<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 15, 1999
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. 27 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 29 /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
MARK NAGLE
C/O SEI INVESTMENTS COMPANY
ONE FREEDOM VALLEY DRIVE
OAKS, PENNSYLVANIA 19456
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copies to:
RICHARD W. GRANT, ESQ. JOHN H. GRADY, JR., ESQ.
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
1701 MARKET STREET 1701 MARKET STREET
PHILADELPHIA, PA 19103 PHILADELPHIA, PA 19103
Title of Securities Being Registered . . . . . . . .Units of Beneficial Interest
It is proposed that this filing will become effective (check appropriate box)
Immediately upon filing pursuant to paragraph (b), or
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On [date] pursuant to paragraph (b), or
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60 days after filing pursuant to paragraph (a) or
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75 days after filing pursuant to paragraph (a) or
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X On May 1, 1999 pursuant to paragraph (a) of Rule 485.
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S
<PAGE>
STI CLASSIC FUNDS
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT #27
N-1A ITEM NO. LOCATION
- ------------- --------
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Summary
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
Item 5. Management of the Fund Board of Trustees; Investment
Advisor; Distribution;
Administration
Item 5a. Management's Discussion of Fund *
Performance
Item 6. Capital Stock and Other Voting Rights; Shareholder
Securities Inquiries; Dividends and
Distributions; Tax
Information
Item 7. Purchase of Securities Being Cover Page; Purchase of Fund
Offered 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 Description of Permitted
Policies 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 Investment Advisor; The
Services Administrator; The
Distributor; Legal Counsel
(Prospectus); Independent
Auditors (Prospectus); Experts
Item 17. Brokerage Allocation Fund Transactions
<PAGE>
Item 18. Capital Stock and Other Description of Shares
Securities
Item 19. Purchase, Redemption, and Purchase and Redemption of Shares;
Pricing of Securities Being Determination of Net Asset
Offered 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 *
<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>
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES
MONEY MARKET FUND
INVESTMENT ADVISOR TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
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 Corporate Trust Shares of the Classic
Institutional U.S. Treasury Securities Money Market Fund (the "Fund"). THE
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND SEEKS TO
MANAGE ITS INVESTMENTS IN A MANNER CONSISTENT WITH THE CRITERIA FOR OBTAINING
AN Aaa RATING BY MOODY'S INVESTORS SERVICE AND/OR AN AAA RATING BY STANDARD &
POOR'S CORPORATION. Investors are advised to read this Prospectus and retain
it for future reference.
A Statement of Additional Information relating to the Corporate Trust
Shares of 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 Investments Distribution Co., Oaks, Pennsylvania
19456 or by calling 1-800-874-4770. 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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.
MAY 1, 1999
<PAGE>
2
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
3
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 Investments
Distribution Co. (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.
Corporate Trust Shares of the Classic Institutional U.S. Treasury
Securities Money Market Fund are offered and sold only to accounts of various
banking subsidiaries of SunTrust Banks, Inc. ("Shareholders").
TABLE OF CONTENTS
<TABLE>
<S> <C>
Expense Summary...................... 4
The Trust............................ 6
The Fund and Its Investment
Objectives.......................... 6
Investment Policies and Strategies... 6
General Investment Policies and
Strategies.......................... 7
Investment Risks..................... 7
Investment Limitations............... 8
Performance Information.............. 9
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
Banking Laws......................... 13
Distribution......................... 13
Administration....................... 14
Transfer Agent and Dividend
Disbursing Agent.................... 14
Custodian............................ 14
Legal Counsel........................ 14
Independent Public Accountants....... 14
Other Information.................... 14
Voting Rights........................ 14
Reporting............................ 15
Shareholder Inquiries................ 15
Description of Permitted
Investments......................... 15
Appendix............................. A-1
</TABLE>
<PAGE>
4
EXPENSE SUMMARY
Below is a summary of the estimated annual operating expenses for Corporate
Trust Shares of the Fund. A hypothetical example based on the summary is also
shown. Actual expenses may vary.
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------------------------------------------------
Management Fees (after voluntary reductions)(1)............. .14%
All Other Expenses (after voluntary reductions)(2).......... .31%
- ----------------------------------------------------------------------------------------------------------
Total Operating Expenses (after voluntary reductions)(3).... .45%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</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 and reimbursements, Advisory Fees
for the Fund would be .20%. See "Investment Advisors." A person that
purchases shares through an account with a financial institution may be
charged separate fees by the financial institution.
(2) The Administrator is waiving, on a voluntary basis, a portion of its fee
from the Fund. The Administrator reserves the right to terminate its waiver
at any time in its sole discretion. Absent such waivers and reimbursements,
Other Expenses for the Fund would be .33%.
(3) Absent the voluntary waivers described above, Total Operating Expenses for
the Fund would be .53%
<TABLE>
<CAPTION>
<S> <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:
One Year....................................................... $ 5
Three Years.................................................... 14
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</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.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose of this
table is to assist the investor in understanding the various costs and
expenses that may be directly or indirectly borne by investors in the Trust.
<PAGE>
5
THE TRUST
STI CLASSIC FUNDS (the "Trust") is an 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 Funds. This
Prospectus relates to the Corporate Trust Shares of the Classic Institutional
U.S. Treasury Securities Money Market Fund (the "Fund") described below.
THE FUND AND ITS INVESTMENT OBJECTIVES
THE FUND seeks to provide as high a level of current income as is consistent
with preservation of capital and liquidity by investing exclusively in bills,
notes and bonds issued by the U.S. Treasury and repurchase agreements ("U.S.
Treasury obligations") with approved dealers collateralized by U.S. Treasury
obligations.
It is a fundamental policy of the Fund to use its best efforts to maintain a
constant net asset value of $1.00 per share. There can be no assurance that
the Fund will achieve its investment objective or maintain a net asset value
of $1.00 per share on a continuous basis.
The Fund intends to comply with federal regulations applicable to money
market funds using the amortized cost method for calculating net asset value,
which require the Fund to invest only in U.S. dollar denominated obligations,
to maintain an average maturity on a dollar-weighted basis of 90 days or less
and to acquire eligible securities that present minimal credit risk and have
a maturity of 397 days or less. The Fund seeks to manage its investments in a
manner consistent with the criteria for obtaining an Aaa rating by Moody's
Investors Service ("Moody's") and/or an AAA rating by Standard & Poor's
Corporation ("S&P"). These requirements will also limit the Fund's ability to
generate high current income. For a further discussion of these rules, see
"Description of Permitted Investments."
INVESTMENT POLICIES AND STRATEGIES
<PAGE>
6
The Fund will invest exclusively in U.S. Treasury obligations and any
repurchase agreements with dealers will be selected pursuant to guidelines
adopted by the Trust's Board of Trustees and collateralized by U.S. Treasury
obligations.
The Fund, however, seeks to invest exclusively in securities that would qualify
to be rated in the highest ratings category of an NRSRO, such as S&P or Moody's.
