STI CLASSIC FUNDS, 485APOS, 1996-10-18

STI CLASSIC FUNDS
485APOS, 1996-10-18

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 1996
FILE NO. 33-45671
FILE NO. 811-6557

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 17 /X/
AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 19 /X/

STI CLASSIC FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

2 OLIVER STREET
BOSTON, MASSACHUSETTS 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (800) 342-5734

DAVID G. LEE
C/O SEI CORPORATION
680 E. SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(NAME AND ADDRESS OF AGENT FOR SERVICE)

Copies to:

RICHARD W. GRANT JOHN H. GRADY, JR.
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 1800 M STREET, N.W.
PHILADELPHIA, PA 19103 WASHINGTON, D.C. 20036

It is proposed that this filing will become effective (check appropriate box)

/ / Immediately upon filing pursuant to paragraph (b), or
/ / On [DATE] pursuant to paragraph (b), or
/ / 60 days after filing pursuant to paragraph (a) or
/X/ 75 days after filing pursuant to paragraph (a) or
/ / On [DATE] pursuant to paragraph (a) of Rule 485.

Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of units of beneficial interest is being registered
by this Registration Statement. Registrant has filed a Rule24f-2 Notice on
July 29, 1996 for its fiscal year ended May 31, 1996 .

<PAGE>

STI CLASSIC FUNDS
POST-EFFECTIVE AMENDMENT #17
CROSS REFERENCE SHEET

N-1A ITEM NO. LOCATION
- ----------------------------------------------------------------------
PART A - ALL FUNDS
Item 1. Cover Page Cover Page
Item 2. Synopsis *
Item 3. Condensed Financial
Information *
Item 4. General Description of
Registrant Funds and Investment Objectives;
Investment Policies and Strategies;
General
Investment Policies and Strategies;
Investment Risks; Investment
Limitations;
Appendix
Item 5. Management of the Fund Board of Trustees; Investment Advisor;
Distribution; Administration
Item 6. Capital Stock and Other
Securities Voting Rights; Shareholder Inquiries;
Dividends and Distributions; Tax
Information
Item 7. Purchase of Securities
Being Offered Cover Page; Purchase of Fund Shares;
Redemption of Fund Shares
Item 8. Redemption or Repurchase Purchase of Fund Shares;
Redemption of Fund Shares; Distribution
Item 9. Pending Legal Proceedings *

PART B - ALL FUNDS
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and
History The Trust
Item 13. Investment Objectives and
Policies Description of Permitted Investments;
Investment Limitations
Item 14. Management of the
Registrant Trustees and Officers of the Trust; The
Administrator
Item 15. Control Persons and
Principal Trustees and Officers of the Trust
Holders of Securities
Item 16. Investment Advisory and
Other Services Investment Advisor; The Administrator;
The Distributor; Legal Counsel
(Prospectus); Independent Auditors
(Prospectus); Experts
Item 17. Brokerage Allocation Fund Transactions
Item 18. Capital Stock and Other
Securities Description of Shares
Item 19. Purchase, Redemption, and
Pricing of Securities Purchase and Redemption of Shares;
Being Offered Determination of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield
Quotations Computation of Yield; Calculation of
Total Return
Item 23. Financial Statements Financial Information
<PAGE>
PART C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.

* Not applicable
<PAGE>
STI CLASSIC FUNDS
TRUST SHARES
SMALL CAP EQUITY FUND

INVESTMENT ADVISOR TO THE FUND:
STI CAPITAL MANAGEMENT, N.A.
(THE "ADVISOR")

The STI Classic Funds (the "Trust") is a mutual fund that offers shares in a
number of separate investment portfolios. This Prospectus sets forth concisely
the information about the Trust Shares of the Small Cap Equity Fund (the
"Fund"). Investors are advised to read this Prospectus and retain it for future
reference.

A Statement of Additional Information relating to the Fund dated the same date
as this Prospectus has been filed with the Securities and Exchange Commission
and is available without charge through the Distributor, SEI Financial Services
Company, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658 or by calling
1-800-428-6970. The Statement of Additional Information is incorporated into
this Prospectus by reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------

THE TRUST'S SHARES ARE NOT SPONSORED, ENDORSED, OR GUARANTEED BY, AND DO NOT
CONSTITUTE OBLIGATIONS OR DEPOSITS OF, THE ADVISOR OR ANY OF ITS AFFILIATES OR
CORRESPONDENTS INCLUDING SUNTRUST BANKS, INC., ARE NOT GUARANTEED OR INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.

, 199
<PAGE>
2

The Trust Shares are offered primarily to financial institutions and
intermediaries ("Shareholders"), including SunTrust Banks, Inc. and its
affiliates and correspondents, for the investment of funds for which they act in
a fiduciary, agency, investment advisory or custodial capacity. Individuals may
not purchase Trust Shares directly, although individuals may be able to purchase
Trust Shares through accounts maintained with financial institutions.

TABLE OF CONTENTS

<TABLE>
<S> <C>
Expense Summary...................... 3
Performance Information for
Predecessor Collective Fund......... 4
The Trust............................ 4
Fund and Investment Objective........ 4
Investment Policies and Strategies... 4
Investment Risks..................... 5
Investment Limitations............... 6
Performance Information.............. 7
Purchase of Fund Shares.............. 7
Redemption of Fund Shares............ 8
Dividends and Distributions.......... 8
Tax Information...................... 9
STI Classic Funds Information........ 10
The Trust............................ 10
Board of Trustees.................... 10
Investment Advisor................... 10
Portfolio Manager.................... 11
Banking Laws......................... 11
Distribution......................... 11
Administration....................... 12
Transfer Agent and Dividend
Disbursing Agent.................... 12
Custodian............................ 12
Legal Counsel........................ 12
Independent Public Accountants....... 12
Other Information.................... 12
Voting Rights........................ 12
Reporting............................ 13
Shareholder Inquiries................ 13
Description of Permitted
Investments......................... 13
</TABLE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE TRUST'S STATEMENT OF
ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR SEI FINANCIAL SERVICES COMPANY
(THE "DISTRIBUTOR"). THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE>
3

EXPENSE SUMMARY
TRUST SHARES

The purpose of the following table is to help you understand the various costs
and expenses that a shareholder will bear, directly or indirectly, in connection
with an investment in the Trust Shares of the Fund.

ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)

<TABLE>
<CAPTION>
SMALL CAP
EQUITY FUND
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
Management Fees (after fee waivers)(1)................................................................ 1.00%
Other Fund Expenses(2)................................................................................ .20%
- --------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (after fee waivers)(3).................................................. 1.20%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Advisor is waiving, on a voluntary basis, a portion of its fee. The
Advisor reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waivers, Management Fees would be 1.15%.
(2) Other expenses is based on estimated amounts for the current year. See
"Investment Advisor."
(3) Absent the voluntary waiver described above, Total Fund Operating Expenses
would be 1.35%.

<TABLE>
<CAPTION>
EXAMPLES ONE YEAR THREE YEARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
An investor would pay the following expenses on a $1,000 investment assuming: (1) a 5% annual return
and (2) redemption at the end of each time period. ............................................... $ 12 $ 37
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE EXAMPLE IS BASED UPON THE ESTIMATED TOTAL OPERATING EXPENSES OF THE FUND AND
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. THIS FUND
IS NEW AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. INFORMATION
ABOUT THE ACTUAL PERFORMANCE OF THE FUND WILL BE CONTAINED IN THE TRUST'S ANNUAL
REPORTS TO SHAREHOLDERS, WHICH MAY BE OBTAINED WITHOUT CHARGE WHEN AVAILABLE.
<PAGE>
4

PERFORMANCE INFORMATION FOR PREDECESSOR COLLECTIVE FUND

The Small Cap Equity Fund is the successor to a collective investment fund
previously managed by STI Capital Management, Inc. A substantial portion of the
assets of the collective investment fund was transferred to the Fund in
connection with the Fund's commencement of operations. Set forth below is
certain performance data for the predecessor collective investment fund, which
is deemed relevant because the collective investment fund was managed using
virtually the same investment objectives, policies and restrictions as those
used by the Fund. The performance data, however, is not necessarily indicative
of the future performance of the Fund. Further, the predecessor collective fund
was not subject to certain investment limitations imposed on mutual funds,
which, if they had been imposed, may have adversely affected the collective
fund's performance.

The predecessor collective fund did not incur expenses that correspond to the
advisory, administrative, and other fees to which the Fund is subject.
Accordingly, the following performance information has been adjusted by applying
the total expense ratio for the Fund, as disclosed in the Prospectus at the time
the Fund commenced operations, which reduced the actual performance of the
collective fund.

The average annual total returns (adjusted to reflect Fund expenses, net of
voluntary waivers and reimbursements) for the following periods:

<TABLE>
<CAPTION>
ONE TWO SINCE
YEAR YEARS INCEPTION
(ENDING (ENDING (9/1/94-
9/30/96) 9/30/96) 9/30/96)
----------- ----------- -----------
<S> <C> <C> <C>
Small Cap Equity
Fund................ 27.96% 25.29% 24.50%
</TABLE>

THE TRUST

STI CLASSIC FUNDS (the "Trust") is a diversified, open-end management investment
company that provides a convenient and economical means of investing in several
professionally managed portfolios of securities. The Trust currently offers
units of beneficial interest ("shares") in a number of separate investment
portfolios (together with the Fund, the "Funds"). Shareholders may purchase
shares in three separate classes (Trust Shares, Investor Shares and Flex
Shares), which provide for variations in distribution and service fees, transfer
agent fees, voting rights and dividends. Except for differences between classes,
each share represents an undivided, proportionate interest in the Fund. This
Prospectus relates to the Trust Shares of the Small Cap Equity Fund.

FUND AND INVESTMENT OBJECTIVE

THE SMALL CAP EQUITY FUND seeks to provide capital appreciation with a secondary
goal of achieving current income. The investment objective is nonfundamental and
may be changed without shareholder approval. Further, there can be no assurance
that the Fund will achieve its investment objective.

INVESTMENT POLICIES AND STRATEGIES

The Small Cap Equity Fund invests substantially all, and under normal market
conditions at least 65%, of its assets in the equity securities of smaller
companies (I.E., companies with market capitalizations of less than $1 billion)
which, in the Advisor's opinion, are undervalued for above-average capital
growth. Any remaining assets may be invested in the equity securities of
companies with larger market capitalizations which the Advisor believes are also
undervalued. The Fund may also invest U.S.
<PAGE>
5
dollar denominated equity securities of foreign issuers (including American
Depositary Receipts). Equity securities include common stock, preferred stock,
warrants and rights to subscribe to common stock and, in general, any security
that is convertible into or exchangeable for common stock.

In order to meet liquidity needs, or for temporary defensive purposes, the Fund
may invest all or a portion of its assets in common stocks of larger, more
established companies, fixed income securities, repurchase agreements, cash or
money market securities. Fixed income securities will only be purchased if they
are rated investment grade or better by one or more nationally recognized
statistical ratings organizations ("NRSROs"). Investment grade bonds include
securities rated at least BBB by Standard & Poor's Corporation ("S&P") or Baa by
Moody's Investor's Services, Inc. ("Moodys"). Debt securities rated BBB or Baa
lack outstanding investment characteristics, and have speculative
characteristics as well. Money market securities will only be purchased if they
have been given one of the two top ratings by two or more NRSROs, or if not
rated, determined to be of comparable quality by the Fund's Advisor. In the
event that a security owned by the Fund is downgraded below the stated rating
categories, the Advisor will review and take appropriate action with regard to
the security. To the extent the Fund is engaged in temporary defensive
investing, the Fund will not be pursuing its investment objective.

The Fund's annual turnover rate may exceed 100%. Such a turnover rate may result
in higher transactions costs and may result in additional taxes for
shareholders. See "Taxes."

The Fund may borrow money for temporary or emergency purposes in an amount not
to exceed one-third of the value of its total assets. The Fund may not purchase
additional securities while its outstanding borrowings exceed 5% of its total
assets.

The Fund may purchase securities issued by money market mutual funds. The Fund's
purchase of shares of other investment companies is limited by the Investment
Company Act of 1940 (the "1940 Act") and will ordinarily result in an additional
layer of charges and expenses.

The Fund may engage in securities lending and will limit such practice to 33
1/3% of its total assets.

The Fund may engage in options transactions for hedging purposes only.

It is a non-fundamental policy of the Fund to invest no more than 15% of its net
assets in illiquid securities. An illiquid security is a security which cannot
be disposed of in the usual course of business within seven days at a price
approximating its carrying value.

For additional information regarding permitted investments, see "Description of
Permitted Investments" in this Prospectus and in the Statement of Additional
Information.

INVESTMENT RISKS
AMERICAN DEPOSITARY RECEIPTS

American Depositary Receipts ("ADRs") are securities, typically issued by a U.S.
financial institution (a "depositary"), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer and deposited with
the depositary. ADRs may be available through "sponsored" or "unsponsored"
facilities. The Fund will not invest more than 20% of its total assets in
unsponsored facilities.
<PAGE>
6

EQUITY SECURITIES

Investments in equity securities are generally subject to market risks that may
cause their prices to fluctuate over time. The values of convertible equity
securities are also affected by prevailing interest rates, the credit quality of
the issuer and any call provision. Fluctuations in the value of equity
securities in which the Fund invests will cause the Fund's net asset value to
fluctuate.

Investments in small capitalization companies involve greater risk than is
customarily associated with larger, more established companies due to the
greater business risks of small size, limited markets and financial resources,
narrow product lines and the frequent lack of depth of management. The
securities of small companies are often traded over-the-counter and may not be
traded in volumes typical on a national securities exchange. Consequently, the
securities of smaller companies may have limited market stability and may be
subject to more abrupt or erratic market movements than securities of larger,
more established growth companies or the market averages in general.

INVESTMENT LIMITATIONS

The following investment limitations constitute fundamental policies of the
Fund. Fundamental policies cannot be changed without the consent of the holders
of a majority of the Fund's outstanding shares. The term "majority of the
outstanding shares" means the vote of (i) 67% or more of the Fund's shares
present at a meeting, if more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the Fund's outstanding
shares, whichever is less.

The Fund may not:

1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if as a result more than 5% of the total assets of
the Fund would be invested in the securities of such issuer; provided, however,
that the Fund may invest up to 25% of its total assets without regard to this
restriction.

2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in obligations issued or guaranteed by
the U.S. Government or its agencies and instrumentalities, repurchase agreements
involving such securities or tax-exempt securities issued by governments or
political subdivisions of governments. For purposes of this limitation, (i)
utility companies will be divided according to their services, for example, gas,
gas transmission, electric and telephone will each be considered a separate
industry; (ii) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; and (iii)
supranational entities will be considered to be a separate industry.

The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
<PAGE>
7

PERFORMANCE INFORMATION

From time to time, the Fund may advertise performance (total return). These
figures will be historical and are not intended to indicate future performance.

The total return of the Fund refers to the average compounded rate of return on
a hypothetical investment, including any sales charge imposed, for designated
time periods (including but not limited to, the period from which the Fund
commenced operations through the specified date), assuming that the entire
investment is redeemed at the end of each period and assuming the reinvestment
of all dividend and capital gains distributions.

The performance of the Trust Shares of the Trust will normally be higher than
for Investor Shares and Flex Shares because Investor Shares and Flex Shares are
subject to distribution, service and certain transfer agent fees not charged to
Trust Shares. The performance of Flex Shares in comparison to Investor Shares
will vary depending upon the investment time horizon.

The Fund may periodically compare its performance to other mutual funds tracked
by mutual fund rating services, to broad groups of comparable mutual funds or to
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.

PURCHASE OF FUND SHARES

Trust Shares of the Trust are sold primarily to financial institutions or
intermediaries, including subsidiaries of SunTrust Banks, Inc. ("SunTrust"), for
the investment of funds for which they act in a fiduciary, agency, investment
advisory or custodial capacity. Individuals may not purchase Trust Shares
directly, although individuals may be able to purchase Trust Shares through
accounts maintained with financial institutions. Trust Shares are sold without a
sales charge, although financial institutions may charge their customer accounts
for services provided in connection with the purchase of shares. Financial
institutions may impose an earlier cut-off time for receipt of purchase orders
directed through them to allow for processing and transmittal of these orders to
the Trust's transfer agent, Federated Services Company (the "Transfer Agent"),
for effectiveness the same day. Information concerning these services and any
charges will be provided to customers by the financial institutions. Trust
Shares will be held of record by the financial institutions, although customers
may have or be given the right to vote the shares depending upon the terms of
their relationship with the financial institution. Confirmations of share
purchases and redemptions will be sent to the financial institution as the
shareholder of record.

Shares may be purchased on days on which the New York Stock Exchange is open for
business (a "Business Day").

A purchase order for the Fund will be effective as of the Business Day received
by the Transfer Agent if the Transfer Agent receives the order before 4:00 p.m.
Eastern time and payment is received within one day. Purchases will be made in
full and fractional shares of the Fund calculated to three decimal places. The
purchase price of shares of the Fund is the net asset value next determined
after a purchase order is effective plus any applicable sales charge (the
"offering price"). The net asset value per share of the Fund is determined by
dividing the total market value of the Fund's investments and other assets, less
any liabilities, by the total outstanding shares of the Fund. Net asset value
per share is determined daily as of the close of business of the New
<PAGE>
8
York Stock Exchange (currently 4:00 p.m. Eastern time) on any Business Day.
Pursuant to guidelines established by the Trustees, the Trust may use a pricing
service to provide market quotations or valuations for securities owned by the
Fund.

The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or
Shareholder(s).

The Trust maintains procedures, including identification methods and other
means, for ascertaining the identity of callers and authenticity of
instructions. If reasonable procedures are not employed, the Trust and/or the
Transfer Agent may be liable for any losses due to unauthorized or fraudulent
telephone transactions. Neither the Transfer Agent nor the Trust will be
responsible for any loss, liability, cost or expense for acting upon telephone
or wire instructions reasonably believed to be genuine.

Shares of the Fund are offered only to residents of states in which the shares
are eligible for purchase. Investors in certain states may be required to
purchase shares through institutions registered as broker-dealers in such
states.

Although the methodology and procedures for calculating the net asset value for
Trust Shares are identical to those of Investor Shares and Flex Shares, the net
asset value per share of the classes of the Fund may differ because of the
distribution, service, and certain transfer agent expenses charged to Investor
Shares and Flex Shares.

REDEMPTION OF FUND SHARES

An order to redeem Trust Shares must be transmitted to the Transfer Agent by the
financial institution as the record owner. Financial institutions may establish
procedures for their customers to request redemption of Trust Shares held in
their account with the financial institution. Customers should contact their
financial institution for information concerning these procedures.

Redemption orders must be received by the Transfer Agent before 4:00 p.m.
Eastern time on any Business Day to be effective that day. Redemption proceeds
are normally remitted in federal funds wired to the record owner of the shares
within one Business Day, but in no event more than seven days following the
effective date of the order. No charge for wiring redemption payments is imposed
by the Trust. Redemption orders are effected at the net asset value per share
next determined after an order is effective.

The Trust intends to pay cash for all shares redeemed, but under abnormal
conditions which make payment in cash unwise, payment may be made wholly or
partly in liquid portfolio securities with a market value equal to the
redemption price. In such circumstances, an investor may incur brokerage costs
in converting such securities to cash.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income (exclusive of capital gains) are declared
and paid quarterly by the Fund. The Fund's net realized capital gains (including
net short-term capital gains) are distributed at least annually. Net income for
dividend purposes consists of (i) interest accrued and original issue discount
earned on the Fund's assets, (ii) plus the amortization of market discount and
minus the amortization of market premium on such assets, (iii) plus dividend or
distribution income on such assets, (iv) less accrued expenses directly
attributable to the Fund and the general expenses of the Trust prorated to the
Fund on
<PAGE>
9
the basis of its relative net assets. Shareholders of record on the record date
will be entitled to receive dividends.

The net asset value of Trust Shares of the Fund will be reduced by the amount of
any dividend or distribution. Dividends and distributions are paid in the form
of additional Trust Shares of the Fund unless the Shareholder has elected prior
to the date of distribution to receive payment in cash. Such election, or any
revocation thereof, must be made in writing prior to the date of distribution to
the Transfer Agent and will become effective with respect to dividends paid
after its receipt. Dividends and distributions are paid within ten days of the
end of the time period to which the dividend relates. Dividends and
distributions payable to a Shareholder are paid in cash within ten Business Days
after a Shareholder's complete redemption of its Trust Shares in the Fund.

TAX INFORMATION

The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal, state or local income tax treatment of the Fund or
its Shareholders. Shareholders are urged to consult their tax advisors regarding
specific questions as to federal, state and local income taxes.

TAX STATUS OF THE FUND:

The Fund is treated as a separate entity for federal tax purposes, and is not
combined with the Trust's other Funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies by the Internal
Revenue Code of 1986, as amended (the "Code"), so that it will be relieved of
federal income tax on that part of its net investment income and net capital
gains (the excess of long-term capital gains over net short-term capital loss)
which is distributed to Shareholders. The Fund intends to make sufficient
distributions prior to the end of each calendar year to avoid liability for the
federal excise tax applicable to regulated investment companies.

