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Home My WebLink About2007 01 31 Document Given To Board Members On 01/25/07 For Regular 301 - SunTrust (Trusco)Date: January 31, 2007 THE FOLLOWING DOCUMENT WAS GIVEN TO THE BOARD OF TRUSTEE MEMBERS ON JANUARY 25, 2007 REGARDING REGULAR AGENDA ITEM 301. ~,,.,,:,.,,:y;..~ 145U • ~ } ~ To: From: Re: DEPARTMENT OF GENERAL SERVICES MEMORANDUM January 25, 2007 Board of Trustees Kevin Smith, General Services Director BOT January 31, 2007 Meeting I. Investment Manger RFP Enclosed please find presentation materials for each firm scheduled for interview for Investment Manager Services to the City's Defined Benefit Pension Plan. Also enclosed is a sample contract for Investment Manager Services as prepared by Bogdahn Consulting. Interview schedule is as follows: Date: Wednesday, January 31, 2007 Time: 5:00 PM Location: East Training Room, City Hall Time Manager 5:15 p.m. DG Capital 5:45 p.m. Lateef Asset Mgmt. • 6:15 p.m. Renaissance Investment Mgmt. 6:45 p.m. Fifth Third Asset Mgmt. 7:15 p.m. Oppenheimer Capital 7:45 p.m. Snow Capital Mgmt 8:15 p.m. Galliard Capital Mgmt. 8:45 p.m. MBIA Asset Mgmt. Mandate Broad Growth Broad Growth Broad Growth Broad Value Broad Value Broad Value Domestic Fixed Income Domestic Fixed Income • Presentation materials were due to City Hall by 5:00 PM on January 24, 2007. Lateef Asset Mgmt. did not submit materials by this deadline, nor have they been received as of the date of this memo. Staff and Bogdahn Consulting are contacting representatives from Lateef to discuss this issue. We will transmit materials from Lateef as soon as they are received. Each firm has been allotted 20 minutes for their presentation and 10 minutes for questions. II. SunTrust 4th Quarter 2006 Report Additionally, enclosed please find SunTrust's Fourth Quarter 2006 Report for your review. Due to the full schedule for this meeting, SunTrust was asked not to present their report. cc: City Manager Finance Director U:\docs\word\Memos KLS\BOT Investment Manager IV.doc Trusco Capital Management, Inc. Defined Benefit & Trust for the Employees of the City of Winter Springs Fourth Quarter 2006 Molly Halcom Investment Manager Trusco Capital Management 407-237-4372 molly. halcom @ truscocapital.com Dianne Garcia Relationship Manager SunTrust Retirement Services 407-237-4513 dianne.garcia @ suntrust.com r r rr rr r wr r~ ^r~ rr r~ r rr ~r r~ r rr rr rr r Table of Contents Market Overview . .............................. . .. Section Portfolio Review ............. . ............. . ...... Section II Appendix ........................................ Section III .r r^~ r r r r r r r rr r r r r r r r r r Key Q4 Themes: Stocks Finished Strong in Q4 1450 1400 1350 1300 S P 500 Index Daily Close) 1250 1200 12/30 3/30 6/30 9/30 Source: Baseline • Steady growth and lower recession risks helped stocks and hurt bonds in the fourth quarter. • Inflation moderated, but Fed anti-inflation rhetoric continued. Fed's confidence in growth sustainability was at odds with bond market relative pessimism. • Oil prices stabilized near year ago levels. • Housing weakness continued, but early signs of stability emerged. Mortgage applications up. • Democrats won control on Congress in November elections. "First 100 hours" or gridlock? • Bottom line: Fears of recession ebbed helping stocks generate strong returns in most markets for the quarter and all of 2006. Bonds retraced earlier gains, as anti-inflation rhetoric from the Federal Reserve dimmed hopes of a near-term rate cut. r~ r^~ re r. r r ~ r~ r r wee r rr r r r r Market Snapshot: 12/31/2006 .. ~ .. . _ S8P 500 1418.30 1.4 6.7 12.7 15.8 15.8 10.4 6.2 Lehman Aggregate 5.34 -0.58 1,24 5,09 4.33 4.33 3.70 5.06 Russell Top 200 603.04 1.8 6.7 13.4 15.5 15.5 9.1 4.7 Treasury 4.79 -0.82 0.72 4.43 3.08 3.08 3.14 4.63 Russe111000 1480.33 1.3 7.0 12.4 15.5 15.5 11.0 6.8 TIPS 4.35 -2.33 -1.29 2.22 0.41 0.41 3.85 7.19 Russell MidCap 2542.53 0.0 7.7 9.9 15.3 15.3 16.0 12.9 Government-Related 5.13 -0.45 1.14 4.69 4.28 4.28 3.51 4.98 Russe112000 1957.59 0.3 8.9 9.4 18.4 18.4 13.6 11.4 Corporate 5.66 -0.91 1.36 5 95 4 30 4 30 78 3 5 90 Russe113000 1510.29 1.2 7.1 12.1 15.7 15.7 11.2 7.2 Securitized 5.59 -0.33 1.53 . 5.24 . 5.16 . 5.16 . 4.09 . 4 89 MSCI EAFE 2074.48 3.1 10.4 14.8 26.9 26.9 20.4 15.4 Lehman GovernmenUCredit 5.16 -0.76 1.04 4.99 3.78 3.78 3.44 . 5.17 MSCI EAFE Small Cap 193.29 3.3 11.7 12.3 19.7 19.7 25.8 24.5 Lehman Intermediate G/C 5.08 -0.41 1.03 4.26 4.08 4.08 2.90 4.53 MSCI Emerging Markets 912.65 4.5 17.6 23.5 32.6 32.6 31.0 27.0 Lehman High Yield 7.70 1.10 4.20 8.44 11.85 11.85 8.49 10.18 ~ r' ' Lehman Municipal Bond Index 3.94 -0.35 1.11 4.55 4.84 4 84 4 28 5 53 Russell Top 200 Growth 629.57 0.9 5.5 11.1 8.6 8.6 5.0 1.1 ML U.S Govt. Corp., 1-5 5.01 -0.15 1.00 3 49 4 23 . 4 23 . 2 47 . 71 3 Russell Top 200 Value 849.64 2.7 7.8 15.6 23.0 23.0 13.4 8.7 ML 1-3 U.S. Treasury 4.86 0.00 0.90 . 2.87 . 3.95 . 3.95 . 2.16 . 2.82 Russell 1000 Grow[h 366.08 0.3 5.9 10.1 9.1 9.1 6.9 2.7 ~ Russell 1000 Value 504.98 2.2 8.0 14.7 22.2 22.2 15.2 10.9 3 Mo 5,04 0.44 1.26 2,61 4.86 4.86 3.07 2.42 Russell MidCap Growth 884.19 -0.9 6.9 7.9 10.7 10.7 12.7 8.2 6 Mo 5.09 0.44 1.25 2.67 4.82 4.82 3.04 2 52 Russell MidCap Value 1142.90 1.0 8.5 12.3 20.2 20.2 19.0 15.9 2 Yr 4.81 0.02 0.88 2.88 3.71 3.71 1.98 . 2.90 Russell 2000 Growth 2401.65 -0.2 8.8 6.9 13.3 13.3 10.5 6.9 5 Yr 4.70 -0.24 0.76 3.29 3.60 3.60 1.66 3.82 Russell 2000 Value 4354.95 0.9 9.0 11.8 23.5 23.5 16.6 15.4 10 Yr 4.71 -0.74 0.53 3.92 2.51 2.51 2.76 4 71 Russell 3000 Growth 2183.67 0.3 6.2 9.8 9.5 9.5 7.2 3.0 30 Yr 4.81 -1.55 0.44 5.46 1.34 1.34 5.44 . 6.52 Russell 3000 Value 3115.65 2.1 8.1 14.4 22.3 22.3 15.3 11.2 ~ . r r ~ ~ r ' ~ 3 Month r . 5.02 4.94 4.89 5.01 5.02 4.08 0.94 1 68 Consumer Discretionary 302.92 2.3 10.3 15.8 18.6 18.6 8.0 5.7 6 Month 5.09 5.08 4.88 5.10 5.09 4.37 1.01 . 1.75 Consumer Staples 268.41 2.5 3.5 9.4 14.4 14.4 8.6 6.5 2-Years 4.81 4.62 4.69 5.16 4.81 4 40 1 84 3 02 Energy 455.53 -1.9 11.2 9.2 24.2 24.2 29.0 19.1 5-Years 4.70 4.44 4.59 5.10 4.70 . 4.36 . 3 22 . 4 31 Financials 495.31 3.9 7.0 15.6 19.2 19.2 12.1 9.5 10-Years 4.71 4.46 4.63 5.14 4.71 4 40 . 4 26 . 5 03 Health Care 388.74 1.2 1.4 11.8 7.5 7.5 5.2 1.7 30-Years 4.81 4.56 4.77 5.19 4.81 . 4.55 . 5.08 . 5.47 Industrials 322.63 1.1 5.9 5.8 13.3 13.3 11.0 5.9 ~ : ~ ~ , , ~ Information Technology 356.28 -1.3 6.1 15.2 8.4 8.4 3.9 0.7 Citigroup WGBI (USD) 657.27 -1.9 1.8 3.3 6.1 6.1 2.9 8.4 Materials 216.56 0.7 11.4 10.9 18.6 18.6 12.0 12.9 JP Morgan EMBI Global 384.48 0.7 3.8 10.6 9.9 9.9 10.8 14.1 Telecommunication Services 155.15 4.7 8.7 20 2 36 8 36 8 15 7 1 8 . . . . . ~ ~ ~ r , ~ Utilities 186.60 1.1 9.2 15.8 21.0 21.0 20.7 9.2 Tr -W i d ht d D ll 1973 100 ~ ~. ~ g a e e e o ar ( = ) 80.89 -0.7 -1.1 -1.0 -5.6 -5.6 -2.1 -5.9 CSrf Equity Market Neutral 11/30/06 1.0 1.6 3.4 10.2 11.8 7.9 7.4 Gold Futures Cr de Oil F t 635.20 -1.8 6.1 3.5 22.8 22.8 15.2 17.9 CS/T Distressed Debt 11/30/06 1.6 4.8 6.7 13.7 15.6 14.3 13.2 u u ures DJ/AIG Commodit Futures 61.05 166 51 -3.3 5 0 -3.0 4 1 -17.4 3 9 0.0 0.0 23.4 25.2 CS/T LonglShort Equity 11/30/06 2.6 4.9 5.4 12.1 15.2 12.0 9.9 y . - . . - . -2.7 -2.7 7.2 13.3 ~ ~ r ~ CSIf Multi-Strategy 11/30/06 2.3 4.2 5.0 12.5 14.7 10.0 9.7 FTSE NAREIT Equity Index 12/31/06 -1.6 9.5 19.6 35.1 35.1 25.8 23.2 Consumer Price Index (82-84=100} 201.7 0.0 -1.0 -0.1 2.0 2.0 2.9 2.6~ Ir r rr rr r ~r Ir Ir Ir r r