As a result, the Fund's ability to maintain an average dollar-weighted portfolio
maturity to the maximum extent permitted by Rule 2a-7 will be limited, and the
Fund's performance may be affected adversely.
GENERAL INVESTMENT POLICIES AND STRATEGIES
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 66
1/3% of its total assets. The Fund may not purchase additional securities
while its outstanding borrowings exceed 5% of its assets.
It is a non-fundamental policy of the Fund to invest no more than 10% 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. Rule 144A securities and Section 4(2)
commercial paper that meet the criteria established by the Board of Trustees of
the Trust may be considered liquid.
For additional information regarding permitted investments, see "Description of
Permitted Investments" in this Prospectus and in the Statement of Additional
Information.
INVESTMENT RISKS
<PAGE>
7
GOVERNMENT SECURITIES
Guarantees of the Fund's securities by the U.S. Government, its agencies or
instrumentalities guarantee only the payment of principal and interest on the
guaranteed securities, and do not guarantee the securities' yield or value or
the yield or value of the Fund's shares.
ZERO COUPON OBLIGATIONS
The Fund may invest, subject to its investment objective and policies, in 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
greater fluctuations in value due to interest rate changes than interest bearing
obligations. 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 Shareholders, 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 the 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 a 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 assets in "first
tier" securities of a single issuer for a period of up to three business days.
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
<PAGE>
8
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, its agencies and instrumentalities,
repurchase agreements involving such securities.
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 Fund may advertise its "current yield" and "effective
yield." Both yield figures are based on historical earnings and are not
intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is
then "annualized." That is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week period
and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment
in the Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment.
PURCHASE OF FUND SHARES
Corporate Trust Shares of the Fund are offered and sold only to accounts of
various banking subsidiaries of SunTrust Banks, Inc. which are administered by
the Corporate Trust Division of SunTrust Banks, Inc. ("SunTrust"). Corporate
Trust Shares are sold without a sales charge. There is no minimum investment
required. Corporate Trust Shares will be held of record by SunTrust,
although customers may have or be given the right to vote the shares
depending upon the terms of their relationship with SunTrust. Confirmations
of share purchases and redemptions will be sent to SunTrust as the
shareholder of record.
Corporate Trust Shares may be purchased on days on which the New York Stock
Exchange is open for business (a "Business Day"). However, shares cannot be
purchased or redeemed for same day settlement on days the Federal Reserve is
closed.
<PAGE>
9
Purchase orders for the Fund will be effective as of the Business Day
received by Federated Services Company (the "Transfer Agent") and eligible to
receive dividends declared the same day if the Transfer Agent receives the
order before 1:00 p.m. Eastern time, and the Custodian receives federal funds
before 4:00 p.m. Eastern time on such day. Otherwise, purchase orders for the
Fund will be effective the next Business Day provided the Custodian receives
readily available funds before 4:00 p.m. Eastern time on the next such
Business Day. The purchase price is the net asset value per share next
computed after the order is received and accepted by the Trust. The net asset
value per share is calculated as of the regularly scheduled close of normal
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time)
each Business Day based on the amortized cost method described in the
Statement of Additional Information and is expected to remain constant at
$1.00 per share.
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).
Neither the Trust's 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. The Trust maintains procedures, including
identification methods and other means, for ascertaining the identity of callers
and authenticity of instructions.
REDEMPTION OF FUND SHARES
An order to redeem shares must be transmitted to the Transfer Agent by
SunTrust as the record owner of shares. SunTrust may establish procedures for
their customers to request redemption of shares held in their account with
SunTrust. Customers should contact SunTrust for information concerning these
procedures.
Redemption orders must be received by the Transfer Agent on a Business Day
before 1:00 p.m. Eastern time. Redemption orders received after the time noted
above will be executed the following day. The Trust reserves the right to wire
redemption proceeds within five Business Days after receiving the redemption
orders if, in the judgment of the Advisor, an earlier payment could adversely
impact the Fund.
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) of the Fund
are declared on each Business Day to Shareholders at the close of business on
the day of declaration. 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) less accrued expenses directly
attributable to the Corporate Trust Shares of the Fund, the general expenses
of the Fund prorated to the Corporate Trust Shares on the basis of relative
net assets, and the general expenses of the Trust prorated to the Fund on the
basis of its relative net assets. Shares begin earning dividends on the
Business Day the purchase order is effective and continue earning dividends
through and including the Business Day before the redemption order is
effective. Dividends are
<PAGE>
10
paid within ten Business Days after the end of each month in the form of
additional shares of the same 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 at least 15 days prior to the
date of distribution to the Transfer Agent and will become effective with
respect to dividends paid after its receipt. Dividends are paid within ten
Business Days after a Shareholder's complete redemption of its shares in a
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. Accordingly, 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 all of its net investment income (including, for
this purpose, net short-term capital gains) to Shareholders. Dividends from
net investment income will be taxable to Shareholders that are subject to
income tax as ordinary income whether received in cash or in additional
shares. 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 Shareholders on December 31, of that year, if paid by the
Fund any time during the following January.
Income received on direct U.S. obligations is exempt from tax at the state
level when received directly by the Fund and may be exempt, depending on the
state, when received by a Shareholder 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 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
states.
A sale, exchange or redemption of Fund shares is a taxable event to the
Shareholder.
<PAGE>
11
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 the Fund. All
consideration received by the Trust for shares of the Fund and all assets of
the 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 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 ADVISOR
Trusco Capital Management, Inc. ("Trusco") serves as the Advisor to the Fund.
As of _________, Trusco had approximately $___ billion in assets under
management. The principal business address of Trusco is 50 Hurt Plaza,
Suite 1400, Atlanta, Georgia 30303.
The Advisor is an indirect wholly-owned subsidiary of SunTrust Banks, Inc.
("SunTrust"), a bank holding company with assets of $87 billion as of
December 31, 1998. SunTrust ranks among the ten largest U.S. banking
companies. Total discretionary assets under management with SunTrust Banks,
Inc. equalled approximately $___ billion as of ______________.
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 FUNDS 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 Advisory
Agreement: Trusco is entitled to receive advisory fees
<PAGE>
12
computed daily and paid monthly at the annual rate of .20% of the average daily
net assets of each Fund.
From time to time, the Advisor may waive (either voluntarily or pursuant to
applicable state 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 anytime.
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 the Funds. If the
Advisor was prohibited from providing services to the Funds, the Board of
Trustees would consider selecting another qualified firm. Any new investment
advisory agreements would be subject to Shareholder approval.
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
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 Investments Distribution Co. (the "Distributor"), a wholly-owned
subsidiary of SEI Investments Company ("SEI Investments"), and the Trust are
parties to a distribution agreement. No compensation is paid to the Distributor
for distribution services. Corporate Trust Shares of the Fund are offered and
sold only to accounts administered by the Corporate Trust Division of SunTrust.
<PAGE>
13
The Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor receives compensation.
