<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 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. 28 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 30 /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 ROAD
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)
X Immediately upon filing pursuant to paragraph (b), or
---
On pursuant to paragraph (b), or
--- ------------
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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On pursuant to paragraph (a) of Rule 485.
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<PAGE>
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
CLASSIC INSTITUTIONAL U.S. GOVERNMENT 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 Shares of the Classic Institutional Cash Management
Money Market Fund and the Classic Institutional U.S. Government Securities Money
Market Fund (each a "Fund" and, together, the "Classic Institutional Money
Market Funds"). Investors are advised to read this Prospectus and retain it for
future reference.
A Statement of Additional Information relating to the Funds dated the same
date as this Prospectus has been filed with the Securities and Exchange
Commission and is available without charge through the Distributor, SEI
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 24, 1999
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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.
Institutional Shares of the Classic Institutional Money Market Funds are offered
primarily to various types of institutional investors ("Shareholders"),
including SunTrust Banks, Inc. and its affiliates and correspondents, for the
investment of funds for which they act in a fiduciary, agency, investment
advisory or custodial capacity.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Expense Summary...................... 4
Financial Highlights................. 5
The Trust............................ 6
Funds and 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...................... 10
STI Classic Funds Information........ 11
The Trust............................ 11
Board of Trustees.................... 12
Investment Advisor................... 12
Banking Laws......................... 12
Distribution......................... 13
Administration....................... 13
Transfer Agent and Dividend
Disbursing Agent.................... 14
Custodian............................ 14
Legal Counsel........................ 14
Independent Public Accountants....... 14
Other Information.................... 14
Voting Rights........................ 14
Reporting............................ 14
Shareholder Inquiries................ 14
Description of Permitted
Investments......................... 14
Appendix............................. A-1
</TABLE>
<PAGE>
4
EXPENSE SUMMARY
Below is a summary of the estimated annual operating expenses for shares of each
Classic Institutional Money Market 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>
CLASSIC CLASSIC INSTITUTIONAL
INSTITUTIONAL U.S. GOVERNMENT
CASH MANAGEMENT SECURITIES
MONEY MARKET FUND MONEY MARKET FUND
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Management Fees (after voluntary reductions)(1)............. .17%
All Other Expenses (after voluntary reductions)(2).......... .08%
- ----------------------------------------------------------------------------------------------------------
Total Operating Expenses (after voluntary reductions)(3).... .25%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Advisor is waiving, on a voluntary basis, a portion of its fee from each
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 Funds would be as follows: Classic Institutional Cash Management
Money Market Fund--.20%, Classic Institutional U.S. Government Securities
Money Market Fund-- %. 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 each 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 Funds would be as follows: Classic Institutional Cash
Management Money Market Fund--.10%, Classic Institutional U.S. Government
Securities Money Market Fund-- %.
(3) Absent the voluntary waivers described above, Total Operating Expenses for
the Funds would be as follows: Classic Institutional Cash Management Money
Market Fund--.30%, Classic Institutional U.S. Securities Money Market
Fund-- %.
<TABLE>
<CAPTION>
CLASSIC INSTITUTIONAL CLASSIC INSTITUTIONAL
CASH MANAGEMENT U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND MONEY MARKET FUND
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
An investor would pay the following expenses on a $1,000 investment
assuming: (1) a 5% annual return and (2) redemption at the end of
each time period:
One Year....................................................... $ 3
Three Years.................................................... 8
Five Years..................................................... 14
Ten Years...................................................... 32
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE IS BASED UPON THE ESTIMATED TOTAL OPERATING EXPENSES OF A 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
FINANCIAL HIGHLIGHTS
The table that follows presents information about the investment results of the
Classic Institutional Money Market Funds. The financial highlights for the
Classic Institutional U.S. Treasury Securities Money Market Fund for the periods
from inception through May 31, 1998 have been audited by Arthur Andersen LLP,
independent public accountants. The financial highlights for the Classic
Institutional Cash Management Money Market Fund (successor to the Prime
Obligations Fund, a series of The Arbor Fund) and the Classic Institutional U.S.
Government Securities Money Market Fund (formerly U.S. Government Securities
Fund, a series of The Arbor Fund) for the periods from inception through January
31, 1999 have been audited by PricewaterhouseCoopers LLP, independent public
accountants. Both reports appear in the annual reports and accompany the
Statement of Additional Information. The annual report for each Fund, which
contains more information about performance, is available at no charge by
calling 1-800-874-4770.
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN
----------- ----------- ------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
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CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
---------------------------------------------------------
Institutional Shares
1999................... $ 1.00 $ 0.05 $ -- $ (0.05 ) $ -- $ 1.00 5.46%
1998................... 1.00 0.06 -- (0.06 ) -- 1.00 5.66
1997................... 1.00 0.05 -- (0.05 ) -- 1.00 5.45
1996(1)................ 1.00 0.02 -- (0.02 ) -- 1.00 5.82*
-----------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
-----------------------------------------------------------------
<CAPTION>
RATIO OF NET
RATIO OF NET RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF INVESTMENT TO AVERAGE NET TO AVERAGE NET
NET ASSETS EXPENSES TO INCOME TO ASSETS (EXCLUDING ASSETS (EXCLUDING
END OF AVERAGE NET AVERAGE NET WAIVERS AND WAIVERS AND
PERIOD (000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS)
------------ ------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
---------------------------------------------------------
Institutional Shares
1999................... $ 884,490 0.23% 5.31% 0.35% 5.19%
1998................... 740,837 0.20% 5.52% 0.36% 5.36%
1997................... 477,435 0.20% 5.33% 0.38% 5.15%
1996(1)................ 382,632 0.20% 5.61%* 0.40%* 5.41%*
-----------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
-----------------------------------------------------------------
</TABLE>
(2) Commenced operations on October 25, 1995.
