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Home My WebLink AboutSTI Capital Management Investment Performance Report 03/31/98i • • • • • • • • • • City of Winter Springs Money Purchase Plan Investment Performance Report March 31, 1998 STI Capital Management Summary Performance for WINTER SPGS, CITY OF-MPPP IM For the Period Ended March 31, 1998 Inception to Date 3 Months 6 Months (55 Months) Total Return 8.72% 9.08% 15.39% Current Asset Allocation Equity Assets 70.92% Fixed Assets 28.12% Cash Equivalent .96% Comparisons High Grade Equity 15.45% 19.65% 22.30% S&P 500 Index 13.95% 17.22% 23.64% High Grade Eq Income 12.30% 12.84% 21.89% STI Small Cap Equity 9.67% 7.36% Russell 2000 Val Indx 8.36% 10.18% 19.39% STI Mid-Cap Equity 8.75% 6.29% S&P Mid Cap 400 Index 1 I.OI% 11.94% 19.84% STI Intl Eq Fund 15.17% 6.20% MSC[ EAFE Index 14.44% 5.47% 8.60% High Grade Bond 1.66% 5.23% 6.36% Lehman Govt/Corp Indx 1.52% 4.78% 6.24% Lehman Aggregate Bnd 1.54% 4.53% 6.45% STI Classic Fund resuhs are reponed after prospectus level investment manage ment and administrative fees. Your actual fees may be different. Longer term results for the STI Classic Funds are linked with similar SunTrnst Common Trust Funds to show results prior to the inception of the STI Classic Funds. Prior common trnst fund results are reported after investment management fees at the same rate as the similar STI Classic Fund. All returns reflect reinvestment of all distributions. Inveshnent results reflect past performance and are not indi cative of future retums. • • • • • • STI Capital Management Cash Flow Report WINTER SPGS, CITY OF-MPPP IM For the 6 Months Ending: 03/31/98 Portfolio Value on 09/30/97 Contributions Withdrawals Gain (Loss) Interest and Dividends Portfolio Value on 03/31/98 Total Return Equities High Grade Equity S&P 500 [ndex High Grade Eq Income STI Small Cap Equity Russell 2000 Val Indx STI Mid-Cap Equity S&P Mid Cap 400 Index STI Intl Eq Fund MSCI EAFE Index Fixed Income High Grade Bond Lehman Govt/Core Indx Lehman Aggregate Bnd $2,680,077.71 $ 253,685.85 $ -32,591.38 $ 150,389.10 $ 110,799.76 $3,162,361.04 9.08% 10.77% 19.65% 17.22% 12.84% 7.3 6% 10.18% 6.29% 11.94% 6.20% 5.47% 5.24% 5.23% 4.78% 4.53% • • • • Asset Allocation WINTER SPGS, CITY OF-MPPP IM Period Ending 03/31/98 Asset Securities Units Book Value Price Market Value Alloc Equity Assets Cap. Growth SUNTRUST HI GRD EQUITY 12,173.00 $21 1,332.17 39.55 $481,447.40 15.22% Value Income SUNTRUST H[ GD EQ INC 18,364.00 $266,729.54 26.11 $479,435.03 15.16% MidCap STI MID-CAP EQUITY FUND 36,773.00 $527,046.60 14.05 $516,665.29 16.34% Intl Equity STI INTL EQUITY FUND 16,452.00 $227,859.58 14.50 $238,561.11 7.54% Small Cap STI SMALL CAP EQTY FUND 39,507.00 $489,042.79 13.33 $526,624.44 16.65% Sub-Total for Equity Assets $1,722,010.68 $2,242,733.27 70.92% Fixed Assets Fixed Fds SUNTRUST HI GRD BOND 42,726.00 $735,284.99 20.81 $889,287.94 28.12% Sub-Total for Fixed Assets $735,284.99 $889,287.94 28.12% Cash Equivalent Cash UNINVESTED CASH $.00 1.00 $.83 .00% Money Mkt Fds CASH MGMT FUND 30,339.00 $30,339.00 1.00 $30,339.00 .96% Sub-Total for Cash Equivalent $30,339.00 $30,339.83 .96% Total for Account # 56825788 $2,487,634.67 $3,162,361.04 100.00% ,) ~: . _ 1 Iltll~f sil1:~~ -_ -. ... ~ ,~`'~. .~~f~ ~, "' _, a •t ~; - 4 STI C~~1~ . ~a ~ _- ~ -- ~i~'~ • 1 1 1 1 lower Higher Characteristic Fund SiP MidCap 400 Plus/Miaus • O O O • O Dividend Yield (current) 0.5 1.1 - • Earnings Per Share Growth (5 year estimate) 22.6 17.8 + 1 1 1 Market Capitalization ($bil) 2.4 4.0 • fund Category Price-to-Book 4.5 3.8 + Lipper Mid Cap Price-to-Earnings (12 months trailing) 27.3 28.4 • Fund Objective Return on Equity 16.2 16.3 • The fund seeks long-term capital growth and income by investing in the stocks of compa- • Hies with a market capitalization between 1 1 1 $500 million and $5 billion. • ~ ProCass ;~ STI Classic Mid~ap Equity Fund '>::; S&P MidCap 400 The fund's managers use abottom-up stock • selection process to find high quality compa- nieswith ahistory of earnings growth, which • appear historicaly undervalued relative to the market. • Summary Dsscriptioa • Primarily irrvests in mid-size companies • • Focuses on high quality stocks • Growthorientation • • Bottom-up stock selection process • rickar Symbd sAGTx • 1 1 1 -. • sac,lritr Percelrt of Dsseriptlon total Equigr i%I • US Fitter Corp. 4.28 Allied Waste Inds Inc. 3.43 • LCI International Inc. 3.01 1 1 1 1 1 1 • Harley Davidson Inc. 2.82 Interstate Bakeries Corp. 2.71 • Roval Caribbean Cruises Ltd. 2.68 Flextronics International Ltd. 2.54 • Mens Wearhouse Inc. 2.33 Sawtek Inc. 2.32 • Cracker Barrel Old Country Store 2.28 • STI Classic Funds: • Are not insured by the FDIC. For the most current information on the portfolio, please call STI Capital Management at 1-804926-4STI. • • Do not have a bank guarantee. • May lose value. During the first quarter, the most consis tent winning group was retailing. Staples, an office supplier, was up 25% during the quarter while BJ Wholesale Club, a warehouse club operator based in the Northeast, was up 24%. Herman Miller, an office furniture retailer, was up 23% while Ralph Lauren was up 24%. Part of the reason for the good perfor- mance was simply abounce-back from the weak fourth quarter for many of these compa- nies. In addition, consumer spending has been robust in the first quarter. Unemployment