rr ~r rr rr Ir r r r 2007: Moderating Growth Slowing Inflation Economic ntotnentutn has slowed, and Fed policy remained steady since tnid- year. Core inflation above 2~c is still a concern however. Global monetary tightening continues, but recession risks are lower in light of the steady rate policy and the recent decline in energy prices. _- .. - . Fading Fading At Risk Weak housing and elevated energy prices dampens consumer spending, though modest job gains and recent oil/gasoline price declines may provide a nea term partial offset. Job growth now key driver of consumer strength. Relatively Positive / Neutral Above-average profit growth, strong cash flow, and High Neutral need for productivity gains should continue to support capital spending, though slowing earnings growth in 2007 will curb pace of future investment. Low Weaker Weaker / Weaker growth and expectations of Fed ease in the Neutral U.S. contrasts with firm growth and more restrictive monetary policies overseas. Stable / Core Core Sharp oil price drop softening headline inflation Slightly Peaking Moderately near-term. Core inflation above 2% remains a policy Lower Lower concern, however. Capacity is tighter, and unit labor costs may have begun alate-cycle advance. Slower growth expected to curb core inflation in 2007. Moderately Moderately Restrictive / Fed on hold at 5'/a% following 17 rate hikes since Restrictive Restrictive Neutral 6/30/04. Anti-inflation rhetoric continuing and "data- dependenY' policy approach likely to keep markets volatile. Fed ease still an option rather than an obligation as long as growth remains moderate. Tax revenues enjoying cyclical growth, offset in part Neutral Neutral Neutral by stimulus from hurricane relief in addition to war costs. This perspective was prepared for clients and prospective clients of Trusco Capital Management, Inc. Neither Trusco or any affiliations make any representation or warranties as to the accuracy or merit of this analysis for individual use. Past returns are not indicative of future results. Comments and projections were based on information available at the time of writing, are for informational purposes only, are not intended as individual or specific advice, and may not be relied upon for future investing. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment decisions. ,,. yrlr.~.,.,,, r ... 4 '. r ~ , - J ~ _~~..~_ ~- Ir - _n~ ,,. ~,~rin~ r ~ rr rr ~^r r rr rr rr rr rr rr rr r rr rr rr ~r rr Domestic Equity Markets in the Fourth Quarter, 2006 30 Value 2s% 22.2°r° outperformed 20% 15.5% GrowtJt i~1 the ,o% ° ~.o% 8.o°r° ai% 5.9 /° Large-Cap space 5 % during the fourth o% 4th Quarter 2006 1 Year Ending 12/31/2006 quarter aild for ^ Russell 1000 Growth Index ^ Russell 1000 Core Index ^ Russell 1000 Value Index 200h. Mid-caps 30 % outperformed z5% 20.3-° Large-Caps for zo % 15.3°% the quarter but ,o% s.s~~o ~.~°~~ $.5°'° io.~% trailed slightly for 5% o% the year. Value 4th Quarter 2006 1 Year Ending 12/31/2006 outperformed i~t v Russell Mid-Cap Growth Index ^ Russell Mid-Cap Core Index o Russell Mid-Cap Value Index Goth periods. Small-caps 30 % 23.5% outpe~fonned zs% 20% 18.4°0 Goth Mid and ,5% 13.3°° 8.8% 8.9% 9.0% barge-Caps iit Q4. 10% 5% Value o% outperformed 4th quarter 2006 1 Year Ending 12/31/2006 Growth. ^ Russe112000 Growth hdex ^ Russe112000 Core Index ^ Russe112000 Value Index Drivers of Return • Energy, Materials, Consumer Discretionary, Utilities Detractors from Return • Health Care. Consumer Staples Drivers of Return • Materials, Telecom, Industrials, Energy Detractors from Return • Financials, Health Care Drivers of Return • Telecom, Materials, Utilities, Energy Detractors from Return • Health Care, Consumer Staples Past Performance is not indicative of future results. Please refer to appendix for full disclosure. 'Source: FactSet rr rr ^~ rr rr v rr r~ r rri ~r ~ r r ~ r r r r International Equity Markets in the Fourth Quarter, 2006 International Large-Cap MSCI EAFE index outpaced the S&P 500 in the f'ottrth gtearter. The Small-Cap EAFE attd Etnerging Markets indexes were even stronger. ao % 30% zs.e r 20 i° ,o.a o 1 o°i , o°r - 4th Quarter 1 Year Ending 12/31/2006 ~ MSCI EAFE Index ao % 30 ao i°l International Large Cap Core Drivers of Return • Norway, Singapore, New Zealand, Sweden Detractors from Return • Japan, Canada, Netherlands, Switzerland International Small Cap Drivers of Return • Singapore, Finland, Spain, Denmark,. Ireland Detractors from Return • Japan, Portugal, Belgium, Canada 32.6 30 % International Emerging Market Drivers of Return 2or° ,~.6~ China, Argentina, Hungary, South Africa, 10 % Brazil Detractors from Return o % Jordan, Pakistan, Israel, Thailand 4th Quarter 1 Year Ending 12/31/2006 ^MSCI EAFE Emerging Mkts. Index Past Performance is not indicative of future results. Please refer to appendix for full disclosure. 'Source: FactSet • 1•fU r~r-~f'ar ~ci ~ ~i-c-~- Jl l~r r r r r r r r r r r r r r s r r r r Bond Markets i n Q4, 2006 US Treasury Benchmark Security Yields US Treasury Benchmark Returns 5.5 6 0 5.0 4.5 4.0 12/31 /06 9/30/06 6/30/06 12/31/05 0 5 10 15 20 25 30 US Sector Benchmark Returns 5.0 4.0 3.0 2.0 1.0 0.0 3Nb 6Mo ^ 3-Nbs. 1.26 1.25 6 Mos. 2.61 2.67 1-Yr. 4.86 4.82 ~~~I 2 Yr 5 Yr 10 Yr 30 Yr 0.88 0.76 0.53 0.44 2.88 3.29 3.92 5.46 3.71 3.60 2.51 1.34 14 Signs of a stabilizing economy and Fed anti-inflation 12 rhetoric pushed bond yields higher in the fourth quarter, 1 o despite no policy changes from the Fed. s The yield curve shifted higher, but remained slightly inverted. The yield on the 10-year Treasury note rose to 6 4.71 %. 4 The upward shift in the yield curve favored shorter maturity 2 bonds in the fourth quarter, which also outperformed for 0 ~ the full year. _2 All major bond sectors, excluding TIPS improved In the Agg. G/C i c~c Tr. TIPS Govt Corp sec HiYd nn~,ni final quarter. High Yield and Mortgages outperformed on ^ 3-Nbs. 1.24 1.04 1.03 0.72 -1.29 1.14 1.36 1.53 4.20 1.11 are abSOlUte and dUratlOrl adJUSted bases. O 6-Mos. 5.09 4.99 4.26 4.43 2.22 4.69 5.95 5.24 8.44 4.55 D 1-Yr. 4.33 3.78 4.08 3.08 0.41 4.28 4.30 5.16 11.85 4.84 *Sources: FactSet, Lehman Brothers ~~~~~ rfLl~:'J .:! rr I• Ir r~ r r r r r Ir rr r r r Ir r r r Asset Allocation: Current Strategy NEUTRAL U.S. Stock Market ~ -~- '`=-^ December 14, 2006 Large/Small ®October 26. 2006 Increase exposure to moderate equity overweighting. Valuations remain BOndS ~ reasonable /attractive, headwinds are reduced, and prospects for sustained growth in 2007 are improved. Small /~ Attractive relative valuation. Flatter yield curve. ~ ~ GrowthNalue :~ Domestic/Forei~n ~'~ -~.