* Not annualized.
On May 24, 1999, the Prime Obligations Fund and the U.S. Government Securities
Money Market Fund, each a series of The Arbor Fund, each exchanged all of its
assets and certain liabilities for shares of the Classic Institutional Cash
Management Money Market Fund and the Classic Institutional U.S. Government
Securities Money Market Fund, respectively. As the Prime Obligations Fund and
the U.S. Government Securities Money Market Fund are each the respective
accounting survivor, its basis of accounting for assets and liabilities and its
operating results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
<PAGE>
6
THE TRUST
STI CLASSIC FUNDS (the "Trust") is a diversified, open-end management investment
company that provides a convenient and economical means of investing in several
professionally managed portfolios of securities. The Trust currently offers
units of beneficial interest ("shares") in a number of separate Funds. This
Prospectus relates to the Classic Institutional Money Market Funds described
below.
FUNDS AND INVESTMENT OBJECTIVES
THE CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND seeks to provide as
high a level of current income as is consistent with preservation of capital and
liquidity by investing exclusively in high quality money market instruments
issued by corporations and the U.S. Government.
THE CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND seeks to
provide high current income consistent with preservation of capital and the
maintenance of liquidity.
It is a fundamental policy of each Classic Institutional Money Market Fund to
use its best efforts to maintain a constant net asset value of $1.00 per share.
There can be no assurance that either Fund will achieve its investment objective
or maintain a net asset value of $1.00 per share on a continuous basis.
Each Classic Institutional Money Market Fund intends to comply with federal
regulations applicable to money market funds using the amortized cost method for
calculating net asset value, which require each 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.
INVESTMENT POLICIES AND STRATEGIES
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
The Classic Institutional Cash Management Money Market Fund will invest in money
market instruments denominated in U.S. dollars consisting of: (i) U.S. Treasury
obligations; (ii) receipts; (iii) obligations issued or guaranteed as to
principal and interest by agencies and instrumentalities of the U.S. Government;
(iv) commercial paper issued by domestic and foreign issuers rated in the
highest short-term rating category by one or more nationally recognized
statistical rating organizations (an "NRSRO") as described in the "Appendix" or,
if not rated, determined by the Advisor to be of comparable quality; (v) high
quality obligations (including certificates of deposit, time deposits, bankers'
acceptances, Eurodollar and Yankee bank obligations) of U.S. commercial banks
(including foreign branches of such banks), and U.S. and London branches of
foreign banks or savings and loan and thrift institutions that are members of
the Federal Reserve System, the Federal Deposit Insurance Corporation, or
savings and loan associations; (vi) high quality short-term corporate
obligations issued by companies with commercial paper meeting the ratings
indicated in (iv) above, or, if not rated, determined by the Advisor to be of
comparable quality; (vii) repurchase agreements involving such obligations;
(viii) high quality obligations of supranational entities satisfying the credit
ratings described in (iv) above, or, if not rated, determined by the Advisor to
be of comparable quality; (ix) high quality medium term notes; (x) municipal
securities; (xi) mortgage-backed
<PAGE>
7
securities and (xii) asset-backed securities. The Fund may not invest more than
25% of its total assets in obligations issued by foreign branches of U.S. banks
and London branches of foreign banks. The Fund may purchase securities subject
to standby commitments. The Fund may also purchase restricted securities. As a
money market fund, the Fund is subject to limitations on the percentage of its
assets that may be invested in any one issuer and on the percentage that may be
invested in securities carrying the second highest rating assigned by the
requisite NRSROs.
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
The Classic Institutional U.S. Government Securities Money Market Fund will
invest solely in (i) U.S. Treasury Obligations; (ii) obligations issued or
guaranteed as to principal and interest by agencies or instrumentalities of the
U.S. Government; (iii) repurchase agreements involving and of the foregoing
obligations; and (iv) shares of registered money market funds that invest in the
foregoing.
GENERAL INVESTMENT POLICIES AND STRATEGIES
In the event that a security owned by a Fund is downgraded below the stated
rating categories, the Advisor will review and take appropriate action with
regard to the security.
Each of the Funds may engage in securities lending and will limit such practice
to 33 1/3% of its total assets. No Fund may purchase additional securities while
its outstanding borrowings exceed 5% of its assets.
It is a non-fundamental policy of each 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
FOREIGN SECURITIES
Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks and considerations include differences in accounting, auditing and
financial reporting standards, generally higher commission rates on foreign
portfolio transactions, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investment in foreign countries
and potential restrictions of the flow of international capital and currencies.
Foreign companies may also be subject to less government regulation than U.S.
companies. Moreover, the dividends payable on the foreign securities may be
subject to foreign withholding taxes, thus reducing the net amount of income
available for distribution to the Fund's Shareholders. Foreign securities often
trade with less frequency and volume than domestic securities and, therefore,
may exhibit greater price volatility.