ADMINISTRATION
SEI Investments Mutual Funds Services (the "Administrator") serves as
Administrator to 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, 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 .12%
over $1 billion to $5 billion .09%
over $5 billion to $8 billion .07%
over $8 billion to $10 billion .065%
over $10 billion .06%
</TABLE>
From time to time, the Administrator may voluntarily waive all or a portion of
its fee to limit the net expenses of the Fund to the amounts in the Fund's
Expense Summary.
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
Peachtree 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 Funds as required by the Investment Company Act of 1940.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP 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 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.
<PAGE>
14
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.
<PAGE>
15
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.
<PAGE>
16
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
Investment Company Act of 1940.
RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS -- Investments by a money market
fund are subject to limitations imposed under regulations adopted by the
Securities and Exchange Commission. Under these regulations, money market funds
may only acquire obligations that present minimal credit risk and that are
"eligible securities," which means they are (i) rated, at the time of
investment, by at least two NRSROs organizations (one if it is the only
organization rating such obligation) in the highest rating category or, if
unrated, determined to be of comparable quality (a "first tier security"), or
(ii) rated according to the foregoing criteria in the second highest rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). A security is not considered to be unrated if its issuer has
outstanding obligations of comparable priority and securities that have a
short-term rating. In the case of taxable money market funds, investments in
second tier securities are subject to the further constraints in that (i) no
more than 5% of a Fund's assets may be invested in second tier securities and
(ii) any investment in securities of any one such issuer is limited to the
greater of 1% of the Fund's total assets or $1 million. A taxable money market
fund may also hold more than 5% of its assets in first tier securities of a
single issuer for three "business days" (that is, any day other than a Saturday,
Sunday or customary business holiday).
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
<PAGE>
17
guidelines and procedures for determining the liquidity of restricted
securities, and for monitoring the Advisor's implementation of the guidelines
and procedures.
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>
18
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") and Coupon Under Book Entry Safekeeping
("CUBES").
VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain obligations may 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.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed
delivery basis transactions involve the purchase of an instrument with
payment and delivery taking place in the future. Delivery of and payment for
these securities may occur a month or more after the date of the purchase
commitment. The Fund will segregate liquid high grade debt securities or cash
in an amount at least equal to these commitments. The interest rate realized
on these securities is fixed as of the purchase date and no interest accrues
to the Fund before settlement. These securities are subject to market
fluctuation due to changes in market interest rates and it is possible that
the market value at the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has changed. Although
the Fund generally purchases securities on a when-issued or forward
commitment basis with the intention of actually acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward
commitment prior to settlement if it deems appropriate.
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>
<TABLE>
<S> <C> <C>
STI CLASSIC FUNDS ORGANIZATIONAL OVERVIEW
* INVESTMENT ADVISOR
Trusco Capital Management, Inc. 50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
* DISTRIBUTOR
SEI Investments Distribution Co. Oaks, PA 19456
* ADMINISTRATOR
SEI Investments Mutual Funds
Services Oaks, PA 19456
* 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 1800 M Street, N.W.
Washington, D.C. 20036
* INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen, LLP 1601 Market Street
Philadelphia, PA 19103
</TABLE>
<PAGE>
DISTRIBUTOR
SEI Investments
Distribution Co.
PROSPECTUS
Corporate Trust Shares
CLASSIC INSTITUTIONAL
U.S. TREASURY SECURITIES
MONEY MARKET FUND
INVESTMENT ADVISOR
TRUSCO CAPITAL MANAGEMENT, INC.
MAY 1, 1999
[LOGO]
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISOR:
TRUSCO CAPITAL MANAGEMENT, INC.
This Statement of Additional Information ("SAI") 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
Classic Institutional U.S. Treasury Securities Money Market Fund Corporate
Trust Shares prospectus dated May 1, 1999. The prospectus may be obtained
through the Distributor, SEI Investments Distribution Co., Oaks,
Pennsylvania 19456.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . .B-2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .B-3
INVESTMENT ADVISOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-5
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-6
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-7
SHAREHOLDER SERVICING PLAN . . . . . . . . . . . . . . . . . . . . . . . . .B-7
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . . .B-8
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . B-11
COMPUTATION OF YIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . B-11
CALCULATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . . B-12
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . B-13
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . B-13
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
FUND TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-15
TRADING PRACTICES AND BROKERAGE. . . . . . . . . . . . . . . . . . . . . . B-16
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . . B-18
YEAR 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
LEGAL COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
</TABLE>
May 1, 1999
<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. This
Statement of Additional Information relates to the Corporate Trust Shares of the
Trust's Classic Institutional U.S. Treasury Securities Money Market Fund (the
"Funds"), which currently offers two classes of shares.
DESCRIPTION OF PERMITTED INVESTMENTS
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. Repurchase agreements are
agreements by which a person (E.G., the 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.
RESTRICTED AND ILLIQUID 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 Funds include
restricted securities. The Fund may invest up to 10% of its net assets in
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 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
B-2
<PAGE>
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 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.
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. Consistent with Rule 2a-7
under the Investment Company Act of 1940, as amended, (the "1940 Act"), the
Advisor will only purchase STRIPS for the Fund that have a remaining maturity of
397 days or less; therefore, the Fund currently may only purchase interest
component parts of U.S. Treasury 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.
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 term "a majority of the outstanding shares" of the Fund means the vote of
the lesser of (i) 67% or more of the shares of such Fund present at a meeting,
if the holders of more than 50% of the outstanding shares of such Fund are
present or represented by proxy or (ii) more than 50% of the outstanding shares
of such Fund.
B-3
<PAGE>
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 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.
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 Prospectus 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 and interests in a pool of securities
that are secured by interests in real estate. However, subject to their
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 except for money market
funds and CMOs and REMICs deemed to be investment companies and then only
as permitted by 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-4
<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 purchase or hold illiquid securities, I.E., securities that
cannot be disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in more
than seven days) if, in the aggregate, more than 10% of its net assets would be
invested in illiquid securities.
The foregoing percentages, except with respect to holding illiquid securities,
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 Trusco Capital Management, Inc. (the "Advisor") have entered
into an advisory agreement (the "Advisory Agreement"). The Advisor is an
indirect wholly-owned subsidiary of SunTrust Banks, Inc. ("SunTrust").
SunTrust is a bank holding company with assets of $87 billion as of December
31, 1998. 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.
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 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 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.
B-5
<PAGE>
For the fiscal years ended May 31, 1998 and 1997, the Fund paid the following
advisory fee:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FEES PAID FEES WAIVED OR REIMBURSED
FUND --------------------------------------------------
1998 1997 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Classic Institutional U.S. $ 11,328 $0 $197,908 $ 18,255
Treasury Securities Money
Market Fund
- --------------------------------------------------------------------------------
</TABLE>
BANKING LAWS
Current interpretations of federal banking laws and regulations:
- - prohibit SunTrust and the Advisor from sponsoring, organizing, controlling,
or distributing the Fund's shares; but
- - do not prohibit SunTrust or the Advisor generally from acting as an
investment advisor, transfer agent, or custodian to the Fund or from
purchasing Fund shares as agent for and upon the order of a customer.