is krw, inflation Is almost rwn-existent and the stock market is raging ahead, making corn sumers feel wealthy. Another group that performed well was the leisure group. One of the best performers was Royal Caribbean Cruise Lines, up 32%, as the vacation cruise business continues to show strong bookings. International Speedway, the manager of the Daytona Race Track and sever- al other tracks, was up 30% as auto racing con- tinues to surge in popularity. The health care area produced some poor results during the quarter. MedPartners, a physician practice management comparry, called off its merger with Phycor, and then announced problems on the West coast with some of its medical practices. Duna Pharmaceuticals announced that revenues were IigM in the quarter. The company increased the sales force to ramp up some new products, which initially hurt profits. Both stocks fell sharply. The technology area was mixed. SoRware companies with little exposure to Asia performed better than hardware manufacturers that were more dependent on those markets. M idcap stocks continue to offer greater earnings growth, yet still sell at a discount to the large cap stocks. We believe that U.S. cor- porate profrt growth will slow in 1998, but the profit slowdown will be less pronounced in the midcap area. Mnaaruoed Since Three One Two Three Inception Months Ysar Years Years 0?/02/94 Fund 8.75 35.76 21.09 22.47 17.64 _ Upper Mid Cap Fd Index 12.65 41.84 20.22 24.43 S&P MidCap 400 Index 11.01 49.03 28.40 28.43 1984 1995 1986 1997 1998 First Quarter 8.71 3.78 -2.89 8.75 Second Quarter -3.66 8.98 1.95 11.82 Third Quarter 6.10 8.52 3.59 14.22 Fourth Quarter -2.38 2.07 5.30 -2.26 Yeardo-DataiCahsndar Fund -0.22 31.22 15.42 21.23 8.75 Lipper Mid Cap Fd Index 12.26 33.08 16.28 17.55 12.65 S&P MidCap 400 Index 0.22 30.94 19.20 32.25 11.01 Shr Sae of Characteristic Value period Rating Unlrarse Alpha -1.64 *** 2332 Beta 0.91 Rz 0.93 Standard Deviation 11.79 ThreeYear Overall it~r# 2332 Uni,erse: Oornestic Equity Fads STl o Capital Management an c.vllr M.n.s.nwrt 100 Sant Oranp A•arw, 8M floor OAado, FlorMa 31BM iaoo•r¢s~asTr swrx rxcn arse i. Managers' Quarterly Perspective is not a complete analysis of every material fact rep- resenting any country, industry, security or irnestment. Opinions expressed are subject to change without notice. StatemeMS of fact have been obtained from sources believed to be reliable but rp representation is made by STI Capital Management or its affiliates as to its completeness or accuracy. 2. Cumulative and Annualized Total Return Performance represent the change and/or average annual change in the value of an irnestment over the specked periods, assuming reirnestment of dividends and capi- tal gains at net asset value. 3. Quartery, Yearto-Date, Calendar and Cumulative Performance show the charge in value of an investment over the periods indi- cated. Calculations assume reirnestment of dividends and capital gains at net asset value. 4. Risk Data is calculated using annualized momhly returns for the fund, from the fund's first full calendar month of operation through the most recent calendar quarter. 5. Morningstar ratings reflect historical risk- adjusted performance as of December 31, 1997. Ratings are calculated from the fund's one-, three, five-, and/or ten-year annualized returns in excess of 904ay Treasury bill returns and a risk factor that reflects fund performance below 90-0ay T-bill returns. The top ten percent of the funds in an investment category receive five stars, 22.5% receive four stars, 35% receive three stars, 22.5% receive two stars, and the bot- tom 10% receive one star. Index performance includes reirnested divi- dends. One cannot irnest directy in an index, which includes no management fees. The historical performance data shown per- tain only to the fund's trust shares. Other share classes are available and are subject to differerrt fees and expenses, which will affect their performance. Please see the prospectus for more details regarding the fund's share classes. This material is authorized for distribution only when accompanied or proceeded by a current prospectus of the STI Classic Mid-0ap Equity Fund, which contains more information including fees and expenses. Please read the prospectus carefully before irnesting The distributor of STI Classic Funds is SEI Investments Distribution Co., Oaks, Pennsylvania 19456, which is not affiliated with SunTrust or its affiliates. Imeatmerlt rotum and pnhlclpal vahne fluctlf ats so that yow shares, whorl rodeemed, may bs worth more or boa than theh orig4 nal cost. Past peAomlanlce carrot guarrltee hrture resutts. • • • • • • • • _ a -_ u '. J - ~ w. a '~ S'TI ~~:as)~i~ Internatio: E w~~.nd As d MltraM ~;~ r ,., • LowK Nlg~ • • I ~ t • Fund G~f Lipper International • Fund Objuetiw The fund seeks long-term capital appreciation • by investing primarlty in a diversified portfolio of equity securities of foreign Issuers. • iureslnmt Precen The fund's managers employ abottom-up • stock selection process to fled high quality companies selling at a discount to their glotr ~ al Industry peers. Swr~ry • Primarity invests in non-U.S. companies • Focuses on high quality stocks • ValueorieMffiion • Bottonrup stock selection process ING Groep NV CVA 3.04 Novartis AG 2.60 Gen Electric Ord 2.40 Nestle SA 2.39 Schw Bankverein Ord 2.22 Elf Aquitaine 