GOVERNMENT SECURITIES
Guarantees of a Fund's securities by the U.S. Government, its agencies or
instrumentalities guarantee only the payment of principal and
<PAGE>
8
interest on the guaranteed securities, and do not guarantee the securities'
yield or value or the yield or value of a Fund's shares.
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities are subject to the risk of prepayment of the
underlying mortgages. During periods of declining interest rates, prepayment of
mortgages underlying these securities can be expected to accelerate. When the
mortgage-backed securities held by a Fund are prepaid, the Fund generally will
reinvest the proceeds in securities with a yield that reflects prevailing
interest rates, which may be lower than the prepaid security.
ZERO COUPON OBLIGATIONS
Each 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. A Fund will be required to include the imputed interest in zero
coupon obligations in its current income. Because each 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 each
Fund. Fundamental policies cannot be changed with respect to a Fund without the
consent of the holders of a majority of the Fund's outstanding shares. The term
"majority of the outstanding shares" means the vote of (i) 67% or more of 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 a
Fund's outstanding shares, whichever is less.
Each 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 a
Fund would be invested in the securities of such issuer; provided, however, that
a 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 a Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in obligations issued or guaranteed by
the U.S. Government, its agencies and instrumentalities, repurchase agreements
involving such securities and, with respect to only the Classic Institutional
Cash Management Money Market Fund, obligations issued by domestic branches of
U.S. banks or U.S. branches of foreign banks subject to the same regulations as
U.S. banks. For purposes of this limitation, (i) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (ii)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (iii) supranational
entities will be considered to be a separate industry.
<PAGE>
9
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 each Classic Institutional Money Market 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 a 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
a 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
Shares of the Fund are sold primarily to various types of institutional
investors, including subsidiaries of SunTrust Banks, Inc. ("SunTrust"), for the
investment of funds for which they act in a fiduciary, agency, investment
advisory or custodial capacity. Shares are sold without a sales charge, although
the institutional investors may charge their customer accounts for services
provided in connection with the purchase of shares. The minimum initial
investment is $10,000,000. Institutional investors may impose an earlier cut-off
time for receipt of purchase orders directed through them to allow for
processing and transmittal of the reorders to Federated Services Company (the
"Transfer Agent") for effectiveness the same day. Information concerning these
services and any charges will be provided to customers by the institutional
investors. Shares will be held of record by the institutional investors,
although customers may have or be given the right to vote the shares depending
upon the terms of their relationship with the institutional investor.
Confirmations of share purchases and redemptions will be sent to the
institutional investor as the shareholder of record.
Shares may be purchased on days on which the New York Stock Exchange is open for
business (a "Business Day"). However, shares cannot be purchased or redeemed for
same day settlement on days the Federal Reserve is closed.
Purchase orders for the Funds will be effective as of the Business Day received
by the Transfer Agent and eligible to receive dividends declared the same day if
the Transfer Agent receives the order before 3:00 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 Funds 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.
<PAGE>
10
The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or
Shareholder(s).
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 the
institutional investor as the record owner of shares. Institutional investors
may establish procedures for their customers to request redemption of shares
held in their account with the institutional investor. Customers should contact
their institutional investor 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 a 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 each of the
Classic Institutional Money Market Funds 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 Fund 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 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 each Fund or
its Shareholders. Accordingly, Shareholders are
<PAGE>
11
urged to consult their tax advisors regarding specific questions as to federal,
state and local income taxes.
TAX STATUS OF EACH FUND
Each Fund is treated as a separate entity for federal tax purposes, and is not
combined with the Trust's other Funds. Each 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. Each 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 Institutional Money Market Funds will each distribute all of their net
investment income (including, for this purpose, net short-term capital gains) to
Shareholders. Dividends from net investment income will be taxable to
Shareholders as ordinary income whether received in cash or in additional
shares. Each Fund will make annual reports to Shareholders of the federal income
tax status of all distributions. Dividends declared by a 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 a 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. Each 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 a Fund is considered tax
exempt in their particular states.
A sale, exchange or redemption of Fund shares is a taxable event to the
Shareholder.
STI CLASSIC FUNDS INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated January 15, 1992. The Declaration of Trust permits the Trust to
offer separate portfolios of shares and different classes of each Fund. All
consideration received by the Trust for shares of any Fund and all assets of
such Fund belong to that Fund and would be subject to liabilities related
thereto.
The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Share-
holders, 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.
<PAGE>
12
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
Institutional Money Market Funds. As of December 31, 1998, Trusco had
approximately $23 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 $93.2 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 $90.8 billion as of December 31, 1998.
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 Funds and continuously reviews, supervises and
administers each 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 each 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 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 a Fund. Currently, the
Advisor has agreed to voluntary reductions in its fees in amounts necessary to
maintain the total operating expenses at the amounts set forth in the Expense
Summary. Voluntary reductions of fees may be terminated at anytime.
Crestar Asset Management Company served as the Adviser to the predecessors of
the Classic Institutional Cash Management and Classic Institutional U.S.
Government Securities Money Market Funds. For the fiscal year ended January 31,
1999, Crestar Asset Management Company received advisory fees of .11% for the
Classic Institutional Cash Management Money Market Fund and .10% for the Classic
Institutional U.S. Government Securities Money Market Funds.
