits were translating into increased levels of capital spending. All the while the consumer continued to spend and "core" inflation readings remained tame. Municipal market participants responded by taking 5, 10, and 30-year generic AAA rated municipal bond yields 31, 45, and 38 basis points higher, respectively, during the first half. The relatively small increase in yields (and decline in prices) belied the volatility endured. The domestic economy returned to trend growth during the second half of the period with net payroll gains continuing in earnest, industrial production increasing, and pricing power returning to many industries. Inflation began to increase, validating the earlier movement in market-based inflation indicators. In response, the Federal Reserve was expected to embark on a well-telegraphed removal of monetary policy accommodation by raising the Federal Funds Rate (the rate banks charge each other for overnight loans) from its current 1% level, commencing in the summer of 2004. In advance of the tightening cycle, 5, 10, and 30-year generic AAA rated municipal bond yields increased 71, 38, and 27 basis points, respectively, during the second half. For the entire period, the 2-year to 30-year municipal yield curve flattened 22 basis points to 321 basis points of slope. The Fund began the year with almost 50% of its assets invested in bonds with final maturities from 7 to 12 years. This "bullet" yield curve strategy contributed to the Fund's underperformance in the period. As the curve flattened in the intermediate range, total returns were negative for 5 to 12-year maturities while the 1 to 3-year and 20-year sectors outperformed. The past year was spent reducing the 7 to 12-year allocation to about 25% of Fund assets and becoming more "barbelled" via an overweight of 1 to 4-year and 15-year and longer paper. This strategy should perform well in the modest "bear flattening" yield curve environment anticipated for the future. The Fund continues to favor premium bonds (prices greater than par) for their income benefit and relative price stability. All activity for the period has taken place within an investment grade construct and the average credit quality of Fund holdings remains high. /s/ Christopher D. Carter Christopher D. Carter, CFA Vice President 4 T Shares Average Annual Total Returns (periods ended May 31, 2004)
- --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -2.18% 4.30% 4.47% 5.16% 4.51% 58.03% - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman 10-Year Lipper Georgia Georgia Tax-Exempt Municipal Bond Municipal Debt Bond Fund, T Shares Index Objective 5/31/94 $10,000 $10,000 $10,000 5/95 $10,694 $10,899 $10,824 5/96 $11,110 $11,415 $11,230 5/97 $11,864 $12,347 $12,101 5/98 $12,857 $13,493 $13,287 5/99 $13,286 $14,115 $13,722 5/00 $13,166 $14,090 $13,302 5/01 $14,571 $15,752 $14,848 5/02 $15,417 $16,785 $15,664 5/03 $16,904 $18,645 $17,146 5/04 $16,535 $18,573 $16,981 A Shares Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -2.39% 4.05% 4.22% 4.92% 4.31% 54.79% Without load - --------------------------------------------------------------------------------------------- - -6.01% 2.74% 3.43% 4.52% 3.92% 48.98% With load - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman 10-Year Lipper Georgia Georgia Tax-Exempt Municipal Bond Municipal Debt Bond Fund, A Shares Index Objective 5/31/94 $ 9,625 $10,000 $10,000 5/95 $10,270 $10,899 $10,824 5/96 $10,649 $11,415 $11,230 5/97 $11,338 $12,347 $12,101 5/98 $12,274 $13,493 $13,287 5/99 $12,659 $14,115 $13,722 5/00 $12,499 $14,090 $13,302 5/01 $13,819 $15,752 $14,848 5/02 $14,590 $16,785 $15,664 5/03 $15,945 $18,645 $17,146 5/04 $15,564 $18,573 $16,981 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -2.87% 3.57% 3.74% 4.15% 44.04% Without CDSC - ----------------------------------------------------------------------------- - -4.75% With CDSC - ------ COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman 10-Year Lipper Georgia Georgia Tax-Exempt Municipal Bond Municipal Debt Bond Fund, L Shares Index Objective 6/30/95 $10,000 $10,000 $10,000 5/96 $10,370 $10,539 $10,486 5/97 $10,998 $11,400 $11,299 5/98 $11,850 $12,456 $12,407 5/99 $12,161 $13,032 $12,812 5/00 $11,968 $13,008 $12,420 5/01 $13,155 $14,543 $13,863 5/02 $13,822 $15,497 $14,626 5/03 $15,047 $17,214 $16,009 5/04 $14,615 $17,147 $15,856 Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
5 STI CLASSIC HIGH INCOME FUND ---------------------------- The STI Classic High Income Fund (the "Fund") seeks to achieve its investment objective by investing primarily in income producing debt instruments of U.S. and foreign issuers that are rated below investment grade. The Fund became an STI Classic Fund on March 28, 2000 as the successor to the ESC Strategic Income Fund, which merged into the STI Classic High Income Fund on that date. (Prior to September 30, 1998, this Fund primarily invested in a diversified portfolio of corporate, government and other debt instruments of U.S. issuers.) We are pleased to be able to report to shareholders that for the fiscal year ended May 31, 2004, the total return for the Fund's T Shares was 11.94%. This performance compares to the 11.90% return for average mutual fund in the Lehman U.S. Corporate High Yield Bond Index. The out performance is attributable to a strong focus on the bonds of issuers that demonstrated improved credit fundamentals during the course of the fiscal year. This strategy also lessened reliance on those securities whose performance we believed would be adversely affected by an increase in interest rates. Fiscal 2004 opened with the high yield market continuing the rally that had begun in fiscal 2003. However, as summer progressed, the market weakened due to an anemic Treasury market, a heavy calendar of new high yield issuance, and dwindling demand for high yield securities. In mid-August the demand returned and the high yield market resumed its ascent, reaching a peak in mid January. The market then experienced a mild correction through late April, when expectations of an increase in short term rates by the Federal Reserve weighed on the market. As the fiscal year came to a close, the market began to rebound. In making investment decisions for the Fund, we utilize a "bottom up" approach, identifying opportunities based upon the underlying financial and business fundamentals of specific issuers. Given expectations of a rising interest rate environment, we will continue to shy away from securities that we believe will be susceptible to adverse price action due to declining Treasury prices. With the economy exhibiting continued growth over the remainder of 2004, high yield securities of issuers that continue fundamental growth should continue to perform well. /s/ Agnes G. Pampush Agnes G. Pampush, CFA Managing Director /s/ Howard B. Udis Howard B. Udis, J.D. Vice President 6 T Shares Average Annual Total Returns (periods ended May 31, 2004) - ---------------------------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date - ---------------------------------------------------------- 11.94% 8.95% 25.58% - ---------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman U.S. Corporate High Income Fund, High Yield Bond T Shares Index 10/31/01 $10,000 $10,000 05/02 $10,128 $10,605 05/03 $10,958 $11,721 05/04 $12,266 $13,116 A Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------- Cumulative Inception to Date - ----------- 4.61% Without load - ----------- 0.66% With load - ----------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman U.S. Corporate High Income Fund, High Yield Bond A Shares Index 10/31/03 $ 9,625 $10,000 5/04 $10,018 $10,374 L Shares(1) Average Annual Total Returns (periods ended May 31, 2004)
- --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- 11.23% 6.66% 2.68% 4.33% 4.27% 52.35% Without CDSC - --------------------------------------------------------------------------------------------- 9.23% With CDSC - -------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Lehman U.S. Corporate High Income Fund, High Yield Bond L Shares Index 5/31/94 $10,000 $10,000 5/95 $11,035 $11,346 5/96 $11,407 $12,420 5/97 $12,055 $14,067 5/98 $12,853 $15,826 5/99 $13,385 $15,857 5/00 $12,018 $15,348 5/01 $12,588 $15,958 5/02 $12,772 $16,141 5/03 $13,732 $17,841 5/04 $15,274 $19,964 (1) Returns prior to March 28, 2000 represent the performance of the ESC Strategic Income Fund, Class D Shares. Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 7 STI CLASSIC INVESTMENT GRADE BOND FUND -------------------------------------- The STI Classic Investment Grade Bond Fund ("the Fund") seeks to provide a high level of total return through current income and capital appreciation as is consistent with the preservation of capital primarily through investing in investment grade fixed income securities. Total return includes not only current income but also the changes in value of assets held by the Fund. For the year ended May 31, 2004, the Fund's T shares had a total return of -2.31% versus an average return of -0.39% for the Lipper Intermediate Investment Grade Debt Category. For the same period the Lehman Government Credit Index, which has no fees taken out, had a total return of 1.51%. At the beginning of the period there were deflationary concerns and interest rates were within a few weeks of hitting their low. Continued economic growth into 2004 resulted in improved jobs growth and an uptick in inflation. With the Federal Funds' rate at very stimulative levels (1.00%) the Federal Reserve Bank ("Fed") began to signal that with the economy on a sustainable growth trajectory they would gradually raise the funds rate to remove some of the excess stimulus. Over the period as a whole interest rates increased by 1.00% to 1.50% with intermediate maturities underperforming on a relative basis. Corporate securities had one of their best years ever in 2003 as credit spreads consistently narrowed, but spreads stabilized in 2004 giving corporate only a slight advantage over treasuries. High volatility and extremes in interest rates led to a more mixed performance by the mortgage sector. The overweight in the corporate sector enhanced the Fund's return. However, the relatively high quality of the corporate holdings limited the benefit as lower quality corporates generally outperformed. For the period as a whole, duration was maintained relatively close to neutral and therefore had limited impact on total return. The Fund's general barbell positioning, overweighting shorter and longer maturity ranges and underweighting intermediate maturities, added value for the period. Mortgages had a very volatile year with substantial periods of outperformance and under performance with the net result of reducing total return for the period. Looking forward sustainable economic growth should lead the Fed to reduce the monetary stimulus in the economy by gradually raising the federal funds rate. This should lead to higher interest rates and a flatter yield curve as short rates increase more than longer term rates. Although spread sectors are not especially cheap they are not expected to widen dramatically in a positive economic environment and the incremental yield from the sectors should be a positive for total return. The Fund continues to be managed with only moderate shifts in average maturity and duration. The total return is enhanced with yield curve analysis (monitoring and analyzing the risk/reward trade-offs of different maturity sectors), sector rotations and other low risk strategies. By actively pursuing these strategies, the Fund strives to add total return while reducing risk. /s/ L. Earl Denney L. Earl Denney, CFA Managing Director /s/ Charles B. Leonard Charles B. Leonard, CFA, FLMI Managing Director 8 T Shares Average Annual Total Returns (periods ended May 31, 2004)
- --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -2.31% 4.67% 5.05% 6.16% 5.96% 98.86% - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Investment Lehman U.S. Government/ Lipper Intermediate Grade Bond Fund, Credit Investment-Grade T Shares Index Debt Objective 5/31/94 $10,000 $10,000 $10,000 5/95 $11,039 $11,161 $11,044 5/96 $11,483 $11,619 $11,487 5/97 $12,285 $12,536 $12,397 5/98 $13,627 $13,976 $13,667 5/99 $14,206 $14,543 $14,122 5/00 $13,956 $14,818 $14,288 5/01 $15,847 $16,725 $16,028 5/02 $16,668 $18,036 $17,115 5/03 $18,603 $20,662 $18,901 5/04 $18,173 $20,350 $18,826 A Shares Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -2.70% 4.27% 4.63% 5.75% 5.61% 92.18% Without load - --------------------------------------------------------------------------------------------- - -6.38% 2.94% 3.84% 5.34% 5.27% 84.97% With load - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Investment Lehman U.S. Government/ Lipper Intermediate Grade Bond Fund, Credit Investment-Grade A Shares Index Debt Objective 5/31/94 $ 9,625 $10,000 $10,000 5/95 $10,591 $11,161 $11,044 5/96 $10,962 $11,619 $11,487 5/97 $11,692 $12,536 $12,397 5/98 $12,919 $13,976 $13,667 5/99 $13,417 $14,543 $14,122 5/00 $13,126 $14,818 $14,288 5/01 $14,844 $16,725 $16,028 5/02 $15,558 $18,036 $17,115 5/03 $17,295 $20,662 $18,901 5/04 $16,828 $20,350 $18,826 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -3.27% 3.71% 4.10% 4.71% 51.16% Without CDSC - ----------------------------------------------------------------------------- - -5.15% With CDSC - ------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Investment Lehman U.S. Government/ Lipper Intermediate Grade Bond Fund, Credit Investment-Grade L Shares Index Debt Objective 6/30/95 $10,000 $10,000 $10,000 5/96 $10,232 $10,327 $10,338 5/97 $10,862 $11,143 $11,157 5/98 $11,948 $12,422 $12,301 5/99 $12,348 $12,927 $12,710 5/00 $12,023 $13,171 $12,859 5/01 $13,531 $14,866 $14,425 5/02 $14,108 $16,032 $15,403 5/03 $15,605 $18,366 $17,011 5/04 $15,095 $18,089 $16,943
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 9 STI CLASSIC INVESTMENT GRADE TAX-EXEMPT BOND FUND ------------------------------------------------- The STI Classic Investment Grade Tax-Exempt Bond Fund (the "Fund") seeks to provide high total return through (i) current income exempt from federal income taxes and (ii) capital appreciation, while preserving the principal amount invested by investing in investment grade tax-exempt obligations. In the municipal bond funds we try to limit risk as much as possible. We do not make major maturity shifts. We will bias the Fund based upon our near term fundamental and technical analysis, however, these will be moderate maturity shifts. Our style of investing enables us to enhance performance by utilizing various techniques. One such technique is to emphasize cheap sectors of the yield curve. Also, we take advantage of changes in yield spread. We buy specific bonds when spreads are trading historically wide and sell when spreads are trading historically narrow. Credit analysis is an important technique especially in today's market. We try to identify and invest in improving credit and avoid those credits that are deteriorating. The underlying strategy to all these techniques is to enhance total return without adding risk. The Fund's T Shares return from June 2003 to May 2004 was -0.45% versus the Lipper Intermediate Municipal Debt Funds Objective return of -0.70% and the Lehman 5-year Municipal Bond Index return of -1.26%. Our commitment to the barbell maturity structure and positions of "kicker" bonds help the fund out perform during this period. We were short-to-neutral versus our benchmark for this period. The municipal market saw record issuance in 2003 of $382.6 billion. The state of California and Tobacco issues continued to make headlines as downgrades, gubernatorial recalls, and credit concerns persisted. An unusually steep yield curve and an economy buoyed by short-term fiscal stimulus and stronger corporate earnings held the individual investor to inside of 5 years as they reallocated into equities. By the end of 2003 the 2-30 AAA municipal spread, as reported by Municipal Market Dataline, was 322 basis points. The 2-10 spread was 212 basis points, the 10-20 year spread 95 basis points and the 20-30 year spread at 15 basis points. The first quarter of 2004 saw issuance on a similar pace as 2003, however strong employment gains and greater optimism that the Federal Reserve would increase overnight rates dominated April's news sending municipal yields higher, ultimately erasing any gains for the year. At the end of May 2004, the spread between the 2-30 year AAA municipal bond, as reported by Municipal Market Dataline, was 299 basis points. The 2-10 spread was 193 basis points; the 10-20 year was 87 basis points compared to the 20 to 30 year spread actually widened to 19 basis points. Supply continues to find placement with either non-traditional buyers or the individual investor. The perceived safety of municipal credits continues to lure the disenchanted equity and taxable investors. We continue to emphasize high quality, intermediate bonds and prefer cushions to non-callable in the intermediate range. The Fund has maintained its barbell distribution and overall average high quality. /s/ Ronald H Schwartz Ronald H Schwartz, CFA, CFP Managing Director 10 T Shares Average Annual Total Returns (periods ended May 31, 2004)
- --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -0.45 5.73% 5.86% 6.56% 6.06% 86.68% - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Investment Lehman 5-Year Lipper Intermediate Grade Tax-Exempt Municipal Bond Municipal Debt Bond Fund, T Shares Index Funds Objective 5/31/94 $10,000 $10,000 $10,000 5/95 $11,021 $10,713 $10,730 5/96 $11,661 $11,210 $11,171 5/97 $12,492 $11,880 $11,887 5/98 $13,562 $12,676 $12,773 5/99 $14,195 $13,285 $13,261 5/00 $14,396 $13,385 $13,143 5/01 $15,969 $14,754 $14,462 5/02 $17,111 $15,711 $15,263 5/03 $18,959 $17,106 $16,571 5/04 $18,874 $17,040 $16,455 A Shares Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -0.85% 5.32% 5.42% 6.14% 6.53% 113.34% Without load - --------------------------------------------------------------------------------------------- - -4.58% 4.00% 4.63% 5.73% 6.19% 105.33% With load - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Investment Lehman 5-Year Lipper Intermediate Grade Tax-Exempt Municipal Bond Municipal Debt Bond Fund, A Shares Index Funds Objective 5/31/94 $ 9,625 $10,000 $10,000 5/95 $10,579 $10,713 $10,730 5/96 $11,150 $11,210 $11,171 5/97 $11,896 $11,880 $11,887 5/98 $12,852 $12,676 $12,773 5/99 $13,412 $13,285 $13,261 5/00 $13,532 $13,385 $13,143 5/01 $14,950 $14,754 $14,462 5/02 $15,954 $15,711 $15,263 5/03 $17,616 $17,106 $16,571 5/04 $17,466 $17,040 $16,455 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.33% 4.80% 4.93% 5.22% 58.10% Without CDSC - ----------------------------------------------------------------------------- - -3.23% With CDSC - --------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Investment Lehman 5-Year Lipper Intermediate Grade Tax-Exempt Municipal Bond Municipal Debt Bond Fund, L Shares Index Funds Objective 6/30/95 $10,000 $10,000 $10,000 5/96 $10,541 $10,446 $10,462 5/97 $11,193 $11,071 $11,133 5/98 $12,033 $11,812 $11,962 5/99 $12,487 $12,379 $12,419 5/00 $12,552 $12,472 $12,308 5/01 $13,804 $13,748 $13,544 5/02 $14,661 $14,640 $14,294 5/03 $16,101 $15,940 $15,519 5/04 $15,887 $15,878 $15,411
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 11 STI CLASSIC LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND --------------------------------------------------------- The STI Classic Limited Term Federal Mortgage Securities Fund (the "Fund") seeks to provide a high level of total return through the combination of interest income and principal appreciation, while preserving capital through the investment in U.S. Agency and mortgage related securities. For the year ended May 31, 2004, the Fund's T shares had a total return of -1.10% versus the total return of 0.05% for the Merrill Lynch 1-5 Year AAA U.S. Treasuries/Agencies Index. For the same period, the Merrill Lynch 1-5 Year U.S. Treasuries Index had a total return of 0.03%. (The Merrill Index is non-managed and has no fees.) During the early part of the period of review, the Federal Reserve Bank ("Fed") continued to be publicly concerned about the risks of deflationary price pressures in the economy, and thus lowered the Fed Funds rate to a 40-year low of 1% in late June 2003. However, shortly thereafter, published economic data began to significantly improve on a sustained basis. This strength, along with firming commodity, oil, and precious metals prices, caused market interest rates to move up sharply across the yield curve. From June 2003 to May 2004 interest rates increased from 100 to 150 basis points across all maturity ranges. Over this period, mortgage-backed securities ("MBS") generally underperformed similar duration Agency and Treasury securities. During a very difficult July 2003, the MBS sector underperformed U.S. Treasuries on a duration-matched basis by 145 basis points. As interest and mortgage rates moved higher, the estimated average duration of the MBS Index extended from 0.5 year to almost 4 years. This change has a strong tendency to put downward price pressure on mortgage-related securities. Given the Fund's overweight position in higher yielding MBS, this caused the Fund to underperform the Lipper and Merrill categories. Somewhat offsetting this underperformance was positive attribution due to duration and yield curve positioning. The Fund continues to maintain an overweight position in MBS. A large portion of the mortgages are adjustable rate, and thus will reset at higher rate levels over the next few years. Additionally, the Fund has a somewhat shorter maturity structure than the Lipper and Merrill categories. As the Fed prepares to move the Fed Funds' rate higher in the near future, the Fund is well positioned to achieve its' investment objective of continuing to provide a high level of total return while preserving principal value. /s/ L. Earl Denney L. Earl Denney, CFA Managing Director /s/ Michael Sebesta Michael Sebesta Managing Director 12 T Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.10% 4.40% 5.08% 5.61% 72.42% - -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Limited-Term Merrill Lynch 1-5 Year Merrill Lynch 1-5 Year Federal Mortgage Securities AAA U.S. Treasuries/ U.S. Treasuries Fund, T Shares Agencies Index Index 6/30/94 $10,000 $10,000 $10,000 5/95 $10,756 $10,809 $10,810 5/96 $11,276 $11,345 $11,342 5/97 $12,002 $12,118 $12,111 5/98 $12,856 $13,049 $13,041 5/99 $13,467 $13,731 $13,723 5/00 $13,780 $14,234 $14,245 5/01 $15,161 $15,774 $15,736 5/02 $16,303 $16,875 $16,794 5/03 $17,442 $18,113 $18,036 5/04 $17,251 $18,122 $18,042 A Shares Average Annual Total Returns (periods ended May 31, 2004) One Year - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.36% 4.10% 4.78% 5.42% 68.38% Without load - ----------------------------------------------------------------------------- - -3.82% 3.21% 4.26% 5.15% 64.10% With load - ----------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Limited-Term Merrill Lynch 1-5 Year Merrill Lynch 1-5 Year Federal Mortgage Securities AAA U.S. Treasuries/ U.S. Treasuries Fund, A Shares Agencies Index Index 7/31/94 $ 9,750 $10,000 $10,000 5/95 $10,440 $10,698 $10,698 5/96 $10,919 $11,229 $11,224 5/97 $11,593 $11,993 $11,985 5/98 $12,398 $12,914 $12,906 5/99 $12,953 $13,590 $13,581 5/00 $13,203 $14,087 $14,097 5/01 $14,502 $15,611 $15,573 5/02 $15,540 $16,701 $16,619 5/03 $16,584 $17,927 $17,849 5/04 $16,359 $17,936 $17,854 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.71% 3.74% 4.46% 4.76% 51.78% Without CDSC - ----------------------------------------------------------------------------- - -3.63% With CDSC - ------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Limited-Term Merrill Lynch 1-5 Year Merrill Lynch 1-5 Year Federal Mortgage Securities AAA U.S. Treasuries/ U.S. Treasuries Fund, L Shares Agencies Index Index 6/30/95 $10,000 $10,000 $10,000 5/96 $10,393 $10,436 $10,431 5/97 $10,996 $11,146 $11,139 5/98 $11,709 $12,002 $11,994 5/99 $12,194 $12,630 $12,621 5/00 $12,402 $13,092 $13,101 5/01 $13,581 $14,509 $14,473 5/02 $14,508 $15,522 $15,445 5/03 $15,427 $16,661 $16,588 5/04 $15,163 $16,669 $16,593
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 13 STI CLASSIC MARYLAND MUNICIPAL BOND FUND ---------------------------------------- The STI Classic Maryland Municipal Bond Fund (the "Fund") is managed as a long term bond fund that purchases, primarily, investment grade rated bonds. From time to time a small allocation may be made to non-rated securities. The Fund buys securities issued by the state of Maryland and its political subdivisions, supplemented by bonds from Puerto Rico that are exempt from state income taxation. The Fund seeks to produce a competitive Total Rate of Return ("TRR") and an attractive distribution to its shareholders. The Fund holds bonds with maturity dates out to 30 years or longer, as well as adjustable rate tender bonds as money market securities. Although there are no average maturity or duration limitations on the portfolio, we generally follow maturity and duration characteristics of the Lipper Maryland Fund peer group as well as the Lehman Municipal 10-year Index. This Index had a modified adjusted duration of 6.89 and weighted average maturity of 9.80 years on May 31, 2004. The Fund's duration was 5.74 years and the average maturity was 9.89 years. The Lehman G O Index is consulted as it provides wider maturity dispersion with a similar duration. Compared to one year ago, the municipal yield curve remains steep at +305 basis points compared to +322, as measured from 2 to 30 years. However, in the short to intermediate area the slope has seen greater adjustment with rates rising, dramatically, after reaching near 40 year lows during June 2003. In terms of yield changes, rates climbed 103 bp on 5-year high-grade bonds, 84 bp in 10 years, 77 bp in 15 years, 71 bp in 20 years, and 69 bp in 30 years. Much of this increase occurred in the 2nd quarter of 2004 with an improved U S employment picture and an expectation that the Federal Reserve will soon increase overnight interest rates. As the curve flattened in the intermediate range, returns were negative over 12 months within the 5 to 15 year range while positive returns were generated only on 1 to 3 year bonds and 15 to 20 year bonds. The longer bonds saw significant price erosion but their income advantage produced a positive total return. The Fund holds a mix of all sectors of the municipal market with an emphasis on credit quality and call protection. Approximately 72% of assets were rated AA or higher. State and local general obligation tax supported bonds represented the largest category at 41% of assets, with health care and housing bonds the next largest at 17% and 20%. Bonds subject to the Alternative Minimum Tax were 11% of total assets. For the year ended May 31, 2004, the Fund's TRR was -1.06% for T Shares while the Lehman 10-Year Municipal Bond Index, computed without fees, had a TRR of - -0.39%. The Lipper MD Municipal Debt Funds Objective average return was reported as -0.84%. Our underperformance in the past year can be attributed to an inconsistent exposure to long maturity bonds. We pulled duration down after the market sell off in July. Sporadic rallies late in the year and again in the 1st quarter of 2004 enabled the 20-year area to be the 2nd best performing part of the curve and only the shortest bonds outperformed the 20 year. The Fund was underweight in this spot on the maturity curve and remains so today as the defensive, fuller coupon bonds we desire have not been available. The Fund was overweight the 5 to 15 year range where performance was poor. The U.S. economy has shown gradual improvement in recent months as measured by employment, industrial production, and housing market activity. The headline consumer and producer price indices are showing large gains but the year over year level of these indices, as measured by the so called "core rate" without volatile food and energy costs, remains below 2%. Meanwhile, the war in Iraq and the U S budget and trade deficits remain large concerns, just as they were one year ago. We continue to expect higher yields and a flatter curve and are positioned shorter than has been the case over the past few years. Higher coupon bonds are our preferred choice and the largest portion of holdings will continue to be AA and AAA rated bonds with some A and BBB bonds included to improve income. /s/ George E. Calvert Jr. George E. Calvert Jr. Vice President 14 T Shares(1) Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.06% 4.77% 4.74% 4.65% 45.49% - -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Maryland Lehman 10-Year Lipper MD Municipal Bond Municipal Bond Municipal Debt Fund, T Shares Index Funds Objective 3/31/96 $10,000 $10,000 $10,000 5/96 $ 9,846 $ 9,937 $ 9,958 5/97 $10,500 $10,749 $10,648 5/98 $11,443 $11,746 $11,549 5/99 $11,923 $12,288 $11,952 5/00 $11,710 $12,266 $11,639 5/01 $13,068 $13,713 $12,871 5/02 $13,826 $14,613 $13,560 5/03 $15,187 $16,232 $14,787 5/04 $15,026 $16,169 $14,703 L Shares(1) Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.97% 3.80% 3.78% 4.35% 41.21% Without CDSC - ----------------------------------------------------------------------------- - -3.84% With CDSC - -------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Maryland Lehman 10-Year Lipper MD Municipal Bond Municipal Bond Municipal Debt Fund, L Shares Index Funds Objective 4/30/96 $10,000 $10,000 $10,000 5/96 $ 9,936 $ 9,972 $ 9,996 5/97 $10,514 $10,787 $10,689 5/98 $11,366 $11,788 $11,593 5/99 $11,735 $12,331 $11,998 5/00 $11,423 $12,309 $11,683 5/01 $12,633 $13,761 $12,921 5/02 $13,244 $14,664 $13,612 5/03 $14,411 $16,289 $14,844 5/04 $14,127 $16,225 $14,759
(1) Returns prior to May 24, 1999 represent the performance of the CrestFund Maryland Municipal Bond Fund. Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 15 STI CLASSIC SHORT-TERM BOND FUND -------------------------------- The investment goal of the STI Classic Short Term Bond Fund (the "Fund") is to maximize income while preserving principal value. 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, while not assuming the greater market risk of longer-term bond funds. Money market yields and short-term bond yields remained at very low levels during most of the fiscal year ended May 31, 2004. The primary factors that kept yields low and monetary policy accommodative during 2003 and early 2004 were the war with Iraq, terrorism fears, lingering deflation concerns, and lack of improvement in labor markets and manufacturing. The Federal Reserve made only one policy rate change during the Fund's fiscal year. That move occurred in June, 2003 when the Fed lowered the Fed Funds rate to 1.00% from 1.25%. The Fund's fiscal year can be broken down into three distinct periods. At the beginning of the year, short-term bond yields were rising steadily from historic lows as the Fed was backpedaling from deflationary comments that had brought yields to unrealistically low levels. In the middle of the year, yields remained low and were relatively range bound as there was no clear cut direction for the economy as investors waited patiently for good economic news. By the end of the Fund's fiscal year, while Iraq and terrorism fears remained, most of the issues that held yields in check had reversed course: economic growth was strong, labor markets were improving rapidly, manufacturing was gaining momentum, and inflation concerns had resurfaced. As a result, short-term bond yields rose rapidly late in the Fund's fiscal year and market participants were anticipating the Federal Reserve would initiate a series of tightening moves. The Fund maintained its overweight in corporate bonds for the fiscal year ending May, 31, 2004, which elevated the overall return of the portfolio. The largest overweight was in the finance sector which performed well relative to the corporate sector as a whole. There were no significant credit problems in the portfolio during the fiscal year ending May, 31, 2004. Intelstat was purchased in the Fund at the beginning of May, 31, 2004, and over the last two weeks some negative developments have occurred, which have resulted in our reevaluating the investment. The bond has underperformed over the holding period. Our holding, however, is less than one half of one percent of the total Fund. The best performing sector in the Fund was the automotive sector with holdings of GM, F and DCX. The overweight in corporates was offset by a large underweight in U.S. Treasury Securities. As noted, Treasuries underperformed corporates during the fiscal year. The Fund had an underweight in the 1-3 year part of the curve offset by an overweight in the 0-1 year and 3-5 year part of the curve. On an absolute basis, the longer securities underperformed in the rising rate environment, but on an absolute basis this enabled the manager to underweight the 1-3 year part of the curve and as the yield curve flattened this enhanced the overall performance. Some of the positive actions that helped performance of the Fund over the last year was shortening the duration range and increasing the allocation to floating rate and adjustable rate securities. The most significant sector change was an increase to asset backed securities and mortgage backed securities. Over the past year, the dividend yield of the Fund has been consistently higher than that of money market funds. The NAV has fluctuated in a relatively narrow range, ending the year down -1.99% from the same period a year ago. The total return of the Fund's T Shares for the one year time period ending May 31, 2004 was a positive 0.45%. /s/ Robert W. Corner /s/ H. Rick Nelson Robert W. Corner H. Rick Nelson Managing Director Managing Director 16 T Shares Average Annual Total Returns (periods ended May 31, 2004)
- --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- 0.45% 2.80% 4.24% 5.08% 4.80% 69.07% - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Short-Term Citigroup 1-3 Year Bond Fund, Treasury/Government/ T Shares Credit Index 5/31/94 $10,000 $10,000 5/95 $10,760 $10,742 5/96 $11,239 $11,321 5/97 $11,947 $12,072 5/98 $12,820 $12,920 5/99 $13,341 $13,618 5/00 $13,724 $14,175 5/01 $15,114 $15,656 5/02 $15,762 $16,668 5/03 $16,345 $17,749 5/04 $16,419 $17,944 A Shares Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- 0.24% 2.62% 4.05% 4.89% 4.55% 64.56% Without load - --------------------------------------------------------------------------------------------- - -1.81% 1.91% 3.63% 4.67% 4.36% 61.19% With load - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Short-Term Citigroup 1-3 Year Bond Fund, Treasury/Government/ A Shares Credit Index 5/31/94 $ 9,800 $10,000 5/95 $10,529 $10,742 5/96 $10,975 $11,321 5/97 $11,630 $12,072 5/98 $12,466 $12,920 5/99 $12,950 $13,618 5/00 $13,295 $14,175 5/01 $14,612 $15,656 5/02 $15,224 $16,668 5/03 $15,752 $17,749 5/04 $15,790 $17,944 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -0.11% 2.24% 3.68% 4.23% 44.91% Without CDSC - ----------------------------------------------------------------------------- - -2.07% With CDSC - ------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Short-Term Citigroup 1-3 Year Bond Fund, Treasury/Government/ L Shares Credit Index 6/30/95 $10,000 $10,000 5/96 $10,359 $10,481 5/97 $10,941 $11,176 5/98 $11,689 $11,962 5/99 $12,098 $12,608 5/00 $12,378 $13,124 5/01 $13,566 $14,495 5/02 $14,075 $15,431 5/03 $14,513 $16,433 5/04 $14,497 $16,614
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 17 STI CLASSIC SHORT-TERM U.S. TREASURY SECURITIES FUND ---------------------------------------------------- The investment objective of the STI Classic Short-Term U.S. Treasury Securities Fund (the "Fund") is to provide high current income while preserving capital through investing in exclusively in short-term U.S. Treasury securities. The goal of the Fund is to capture the yield advantage, which normally exists between money market instruments and short-term bonds. The price volatility of short-term bonds is very modest and over time has consistently been offset by the incremental yield of these instruments relative to money market securities. The Fund is managed from a total return perspective, that is, day to day decisions are made with a view toward maximizing income and price appreciation. The investment discipline applied in managing the Fund emphasizes adding value through yield curve analysis. Investments are made in those segments of the yield curve within the applicable universe, which offer the most attractive risk/reward characteristics. Money market yields and short-term bond yields remained at very low levels during most of the fiscal year ended May 31, 2004. The primary factors that kept yields low and monetary policy accommodative during 2003 and early 2004 were the war with Iraq, terrorism fears, lingering deflation concerns, and lack of improvement in labor markets and manufacturing. The Federal Reserve Bank ("Fed") made only one policy rate change during the Fund's fiscal year. That move occurred in June, 2003 when the Fed lowered the Fed Funds rate to 1.00% from 1.25%. The Fund's fiscal year can be broken down into three distinct periods. At the beginning of the year, short-term bond yields were rising steadily from historic lows as the Fed was backpedaling from deflationary comments that had brought yields to unrealistically low levels. In the middle of year, yields remained low and were relatively range bound as there was no clear cut direction for the economy as investors waited patiently for good economic news. By the end of the Fund's fiscal year, while Iraq and terrorism fears remained, most of the issues that held yields in check had reversed course: economic growth was strong, labor markets were improving rapidly, manufacturing was gaining momentum, and inflation concerns had resurfaced. As a result, short-term bond yields rose rapidly late in the Fund's fiscal year and market participants were anticipating the Federal Reserve would initiate a series of tightening moves. The rise in short-term interest rates over the one-year period ending May 31, 2004 led to a modest decline in the Fund's NAV. The Fund mitigated the negative price effect of the rising rates by shortening its duration and average life. The Fund's one-year returns of 0.11% for the T Shares was respectable in this environment of rising rates. /s/ David S. Yealy David S. Yealy Managing Director 18 T Shares Average Annual Total Returns (periods ended May 31, 2004)