2.19 AXA{JAP 2.13 Bass PLC 2.08 Telefonica de Espa 2.00 Siebe PLC 1.82 STI Classic Funds: • Are not insured by the FDIC. • Do not have a bank guarantee. • May lose value. CYaraeteriatic Fund 1LSC1 EAFE laden Fira/Miuus Dividend Yield (current) 2.1 1.8 + Market Capitalaation (US 5bil) 22.0 68.6 Price-to-Book 3.9 2.8 + Price-to-Cash Flow 12.7 12.1 + Priceto-Earnirgs 22.2 26.1 - STI Classic International Equity FurM ;f'#: MSCI EAFE Index ~ STI Classic Intemational Equity Fund i2: MSCI EAFE Indeu Asia 3.6 «<:a.i Central Euroce 25.8 .................v....,.................,................. ii 24.6 Japan ios Middle East X1.8 0.0 Scandinavia 5.6 :.::.:::.2'i; 5.7 Western Euroce a5.7 »:::;, ao .a Other a.3 For the most current information on the portfolio, please call STI Capital Management at 1-804926.4STI. From a regional perspective, the star per- former continues to be Europe, where compa• Hies are increasirgry focusing on the interests of shareholders as the single currency plan moves forward. Because of the improving interest rate climate and a number of merger transactbns, banks such as Banco Popular De Milano and San Paolo, two Italian institutions, performed well during the quarter. Other banking and insurance companies include ING Group, the fund's top holding, which pur- chased Borings Bank and Equitable of Iowa. Another large insurer, AXA~IAP, which owns equitable companies and DU in the U.S., is benefiting from the financial services boom. This company has been able to improve its property/casualty business in France, which has always been a tough market. European automakers such as BMW, Volkswagen and Volvo performed well during the quarter, benefiting from an improving ecor} omy, the Introduction of new nadels and lower financing rates. VW, which has received much publiclty for tts reintroduction of the Beetle after a 24year hiatus, has cut production costs by reducing the number of rradel plat- forms from 20 to about five. Europe's move to a single currency will facilltate trade and the movement of capttal across markets, without the costs associated with currency translation. The result will be lower inflation and a more competitive business ernironment. Europe's future looks very txigM. Unfortunatery, Japan, which represents the third largest works market, has not yet worked out tts financial difficulties. Managements are still not generalry incen- tivfzed to provide good returns to sharehold- ers. Large blocks of shares are held by affili- ated companies and Japanese markets remain closed in many industries. Our investments in exporters such as Honda, Canon erW Fujf have not done particularry well, primariry because of the yen's recent strength against the U.S. dol- lar. Irnestors bought the Japanese currency and stocks at the first of the year thinking that the government would jump start the market wtth stimulus measures; we do not feel the gaverrxnent has fixed their financial system yet. As a result, we remain underweighted in Japan. Maralimd Siace Thrss One lino Three Inception Months Year Yams Years 02/02/'95 Fund 15.17 25.44 23.36 27.44 28.41 Lipper International Fd Index 14.89 20.22 16.22 16.74 MSCI EAFE Irxlex 14.44 18.31 9.56 10.47 1984 1985 1886 1997 1898 4.72 4.06 15.17 Second Quarter 11.76 5.52 12.19 Third Quarter • 11.52 1.21 5.29 Fourth Quarter 4.22 9.16 -7.79 Year-Es-DatdGMdar Fund 29.88 22.08 13.35 15.17 Upper International Fd Index • 12.82 14.43 7.27 14.89 MSCI SAFE Index 9.18 6.04 -7.83 14.44 szs,ooo Characterhdic Valve Alpha 18.87 Beta 0.78 R~ 0.70 Standard Deviation 11.56 STI o Capital Management sn c~ errroarn.e aoo soma or.i/. A.u•u, au poor orr.r., Flerw. aze0s iaooazsasn eTR1I FACTa 9/N i. Managers' Quarterty Perspective is rat a complete analysis of every material fact rep- resentirg any country, industry, security or irnestmern. Opinions expressed are subject to charge without notice. Statements of tact have been obtained from sources believed to be reliable but no representation is made by STI Capital Management or tts affiliates as to its completeness or accuracy. 2. Cumulative and Amm~ualized Total Return Performance represent the change and/or average annual charge in the value of an investment over the specified periods, assuming reinvestment of dividends and capi- tal gaire at net asset value. 3. Quarterty, Year-to-Date, Calendar and Cumulative Performance show the charge in value of an irnestrnent over the pedods indi- cated. Calculations assume reirnestment of dividends and capital gains at net asset value. 4. Risk Data is calculated using annualized monthly returns for the fund, from the fund's first full calendar month of operation through prospectus for more details regarding the the most recent calendar quarter. fund's share classes. Index performance includes reirnested divi- dends. One cannot irnest directty in an index, which includes no management fees. The performance of the STI Classic International Equity Fund includes that of the STI International Equity Fund, a cdlective Vust fund account, advised by STI Capital Management from February 2, 1995 to December 1, 1995. The cdlective trust fund's performance has been adjusted to reflect the current expenses associated with the STI Classic International Equty Fund. The trust fund was not registered under the 1940 Act, and therefore was not subject to certain restrictions which may have affected performance. The