BANKING LAWS
Banking laws and regulations, including the Glass-Steagall Act as presently
interpreted by the Board of Governors of the Federal Reserve
<PAGE>
13
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. Shares of the Classic Institutional Money Market Funds
are offered primarily to institutional investors, including affiliates and
correspondents for the investment of funds in which they act in a fiduciary,
agency or custodial capacity.
Each 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>
<PAGE>
14
From time to time, the Administrator may voluntarily waive all or a portion of
its fee to limit the net expenses of the Funds to the amounts in the Funds'
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 each 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.
REPORTING
The Trust issues unaudited financial information and audited financial
statements annually. The Trust furnishes proxy statements and other reports to
Shareholders of record.
SHAREHOLDER INQUIRIES
Shareholders may contact their financial
institution's representative in order to obtain
information on account statements, procedures
and other related information.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of the permitted investments for the Funds.
Further discussion is contained in the Statement of Additional Information.
ASSET-BACKED SECURITIES -- Asset-backed securities are securities secured by
non-mortgage assets such as company receivables, truck and auto loans, leases
and credit card receivables. Such securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pools of assets.
<PAGE>
15
Such securities also may be debt instruments, which are also known as
collateralized obligations and are generally issued as the debt of a special
purpose entity, such as a trust, organized solely for the purpose of owning such
assets and issuing such debt.
Asset-backed securities are not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and for a
certain period by a letter of credit issued by a financial institution (such as
a bank or insurance company) unaffiliated with the issuers of such securities.
The purchase of asset-backed securities raises risk considerations peculiar to
the financing of the instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in the obligations
superior to that of the holders of the asset-backed securities. There also is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. Asset-backed
securities entail prepayment risk, which may vary depending on the type of
asset, but is generally less than the prepayment risk associated with
mortgage-backed securities. In addition, credit card receivables are unsecured
obligations of the card holder.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.
BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. Bankers' acceptances are used
by corporations to finance the shipment and storage of goods. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT -- Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entities. Maturities on these issues vary from a few to 270 days.
EURODOLLAR AND YANKEE BANK OBLIGATIONS -- Eurodollar bank obligations are U.S.
dollar-denominated certificates of deposit or time deposits issued outside the
United States by foreign branches of U.S. banks or by foreign banks. Yankee bank
obligations are U.S. dollar denominated obligations issued in the United States
by foreign banks.
ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. An illiquid security includes a demand
instrument with a demand notice period exceeding seven days, where there is no
secondary market for such security, and repurchase agreements with durations (or
maturities) over seven days in length.
MEDIUM TERM NOTES -- Medium term notes are periodically or continuously offered
corporate or agency debt that differs from traditionally underwritten corporate
bonds only in the process by which they are issued.
MORTGAGE-BACKED SECURITIES -- Mortgage-backed securities are instruments that
entitle the holder to a share of all interest
<PAGE>
16
and principal payments from mortgages underlying the security. The mortgages
backing these securities include conventional thirty-year fixed rate mortgages,
graduated payment mortgages, and adjustable rate mortgages. During periods of
declining interest rates, prepayment of mortgages underlying mortgage-backed
securities can be expected to accelerate. Prepayment of mortgages which underlie
securities purchased at a premium often results in capital losses, while
prepayment of mortgages purchased at a discount often results in capital gains.
Because of these unpredictable prepayment characteristics, it is often not
possible to predict accurately the average life or realized yield of a
particular issue.
GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are GNMA, FNMA and FHLMC. FNMA and FHLMC obligations are not backed
by the full faith and credit of the U.S. Government as GNMA certificates are,
but FNMA and FHLMC securities are supported by the instrumentalities' right to
borrow from the U.S. Treasury. GNMA, FNMA and FHLMC each guarantees timely
distributions of interest to certificate holders. GNMA and FNMA also each
guarantees timely distributions of scheduled principal. FHLMC has in the past
guaranteed only the ultimate collection of principal of the underlying mortgage
loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold PCs)
which also guarantee timely payment of monthly principal reductions. Government
and private guarantees do not extend to the securities' value, which is likely
to vary inversely with fluctuations in interest rates.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"): CMOs are debt obligations or
multiclass pass-through certificates issued by agencies or instrumentalities of
the U.S. Government or by private originators or investors in mortgage loans. In
a CMO, series of bonds or certificates are usually issued in multiple classes.
Principal and interest paid on the underlying mortgage assets may be allocated
among the several classes of a series of a CMO in a variety of ways. Each class
of a CMO, often referred to as a "tranche," is issued with a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal payments on the underlying mortgage assets may cause CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates, resulting in a loss of all or part of any premium paid.
REMICS: A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and investes in certain mortgages principally secured by
interests in real property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or "residual" interests.
Guaranteed REMIC pass-through certificates ("REMIC Certificates") issued by FNMA
or FHLMC represent beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or FNMA, FHLMC or GNMA-guaranteed mortgage
pass-through certificates. For FHLMC REMIC Certificates, FHLMC guarantees the
timely payment of interest, and also guarantees the payment of principal as
payments are required to be made on the underlying mortgage participation
certificates. FNMA REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA.
MUNICIPAL SECURITIES -- Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
<PAGE>
17
operating expenses, and for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial development bonds
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated facilities.