TAX STATUS OF DISTRIBUTIONS:

The Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gains) to Shareholders.
Dividends from net investment income paid by the Fund will be taxable to
Shareholders as ordinary income whether received in cash or in additional
shares. Dividends from net investment income will qualify for the dividends
received deduction for corporate Shareholders only to the extent such
distributions are derived from dividends paid by domestic corporations. Any net
capital gains will be distributed annually and will be taxed to Shareholders as
long-term capital gains, regardless of how long the Shareholder has held shares
and regardless of whether distributions are received in cash or in additional
shares. For certain individual Shareholders, net long-term capital gains may be
taxed at a lower rate than ordinary income. The Fund will make annual reports to
Shareholders of the federal income tax status of all distributions. Dividends
declared by the Fund in October, November or December of any year and payable to
Shareholders of record on a date in that month will be deemed to have been paid
by the Fund and received by the Shareholder on December 31 of that year, if paid
by the Fund at any time during the following January.
<PAGE>
10

Income derived by the Fund from obligations of foreign issuers may be subject to
foreign withholding taxes.

A sale, exchange or redemption of Fund shares is a taxable event to the
Shareholder.

STI CLASSIC FUNDS INFORMATION
THE TRUST

The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated January 15, 1992. The Declaration of Trust permits the Trust to
offer separate portfolios of shares and different classes of each of the Funds.
All consideration received by the Trust for shares of a Fund and all assets of
such Fund belong to that Fund and would be subject to liabilities related
thereto.

The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.

BOARD OF TRUSTEES

The management and affairs of the Trust are supervised by its Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described below, certain
companies provide essential management services to the Trust.

INVESTMENT ADVISOR

The Advisor is an indirect wholly-owned subsidiary of SunTrust Banks, Inc.
("SunTrust"), a southeastern regional bank holding company with assets of $
billion as of , 1996. SunTrust ranks among the twenty largest U.S.
banking companies. Its three principal subsidiaries -- SunTrust Banks of
Florida, Inc. SunTrust Banks of Georgia, Inc. and SunTrust Banks of Tennessee,
Inc. -- provide a wide range of personal and corporate banking, trust, and
investment services through more than 600 locations in the three-state area.
Total discretionary assets under management with SunTrust Banks, Inc. equalled
approximately $ billion as of , 1996.

STI Capital Management, N.A. ("STI Capital") serves as the Advisor to the Small
Cap Equity Fund. As of June 30, 1996, STI Capital had discretionary management
authority with respect to assets of approximately $11 billion. The principal
business address of STI Capital is P.O. Box 3808, Orlando, Florida 32802.

The Trust and the Advisor have entered into an advisory agreement (the "Advisory
Agreement"). Under the Advisory Agreement, the Advisor makes the investment
decisions for the assets of the Fund and continuously reviews, supervises and
administers the Fund's investment program. The Advisor discharges its
responsibilities subject to the supervision of, and policies established by, the
Trustees of the Trust. STI CLASSIC FUNDS ARE NOT DEPOSITS, ARE NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY, AND ARE NOT ENDORSED OR
GUARANTEED BY AND DO NOT CONSTITUTE OBLIGATIONS OF SUNTRUST BANKS, INC. OR ANY
OF ITS AFFILIATES. INVESTMENTS IN THE FUND INVOLVE RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE AND SHARES AT
REDEMPTION MAY BE WORTH
<PAGE>
11
MORE OR LESS THAN THEIR ORIGINAL COST. THERE IS NO GUARANTEE THAT ANY STI
CLASSIC FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. With respect to the Fund,
the Advisor may execute brokerage or other agency transactions through
affiliates of the Advisor.

For the services provided and expenses incurred pursuant to the Advisory
Agreement, STI Capital is entitled to receive an advisory fee computed daily and
paid monthly at an annual rate of 1.15% of the average daily net assets of the
Fund.

From time to time, the Advisor may waive (either voluntarily or pursuant to
applicable state limitations) advisory fees payable by a Fund. Currently, the
Advisor has agreed to voluntary reductions in its fees in amounts necessary to
maintain the total operating expenses at the amounts set forth in the Expense
Summary. Voluntary reductions of fees may be terminated at any time.

PORTFOLIO MANAGER

Mr. Brett Barner, CFA, has been responsible for the day-to-day management of the
Fund since commencement of operations. Mr. Barner has been a portfolio manager
with STI Capital since 1990.

BANKING LAWS

Banking laws and regulations, including the Glass-Steagall Act as presently
interpreted by the Board of Governors of the Federal Reserve System, currently
(a) prohibit a bank holding company registered under the Federal Bank Holding
Company Act of 1956 or its affiliates from sponsoring, organizing, controlling,
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and generally prohibit banks
from underwriting securities, but (b) do not prohibit such a bank holding
company or affiliate or banks generally from acting as an investment advisor,
transfer agent, or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of a customer. The
Advisor believes that it may perform the services for STI Classic Funds
contemplated by its Advisory Agreement described in this Prospectus without
violation of applicable banking laws or regulations. However, future changes in
legal requirements relating to the permissible activities of banks and their
affiliates, as well as future interpretations of present requirements, could
prevent the Advisor from continuing to perform services for STI Classic Funds.
If the Advisor was prohibited from providing services to STI Classic Funds, the
Board of Trustees would consider selecting other qualified firms. Any new
investment advisory agreements would be subject to Shareholder approval.

In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.

DISTRIBUTION

SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary of
SEI
<PAGE>
12
Corporation ("SEI"), and the Trust are parties to a distribution agreement (the
"Distribution Agreement"). No compensation is paid to the Distributor for
distribution services for the Trust Shares of the Fund. Trust Shares of the Fund
are offered primarily to financial institutions and intermediaries, including
SunTrust, its affiliates and correspondents for the investment of funds in which
they act in a fiduciary, agency or custodial capacity. An investor may call
1-800-428-6970 to receive more information regarding Investor Shares or Flex
Shares. It is possible that a financial institution may offer different classes
of shares to its customers and thus receive different compensation with respect
to different classes of shares.
The Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor receives compensation.

ADMINISTRATION

SEI Fund Resources (the "Administrator") serves as the Administrator of the
Trust. The Administrator provides the Trust with certain administrative
services, other than investment advisory services, including regulatory
reporting, all necessary office space, equipment, personnel and facilities.

The Administrator is entitled to a fee from the Trust, which is calculated daily
and paid monthly, at an annual rate as follows:

<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET ASSETS FEE
- ------------------------------------------ -----------
<S> <C>
$1 - $1 billion 0.10 %
over $1 billion to $5 billion 0.07 %
over $5 billion to $8 billion 0.05 %
over $8 billion to $10 billion 0.045%
over $10 billion 0.04 %
</TABLE>

From time to time, the Administrator may waive (either voluntarily or pursuant
to applicable state limitations) all or a portion of the administration fee
payable by the Trust.

TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT

Federated Services Company, Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779 is the Transfer Agent for the shares of the Trust and dividend
disbursing agent for the Trust.

CUSTODIAN

SunTrust Bank, Atlanta, c/o STI Trust & Investment Operations, Inc., 303
Peacetree Street N.E., 14th Floor, Atlanta, Georgia 30308, serves as custodian
of the assets of the Fund. The custodian holds cash, securities and other assets
of the Trust as required by the 1940 Act.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania, serves as legal counsel
to the Trust.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants to the Trust are Arthur Andersen LLP,
Philadelphia, Pennsylvania.

OTHER INFORMATION
VOTING RIGHTS

Each share held entitles the Shareholder of record to one vote. Each Fund or
class of a Fund will vote separately on matters relating solely to that Fund or
class. As a Massachusetts business trust, the Trust is not required to hold
annual meetings of Shareholders but approval will be sought for certain changes
in the operation of the Trust and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by the remaining Trustees
or by Shareholders at a special meeting called upon
<PAGE>
13
the written request of Shareholders owning at least 10% of the outstanding
shares of the Trust. In the event that such a meeting is requested the Trust
will provide appropriate assistance and information to the Shareholders
requesting the meeting.

REPORTING

The Trust issues unaudited financial information and audited financial
statements annually. The Trust furnishes proxy statements and other reports to
Shareholders of record.

SHAREHOLDER INQUIRIES

Shareholders may contact their financial institution's representative in order
to obtain information on account statements, procedures and other related
information.

DESCRIPTION OF PERMITTED INVESTMENTS

The following is a description of the permitted investments for the Fund.
Further discussion is contained in the Statement of Additional Information.

AMERICAN DEPOSITARY RECEIPTS ("ADRs") -- ADRs are securities, typically issued
by a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation by
the issuer of the underlying security. Holders of unsponsored depositary
receipts generally bear all the costs of the unsponsored facility. The
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.

BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. Bankers' acceptances are used
by corporations to finance the shipment and storage of goods. Maturities are
generally six months or less.

CERTIFICATES OF DEPOSIT-- Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.

COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entities. Maturities on these issues vary from a few to 270 days.

CONVERTIBLE SECURITIES -- Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both fixed
income and equity securities. Because of the conversion feature, the market
value of a convertible security tends to move with the market value of the
underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.

ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's
<PAGE>
14
books. An illiquid security includes a demand instrument with a demand notice
period exceeding seven days, where there is no secondary market for such
security, and repurchase agreements with durations (or maturities) over seven
days in length.

OPTIONS -- A put option gives the purchaser of the option the right to sell, and
the writer of the option the obligation to buy, the underlying security at any
time during the option period. A call option gives the purchaser of the option
the right to buy, and the writer of the option the obligation to sell, the
underlying security at any time during the option period. The premium paid to
the writer is the consideration for undertaking the obligations under the option
contract. The initial purchase (sale) of an option contract is an "opening
transaction." In order to close out an option position, a Fund may enter into a
"closing transaction," which is simply the sale (purchase) of an option contract
on the same security with the same exercise price and expiration date as the
option contract originally opened.

A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to protect against an
increase in the cost of securities that the Fund may seek to purchase in the
future. A Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for the Fund, loss of the premium paid may be offset by
an increase in the value of the Fund's securities or by a decrease in the cost
of acquisition of securities by the Fund.

A Fund may write covered put and call options as a means of increasing the yield
on its portfolio and as a means of providing limited protection against
decreases in its market value. When a Fund sells an option, if the underlying
securities do not increase or decrease to a price level that would make the
exercise of the option profitable to the holder thereof, the option generally
will expire without being exercised and the Fund will realize as profit the
premium received for such option. When a call option of which a Fund is the
writer is exercised, the Fund will be required to sell the underlying securities
to the option holder at the strike price, and will not participate in any
increase in the price of such securities above the strike price. When a put
option of which a Fund is the writer is exercised, the Fund will be required to
purchase the underlying securities at the strike price, which may be in excess
of the market value of such securities.

A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information to a market maker. It is
the position of the Securities and Exchange Commission that OTC options are
illiquid.

A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
custodian bank consisting of cash or
<PAGE>
15
liquid, high grade debt securities in an amount equal to the amount the Fund
would be required to pay upon exercise of the put.

A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of a Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.

All options written on indices must be covered. When a Fund writes an option on
an index, it will establish a segregated account containing cash or liquid high
grade debt securities with its custodian in an amount at least equal to the
market value of the option and will maintain the account while the option is
open or will otherwise cover the transaction.

RISK FACTORS. Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.

REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The custodian will hold the security as collateral
for the repurchase agreement. The Fund bears a risk of loss in the event the
other party defaults on its obligations and the Fund is delayed or prevented
from exercising its right to dispose of the collateral or if the Fund realizes a
loss on the sale of the collateral. The Fund will enter into repurchase
agreements only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on established guidelines.
Repurchase agreements are considered loans under the 1940 Act.

SECURITIES LENDING -- In order to generate additional income, the Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash, securities of the U.S.
Government or its agencies equal to at least 100% of the market value of the
securities lent. The Fund continues to receive interest on the securities lent
while simultaneously earning interest on the investment of cash collateral.
Collateral is marked to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral should the borrower of
the securities fail financially or become insolvent.
<PAGE>
16

TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits are considered to be illiquid
securities.

WARRANTS -- Instruments giving holders the right, but not the obligation, to buy
shares of a company at a given price during a specified period.
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>

<TABLE>
<S> <C> <C>
STI CLASSIC FUNDS ORGANIZATIONAL OVERVIEW

* INVESTMENT ADVISOR

STI Capital Management, N.A. P.O. Box 3808
Orlando, FL 32802

* DISTRIBUTOR

SEI Financial Services Company 680 E. Swedesford Road
Wayne, PA 19087

* ADMINISTRATOR

SEI Fund Resources 680 E. Swedesford Road
Wayne, PA 19087

* TRANSFER AGENT

Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779

* CUSTODIAN

SunTrust Bank, Atlanta c/o STI Trust & Investment
Operations, Inc.
303 Peachtree Street N.E.
14th Floor
Atlanta, GA 30308

* LEGAL COUNSEL

Morgan, Lewis & Bockius LLP 2000 One Logan Square
Philadelphia, PA 19103

* INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen, LLP 1601 Market Street
Philadelphia, PA 19103
</TABLE>

<PAGE>
100093/10-95

DISTRIBUTOR
SEI Financial Services
Company

-- - - - - - - - - - - - - - -

PROSPECTUS

TRUST SHARES

SMALL CAP EQUITY FUND

INVESTMENT ADVISOR
STI CAPITAL MANAGEMENT, N.A.

[LOGO]
<PAGE>
STI CLASSIC FUNDS
TRUST SHARES
EMERGING MARKETS EQUITY FUND

INVESTMENT ADVISOR TO THE FUND:
STI CAPITAL MANAGEMENT, N.A.
(THE "ADVISOR")

The STI Classic Funds (the "Trust") is a mutual fund that offers shares in a
number of separate investment portfolios. This Prospectus sets forth concisely
the information about the Trust Shares of the Emerging Markets Equity Fund (the
"Fund"). Investors are advised to read this Prospectus and retain it for future
reference.

A Statement of Additional Information relating to the Funds dated the same date
as this Prospectus has been filed with the Securities and Exchange Commission
and is available without charge through the Distributor, SEI Financial Services
Company, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658 or by calling
1-800-874-4770. The Statement of Additional Information is incorporated into
this Prospectus by reference.

- --------------------------------------------------------------------------------

JANUARY 1, 1997
<PAGE>
2

TABLE OF CONTENTS

<TABLE>
<S> <C>
Expense Summary........................................................... 3
Performance Information for the Predecessor Collective Fund............... 4
The Trust................................................................. 4
Fund and Investment Objective............................................. 4
Investment Policies and Strategies........................................ 4
General Investment Policies and Strategies................................ 5
Investment Risks.......................................................... 6
Investment Limitations.................................................... 8
Performance Information................................................... 8
Purchase of Fund Shares................................................... 9
Redemption of Fund Shares................................................. 10
Dividends and Distributions............................................... 10
Tax Information........................................................... 11
STI Classic Funds Information............................................. 12
The Trust................................................................. 12
Board of Trustees......................................................... 12
Investment Advisor........................................................ 12
Portfolio Manager......................................................... 13
Banking Laws.............................................................. 13
Distribution.............................................................. 14
Administration............................................................ 14
Transfer Agent and Dividend Disbursing Agent.............................. 14
Custodian................................................................. 14
Legal Counsel............................................................. 14
Independent Public Accountants............................................ 14
Other Information......................................................... 15
Voting Rights............................................................. 15
Reporting................................................................. 15
Shareholder Inquiries..................................................... 15
Description of Permitted Investments...................................... 15
Appendix.................................................................. A-1
</TABLE>

EXPENSE SUMMARY
TRUST SHARES

ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)

<TABLE>
<CAPTION>
EMERGING
MARKETS EQUITY
FUND
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------
Management Fees (after fee waivers & reimbursements)(1).............................................. 1.05%
Other Fund Expenses.................................................................................. .50%
- ----------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (after fee waivers & reimbursements)(2)(3)............................. 1.55%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Advisor is waiving, on a voluntary basis, a portion of its fee from the
Fund. The Advisor reserves the right to terminate its waiver at any time in
its sole discretion. Absent such waivers, Management Fees for the Fund would
be 1.30%. See "Investment Advisor."

(2) Other Fund Expenses have been estimated.

(3) Absent the voluntary waivers described above, Total Fund Operating Expenses
would be 1.80%.

<TABLE>
<CAPTION>
ONE THREE
EXAMPLES YEAR YEARS
<S> <C> <C>
- ---------------------------------------------------------------
An investor would pay the following expenses on a
$1,000 investment assuming: (1) a 5% annual
return and (2) redemption at the end of each
time period.
Emerging Markets Equity Fund...................... $16 $ 49
- ---------------------------------------------------------------
- ---------------------------------------------------------------
</TABLE>

THE EXAMPLES ARE BASED UPON ESTIMATED TOTAL OPERATING EXPENSES OF THE FUND AND
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<PAGE>
4

PERFORMANCE INFORMATION FOR PREDECESSOR COLLECTIVE FUND

The Emerging Markets Equity Fund is the successor to a collective investment
fund previously managed by STI Capital Management, Inc. A substantial portion of
the assets of the collective investment fund was transferred to the Fund in
connection with the Fund's commencement of operations. Set forth below is
certain performance data for the predecessor collective investment fund, which
is deemed relevant because the collective investment fund was managed using
virtually the same investment objectives, policies and restrictions as those
used by the Fund. The performance data, however, is not necessarily indicative
of the future performance of the Fund. Further, the predecessor collective fund
was not subject to certain investment limitations imposed on mutual funds,
which, if they had been imposed, may have adversely affected the collective
fund's performance.

The predecessor collective fund did not incur expenses that correspond to the
advisory, administrative, and other fees to which the Fund is subject.
Accordingly, the following performance information has been adjusted by applying
the total expense ratios for the Fund, as disclosed in the Prospectus at the
time the Fund commenced operations, which reduced the actual performance of the
collective fund.

The average annual total returns (adjusted to reflect Fund expenses, net of
voluntary waivers and reimbursements) for the following periods:

<TABLE>
<CAPTION>
- -------------------------------------------------------------
SINCE
INCEPTION
- -------------------------------------------------------------
<S> <C>
Emerging Markets Equity Collective Fund 26.01%
(3/29/96 -
9/30/96)
</TABLE>

THE TRUST

STI CLASSIC FUNDS (the "Trust") is a diversified, open-end management investment
company that provides a convenient and economical means of investing in several
professionally managed portfolios of securities. The Trust currently offers
units of beneficial interest ("shares") in a number of separate Investment
portfolios (together with the Fund, the "Funds"), Shareholders may purchase
shares in three separate classes (Trust Shares, Investor Shares and Flex Shares)
which provide for variations in distribution and service fees, transfer agent
fees, voting rights and dividends. Except for differences between classes, each
share represents an undivided, proportionate interest in the Fund. This
Prospectus relates to the Trust Shares of the Emerging Markets Equity Fund.

FUND AND INVESTMENT OBJECTIVE

THE EMERGING MARKETS EQUITY FUND seeks to provide long term capital appreciation
by investing primarily in equity securities of companies located in emerging
markets that appear undervalued relative to their global peers.

The investment objective of the Fund is nonfundamental and may be changed
without shareholder approval. Further, there can be no assurance that a Fund
will achieve its investment objective.

INVESTMENT POLICIES AND STRATEGIES

The Fund, under normal market conditions will invest at least 65% of its assets
in publicly traded and privately placed equity securities of foreign issuers
located in emerging market countries consisting of: common and preferred stocks,
warrants, options and securities
<PAGE>
5
convertible into common stock. As used in this Prospectus, the term "emerging
market country" applies to any country with a gross domestic product per capita
not greater than $10,000.

Securities of foreign issuers purchased by the Fund may be purchased in foreign
markets, on United States registered exchanges, the over-the-counter market or
in the form of sponsored or unsponsored ADRs traded on registered exchanges or
NASDAQ.

The Fund may enter into forward foreign currency contracts as a hedge against
possible variations in foreign exchange rates. A forward foreign currency
contract is a commitment to purchase or sell a specified currency, at a
specified future date, at a specified price. The Fund may enter into forward
foreign currency contracts to hedge a specific security transaction or to hedge
a portfolio position. The Fund also may purchase and write put and call options
on foreign currencies (traded on U.S. and foreign exchanges or over-the-counter
markets) to manage the portfolios exposure to changes in dollar exchange rates.

The Fund may invest in futures contracts, including options on futures. The Fund
may also purchase shares of closed-end investment companies. The Fund is also
permitted to purchase illiquid securities and may write or purchase put or call
options.

The Fund expects to be fully invested in the investments described above, but
may invest up to 35% of its total assets in bonds and debentures issued by
non-U.S. or U.S. companies, securities issued or guaranteed by foreign or U.S.
governments, including U.S. Treasury obligations, U.S. Treasury STRIPs and
Canadian government obligations, and foreign and U.S. Commercial paper. The
bonds that the Fund may purchase may be rated in any rating category or may be
unrated provided that no more than 20% of the Fund's total assets will be rated
below BBB by S&P or below Baa by Moody's, Inc. or securities not rated by S&P or
Moody's and of comparable quality (see "Investment Risks -- High Yield, Lower
Rated Bonds"). When investing in bonds, the Fund may seek capital gains by
taking advantage of price appreciation caused by interest rate and credit
quality changes. The Fund is also permitted to acquire floating and variable
rate securities. The Fund may invest in mortgage-backed securities and
collateralized mortgage obligations ("CMOs") with a rating no lower than "O" and
asset-backed securities with a rating no lower than "P". The Fund is also
permitted to invest in the short-term obligations of U.S. and foreign banks,
such as commercial banks and savings and loan institutions, with assets of at
least $500 million.