- --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- 0.11% 3.01% 4.14% 4.82% 4.53% 64.34% - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Short-Term Citigroup 1-3 Year Citigroup 6-Month U.S. Treasury Securities Treasury Treasury Bill Fund, T Shares Index Index 5/31/94 $10,000 $10,000 $10,000 5/95 $10,611 $10,729 $10,542 5/96 $11,113 $11,236 $11,142 5/97 $11,753 $11,977 $11,741 5/98 $12,493 $12,813 $12,379 5/99 $13,067 $13,492 $12,993 5/00 $13,557 $14,048 $13,674 5/01 $14,644 $15,423 $14,502 5/02 $15,331 $16,366 $14,937 5/03 $15,992 $17,249 $15,175 5/04 $16,009 $17,377 $15,334 A Shares Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -0.06% 2.82% 3.96% 4.65% 4.36% 61.31% Without load - --------------------------------------------------------------------------------------------- - -1.01% 2.48% 3.75% 4.54% 4.27% 59.72% With load - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Short-Term Citigroup 1-3 Year Citigroup 6-Month U.S. Treasury Securities Treasury Treasury Bill Fund, A Shares Index Index 5/31/94 $ 9,900 $10,000 $10,000 5/95 $10,497 $10,729 $10,542 5/96 $10,971 $11,236 $11,142 5/97 $11,585 $11,977 $11,741 5/98 $12,284 $12,813 $12,379 5/99 $12,842 $13,492 $12,993 5/00 $13,302 $14,048 $13,674 5/01 $14,349 $15,423 $14,502 5/02 $14,986 $16,366 $14,937 5/03 $15,605 $17,249 $15,175 5/04 $15,595 $17,377 $15,334 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -0.30% 2.60% 3.74% 4.21% 44.55% Without CDSC - ----------------------------------------------------------------------------- - -2.25% With CDSC - -------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Short-Term Citigroup 1-3 Year Citigroup 6-Month U.S. Treasury Securities Treasury Treasury Bill Fund, L Shares Index Index 6/30/95 $10,000 $10,000 $10,000 5/96 $10,357 $10,416 $10,516 5/97 $10,894 $11,102 $11,081 5/98 $11,537 $11,877 $11,683 5/99 $12,036 $12,506 $12,263 5/00 $12,438 $13,022 $12,905 5/01 $13,392 $14,296 $13,687 5/02 $13,996 $15,170 $14,098 5/03 $14,508 $15,989 $14,322 5/04 $14,464 $16,107 $14,472
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 19 STI CLASSIC STRATEGIC INCOME FUND --------------------------------- For the year ended May 31, 2004 the STI Classic Strategic Income Fund (the "Fund") achieved its investment objectives of providing a relatively high level of current income while maintaining a relatively stable Net Asset Value. The Fund ended the fiscal year with an income distribution rate of 5.75% for the Fund's T Shares, while generating 4.15% in total return over the past year. After an extended multi-year period of Monetary and Fiscal stimulus, the economy has at long last gained a firm footing and appears to be on its way to a self-sustaining recovery. The employment situation has improved markedly, and the fears of deflation have dissipated. In response to this revelation, interest rates rose significantly, generating negative returns for the year in interest rate sensitive bonds. The Merrill Lynch AAA U.S. Treasury/Agency Master Index returned a negative 2.16% for the past year. The economic recovery that caused interest rates to rise has also boosted the credit worthiness of corporate America, and yield premiums on High Yield corporate bonds fell. The Merrill Lynch High Yield Master II Index returned 11.65% over the past year. Finally, many international interest rates rose amid expectations that the U.S. recovery will boost the global economy; however, the international fixed income market was relatively stable. The Merrill Lynch Global Government Bond II ex U.S., Hedged Index returned a negative 0.68% over the past year. The inverse relationship between interest rate risk and credit risk was proven over the past year, and the inherent diversification of the Fund provided for a relatively stable profile in an otherwise volatile market. The Fund provided protection and positive returns in the rising rate environment. Early in the fiscal year, the Fund benefited from a significant overweight to the high yield sector as the early stages of the economic recovery took hold. As valuations changed, the relative attractiveness of that sector lessened by spring. We took the allocation down gradually from a high of 58% to 38%. We reallocated much of those assets into mortgage backed securities in the government sector, as the rise in rates significantly reduced prepayment activity and restored income to the sector. The Fund benefited from the higher yields and relatively attractive total returns. We also reallocated asset to the international bond markets of mature economies where rates had already risen significantly through central bank tightening. Our hedging activity proved to protect the Fund as the U.S. Dollar regained its footing and rose against foreign countries as the expectations of higher U.S. interest rates increased. Interest rates in the United States rose 200 basis points from May 2003 to May 2004 reflecting the improved economic environment. Yield spreads on corporate bonds have narrowed considerably, and mortgage backed securities have fully extended. All sectors of the fixed income market come into the new Fiscal year at relatively fair value. The higher level of longer term market rates should help to temper economic activity, doing some of the Feds work for it. The Federal Reserve will most likely bring the Federal Funds rate up to where current market expectations are, and long term rates will surely fluctuate somewhat based upon economic activity. Over the course of the next year, the fixed income market will once again try to find a level of equilibrium with the economy. This should all set the stage for a reduced level of interest rate volatility and the financial markets should "plane out" going into 2005. There may be some added volatility continuing into year end due to Iraq, the presidential election, and/or continued varied opinions on the economy; however, the stage is set for a more normal, self-sustaining economic performance. In this environment, income will again dominate total return, and corporate America will maintain a relatively healthy credit profile. This implies a yield based strategy of U.S. Governments, High Yield corporate bonds, and Mortgage Backed Securities will provide attractive return profiles. Also, on the International front, some higher yielding and maturing economies will provide additional yield and total return opportunities. Going forward, we will continue to attempt to maintain a well-balanced, diversified portfolio of U.S. Government, International Government, and High Yield Corporate bonds to provide income and stability. /s/ Agnes G. Pampush /s/ Neil J. Powers Agnes G. Pampush, CFA Neil J. Powers, CFA Managing Director Managing Director 20 T Shares Average Annual Total Returns (periods ended May 31, 2004) - ---------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date - ---------------------------------------- 4.15% 5.41% 14.08% - ----------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT 34/33/33 Hybrid of Merrill AAA U.S. Treasury/ Agency Master, Merrill High STI Classic Strategic Yield Master II, & Merrill Merrill AAA U.S. Merrill High Merrill Global Income Fund, Global Government Treasury/Agency Yield Master II Government Bond T Shares Bond II ex U.S. Indices Master Index Index II ex U.S. Index 11/30/01 $10,000 $10,000 $10,000 $10,000 $10,000 5/02 $10,075 $10,107 $10,146 $10,174 $ 9,991 5/03 $10,954 $11,244 $11,476 $11,159 $11,003 5/04 $11,409 $11,554 $11,228 $12,459 $10,928 A Shares Average Annual Total Returns (periods ended May 31, 2004) - ---------- Cumulative Inception to Date - ---------- 2.59% Without CDSC - ------ - -1.29% With CDSC COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT 34/33/33 Hybrid of Merrill AAA U.S. Treasury/ Agency Master, Merrill High STI Classic Strategic Yield Master II, & Merrill Merrill AAA U.S. Merrill High Merrill Global Income Fund, Global Government Treasury/Agency Yield Master II Government Bond A Shares Bond II ex U.S. Indices Master Index Index II ex U.S. Index 10/31/03 $9,625 $10,000 $10,000 $10,000 $10,000 5/04 $9,819 $10,195 $10,043 $10,370 $10,177 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ---------------------------------------- Annualized Cumulative Inception Inception One Year to Date to Date - ---------------------------------------- 3.59% 4.89% 12.67% Without CDSC - ---------------------------------------- 1.63% With CDSC - ------ COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT 34/33/33 Hybrid of Merrill AAA U.S. Treasury/ Agency Master, Merrill High STI Classic Strategic Yield Master II, & Merrill Merrill AAA U.S. Merrill High Merrill Global Income Fund, Global Government Treasury/Agency Yield Master II Government Bond L Shares Bond II ex U.S. Indices Master Index Index II ex U.S. Index 11/30/01 $10,000 $10,000 $10,000 $10,000 $10,000 5/02 $10,056 $10,107 $10,146 $10,174 $ 9,991 5/03 $10,876 $11,244 $11,476 $11,159 $11,003 5/04 $11,267 $11,554 $11,228 $12,459 $10,928
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 21 STI CLASSIC U.S. GOVERNMENT SECURITIES FUND ------------------------------------------- The STI Classic U.S. Government Securities Fund (the "Fund") seeks to provide a high level of total return through the combination of interest income and principal appreciation, while preserving capital through the investment in U.S. Agency and mortgage related securities. For the year end May 31, 2004, the Fund's T shares had a total return of -1.77% versus the average return of -0.89% for the Lehman Intermediate U.S. Government Bond Index. For the same period, the Merrill Lynch Government/Mortgage Fund had a total return of -0.51%. (The Merrill Index is non-managed and has no fees.) During the early part of the period of review, the Federal Reserve Bank ("Fed") continued to be publicly concerned about the risks of deflationary price pressures in the economy, and thus lowered the Fed Funds rate to a 40-year low of 1% in late June 2003. However, shortly thereafter, published economic data began to significantly improve on a sustained basis. This strength, along with firming commodity, oil, and precious metals prices, caused market interest rates to move up sharply across the yield curve. From May 2003 to May 2004 interest rates increased from 100 to 150 basis points ("bp") across all maturity ranges. Over this period, mortgage-backed securities ("MBS") generally underperformed similar duration Agency and Treasury securities. During a very difficult July 2003, the MBS sector underperformed U.S. Treasuries on a duration-matched basis by 145 bp. As interest and mortgage rates moved higher, the estimated average duration of the MBS Index extended from .5 year to almost 4 years. This change has a strong tendency to put downward price pressure on mortgage-related securities. Given the Fund's overweight position in higher yielding MBS, this caused the Fund to underperform the Lehman and Merrill categories. Somewhat offsetting this underperformance was positive attribution due to duration and yield curve positioning. The Fund continues to maintain an overweight position in MBS. A large portion of the mortgages are adjustable rate, and thus will reset at higher rate levels over the next few years. Additionally, the Fund has a somewhat shorter maturity structure than the Lehman and Merrill categories. As the Fed prepares to move the Fed Funds' rate higher in the near future, the Fund is well positioned to achieve its investment objective of continuing to provide a high level of total return while preserving principal value. /s/ Michael Sebesta Michael Sebesta Managing Director 22 T Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.77% 5.01% 5.57% 6.23% 81.15% - -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic U.S. Government Merrill Lynch Government/ Lehman Intermediate Securities Fund, Mortgage Custom U.S. Government T Shares Index* Bond Index 8/31/94 $10,000 $10,000 $10,000 5/95 $10,832 $10,925 $10,734 5/96 $11,132 $11,404 $11,221 5/97 $11,972 $12,331 $12,018 5/98 $13,260 $13,653 $13,050 5/99 $13,777 $14,284 $13,699 5/00 $14,002 $14,685 $14,112 5/01 $15,599 $16,504 $15,777 5/02 $16,831 $17,847 $16,978 5/03 $18,388 $19,680 $18,703 5/04 $18,063 $19,579 $18,536 A Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -2.17% 4.58% 5.13% 5.76% 74.89% Without load - ----------------------------------------------------------------------------- - -5.87% 3.27% 4.33% 5.35% 68.33% With load - ----------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic U.S. Government Merrill Lynch Government/ Lehman Intermediate Securities Fund, Mortgage Custom U.S. Government A Shares Index* Bond Index 6/30/94 $ 9,625 $10,000 $10,000 5/95 $10,571 $11,139 $10,906 5/96 $10,832 $11,628 $11,401 5/97 $11,613 $12,573 $12,211 5/98 $12,801 $13,921 $13,259 5/99 $13,257 $14,564 $13,919 5/00 $13,415 $14,974 $14,338 5/01 $14,883 $16,827 $16,030 5/02 $15,995 $18,197 $17,250 5/03 $17,401 $20,066 $19,002 5/04 $17,024 $19,964 $18,833 L Shares Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -2.67% 4.06% 4.62% 4.86% 53.11% Without CDSC - ----------------------------------------------------------------------------- - -4.56% With CDSC - ------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic U.S. Government Merrill Lynch Government/ Lehman Intermediate Securities Fund, Mortgage Custom U.S. Government L Shares Index* Bond Index 6/30/95 $10,000 $10,000 $10,000 5/96 $10,143 $10,365 $10,387 5/97 $10,809 $11,207 $11,125 5/98 $11,866 $12,409 $12,080 5/99 $12,221 $12,982 $12,681 5/00 $12,306 $13,347 $13,063 5/01 $13,592 $14,999 $14,605 5/02 $14,552 $16,220 $15,716 5/03 $15,737 $17,886 $17,313 5/04 $15,316 $17,795 $17,159
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. *The Merrill Lynch Government/Mortgage Index is a synthetic index created by combining, at their respective market weights: (i) the Merrill Lynch Government Master Index, which is a widely-recognized index comprised of U.S. Treasury securities and U.S. Government agency securities with a maturity of at least one year; and (ii) the Merrill Lynch Mortgage Master Index, which is a widely-recognized market value-weighted index comprised of mortgage-backed securities including 15 and 30 year single family mortgages in addition to aggregate pooled mortgages. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 23 STI CLASSIC VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND ----------------------------------------------------- The STI Classic Virginia Intermediate Municipal Bond Fund (the "Fund") is an intermediate maturity fund that holds, primarily, investment grade bonds, supplemented by a small allocation to non-rated bonds that the Advisor believes to have characteristics similar to lower investment grade rated bonds. The Fund purchases securities issued by the Commonwealth of Virginia, its authorities, political subdivisions and agencies, occasionally supplemented with bonds from Puerto Rico that are exempt from state income taxation. The Fund seeks to generate a competitive total return and income distribution with a more stable net asset value than long term funds. We expect to maintain an average maturity between 5 and 10 years with no limitation on the maturity of a single holding. Currently, the Fund's longest bonds mature in 20 years. Nearly 75% of assets mature within 12 years. Duration normally ranges between 5 and 5.5. Modified adjusted duration is currently 5.18. The Fund monitors the Lehman 5-Year Municipal Bond Index as well as the Lipper Other States Intermediate Municipal Debt Funds Objective peer group. Compared to one year ago, the municipal yield curve remains steep at +305 basis points compared to +322, as measured from 2 to 30 years. However, in the short to intermediate area the slope has witnessed a greater adjustment as rates have risen dramatically across the curve after reaching near 40 year lows in June 2003. In terms of yield changes, rates climbed 103 bp on 5-year high-grade bonds, 84 bp in 10 years, 77 bp in 15 years, 71 bp in 20 years, and 69 bp in 30 years. Much of this increase occurred in the 2nd quarter of 2004 with a better U S employment situation and an expectation that the Federal Reserve will raise overnight interest rates. As the curve flattened in the intermediate range, returns were negative in the municipal market over 12 months within the 5 to 15 year area while positive returns were generated on 1 to 3 year bonds and 15 to 20 years bonds due to their income advantage. For the 12 months ended May 31 the Fund produced a competitive return. Our emphasis on credit quality provided a minor allocation to bonds rated below single-A of just 5.5% while over 85% of assets were rated double or triple A. The largest sectors represented are local general obligations at 30%, health care at 19% and housing at 13% of assets. Bonds subject to the Alternative Minimum Tax are 8.5%. For the year, the Fund's total rate of return was -1.00% for the T Shares. The Lehman 5-Year Municipal Bond Index (computed without fees) had a return of - -0.39% for the same period. The Lipper Municipal Debt Funds Objective average return was reported as -1.07%. The Fund has tended to outperform in sideways to down markets with its emphasis on high coupon bonds, including some lower rated and callable bonds. These securities do not usually capture price appreciation when rates are dropping as was the case over most of the last four years. The Fund has not been traded actively, resulting in a portfolio that is not "bulleted" to a particular part of the short to intermediate spectrum. As a result the Fund has been an average performer over longer periods while providing a very competitive income distribution. Thus far in calendar year 2004 the Fund is performing better than the peer group average and we expect this to continue if rates rise. The U S economy has shown gradual improvement in recent months as measured by employment, industrial production, and the housing market. The headline consumer and producer price indices exhibit large gains while the year over year level of the indices, as measured by the so called "core rate" without volatile food and energy costs, remains below 2%. Meanwhile, the war in Iraq and the U S budget and trade deficits continue to be serious concerns, much as they were one year ago. We expect higher yields and a flatter curve and expect to be positioned shorter than the average of recent years. Higher coupon bonds are our preferred choice and the largest portion of holdings will continue to be AA and AAA rated bonds with some lower rated and well researched non-rated local bonds included for their contribution to the Fund's income distribution. /s/ George E. Calvert Jr. George E. Calvert Jr. Vice President 24 T Shares(1) Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.00% 4.24% 4.29% 4.66% 67.97% - -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Virginia Lehman 5-Year Lipper Other States Intermediate Municipal Bond Municipal Bond Intermediate Municipal Fund, T Shares Index Debt Funds Objective 5/31/94 $10,000 $10,000 $10,000 5/95 $10,787 $10,713 $10,694 5/96 $11,181 $11,210 $11,086 5/97 $11,847 $11,880 $11,753 5/98 $12,721 $12,676 $12,577 5/99 $13,163 $13,285 $13,009 5/00 $12,990 $13,385 $12,853 5/01 $14,340 $14,754 $14,105 5/02 $15,132 $15,711 $14,848 5/03 $16,407 $17,106 $16,100 5/04 $16,243 $17,040 $15,928 A Shares(1) Average Annual Total Returns (periods ended May 31, 2004) - --------------------------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years 10 Years to Date to Date - --------------------------------------------------------------------------------------------- - -1.04% 4.20% 4.25% 4.95% 4.43% 61.65% Without load - --------------------------------------------------------------------------------------------- - -4.78% 2.86% 3.45% 4.55% 4.07% 55.57% With load - --------------------------------------------------------------------------------------------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Virginia Lehman 5-Year Lipper Other States Intermediate Municipal Bond Municipal Bond Intermediate Municipal Fund, A Shares Index Debt Funds Objective 5/31/94 $ 9,625 $10,000 $10,000 5/95 $10,371 $10,713 $10,694 5/96 $10,748 $11,210 $11,086 5/97 $11,388 $11,880 $11,753 5/98 $12,239 $12,676 $12,577 5/99 $12,667 $13,285 $13,009 5/00 $12,510 $13,385 $12,853 5/01 $13,790 $14,754 $14,105 5/02 $14,544 $15,711 $14,848 5/03 $15,763 $17,106 $16,100 5/04 $15,599 $17,040 $15,928
(1) Returns prior to May 24, 1999 represent the performance of the CrestFund Virginia Intermediate Municipal Bond Fund. Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 25 STI CLASSIC VIRGINIA MUNICIPAL BOND FUND ---------------------------------------- The STI Classic Virginia Municipal Bond Fund (the "Fund") is a long term bond fund that holds, primarily, investment grade bonds supplemented by a small allocation to non rated bonds that the Advisor believes are comparable in quality to lower investment grade bonds. The Fund purchases securities issued by the Commonwealth of Virginia, its political subdivisions, authorities and agencies, supplemented, occasionally, with bonds issued by Puerto Rico. The Fund seeks to generate a competitive total rate of return ("TRR") with an attractive distribution to shareholders. The Fund holds bonds maturing out to 30 years as well as variable rate tender bonds as money market securities. Though there are no average maturity or duration limitations on the portfolio, we generally follow the Lipper Virginia peer group characteristics and the duration of the Lehman 10-Year Index with its modified adjusted duration of 6.89 years and average maturity of 9.80 years at May 31. The Fund's duration was shorter at 6.38 and average maturity was 11.83 years. We also monitor the Lehman G O Index with its wider maturity dispersion but similar duration as the 10-Year Index. Compared to one year ago, the municipal yield curve remains steep at +305 basis points compared to +322, as measured from 2 to 30 years. However, in the short to intermediate area the slope has witnessed a greater adjustment and rates have risen dramatically after reaching near 40 year lows in June 2003. In terms of yield changes, rates climbed 103 bp on 5-year high-grade bonds, 84 bp in 10 years, 77 bp in 15 years, 71 bp in 20 years, and 69 bp in 30 years. Much of this increase occurred in the 2nd quarter of 2004 with a better U S employment picture and the expectation of the Federal Reserve finally lifting overnight rates. As the curve flattened in the intermediate range, returns were negative over 12 months within the 5 to 15 year area while positive returns were generated only on the shortest bonds and bonds maturing in 15 to 20 years due to their income advantage. The Fund holds all sectors of the market with an emphasis on credit quality and higher coupon bonds. Approximately 79% of total assets were rated double A or higher. There is little or no sector concentration with G O bonds the largest at 23% followed by water & sewer revenue bonds at 18% and healthcare at 14%. The Fund holds 7.5% of assets in non-rated, governmental purpose and private activity bonds for yield enhancement. Bonds subject to the Alternative Minimum Tax comprise only 2.0% of assets. For the year the Fund's TRR for T Shares was -0.90% while the Lehman 10-Year Municipal Bond Index (computed without fees) had a return of -0.39% for the same period. The Lipper Virginia Municipal Debt Funds Objective return was reported as -0.67%. The Fund lagged the peers over 12 months as many of our large premium coupon bonds failed to capture the rallies and price appreciation that occurred late in 2003 and again in early 2004. These bonds, unfortunately also suffered along with the 5 to 15 year area when the severe market correction began in March and their duration "extended" from the call dates. The U.S. economy has shown gradual improvement in recent months as measured by employment, industrial production, and the strong housing market. Headline consumer and producer price indices are showing noticeable jumps while the year over year level of these indices, as measured by the so called "core rate" without volatile food and energy costs, remains below 2%. Meanwhile, the war in Iraq and the U S budget and trade deficits remain a concern, much as they were one year ago. We expect higher yields and a flatter curve and are positioned shorter than in recent years. Higher coupon bonds are our preferred choice and the largest portion of holdings will continue to be AA and AAA rated bonds with some lower rated and well researched non-rated bonds included for their contribution to income. /s/ George E. Calvert Jr. George E. Calvert Jr. Vice President 26 T Shares(1) Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -0.90% 4.86% 4.48% 5.17% 58.67% - -----------------------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Virginia Lehman 10-Year Lipper Virginia Municipal Bond Fund, Municipal Bond Municipal Debt T Shares Index Funds Objective 4/30/95 $10,000 $10,000 $10,000 5/95 $10,333 $10,317 $10,319 5/96 $10,568 $10,805 $10,696 5/97 $11,302 $11,688 $11,499 5/98 $12,356 $12,772 $12,572 5/99 $12,820 $13,361 $13,016 5/00 $12,412 $13,337 $12,660 5/01 $13,841 $14,911 $14,045 5/02 $14,657 $15,889 $14,776 5/03 $16,103 $17,650 $16,138 5/04 $15,958 $17,581 $16,030 L Shares(1) Average Annual Total Returns (periods ended May 31, 2004) - ----------------------------------------------------------------------------- Annualized Cumulative Inception Inception One Year 3 Years 5 Years to Date to Date - ----------------------------------------------------------------------------- - -1.90% 3.88% 3.51% 4.19% 45.40% Without CDSC - ----------------------------------------------------------------------------- - -3.77% With CDSC - -------- COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT STI Classic Virginia Lehman 10-Year Lipper Virginia Municipal Bond Fund, Municipal Bond Municipal Debt L Shares Index Funds Objective 4/30/95 $10,000 $10,000 $10,000 5/95 $10,336 $10,317 $10,319 5/96 $10,480 $10,805 $10,696 5/97 $11,121 $11,688 $11,499 5/98 $12,051 $12,772 $12,572 5/99 $12,400 $13,361 $13,016 5/00 $11,888 $13,337 $12,660 5/01 $13,146 $14,911 $14,045 5/02 $13,794 $15,889 $14,776 5/03 $15,020 $17,650 $16,138 5/04 $14,735 $17,581 $16,030
(1) Returns prior to May 24, 1999 represent the performance of the CrestFund Virginia Municipal Bond Fund. Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 27 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 FLORIDA TAX-EXEMPT BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MUNICIPAL BONDS (98.0%) FLORIDA (87.9%) Brevard County, Sales Tax Authority, RB, MBIA Prerefunded @ 101 (F) 5.700%, 12/01/04 $ 100 $ 103 Brevard County, School Board, COP, AMBAC Callable 07/01/12 @ 100 5.500%, 07/01/17 1,360 1,474 5.500%, 07/01/18 3,015 3,255 Brevard County, Utility Authority, RB, FGIC Callable 03/01/12 @ 100 5.250%, 03/01/13 1,000 1,088 5.250%, 03/01/14 1,000 1,080 Broward County, Airport Systems Authority, RB, MBIA, AMT Callable 10/01/08 @ 101 5.375%, 10/01/13 5,100 5,401 Broward County, School Board, COP, MBIA Callable 07/01/13 @ 100 5.250%, 07/01/15 1,750 1,892 Collier County, Water-Sewer District, Ser B, RB, FSA Callable 07/01/13 @ 100 5.500%, 07/01/16 2,125 2,323 Dade County, Aviation Authority, Ser A, RB, AMBAC Callable 10/01/05 @ 102 6.000%, 10/01/09 500 535 Dade County, Ser CC, GO, AMBAC 7.125%, 10/01/15 2,380 2,948 Daytona Beach, Utility Systems Authority, Ser D, RB, FSA Callable 11/15/12 @ 100 5.250%, 11/15/15 1,000 1,078 Deerfield Beach, Water & Sewer Authority, Refunding & Improvement Project, RB, FGIC 6.125%, 10/01/06 250 261 Escambia County, Sales Tax Authority, RB, AMBAC Callable 10/01/12 @ 101 5.250%, 10/01/15 2,165 2,347 Florida State, Board of Education, Capital Outlay, GO, ETM 9.125%, 06/01/14 950 1,260 Florida State, Board of Education, Capital Outlay, Public Education Project, Ser B, GO Callable 06/01/08 @ 101 5.250%, 06/01/11 1,000 1,076 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Florida State, Board of Education, Capital Outlay, Public Education Project, Ser B, GO Callable 06/01/11 @ 101 5.500%, 06/01/15 $3,000 $ 3,263 Florida State, Board of Education, Capital Outlay, Public Education Project, Ser B, GO, FGIC Callable 06/01/12 @ 101 5.375%, 06/01/18 2,130 2,283 Florida State, Board of Education, Capital Outlay, Public Education Project, Ser C, GO Callable 06/01/05 @ 101 5.400%, 06/01/10 2,745 2,869 Florida State, Board of Education, Capital Outlay, Public Education Project, Ser D, GO Callable 06/01/12 @ 100 5.375%, 06/01/15 1,535 1,660 Florida State, Board of Education, Capital Outlay, Public Education Project, Ser D, GO Callable 06/01/10 @ 101 5.625%, 06/01/15 1,235 1,346 Florida State, Board of Education, Capital Outlay, Public Education Project, Ser D, GO Callable 06/01/10 @ 101 5.500%, 06/01/14 790 868 Florida State, Board of Education, Capital Outlay, Ser C, GO, ETM Callable 07/06/04 @ 100 7.100%, 06/01/07 190 196 Florida State, Board of Education, Lottery Revenue, Ser A, RB, FGIC Callable 07/01/10 @ 101 6.000%, 07/01/12 1,295 1,471 Florida State, Board of Education, Lottery Revenue, Ser A, RB, FGIC Callable 07/01/12 @ 101 5.375%, 07/01/15 3,500 3,817 Florida State, Board of Education, Lottery Revenue, Ser B, RB, FGIC Callable 07/01/10 @ 101 5.500%, 07/01/12 4,050 4,497 Florida State, Board of Education, Public Education Project, Ser H, GO, FSA 5.250%, 06/01/11 2,150 2,372 Florida State, Board of Education, Public Education Project, Ser J, GO 5.000%, 06/01/12 4,460 4,841 28 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Florida State, Boynton Beach, Utility System Authority, RB, FGIC 5.500%, 11/01/16 $1,310 $ 1,461 5.375%, 11/01/14 2,000 2,229 Florida State, Department of Environmental Protection & Preservation, Florida Forever Project, Ser A, RB, MBIA 5.000%, 07/01/11 3,000 3,265 Florida State, Department of Environmental Protection & Preservation, Ser A, RB 5.500%, 07/01/13 3,920 4,399 Florida State, Division of Bond Finance, Department of General Services, Department of Environmental Protection & Preservation, Ser 2000-A, RB, FGIC Callable 07/01/09 @ 101 5.375%, 07/01/11 2,130 2,324 Florida State, Division of Bond Finance, Department of General Services, Department of Environmental Protection & Preservation, Ser 2000-A, RB, MBIA 6.000%, 07/01/06 1,000 1,080 Florida State, Housing Financing Authority, Homeowner Mortgage Project, Ser 7, RB, AMT, FSA Callable 07/01/09 @ 100 5.200%, 01/01/31 590 604 Florida State, Jea-Johns River Power Park System, Issue 2 - 17th Ser, RB 5.250%, 10/01/10 2,000 2,186 Florida State, Municipal Loan Council, Ser A, RB, MBIA 5.000%, 05/01/12 2,165 2,340 Florida State, Turnpike Authority, Department of Transportation, RB, FGIC 5.000%, 07/01/04 1,500 1,505 Florida State, Turnpike Authority, Department of Transportation Project, Ser B, RB, AMBAC Callable 07/01/13 @ 101 5.250%, 07/01/14 2,215 2,437 Greater Orlando, Aviation Authority, Airport Facilities, RB, AMT, FGIC 5.500%, 10/01/17 1,810 1,950 5.250%, 10/01/13 725 773 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Hillsborough County, Industrial Development Authority, University Community Hospital Project, RB, MBIA 6.500%, 08/15/19 $ 145 $ 173 Jacksonville, Electric Authority, Electrical Systems Project, Ser 3-A, RB Callable 10/01/07 @ 101 5.250%, 10/01/13 1,000 1,074 Jacksonville, Health Facilities Authority, Charity Obligation Group, Ser C, RB Prerefunded @ 101 (F) 5.750%, 08/15/09 3,090 3,434 Jacksonville, Sales Tax Revenue, RB, AMBAC Callable 10/01/11 @ 100 5.500%, 10/01/13 1,435 1,590 5.500%, 10/01/14 1,200 1,321 5.500%, 10/01/15 1,550 1,675 Jacksonville, Sales Tax Revenue, River City Renaissance Project, RB, FGIC Prerefunded @ 101 (F) 5.500%, 04/01/06 5,525 5,920 Lakeland, Utility Tax Authority, Ser A, RB, FGIC Prerefunded @ 102 (F) 5.700%, 10/01/04 100 103 Lee County, Industrial Development Authority, Bonita Springs Utilities Project, RB, AMT, MBIA Callable 11/01/06 @ 101 5.750%, 11/01/10 1,480 1,591 Lee County, Memorial Health Systems Hospital, Ser A, RB, FSA Callable 04/01/12 @ 100 5.750%, 04/01/15 1,000 1,097 Lee County, Transportation Facilities Authority, Ser A, RB, AMBAC Callable 10/01/11 @ 100 5.500%, 10/01/13 2,000 2,217 Lee County, Transportation Facilities Authority, Ser B, RB, AMBAC 5.000%, 10/01/12 2,000 2,174 Miami, Parking Facilities Authority, RB, MBIA 5.250%, 10/01/15 1,000 1,085 Ocala, Capital Improvements, RB, AMBAC Callable 10/01/13 @ 100 5.375%, 10/01/17 1,610 1,734 5.375%, 10/01/18 1,700 1,826 29 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 FLORIDA TAX-EXEMPT BOND FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Orange County, Health Facilities Authority, Ser C, RB, ETM, MBIA 6.250%, 10/01/16 $4,855 $ 5,711 Orange County, School Board Certificate Partnership, Ser A, COP, MBIA Callable 08/01/12 @ 100 5.500%, 08/01/18 2,335 2,522 Orange County, Tourist Development Tax Authority, RB, MBIA Callable 10/01/07 @ 101 4.900%, 10/01/11 2,000 2,122 Orlando, Utilities Commission Water & Sewer Authority, Sub-Ser D, RB, ETM 6.750%, 10/01/17 5,385 6,492 Osceola County, Tourist Development Tax Authority, Ser A, RB, FGIC Callable 10/01/12 @ 100 5.500%, 10/01/15 1,000 1,094 Palm Beach County, Criminal Justice Facility, RB 5.000%, 06/01/15 1,865 1,992 Palm Beach County, Land Acquisition Program, Ser A, GO Callable 06/01/11 @ 100 5.500%, 06/01/16 1,200 1,298 5.375%, 06/01/13 2,260 2,478 5.375%, 06/01/14 1,050 1,151 Palm Beach County, Public Improvement Authority, RB, Callable 08/01/14 @ 100 5.000%, 08/01/16 2,000 2,113 Palm Beach County, School Board Authority, Ser C, COP, FSA Callable 08/01/12 @ 100 5.500%, 08/01/14 2,735 3,017 5.500%, 08/01/19 3,305 3,556 Palm Beach County, Solid Waste Authority, Ser A, RB, ETM, AMBAC 6.000%, 10/01/09 300 340 Pensacola, Airport Authority, Ser A, RB, AMT, MBIA 6.250%, 10/01/09 505 565 Pensacola, Airport Authority, Ser A, RB, AMT, MBIA Callable 10/01/08 @ 102 6.000%, 10/01/12 1,075 1,186 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Plant City, Utility Systems Authority, Refunding & Improvements Project, RB, MBIA 6.000%, 10/01/15 $ 400 $ 463 Polk County, Utility Systems Authority, RB, ETM, FGIC 6.000%, 10/01/08 2,250 2,431 Polk County, Utility Systems Authority, RB, FGIC Callable 10/01/13 @ 100 5.250%, 10/01/19 3,270 3,452 5.250%, 10/01/20 2,940 3,088 Port Orange, Water & Sewer Authority, RB, AMBAC Callable 10/01/12 @ 101 5.000%, 10/01/16 1,345 1,418 Reedy Creek, Improvements District, Ser 1, RB, MBIA 6.000%, 10/01/04 2,495 2,535 6.000%, 10/01/05 2,645 2,796 Reedy Creek, Improvements District, Ser A, GO, MBIA Callable 04/01/14 @ 100 5.000%, 06/01/17 2,185 2,289 Sarasota County, Public Hospitals Board, Sarasota Memorial Hospital, Ser B, RB, MBIA 5.250%, 07/01/14 2,000 2,172 Tampa, Guaranteed Entitlement Authority, RB, AMBAC 6.000%, 10/01/18 500 570 Tampa, Sales Tax Authority, Ser A, RB, AMBAC Callable 10/01/11 @ 101 5.375%, 10/01/14 1,640 1,794 -------- 167,816 -------- PUERTO RICO (10.1%) Puerto Rico Commonwealth, Electric Power Authority, Capital Appreciation Project, Ser N, GO, FGIC (D) 1.050%, 07/01/04 4,740 4,734 Puerto Rico Commonwealth, Municipal Finance Agency, Ser A, RB, FSA Callable 08/01/12 @ 100 5.250%, 08/01/14 4,330 4,729 5.250%, 08/01/16 1,020 1,101 30 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) - -------------------------------------------------------------------------------- Puerto Rico Commonwealth, Public Buildings Authority, Government Facilities Project, Ser A, RB, ETM, AMBAC 6.750%, 07/01/05 $3,000 $ 3,170 Puerto Rico Commonwealth, Public Improvements Project, Ser A, GO, FGIC 5.500%, 07/01/11 1,000 1,125 Puerto Rico Commonwealth, Public Improvements Project, Ser A, GO, MBIA 5.500%, 07/01/18 1,000 1,119 Puerto Rico Commonwealth, Public Improvements Project, Ser B, GO, FGIC 5.500%, 07/01/13 3,000 3,384 -------- 19,362 -------- Total Municipal Bonds (Cost $186,840) 187,178 -------- CASH EQUIVALENT (1.0%) SEI Tax Exempt Trust, Institutional Tax Free Fund 1,910,068 1,910 -------- Total Cash Equivalent (Cost $1,910) 1,910 -------- Total Investments (99.0%) (Cost $188,750) 189,088 -------- OTHER ASSETS AND LIABILITIES (1.0%) Investment Advisory Fees Payable (99) Distribution Fees Payable (11) Administration Fees Payable (11) Custody Fees Payable (1) Transfer Agent Shareholder Servicing Fees Payable (1) Payable to Adviser (1) Receivable from Affiliated Funds 1 Other Assets and Liabilities, Net 1,958 -------- Total Other Assets and Liabilities 1,835 -------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 15,099,912 outstanding shares of beneficial interest $162,775 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 540,156 outstanding shares of beneficial interest 5,817 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 1,821,165 outstanding shares of beneficial interest 19,902 Undistributed net investment income 4 Accumulated net realized gain on investments 2,087 Net unrealized appreciation on investments 338 -------- Total Net Assets (100.0%) $190,923 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($165,065,498 / 15,099,912 shares) $10.93 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($5,905,656 / 540,156 shares) $10.93 ======== Maximum Offering Price Per Share -- A Shares ($10.93 / 96.25%) $11.36 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($19,952,126 / 1,821,165 shares) $10.96 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 31 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 GEORGIA TAX-EXEMPT BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MUNICIPAL BONDS (97.5%) GEORGIA (90.1%) Athens, Housing