Municipal securities include both municipal notes and municipal bonds. Municipal
notes include general obligation notes, tax-exempt commercial paper tax
anticipation notes, revenue anticipation notes, bond anticipation notes,
certificates of indebtedness, demand notes and construction loan notes and
participation interests in municipal notes. Municipal bonds include general
obligation bonds, revenue or special obligation bonds, private activity and
industrial development bonds and participation interests in municipal bonds.
General obligation bonds are backed by the taxing power of the issuing
municipality. Revenue bonds are backed by the revenues of a project or facility
(tolls from a bridge, for example). Certificates of participation represent an
interest in an underlying obligation or commitment, such as an obligation issued
in connection with a leasing arrangement. The payment of principal and interest
on private activity and industrial development bonds generally is dependent
solely on the ability of a facility's user to meet its financial obligations and
the pledge, if any, of real and personal property as security for such payment.
TAXABLE MUNICIPAL SECURITIES -- Taxable municipal securities are municipal
securities the interest on which is not exempt from federal income tax. Taxable
municipal securities include "private activity bonds" that are issued by or on
behalf of states or political subdivisions thereof to finance privately-owned or
operated facilities for business and manufacturing, housing, sports, and
pollution control and to finance activities of and facilities for charitable
institutions. Private activity bonds are also used to finance public facilities
such as airports, mass transit systems, ports, parking lots, and low income
housing. The payment of the principal and interest on private activity bonds is
not backed by a pledge of tax revenues, and is dependent solely on the ability
of the facility's user to meet its financial obligations, and may be secured by
a pledge of real and personal property so financed. Interest on these bonds may
not be exempt from federal income tax.
RECEIPTS -- Receipts are interests in separately traded interest and principal
component parts of U.S. Treasury obligations that are issued by banks and
brokerage firms and are created by depositing U.S. Treasury obligations into a
special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts are sold as
zero coupon securities which means that they are sold at a substantial discount
and redeemed at face value at their maturity date without interim cash payments
of interest or principal. This discount is amortized over the life of the
security and such amortization will constitute the income earned on the security
for both accounting and tax purposes. Because of these features, receipts may be
subject to greater price volatility than interest paying U.S. Treasury
obligations. See also "Taxes".
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The
<PAGE>
18
custodian will hold the security as collateral for the repurchase agreement. A
Fund bears a risk of loss in the event the other party defaults on its
obligations and the Fund is delayed or prevented from exercising its right to
dispose of the collateral or if the Fund realizes a loss on the sale of the
collateral. A Fund will enter into repurchase agreements only with financial
institutions deemed to present minimal risk of bankruptcy during the term of the
agreement based on established guidelines. Repurchase agreements are considered
loans under the Investment Company Act of 1940.
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 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, a 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. A 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.
STANDBY COMMITMENTS AND PUTS -- Securities subject to standby commitments or
puts permit the holder thereof to sell the securities at a fixed price prior to
maturity. Securities subject to a standby commitment or put may be sold at any
time at the current market price. However, unless the standby commitment or put
was an integral part of the security as originally issued, it may not be
marketable or assignable; therefore, the
<PAGE>
19
standby commitment or put would only have value to the Fund owning the security
to which it relates. In certain cases, a premium may be paid for a standby
commitment or put, which premium will have the effect of reducing the yield
otherwise payable on the underlying security. The Fund will limit standby
commitment or put transactions to institutions believed to present minimal
credit risk.
SUPRANATIONAL AGENCY OBLIGATIONS -- Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, Inter-American Development Bank, International Bank
for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and Nordic Investment
Bank.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits are considered to be illiquid
securities.
U.S. GOVERNMENT AGENCIES -- Obligations issued or guaranteed by agencies of the
U.S. Government, including, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage Corporation, the Federal
Land Banks and the U.S. Postal Service. Some of these securities are supported
by the full faith and credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by the right of the
issuer to borrow from the Treasury (e.g., Federal Farm Credit Bank securities),
while still others are supported only by the credit of the instrumentality
(e.g., Fannie Mae securities). Guarantees of principal by agencies or
instrumentalities of the U.S. Government may be a guarantee of payment at the
maturity of the obligation so that in the event of a default prior to maturity
there might not be a market and thus no means of realizing on the obligation
prior to maturity. Guarantees as to the timely payment of principal and interest
do not extend to the value or yield of these securities nor to the value of the
Fund's shares.
U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS") 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
<PAGE>
20
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.
A 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 a Fund generally purchases securities on
a when-issued or forward commitment basis with the intention of actually
acquiring securities for its portfolio, a 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>
A-1
APPENDIX
X. COMMERCIAL PAPER AND SHORT-TERM RATINGS
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Services, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff and Phelps ("Duff")
and IBCA Limited ("IBCA"), respectively.
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+ and 1. Issues rated A-1+ are those with an "overwhelming degree" of
credit protection. Those rated A-1 reflect a "very strong" degree of safety
regarding timely payment. Those rated A-2 reflect a safety regarding timely
payment but not as high as A-1.
Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to have superior ability and strong ability for repayment, respectively.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.
The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
<TABLE>
<S> <C> <C>
STI CLASSIC FUNDS ORGANIZATIONAL OVERVIEW
* INVESTMENT ADVISOR
Trusco Capital Management, Inc. 50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
* DISTRIBUTOR
SEI Investments Distribution Co. Oaks, PA 19456
* ADMINISTRATOR
SEI Investments Mutual Fund 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
CLASSIC INSTITUTIONAL
CASH MANAGEMENT
MONEY MARKET FUND
CLASSIC INSTITUTIONAL
U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND
INVESTMENT ADVISOR
TRUSCO CAPITAL MANAGEMENT, INC.
