-----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, LHxn+sIF4ov+V3ldaY/GJvIuBsERUX/ZBSuEfsMM07kdgSFTycpkKzAFUCt1XKiN W4zinQaWBt7r8XH5XK9C3A== 0000935069-99-000010.txt : 19990201 0000935069-99-000010.hdr.sgml : 19990201 ACCESSION NUMBER: 0000935069-99-000010 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STI CLASSIC FUNDS CENTRAL INDEX KEY: 0000883939 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06557 FILM NUMBER: 99515862 BUSINESS ADDRESS: STREET 1: 2 OLIVER STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6109896602 MAIL ADDRESS: STREET 1: 530 E SWEDESFORD ROAD CITY: WAYNE STATE: PA ZIP: 19087-1693 N-30D 1 STI CLASSIC INSTITUTIONAL SEMI-ANNUAL REPORT SEMI-ANNUAL - -------------------------------------------------------------------------------- FINANCIAL REPORT - -------------------------------------------------------------------------------- STI CLASSIC FUNDS - -------------------------------------------------------------------------------- A Family of Mutual Funds - -------------------------------------------------------------------------------- Classic Institutional Cash Management Money Market Fund Classic Institutional U.S. Treasury Securities Money Market Fund November 30, 1998 STI Classic Funds STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS November 30, 1998 Unaudited Classic Institutional Cash Management Money Market Fund - ------------------------------------------------------------- Face Amount(000) Value (000) - ------------------------------------------------------------- Commercial Paper (28.9%) Finance (20.3%) American Express 4.950%, 12/18/98 $ 2,800 $ 2,793 Banc One Funding 5.150%, 12/08/98 1,979 1,977 5.130%, 01/28/99 6,623 6,568 5.280%, 01/28/99 9,000 8,923 Barclays U.S. Funding 5.180%, 01/07/99 15,000 14,920 Chrysler Financial 5.240%, 02/11/99 10,000 9,895 Dresdner U.S. Finance 5.190%, 01/08/99 10,000 9,945 GMAC 5.240%, 02/11/99 8,500 8,411 KFW International 5.000%, 12/04/98 1,100 1,100 5.300%, 12/07/98 600 599 4.950%, 12/07/98 500 500 5.250%, 12/08/98 300 300 Marsh & Mclennan 5.230%, 02/24/99 15,000 14,815 5.290%, 02/24/99 2,700 2,666 Metlife Funding 4.950%, 12/03/98 254 254 Morgan Stanley Dean Witter 5.200%, 01/21/99 10,000 9,926 Panasonic Finance 5.330%, 01/21/99 100 99 5.380%, 01/21/99 15,000 14,886 Republic New York 5.190%, 01/15/99 10,000 9,935 Royal Bank of Canada 5.450%, 01/15/99 1,000 993 -------- 119,505 -------- - ------------------------------------------------------------- Face Amount(000) Value (000) - ------------------------------------------------------------- Industrial (8.6%) Allied Signal 5.550%, 01/21/99 $14,050 $ 13,940 5.550%, 01/25/99 2,500 2,479 Archer Daniels 5.150%, 01/15/99 470 467 Eastman Kodak 5.400%, 12/02/98 2,600 2,600 Heinz 5.150%, 12/03/98 535 535 IBM 5.500%, 12/04/98 650 650 Motorola 4.950%, 12/08/98 900 899 JC Penney Funding 5.250%, 12/18/98 493 492 RTZ America 5.000%, 12/11/98 1,230 1,228 5.230%, 12/16/98 5,200 5,189 5.330%, 01/21/99 100 99 5.350%, 01/22/99 4,800 4,763 Sara Lee 5.000%, 12/09/98 5,000 4,994 Smithkline Beecham 5.000%, 12/02/98 300 300 4.950%, 12/11/98 10,900 10,885 Toys R Us 5.250%, 12/10/98 300 300 Walt Disney 5.550%, 12/04/98 515 515 -------- 50,335 -------- Utilities (0.0%) Bell Atlantic 5.000%, 12/11/98 100 100 -------- Total Commercial Paper (Cost $169,940) 169,940 -------- 1 STATEMENT OF NET ASSETS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS November 30, 1998 Classic Institutional Cash Management Money Market Fund--continued - ------------------------------------------------------------ Face Amount(000) Value(000) - ------------------------------------------------------------ Corporate Obligations (16.8%) Finance (14.7%) Associates, MTN 5.650%, 12/01/98 $ 1,000 $ 1,000 Bankers Trust, New York (B) (C) 5.379%, 02/19/99 7,000 7,000 British Telecom Finance 9.375%, 02/15/99 1,000 1,007 Caterpillar Financial Services, MTN (C) 5.160%, 05/09/99 5,000 5,000 Caterpillar Financial Services, MTN 5.470%, 12/15/98 750 750 6.800%, 07/01/99 250 253 Dean Witter Discover 5.030%, 03/02/99 4,990 4,983 Deutsche Bank, New York (C) 5.120%, 04/14/99 5,000 4,999 FCC National Bank (A) (C) 5.120%, 04/09/99 5,000 4,999 Ford Motor Credit 8.000%, 01/15/99 1,000 1,003 6.375%, 09/15/99 500 506 General Motors Acceptance 7.750%, 01/15/99 500 501 GMAC, MTN 7.150%, 04/30/99 1,000 1,005 Household Finance (A) 4.780%, 03/15/99 3,000 2,992 IBM Credit (A) 5.450%, 09/15/99 10,000 10,000 International Lease Finance 5.750%, 01/15/99 752 752 6.700%, 04/30/99 300 302 International Lease Finance, MTN 5.960%, 07/07/99 500 500 - ------------------------------------------------------------- Face Amount(000) Value (000) - ------------------------------------------------------------- Finance--continuued Nationsbank 8.500%, 03/01/99 $ 1,000 $ 1,006 Nationsbank (A) 5.190%, 08/06/99 10,000 10,010 PNC Bank (A) 5.116%, 08/03/99 10,000 9,996 Salomon Smith Barney, MTN 6.050%, 12/17/98 2,000 2,001 Transamerica Financial (A) 5.450%, 10/22/99 13,500 13,500 Transamerica, MTN (C) 5.427%, 02/18/99 1,500 1,500 Xerox Credit 10.000%, 04/01/99 780 790 -------- 86,355 -------- Industrial (0.4%) Fortune Brands 7.500%, 05/15/99 1,025 1,032 IBM, MTN 6.150%, 12/11/98 1,000 1,000 -------- 2,032 -------- Utilities (1.7%) Alabama Power 7.000%, 01/01/03 4,500 4,544 GTE Northwest 6.125%, 02/15/99 650 650 Hydro-Quebec Yankee, MTN 7.430%, 12/14/98 1,000 1,001 7.740%, 03/03/99 1,000 1,005 Pacific Gas & Electric 5.750%, 12/01/98 1,000 1,000 Southern California Edison 7.500%, 04/15/99 505 508 Virginia Electric & Power 8.875%, 06/01/99 450 457 2 - -------------------------------------------------------------------------------- Unaudited - ------------------------------------------------------------- Face Amount(000) Value(000) - ------------------------------------------------------------- Utilities--continued Virginia Electric & Power, MTN 9.650%, 01/25/99 $ 990 $ 995 -------- 10,160 -------- Total Corporate Obligations (Cost $98,547) 98,547 -------- Certificates of Deposit (9.0%) Bayerische Landesbank, New York (C) 5.108%, 04/21/99 10,000 9,998 Commerzbank (C) 5.130%, 04/14/99 10,000 9,999 Deutsche Bank, New York 5.640%, 03/23/99 4,000 3,999 Rabobank 5.750%, 04/27/99 8,000 7,998 Societe Generale, New York 5.580%, 02/10/99 2,000 2,000 5.800%, 04/28/99 9,000 8,996 SBC Warburg, New York 5.650%, 03/24/99 5,000 4,999 5.810%, 04/29/99 5,000 4,999 -------- Total Certificates of Deposit (Cost $52,988) 52,988 -------- Asset-Backed Securities (10.6%) Americredit Auto Recievables Trust, Ser 1998-B Cl A1 5.629%, 06/12/99 1,441 1,441 5.638%, 09/12/99 2,886 2,886 5.199%, 11/12/99 8,000 8,000 Arcadia Auto Receivables Trust, Ser 1998-B Cl A1 5.470%, 02/16/99 13,197 13,197 5.628%, 07/15/99 1,562 1,562 - ------------------------------------------------------------- Face Amount(000) Value (000) - ------------------------------------------------------------- Asset-Backed Securities--continuued Case Equipment Loan Trust, Ser 1998-C Cl A1 5.420%, 12/15/99 $10,400 $ 10,400 Chase Manhattan Auto Owner Trust, Ser 1999-B Cl A1 5.578%, 05/10/99 778 778 Compass Auto Receivables Trust, Ser 1998-A Cl A1 5.659%, 07/15/99 1,583 1,583 First Security Auto Owner Trust, Ser 1998-1 Cl A1 5.248%, 11/15/99 2,344 2,344 Ford Credit Auto Owner Trust, Ser 1998-B Cl A1 5.615%, 05/15/99 228 228 Household Automobile Revolving Trust, Ser 1998-1, Cl A1 5.330%, 12/17/99 18,000 18,000 Union Acceptance, Ser 1998-C, Cl A1 5.527%, 10/08/99 1,685 1,685 -------- Total Asset-Backed Securities (Cost $62,104) 62,104 -------- Bank Notes (8.2%) American Express Centurion (A) 5.223%, 08/09/99 5,000 5,000 American Express Centurion (C) 5.169%, 03/24/99 5,000 5,000 First National Bank, Chicago (C) 5.110%, 04/19/99 10,000 9,998 Key Bank NA (A) 5.160%, 05/05/99 18,000 17,997 Northern Trust (C) 5.120%, 04/09/99 10,000 9,999 -------- Total Bank Notes (Cost $47,994) 47,994 -------- 3 STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- STI CLASSIC FUNDS November 30, 1998 Classic Institutional Cash Management Money Market Fund--concluded - ------------------------------------------------------------- Face Amount(000) Value(000) - ------------------------------------------------------------- U.S. Government