Authority, Student Housing Lease Project, RB, AMBAC Callable 12/01/12 @ 100 5.250%, 12/01/21 $1,000 $ 1,037 Athens-Clarke County, Government Development Educational Facilities, RB, AMBAC Callable 12/15/12 @ 100 5.000%, 12/15/16 1,000 1,047 Augusta, Water & Sewer, RB, FSA Callable 10/01/12 @ 100 5.250%, 10/01/21 1,250 1,300 Brunswick, Water & Sewer, Refunding & Improvement Project, RB, MBIA 6.100%, 10/01/14 1,000 1,163 Burke County, Development Authority, Pollution Control, Vogtle Project, RB (C) 1.250%, 10/01/32 3,870 3,870 Carroll County, Water & Sewer Authority, RB, AMBAC Callable 07/01/12 @ 101 5.250%, 07/01/21 1,115 1,159 Central Valdosta, Development Authority, Lowndes County Judicial Project, RB Callable 06/01/13 @ 102 5.250%, 06/01/21 1,885 1,959 Clarke County, Hospital Authority, Athens Regional Medical Control Project, RB, MBIA 5.375%, 01/01/07 1,425 1,527 Cobb-Mariatta County, Coliseum & Exhibit Hall, Performing Arts Center Project, RB Callable 01/01/14 @ 100 5.000%, 01/01/22 2,960 3,023 Cobb-Marietta County, Coliseum & Expo Project, RB, MBIA 5.625%, 10/01/26 2,400 2,607 5.500%, 10/01/12 940 1,045 Dalton, Utilities, RB, MBIA 6.000%, 01/01/08 3,240 3,584 DeKalb County, Development Authority, Emory University Project, Ser A, RB 5.375%, 11/01/05 5,150 5,414 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Dougherty County, School District, Sales Tax Authority, GO 4.000%, 03/01/07 $2,000 $ 2,080 Douglasville-Douglas County, Water & Sewer Authority, RB, AMBAC 5.625%, 06/01/15 1,390 1,552 Forsyth County, Hospital Authority, Baptist Health Care System Project, RB, ETM Callable 10/01/08 @ 102 6.375%, 10/01/28 1,000 1,199 Forsyth County, School District, GO Callable 02/01/10 @ 102 6.000%, 02/01/15 1,000 1,120 Fulton County, Development Authority, Klaus Parking & Family Housing Projects, RB, MBIA Callable 11/01/13 @ 100 5.250%, 11/01/15 2,535 2,744 5.250%, 11/01/16 2,000 2,146 Fulton County, School District, GO 5.500%, 01/01/21 400 441 Fulton County, Water & Sewer, RB, ETM, FGIC 6.375%, 01/01/14 1,000 1,161 Fulton-Dekalb County, Hospital Authority, RB, FSA Callable 01/01/14 @ 100 5.250%, 01/01/16 5,100 5,465 Georgia State, Association of County Commissioners, Leasing Program, Public Purpose Project, COP Callable 04/01/14 @ 102 5.250%, 04/01/21 2,680 2,790 5.250%, 04/01/24 1,850 1,892 Georgia State, Municipal Electric Authority, RB, ETM 8.000%, 01/01/15 1,900 2,470 Georgia State, Private Colleges & Universities Facilities Authority, Mercer University Project, RB, ETM, MBIA 6.400%, 11/01/11 1,675 1,919 Georgia State, Road & Thruway Authority, Governors Transportation Choices Project, RB Callable 03/01/12 @ 100 5.000%, 03/01/21 1,000 1,029 32 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Georgia State, Ser A, GO 6.250%, 03/01/06 $1,000 $ 1,073 Georgia State, Ser B, GO 6.250%, 04/01/06 2,850 3,065 Gwinnett County, Development Authority, Public Schools Project, COP, MBIA Callable 01/01/14 @ 100 5.250%, 01/01/21 2,910 3,019 Gwinnett County, School District, Ser B, GO 6.400%, 02/01/07 1,500 1,653 Heard County, Development Authority, Pollution Control, RB (C) 1.250%, 09/01/29 2,475 2,475 Henry County, Hospital Authority, Henry Medical Center Project, RB, AMBAC Prerefunded @ 102 (F) 5.500%, 07/01/07 1,640 1,812 Henry County, Water & Sewer, RB, AMBAC 6.150%, 02/01/20 2,465 2,883 Henry County, Water & Sewer, RB, FGIC Callable 02/02/10 @ 101 5.625%, 02/01/30 1,750 1,826 Medical Center Hospital Authority, Columbus Regional Health Care System, RB, MBIA Prerefunded @ 102 (F) 6.000%, 08/01/05 1,340 1,436 Metropolitan Atlanta, Rapid Transportation Authority, Ser E, RB, ETM Callable 07/01/08 @ 100 7.000%, 07/01/11 3,595 4,214 Metropolitan Atlanta, Rapid Transportation Authority, Ser N, RB 6.000%, 07/01/07 1,000 1,099 Newnan, Hospital Authority, Newnan Hospital Project, RB, MBIA Callable 01/01/13 @ 100 5.500%, 01/01/16 2,435 2,632 5.500%, 01/01/17 2,570 2,761 Oconee County, Industrial Development Authority, OIIT Project, RB Callable 07/01/13 @ 100 5.250%, 07/01/18 1,500 1,571 5.250%, 07/01/23 1,295 1,321 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Paulding County, School District, GO, MBIA 6.000%, 02/01/10 $1,000 $ 1,133 Paulding County, School District, Ser A, GO 6.625%, 02/01/07 1,000 1,105 6.625%, 02/01/08 525 592 Savannah, Water & Sewer Authority, RB, ETM Callable 06/01/04 @ 100 6.450%, 12/01/04 1,000 1,026 South Fulton, Municipal Regional Water & Sewer, RB, MBIA Callable 01/01/13 @ 100 5.250%, 01/01/21 1,600 1,666 South Georgia, Governmental Services, Telecommunications/ Cable Project, RB, FGIC Callable 01/01/14 @ 102 5.000%, 01/01/20 1,395 1,436 Tift County, Hospital Authority, RB, AMBAC Callable 12/01/12 @ 101 5.250%, 12/01/17 1,965 2,067 Valdosta & Lowndes County, Hospital Authority, South Georgia Medical Center Project, RB, AMBAC Callable 10/01/12 @ 101 5.500%, 10/01/15 965 1,045 5.250%, 10/01/27 1,110 1,120 Vidalia, Water & Sewer, RB, ETM, Callable 07/01/04 @ 101 6.000%, 07/01/07 605 667 Walker, Dade & Catoosa Counties, Hutcheson Medical Project, Ser A, RB, FSA Callable 10/01/07 @ 102 5.500%, 10/01/08 1,370 1,498 -------- 102,938 -------- PUERTO RICO (7.4%) Puerto Rico Commonwealth, Electric Power Authority, Ser II, RB, MBIA Callable 07/01/12 @ 101 5.375%, 07/01/16 2,000 2,181 Puerto Rico Commonwealth, Highway & Transportation Authority, Ser G, RB, FGIC Callable 07/01/13 @ 100 5.250%, 07/01/19 3,000 3,192 33 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 GEORGIA TAX-EXEMPT BOND FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) - -------------------------------------------------------------------------------- Puerto Rico Commonwealth, Public Buildings Authority, Government Facilities, Ser 1, RB Callable 07/01/14 @ 100 5.500%, 07/01/22 $3,000 $ 3,134 -------- 8,507 -------- Total Municipal Bonds (Cost $111,129) 111,445 -------- CASH EQUIVALENTS (4.1%) Federated Tax Free Reserve Fund 4,227,229 4,227 SEI Tax Exempt Trust, Institutional Tax Free Fund 405,733 406 -------- Total Cash Equivalents (Cost $4,633) 4,633 -------- Total Investments (101.6%) (Cost $115,762) 116,078 -------- OTHER ASSETS AND LIABILITIES (-1.6%) Investment Advisory Fees Payable (58) Distribution Fees Payable (7) Administration Fees Payable (7) Transfer Agent Shareholder Servicing Fees Payable (1) Other Assets and Liabilities, Net (1,806) -------- Total Other Assets and Liabilities (1,879) -------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 9,581,468 outstanding shares of beneficial interest $ 95,527 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 266,782 outstanding shares of beneficial interest 2,622 Paid in Capital-- L Shares (unlimited authorization -- no par value) based on 1,302,694 outstanding shares of beneficial interest 13,287 Undistributed net investment income 2 Accumulated net realized gain on investments 2,445 Net unrealized appreciation on investments 316 -------- Total Net Assets (100.0%) $114,199 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($98,113,025 / 9,581,468 shares) $10.24 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($2,735,343 / 266,782 shares) $10.25 ======== Maximum Offering Price Per Share -- A Shares ($10.25 / 96.25%) $10.65 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($13,350,764 / 1,302,694 shares) $10.25 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 34 - -------------------------------------------------------------------------------- HIGH INCOME FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS (92.8%) AEROSPACE & DEFENSE (2.1%) K & F Industries, Ser B Callable 12/15/06 @ 104.813 9.625%, 12/15/10 $ 500 $ 547 L-3 Communications Callable 07/15/08 @ 103.063 6.125%, 07/15/13 1,000 935 Sequa 9.000%, 08/01/09 1,500 1,620 -------- 3,102 -------- AUTOPARTS (4.0%) Cummins (B) 9.500%, 12/01/10 500 567 Metaldyne Callable 06/15/07 @ 105.5 11.000%, 06/15/12 2,000 1,660 Metaldyne (B) Callable 11/01/10 @ 100 10.000%, 11/01/13 250 241 RJ Tower (K) 12.000%, 06/01/13 1,000 960 TRW Automotive 9.375%, 02/15/13 446 498 TRW Automotive (K) 11.000%, 02/15/13 1,494 1,741 Tenneco Automotive, Ser B Callable 07/15/08 @ 105.125 10.250%, 07/15/13 250 278 -------- 5,945 -------- BROADCASTING (1.9%) Paxson Communications (A) Callable 01/15/06 @ 106.12 11.900%, 01/15/09 1,500 1,275 Paxson Communications Callable 07/15/05 @ 105.375 10.750%, 07/15/08 500 512 Spanish Broadcasting (K) Callable 11/01/04 @ 104.813 9.625%, 11/01/09 500 527 Young Broadcasting (B) 8.750%, 01/15/14 500 488 -------- 2,802 -------- BUILDING & CONSTRUCTION (5.8%) Jacuzzi Brands 9.625%, 07/01/10 250 267 K. Hovnanian Enterprises Callable 04/01/07 @ 104.438 8.875%, 04/01/12 1,000 1,040 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Koppers Industries (B) Callable 10/15/08 @ 104.94 9.875%, 10/15/13 $ 250 $ 269 Nortek Holdings (A) (B) Callable 11/15/07 @ 105 10.000%, 05/15/11 750 562 Standard Pacific 9.250%, 04/15/12 1,500 1,613 Votorantim Overseas III (B) 7.875%, 01/23/14 2,000 1,870 WCI Communities Callable 02/15/06 @ 105.313 10.625%, 02/15/11 1,000 1,095 WCI Communities (K) Callable 05/01/07 @ 104.56 9.125%, 05/01/12 750 799 William Lyon Homes 10.750%, 04/01/13 1,000 1,100 -------- 8,615 -------- CABLE (6.0%) Adelphia Communications (J) 10.875%, 10/01/10 250 262 Adelphia Communications, Ser B (J) 10.500%, 07/15/04 500 527 Atlantic Broadband Financial (B) Callable 01/15/09 @ 104.69 9.375%, 01/15/14 250 234 Charter Communications Holdings 10.750%, 10/01/09 1,500 1,305 Comcast 10.625%, 07/15/12 340 426 Echostar DBS Callable 10/01/04 @ 105.188 10.375%, 10/01/07 1,000 1,071 Echostar DBS Callable 01/15/06 @ 104.563 9.125%, 01/15/09 325 358 Insight Midwest LP (K) Callable 10/01/04 @ 104.875 9.750%, 10/01/09 2,000 2,105 Mediacom LLC (K) Callable 01/15/06 @ 104.75 9.500%, 01/15/13 2,250 2,171 Mediacom LLC, Ser B (K) Callable 04/15/06 @ 100 8.500%, 04/15/08 400 403 -------- 8,862 -------- CHEMICALS (7.1%) Braskem (B) 11.750%, 01/22/14 2,000 1,750 35 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 HIGH INCOME FUND--CONTINUED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Compass Minerals Group Callable 08/15/06 @ 105 10.000%, 08/15/11 $ 750 $ 832 Equistar Chemical Callable 05/01/07 @ 105.313 10.625%, 05/01/11 2,000 2,195 Huntsman (B) Callable 10/15/07 @ 105.81 11.625%, 10/15/10 1,000 1,077 IMC Global Callable 08/01/08 @ 105.44 10.875%, 08/01/13 500 598 IMC Global, Ser B Callable 06/01/06 @ 105.63 11.250%, 06/01/11 750 866 IMC Global, Ser B Callable 06/01/06 @ 105.62 11.250%, 06/01/11 500 578 Millenium America (B) 9.250%, 06/15/08 250 265 Nalco Finance Holdings (A) (B) Callable 02/01/12 @ 100 9.000%, 02/01/14 2,000 1,320 OM Group Callable 12/15/06 @ 104.625 9.250%, 12/15/11 500 503 Westlake Chemical Callable 07/15/07 @ 104.38 8.750%, 07/15/11 500 540 -------- 10,524 -------- COMPUTER SOFTWARE (0.3%) Activant Solutions Callable 06/15/07 @ 105.25 10.500%, 06/15/11 500 525 -------- CONSUMER PRODUCTS (0.2%) Jostens Holding (A) 10.231%, 12/01/13 400 268 -------- ENERGY (3.6%) Denbury Resources Callable 04/01/08 @ 103.75 7.500%, 04/01/13 500 500 El Paso Energy Partners, Ser B Callable 12/01/06 @ 104.25 8.500%, 06/01/11 670 730 GulfTerra Energy Partners Callable 12/01/07 @ 105.313 10.625%, 12/01/12 336 407 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Petrobras International Finance 9.125%, 07/02/13 $2,000 $ 1,990 8.375%, 12/10/18 1,000 895 Swift Energy Callable 05/01/07 @ 104.688 9.375%, 05/01/12 750 806 -------- 5,328 -------- ENTERTAINMENT (6.3%) Bally Total Fitness Holding Callable 07/15/07 @ 105.25 10.500%, 07/15/11 500 447 Imax (B) 9.625%, 12/01/10 500 447 Kerzner International Callable 08/15/06 @ 104.438 8.875%, 08/15/11 2,000 2,110 MGM Mirage 9.750%, 06/01/07 500 558 Muzak Callable 02/15/06 @ 105 10.000%, 02/15/09 500 480 Resort International Hotel & Casino (K) Callable 03/15/07 @ 106 11.500%, 03/15/09 500 555 Royal Caribbean Cruises 8.750%, 02/02/11 500 551 Six Flags (B) 9.625%, 06/01/14 250 247 Six Flags (K) Callable 04/15/08 @ 104.875 9.750%, 04/15/13 1,000 1,000 Six Flags (K) Callable 02/01/06 @ 104.44 8.875%, 02/01/10 1,000 983 Venetian Casino Callable 06/15/06 @ 105.5 11.000%, 06/15/10 1,500 1,723 Vivendi Universal Callable 04/15/07 @ 104.625 9.250%, 04/15/10 250 293 -------- 9,394 -------- FINANCIAL SERVICES (2.0%) Dollar Financial Group Callable 11/15/07 @ 104.875 9.750%, 11/15/11 515 525 WMC Finance (B) 11.750%, 12/15/08 2,000 2,500 -------- 3,025 -------- FOOD, BEVERAGE & TOBACCO (3.8%) Burns Philp Capital Property (B) Callable 07/15/07 @ 104.875 9.750%, 07/15/12 2,000 2,060 36 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Del Monte, Ser B Callable 05/15/06 @ 104.63 9.250%, 05/15/11 $ 500 $ 536 Land O Lakes, Ser B (K) Callable 11/15/06 @ 104.38 8.750%, 11/15/11 2,000 1,860 Merisant (B) Callable 07/15/08 @ 104.75 9.500%, 07/15/13 250 264 RJ Reynolds Tobacco Holdings, Ser B 7.750%, 05/15/06 1,000 1,018 -------- 5,738 -------- HOTELS & LODGING (0.4%) John Q Hammons Hotels, Ser B Callable 05/15/07 @ 104.438 8.875%, 05/15/12 500 540 -------- INDUSTRIAL (8.0%) AMI Semiconductor Callable 02/01/08 @ 105.375 10.750%, 02/01/13 650 756 Berry Plastics (B) Callable 07/15/07 @ 105.375 10.750%, 07/15/12 500 552 Constar Callable 12/01/07 @ 105.50 11.000%, 12/01/12 500 440 Corning 5.900%, 03/15/14 500 466 Federal-Mogul (J) 7.375%, 01/15/06 175 45 Foamex LP Callable 04/01/06 @ 105.375 10.750%, 04/01/09 500 477 Gerdau Ameristeel Callable 07/15/07 @ 105.375 10.375%, 07/15/11 1,000 1,100 International Steel Group (B) 6.500%, 04/15/14 250 233 NMGH Holding Callable 05/15/06 @ 105 10.000%, 05/15/09 1,500 1,643 Polaroid (I) 11.500%, 02/15/06 100 12 Polaroid, Ser A, MTN (I) (N) 6.750%, 01/15/02 100 -- SUP ESSX/ESSX Group (B) 9.000%, 04/15/12 1,000 960 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Sensus Metering Systems (B) 8.625%, 12/15/13 $1,000 $ 945 Shaw Group (K) Callable 03/15/07 @ 105.375 10.750%, 03/15/10 1,000 978 Trimas Callable 06/15/07 @ 104.938 9.875%, 06/15/12 1,500 1,613 UCAR Finance Callable 02/15/07 @ 105.125 10.250%, 02/15/12 250 279 United States Steel Callable 05/15/07 @ 104.88 9.750%, 05/15/10 841 927 Xerox 7.125%, 06/15/10 500 494 -------- 11,920 -------- MEDICAL & MEDICAL PRODUCTS (5.5%) Ameripath Callable 04/01/08 @ 105.25 10.500%, 04/01/13 2,000 2,010 Healthsouth 8.375%, 10/01/11 1,500 1,470 Pacificare Health Systems Callable 06/01/06 @ 105.375 10.750%, 06/01/09 975 1,112 PerkinElmer (B) (K) Callable 01/15/08 @ 104.438 8.875%, 01/15/13 500 551 Psychiatric Solutions Callable 06/15/08 @ 105.313 10.625%, 06/15/13 500 566 United Surgical Partners Callable 12/15/06 @ 105 10.000%, 12/15/11 1,710 1,920 VWR International (B) Callable 04/15/09 @ 104 8.000%, 04/15/14 500 501 -------- 8,130 -------- PRINTING & PUBLISHING (4.1%) Dex Media (A) (B) Callable 11/15/08 @ 104.50 9.000%, 11/15/13 750 484 Dex Media East LLC Callable 11/15/07 @ 106.063 12.125%, 11/15/12 250 290 Dex Media East LLC Callable 11/15/06 @ 104.94 9.875%, 11/15/09 250 282 Dex Media West LLC (B) Callable 08/15/08 @ 104.94 9.875%, 08/15/13 500 551 37 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 HIGH INCOME FUND--CONTINUED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Dex Media West LLC (B) Callable 08/15/07 @ 104.25 8.500%, 08/15/10 $ 500 $ 545 Mail Well I (B) 7.875%, 12/01/13 500 460 Primedia (B) Callable 05/15/08 @ 104 8.000%, 05/15/13 1,000 940 Primedia (K) 7.625%, 04/01/08 500 499 RH Donnelley (B) Callable 12/15/07 @ 105.438 10.875%, 12/15/12 250 292 RH Donnelley (B) Callable 12/15/06 @ 104.438 8.875%, 12/15/10 250 275 Von Hoffman 10.250%, 03/15/09 1,490 1,479 -------- 6,097 -------- REAL ESTATE INVESTMENT TRUSTS (1.4%) CB Richard Ellis Service Callable 05/15/07 @ 104.88 9.750%, 05/15/10 250 270 Crescent Real Estate Callable 04/15/06 @ 104.625 9.250%, 04/15/09 1,000 1,060 Meristar Hospitality (K) 9.000%, 01/15/08 500 502 Ventas Realty LP 9.000%, 05/01/12 250 274 -------- 2,106 -------- RETAIL (8.2%) AmeriGas Partners LP, Ser B Callable 05/20/06 @ 104.438 8.875%, 05/20/11 500 530 Asbury Automotive Group 8.000%, 03/15/14 500 462 Asbury Automotive Group Callable 06/15/07 @ 104.5 9.000%, 06/15/12 1,000 990 Broder Brothers Callable 10/15/07 @ 105.62 11.250%, 10/15/10 1,000 965 Great Atlantic & Pacific Tea Callable 12/15/06 @ 104.563 9.125%, 12/15/11 1,750 1,461 Hines Nurseries Callable 10/01/08 @ 105.12 10.250%, 10/01/11 250 266 Hollywood Entertainment Callable 03/15/07 @ 104.813 9.625%, 03/15/11 1,000 1,130 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Jafra Cosmetics International Callable 05/15/07 @ 105.38 10.750%, 05/15/11 $ 500 $ 552 Office Depot 10.000%, 07/15/08 500 578 Pantry (B) Callable 02/15/09 @ 103.88 7.750%, 02/15/14 500 489 Rite Aid Callable 05/01/07 @ 104.063 8.125%, 05/01/10 500 518 Roundy's, Ser B (B) Callable 06/15/07 @ 104.438 8.875%, 06/15/12 1,500 1,598 Star Gas Partner Callable 02/15/08 @ 105.125 10.250%, 02/15/13 2,000 2,130 Suburban Propane Partners (B) 6.875%, 12/15/13 500 487 -------- 12,156 -------- SERVICES (2.5%) Coinmach Callable 02/01/06 @ 104.5 9.000%, 02/01/10 500 530 IESI Callable 06/15/07 @ 105.125 10.250%, 06/15/12 500 540 IPC Acquisition Callable 12/15/05 @ 105.750 11.500%, 12/15/09 400 426 Iron Mountain Callable 07/01/08 @ 103.31 6.625%, 01/01/16 500 455 National Waterworks, Ser B Callable 12/01/07 @ 105.25 10.500%, 12/01/12 250 275 Service International 7.700%, 04/15/09 500 510 United Rentals 7.750%, 11/15/13 1,000 940 -------- 3,676 -------- TELEPHONE & TELECOMMUNICATIONS (11.2%) Alaska Communications Systems Holdings Callable 08/15/07 @ 104.938 9.875%, 08/15/11 1,000 1,020 Axtel (B) 11.000%, 12/15/13 2,000 1,895 Centennial Cellular Operating Callable 06/15/08 @ 105.06 10.125%, 06/15/13 500 510 38 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Centennial Communications (B) Callable 02/01/09 @ 104.062 8.125%, 02/01/14 $ 100 $ 92 Cincinnati Bell Callable 01/15/12 @ 100 8.375%, 01/15/14 250 224 Consolidated Communication Holdings (B) 9.750%, 04/01/12 250 250 Crown Castle International Callable 08/01/05 @ 105.375 10.750%, 08/01/11 2,000 2,230 Eircom Funding Callable 08/15/08 @ 104.12 8.250%, 08/15/13 250 255 Embratel (B) 11.000%, 12/15/08 2,000 2,065 Excelcomindo Finance (B) 8.000%, 01/27/09 500 460 Fairpoint Communications Callable 03/01/07 @ 105.94 11.875%, 03/01/10 250 282 Horizon PCS (J) Callable 12/15/06 @ 106.87 13.750%, 06/15/11 400 142 MCI 7.735%, 05/01/14 99 90 6.688%, 05/01/09 115 108 5.908%, 05/01/07 115 111 Nextel Communications Callable 10/31/11 @ 100 6.875%, 10/31/13 500 499 PanAmSat Callable 02/01/07 @ 104.25 8.500%, 02/01/12 1,500 1,680 Qwest Services (B) Callable 12/15/05 @ 106.5 13.000%, 12/15/07 2,000 2,275 Rural Cellular, Ser B (K) Callable 05/15/06 @ 100 9.625%, 05/15/08 631 587 TSI Telecommunications Services, Ser B Callable 02/01/06 @ 106.375 12.750%, 02/01/09 1,000 1,073 Time Warner Telecommunications Holding (B) 9.250%, 02/15/14 750 735 -------- 16,583 -------- TRANSPORTATION (5.2%) Continental Airlines (K) 8.000%, 12/15/05 2,150 1,892 Delta Air Lines (B) Callable 08/15/08 @ 100 10.000%, 08/15/08 3,000 1,545 - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) - -------------------------------------------------------------------------------- General Maritime Callable 03/15/08 @ 105 10.000%, 03/15/13 $1,000 $ 1,096 Laidlaw, Ser B 11.500%, 04/15/07 2,000 1,882 Overseas Shipholding Group Callable 03/15/08 @ 104.12 8.250%, 03/15/13 500 536 Quality Distribution (B) Callable 11/15/09 @ 100 9.000%, 11/15/10 500 478 Stena 7.500%, 11/01/13 250 249 -------- 7,678 -------- UTILITIES (3.2%) Calpine 8.500%, 02/15/11 (K) 300 174 7.875%, 04/01/08 75 43 7.625%, 04/15/06 (K) 435 324 Mission Energy Holdings 13.500%, 07/15/08 1,950 2,125 MSW Energy Holdings Callable 09/01/07 @ 104.25 8.500%, 09/01/10 250 259 MSW Energy Holdings (B) Callable 09/01/10 @ 100 7.375%, 09/01/10 500 493 PSEG Energy Holdings 7.750%, 04/16/07 500 520 Westar Energy (K) 9.750%, 05/01/07 747 855 -------- 4,793 -------- Total Corporate Obligations (Cost $135,227) 137,807 -------- FOREIGN GOVERNMENT DEBT SECURITY (1.9%) BRAZIL (1.9%) Federal Republic of Brazil 10.250%, 06/17/13 3,000 2,813 -------- Total Foreign Government Debt Security (Cost $2,943) 2,813 -------- UNIT INVESTMENT TRUST (1.1%) HMP Equity Holdings (B) (D) (K) 13.900%, 05/15/08 2,250 1,699 -------- Total Unit Investment Trust (Cost $1,315) 1,699 -------- 39 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 HIGH INCOME FUND--CONCLUDED - -------------------------------------------------------------------------------- SHARES VALUE (000) - -------------------------------------------------------------------------------- COMMON STOCK (0.6%) PHOTOGRAPHIC EQUIPMENT & SUPPLIES (0.0%) Polaroid Holding* (K) 1,830 $ 27 -------- TELEPHONE & TELECOMMUNICATIONS (0.6%) Allstream (M) 96 5 Allstream, Cl B (M) 5,159 271 MCI* (K) 43,038 639 -------- 915 -------- Total Common Stock (Cost $1,859) 942 -------- PREFERRED STOCK (0.0%) PHOTOGRAPHIC EQUIPMENT & SUPPLIES (0.0%) Polaroid Holding (P) 12 -- -------- Total Preferred Stock (Cost $0) -- -------- ESCROW BOND (0.0%) Intermedia Communications Escrow (N) 1,500 -- -------- Total Escrow Bond (Cost $0) -- -------- CASH EQUIVALENT (14.1%) Boston Global Investment Trust -- Enhanced Portfolio (L) 20,892,243 20,892 -------- Total Cash Equivalent (Cost $20,892) 20,892 -------- Total Investments (110.5%) (Cost $162,236) 164,153 -------- OTHER ASSETS AND LIABILITIES (-10.5%) Payable upon Return of Securities Loaned (20,892) Investment Advisory Fees Payable (91) Distribution Fees Payable (37) Administration Fees Payable (10) Custodian Fees Payable (1) Transfer Agent Shareholder Servicing Fees Payable (1) Other Assets and Liabilities, Net 5,394 -------- Total Other Assets and Liabilities (15,638) -------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 9,664,391 outstanding shares of beneficial interest $ 67,231 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 204,155 outstanding shares of beneficial interest 1,563 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 10,253,959 outstanding shares of beneficial interest 76,783 Distributions in excess of net investment income (1) Accumulated net realized gain on investments 1,022 Net unrealized appreciation on investments 1,917 -------- Total Net Assets (100.0%) $148,515 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($71,314,235 / 9,664,391 shares) $7.38 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($1,507,639 / 204,155 shares) $7.38 ======== Maximum Offering Price Per Share -- A Shares ($7.38 / 96.25%) $7.67 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($75,692,932 / 10,253,959 shares) $7.38 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 40 - -------------------------------------------------------------------------------- INVESTMENT GRADE BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS (58.1%) AUTOMOTIVE (1.6%) DaimlerChrysler 4.750%, 01/15/08 $ 3,240 $ 3,249 Ford Motor 7.450%, 07/16/31 3,385 3,207 General Motors 8.375%, 07/15/33 3,500 3,643 -------- 10,099 -------- BANKS (6.8%) Bank One 5.500%, 03/26/07 3,280 3,454 Bank of America 6.500%, 03/15/06 10,435 11,087 First Union Institutional Capital I 8.040%, 12/01/26 2,600 2,828 NB Capital Trust 8.250%, 04/15/27 7,600 8,398 Washington Mutual 4.625%, 04/01/14 3,300 3,003 Wells Fargo 3.500%, 04/04/08 9,975 9,810 Wells Fargo Capital I 7.960%, 12/15/26 4,225 4,632 -------- 43,212 -------- BROADCASTING (2.7%) British Sky Broadcasting 8.200%, 07/15/09 2,815 3,248 Comcast 6.500%, 01/15/15 3,050 3,167 Cox Communications 7.125%, 10/01/12 3,060 3,348 Liberty Media 3.500%, 09/25/06 3,860 3,856 Univision Communications 3.500%, 10/15/07 3,825 3,776 -------- 17,395 -------- FINANCE (16.2%) Boeing Capital 6.500%, 02/15/12 5,880 6,270 CIT Group 4.125%, 02/21/06 9,275 9,467 Citicorp Capital I 7.933%, 02/15/27 6,210 6,645 Freddie Mac 5.875%, 03/21/11 13,360 13,988 General Electric Capital 3.500%, 05/01/08 13,165 12,929 Golden West Financial 4.125%, 08/15/07 5,000 5,061 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Household Finance 5.750%, 01/30/07 $ 6,130 $ 6,473 International Lease Finance 3.750%, 08/01/07 9,395 9,359 MBNA America Bank 5.375%, 01/15/08 3,055 3,176 National Rural Utilities 3.000%, 02/15/06 9,800 9,832 SLM, MTN 3.625%, 03/17/08 9,955 9,864 Textron Financial, Ser E, MTN 2.750%, 06/01/06 2,985 2,968 Washington Mutual Financial 8.250%, 06/15/05 6,135 6,503 -------- 102,535 -------- FOOD, BEVERAGE & TOBACCO (2.3%) Albertson's 7.500%, 02/15/11 3,185 3,574 Kraft Foods 5.250%, 10/01/13 3,820 3,697 Kroger 7.800%, 08/15/07 3,530 3,931 Safeway 6.150%, 03/01/06 3,510 3,690 -------- 14,892 -------- INDUSTRIAL (9.0%) Alcan 6.125%, 12/15/33 7,300 6,979 Anadarko Petroleum 3.250%, 05/01/08 3,640 3,539 Computer Sciences 7.500%, 08/08/05 6,740 7,112 Conoco 6.950%, 04/15/29 7,090 7,755 Devon Financing 6.875%, 09/30/11 2,535 2,767 First Data 3.375%, 08/01/08 4,010 3,903 Fund American 5.875%, 05/15/13 3,330 3,313 International Paper 6.750%, 09/01/11 3,585 3,893 Kerr-McGee 5.875%, 09/15/06 3,090 3,247 Masco 5.875%, 07/15/12 3,800 3,926 Petroleos Mexicanos 9.250%, 03/30/18 2,845 3,193 Weyerhaeuser 7.950%, 03/15/25 3,850 4,302 41 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 INVESTMENT GRADE BOND FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Wyeth 6.500%, 02/01/34 $ 3,285 $ 3,104 -------- 57,033 -------- INSURANCE (1.6%) Prudential Financial, Ser B, MTN 4.750%, 04/01/14 6,885 6,391 Safeco 6.875%, 07/15/07 3,220 3,518 -------- 9,909 -------- INVESTMENT BANKERS/BROKER DEALERS (7.8%) Bear Stearns 4.000%, 01/31/08 10,435 10,434 Citigroup Global Markets Holdings 6.500%, 02/15/08 6,335 6,881 Goldman Sachs Capital 6.345%, 02/15/34 9,880 9,288 JP Morgan Chase 5.250%, 05/30/07 6,275 6,544 Merrill Lynch, Ser B, MTN 3.375%, 09/14/07 9,875 9,761 Morgan Stanley 3.625%, 04/01/08 6,620 6,536 -------- 49,444 -------- MULTIMEDIA (1.1%) AOL Time Warner 6.750%, 04/15/11 2,970 3,202 Viacom 7.875%, 09/01/23 3,180 3,677 -------- 6,879 -------- REAL ESTATE INVESTMENT TRUSTS (0.9%) EOP Operating LP 8.375%, 03/15/06 2,275 2,480 Simon Property Group 6.375%, 11/15/07 2,890 3,094 -------- 5,574 -------- RETAIL (0.6%) May Department Stores 7.450%, 09/15/11 3,470 3,895 -------- TELEPHONE & TELECOMMUNICATIONS (3.9%) British Telecom PLC 7.875%, 12/15/05 1,700 1,829 Deutsche Telekom 8.750%, 06/15/30 2,755 3,358 Sprint Capital 7.625%, 01/30/11 2,575 2,859 US Cellular 6.700%, 12/15/33 3,370 3,185 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Verizon Global Funding 7.750%, 12/01/30 $ 2,780 $ 3,129 7.250%, 12/01/10 9,210 10,288 -------- 24,648 -------- TRANSPORTATION (1.0%) Norfolk Southern 7.800%, 05/15/27 3,180 3,649 Union Pacific 5.750%, 10/15/07 2,710 2,861 -------- 6,510 -------- UTILITIES (2.6%) Alabama Power, Ser X 3.125%, 05/01/08 3,195 3,088 Carolina Power & Light 6.500%, 07/15/12 3,385 3,637 Pacific Gas & Electric 6.050%, 03/01/34 3,505 3,286 Pacificorp 6.900%, 11/15/11 2,585 2,881 Southern California Edison 8.000%, 02/15/07 3,070 3,410 -------- 16,302 -------- Total Corporate Obligations (Cost $373,095) 368,327 -------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (11.5%) FNMA 6.500%, 07/01/32 to 12/01/32 9,735 10,087 6.000%, 09/01/17 7,032 7,307 5.000%, 06/01/33 21,455 20,661 4.500%, 06/01/18 14,115 13,819 GNMA 8.500%, 04/15/31 5,416 5,906 8.000%, 08/15/31 to 09/15/31 14,090 15,364 -------- Total U.S. Government Agency Mortgage-Backed Obligations (Cost $73,252) 73,144 -------- U.S. TREASURY OBLIGATIONS (10.2%) U.S. Treasury Bonds (K) 6.250%, 08/15/23 21,300 23,442 5.375%, 02/15/31 38,415 38,557 U.S. Treasury Notes 4.375%, 08/15/12 2,845 2,823 -------- Total U.S. Treasury Obligations (Cost $66,509) 64,822 -------- 42 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES (E) VALUE (000) - -------------------------------------------------------------------------------- ASSET-BACKED OBLIGATIONS (6.8%) Capital Auto Receivables Asset Trust, Ser 2002-4, Cl A4 2.640%, 03/17/08 $ 6,910 $ 6,910 Citibank Credit Card Issuance Trust, Ser 2004-A1, Cl A1 2.550%, 01/20/09 13,940 13,683 GE Capital, Ser 2002-1A, Cl A3 6.269%, 12/10/35 8,155 8,767 Harley-Davidson Motorcycle Trust, Ser 2002-2, Cl A2 3.090%, 06/15/10 3,930 3,967 JP Morgan Chase Commercial Mortgage Trust, Ser 2004-CB8, Cl A4 4.404%, 01/12/39 10,300 9,563 -------- Total Asset-Backed Obligations (Cost $43,315) 42,890 -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (4.7%) FHLB 2.625%, 05/15/07 16,125 15,763 FHLMC 5.200%, 03/05/19 7,325 6,859 3.875%, 01/12/09 6,980 6,848 -------- Total U.S. Government Agency Obligations (Cost $30,173) 29,470 -------- FOREIGN GOVERNMENT DEBT SECURITIES (2.0%) CANADA (1.5%) Quebec Province, Ser NN (CAD) 7.125%, 02/09/24 8,465 9,671 -------- MEXICO (0.5%) United Mexican States 4.625%, 10/08/08 3,280 3,254 -------- Total Foreign Government Debt Securities (Cost $13,345) 12,925 -------- CASH EQUIVALENTS (15.5%) Boston Global Investment Trust -- Enhanced Portfolio (L) 61,627,250 61,627 Federated Prime Money Market Obligations Fund 5,729,054 5,729 Federated Prime Value Money Market Fund 30,880,562 30,881 -------- Total Cash Equivalents (Cost $98,237) 98,237 -------- Total Investments (108.8%) (Cost $697,926) 689,815 -------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (-8.8%) Payable upon Return of Securities Loaned $ (61,627) Investment Advisory Fees Payable (389) Administration Fees Payable (37) Distribution Fees Payable (24) Custody Fees Payable (5) Transfer Agent Shareholder Servicing Fees Payable (3) Trustees' Fees Payable (1) Payable to Adviser (2) Receivable from Affiliated Funds 2 Other Assets and Liabilities, Net 6,206 -------- Total Other Assets and Liabilities (55,880) -------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 56,102,757 outstanding shares of beneficial interest 600,539 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 3,033,189 outstanding shares of beneficial interest 32,740 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 2,358,630 outstanding shares of beneficial interest 25,225 Undistributed net investment income 6 Accumulated net realized loss on investments (16,464) Net unrealized depreciation on investments (8,111) -------- Total Net Assets (100.0%) $633,935 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($578,344,703 / 56,102,757 shares) $10.31 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($31,263,273 / 3,033,189 shares) $10.31 ======== Maximum Offering Price Per Share -- A Shares ($10.31 / 96.25%) $10.71 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($24,326,992 / 2,358,630 shares) $10.31 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 43 SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 INVESTMENT GRADE TAX-EXEMPT BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MUNICIPAL BONDS (100.5%) ALABAMA (8.2%) Alabama State, Public School & College Authority, Capital Improvement Project, Ser C, RB Callable 07/01/09 @ 101.5 5.750%, 07/01/17 $ 3,950 $4,341 Alabama State, Water Pollution Control Authority, Revolving Fund Loan Project, RB, AMBAC Callable 08/15/09 @ 100 5.750%, 08/15/12 5,205 5,753 Auburn University, Ser A, RB, MBIA Callable 06/01/11 @ 100 6.000%, 06/01/16 4,060 4,550 Huntsville, Ser A, GO Callable 05/01/12 @ 102 5.750%, 05/01/19 2,800 3,076 5.625%, 05/01/16 2,375 2,613 -------- 20,333 -------- ARIZONA (2.2%) Arizona State, University & College Improvements Project, RB, FGIC Callable 07/01/12 @ 100 5.500%, 07/01/15 1,665 1,821 Arizona State, Water Infrastructure Finance Authority, Ser A, RB Callable 10/01/09 @ 101 5.625%, 10/01/12 3,280 3,637 -------- 5,458 -------- ARKANSAS (1.3%) Arkansas State, Development Finance Authority, Waste Water System, Ser A, RB, MBIA Callable 06/11/11 @ 100 5.000%, 06/01/15 3,000 3,141 -------- CALIFORNIA (3.2%) Fresno, University School District, Ser A, GO, MBIA Callable 02/01/13 @ 103 6.550%, 08/01/20 1,950 2,294 Orange County, Loma Ridge/Data Center Project, COP, AMBAC Prerefunded @ 100 (F) 6.000%, 06/01/19 2,075 2,383 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- San Bernardino County, Medical Center Financing Project, Ser A, COP, MBIA Prerefunded @ 102 (F) 6.500%, 08/01/05 $ 3,000 $ 3,233 -------- 7,910 -------- COLORADO (10.5%) Colorado State, Health Facilities Authority, North Colorado Medical Center Project, RB, MBIA (C) Callable 07/01/04 @ 100 0.980%, 05/15/20 2,600 2,600 Colorado State, Metro Wastewater Reclamation District Authority, Sewer Project, RB Callable 04/01/08 @ 100 5.450%, 04/01/12 2,570 2,777 Colorado State, Regional Transition District, State Sales Tax, Ser B, RB, AMBAC Callable 11/01/12 @ 100 5.500%, 11/01/17 2,655 2,887 Larimer County, School District No. R 1, GO, FGIC Callable 12/15/10 @ 100 6.000%, 12/15/15 3,000 3,364 6.000%, 12/15/16 3,000 3,365 6.000%, 12/15/17 4,000 4,486 Westminster, Sales & Use Tax, Ser A, RB Callable 12/01/07 @ 102 5.600%, 12/01/16 5,940 6,447 -------- 25,926 -------- FLORIDA (8.4%) Florida State, Board Capital Outlay, Public Education Project, Ser C, GO Callable 06/01/05 @ 101 5.300%, 06/01/09 7,395 7,722 Jacksonville, Sales Tax Revenue, River City Renaissance Project, RB, FGIC Prerefunded @ 101 (F) 5.500%, 04/01/06 5,000 5,357 Miami-Dade County, School District, GO (H) 5.000%, 08/01/05 4,420 4,598 44 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Palm Beach County, State School Board, Ser C, COP, FSA Callable 08/01/12 @ 100 5.500%, 08/01/15 $ 2,825 $ 3,083 -------- 20,760 -------- IOWA (0.9%) Des Moines, Public Parking System, Ser A, RB, FGIC Callable 06/01/10 @ 100 6.375%, 06/01/18 2,005 2,271 -------- KANSAS (2.8%) Sedgwick County, Unified School District No. 259, GO, MBIA Callable 09/01/10 @ 100 5.500%, 09/01/12 6,150 6,788 -------- MASSACHUSETTS (7.1%) Massachusetts Bay, Transportation Authority, Ser C, RB 6.000%, 07/01/06 3,235 3,492 Massachusetts State, Ser B, GO, FSA Prerefunded @ 100 (F) 5.500%, 03/01/12 4,000 4,438 Massachusetts State, Water Pollution Abatement, Treatment Pool Project, Ser 6, RB Callable 08/01/10 @ 101 5.625%, 08/01/16 2,500 2,729 5.625%, 08/01/17 6,250 6,813 -------- 17,472 -------- MICHIGAN (2.3%) Michigan State, Environment Protection Program, GO Prerefunded @ 100 (F) 5.000%, 11/01/08 2,000 2,166 Michigan State, Municipal Authority, Clean Water State Revolving Fund, Water Utility Improvements, RB Callable 10/01/12 @ 100 5.375%, 10/01/17 3,300 3,563 -------- 5,729 -------- MISSISSIPPI (1.0%) Jackson, Public School District, Ser B, GO, AMBAC Callable 10/01/10 @ 100 5.750%, 10/01/15 2,275 2,498 -------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MISSOURI (3.9%) Missouri State, Highways & Transportation Commission, Ser A, RB Callable 02/01/11 @ 100 5.625%, 02/01/18 $ 8,885 $ 9,636 -------- NEW YORK (19.3%) Buffalo, School District, Ser D, GO, FGIC Callable 12/15/11 @ 100 5.500%, 12/15/14 1,075 1,185 New York City, Ser G, GO, MBIA Callable 02/01/08 @ 101 5.000%, 08/01/10 5,045 5,386 New York City, Transitional Finance Authority, Future Tax Secured Project, Sub-Ser D-1, RB 4.000%, 11/01/06 6,000 6,246 New York State, Dormitory Authority, School Districts Financing Program, Ser B, RB Callable 10/01/12 @ 100 6.500%, 10/01/17 3,505 4,116 New York State, Metropolitan Transportation Authority, Ser G-1, RB, AMBAC (C) 1.000%, 11/01/26 10,000 10,000 New York State, Tobacco Settlement Financing Corporation, Ser A, RB Callable 06/01/08 @ 100 5.250%, 06/01/13 10,000 10,462 New York State, Tobacco Settlement Financing Corporation, Ser A-1, RB Callable 06/01/05 @ 100 5.000%, 06/01/10 3,215 3,309 New York State, Tobacco Settlement Financing Corporation, Ser C-1, RB Callable 06/01/07 @ 100 5.250%, 06/01/12 6,720 7,045 -------- 47,749 -------- OHIO (2.8%) Ohio State, Building Authority, Adult Correctional Projects, Ser A, RB, MBIA Callable 04/01/14 @ 100 5.250%, 04/01/17 3,100 3,303 45 SCHEDULE OF INVESTMENTS/STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 INVESTMENT GRADE TAX-EXEMPT BOND FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Ohio State, Water Development Authority, Fresh Water Improvements Project, RB Callable 06/01/12 @ 100 5.375%, 12/01/17 $ 1,900 $ 2,045 Ohio State, Water Development Authority, Fresh Water Improvements Project, RB, AMBAC, ETM Callable 06/01/05 @ 102 5.700%, 06/01/08 1,520 1,610 -------- 6,958 -------- OKLAHOMA (1.9%) Oklahoma County, Independent School District No 89, GO, FGIC 5.000%, 07/01/11 2,025 2,201 5.000%, 07/01/12 2,400 2,603 -------- 4,804 -------- OREGON (3.3%) Oregon State, Department of Transportation, Highway Usertax Authority, Ser A, RB Callable 11/15/12 @ 100 5.500%, 11/15/17 7,500 8,156 -------- SOUTH CAROLINA (1.2%) South Carolina State, Clemson University, RB, AMBAC Callable 05/01/09 @ 101 6.250%, 05/01/15 2,725 3,062 -------- TEXAS (9.3%) Dallas, Refunding & Improvement Project, GO 5.000%, 02/15/12 6,500 6,833 Irving, Waterworks & Sewer Authority, RB Callable 06/15/09 @ 100.5 5.950%, 06/15/19 1,460 1,608 Lancaster, Independent School District, Capital Appreciation Project, GO, FSA (D) 4.400%, 02/15/11 2,495 1,868 4.170%, 02/15/10 2,500 1,980 San Antonio, Water Authority, RB, FGIC 5.250%, 05/15/17 2,035 2,142 5.250%, 05/15/18 2,340 2,448 - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) - -------------------------------------------------------------------------------- Texas State, Public Financial Authority, Ser A, GO Prerefunded @ 100 (F) 6.000%, 04/01/05 $ 6,000 $ 6,227 -------- 23,106 -------- WASHINGTON (2.4%) Washington State, Energy North West, Electric Authority, Ser A, RB, AMBAC 5.250%, 07/01/09 5,500 5,991 -------- PUERTO RICO (8.5%) Puerto Rico Commonwealth, Government Development Authority, RB, MBIA (C) Callable 07/01/04 @ 100 0.970%, 12/01/15 7,000 7,000 Puerto Rico Commonwealth, Highway & Transportation Authority, RB, FGIC Callable 07/01/13 @ 100 5.250%, 07/01/15 5,000 5,448 Puerto Rico Commonwealth, Municipal Finance Agency, Ser A, RB, FSA Callable 08/01/12 @ 100 5.250%, 08/01/14 4,000 4,369 Puerto Rico Commonwealth, Public Buildings Authority, Government Facilities Project, Ser K, RB, MBIA 4.000%, 07/01/26 4,000 4,134 -------- 20,951 -------- Total Municipal Bonds (Cost $247,062) 248,699 -------- CASH EQUIVALENTS (7.2%) Federated Tax Free Reserve Fund (O) 11,328,797 11,329 SEI Tax Exempt Trust, Institutional Tax Free Fund 6,308,003 6,308 -------- Total Cash Equivalents (Cost $17,637) 17,637 -------- Total Investments (107.7%) (Cost $264,699) $266,336 ======== PERCENTAGES BASED ON NET ASSETS OF $247,320,599. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 46 - -------------------------------------------------------------------------------- LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (79.1%) FHLMC 6.500%, 02/01/17 $ 4,311 $ 4,557 6.000%, 07/01/17 4,976 5,175 5.000%, 03/01/34 27,265 26,221 4.500%, 06/01/13 31,002 31,010 4.000%, 09/01/13 9,153 8,978 FHLMC (C) 4.500%, 01/01/19 25,976 25,429 3.352%, 07/01/33 7,879 7,914 2.478%, 05/15/10 8,000 7,659 FNMA 8.500%, 04/01/17 77 84 7.000%, 11/01/16 to 05/01/32 15,184 16,018 6.500%, 06/01/13 to 12/01/32 11,762 12,245 6.000%, 09/01/13 to 04/01/34 59,040 60,596 5.500%, 03/01/24 9,691 9,753 5.000%, 04/01/34 14,899 14,328 4.500%, 03/01/14 to 05/01/19 38,187 37,891 4.000%, 11/01/13 13,788 13,515 FNMA (C) 4.717%, 05/01/34 4,695 4,697 4.256%, 05/01/34 8,064 8,044 4.171%, 08/01/33 22,003 22,171 4.133%, 05/01/33 12,047 11,952 4.071%, 06/01/33 20,038 19,932 3.195%, 05/01/33 11,526 11,525 GNMA 9.000%, 11/15/17 135 151 8.500%, 04/15/31 652 712 8.000%, 06/15/30 to 09/15/31 7,274 7,932 7.000%, 07/15/31 to 09/15/31 2,923 3,093 6.000%, 12/15/31 3,724 3,800 5.500%, 12/15/32 6,959 6,930 GNMA 3/1 Hybrid ARM 3.750%, 01/20/34 24,705 24,910 -------- Total U.S. Government Agency Mortgage-Backed Obligations (Cost $410,292) 407,222 -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (15.9%) FHLB 4.500%, 09/16/13 5,000 4,752 FHLMC 4.500%, 11/01/18 9,196 9,002 4.250%, 05/22/13 3,000 2,749 3.875%, 01/12/09 5,720 5,612 3.000%, 10/27/06 to 07/22/08 20,000 19,470 2.150%, 06/02/06 15,000 14,790 - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) - -------------------------------------------------------------------------------- FNMA 5.500%, 02/15/06 $15,000 $ 15,711 5.250%, 08/01/12 1,970 1,954 2.750%, 10/27/06 4,000 3,971 FNMA (C) 2.833%, 02/17/09 4,000 3,970 -------- Total U.S. Government Agency Obligations (Cost $83,359) 81,981 -------- ASSET-BACKED OBLIGATION (1.7%) JP Morgan Mortgage Trust, Ser 2003-A2, Cl 2A2 4.723%, 11/25/33 9,000 8,816 -------- Total Asset-Backed Obligation (Cost $8,981) 8,816 -------- CASH EQUIVALENT (0.0%) SEI Liquid Asset Trust, Prime Obligations Fund 3,950 4 -------- Total Cash Equivalent (Cost $4) 4 -------- REPURCHASE AGREEMENTS (3.0%) Merrill Lynch, 1.020%, dated 05/28/04, to be repurchased on 06/01/04, repurchase price $5,860,542 (collateralized by U.S. Government Obligations; total market value $5,977,373) (G) 5,860 5,860 Morgan Stanley, 1.010%, dated 05/28/04, to be repurchased on 06/01/04, repurchase price $9,771,339 (collateralized by U.S. Government obligations; total market value $10,163,984) (G) 9,770 9,770 -------- Total Repurchase Agreements (Cost $15,630) 15,630 -------- Total Investments (99.7%) (Cost $518,266) 513,653 -------- OTHER ASSETS AND LIABILITIES (0.3%) Investment Advisory Fees Payable (265) Distribution Fees Payable (34) Administration Fees Payable (31) Custodian Fees Payable (2) Transfer Agent Shareholder Servicing Fees Payable (2) Payable to Adviser (1) Receivable from Affiliated Funds 1 Other Assets and Liabilities, Net 1,622 -------- Total Other Assets and Liabilities 1,288 -------- 47 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND--CONCLUDED - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 42,782,812 outstanding shares of beneficial interest $441,659 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 934,332 outstanding shares of beneficial interest 9,848 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 6,874,500 outstanding shares of beneficial interest 73,202 Undistributed net investment income 8 Accumulated net realized loss on investments (5,163) Net unrealized depreciation on investments (4,613) -------- Total Net Assets (100.0%) $514,941 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($435,445,769 / 42,782,812 shares) $10.18 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($9,494,925 / 934,332 shares) $10.16 ======== Maximum Offering Price Per Share -- A Shares ($10.16 / 97.50%) $10.42 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($70,000,296 / 6,874,500 shares) $10.18 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 48 - -------------------------------------------------------------------------------- MARYLAND MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MUNICIPAL BONDS (97.8%) MARYLAND (95.4%) Annapolis, Public Improvements, GO 5.000%, 04/01/08 $1,000 $ 1,078 Anne Arundel County, Arundel Mills Project, RB Callable 07/01/14 @ 100 5.125%, 07/01/22 1,000 1,032 Anne Arundel County, GO 6.000%, 02/01/07 1,000 1,091 Baltimore County, Pension Funding, GO 4.500%, 06/01/09 1,000 1,064 Baltimore, GO, MBIA 7.000%, 10/15/10 1,365 1,638 Baltimore, Pollution Control, General Motors Project, RB 5.350%, 04/01/08 1,160 1,234 Baltimore, Ser A, RB, FGIC 5.900%, 07/01/13 900 1,033 Calvert County, GO 5.000%, 07/15/08 1,000 1,083 Frederick County, GO Callable 07/01/09 @ 101 5.250%, 07/01/11 1,000 1,087 Howard County, Construction Public Improvement Project, Ser A, GO 5.250%, 08/15/14 1,205 1,316 Howard County, Metropolitan District Project, Ser A, GO Callable 02/15/12 @ 100 5.250%, 08/15/13 1,100 1,202 Maryland State, 1st Ser, GO Callable 03/01/08 @ 101 5.000%, 03/01/10 1,000 1,070 Maryland State, 2nd Ser, GO Callable 07/15/09 @ 101 5.250%, 07/15/12 1,000 1,090 Maryland State, 3rd Ser, GO 5.000%, 10/15/06 750 801 Maryland State, Community Development Administration, Ser 2001B, RB, FHA, AMT 4.100%, 07/01/08 285 294 Maryland State, Community Development Administration, Ser C, RB, FHA Callable 03/01/10 @ 100 5.650%, 09/01/12 35 35 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Maryland State, Community Development Administration, Ser E, RB, FHA Callable 09/01/09 @ 100 5.700%, 09/01/17 $ 900 $ 924 Maryland State, Community Development Administration, Ser F, RB, AMT Callable 09/01/09 @ 100 5.900%, 09/01/19 1,000 1,020 Maryland State, Community Development Administration, Single-Family Housing, 1st Ser, RB, FHA Callable 04/01/07 @ 101.5 5.600%, 04/01/18 280 290 Maryland State, Community Development Administration, Single-Family Program, 2nd Ser, RB, AMT 4.700%, 04/01/11 1,000 1,043 Maryland State, Economic Development Corporation, Department of Transportation Headquarters Project, RB Callable 06/01/12 @ 100.5 5.375%, 06/01/19 1,000 1,061 Maryland State, Economic Development Corporation, Frostburg State University Project, Ser A, RB Callable 10/01/12 @ 101 5.500%, 10/01/15 250 255 Maryland State, Economic Development Corporation, Student Housing, University of Maryland, Ser A, RB Callable 10/01/13 @ 100 5.625%, 10/01/23 500 502 Maryland State, Economic Development Corporation, University of Maryland College Park Project, RB Callable 06/01/13 @ 100 5.750%, 06/01/18 475 500 Maryland State, Economic Development Corporation, University Village at Sheppard Pratt Project, RB, ACA Callable 07/01/11 @ 101 5.875%, 07/01/21 250 256 49 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 MARYLAND MUNICIPAL BOND FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Maryland State, Health & Higher Educational Facilities Authority, Board of Child Care Project, RB Callable 07/01/12 @ 100 5.500%, 07/01/13 $1,000 $ 1,091 Maryland State, Health & Higher Educational Facilities Authority, Carroll County General Hospital, RB 4.400%, 07/01/09 910 946 Maryland State, Health & Higher Educational Facilities Authority, Carroll County General Hospital, RB Callable 07/01/12 @ 100 6.000%, 07/01/18 1,035 1,114 6.000%, 07/01/21 250 266 Maryland State, Health & Higher Educational Facilities Authority, Catholic Health Initiatives, Ser A, RB Callable 06/01/10 @ 101 6.000%, 12/01/24 250 271 Maryland State, Health & Higher Educational Facilities Authority, Hebrew Home of Greater Washington, RB Callable 01/01/12 @ 100 5.700%, 01/01/21 480 498 5.700%, 01/01/22 510 526 Maryland State, Health & Higher Educational Facilities Authority, Johns Hopkins Hospital Issue, RB Callable 11/15/13 @ 100 5.000%, 11/15/28 500 489 Maryland State, Health & Higher Educational Facilities Authority, Medstar Health Project, RB Callable 08/15/14 @ 100 5.500%, 08/15/25 500 482 5.500%, 08/15/33 250 238 5.375%, 08/15/24 250 238 Maryland State, Health & Higher Educational Facilities Authority, Mercy Ridge Project, Ser B, RB Callable 04/01/06 @ 101 5.000%, 04/01/08 300 307 Maryland State, Health & Higher Educational Facilities Authority, North Arundel Hospital Project, RB Callable 07/01/10 @ 101 6.500%, 07/01/26 400 432 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Maryland State, Health & Higher Educational Facilities Authority, Union Hospital of Cecil County Project, RB Callable 07/01/12 @ 100 5.750%, 07/01/20 $ 500 $ 524 Maryland State, Health & Higher Educational Facilities Authority, University of Maryland Medical Project, RB 6.000%, 07/01/05 100 104 Maryland State, Health & Higher Educational Facilities Authority, University of Maryland Medical Project, RB Callable 07/01/11 @ 100 5.750%, 07/01/21 1,725 1,807 Maryland State, Industrial Development Financing Authority, Baltimore Aquarium Project, Ser B, RB Callable 11/01/12 @ 100 5.500%, 11/01/17 500 535 Maryland State, Ser A, GO 5.500%, 08/01/14 1,000 1,132 Maryland State, Stadium Authority, Sports Facility Project, RB, AMBAC Callable 03/01/06 @ 101 5.800%, 03/01/26 250 263 Maryland State, State & Local Facilities Authority, Second Series, GO Callable 08/01/13 @ 100 5.000%, 08/01/16 1,425 1,514 Maryland State, Transportation Authority, Baltimore/ Washington International Airport, Ser B, RB, AMBAC, AMT Callable 03/01/12 @ 101 5.375%, 03/01/15 1,000 1,060 Montgomery County, Housing Opportunity, Aston Woods Apartments Project, Ser A, RB Callable 05/15/08 @ 102 4.900%, 05/15/31 600 628 Montgomery County, Housing Opportunity, Housing Development Project, RB Callable 07/01/10 @ 100 6.000%, 07/01/20 990 1,033 50 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Montgomery County, Housing Opportunity, Single-Family Mortgage, Ser A, RB Callable 01/01/11 @ 100 4.450%, 07/01/17 $ 290 $ 298 Montgomery County, Ser A, GO 5.700%, 07/01/05 675 706 Montgomery County, Trinity Healthcare Group, RB Callable 12/01/11 @ 100 5.500%, 12/01/16 1,000 1,063 Northeast Maryland, Waste Disposal Authority, Resources Recovery Project, Ser A, RB, AMT 6.000%, 07/01/06 1,080 1,146 Prince Georges County, Housing Authority, Emerson House Project, Ser A, RB Callable 10/15/04 @ 102 7.000%, 04/15/19 500 517 St. Mary's County, GO 5.500%, 07/01/11 1,165 1,312 Talbot County, GO Callable 03/15/12 @ 101 5.375%, 03/15/17 1,455 1,568 Washington Suburban Sanitation District, GO Callable 06/01/04 @ 102 4.625%, 06/01/06 750 765 Westminister, Economic Development Authority, Carroll Lutheran Village Project, Ser C, RB (LOC: Citizens Bank of PA) (C) 1.070%, 05/25/34 1,500 1,500 ------- 46,372 ------- PUERTO RICO (2.4%) Puerto Rico Commonwealth, Housing Bank & Finance Agency, Affordable Housing Mortgage Portfolio, Ser I, RB, AMT, GNMA Callable 04/01/05 @ 102 6.250%, 04/01/29 625 643 Puerto Rico Commonwealth, Ser A, GO, MBIA Callable 08/01/11 @ 100 5.500%, 08/01/20 500 543 ------- 1,186 ------- Total Municipal Bonds (Cost $46,690) 47,558 ------- - -------------------------------------------------------------------------------- SHARES VALUE (000) - -------------------------------------------------------------------------------- CASH EQUIVALENT (0.5%) Federated Tax-Free Obligation Fund 267,385 $ 267 ------- Total Cash Equivalent (Cost $267) 267 ------- Total Investments (98.3%) (Cost $46,957) 47,825 ------- OTHER ASSETS AND LIABILITIES (1.7%) Investment Advisory Fees Payable (24) Distribution Fees Payable (15) Administration Fees Payable (3) Other Assets and Liabilities, Net 849 ------- Total Other Assets and Liabilities 807 ------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 2,895,669 outstanding shares of beneficial interest 28,784 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 1,836,391 outstanding shares of beneficial interest 18,761 Distributions in excess of net investment income (17) Accumulated net realized gain on investments 236 Net unrealized appreciation on investments 868 ------- Total Net Assets (100.0%) $48,632 ======= Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($29,734,501 / 2,895,669 shares) $10.27 ======= Net Asset Value and Offering Price Per Share -- L Shares (1) ($18,897,162 / 1,836,391 shares) $10.29 ======= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 51 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 SHORT-TERM BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS (42.0%) AEROSPACE & DEFENSE (0.5%) Boeing Capital 5.650%, 05/15/06 $ 1,490 $ 1,564 -------- AUTOMOTIVE (0.7%) DaimlerChrysler 7.750%, 06/15/05 2,250 2,369 -------- BANKS (3.0%) Bank of America 5.250%, 02/01/07 2,250 2,347 KFW International Finance, Ser DTC 4.750%, 01/24/07 3,000 3,131 Wachovia 6.800%, 06/01/05 3,825 3,987 -------- 9,465 -------- BROADCASTING (1.5%) Comcast Cablevision 8.375%, 05/01/07 1,425 1,601 Liberty Media 3.500%, 09/25/06 1,710 1,709 Univision Communications 2.875%, 10/15/06 1,275 1,259 -------- 4,569 -------- FINANCE (11.9%) CIT Group 4.125%, 02/21/06 3,905 3,986 Capital One Financial 7.250%, 05/01/06 1,400 1,489 Citigroup 6.750%, 12/01/05 4,500 4,776 Countrywide Home Loan, Ser J, MTN 5.500%, 08/01/06 3,125 3,272 EOP Operating LP 8.375%, 03/15/06 1,505 1,641 Ford Motor Credit 7.500%, 03/15/05 1,675 1,741 6.875%, 02/01/06 1,700 1,785 General Motors Acceptance 6.750%, 01/15/06 3,025 3,181 Housing Finance 6.500%, 01/24/06 3,850 4,079 International Lease Finance 3.500%, 04/01/09 1,125 1,070 National Rural Utilities 3.000%, 02/15/06 4,160 4,174 SLM, Ser A, MTN (C) 1.310%, 09/15/06 5,800 5,816 -------- 37,010 -------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- FOOD, BEVERAGE & TOBACCO (2.1%) Coca-Cola Enterprises 5.250%, 05/15/07 $ 2,870 $ 3,013 ConAgra Foods 7.500%, 09/15/05 1,690 1,791 Safeway 6.150%, 03/01/06 1,575 1,656 -------- 6,460 -------- INDUSTRIAL (4.3%) Anadarko Petroleum 3.250%, 05/01/08 1,610 1,565 Diageo Capital PLC 3.375%, 03/20/08 1,600 1,565 Kerr-McGee 5.875%, 09/15/06 1,500 1,576 Kroger 7.375%, 03/01/05 1,575 1,636 Masco 6.750%, 03/15/06 1,600 1,706 Phillips Petroleum 8.500%, 05/25/05 2,925 3,100 Weyerhaeuser 6.125%, 03/15/07 2,000 2,120 -------- 13,268 -------- INSURANCE (2.4%) Allstate 7.875%, 05/01/05 4,530 4,762 MetLife 3.911%, 05/15/05 1,525 1,552 Safeco 4.200%, 02/01/08 1,110 1,128 -------- 7,442 -------- INVESTMENT BANKERS/BROKER DEALERS (7.7%) Bear Stearns 5.700%, 01/15/07 2,225 2,346 Credit Suisse First Boston 5.875%, 08/01/06 3,250 3,431 Goldman Sachs Group 7.625%, 08/17/05 4,460 4,728 JP Morgan Chase 5.250%, 05/30/07 3,010 3,139 Lehman Brothers Holdings 7.750%, 01/15/05 4,000 4,140 Merrill Lynch, Ser B, MTN 3.375%, 09/14/07 3,985 3,939 Morgan Stanley Dean Witter (K) 7.750%, 06/15/05 2,200 2,324 -------- 24,047 -------- 52 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MULTIMEDIA (1.3%) Time Warner 6.125%, 04/15/06 $ 1,500 $ 1,580 Viacom 7.750%, 06/01/05 2,500 2,638 -------- 4,218 -------- TELEPHONE & TELECOMMUNICATIONS (4.7%) AT&T Wireless 7.500%, 05/01/07 2,000 2,202 British Telecom PLC 7.875%, 12/15/05 2,875 3,094 Deutsche Telekom International Finance 8.250%, 06/15/05 3,000 3,176 IntelSat 5.250%, 11/01/08 805 744 Verizon Wireless 5.375%, 12/15/06 2,000 2,096 Vodafone Group PLC (B) 7.625%, 02/15/05 3,125 3,249 -------- 14,561 -------- UTILITIES (1.9%) Alabama Power, Ser X 3.125%, 05/01/08 815 788 Dominion Resources, Ser B 7.625%, 07/15/05 1,500 1,585 Pacific Gas & Electric (C) 1.810%, 04/03/06 1,125 1,125 Scottish Power PLC, Ser H, MTN 6.750%, 07/15/04 2,500 2,515 -------- 6,013 -------- Total Corporate Obligations (Cost $130,109) 130,986 -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (23.9%) FHLB 2.625%, 05/15/07 1,125 1,100 2.500%, 03/15/06 9,175 9,146 FHLMC 4.250%, 06/15/05 7,825 8,004 3.375%, 04/15/09 1,620 1,559 3.250%, 08/15/05 7,925 8,023 3.050%, 01/19/07 3,725 3,713 2.875%, 11/03/06 4,625 4,592 2.400%, 03/29/07 4,000 3,902 FHLMC (K) 2.375%, 02/15/07 2,425 2,367 FHLMC, MTN 2.500%, 12/04/06 4,000 3,943 2.050%, 07/14/06 4,000 3,937 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- FNMA 3.125%, 03/16/09 $ 1,625 $ 1,541 2.625%, 01/19/07 4,625 4,544 1.875%, 12/15/04 7,000 7,013 FNMA (K) 3.875%, 03/15/05 11,000 11,186 -------- Total U.S. Government Agency Obligations (Cost $75,004) 74,570 -------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (10.4%) FHLMC 5.000%, 05/15/11 1,820 1,842 4.000%, 07/01/08 3,873 3,873 FHLMC (C) 3.352%, 07/01/33 3,940 3,957 FNMA 4.000%, 11/25/16 4,250 4,303 FNMA (C) 4.360%, 03/01/34 3,220 3,226 4.359%, 03/01/34 3,812 3,825 3.195%, 05/01/33 4,303 4,302 3.135%, 09/01/33 3,116 3,172 3.108%, 10/01/33 3,723 3,855 -------- Total U.S. Government Agency Mortgage-Backed Obligations (Cost $32,535) 32,355 -------- U.S. TREASURY OBLIGATIONS (8.6%) U.S. Treasury Notes 5.875%, 11/15/05 3,000 3,157 3.125%, 05/15/07 7,725 7,735 U.S. Treasury Notes (K) 5.750%, 11/15/05 2,500 2,628 2.625%, 03/15/09 8,275 7,862 2.250%, 02/15/07 5,550 5,451 -------- Total U.S. Treasury Obligations (Cost $27,025) 26,833 -------- ASSET-BACKED OBLIGATIONS (11.8%) Bank One Issuance Trust, Ser 2002-A4, Cl A4 2.940%, 06/16/08 4,500 4,530 Capital Auto Receivables Asset Trust, Ser 2002-3, Cl A3 3.580%, 10/16/06 4,500 4,567 Capital Auto Receivables Asset Trust, Ser 2002-4, Cl A4 2.640%, 03/17/08 3,350 3,350 Citibank Credit Card Issuance Trust, Ser 2001-A8, Cl A8 4.100%, 12/07/06 4,875 4,936 Citibank Credit Card Issuance Trust, Ser 2004-A1, Cl A1 2.550%, 01/20/09 3,175 3,116 53 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 SHORT-TERM BOND FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES (E) VALUE (000) - -------------------------------------------------------------------------------- Daimler Chrysler Auto Trust, Ser 2004-A, Cl A2 1.410%, 11/08/06 $ 4,850 $ 4,828 Ford Credit Auto Owner Trust, Ser 2004-A, Cl A2 2.130%, 10/15/06 3,625 3,626 Honda Auto Receivables Owner Trust, Ser 2002-3, Cl A4 3.610%, 12/18/07 1,500 1,522 MBNA Credit Card Master Trust, Ser 2003-A11, Cl A11 3.650%, 03/15/11 2,375 2,336 USAA Auto Owner Trust, Ser 2004-1, Cl A3 2.060%, 04/15/08 4,100 4,047 -------- Total Asset-Backed Obligations (Cost $36,884) 36,858 -------- FOREIGN GOVERNMENT DEBT SECURITIES (2.0%) CANADA (2.0%) Province of Ontario (CAD) 7.000%, 08/04/05 4,000 4,225 Quebec Province (CAD) 5.500%, 04/11/06 2,000 2,097 -------- Total Foreign Government Debt Securities (Cost $6,078) 6,322 -------- CASH EQUIVALENTS (5.6%) Boston Global Investment Trust -- Enhanced Portfolio (L) 13,385,975 13,386 Federated Prime Value Money Market Fund 3,767,020 3,767 -------- Total Cash Equivalents (Cost $17,153) 17,153 -------- Total Investments (104.3%) (Cost $324,788) 325,077 -------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES (-4.3%) Payable upon Return of Securities Loaned $(13,386) Investment Advisory Fees Payable (160) Administration Fees Payable (18) Distribution Fees Payable (9) Custodian Fees Payable (2) Transfer Agent Shareholder Servicing Fees Payable (1) Payable to Adviser (1) Receivable from Affiliated Funds 1 Other Assets and Liabilities, Net 95 -------- Total Other Assets and Liabilities (13,481) -------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 28,670,095 outstanding shares of beneficial interest 290,913 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 595,874 outstanding shares of beneficial interest 6,035 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 2,385,295 outstanding shares of beneficial interest 24,139 Undistributed net investment income 10 Accumulated net realized loss on investments (9,790) Net unrealized appreciation on investments 289 -------- Total Net Assets (100.0%) $311,596 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($282,187,856 / 28,670,095 shares) $9.84 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($5,880,212 / 595,874 shares) $9.87 ======== Maximum Offering Price Per Share -- A Shares ($9.87 / 98.00%) $10.07 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($23,527,669 / 2,385,295 shares) $9.86 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 54 - -------------------------------------------------------------------------------- SHORT-TERM U.S. TREASURY SECURITIES FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) - -------------------------------------------------------------------------------- U.S. TREASURY OBLIGATIONS (97.2%) U.S. Treasury Notes 1.625%, 04/30/05 $27,000 $ 26,966 1.125%, 06/30/05 15,000 14,879 1.500%, 07/31/05 10,000 9,948 6.500%, 08/15/05 25,000 26,335 5.875%, 11/15/05 10,000 10,525 5.750%, 11/15/05 15,000 15,769 2.250%, 04/30/06 10,000 9,954 4.625%, 05/15/06 10,000 10,396 7.000%, 07/15/06 5,000 5,446 2.625%, 11/15/06 10,000 9,952 2.250%, 02/15/07 23,000 22,588 -------- Total U.S. Treasury Obligations (Cost $163,213) 162,758 -------- CASH EQUIVALENT (2.7%) Federated U.S. Treasury Cash Reserves Fund 4,466,438 4,466 -------- Total Cash Equivalent (Cost $4,466) 4,466 -------- Total Investments (99.9%) (Cost $167,679) 167,224 -------- OTHER ASSETS AND LIABILITIES (0.1%) Investment Advisory Fees Payable (86) Distribution Fees Payable (21) Administration Fees Payable (10) Custody Fees Payable (1) Transfer Agent Shareholder Servicing Fees Payable (1) Payable to Adviser (1) Receivable from Affiliated Funds 1 Other Assets and Liabilities, Net 321 -------- Total Other Assets and Liabilities 202 -------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 9,138,502 outstanding shares of beneficial interest $ 90,954 Paid in Capital --A Shares (unlimited authorization -- no par value) based on 1,269,894 outstanding shares of beneficial interest 13,081 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 6,169,064 outstanding shares of beneficial interest 62,754 Accumulated net realized gain on investments 1,092 Net unrealized depreciation on investments (455) -------- Total Net Assets (100.0%) $167,426 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($92,371,024 / 9,138,502 shares) $10.11 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($12,822,972 / 1,269,894 shares) $10.10 ======== Maximum Offering Price Per Share -- A Shares ($10.10 / 99.00%) $10.20 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($62,231,810 / 6,169,064 shares) $10.09 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 55 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 STRATEGIC INCOME FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- CORPORATE OBLIGATIONS (38.3%) AEROSPACE & DEFENSE (0.9%) L-3 Communications Callable 07/15/08 @ 103.063 6.125%, 07/15/13 $ 1,000 $ 935 Sequa 9.000%, 08/01/09 1,000 1,080 -------- 2,015 -------- AUTOPARTS (2.0%) Cummins (B) 9.500%, 12/01/10 500 567 Dana (K) 6.500%, 03/15/08 1,000 1,020 Eagle-Picher (B) Callable 09/01/08 @ 104.875 9.750%, 09/01/13 500 534 Metaldyne Callable 06/15/07 @ 105.5 11.000%, 06/15/12 1,000 830 RJ Tower 12.000%, 06/01/13 500 480 TRW Automotive 9.375%, 02/15/13 892 997 -------- 4,428 -------- BROADCASTING (1.8%) Albritton Communications Callable 12/15/07 @ 103.88 7.750%, 12/15/12 1,000 991 Corus Entertainment Callable 03/01/07 @ 104.375 8.750%, 03/01/12 500 531 Entravision Communications Callable 03/15/06 @ 104.063 8.125%, 03/15/09 500 515 Paxson Communications (A) Callable 01/15/06 @ 106.12 11.900%, 01/15/09 1,000 850 Spanish Broadcasting Callable 11/01/04 @ 104.813 9.625%, 11/01/09 1,000 1,055 -------- 3,942 -------- BUILDING & CONSTRUCTION (2.0%) K. Hovnanian Enterprises Callable 04/01/07 @ 104.438 8.875%, 04/01/12 1,000 1,040 Standard Pacific 9.250%, 04/15/12 1,000 1,075 WCI Communities Callable 02/15/06 @ 105.313 10.625%, 02/15/11 500 547 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- WCI Communities Callable 05/01/07 @ 104.56 9.125%, 05/01/12 $ 500 $ 533 William Lyon Homes 10.750%, 04/01/13 1,000 1,100 -------- 4,295 -------- CABLE (2.2%) Adelphia Communications (J) 10.875%, 10/01/10 750 786 Charter Communications Holdings 10.750%, 10/01/09 750 652 Echostar DBS Callable 01/15/06 @ 104.563 9.125%, 01/15/09 324 356 Echostar DBS Callable 10/01/04 @ 105.188 10.375%, 10/01/07 600 643 Insight Midwest LP (K) Callable 10/01/04 @ 104.875 9.750%, 10/01/09 1,000 1,053 Mediacom LLC (K) Callable 01/15/06 @ 104.75 9.500%, 01/15/13 1,250 1,206 Mediacom LLC, Ser B (K) Callable 04/15/05 @ 101.417 8.500%, 04/15/08 250 252 -------- 4,948 -------- CHEMICALS (2.5%) Acetex 10.875%, 08/01/09 500 545 Compass Minerals Group Callable 08/15/06 @ 105 10.000%, 08/15/11 500 555 Equistar Chemical Callable 05/01/07 @ 105.313 10.625%, 05/01/11 1,000 1,097 Huntsman (B) Callable 10/15/07 @ 105.81 11.625%, 10/15/10 500 539 IMC Global, Ser B Callable 06/01/06 @ 105.62 11.250%, 06/01/11 500 577 IMC Global, Ser B Callable 06/01/06 @ 105.63 11.250%, 06/01/11 500 577 OM Group Callable 12/15/06 @ 104.625 9.250%, 12/15/11 500 503 56 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Vale Overseas 8.250%, 01/17/34 $ 500 $ 429 Westlake Chemical Callable 07/15/07 @ 104.38 8.750%, 07/15/11 500 540 -------- 5,362 -------- COMPUTER SOFTWARE (0.2%) Activant Solutions Callable 06/15/07 @ 105.25 10.500%, 06/15/11 500 525 -------- ENERGY (2.1%) Chesapeake Energy 9.000%, 08/15/12 1,000 1,120 Denbury Resources Callable 04/01/08 @ 103.75 7.500%, 04/01/13 500 500 Energy Partners 8.750%, 08/01/10 750 769 Peabody Energy, Ser B Callable 03/15/08 @ 103.44 6.875%, 03/15/13 1,000 1,007 Premcor Refining Group (K) Callable 02/01/08 @ 103.88 7.750%, 02/01/12 500 511 Swift Energy Callable 05/01/07 @ 104.688 9.375%, 05/01/12 500 538 Westport Resources 8.250%, 11/01/11 250 278 -------- 4,723 -------- ENTERTAINMENT (3.1%) Bally Total Fitness Holding Callable 07/15/07 @ 105.25 10.500%, 07/15/11 500 447 Boyd Gaming (B) Callable 12/15/07 @ 103.875 7.750%, 12/15/12 500 499 Kerzner International Callable 08/15/06 @ 104.438 8.875%, 08/15/11 1,000 1,055 Mandalay Resort Group 10.250%, 08/01/07 1,000 1,120 Resort International Hotel & Casino (K) Callable 03/15/07 @ 106 11.500%, 03/15/09 500 555 Royal Caribbean Cruises 8.750%, 02/02/11 1,000 1,102 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Six Flags Callable 02/01/06 @ 104.44 8.875%, 02/01/10 $ 1,000 $ 983 Venetian Casino Callable 06/15/06 @ 105.5 11.000%, 06/15/10 1,000 1,149 -------- 6,910 -------- FINANCE (1.9%) Capital One Bank 6.500%, 06/13/13 1,500 1,530 Nalco Finance Holdings (A) (B) (K) Callable 02/01/12 @ 100 9.000%, 02/01/14 2,000 1,320 WMC Finance (B) 11.750%, 12/15/08 1,000 1,250 -------- 4,100 -------- FOOD, BEVERAGE & TOBACCO (0.9%) Burns Philp Capital Property (B) Callable 07/15/07 @ 104.875 9.750%, 07/15/12 1,000 1,030 Land O Lakes, Ser B (K) Callable 11/15/06 @ 104.38 8.750%, 11/15/11 1,000 930 -------- 1,960 -------- HOTELS & LODGING (0.2%) Host Marriott, Ser B, Callable 08/01/04 @ 102.657 7.875%, 08/01/08 532 545 -------- INDUSTRIAL (2.4%) Case New Holland (B) Callable 08/01/07 @ 104.625 9.250%, 08/01/11 500 525 Constar (K) Callable 12/01/07 @ 105.5 11.000%, 12/01/12 500 440 Foamex LP Callable 04/01/06 @ 105.375 10.750%, 04/01/09 500 477 Gerdau Ameristeel (K) Callable 07/15/07 @ 105.375 10.375%, 07/15/11 1,000 1,100 NMGH Holding Callable 05/15/06 @ 105 10.000%, 05/15/09 500 548 Sanmina-SCI Callable 01/15/07 @ 105.188 10.375%, 01/15/10 500 573 57 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 STRATEGIC INCOME FUND -- CONTINUED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Trimas Callable 06/15/07 @ 104.938 9.875%, 06/15/12 $ 1,000 $ 1,075 United States Steel Callable 05/15/07 @ 104.88 9.750%, 05/15/10 420 463 -------- 5,201 -------- MEDICAL & MEDICAL PRODUCTS (2.1%) Ameripath Callable 04/01/08 @ 105.25 10.500%, 04/01/13 1,000 1,005 Apogent Technology (B) Callable 05/15/08 @ 103.25 6.500%, 05/15/13 500 505 Fisher Scientific International Callable 05/01/07 @ 104.06 8.125%, 05/01/12 435 460 Healthsouth (K) Callable 10/01/04 @ 105.375 10.750%, 10/01/08 750 722 Pacificare Health Systems Callable 06/01/06 @ 105.375 10.750%, 06/01/09 649 740 United Surgical Partners Callable 12/15/06 @ 105 10.000%, 12/15/11 1,000 1,122 -------- 4,554 -------- PRINTING & PUBLISHING (1.2%) Dex Media East LLC Callable 11/15/07 @ 106.063 12.125%, 11/15/12 1,000 1,160 Primedia (B) Callable 05/15/08 @ 104 8.000%, 05/15/13 1,000 940 Von Hoffman Press 10.250%, 03/15/09 500 496 -------- 2,596 -------- REAL ESTATE INVESTMENT TRUSTS (1.9%) Crescent Real Estate Callable 04/15/06 @ 104.625 9.250%, 04/15/09 750 795 IStar Financial 7.000%, 03/15/08 750 779 MeriStar Hospitality Operating Partnership LP Callable 12/15/05 @ 105.25 10.500%, 06/15/09 1,000 1,060 Senior Housing Properties Trust Callable 04/15/08 @ 103.938 7.875%, 04/15/15 500 514 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Ventas Realty LP 9.000%, 05/01/12 $ 1,000 $ 1,095 -------- 4,243 -------- RETAIL (2.3%) Asbury Automotive Group Callable 06/15/07 @ 104.5 9.000%, 06/15/12 1,000 990 Great Atlantic & Pacific Tea Callable 12/15/06 @ 104.563 9.125%, 12/15/11 1,000 835 Hollywood Entertainment Callable 03/15/07 @ 104.813 9.625%, 03/15/11 1,000 1,130 Ingles Markets Callable 12/01/06 @ 104.438 8.875%, 12/01/11 500 515 Office Depot 10.000%, 07/15/08 500 578 Roundy's, Ser B (B) Callable 06/15/07 @ 104.438 8.875%, 06/15/12 1,000 1,065 -------- 5,113 -------- SERVICE INDUSTRIES (2.4%) Allied Waste, Ser B (B) 9.250%, 09/01/12 500 554 Coinmach Callable 02/01/06 @ 104.5 9.000%, 02/01/10 500 530 IESI Callable 06/15/07 @ 105.125 10.250%, 06/15/12 500 540 IPC Acquistion Callable 12/15/05 @ 105.75 11.500%, 12/15/09 200 213 Iron Mountain Callable 01/15/08 @ 103.88 7.750%, 01/15/15 500 496 Iron Mountain Callable 07/01/08 @ 103.31 6.625%, 01/01/16 500 455 Service International 7.700%, 04/15/09 500 510 Shaw Group (K) Callable 03/15/07 @ 105.375 10.750%, 03/15/10 1,000 978 United Rentals 7.750%, 11/15/13 1,000 940 -------- 5,216 -------- 58 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- TELEPHONE & TELECOMMUNICATIONS (3.8%) Axtel (B) 11.000%, 12/15/13 $ 1,000 $ 947 Crown Castle International (K) Callable 08/01/05 @ 105.375 10.750%, 08/01/11 1,000 1,115 Embratel (B) 11.000%, 12/15/08 1,000 1,033 MCI 7.735%, 05/01/14 49 45 6.688%, 05/01/09 58 54 5.908%, 05/01/07 58 56 Nextel Communications Callable 08/01/08 @ 103.688 7.375%, 08/01/15 1,000 1,008 PanAmSat Callable 02/01/07 @ 104.25 8.500%, 02/01/12 1,000 1,120 Qwest Services (B) Callable 12/15/05 @ 106.5 13.000%, 12/15/07 1,000 1,138 Rogers Wireless (B) 6.375%, 03/01/14 1,500 1,406 TSI Telecommunications Services, Ser B Callable 02/01/06 @ 106.375 12.750%, 02/01/09 500 536 -------- 8,458 -------- TRANSPORTATION (1.5%) Delta Air Lines (B) 10.000%, 08/15/08 1,000 515 El Paso Energy Partners, Ser B Callable 12/01/06 @ 104.25 8.500%, 06/01/11 669 729 Laidlaw, Ser B 11.500%, 04/15/07 1,000 942 Seabulk International Callable 08/15/08 @ 104.75 9.500%, 08/15/13 1,000 1,026 -------- 3,212 -------- UTILITIES (0.9%) Calpine (K) 8.500%, 02/15/11 500 290 Mission Energy Holdings 13.500%, 07/15/08 1,000 1,090 PSEG Energy Holdings 7.750%, 04/16/07 500 520 -------- 1,900 -------- Total Corporate Obligations (Cost $81,990) 84,246 -------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) (E) VALUE (000) - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (29.4%) FNMA 5.936%, 11/01/11 $ 973 $ 1,030 5.500%, 12/01/32 to 02/01/34 26,923 26,701 4.500%, 06/01/18 to 10/01/18 6,514 6,375 FNMA, 15 year 5.000%, 06/01/18 1,843 1,845 FNMA, 30 year 5.000%, 06/01/33 to 08/01/33 19,851 19,112 GNMA 6.000%, 02/15/33 5,000 5,098 5.500%, 11/15/33 4,475 4,456 -------- Total U.S. Government Agency Mortgage-Backed Obligations (Cost $66,350) 64,617 -------- FOREIGN GOVERNMENT DEBT SECURITIES (20.5%) AUSTRALIA (2.4%) Australian Government (AUD) 8.750%, 08/15/08 2,000 1,597 6.500%, 05/15/13 2,500 1,864 5.750%, 06/15/11 2,600 1,852 -------- 5,313 -------- BELGIUM (0.6%) Kingdom of Belgium (EUR) 4.250%, 09/28/13 1,000 1,215 -------- BRAZIL (2.2%) Federal Republic of Brazil 11.000%, 01/11/12 2,000 1,955 10.250%, 06/17/13 3,000 2,812 -------- 4,767 -------- CANADA (2.7%) Canadian Government (CAD) 5.250%, 06/01/12 4,000 3,043 4.500%, 09/01/07 2,000 1,505 4.250%, 09/01/08 2,000 1,482 -------- 6,030 -------- COLOMBIA (0.7%) Republic of Columbia (COP) 8.125%, 05/21/24 2,000 1,555 -------- GERMANY (1.7%) Deutschland Republic (EUR) 4.500%, 01/04/13 3,000 3,744 -------- IRELAND (1.0%) Depfa ACS Bank (EUR) 3.875%, 07/15/13 2,000 2,345 -------- 59 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 STRATEGIC INCOME FUND--CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000) (E) VALUE (000) - -------------------------------------------------------------------------------- ITALY (1.5%) Italy Buoni Poliennali del Tesoro (EUR) 4.250%, 08/01/13 2,700 $ 3,267 -------- NEW ZEALAND (0.6%) New Zealand Government (NZD) 6.500%, 04/15/13 2,000 1,282 -------- SPAIN (1.7%) Government of Spain (EUR) 6.000%, 01/31/08 1,000 1,339 4.200%, 07/30/13 2,000 2,426 -------- 3,765 -------- SWEDEN (2.0%) Kingdom of Sweden (SEK) 5.000%, 01/28/09 32,000 4,485 -------- UNITED KINGDOM (3.4%) United Kingdom (GBP) 7.500%, 12/07/06 1,000 1,938 5.000%, 03/07/08 1,000 1,825 5.000%, 03/07/12 2,000 3,627 -------- 7,390 -------- Total Foreign Government Debt Securities (Cost $44,180) 45,158 -------- U.S. TREASURY OBLIGATIONS (8.9%) U.S. Treasury Bond 5.375%, 02/15/31 $ 7,010 7,036 U.S. Treasury Notes 4.750%, 05/15/14 3,000 3,023 4.000%, 02/15/14 10,000 9,506 -------- Total U.S. Treasury Obligations (Cost $19,753) 19,565 -------- ASSET-BACKED OBLIGATIONS (1.3%) Greenwich Capital Commercial Finance, Ser 2003-C2, Cl H 5.810%, 01/05/36 2,000 1,931 Long Beach Asset Holdings, Ser 2003-4, Cl N1 6.535%, 08/25/33 391 394 Saxon Net Interest Margin Trust, Ser 2003-A, Cl A 6.656%, 08/26/33 575 575 -------- Total Asset-Backed Obligations (Cost $2,970) 2,900 -------- - -------------------------------------------------------------------------------- FACE AMOUNT (000)/SHARES VALUE (000) - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATION (0.4%) FNMA 3.250%, 01/15/08 $ 1,000 $ 984 -------- Total U.S. Government Agency Obligation (Cost $978) 984 -------- UNIT INVESTMENT TRUST (0.3%) HMP Equity Holdings (B) (D) (K) 13.900%, 05/15/08 1,000 755 -------- Total Unit Investment Trust (Cost $588) 755 -------- COMMON STOCK (0.2%) TELEPHONE & TELECOMMUNICATIONS (0.2%) MCI 22 319 -------- Total Common Stock (Cost $585) 319 -------- ESCROW BOND (0.0%) Intermedia Communication Escrow (N) 750 -- -------- Total Escrow Bond (Cost $0) -- -------- CASH EQUIVALENT (5.1%) Boston Global Investment Trust -- Enhanced Portfolio (L) 11,131,601 11,132 -------- Total Cash Equivalent (Cost $11,132) 11,132 -------- Total Investments (104.4%) (Cost $228,526) 229,676 -------- OTHER ASSETS AND LIABILITIES (-4.4%) Payable upon Return of Securities Loaned (11,132) Investment Advisory Fees Payable (139) Distribution Fees Payable (52) Custodian Fees Payable (16) Administration Fees Payable (13) Transfer Agent Shareholder Servicing Fees Payable (1) Payable to Adviser (1) Receivable from Affiliated Funds 1 Other Assets and Liabilities, Net 1,644 -------- Total Other Assets and Liabilities (9,709) -------- 60 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 10,051,103 outstanding shares of beneficial interest $ 99,196 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 425,739 outstanding shares of beneficial interest 4,279 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 11,944,535 outstanding shares of beneficial interest 116,691 Distributions in excess of net investment income (1,028) Accumulated net realized loss on investments (321) Net unrealized appreciation on investments 1,150 -------- Total Net Assets (100.0%) $219,967 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($98,570,389 / 10,051,103 shares) $9.81 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($4,181,432 / 425,739 shares) $9.82 ======== Maximum Offering Price Per Share -- A Shares ($9.82 / 96.25%) $10.20 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($117,215,500 / 11,944,535 shares) $9.81 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 61 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 U.S. GOVERNMENT SECURITIES FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (71.9%) FHLMC 7.000%, 06/01/17 $ 435 $ 460 6.500%, 03/01/12 to 09/01/16 1,518 1,605 5.500%, 04/01/17 to 02/01/24 14,688 14,851 5.000%, 05/01/33 to 10/01/33 10,509 10,111 4.500%, 06/01/13 to 10/01/18 17,755 17,739 4.000%, 12/01/13 5,663 5,548 FHLMC (C) 5.212%, 04/01/33 3,620 3,622 FHLMC REMIC, Ser 1623, Cl PG 3.000%, 07/15/21 513 513 FNMA 7.000%, 12/01/31 to 06/01/32 4,996 5,255 6.500%, 06/01/13 to 07/01/32 6,106 6,337 6.290%, 08/01/18 1,267 1,315 6.000%, 11/01/07 to 04/01/34 54,863 55,934 5.936%, 11/01/11 3,894 4,118 5.500%, 09/01/17 to 11/01/18 15,000 15,328 5.000%, 09/01/33 1,924 1,853 4.000%, 11/01/13 9,192 9,010 FNMA (C) 5.331%, 03/01/33 10,968 11,018 4.750%, 05/01/34 10,001 9,782 4.717%, 05/01/34 9,390 9,394 4.171%, 08/01/33 14,668 14,780 4.133%, 05/01/33 8,031 7,968 3.998%, 11/01/33 4,659 4,602 FNMA REMIC, Ser 143, Cl J 8.750%, 12/25/20 9 10 FNMA, Ser 2002-M2, Cl C 4.717%, 08/25/12 5,000 4,867 GNMA 7.500%, 10/20/09 5 6 6.500%, 05/20/28 267 277 6.250%, 10/15/28 413 427 6.000%, 07/15/13 to 03/15/33 6,410 6,558 5.500%, 12/15/32 3,479 3,465 GNMA 3/1 Hybrid ARM 3.750%, 01/20/34 4,941 4,982 GNMA, Ser 2002-9, Cl B 5.881%, 03/16/24 3,000 3,161 -------- Total U.S. Government Agency Mortgage-Backed Obligations (Cost $236,737) 234,896 -------- U.S. GOVERNMENT AGENCY OBLIGATIONS (11.2%) FHLB 5.890%, 06/30/08 4,000 4,295 FHLMC 4.875%, 11/15/13 5,000 4,883 4.250%, 05/22/13 2,000 1,833 3.000%, 10/27/06 4,000 3,998 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- FNMA 4.625%, 10/15/13 $ 5,000 $ 4,791 3.875%, 11/17/08 10,000 9,837 2.500%, 06/15/06 5,000 4,958 FNMA (C) 2.833%, 02/17/09 2,000 1,985 -------- Total U.S. Government Agency Obligations (Cost $37,550) 36,580 -------- U.S. TREASURY OBLIGATIONS (5.1%) U.S. Treasury Bond (K) 5.375%, 02/15/31 4,900 4,918 U.S. Treasury Note 4.000%, 11/15/12 2,000 1,929 U.S. Treasury Notes (K) 4.250%, 11/15/13 7,000 6,785 2.000%, 05/15/06 3,000 2,970 -------- Total U.S. Treasury Obligations (Cost $16,953) 16,602 -------- ASSET-BACKED OBLIGATIONS (2.4%) CitiFinancial Mortgage Securities, Ser 2003-4, Cl AF3 3.221%, 10/25/33 2,000 1,976 JP Morgan Mortgage Trust, Ser 2003-A2, Cl 2A2 4.723%, 11/25/33 5,000 4,898 MBNA Credit Card Master Note Trust, Ser 2003-A7, Cl A7 2.650%, 11/15/10 1,000 952 -------- Total Asset-Backed Obligations (Cost $7,958) 7,826 -------- CORPORATE OBLIGATIONS (1.1%) AUTOMOTIVE (0.6%) DaimlerChrysler Holdings 4.750%, 01/15/08 2,000 2,006 -------- FINANCE (0.5%) SLM, MTN 3.625%, 03/17/08 1,500 1,486 -------- Total Corporate Obligations (Cost $3,545) 3,492 -------- 62 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SHARES/FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- EXCHANGE TRADED FUND (3.0%) iShares GS InvesTop Corporate Bond Fund 92,000 $ 9,936 -------- Total Exchange Traded Fund (Cost $10,085) 9,936 -------- CASH EQUIVALENTS (2.2%) Boston Global Investment Trust -- Enhanced Portfolio (L) 7,064,750 7,065 SEI Daily Income Trust, Government II Fund 4,665 5 -------- Total Cash Equivalents (Cost $7,070) 7,070 -------- REPURCHASE AGREEMENT (5.2%) Merrill Lynch, 1.020%, dated 05/28/04, to be repurchased on 06/01/04, repurchase price $17,073,275 (collateralized by U.S. Government obligations; total market value $17,413,577) (G) $17,071 17,071 -------- Total Repurchase Agreement (Cost $17,071) 17,071 -------- Total Investments (102.1%) (Cost $336,969) 333,473 -------- OTHER ASSETS AND LIABILITIES (-2.1%) Payable upon Return of Securities Loaned (7,065) Investment Advisory Fees Payable (198) Administration Fees Payable (19) Distribution Fees Payable (13) Custodian Fees Payable (2) Transfer Agent Shareholder Servicing Fees Payable (1) Payable to Adviser (1) Receivable from Affiliated Funds 1 Other Assets and Liabilities, Net 299 -------- Total Other Assets and Liabilities (6,999) -------- - -------------------------------------------------------------------------------- VALUE (000) - -------------------------------------------------------------------------------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 28,891,219 outstanding shares of beneficial interest $304,469 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 819,826 outstanding shares of beneficial interest 8,629 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 1,835,323 outstanding shares of beneficial interest 19,751 Undistributed net investment income 1 Accumulated net realized loss on investments (2,880) Net unrealized depreciation on investments (3,496) -------- Total Net Assets (100.0%) $326,474 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($298,996,729 / 28,891,219 shares) $10.35 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($8,484,263 / 819,826 shares) $10.35 ======== Maximum Offering Price Per Share -- A Shares ($10.35 / 96.25%) $10.75 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($18,992,588 / 1,835,323 shares) $10.35 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 63 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MUNICIPAL BONDS (98.4%) VIRGINIA (98.4%) Albemarle County, Industrial Development Authority, Residential Care Facilities, Ser A, RB Callable 01/01/05 @ 101 5.000%, 01/01/07 $1,500 $ 1,521 Arlington County, Industrial Development Authority, Alexandria/Arlington Waste Project, Ser A, RB, FSA 5.250%, 01/01/05 4,000 4,092 Arlington County, Industrial Development Authority, Alexandria/Arlington Waste Project, Ser B, RB, AMT, FSA Callable 07/01/08 @ 101 5.375%, 01/01/11 2,785 2,963 Arlington County, Industrial Development Authority, Arlington Health Systems, RB 5.500%, 07/01/06 2,000 2,129 5.500%, 07/01/11 2,000 2,186 Arlington County, Industrial Development Authority, Arlington Health Systems, RB Callable 07/01/11 @ 101 5.500%, 07/01/17 2,225 2,336 Bristol, GO, FSA, ETM Callable 11/01/12 @ 102 5.500%, 11/01/16 1,190 1,321 Bristol, Public Improvement Project, GO, FSA Callable 11/01/12 @ 102 5.250%, 11/01/14 1,250 1,377 Bristol, Utility Systems, RB, FSA, ETM Callable 07/15/11 @ 102 5.750%, 07/15/14 1,055 1,208 Chesapeake Bay, Bridge & Tunnel Commission, General Resolution, RB, FGIC 5.000%, 07/01/09 1,000 1,082 Chesapeake, GO 5.400%, 12/01/08 2,500 2,752 Chesapeake, Public Improvement Project, GO 5.500%, 12/01/10 2,500 2,795 Chesapeake, Water & Sewer Project, GO Callable 12/01/14 @ 101 5.000%, 12/01/19 2,465 2,561 5.000%, 12/01/20 2,500 2,580 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Danville, GO, FSA 5.000%, 08/01/12 $1,000 $ 1,087 Fairfax County, Industrial Development Authority, Inova Health System Project, RB Callable 08/15/06 @ 102 5.300%, 08/15/07 1,500 1,610 Fairfax County, Refunding & Public Improvement Project, Ser A, GO Callable 04/01/14 @ 100 5.000%, 04/01/16 2,000 2,131 Fairfax County, Water Authority, RB Callable 04/01/07 @ 102 6.000%, 04/01/22 5,560 6,047 Fairfax County, Water Authority, RB Callable 04/01/12 @ 100 5.500%, 04/01/14 2,000 2,209 Greater Richmond, Convention Center Authority, RB 5.250%, 06/15/05 460 477 Greater Richmond, Convention Center Authority, RB Callable 06/15/10 @ 101 6.000%, 06/15/11 1,170 1,315 6.000%, 06/15/13 3,185 3,523 Hampton, Public Improvement Project, GO Callable 01/15/08 @ 102 5.000%, 01/15/10 1,200 1,286 Hampton, Public Improvement Project, Ser A, GO Callable 07/15/12 @ 101 5.500%, 07/15/18 1,275 1,380 Hanover County, Industrial Development Authority, Memorial Regional Medical Center Project, RB, MBIA 6.375%, 08/15/18 6,000 7,073 Harrisonburg, Industrial Development Authority, Rockingham Memorial Hospital Project, RB, MBIA Callable 01/05/04 @ 101 5.750%, 12/01/13 3,000 3,039 Henrico County, Economic Development Authority, Residential Care Facility Westminister Centerbury Project, Ser B, RB (LOC: KBC Bank N.V.) (C) 1.070%, 07/01/08 2,750 2,750 64 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Henrico County, Economic Development Authority, United Methodist Homes Project, Ser A, RB 5.000%, 06/01/10 $1,000 $ 1,009 4.250%, 06/01/07 525 520 3.750%, 06/01/06 255 254 Henrico County, Economic Development Authority, United Methodist Homes Project, Ser A, RB Callable 06/01/12 @ 100 6.500%, 06/01/22 1,000 1,010 Henrico County, Industrial Development Authority, Governmental Projects, RB Callable 06/01/06 @ 102 5.150%, 06/01/07 2,500 2,676 Henrico County, Industrial Development Authority, Solid Waste Facility, Browning Ferris Project, RB, AMT 5.300%, 12/01/05 1,000 984 Henrico County, Refunding & Public Improvement Projects, GO 5.000%, 01/15/08 2,220 2,393 Henry County, Public Service Authority, RB, FSA 5.000%, 11/15/08 1,990 2,152 Isle of Wight County, GO, MBIA 5.000%, 02/01/12 1,000 1,093 James City County, Industrial Development Authority, Residential Care Facility, Ser B, RB Callable 09/01/04 @ 101 5.375%, 03/01/26 1,900 1,914 Loudoun County, Public Improvement Project, Ser A, GO, MBIA 5.000%, 11/01/06 2,500 2,668 Lynchburg, Industrial Development Authority, Centra Health, Health Care Facility, RB 5.000%, 01/01/08 1,180 1,250 Lynchburg, Industrial Development Authority, Residential Care Facility, The Summit Project, Ser A, RB Callable 01/01/05 @ 101 4.750%, 01/01/06 1,850 1,861 Lynchburg, Ser B, GO 5.000%, 02/01/10 1,940 2,108 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Metropolitan Washington, Airports Authority, Ser B, RB, MBIA, AMT Callable 10/01/08 @ 101 4.750%, 10/01/11 $1,625 $ 1,675 Montgomery County, Industrial Development Authority, RB, AMBAC Callable 01/15/12 @ 101 5.500%, 01/15/18 1,865 2,009 Newport News, GO Callable 03/01/08 @ 102 5.000%, 03/01/10 3,210 3,460 Newport News, General Improvement & Water Projects, Ser B, GO 5.250%, 07/01/15 3,000 3,285 Newport News, Industrial Development Authority, Advanced Shipbuilding Carrier Project, RB 5.500%, 09/01/09 2,500 2,763 Newport News, Water & General Improvement Projects, Ser B, GO Callable 01/15/14 @ 101 5.000%, 01/15/17 2,000 2,103 Newport News, Water Project, Ser C, GO Callable 05/01/14 @ 101 5.000%, 05/01/19 2,000 2,075 Norfolk, Industrial Development Authority, Children's Hospital Project, RB, AMBAC 6.900%, 06/01/06 1,000 1,091 Norfolk, Redevelopment & Housing Authority, Educational Facility - Tidewater Community College, RB 5.000%, 11/01/13 1,135 1,225 Peninsula Ports Authority, Virginia Baptist Homes Project, Ser A, RB Callable 12/01/13 @ 100 7.375%, 12/01/23 1,500 1,589 Richmond, GO, FSA 5.500%, 01/15/11 1,000 1,119 5.250%, 01/15/09 1,470 1,606 Richmond, GO, FSA Callable 01/15/11 @ 101 5.500%, 01/15/12 2,500 2,782 5.500%, 01/15/18 2,755 2,956 Roanoke County, Industrial Development Authority, Glebe Inc. Project, Ser A, RB Callable 07/01/07 @ 101 4.400%, 07/01/08 1,000 996 65 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND -- CONCLUDED - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Roanoke, Industrial Development Authority, Carilion Health System Project, Ser A, RB, MBIA 5.250%, 07/01/11 $1,500 $ 1,640 Roanoke, Industrial Development Authority, Carilion Health System Project, Ser A, RB, MBIA Callable 07/01/12 @ 100 5.750%, 07/01/13 2,000 2,233 5.750%, 07/01/14 2,000 2,214 5.500%, 07/01/18 2,000 2,127 Roanoke, Industrial Development Authority, Carilion Health System Project, Ser C, RB (C) Callable 07/01/04 @ 100 1.020%, 07/01/27 6,400 6,400 Roanoke, Ser B, GO, AMT, FGIC 5.000%, 10/01/11 1,000 1,071 Southwest Virginia, Regional Jail Authority, RB, GAN Callable 09/01/05 @ 100 3.000%, 09/01/06 1,750 1,768 Southwest Virginia, Regional Jail Authority, RB, MBIA Callable 09/01/13 @ 100 5.125%, 09/01/14 1,145 1,232 5.125%, 09/01/15 1,465 1,560 Stafford County, Water & Sewer, RB, FSA 5.000%, 06/01/12 2,275 2,469 Upper Occoquan, Sewer Authority, RB, FSA Callable 01/01/14 @ 100 5.000%, 07/01/18 2,265 2,358 Virginia Beach, Development Authority, Public Facility Town Center Project Phase I, Ser A, RB Callable 08/01/12 @ 100 5.375%, 08/01/16 1,650 1,779 Virginia Beach, GO 5.450%, 07/15/11 1,000 1,116 5.250%, 03/01/07 2,500 2,686 Virginia Commonwealth, Transportation Board, Federal Highway Reimbursement Project, RB 5.500%, 10/01/05 2,500 2,626 Virginia Commonwealth, Transportation Board, Northern Transportation District Project, Ser A, RB Callable 05/01/11 @ 100 5.375%, 05/15/13 2,045 2,242 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Virginia State, College Building Authority, Public Higher Education, Ser A, RB 5.500%, 09/01/09 $1,415 $ 1,564 5.000%, 09/01/11 1,510 1,646 Virginia State, College Building Authority, Washington & Lee University, RB 5.375%, 01/01/21 2,945 3,197 Virginia State, Education Loan Authority, Guaranteed Student Loan Program, Ser B, RB, ETM, AMT 5.550%, 09/01/10 1,800 1,901 Virginia State, Housing Development Authority, Commonwealth Mortgage Project, Ser A, RB, AMT 2.000%, 07/01/06 750 747 Virginia State, Housing Development Authority, Commonwealth Mortgage Project, Ser I, Sub Ser I-1, RB, AMT 3.750%, 07/01/05 1,000 1,017 Virginia State, Housing Development Authority, Multi-Family Housing, Ser E, RB Callable 01/01/08 @ 102 5.350%, 11/01/11 1,250 1,324 Virginia State, Housing Development Authority, Multi-Family Housing, Ser I, RB, AMT Callable 01/01/09 @ 101 4.875%, 11/01/12 1,950 2,012 Virginia State, Housing Development Authority, Rental Housing, Ser H, RB, AMT Callable 11/01/09 @ 100 5.625%, 11/01/18 3,500 3,616 Virginia State, Housing Development Authority, Ser C, Sub-Ser C-1, RB Callable 01/01/08 @ 102 5.100%, 07/01/14 635 657 Virginia State, Housing Development Authority, Sub-Ser J-1, RB, MBIA Callable 07/01/11 @ 100 4.875%, 07/01/13 2,500 2,546 66 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Virginia State, Polytechnic Institute & State University, Athletic Facility Systems Project, RB, AMBAC Callable 06/01/14 @ 101 5.125%, 06/01/21 $1,095 $ 1,144 Virginia State, Polytechnic Institute & State University, Ser A, RB Prerefunded @ 102 (F) 5.350%, 06/01/06 2,000 2,166 Virginia State, Public Building Authority, Ser A, RB Prerefunded @ 101 (F) 6.000%, 08/01/07 1,000 1,112 Virginia State, Public School Authority, Ser B, GO Callable 08/01/10 @ 101 5.000%, 08/01/13 2,910 3,111 Virginia State, Public School Authority, Ser D, RB 5.000%, 02/01/11 2,000 2,175 Virginia State, Resources Authority, Pooled Financing Program, RB Callable 11/01/13 @ 100 5.000%, 11/01/22 1,670 1,698 Virginia State, Resources Authority, RB 5.000%, 04/01/12 1,225 1,331 Virginia State, Resources Authority, Ser D, RB Callable 05/01/10 @ 101 5.000%, 05/01/13 1,485 1,582 York County, GO 5.000%, 07/15/09 1,545 1,672 -------- 189,195 -------- Total Municipal Bonds (Cost $186,246) 189,195 -------- - -------------------------------------------------------------------------------- SHARES VALUE (000) - -------------------------------------------------------------------------------- CASH EQUIVALENT (0.8%) Federated Tax-Free Obligation Fund 1,457,979 $ 1,458 -------- Total Cash Equivalent (Cost $1,458) 1,458 -------- Total Investments (99.2%) (Cost $187,704) 190,653 -------- OTHER ASSETS AND LIABILITIES (0.8%) Investment Advisory Fees Payable (106) Administration Fees Payable (11) Custody Fees Payable (1) Transfer Agent Shareholder Servicing Fees Payable (1) Payable to Adviser (1) Receivable from Affiliated Funds 1 Receivable from Distributor 1 Other Assets and Liabilities, Net 1,589 -------- Total Other Assets and Liabilities 1,471 -------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 17,883,264 outstanding shares of beneficial interest 177,484 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 1,040,580 outstanding shares of beneficial interest 10,862 Undistributed net investment income 19 Accumulated net realized gain on investments 810 Net unrealized appreciation on investments 2,949 -------- Total Net Assets (100.0%) $192,124 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($181,558,390 / 17,883,264 shares) $10.15 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($10,565,599 / 1,040,580 shares) $10.15 ======== Maximum Offering Price Per Share -- A Shares ($10.15 / 96.25%) $10.55 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 67 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 VIRGINIA MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- MUNICIPAL BONDS (95.3%) VIRGINIA (95.3%) Amherst County, Service Authority, RB Callable 12/15/10 @ 102 6.000%, 12/15/20 $ 500 $ 520 6.000%, 12/15/30 1,750 1,801 Blacksburg, VPI Sanitation Authority, Sewer System Project, RB 4.150%, 11/01/06 500 519 Bristol, Utility System, RB, MBIA Callable 07/15/13 @ 100 5.250%, 07/15/23 1,000 1,033 Brunswick County, Industrial Development Authority, RB, MBIA Callable 07/01/06 @ 102 5.700%, 07/01/10 1,000 1,086 Capital Region Airport Commission, Ser A, RB, FSA 5.000%, 07/01/10 1,000 1,080 Chesterfield County, GO Prerefunded @ 100 (F) 5.000%, 01/15/11 1,105 1,199 Chesterfield County, Industrial Development Authority, Virginia State University Real Estate Project, Ser A, RB (LOC: Bank of America N.A.) (C) 1.077%, 07/01/29 1,000 1,000 Fairfax County, Refunding & Public Improvement Projects, Ser A, GO Callable 04/01/14 @ 100 5.000%, 04/01/16 1,000 1,065 Fairfax County, Sewer Revenue, RB, MBIA Callable 07/15/06 @ 102 5.800%, 07/15/22 1,000 1,074 Fredericksburg, Industrial Development Authority, Medicorp Health System Project, RB 5.000%, 08/15/09 1,000 1,062 Greater Richmond, Convention Center Authority, Convention Center Expansion Project, RB 5.500%, 06/15/08 550 597 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Greater Richmond, Convention Center Authority, Convention Center Expansion Project, RB Callable 06/15/10 @ 101 6.125%, 06/15/25 $1,200 $ 1,305 5.900%, 06/15/16 850 920 Hampton, Golf Course Project, RB 6.000%, 12/01/12 1,076 1,117 Hanover County, Industrial Development Authority, Bon Secours Health Systems Projects, RB, MBIA 6.000%, 08/15/09 1,000 1,122 Hanover County, Industrial Development Authority, Memorial Regional Medical Center Project, RB, MBIA 6.375%, 08/15/18 1,000 1,179 Henrico County, Economic Development Authority, Beth Sholom Assisted Living, Ser A, RB, GNMA Callable 07/20/09 @ 102 5.900%, 07/20/29 500 527 5.850%, 07/20/19 400 427 Henry County, Public Service Authority, RB, FSA 5.250%, 11/15/13 1,500 1,648 Loudoun County, Public Improvement Project, Ser A, GO, MBIA 5.000%, 11/01/06 500 534 Loudoun County, Refunding & Public Improvement Projects, Ser A, GO Callable 05/01/12 @ 100 5.250%, 05/01/18 1,535 1,632 Lynchburg, Industrial Development Authority, Centra Health Project, RB Callable 01/01/08 @ 101 5.250%, 01/01/11 1,430 1,507 Metropolitan Washington, Airports Authority, Ser A, RB, MBIA, AMT Callable 10/01/11 @ 101 5.500%, 10/01/27 1,000 1,017 Middle River Regional Jail Authority, Virginia Jail Facility Project Callable 05/15/14 @ 101 5.000%, 05/15/17 1,015 1,059 68 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Newport News, GO Callable 03/01/08 @ 102 5.000%, 03/01/10 $1,000 $ 1,078 Newport News, General Improvement Project, Ser A, GO, MBIA Callable 07/15/14 @ 101 5.000%, 07/15/16 1,250 1,328 Newport News, Redevelopment & Housing Authority, Ser A, RB, GNMA Callable 08/20/07 @ 102 5.850%, 12/20/30 500 516 Newport News, Refunding & Water Projects, Ser C Callable 05/01/14 @ 101 5.000%, 05/01/20 1,000 1,030 Peninsula Ports Authority, Virginia Baptist Homes Project, Ser A, RB Callable 12/01/13 @ 100 7.375%, 12/01/23 500 530 Pittsylvania County, Ser B, GO, MBIA Callable 03/01/11 @ 102 5.625%, 03/01/15 1,000 1,106 Richmond, GO, FSA 5.500%, 01/15/11 1,000 1,119 Richmond, GO, FSA Callable 01/15/11 @ 101 5.500%, 01/15/15 1,290 1,405 5.500%, 01/15/18 1,000 1,073 Richmond, Industrial Development Authority, University Real Estate Foundation Project, RB Callable 01/01/11 @ 102 5.450%, 01/01/21 1,000 1,023 Riverside Regional Jail Authority, RB, MBIA Prerefunded @ 102 (F) 5.875%, 07/01/05 910 971 Roanoke, Industrial Development Authority, Carilion Health System Project, Ser A, RB, MBIA Callable 07/01/12 @ 100 5.500%, 07/01/16 1,000 1,073 Roanoke, Industrial Development Authority, Carilion Health System Project, Ser A, RB, MBIA Callable 07/01/12 @ 100 5.500%, 07/01/21 1,000 1,053 - -------------------------------------------------------------------------------- FACE AMOUNT (000) VALUE (000) - -------------------------------------------------------------------------------- Virginia Beach Development Authority, General Hospital Project, RB, AMBAC 6.000%, 02/15/09 $ 500 $ 558 Transportation Board, Federal Highway Reimbursement Project, RB 5.500%, 10/01/05 1,000 1,051 Virginia Commonwealth, Transportation Board, Ser A, RB Callable 05/01/11 @ 100 5.375%, 05/15/12 1,500 1,652 Virginia State, College Building Authority, 21st Century College & Equipment Programs, Ser A, RB Callable 02/01/12 @ 100 5.500%, 02/01/13 1,000 1,104 Virginia State, College Building Authority, Public Higher Education, Ser A, RB 5.500%, 09/01/09 1,000 1,105 Virginia State, Polytechnic Institute & State University, Athletic Facility Systems Project, Ser D, RB, AMBAC Callable 06/01/14 @ 101 5.125%, 06/01/21 1,000 1,044 Virginia State, Public Building Authority, Ser A, RB Callable 08/01/10 @ 100 5.750%, 08/01/16 1,000 1,095 Virginia State, Public School Authority, School Equipment Financing, RB 5.250%, 04/01/05 1,000 1,032 Virginia State, Resources Authority, Pooled Financing Program, RB Callable 11/01/13 @ 100 5.000%, 11/01/22 1,250 1,271 Virginia State, Resources Authority, RB, MBIA Callable 05/01/11 @ 101 5.800%, 05/01/30 1,500 1,617 ------- 50,864 ------- Total Municipal Bonds (Cost $49,866) 50,864 ------- 69 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 VIRGINIA MUNICIPAL BOND FUND -- CONCLUDED - -------------------------------------------------------------------------------- SHARES VALUE (000) - -------------------------------------------------------------------------------- CASH EQUIVALENT (3.6%) Federated Tax-Free Obligation Fund 1,893,966 $ 1,894 ------- Total Cash Equivalent (Cost $1,894) 1,894 ------- Total Investments (98.9%) (Cost $51,760) 52,758 ------- OTHER ASSETS AND LIABILITIES (1.1%) Investment Advisory Fees Payable (30) Distribution Fees Payable (5) Administration Fees Payable (3) Other Assets and Liabilities, Net 623 ------- Total Other Assets and Liabilities 585 ------- NET ASSETS: Paid in Capital -- T Shares (unlimited authorization -- no par value) based on 4,193,208 outstanding shares of beneficial interest 41,625 Paid in Capital -- A Shares (unlimited authorization -- no par value) based on 12,405 outstanding shares of beneficial interest 128 Paid in Capital -- L Shares (unlimited authorization -- no par value) based on 933,250 outstanding shares of beneficial interest 9,826 Undistributed net investment income 1 Accumulated net realized gain on investments 765 Net unrealized appreciation on investments 998 ------- Total Net Assets (100.0%) $53,343 ======= Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($43,491,500 / 4,193,208 shares) $10.37 ======= Net Asset Value and Redemption Price Per Share -- A Shares ($128,612 / 12,405 shares) $10.37 ======= Maximum Offering Price Per Share -- A Shares ($10.37 / 96.25%) $10.77 ======= Net Asset Value and Offering Price Per Share -- L Shares (1) ($9,722,993 / 933,250 shares) $10.42 ======= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. FOR DESCRIPTIONS OF ABBREVIATIONS AND FOOTNOTES, PLEASE SEE PAGE 71. 70 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 KEY TO ABBREVIATIONS AND FOOTNOTES USED IN THE STATEMENTS OF NET ASSETS AND SCHEDULE OF INVESTMENTS ACA American Capital Access AMBAC Security insured by the American Municipal Bond Assurance Corporation AMT Alternative Minimum Tax ARM Adjustable Rate Mortgage Cl Class COP Certificate of Participation ETM Escrowed to Maturity FGIC Security insured by the Financial Guaranty Insurance Company FHA Federal Housing Authority FHLB Federal Home Loan Bank FHLMC Federal Home Loan Mortgage Corporation FNMA Federal National Mortgage Association FSA Security insured by Financial Security Assurance GAN Grant Appreciation Note GNMA Government National Mortgage Association GO General Obligation LLC Limited Liability Company 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 REMIC Real Estate Mortgage Investment Conduit Ser Series * Non-income producing security (A) Step Bond -- The rate shown is the effective yield at time of purchase. (B) Securities sold within terms of a private placement memorandum, exempt from registration under section 144a of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors". (C) Variable rate security -- The rate shown is the rate in effect on May 31, 2004. (D) Zero Coupon Security -- The rate shown is the effective yield at the time of purchase. (E) Face amounts of foreign debt securities are shown in U.S. Dollars unless otherwise indicated. (F) Prerefunded Security -- The maturity date shown is the prerefunded date. (G) Tri-Party Repurchase Agreement (H) Security purchased on a when-issued basis. (I) Security in default on interest and principal payments. Collectability of interest and principal may be in doubt due to the fact that the company is either in, or contemplating bankruptcy. (J) Security in default on interest payments. Collectability of interest may be in doubt due to the fact that the company is either in, or contemplating bankruptcy. (K) This security or a partial position of this security is on loan at May 31, 2004 (see note 8 in the Notes to the Financial Statements). The total value of securities on loan as of May 31, 2004 was $19,555,119 $59,161,466, $12,983,126, $10,677,377 and $6,864,652 for the High Income, Investment Grade Bond, Short-Term Bond, Strategic Income and U.S. Government Securities Funds, respectively. (L) This security was purchased with cash collateral held from securities lending. The total value of such securities as of May 31, 2004 was $20,892,243, $61,627,250, $13,385,975, $11,131,601 and $7,064,750 for the High Income, Investment Grade Bond, Short-Term Bond, Strategic Income and U.S. Government Securities Funds, respectively. (M) Canadian-domiciled security traded on the Nasdaq Stock Market. (N) Securities fair valued using methods determined in good faith according to procedures adopted by the Fair Valuation Committee of the Board of Trustees. The total value of the securities were 0.00% and 0.00% of total net assets for the High Income and Strategic Income Funds, respectively. (see Note 2 in Notes to Financial Statements). (O) All or a portion of this security has been pledged as collateral for a when-issued security. (P) Security is considered illiquid. The total value of the security was 0.00% of total net assets for the High Income Fund. (1) L Shares have a contingent deferred sales charge. For a description of a possible sales charge, see Note 2 in the Notes to Financial Statements. Amounts designated as "--" are either $0 or have been rounded to $0. CURRENCY LEGEND (AUD) Australian Dollar (CAD) Canadian Dollar (COP) Columbian Peso (EUR) Euro Dollar (GBP) British Pound (NZD) New Zealand Dollar (SEK) Swedish Krona 71 This page intentionally left blank STATEMENT OF ASSETS & LIABILITIES (000) - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004
INVESTMENT GRADE TAX-EXEMPT BOND FUND --------------- Assets: Investments at Market Value (Cost $264,699) ............................. $266,336 Receivable for Investment Securities Sold ............................... 19,675 Accrued Income .......................................................... 3,530 Receivable for Capital Shares Sold ...................................... 140 Receivable from Affiliated Funds ........................................ 2 Prepaid Expenses ........................................................ 7 -------- Total Assets ............................................................ 289,690 -------- Liabilities: Payable for Investment Securities Purchased ............................. 41,561 Income Distribution Payable ............................................. 341 Payable for Capital Shares Redeemed ..................................... 260 Investment Advisory Fees Payable ........................................ 149 Distribution Fees Payable ............................................... 22 Administration Fees Payable ............................................. 14 Custody Fees Payable .................................................... 1 Transfer Agent Shareholder Servicing Fees Payable ....................... 1 Payable to Adviser ...................................................... 2 Accrued Expense ......................................................... 18 -------- Total Liabilities ....................................................... 42,369 -------- Total Net Assets ........................................................ $247,321 ======== Net Assets: Paid-in-Capital -- T Shares (unlimited authorization -- no par value) Based on 17,936,701 Outstanding Shares of Beneficial Interest ......... $203,939 Paid-in-Capital -- A Shares (unlimited authorization -- no par value) Based on 1,666,095 Outstanding Shares of Beneficial Interest .......... 17,458 Paid-in-Capital -- L Shares (unlimited authorization -- no par value) Based on 2,008,009 Outstanding Shares of Beneficial Interest .......... 22,980 Undistributed Net Investment Income ..................................... 9 Accumulated Net Realized Gain on Investments ............................ 1,298 Net Unrealized Appreciation on Investments .............................. 1,637 -------- Total Net Assets ........................................................ $247,321 ======== Net Asset Value, Offering and Redemption Price Per Share -- T Shares ($205,266,254 / 17,936,701 shares) ...................................... $11.44 ======== Net Asset Value and Redemption Price Per Share -- A Shares ($19,085,812 / 1,666,095 shares) ........................................ $11.46 ======== Maximum Offering Price Per Share -- A Shares ($11.46 / 96.25%) ............. $11.91 ======== Net Asset Value and Offering Price Per Share -- L Shares (1) ($22,968,533 / 2,008,009 shares) ........................................ $11.44 ========
(1) L Shares have a contingent deferred sales charge. For a description of a possible sales charge, see Note 2 in Notes to Financial Statements. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 73
STATEMENTS OF OPERATIONS (000) - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FIXED INCOME FUNDS FOR THE YEAR ENDED MAY 31, 2004 INVESTMENT FLORIDA GEORGIA HIGH INVESTMENT GRADE TAX-EXEMPT TAX-EXEMPT INCOME GRADE BOND TAX-EXEMPT BOND FUND BOND FUND FUND FUND BOND FUND ---------- ------------ -------- ---------- ---------- Income: Interest Income ............................................. $7,019 $4,715 $16,189 $30,358 $7,551 Dividend Income ............................................. 94 29 -- 55 152 Income from Security Lending ............................. -- -- 71 359 -- Less: Foreign Taxes Withheld ............................. -- -- -- -- -- -------- -------- ------- -------- ------- Total Income ............................................ 7,113 4,744 16,260 30,772 7,703 ======== ======== ======= ======== ======= Expenses: Investment Advisory Fees ................................. 1,309 778 1,444 5,555 1,819 Administration Fees ...................................... 138 82 124 514 168 Distribution Fees -- A Shares ............................ 12 5 2 143 89 Distribution Fees -- L Shares ............................ 310 163 852 319 290 Custodian Fees ........................................... 5 3 7 32 6 Transfer Agent Shareholder Servicing Fees ................ 5 3 5 20 7 Trustee Fees ............................................. 2 1 2 8 3 Transfer Agent Fees -- T Shares .......................... 16 16 16 16 16 Transfer Agent Fees -- A Shares .......................... 14 13 6 38 20 Transfer Agent Fees -- L Shares .......................... 21 16 71 52 24 Professional Fees ........................................ 8 5 8 31 10 Registration Fees ........................................ 7 4 7 29 7 Transfer Agent Out of Pocket Expenses .................... 7 4 6 25 8 Printing Fees ............................................ 7 4 6 21 8 Other Expenses ........................................... 7 3 4 13 7 -------- -------- ------- -------- ------- Total Expenses ........................................... 1,868 1,100 2,560 6,816 2,482 -------- -------- ------- -------- ------- Less: Investment Advisory Fees Waived .......................... (90) (54) (271) (155) (79) Distribution Fees Waived/Expenses Reimbursed -- A Shares ............................................... (11) (12) (5) (46) (22) Distribution Fees Waived -- L Shares ....................... (107) (61) (364) (84) (53) -------- -------- ------- -------- ------- Net Expenses ............................................. 1,660 973 1,920 6,531 2,328 -------- -------- ------- -------- ------- Net Investment Income .................................... 5,453 3,771 14,340 24,241 5,375 -------- -------- ------- -------- ------- Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions: Net Realized Gain (Loss) on Investments Sold ............. 3,674 3,872 3,353 16,393 1,822 Net Realized Gain on Forward Foreign Currencies and Foreign Currency Transactions ...................... -- -- -- -- -- Net Change in Unrealized Appreciation on Forward Foreign Currency Contracts, Foreign Currencies and Translation of Other Assets and Liabilities in Foreign Currency ............. -- -- -- -- -- Net Change in Unrealized Appreciation (Depreciation) on Investments .......................... (13,497) (10,196) 931 (60,476) (8,837) -------- -------- ------- -------- ------- Total Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions .......... (9,823) (6,324) 4,284 (44,083) (7,015) -------- -------- ------- -------- ------- Net Increase (Decrease) in Net Assets From Operations ........................................ $ (4,370) $ (2,553) $18,624 $(19,842) $(1,640) ======== ======== ======= ======== =======
Amounts designated as "--" are zero or have been rounded to zero. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 74
- ------------------------------------------------------------------------------------------------------------------------------------ LIMITED- TERM FEDERAL SHORT-TERM MORTGAGE MARYLAND U.S. TREASURY STRATEGIC SECURITIES MUNICIPAL SHORT-TERM SECURITIES INCOME FUND BOND FUND BOND FUND FUND FUND ------------ ----------- ---------- ------------- --------- Income: Interest Income ............................................. $ 16,973 $ 2,236 $10,238 $ 4,501 $14,267 Dividend Income ............................................. -- 8 59 32 -- Income from Security Lending ............................. 57 -- 78 -- 31 Less: Foreign Taxes Withheld ............................. -- -- -- -- (21) -------- ------- ------- ------- ------- Total Income ............................................ 17,030 2,244 10,375 4,533 14,277 ======== ======= ======= ======= ======= Expenses: Investment Advisory Fees ................................. 3,674 356 2,163 1,426 1,896 Administration Fees ...................................... 387 37 228 151 153 Distribution Fees -- A Shares ............................ 27 -- 15 29 6 Distribution Fees -- L Shares ............................ 1,237 253 299 975 1,520 Custodian Fees ........................................... 15 1 11 5 59 Transfer Agent Shareholder Servicing Fees ................ 15 1 9 6 6 Trustee Fees ............................................. 6 1 3 2 2 Transfer Agent Fees -- T Shares .......................... 16 16 16 16 16 Transfer Agent Fees -- A Shares .......................... 22 -- 16 23 5 Transfer Agent Fees -- L Shares .......................... 83 20 36 66 85 Professional Fees ........................................ 23 2 15 8 9 Registration Fees ........................................ 24 2 11 9 6 Transfer Agent Out of Pocket Expenses .................... 19 2 11 7 7 Printing Fees ............................................ 19 2 11 7 8 Other Expenses ........................................... 36 1 10 7 16 -------- ------- ------- ------- ------- Total Expenses ........................................... 5,603 694 2,854 2,737 3,794 -------- ------- ------- ------- ------- Less: Investment Advisory Fees Waived .......................... (281) (44) (157) (131) (222) Distribution Fees Waived/Expenses Reimbursed -- A Shares ............................................... (18) -- (17) (23) (6) Distribution Fees Waived -- L Shares ....................... (562) (25) (166) (626) (760) -------- ------- ------- ------- ------- Net Expenses ............................................. 4,742 625 2,514 1,957 2,806 -------- ------- ------- ------- ------- Net Investment Income .................................... 12,288 1,619 7,861 2,576 11,471 -------- ------- ------- ------- ------- Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions: Net Realized Gain (Loss) on Investments Sold ............. (562) 500 1,780 1,438 872 Net Realized Gain on Forward Foreign Currencies and Foreign Currency Transactions ...................... -- -- -- -- 2,117 Net Change in Unrealized Appreciation on Forward Foreign Currency Contracts, Foreign Currencies and Translation of Other Assets and Liabilities in Foreign Currency ............. -- -- -- -- 42 Net Change in Unrealized Appreciation (Depreciation) on Investments .......................... (17,136) (3,073) (8,220) (4,029) (6,647) -------- ------- ------- ------- ------- Total Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions .......... (17,698) (2,573) (6,440) (2,591) (3,616) -------- ------- ------- ------- ------- Net Increase (Decrease) in Net Assets From Operations ........................................ $ (5,410) $ (954) $ 1,421 $ (15) $ 7,855 ======== ======= ======= ======= =======
VIRGINIA U.S. INTERMEDIATE VIRGINIA GOVERNMENT MUNICIPAL MUNICIPAL SECURITIES FUND BOND FUND BOND FUND --------------- ------------ --------- Income: Interest Income ............................................. $ 11,387 $ 8,038 $ 2,523 Dividend Income ............................................. 308 16 11 Income from Security Lending ............................. 93 -- -- Less: Foreign Taxes Withheld ............................. -- -- -- -------- ------- ------- Total Income ............................................ 11,788 8,054 2,534 ======== ======= ======= Expenses: Investment Advisory Fees ................................. 2,322 1,316 388 Administration Fees ...................................... 215 139 41 Distribution Fees -- A Shares ............................ 32 15 -- Distribution Fees -- L Shares ............................ 289 -- 137 Custodian Fees ........................................... 12 5 1 Transfer Agent Shareholder Servicing Fees ................ 8 5 2 Trustee Fees ............................................. 3 2 1 Transfer Agent Fees -- T Shares .......................... 16 16 16 Transfer Agent Fees -- A Shares .......................... 25 15 2 Transfer Agent Fees -- L Shares .......................... 39 -- 17 Professional Fees ........................................ 13 8 2 Registration Fees ........................................ 10 7 2 Transfer Agent Out of Pocket Expenses .................... 11 7 2 Printing Fees ............................................ 10 6 1 Other Expenses ........................................... 12 5 -- -------- ------- ------- Total Expenses ........................................... 3,017 1,546 612 -------- ------- ------- Less: Investment Advisory Fees Waived .......................... (101) -- -- Distribution Fees Waived/Expenses Reimbursed -- A Shares ............................................... (22) (25) (2) Distribution Fees Waived -- L Shares ....................... (60) -- (22) -------- ------- ------- Net Expenses ............................................. 2,834 1,521 588 -------- ------- ------- Net Investment Income .................................... 8,954 6,533 1,946 -------- ------- ------- Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions: Net Realized Gain (Loss) on Investments Sold ............. (1,679) 1,253 1,373 Net Realized Gain on Forward Foreign Currencies and Foreign Currency Transactions ...................... -- -- -- Net Change in Unrealized Appreciation on Forward Foreign Currency Contracts, Foreign Currencies and Translation of Other Assets and Liabilities in Foreign Currency ............. -- -- -- Net Change in Unrealized Appreciation (Depreciation) on Investments .......................... (13,732) (9,858) (4,048) -------- ------- ------- Total Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions .......... (15,411) (8,605) (2,675) -------- ------- ------- Net Increase (Decrease) in Net Assets From Operations ........................................ $ (6,457) $(2,072) $ (729) ======== ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 75