MAY 24, 1999
[LOGO]
<PAGE>
STI CLASSIC FUNDS
INVESTMENT ADVISOR:
TRUSCO CAPITAL MANAGEMENT, INC.
This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
Trust and should be read in conjunction with the Trust's Classic Institutional
Cash Management and Classic Institutional U.S. Government Securities Money
Market Fund prospectus dated May 24, 1999. The prospectus may be obtained
through the Distributor, SEI Investments Distribution Co., Oaks, Pennsylvania
19456.
TABLE OF CONTENTS
PAGE
THE TRUST..................................................................B-
DESCRIPTION OF PERMITTED INVESTMENTS.......................................B-
INVESTMENT LIMITATIONS.....................................................B-
INVESTMENT ADVISOR.........................................................B-
THE ADMINISTRATOR..........................................................B-
THE DISTRIBUTOR............................................................B-
TRUSTEES AND OFFICERS OF THE TRUST.........................................B-
PERFORMANCE INFORMATION....................................................B-
CALCULATION OF TOTAL RETURN................................................B-
PURCHASE AND REDEMPTION OF SHARES..........................................B-
DETERMINATION OF NET ASSET VALUE...........................................B-
TAXES......................................................................B-
FUND TRANSACTIONS..........................................................B-
TRADING PRACTICES AND BROKERAGE............................................B-
DESCRIPTION OF SHARES......................................................B-
SHAREHOLDER LIABILITY......................................................B-
LIMITATION OF TRUSTEES' LIABILITY..........................................B-
YEAR 2000..................................................................B-
5% AND 25% SHAREHOLDERS....................................................B-
EXPERTS....................................................................B-
May 24, 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 Trust's Classic Institutional Cash
Management Money Market Fund and Classic Institutional U.S. Treasury Securities
Money Market Fund (collectively, the "Funds"), each of which currently offers
one class of shares.
DESCRIPTION OF PERMITTED INVESTMENTS
FOREIGN SECURITIES
The Institutional Cash Management Money Market Fund may invest in U.S. dollar
denominated obligations or securities of foreign issuers. Possible investments
include equity securities of foreign entities, obligations of foreign branches
of U.S. banks and of foreign banks, including, without limitation, European
Certificates of Deposit, European Time Deposits, European Bankers' Acceptances,
Canadian Time Deposits and Yankee Certificates of Deposit, and investments in
Canadian Commercial Paper, Europaper and foreign securities. These instruments
may subject the Fund to investment risks that differ in some respects from those
related to investments in obligations of U.S. domestic issuers. Such risks
include future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible seizure,
nationalization, or expropriation of foreign deposits, the possible
establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks.
BANK INVESTMENT CONTRACTS ("BICs")
BICs are contracts issued by U.S. banks and savings and loans institutions.
Pursuant to such contracts, the Institutional Cash Management Money Market Fund
makes cash contributions to a deposit fund of the general account of the bank or
savings and loan institution. The bank or savings and loan institution then
credits to the Fund on a monthly basis guaranteed interest at either a fixed,
variable or floating rate. A BIC provides that this guaranteed interest will not
be less than a certain minimum rate. A BIC is a general obligation of the
issuing bank or savings and loan institution and not a separate account. The
purchase price paid for a BIC becomes part of the general assets of the issuer,
and the contract is paid at maturity from the general assets of the issuer.
1-WA:1230248.1
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<PAGE>
BICs are generally not assignable or transferable without the permission of the
issuing bank or savings and loan institution. For this reason, an active
secondary market in BICs currently does not exist. Therefore, BICs are
considered to be illiquid investments. The Fund may invest up to an aggregate
amount of 5% of its total assets in BICs.
GUARANTEED INVESTMENT CONTRACTS ("GICs")
GICs are contracts issued by U.S. insurance companies. Pursuant to such
contracts, the Institutional Cash Management Money Market Fund makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Fund on a monthly basis guaranteed
interest at either a fixed, variable or floating rate. A GIC provides that this
guaranteed interest will not be less than a certain minimum rate. A GIC is a
general obligation of the issuing insurance company and not a separate account.
The purchase price paid for a GIC becomes part of the general assets of the
issuer, and the contract is paid at maturity from the general assets of the
issuer.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance company. For this reason, an active secondary market in GICs
does not currently exist and GICs are generally considered to be illiquid
investments. However, the Fund will treat GICs with seven-day unconditional
demand features as liquid investments.
INVESTMENT COMPANY SHARES
Investment companies typically incur fees that are separate from those fees
incurred directly by the Funds. A Fund's purchase of such investment company
securities results in the layering of expenses, such that Shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.
1-WA:1230248.1
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<PAGE>
MUNICIPAL SECURITIES
The Funds may invest in municipal securities. The two principal classifications
of municipal securities are "general obligation" and "revenue" issues. General
obligation issues are issues involving the credit of an issuer possessing taxing
power and are payable from the issuer's general unrestricted revenues, although
the characteristics and method of enforcement of general obligation issues may
vary according to the law applicable to the particular issue. Revenue issues are
payable only from the revenues derived from a particular facility or class of
facilities or other specific revenue source. A Fund may also invest in "moral
obligation" issues, which are normally issued by special purpose authorities.