historical performance data shown per- tain oMy to the fund's trust shares. Other share classes are available and are subject to dffferent fees and expenses, which will affect their performance. Please see the Foreign irrvestirg irnolves special risks, including currency fluctuations and pdit~al uncertairrty. This matedal is authodzed for distribution only when accompanied or proceeded by a current prospectus of the STI Classic Irrternetional Equity Fund, which contains more information including fees and expens- es. Please read the prospectus carefulty before irnestirg money. The distributor of STI Classic Funds is SEI Irnestments Distribution Co., Oaks, Pennsylvania 19456, which is rat affiliated wtth SunTrust or its affiliates. Imatmerrt rMwn and pAneipal valve fWcta ate so Mat your shares, when rodeamsd, may bs worth moro or krss Man Msk oril~ Hal cost. Past performance carrot gvarantse hrbae rosalts. _~. ,~; ,,~ ~ . ~sis~~~~~:~~ ~ . ~ '~`- v ,. :„,.. .~ - w ~ r - .,~, ~.. ti F 4 STS ~~lassl~ ~ ~ ~ _ - ~~ 9 ~ ~ c. ~ • ;}-. ._ r i~ t~ ~. ;a a '- .. Lower Nigrrer • ~ ~ 0 • ~ ~ i • Fund Category Lipper Small Cap • Fund Objective • The fund seeks long-term capital growth and income by investing in the stocks of comps- . Hies with a market capitalization between $50 million and $1 billion. • Investment Process The fund's managers employ a valueorient- • ed, bottom-up stock selection process focus- ing on dividend paying companies, which • appear undervalued by the market. • Summary Descnpbon • Primarily invests in small cap stocks • • Focuses on income • Value-orientation • Bottorrrup stock selection process • Ticker Symbol SCETX Security Percent of Description Total Equity IXI Regal-Beloit Corp. 3.07 Nowell Corp. 2.95 K2 Inc. 2.70 Texas Industries Harman International Inds 2.66 Sotheby's Holdings Inc. 2.41 Quaker State Corp. 2.39 Universal Foods Corp. 2.33 Sea Containers Ltd. 2.25 Guilford Mls Inc. 2.14 STI Classic Funds: • Are not insured by the FDIC. • Do not have a bank guarantee. • May lose value. Charscteristie Fund Iarsse112000 PkrslMinus Dividend Yield (current)* 2.0 1.2 + Earnings Per Share Growth (5 yr estimate) 17.7 14.9 + Market Capitalization ($100miq 6.5 9.6 Priceto-Book 2.5 4.6 Price-toEarnings (12 months trailing) 15.1 22.1 - Return on Equity 13.0 13.5 ;~ STI Classic Small Cap Equity Fund .< Russell 2000 For the most current information on the portfolio, please call STI Capital Management at 1.804926-4STI. *The SEC 30tlay yield is 0.76%. During the first quarter, the stock mar- ket seemed unstoppable~by Asia, by White House scandals, by a backup in interest rates or by extremely high valuations. Although the Small Cap Value fund per- formed slightly behind the Russell 2000 Index, and was ahead of the Russell 2000 Value Index, it trailed the S&P 500 Index. Irnestors around the world continue to prefer large U.S. bluechip growth stocks, a phe- nomenon that has continued for several years now. Nevertheless, our portfolio had a num- ber of strong performers, some from merg- ers and acquisitions. Zurn Industries, a plumbing equipment supply company, rose about 40% during the quarter after being bough out. Quaker State, which markets automotive goods, rose about 30% because of consolidation within its industry and spec- ulation that it could be an acquisition candi- date. Another good performer was Interface, a manufacturer of carpeting for commercial buildings, which is benefiting from the cur- rent boom in commercial construction. Only a handful of stocks out of a port- folio of 75 performed poorly during the quar- ter. Toro, a manufacturer of lawn and irriga• lion equipment underperformed, primarily because of the EI Nino effect as the warm winter hampered snowblower and spring lawn sales. As a sector, utilities did not partici- pate in this quarter's rally because defensive stocks underperformed in this growthorient- ed market. In addition, energy stocks per- formed poorly as the price of oil fell. In terms of valuations, we are much more com- fortablewith small cap value stocks than the S&P 500 because we are still able to buy companies selling at 15-18 times trailing earnings, whereas the S&P 500 is selling at a multiple of 25 to 26. Mnwihed Sina~ Thres One 11vo Throe Inception INontlrs Year Ysaro Yeah 08/31/94 Fund 9.68 38.81 34.29 32.87 30.24 Lipper Small Cap Fd Index 10.71 40.64 17.43 21.99 Russe1120001ndex 10.05 42.00 22.17 24.43 1994 1885 1996 1997 1888 First Quarter 9.00 8.25 4.75 9.68 Second Quarter 5.62 6.22 14.95 Third Quarter 6.26 3.95 12.48 Fourth Quarter 0.18 7.06 12.23 -2.11 YeaMo-WtalC;akndar Fund 0.18 30.97 34.15 32.59 9.68 Lipper Small Cap Fd Index -0.25 31.62 14.37 15.06 10.71 Russe1120001ndex -1.87 28.44 16.53 22.36 10.05 Charaetsridic Yalrre Aloha 17.30 Beta 0.62 Rz 0.70 Standard Deviation 9.81 STI O Capital Management sn c,pt,r M.u~.ewK 200 SovM OraK~ Awnw, aU Floor oe.~m, Fl•na. saoo5ne-~sn SCETx FACTS 3/9e i. Managers' Quartery Perspective is rat a complete analysis of every material fact refs reseming any country, industry, security or irnestment. Opinions expressed are subject to change without ratice. StatemeMS of fact have been obtained from sources believed to be reliable but no representation is made try STI Capital Management or its affiliates as to its completeness or accuracy. 