The Advisor believes that it may perform advisory and related services for the
Trust without violating applicable banking laws or regulations. However, the
legal requirements and interpretations about the permissible activities of banks
and their affiliates may change in the future. These changes could prevent the
Advisor from continuing to perform services for the Trust. If this happens, the
Board of Trustees would consider selecting other qualified firms. Shareholders
would approve any new investment advisory agreements would be subject to
Shareholder approval.
If current restrictions on bank activities with mutual funds were relaxed, the
Advisor, or its affiliates, would consider performing additional services for
the Trust. We cannot predict whether these changes will be enacted. We also
cannot predict the terms that the Advisor, or its affiliates, might offer to
provide additional services.
THE ADMINISTRATOR
The Trust and SEI Investments Mutual Funds Services (the "Administrator"), are
parties to an administration agreement (the "Administration Agreement") dated
May 29, 1995. 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 Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI
B-6
<PAGE>
Investments Company ("SEI Investments"), 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 or sub-administrator to the following
other mutual funds: The Achievement Funds Trust, The Advisors' Inner Circle
Fund, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, Morgan Grenfell
Investment Trust, The Nevis Fund, Inc., Oak Associates Funds, The PBHG Funds,
Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International
Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Variable Trust, TIP Funds
and Alpha Select Funds.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, 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 Shares.
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.
SHAREHOLDER SERVICING PLAN
The Fund has adopted a shareholder servicing plan for Corporate Trust Shares
(the "Service Plan"). Under the Service Plan, the Distributor may perform,
or may compensate other service providers for performing, the following
shareholder services: maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services provided on investments;
assisting clients in changing divident options, account designations and
addresses; sub-accounting; providing information on share positions to
clients; forwarding shareholder communications to clients; processing
purchase, exchange and redemption orders; and processing divident payments.
Under the Service plan, the Distributor may retain as a profit any difference
between the fee it receives and the amount it pays to third parties.
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 Securities and Exchange Commission ("SEC") by the Office of
the Comptroller of the Currency, financial instituions are not prohibited from
acting in other capacities for investment 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.
B-7
<PAGE>
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees supervise the management and affairs of the Trust. The Trustees
have approved contracts with certain companies that provide the Trust with
essential management services. The Trustees and Executive Officers of the
Trust, their respective dates of birth, and their principal occupations for the
last five years are set forth below. Each may have held other positions with
the named companies during that period. The business address of each Trustee
and each Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456.
Certain officers of the Trust also serve as officers of some or all of the
following: The Achievement Funds Trust, The Advisors' Inner Circle Fund, The
Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston
1784 Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, Morgan Grenfell
Investment Trust, The Nevis Fund, Inc., Oak Associates Funds, The PBHG Funds,
Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International
Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Variable Trust, TIP Funds
and TIP Institutional Funds, each of which is an open-end management investment
company managed by SEI Investments Mutual Funds Services or its affiliates and,
except for PBHG Advisor Funds, Inc., distributed by SEI Investments Distribution
Co.
DANIEL S. GOODRUM (7/11/26) - Trustee* - 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* - 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.
CHAMPNEY A. MCNAIR (10/30/24) - Trustee* - 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 - Retired. President, Orange County
Publishing Co., Inc., 1981 - 1997, Publisher of the Paoli News and the Paoli
Republican and Editor of the Paoli Republican, 1981 - 1997, President, H & W
Distribution, Inc., 1984 - 1997. 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 - Retired President, Chairman, and CEO of
Crawford & Company; held these positions, 1973-1987. Member of the Board of
Directors, 1970-1990, joined
B-8
<PAGE>
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 - Director, Stavros Center for
Economic Education, Florida State University, 1991-present. 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* - Executive Vice President, SunTrust Banks,
Inc., 1985-1994; Director of Crawford & Company since 1979; Member, Atlanta
Estate Planning Council, 1988-1993.
JONATHAN T. WALTON (3/28/30) - Trustee - Retired. Executive Vice President, NBD
Bank, N.A. and NBD Bancorp, October 1956 to March 1995. Trustee, W.K. Kellogg
Trust.
WILLIAM H. CAMMACK (11/24/29) - Trustee* - Chairman & Director, SunTrust
Equitable Securities Corporation, January 1998-present. Chairman and CEO,
Equitable Asset Management, Inc., December 1993-present. Chairman and CEO,
Equitable Trust Company, June 1991-present. Chairman, Equitable Securities
Corporation, July 1972-January 1998.
MARK NAGLE (10/20/59) - President and Chief Executive Officer - Vice President
and Controller, Funds Accounting since 1996. Vice President of the Administrator
and Distributor since 1996. Vice President of Fund Accounting - BISYS Fund
Services 1995-1996. Senior Vice President - Fidelity Investments 1981-1995.
TODD CIPPERMAN (2/14/66) - Vice President, Assistant Secretary - Vice President
and Assistant Secretary of the Administrator and the Distributor since 1995.
Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston & Strawn
(law firm), 1991-1994.
LYDIA A. GAVALIS (6/5/64) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Assistant General Counsel and Director of Arbitration, Philadelphia Stock
Exchange, 1989-1998.
KATHY HEILIG (12/21/58) - Vice President and Assistant Secretary - Treasurer of
SEI Investments Company since 1997. Assistant Controller of SEI Investments
Company since 1995. Vice President of SEI Investments Company since 1991.
Director of Taxes of SEI Investments Company, 1987-1991. Tax Manager - Arthur
Anderson LLP prior to 1987.
JOSEPH M. O'DONNELL (11/13/54) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Vice President and General Counsel, FPS Services, Inc., 1993-1997.
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<PAGE>
SANDRA K. ORLOW (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1983.
LYNDA J. STRIEGEL (10/30/48) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Senior Asset Management Counsel, Barnett Banks, Inc., 1997-1998.
Partner, Groom and Nordberg, Chartered, 1996-1997. Associate General Counsel,
Riggs Bank, N.A., 1991-1995.
KEVIN P. ROBINS (4/15/61) - Vice President, Assistant Secretary - Senior Vice
President & General Counsel of SEI Investments, the Administrator and the
Distributor since 1994. Vice President of SEI, the Administrator and the
Distributor, 1992-1994.
KATHRYN L. STANTON (11/19/58) - Vice President, Assistant Secretary - Vice
President, Assistant Secretary of SEI Investments, the Administrator and
Distributor since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1989-1994.
CAROL ROONEY (5/8/64) - Controller, Chief Financial Officer - A Director of SEI
Investments Mutual Funds Services since 1992.
RICHARD W. GRANT (10/25/45) - Secretary - 1701 Market Street, Philadelphia,
Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Administrator and Distributor, since 1989.