Moral obligation issues are not backed by the full faith and credit of the state
and are generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public facilities,
the refunding of outstanding obligations, the payment of general operating
expenses, and the extension of loans to other public institutions and
facilities. Certain private activity bonds that are issued by or on behalf of
public authorities to finance various privately-owned or operated facilities are
included within the term "Municipal Securities." Private activity bonds are
industrial development bonds are generally revenue bonds, the credit and quality
of which are directly related to the credit of the private user of the
facilities.
Municipal securities may also include general obligation notes, tax anticipation
notes, bond anticipation notes, revenue anticipation notes, project notes,
certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of fax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are sold by the Department of
Housing and Urban Development. While the issuing agency has the primary
obligation with respect to its project notes, they are also secured by the full
faith and credit of the United States through agreements with the issuing
authority which provide that, if required, the federal government will end the
issuer an amount equal to the principal of and interest on the project notes.
The quality of municipal securities, both within a particular classification and
between classifications, will vary, and the yields on municipal securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating(s)
of the issue. In this regard, it should be emphasized that the ratings of any
NRSRO are general and are not absolute standards of quality. Municipal
securities with the same maturity, interest rate and rating(s) may have
different yields, while municipal securities of the same maturity and interest
rate with different rating(s) may have the same yield.
An issuer's obligations under its municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such
1-WA:1230248.1
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<PAGE>
obligations or upon the ability of municipalities to levy taxes. The power or
ability of an issuer to meet its obligations for the payment of interest on and
principal of its municipal securities may be materially adversely affected by
litigation or other conditions.
MUNICIPAL NOTE RATINGS: Moody's highest rating for state and municipal and other
short-term notes is MIG-1 and VMIG-1. Short-term municipal securities rated
MIG-1 or VMIG-1 are of the best quality. They have strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing or both. Short-term municipal
securities rated MIG-2 and VMIG-2 are of high quality. Margins of protection are
ample although not so large as in the preceding group.
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a long-term
debt rating. The following criteria will be used in making that assessment.
- Amortization schedule (the larger the final maturity relative
to other maturities the more likely it will be treated as a
note).
- Source of payment (the more dependent the issue is on the
market for its refinancing, the more likely it will be treated
as a note).
Note rate symbols are as follows:
SP-1. Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.
SP-2. Satisfactory capacity to pay principal and interest.
SUPRANATIONAL AGENCY OBLIGATIONS
The Institutional Cash Management Money Market Fund may purchase obligations of
supranational agencies. Currently the Fund intends to invest only in obligations
issued or guaranteed by the Asian Development Bank, Inter-American Development
Bank, International Bank for Reconstruction and Development (World Bank),
African Development Bank, European Coal and Steel Community, European Economic
Community, European Investment Bank and the Nordic Investment Bank.
OTHER INVESTMENTS
The Trust is not prohibited from investing in obligations of banks which are
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Administrator and the Distributor. The purchase of shares of the Trust by
such banks or by their customers will not be a consideration in determining
which bank obligations the Trust will purchase. However, the Trust will not
purchase obligations issued by the Advisor.
REPURCHASE AGREEMENTS
1-WA:1230248.1
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<PAGE>
Each Fund may enter into repurchase agreements. Repurchase agreements are
agreements by which a person (e.g., a Fund) obtains a security and
simultaneously commits to return the security to the seller (a primary
securities dealer as recognized by the Federal Reserve Bank of New York or a
national member bank as defined in Section 3(d)(1) of the Federal Deposit
Insurance Act, as amended) at an agreed-upon price (including principal and
interest) on an agreed-upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is, in
effect, secured by the value of the underlying security.
Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a 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 a Fund, the Custodian or its agent must take possession of the underlying
collateral. However, if the seller defaults, a 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, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if a Fund is treated as an unsecured creditor and required to return
the underlying security to the seller's estate.
RESTRICTED SECURITIES
Restricted securities are securities that may not be sold to the public without
registration under the Securities Act of 1933 (the "1933 Act") absent an
exemption from registration. Permitted investments for the Funds include
restricted securities, and each Fund may invest up to 10% of its net assets in
illiquid securities, subject to each Fund's investment limitations on the
purchase of illiquid securities. Restricted securities, including securities
eligible for re-sale under 1933 Act Rule 144A, that are determined to be liquid
are not subject to this limitation. This determination is to be made by the
Fund's Advisor pursuant to guidelines adopted by the Board of Trustees. Under
these guidelines, the Advisor will consider the frequency of trades and quotes
for the security, the number of dealers in, and potential purchasers for, the
securities, dealer undertakings to make a market in the security, and the nature
of the security and of the marketplace trades. In purchasing such Restricted
Securities, the Advisor intends to purchase securities that are exempt from
registration under Rule 144A under the 1933 Act.
1-WA:1230248.1
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<PAGE>
SECURITIES LENDING
The Funds 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 a Fund exceed one-third of the value of the
Fund's total assets taken at fair market value. A 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, a 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 Funds may use the Distributor or a broker-dealer
affiliate of the Advisor as a broker in these transactions.