2. Cumulative and Annualized Total Return Performance represent the change and/or average annual change in the value of an investment over the specified periods, assuming reirnestment of dividends and capi- tal gains at net asset value. 3. Quartery, Year-to-Date, Calendar and Cumulative Performance show the change in value of an irnestment over the periods indi- cated. Calculations assume reirnestment of dividends and capital gains at net asset value. 4. Risk Data is calculated using annualized monthly returns for the fund, from the fund's first full calendar month of operation through the most recent calendar quarter. Indeu performance includes reirnested divi- dends. One cannot irnest directy in an index, which includes no management fees. The performance of the STI Classic Small Cap Equity Fund includes that of the SunTrust Small Cap Value Income fund, a collective Vust fund account, advised by STI Captal Management from August 31, 1994 to January 31, 1997. The collective trust fund's performance has been adjusted to reflect the current expenses associated with the STI Classic Small Cap Equity Fund. The Vust fund was not registered under the 1940 Act, and therefore was rat subject to certain restrictions which may have affected perfor- mance. This material is authorized for distribution only when accompanied or proceeded by a current prospectus of the STI Classic Small Cap Equity Fund, which contains more infor- mation including fees and expenses. Please read the prospectus carefully before irnestirg money. The distributor of STI Classic Funds is SEI IrnestmeMS Distribution Co., Oaks, Pennsylvania 19456, which is not affiliated wtth SunTrust or its affiliates. Investment return and prkrcipal vahre ffuctrr ats so that your shams, when rodeemed, may bs worth mom a bee then thek oripl- nal cost. Past perfomrarrce carrot ~rarontss futree results. f ,, ' a {~ r - - -° -- - ., .. a7 '~'' ~ e~ds•y~,.. ~ • ~ __ . ~ ~~ -~ r' '~'~1c-( "'rte ,_`I4 T'V' ~ CYa 1 '1 y, ~,,, ,~~y;~' ,41 "Ji ,~y ~/ ~ 1 . + - ~i? l ~"F~- ~f2~-~ tip" /~4' "+%i Yf . • • ~~~ • lower Hier • ~ 0 • i ~ r Frnd Catadory • Growth Fnnd Objsrtirs • The fund seeks capital appreciation by irrvest- irg primarily in the stocks of large, welF • established companies rated A or higher by major credit rating agencies, including Value • Line, Moody's and Standard & Poor's. • Invedmsrt Process The fund's manager uses abottom-up selec- tion process to find high quality companies • with a history of earnings growth, which appear historically undervalued relative to the • market. • Srnrntry • Suitable for Florida Municipalities • Primarily invests in stocks of well- . established, high quality companies • Focuses on growth characteristics • • Evaluates historical relative value • Bottorrfup stock selection process Frrd Code SHGEQ Securib Prrcant of Descriptioa Total Equity (%) General Electric Co. 4.15 Merck & Co. Inc. 3.89 Cisco Systems Inc. 3.02 Microsoft Corp. 2.95 Home Depot Inc. 2.80 Cendant Corp. 2.63 Coca Cola Co. 2.58 Xerox Corp. 2.49 American Int'I Group Inc. 2.47 Bristol Myers Squibb Co. 2.37 Investments: • Are not insured by the FDIC. • Do not have a bank guarantee. • May lose value. Characteridic Fund SiP 500 Plus/Minrs Dividend Yield (current) 0.9 1.5 Earnings Per Share Growth (5 year estimate) 19.0 13.5 + Market Capitalization (Ebil) 68.3 64.1 + Price-to-8ook 7.0 4.4 + Priceto-Earnings (12 months trailing) 28.8 26.3 + Return on Equity 22.1 21.3 + SunTrust High Grade Equity Fund ::::: S&P 500 For the most current information on the portfolio, please call STI Capital Management at 1-8049264STI. The first quarter was another strong one for this portfolio, which focuses on largo- capitalization growth stocks. For the quarter, the fund returned 15.5% versus 13.9% for the S&P 500 index. Over the last year, the portfolio has returned in excess of 50%. The fund has benefitted from a strong U.S. stock market, fueled by low interest rates and inflation as well as huge amounts of money coming into the market from all over the world. There has been a definite flight to quality over the most recent quar- ters, principally because of the Asian eco- rwmic crisis and its potential impact on worldwide economic growth. However, for the large U.S. multinationals, weakness because of Asia has generally been offset by strength at home and from other parts of the world. Despite selected earnings disappoint- ments, technology stocks bounced back strongy from a poor fourth quarter. The biggest winner was Lucent Technologies, a 1996 spinoff from AT&T, which was up 60% for the quarter. Other tech winners included Xerox, EMC Corp., Microsoft, Oracle and Cisco Systems. Drug stocks continued to do well In spite of lofty valuations. New product pipelines, resulting in increasing growth rates, continue to make this group attractive. Merck is the fund's largest holding in this group. Other strong stocks in the fund includ- ed consumer stocks such as Coca-Cola and Gillette, and retailers like Costco, Gap Stores and WalMart. Disappointing performance came from Intel and Compaq Computer, which Moth pre- announced poor earnings because of a near term oversupply of personal computers. While this sttuation may continue fora cou- ple of quarters, we view these companies 85 attractive longer term. In an environment of moderate econom- icgrowth with low levels of interest rates and inflation, we continue to believe that this fund's focus on large, high~ualtty