JOHN H. GRADY, JR. (6/1/61) - Assistant Secretary -1701 Market Street,
Philadelphia, Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law
firm) since 1995, counsel to the Trust, Administrator and Distributor.
Associate, Morgan, Lewis & Bockius LLP, 1993-1995.
- --------------------
* Messrs. Looney, Goodrum, McNair, Hall and Cammack may be deemed to be an
"interested person" of the Trust as defined in the 1940 Act.
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, 1998, the Trust paid the following amounts to
Trustees and Officers of the Trust:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PENSION OR
RETIREMENT ESTIMATED
BENEFITS ANNUAL TOTAL COMPENSATION
AGGREGATE ACCRUED AS BENEFITS FROM FUND AND FUND
COMPENSATION PART OF UPON COMPLEX PAID TO
NAME OF PERSON, POSITION FROM FUND FUND EXPENSES RETIREMENT TRUSTEES
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum, Trustee $15,000 $15,000 for service on
two boards
- -------------------------------------------------------------------------------------------------
Wilton Looney, Trustee $14,000 $14,000 for service on
two boards
- -------------------------------------------------------------------------------------------------
B-10
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PENSION OR
RETIREMENT ESTIMATED
BENEFITS ANNUAL TOTAL COMPENSATION
AGGREGATE ACCRUED AS BENEFITS FROM FUND AND FUND
COMPENSATION PART OF UPON COMPLEX PAID TO
NAME OF PERSON, POSITION FROM FUND FUND EXPENSES RETIREMENT TRUSTEES
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Champney A. McNair, Trustee $17,000 $17,000 for service on
two boards
- -------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $13,000 $13,000 for service on
two boards
- -------------------------------------------------------------------------------------------------
T. Gordy Germany, Trustee $15,000 $15,000 for service on
two boards
- -------------------------------------------------------------------------------------------------
Dr. Bernard F. Sliger, Trustee $15,000 $15,000 for service on
two boards
- -------------------------------------------------------------------------------------------------
Jesse S. Hall, Trustee $14,000 $14,000 for service on
two boards
- -------------------------------------------------------------------------------------------------
Jonathan T. Walton, Trustee* $ 3,500 $ 3,500 for service on
two boards
- -------------------------------------------------------------------------------------------------
William H. Cammack, Trustee $ 0 $ 0 for service on
two boards
- -------------------------------------------------------------------------------------------------
</TABLE>
*Messr. Walton's compensation reflects a starting date of June 19, 1998.
PERFORMANCE INFORMATION
From time to time the Fund may advertise its performance. Performance figures
are based on historical earnings and are not intended to indicate future
performance.
PERFORMANCE COMPARISONS
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. These comparisons may assume reinvestment of dividends
but generally do not reflect deductions for administrative and management costs.
COMPUTATION OF YIELD
The current yield of the Funds will be calculated daily based upon the seven
days ending on the date of calculation (the "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
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<PAGE>
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 Fund 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 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)
TO THE POWER OF 365/7] - 1. The current and the effective yields reflect the
reinvestment of net income earned daily on portfolio assets.
The yield of this Fund fluctuates, and the annualization of a week's dividend is
not a representation by the Trust as to what an investment in the Fund will
actually yield in the future. Actual yields will depend on such variables as
asset quality, average asset maturity, the type of instruments the Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.
Yields are one basis upon which investors may compare the Fund with other money
market funds; however, yields of other money market funds and other investment
vehicles may not be comparable because of the factors set forth above and
differences in the methods used in valuing portfolio instruments.
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) TO THE
POWER OF 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. SunTrust
Bank's investment advisory affiliate, Trusco Capital Management, has been in the
top 1% of the SEI Funds Evaluation database for equity managers over the past
ten years. SEI Investment's database includes research data on over 1,000
investment managers responsible for over $450 billion in assets.
B-12
<PAGE>
ADVERTISING
From time to time, the Trust may include the names of clients of the Advisor in
advertisements and/or sales literature for the Trust.
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 following holidays are observed: New Year's Day, Martin
Luther King, Jr. 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.
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 the
Fund for any period during which the NYSE, an Advisor, the Administrator and/or
the Custodian are not open for business. Investors will receive written
notification at least thirty days prior to any change in the Fund's investment
objective.
Certain state securities laws may require those financial institutions providing
certain distribution services to the Trust to register as dealers pursuant to
state law.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Corporate Trust Shares of the Fund is
calculated daily by the Administrator by adding the value of securities and
other assets, subtracting liabilities and dividing by the number of
outstanding shares. Securities will be valued by the amortized cost method
which involves valuing a security at its cost on the date of purchase and
thereafter (absent unusual circumstances) assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuations
in general market rates of interest on the value of the instrument. While
this method provides certainty in valuation, it may result in periods during
which a security's value, as determined by this method, is higher or lower
than the price the Fund would receive if it sold the instrument. During
periods of declining interest rates, the daily yield of the Fund may tend to
be higher than a like computation made by a company with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio securities. Thus, if the
use of amortized cost by the Fund resulted in a lower aggregate portfolio
value on a particular day, a prospective investor in the Fund
B-13
<PAGE>
would be able to obtain a somewhat higher yield than would result from
investment in a company utilizing solely market values, and existing investors
in the Fund would experience a lower yield. The converse would apply in a
period of rising interest rates.
The Fund's use of amortized cost and the maintenance of the Fund's net asset
value at $1.00 are permitted by regulations promulgated by Rule 2a-7 under the
1940 Act, provided that certain conditions are met. The regulations also
require the Trustees to establish procedures which are reasonably designed to
stabilize the net asset value per share at $1.00 for the Fund. Such procedures
include the determination of the extent of deviation, if any, of the Fund
current net asset value per share calculated using available market quotations
from the Fund amortized cost price per share at such intervals as the Trustees
deem appropriate and reasonable in light of market conditions and periodic
reviews of the amount of the deviation and the methods used to calculate such
deviation. In the event that such deviation exceeds 1/2 of 1%, the Trustees are
required to consider promptly what action, if any, should be initiated, and, if
the Trustees believe that the extent of any deviation may result in material
dilution or other unfair results to Shareholders, the Trustees are required to
take such corrective action as they deem appropriate to eliminate or reduce such
dilution or unfair results to the extent reasonably practicable. Such actions
may include the sale of portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity; withholding
dividends; redeeming shares in kind; or establishing a net asset value per share
by using available market quotations. In addition, if the Fund incurs a
significant loss or liability, the Trustees have the authority to reduce pro
rata the number of shares of the Fund in each Shareholder's account and to
offset each Shareholder's pro rata portion of such loss or liability from the
Shareholder's accrued but unpaid dividends or from future dividends while the
Fund must annually distribute at least 90% of its investment company taxable
income.
TAXES
The following is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders that are not described in
the Fund's prospectus. No attempt is made to present a detailed explanation of
the Federal tax treatment of the Fund or their Shareholders, and the discussion
here and in the Fund's prospectus is not intended as a substitute for careful
tax planning.