~ (developed High Yield Value Extended value outperformance. Slowing earnings growth favors consistent growers. Foreign Improved foreign growth prospects in Asia and Europe. Projected weaker dollar. Overweight ~ Extended outperformance by high yield and historically narrow credit spreads, but recession risks have diminished. • Economic growth continuing at asub-average pace into next year. Recession probability higher but still low; imbalances are limited, Fed policy is on hold, and energy prices have declined noticeably in August and September. However, housing will continue to slow and the pace of consumer spending will soften. CAPEX growth is likely to remain relatively firm near-term, though profits growth will slow to mid single-digits and disappoint more optimistic forecasts. • Core inflation remains a focus for policymakers, but is likely to trend somewhat lower in 2007. • "Data-dependant" -Economic volatility around slower growth rates will help generate market volatility. • Fed now on hold into 2007. • Valuations are reasonable, though not compelling. Near-term risks are reduced given the drop in energy prices and the decline in bond yields, but 2007 profit expectations remain lofty, in our view, and vulnerable to cuts. • Moderate overweight position in Equities, but still favoring quality: Large-Cap and Growth. Overweight International. • Bonds, as with stocks, emphasize quality. Reduce underweight in High Yield. Overweight in Mortgages. Account Activity Summary Beginning Portfolio Market Value 9/30/06 Portfolio AdditionslWithdrawals Additions Withdrawals Total Additions/Withdrawals Portfolio Earnings Net Accrued Income Interest and Dividends Gains/Losses Total Portfolio Earnings Ending Portfolio Market Value 12/31/06 Net Change $ 13, 527, 222.08 $ 427, 937.47 $ (75, 570.73) $ 352, 366.74 $ (445.16) $ 131, 694.52 $ 526, 251.79 $ 657, 501.15 $ 14, 538, 397.98 $ 1,011,175.90 Period Ending December 31, 2006 Please refer to appendix for full disclosure. Source: First Rate investment performance system. Data includes accrued income. Account Activity Summary Beginning Portfolio Market Value 12/31/05 $ 11, 809, 789.65 Portfolio Additions/Withdrawals Additions $ 1,576,359.18 Withdrawals $ (272,979.96) Total Additions/Withdrawals $ 1,303,379.22 Portfolio Earnings Net Accrued Income $ (395.90) Interest and Dividends $ 148,019.11 Gains/Losses $ 1,276,347.15 Total Portfolio Earnings $ 1,423,970.36 Ending Portfolio Market Valuel2/31/06 $ 14,538,397.98 Net Change $ 2,728,608.33 Period Ending December 31, 2006 Please refer to appendix for full disclosure. Source: First Rate investment performance system. Data includes accrued income. ~~~~~ l ~: 'f{~.~~ ~ ~prin~ ..~ ~ Portfolio Composition rotas c~~h 0.2~ Fixed Income 30.3% High Grade Relative Value High Grade Growth International Index Mid Cap Equity Small Cap Growth Small Cap Value $ 14,537,535 Total Equity 69.5% $ 3,495,347 24.0% $ 3,398,050 23.4% $ 1,631,656 11.2% $ 914,089 6.3% $ 343,539 2.4% $ 331,891 2.3% $ 4,400,318 30.3% High Grade Bond $ 4,400,318 30.3% Total Cash $ 22,645 0.2% Please refer to appendix for full disclosure. Period Ending December 31, 2006 ~~~~ 1 Lrf~J.r ~;~riri Performance Comparisons 4.81 % 11.32% otal Equity High Grade Relative Value'" Russell 1000 Value Index S&P 500 Index High Grade Growth Russell 1000 Growth Index S&P 500 Index International Index MSCI-EAFE Index Mid Cap Equity Russell Mid Cap Index Small Cap Growth Russell 2000 Growth Index 6.59% 6.85% 15.98% 8.00% 22.25% 6.70% 15.80% 4.40% 11.75% 5.93% 9.07% 6.70% 15.80% 10.95% 26.60% 10.36% 26.35% 7.16% 11.09% 7.67% 15.26% 4.50% 1.51 8.77% 13.35% 9.56% 6.96% 12.29% 7.35% 13.40% 8.21% 15.09% 10.86% 10.44% 6.19% 6.17% 3.16% 6.87% 2.69% 10.44% 6.19% 20.00% 15.18% 19.93% 14.98% 14.84% 6.23% 16.00% 12.88% 9.30% 8.01 10.51% 6.93% 8.74% 9.56% 9.49% 9.25% 11.21 10.64% 11.00% 12.71% 8.42% 10.95% 9.55% 11.05% 5.44% 8.75% 8.42% 10.95% 9.07% -- 7.68% 8.35% 13.81% -- 12.13% 13.24% 4.88% Small Cap Value 6.32% 16.14% 17.90% 17.15% 13.42% -- Russell 2000 Value Index 9.03% 23.48% 16.48% 15.37% 13.26% 13.72% Total Fixed Income 0.94% 3.32% 3.19% 4.80% 6.17% 6.07% High Grade Bond 0.94% 3.29% 3.38% 4.98% 6.26% 6.15% Lehman Govt Credit Bond 1.04% 3.78% 3.44% 5.17% 6.13% 6.05% Lehman Aggregate Bond 1.24% 4.33% 3.70% 5.06% 6.24% 6.19% Period Ending December 31, 2006 'Inception is 157 months " -Inception 6/30/2002. Longer term results are linked to the Past Performance is not indicative of future results. STI Classic Growth and Income Fund to show results prior to inception. Please refer to appendix for full disclosure. Source: First Rate investment performance system cif#~ .~ ~ ,. ~ _ _rr'J c ,;,t;r,~ ._., - ~ ~ ~ ~ i ~ ~ r M ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ December 3 I, 2006 fl/g000 6738,780 SlOQ000 5160,000 F 170 000 segooo s/aooo fo IL31 /96 IL31/01 17/31/06 ~ Anarn ealue xnn iexxeamem of arcane and rapnal gain The above graph mx+mes on ireVd hypothetrral investrnent off f 00,000 (ran f213f196to 11131!06. The performance quoted herein represems Past performance, Eni Spa Toyota Motor - - ---- Taal SA 1.6% 1.4% - 1.3% A li anz SE 1.3% Siemens NPV 1.3% E ON AG Banco Santander Ceno-al Hispano 1.3% 1.2% Unicredito Italiano 1.2% Telefonica I. I% Deutsche Bank AG *As of December 31, 2006 and subject to change. I.I% Fund Benchmark' japan 21.17% 21.96% Germany _ _ 15.21% _ 15.04 % France IO.BB% _ 10.74% United Kingdom 10.71% I L25% Idy __-_ . .9:30% 9.41% Spain 6.59% 651% Netherlands 4.33% 3.B0% Australia 3.95% 4.01% Belgium Z04% _ ___ 200% Sweden 200% 1,97% Sw~. Berland 1.81% 1.95% Austria 1.70% 1.73% Norway _ _____ 1.50% 149% Denmark IAB% 1.52% Ireland 1.37% 1.17% Greece 1.20% 1.23% Portugal 1.07% L02% Hong Kong 0.94% 0.99% Finland 0,89% 0,94% Singapore 0,63% 0,66% New Zealand 056% OS3% Other 0.06% 0.05% ~. , „ . , .. _. Aggregate Returns Average Annual Total Reform Inception Laoest I 3 5 10 Equines 97.9% Shares Date Quarter YTD Year Year Year Year Cash Equivalenn 21% I 616194 10.95% 26.60% 26,60% 20.00% 15.16% 9.07% MSCI EAFE Index GDP Weighted (Price Return)' 10.86% 24.59% 2459% 18.50% 14.01% 7.64% MSCI EAFE Index GDP Weighted (Tohl Remm)' 11.20% 28.02% 28.02% 21 65% 16,90% 9.85% *"As of December 31, 2006 and subject ro change. Post performance does not guarantee future rewkslhe performance data quoted represents post performance and currant returns maybe kswer or higher.Tartol return figures Include change in share price, reinvestment of dividends orrd capitol gains The irrsestmera return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth mote or kiss than the odglnaJ cost For performance data current to the most recent month end, visit our website of www.stklasskfundscom. bwestmmt per(onnona reflects rdunmry fee waivers er effect H absence o(sudr fee worrers tom! remm would be reduced. '7he MSCI EAFE Index, GDP weghted (Price Aeum) and (7otd Aeum) on: unmanaged grosz damestrcProduct-weighted e#urp radices comprcerg 20 o(the 48 countries trr 4te MSC! universe and npresenwrg be desrloped wodd outside o(Nortlr Americo. Eadr MSCI coumry index s aeoted .~zporotdy then aggregated, svrthcut drange, arm regiond MSCI trrdices. FAfE performance data a colodo[e4 m U.S. dotors and rn tad arrerrcy.7he MX! EAFE !ride, GDP weighed (7omr Aeum) a odpsed (or die reerresmmt o(ercome dmdendz, brw_smrs cannot imezt drrecdy m on crdar. Yalue Blind Growth Large Mid Stroll AttVlSer: Truzco Capital Management Inc. Portfolio Managers •Chad Deakins,CFA Pordolio manager since 1999 •AndrewAtldns Pordolio manager since 2005 Objective The Fund seeks to provide investment results that correspond to the aggregate price performance of the securities included in the Morgan Stanley Capial International Europe,Austnlasia,Far East (EAFE),GDPWeighted Index (Price Rewrn). Suitability This Fund is suitable for aggressive investors who want exposure to foreign markeu and are willing ro accept the increased risks of foreign investing for the possibility of higher rewms. Imrestment Concerns International investing irnolves increased ink and volatility. Equity securities (stocks) are more voladle and Gamy more risk than other forms of investments, including inrestrnenu in high grade fixed income securities.The net assetvalue per share of this Fund will Aucwate as the value of the securities in the Pordolio changes. It is important to remember that there are risks associated with index investing,including the potential risk of market dedine,as wdl az the risks azsociated with investing in specific conQanies Share Class Options 19iares are offered exclusively to finandal instiwnons and intermediaries {or their own accounu or for the attounu of customers for which they act az fduciary agent, investment adviser, or msmdian and which consisu of azsets of a bona Ade trust, or assets of a business entity possessmga tax identification number Classic Funds J ~ _ Tfeai~rJ ri!