compa- nies, with earnings growth at above market rates will provide superior returns to irnestors. ~• AaseaNaed Siete Thra Ose Two Thrss Firs Isceptios Maths Year Yeah Yan Yars 03!31/90 Fund 15.44 52.55 33.90 31.66 21.03 18.75_ S&P 5001ndex 13.95 48.00 33.17 32.81 22.40 1984 1995 1898 1897 1998 First Quarter -2.39 9.33 5.55 2.56 15.44 Second Quarter -1.23 6.54 5.55 18.80 Third Quarter 4.34 6.82 3.67 7.31 Fourth Ouarter -3.02 5.96 4.72 3.64 Year-9o-DetdGleedar Fund -2.45 31.84 20.95 35.52 15.44 S&P 500 Index 1.32 37.58 22.96 33.36 13.95 530,000 Characterlstlc Value Aloha -0.18 Beta 1.00 RZ 0.89 Standard Deviation 12.96 STI o Capital Management en crp~ Mrupnnec 200 !ant Orrrp Avrw, aN Boor OAartlo, nork• 22801 iaoas2e-ssn SIIGEO FACTS 2/9S 1. Managers' Quarterry Perspective is not a complete analysis of every material fact rep- resenting arty country, industry, security or irnestment. Opinions expressed are subject to change without notice. Statements of fact have been obtained from sources believed to be reliable but ra representation Is made by STI Capital Management or its affiliates as to its completeness or accuracy. 2. Cumulative and Annualized Total Return Performance represent the change and/or average annual change in the value of an irnestmeM over the specified periods, assuming reirnestmeM of dividends and capi- tal gains at net asset value. 3. Quarterry, Year-to-Date, Calendar and Cumulative Performance show the change in value of an irnestment over the periods indi- cated. Calculations assume reinvestment of dividends and capital gains at net asset value. 4. Risk Data is calculated using annualized nardhly returns for the fund, from the fund's first full calendar month of operation through the most recent calendar quarter. IrWex performance includes reirnested divi- dends. One cannot irrvest directly in an index, which includes rq management fees. imrestmsnt rotum wnd prbcipal value Ouetu- ate so that your shares, when redeemed, may be worth moro a bss then they orl~ Hal cost. Past performance carrtot Quarantes futuro rosults. • • • • • ~,. ~ b ~~„ ,,. a ~ ' ~ ~0~ ~ 7W `,~ a ~.. ' ~` F .~~~ ~~~~ ~ J {~ ~ 1v+ ~ M ~ ~ , , ~i ' ' ~ R `~ ~ • • r • Lower Higher • 0 • ~ ~ r Fund Category • Equity Income • Fund Objective The fund seeks to provide current income with the secondary goal of achieving capital • appreciation by investir~ primadty in equity securities of companies rated A or better by • major credit rating agencies including Value Line, Moody's and Standard & Poor's. • Investment Process The fund's managers employ a valueorient- • ed, bottorrrup stock selection process,focus- ing on dividend-paying companies, which • appear undervalued by the market. • Surmrary Description • Suitable for Florida Municipalities • Primarily irnests in high quality, dividend • paying stocks • Focuses on income • • Valueorientation • Bottom-up stock selection process Fund Code SHGEQI Security Percent of Descriptia Total Equib (%1 Conagra Inc. 2.66 Unocal Corp. 2.58 Pharmacia & Upjohn Inc. 2.53 Kimberly-Clark Corp. 2.53 Texaco Inc. 2.40 Mobil Corp. 2.33 Cigna Corp. 2.11 Tenneco Inc. 2.11 Crawn Cork & Seal Inc, 1.86 Thomas & Betts Corp. 1.78 Investments: • Are not insured by the FDIC. • Do not have a bank guarantee. • May lose value. 1 iirii~all•~1~:~~ ;';fir,..,.. ~• .. ,roy r~ .. ~.. _ ' - ~`~. ~' ~ ~ a f ~'... - ar' 7 a e,r, Characteristic Fund SiP 500 Phrs/Minus Dividend Yield (current) 2.4 1.5 + Earnings Per Share Growth (5 year estimate) 11.7 13.5 - Market Capftalization ($bil) 11.9 64.1 Price-to-Book 3.3 4.4 Price-to-Earnings (12 month trailing) 21.0 26.3 Return on Equity 14.0 21.3 ~ SunTrust High Grade Equity Income Fund :: S&P 500 For the most current information on the portfolio, please call STI Capital Management at 1-800-926.4STI. Growth continues to have an advantage over value in the marketplace, as irnestors around the world buy stocks they kraw-typi- calty large cap growth names such as General Electric, Microsoft and Procter & Gamble. Nevertheless, the Value EquRy portfolio had a number of big winners during the quar- ter. A major theme continues to be corporate restructuring and M&A activity. For example, Beneficial Corp., a consumer finance compa- rry, had been lagging its peers in terms of earnings growth. The company announced that K would entertain all strategic options and the stock virtualty doubled. Similarty, Echlin, an auto parts manufacturer, per- formed extremety well, primarily because of a hostile bld by SPX Corp. Other mergers included Southern New England Telecom, which entered into an agreement with SBC Communications, and Magna Corp., a region- al bank which announced a merger with Union Planters. Another value category during the quar- terwere turnaround stories such as Food Lion, a grocery store chain in the Southeast. Food Lion, which was the subject of a nega- tive "PrimeTime Live" report a few years ago, missed its quarterly earnings expectation partialty because of its acquisition of Kash 'n' Karry in Florida. We believed the prob- lemswere temporary and we were right. Recentty, their same-store sales began to improve and the stock price began moving up. Poor performers during the quarter included ConAgra, which had disappointing results in their refrigerated foods division, and Kimberly Clark, whose tissue business ran into stiff competition in Europe. As long as the outof-proportion demand for large cap growth stocks contin- ues, we will be able to find value names at relativly cheap prices. Aaauali:sd Siva Three ona 7sro TM~ f'rvs laaptbu Maths Ysar Years Ywrs Years 03/31/93 Fund 12.30 38.28 27.20 28.61 21.23 21.23 S&P 500 13.95 48.00 33.17 32.81 22.40 1994 1895 1996 1987 1998 First Quarter -4.29 10.81 5.26 3.14 12.30 Second Quarter 3.76 6.73 4.11 12.56 Third Quarter 7.19 7.98 2.88 8.87 Fourth Quarter -2.38 8.37 5.92 0.48 Year-to-Data/Calendar Fund 3.92 38.41 19.42 27.00 12.30 S&P 500 1.32 37.58 22.96 33.36 13.95 530,000 526,183 RISK DATA (RELATIVE TO SSP 50014 Characterlstlc Value Alpha 3.39 Beta 0.80 R2 0.82 Standard Deviation 9.75 STI O Capital Management sn capon lu.