This discussion of Federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
change the conclusions expressed herein, and may have a retroactive effect with
respect to the transactions contemplated herein.
FEDERAL INCOME TAX
In order to qualify for treatment as a regulated investment company ("RIC")
under the Code, the Fund must distribute annually to its Shareholders at least
the sum of 90% of its net tax-exempt interest (the excess of its gross
tax-exempt interest income over certain disallowed deductions) and 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
B-14
<PAGE>
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) 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 of 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 (iii) 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. Requirement (ii) no
longer applies for tax years beginning after August 5, 1997.
In order to avoid the federal excise tax applicable to RIC's, the Fund
intends to distribute by the end of any calendar year 98% of its ordinary
income for that year and 98% of its net capital gain income for the one-year
period ending on October 31 of that calendar year, plus certain other
amounts. 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.
If, at the close of each quarter of its taxable year, at least 50% of the value
of the Fund's total assets consists of obligations the interest on which is
excludable from gross income, the Fund may pay "exempt-interest dividends," as
defined in Section 852(b)(5) of the Code, to its Shareholders.
The Fund will make annual reports to Shareholders of the Federal income tax
status of all distributions.
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 Funds invest 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
securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.
B-15
<PAGE>
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 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.
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 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
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<PAGE>
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 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 Conduct Rules 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 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 the 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 Fund currently consists of two classes of shares: Institutional Shares
and Corporate Trust Shares. Institutional Shares, which commenced operations
on December 12, 1996, require a minimum initial investment of $10,000,000.
Corporate Trust Shares, which are the subject of this SAI, had not yet
commenced operations as of the date of this SAI. Unlike Institutional
Shares, Corporate Trust Shares do not have a minimum initial investment
requirement, have a higher expense ratio.
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 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.
B-17
<PAGE>
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.
YEAR 2000
The Trust depends on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Trust could be adversely affected if the computer systems
used by its service providers do not properly process dates on and after January
1, 2000 and distinguish between the year 2000 and the year 1900. The Trust has
asked its service providers whether they expect to have their computer systems
adjusted for the year 2000 transition, and received assurances from each from
each that its system is expected to accommodate the year 2000 without material
adverse consequences to the Trust. The Trust and its shareholders may
experience losses if these assurances prove to be incorrect or as a result of
year 2000 computer difficulties experienced by issuers of portfolio securities
or third parties, such as custodians, banks, broker-dealers or others with which
the Trust does business.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
B-18
<PAGE>
STI CLASSIC FUNDS
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 26
Item 23. Exhibits:
(a) Declaration of Trust - originally filed with Registrant's Registration
Statement on Form N-1A filed February 12, 1992 and incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(b)(1) By-Laws - originally filed with Registrant's Pre-Effective Amendment
No. 1 filed April 23, 1992 and incorporated by reference to Exhibit 2
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(b)(2) Amended By-Laws - incorporated by reference to Exhibit (b)(2) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.
(c) Not applicable.
(d)(1) Revised Investment Advisory Agreement with Trusco Capital Management,
Inc. - as originally filed with Registrant's Post-Effective Amendment
No. 5 filed August 2, 1993 and incorporated by reference to Exhibit
5(c) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(d)(2) 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 as Exhibit 5(d) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(d)(3) Investment Advisory Agreement with Sun Bank Capital Management,
National Association (now STI Capital Management, N.A. - as originally
filed with Registrant's Post-Effective Amendment No. 6 filed October
22, 1993 and incorporated by reference to Exhibit 5(e) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(d)(4) Investment Advisory Agreement with Trust Company Bank (now SunTrust
Bank, Atlanta) - as originally filed with Registrant's Post-Effective
Amendment No. 6 filed October 22, 1993 and incorporated by reference
to Exhibit D(4) of Post-Effective Amendment No. 24 to the Registrant's
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-028802 on July 30, 1998.
(e) Distribution Agreement - incorporated by reference to Exhibit 6 of
Post-Effective Amendment No. 16 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.
(f) Not applicable.
(g)(1) Custodian Agreement with Trust Company Bank dated February 1, 1994 -
originally filed with Registrant's Post-Effective Amendment No. 13
filed September 28, 1995 and incorporated by reference to Exhibit 8(b)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(g)(2) Custodian Agreement with the Bank of California - incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(g)(3) Fourth Amendment to Custodian Agreement by and between STI Trust &
Investment Operations, Inc. and The Bank of New York dated May 6, 1997
- incorporated by reference to Exhibit 8(d) of Post-Effective
Amendment No. 21 to the Registrant's Registration Statement filed with
the SEC via EDGAR Accession No. 0000912057-97-032207 on September 30,
1997.
(h)(1) Transfer Agent Agreement with Federated Services Company dated May 14,
1994 - originally filed with Post-Effective Amendment No. 9 filed
September 22, 1994 and incorporated by reference to Exhibit 8(c) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession
C-1
<PAGE>
No. 0000912057-96-015938 on July 31, 1996.
(h)(2) Administration Agreement with SEI Financial Management Corporation
dated May 29, 1995 - originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to Exhibit
9(a) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(h)(3) Consent to Assignment and Assumption of the Administration Agreement
between STI Classic Funds and SEI Financial Management Corporation -
incorporated by reference to Exhibit 9(b) of Post-Effective Amendment
No. 21 to the Registrant's Registration Statement filed with the SEC
via EDGAR Assession No. 0000912057-97-032207 on September 30, 1997.
(i) Opinion and Consent of Counsel - originally filed with Pre-Effective
Amendment No. 2 to the Registrant's Registration Statement on May 22,
1992 and incorporated by reference to Exhibit (i) of Post-Effective
Amendment No. 23 to the Registrant's Registration Statement filed with
the SEC via EDGAR Accession No. 0001047469-98-027407 on July 15, 1998.
(j) Consent of Arthur Andersen, LLP is filed herewith.
(k) Not applicable.
(l) Not applicable.
(m)(1) Distribution Plan - Investor Class - incorporated by reference to
Exhibit 15 of Post-Effective Amendment No. 16 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.
(m)(2) Distribution and Service Agreement relating to Flex Shares dated May
29, 1995 - originally filed with Post-Effective Amendment No. 12
filed August 17, 1995 and incorporated by reference to Exhibit 15(a)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(n) Not applicable.
(o) Rule 18f-3 Plan - incorporated by reference to Exhibit (o) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.
(o)(1) Certificate of Class Designation is filed herewith.
(p) Powers of Attorney - incorporated by reference to Exhibit (p) of
Post-Effective Amendment No. 24 to the Registrant's Statement filed
with the SEC via EDGAR Accession No. 0001047469-98-028802 on July 30,
1998.
Item 24. 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
Investments which also controls the distributor of the Registrant, SEI
Investments Distribution Co., and other corporations engaged in providing
various financial and record keeping services, primarily to bank trust
departments, pension plan sponsors, and investment managers.