The Fund's turnover rate may exceed 100%. This rate of turnover, if continued,
will likely result in higher brokerage commissions and higher levels of realized
capital gains than if the turnover rate was lower.

GENERAL INVESTMENT POLICIES AND STRATEGIES

For temporary defensive purposes, during periods when the Advisor determines
that market conditions warrant, the Fund may hold a portion of its assets in
cash and invest up to 100% of its assets in money market instruments consisting
of: securities issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities; repurchase agreements;
certificates of deposit; bankers' acceptances; time deposits issued by banks or
savings and loan associations; and commercial paper rated in the highest rating
category. The Fund may not be pursuing its investment objective when it is
engaged in temporary defensive investing.
<PAGE>
6

The Fund may purchase restricted securities, including Rule 144A securities,
that the Advisor determines are liquid pursuant to guidelines established by the
Trust's Board of Trustees.

In the event that a security owned by the Fund is downgraded below the stated
rating categories, the Advisor will review and take appropriate action with
regard to the security.

The Fund may engage in securities lending and will limit such practice to 33
1/3% of its total assets.

For additional information regarding permitted investments, see "Description of
Permitted Investments" in this Prospectus and in the Statement of Additional
Information.

INVESTMENT RISKS
EQUITY SECURITIES

FIXED INCOME SECURITIES

The market value of the Fund's fixed income investments will change in response
to interest rate changes and other factors. During periods of falling interest
rates, the values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values of such
securities generally decline. Securities with longer maturities are subject to
greater fluctuations in value than securities with shorter maturities. Changes
by a nationally recognized statistical rating organization ("NRSRO") to the
rating of any fixed income security and in the ability of an issuer to make
payments of interest and principal also affect the value of these investments.
Changes in the value of the Fund's securities will not affect cash income
derived from these securities but will affect the Fund's net asset value.

There is a risk that the current interest rate on floating and variable rate
instruments may not accurately reflect existing market interest rates.

Fixed income securities rated BBB by S&P or Baa by Moody's (the lowest ratings
of investment grade bonds) are deemed by these rating services to have
speculative characteristics.

FOREIGN SECURITIES AND FOREIGN CURRENCY CONTRACTS

Investing in the securities of foreign companies and the utilization of forward
foreign currency
<PAGE>
7
contracts involve special risks and considerations not typically associated with
investing in U.S. companies. These risks and considerations include differences
in accounting, auditing and financial reporting standards, generally higher
commission rates on foreign portfolio transactions, the possibility of
expropriation or confiscatory taxation, adverse changes in investment or
exchange control regulations, limited publicly available information regarding
foreign issuers, less liquidity of securities, possible seizure, nationalization
and expropriation of the foreign issuer or foreign deposits, political
instability which could affect U.S. investment in foreign countries and
potential restrictions of the flow of international capital and currencies.
Foreign companies may also be subject to less government regulation than U.S.
companies. Moreover, the dividends payable on the foreign securities may be
subject to foreign withholding taxes, thus reducing the net amount of income
available for distribution to the Fund's Shareholders. Further, foreign
securities often trade with less frequency and volume than domestic securities
and, therefore, may exhibit greater price volatility. Changes in foreign
exchange rates will affect, favorably or unfavorably, the value of those
securities which are denominated or quoted in currencies other than the U.S.
dollar.

By entering into forward foreign currency contracts, the Fund will seek to
protect the value of its respective investment securities against a decline in
the value of a currency. However, these forward foreign currency contracts will
not eliminate fluctuations in the underlying prices of the securities. Rather,
they simply establish a rate of exchange which one can obtain at some future
point in time. Although such contracts tend to minimize the risk of loss due to
a decline in the value of the hedged currency, they tend to limit any potential
gain which might result should the value of such currency increase.

HIGH YIELD, LOWER RATED BONDS

The Fund's investments in high yield, lower rated bonds ("junk bonds") involve
greater risk of default or price declines than investments in investment grade
securities (E.G., securities rated BBB or higher by S&P or Baa or higher by
Moody's) due to changes in the issuer's creditworthiness. The market for high
risk, high yield securities may be thinner and less active, causing market price
volatility and limited liquidity in the secondary market. This may limit the
ability of the Fund to sell such securities at their fair market value either to
meet redemption requests or in response to changes in the economy or the
financial markets. Market prices for high risk, high yield securities may also
be affected by investors' perception of the issuer's credit quality and the
outlook for economic growth. Thus, prices for high risk, high yield securities
may move independently of interest rates and the overall bond market. In
addition, the market for high risk, high yield securities may be adversely
affected by legislative and regulatory developments.

MORTGAGE-BACKED SECURITIES

Mortgage-backed securities are subject to the risk of prepayment of the
underlying mortgages. During periods of declining interest rates, prepayment of
mortgages underlying these securities can be expected to accelerate. When the
mortgage-backed securities held by the Fund are prepaid, the Fund generally will
reinvest the proceeds in securities with a yield that reflects prevailing
interest rates, which may be lower than the prepaid security.
<PAGE>
8

ZERO COUPON OBLIGATIONS

Zero coupon obligations are sold at original issue discount and do not make
periodic payments. Zero coupon obligations may be subject to great fluctuations
in value due to interest rate changes.

The Fund will be required to include the imputed interest in zero coupon
obligations in its current income. Because the Fund distributes all of its net
investment income to investors, the Fund may have to sell portfolio securities
to distribute the income attributable to these obligations and securities at a
time when the Advisor would not have chosen to sell such obligations or
securities.

INVESTMENT LIMITATIONS

The following investment limitations constitute fundamental policies of the
Fund. Fundamental policies cannot be changed with respect to a Fund without the
consent of the holders of a majority of the Fund's outstanding shares. The term
"majority of the outstanding shares" means the vote of (i) 67% or more of the
Fund's shares present at a meeting, if more than 50% of the outstanding shares
of the Fund are present or represented by proxy, or (ii) more than 50% of the
Fund's outstanding shares, whichever is less.

The Fund may not:

The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.

PERFORMANCE INFORMATION

From time to time, the Funds may advertise performance (total return and yield).
These figures will be historical and are not intended to indicate future
performance. The yield of the Fund refers to the annualized income generated by
an investment in the Fund over a specified 30-day period. The yield is
calculated by assuming that the income generated by the investment during that
period is generated over one year and is shown as a percentage of the
investment.

The total return of the Fund refers to the average compounded rate of return on
a hypothetical investment, including any sales
<PAGE>
9
charge imposed, for designated time periods (including but not limited to, the
period from which the Fund commenced operations through the specified date),
assuming that the entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gains distributions.

PURCHASE OF FUND SHARES

Trust Shares of the Trust are sold primarily to financial institutions or
intermediaries, including subsidiaries of SunTrust Banks, Inc. ("SunTrust"), for
the investment of funds for which they act in a fiduciary, agency, investment
advisory or custodial capacity. Individuals generally may not purchase Trust
Shares directly, although individuals may be able to purchase Trust Shares
through accounts maintained with financial institutions and potentially through
the Preferred Portfolio Account (an asset allocation account available through
SunTrust Securities, Inc.) Trust Shares are sold without a sales charge,
although financial institutions may charge their customer accounts for services
provided in connection with the purchase of shares. Financial institutions may
impose an earlier cut-off time for receipt of purchase orders directed through
them to allow for processing and transmittal of these orders to the Trust's
transfer agent, Federated Services Company (the "Transfer Agent"), for
effectiveness the same day. Information concerning these services and any
charges will be provided to customers by the financial institutions. Trust
Shares will be held of record by the financial institutions, although customers
may have or be given the right to vote the shares depending upon the terms of
their relationship with the financial institution. Confirmations of share
purchases and redemptions will be sent to the financial institution as the
shareholder of record.

Shares may be purchased on days on which the New York Stock Exchange is open for
business (a "Business Day").

A purchase order for the Fund will be effective as of the Business Day received
by the Transfer Agent if the Transfer Agent receives the order before 4:00 p.m.
Eastern time and payment is received within one day. Purchases will be made in
full and fractional shares of the Trust calculated to three decimal places. The
purchase price of shares of the Fund is the net asset value next determined
after a purchase order is effective plus any applicable sales charge (the
"offering price"). The net asset value per share of the Fund is determined by
dividing the total market value of the Fund's investments and other assets, less
any liabilities, by the total outstanding shares of the Fund. Net asset value
per share is determined daily as of the close of business of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) on any Business Day. Pursuant to
guidelines established by the Trustees, the Trust may use a pricing service to
provide market quotations or valuations for securities owned by the Fund.
<PAGE>
10

The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or
Shareholder(s).

REDEMPTION OF FUND SHARES

An order to redeem Trust shares must be transmitted to the Transfer Agent by the
financial institution as the record owner. Financial institutions may establish
procedures for their customers to request redemption of Trust Shares held in
their account with the financial institution. Customers should contact their
financial institution for information concerning these procedures.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income (exclusive of capital gains) are declared
and paid annually by the Fund. The Fund's net realized capital gains (including
net short-term capital gains) are distributed at least annually. Net income for
dividend purposes consists of (i) interest accrued and original issue discount
earned on the Fund's assets, (ii) plus the amortization of market discount and
minus the amortization of market premium on such assets, (iii) plus dividend or
distribution income on such assets, (iv) less accrued expenses directly
attributable to the Fund and the general expenses of the Trust prorated to the
Fund on the basis of its relative net assets. Shareholders of record on the
record date will be entitled to receive dividends.

The net asset value of Trust Shares of the Funds will be reduced by the amount
of any dividend or distribution. Dividends and distributions are paid in the
form of additional Trust Shares of the Fund unless the customer has elected
prior to the date of distribution to receive payment in cash. Such election, or
any
<PAGE>
11

revocation thereof, must be made in writing prior to the date of distribution to
the Transfer Agent and will become effective with respect to dividends paid
after its receipt. Dividends and distributions are paid within ten days of the
end of the time period to which the dividend relates. Dividends and
distributions payable to a Shareholder are paid in cash within ten Business Days
after a Shareholder's complete redemption of its Trust Shares in the Fund.

TAX INFORMATION

TAX STATUS OF EACH FUND:

The Fund intends to qualify for the special tax treatment afforded regulated
investment companies by the Internal Revenue Code of 1986, as amended (the
"Code"), so that it will be relieved of federal income tax on that part of its
net investment income and net capital gains (the excess of long-term capital
gains over net short-term capital loss) which is distributed to Shareholders.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for the federal excise tax applicable to
regulated investment companies.

TAX STATUS OF DISTRIBUTIONS:

The Fund will distribute substantially all of its net investment income
(including, for this purpose, net short-term capital gains) to Shareholders.
Dividends from net investment income paid by the Funds will be taxable to
Shareholders as ordinary income whether received in cash or in additional
shares. Dividends from net investment income will qualify for the dividends
received deduction for corporate Shareholders only to the extent such
distributions are derived from dividends paid by domestic corporations. Any net
capital gains will be distributed annually and will be taxed to Shareholders as
long-term capital gains, regardless of how long the Shareholder has held shares
and regardless of whether distributions are received in cash or in additional
shares. For certain individual Shareholders, net long-term capital gains may be
taxed at a lower rate than ordinary income. The Funds will make annual reports
to Shareholders of the federal income tax status of all distributions. Dividends
declared by the Fund in October, November or December of any year and payable to
Shareholders of record on a date in that month will be deemed to have been paid
by the Fund and received by the Shareholder on December 31 of that year, if paid
by the Fund at any time during the following January.

Income derived by the Fund from obligations of foreign issuers may be subject to
foreign withholding taxes. The Fund expects to elect to treat Shareholders as
having paid their proportionate share of such foreign taxes.

Income received on direct U.S. obligations is exempt from tax at the state level
when received directly by a Fund and may be exempt, depending on the state, when
received by the Shareholder as income dividends from the Fund, provided certain
state-specific conditions are satisfied. Not all states permit such income
dividends to be tax exempt and some require that a certain minimum percentage of
an investment company's
<PAGE>
12
income be derived from state tax-exempt interest. The Fund will inform
Shareholders annually of the percentage of income and distributions derived from
direct U.S. obligations. Shareholders should consult their tax advisors to
determine whether any portion of the income dividends received from the Fund is
considered tax-exempt in their particular state.

A sale, exchange or redemption of Fund shares is a taxable event to the
Shareholder.

STI CLASSIC FUNDS INFORMATION
THE TRUST

The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated January 15, 1992. The Declaration of Trust permits the Trust to
offer separate portfolios of shares and different classes of each Fund. All
consideration received by the Trust for shares of any Fund and all assets of
such Fund belong to that Fund and would be subject to liabilities related
thereto.

The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services, state filing fees and
registering the shares under federal securities laws, pricing, insurance
expenses, litigation and other extraordinary expenses, brokerage costs, interest
charges, taxes and organization expenses.

BOARD OF TRUSTEES

The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described below, certain
companies provide essential management services to the Trust.

INVESTMENT ADVISORS

The Advisors is an indirect wholly-owned subsidiaries of SunTrust Banks, Inc.
("SunTrust"), a southeastern regional bank holding company with assets of $66
billion as of December 31, 1995. SunTrust ranks among the twenty largest U.S.
banking companies. Its three principal subsidiaries -- SunTrust Banks of
Florida, Inc. SunTrust Banks of Georgia, Inc. and SunTrust Banks of Tennessee,
Inc. -- provide a wide range of personal and corporate banking, trust, and
investment services through more than 600 locations in the three-state area.
Total discretionary assets under management with SunTrust Banks, Inc. equalled
approximately $ billion as of.

STI Capital Management, N.A. ("STI Capital") serves as the Advisor to the
Emerging Markets Equity Fund. As of, 199 , STI Capital had discretionary
management authority with respect to assets of approximately $ billion. The
principal business address of STI Capital is P.O. Box 3808, Orlando, Florida
32802.

The Trust and the Investment Advisor have entered into an advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Advisor makes the
investment decisions for the assets of the Fund it advises and continuously
reviews, supervises and administers the Fund's investment programs. The Advisor
discharges the responsibilities subject to the supervision of, and policies
established by, the Trustees of the Trust. STI CLASSIC FUNDS ARE NOT DEPOSITS,
ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY, AND
ARE NOT ENDORSED OR GUARANTEED BY AND DO NOT CONSTITUTE OBLIGATIONS OF SUNTRUST
<PAGE>
13
BANKS, INC. OR ANY OF ITS AFFILIATES. INVESTMENTS IN THE FUND INVOLVE RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. RETURNS AND PRINCIPAL VALUES WILL
FLUCTUATE AND SHARES AT REDEMPTION MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THERE IS NO GUARANTEE THAT ANY STI CLASSIC FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. With respect to the Fund, the Advisor may execute
brokerage or other agency transactions through affiliates of the Advisor.

For the services provided and expenses incurred pursuant to the applicable
Advisory Agreement, STI Capital is entitled to receive advisory fees computed
daily and paid monthly at the annual rate of 1.30% of the average daily net
assets of the Fund.

Although the advisory fee for the Fund is higher than advisory fees paid by
other mutual funds, the Trust believes that the fee is comparable to the
advisory fee paid by many other mutual funds with similar investment objectives
and policies. From time to time, the Advisor may waive (either voluntarily or
pursuant to applicable regulatory limitations) advisory fees payable by the
Fund. Currently, the Advisor has agreed to voluntary reductions in its fees in
amounts necessary to maintain the total operating expenses at the amounts set
forth in the Expense Summary. Voluntary reductions of fees may be terminated at
any time.

PORTFOLIO MANAGER

Mr. Pablo Salas has been responsible for the day-to-day management of the Fund
since its inception. Mr Salas joined STI Capital in 1996. Prior to joining STI
Capital, Mr Salas managed an emerging markets portfolio at Lazard Freres Asset
Management from 1994 to 1996 and was a securities analyst at The Principal
Group/ Invista Capital Management from 1992 to 1994.

BANKING LAWS

If current restrictions preventing a bank or its affiliates from legally
sponsoring, organizing, controlling, or distributing shares of an investment
company were relaxed, the Advisor, or its affiliates, would consider the
possibility of offering to perform additional services for STI Classic Funds. It
is not possible, of course, to predict whether or in what form such legislation
<PAGE>
14
might be enacted or the terms upon which the Advisor, or such affiliates, might
offer to provide such services.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.

DISTRIBUTION

SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary of
SEI Corporation ("SEI"), and the Trust are parties to a distribution agreement
(the "Distribution Agreement"). No compensation is paid to the Distributor for
distribution services for the Trust Shares of the Fund. Trust Shares of the Fund
are offered primarily to institutional investors, including affiliates and
correspondents for the investment of funds in which they act in a fiduciary,
agency or custodial capacity. An investor may call 1-800-874-4770 to receive
more information regarding Investor Shares or Flex Shares. It is possible that a
financial institution may offer different classes of shares to its customers and
thus receive different compensation with respect to different classes of shares.

The Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor receives compensation.

ADMINISTRATION

The Administrator is entitled to a fee from the Trust, which is calculated daily
and paid monthly, at an annual rate as follows:

From time to time, the Administrator may waive (either voluntarily or pursuant
to applicable state limitations) all or a portion of the administration fee
payable by the Trust.

TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT

Federated Services Company, Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779 is the Transfer Agent for the shares of the Trust and dividend
disbursing agent for the Trust.

CUSTODIAN

The Bank of New York, One Wall Street, New York, New York 10286, serves as
custodian for the Fund. The custodian holds cash, securities and other assets of
the Trust as required by the 1940 Act.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania, serves as legal counsel
to the Trust.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants to the Trust are Arthur Andersen LLP,
Philadelphia, Pennsylvania.
<PAGE>
15

OTHER INFORMATION
VOTING RIGHTS

Each share held entitles the Shareholder of record to one vote. Each of the Fund
will vote separately on matters relating solely to that Fund or class. As a
Massachusetts business trust, the Trust is not required to hold annual meetings
of Shareholders but approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining Trustees or by Shareholders
at a special meeting called upon written request of Shareholders owning at least
10% of the outstanding shares of the Trust. In the event that such a meeting is
requested the Trust will provide appropriate assistance and information to the
Shareholders requesting the meeting.

REPORTING

The Trust issues unaudited financial information and audited financial
statements annually. The Trust furnishes proxy statements and other reports to
Shareholders of record.

SHAREHOLDER INQUIRIES

Shareholders may contact their financial institution's representative in order
to obtain information on account statements, procedures and other related
information.

DESCRIPTION OF PERMITTED INVESTMENTS

The following is a description of the permitted investments for the Funds.
Further discussion is contained in the Statement of Additional Information.

ASSET-BACKED SECURITIES -- Asset-backed securities are securities secured by
non-mortgage assets such as company receivables, truck and auto loans, leases
and credit card receivables. Such securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pools of assets. Such securities also may be debt
instruments, which are also known as collateralized obligations and are
generally issued as the debt of a special purpose entity, such as a trust,
organized solely for the purpose of owning such assets and issuing such debt.

Asset-backed securities are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and for a certain
period by a letter of credit issued by a financial institution (such as
<PAGE>
16
a bank or insurance company) unaffiliated with the issuers of such securities.
The purchase of asset-backed securities raises risk considerations peculiar to
the financing of the instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in the obligations
superior to that of the holders of the asset-backed securities. There also is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. Asset-backed
securities entail prepayment risk, which may vary depending on the type of
asset, but is generally less than the prepayment risk associated with
mortgage-backed securities. In addition, credit card receivables are unsecured
obligations of the card holder.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

CORPORATE DEBT OBLIGATIONS -- Debt instruments issued by corporations with
maturities exceeding 270 days. Such instruments may include putable corporate
bonds and zero coupon bonds.

DERIVATIVES -- Derivatives are securities whose value is derived from an
underlying contract, index or security, or any combination thereof. This
includes: futures, swap agreements, and some mortgage-back securities (CMOs,
REMICs and SMBs). See elsewhere in this "Description of Permitted Investments"
for discussions of these various instruments, and see "Investment Policies and
Strategies" for more information about any investment policies and limitations
applicable to their use.

FORWARD FOREIGN CURRENCY CONTRACTS -- A forward foreign currency contract
involves an obligation to purchase or sell a specific currency amount at a
future date, agreed upon by the parties, at a price set at the time of the
contract. The Fund may also enter into a contract to sell, for a fixed amount of
U.S. dollars or other appropriate currency,
<PAGE>
17
the amount of foreign currency approximating the value of some or all of the
Fund's securities denominated in such foreign currency.

At the maturity of a forward contract, the Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader,
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS -- Futures contracts provide
for the future sale by one party and purchase by another party of a specified
amount of a specific security at a specified future time and at a specified
price. An option on a futures contract gives the purchaser the right, in
exchange for a premium, to assume a position in a futures contract at a
specified exercise price during the term of the option. The Fund may use futures
contracts and related options for bona fide hedging purposes, to offset changes
in the value of securities held or expected to be acquired, to minimize
fluctuations in foreign currencies, or to gain exposure to a particular market
or instrument. The Fund will minimize the risk that it will be unable to close
out a futures contract by only entering into futures contracts which are traded
on national futures exchanges.

Stock index futures are futures contracts for various stock indices that are
traded on registered securities exchanges. A stock index futures contract
obligates the seller to deliver (and the purchaser to take) an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates, (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures, (3) there may not be a liquid secondary market
for a futures contract or option, (4) trading restrictions or limitations may be
imposed by an exchange, and (5) government regulations may restrict trading in
futures contracts and futures options.

ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. An illiquid security includes a demand
instrument with a demand notice period exceeding seven days, where there is no
secondary market for such security, and repurchase agreements with durations (or
maturities) over seven days in length.

MEDIUM TERM NOTES -- Medium term notes are periodically or continuously offered
corporate or agency debt that differs from traditionally underwritten corporate
bonds only in the process by which they are issued.

MORTGAGE-BACKED SECURITIES -- Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional thirty-year fixed rate mortgages, graduated payment
mortgages, and adjustable rate mortgages. During periods of declining interest
rates,
<PAGE>
18

prepayment of mortgages underlying mortgage-backed securities can be expected to
accelerate. Prepayment of mortgages which underlie securities purchased at a
premium often results in capital losses, while prepayment of mortgages purchased
at a discount often results in capital gains. Because of these unpredictable
prepayment characteristics, it is often not possible to predict accurately the
average life or realized yield of a particular issue.

GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), the
Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"). FNMA and FHLMC obligations are not backed by the
full faith and credit of the U.S. Government as GNMA certificates are, but FNMA
and FHLMC securities are supported by the instrumentalities' right to borrow
from the U.S. Treasury. GNMA, FNMA and FHLMC each guarantees timely
distributions of interest to certificate holders. GNMA and FNMA also each
guarantees timely distributions of scheduled principal. FHLMC has in the past
guaranteed only the ultimate collection of principal of the underlying mortgage
loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold PCs)
which also guarantee timely payment of monthly principal reductions. Government
and private guarantees do not extend to the securities' value, which is likely
to vary inversely with fluctuations in interest rates.

PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities issued by
a non-governmental entity, such as a trust. These securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs") that are rated in one of the top two rating categories.
While they are generally structured with one or more types of credit
enhancement, private pass-through securities typically lack a guarantee by an
entity having the credit status of a governmental agency or instrumentality.

COLLATERALIZED MORTGAGE OBLIGATIONS: CMOs are debt obligations or multiclass
pass-through certificates issued by agencies or instrumentalities of the U.S.
Government or by private originators or investors in mortgage loans. In a CMO,
series of bonds or certificates are usually issued in multiple classes.
Principal and interest paid on the underlying mortgage assets may be allocated
among the several classes of a series of a CMO in a variety of ways. Each class
of a CMO, often referred to as a "tranche," is issued with a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal payments on the underlying mortgage assets may cause CMOs to be
retired substantially earlier then their stated maturities or final distribution
dates, resulting in a loss of all or part of any premium paid.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments and is thus termed an interest-only class ("IO"), while
the other class may receive all of the principal payments and is thus termed the
principal-only class ("PO"). The value of IOs tends to increase as rates rise
and decrease as rates fall; the opposite is true of POs. SMBs are extremely
sensitive to changes in interest rates because of the impact thereon of
prepayment of principal on the underlying mortgage
<PAGE>
19
securities. The market for SMBs is not as fully developed as other markets; SMBs
therefore may be illiquid.

OPTIONS ON CURRENCIES -- The International Equity Index Fund may purchase and
write put and call options on foreign currencies (traded on U.S. and foreign
exchanges or over-the-counter markets) to manage the portfolio's exposure to
changes in dollar exchange rates. Call options on foreign currency written by
the Fund will be "covered," which means that the Fund will own an equal amount
of the underlying foreign currency. With respect to put options on foreign
currency written by the Fund, the Fund will establish a segregated account with
its custodian bank consisting of cash, U.S. Government securities or other high
grade liquid debt securities in an amount equal to the amount the Fund would be
required to pay upon exercise of the put.

PAY-IN-KIND SECURITIES -- Pay-in-kind securities are bonds or preferred stock
that pay interest or dividends in the form of additional bonds or preferred
stock.

REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The custodian will hold the security as collateral
for the repurchase agreement. The Fund bears a risk of loss in the event the
other party defaults on its obligations and the Fund is delayed or prevented
from exercising its right to dispose of the collateral or if the Fund realizes a
loss on the sale of the collateral. A Fund will enter into repurchase agreements
only with financial institutions deemed to present minimal risk of bankruptcy
during the term of the agreement based on established guidelines. Repurchase
agreements are considered loans under the Investment Company Act of 1940.

RESTRICTED SECURITIES -- Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933
or an exemption from registration. Rule 144A securities are securities that have
not been registered under the Securities Act of 1933, but which may be traded
between certain institutional investors, including investment companies. The
Trust's Board of Trustees is responsible for developing guidelines and
procedures for determining the liquidity of restricted securities and monitoring
the Advisors' implementation of the guidelines and procedures.

SWAPS, CAPS, FLOORS and COLLARS -- Interest rate swaps, mortgage swaps, currency
swaps and other types of swap agreements such as caps, floors and collars are
designed to permit the purchaser to preserve a return or spread on a particular
investment or portion of its portfolio, and to protect against any increase in
the price of securities the Fund anticipates purchasing at a later date. In a
typical interest rate swap, one party agrees to make regular
<PAGE>
20
payments equal to a floating interest rate times a "notional principal amount,"
in return for payments equal to a fixed rate times the same amount, for a
specific period of time. If a swap agreement provides for payment in different
currencies, the parties might agree to exchange the notional principal amount as
well. Swaps may also depend on other prices or rates, such as the value of an
index or mortgage prepayment rates.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specific interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.

Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risk assumed. As a result,
swaps can be highly volatile and have a considerable impact on the Fund's
performance. Swap agreements are subject to risks related to the counterparty's
ability to perform, and may decline in value if the counterparty's
creditworthiness deteriorates. The Fund may also suffer losses if it is unable
to terminate outstanding swap agreements or reduce its exposure through
offsetting transactions. Any obligation the Fund may have under these types of
arrangements will be covered by setting aside liquid high grade securities in a
segregated account. The Fund will enter into swaps only with counterparties
believed to be creditworthy.

U.S. GOVERNMENT AGENCIES -- Obligations issued or guaranteed by agencies of the
U.S. Government, including, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the U.S. Government,
including, among others, FHLMC, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full faith and credit of
the U.S. Treasury (e.g., GNMA securities), others are supported by the right of
the issuer to borrow from the Treasury (e.g., Federal Farm Credit Bank
securities), while still others are supported only by the credit of the
instrumentality (e.g., FNMA securities). Guarantees of principal by agencies or
instrumentalities of the U.S. Government may be a guarantee of payment at the
maturity of the obligation so that in the event of a default prior to maturity
there might not be a market and thus no means of realizing on the obligation
prior to maturity. Guarantees as to the timely payment of principal and interest
do not extend to the value or yield of these securities nor to the value of the
Fund's shares.

U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS").

VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain obligations may
<PAGE>
21
carry variable or floating rates of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or some
other reset period, and may have a floor or ceiling on interest rate changes.
There is a risk that the current interest rate on such obligations may not
accurately reflect existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such security.

WARRANTS -- Instruments giving holders the right, but not the obligation, to buy
shares of a company at a given price during a specified period.

ZERO COUPON OBLIGATIONS -- Zero coupon obligations are debt securities that do
not bear any interest, but instead are issued at a deep discount from par. The
value of a zero coupon obligation increases over time to reflect the interest
accreted. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at par and pay interest periodically.
<PAGE>
A-1

APPENDIX
I. BOND RATINGS
CORPORATE BONDS

The following are descriptions of Standard & Poor's Corporation ("S&P's") and
Moody's Investors Service, Inc. ("Moody's") corporate bond ratings.

Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. Debt rated A has a strong capacity
to pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories.

Bonds which are rated BBB are considered to be medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Debt rated BB, B, CCC, CC or C is regarded as having predominately speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposure to adverse conditions.

Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities. Together with
bonds rated Aaa, they comprise what are generally known as high-grade bonds.

Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Debt rated Baa is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times
<PAGE>
A-2
over the future. Uncertainty of position characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small. Bonds
which are rated Caa are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal and interest. Bonds
which are rated Ca represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings. Bonds which
are rated C are the lowest rated class of bonds and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.

II. COMMERCIAL PAPER AND SHORT-TERM RATINGS

The following descriptions of commercial paper ratings have been published by
S&P, Moody's, Fitch Investors Service, Inc. ("Fitch"), Duff and Phelps ("Duff")
and IBCA Limited ("IBCA"), respectively.

Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+ and 1. Issues rated A-1+ are those with an "overwhelming degree" of
credit protection. Those rated A-1 reflect a "very strong" degree of safety
regarding timely payment. Those rated A-2 reflect a safety regarding timely
payment but not as high as A-1.

Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to have superior ability and strong ability for repayment, respectively.

The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.

The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.

The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>

<TABLE>
<S> <C> <C>
STI CLASSIC FUNDS ORGANIZATIONAL OVERVIEW

* INVESTMENT ADVISOR

STI Capital Management, N.A. P.O. Box 3808
Orlando, FL 32802

* DISTRIBUTOR

SEI Financial Services Company 680 E. Swedesford Road
Wayne, PA 19087

* ADMINISTRATOR

SEI Fund Resources 680 E. Swedesford Road
Wayne, PA 19087

* TRANSFER AGENT

Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779

* CUSTODIAN

The Bank of New York One Wall Street
New York, NY 10286

* LEGAL COUNSEL

Morgan, Lewis & Bockius LLP 2000 One Logan Square
Philadelphia, PA 19103

* INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP 1601 Market Street
Philadelphia, PA 19103
</TABLE>

<PAGE>
100093/10-95

DISTRIBUTOR
SEI Financial Services
Company

-- - - - - - - - - - - - - - -

PROSPECTUS

TRUST SHARES

EMERGING MARKETS
EQUITY FUND

INVESTMENT ADVISOR
STI CAPITAL MANAGEMENT, N.A.

[LOGO]
<PAGE>

STI CLASSIC FUNDS
SMALL CAP EQUITY FUND

INVESTMENT ADVISOR:

STI CAPITAL MANAGEMENT, N.A.

This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
Trust and should be read in conjunction with the Trust's prospectus dated
________________________. Prospectuses may be obtained through the Distributor,
SEI Financial Services Company, 680 E. Swedesford Road, Wayne, Pennsylvania
19087-1658.

TABLE OF CONTENTS
PAGE

THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . . B-
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
INVESTMENT ADVISOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . . . B-
COMPUTATION OF YIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
CALCULATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . . . B-
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . B-
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . B-
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
FUND TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
TRADING PRACTICES AND BROKERAGE. . . . . . . . . . . . . . . . . . . . . . . B-
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . . . B-
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
<PAGE>

THE TRUST

STI Classic Funds (the "Trust") is a diversified, open-end management investment
company established under Massachusetts law as a Massachusetts business trust
under a Declaration of Trust dated January 15, 1992. The Declaration of Trust
permits the Trust to offer separate series ("Funds") of units of beneficial
interest ("shares") and different classes of shares of each Fund. Shareholders
at present may purchase shares of the Trust's Small Cap Equity Fund through
three separate classes (Trust Shares, Investor Shares and Flex Shares), which
provide for variations in sales charges, distribution costs, transfer agent
fees, voting rights and dividends. Except for these differences, each Trust
Share, Investor Share and Flex Share of each Fund represents an equal
proportionate interest in that portfolio. See "Description of Shares." This
Statement of Additional Information relates to the Small Cap Equity Fund (the
"Fund").

DESCRIPTION OF PERMITTED INVESTMENTS

VARIABLE RATE MASTER DEMAND NOTES

The Fund may invest in variable rate master demand notes which may or may not be
backed by bank letters of credit. These notes permit the investment of
fluctuating amounts at varying market rates of interest pursuant to direct
arrangements between the Fund, as lender, and a borrower. Such notes provide
that the interest rate on the amount outstanding varies on a daily, weekly or
monthly basis depending upon a stated short-term interest rate index. Both the
lender and the borrower have the right to reduce the amount of outstanding
indebtedness at any time. There is no secondary market for the notes and it is
not generally contemplated that such instruments will be traded. The quality
of the note or the underlying credit must, in the opinion of the Advisor, be
equivalent to the ratings applicable to permitted investments for the Fund. The
Advisor will monitor on an ongoing basis the earning power, cash flow and
liquidity ratios of the issuers of such instruments and will similarly monitor
the ability of an issuer of a demand instrument to pay principal and interest on
demand.

U.S. TREASURY OBLIGATIONS

The Fund may invest in obligations including bills, notes and bonds issued by
the U.S. Treasury.

STRIPS

B-2
<PAGE>

U.S. GOVERNMENT AGENCY SECURITIES

Certain investments of the Fund may include U.S. Government Agency Securities.
Agencies of the United States Government which issue obligations consist of,
among others, the Export Import Bank of the United States, Farmers Home
Administration, Federal Farm Credit Bank, Federal Housing Administration,
Government National Mortgage Association ("GNMA"), Maritime Administration,
Small Business Administration and The Tennessee Valley Authority. Obligations
of instrumentalities of the United States Government include securities issued
by, among others, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation ("FHLMC"), Federal Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association ("FNMA") and the United States Postal
Service as well as government trust certificates. Some of these securities are
supported by the full faith and credit of the United States Treasury (E.G., GNMA
securities), others are supported by the right of the issuer to borrow from the
Treasury and still others are supported only by the credit of the
instrumentality (E.G., FNMA securities). Guarantees of principal by agencies or
instrumentalities of the U.S. Government may be a guarantee of payment at the
maturity of the obligation so that in the event of a default prior to maturity
there might not be a market and thus no means of realizing the value of the
obligation prior to maturity.

MORTGAGE-BACKED SECURITIES

The Fund may invest in mortgage-backed securities issued or guaranteed by U.S.
Government agencies or instrumentalities such as GNMA, FNMA and FHLMC.
Obligations of GNMA are backed by the full faith and credit of the United States
Government. Obligations of FNMA and FHLMC are not backed by the full faith and
credit of the United States Government but are considered to be of high quality
since they are considered to be instrumentalities of the United States. The
market value and interest yield of these mortgage-backed securities can vary due
to market interest rate fluctuations and early prepayments of underlying
mortgages. These securities represent ownership in a pool of federally insured
mortgage loans with a maximum maturity of 30 years. However, due to scheduled
and unscheduled principal payments on the underlying loans, these securities
have a shorter average maturity and, therefore, less principal volatility than a
comparable 30-year bond. Since prepayment rates vary widely, it is not possible
to accurately predict the average maturity of a particular mortgage-backed
security. The scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. Government
mortgage-backed securities differ from conventional bonds in that principal is
paid back to the certificate holders over the life of the loan rather than at
maturity. As a result, there will be monthly scheduled payments of principal
and interest. In addition, there may be unscheduled principal payments
representing prepayments on the underlying mortgages. Although these securities
may offer yields higher than those available from other types of U.S. government
securities, mortgage-backed securities may be less effective than other types of
securities as a means of "locking in" attractive long-term rates because of the
prepayment feature. For instance, when interest

B-3
<PAGE>

rates decline, the value of these securities likely will not rise as much as
comparable debt securities due to the prepayment feature. In addition, these
prepayments can cause the price of a mortgage-backed security originally
purchased at a premium to decline in price to its par value, which may result in
a loss.

The Fund may also invest in privately issued mortgage-backed securities. Two
principal types of mortgage-backed securities are collateralized mortgage
obligations ("CMOs") and real estate mortgage investment conduits ("REMICS"),
which are rated in one of the two highest categories by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"). CMOs are
securities collateralized by mortgages, mortgage pass-throughs, mortgage pay-
through bonds (bonds representing an interest in a pool of mortgages where the
cash flow generated from the mortgage collateral pool is dedicated to bond
repayment), and mortgage-backed bonds (general obligations of the issuers
payable out of the issuers' general funds and additionally secured by a first
lien on a pool of single family detached properties). May CMOs are issued with
a number of classes or series which have different expected maturities.
Investors purchasing such CMOs are credited with their portion of the scheduled
payments of interest and principal on the underlying mortgages plus all
unscheduled prepayments of principal based on a predetermined priority schedule.
Accordingly, the CMOs in the longer maturity series are less likely than other
mortgage pass-throughs to be prepaid prior to their stated maturity. Although
some of the mortgages underlying CMOs may be supported by various types of
insurance, and some CMOs may be backed by GNMA certificates or other mortgage
pass-throughs issued or guaranteed by U.S. Government agencies or
instrumentalities, the CMOs themselves are not generally guaranteed.

REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured by
an interest in real property. REMICs are similar to CMOs in that they issue
multiple classes of securities.

DETERMINING MATURITIES OF MORTGAGE-BACKED SECURITIES

Due to prepayments of the underlying mortgage instruments, mortgage-backed
securities do not have a known actual maturity. In the absence of a known
maturity, market participants generally refer to an estimated average life. The
Advisors believe that the estimated average life is the most appropriate measure
of the maturity of a mortgage-backed security. Accordingly, in order to
determine whether such security is a permissible investment for a Fund, it will
be deemed to have a remaining maturity equal to its average life as estimated by
that Fund's Advisor. An average life estimate is a function of an assumption
regarding anticipated prepayment patterns. The assumption is based upon current
interest rates, current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus different market
participants could produce somewhat different average life estimates with regard
to the same security. There can be no assurance that the average life as
estimated by an Advisor will be the actual average life.

B-4
<PAGE>

STRIPPED MORTGAGE-BACKED SECURITIES

The Limited-Term Federal Mortgage Securities Fund may also invest in stripped
mortgage-backed securities, which are securities that are created when a U.S.
Government agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while the
holder of the "interest-only" security (IO) receives interest payments from the
same underlying security.

The prices of stripped mortgage-backed securities may be particularly affected
by changes in interest rates. As interest rates fall, prepayment rates tend to
increase, which tends to reduce prices of IOs and increase prices of POs.
Rising interest rates can have the opposite effect.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements. Repurchase agreements are
agreements by which a person (E.G., a Fund) obtains a security and
simultaneously commits to return the security to the seller (a primary
securities dealer as recognized by the Federal Reserve Bank of New York or a
national member bank as defined in Section 3(d)(1) of the Federal Deposit
Insurance Act, as amended) at an agreed upon price (including principal and
interest) on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves
the obligation of the seller to pay the agreed upon price, which obligation is,
in effect, secured by the value of the underlying security.

Repurchase agreements are considered to be loans by the Fund for purposes of its
investment limitations. The repurchase agreements entered into by the Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Advisor monitors
compliance with this requirement). Under all repurchase agreements entered into
by the Fund, the Custodian or its agent must take possession of the underlying
collateral. However, if the seller defaults, the Fund could realize a loss on
the sale of the underlying security to the extent that the proceeds of the sale
including accrued interest are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, the Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and required to return
the underlying security to the seller's estate.

B-5
<PAGE>

STANDBY COMMITMENTS AND PUTS

The Fund may purchase securities at a price which would result in a yield to
maturity lower than that generally offered by the seller at the time of purchase
when they can simultaneously acquire the right to sell the securities back to
the seller, the issuer or a third party (the "writer") at an agreed-upon price
at any time during a stated period or on a certain date. Such a right is
generally denoted as a "standby commitment" or a "put." The purpose of engaging
in transactions involving puts is to maintain flexibility and liquidity to
permit the Funds to meet redemptions and remain as fully invested as possible in
municipal securities. The Funds reserve the right to engage in put
transactions. The right to put the securities depends on the writer's ability
to pay for the securities at the time the put is exercised. A Fund would limit
its put transactions to institutions which the Advisor believes present minimal
credit risks, and the Advisor would use its best efforts to initially determine
and continue to monitor the financial strength of the sellers of the options by
evaluating their financial statements and such other information as is available
in the marketplace. It may, however be difficult to monitor the financial
strength of the writers because adequate current financial information may not
be available. In the event that any writer is unable to honor a put for
financial reasons, a Fund would be a general creditor (I.E., on a parity with
all other unsecured creditors) of the writer. Furthermore, particular
provisions of the contract between the Fund and the writer may excuse the writer
from repurchasing the securities; for example, a change in the published rating
of the underlying securities or any similar event that has an adverse effect on
the issuer's credit or a provision in the contract that the put will not be
exercised except in certain special cases, for example, to maintain portfolio
liquidity. The Fund could, however, at any time sell the underlying portfolio
security in the open market or wait until the portfolio security matures, at
which time it should realize the full par value of the security.

The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Fund.
Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could, of course, sell the portfolio
security. The maturity of the underlying security will generally be different
from that of the put. There will be no limit to the percentage of portfolio
securities that the Fund may purchase subject to a standby commitment or put,
but the amount paid directly or indirectly for all standby commitments or puts
which are not integral parts of the security as originally issued held in the
Fund will not exceed 1/2 of 1% of the value of the total assets of such Fund
calculated immediately after any such put is acquired.

B-6
<PAGE>

WHEN-ISSUED SECURITIES

The Fund may purchase when-issued securities, in which case delivery and payment
normally take place within 45 days after the date of commitment to purchase.
The Fund will only make commitments to purchase when-issued securities with the
intention of actually acquiring the securities, but may sell them before the
settlement date. When-issued securities are subject to market fluctuation, and
accrue no interest to the purchaser during this pre-settlement period. The
payment obligation and the interest rate that will be received on the securities
are each fixed at the time the purchaser enters into the commitment. Purchasing
municipal forwards and when-issued securities entails leveraging and can involve
a risk that the yields available in the market when the delivery takes place
may actually be higher than those obtained in the transaction itself. In that
case, there could be an unrealized loss at the time of delivery.