STATEMENTS OF CHANGES IN NET ASSETS (000) - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FIXED INCOME FUNDS FOR THE YEARS ENDED MAY 31 FLORIDA TAX-EXEMPT GEORGIA TAX-EXEMPT BOND FUND BOND FUND HIGH INCOME FUND* ---------------------- ---------------------- -------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 05/31/04 05/31/03 --------- --------- --------- --------- --------- --------- Operations: Net Investment Income .............................. $ 5,453 $ 5,725 $ 3,771 $ 3,908 $ 14,340 $ 8,030 Net Realized Gain (Loss) on Investments Sold ....... 3,674 2,798 3,872 551 3,353 (988) Net Change in Unrealized Appreciation (Depreciation) on Investments ................................... (13,497) 9,086 (10,196) 5,855 931 3,006 -------- -------- -------- -------- -------- --------- Increase (Decrease) in Net Assets from Operations .. (4,370) 17,609 (2,553) 10,314 18,624 10,048 -------- -------- -------- -------- -------- --------- Dividends and Distributions to Shareholders: Net Investment Income: T Shares ......................................... (4,630) (4,598) (3,265) (3,399) (7,786) (4,271) A Shares ......................................... (170) (203) (91) (87) (64) -- L Shares ......................................... (662) (920) (416) (421) (6,492) (3,759) Realized Capital Gains: T Shares ......................................... (3,033) (625) (694) -- -- -- A Shares ......................................... (106) (26) (19) -- -- -- L Shares ......................................... (513) (154) (114) -- -- -- -------- -------- -------- -------- -------- -------- Total Dividends and Distributions ................ (9,114) (6,526) (4,599) (3,907) (14,342) (8,030) -------- -------- -------- -------- -------- -------- Capital Transactions (1): T Shares: Proceeds from Shares Issued ...................... 83,482 40,464 19,156 23,167 42,398 78,322 Reinvestment of Cash Distributions ............... 2,132 934 699 576 3,161 2,263 Cost of Shares Redeemed .......................... (57,242) (23,528) (14,624) (21,636) (77,402) (10,708) -------- -------- -------- -------- -------- -------- Increase (Decrease) in Net Assets From T Share Transactions ............................. 28,372 17,870 5,231 2,107 (31,843) 69,877 -------- -------- -------- -------- -------- -------- A Shares: Proceeds from Shares Issued ...................... 3,093 9,924 1,280 435 2,653 -- Reinvestment of Cash Distributions ............... 166 149 56 45 32 -- Cost of Shares Redeemed .......................... (5,029) (5,146) (1,059) (842) (1,122) -- -------- -------- -------- -------- -------- -------- Increase (Decrease) in Net Assets From A Share Transactions ............................. (1,770) 4,927 277 (362) 1,563 -- -------- -------- -------- -------- -------- -------- L Shares: Proceeds from Shares Issued ...................... 6,043 25,216 2,653 5,069 47,482 32,945 Reinvestment of Cash Distributions ............... 865 854 444 359 4,236 2,357 Cost of Shares Redeemed .......................... (24,958) (9,812) (5,341) (3,962) (42,475) (17,558) -------- -------- -------- -------- -------- -------- Increase (Decrease) in Net Assets From L Share Transactions ............................. (18,050) 16,258 (2,244) 1,466 9,243 17,744 -------- -------- -------- -------- -------- -------- Increase (Decrease) in Net Assets From Share Transactions ............................... 8,552 39,055 3,264 3,211 (21,037) 87,621 -------- -------- -------- -------- -------- -------- Total Increase (Decrease) in Net Assets .......... (4,932) 50,138 (3,888) 9,618 (16,755) 89,639 -------- -------- -------- -------- -------- -------- Net Assets: Beginning of Period ................................ 195,855 145,717 118,087 108,469 165,270 75,631 -------- -------- -------- -------- -------- -------- End of Period ...................................... $190,923 $195,855 $114,199 $118,087 $148,515 $165,270 ======== ======== ======== ======== ======== ======== Undistributed (Distributions in excess of) Net Investment Income ............................ $ 4 $ 12 $ 2 $ 3 $ (1) $ 1 ======== ======== ======== ======== ======== ========
* A shares commenced operations on October 27, 2003. (1) See Note 7 in Notes to Financial Statements for additional information. Amounts designated as "--" are either $0 or have been rounded to $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 76
STATEMENTS OF CHANGES IN NET ASSETS (000) - ---------------------------------------------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS For The Years Ended May 31 INVESTMENT GRADE INVESTMENT GRADE TAX- BOND FUND EXEMPT BOND FUND ---------------------- ----------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 --------- --------- ---------- --------- Operations: Net Investment Income .............................. $ 24,241 $ 35,672 $ 5,375 $ 5,201 Net Realized Gain (Loss) on Investments Sold ....... 16,393 23,215 1,822 9,776 Net Change in Unrealized Appreciation (Depreciation) on Investments ................................... (60,476) 40,999 (8,837) 6,674 --------- -------- -------- -------- Increase (Decrease) in Net Assets from Operations .. (19,842) 99,886 (1,640) 21,651 --------- -------- -------- -------- Dividends and Distributions to Shareholders: Net Investment Income: T Shares ......................................... (24,510) (37,781) (4,556) (4,282) A Shares ......................................... (1,058) (1,060) (394) (441) L Shares ......................................... (857) (1,273) (418) (476) Realized Capital Gains: T Shares ......................................... -- -- (4,156) (6,535) A Shares ......................................... -- -- (418) (802) L Shares ......................................... -- -- (595) (1,092) --------- -------- -------- -------- Total Dividends and Distributions ................ (26,425) (40,114) (10,537) (13,628) --------- -------- -------- -------- Capital Transactions (1): T Shares: Proceeds from Shares Issued ...................... 131,151 190,331 83,827 65,057 Reinvestment of Cash Distributions ............... 10,827 15,210 2,327 3,476 Cost of Shares Redeemed .......................... (342,709) (326,113) (56,635) (38,360) --------- -------- -------- -------- Increase (Decrease) in Net Assets From T Share Transactions ............................. (200,731) (120,572) 29,519 30,173 --------- -------- -------- -------- A Shares: Proceeds from Shares Issued ...................... 11,284 23,705 3,424 4,022 Reinvestment of Cash Distributions ............... 943 968 654 1,017 Cost of Shares Redeemed .......................... (13,838) (12,533) (5,748) (4,495) --------- -------- -------- -------- Increase (Decrease) in Net Assets From A Share Transactions ............................. (1,611) 12,140 (1,670) 544 --------- -------- -------- -------- L Shares: Proceeds from Shares Issued ...................... 6,557 21,399 4,230 13,844 Reinvestment of Cash Distributions ............... 739 1,095 871 1,334 Cost of Shares Redeemed .......................... (18,778) (23,304) (13,377) (8,216) --------- -------- -------- -------- Increase (Decrease) in Net Assets From L Share Transactions ............................. (11,482) (810) (8,276) 6,962 --------- -------- -------- -------- Increase (Decrease) in Net Assets From Share Transactions ............................... (213,824) (109,242) 19,573 37,679 --------- -------- -------- -------- Total Increase (Decrease) in Net Assets .......... (260,091) (49,470) 7,396 45,702 --------- -------- -------- -------- Net Assets: Beginning of Period ................................ 894,026 943,496 239,925 194,223 --------- -------- -------- -------- End of Period ...................................... $ 633,935 $894,026 $247,321 $239,925 ========= ======== ======== ======== Undistributed (Distributions in excess of) Net Investment Income ............................ $ 6 $ 5 $ 9 $ 2 ========= ======== ======== =======
LIMITED-TERM FEDERAL MARYLAND MUNICIPAL MORTGAGE SECURITIES FUND BOND FUND ------------------------ ---------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 --------- --------- --------- --------- Operations: Net Investment Income .............................. $ 12,288 $ 7,976 $ 1,619 $ 1,928 Net Realized Gain (Loss) on Investments Sold ....... (562) 2,377 500 832 Net Change in Unrealized Appreciation (Depreciation) on Investments ................................... (17,136) 9,868 (3,073) 2,803 --------- -------- -------- -------- Increase (Decrease) in Net Assets from Operations .. (5,410) 20,221 (954) 5,563 --------- -------- -------- -------- Dividends and Distributions to Shareholders: Net Investment Income: T Shares ......................................... (12,201) (8,520) (996) (1,251) A Shares ......................................... (300) (245) -- -- L Shares ......................................... (2,707) (2,670) (620) (674) Realized Capital Gains: T Shares ......................................... -- (267) (546) (41) A Shares ......................................... -- (9) -- -- L Shares ......................................... -- (111) (459) (30) --------- -------- -------- -------- Total Dividends and Distributions ................ (15,208) (11,822) (2,621) (1,996) --------- -------- -------- -------- Capital Transactions (1): T Shares: Proceeds from Shares Issued ...................... 270,058 226,297 8,075 19,146 Reinvestment of Cash Distributions ............... 4,093 3,910 489 301 Cost of Shares Redeemed .......................... (144,748) (80,208) (7,414) (24,605) --------- -------- -------- -------- Increase (Decrease) in Net Assets From T Share Transactions ............................. 129,403 149,999 1,150 (5,158) --------- -------- -------- -------- A Shares: Proceeds from Shares Issued ...................... 8,182 18,913 -- -- Reinvestment of Cash Distributions ............... 279 228 -- -- Cost of Shares Redeemed .......................... (12,123) (7,223) -- -- --------- -------- -------- -------- Increase (Decrease) in Net Assets From A Share Transactions ............................. (3,662) 11,918 -- -- --------- -------- -------- -------- L Shares: Proceeds from Shares Issued ...................... 23,896 160,430 4,056 9,395 Reinvestment of Cash Distributions ............... 2,217 2,359 932 596 Cost of Shares Redeemed .......................... (116,892) (14,640) (13,988) (5,226) --------- -------- -------- -------- Increase (Decrease) in Net Assets From L Share Transactions ............................. (90,779) 148,149 (9,000) 4,765 --------- -------- -------- -------- Increase (Decrease) in Net Assets From Share Transactions ............................... 34,962 310,066 (7,850) (393) --------- -------- -------- -------- Total Increase (Decrease) in Net Assets .......... 14,344 318,465 (11,425) 3,174 --------- -------- -------- -------- Net Assets: Beginning of Period ................................ 500,597 182,132 60,057 56,883 --------- -------- -------- -------- End of Period ...................................... $ 514,941 $500,597 $ 48,632 $ 60,057 ========= ======== ======== ======== Undistributed (Distributions in excess of) Net Investment Income ............................ $ 8 $ 1 $ (17) $ (20) ========= ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 77
STATEMENTS OF CHANGES IN NET ASSETS (000) - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FIXED INCOME FUNDS FOR THE YEARS ENDED MAY 31 SHORT-TERM SHORT-TERM U.S. TREASURY BOND FUND SECURITIES FUND ------------------------ ------------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 --------- --------- --------- --------- Operations: Net Investment Income .................................... $ 7,861 $ 11,183 $ 2,576 $ 4,346 Net Realized Gain (Loss) on Investments Sold ............. 1,780 (6,286) 1,438 2,689 Net Realized Gain (Loss) on Forward Foreign Currencies and Foreign Currency Transactions .......................... -- -- -- -- Net Change in Unrealized Appreciation on Forward Foreign Currency Contracts, Foreign Currency and Translation of Other Assets and Liabilities in Foreign Currency .... -- -- -- -- Net Change in Unrealized Appreciation (Depreciation) on Investments ......................................... (8,220) 7,359 (4,029) 1,929 --------- --------- -------- -------- Increase (Decrease) in Net Assets from Operations ........ 1,421 12,256 (15) 8,964 --------- --------- -------- -------- Dividends and Distributions to Shareholders: Net Investment Income: T Shares ............................................... (7,288) (10,196) (1,437) (2,438) A Shares ............................................... (147) (148) (199) (191) L Shares ............................................... (569) (836) (940) (1,717) Realized Capital Gains: T Shares ............................................... -- -- (1,216) (688) A Shares ............................................... -- -- (199) (62) L Shares ............................................... -- -- (1,134) (649) --------- --------- -------- -------- Total Dividends and Distributions ........................ (8,004) (11,180) (5,125) (5,745) --------- --------- -------- -------- Capital Transactions (1): T Shares: Proceeds from Shares Issued ............................ 112,609 117,712 16,704 42,670 Reinvestment of Cash Distributions ..................... 2,305 2,890 678 653 Cost of Shares Repurchased ............................. (129,543) (124,705) (44,103) (30,621) --------- --------- -------- -------- Increase (Decrease) in Net Assets From T Share Transactions ................................... (14,629) (4,103) (26,721) 12,702 --------- --------- -------- -------- A Shares: Proceeds from Shares Issued ............................ 5,818 7,799 11,230 19,530 Reinvestment of Cash Distributions ..................... 115 108 349 217 Cost of Shares Repurchased ............................. (5,618) (7,986) (13,938) (9,039) --------- --------- -------- -------- Increase (Decrease) in Net Assets From A Share Transactions ................................... 315 (79) (2,359) 10,708 --------- --------- -------- -------- L Shares: Proceeds from Shares Issued ............................ 8,024 18,740 16,687 95,244 Reinvestment of Cash Distributions ..................... 449 600 1,810 2,065 Cost of Shares Repurchased ............................. (16,981) (13,276) (81,783) (41,630) --------- --------- -------- -------- Increase (Decrease) in Net Assets From L Share Transactions ................................... (8,508) 6,064 (63,286) 55,679 --------- --------- -------- -------- Increase (Decrease) in Net Assets From Share Transactions (22,822) 1,882 (92,366) 79,089 --------- --------- -------- -------- Total Increase (Decrease) in Net Assets .................. (29,405) 2,958 (97,506) 82,308 --------- --------- -------- -------- Net Assets: Beginning of Period ...................................... 341,001 338,043 264,932 182,624 --------- --------- -------- -------- End of Period ............................................ $ 311,596 $ 341,001 $167,426 $264,932 ========= ========= ======== ======== Undistributed (Distributions in excess of) Net Investment Income .................................. $ 10 $ 3 $ -- $ -- ========= ========= ======== ========
* A shares commenced operations on October 8, 2003. ** A shares commenced operations on May 11, 2004. (1) See Note 7 in Notes to Financial Statements for additional information. Amounts designated as "--" are either $0 or have been rounded to $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 78
U.S. GOVERNMENT STRATEGIC INCOME FUND* SECURITIES FUND ------------------------ ------------------------ 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 --------- --------- --------- --------- Operations: Net Investment Income .................................... $ 11,471 $ 6,980 $ 8,954 $ 10,089 Net Realized Gain (Loss) on Investments Sold ............. 872 866 (1,679) 3,921 Net Realized Gain (Loss) on Forward Foreign Currencies and Foreign Currency Transactions .......................... 2,117 (4,173) -- -- Net Change in Unrealized Appreciation on Forward Foreign Currency Contracts, Foreign Currency and Translation of Other Assets and Liabilities in Foreign Currency .... 42 486 -- -- Net Change in Unrealized Appreciation (Depreciation) on Investments ......................................... (6,647) 7,654 (13,732) 8,184 -------- -------- -------- -------- Increase (Decrease) in Net Assets from Operations ........ 7,855 11,813 (6,457) 22,194 -------- -------- -------- -------- Dividends and Distributions to Shareholders: Net Investment Income: T Shares ............................................... (3,651) (3,391) (9,197) (9,284) A Shares ............................................... (81) -- (243) (271) L Shares ............................................... (7,336) (3,676) (696) (1,246) Realized Capital Gains: T Shares ............................................... (423) -- (922) (548) A Shares ............................................... (19) -- (24) (13) L Shares ............................................... (792) -- (92) (91) -------- -------- -------- -------- Total Dividends and Distributions ........................ (12,302) (7,067) (11,174) (11,453) -------- -------- -------- -------- Capital Transactions (1): T Shares: Proceeds from Shares Issued ............................ 61,718 33,833 138,247 135,338 Reinvestment of Cash Distributions ..................... 789 607 3,400 3,379 Cost of Shares Repurchased ............................. (23,966) (17,743) (85,923) (57,596) -------- -------- -------- -------- Increase (Decrease) in Net Assets From T Share Transactions ................................... 38,541 16,697 55,724 81,121 -------- -------- -------- -------- A Shares: Proceeds from Shares Issued ............................ 4,920 -- 11,471 16,742 Reinvestment of Cash Distributions ..................... 41 -- 241 257 Cost of Shares Repurchased ............................. (682) -- (12,029) (16,515) -------- -------- -------- -------- Increase (Decrease) in Net Assets From A Share Transactions ................................... 4,279 -- (317) 484 -------- -------- -------- -------- L Shares: Proceeds from Shares Issued ............................ 75,089 103,253 4,150 19,543 Reinvestment of Cash Distributions ..................... 5,643 2,635 645 1,155 Cost of Shares Repurchased ............................. (91,009) (18,667) (23,438) (14,717) -------- -------- -------- -------- Increase (Decrease) in Net Assets From L Share Transactions ................................... (10,277) 87,221 (18,643) 5,981 -------- -------- -------- -------- Increase (Decrease) in Net Assets From Share Transactions 32,543 103,918 36,764 87,586 -------- -------- -------- -------- Total Increase (Decrease) in Net Assets .................. 28,096 108,664 19,133 98,327 -------- -------- -------- -------- Net Assets: Beginning of Period ...................................... 191,871 83,207 307,341 209,014 -------- -------- -------- -------- End of Period ............................................ 219,967 $191,871 $326,474 $307,341 ======== ======== ======== ======== Undistributed (Distributions in excess of) Net Investment Income .................................. $ (1,028) $ (3,788) $ 1 $ 3 ======== ======== ======== ========
VIRGINIA INTERMEDIATE VIRGINIA MUNICIPAL MUNICIPAL BOND FUND BOND FUND** ------------------------ ------------------------ 06/01/03- 06/01/02- 06/01/03- 06/01/03- 05/31/04 05/31/03 05/31/04 05/31/03 --------- --------- --------- --------- Operations: Net Investment Income .................................... $ 6,533 $ 7,253 $ 1,946 $ 2,368 Net Realized Gain (Loss) on Investments Sold ............. 1,253 2,169 1,373 896 Net Realized Gain (Loss) on Forward Foreign Currencies and Foreign Currency Transactions .......................... -- -- -- -- Net Change in Unrealized Appreciation on Forward Foreign Currency Contracts, Foreign Currency and Translation of Other Assets and Liabilities in Foreign Currency .... -- -- -- -- Net Change in Unrealized Appreciation (Depreciation) on Investments ......................................... (9,858) 7,601 (4,048) 2,913 -------- -------- ------- ------- Increase (Decrease) in Net Assets from Operations ........ (2,072) 17,023 (729) 6,177 -------- -------- ------- ------- Dividends and Distributions to Shareholders: Net Investment Income: T Shares ............................................... (6,203) (6,987) (1,596) (1,962) A Shares ............................................... (324) (272) -- -- L Shares ............................................... -- -- (353) (408) Realized Capital Gains: T Shares ............................................... (1,617) (1,900) (996) (136) A Shares ............................................... (78) (69) -- -- L Shares ............................................... -- -- (278) (40) -------- -------- ------- ------- Total Dividends and Distributions ........................ (8,222) (9,228) (3,223) (2,546) -------- -------- ------- ------- Capital Transactions (1): T Shares: Proceeds from Shares Issued ............................ 19,400 28,200 8,850 8,431 Reinvestment of Cash Distributions ..................... 1,285 1,656 477 185 Cost of Shares Repurchased ............................. (35,871) (22,296) (10,867) (19,915) -------- -------- ------- ------- Increase (Decrease) in Net Assets From T Share Transactions ................................... (15,186) 7,560 (1,540) (11,299) -------- -------- ------- ------- A Shares: Proceeds from Shares Issued ............................ 5,471 4,074 128 -- Reinvestment of Cash Distributions ..................... 308 249 -- -- Cost of Shares Repurchased ............................. (5,091) (1,425) -- -- -------- -------- ------- ------- Increase (Decrease) in Net Assets From A Share Transactions ................................... 688 2,898 128 -- -------- -------- ------- ------- L Shares: Proceeds from Shares Issued ............................ -- -- 2,118 6,447 Reinvestment of Cash Distributions ..................... -- -- 458 312 Cost of Shares Repurchased ............................. -- -- (8,927) (4,047) -------- -------- ------- ------- Increase (Decrease) in Net Assets From L Share Transactions ................................... -- -- (6,351) 2,712 -------- -------- ------- ------- Increase (Decrease) in Net Assets From Share Transactions (14,498) 10,458 (7,763) (8,587) -------- -------- ------- ------- Total Increase (Decrease) in Net Assets .................. (24,792) 18,253 (11,715) (4,956) -------- -------- ------- ------- Net Assets: Beginning of Period ...................................... 216,916 198,663 65,058 70,014 -------- -------- ------- ------- End of Period ............................................ $192,124 $216,916 $53,343 $65,058 ======== ======== ======= ======= Undistributed (Distributions in excess of) Net Investment Income .................................. $ 19 $ 13 $ 1 $ 4 ======== ======== ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 79
FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FIXED INCOME FUNDS FOR THE YEARS ENDED MAY 31, (UNLESS OTHERWISE INDICATED) FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD NET ASSET NET REALIZED AND DIVIDENDS TOTAL VALUE, NET UNREALIZED GAINS TOTAL FROM NET DISTRIBUTIONS DIVIDENDS NET ASSET BEGINNING INVESTMENT (LOSSES) FROM INVESTMENT FROM REALIZED AND VALUE, END OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS OF PERIOD --------- ---------- ---------------- ---------- ---------- ------------- ------------- --------- FLORIDA TAX-EXEMPT BOND FUND T Shares 2004 $11.69 $0.32(1) $(0.56)(1) $(0.24) $(0.32) $(0.20) $(0.52) $10.93 2003 10.95 0.40 0.79 1.19 (0.40) (0.05) (0.45) 11.69 2002 10.79 0.40 0.22 0.62 (0.40) (0.06) (0.46) 10.95 2001 10.06 0.44 0.73 1.17 (0.44) -- (0.44) 10.79 2000 10.59 0.44 (0.49) (0.05) (0.44) (0.04) (0.48) 10.06 A Shares 2004 $11.69 $0.30(1) $(0.56)(1) $(0.26) $(0.30) $(0.20) $(0.50) $10.93 2003 10.95 0.38 0.79 1.17 (0.38) (0.05) (0.43) 11.69 2002 10.79 0.38 0.22 0.60 (0.38) (0.06) (0.44) 10.95 2001 10.07 0.42 0.72 1.14 (0.42) -- (0.42) 10.79 2000 10.60 0.42 (0.49) (0.07) (0.42) (0.04) (0.46) 10.07 L Shares 2004 $11.71 $0.24(1) $(0.55)(1) $(0.31) $(0.24) $(0.20) $(0.44) $10.96 2003 10.97 0.32 0.79 1.11 (0.32) (0.05) (0.37) 11.71 2002 10.81 0.32 0.22 0.54 (0.32) (0.06) (0.38) 10.97 2001 10.09 0.37 0.72 1.09 (0.37) -- (0.37) 10.81 2000 10.62 0.36 (0.49) (0.13) (0.36) (0.04) (0.40) 10.09 GEORGIA TAX-EXEMPT BOND FUND T Shares 2004 $10.89 $0.34(1) $(0.58)(1) $(0.24) $(0.34) $(0.07) $(0.41) $10.24 2003 10.29 0.38 0.60 0.98 (0.38) -- (0.38) 10.89 2002 10.10 0.39 0.19 0.58 (0.39) -- (0.39) 10.29 2001 9.50 0.40 0.60 1.00 (0.40) -- (0.40) 10.10 2000 10.03 0.40 (0.49) (0.09) (0.40) (0.04) (0.44) 9.50 A Shares 2004 $10.90 $0.32(1) $(0.58)(1) $(0.26) $(0.32) $(0.07) $(0.39) $10.25 2003 10.31 0.35 0.59 0.94 (0.35) -- (0.35) 10.90 2002 10.12 0.37 0.19 0.56 (0.37) -- (0.37) 10.31 2001 9.51 0.38 0.61 0.99 (0.38) -- (0.38) 10.12 2000 10.05 0.38 (0.50) (0.12) (0.38) (0.04) (0.42) 9.51 L Shares 2004 $10.90 $0.27(1) $(0.58)(1) $(0.31) $(0.27) $(0.07) $(0.34) $10.25 2003 10.30 0.30 0.60 0.90 (0.30) -- (0.30) 10.90 2002 10.11 0.32 0.19 0.51 (0.32) -- (0.32) 10.30 2001 9.51 0.33 0.60 0.93 (0.33) -- (0.33) 10.11 2000 10.04 0.33 (0.49) (0.16) (0.33) (0.04) (0.37) 9.51 HIGH INCOME FUND (A) T Shares 2004 $ 7.16 $0.62(1) $ 0.22(1) $ 0.84 $(0.62) $ -- $(0.62) $ 7.38 2003 7.25 0.61 (0.09) 0.52 (0.61) -- (0.61) 7.16 2002(2) 7.37 0.39 (0.12) 0.27 (0.39) -- (0.39) 7.25 A Shares 2004(3) $ 7.39 $0.35(1) $(0.01)(1) $ 0.34 $(0.35) $ -- $(0.35) $ 7.38 L Shares 2004 $ 7.16 $0.57(1) $ 0.22(1) $ 0.79 $(0.57) $ -- $(0.57) $ 7.38 2003 7.25 0.57 (0.09) 0.48 (0.57) -- (0.57) 7.16 2002 7.69 0.55 (0.44) 0.11 (0.55) -- (0.55) 7.25 2001 7.88 0.55 (0.19) 0.36 (0.55) -- (0.55) 7.69 2000(4) 7.98 0.09 (0.10) (0.01) (0.09) -- (0.09) 7.88 For the years ended March 31: 2000 9.77 0.87 (1.85) (0.98) (0.81) -- (0.81) 7.98
+ Returns are for the period indicated and have not been annualized. Total return figures do not reflect applicable sales loads. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. (1) Per share data was calculated using the average shares method. (2) T shares commenced operations on October 3, 2001. All ratios for the period have been annualized. (3) A shares commenced operations on October 27, 2003. All ratios for the period have been annualized. (4) For the two month period ended May 31, 2000. All ratios for the period have been annualized. 80
- ------------------------------------------------------------------------------------------------------------------------------------ RATIO OF RATIO OF EXPENSES TO NET ASSETS, RATIO OF NET NET INVESTMENT AVERAGE NET ASSETS PORTFOLIO TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS TURNOVER RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) RATE ------- ------------ ------------------ ------------------ ------------------ ---------- FLORIDA TAX-EXEMPT BOND FUND T Shares 2004 (2.07)% $165,065 0.71% 2.82% 0.75% 56% 2003 11.13 147,423 0.71 3.54 0.75 62 2002 5.88 120,885 0.71 3.65 0.76 91 2001 11.84 107,867 0.71 4.19 0.76 59 2000 (0.48) 93,040 0.67 4.25 0.78 88 A Shares 2004 (2.28)% $ 5,906 0.92% 2.62% 1.13% 56% 2003 10.89 8,191 0.92 3.29 1.13 62 2002 5.66 2,935 0.92 3.44 1.37 91 2001 11.50 2,747 0.91 4.00 1.38 59 2000 (0.68) 2,875 0.87 4.05 1.36 88 L Shares 2004 (2.68)% $ 19,952 1.42% 2.14% 1.81% 56% 2003 10.32 40,241 1.42 2.81 1.80 62 2002 5.15 21,897 1.42 2.93 1.84 91 2001 10.95 12,806 1.41 3.49 1.89 59 2000 (1.17) 9,791 1.37 3.54 1.89 88 GEORGIA TAX-EXEMPT BOND FUND T Shares 2004 (2.18)% $ 98,113 0.71% 3.26% 0.76% 100% 2003 9.64 98,866 0.71 3.55 0.76 17 2002 5.81 91,356 0.71 3.79 0.76 23 2001 10.67 85,880 0.71 4.03 0.77 21 2000 (0.90) 81,160 0.67 4.13 0.77 19 A Shares 2004 (2.39)% $ 2,735 0.92% 3.06% 1.36% 100% 2003 9.29 2,630 0.92 3.34 1.41 17 2002 5.58 2,844 0.92 3.58 1.36 23 2001 10.56 2,901 0.91 3.83 1.42 21 2000 (1.26) 2,458 0.87 3.93 1.40 19 L Shares 2004 (2.87)% $ 13,351 1.42% 2.55% 1.84% 100% 2003 8.86 16,591 1.42 2.84 1.84 17 2002 5.07 14,269 1.42 3.08 1.84 23 2001 9.92 14,079 1.41 3.33 1.89 21 2000 (1.59) 8,827 1.37 3.43 1.95 19 HIGH INCOME FUND (A) T Shares 2004 11.94% $ 71,314 0.76% 8.27% 0.91% 49% 2003 8.19 100,852 0.78 8.95 0.93 20 2002(2) 3.70 28,767 0.82 8.27 0.97 59 A Shares 2004(3) 4.61% $ 1,508 1.10% 7.80% 1.88% 49% L Shares 2004 11.23% $ 75,693 1.40% 7.62% 1.98% 49% 2003 7.52 64,418 1.40 8.43 2.00 20 2002 1.46 46,864 1.40 7.35 2.02 59 2001 4.74 19,875 1.40 6.88 2.13 10 2000(4) (0.13) 3,075 1.40 6.57 2.83 -- For the years ended March 31: 2000 (10.84) 2,032 1.73 8.94 2.95 24
(A) On March 28, 2000, the ESC Strategic Income Fund exchanged all of its assets and liabilities for shares of the High Income Fund. The ESC Strategic Income Fund is the accounting survivor in this transaction, and as a result, its basis of accounting for assets and liabilities and its operating results for the periods prior to March 28, 2000 have been carried forward in these financial highlights. Subsequent to the merger, the High Income Fund changed its fiscal year end to May 31. Amounts designated as "--" are either $0 or have been rounded to $0. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 81
FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FIXED INCOME FUNDS FOR THE YEARS ENDED MAY 31, FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD NET ASSET NET REALIZED AND DIVIDENDS TOTAL VALUE, NET UNREALIZED GAINS TOTAL FROM NET DISTRIBUTIONS DIVIDENDS NET ASSET BEGINNING INVESTMENT (LOSSES) FROM INVESTMENT FROM REALIZED AND VALUE, END OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS OF PERIOD --------- ---------- ---------------- ---------- ---------- ------------- ------------- --------- INVESTMENT GRADE BOND FUND T Shares 2004 $10.94 $0.35(1) $(0.60)(1) $(0.25) $(0.38) $ -- $(0.38) $10.31 2003 10.24 0.40 0.76 1.16 (0.46) -- (0.46) 10.94 2002 10.23 0.51 0.01 0.52 (0.51) -- (0.51) 10.24 2001 9.58 0.61 0.65 1.26 (0.61) -- (0.61) 10.23 2000 10.36 0.61 (0.78) (0.17) (0.61) -- (0.61) 9.58 A Shares 2004 $10.94 $0.31(1) $(0.60)(1) $(0.29) $(0.34) $ -- $(0.34) $10.31 2003 10.24 0.38 0.74 1.12 (0.42) -- (0.42) 10.94 2002 10.23 0.48 0.01 0.49 (0.48) -- (0.48) 10.24 2001 9.58 0.57 0.65 1.22 (0.57) -- (0.57) 10.23 2000 10.36 0.57 (0.78) (0.21) (0.57) -- (0.57) 9.58 L Shares 2004 $10.95 $0.25(1) $(0.60)(1) $(0.35) $(0.29) $ -- $(0.29) $10.31 2003 10.25 0.31 0.76 1.07 (0.37) -- (0.37) 10.95 2002 10.24 0.42 0.01 0.43 (0.42) -- (0.42) 10.25 2001 9.59 0.53 0.65 1.18 (0.53) -- (0.53) 10.24 2000 10.37 0.52 (0.78) (0.26) (0.52) -- (0.52) 9.59 INVESTMENT GRADE TAX-EXEMPT BOND FUND T Shares 2004 $12.01 $0.27(1) $(0.32)(1) $(0.05) $(0.27) $(0.25) $(0.52) $11.44 2003 11.57 0.30 0.90 1.20 (0.30) (0.46) (0.76) 12.01 2002 11.38 0.34 0.46 0.80 (0.34) (0.27) (0.61) 11.57 2001 10.67 0.44 0.71 1.15 (0.44) -- (0.44) 11.38 2000 11.10 0.43 (0.29) 0.14 (0.43) (0.14) (0.57) 10.67 A Shares 2004 $12.03 $0.23(1) $(0.33)(1) $(0.10) $(0.22) $(0.25) $(0.47) $11.46 2003 11.58 0.25 0.91 1.16 (0.25) (0.46) (0.71) 12.03 2002 11.39 0.29 0.46 0.75 (0.29) (0.27) (0.56) 11.58 2001 10.68 0.40 0.71 1.11 (0.40) -- (0.40) 11.39 2000 11.12 0.39 (0.30) 0.09 (0.39) (0.14) (0.53) 10.68 L Shares 2004 $12.01 $0.17(1) $(0.32)(1) $(0.15) $(0.17) $(0.25) $(0.42) $11.44 2003 11.57 0.20 0.90 1.10 (0.20) (0.46) (0.66) 12.01 2002 11.38 0.24 0.46 0.70 (0.24) (0.27) (0.51) 11.57 2001 10.67 0.34 0.71 1.05 (0.34) -- (0.34) 11.38 2000 11.10 0.34 (0.29) 0.05 (0.34) (0.14) (0.48) 10.67 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND T Shares 2004 $10.59 $0.24(1) $(0.36)(1) $(0.12) $(0.29) $ -- $(0.29) $10.18 2003 10.31 0.29(1) 0.42(1) 0.71 (0.42) (0.01) (0.43) 10.59 2002 10.01 0.43 0.32 0.75 (0.43) (0.02) (0.45) 10.31 2001 9.62 0.55 0.39 0.94 (0.55) -- (0.55) 10.01 2000 9.94 0.55 (0.32) 0.23 (0.55) -- (0.55) 9.62 A Shares 2004 $10.57 $0.21(1) $(0.35)(1) $(0.14) $(0.27) $ -- $(0.27) $10.16 2003 10.29 0.24(1) 0.44(1) 0.68 (0.39) (0.01) (0.40) 10.57 2002 10.00 0.40 0.31 0.71 (0.40) (0.02) (0.42) 10.29 2001 9.60 0.53 0.40 0.93 (0.53) -- (0.53) 10.00 2000 9.93 0.52 (0.33) 0.19 (0.52) -- (0.52) 9.60 L Shares 2004 $10.59 $0.17(1) $(0.35)(1) $(0.18) $(0.23) $ -- $(0.23) $10.18 2003 10.31 0.21(1) 0.43(1) 0.64 (0.35) (0.01) (0.36) 10.59 2002 10.02 0.37 0.31 0.68 (0.37) (0.02) (0.39) 10.31 2001 9.62 0.50 0.40 0.90 (0.50) -- (0.50) 10.02 2000 9.94 0.49 (0.32) 0.17 (0.49) -- (0.49) 9.62
+ Returns are for the period indicated and have not been annualized. Total return figures do not reflect applicable sales loads. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. (1) Per share data was calculated using the average shares method. Amounts designated as "--" are either $0 or have been rounded to $0. 82
- ------------------------------------------------------------------------------------------------------------------------------------ RATIO OF RATIO OF EXPENSES TO NET ASSETS, RATIO OF NET NET INVESTMENT AVERAGE NET ASSETS PORTFOLIO TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS TURNOVER RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) RATE ------- ------------ ------------------ ------------------ ------------------ ---------- INVESTMENT GRADE BOND FUND T Shares 2004 (2.31)% $578,345 0.82% 3.29% 0.84% 119% 2003 11.61 821,342 0.81 3.92 0.83 137 2002 5.18 886,471 0.81 4.81 0.83 123 2001 13.55 860,073 0.81 6.17 0.84 131 2000 (1.76) 998,596 0.77 6.05 0.84 202 A Shares 2004 (2.70)% $ 31,263 1.22% 2.90% 1.38% 119% 2003 11.16 34,874 1.22 3.45 1.38 137 2002 4.81 20,825 1.22 4.40 1.40 123 2001 13.09 21,244 1.21 5.77 1.42 131 2000 (2.17) 22,553 1.17 5.60 1.37 202 L Shares 2004 (3.27)% $ 24,327 1.71% 2.40% 2.00% 119% 2003 10.61 37,810 1.71 3.01 1.97 137 2002 4.27 36,200 1.71 3.90 1.96 123 2001 12.54 25,791 1.70 5.24 1.99 131 2000 (2.63) 20,056 1.66 5.14 1.99 202 INVESTMENT GRADE TAX-EXEMPT BOND FUND T Shares 2004 (0.45)% $205,266 0.81% 2.33% 0.84% 242% 2003 10.80 185,485 0.81 2.57 0.84 329 2002 7.15 149,200 0.81 2.93 0.84 311 2001 10.93 134,139 0.81 3.93 0.85 285 2000 1.41 117,384 0.77 3.98 0.83 226 A Shares 2004 (0.85)% $ 19,086 1.22% 1.92% 1.36% 242% 2003 10.42 21,756 1.22 2.16 1.36 329 2002 6.71 20,436 1.22 2.51 1.36 311 2001 10.48 18,601 1.21 3.54 1.37 285 2000 0.90 19,443 1.17 3.59 1.33 226 L Shares 2004 (1.33)% $ 22,969 1.70% 1.45% 1.92% 242% 2003 9.82 32,684 1.70 1.68 1.91 329 2002 6.21 24,587 1.70 2.03 1.92 311 2001 9.97 20,010 1.69 3.04 1.96 285 2000 0.52 14,678 1.65 3.11 1.95 226 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND T Shares 2004 (1.10)% $435,446 0.70% 2.32% 0.75% 146% 2003 6.99 320,718 0.70 2.79 0.75 117 2002 7.53 164,624 0.70 3.72 0.75 410 2001 10.02 107,674 0.70 5.62 0.76 532 2000 2.33 125,355 0.67 5.60 0.79 384 A Shares 2004 (1.36)% 9,495 0.96% 2.06% 1.17% 146% 2003 6.72 13,668 0.96 2.33 1.20 117 2002 7.16 1,578 0.96 3.50 2.06 410 2001 9.84 849 0.95 5.39 2.28 532 2000 1.93 1,194 0.92 5.31 1.09 384 L Shares 2004 (1.71)% $ 70,000 1.31% 1.68% 1.82% 146% 2003 6.33 166,211 1.31 1.97 1.80 117 2002 6.83 15,930 1.31 2.88 1.98 410 2001 9.50 3,452 1.30 4.99 2.60 532 2000 1.71 1,706 1.27 4.97 2.38 384
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 83
FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FIXED INCOME FUNDS FOR THE YEARS ENDED MAY 31, FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD NET ASSET NET REALIZED AND DIVIDENDS TOTAL VALUE, NET UNREALIZED GAINS TOTAL FROM NET DISTRIBUTIONS DIVIDENDS NET ASSET BEGINNING INVESTMENT (LOSSES) FROM INVESTMENT FROM REALIZED AND VALUE, END OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS OF PERIOD --------- ---------- ---------------- ---------- ---------- ------------- ------------- --------- MARYLAND MUNICIPAL BOND FUND T Shares 2004 $10.94 $0.36(1) $(0.47)(1) $(0.11) $(0.36) $(0.20) $(0.56) $10.27 2003 10.32 0.37 0.63 1.00 (0.37) (0.01) (0.38) 10.94 2002 10.12 0.38 0.20 0.58 (0.38) -- (0.38) 10.32 2001 9.46 0.42 0.66 1.08 (0.42) -- (0.42) 10.12 2000 10.06 0.42 (0.60) (0.18) (0.42) -- (0.42) 9.46 L Shares 2004 $10.96 $0.26(1) $(0.47)(1) $(0.21) $(0.26) $(0.20) $(0.46) $10.29 2003 10.34 0.27 0.63 0.90 (0.27) (0.01) (0.28) 10.96 2002 10.14 0.29 0.20 0.49 (0.29) -- (0.29) 10.34 2001 9.48 0.33 0.66 0.99 (0.33) -- (0.33) 10.14 2000 10.08 0.33 (0.60) (0.27) (0.33) -- (0.33) 9.48 SHORT-TERM BOND FUND T Shares 2004 $10.04 $0.24(1) $(0.19)(1) $ 0.05 $(0.25) $ -- $(0.25) $ 9.84 2003 10.01 0.33 0.03 0.36 (0.33) -- (0.33) 10.04 2002 10.04 0.46 (0.03) 0.43 (0.46) -- (0.46) 10.01 2001 9.65 0.56 0.39 0.95 (0.56) -- (0.56) 10.04 2000 9.91 0.53 (0.25) 0.28 (0.53) (0.01) (0.54) 9.65 A Shares 2004 $10.07 $0.22(1) $(0.20)(1) $ 0.02 $(0.22) $ -- $(0.22) $ 9.87 2003 10.04 0.31 0.03 0.34 (0.31) -- (0.31) 10.07 2002 10.06 0.44 (0.02) 0.42 (0.44) -- (0.44) 10.04 2001 9.67 0.54 0.39 0.93 (0.54) -- (0.54) 10.06 2000 9.93 0.51 (0.25) 0.26 (0.51) (0.01) (0.52) 9.67 L Shares 2004 $10.06 $0.19(1) $(0.20)(1) $(0.01) $(0.19) $ -- $(0.19) $ 9.86 2003 10.03 0.28 0.03 0.31 (0.28) -- (0.28) 10.06 2002 10.06 0.40 (0.03) 0.37 (0.40) -- (0.40) 10.03 2001 9.67 0.52 0.39 0.91 (0.52) -- (0.52) 10.06 2000 9.93 0.48 (0.25) 0.23 (0.48) (0.01) (0.49) 9.67 SHORT-TERM U.S. TREASURY SECURITIES FUND T Shares 2004 $10.36 $0.14(1) $(0.13)(1) $ 0.01 $(0.14) $(0.12) $(0.26) $10.11 2003 10.20 0.22 0.22 0.44 (0.22) (0.06) (0.28) 10.36 2002 10.13 0.37 0.10 0.47 (0.37) (0.03) (0.40) 10.20 2001 9.85 0.49 0.28 0.77 (0.49) -- (0.49) 10.13 2000 9.95 0.46 (0.10) 0.36 (0.46) -- (0.46) 9.85 A Shares 2004 $10.35 $0.12(1) $(0.13)(1) $(0.01) $(0.12) $(0.12) $(0.24) $10.10 2003 10.19 0.20 0.22 0.42 (0.20) (0.06) (0.26) 10.35 2002 10.13 0.35 0.09 0.44 (0.35) (0.03) (0.38) 10.19 2001 9.85 0.48 0.28 0.76 (0.48) -- (0.48) 10.13 2000 9.95 0.45 (0.10) 0.35 (0.45) -- (0.45) 9.85 L Shares 2004 $10.34 $0.10(1) $(0.13)(1) $(0.03) $(0.10) $(0.12) $(0.22) $10.09 2003 10.18 0.17 0.22 0.39 (0.17) (0.06) (0.23) 10.34 2002 10.11 0.33 0.10 0.43 (0.33) (0.03) (0.36) 10.18 2001 9.83 0.46 0.28 0.74 (0.46) -- (0.46) 10.11 2000 9.93 0.42 (0.10) 0.32 (0.42) -- (0.42) 9.83