Item 25. Indemnification:
Article VIII of the Agreement of Declaration of Trust filed as Exhibit (a) 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 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.
C-2
<PAGE>
Item 26. 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 SunTrust Banks, Inc. --
Director
Hunting F. Deutsch SunTrust Bank, Orlando --
Director
Anthony R. Gray -- --
Chairman & Chief Investment Officer
James R. Wood -- --
President
Elliott A. Perny -- --
Executive Vice President
Stuart F. Van Arsdale -- --
Senior Vice President
Jonathan D. Rich -- --
Director
Larry M. Cole -- --
Senior Vice President
L. Earl Denney -- --
Executive Vice President
Ronald Schwartz -- --
Senior Vice President
Andre B.Prawato -- --
Senior Vice President
Edward J. Dau -- --
Senior Vice President
James K. Wood -- --
Senior Vice President
C-3
<PAGE>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
Mills A. Riddick -- --
Senior Vice President
Christopher A. Jones -- --
Senior Vice President
David E. West -- --
Vice President
Brett L. Barner -- --
Senior Vice President
TRUSCO CAPITAL MANAGEMENT, INC.
Douglas S. Phillips -- --
President
Paul L. Robertson, III -- --
Secretary/Treasurer
E. Jenner Wood SunTrust Banks, Inc. Director
Director
Donald W. Thurmond SunTrust Bank, Atlanta Director
Director
Bob M. Farmer -- --
Vice President
M. Elizabeth (Beth) Wines -- --
Vice President
Charles Arnold, Jr. -- --
Senior Vice President
James R. Dillon, Jr. -- --
First Vice President
James P. Foster -- --
Vice President
Mark D. Garfinkel -- --
Vice President
Robert (Bob) G. Goggin -- --
Vice President
C-4
<PAGE>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
Joe E. Ransom -- --
Vice President
George D. Smith, Jr. -- --
Vice President
Jonathan Mote -- --
Vice President
Charles B. Leonard -- --
First Vice President
Mary F. Cernilli -- --
Vice President
Garrett P. Smith -- --
Vice President
Gregory L. Watkins -- --
Vice President
David S. Yealy -- --
Vice President
Robert J. Rhoades -- --
Senior Vice President
Kar Ming Leong -- --
Vice President
Stephen M. Yarbrough -- --
Vice President
Celia S. Stanley -- --
Vice President
Rebekah R. Alley -- --
Vice Presiden
SUNTRUST BANK, ATLANTA
Robert R. Long SunTrust Banks of Chairman of the Board
Chairman of the Board and Georgia, Inc.
President
Ronald S. Crowding -- Executive Vice
Executive Vice President President
C-5
<PAGE>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
Charles B. Ginden -- --
Executive Vice President
William H. Rogers, Jr. -- --
Executive Vice President
Donald Wayne Thurmond -- --
Executive Vice President
Dr. William M. Chase Emory University President
Director
Gaylord O. Coan Gold Kist, Inc. CEO
Director .
A.D. Correll Georgia-Pacific Corporation Chairman & CEO
Director
R.W. Courts, II Atlantic Realty Company President
Director
A.W. Dahlberg The Southern Company President,
Director Chairman &
CEO
L. Phillip Humann SunTrust Banks, Inc. President,
Director Services Corporation Chairman & CEO
William B. Johnson The Ritz Carlton Hotel Chairman of the
Director Board
J. Hicks Lanier Oxford Industries, Inc. Chairman of the
DirectorDirector Board
& President
Pinehill Development Co. 30% owner
Joseph L. Lanier, Jr. Dan River, Inc. Chairman of the
Director Board Chairman
Larry L. Prince Genuine Parts Company Chairman of the
Director Board
R. Randall Rollins Rollins, Inc. Chairman of the
Director Board
Lor, Inc. Director
Maran, Inc. Director
Gutterworld, Inc. Director
Dabora, Inc. Director &
Secretary
Simpson, Nance & Graham Director
Auto Parts Wholesale, Inc. Director
C-6
<PAGE>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
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
Gerald T. Adams -- --
Senior Vice President
James R. Albach -- --
Group Vice President
Gay Cash -- --
Vice President
Joseph B. Foley, Jr. -- --
Group Vice President
Thomas R. Frisbie -- --
Group Vice President
Mark Stancil -- --
Group Vice President
David E. Thompson -- --
Vice President
Charles C. Watson -- --
Group Vice President
Dr. Mary B. Bullock Agnes Scott College President
Director
Larry L. Gellerstedt, III Beers Construction Co. Chairman
Director
C-7
<PAGE>
John T. Glover Post Properties, Inc. President
Director
M. Douglas Ivester The Coca-Cola Company Chairman
Director of the Board &
CEO
Dennis M. Love Printpack, Inc. President & CEO
Director
Charles H. McTier Robert Woodruff Foundation President
Director
Item 27. 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.
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), 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 Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 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
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
C-8
<PAGE>
The Nevis Fund, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 1998
The Distributor 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 Oaks, PA 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President &
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President &
Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President &
Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President &
Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
C-9
<PAGE>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Mark Nagle Vice President President & Chief
Executive Officer
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President &
Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President &
Assistant Secretary
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President &
Assistant Secretary
Lynda J. Striegel Vice President & Assistant Secretary Vice President &
Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
Item 28. 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:
SunTrust Bank, Atlanta
25 Park Place
P.O. Box 4418
Atlanta, Georgia 30303
Bank of New York
One Wall Street
New York, New York
(International Equity Index Fund, International Equity Fund, Emerging
Markets Equity Fund)
(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 Investments Mutual Funds Services
One Freedom Valley Drive
Oaks, Pennsylvania 19456
C-10
<PAGE>
(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 Advisors:
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, Atlanta
25 Park Place
Atlanta, Georgia 30303
Item 29. Management Services: None.
Item 30. Undertakings: None.
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-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the "Securities
Act") and the Investment Company Act of 1940, as amended and has duly caused
this Post-Effective Amendment No. 27 to Registration Statement No. 33-45671 to
be signed on its behalf by the undersigned, duly authorized, in the City of
Oaks, Commonwealth of Pennsylvania on the 11th day of March, 1999.
By: /s/ Mark Nagle
-------------------------------------------------
Mark Nagle, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacity on the
dates indicated.