Agency Obligations (4.9%) Federal Farm Credit, MTN (C) 4.540%, 03/02/99 $ 10,000 $ 9,999 FHLB (A) 5.030%, 04/09/99 1,000 1,000 FHLMC REMIC, Ser 1314-JB 7.500%, 02/15/06 789 789 FNMA 7.050%, 12/10/98 110 110 SLMA, MTN (C) 5.000%, 04/01/99 5,000 4,999 SLMA (A) 4.780%, 08/02/99 12,000 11,975 -------- Total U.S. Government Agency Obligations (Cost $28,762) 28,872 -------- Foreign Government Agency Obligation (0.4%) Province of Quebec 9.375%, 04/01/99 2,200 2,228 -------- Total Foreign Government Agency Obligation (Cost $2,228) 2,228 -------- Repurchase Agreements (24.2%) Barclays 5.390%, dated 11/30/98, matures 12/01/98, repurchase price $68,701,936 (collateralized by FHLB obligations: total market value $70,065,881) (D) 68,692 68,692 Deutsche Bank 5.390%, dated 11/30/98, matures 12/01/98 repurchase price $21,160,295 (collateralized by FHLMC obligations: total market value $21,580,434) (D) 21,157 21,157 - ------------------------------------------------------------- Face Amount(000) Value (000) - ------------------------------------------------------------- Repurchase Agreements--continued Merrill Lynch 5.390%, dated 11/30/98, matures 12/01/98, repurchase price $29,940,674 (collateralized by FHLB and FNMA obligations: total market value $30,536,475) (D) $29,936 $ 29,936 Morgan Stanley 5.390%, dated 11/30/98, matures 12/01/98, repurchase price $5,000,749 (collateralized by FNMA obligation: total market value $5,673,424) (D) 5,000 5,000 Salomon Brothers 5.390%, dated 11/30/98, matures 12/01/98, repurchase price $17,458,044 (collateralized by various FHLMC and FNMA obligations: total market value $17,907,861) (D) 17,455 17,455 -------- Total Repurchase Agreements (Cost $142,240) 142,240 -------- Total Investments (103.0%) (Cost $604,913) 604,913 -------- Other Assets and Liabilities, Net (-3.0%) (17,463) -------- Net Assets: Fund shares of the Institutional Class (unlimited authorization -- no par value) based on 587,451,388 outstanding shares of beneficial interest 587,451 Overdistributed Net Investment Income (1) -------- Total Net Assets 100.0% $587,450 ======== Net Asset Value, Offering and Redemption Price Per Share -- Trust Shares $ 1.00 ======== The accompanying notes are an integral part of the financial statements. For descriptions of abbreviations, please see page 6. 4 - -------------------------------------------------------------------------------- Unaudited Classic Institutional U.S. Treasury Securities Money Market Fund - ------------------------------------------------------------- Face Amount(000) Value(000) - ------------------------------------------------------------- U.S. Treasury Obligation (4.8%) U.S. Treasury Note 6.375%, 05/15/99 $10,000 $ 10,031 -------- Total U.S. Treasury Obligation (Cost $10,031) 10,031 -------- Cash Equivalent (3.8%) AIM Management Institutional Treasury Portfolio (C) 8,000 8,000 -------- Total Cash Equivalent (Cost $8,000) 8,000 -------- Repurchase Agreements (68.1%) Barclays 5.250%, dated 11/30/98, matures 12/01/98, repurchase price $9,009,218 (collateralized by U.S. Treasury Note: market value $9,188,389) (D) 9,008 9,008 Duetsche Bank, 5.250%, dated 11/30/98, matures 12/01/98, repurchase price $8,322,400 (collateralized by U.S. Treasury Note: market value $8,488,193) (D) 8,321 8,321 Greenwich 5.250%, dated 11/30/98, matures 12/01/98, repurchase price $8,887,963 (collateralized by U.S. Treasury STRIPS: market value $9,065,706) (D) 8,887 8,887 Merrill Lynch 5.250%, dated 11/30/98, matures 12/01/98, repurchase price $9,854,790 (collateralized by U.S. Treasury STRIPS: market value $10,051,323) (D) 9,853 9,853 - ------------------------------------------------------------- Face Amount(000) Value (000) - ------------------------------------------------------------- Morgan Stanley 5.250%, dated 11/30/98, matures 12/01/98, repurchase price $9,832,471 (collateralized by various U.S. Treasury obligations: total market value $10,051,963) (D) $ 9,831 $ 9,831 Salomon Brothers 5.250%, dated 11/30/98, matures 12/01/98, repurchase price $47,878,234 (collateralized by U.S. Treasury Note: market value $48,833,273) (D) 47,871 47,871 SBC Warburg 5.250%, dated 11/30/98, matures 12/01/98, repurchase price $49,031,289 (collateralized by various U.S. Treasury obligations: total market value $50,008,204) (D) 49,024 49,024 -------- Total Repurchase Agreements (Cost $142,795) 142,795 -------- Total Investments (76.7% of Net Assets) (Cost $160,826) 160,826 -------- The accompanying notes are an integral part of the financial statements. For descriptions of abbreviations, please see page 6. 