+ Returns are for the period indicated and have not been annualized. Total return figures do not reflect applicable sales loads. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. (1) Per share data was calculated using the average shares method. Amounts designated as "--" are either $0 or have been rounded to $0. 84
- ------------------------------------------------------------------------------------------------------------------------------------ RATIO OF RATIO OF EXPENSES TO NET ASSETS, RATIO OF NET NET INVESTMENT AVERAGE NET ASSETS PORTFOLIO TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS TURNOVER RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) RATE ------- ------------ ------------------ ------------------ ------------------ ---------- MARYLAND MUNICIPAL BOND FUND T Shares 2004 (1.06)% $ 29,735 0.72% 3.39% 0.80% 15% 2003 9.85 30,501 0.70 3.47 0.78 31 2002 5.80 33,668 0.71 3.69 0.79 45 2001 11.59 26,526 0.72 4.16 0.82 42 2000 (1.78) 26,176 0.68 4.24 0.80 14 L Shares 2004 (1.97)% $ 18,897 1.64% 2.46% 1.82% 15% 2003 8.81 29,556 1.64 2.52 1.81 31 2002 4.84 23,215 1.64 2.75 1.83 45 2001 10.59 12,090 1.63 3.24 1.97 42 2000 (2.66) 6,212 1.59 3.34 1.95 14 SHORT-TERM BOND FUND T Shares 2004 0.45% $282,188 0.70% 2.42% 0.75% 66% 2003 3.70 302,708 0.70 3.34 0.75 89 2002 4.29 305,884 0.70 4.48 0.75 142 2001 10.13 215,458 0.70 5.71 0.76 87 2000 2.87 180,402 0.67 5.40 0.76 70 A Shares 2004 0.24% $ 5,880 0.91% 2.21% 1.21% 66% 2003 3.47 5,685 0.91 3.09 1.28 89 2002 4.19 5,767 0.91 4.28 1.26 142 2001 9.90 4,176 0.90 5.47 1.71 87 2000 2.67 1,446 0.87 5.20 1.75 70 L Shares 2004 (0.11)% $ 23,528 1.26% 1.87% 1.87% 66% 2003 3.11 32,608 1.26 2.74 1.85 89 2002 3.75 26,392 1.26 3.89 1.87 142 2001 9.60 10,682 1.25 5.09 2.17 87 2000 2.31 2,065 1.22 4.85 2.41 70 SHORT-TERM U.S. TREASURY SECURITIES FUND T Shares 2004 0.11% $ 92,371 0.70% 1.36% 0.76% 131% 2003 4.31 121,617 0.69 2.07 0.75 140 2002 4.69 107,169 0.70 3.57 0.76 117 2001 8.02 88,398 0.71 4.95 0.78 87 2000 3.75 72,570 0.67 4.70 0.79 50 A Shares 2004 (0.06)% $ 12,823 0.86% 1.20% 1.06% 131% 2003 4.13 15,558 0.86 1.76 1.07 140 2002 4.44 4,735 0.86 3.36 1.41 117 2001 7.87 2,179 0.85 4.81 1.56 87 2000 3.58 2,066 0.82 4.50 1.44 50 L Shares 2004 (0.30)% $ 62,232 1.11% 0.97% 1.82% 131% 2003 3.88 127,757 1.11 1.59 1.79 140 2002 4.29 70,720 1.11 3.09 1.81 117 2001 7.67 27,861 1.10 4.45 1.96 87 2000 3.34 5,391 1.07 4.26 2.04 50
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 85
FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------------------------------------------------------------ STI CLASSIC FIXED INCOME FUNDS FOR THE YEARS ENDED MAY 31, NET ASSET NET REALIZED AND DIVIDENDS TOTAL VALUE, NET UNREALIZED GAINS TOTAL FROM NET DISTRIBUTIONS DIVIDENDS NET ASSET BEGINNING INVESTMENT (LOSSES) FROM INVESTMENT FROM REALIZED AND VALUE, END OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS OF PERIOD --------- ---------- ---------------- ---------- ---------- ------------- ------------- --------- STRATEGIC INCOME FUND T Shares 2004 $ 9.99 $0.55(1) $(0.14)(1) $ 0.41 $(0.53) $(0.06) $(0.59) $ 9.81 2003 9.80 0.61 0.20 0.81 (0.62) -- (0.62) 9.99 2002(2) 10.00 0.27 (0.20) 0.07 (0.27) -- (0.27) 9.80 A Shares 2004(3) $ 9.93 $0.33(1) $(0.07)(1) $ 0.26 $(0.31) $(0.06) $(0.37) $ 9.82 L Shares 2004 $ 9.99 $0.50(1) $(0.14)(1) $ 0.36 $(0.48) $(0.06) $(0.54) $ 9.81 2003 9.80 0.57 0.19 0.76 (0.57) -- (0.57) 9.99 2002(2) 10.00 0.25 (0.20) 0.05 (0.25) -- (0.25) 9.80 U.S. GOVERNMENT SECURITIES FUND T Shares 2004 $10.93 $0.31(1) $(0.50)(1) $(0.19) $(0.35) $(0.04) $(0.39) $10.35 2003 10.47 0.44 0.51 0.95 (0.46) (0.03) (0.49) 10.93 2002 10.38 0.54 0.26 0.80 (0.54) (0.17) (0.71) 10.47 2001 9.86 0.58 0.52 1.10 (0.58) -- (0.58) 10.38 2000 10.28 0.58 (0.42) 0.16 (0.58) -- (0.58) 9.86 A Shares 2004 $10.93 $0.27(1) $(0.50)(1) $(0.23) $(0.31) $(0.04) $(0.35) $10.35 2003 10.47 0.40 0.51 0.91 (0.42) (0.03) (0.45) 10.93 2002 10.38 0.50 0.26 0.76 (0.50) (0.17) (0.67) 10.47 2001 9.86 0.54 0.52 1.06 (0.54) -- (0.54) 10.38 2000 10.28 0.54 (0.42) 0.12 (0.54) -- (0.54) 9.86 L Shares 2004 $10.93 $0.22(1) $(0.50)(1) $(0.28) $(0.26) $(0.04) $(0.30) $10.35 2003 10.48 0.34 0.50 0.84 (0.36) (0.03) (0.39) 10.93 2002 10.38 0.45 0.27 0.72 (0.45) (0.17) (0.62) 10.48 2001 9.86 0.49 0.52 1.01 (0.49) -- (0.49) 10.38 2000 10.28 0.49 (0.42) 0.07 (0.49) -- (0.49) 9.86 VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND T Shares 2004 $10.68 $0.34(1) $(0.44)(1) $(0.10) $(0.34) $(0.09) $(0.43) $10.15 2003 10.29 0.36 0.49 0.85 (0.36) (0.10) (0.46) 10.68 2002 10.14 0.40 0.15 0.55 (0.40) -- (0.40) 10.29 2001 9.58 0.42 0.56 0.98 (0.42) -- (0.42) 10.14 2000 10.20 0.43 (0.57) (0.14) (0.43) (0.05) (0.48) 9.58 A Shares 2004 $10.68 $0.33(1) $(0.44)(1) $(0.11) $(0.33) $(0.09) $(0.42) $10.15 2003 10.29 0.36 0.49 0.85 (0.36) (0.10) (0.46) 10.68 2002 10.14 0.39 0.16 0.55 (0.40) -- (0.40) 10.29 2001 9.59 0.42 0.55 0.97 (0.42) -- (0.42) 10.14 2000 10.20 0.42 (0.56) (0.14) (0.42) (0.05) (0.47) 9.59 VIRGINIA MUNICIPAL BOND FUND T Shares 2004 $11.07 $0.37(1) $(0.47)(1) $(0.10) $(0.37) $(0.23) $(0.60) $10.37 2003 10.48 0.39 0.62 1.01 (0.39) (0.03) (0.42) 11.07 2002 10.29 0.41 0.19 0.60 (0.41) -- (0.41) 10.48 2001 9.64 0.45 0.65 1.10 (0.45) -- (0.45) 10.29 2000 10.43 0.45 (0.78) (0.33) (0.45) (0.01) (0.46) 9.64 A Shares 2004(4) $10.28 $0.02(1) $ 0.09(1) $ 0.11 $(0.02) $ -- $(0.02) $10.37 L Shares 2004 $11.13 $0.27(1) $(0.48)(1) $(0.21) $(0.27) $(0.23) $(0.50) $10.42 2003 10.53 0.29 0.63 0.92 (0.29) (0.03) (0.32) 11.13 2002 10.34 0.31 0.19 0.50 (0.31) -- (0.31) 10.53 2001 9.68 0.35 0.66 1.01 (0.35) -- (0.35) 10.34 2000 10.48 0.36 (0.79) (0.43) (0.36) (0.01) (0.37) 9.68
+ Returns are for the period indicated and have not been annualized. Total return figures do not reflect applicable sales loads. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. ++ Ratio reflects the impact of the initial low level of average net assets associated with commencement of operations. (1) Per share data was calculated using the average shares method. (2) Commenced operations on November 30, 2001. All ratios for the period have been annualized. (3) A shares commenced operations on October 8, 2003. All ratios for the period have been annualized. (4) A shares commenced operations on May 11, 2004. All ratios for the period have been annualized. Amounts designated as "--" are either $0 or have been rounded to $0. 86
- ------------------------------------------------------------------------------------------------------------------------------------ RATIO OF RATIO OF EXPENSES TO NET ASSETS, RATIO OF NET NET INVESTMENT AVERAGE NET ASSETS PORTFOLIO TOTAL END OF EXPENSES TO INCOME TO (EXCLUDING WAIVERS TURNOVER RETURN+ PERIOD (000) AVERAGE NET ASSETS AVERAGE NET ASSETS AND REIMBURSEMENTS) RATE ------- ------------ ------------------ ------------------ ------------------ ---------- STRATEGIC INCOME FUND T Shares 2004 4.15% $ 98,570 0.90% 5.53% 1.00% 95% 2003 8.73 61,906 0.91 6.39 1.01 52 2002(2) 0.74 43,717 0.94 6.07 1.04 43 A Shares 2004(3) 2.59% $ 4,181 1.15% 5.15% 1.60% 95% L Shares 2004 3.59% $117,216 1.43% 4.98% 2.03% 95% 2003 8.16 129,965 1.43 5.67 2.04 52 2002(2) 0.55 39,490 1.53 5.49 2.07 43 U.S. GOVERNMENT SECURITIES FUND T Shares 2004 (1.77)% $298,997 0.81% 2.95% 0.84% 240% 2003 9.25 258,585 0.81 4.00 0.84 150 2002 7.90 168,609 0.82 5.09 0.85 262 2001 11.41 148,666 0.81 5.66 0.85 207 2000 1.63 85,420 0.77 5.77 0.84 29 A Shares 2004 (2.17)% $ 8,484 1.22% 2.54% 1.52% 240% 2003 8.79 9,333 1.22 3.59 1.45 150 2002 7.47 8,483 1.22 4.70 1.40 262 2001 10.95 6,617 1.21 5.21 1.83 207 2000 1.19 1,407 1.17 5.34 2.14 29 L Shares 2004 (2.67)% $ 18,993 1.73% 2.04% 1.97% 240% 2003 8.14 39,423 1.73 3.10 1.93 150 2002 7.06 31,922 1.73 4.17 1.93 262 2001 10.45 21,617 1.72 4.71 2.04 207 2000 0.70 7,750 1.68 4.85 2.28 29 VIRGINIA INTERMEDIATE MUNICIPAL SECURITIES FUND T Shares 2004 (1.00)% $181,558 0.75% 3.23% 0.75% 26% 2003 8.43 206,432 0.75 3.45 0.75 30 2002 5.52 191,406 0.75 3.86 0.75 33 2001 10.39 194,849 0.73 4.23 0.75 32 2000 (1.31) 202,209 0.76 4.35 0.76 18 A Shares 2004 (1.04)% $ 10,566 0.79% 3.19% 1.04% 26% 2003 8.38 10,484 0.79 3.40 1.07 30 2002 5.47 7,257 0.79 3.82 1.11 33 2001 10.23 6,197 0.76 4.20 1.11 32 2000 (1.24) 6,808 0.79 4.33 0.94 18 VIRGINIA MUNICIPAL BOND FUND T Shares 2004 (0.90)% $ 43,491 0.77% 3.47% 0.77% 33% 2003 9.86 48,102 0.77 3.67 0.77 18 2002 5.90 56,586 0.77 3.90 0.77 38 2001 11.51 56,573 0.77 4.40 0.78 60 2000 (3.18) 48,980 0.74 4.53 0.79 19 A Shares 2004(4) 1.07% $ 129 0.93% 3.95% 71.10%++ 33% L Shares 2004 (1.90)% $ 9,723 1.70% 2.54% 1.86% 33% 2003 8.89 16,956 1.70 2.71 1.85 18 2002 4.93 13,428 1.70 2.97 1.88 38 2001 10.58 7,983 1.69 3.47 2.00 60 2000 (4.13) 5,367 1.65 3.61 2.08 19
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 87 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 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 45 funds as of May 31, 2004. The financial statements presented herein are those of the Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund, High Income Fund, Investment Grade Bond Fund, Investment Grade Tax-Exempt Bond Fund, Limited-Term Federal Mortgage Securities Fund, Maryland Municipal Bond Fund, Short-Term Bond Fund, Short-Term U.S. Treasury Securities Fund, Strategic Income Fund, U.S. Government Securities Fund, Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund (each a "Fund" and collectively the "Funds"). The Funds may offer the following share classes: T shares, A shares and L shares. 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 the 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 -- Securities listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ) are valued at the last quoted sale price on the primary exchange or market (foreign or domestic) on which they are traded, or, if there is no such reported sale, at the most recent quoted bid price. For securities traded on NASDAQ, the NASDAQ Official Closing Price will be used. 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. The prices for foreign securities are reported in local currency and converted to U.S. dollars using currency exchange rates. Prices for most securities held in the Funds are provided daily by recognized independent pricing agents. If a security price cannot be obtained from an independent, third-party pricing agent, the Funds seek to obtain a bid price from at least one independent broker. Securities for which market prices are not "readily available" are valued in accordance with Fair Value Procedures established by the Funds' Board of Trustees. The Funds' Fair Value Procedures are implemented through a Fair Value Committee (the "Committee") designated by the Funds' Board of Trustees. Some of the more common reasons that may necessitate that a security be valued using Fair Value Procedures include: the security's trading has been halted or suspended; the security has been de-listed from a national exchange; the security's primary trading market is temporarily closed at a time when under normal conditions it would be open; or the security's primary pricing source is not able or willing to provide a price. When a security is valued in accordance with the Fair Value Procedures, the Committee will determine the value after taking into consideration relevant information reasonably available to the Committee. For securities that principally trade on a foreign market or exchange, a significant gap in time can exist between the time of a particular security's last trade and the time at which a Fund calculates its net asset value. The closing prices of such securities may no longer reflect their market value at the time the Fund calculates net asset value if an event that could materially affect the value of those securities (a "Significant Event") has occurred between the time of the security's last close and the time that the Fund calculates net asset value. A Significant Event may relate to a single issuer or to an entire market sector. If the adviser of a Fund becomes aware of a Significant Event that has occurred with respect to a security or group of securities after the closing of the exchange or market on which the security or securities principally trade, but before the time at which 88 - -------------------------------------------------------------------------------- the Fund calculates net asset value, it may request that a Fair Value Committee Meeting be called. In addition, the Funds' administrator monitors price movements among certain selected indices, securities and/or baskets of securities that may be an indicator that the closing prices received earlier from foreign exchanges or markets may not reflect market value at the time the Fund calculates net asset value. If price movements in a monitored index or security exceed levels established by the administrator, the administrator notifies the adviser or sub-adviser for any Fund holding the relevant securities that such limits have been exceeded. In such event, the adviser makes the determination whether a fair value committee meeting should be called based on the information provided. SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are accounted for on the date the security is purchased or sold (trade date). Interest income is recognized on an accrual basis. Costs used in determining net realized gains and losses on the sales of investment securities are those of the specific securities sold, adjusted for the accretion and amortization of purchase discounts and premiums during the respective holding period. Purchase discounts and premiums on securities held by the Funds are accreted and amortized to expected maturity using the effective interest method. 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. NET ASSET VALUE PER SHARE -- The net asset value per share of each Fund is calculated each business day, by dividing the total value of each Fund's assets, less liabilities, by the number of shares outstanding. The maximum offering price per share for A shares of the Florida Tax-Exempt Bond, the Georgia Tax-Exempt Bond, the High Income, the Investment Grade Bond, the Investment Grade Tax-Exempt Bond, the Strategic Income, the U.S. Government Securities, the Virginia Intermediate Municipal Bond and Virginia Municipal Bond Funds is equal to the net asset value per share plus a sales load of 3.75%. The maximum offering price per share for A shares of the Short-Term U.S. Treasury Securities Fund is equal to the net asset value per share plus a sales load of 1.00%. The maximum offering price per share for A shares of the Short-Term Bond Fund is equal to the net asset value per share plus a sales load of 2.00%. The maximum offering price per share for A shares of the Limited-Term Federal Mortgage Securities Fund is equal to the net asset value per share plus a sales load of 2.50%. L Shares of the Funds may be purchased at their net asset value. Shares redeemed within the first year after purchase will be subject to a contingent deferred sales charge ("CDSC") equal to 2.00% of either the net asset value of the shares at the time of purchase or the net asset value of the shares next calculated after the Fund receives the sale request, whichever is less. The CDSC will not apply to shares redeemed after such time. The Funds may charge a redemption fee up to 2% of redemption proceeds, which will automatically be paid to the Fund. There were no redemption fees for the year ended May 31, 2004. SECURITIES PURCHASED ON A WHEN-ISSUED BASIS -- Delivery and payment for securities that have been purchased by a Fund on a forward commitment or when-issued basis can take place up to a month or more after the transaction date. During this period, such securities are subject to market fluctuations. The purchase of securities on a when-issued or forward commitment basis may increase the volatility of a Fund's net asset value if the Fund makes such investments while remaining substantially fully invested. FOREIGN CURRENCY TRANSLATION -- The books and records of the Funds are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following bases: (i) market value of investment securities, other assets and liabilities at the current rate of exchange; and (ii) purchases and sales of investment securities, income and expenses at the relevant rates of exchange prevailing on the respective dates of such transactions. 89 NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 The Funds isolate the effect of fluctuations in foreign currency rates when determining the gain or loss upon sale or maturity of foreign currency denominated debt obligations for Federal income tax purposes. The Funds report gains and losses on foreign currency-related transactions as realized and unrealized gains and losses for financial reporting purposes, whereas such gains and losses are treated as ordinary income or loss for Federal income tax purposes. FORWARD FOREIGN CURRENCY CONTRACTS -- The Strategic Income Fund may enter into forward foreign currency contracts as hedges against either specific transactions, fund positions or anticipated fund positions. All commitments are "marked-to-market" daily at the applicable foreign exchange rate, and any resulting unrealized gains or losses are recorded currently. The Fund realizes gains and losses at the time forward contracts are extinguished. Unrealized gains or losses on outstanding positions in forward foreign currency contracts held at the close of the year are recognized as ordinary income or loss for Federal income tax purposes. As of May 31, 2004, there were no open forward foreign currency contracts. TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (To Be Announced) purchase commitments to purchase securities for a fixed price at a future date beyond customary settlement time. TBA purchase commitments may be considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines prior to settlement date. Unsettled TBApurchase commitments are valued at the current market value of the underlying securities, generally according to the procedures described under "Security Valuation." MORTGAGE DOLLAR ROLLS -- The Funds may enter into mortgage dollar rolls (principally using TBA's) in which a Fund sells mortgage securities for delivery in the current month and simultaneously contracts to repurchase substantially similar securities at an agreed-upon price on a fixed date. The Funds account for such dollar rolls under the purchases and sales method and receive compensation as consideration for entering into the commitment to repurchase. The Funds must maintain liquid securities having a value not less than the repurchase price (including accrued interest) for such dollar rolls. The market value of the securities that the Funds are required to purchase may decline below the agreed upon repurchase price of those securities. The counterparty receives all principal and interest payments, including pre-payments, made in respect of a security subject to such a contract while it is with the holder. Mortgage dollar rolls may be renewed with a new purchase and repurchase price and a cash settlement made on settlement date without physical delivery of the securities subject to the contract. The Funds engage in dollar rolls for the purpose of enhancing its yield, principally by earning a negotiated fee. As of May 31, 2004, there were no open mortgage dollar rolls. EXPENSES -- Expenses that are directly related to a specific Fund are charged to that Fund. Class specific expenses, such as distribution and transfer agent fees, 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. CLASSES -- Income, non-class specific expenses and realized/unrealized gains and losses are allocated to the respective classes on the basis of the relative daily net assets. COMPENSATING BALANCES -- If a Fund has a cash overdraft in excess of $100,000 it is required to leave 110% in compensating balance with SunTrust Bank (the "Custodian"), a wholly-owned subsidiary of SunTrust Banks, Inc., on the following day. If a Fund has a positive cash balance in excess of $100,000 it is allowed to overdraw 90% of the balance with the Custodian on the following business day. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to shareholders, which are determined in accordance with Federal tax regulations, are recorded on the ex-dividend date. Dividends from net investment income for each of the Funds are declared daily and paid monthly. Any net realized capital gains on sales of securities are distributed to shareholders at least annually. 90 - -------------------------------------------------------------------------------- 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 May 29, 1992, and last amended November 12, 2003. Under terms of the amended agreement, the Funds are charged the following annual fees based upon average daily net assets: MAXIMUM ANNUAL NET ADVISORY FEES FEE PAID -------- --------- Florida Tax-Exempt Bond Fund ..................... 0.65% 0.61% Georgia Tax-Exempt Bond Fund ..................... 0.65% 0.61% High Income Fund ................................. 0.80% 0.65% Investment Grade Bond Fund ....................... 0.74% 0.72% Investment Grade Tax-Exempt Bond Fund ............ 0.74% 0.71% Limited-Term Federal Mortgage Securities Fund .... 0.65% 0.60% Maryland Municipal Bond Fund ..................... 0.65% 0.57% Short-Term Bond Fund ............................. 0.65% 0.60% Short-Term U.S. Treasury Securities Fund ......... 0.65% 0.59% Strategic Income Fund ............................ 0.85% 0.75% U.S. Government Securities Fund .................. 0.74% 0.71% Virginia Intermediate Municipal Bond Fund ........ 0.65% 0.65% Virginia Municipal Bond Fund ..................... 0.65% 0.65% The Investment Adviser has voluntarily agreed to waive all or a portion of its fees (and to reimburse Fund 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 last amended February 28, 2004, under which the Administrator provides administrative services for an annual fee (expressed as a percentage of the combined average daily net assets of the Trust and STI Classic Variable Trust) of: 0.12% up to $1 billion, 0.09% on the next $4 billion, 0.07% on the next $3 billion, 0.065% on the next $2 billion and 0.06% for over $10 billion. DISTRIBUTION AGREEMENT -- The Trust and SEI Investments Distribution Co. (the "Distributor") are parties to a Distribution Agreement dated November 21, 1995. The Distributor will receive no fees for its distribution services under the agreement for the T Shares of any Fund. With respect to the A Shares and L Shares, the Distributor receives amounts, pursuant to a Distribution Plan and (in the case of L Shares) a Distribution and Service Plan, as outlined in the tables below. MAXIMUM A SHARE NET DISTRI- FEES BUTION FEE PAID ---------- ---------- Florida Tax-Exempt Bond Fund ..................... 0.18% 0.01% Georgia Tax-Exempt Bond Fund ..................... 0.18% 0.00% High Income Fund ................................. 0.30% 0.00% Investment Grade Bond Fund ....................... 0.43% 0.29% Investment Grade Tax-Exempt Bond Fund ............ 0.43% 0.32% Limited-Term Federal Mortgage Securities Fund .... 0.23% 0.08% Maryland Municipal Bond Fund ..................... -- -- Short-Term Bond Fund ............................. 0.23% 0.00% Short-Term U.S. Treasury Securities Fund ......... 0.18% 0.04% Strategic Income Fund ............................ 0.35% 0.00% U.S. Government Securities Fund .................. 0.38% 0.12% Virginia Intermediate Municipal Bond Fund ........ 0.15% 0.00% Virginia Municipal Bond Fund ..................... 0.15% 0.00% MAXIMUM L SHARE DISTRI- BUTION AND NET SERVICE FEES FEE PAID ---------- ---------- Florida Tax-Exempt Bond Fund ..................... 1.00% 0.66% Georgia Tax-Exempt Bond Fund ..................... 1.00% 0.63% High Income Fund ................................. 1.00% 0.57% Investment Grade Bond Fund ....................... 1.00% 0.74% Investment Grade Tax-Exempt Bond Fund ............ 1.00% 0.82% Limited-Term Federal Mortgage Securities Fund .... 1.00% 0.55% Maryland Municipal Bond Fund ..................... 1.00% 0.90% Short-Term Bond Fund ............................. 1.00% 0.45% Short-Term U.S. Treasury Securities Fund ......... 1.00% 0.36% Strategic Income Fund ............................ 1.00% 0.50% U.S. Government Securities Fund .................. 1.00% 0.79% Virginia Intermediate Municipal Bond Fund ........ -- -- Virginia Municipal Bond Fund ..................... 1.00% 0.84% The Distributor has voluntarily agreed to waive all or a portion of its fees (and to reimburse Fund expenses). Fee waivers and expense reimbursements 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 agency service fees are based upon a monthly per account charge for the total shareholder accounts at the Trust's transfer agent. These fees are presented on the Statement of Operations as Transfer Agent Shareholder Servicing Fees. CUSTODIAN AGREEMENTS -- SunTrust Bank acts as custodian for all of the Funds except the Strategic Income Fund, which utilizes Brown Brothers Harriman & Co. as custodian. Custodians are paid on the basis of net assets and 91 NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 transaction costs of the Funds. The custodians play no role in determining the investment policies of the Trust or which securities are to be purchased or sold in the Funds. OTHER -- Certain officers of the Trust are also officers of the Adviser, Administrator and/or the Distributor. Such officers are paid no fees by the Trust for serving as officers of the Trust. The Trust has entered into an agreement with the Distributor to act as an agent in placing repurchase agreements for the Trust. As of October 24, 2003, this agreement was discontinued. For the year ended May 31, 2004, the following Funds paid the Distributor through a reduction in the yield earned by the Funds on those repurchase agreements: FEES ------- Florida Tax-Exempt Fund ............................. $ 888 High Income Fund .................................... 3 Investment Grade Bond Fund .......................... 3,180 Investment Grade Tax-Exempt Bond Fund ............... 888 Limited-Term Federal Mortgage Securities Fund ....... 12,842 U.S. Government Securities Fund ..................... 2,358 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, 2004, the following Funds paid SunTrust Robinson Humphrey through a reduction in the yield earned by the Funds on those repurchase agreements: FEES ------- Florida Tax-Exempt Bond Fund ........................ $ 106 Investment Grade Tax-Exempt Bond Fund ............... 1,799 Limited-Term Federal Mortgage Securities Fund ....... 10,766 U.S. Government Securities Fund ..................... 5,594 4. Investment Transactions: The cost of purchases and the proceeds from sales and maturities of securities, excluding short-term investments and U.S. Government securities, for the year ended May 31, 2004, were as follows: SALES AND PURCHASES MATURITIES (000) (000) --------- ----------- Florida Tax-Exempt Bond Fund ........................ $109,421 $ 97,043 Georgia Tax-Exempt Bond Fund ........................ 110,883 107,974 High Income Bond Fund ............................... 83,729 96,819 Investment Grade Bond Fund .......................... 369,313 447,260 Investment Grade Tax-Exempt Bond Fund ............... 519,257 483,147 Limited-Term Federal Mortgage Securities Fund ....... 13,977 4,865 Maryland Municipal Bond Fund ........................ 7,645 17,205 Short-Term Bond Fund ................................ 108,431 132,544 Strategic Income Fund ............................... 72,462 64,568 U.S. Government Securities Fund ..................... 30,785 9,227 Virginia Intermediate Municipal Bond Fund ........... 49,497 64,121 Virginia Municipal Bond Fund ........................ 18,563 26,372 The cost of purchases and proceeds from sales and maturities of U.S. Government securities for the year ended May 31, 2004 were: SALES AND PURCHASES MATURITIES (000) (000) --------- ----------- Investment Grade Bond Fund .......................... $507,546 $653,108 Limited-Term Federal Mortgage Securities Fund ....... 812,036 751,047 Short-Term Bond Fund ................................ 98,922 85,291 Short-Term U.S. Treasury Securities Fund ............ 265,480 325,718 Strategic Income Fund ............................... 167,247 142,242 U.S. Government Securities Fund ..................... 692,682 683,269 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. The Funds may be subject to taxes imposed by countries in which they invest with respect to their investments in issuers existing or operating in such countries. Such taxes are generally based on income earned. The Funds accrue such taxes when the related income is earned. 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 these differences are permanent in nature, they are charged or credited to paid-in-capital, undistributed net investment income (loss), or accumulated net realized gain (loss), as appropriate, in the period that the differences arise. Accordingly, the following permanent differences, primarily attributable to differing treatments for foreign currency transactions and realized gains (losses) on paydowns, have been reclassified to/from the following accounts: UNDISTRIBUTED NET ACCUMULATED INVESTMENT REALIZED INCOME/(LOSS) GAIN/(LOSS) (000) (000) ------------ ------------ Investment Grade Bond Fund ......................... $2,185 $(2,185) Limited-Term Federal Mortgage Securities Fund ...... 2,927 (2,927) Short-Term Bond Fund ............................... 150 (150) Strategic Income Fund .............................. 2,357 (2,357) U.S. Government Securities Fund .................... 1,180 (1,180) These reclassifications have no effect on the net assets or net asset value per share. 92 - -------------------------------------------------------------------------------- The tax character of dividends and distributions declared during the years ended May 31, 2004 and May 31, 2003 were as follows (000):
ORDINARY TAX-EXEMPT LONG-TERM INCOME INCOME CAPITAL GAINS TOTALS 2004 2003 2004 2003 2004 2003 2004 2003 ------- ------- ------ ------ ------ ------ ------- ------- Florida Tax-Exempt Bond Fund $ 973 $ 733 $5,436 $5,721 $2,705 $ 72 $ 9,114 $ 6,526 Georgia Tax-Exempt Bond Fund 2 -- 3,770 3,907 827 -- 4,599 3,907 High Income Fund 14,342 8,030 -- -- -- -- 14,342 8,030 Investment Grade Bond Fund 26,425 40,114 -- -- -- -- 26,425 40,114 Investment Grade Tax-Exempt Bond Fund 3,652 6,573 5,330 5,199 1,555 1,856 10,537 13,628 Limited-Term Federal Mortgage Securities Fund 15,208 11,822 -- -- -- -- 15,208 11,822 Maryland Municipal Bond Fund 66 40 1,615 1,925 940 31 2,621 1,996 Short-Term Bond Fund 8,004 11,180 -- -- -- -- 8,004 11,180 Short-Term U.S. Treasury Securities Fund 3,462 5,476 -- -- 1,663 269 5,125 5,745 Strategic Income Fund 11,744 7,067 -- -- 558 -- 12,302 7,067 U.S. Government Securities Fund 10,576 11,422 -- -- 598 31 11,174 11,453 Virginia Intermediate Municipal Bond Fund -- 59 6,527 7,247 1,695 1,922 8,222 9,228 Virginia Municipal Bond Fund 42 3 1,945 2,367 1,236 176 3,223 2,546
Amounts designated as "--" are either $0 or have been rounded to $0. As of May 31, 2004, the components of Distributable Earnings/(Accumulated Losses) on a tax basis were as follows (000):
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED CAPITAL POST- POST-OCTOBER UNREALIZED OTHER ORDINARY TAX-EXEMPT LONG-TERM LOSS OCTOBER CURRENCY APPRECIATION TEMPORARY INCOME INCOME CAPITAL GAIN CARRYFORWARDS LOSSES LOSSES (DEPRECIATION) DIFFERENCES TOTALS ------------- ------------- ------------- ------------- ------- ------------ -------------- ----------- -------- Florida Tax-Exempt Bond Fund $ 151 $ 4 $1,936 $ -- $-- $ -- $ 338 $ -- $ 2,429 Georgia Tax-Exempt Bond Fund -- 2 2,445 -- -- -- 316 -- 2,763 High Income Fund 30 -- 1,023 -- -- -- 1,917 (32) 2,938 Investment Grade Bond Fund 5 -- -- (14,890) -- -- (9,684) -- (24,569) Investment Grade Tax-Exempt Bond Fund 373 461 473 -- -- -- 1,637 -- 2,944 Limited-Term Federal Mortgage Securities Fund 6 -- -- (5,161) -- -- (4,613) -- (9,768) Maryland Municipal Bond Fund -- (18) 237 -- -- -- 868 -- 1,087 Short-Term Bond Fund 11 -- -- (9,729) -- -- 227 -- (9,491) Short-Term U.S. Treasury Securities Fund 306 -- 896 -- -- -- (565) -- 637 Strategic Income Fund (187) -- 170 -- (2) (717) 531 6 (199) U.S. Government Securities Fund 1 -- -- (2,698) -- -- (3,678) -- (6,375) Virginia Intermediate Municipal Bond Fund -- 4 812 -- -- -- 2,962 -- 3,778 Virginia Municipal Bond Fund -- 1 764 -- -- -- 999 -- 1,764
Post-October loss represents losses realized on investments from November 1, 2003 through May 31, 2004 that, in accordance with Federal income tax regulations, the Funds may elect to defer and treat as having arisen in the following fiscal year. For Federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains as follows: EXPIRES EXPIRES EXPIRES EXPIRES 2009 2010 2011 2012 ------ ------ ------ ------ Investment Grade Bond Fund $14,890 $-- $ -- $ -- Limited-Term Federal Mortgage Securities Fund -- -- -- 5,161 Short-Term Bond Fund 513 -- 9,216 -- U.S. Government Securities Fund -- -- -- 2,698 During the year ended May 31, 2004, the Georgia Tax-Exempt Bond Fund, High Income Fund, Investment Grade Bond Fund and Short-Term Bond Fund utilized capital loss carryforwards of $600,040, $1,096,670, $15,781,488, and $1,691,385, respectively. The Investment Grade Bond Fund, Short-Term Bond Fund, Short-Term U.S. Treasury Fund, Strategic Income Fund and U.S. Government Securities Fund had cumulative wash sales at May 31, 2004 amounting to $1,573,748, $61,582, $110,829, $619,119 and $181,600, respectively. These wash sales losses cannot be used for Federal income tax purposes in the current year and have been deferred for use in future years. 93 NOTES TO FINANCIAL STATEMENTS (continued) - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 At May 31, 2004, the total cost of securities and the net realized gains or losses on securities sold for Federal income tax purposes were different from amounts reported for financial reporting purposes generally due to wash sales which cannot be used for Federal income tax purposes in the current year and have been deferred for use in future years. The Federal tax cost and aggregate gross unrealized appreciation and depreciation for securities held by the Funds at May 31, 2004, were as follows: AGGREGATE AGGREGATE NET FEDERAL GROSS GROSS UNREALIZED TAX UNREALIZED UNREALIZED APPRECIATION COST APPRECIATION DEPRECIATION (DEPRECIATION) (000) (000) (000) (000) -------- ------------ ------------ ------------- Florida Tax-Exempt Bond Fund .......... $188,750 $3,073 $ (2,735) $ 338 Georgia Tax-Exempt Bond Fund .......... 115,762 2,063 (1,747) 316 High Income Fund ..... 162,236 7,622 (5,705) 1,917 Investment Grade Bond Fund .......... 699,499 3,341 (13,025) (9,684) Investment Grade Tax-Exempt Bond Fund ............... 264,699 3,134 (1,497) 1,637 Limited-Term Federal Mortgage Securities Fund ............... 518,266 3,181 (7,794) (4,613) Maryland Municipal Bond Fund .......... 46,957 1,060 (192) 868 Short-Term Bond Fund . 324,850 2,076 (1,849) 227 Short-Term U.S. Treasury Securities Fund .... 167,789 108 (673) (565) Strategic Income Fund 229,145 5,906 (5,375) 531 U.S. Government Securities Fund .... 337,151 1,013 (4,691) (3,678) Virginia Intermediate Municipal Bond Fund ............... 187,691 4,044 (1,082) 2,962 Virginia Municipal Bond Fund .......... 51,759 1,401 (402) 999 6. Concentrations/Risks: The prices of the Funds' fixed income securities respond to economic developments, particularly interest rate changes, as well as to perceptions about the creditworthiness of individual issuers, including governments. Generally, the Funds' fixed income securities will decrease in value if interest rates rise and vice versa, and the volatility of lower-rated securities is even greater than that of higher-rated securities. Also, longer-term securities are generally more volatile, so the average maturity or duration of these securities affects risk. The High Income and Strategic Income Funds invest in high yield corporate, government, and other debt instruments of U.S. and non-U.S. issuers. High yield securities involve greater risk of default or downgrade and are more volatile than investment grade securities. The High Income and Strategic Income Funds' investment in foreign countries poses additional risks since political and economic events unique to a country or region will affect those markets and their issuers. In addition, investments in foreign countries are generally denominated in a foreign currency. As a result, changes in the value of those currencies compared to the U.S. dollar may affect the value of a Fund's investment. The Florida Tax-Exempt Bond, Georgia Tax-Exempt Bond, Maryland Municipal Bond, Virginia Intermediate Municipal Bond, and Virginia Municipal Bond Funds' concentrations of investments in securities of issuers located in a specific region subjects each Fund to the economic and government policies of that region. The Investment Grade Bond, Limited-Term Federal Mortgage Securities, Short-Term Bond, and U.S. Government Securities Funds invest 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 a fund's average duration. 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. In the normal course of business, the Funds may enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is dependent on future claims that may be made against the Funds and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote. 94 This page intentionally left blank.