~J7[;~I 1~/j:!(1 it :i` a r,:1lJ.. ip(Iflr~ , „~ _ ._. ~ ~ _.:.•.w - .._ .. ~ ~ ~ ~ ~ ~ r r ~ ~ r ~ ~ ~ ~ ~ ~ ~ ~ December 3 I, 2006 Ticker SIEIX CUSIP 7&1766594 N et AssetValue $17.87 Expense Ratio 0.67% Tord Fund Assets $945,349,087 Lipper Gregory ___ International Multi-Cap Core Funds - -- -- Market Capitalisation ($bil) - $44.7(6) Price-to-Book 2.3x Price-to-Earnings (12 month trailing) 15.7x Return on Equity (12month trailing) _ 17.6% 45% 3S•/ ° = ~ - 15% IS% m S SY - ° - S% -I SX Alpha __ Beta Sharpe Ratio Standard Deviation *As of December 31,2006 and subject to change. %. S r~ e \ ~~ _ e • o t - - IrnestmentTetms 0.18% 0.95 trice-to-0ook Ratio is used to compare a stock's market value 0.98 to its book value.The higher the ratio, the higher the premium the 1.85 market is willing to pry for a company above iu hard assets. 10.52% P~ce,to-Eamin;s Rat(o ("PIE") is a valuation ratio of a companyi current share price to is per-share earrtings, The higher the PIE rauo, the more the market is willing to pay (or each dollar of annual earnings. Afplsa meazures a fund's risk-adjusted performance and represents the difference between a fund's actual performance and its expected periomnance,given iu level of risk az meazured bI' beta -~ Beta is a means of measuring the volatdlty of a security or portfolio of securities in comparison with the market az a whole, A beta o(I indicates that the security will move with the market greater than I indicates that it's more volatile than the market, and e less than I indicates that its less volatile than the market ~ RSquarsd measures the portion of afund's movement that is ; ~ es~lained by movements in the market index, and helps indicate - the atturacy of a fund's alpha and beta Sbarys Ratio is a risk-adjusted measure that iz calculated using standard deviation and excess return to decermne reward per unit of risk. The higher the Sharpe ratio, the better the fund's historical risk-adjusted performance. -2fh ' ^ I Shares MSCI EAFE Index GDP Weighted (Price Return} ^ MSGI EAFE Index GDP Weighted (Total Return) Pa# performance does not guarantee future rewks.The performance data goofed represents past performance and current returns maybe tower or higher.Totat return figures include charge In share pike, relrrsestment of dividends and copRal gans.The lnrr#ment return ondpNncipal value will! fluctuate so that on rose#or's shoe; when redeemed, maybe worth nwre or less than Use origins! cost For performance data current to rise mo# recent month end, visit our websiie at www.#klasskfunds.com. An irxesior should rnnslder the ford's love#merx objectNe; dsk; and drarges and expenses carefully before rnMesUng or sending money. TMs and other important infotmatlon about the STI Classic Funds can be found in the fund's prospectus. To obtain a prospectu; please cal! 1-888-STI-FUND or visit www.#iclassicfunds.com. Please read the prospectus carefully before issue#rng The S71 Gassic Funds are adsised byTrusco Capital Management, inc., which receives a fee fw its services, and are distributed by B1SYS Fund Services limited Portnership, which is rat affdiated with7rusco Capital Management, Jnc. • Not FDIC Insured • No Bank Guuantee • Ma Lose Value I -IEI.1106 01107 •r J fr,;r~ ~ ~i~~ ~;~rin~ .~ 'r, -. Standard Deflation is a statistical meazurement of dispersion ': about an averege,which depicts how widely returns varied over a certain period of time. .~. .. r . .. ~. r .~ ~.. .. .. .. ... .. ~.. .~^ .^ .. .. December 3 I, 200b Yalue Blend Growth large f3S0,000 i f2o7, 390 _ _Fund Benchmark' 1300.000 Psychiatric Solutions, Inc. L I% Consumer Discretionary 11.97% 16,28% Mid f1S0,oo0 Trimble Navigation United 08% Consumer Staples 3.2T% 2.70% ilo0.ooo I General Cable Corp. OB% Energy - 7.47% 6,09% Small fls0.ooo ~ Ventana Medical Sysrems 08% Financial Services 5.96% 9.20% ~ Palomar Medical Technologies 08% Health Care 74% 21 1965% Adviser: Trusm Capital Management, Inc. floo,ooo . is0.ooo Digene Corp_ QB% Industrials 14.18% 17.51% j0 - - _ -- - - - _ TlmeWamaTelecommunicadons,Clazs-A OB% In(ormadonTechnology 24.63% 23.84% Portfolio Managers ---- -- --- - IlB l1% tin uoi ^l3ilo6 NBTY, Inc. 08% I0lii98 - - --- -- -- - -- - - Materials 3.55% 3.24% • fames P. Foster Pordolio rr6nager since 2006 ^Amoum rdue rich reirresimenl of income and caglvl gains Nlscrip6 Healthcare Solutions 08% Telecom Services 1.23% 1.35% • Stuart EYan Arsdale, CFA The obove gmph msrrmeson irdtiol hypodretrcd ervatmeri off (00,000 (ran the Hologic,lnc. 0.8% Utilities -- 0.00% 0.14% Pordolio rtnnager since 200b funds inception dote to 111311D6, The performance quoted herein represems past per(wmance, Ob~eetive The Fund seeks to provide long-term coital appreciation by investing in U.S. companies with market capitalizations of up to $3 billion that derransvate above average growth potential. Suitability Aggregate Returns AverageAnnualTotalReturm Equitles 48J% This fund is suitable for investor who want the value of their Inogstlon Latest I 3 S Since investrnenu to grow,but do not need current income. Shams Date Quarter YTD Year Yasr Year InceQtion Cazh Equivalents 13% I 1018198 4.50% LSI% L51% 9.30% 8.01% 13.69% InvestmentConcerns Russell 2000" Growth Indeoc' 8.77% 13.35% 13.35% 10.51% 6.93% 9.66% Srtrall capitalintion funds typically carry additional risks since - - - - - -- smaller cortpanies generally have a higher risk of failure. *As of December 31, 2~6 and subject to change. Aa# per~brtnance does not guarnrrtee rotate results7he performance data quoted represents past performarsce and consist returns maybe rower w hi~ter.Total return figures arclude change Equity securities (stocks? are more volatile and carry more risk la Than precl, relrtvesurteM Of dividendf and Capital gains.The Irrve#mera Rtafn and principal vofue will fluctuate 50 that an Inve#Of f fhare$ Wflen lEdeemed, maybe WOrtfl n107e Of JefTThan than other forms of investments, including invesments in high the original cosC for performance data curterR to the mo# recent month end, vait out website at www #klassic funds.rnm. grade fixed income securitie:.The net asset value per share of this Lrveanelt per(ormona relfats vdunmry fee worvers m effect N obsnce o(sudr fee warrers mmt rearm wcutd be reduced. Fund will fluctuate az die value of the securities in the pordolio 1 The Fussell 20008 Growth Index is canpraed o(the searita founder die AussaO 2000 tndu with o greater-rhawrerage growth oommtion. Compmiu n tlris index teed to efiibit highs pike-m-book and prrcrm-mmngs mtlca. finestors cannot changes. eruct dlrecdy m an adex. Share Class Options I Shares are offered exclusively to finandal instiwtions and intermediaries for their own accounts or (or the accounu o{ customers for which they act az fdudary agent,investment adviser or custodian and which consisu of assets of a bona