5 - ------------------------------------------------------------------------------- Key to Abbreviations used in the Statement of Net Assets/Schedule of Investments Cl Class FHLB Federal Home Loan Bank FHLMC Federal Home Loan Mortgage Corporation FNMA Federal National Mortgage Association MTN Medium Term Note REMIC Real Estate Mortgage Investment Conduit Ser Series SLMA Student Loan Marketing Association STRIPS Separately Traded Registered Interest and Principal Security (A) Private Placement Security (B) Securities are held in connection with a letter of credit issued by a major bank. (C) Variable rate security. The rate reported on the Statement of Net Assets is the rate in effect on November 30, 1998. (D) Tri-Party Repurchase Agreement The accompanying notes are an integral part of the financial statements. 6
STATEMENT OF ASSETS AND LIABILITIES (000) - -------------------------------------------------------------------------------------------------------------------------- STI CLASSIC FUNDS November 30, 1998 Unaudited Classic Institutional U.S. Treasury Securities Money Market Fund ------------------------ Assets: Investments at market value (Cost $160,826) .................................................. $160,826 Accrued income ............................................................................... 819 Receivables for investment securities sold ................................................... 49,685 Other assets ................................................................................. 13 -------- Total Assets.................................................................................. 211,343 -------- Liabilities: Accrued expenses ............................................................................. (11) Distribution payable ......................................................................... (801) Other liabilities ............................................................................ (784) -------- Total Liabilities ............................................................................ (1,596) -------- Net Assets: Fund Shares of the Institutional Class (unlimited authorization -- no par value) based on 209,739,934 outstanding shares of beneficial interest ............................. 209,740 Accumulated net realized gain on investments ................................................. 7 -------- Total Net Assets ............................................................................. $209,747 ======== Net Asset Value, Offering and Redemption Price Per Share -- Institutional Shares .............. $ 1.00 ========
7
STATEMENT OF OPERATIONS (000) - ------------------------------------------------------------------------------------------------------------ STI CLASSIC FUNDS For The Period Ended November 30, 1998 Unaudited Classic Classic Institutional Institutional Cash Management U.S. Treasury Money Market Securities Money Fund Market Fund --------------- ---------------- 06/01/98- 06/01/98- 11/30/98 11/30/98 ---------- --------- Income: Interest Income ...................................................... $13,913 $5,410 ------- ------ Expenses: Investment Advisory Fees ............................................. 504 203 Investment Advisory Fees Waived ...................................... (217) (105) Administrator Fees ................................................... 198 80 Administrator Fees Waived ............................................ (50) (20) Transfer Agent Fees .................................................. 13 7 Transfer Agent Out of Pocket ......................................... 