•.pnwK 300 sous oranaa Av«w, sM Floor odanAO, nona.3zeoi saoosae~sn 1. Managers' Quarterry Perspective is not a complete analysis of every material fact rep- resenting any country, industry, security a investment. Opinions expressed are subject to charge without ratite. Statements of fact have been obtained from sources believed to be reliable but no representation is made by STI Captal Management or its affiliates as to its completeness or accuracy. 2. Cumulative and Annualized Total Return Performance represent the change and/or average annual change in the value of an investment over the specified periods, assuming reirnestment of dividends and capi- tal gains at net asset value. 3. Quarterty Year-to-Date, Calendar and Cumulative Performance show the change in value of an investment over the periods indi- cated. Calculations assume reirnestment of dividends and capital gains at net asset value. 4. Risk Data is calculated using annualized nanthry returns for the fund, from the fund's first full calendar month of operation through the most recent calendar quarter. Indeu performance includes reirnested divi- dends. One cannot invest directty in an index, which includes n0 management fees. Investment rotum and prircipal slue fluetu• ate so that your shares, when redeemed, may be worth moro a Isss than thek orlg4 nal art. Past performance amot guarantee hrturo rosults. srrofp racrs a/ee - ~ ~ ~~ ~~~ ~- ~-unTrust I-~ h ~ra~ g ~ ~~:F ; ~~ ~r . . ~, . fond F.. .3~. N~ - ~~~ As of March 31, 1998 - r, ~; ~.- ° ~ ~ r •~ •~• r ~ Lower Higher Lehman Lehman Characteristic Fund Aggrogate Covt/Corp 0 Fund Category Income and Growth Fund Objective The fund seeks to provide a high level of total return through current income and capi- tal appreciation by investing in corporate irrvestment grade bonds rated A or higher by major credit rating agencies and U.S. govern- ment securities. Inrestmerrt Process The fund's managers systematically reduce their reliance on interest rate forecasts and credit analysis, allowing them to focus on exploiting undervalued sectors and areas along the yield curve. Summary Deacriptioa • Suitable for Florida municipalities • Invests in investment grade bonds and U.S. government securities • Focuses on undervalued areas of the bond market • Avoids reliance on interest rate forecasts and credit quality improvements • Emphasizes sector selection and maturity distritwtion Fund Code SHGBD Dascripdon Percent d Portfo110 I%1 U.S. Treasuries 42.92 Finance 26.73 Industrial 15.54 Mort(~ages 8.61 Cash 6.20 Investments: • Are not insured by the FDIC. • Do not have a bank guarantee. • May lose value. Averse Coupon (%) 6.6 7.1 7.0 Modified Duration 4.9 4.5 5.4 Years to Maturity 7.8 8.8 10.2 Yield to Maturity (%) 6.1 6.2 6.0 60 45.1 4s A For the most current information on the portfolio, please call STI Capital Management at 1-804926-4STI. The interest-rate ernironment has been calm in the first quarter, with bond yields trad- ingwithin anarrow range of five or six points. Because the direction of interest rates has been flat and the economy has remained mod- eratety strong, corporate bonds have outper- formed U.S. Treasury bonds and mortgage- backed securities during the period. The portfolio has been overweighed in corporates, which has added value, because of our belief that the economy was going to remain stronger than consensus expectations. That has turned out to be the case. However, we also though that interest rates would back up more than they have, and, as a resuK, we shortened the Fund's duration and we raised our cash position. That decision hampered our performance slightty, as did our decision to underwe~M mortgages, which we though would underperform significaMty. Instead, mortgages performed in line with Treasury bonds. Looking ahead to the second quarter, we expect economic growth to remain fairly good, and so we will continue to overweigh the cor- porate sector. At current interest rate levels, we are still uncomfortable with mortgages. If the market rallies, they would underperform quite dramatically; if the market backs up, then they would outperform. However, since they only outperform materially if the market goes down, we currenty plan to underweight the sec- tor. The U.S. ecoramy is currently stronger than the Federal Reserve Board would normalty tolerate. However, inflation remains subdued and the economic impact of Asia's financial cri- sis has yet to be felt in the U.S., and econo- mists disagree on its potential impact. As a result, the Fed is on hold for now. As long as it stays on the sidelines, the bond market is like- ly to be relativey quiet. Annwlized Sinee~ Three One Two