Segregated accounts will be established with the Custodian, and the Fund will
maintain high quality, liquid assets in an amount at least equal in value to its
commitments to purchase when-issued securities and municipal forwards. If the
value of these assets declines, the Fund will place additional liquid assets in
the account on a daily basis so that the value of the assets in the account is
equal to the amount of such commitments.

OPTIONS

The Fund may write call options on a covered basis only, and will not engage in
option writing strategies for speculative purposes. A call option gives the
purchaser of such option the right to buy, and the writer, in this case the
Fund, the obligation to sell the underlying security at the exercise price
during the option period. The advantage to the Fund of writing covered calls is
that the Fund receives a premium which is additional income. However, if the
security rises in value, the Fund may not fully participate in the market
appreciation.

During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction is one in which the Fund, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written.

A closing purchase transaction cannot be effected with respect to an option once
the option writer has received an exercise notice for such option.

B-7
<PAGE>

security with either a different exercise price or expiration date or both. The
Fund may realize a net gain or loss from a closing purchase transaction
depending upon whether the net amount of the original premium received on the
call option is more or less than the cost of effecting the closing purchase
transaction. Any loss incurred in a closing purchase transaction may be
partially or entirely offset by the premium received from a sale of a different
call option on the same underlying security. Such a loss may also be wholly or
partially offset by unrealized appreciation in the market value of the
underlying security.

If a call option expires unexercised, the Fund will realize a short-term capital
gain in the amount of the premium on the option, less the commission paid. Such
a gain, however, may be offset by depreciation in the market value of the
underlying security during the option period. If a call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security, and the
proceeds of the sale of the security plus the amount of the premium on the
option, less the commission paid.

The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security and the time remaining until the expiration date.

The Fund will write call options only on a covered basis, which means that the
Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected,
the Fund would be required to continue to hold a security which it might
otherwise wish to sell, or deliver a security it would want to hold. Options
written by the Fund will normally have expiration dates between one and nine
months from the date written. The exercise price of a call option may be below,
equal to or above the current market value of the underlying security at the
time the option is written.

OBLIGATIONS OF SUPRANATIONAL AGENCIES

The Fund may purchase obligations of supranational agencies. Currently the Fund
intends to invest only in obligations issued or guaranteed by the Asian
Development Bank, Inter-American Development Bank, International Bank for
Reconstruction and Development (World Bank), African Development Bank, European
Coal and Steel Community, European Economic Community, European Investment Bank
and the Nordic Investment Bank.

SECURITIES LENDING

B-8
<PAGE>

value of the Fund's total assets taken at fair market value. The Fund will
continue to receive interest on the securities lent while simultaneously earning
interest on the investment of the cash collateral in U.S. Government securities.
However, the Fund will normally pay lending fees to such broker-dealers and
related expenses from the interest earned on invested collateral. There may be
risks of delay in receiving additional collateral or risks of delay in recovery
of the securities or even loss of rights in the collateral should the borrower
of the securities fail financially. However, loans are made only to borrowers
deemed by the Advisor to be of good standing and when, in the judgment of the
Advisor, the consideration which can be earned currently from such securities
loans justifies the attendant risk. Any loan may be terminated by either party
upon reasonable notice to the other party. The Fund may use the Distributor or
a broker-dealer affiliate of the Advisor as a broker in these transactions.

INVESTMENT COMPANY SHARES

Investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. The Fund's purchase of such investment company
securities results in the layering of expenses, such that Shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.

OTHER INVESTMENTS

The Trust is not prohibited from investing in obligations of banks which are
clients of SEI Corporation ("SEI"), the parent company of the Administrator and
the Distributor. However, the purchase of shares of the Fund by such banks or
by their customers will not be a consideration in determining which bank
obligations the Fund will purchase. The Fund will not purchase obligations
issued by the Advisor.

Investors will receive written notification at least thirty days prior to any
change in the Fund's investment objective.

INVESTMENT LIMITATIONS

The following are fundamental policies of the Fund and cannot be changed with
respect to the Fund without the consent of the holders of a majority of the
Fund's outstanding shares.

The Fund may not:

1. Acquire more than 10% of the voting securities of any one issuer.

2. Invest in companies for the purpose of exercising control.

3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. Any borrowing
will be

B-9
<PAGE>

done from a bank and, to the extent that such borrowing exceeds 5% of the
value of the Fund's assets, asset coverage of at least 300% is required.
In the event that such asset coverage shall at any time fall below 300%,
the Fund shall, within three days thereafter or such longer period as the
Securities and Exchange Commission may prescribe by rules and regulations,
reduce the amount of its borrowings to such an extent that the asset
coverage of such borrowings shall be at least 300%. This borrowing
provision is included solely to facilitate the orderly sale of portfolio
securities to accommodate heavy redemption requests if they should occur
and is not for investment purposes. All borrowings in excess of 5% of the
value of a Fund's total assets will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.

4. Make loans, except that (a) the Fund may purchase or hold debt instruments
in accordance with its investment objective and policies; (b) the Fund may
enter into repurchase agreements, and (c) the Fund may engage in securities
lending as described in the Prospectuses and in this Statement of
Additional Information.

5. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (3) above in aggregate amounts not to exceed 10% of
the Fund's total assets, taken at current value at the time of the
incurrence of such loan, except as permitted with respect to securities
lending.

6. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts (except for financial futures
contracts) and interests in a pool of securities that are secured by
interests in real estate. However, subject to its permitted investment
spectrum, the Fund may invest in companies which invest in real estate
commodities or commodities contracts.

7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits
as necessary for the clearance of security transactions.

8. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a security.

9. Purchase securities of other investment companies if, as a result of such
acquisition, the Fund owns more than 3% of the total voting stock of the
company; securities issued by any one investment company represent more
than 5% of the total assets of the Fund; or securities (other than treasury
stock) issued by all investment companies represent more than 10% of the
total assets of the Fund.

B-10
<PAGE>

10. Issue senior securities (as defined in the Investment Company Act of 1940
(the "1940 Act")) except in connection with permitted borrowings as
described above or as permitted by rule, regulation or order of the SEC.

NON-FUNDAMENTAL POLICIES

The Fund may not purchase or retain securities of an issuer if, to the knowledge
of the Trust, an officer, trustee, partner or director of the Trust or the
Advisor of the Trust owns beneficially more than 1/2 of 1% of the shares or
securities of such issuer and all such officers, trustees, partners and
directors owning more than 1/2 of 1% of such shares or securities together own
more than 5% of such shares or securities.

The Fund may not invest in warrants in an amount exceeding 5% of its net assets
as valued at the lower of cost or market value. Included in that amount, but
not to exceed 2% of the Fund's net assets, may be warrants not listed on the New
York Stock Exchange or American Stock Exchange.

The Fund may not invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of the Fund's assets. An illiquid security is a security which
cannot be disposed of promptly (within seven days), and in the usual course of
business without a loss, and includes repurchase agreements maturing in excess
of seven days, time deposits with a withdrawal penalty, non-negotiable
instruments and instruments for which no market exists.

The Fund may not invest in interests in oil, gas or other mineral exploration or
development programs and oil, gas or mineral leases.

The Fund may not invest in securities of issuers which together with
predecessors have a record of less than three years continuous operation or
equity securities of issuers which are not readily marketable if such
investments will exceed 5% of the Fund's total assets.

With the exception of the limitations on liquidity standards, the foregoing
percentages will apply at the time of the purchase of a security and shall not
be considered violated unless an excess occurs or exists immediately after and
as a result of a purchase of such security.

INVESTMENT ADVISOR

The Trust and STI Capital Management, N.A. (the "Advisor") have entered into an
advisory agreement (the "Advisory Agreement"). The Advisory Agreement provides
that the Advisor shall not be protected against any liability to the Trust or
its Shareholders by reason of willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.

B-11
<PAGE>

The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of the Fund (including amounts payable to the Advisor but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by certain states, the Advisor and/or the
Administrator will bear the amount of such excess. The Advisor will not be
required to bear expenses of the Trust to an extent which would result in a
Fund's inability to qualify as a regulated investment company under provisions
of the Internal Revenue Code.

The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Funds, by a majority of the outstanding shares of the Funds, on
not less than 30 days' nor more than 60 days' written notice to the Advisor, or
by the Advisor on 90 days' written notice to the Trust.

THE ADMINISTRATOR

The Trust and SEI Fund Resources (the "Administrator") are parties to an
Administration Agreement (the "Administration Agreement") dated May 29, 1992.
The Administration Agreement provides that the Administrator shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.

The Administrator, a Delaware business trust, has its principal business offices
at 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658. SEI Financial
Management Corporation ("SFM"), a wholly-owned subsidiary of SEI Corporation
("SEI"), is the owner of all beneficial interest in the Administrator. SEI and
its subsidiaries and affiliates, including the Administrator, are leading
providers of funds evaluation services, trust accounting systems, and brokerage
and information services to financial institutions, institutional investors and
money managers. The Administrator and its affiliates also serve as
administrator to the following other mutual funds: The Achievement Funds Trust;
The Advisors' Inner Circle Fund; The Arbor Fund; ARK Funds; Bishop Street Funds;
CoreFunds, Inc.; CrestFunds, Inc.; CUFUND; FMB Funds, Inc.; First American
Funds, Inc.; First American Investment Funds, Inc.; First American Strategy
Funds, Inc.; ^ Marquis Funds-Registered Trademark-; Monitor Funds; Morgan
Grenfell Investment Trust; The PBHG Funds, Inc.; The Pillar Funds; Profit Funds
Investment Trust; Rembrandt Funds-Registered Trademark-; Santa Barbara Group of
Mutual Funds, Inc.; 1784 Funds-Registered Trademark-; SEI Asset Allocation
Trust; SEI Daily Income Trust; SEI Index Funds; SEI Institutional Investments
Trust; SEI Institutional Managed Trust; SEI International Trust; SEI Liquid
Asset Trust; SEI Tax Exempt Trust; Stepstone Funds; and Turner Funds.

B-12
<PAGE>

THE DISTRIBUTOR

SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary of
SEI, and the Trust have entered into a distribution agreement (the "Distribution
Agreement") dated May 29, 1992. The Distributor will receive no compensation
for distribution of Trust Shares. In addition, the Investor Shares of the Funds
have a distribution plan ("Investor Plan"), and the Flex Shares of the Funds
have a distribution plan ("Flex Plan").

The Distribution Agreement is renewable annually and may be terminated by the
Distributor, the Qualified Trustees (as defined in the Distribution Agreement),
or by a majority vote of the outstanding securities of the Trust upon not more
than 60 days' written notice by either party.

INVESTOR SHARES AND FLEX SHARES DISTRIBUTION PLANS

The Distribution Agreement and the Investor Plan adopted by the Trust provide
that Investor Shares of the Fund will pay the Distributor fees of up to .30% of
the average daily net assets of the Fund.

The Distribution Agreement and the Flex Plan adopted by the Trust provide that
each Flex Shares Fund will pay the Distributor a fee of up to .75% of the
average daily net assets of that Fund. The Distributor can use these fees to
compensate broker-dealers and service providers, including SunTrust and its
affiliates, which provide administrative and/or distribution services to
Investor Shares or Flex Shares Shareholders or their customers who beneficially
own Investor Shares or Flex Shares. In addition, Flex Shares are subject to a
service fee of up to .25% of the average daily net assets of the Flex Shares of
each Fund. This service fee will be used for services provided and expenses
incurred in maintaining shareholder accounts, responding to shareholder
inquiries and providing information on their investments.

Services for which broker-dealers and service providers may be compensated
include establishing and maintaining customer accounts and records; aggregating
and processing purchase and redemption requests from customers; placing net
purchase and redemption orders with the Distributor; automatically investing
customer account cash balances; providing periodic statements to customers;
arranging for wires; answering customer inquiries concerning their investments;
assisting customers in changing dividend options, account designations, and
addresses; performing sub-accounting functions; processing dividend payments
from the Trust on behalf of customers; and forwarding Shareholder communications
from the Trust (such as proxies, Shareholder reports, and dividend distribution
and tax notices) to these customers with respect to investments in the Trust.
Certain state securities laws may require those financial institutions providing
such distribution services to register as dealers pursuant to state law.
Although banking laws and regulations prohibit banks from distributing shares of
open-end investment companies such as the Trust, according to an opinion issued
to the staff of the SEC by the Office of the Comptroller of the Currency,
financial institutions are not prohibited from acting in other capacities for
investment

B-13
<PAGE>

companies, such as providing shareholder services. Should future legislative,
judicial or administrative action prohibit or restrict the activities of
financial institutions in connection with providing shareholder services, the
Trust may be required to alter materially or discontinue its arrangements with
such financial institutions.

The Trust has adopted the Investor Plan and the Flex Plan in each case in
accordance with the provisions of Rule 12b-1 under the 1940 Act, which Rule
regulates circumstances under which an investment company may directly or
indirectly bear expenses relating to the distribution of its shares.
Continuance of the Investor Plan and the Flex Plan must be approved annually by
a majority of the Trustees of the Trust and by a majority of the Qualified
Trustees. The Investor Plan and the Flex Plan require that quarterly written
reports of amounts spent under the Investor Plan and the Flex Plan,
respectively, and the purposes of such expenditures be furnished to and reviewed
by the Trustees. The Investor Plan and the Flex Plan may not be amended to
increase materially the amount which may be spent thereunder without approval by
a majority of the outstanding shares of the affected class of shares of the
Trust. All material amendments of the Plans will require approval by a majority
of the Trustees of the Trust and of the Qualified Trustees.

There is no sales charge on purchases of Flex Shares, but Flex Shares are
subject to a contingent deferred sales charge if they are redeemed within one
year of purchase. Pursuant to the Distribution Agreement and the Flex Plan,
Flex Shares are subject to an ongoing distribution and service fee calculated on
each of the Fund's, aggregate average daily net assets attributable to its Flex
Shares.

TRUSTEES AND OFFICERS OF THE TRUST

The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees and executive officers of the Trust, their dates of birth and their
principal occupations for the last five years are set forth below. Unless
otherwise noted, the principal business address for each officer listed below is
680 East Swedesford Road, Wayne, Pennsylvania 19087-1658.

DANIEL S. GOODRUM (7/11/26) - Trustee - 48 Cayuga Road, Fort Lauderdale, Florida
33308. Chairman & CEO, SunBank/South Florida, N.A., 1985-1991; Chairman, Audit
Committee and Director, Holy Cross Hospital; Executive Committee Member and
Director, Honda Classic Foundation; Director, Broward Community College
Foundation.

WILTON LOONEY (4/18/19) - Trustee - 2999 Circle 75 Parkway, Atlanta, Georgia
30339. President of Genuine Parts Company, 1961-1964; Chairman of the Board,
1964-1990; Honorary Chairman of the Board, 1990 to present. Director, Rollins,
Inc., Director, RPC Energy Services, Inc.

B-14
<PAGE>

CHAMPNEY A. MCNAIR (10/30/24) - Trustee - 1405 Trust Co. of Georgia Building,
Atlanta, Georgia 30303. Director and Chairman of Investment Committee and
member of Executive Committee, Cotton States Life and Health Insurance Company;
Director and Chairman of Investment Committee and member of Executive Committee,
Cotton States Mutual Insurance Company; Chairman, Trust Company of Georgia
Advisory Council.

F. WENDELL GOOCH (12/3/32) - Trustee - P.O. Box 190, Paoli, Indiana 47454.
President, Orange County Publishing Co., Inc., since October 1981. Publisher of
the Paoli News and the Paoli Republican and Editor of the Paoli Republican since
January 1981, President, H & W Distribution, Inc. since July 1984. Current
Trustee on the Board of Trustees for the SEI Family of Funds and The Capitol
Mutual Funds. Executive Vice President, Trust Department, Harris Trust and
Savings Bank and Chairman of the Board of Directors of The Harris Trust Company
of Arizona before January 1981.

T. GORDY GERMANY (11/28/25) -Trustee - 17 Windy Point, Alexander City, Alabama
35010. Retired President, Chairman, and CEO of Crawford & Company; held these
positions, 1973-1987. Member of the Board of Directors, 1970-1990, joined
company in 1948; spent entire career at Crawford, currently serves on Boards of
Norrell Corporation and Mercy Health Services, the latter being the holding
company of St. Joseph's Hospitals.

DR. BERNARD F. SLIGER (9/30/24) - Trustee - Florida State University, The Gus A.
Stavros Center, 250 South Woodward Avenue, Tallahassee, Florida 32306-4035.
Currently on sabbatical leave from Florida State University (1991-92); now
serves as visiting professor at the University of New Orleans. President of
Florida State University, 1976-91; previous four years EVP and Chief Academic
Officer. During educational career, taught at Florida State, Michigan State,
Louisiana State and Southern University. Spent 19 years as faculty member and
administrator at Louisiana State University and served as Head of Economics
Department, member and Chairman of the Graduate Council, Dean of Academic
Affairs and Vice Chancellor. Member of Board of Directors of Federal Reserve
Bank of Atlanta, 1983-1988.

JESSE HALL (9/26/29) - Trustee* - 988 Winall Down Road, NE, Atlanta, Georgia
30318. Executive Vice President, SunTrust Banks, Inc., 1985-1994; Director of
Crawford & Company since 1979; Member, Atlanta Estate Planning Council, 1988-
1993.

DAVID G. LEE (4/16/52) - President, Chief Executive Officer - Senior Vice
President of the Administrator and Distributor since 1993. Vice President of
the Administrator and Distributor (1991-1993). President, GW Sierra Trust Funds
before 1991.

STEPHEN G. MEYER (7/12/65) - Controller, Chief Financial Officer - Vice
President & Controller of SEI, the Administrator and Distributor since 1994.
Director, Internal Audit and Risk Management, SEI Corporation, 1992-1994.
Senior Associate, Coopers & Lybrand, 1990-1992. Internal Audit, Vanguard Group
of Investment prior to 1992.

B-15
<PAGE>

RICHARD W. GRANT (10/25/45) - Secretary - 2000 One Logan Square, Philadelphia,
Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law firm). Counsel
to the Trust, Administrator and Distributor.

SANDRA K. ORLOW (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1983.

KEVIN P. ROBINS (4/15/61) - Vice President, Assistant Secretary - Senior Vice
President & General Counsel of SEI, the Administrator and the Distributor since
1994. Vice President of SEI, the Administrator and the Distributor, 1992-1994.
Associate, Morgan, Lewis & Bockius LLP (law firm) prior to 1992.

KATHRYN L. STANTON (11/19/58) - Vice President, Assistant Secretary - Vice
President, Assistant Secretary of SEI, the Administrator and Distributor since
1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.

MARC H. CAHN (6/19/57) - Vice President, Assistant Secretary - Vice President
and Assistant Secretary of SEI, the Administrator and Distributor since 1996.
Associate General Counsel, Barclays Bank PLC, 1995-1996. Counsel for First
Fidelity Bancorporation prior to 1995.

JOSEPH M. LYDON (9/27/59) - Vice President - Director of Business Administration
of Fund Resources, SEI Corporation since 1995. Vice President of Fund Group and
Vice President of the Adviser, Dreman Value Management and President of Dremen
Financial Services, Inc. prior to 1995.

TODD CIPPERMAN (2/14/66) - Vice President, Assistant Secretary - Vice President
and Assistant Secretary of SEI, the Administrator and the Distributor since
1995. Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston &
Strawn (law firm), 1991-1994.

BARBARA A. NUGENT (6/18/56) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate, Drinker Biddle & Reath (law firm), 1994-1996. Assistant
Vice President/Administration, Delaware Service Company, Inc., 1992-1994.
Assistant Vice President/Operations, Delaware Service Company, Inc., 1988-1992.

JOHN H. GRADY, JR. (6/1/61) - Assistant Secretary - 1800 M Street, N.W.
Washington, DC 20036. Partner, Morgan, Lewis & Bockius LLP (law firm) since
1995. Associate, Morgan, Lewis & Bockius LLP, 1993-1995. Associate, Ropes &
Gray (law firm), 1988-1993.

- -----------------

* Jesse S. Hall may be deemed to be an "interested person" of the Trust as
defined in the Investment Company Act of 1940.

B-16
<PAGE>

The Trustees and officers of the Trust own, in the aggregate, less than 1% of
the outstanding shares of the Trust.

For the fiscal year end May 31, 1996, the Trust paid the following amounts to
Trustees and Officers of the Trust:

Total
Pension or Compensation from
Aggregate Retirement Estimated Registrant and
Compensation Benefits Annual Fund Complex
From Registrant Accrued Benefits Paid to Directors
Name of Person, for Fiscal Year as Part Upon for Fiscal Year
Position Ended 1996 of Fund Retirement Ended 1996
Expenses
<S> <C> <C> <C> <C>
Daniel S. Goodrum, $13,500 N/A N/A $13,500 for service on
Trustee two boards
Wilton Looney, $16,000 N/A N/A $16,000 for service on
Trustee two boards
Champney A. McNair, $13,500 N/A N/A $13,500 for service on
Trustee two boards
F. Wendell Gooch, $13,500 N/A N/A $13,500 for service on
Trustee two boards
T. Gordy Germany, $13,500 N/A N/A $13,500 for service on
Trustee two boards
Dr. Bernard F. Sliger, $13,500 N/A N/A $13,500 for service on
Trustee two boards
Jesse S. Hall, $13,500 N/A N/A $13,500 for service on
Trustee two boards
</TABLE>

COMPUTATION OF YIELD

The current yield of the Fund will be calculated daily based upon the thirty
days ending on the date of calculation ("base period"). The yield is computed
by determining the net change (exclusive of capital changes) in the value of a
hypothetical pre-existing shareholder account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing such net change by the value
of the account at the beginning of the same period to obtain the base
period return and multiplying the result by (365/7). Realized and unrealized
gains and losses are not included in the calculation of the yield. The
effective compound yield of the Funds is determined by computing the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base

B-17
<PAGE>

period return, and then compounding the base period return by adding 1, raising
the sum to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula: Effective Yield = [Base Period Return + 1)
365/7] - 1. The current and the effective yields reflect the reinvestment of
net income earned daily on portfolio assets.