20 6 Printing Fees ........................................................ 11 8 Custody Fees ......................................................... 11 6 Professional Fees .................................................... 13 1 Trustee Fees ......................................................... -- -- Registration Fees .................................................... 3 8 Insurance and Other Fees ............................................. -- 11 Amortization of Deferred Organizational Costs ........................ (2) (2) ------- ------ Total Expenses ..................................................... 504 203 ------- ------ Net Investment Income .............................................. 13,409 5,207 ------- ------ Net Realized Gain on Securities Sold ............................... -- 4 ------- ------ Increase in Net Assets Resulting from Operations ........................ $13,409 $5,211 ======= ======
Amounts designated as "--" are either $0 or round to $0. The accompanying notes are an integral part of the financial statements. 8
STATEMENT OF CHANGES IN NET ASSETS (000) - ----------------------------------------------------------------------------------------------------------------------- STI CLASSIC FUNDS For The Period Ended November 30, 1998 Unaudited Classic Classic Institutional Institutional Cash Management U.S. Treasury Money Market Securities Money Fund Market Fund ----------------------- --------------------- 06/01/98- 06/01/97- 06/01/98- 06/01/97- 11/30/98 05/31/98 11/30/98 05/31/98 --------- --------- --------- --------- Operations: Net Investment Income ............................................ $ 13,409 $ 16,700 $ 5,207 $ 5,596 Net Realized Gain on Investments ................................. -- -- 4 4 --------- --------- --------- -------- Increase in Net Assets Resulting from Operations ............... 13,409 16,700 5,211 5,600 --------- --------- --------- -------- Distributions to Shareholders: Net Investment Income ............................................ (13,410) (16,700) (5,207) (5,596) --------- --------- --------- -------- Total Distributions ........................................... (13,410) (16,700) (5,207) (5,596) --------- --------- --------- -------- Share Transactions: Proceeds from Shares Issued .................................... 1,084,627 1,549,940 565,486 991,131 Reinvestments of Cash Distributions ............................ 11,720 11,287 3,716 4,231 Cost of Shares Redeemed ........................................ (883,698) (1,582,098) (499,793) (875,270) --------- --------- --------- -------- Increase (Decrease) in Net Assets from Share Transactions .... 212,649 (20,871) 69,409 120,092 --------- --------- --------- -------- Total Increase (Decrease) in Net Assets ..................... 212,648 (20,871) 69,413 120,096 --------- --------- --------- -------- Net Assets: Beginning of Period .............................................. 374,802 395,673 140,334 20,238 --------- --------- --------- -------- End of Period .................................................... $ 587,450 $ 374,802 $ 209,747 $ 140,334 ========= ========= ========= ========= Shares Issued and Redeemed: Shares Issued .................................................. 1,084,627 1,549,940 565,486 991,131 Shares Issued in Lieu of Cash Distributions .................... 11,720 11,287 3,716 4,231 Shares Redeemed ................................................ (883,698) (1,582,098) (499,793) (875,270) --------- --------- --------- -------- Net Share Transactions ........................................... 212,649 (20,871) 69,409 120,092 ========= ========= ========= ========
Amounts designated as "--" are either $0 or round to $0. The accompanying notes are an integral part of the financial statements. 9 FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- STI CLASSIC FUNDS For the Period Ended November 30 and the Years Ended May 31. For a Share Outstanding Throughout the Period