fide trust,or ?set: of a business entity possessing a tax identification number D Classic Funds ~rin~ I~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ r ~ December 3 I, 2006 Tcker _ _ SSCTX CUSIP _ 7&1766263 N et Asset Value $20.12 Expense Ratio 1.17% Total Fund Assets $1,146,928,491 Upper Gregory SrrellLap Growth Funds MarketCapitaliration($bil} $1,3(b) Price-to-Book 3Ax Price-to-Earnings (12 month trailing} 21.4x Return on Equity (I 2 month trailing) 13.2% SS%~ 45% 3S% 2SY I SYi S9. -S% -I SX -25% -3 SX ^ I Shares Russell 200 Growth Index Beta Sharpe Ratio Standard Deviation *As of Decenber 31,2006 and subject m change. Alpha meazures a fund's risk-adjusted performance and represents the difference between a fund's acwal performance and its expected per4onnance, given iu level of risk as meazured by beta Beta is a means of meazuring the volatility of a security or portfolio o(seturities in comparison with the market as a whole. A betaof I indicates that the security will move with the market, greater than I indicates that it's more volatile than the market, and less than I indicates that its less volatile than the market RSquarod measures the portion of a fund's movement that is explained by pavements in the market index, and helps indicate the accuracy of a fund's alpha and beta Sharys Ratio is arisk-adjusted measure that is calculated using standard deviation and excess return m deterrrine reward per unitof risk. The higher the Shape ratio, the better the fund's historical risk-adjusted performance. Standard Deflation n a statistical meazurement o< dispersion about an average, which depicv how widely rewms varied over a certain period of time. Past perfonnarrte does rat guarorrtee future rewttsThe performance data quoted represents past performance and current returns may 6e tower or hl~ter.Totol return figures Include charge in share price, reirtaestmerrc of dividends tired capita! gains.7he irtsestment return andprincipol value will (fuauate so that on investors share; when redeemed, nay be worth pare or less than the origVnoJ cost For performance data currerN to the most recent month end, vhit our websiae of www.stklossKfurds.com. An Investor should rnnslder the fund's Investment ob~ectMes, dsk; and charges and expenses carefully before Irtwesting or sending money. TMs and other Important inlbtmdlon about the STl Classic Funds can be found in the fund's prospectus.7o obtain a prospedu; please cal! t~8&STt-FtlND or visft www.sticlassicfunds.com. Please read the prospectus caefuly before Irrwesting. The S71 Gossk Funds are advised by7rusco Capita! Management,lnc, which receives a fee fa its services, and are distributed by BlSYS Fund Servkes limited Portnership, whkh is rwt offdiated with7rusco Capital Management, Inc. C13SS1C FL1IldS • Not FDIC Insured • No Bank Guarantee • Ma Lose Value i-SCG-1206 IrnestmentTerms -0,04 % 0.94 Pdca-to~ook Ratio is used m compare a stock's market value 0.93 to iu book value.The higher the ratio, the higher the premium the 042 market is willing m pay for a company above its hard assets. .._.---- 15.20% pdoe-to-EamMgs Ratio ("PIE") Is a valuation ratio of a company's current share price m its per-share earnings. The higher the PJE ratio, the more the market is willing m pay for each dollar o(annual earnings. 1497 1998 1994 2000 2001 2002 2003 2004 2005 2006 rr r rr r a~ r ar r rr rr r rr r rr r r r^ rr rr December 3 I, 2006 SSOg000 s~agooo f3;2,2~0 f30g000 Slogooo SIOg000 m 1781/96 1717 V01 '2/31/UE ^ AttarA value xnh ie!me9 mem of urome and opnal gains Tire obove groph ossumes on iro4d hypotheticol errestment o(S 100,000 (rcm 12131196 to !2!31106, The performance quoted herein represems past performance, GATX Corp 4.3% Cooper Companies, Inc. 4.2% Steris Corp. 3A% Grupo Aeroportuario AD R 3.2% Greco, Inc. 2S% Airgas, Inc. 22% Wabtec 21% CHC Helicopter Corp. 20% Hub International Umited 20% Church 8 Dwight, Inc. I.T% Yalue &md 6ravrds large Fund Bendsmark' Consumer Discretionary 13.00° 15.58% Mid Consumer Staples 4.61% 3.59% Energy 5.66% 4.18% Stroll FinandalServices 16.58% 34.71% Health Care 4.91% 456% AdYlser: Trusco Capital Management, Inc. Indmtrials 33.93% 11.04% portfolio Manager InformadonTechnology 6.78% 13.21% 'BrettBamegCFA Materials 7.01°b 5.86% Portfolio manager since 1947 TelemmServicea 0.00% I,bl% Utilities 252% 5.63% Objective The Fund seeks ro provide capital appreciadon and income by invesOng primarily in small capitalization companies that pay egaar ~ncome dndend: and are undervalued in the opinion of theAdvse•. Suitability Aggregate Returns Avewage Annual Total Returns This Fund is suitable for investors who want the value of their Equities g7S% !rives[menutogrow,butdonotneedcurrentincome. Inoeptlon Latest I 3 5 10 Shares Date Quarter YTD Year Year Yoar Year Cash Equivalents 25% ___ _-____ Investment Concerns I 8131194 6.32% 16.14% 16.14% 11.90% ITJS% 13.42% _ _- $mdl npinliation funds typ!cally carry additional risks since Russell 1000"Value Irdoc' 9.03% 23.48% 23.48% 16.48% 15.37% 13.27% smaller conpanies generally have a higher risk of failure. *As of December 3 I, 2006 and subject to change, Equity securities (stocks) are more volatile and carry more risk past perfatnance does not guomntee (afore resuks.The perJbrmance data quoted represents past performance and carters[ returns may be lower or higfser.Total return jtgarses include change than other forms of investmenu, including investmenu !n high in shuns price, rein4estrrreM of dividends otrd capital gains The inrestmerR return and principal value wiq (Juctuate so that an irnestor's share; when redeemed, may be worth m01! or kss thon grade fixed income securities.The net asset value per share of this the oridgnal cost for perfornsarsce data eurnent to the most recent month end, visit out websJOe of www.sticlosskfunds.com. fund will fluctuaoe a9 the value of the securities in the pordolio Imesanert per(otmara reflects rduntory fee xoirers er effect H obsence o(sudr fee wohers rotrJ return wcufd be reduced. changes. The pef(ormonce quoted reprarms post performance o(Ae Bonitos[ Bonk"s mtemauy maroged common Nat ,end, odpsted (or (ea and eapmses (or the perrod prior m 1!31197. The common trust fund wos not rcgisoered under tre fnvatrriem Vdue-based investment: arc zubject to the risk that the broad CompanyAct of 1940 and therc(orc wos not subjea to cermm enesimeni resirictiora whiff may hove odversdy affected performance. market may not recogn¢e their intrinsic value, 'The Russell 10008 Vdue bdea is m unmmoged erda ^hrfi is compraed of the searites in the Rase-1000 Inds widr o lesrborroveroge growth wimtocan, Componies er lris nda genero0y hove low prke•tobodc and price-totarnerg; roods, Investors cmnot ewes[ directly er on hrdez, Share Class Options I Shares are offered exclusively to finandal instiwtions and intermediaries for their own attounts or for the attounts of customers for wfiich they act as fiduciary agent,investmentedviser, or custodian and which consists of asseu of a bona fide trust, or azs ets d a business entity possessing a taz identification number ® Classic Funds rr rr r~ r r r rr r r~ rr err rr ~r rr r rr r rr ~r December 3 I, 2006 Ticker - - SCETX - - - Alpha CUSIP 784766370 geU Net Asset Value _ $16,46 RSquared Expense RadO __ 1,20'~b ___ Sharye Rauo _ Standard_Deviation Total Fund Assets $707,240,530 ~~` ~ December 31,2006 and subject to change. Lipper G_tegory Small{ap Value Funds Market Capiuliuuon ($bil) $ LB(b) Price-to-Book 22x Price-to-Earnings (I 2 month trailing) 18,2x Return on Equity (12 month trading) 17. I% SSX 4S% 3S% 2S% ISY S% -S% -IS% -IS% IrrrestmentTerrvts 0.78% 0.89 PNce-ta-Batik Ratio is uzed t4 compare a ztock's market value to its book value.The higher the ratio, the higher the premium the 0.76 market is willing m pay for a company above iu hard azsets. 