The Fund may advertise a 30-day yield. In particular, yield will be calculated
according to the following formula:

Yield = (2 (a-b/cd + 1)6 - 1) where a = dividends and interest earned during the
period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.

CALCULATION OF TOTAL RETURN

From time to time, the Fund may advertise total return. In particular, total
return will be calculated according to the following formula: P (1 + T)n = ERV,
where P = a hypothetical initial payment of $1,000; T = average annual total
return; n = number of years; and ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the designated time period as of the end
of such period.

From time to time, the Trust may include the names of clients of the Advisor in
advertisements and/or sales literature for the Trust. The SEI Funds Evaluation
database tracks the total return of numerous tax-exempt pension accounts. The
range of returns in these accounts determines the percentile rankings. STI
Capital Management, N.A. has been in the top 1% of the SEI Funds Evaluation
database for equity managers over the past ten years. SEI's database includes
research data on over 1,000 investment managers responsible for over $450
billion in assets.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions of shares of the Fund may be made on any day the New
York Stock Exchange ("NYSE") is open for business. Currently, the NYSE is
closed on the days the following holidays are observed: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

It is currently the Trust's policy to pay for all redemptions in cash. The
Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of readily marketable
securities held by the Fund in lieu of cash. Shareholders may incur brokerage
charges on the sale of any such securities so received in payment of
redemptions. A Shareholder will at all times be entitled to aggregate cash
redemptions from all Funds of the Trust during any 90-day period of up to the
lesser of $250,000 or 1% of the Trust's net assets.

B-18
<PAGE>

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the NYSE is restricted, or during the existence of an emergency (as determined
by the Securities and Exchange Commission by rule or regulation) as a result of
disposal or valuation of the Fund's securities is not reasonably practicable, or
for such other periods as the Securities and Exchange Commission has by order
permitted. The Trust also reserves the right to suspend sales of shares of a
Fund for any period during which the NYSE, the Advisor, the Administrator
and/or, the Custodian are not open for business.

DETERMINATION OF NET ASSET VALUE

The securities of the Fund are valued by the Administrator pursuant to
valuations provided by an independent pricing service. The pricing service
relies primarily on prices of actual market transactions as well as trader
quotations. However, the service may also use a matrix system to determine
valuations of fixed income securities, which system considers such factors as
security prices, yields, maturities, call features, ratings and developments
relating to specific securities in arriving at valuations. The procedures of
the pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.

Although the methodology and procedures are identical, the net asset value per
share of Trust Shares, Flex Shares and Investor Shares of the Bond, Short-Term
U.S. Treasury Securities and Equity Funds may differ because of variations in
the distribution and service fees and transfer agent fees charged to Investor
Shares and Flex Shares.

TAXES

FEDERAL INCOME TAX

In order to qualify for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended ("Code"), the Fund must
distribute annually to its Shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, or certain other income, (ii) the Fund
must derive less than 30% of its gross income each taxable year from the sale or
other disposition of stocks or securities held for less than three months; (iii)
at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RIC's and other securities, with such
other securities limited, in respect to any one issuer, to an amount that does
not exceed 5% of the value of the Fund's assets and that does not represent more
than 10% of the outstanding voting securities of such issuer; and

B-19
<PAGE>

(iv) at the close of each quarter of the Fund's taxable year, not more than 25%
of the value of its assets may be invested in securities (other than U.S.
Government securities or the securities of other RIC's) of any one issuer, or of
two or more issuers engaged in same or similar businesses if the Fund owns at
least 20% of the voting power of such issuers.

Notwithstanding the Distribution Requirement described above, which only
requires the Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gains (the excess of net long-term capital gains over net short-term capital
loss), the Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its capital gain net income for the one-year
period ending on October 31 of that calendar year, plus certain other amounts.

Any gain or loss recognized on a sale or redemption of Shares of the Fund by a
Shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than twelve
months and otherwise will be generally treated as a short-term capital gain or
loss. If shares on which a net capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss recognized will be treated as a long-term capital loss to the
extent of the long-term capital gain distribution.

STATE TAXES

The Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the Fund
to Shareholders and the ownership of shares may be subject to state and local
taxes.

FOREIGN TAXES

Dividends and interests received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on the Fund's securities. Tax conventions between
certain countries and the United States may reduce or eliminate these taxes.
Foreign countries generally do not impose taxes on capital gains with respect to
investments by foreign investors.

If the Fund meets the Distribution Requirement and if more than 50% of the value
of the Fund's total assets at the close of its taxable year consists of
securities of foreign corporations, the Fund will be eligible to, and will, file
an election with the Internal Revenue Service that will enable Shareholders, in
effect, to receive the benefit of the foreign tax credit with respect to any
foreign and U.S. possessions income taxes paid by the Fund. Pursuant to the
election, the Fund will treat those taxes as dividends paid to its Shareholders.
Each Shareholder will be required to include a proportionate share of those
taxes in gross income as income received from a foreign source and must treat
the amount so included as if the

B-20
<PAGE>

Shareholder had paid the foreign tax directly. The Shareholder may then either
deduct the taxes deemed paid by him or her in computing his or her taxable
income or, alternatively, use the foregoing information in calculating the
foreign tax credit against the Shareholders' federal income tax. If the Fund
makes the election, the Fund will report annually to its Shareholders the
respective amounts per share of the Fund's income from sources within, and taxes
paid to, foreign countries and U.S. possessions.

The Fund's transactions in foreign currencies and forward foreign currency
contracts will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund (I.E.,
may effect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
Shareholders. These provisions also may require the Fund to mark-to-market
certain types of the positions in its portfolio (I.E., treat them as if they
were closed out) which may cause the Fund to recognize income without receiving
cash with which to make distributions in amounts necessary to satisfy the 90%
and 98% distribution requirements for avoiding income and excise taxes. The
Fund will monitor its transactions, will make the appropriate tax elections, and
will make the appropriate entries in the books and records when it acquires any
foreign currency or forward foreign currency contract in order to mitigate the
effect of these rules and prevent disqualification of the Fund as a regulated
investment company and minimize the imposition of income and excise taxes.

FUND TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Advisor is responsible for placing the orders
to execute transactions for the Fund. In placing orders, it is the policy of
the Trust to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Advisor generally seeks reasonably competitive spreads or
commissions, the Trust will not necessarily be paying the lowest spread or
commission available.

The money market securities in which the Fund invests are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Advisor
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio

B-21
<PAGE>

securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.

TRADING PRACTICES AND BROKERAGE

The Trust selects brokers or dealers to execute transactions for the purchase or
sale of portfolio securities on the basis of its judgment of their professional
capability to provide the service. The primary consideration is to have brokers
or dealers provide transactions at best price and execution for the Trust. Best
price and execution includes many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Trust's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry.
In some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is
a spread (the difference between the buy and sell price) which is the equivalent
of a commission.

The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by an Advisor, brokerage business to brokers
or dealers who provide brokerage and research services. These research services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends, assisting in
determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by an Advisor in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the fund
or account generating the brokerage.

As provided in the Securities Exchange Act of 1934 (the "1934 Act") higher
commissions may be paid to broker-dealers who provide brokerage and research
services than to broker-dealers who do not provide such services if such higher
commissions are deemed reasonable in relation to the value of the brokerage and
research services provided. Although transactions are directed to broker-
dealers who provide such brokerage and research services, the Trust believes
that the commissions paid to such broker-dealers are not, in general, higher
than commissions that would be paid to broker-dealers not providing such
services and that such commissions are reasonable in relation to the value of
the brokerage and research services provided. In addition, portfolio
transactions which generate commissions or their equivalent are directed to
broker-dealers who provide daily portfolio

B-22
<PAGE>

pricing services to the Trust. Subject to best price and execution, commissions
used for pricing may or may not be generated by the funds receiving the pricing
service.

The Advisor may place a combined order for two or more accounts or funds engaged
in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in
a manner deemed equitable to each account or fund. It is believed that the
ability of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or Fund may obtain, it is the opinion
of each Advisor and the Trust's Board of Trustees that the advantages of
combined orders outweigh the possible disadvantages of separate transactions.

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Funds, at the request of the Distributor, give consideration to sales of shares
of the Trust as a factor in the selection of brokers and dealers to execute
Trust portfolio transactions.

It is expected that the Trust may execute brokerage or other agency transactions
through the Distributor or an affiliate of an Advisor, both of which are
registered broker-dealers, for a commission in conformity with the 1940 Act, the
1934 Act and rules promulgated by the SEC. Under these provisions, the
Distributor or an affiliate of an Advisor is permitted to receive and retain
compensation for effecting portfolio transactions for the Trust on an exchange
if a written contract is in effect between the Distributor and the Trust
expressly permitting the Distributor or an affiliate of an Advisor to receive
and retain such compensation. These rules further require that commissions paid
to the Distributor by the Trust for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other renumeration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." In addition, the Trust may direct commission business to one or more
designated broker-dealers in connection with such broker/dealer's provision of
services to the Trust or payment of certain Trust expenses (e.g., custody,
pricing and professional fees). The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor, and will review these
procedures periodically.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares and classes of shares of the Funds each of which represents an equal
proportionate interest in that Fund with each other share. Shares are entitled
upon liquidation to a PRO RATA share in

B-23
<PAGE>

the net assets of the Funds. Shareholders have no preemptive rights. The
Declaration of Trust provides that the Trustees of the Trust may create
additional series of shares or classes of series. All consideration received by
the Trust for shares of any additional series and all assets in which such
consideration is invested would belong to that series and would be subject to
the liabilities related thereto. Share certificates representing shares will
not be issued.

SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the Shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of Shareholder liability for obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any Shareholder held personally liable for the
obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisors, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the
Trust unless it is determined in the manner provided in the Declaration of Trust
that they have not acted in good faith in the reasonable belief that their
actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his willful misfeasance, bad faith, gross negligence or reckless disregard
of his duties.

B-24
<PAGE>

APPENDIX

I. BOND RATINGS

CORPORATE BONDS

The following are descriptions of Standard & Poor's Corporation ("S&P's") and
Moody's Investors Service, Inc. ("Moody's") corporate bond ratings.

Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such
a rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. Debt rated A has a strong capacity
to pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories.

Debt rated BB, B, CCC, CC or C is regarded as having predominately speculative
characteristics with respect to capacity to pay interest and repay principal.
BB indicates the least degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposure to adverse conditions.

Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in Aaa securities. Together with bonds
rated Aaa, they comprise what are generally known as high-grade bonds.

Debt rated Baa is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are ore likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class. Bonds which are rated B generally lack characteristics of
a desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal and
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

II. COMMERCIAL PAPER AND SHORT-TERM RATINGS

The following descriptions of commercial paper ratings have been published by
S&P, Moody's, Fitch Investors Service, Inc. ("Fitch"), Duff and Phelps ("Duff")
and IBCA Limited ("IBCA"), respectively.

A-1
<PAGE>

payment. Those rated A-2 reflect a safety regarding timely payment but not as
high as A-1.

Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to have superior ability and strong ability for repayment, respectively.

The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the
second highest commercial paper rating assigned by Fitch which reflects an
assurance of timely payment only slightly less in degree than the strongest
issues.

The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small.

The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are
supported by a strong capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic or financial conditions.

A-2
<PAGE>

STI CLASSIC FUNDS
EMERGING MARKETS EQUITY FUND

INVESTMENT ADVISOR:

STI CAPITAL MANAGEMENT, N.A.

This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
Trust and the Fund and should be read in conjunction with the Fund's prospectus
dated January 1, 1997. A prospectus may be obtained through the Distributor,
SEI Financial Services Company, 680 E. Swedesford Road, Wayne, Pennsylvania
19087-1658.

TABLE OF CONTENTS
PAGE

THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
DESCRIPTION OF PERMITTED INVESTMENTS. . . . . . . . . . . . . . . . B-
INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . B-
INVESTMENT ADVISORS . . . . . . . . . . . . . . . . . . . . . . . . B-
THE ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . B-
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . B-
TRUSTEES AND OFFICERS OF THE TRUST. . . . . . . . . . . . . . . . . B-
COMPUTATION OF YIELD. . . . . . . . . . . . . . . . . . . . . . . . B-
CALCULATION OF TOTAL RETURN . . . . . . . . . . . . . . . . . . . . B-
PURCHASE AND REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . B-
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . . . . . . B-
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-
FUND TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . B-
TRADING PRACTICES AND BROKERAGE . . . . . . . . . . . . . . . . . . B-
DESCRIPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . B-
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . . . . . B-
LIMITATION OF TRUSTEES' LIABILITY . . . . . . . . . . . . . . . . . B-

January 1, 1997

<PAGE>

THE TRUST

DESCRIPTION OF PERMITTED INVESTMENTS

VARIABLE RATE MASTER DEMAND NOTES

STRIPS

The Fund may invest in Separately Traded Interest and Principal Securities
("STRIPS"), which are component parts of U.S. Treasury Securities traded through
the Federal Book-Entry System. The Advisor will only purchase STRIPS that it
determines are liquid or, if illiquid, do not violate the Fund's investment
policy concerning investments in illiquid securities. While there is no
limitation on the percentage of the Fund's assets that may be comprised of
STRIPS, the Advisor will monitor the level of such holdings to avoid the risk of
impairing shareholders' redemption rights and of deviations in the value of
shares of the Fund.

U.S. GOVERNMENT AGENCY SECURITIES

B-2

<PAGE>

Maritime Administration, Small Business Administration and The Tennessee Valley
Authority. Obligations of instrumentalities of the United States Government
include securities issued by, among others, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation ("FHLMC"), Federal Intermediate Credit Banks,
Federal Land Banks, Federal National Mortgage Association ("FNMA") and the
United States Postal Service as well as government trust certificates. Some of
these securities are supported by the full faith and credit of the United States
Treasury (E.G., GNMA securities), others are supported by the right of the
issuer to borrow from the Treasury and still others are supported only by the
credit of the instrumentality (E.G., FNMA securities). Guarantees of principal
by agencies or instrumentalities of the U.S. Government may be a guarantee of
payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing the
value of the obligation prior to maturity.

MORTGAGE-BACKED SECURITIES

The Fund may invest in mortgage-backed securities issued or guaranteed by U.S.
Government agencies or instrumentalities such as GNMA, FNMA and FHLMC.
Obligations of GNMA are backed by the full faith and credit of the United States
Government. Obligations of FNMA and FHLMC are not backed by the full faith and
credit of the United States Government but are considered to be of high quality
since they are considered to be instrumentalities of the United States. The
market value and interest yield of these mortgage-backed securities can vary due
to market interest rate fluctuations and early prepayments of underlying
mortgages. These securities represent ownership in a pool of federally insured
mortgage loans with a maximum maturity of 30 years. However, due to scheduled
and unscheduled principal payments on the underlying loans, these securities
have a shorter average maturity and, therefore, less principal volatility than a
comparable 30-year bond. Since prepayment rates vary widely, it is not possible
to accurately predict the average maturity of a particular mortgage-backed
security. The scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. Government
mortgage-backed securities differ from conventional bonds in that principal is
paid back to the certificate holders over the life of the loan rather than at
maturity. As a result, there will be monthly scheduled payments of principal
and interest. In addition, there may be unscheduled principal payments
representing prepayments on the underlying mortgages. Although these securities
may offer yields higher than those available from other types of U.S. Government
securities, mortgage-backed securities may be less effective than other types of
securities as a means of "locking in" attractive long-term rates because of the
prepayment feature. For instance, when interest rates decline, the value of
these securities likely will not rise as much as comparable debt securities due
to the prepayment feature. In addition, these prepayments can cause the price
of a mortgage-backed security originally purchased at a premium to decline in
price to its par value, which may result in a loss.

The Fund may also invest in privately issued mortgage-backed securities. Two
principal types of mortgage-backed securities are collateralized mortgage
obligations ("CMOs") and real

B-3

<PAGE>

estate mortgage investment conduits ("REMICs"), which are rated in one of the
two highest categories by Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"). CMOs are securities collateralized by
mortgages, mortgage pass-throughs, mortgage pay-through bonds (bonds
representing an interest in a pool of mortgages where the cash flow generated
from the mortgage collateral pool is dedicated to bond repayment), and
mortgage-backed bonds (general obligations of the issuers payable out of the
issuers' general funds and additionally secured by a first lien on a pool of
single family detached properties). Many CMOs are issued with a number of
classes or series which have different expected maturities. Investors
purchasing such CMOs are credited with their portion of the scheduled payments
of interest and principal on the underlying mortgages plus all unscheduled
prepayments of principal based on a predetermined priority schedule.
Accordingly, the CMOs in the longer maturity series are less likely than other
mortgage pass-throughs to be prepaid prior to their stated maturity. Although
some of the mortgages underlying CMOs may be supported by various types of
insurance, and some CMOs may be backed by GNMA certificates or other mortgage
pass-throughs issued or guaranteed by U.S. Government agencies or
instrumentalities, the CMOs themselves are not generally guaranteed.

DETERMINING MATURITIES OF MORTGAGE-BACKED SECURITIES

Due to prepayments of the underlying mortgage instruments, mortgage-backed
securities do not have a known actual maturity. In the absence of a known
maturity, market participants generally refer to an estimated average life. The
Advisor believes that the estimated average life is the most appropriate measure
of the maturity of a mortgage-backed security. Accordingly, in order to
determine whether such security is a permissible investment for the Fund, it
will be deemed to have a remaining maturity equal to its average life as
estimated by the Fund's Advisor. An average life estimate is a function of an
assumption regarding anticipated prepayment patterns. The assumption is based
upon current interest rates, current conditions in the relevant housing markets
and other factors. The assumption is necessarily subjective, and thus different
market participants could produce somewhat different average life estimates with
regard to the same security. There can be no assurance that the average life as
estimated by the Advisor will be the actual average life.

STRIPPED MORTGAGE-BACKED SECURITIES

The Fund may also invest in stripped mortgage-backed securities, which are
securities that are created when a U.S. Government agency or a financial
institution separates the interest and principal components of a mortgage-backed
security and sells them as individual securities. The holder of the "principal-
only" security (PO) receives the principal payments

B-4

<PAGE>

made by the underlying mortgage-backed security, while the holder of the
"interest-only" security (IO) receives interest payments from the same
underlying security.

ASSET-BACKED SECURITIES

In addition to mortgage-backed securities, the Fund may invest in other asset-
backed securities rated in one of the two highest rating categories by S&P or
Moody's, including company receivables, truck and auto loans, leases and credit
card receivables. The Fund may invest in other asset-backed securities that may
be created in the future if the Advisor determines they are suitable. These
issues may be traded over-the-counter and typically have a short-intermediate
maturity structure depending on the paydown characteristics of the underlying
financial assets which are passed through to the security holder.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements. Repurchase agreements are
agreements by which a person (e.g., a Fund) obtains a security and
simultaneously commits to return the security to the seller (a primary
securities dealer as recognized by the Federal Reserve Bank of New York or a
national member bank as defined in Section 3(d)(1) of the Federal Deposit
Insurance Act, as amended) at an agreed upon price (including principal and
interest) on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves
the obligation of the seller to pay the agreed upon price, which obligation is,
in effect, secured by the value of the underlying security.

B-5

<PAGE>

FOREIGN SECURITIES

The Fund, may invest in U.S. dollar denominated obligations or securities of
foreign issuers. The Fund will invest primarily in certain obligations or
securities of foreign issuers. Possible investments include equity securities
of foreign entities, obligations of foreign branches of U.S. banks and of
foreign banks. In addition, the Fund may invest in American Depositary
Receipts. These instruments may subject the Fund to investment risks that
differ in some respects from those related to investments in obligations of U.S.
domestic issuers. Such risks include future adverse political and economic
developments, the possible imposition of withholding taxes on interest or other
income, possible seizure, nationalization, or expropriation of foreign deposits,
the possible establishment of exchange controls or taxation at the source,
greater fluctuations in value due to changes in exchange rates, or the adoption
of other foreign governmental restrictions which might adversely affect the
payment of principal and interest on such obligations. Such investments may
also entail higher custodial fees and sales commissions than domestic
investments. Foreign issuers of securities or obligations are often subject to
accounting treatment and engage in business practices different from those
respecting domestic issuers of similar securities or obligations. Foreign
branches of U.S. banks and foreign banks may be subject to less stringent
reserve requirements than those applicable to domestic branches of U.S. banks.