Net Net Realized Net Asset Value Investment Gains (Losses) Distributions from Distributions from Beginning of Period Income on Investments Net Investment Income Realized Capital Gains ------------------- ---------- -------------- --------------------- ---------------------- Classic Institutional Cash Management Money Market Fund Institutional Shares 1998** $1.00 $ 0.03 $ -- $(0.03) $ -- 1998 1.00 0.05 -- (0.05) -- 1997(A) 1.00 0.02 -- (0.02) --
Classic Institutional U.S. Treasury Securities Money Market Fund Institutional Shares 1998** $1.00 $ 0.03 $ -- $(0.03) $ -- 1998 1.00 0.05 -- (0.05) -- 1997(A) 1.00 0.02 -- (0.02) --
(A) Commenced operations on December 12, 1996. * Total return is for the period indicated and has not been annualized. ** For the six month period ended November 30, 1998. All ratios have been annualized. The accompanying notes are an integral part of the financial statements. 10
- ----------------------------------------------------------------------------------------------------------------------------------- Unaudited Net Assets Net Assets Ratio of Value End Total End of Expenses to of Period Return Period (000) Average Net Assets --------- ------ ------------ ------------------ 1998** $1.00 2.07%* $ 587,450 0.20% 1998 1.00 5.63 374,802 0.16 1997(A) 1.00 2.51* 395,673 0.06 1998** $1.00 2.61%* $ 209,747 0.20% 1998 1.00 5.50 140,334 0.18 1997(A) 1.00 2.46* 20,238 0.09 Ratio of Ratio of Net Investment Ratio of Expenses to Income to Net Investment Average Net Assets Average Net Assets Income to (Excluding Waivers (Excluding Waivers Average Net Assets and Reimbursements) and Reimbursements) ------------------ ------------------ ------------------ 1998** 5.32% 0.31% 5.21% 1998 5.49 0.30 5.35 1997(A) 5.49 0.52 5.03 1998** 5.13% 0.32% 5.01% 1998 5.34 0.38 5.14 1997(A) 5.27 0.51 4.85
The accompanying notes are an integral part of the financial statements. 11 NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- STI CLASSIC FUNDS November 30, 1998 1. Organization: The STI Classic Funds (the "Trust") was organized as a Massachusetts business trust under a Declaration of Trust dated January 15, 1992. The Trust is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company with twenty-three portfolios: the Balanced Fund, the Capital Growth Fund, the Emerging Markets Equity Fund, the International Equity Fund, the International Equity Index Fund, the Mid-Cap Equity Fund, the Small Cap Equity Fund, the Small Cap Growth Stock Fund, the Sunbelt Equity Fund, the Value Income Stock Fund, the Florida Tax-Exempt Bond Fund, the Georgia Tax-Exempt Bond Fund, the Investment Grade Bond Fund, the Investment Grade Tax-Exempt Bond Fund, the Limited-Term Federal Mortgage Securities Fund, the Short-Term Bond Fund, the Short-Term U.S. Treasury Securities Fund, and the U.S. Government Securities Fund, (collectively the "Non-Dollar Funds"), the Prime Quality Money Market Fund, the Tax-Exempt Money Market Fund, the U.S. Government Securities Money Market Fund, the Classic Institutional Cash Management Money Market Fund and the Classic Institutional U.S. Treasury Securities Money Market Fund, (collectively the "Money Market Funds"). The assets of each portfolio are segregated, and a shareholder's interest is limited to the Fund in which shares are held. Each Fund's prospectus provides a description of the Fund's investment objectives, policies and strategies. The financial statements of the Classic Institutional Cash Management Money Market Fund and the Classic Institutional U.S. Treasury Securities Fund (collectively the "Funds") are included herein. The financial statements of the remaining Funds are presented separately. 