1.38 I LOB% PNce~o,EamMas Rauo ("P1E") is a valuation ratio of a comparry's current share price to in per-share earnings. The higher the P1E ratio, the more the market is willing to pay for each dollar of annual earnings, Alpha meazures a fund's riskadjusted performance and represents the difference between a fund's actual performance and its expected performante,given its level of risk az meazured by beta r Beta is a means of measuring the volatility of a security or portfolio of securities in comparison with the market az a whole. A beta of I indicates that the security will move with the market, greater than I indicates that it's more volatile than the market, and less than I indicates that it's less volatile than the market R.Squand meazures the portlon of a fund's ngvement that is explained by navements in the market index, and helps indicate { the accuracy of a fund's alpha and beta. Sharpy Ratfo is arisk-adjusted measure that n dculated using standard deviation and excess return ro deternine reward per unit of risk. The higher the Shaee ratio, the better the fund's historical risk-adjusted pericrrnance. 3S~ Standard Derhrtfon s a statistical measurement of dis7ersion about ar average which depicts how widely returns varied over a ^ I Shares Russe12000°VaYse Index certain period of tme. Past perFormatsce does tat guaf+aMee future tesufts.The performance data quoted represents past performance and current returns may be tower w Mgher.Taal return figures include chorsge in shay price, relrwestmertt of dividends and capital gWnsThe irwestment return andprtncipal value wiq fluctuate m that an investor's shoe; when redeemed, may be worth mole or kss than the original cost. For performance data currem to the most recent morNla end, vBit our website at www.siiclassic funds.com. An investor should rnrrsider the ford's Inves[merN objective; risk; and charges and expenses corefulty before investing or sending money. TMs and other Important In;fomtatbn about the "s 5T1 Classic Funds can be found in the fund's prospectus. To obtdn a proapecttt; pkase cal! 1-688-5T1-Fi1ND or visit wwsv.sticlassicfunds.com. Pkase tend the prospectus calefudy halals • - Irwesting the STl Classic Funds are advised by7rusco Capital Management, inc., which receives a fee for its services, and ore distributed by B15YS fund Services Umited Partnership, whkh a rrot o~diated with 7rraco Capital Management, Jnc. C18SS1C L"L111dS • Not FDIC Insured • No Bank Guarantee • Ma Lose Value I -SCV--1206 01107 r r rr rr r err r r ~r i^r err ~r r^r ~r rr rr rr rr rr Period Ending December 31, 2006. SunTrust Retirement High Grade Growth Fund Fund Type: Large Growth - .. -. -- . Value Blend Grow[h Large Annualized Medium Three Year to One Three Five Ten Inception Small Months Date Year Years Years Years 4/1/1990 Fund 4.40% 11.75% 11.75% 6.17% 3.16% 9.55% 11.79% Objective and Strategy The Fund seeks capital appreciation by investing primarily in large, well- Lipper Large Cap Growth Index 5.92% 4.71 % 4.71 % 6.57% 2.01 % N/A N/A established domestic corporations. The Fund is designed to comply with ' • - - - guidelines that are based principally on Florida laws governing the investment of Characteristic Fund to.s°-o municipal retirement plans for fire. police Consumer Discretionary Dividend Yield (Current) 1.0% to.s°% and general government employees. ~ s°,o EPS Growth (5 yr. est.) 18.7% Consumer staples Portfolio Data s.3 r Cusip . .... ............990001273 Market Capitalization ($bil) 75.4 Energy 4 4°° 9.8°b enc mark............ S&P 500 Index rlCe-tO- o0k 3.6x Unit Value .................. $62.95 Financials 16.6 P/E (12 months trailing) 20.7x zz.3i Assets ($mil) ...... ... .. S41.27 ta.o°o Return on Equity 21.3% Healthcare t zo°.o 'Portfolio Characteristics are subject to change. ~ s 3°° Portfolio Manager Industrials Elliott Perny. CFA to.a°° 24.3 Int ormation Technology 15 t°% Top Holdings' % Fund ~ ~ • Materials 3.1°` Microsoft Corp. 3.9 U.S. Stocks .................. 97.96% 3 0°"° Praxair Inc. 3.1 ° o.o°-o Cash ........................ 2.04 /° Telecom Services 3.5°0 ~ Fund Hew Jett-Packard Co. 3.0 Utilities °'0i ^ Index Baxter International Inc. 3.0 3.si Procter & Gamble Co. 2.9 American Express Co. 2.8 Cisco Systems Inc. 2.8 Raytheon Co. 2.7 American International Group Inc 2.7 PepsiCo Inc. 2.7 'Holdings are subject to change This fund is a common fund managed by Trusco Capital Management and trusteed by SunTrust Bank. ~~ ~_ ~ ._~ s r rr rr rr r~ rr r rr rr rl rr rr r rr r rr r r rr Period Ending December 31, 2006 SunTrust Retirement High Grade Growth Fund -continued The stock market rally that started in August continued through the fourth quarter. Investor confidence recovered as fears of an economic slowdown subsided. The Fund was up 4.4% for the quarter and 11.75% for the year. While the returns trailed the S&P500 Index returns of 6.7% and 15.8% for the quarter and year respectively, the Fund compared favorably to the major growth stock indices. The sectors which added significantly to the returns were Industrials, Financials and Technology. Underperformance came in the Consumer Discretionary, Energy and Materials sectors. As happened through most of 2006, the fourth quarter saw smaller cap stocks and value style stocks outperform large cap growth stocks. As profits slow in 2007, we expect that multi-year trend to reverse and look forward to good relative performance. Elliott Perny, CFA 2002 2003 2004 2005 2006 First Quarter 2.39% -2.02% 1.30% -3.60% 2.19% Second Quarter -10.89% 9.57% 0.96% 0.12% -2.42% Third Quarter -14.94% 2.03% -3.40% 0.91% 7.34% Forth Quarter 4.03% 10.41 % 7.01 % 3.12% 4.40% Fund -19.26% 20.94% 6.62% 0.43% 11.75% Lipper Large Cap Growth Index -24.20% 26.97% 7.50% 7.58% 4.71 yOV.UVV.VU . $50.000.00 -v~ .~ $30,000.00 $20.000.00 $io,ooo.oo -- $- Apr-90 Apr-92 Apr-94 Apr-96 Apr-98 Apr-00 Apr-02 Apr-04 Apr-06 Fund S&P 5001 3 Year Sharpe Standard Alpha Beta R-Squared Ratio Deviation Fund -0.31 0.97 87.85 0.45 7.08 ~ ~ ~ ~ r ~ r ~ ~ ~ ~r ~ ~ ~ ~ ~ . ~ ~ Period Ending December 31, 2006 SunTrust Retirement High Grade Relative Value Fund Fund Type: Large Value Value Blend Grow[h Large Medium Small Objective and Strategy The Fund seeks long-term capital appreciation with a secondary goal of current income by using avalue-oriented investment strategy. The Fund is designed to comply with guidelines that are based principally on Florida laws governing the investment of municipal retirement plans for fire, police and general government employees. Portfolio Data Cusip ....................990001182 Benchmark........ Russell Value Index Unit Value .................. $16.24 Assets ($mil) ............... $42.36 Portfolio Manager Charles B. Arrington. CFA Top Holdings' % Fund 1 ConocoPhillips 2.4 2. Citigroup 2.2 3. Chevron 2.2 4. Exxon Mobil 2.1 5. Bank of America 2.1 6. General Electric 2.0 7. Cisco Systems 1.9 8. Pfizer 1.8 9. Time Warner 1.8 10. Berkshire Hathaway B 1.7 Annualized Three One Two Three Inception Months Year Years Years 6/30/2002 Fund 6.85% 15.98% 12.77% 13.40% 11.39% Russell Value Index 8.00°-r, 22.25:- 14.40°~ 15.09°~ 13.37°- S&P 500 6.70% 15.80% 10.22% 10.44% 10.31% Characteristic Fund Index Dividend Yield (Current) 1.8% 2.3% EPS Growth (3-5 yr. est.) 13.8% 9.8% Market Capitalization ($bil) 80.9 109.6 Price-to-Book 2.7x 2.2x P/E (12 months trailing) 16.Ox 14.1 x 5 Year Return on Equity 19.7% 17.2x "Portfolio Characteristics are subject to change U.S.Stocks ................ Cash ...................... Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials 99.07% Telecom Services 0.93% Utilities s.s% s.s% 11.7% 7.6°a ~6°a 14.0°° 23.7°0 -1 36.4°% 1 2.3 6.9°.0 9.0°° 6.9°° ~ 1 z.7~% 3.4°'° I 4.5°b 3.7°0 3.1 °,o 6.2°-b ,, ^ Fund s.a % ^ Index 'Holdings are subject to change. This fund is a common fund managed by Trusco Capital Management and trusteed by SunTrust Bank. ~~ Tf! I~.~'~ r ~pflllr~ - ~_ .....~. Period Ending December 31, 2006 SunTrust Retirement High Grade Relative Value Fund -continued Stocks continued to advance in the fourth quarter, capping a strong second half rally. Despite political First Quarter change in Washington, ongoing negative news in the Second Quarter Middle East, slower growth in the economy, and a Third Quarter growing stock option scandal, investors stayed focused Fourth Quarter on corporate profits, a Federal Reserve on hold, and friendlier energy prices. The S&P 500 finished the Fund quarter with a return of 6.7% while the Russell Value Russell Value Index Index finished a sensational year with a gain of 8.0% S&P 500 for the period. Overall, 2006 returns exceeded expectations but active managers struggled to finish ahead of their respective benchmarks. The Fund • ~ ~ ~ returned 6.9% during the fourth quarter and 16.0% for the full year, ahead of the S&P 500 but behind the Russell Value Index. 2002 2003 2004 2005 2006 N/A -4.11 % 2.36% 1.68% 4.00% N/A 13.45% 2.59% 1.16% -1.02% -17.45% 2.10% 0.05% 3.94% 5.45% 6.53% 14.05% 9.14% 2.57% 6.85% -12.05% 26.68% 14.67% 9.65% 15.98% -11.29°io 30.03°0 16.49°~0 7.05°-~ 22.25° -10.30% 28.68% 10.88% 4.91% 15.80% $15,000 $14,000 $13,000 $12,000 ~ - $11,000 $10,000 i _ $9,000 $8,000 $7,000 Sept Dec Mar Jun Sept Dec Mar June Sept Dec Mar June Sept Dec SunTnist Retirement High Grade Relative Value Russell 1000 Value r~ r ~r r~ r rr rr rr ~r r ^r ~r r r~ ~ r r r~ r~ Period Ending December 31, 2006 Su nTrust R etirement Mid-Cap Equity Fund Fund Type: Mid-Cap Bien. - -. Value Blend Growth Annualized Large Three One Three Five Ten Inception Medium Months Year Years Years Years 12/1996 small FUrtd 7.16% 11.09% 14.84% 6.23% 13.82% 13.79% Russell Mid-Cap Index 7.67°~, 15.26°~~ 16.00°-~ 12.88°s 11.92°0 11.92°~0 Objective and Strategy The Fund seeks long-term capital growth Lipper Mid-Cap Core Funds Avg.' 7.44% 12.22% 12.33% 9.53% 10.07% 9.83% by investing in domestic corporations with Source. upper Ir,c a market capitalization between $1 billion and $15 billion. The Fund is designed to . ~ ~ ~ _ - , comply with guidelines that are based Principally on Florida laws governing the Characteristic Fund Index investment of municipal retirement plans consumer oiscreeonary ,as~a for fire, police and general government Dividend Yield (Current) 1.2% 1.3° c ,e 30..0 employees. EPS Growth (3 yr. hist.) 29.0% 25.5% Consumer staples 6.6°,0 ~ Portfolio Data 57 ° Market Capitalization ($bil) 8.0 8.3 7 5°~ Cusi ..............990001653 P ..... a,ergv sz~.o Benchmark...... Russell Mid-Cap Index Price-to-Book 2.4x 2.7x ' Unit Value .................. $36.49 P/E (12 months trailing) 15.6x 18.1 x Financials x° ~ 6.9 20.0 0 Assets ($mil) ............... $38.96 Return on Equity 18.0% 16.7% Healthcare 9.7°° s s°,o Portfolio Managers 'Portfolio Characteristics are subject to ch ange. industrials a g'° Scott Yuschak. CFA ~ t.a°a ° Chuck Arrington, CFA Information Technology 14.5 0 13.4 0 * c Top Holdings /° Fund - • • Materials 5.9q` s.z~~ 1. American Electric Power Co. 1.5 U.S. StOCks ................ 100.00% z too 2. MGIC Investment Corp. 1.5 Telecom Services 2 boo 3. PMI Group Inc. 1.5 9 30,.0 ^ Fund 4. PG&E Corp. 1.4 ~~illties e 2°0 ^ Index 5. Noble Energy Inc. 1.4 6. Hilton Hotels Corp. 1.4 7. CIT Group Inc. 1.3 8. Alliant Energy Corp. 1.3 9. Wellcare Group Inc. 1.3 10. Edison International 1.2 'Holdings are subject to change Period Ending December 31, 2006 SunTrust Retirement Mid-Cap Equity Fund -continued The Russell Mid Cap advanced 7.7% in the 4th quarter of 2006. The Materials sector had the best performance, advancing +13.2%. Other strong sectors were: Utilities,+11.7%, Consumer Discretionary, +9.8%, and the Industrials sector, +9.0%. The worst performance came from Health Care, which advanced 3.2%. The Consumer Staples sector advanced 4.5% and Telecommunications Services advanced 4.7%. The Russell Midcap Value Index advanced 8.5% and the Russell Midcap Growth index advanced 7.0%. The SunTrust Retiement Mid-Cap Equity Fund total return for the quarter was 7.2%. During the quarter we added to the Industrials, Consumer Discretionary, Energy, Materials, and Telecommunications sectors and reduced the weighting of the Information Technology, Consumer Staples, Financials, Utilities and Health Care sectors. First Quarter Second Quarter Third quarter Fourth Quarter Fund Russell Mid-Cap Index Lipper Mid-Cap Core Funds Avg.* $ao,ooo $35,000 $30,000 $2s,ooo $20,000 $15,000 $10,000 $5,000 $0 2002 2003 2004 2005 2006 -5.53% -4.92% 3.78% 1.60% 5.98% -13.42% 14.12% 0.50% 5.40% -2.14% -15.34% 4.05% 0.18% 5.98% -0.05% 0.45% 13.20% 13.01 % 1.80% 7.16% -30.44% 28.37% 18.04% 15.49% 11.09% -16.19°~, 40.06°'~ 20.20°~0 12.65% 15.26°a -17.37% 36.11 % 15.50% 10.30% 7.44% 'Source: Linger Inc. +~ Fund Russell M id-Cap Index 3 Year Sharpe Standard Alpha Beta R-Squared Ratio Deviation Fund -0.12 1.04 0.92 1.14 10.43 Russell Mid-Cap Index 0.00 1.00 1.00 1.35 9.62 SunTrust Retirement Fund Type: Intermediate-Term Bond Period Ending December 31, 2006 High Grade Bond Fund Short Int. Long • • • • • • • High Annualized Medium Three One Three Five Ten Inception Months Year Years Years Years 8/31/1989 L°w Fund 0.94% ° ° ° ° ° 3.29 /° 3.38 /° 4.98 /° 6.26 /° 7.49 /° Merrill Lynch Gov't~`Credit A+ Index 0.95°~~ 3.69°~~ 3.35°% 4.92°~b 6.17°% 8.23°~0 Objective and Strategy The fund seeks to provide a high level of total return through current income and capital appreciation by investing in ' • - ~ ~ • domestic corporate investment grade bonds rated A or higher by major credit Characteristic Fund Index rating agencies and U.S. Government Average Rating AGY AAA securities. Average Coupon 4.7% 5.4°~ 0-1 Year Portfolio Data Current Yield 4.7% 5.2°% Cusip ..................990001265 Yield-to-Maturity 5.0% 5.1 °~ s°o Benchmark ............. Merrill Lynch ~-a years Government/Credit Average Maturity (Years) 8.4 7.2 ss a°-o A Rated and Above Index Effective Duration (Years) 4.8 4.8 Unit Value ................. $34.16 Assets ($mil) ............... $194.28 Portfolio Characteristics are subject to change. s-s Years Portfolio Managers ~ • 5-7 Years John Tatty, CFA Perry Troisi Characteristic Fund Index Treasury 53.7% 49.1 °~° Quality Distribution % Fund TIPS 0.0% 0.0°-b ~-~o years Treasury 53.7 Agency/Gov't Related 11.1% 25.2°~ AAA 38.9 AA 4.0 Mortgages 24.8% 0.0°~0 10+ Years Fund A 3.4 Corporate Bond 9.8% 25.7°io Index Cash Equivalents 0.6% 0.0% Period Ending December 31, 2006 SunTrust Retirement High Grade Bond Fund -~ontinued After the very high returns in the third quarter, results were more modest in the fourth