By investing in foreign securities, the Fund attempts to take advantage of
differences between both economic trends and the performance of securities
markets in the various countries, regions and geographic areas as prescribed by
the Fund's investment objective and policies. During certain periods the
investment return on securities in some or all countries may exceed the return
on similar investments in the United States, while at other times the investment
return may be less than that on similar U.S. securities. Shares of the Fund,
when included in amounts in a portfolio otherwise consisting of domestic
securities, may provide a source of increased diversification. The Fund seeks
increased diversification by combining securities from various emerging markets
countries and geographic areas that offer different investment opportunities and
are affected by different economic trends. The international investments of the
Fund may reduce the effect that events in any one country or geographic area
will have on its investment holdings. Of course, negative movement by the
Fund's investments in one foreign market represented in its portfolio may offset
potential gains from the Fund's investments in another country's markets.

RESTRICTED SECURITIES

Restricted Securities are securities that may not be sold to the public without
registration under the Securities Act of 1933 (the "1933 Act") absent an
exemption from registration. Permitted investments for the Fund includes
restricted securities, and the Fund may invest up to 15% of its total assets in
illiquid securities, subject to the Fund's investment limitations on the
purchase of illiquid securities. Restricted Securities, including securities
eligible for re-sale under 1933 Act Rule 144A, that are determined to be liquid
are not subject to this

B-6

<PAGE>

limitation. This determination is to be made by the Fund's Advisor pursuant to
guidelines adopted by the Board of Trustees. Under these guidelines, the
Advisor will consider the frequency of trades and quotes for the security, the
number of dealers in, and potential purchasers for, the securities, dealer
undertakings to make a market in the security, and the nature of the security
and of the marketplace trades. In purchasing such Restricted Securities, the
Advisor intends to purchase securities that are exempt from registration under
Rule 144A under the 1933 Act.

SECURITIES LENDING

The Fund may lend securities pursuant to agreements which require that the loans
be continuously secured by collateral at all times equal to 100% of the market
value of the loaned securities which consists of: cash, securities of the U.S.
Government or its agencies, or any combination of cash and such securities.
Such loans will not be made if, as a result, the aggregate amount of all
outstanding securities loans for the Fund exceed one-third of the value of the
Fund's total assets taken at fair market value. The Fund will continue to
receive interest on the securities lent while simultaneously earning interest on
the investment of the cash collateral in U.S. Government securities. However,
the Fund will normally pay lending fees to such broker-dealers and related
expenses from the interest earned on invested collateral. There may be risks of
delay in receiving additional collateral or risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans are made only to borrowers deemed
by the Advisor to be of good standing and when, in the judgment of that Advisor,
the consideration which can be earned currently from such securities loans
justifies the attendant risk. Any loan may be terminated by either party upon
reasonable notice to the other party. The Fund may use the Distributor or a
broker-dealer affiliate of an Advisor as a broker in these transactions.

FUTURES CONTRACTS AND OPTIONS ON FUTURES

The Fund may invest in futures contracts and options on futures. Although
futures contracts by their terms call for actual delivery or acceptance of the
underlying securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery. Closing out an open
futures position is done by taking an opposite position ("buying" a contract
which has previously been "sold" or "selling" a contract which has previously
been "purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.

Futures traders are required to make a good faith margin deposit in cash or
government securities with or for the account of a broker or custodian to
initiate and maintain open secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close a
futures position. In the event of adverse price movements, the Fund would
continue to be required to make daily cash payments to maintain its required
margin. In such situations, if the Fund has insufficient cash, it may have to
sell portfolio

B-7

<PAGE>

securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Fund may be required to make
delivery of the instruments underlying the futures contracts they hold. The
inability to close options and futures positions also could have an adverse
impact on the ability to effectively hedge the underlying securities.

The Fund will minimize the risk that they will be unable to close out a futures
contract by entering into futures contracts that are traded on national futures
exchanges and for which there appears to be a liquid secondary market.

The risk of loss in trading futures contracts can be substantial, due both to
the low margin deposits required and the extremely high degree of leverage
involved in futures pricing. As a result, a relatively small price movement in
a futures contract may result in immediate and substantial loss (or gain) to the
Fund. For example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of the
futures contract would result in a total loss of the margin deposit, before any
deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit if
the contract were closed out. Thus, a purchase or sale of a futures contract
may result in losses in excess of the amount invested in the contract. However,
because the Fund will be engaged in futures transactions only for hedging
purposes, the Advisor does not believe that the Fund will generally be subject
to the risks of loss frequently associated with futures transactions. The Fund
presumably would have sustained comparable losses if, instead of the futures
contract, it had invested in the underlying financial instrument and sold it
after the decline. The risk of loss from the purchase of options is less as
compared with the purchase or sale of futures contracts because the maximum
amount at risk is the premium paid for the option.

Utilization of futures transactions by the Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the fund securities being hedged. It is also
possible that the Fund could both lose money on futures contracts and experience
a decline in value of its fund securities. There is also the risk of loss by
the Fund of margin deposits in the event of the bankruptcy of a broker with whom
the Fund have an open position in a futures contract or related option.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some futures
traders to substantial losses.

B-8

<PAGE>

OPTIONS

The Fund may write put and call options on a covered basis only, and will not
engage in option writing strategies for speculative purposes. A put option
gives the purchaser of such option the right to sell, and the writer, in this
case the Fund, the obligation to buy the underlying security at the exercise
price during the option period. A call option gives the purchaser of such
option the right to buy, and the writer, in this case the Fund, the obligation
to sell the underlying security at the exercise price during the option period.
The advantage to the Fund of writing covered calls is that the Fund receives a
premium which is additional income. However, if the security rises in value,
the Fund may not fully participate in the market appreciation.

A closing purchase transaction cannot be effected with respect to an option once
the option writer has received an exercise notice for such option.

Closing purchase transactions will ordinarily be effected to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
to permit the sale of the underlying security or to enable the Fund to write
another call option on the underlying security with either a different exercise
price or expiration date or both. The Fund may realize a net gain or loss from
a closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security.

B-9

<PAGE>

INVESTMENT COMPANY SHARES

OTHER INVESTMENTS

Investors will receive written notification at least thirty days prior to any
change in the Fund's investment objective.

INVESTMENT LIMITATIONS

The following are fundamental policies of the Fund and cannot be changed without
the consent of the holders of a majority of the Fund's outstanding shares.

The Fund may not:

1. Acquire more than 10% of the voting securities of any one issuer.

2. Invest in companies for the purpose of exercising control.

3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. Any borrowing
will be

B-10

<PAGE>

done from a bank and, to the extent that such borrowing exceeds 5% of the
value of the Fund's assets, asset coverage of at least 300% is required.
In the event that such asset coverage shall at any time fall below 300%,
the Fund shall, within three days thereafter or such longer period as the
Securities and Exchange Commission may prescribe by rules and regulations,
reduce the amount of its borrowings to such an extent that the asset
coverage of such borrowings shall be at least 300%. This borrowing
provision is included solely to facilitate the orderly sale of portfolio
securities to accommodate heavy redemption requests if they should occur
and is not for investment purposes. All borrowings in excess of 5% of the
value of the Fund's total assets will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.

6. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts (except for financial futures
contracts) and interests in a pool of securities that are secured by
interests in real estate (except that the Fund may purchase mortgage-backed
and other mortgage-related securities, including collateralized mortgage
obligations and REMICs). However, subject to their permitted investment
spectrum, the Fund may invest in companies which invest in real estate
commodities or commodities contracts.

8. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a security.

9. Purchase securities of other investment companies unless permitted by the
Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations thereunder. Under these rules and regulations, the Fund is
prohibited from acquiring the securities of other investment companies if,
as a result of such acquisition, the Fund owns more than 3% of the total
voting stock of the company; securities issued by any one investment
company represent more than 5% of the total assets of the Fund; or

B-11

<PAGE>

securities (other than treasury stock) issued by all investment companies
represent more than 10% of the total assets of the Fund.

10. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.

NON-FUNDAMENTAL POLICIES

The Fund may not invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of a Fund's assets. An illiquid security is a security which
cannot be disposed of promptly (within seven days), and in the usual course of
business without a loss, and includes repurchase agreements maturing in excess
of seven days, time deposits with a withdrawal penalty, non-negotiable
instruments and instruments for which no market exists.

The Fund may not invest in interests in oil, gas or other mineral exploration or
development programs and oil, gas or mineral leases.

INVESTMENT ADVISOR

The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of the Fund (including amounts payable to the Advisor but excluding
interest, taxes, brokerage, litigation,

B-12

<PAGE>

and other extraordinary expenses) exceeds limitations established by certain
states, the Advisor and/or the Administrator will bear the amount of such
excess. The Advisor will not be required to bear expenses of the Trust to an
extent which would result in the Fund's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code.

The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to each
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Fund, by a majority of the outstanding shares of the Fund, on not
less than 30 days' nor more than 60 days' written notice to the Advisor, or by
the Advisor on 90 days' written notice to the Trust.

THE ADMINISTRATOR

The Trust and SEI Fund Resources (the "Administrator") are parties to an
Administrative Agreement. The Administration Agreement provides that the
Administrator shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to which the
Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Administrator in
the performance of its duties or from reckless disregard by it of its duties and
obligations thereunder. The Administration Agreement shall remain in effect for
a period of five years after the date of the Agreement and shall continue in
effect for successive periods of two years subject to review at least annually
by the Trustees of the Trust unless terminated by either party on not less than
ninety days' written notice to the other party.

The Administrator, a Delaware business trust, has its principal business offices
at 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658. SFM, a wholly-
owned subsidiary of SEI Corporation ("SEI"), is the owner of all beneficial
interest in the Administrator, SEI, its subsidiaries and the Administrator are
leading providers of funds evaluation services, trust accounting systems, and
brokerage and information services to financial institutions, institutional
investors and money managers. The Administrator and its affiliates also serve
as administrator to the following other mutual funds: The Achievement Funds
Trust; The Advisors' Inner Circle Fund; The Arbor Fund; ARK Funds; Bishop Street
Funds; CoreFunds, Inc.; CrestFunds, Inc.; CUFUND; FMB Funds, Inc.; First
American Funds, Inc.; First American Investment Funds, Inc.; First American
Strategy Funds, Inc.; Inventor Funds, Inc; Marquis Funds-Registered Trademark-;
Monitor Funds; Morgan Grenfell Investment Trust; The PBHG Funds, Inc.; The
Pillar Funds; The Profit Funds Investment Trust; Rembrandt Funds-Registered
Trademark-; Santa Barbara Group of Mutual Funds, Inc.; 1784 Funds-Registered
Trademark-; SEI Asset Allocation Trust; SEI Daily Income Trust; SEI Index Funds;
SEI Institutional Investments Trust; SEI Institutional Managed Trust; SEI

B-13

<PAGE>

International Trust; SEI Liquid Asset Trust; SEI Tax Exempt Trust; Stepstone
Funds; and Turner Funds.

THE DISTRIBUTOR

TRUSTEES AND OFFICERS OF THE TRUST

The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees and executive officers of the Trust and their dates of birth and their
principal occupations for the last five years are set forth below. Unless
otherwise noted, the principal business address for each officer listed below is
680 East Swedesford Road, Wayne, Pennsylvania 19087-1658.

DANIEL S. GOODRUM (7/11/26) - Trustee - 48 Cayuga Road, Fort Lauderdale, Florida
33308. Chairman & CEO, SunBank/South Florida, N.A., 1985-1991; Chairman Audit
Committee and Director, Holy Cross Hospital; Executive Committee Member and
Director, Honda Classic Foundation; Director, Broward Community College
Foundation.

B-14

<PAGE>

Family of Funds and The Capitol Mutual Funds. Executive Vice President, Trust
Department, Harris Trust and Savings Bank and Chairman of the Board of Directors
of The Harris Trust Company of Arizona before January 1981.

SANDRA K. ORLOW (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1983.

KEVIN P. ROBINS (4/15/61) - Vice President, Assistant Secretary - Senior Vice
President & General Counsel of SEI, the Administrator and the Distributor since
1994. Vice President of

B-16

<PAGE>

SEI, the Administrator and the Distributor, 1992-1994. Associate, Morgan, Lewis
& Bockius LLP (law firm) prior to 1992.

BARBARA A. NUGENT (6/18/56) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor.
Associate, Drinker Biddle & Reath (law firm), 1994-1996. Assistant Vice
President/Administration, Delaware Service Company, Inc., 1981-1994.

MARC H. CAHN (6/19/57) - Vice President, Assistant Secretary - Vice President
and Assistant Secretary of SEI, the Administrator and Distributor. Associate
General Counsel, Barclays Bank PLC, 1995-1996. Counsel for First Fidelity
Bancorporation prior to 1995.

- -------------------------
* Jesse S. Hall may be deemed to be an "interested person" of the Trust as
defined in the Investment Company Act of 1940.

The Trustees and officers of the Trust own, in the aggregate, less than 1% of
the outstanding shares of the Trust.

For the fiscal year end May 31, 1996, the Trust paid the following amounts to
Trustees and Officers of the Trust:

B-16

<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Aggregate Pension or Total Compensation
Compensation Retirement from Registrant and
From Registrant Benefits Estimated Annual Fund Complex Paid to
Name of Person, for Fiscal Year Accrued as Part Benefits Upon Directors for Fiscal Year
Position Ended 1996 of Fund Retirement Ended 1996
Expenses
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum,
Trustee $13,500 N/A N/A $13,500 for service on two boards

Wilton Looney,
Trustee $16,000 N/A N/A $16,000 for service on two boards

Champney A. McNair,
Trustee $13,500 N/A N/A $13,500 for service on two boards

F. Wendell Gooch,
Trustee $13,500 N/A N/A $13,500 for service on two boards

T. Gordy Germany,
Trustee $13,500 N/A N/A $13,500 for service on two boards

Dr. Bernard F. Sliger,
Trustee $13,500 N/A N/A $13,500 for service on two boards

Jesse S. Hall,
Trustee $13,500 N/A N/A $13,500 for service on two boards
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

CALCULATION OF TOTAL RETURN

From time to time, the Trust may include the names of clients of the Advisor in
advertisements and/or sales literature for the Trust. The SEI Funds Evaluation
database tracks the total return of numerous tax-exempt pension accounts. The
range of returns in these accounts determines the percentile rankings. SunTrust
Bank's investment advisory affiliates, STI Capital Management, N.A. acting as
the portfolio manager for the Value Income Stock Fund and the International
Equity Fund, has been in the top 1% of the SEI Funds Evaluation database for
equity managers over the past ten years. SEI's database includes research data
on over 1,000 investment managers responsible for over $450 billion in assets.

PURCHASE AND REDEMPTION OF SHARES

B-17

<PAGE>

It is currently the Trust's policy to pay for all redemptions in cash. The
Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of readily marketable
securities held by the Fund in lieu of cash. Shareholders may incur brokerage
charges on the sale of any such securities so received in payment of
redemptions. A Shareholder will at all times be entitled to aggregate cash
redemptions from the Fund during any 90-day period of up to the lesser of
$250,000 or 1% of the Trust's net assets.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the NYSE is restricted, or during the existence of an emergency (as determined
by the Securities and Exchange Commission by rule or regulation) as a result of
disposal or valuation of a Fund's securities is not reasonably practicable, or
for such other periods as the Securities and Exchange Commission has by order
permitted. The Trust also reserves the right to suspend sales of shares of a
Fund for any period during which the NYSE, an Advisor, the Administrator and/or,
the Custodian are not open for business.

DETERMINATION OF NET ASSET VALUE

TAXES

FEDERAL INCOME TAX

B-18

<PAGE>

gross income each taxable year must be derived from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities, or certain other income, (ii) the Fund must
derive less than 30% of its gross income each taxable year from the sale or
other disposition of stocks or securities held for less than three months; (iii)
at the close of each quarter of the Fund's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RIC's and other securities, with such
other securities limited, in respect to any one issuer, to an amount that does
not exceed 5% of the value of the Fund's assets and that does not represent more
than 10% of the outstanding voting securities of such issuer; and (iv) at the
close of each quarter of the Fund's taxable year, not more than 25% of the value
of its assets may be invested in securities (other than U.S. Government
securities or the securities of other RIC's) of any one issuer, or of two or
more issuers engaged in same or similar businesses if the Fund owns at least 20%
of the voting power of such issuers.

STATE TAXES

FOREIGN TAXES

B-19

<PAGE>

If the Fund meets the Distribution Requirement and if more than 50% of the value
of Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and will, file an
election with the Internal Revenue Service that will enable Shareholders, in
effect, to receive the benefit of the foreign tax credit with respect to any
foreign and U.S. possessions income taxes paid by the Fund. Pursuant to the
election, the Fund will treat those taxes as dividends paid to its Shareholders.
Each Shareholder will be required to include a proportionate share of those
taxes in gross income as income received from a foreign source and must treat
the amount so included as if the Shareholder had paid the foreign tax directly.
The Shareholder may then either deduct the taxes deemed paid by him or her in
computing his or her taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit against the Shareholders'
federal income tax. If the Fund makes the election, the Fund will report
annually to its Shareholders the respective amounts per share of the Fund's
income from sources within, and taxes paid to, foreign countries and U.S.
possessions.

The Fund's transactions in foreign currencies and forward foreign currency
contracts will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund (I.E.,
may effect whether gains or losses are ordinary or capital), accelerate
recognition of income to the fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
Shareholders. These provisions also may require the Fund to mark-to-market
certain types of the positions in its portfolio (I.E., treat them as if they
were closed out) which may cause the Fund to recognize income without receiving
cash with which to make distributions in amounts necessary to satisfy the 90%
and 98% distribution requirements for avoiding income and excise taxes. The
Fund will monitor its transactions, will make the tax elections, and will make
the entries in the books and records when it acquires any foreign currency or
forward foreign currency contract in order to mitigate the effect of these rules
and prevent disqualification of the Fund as a regulated investment company and
minimize the imposition of income and excise taxes.

FUND TRANSACTIONS

B-20

<PAGE>

TRADING PRACTICES AND BROKERAGE

The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by the Advisor, brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include advice, either directly or through publications or writings, as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends, assisting
in determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Advisor in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the fund
or account generating the brokerage.

B-21

<PAGE>

The Advisor may place a combined order for two or more accounts or funds engaged
in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in
a manner deemed equitable to each account or fund. It is believed that the
ability of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or the Fund may obtain, it is the
opinion of the Advisor and the Trust's Board of Trustees that the advantages of
combined orders outweigh the possible disadvantages of separate transactions.

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Fund, at the request of the Distributor, gives consideration to sales of shares
of the Trust as a factor in the selection of brokers and dealers to execute
Trust portfolio transactions.

It is expected that the Trust may execute brokerage or other agency transactions
through the Distributor or an affiliate of the Advisor, both of which are
registered broker-dealers, for a commission in conformity with the 1940 Act, the
1934 Act and rules promulgated by the SEC. Under these provisions, the
Distributor or an affiliate of the Advisor is permitted to receive and retain
compensation for effecting portfolio transactions for the Trust on an exchange
if a written contract is in effect between the Distributor and the Trust
expressly permitting the Distributor or an affiliate of an Advisor to receive
and retain such compensation. These rules further require that commissions paid
to the Distributor by the Trust for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other renumeration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." In addition, the Trust may direct commission business to one or more
designated broker-dealers in connection with such

B-22

<PAGE>

broker/dealer's provision of services to the Trust or payment of certain Trust
expenses (E.G., custody, pricing and professional fees). The Trustees,
including those who are not "interested persons" of the Trust, have adopted
procedures for evaluating the reasonableness of commissions paid to the
Distributor, and will review these procedures periodically.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares and classes of shares of the Fund each of which represents an equal
proportionate interest in the Fund with each other share. Shares are entitled
upon liquidation to a PRO RATA share in the net assets of the Fund. Shareholders
have no preemptive rights. The Declaration of Trust provides that the Trustees
of the Trust may create additional series of shares or classes of series. All
consideration received by the Trust for shares of any additional series and all
assets in which such consideration is invested would belong to that series and
would be subject to the liabilities related thereto. Share certificates
representing shares will not be issued.

SHAREHOLDER LIABILITY

LIMITATION OF TRUSTEES' LIABILITY

B-23

<PAGE>

STI CLASSIC FUNDS
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 17

Item 24. Financial Statements and Exhibits:

Financial Statements

(a) Part A - Not Applicable
Part B - Not Applicable

(b) Additional Exhibits
(1) Declaration of Trust--as originally filed with Registrant's
Registration Statement on Form N-1A filed February 12, 1992 and
incorporated by reference to Post-Effective Amendment No. 15
filed July 31, 1996.
(2) By-Laws--as originally filed with Registrant's Pre-Effective
Amendment No. 1 filed April 23, 1992 and incorporated by
reference to Post-
Effective Amendment No. 15 filed July 31, 1996.
(3) Not applicable.
(4) Not applicable.
(5)(b) Investment Advisory Agreements with:
SunBank Capital Management, N.A.
Trusco Capital Management, Inc.
Trust Company Bank
(5)(c) Revised Investment Advisory Agreement with Trusco Capital
Management--as originally filed with Registrant's Post-Effective
Amendment No. 5 filed August 2, 1993 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(5)(d) Investment Advisory Agreement with American National Bank and
Trust Company--as originally filed with Registrant's Post-
Effective Amendment No. 6 filed October 22, 1993 and incorporated
by reference to Post-Effective Amendment No. 15 filed July 31,
1996.
(5)(e) Investment Advisory Agreement with Trust Company Bank--as
originally filed with Registrant's Post-Effective Amendment No. 6
filed October 22, 1993 and incorporated by reference to Post-
Effective Amendment No. 15 filed July 31, 1996.
(6) Distribution Agreement incorporated by reference to Post-
Effective Amendment No. 16 filed September 10, 1996.
(7) Not applicable.
(8)(a) Custodian Agreement with Trust Company Bank dated February 1,
1994--as originally filed with Registrant's Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(8)(b) Custodian Agreement with the Bank of California incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(8)(c) Transfer Agent Agreement with Federated Services Company dated
May 14, 1994--as originally filed with Post-Effective Amendment
No. 9 filed September 22, 1994 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(8)(d) Third Amendment to Custodian Agreement between STI Trust &
Investment Operations, Inc. and The Bank of New York.