2. Significant Accounting Policies: The following is a summary of significant accounting policies followed by the Trust: Security Valuation -- Investment securities held by the Funds are stated at amortized cost, which approximates market value. Federal Income Taxes -- It is each Fund's intention to qualify as a regulated investment company for Federal income tax purposes and distribute all of its taxable income and net capital gains. Accordingly, no provisions for Federal income taxes are required. Security Transactions and Investment Income -- Security transactions are accounted for on the date the security is purchased or sold (trade date). Interest income is recognized on an accrual basis. Costs used in determining net realized gains and losses on the sales of investment securities are those of the specific securities sold adjusted for the accretion and amortization of purchase discounts and premiums during the respective holding period. Purchase discounts and premiums on securities held by the Funds are accreted and amortized ratably to maturity and are included in interest income. Repurchase Agreements -- Securities pledged as collateral for repurchase agreements are held by the custodian bank until the respective agreements mature. Provisions of the repurchase agreements ensure that the market value of the collateral, including accrued interest thereon, is sufficient in the event of default of the counterparty. If the counterparty defaults and the value of the collateral declines or if the counterparty enters into an insolvency proceeding, realization of the collateral by the Funds may be delayed or limited. 12 - -------------------------------------------------------------------------------- Unaudited Net Asset Value Per Share -- The net asset value per share of each Fund is calculated each business day, by dividing the total value of each Fund's assets, less liabilities, by the number of shares outstanding. Other -- Expenses that are directly related to a specific Fund are charged to that Fund. Class specific expenses are borne by that class. Other operating expenses of the Trust are pro-rated to the Funds on the basis of relative net assets. Fund expenses are pro-rated to the respective classes on the basis of relative net assets. Distributions from net investment income of each of the Funds are declared on each business day and paid to shareholders on a monthly basis. Any net realized capital gains on sales of securities are distributed to shareholders at least annually. Use of Estimates -- The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from these estimates. 3. Organization Costs and Transactions with Affiliates: The Trust incurred organization costs of approximately $808,836 including approximately $395,594 relating to state registration fees. These costs have been deferred in the accounts of the Funds and are being amortized on a straight line basis over a period of sixty months commencing with operations with the exception of state registration fees, which are being amortized over a period of twelve months. The costs include legal fees of approximately $60,383 for organizational work performed by a law firm of which two officers of the Trust are partners. On March 18, 1992, the Trust sold initial shares of beneficial interest to SEI Investments Mutual Fund Services, (the "Administrator"). In the event any of the initial shares of the Trust are redeemed by any holder thereof during the period that the Trust is amortizing its organizational costs, the redemption proceeds payable to the holder thereof will be reduced by the unamortized organizational costs in the same ratio as the number of initial shares being redeemed bears to the number of initial shares outstanding at the time of redemption. In April 1998, the AICPA issued Statement of Position (SOP) No. 98-5, "Reporting on the Costs of Start-Up Activities." This SOP provides guidance on the financial reporting of start-up costs and organization costs and requires costs of start-up activities and organization costs to be expensed as incurred. Investment companies that began operations prior to June 30, 1998 can adopt the SOP prospectively. Therefore, previously capitalized organization costs will continue to be amortized as discussed above. Any future start-up or organization costs will be expensed as incurred. Certain officers of the Trust are also officers of the Administrator and/or SEI Investments Distribution Co. (the "Distributor"). Such officers are paid no fees by the Trust for serving as officers of the Trust. 