quarter, as interest rates rose about 10 basis points across the yield curve. For the full year at 3.69% the Merrill Lynch Govt/Corp A or better Index, performance improved over the disappointing results of 2005. When the Fed ceased raising rates at mid- year, there were widespread expectations that the economy would slow dramatically, possibly to the point of recession. We were not nearly as pessimistic, believing that inflation remains within target ranges and growth, although declining, will stay positive. The housing market has slumped, but not crashed. In this environment, the FED will remain idle for some time while closely monitoring developments on the inflation front before establishing its next move. In particular, investor appetite for risk should remain strong over the near term. We are positioned much less defensively than we were during the first part of 2006 and believe our current allocation of overweighting mortgage-backed securities should provide the potential for increased returns in the year ahead. Finally, bond markets should be attractive in 2007 as the continued glut of cash and liquidity around the world finds a home in U.S. assets. First Quarter Second Quarter Third Quarter Fourth Quarter Fund Merrill Lynch Gov't/Credit A+ Index $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $s,ooo a- Aug-89 2002 2003 2004 2005 2006 -0.49% 1.56% 2.90% -0.11% -1.15% 4.21 % 2.52% -2.96% 3.01 % -0.07% 5.74% -0.41 % 3.27% -0.88% 3.60% 1.53% -0.06% 0.97% 0.76% 0.94% 11.33% 3.63% 4.12% 2.76% 3.29% 11.63°a 3.20°a 3.73°io 2.62°0 3.69°,-~ Aug-92 Aug-95 Aug-98 Aug-01 Aug-04 Fund Merrill Lynch Gov't/Credit A+ Index Important Disclosure Information This material must be preceded or accompanied by a prospectus. An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the STI Classic Funds can be found in the fund's prospectus. To obtain a prospectus, please call 1-800-STI-FUND, or by visiting www.sticlassicfunds.com. Please read the prospectus carefully before investing. Mutual fund investing involves risk, including possible loss of principal. STI Classic Funds are advised by Trusco Capital Management, Inc., which receives a fee for its services, and are distributed by BISYS Fund Services, LP, which is not affiliated with Trusco Capital Management, Inc. MPT STATISTICS/OTHER MEASUREMENTS Alpha - is defined as the difference between the average realized return of a portfolio manager with private information and the expected return of the passive strategy based upon public information with equal systematic risk. Beta - is a measure of an investment's volatility, relative to an appropriate asset class. R-Squared - a statistical measure of how well a regression line approximates real data points; an r-squared of 1.0 (100%) indicates a perfect fit. r- squared measures how well the Capital Asset Pricing Model predicts the actual performance of an investment or portfolio. Sharpe Ratio -also known as Reward-to-Volatility-Ratio, indicates the excess return per unit of risk associated with the excess return. The higher the Sharpe Ratio, the better the performance. Standard Deviation - a statistical measurement of dispersion about an average, which, for a mutual fund, depicts how widely the returns varied over a certain period of time. PORTFOLIO CHARACTERISTICS DEFINITIONS 30 Day SEC Yield - is calculated by dividing the net investment income per share for the 30 days ended on the date of calculation by the offering price per share on that date. The figure is compounded and annualized. 5 Year EPS Growth - is the five-year reported earnings per share growth rate for each company in percent per year. Price-to-Book - is used to compare a stock's market value to its book value. This ratio gives some idea of whether you're paying too much for what would be left if the company went bankrupt immediately. P/E (12 months trailinq~ - is the price of a stock divided by its historical earnings per share. Return on EquitK- is a measure of a corporation's profitability, calculated by taking a company's net income and dividing it by the shareholder's equity. Investments in the STI Classic Funds are not insured by the FDIC or any other Federal agency nor are they guaranteed by any bank, and may lose value. ~ ~ ~ ~ ~ ~ ~ i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Important Disclosure Information INVESTMENT PERFORMANCE Past performance is not indicative of future results. Performance data related to accounts managed by Trusco represents returns gross of investment management fees. See Trusco's Form ADV, Part II for a description of investment advisory fees. The performance information reported herein may be for a variety of products which have different methods of presenting performance data, i.e. net of fees, gross of fees, or a combination of these. This information should not be evaluated independent of or without reference to the investment advisory agreement that more specifically addresses applicable investment advisory fees. Fees have a compounding effect on cumulative results. For example, assume the account achieves a 10% annual return prior to the deduction of fees each year for a period of ten years. If an annual fee of 0.5% of assets under management were charged each of the ten years, the resulting annual average return net of fees would be reduced to 9.48%. YIELD INFORMATION Yield information more closely reflects the current earnings of the Fund than the total return. In the absence of current fee waivers the yield would be reduced. A SEC Yield relates aggregate net earnings of a fund to its aggregate net assets. In any given period a fund may distribute more or less than its actual income. SECTOR WEIGHTINGS AND PORTFOLIO CHARACTERISTICS The sector weightings and portfolio characteristics are presented as of the date shown in the left-hand corner of this presentation, and may change without notice. A complete list of sector weightings and individual security positions for any specific period are available upon request. ECONOMIC AND MARKET REVIEW This perspective was prepared for clients and prospective clients of Trusco Capital Management, Inc. Neither Trusco nor any affiliations make any representation or warranties as to the accuracy or merit of this analysis for individual use. Comments and projections are based on information available at the time of writing and believed to be accurate, are for informational purposes only, and may not be relied upon for future investing. Investors are advised to consult with their investment professional about their specific circumstances before making any investment decisions. COMMON AND COLLECTIVE FUNDS Are operated by SunTrust Bank as Trustee and managed by Trusco Capital Management, in accordance with the laws of Georgia and applicable banking regulations. They open to investment only by trusts for which SunTrust Bank serves as trustee or qualified retirement plans which adopt the terms of a collective trust. They are not subject to direct regulation by the United States Securities and Exchange Commission and are exempt from registration as securities. The Plan and Declaration documents which govern their operations are available upon request. The sheets should not be used by anyone who is a registered rep absent approval from the compliance office of the broker through whom they are registered. Recent experience suggests that such approval is unlikely. Thank You! ..~.. TRUSCO CAPITAL MANAGEMENT