* Trustee March 11, 1999
- ---------------------------------
F. Wendell Gooch
* Trustee March 11, 1999
- ---------------------------------
Daniel S. Goodrum
* Trustee March 11, 1999
- ---------------------------------
Jesse S. Hall
* Trustee March 11, 1999
- ---------------------------------
Wilton Looney
* Trustee March 11, 1999
- ---------------------------------
Champney A. McNair
* Trustee March 11, 1999
- ---------------------------------
T. Gordy Germany
* Trustee March 11, 1999
- ---------------------------------
Bernard F. Sliger
* Trustee March 11, 1999
- ---------------------------------
Jonathan T. Walton
* Trustee March 11, 1999
- ---------------------------------
William H. Cammack
* Controller, March 11, 1999
- --------------------------------- Treasurer &
Carol Rooney Chief Financial Officer
/s/ Mark Nagle President & Chief March 11, 1999
- --------------------------------- Executive Officer
Mark Nagle
* By: /s/ Kevin P. Robins
--------------------------
Kevin P. Robins, With Power of Attorney
<PAGE>
EXHIBIT INDEX
NUMBER EXHIBIT
EX-99.A Declaration of Trust - originally filed with Registrant's Registration
Statement on Form N-1A filed February 12, 1992 and incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
EX-99.B1 By-Laws - originally filed with Registrant's Pre-Effective Amendment
No. 1 filed April 23, 1992 and incorporated by reference to Exhibit 2
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.B2 Amended By-Laws - incorporated by reference to Exhibit (b)(2) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.
EX-99.C Not applicable.
EX-99.D1 Revised Investment Advisory Agreement with Trusco Capital Management,
Inc. - as originally filed with Registrant's Post-Effective Amendment
No. 5 filed August 2, 1993 and incorporated by reference to Exhibit
5(c) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.D2 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 as Exhibit 5(d) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.D3 Investment Advisory Agreement with Sun Bank Capital Management,
National Association (now STI Capital Management, N.A. - as originally
filed with Registrant's Post-Effective Amendment No. 6 filed October
22, 1993 and incorporated by reference to Exhibit 5(e) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.D4 Investment Advisory Agreement with Trust Company Bank (now SunTrust
Bank, Atlanta) - as originally filed with Registrant's Post-Effective
Amendment No. 6 filed October 22, 1993 and filed herewith.
EX-99.E Distribution Agreement - incorporated by reference to Exhibit 6 of
Post-Effective Amendment No. 16 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.
EX-99.F Not applicable.
EX-99.G1 Custodian Agreement with Trust Company Bank dated February 1, 1994 -
originally filed with Registrant's Post-Effective Amendment No. 13
filed September 28, 1995 and incorporated by reference to Exhibit 8(b)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.G2 Custodian Agreement with the Bank of California - incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
EX-99.G3 Fourth Amendment to Custodian Agreement by and between STI Trust &
Investment Operations, Inc. and The Bank of New York dated May 6, 1997
- incorporated by reference to Exhibit 8(d) of Post-Effective
Amendment No. 21 to the Registrant's Registration
C-13
<PAGE>
Statement filed with the SEC via EDGAR Accession No.
0000912057-97-032207 on September 30, 1997.
EX-99.H1 Transfer Agent Agreement with Federated Services Company dated May 14,
1994 - originally filed with Post-Effective Amendment No. 9 filed
September 22, 1994 and incorporated by reference to Exhibit 8(c) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.H2 Administration Agreement with SEI Financial Management Corporation
dated May 29, 1995 - originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to Exhibit
9(a) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.H3 Consent to Assignment and Assumption of the Administration Agreement
between STI Classic Funds and SEI Financial Management Corporation -
incorporated by reference to Exhibit 9(b) of Post-Effective Amendment
No. 21 to the Registrant's Registration Statement filed with the SEC
via EDGAR Assession No. 0000912057-97-032207 on September 30, 1997.
EX-99.I Opinion and Consent of Counsel - originally filed with Pre-Effective
Amendment No. 2 to the Registrant's Registration Statement on May 22,
1992 and incorporated by reference to Exhibit (i) of Post-Effective
Amendment No. 23 to the Registrant's Registration Statement filed with
the SEC via EDGAR Accession No. 0001047469-98-027407 on July 15, 1998.
EX-99.J Consent of Arthur Andersen, LLP is filed herewith.
EX-99.K Not applicable.
EX-99.L Not applicable.
EX-99.M1 Distribution Plan - Investor Class - incorporated by reference to
Exhibit 15 of Post-Effective Amendment No. 16 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.
EX-99.M2 Distribution and Service Agreement relating to Flex Shares dated May
29, 1995 - originally filed with Post-Effective Amendment No. 12
filed August 17, 1995 and incorporated by reference to Exhibit 15(a)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
EX-99.N Not applicable.
EX-99.O Rule 18f-3 Plan - incorporated by reference to Exhibit (i) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.
EX-99.O1 Certificate of Class Designation - filed herewith.
EX-99.P Powers of Attorney - incorporated by reference to Exhibit (p) of
Post-Effective Amendment No. 24 to the Registrant's Statement filed
with the SEC via EDGAR Accession No. 0001047469-98-028802 on July 30,
1998.
<PAGE>
[LETTERHEAD]
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. 27 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
March 15, 1999
<PAGE>
Amendment #1
STI CLASSIC FUNDS
CERTIFICATE OF CLASS DESIGNATION
Corporate Trust Shares
1. CLASS-SPECIFIC DISTRIBUTION ARRANGEMENTS; OTHER EXPENSES
Corporate Trust Shares are sold without a sales charge, but are subject to
a shareholder servicing fee of up to .20% payable to the Distributor. The
Distributor will provide or will enter into written agreements with service
providers who will provide one or more of the following shareholder services to
clients who may from time to time beneficially own shares: (i) maintaining
accounts relating to clients that invest in shares; (ii) providing information
periodically to clients showing their position in shares; (iii) arranging for
bank wires; (iv) responding to client inquiries relating to the services
performed by the Distributor or any service provider; (v) responding to
inquiries from clients concerning their investments in shares; (vi) forwarding
shareholder communications from the Fund (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to clients; (vii) processing purchase, exchange and redemption requests
from clients and placing such orders with the Fund or its service providers;
(viii) assisting clients in changing dividend options, account designations, and
addresses; (ix) providing subaccounting with respect to shares beneficially
owned by clients; (x) processing dividends payments from the Fund on behalf of
clients; and (xi) providing such other similar services as the Fund may
reasonably request to the extent that the Distributor and/or the service
provider is permitted to do so under applicable laws or regulations.
2. ELIGIBILITY OF PURCHASERS
Corporate Trust Shares do not require a minimum initial investment and are
available only to accounts administered by the corporate trust divisions of
subsidiaries of SunTrust Banks, Inc. and its affiliates.
3. EXCHANGE PRIVILEGES
Corporate Trust Shares of each Fund may be exchanged for Corporate Trust
Shares of each other Fund of the Trust in accordance with the procedures
disclosed in each Fund's Prospectus and subject to and applicable limitations
resulting from the closing of Funds to new investors.
4. VOTING RIGHTS
Each shareholder will have one vote for each full Corporate Trust Share
held and a fractional vote for each fractional Class A share held. Class A
shareholders will have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to Corporate Trust Shares (such as a
distribution plan or service agreement relating to Corporate Trust Shares), and
will have separate voting rights on any other matter submitted to shareholders
in which the interests of the Corporate Trust Shares shareholders differ from
the interests of holders of any other class.
5. CONVERSION RIGHTS
Corporate Trust Shares do not have a conversion feature.