4. Administration and Transfer Agency Servicing Agreements: The Trust and the Administrator are parties to an Administration Agreement dated May 29, 1995, as amended November 19, 1997, under which the Administrator provides administrative services for an annual fee (expressed as a percentage of the combined average daily net assets of the Trust and 13 NOTES TO FINANCIAL STATEMENTS (concluded) - ------------------------------------------------------------------------------- STI CLASSIC FUNDS November 30, 1998 Unaudited STI Classic Variable Annuity Trust) of: .12% up to $1 billion, .09% on the next $4 billion, .07% on the next $3 billion, .065% on the next $2 billion and .06% for over $10 billion. The Trust and Federated Services Company are parties to a Transfer Agency servicing agreement dated May 14, 1994 under which Federated Services Company provides transfer agency services to the Trust. 5. Investment Advisory and Custodian Agreements: The Trust and Trusco Capital Management, Inc. (the "Investment Advisor") have entered into an advisory agreement dated July 15, 1993. Under terms of the respective agreements, the Funds are charged the following annual fees based upon average daily net assets: Maximum Institutional Annual Share Advisory Maximum Fee Expense -------- ----------- Classic Institutional Cash Management Money Market Fund .20% .20% Classic Institutional U.S. Treasury Money Market Fund .20% .20% The Investment Advisor and the Administrator have voluntarily agreed to waive all or a portion of their fees (and to reimburse Funds' expenses) in order to limit operating expenses to an amount as outlined in the table above. Fee waivers and expense reimbursements are voluntary and may be terminated at any time. SunTrust Bank, Atlanta, formerly Trust Company Bank, acts as custodian for the Funds. Fees of the Custodian are paid on the basis of the net assets of the Funds. The Custodian plays no role in determining the investment policies of the Trust or which securities are to be purchased or sold in the Funds. 6. Concentration of Credit Risk: The Classic Institutional Cash Management Money Market Fund invests in high quality money market instruments issued by corporations and the U.S. Government and rated by one or more nationally recognized statistical rating organizations, or, if not rated determined by the Investment Advisor to be of comparable quality. The Classic U.S. Treasury Securities Money Market Fund invests in U.S. Treasury Obligations, which are backed by the full faith and credit of the U.S. Government and repurchase agreements with approved dealers collateralized by U.S. Treasury securities. 7. Subsequent Event: On July 20, 1998 it was announced that Crestar Financial Corporation ("Crestar"), the parent of Crestar Bank, and SunTrust Banks, Inc. ("SunTrust") had signed a definitive agreement for the acquisition of Crestar by SunTrust. The acquisition of Crestar by SunTrust was completed on December 31, 1998. It is currently the intention of Crestar and SunTrust to file an exemptive application with the Securities and Exchange Commission to permit the combination of certain of the CrestFunds with certain of the STI Classic Funds (mutual funds that are served by investment advisers that are subsidiaries of SunTrust). Any combination of CrestFunds and STI Classic Funds would require the approval of the board of directors and the shareholders of the CrestFunds. 14 NOTES NOTES INVESTMENT ADVISOR Trusco Capital Management, Inc. STI Classic Funds are not deposits, are not insured or guaranteed by the FDIC or any other government agency, and are not endorsed by and do not constitute obligations of SunTrust Banks, Inc. or any other of its affiliates. Investment in the Funds involves risk, including the possible loss of principal. There is no guarantee that any STI Classic Fund will achieve its investment objective. The STI Classic Funds are advised by affiliates of SunTrust Banks, Inc. DISTRIBUTOR SEI Investments Distribution Co. This information must be preceded or accompanied by a current prospectus for each Fund described. -----END PRIVACY-ENHANCED MESSAGE-----