NOTES TO FINANCIAL STATEMENTS (continued) - --------------------------------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 7. Capital Share Transactions: Capital Share Transactions for the Funds were as follows (000): FLORIDA TAX-EXEMPT GEORGIA TAX-EXEMPT BOND FUND BOND FUND HIGH INCOME FUND (1) --------------------- --------------------- --------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 05/31/04 05/31/03 --------------------- --------------------- --------------------- T Shares: Shares Issued ................ 7,381 3,571 1,818 2,200 5,657 11,360 Shares Issued in Lieu of Cash Distributions ......... 188 83 66 54 424 336 Shares Redeemed .............. (5,085) (2,081) (1,384) (2,049) (10,511) (1,571) -------- -------- -------- -------- -------- -------- Net T Share Transactions ....... 2,484 1,573 500 205 (4,430) 10,125 -------- -------- -------- -------- -------- -------- A Shares: Shares Issued ................ 272 875 121 42 350 -- Shares Issued in Lieu of Cash Distributions ......... 15 13 5 4 4 -- Shares Redeemed .............. (448) (455) (100) (80) (150) -- -------- -------- -------- -------- -------- -------- Net A Share Transactions ....... (161) 433 26 (34) 204 -- -------- -------- -------- -------- -------- -------- L Shares: Shares Issued ................ 530 2,231 249 478 6,402 4,824 Shares Issued in Lieu of Cash Distributions ......... 76 75 42 34 567 353 Shares Redeemed .............. (2,221) (866) (511) (375) (5,714) (2,641) -------- -------- -------- -------- -------- -------- Net L Share Transactions ....... (1,615) 1,440 (220) 137 1,255 2,536 -------- -------- -------- -------- -------- -------- Net Change in Capital Shares ... 708 3,446 306 308 (2,971) 12,661 ======== ======== ======== ======== ======== ========
SHORT-TERM SHORT-TERM U.S. TREASURY STRATEGIC BOND FUND SECURITIES FUND INCOME FUND (2) --------------------- --------------------- --------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 05/31/04 05/31/03 --------------------- --------------------- --------------------- T Shares: Shares Issued ................ 11,306 11,842 1,628 4,134 6,185 3,513 Shares Issued in Lieu of Cash Distributions ......... 232 291 66 63 79 63 Shares Redeemed .............. (13,012) (12,539) (4,296) (2,965) (2,410) (1,840) -------- -------- -------- -------- -------- -------- Net T Share Transactions ....... (1,474) (406) (2,602) 1,232 3,854 1,736 -------- -------- -------- -------- -------- -------- A Shares: Shares Issued ................ 583 780 1,096 1,894 489 -- Shares Issued in Lieu of Cash Distributions ......... 11 11 34 21 4 -- Shares Redeemed .............. (563) (801) (1,363) (876) (67) -- -------- -------- -------- -------- -------- -------- Net A Share Transactions ....... 31 (10) (233) 1,039 426 -- -------- -------- -------- -------- -------- -------- L Shares: Shares Issued ................ 803 1,882 1,622 9,251 7,519 10,641 Shares Issued in Lieu of Cash Distributions ......... 45 60 178 200 566 273 Shares Redeemed .............. (1,703) (1,333) (7,989) (4,041) (9,144) (1,940) -------- -------- -------- -------- -------- -------- Net L Share Transactions ....... (855) 609 (6,189) 5,410 (1,059) 8,974 -------- -------- -------- -------- -------- -------- Net Change in Capital Shares ... (2,298) 193 (9,024) 7,681 3,221 10,710 ======== ======== ======== ======== ======== ========
(1) A SHARES COMMENCED OPERATIONS ON OCTOBER 27, 2003. (2) A SHARES COMMENCED OPERATIONS ON OCTOBER 8, 2003. (3) A SHARES COMMENCED OPERATIONS ON MAY 11, 2004. 96
- ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT GRADE INVESTMENT GRADE TAX- LIMITED-TERM FEDERAL MARYLAND MUNICIPAL BOND FUND EXEMPT BOND FUND MORTGAGE SECURITIES FUND BOND FUND --------------------- --------------------- ------------------------ --------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 05/31/04 05/31/03 05/31/04 05/31/03 --------------------- --------------------- ------------------------ --------------------- T Shares: Shares Issued ................ 12,373 18,197 7,142 5,507 26,070 21,614 766 1,826 Shares Issued in Lieu of Cash Distributions ......... 1,025 1,450 200 300 397 373 47 28 Shares Redeemed .............. (32,348) (31,144) (4,843) (3,260) (13,982) (7,664) (705) (2,329) -------- -------- -------- -------- -------- -------- -------- -------- Net T Share Transactions ....... (18,950) (11,497) 2,499 2,547 12,485 14,323 108 (475) -------- -------- -------- -------- -------- -------- -------- -------- A Shares: Shares Issued ................ 1,067 2,253 290 341 790 1,808 -- -- Shares Issued in Lieu of Cash Distributions ......... 89 92 56 87 27 22 -- -- Shares Redeemed .............. (1,310) (1,192) (489) (383) (1,176) (690) -- -- -------- -------- -------- -------- -------- -------- -------- -------- Net A Share Transactions ....... (154) 1,153 (143) 45 (359) 1,140 -- -- -------- -------- -------- -------- -------- -------- -------- -------- L Shares: Shares Issued ................ 615 2,045 357 1,177 2,282 15,321 375 886 Shares Issued in Lieu of Cash Distributions ......... 70 104 75 115 215 225 88 56 Shares Redeemed .............. (1,778) (2,229) (1,145) (696) (11,317) (1,396) (1,323) (491) -------- -------- -------- -------- -------- -------- -------- -------- Net L Share Transactions ....... (1,093) (80) (713) 596 (8,820) 14,150 (860) 451 -------- -------- -------- -------- -------- -------- -------- -------- Net Change in Capital Shares ... (20,197) (10,424) 1,643 3,188 3,306 29,613 (752) (24) ======== ======== ======== ======== ======== ======== ======== ========
U.S. GOVERNMENT SECURITIES FUND VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND VIRGINIA MUNICIPAL BOND FUND (3) --------------------- ----------------------------------------- ------------------------------- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 06/01/03- 06/01/02- 05/31/04 05/31/03 05/31/04 05/31/03 05/31/04 05/31/03 --------- ---------- ---------- ----------- ----------- ---------- T Shares: Shares Issued ................ 13,051 12,606 1,860 2,707 821 785 Shares Issued in Lieu of Cash Distributions ......... 322 314 123 159 45 17 Shares Redeemed .............. (8,140) (5,359) (3,434) (2,131) (1,017) (1,857) -------- -------- -------- -------- -------- -------- Net T Share Transactions ....... 5,233 7,561 (1,451) 735 (151) (1,055) -------- -------- -------- -------- -------- -------- A Shares: Shares Issued ................ 1,088 1,551 518 389 12 -- Shares Issued in Lieu of Cash Distributions ......... 23 24 30 24 -- -- Shares Redeemed .............. (1,145) (1,531) (489) (136) -- -- -------- -------- -------- -------- -------- -------- Net A Share Transactions ....... (34) 44 59 277 12 -- -------- -------- -------- -------- -------- -------- L Shares: Shares Issued ................ 387 1,819 -- -- 194 593 Shares Issued in Lieu of Cash Distributions ......... 61 107 -- -- 43 29 Shares Redeemed .............. (2,218) (1,367) -- -- (828) (373) -------- -------- -------- -------- -------- -------- Net L Share Transactions ....... (1,770) 559 -- -- (591) 249 -------- -------- -------- -------- -------- -------- Net Change in Capital Shares ... 3,429 8,164 (1,392) 1,012 (730) (806) ======== ======== ======== ======== ======== ========
97 NOTES TO FINANCIAL STATEMENTS (concluded) - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 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 331/3% of the total asset value of the Fund (including the loan collateral). No Fund will lend portfolio securities to its investment adviser, sub-adviser or their 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. 9. Subsequent Event: Effective July 26, 2004, under separate administration, distribution and transfer agency agreements dated July 24, 2004, July 24, 2004 and July 23, 2004, respectively, BISYS Fund Services began providing administration, distribution and transfer agency services for the Funds. 98 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 To the Board of Trustees and Shareholders of STI Classic Funds: In our opinion, the accompanying statements of net assets of Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund, High Income Fund, Investment Grade Bond Fund, Limited-Term Federal Mortgage Securities Fund, Maryland Municipal Bond Fund, Short-Term Bond Fund, Short-Term U.S. Treasury Securities Fund, Strategic Income Fund, U.S. Government Securities Fund, Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund, and the statement of assets and liabilities, including the schedule of investments, of Investment Grade Tax-Exempt Bond Fund (thirteen of the forty-five funds constituting STI Classic Funds, hereafter referred to as the "Funds") 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 the Funds at May 31, 2004, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the three years (or periods) then ended and the financial highlights of High Income Fund for the year ended March 31, 2000, 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 the standards of the Public Company Accounting Oversight Board (United States), 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 confirmation of securities at May 31, 2004 for Strategic Income Fund by correspondence with the custodian, and physical inspection of securities at May 31, 2004 for all other funds, provide a reasonable basis for our opinion. The financial highlights for each of the two 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 26, 2004 99
TRUSTEES AND OFFICERS OF THE STI CLASSIC FUNDS - ---------------------------------------------------------------------------------------------------------------------------- Information pertaining to the trustees 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 Board Members." Trustees who are deemed to be "interested persons" of the Trust are referred to as "Interested Board Members." Messrs. Courts and Ridley are Trustees who may be deemed to be "interested" persons of the Trust. - ---------------------------------------------------------------------------------------------------------------------------- Term of Number of Portfolios Other Position(s) Office and in STI Classic Directorship Name, Address, Held with Length of Principal Occupation(s) Complex Overseen by Held by Age 1 the Trust Time Served 2 During Past 5 Years Board Member 3 Board Member 4 - ---------------------------------------------------------------------------------------------------------------------------- INTERESTED BOARD MEMBERS 5 - ------------- RICHARD W. Trustee November, Chairman of the Board, Atlantic 52 Current Trustee of STI COURTS, II 2001 Investment Company, 1970 to the Classic Variable Trust. 68 present. - ---------------------------------------------------------------------------------------------------------------------------- CLARENCE H. RIDLEY 61 Trustee November, Chairman of the Board; Haverty 52 Current Trustee of STI 2001 Furniture Companies, 2001 to the Classic Variable Trust. present; Partner, King and Spaulding LLP (law firm), 1971 to 2000. - ---------------------------------------------------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS - ------------- THOMAS Trustee May, 2000 President, Genuine Parts Company 52 Director, National GALLAGHER Wholesale Distribution, 1970 to Service Industries; 56 the present. Director, Oxford Industries. Current Trustee of STI Classic Variable Trust. - ---------------------------------------------------------------------------------------------------------------------------- F. WENDELL Trustee May, 1995 Retired. 52 Current Trustee on GOOCH the Board of 71 Trustees for the SEI Family of Funds, The Capitol Mutual Funds and STI Classic Variable Trust. - ---------------------------------------------------------------------------------------------------------------------------- JAMES O. Trustee May, 2000 President and Chief Executive Officer, 52 Director, NCR; ROBBINS Cox Communications, Inc., 1983 Director, Cox 62 to the present. Communications. Current Trustee of STI Classic Variable Trust. - ---------------------------------------------------------------------------------------------------------------------------- JONATHAN T. Trustee February, Retired. 52 Trustee, W.K. WALTON 1998 Kellogg Trust. 74 Current Trustee of STI Classic Variable Trust. - ----------------------------------------------------------------------------------------------------------------------------
1 Each trustee may be contacted by writing to c/o STI Classic Trust, 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. The president, treasurer and secretary shall hold office for a one year term and until their respective successors are chosen and qualified, or in each case until he or she sooner dies, resigns, is removed, or becomes disqualified in accordance with the Trust's by-laws. 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, 2004, the STI Classic Complex consisted of 52 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. 100
- ---------------------------------------------------------------------------------------------------------------------------- (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------- Term of Number of Portfolios Other Position(s) Office and in STI Classic Directorship Name, Address, Held with Length of Principal Occupation(s) Complex Overseen by Held by Age the Trust Time Served During Past 5 Years Board Member Board Member - ---------------------------------------------------------------------------------------------------------------------------- OFFICERS - -------- JAMES President Since SEI Investments since 1996; N/A N/A VOLK November, Senior Operations Officer Fund 41 2003 Accounting and Administration, 1996-2004, Chief Accounting Officer, present; Assistant Chief Accountant, U.S. Securities and Exchange Commission, 1993-1996; Audit Manager, Coopers & Lybrand LLP, 1985 - 1993. - ---------------------------------------------------------------------------------------------------------------------------- TIMOTHY D. Vice President Since SEI Investments since 1999; N/A N/A BARTO and Assistant November, General Counsel, Vice President 36 Secretary 2001 and Secretary of the Administrator and Adviser, present; Associate, Dechert, Price & Rhoads, 1997-1999. - ---------------------------------------------------------------------------------------------------------------------------- LYDIA A. Vice President Since SEI Investments since 1998; N/A N/A GAVALIS and Assistant May, Vice President and Assistant 40 Secretary 1998 Secretary of the Administrator and Adviser, present; Assistant General Counsel and Director of Arbitration, Philadelphia Stock Exchange, 1989-1998. - ---------------------------------------------------------------------------------------------------------------------------- CHRISTINE Vice President Since SEI Investments since 1999; N/A N/A MCCULLOUGH and Assistant May, Vice President and Assistant 43 Secretary 2000 Secretary of the Adviser, present; Associate, White and Williams LLP, 1991-1999 - ---------------------------------------------------------------------------------------------------------------------------- WILLIAM E. Vice President Since SEI Investments since 2000; N/A N/A ZITELLI JR. and Assistant November, Assistant Secretary of the 35 Secretary 2000 Administrator and Adviser, present; Vice President, Merrill Lynch & Co. Asset Management Group, 1998-2000; Associate, Pepper Hamilton LLP, 1997-1998. - ---------------------------------------------------------------------------------------------------------------------------- DOUGLAS Vice President Since President, Chief Executive Officer N/A N/A PHILLIPS and Assistant August, and Chief Investment Officer of Trusco 56 Secretary 2003 Capital Management, Inc. since its inception in November 1984. - ----------------------------------------------------------------------------------------------------------------------------
101
TRUSTEES AND OFFICERS OF THE STI CLASSIC FUNDS (CONCLUDED) - ---------------------------------------------------------------------------------------------------------------------------- (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------------- Term of Number of Portfolios Other Position(s) Office and in STI Classic Directorship Name, Address, Held with Length of Principal Occupation(s) Complex Overseen by Held by Age the Trust Time Served During Past 5 Years Board Member Board Member - ---------------------------------------------------------------------------------------------------------------------------- OFFICERS -- CONTINUED - --------------------- DEBORAH A. Vice President Since Chief Compliance Officer and N/A N/A LAMB and Assistant November, Vice President of Trusco Capital 51 Secretary 2003 Management, Inc. since March 2003 and President of Investment Industry Consultants, LLC since June 2000. Director of Compliance at INVESCO, Inc. from March 1995 to June 2000. - ---------------------------------------------------------------------------------------------------------------------------- KATHLEEN Vice President Since Vice President and Manager of N/A N/A LENTZ and Assistant November, Special Entities in Financial 43 Secretary 2003 Intelligence Unit of SunTrust Bank since 2002. Vice President of the Third Party Mutual Funds Unit of SunTrust Bank from 1996-2002. - ---------------------------------------------------------------------------------------------------------------------------- JOHN Vice President Since Middle Office Compliance Officer N/A N/A MUNERA and Assistant November, at SEI Investments since 2000. 41 Secretary 2003 Supervising Examiner at Federal Reserve Bank of Philadelphia 1998-2000. - ---------------------------------------------------------------------------------------------------------------------------- JENNIFER E. Treasurer Since Fund Accounting Director, SEI N/A N/A SPRATLEY and May, Investment, 1999-present; Audit 35 CFO 2000 Manager, Ernst & Young, LLP, 1991-1999. - ----------------------------------------------------------------------------------------------------------------------------
102 NOTICE TO SHAREHOLDERS - -------------------------------------------------------------------------------- STI CLASSIC FIXED INCOME FUNDS MAY 31, 2004 (UNAUDITED) For shareholders that do not have a May 31, 2004 tax year end, this notice is for informational purposes only. For shareholders with a May 31, 2004 tax year-end, please consult your tax advisor as to the pertinance of this notice. For the fiscal year ended May 31, 2004, each portfolio is designating the following items with regard to distributions paid during the year.
LONG TERM LONG TERM QUALIFIED (15% RATE) (20% RATE) 5-YEAR ORDINARY CAPITAL GAIN CAPITAL GAIN GAIN INCOME TAX-EXEMPT TOTAL FUND DISTRIBUTION DISTRIBUTION DISTRIBUTION DISTRIBUTIONS INTEREST DISTRIBUTIONS - -------------------------------- ------------ ------------ ------------ ------------- ---------- ------------- Florida Tax-Exempt Bond 17.35% 8.31% 3.93% 10.65% 59.76% 100.00% Georgia Tax-Exempt Bond 17.89% 0.00% 0.00% 0.05% 82.06% 100.00% High Income Fund 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Investment Grade Bond 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Investment Grade Tax-Exempt Bond 14.74% 0.00% 0.00% 34.61% 50.65% 100.00% Limited-Term Federal Mortgage Securities 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Maryland Municipal Bond 12.58% 23.05% 0.00% 2.49% 61.88% 100.00% Short-Term Bond 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% Short-Term U.S. Treasury Securities 7.64% 23.95% 0.00% 68.41% 0.00% 100.00% Strategic Income 0.00% 4.61% 0.00% 95.39% 0.00% 100.00% U.S. Government Securities 0.90% 3.96% 0.46% 94.68% 0.00% 100.00% Virginia Intermediate 5.33% 10.42% 4.68% 0.00% 79.56% 100.00% Virginia Municipal Bond 22.46% 14.74% 0.80% 1.28% 60.72% 100.00% DIVIDENDS QUALIFYING QUALIFYING DIVIDEND FOREIGN FOR CORPORATE INCOME TAX DIVIDENDS REC. (15% TAX RATE WITHHOLDING FUND DEDUCTION (1) FOR QDI) (2) PASS THRU (3) - -------------------------------- -------------- -------------- ------------- Florida Tax-Exempt Bond 0.00% 0.00% 0.00% Georgia Tax-Exempt Bond 0.00% 0.00% 0.00% High Income Fund 0.00% 0.00% 0.00% Investment Grade Bond 0.00% 0.00% 0.00% Investment Grade Tax-Exempt Bond 0.00% 0.00% 0.00% Limited-Term Federal Mortgage Securities 0.00% 0.00% 0.00% Maryland Municipal Bond 0.00% 0.00% 0.00% Short-Term Bond 0.00% 0.00% 0.00% Short-Term U.S. Treasury Securities 0.00% 0.00% 0.00% Strategic Income 0.00% 0.00% 0.00% U.S. Government Securities 0.00% 0.00% 0.00% Virginia Intermediate 0.00% 0.00% 0.00% Virginia Municipal Bond 0.00% 0.00% 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". (2) THE PERCENTAGE IN THIS COLUMN REPRESENTS THE AMOUNT OF "QUALIFYING DIVIDEND INCOME" AS CREATED BY THE JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003 AND IS REFLECTED AS A PERCENTAGE OF "ORDINARY INCOME DISTRIBUTIONS". IT IS THE INTENTION OF EACH OF THE AFOREMENTIONED FUNDS TO DESIGNATE THE MAXIMUM AMOUNT PERMITTED BY THE LAW. (3) FOREIGN TAX CREDIT PASS THRU REPRESENTS THE AMOUNT ELIGIBLE FOR THE FOREIGN TAX CREDIT AND IS REFLECTED AS A PERCENTAGE OF "ORDINARY INCOME DISTRIBUTIONS". 103 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 CLASSIC FUNDS LOGO OMITTED] BACKED BY TRADITION. TRENGTHENED BY EXPERIENCE.(SM) STI-AR-002-0400 ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer, officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Trustees has determined that the Board's Audit Committee does not have an "audit committee financial expert," as the Securities and Exchange Commission has defined that term. After carefully considering all of the factors involved in the definition of "audit committee financial expert," the Board determined that none of the members of the audit committee met all five qualifications in the definition, although some members of the Audit Committees met some of the qualifications. The Board also determined that the Audit Committee members collectively have many years of experience in business and finance, including working with mutual fund financial statements and auditors, and that in light of the nature of the accounting and valuation issues the registrant's portfolios have presented over the past several years, it did not appear that the Audit Committee members lacked any necessary skill to serve on the Audit Committee. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Fees billed by PricewaterhouseCoopers LLP ("PWC") related to the Trust PWC billed the Trust aggregate fees for services rendered to the Trust for the last two fiscal years as follows:
- -------------------------------------------------------------------------------------------------------------------------------- 2004 2003 - -------------------------------------------------------------------------------------------------------------------------------- All fees and All fees and All other fees All fees and All fees and All other fees services to the services to and services to services to the services to and services to Trust that were service service Trust that were service service pre-approved affiliates that affiliates that pre-approved affiliates that affiliates that were did not require were did not require pre-approved pre-approval pre-approved pre-approval - -------------------------------------------------------------------------------------------------------------------------------- (a) Audit $ 563,000 N/A $ 0 $ 448,509 N/A $ 0 Fees(1) - -------------------------------------------------------------------------------------------------------------------------------- (b) Audit- $ 72,000 (2) $ 60,000 (3) $ 1,795,277 (4) $ 61,500 (2) $ 0 $ 1,498,453 (4) Related Fees - -------------------------------------------------------------------------------------------------------------------------------- (c) Tax Fees $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 - -------------------------------------------------------------------------------------------------------------------------------- (d) All $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Other Fees - --------------------------------------------------------------------------------------------------------------------------------
Notes: (1) Audit fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the accountant in connection with statutory and regulatory filings. (2) Services related to security count examinations under Rule 17f-2 of the Investment Company Act for 2004 and 2003 fiscal years. (3) Services related to the audit of the controls around custody operations at SunTrust Bank (SAS No. 70) in 2003. (4) Non-audit services relate principally to certain technical accounting advice on financial products of the Bank; Sarbanes-Oxley 404 implementation; and, tax compliance services to other entities controlled by SunTrust Banks, Inc. (e)(1) The registrant has adopted an Audit and Non-Audit Services Pre-Approval Policy, as follows: I. Statement of Principles As set forth in the chart below, the Sarbanes-Oxley Act of 2002 (the "Act"), and rules adopted by the Securities and Exchange Commission ("SEC") require that the Audit Committee of the Board of Trustees pre-approve all audit services and non-audit services provided to the STI Classic Funds and the STI Classic Variable Trust (the "Trusts") and their respective portfolios (the "Funds") by its independent accountant ("Auditor"),1 as well as non-audit services provided by the Auditor to the Funds' investment adviser and to affiliates of the adviser that provide ongoing services to the Funds ("Service Affiliates") if the services directly impact the Funds' operations and financial reporting.
WHERE PRE-APPROVAL IS REQUIRED - -------------------------------------------------------------------------------------------------------- AUDIT SERVICE NON-AUDIT SERVICE - -------------------------------------------------------------------------------------------------------- Fund Yes Yes - -------------------------------------------------------------------------------------------------------- Adviser No Yes, if directly related to Fund operation and financial reporting - -------------------------------------------------------------------------------------------------------- Service Affiliate 2 No Yes, if directly related to Fund operation and financial reporting - --------------------------------------------------------------------------------------------------------
The following policies and procedures govern the ways in which the Audit Committee will pre-approve audit and various types of non-audit services that the Auditor provides to the Trusts and to Service Affiliates. These policies and procedures do not apply in the case of audit services that the Auditor provides to Service Affiliates, nor do they apply to services that an audit firm other than the Auditor provides to such entities. - -------------------------------------------------------------------------------- 1 The Audit Committee also is permitted to ratify the provision of inadvertent non-audit services, BUT ONLY IF: o the value of all such services do not exceed 5% of total revenues paid by the Fund, the Adviser and Service Affiliates to the Auditor in the fiscal year when services are provided; 2 o the services were not recognized as non-audit services at the time they were provided; and o the services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit. 2 A list of Service Affiliates is set out in Exhibit I, attached hereto. These policies and procedures comply with the requirements for pre-approval, but also provide a mechanism by which management of the Trusts may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations. Pre-approval of non-audit services may be achieved through a combination of the procedures described in Sections II and VI below. II. Delegation As contemplated by the Act and applicable SEC rules, the Audit Committee hereby delegates to the Chairperson of the Audit Committee the authority to approve the engagement of the independent auditor to provide non-audit services as permitted by the Act, to the extent that such non-audit services are not pre-approved by the entire Audit Committee as set forth herein. The Chairman shall report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. III. Audit Services The annual Audit services engagement scope and terms will be subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit (including required rating agency reviews) and other procedures required to be performed by the independent auditor to be able to form an opinion on the Trusts' financial statements. The Audit Committee will monitor the Audit services engagement throughout the year and will also approve, if necessary, any changes in terms and conditions resulting from changes in audit scope, Fund structure or other items. The Audit Committee will pre-approve all Audit services for the Trusts. IV. Audit-related Services Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Trusts' financial statements or that are traditionally performed by the Auditor. The Audit Committee will pre-approve all Audit-related services for the Trusts. V. Tax Services Tax services to the Trusts include tax compliance, tax planning and tax advice. The Audit Committee will review all proposed tax related services to assure that their provision would not impair the independence of the Auditor. The Audit Committee will pre-approve all tax services for the Trusts. VI. All Other Services The Audit Committee believes, based on the SEC's rules prohibiting the independent auditor from providing specific non-audit services, 3 that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may pre-approve those permissible non-audit services classified as All Other Services that it believes would not impair the independence of the auditor, and are consistent with the SEC's rules on auditor independence. The Audit Committee will pre-approve all other services for the Trusts. - -------------------------------------------------------------------------------- 3 A list of specific prohibited non-audit services is set out in Exhibit II, attached hereto. VII. Procedures Annually, the Audit Committee will review and approve the types of services to be provided by the Auditor and review the projected fees for the next fiscal year at a regularly scheduled meeting. That approval will acknowledge that the Audit Committee is in agreement with the specific types of services that the Auditor will be permitted to perform. If subsequent to the annual approval by the Audit Committee, the Funds' or the Trusts or any Service Affiliate seeks to engage the Auditor to perform a service that was not approved, the Auditor, upon learning of such proposed engagement, should submit the proposed engagement to the Trusts' [Treasurer or the Adviser] and if the service fits within the independence guidelines, the [Treasurer or the Adviser] will arrange for a discussion of the service to be included on the agenda for the next regularly scheduled Audit Committee meeting so that specific approval can be obtained. If the timing of the project is critical and the project needs to commence before the regularly scheduled meeting, the specific pre-approval by the Chairperson of the Audit Committee must be obtained before any services are provided. The [Treasurer or the Adviser] will arrange this. The Auditor must not commence any such project until specific approval has been given. VIII. Recordkeeping The Trusts shall maintain a written record of all decisions made by the Audit Committee or by the Chairperson of the Audit Committee pursuant to these procedures, together with appropriate supporting material. In connection with the ratification of any inadvertent non-audit services, a record shall be made indicating that each of the conditions for this exception to the pre-approval requirement has been satisfied. 4 IX. Amendment The Audit Committee may review and amend these policies and procedures from time to time as it deems appropriate. Exhibit I STI CLASSIC FUNDS/STI CLASSIC VARIABLE TRUST Service Affiliates Subject to Pre-Approval of Non-Audit Services o Trusco Capital Management, Inc. o SunTrust Banks, Inc. o SunTrust Securities Inc. o SunTrust Robinson Humphrey o [any other affiliates that provide services to the Trusts] - -------------------------------------------------------------------------------- 4 See footnote 1 herein. Exhibit II STI CLASSIC FUNDS/STI CLASSIC VARIABLE TRUST Prohibited Non-Audit Services o Bookkeeping or other services related to the accounting records or financial statements of the audit client o Financial information systems design and implementation o Appraisal or valuation services, fairness opinions or contribution-in-kind reports o Actuarial services o Internal audit outsourcing services o Management functions o Human resources o Broker-dealer, investment adviser or investment banking services o Legal services o Expert services unrelated to the audit (e)(2) Percentage of fees billed applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows: --------------------------------------------------------------- 2004 2003 --------------------------------------------------------------- Audit-Related Fees 0 % 0 % --------------------------------------------------------------- Tax Fees 0 % 0 % --------------------------------------------------------------- All Other Fees 0 % 0 % --------------------------------------------------------------- (f) Not applicable. (g) The aggregate non-audit fees and services billed by PWC for the last two fiscal years were $1,855,277 and $1,498,453 for 2004 and 2003, respectively. (h) The audit committee of the registrant's Board of Trustees reviewed and considered whether the provision of non-audit services that were rendered to the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7) (ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASERS OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 10. 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 changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrants internal control over financial reporting. ITEMS 11. EXHIBITS. (a)(1) Code of Ethics attached hereto. (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 F. Volk ------------------------------------- James F. Volk, President Date 07/26/04 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 F. Volk ------------------------------------- James F. Volk, President Date 07/26/04 By (Signature and Title)* /s/ Jennifer E. Spratley ------------------------------------- Jennifer E. Spratley, Treasurer & CFO Date 07/26/04 * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 stifixedcodeofethics.txt STI CLASSIC FIXED INCOME CODE OF ETHICS AR 5_04 STI CLASSIC FUNDS STI CLASSIC VARIABLE TRUST FINANCIAL OFFICER CODE OF ETHICS I. INTRODUCTION The reputation and integrity of the STI Classic Funds and STI Classic Variable Trust (the "Trusts") are valuable assets that are vital to the Trusts' success. The Trusts' senior financial officers ("SFOs") are responsible for conducting the Trusts' business in a manner that demonstrates a commitment to the highest standards of integrity. The Trusts' SFOs include the principal executive officer, the principal financial officer, comptroller or principal accounting officer, and any person who performs a similar function. The Sarbanes-Oxley Act of 2002 (the "Act") effected sweeping corporate disclosure and financial reporting reform on public companies, including mutual funds, to address corporate malfeasance and assure investors that the companies in which they invest are accurately and completely disclosing financial information. Under the Act, all public companies (including the Trust) must either have a code of ethics for their SFOs, or disclose why it does not. The Act was intended to foster corporate environments which encourage employees to question and report unethical and potentially illegal business practices. The Trusts have chosen to adopt this Financial Officer Code of Ethics (the "Code") to encourage their SFOs to act in a manner consistent with the highest principles of ethical conduct. II. PURPOSES OF THE CODE The purposes of this Code are: o To promote honest and ethical conduct by the Trusts' SFOs, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o To assist the Trusts' SFOs in recognizing and avoiding conflicts of interest, including disclosing to an appropriate person any material transaction or relationship that reasonably could be expected to give rise to such a conflict; o To promote full, fair, accurate, timely, and understandable disclosure in reports and documents that the Trusts file with, or submit to, the SEC and in other public communications made by the Trusts; o To promote compliance with applicable laws, rules and regulations; o To encourage the prompt internal reporting to an appropriate person of violations of this Code; and o To establish accountability for adherence to this Code. 1 III. QUESTIONS ABOUT THIS CODE The Trusts' compliance officer designated to oversee compliance with the Trusts' Code of Ethics adopted pursuant to Rule 17j-1 shall serve as Compliance Officer for the implementation and administration of this Code. You should direct your questions about this Code to the Compliance Officer. IV. CONDUCT GUIDELINES The Trusts have adopted the following guidelines under which the Trusts' SFOs must perform their official duties and conduct the business affairs of the Trusts. 1. ETHICAL AND HONEST CONDUCT IS OF PARAMOUNT IMPORTANCE. The Trusts' SFOs must act with honesty and integrity and avoid violations of this Code, including the avoidance of actual or apparent conflicts of interest with the Trusts in personal and professional relationships. 2. SFOS MUST DISCLOSE MATERIAL TRANSACTIONS OR RELATIONSHIPS. The Trusts' SFOs must disclose to the Compliance Officer any actual or apparent conflicts of interest the SFO may have with the Trusts that reasonably could be expected to give rise to any violations of this Code. Such conflicts of interest may arise as a result of material transactions or business or personal relationships to which the SFO may be a party. If it is not possible to disclose the matter to the Compliance Officer, it should be disclosed to the Trusts' Chief Financial Officer, Chief Executive Officer or another appropriate person. In addition to disclosing any actual or apparent conflicts of interest in which an SFO is personally involved, the Trusts' SFOs have an obligation to report any other actual or apparent conflicts which they discover or of which they otherwise become aware. If you are unsure whether a particular fact pattern gives rise to a conflict of interest, or whether a particular transaction or relationship is "material," you should bring the matter to the attention of the Compliance Officer. 3. STANDARDS FOR QUALITY OF INFORMATION SHARED WITH SERVICE PROVIDERS OF THE TRUSTS. The Trusts' SFOs must at all times seek to provide information to the Trusts' service providers (adviser, administrator, outside auditor, outside counsel, custodian, ETC.) that is accurate, complete, objective, relevant, timely, and understandable. 4. STANDARDS FOR QUALITY OF INFORMATION INCLUDED IN PERIODIC REPORTS. The Trusts' SFOs must at all times endeavor to ensure full, fair, timely, accurate, and understandable disclosure in the Trusts' periodic reports. 5. COMPLIANCE WITH LAWS. The Trusts' SFOs must comply with the federal securities laws and other laws and rules applicable to the Trusts, such as the Internal Revenue Code. 2 6. STANDARD OF CARE. The Trusts' SFOs must at all times act in good faith and with due care, competence and diligence, without misrepresenting material facts or allowing your independent judgment to be subordinated. The Trusts' SFOs must conduct the affairs of the Trusts in a responsible manner, consistent with this Code. 7. CONFIDENTIALITY OF INFORMATION. The Trusts' SFOs must respect and protect the confidentiality of information acquired in the course of their professional duties, except when authorized by the Trusts to disclose it or where disclosure is otherwise legally mandated. You may not use confidential information acquired in the course of your work for personal advantage. 8. SHARING OF INFORMATION AND EDUCATIONAL STANDARDS. The Trusts' SFOs should share information with relevant parties to keep them informed of the business affairs of the Trusts, as appropriate, and maintain skills important and relevant to the Trusts' needs. 9. PROMOTE ETHICAL CONDUCT. The Trusts' SFOs should at all times proactively promote ethical behavior among peers in your work environment. 10. STANDARDS FOR RECORDKEEPING. The Trusts' SFOs must at all times endeavor to ensure that the Trusts' financial books and records are thoroughly and accurately maintained to the best of their knowledge in a manner consistent with applicable laws and this Code. V. WAIVERS OF THIS CODE You may request a waiver of a provision of this Code by submitting your request in writing to the Compliance Officer for appropriate review. For example, if a family member works for a service provider that prepares the Trusts' financial statements, you may have a potential conflict of interest in reviewing those statements and should seek a waiver of this Code to review the work. An executive officer of the Trusts, or another appropriate person (such as a designated Board or Audit Committee member), will decide whether to grant a waiver. All waivers of this code must be disclosed to the Trusts' shareholders to the extent required by SEC rules. VI. AFFIRMATION OF THE CODE Upon adoption of the Code, the Trusts' SFOs must affirm in writing that they have received, read and understand the Code, and annually thereafter must affirm that they have complied with the requirements of the Code. To the extent necessary, the Trusts' Compliance Officer will provide guidance on the conduct required by this Code and the manner in which violations or suspected violations must be reported and waivers must be requested. 3 VII. REPORTING VIOLATIONS In the event that an SFO discovers or, in good faith, suspects a violation of this Code, the SFO MUST immediately report the violation or suspected violation to the Compliance Officer. The Compliance Officer may, in his or her discretion, consult with another member of the Trusts' senior management or the Board in determining how to address the suspected violation. For example, a Code violation may occur when a periodic report or financial statement of the Trusts omits a material fact, or is technically accurate but, in the view of the SFO, is written in a way that obscures its meaning. SFOs who report violations or suspected violations in good faith will not be subject to retaliation of any kind. Reported violations will be investigated and addressed promptly and will be treated as confidential to the extent possible. VIII. VIOLATIONS OF THE CODE Dishonest or unethical conduct or conduct that is illegal will constitute a violation of this Code, regardless of whether this Code specifically refers to such particular conduct. A violation of this Code may result in disciplinary action, up to and including removal as an SFO of the Trust. A variety of laws apply to the Trusts and their operations, including the Securities Act of 1933, the Investment Company Act of 1940, state laws relating to duties owed by Trust officers, and criminal laws. The Trusts will report any suspected criminal violations to the appropriate authorities, and will investigate, address and report, as appropriate, non-criminal violations. ADOPTED: NOVEMBER 20, 2003 4 EX-99.CERT 3 stifixed302cert_jv.txt STI CLASSIC FIXED INCOME 302 CERTIFICATION JV CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, James F. Volk, certify that: 1. I have reviewed this report on Form N-CSR of STI Classic Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [intentionally left blank]; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 07/26/04 /s/ James F. Volk - ----------------- James F. Volk President EX-99.CERT 4 stifixed302cert_js.txt STI CLASSIC FIXED INCOME 302 CERTIFICATION JS CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Jennifer E. Spratley, certify that: 1. I have reviewed this report on Form N-CSR of STI Classic Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [intentionally left blank]; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 07/26/04 /s/ Jennifer E. Spratley - ------------------------ Jennifer E. Spratley Treasurer & CFO EX-99.906 5 stifixed906cert_jv.txt STI CLASSIC FIXED INCOME 906 CERTIFICATION JV CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The undersigned, the PRESIDENT of STI CLASSIC FUNDS (the "Fund"), with respect to the Form N-CSR for the period ended MAY 31, 2004 as filed with the Securities and Exchange Commission, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certifies that, to the best of my knowledge: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: 07/26/04 /s/ James F. Volk ----------------- James F. Volk EX-99.906 6 stifixed906cert_js.txt STI CLASSIC FIXED INCOME 906 CERTIFICATION JS CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 The undersigned, the CFO of STI CLASSIC FUNDS (the "Fund"), with respect to the Form N-CSR for the period ended MAY 31, 2004 as filed with the Securities and Exchange Commission, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certifies that, to the best of my knowledge: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. Dated: 07/26/04 /s/ Jennifer E. Spratley ------------------------ Jennifer E. Spratley -----END PRIVACY-ENHANCED MESSAGE-----