Three Fiw Inception Months Yaar Years Years Years 08/31/89 Funx1 1.66 12.62 8.32 9.23 7.00 8.91 Lehman A~reBate Index 1.54 12.00 8.40 9.18 6.94 _ Lehman Govt/Cory Index 1.52 12.39 8.36 9.20 6.96 i r r i~ ~~ 1994 1895 1996 1997 1998 First Quarter -2.87 4.44 -1.76 -0.69 1.66 Second Quarter -0.91 6.13 0.50 3.55 Third Quarter 0.27 1.89 1.50 3.37 Fourth Quarter 0.86 4.56 2.84 3.51 Ysar~o-DatdGlendar Fund -2.66 18.09 3.05 10.02 1.66 Lehman Aggregate lrxlex -2.92 18.48 3.61 9.68 1.54 Lehman Govt/Corp Index -3.51 19.24 2.91 9.75 1.52 CUMULATIVE GROWTH OF A 510,000 INVESTMENT; 516 000 Charecteristk Value Alpha 0.75 Beta 0.93 R2 0.99 Standard Deviation 4.08 STI O Capital Management aTl Capihl MiWerrnMt 100 apM Oraiw Aver, 8M R•Or oAaido, Flaw 31901 Saoo•s1e-asn a116aD rACTS 3/9e 1. Managers' Quartery Perspective is not a complete analysis of every material fact rep- resenting any country, industry, security or irnestment. Opinions expressed are subject to change without notice. Statements of fact have been obtained from sources believed to be reliable but no representation is made by STI Capital Management or its affiliates as to its completeness or accuracy. 2. Cumulative and Annualized Total Return Performance represent the change and/or average annual change in the value of an irnestment over the specified periods, assuming reinvestment of dividends and capi- tal gains. 3. Quarterly Year-to-Date, Calendar and Cumulative Performance show the change in value of an investment over the periods indi- cated. Calculations assume reirnestmerrt of dividends and capital gains. 4. Risk Data is calculated using annualized nwnthly returns for the fund, from the fund's first full calendar month of operation through the most recent calendar quarter. Index performance includes reinvested divi- dends. One cannot irnest directly in an index, which includes ra management fees. Investment return and prhrclpal value flrrcdt ats so that your shares, when redeemed, may be worth more or bss than thek orl~ nal cost. Past penhxmarres carnal errarerrtee future rosuks. • • • • • 11 ~ ~f~lrkf~t O~-f-~~•~~i~~~~ F~,r the Periods Ended 'Vl:~r~°u ~ 1 1998 • • • • S&P 500 ~ 13.95 48.00 32.81 S&P 500 Barra Growth 16.26 53.25 35.27 S&P 500 Barra Value ~ 11.56 -42.50 -30.26 US.. MID~CAP EQUITY MARKETS MOST RECENT QUARTER ONE YEAR ANNUALIZED THREE YEARS ANNUALIZED S&P Mldcap 400 11.01 49.03 S&P 400 Barra Growth 12.23 50.27 S&P 400 Barra Value - 9.86 47.61 U.S. SMALL CAP EQUITY MARKETS MOST RECENT QUARTER ONE YEAR ANNUALIZED S&P Small Cap 600 11.07 7.68 S&P 600 Barra Growth ~ 10.69 ~ 44.32 S&P 600 Barra Value 11.38 51.36 28.43 - 26.77 29.81 - 28.07 ~ 22.46 33.55 MOST RECENT QUARTER ONE YEAR ANNUALIZED THREE YEARS ANNUALIZED S&P Super Composite ~ 13.54 48.04 32.14 Basic Materials 11.37 12.67 22.62 12.09 Capital Goods 14.50 10.41 10.87 13.90 Communication Services 17.92 29.22 12.26 18.37 Consumer Cycllcals 20.66 19.07 18.61 20.26 Consumer Staples 11.53 8.77 15.44 11.45 Energy 5.75 -1.98 1.45 5.08 Financials 12.88 8.63 12.75 12.50 Health Care 18.49 21.50 12.11 18.45 Technology 24.50 23.34 14.09 23.97 Transportation 10.66 22.37 10.71 12.48 Utilities 6.01 5.85 2.45 5.82 The indices are not necessarily indicative of the way the STI Classic Funds are managed. Index performance includes reinvested dividends. One cannot invest dirertly in an index which includes no management fees. ~~~~~-l ~.`~. I,~rl~iit~~ ~~I~tc•~F~t 0~~~~~~~ri~~~~~ For the Periods Ended March 31. 1998 MSCI EAFE Net Dlv USS MSCI Canada Net Div USS MSCI Europe Net Dlv USS MSCI Japan Net Dlv USS MSCI Pacific Net Div USS (excluding Japan) 14.71 14.56 ~ 2.04 ~ 6.97 20.30 ^ 18.61 ~ 30.73 ^ -11.69 ^ -22.74 ~ 10.57 23.49 42.01 27.36 ~ -12.19 1-0.12 Capital Equipment 16.60 12.40 16.60 Consumer Goods 14.70 30.70 14.70 Energy 10.60 29.10 10.60 Finance 18.80 34.20 18.80 Materials 16.10 -1.40 16.10 Metals/Mlning 17.50 -17.60 17.50 Multiple Industry 14.00 -4.00 14.00 Services 17.30 29.80 17.30 • MSCI Emerging Markets Free ~ 5.71 ^ -15.27 ^ 0.49 IFCI Composite X6.98 ^ -16.73 ^ 2.27 IFCI Asla 19.44 ^ -48.86 ^ -17.30 IFCI Europe/MldEast/Ahlca ~ 8.11 ~ 2.19 X9.76 IFCI Latin America ^-1.10 11.06 21.32 Capital Equipment 20.20 18.00 20.20 Consumer Goods 12.60 13.60 12.60 Energy -2.60 7.50 -2.60 Finance 12.80 2.10 12.80 Materials 6.40 -8.50 6.40 Metals/Mlning 1.70 -30.90 1.70 Multiple Industry -0.20 -27.70 -0.20 Services 10.50 16.60 10.50 The indices are not necessarily indicative of the way the STI Classic Funds are managed. Index performance includes reinvested dividends. One cannot invest directly in an index which includes no management fees, C ~~ .~. i± i ~f~~ l ltl~~~-~tr~E~ ~I~~t•~f~t O~~~~~~~~if~~~~ For the Periods Ended March 31. 1998 91 Day Treasury BIII Lehman Brothers Mortgage Lehman Brothers 5 Year Munlclpal Lehman Brothers Govt/Cory Irr6ndt Lehman Brothers Govt/Corp Lehman Brothers Aggregate Lehman Brothers Corporate ~ 1.25 ~ 1.16 1.56 - 1.52 1.56 1.53 1.64 ~ 5.10 - 11.14 ~ 7.64 ~ 9.67 12.39 ~ 11.99 13.05 ~ 5.14 ~ 9.17 ~ 6.37 ~ 7.99 - 9.20 - 9.18 10.08 ANNUAL YIELD (%) 6.4 . SEPTEMBER 30, 1997 DECEMBER 31, 1997 - MARCH 31, 1998 Historical Yield Spreads ., A Industrial Versus 10-Year Treasury 0 The indices are not necessarily indicative of the way the STI Classic Funds are managed. Index performance includes reinvested dividends. One cannot invest directly in an index which includes no management fees,