C-1

<PAGE>

(9)(a) Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 as originally filed with Post-
Effective Amendment No. 12 filed August 17, 1995 and incorporated
by reference to Post-Effective Amendment No. 15 filed July 31,
1996.
(10) Opinion and Consent of Counsel (Incorporated by reference to Pre-
Effective Amendment No. 2 filed May 22, 1992)
(11) Consent of Independent Public Accountants *
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan - Investor Class incorporated by reference to
Post-Effective Amendment No. 16 filed September 10, 1996.
(15)(a) Distribution and Service Agreement relating to Flex Shares dated
May 29, 1995--as originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(16) Performance Quotation Computation (Incorporated by reference to
Post-Effective Amendment No. 9 filed September 22, 1994).
(17) Not applicable
(18) Rule 18f-3 Plan incorporated by reference to Post-Effective
Amendment No. 16 filed September 10, 1996.
(24) Powers of Attorney--as originally filed with Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.

*Filed herewith.

Item 25. Persons Controlled by or under Common Control with Registrant:

See the Prospectuses and Statement of Additional Information regarding the
Trust's control relationships. The Administrator is a subsidiary of SEI
Corporation which also controls the distributor of the Registrant, SEI Financial
Services Company, and other corporations engaged in providing various financial
and record keeping services, primarily to bank trust departments, pension plan
sponsors, and investment managers.

Item 26. Number of Holders of Securities:

As of September 30, 1996:

C-2

<PAGE>

NUMBER OF
TITLE OF CLASS RECORD HOLDERS

Units of beneficial interest, without par value-

Trust Shares
------------

Prime Quality Money Market Fund...............................................11
U.S. Government Securities Money Market Fund...................................5
Tax-Exempt Money Market Fund...................................................5
Investment Grade Bond Fund.....................................................6
Investment Grade Tax-Exempt Bond Fund..........................................5
Capital Growth Fund............................................................9
Value Income Stock Fund........................................................8
Short-Term Bond Fund...........................................................6
Short-Term U.S. Treasury Securities Fund.......................................6
Sunbelt Equity Fund............................................................6
Balanced Fund..................................................................6
Mid-Cap Equity Fund............................................................6
Florida Tax-Exempt Bond Fund...................................................6
Georgia Tax-Exempt Bond Fund...................................................6
Tennessee Tax-Exempt Bond Fund.................................................6
U.S. Government Securities Fund................................................6
Limited-Term Federal Mortgage Securities Fund..................................6
International Equity Index Fund................................................5
International Equity Fund......................................................7

Investor Shares
---------------

Prime Quality Money Market Fund..............................................954
U.S. Government Securities Money Market Fund.................................444
Tax-Exempt Money Market Fund.................................................272
Investment Grade Bond Fund..................................................1411
Investment Grade Tax-Exempt Bond Fund........................................919
Capital Growth Fund.........................................................8667
Value Income Stock Fund.....................................................5225
Short-Term Bond Fund..........................................................72
Short-Term U.S. Treasury Securities Fund......................................79
Sunbelt Equity Fund.........................................................1772
Balanced Fund................................................................280
Mid-Cap Equity Fund..........................................................995

C-3

<PAGE>

NUMBER OF
TITLE OF CLASS RECORD HOLDERS

Florida Tax-Exempt Bond Fund..................................................85
Georgia Tax-Exempt Bond Fund..................................................69
Tennessee Tax-Exempt Bond Fund................................................34
U.S. Government Securities Fund...............................................31
Limited-Term Federal Mortgage Securities Fund.................................42
International Equity Index Fund..............................................441
International Equity Fund....................................................209

Flex Shares
-----------

Investment Grade Bond Fund...................................................311
Investment Grade Tax-Exempt Bond Fund........................................144
Capital Growth Fund.........................................................1257
Value Income Stock Fund.....................................................2091
Short-Term Bond Fund..........................................................41
Short-Term U.S. Treasury Securities Fund......................................68
Sunbelt Equity Fund..........................................................406
Balanced Fund................................................................214
Mid-Cap Equity Fund..........................................................551
Florida Tax-Exempt Bond Fund..................................................72
Georgia Tax-Exempt Bond Fund..................................................94
Tennessee Tax-Exempt Bond Fund................................................39
U.S. Government Securities Fund..............................................118
Limited-Term Federal Mortgage Securities Fund.................................75
International Equity Index Fund..............................................105
International Equity Fund....................................................203

Item 27. Indemnification:

Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with

C-4

<PAGE>

the successful defense of any act, suit or proceeding) is asserted by such
trustees, directors, officers or controlling persons in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issues.

Item 28. Business and Other Connections of Investment Advisors:

Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of each Advisor is or has been, at
any time during the last two fiscal years, engaged for his own account or in
the capacity of director, officer, employee, partner or trustee are as follows:

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

STI CAPITAL MANAGEMENT, N.A.
E. Jenner Wood III -- --
Director

Hunting F. Deutsch -- --
Director

Anthony R. Gray -- --
Chairman & Chief Investment
Officer

James R. Wood -- --
President

Daniel Jaworski -- --
Senior Vice President

Elliott A. Perny -- --
Executive Vice President
& Chief Portfolio Manager

Stuart F. Van Arsdale -- --
Senior Vice President

Jonathan D. Rich -- --
Director

Robert Buhrmann -- --

C-5

<PAGE>

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

Senior Vice President

Larry M. Cole -- --
Senior Vice President

L. Earl Denney -- --
Executive Vice President

Thomas A. Edgar -- --
Senior Vice President

Daniel G. Shannon -- --
Senior Vice President

Ronald Schwartz -- --
Senior Vice President

Ryan R. Burrow Catalina Lighting Director/25% owner
Senior Vice President

Mills A. Riddick -- --
Senior Vice President

Christopher A. Jones -- --
Senior Vice President

David E. West -- --
Vice President

The list required by this Item 28 of officers and directors of Trusco Capital
Management, Inc., together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years, is incorporated by reference
to Schedules A and D of Form ADV, filed by Trusco Capital Management, Inc.
pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-23163).

SUNTRUST BANK CHATTANOOGA, N.A.
Paul K. Brock, Jr. Brock Candy Company Vice President - Special
Director Projects

C-6

<PAGE>

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

J. Harold Chandler Provident Life & Accident President & CEO
Director Insurance Co.

William H. Chapin See Rock City, Inc. President
Director

John W. Clay, Jr. Third National Corporation Chairman &
Director
CEO

Andrew G. Cope The Johnston Company Managing
Director Partner

Robert P. Corker, Jr. -- --
Director

John B. Crimmins, Jr. -- --
Director

J.H. Davenport, III Howard Holdings, Inc. President
Director

Edwin B. Duckett, Jr. -- --
Director

R. Alton Duke, Jr. -- --
Director

Daniel K. Frierson Dixie Yarns, Inc. Chairman & CEO
Director

Zan Guerry Chattem, Inc. Chairman & CEO
Director

James L.E. Hill The Tennessee Aquarium President
Director

Summerfield K. Johnston, Jr. Coca Cola Enterprises, Inc. Vice Chairman &
Director CEO

C-7

<PAGE>

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

Robert C. Jones Southern Products Chairman
Director Company, Inc.

James D. Kennedy, Jr. Cherokee Warehouses, Inc. Chairman
Director

T. A. Lupton, Jr. Stone Fort Land Company President
Director

Hugh O. Maclellen, Jr. Provident Life & Accident Chairman -
Director Insurance Co. Executive
Committee

Jack C. McKee McKee Baking Company Executive Vice
Director President

Charles G. Mills Olan Mills Incorporated Chairman -
Director Executive
Committee

J. Woodley Murphy E.I. DuPont de Nemours Plant Manager
Director & Co.

L. Harlen Painter Bell & Associates Attorney-at-Law
Director

Scott L. Probasco, Jr. American National Bank & Chairman -
Director Trust Co. Executive
Committee

Robert J. Sudderth, Jr. American National Bank & Chairman & CEO
Director Trust Co.

Winston W. Walker -- --
Director

SUNTRUST BANK, ATLANTA
Gaylord O. Coan Gold Kist, Inc. President & CEO
Director Hindsight Corp. Director

A.D. Correll Georgia-Pacific Corporation President & CEO
Director

C-8

<PAGE>

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

R.W. Courts, II Atlantic Realty Company President
Director

Ronald S. Crowding -- --

A.W. Dahlberg The Southern Company President
Director

William W. Gaston Gaston & Gaston General Partner
Director Gaston Development Co., Inc. President

Charles B. Ginden -- --
Director

Roberto C. Goizueta The Coca-Cola Company Chairman of the
Director Board

Edward P. Gould Trust Company of Georgia Chairman of the
Director Board

T. Marshall Hahn, Jr. Georgia-Pacific Honorary
Director Corporation Chairman

Jesse Hill, Jr. Atlanta Life Insurance President
Director Company

L. Phillip Humann SunTrust Banks, Inc. President &
Director Services Resources Treasurer
Corporation

William B. Johnson The Ritz Carlton Hotel Chairman of the
Director Company Board

Hicks J. Lanier Oxford Industries, Inc. Chairman of the
Director Board &
President
Pinehill Development Co. 30% owner

Joseph L. Lanier, Jr. Dan River, Inc. Chairman of the
Director Braelan Group Board
Chairman

C-9

<PAGE>

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

Robert R. Long Trust Company Bank President
Director

Arthur L. Montgomery -- --
Director

H.G. Patillo Patillo Construction Chairman of the
Director Company Board

Larry L. Prince Genuine Parts Company Chairman of the
Director Board

R. Randall Rollins Rollins, Inc. Chairman of the
Board
Director Lor, Inc. Director
Maran, Inc. Director
Gutterworld, Inc. Director
Dabora, Inc. Director &
Secretary
Simpson, Nance & Graham Director
Auto Parts Wholesale, Inc. Director
Global Expanded Metal, Inc. Director
Rollins Holding Co. Director
Rol, Ltd. Partner
Rollins Investment Fund Partner
Energy Partners Partner
Petro Partnership Partner
The Piedmont Investment
Group Director
WRG, Ltd. Partner
Rollins, Inc. Chairman
RPC Energy Services, Inc. Chairman
The Mul Company Partner
Bugvac, Inc. Director
Omnitron Int'l, Inc. Director
MRG, Ltd. Partner

Robert W. Scherer -- --
Director

C-10

<PAGE>

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

Charles R. Shufeldt -- --
Executive Vice President

Donald Wayne Thurmond -- --
Senior Vice President

James B. Williams SunTrust Banks, Inc. Chairman of the
Director Board

Gerald T. Adams -- --
Senior Vice President

James R. Albach -- --
Group Vice President

Virginia D. Anderson -- --
Assistant Vice President

Christina Bird -- --
First Vice President

Edward Burgess -- --
Vice President

Gay Cash -- --
Vice President

Krista Lee Cosgrove -- --
Trust Officer

Mark Elam -- --
Vice President

Joseph B. Foley, Jr. -- --
First Vice President

Thomas R. Frisbie -- --
Group Vice President

C-11

<PAGE>

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------

Molly Guenther -- --
Assistant Vice President

Benjamin S. Harris -- --
Vice President

Jethro H. Irby, III -- --
First Vice President

V. Jere Koser -- --
Group Vice President

Richard A. Makepeace -- --
Assistant Vice President

Sally S. McKinley -- --
Assistant Vice President

James B. Murphy, III -- --
Vice President

James E. Russell -- --
Vice President

Mark Stancil -- --
Assistant Vice President

David E. Thompson -- --
Vice President

Charles C. Watson -- --
Group Vice President

ITEM 29. PRINCIPAL UNDERWRITERS:

(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.

C-12

<PAGE>

Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:

SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds-Registered Trademark- August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
Turner Funds April 30, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996

SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").

(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is 680 East Swedesford Road, Wayne, PA 19087.

C-13

<PAGE>

Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President-Investment
Services Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
Larry Hutchison Senior Vice President --
Steven Kramer Senior Vice President --
David G. Lee Senior Vice President --
William Madden Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & --
Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Ed Daly Vice President --
Jeff Drennen Vice President --
Mick Duncan Vice President and Team Leader --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --

</TABLE>

C-14

<PAGE>

Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>

Kim Kirk Vice President & Managing Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing Director --
Robert S. Ludwig Vice President and Team Leader --
Vicki Malloy Vice President and Team Leader --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & Assistant Secretary --
Sandra K. Orlow Vice President & Assistant Secretary --
Donald Pepin Vice President & Managing Director --
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --

</TABLE>

Item 30. Location of Accounts and Records:

Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:

(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6); (8);
(12); and 31a-1(d), the required books and records are maintained at the
offices of Registrant's Custodians:

Trust Company Bank
Park Place
P.O. Box 105504
Atlanta, Georgia 30348

Union Bank of California (INTERNATIONAL EQUITY INDEX FUND ONLY)
475 Sansome Street
Suite 1200
San Francisco, California 94111

C-15

<PAGE>

Bank of New York (INTERNATIONAL EQUITY FUND AND EMERGING MARKETS EQUITY
FUND)
One Wall Street
New York, New York

(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D); (4);
(5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and records are
maintained at the offices of Registrant's Administrator:

SEI Financial Management Corporation
680 E. Swedesford Road
Wayne, Pennsylvania 19087

(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Advisor:

STI Capital Management, N.A.
P.O. Box 3808
Orlando, Florida 32802

Trusco Capital Management
50 Hurt Plaza, Suite 1400
Atlanta, Georgia 30303

SunTrust Bank, Chattanooga
736 Market Street
Chattanooga, Tennessee 37402

SunTrust Bank, Atlanta
25 Park Place
Atlanta, Georgia 30303

Item 31. Management Services: None.

Item 32. Undertakings:

Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the Trust,
the Trustees will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.

C-16

<PAGE>

Registrant undertakes to call a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to Shareholder communications.

Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to Shareholders,
upon request and without a charge.

Registrant undertakes to file a post-effective amendment, including
financial statements which need not be audited, within 4-6 months from the later
of the commencement of operations of the Classic Institutional Cash Management
Money Market Fund and the Classic Institutional U.S. Treasury Securities Money
Market Fund of the Registrant or the effective date of Post-Effective Amendment
No. 16 of the Registrant's 1933 Act Registration Statement.

Registrant hereby undertakes to file a post-effective amendment, including
financial statements which need not be audited, within four to six months from
the later of the commencement of operations of the Small Cap Equity Fund and
Emerging Markets Equity Fund of the Registrant or the effective date of
Post-Effective Amendment No. 17 to the Registrant's 1933 Act Registration
Statement.

C-17

<PAGE>

NOTICE

A copy of the Agreement and Declaration of Trust for STI Classic Funds is
on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this Registration Statement has been executed on
behalf of the Trust by an officer of the Trust as an officer and by its Trustees
as trustees and not individually and the obligations of or arising out of this
Registration Statement are not binding upon any of the Trustees, officers, or
Shareholders individually but are binding only upon the assets and property of
the Trust.

C-18

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 (the "Securities
Act") and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this Post-Effective Amendment No. 17 to Registration Statement No.
33-45671 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wayne, Commonwealth of Pennsylvania on the
17th day of October, 1996.

By: /s/ David G. Lee
------------------------------------
David G. Lee, President and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.

* Trustee October 17, 1996
- -------------------------
F. Wendell Gooch

* Trustee October 17, 1996
- -------------------------
Daniel S. Goodrum

* Trustee October 17, 1996
- -------------------------
Jesse S. Hall

* Trustee October 17, 1996
- -------------------------
Wilton Looney

* Trustee October 17, 1996
- -------------------------
Champney A. McNair

* Trustee October 17, 1996
- -------------------------
T. Gordy Germany

* Trustee October 17, 1996
- -------------------------
Bernard F. Sliger

/s/ Stephen G. Meyer Controller & October 17, 1996
- ------------------------- Chief
Stephen G. Meyer Financial
Officer

/s/ David G. Lee President & October 17, 1996
- ------------------------- Chief
David G. Lee Executive
Officer

* By: /s/ David G. Lee
----------------------------------
David G. Lee, As Power of Attorney

<PAGE>

EXHIBIT INDEX

NUMBER EXHIBIT
EX-99.B1 Declaration of Trust as originally filed with Registrant's
Registration Statement on Form N-1A filed February 12, 1992 and
incorporated by reference to Post-Effective Amendment No. 15

EX-99.B2 By-Laws as originally filed with Registrant's Pre-Effective
Amendment No. 1 filed April 23, 1992 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.

EX-99.B3 Not applicable.

EX-99.B4 Not applicable.

EX-99.B5C Revised Investment Advisory Agreement with Trusco Capital
Management as filed with Registrant's Post-Effective Amendment
No. 5 filed August 2, 1993 and incorporated by reference to Post-
Effective Amendment No. 15 filed July 31, 1996.

EX-99.B5D Investment Advisory Agreement with American National Bank and
Trust Company as filed with Registrant's Post-Effective Amendment
No. 6 filed October 22, 1993 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.

EX-99.B5E Investment Advisory Agreement with Trust Company Bank as
originally filed with Registrant's Post-Effective Amendment No. 6
filed October 22, 1993 and incorporated by reference to Post-
Effective Amendment No. 15 filed July 31, 1996.

EX-99.B6 Distribution Agreement incorporated by reference to Post-
Effective Amendment No. 16 filed September 10, 1996.

EX-99.B7 Not applicable.

EX-99.B8A Custodian Agreement with Trust Company Bank dated February 1,
1994 as originally filed with Registrant's Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.

EX-99.B8B Custodian Agreement with Bank of California incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.

EX-99.B8C Transfer Agent Agreement with Federated Services Company dated
May 14, 1994 as originally filed with Post-Effective Amendment
No. 9 filed September 22, 1994 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.

EX-99.B8D Third Amendment to Custodian Agreement between STI Trust &
Investment Operations, Inc. and The Bank of New York.*

EX-99.B9A Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 as originally filed with Post-
Effective Amendment No. 12 filed August 17, 1995 and incorporated
by reference to Post-Effective Amendment No. 15 filed July 31,
1996.

EX-99.10 Opinion and Consent of Counsel (incorporated by reference to Pre-
Effective Amendment No. 2 filed May 22, 1992)

EX-99.B11 Consent of Independent Public Accountants*

EX-99.B12 Not applicable.

EX-99.B13 Not applicable.

EX-99.B14 Not applicable.

C-20

<PAGE>

EX-99.B15 Distribution Plan--Investor Class incorporated by reference to
Post-Effective Amendment No. 16 filed September 10, 1996.

EX-99.B15A Distribution and Service Agreement relating to Flex Shares dated
May 29, 1995 as originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.

EX-99.B16 Performance Quotation Computation (incorporated by reference to
Post-Effective Amendment No. 9 filed September 22, 1994).

EX-99.B18 Rule 18f-3 Plan incorporated by reference to Post-Effective
Amendment No. 16 filed September 10, 1996.

EX-99.B24 Powers of attorney as originally file dwith Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.

EX-99.27 Not applicable.

*FILED HEREWITH.

C-21

<PAGE>

THIRD AMENDMENT TO CUSTODIAN AGREEMENT

This Third Amendment to Custodian Agreement ("Amendment") is made as of
10th day of October, 1996 by and between STI Trust & Investment Operations,
Inc. ("Customer") and The Bank of New York ("Custodian").

W I T N E S S E T H
-------------------

WHEREAS, Customer and Custodian have previously entered into that certain
Custodian Agreement originally dated as of May 9, 1995 and at amended on May 29,
1996 and August 20, 1995 (the "Custodian Agreement"), and Customer and
Custodian now wish to include an additional new account to be subject to the
terms of the Custodian Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Customer and Custodian agree as
follows:

1. AMENDMENT TO INCLUDE NEW ACCOUNTS. The Custodian Agreement is hereby
amended to include the account listed below.

I) STI Classic Emerging Market Fund

IN WITNESS WHEREOF, each party has caused this Amendment to be executed on
its behalf by its duly authorized officers as of the date first above written.
All other terms of the Custodian Agreement remain in place.

CUSTOMER: CUSTODIAN:

STI Trust & Investment Operations, Inc. The Bank of New York

By: /s/ By: /s/ Stephen E. Grunston
-------------------------- --------------------------
Name: Name: STEPHEN E. GRUNSTON
--------------------- -------------------
Title: Sr. Vice President Title: Vice President
-------------------- -------------------

ATTEST: ATTEST:

- ------------------------------ ------------------------------

<PAGE>

[ARTHUR ANDERSEN LLP LOGO APPEARS HERE]

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our firm name
included in the Post-Effective Amendment No. 17 to the Registration Statement on
Form N-1A of the STI Classic Funds (No. 33-45671), and to all references to our
firm included in this Registration Statement File No. 33-45671.

/s/ Arthur Andersen LLP

Philadelphia, PA
October 18, 1996