STANDBY COMMITMENTS AND PUTS
The Institutional Cash Management Money Market Fund may purchase securities at a
price which would result in a yield-to-maturity lower than that generally
offered by the seller at the time of purchase when it can simultaneously acquire
the right to sell the securities back to the seller, the issuer, or a third
party (the "writer") at an agreed-upon price at any time during a stated period
or on a certain date. Such a right is generally denoted as a "standby
commitment" or a "put." The purpose of engaging in transactions involving puts
is to maintain flexibility and liquidity to permit the Fund to meet redemptions
and remain as fully invested as possible in municipal securities. The Fund
reserves the right to engage in put transactions. The right to put the
securities depends on the writer's ability to pay for the securities at the time
the put is exercised. The Institutional Cash Management Money Market Fund would
limit its put transactions to institutions which the Advisor believes present
minimal credit risks, and the Advisor would use its best efforts to initially
determine and continue to monitor the financial strength of the sellers of the
options by evaluating their financial statements and such other information as
is available in the marketplace. It may, however be difficult to monitor the
financial strength of the writers because adequate current financial information
may not be available. In the event that any writer is unable to honor a put for
financial reasons, the Fund would be a general creditor (I.E., on a parity with
all other unsecured creditors) of the writer. Furthermore, particular provisions
of the contract between the Fund and the writer may excuse the writer from
repurchasing the securities; for example, a change in the published rating of
the underlying securities or any similar event that has an adverse effect on the
issuer's credit or a provision in the contract that the put will not be
exercised except in certain special cases, for example, to maintain portfolio
liquidity. The Fund could, however, at any time sell the underlying portfolio
security in the open market or wait until the portfolio security matures, at
which time it should realize the full par value of the security.
The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be
1-WA:1230248.1
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<PAGE>
marketable or otherwise assignable. Therefore, the put would have value only to
the Fund. Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could, of course, sell the portfolio
security. The maturity of the underlying security will generally be different
from that of the put. There will be no limit to the percentage of portfolio
securities that the Fund may purchase subject to a standby commitment or put,
but the amount paid directly or indirectly for all standby commitments or puts
which are not integral parts of the security as originally issued held in the
Fund will not exceed 1/2 of 1% of the value of its total assets of such Fund
calculated immediately after any such put is acquired.
STRIPS
Each 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 each 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 Funds that have a remaining maturity
of 397 days or less; therefore, the Funds currently may only purchase interest
component parts of U.S. Treasury Securities. While there is no limitation on the
percentage of a 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 Funds.
U.S. GOVERNMENT AGENCY SECURITIES
Certain investments of the Institutional Cash Management Money Market Fund may
include U.S. Government Agency Securities. Agencies of the United States
Government which issue obligations consist of, among others, the Export Import
Bank of the United States, Farmers Home Administration, Federal Farm Credit
Bank, Federal Housing Administration, Government National Mortgage Association
("GNMA"), Maritime Administration, Small Business Administration, and The
Tennessee Valley Authority. Obligations of instrumentalities of the United
States Government include securities issued by, among others, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit
Banks, Federal Land Banks, Fannie Mae, and the United States Postal Service as
well as government trust certificates. Some of these securities are supported by
the full faith and credit of the United States Treasury, others are supported by
the right of the issuer to borrow from the Treasury and still others are
supported only by the credit of the instrumentality. Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be a guarantee of
payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing the
value of the obligation prior to maturity.
VARIABLE RATE MASTER DEMAND NOTES
The Institutional Cash Management Money Market Fund may invest in variable rate
master demand notes which may or may not be backed by bank letters of credit.
These notes permit the investment of
1-WA:1230248.1
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<PAGE>
fluctuating amounts at varying market rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. Such notes provide
that the interest rate on the amount outstanding varies on a daily, weekly or
monthly basis depending upon a stated short-term interest rate index. Both the
lender and the borrower have the right to reduce the amount of outstanding
indebtedness at any time. There is no secondary market for the notes and it is
not generally contemplated that such instruments will be traded. The quality of
the note or the underlying credit must, in the opinion of the Advisor, be
equivalent to the ratings applicable to permitted investments for the Fund. The
Advisor will monitor on an ongoing basis the earning power, cash flow and
liquidity ratios of the issuers of such instruments and will similarly monitor
the ability of an issuer of a demand instrument to pay principal and interest on
demand.
INVESTMENT LIMITATIONS
The following are fundamental policies of each Fund and cannot be changed with
respect to a Fund without the consent of the holders of a majority of a Fund's
outstanding shares.
The term "a majority of the outstanding shares" of a 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.
A 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
a Fund's total assets will be repaid before making additional
investments and any interest paid on such borrowings will reduce
income.
4. Make loans, except that (a) a Fund may purchase or hold debt
instruments in accordance with its investment objective and policies;
(b) a Fund may enter into repurchase agreements, and (c) a Fund may
engage in securities lending as described in the Prospectus and in this
Statement of Additional Information.
1-WA:1230248.1
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<PAGE>
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, any 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, a 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 a Fund; or
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
No Fund may 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.
1-WA:1230248.1
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<PAGE>
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 $ [76 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 a Fund (including amounts payable to the Advisor but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by certain states, the Advisor and/or the
Administrator will bear the amount of such excess. The Advisor will not be
required to bear expenses of the Trust to an extent which would result in a
Fund's inability to qualify as a regulated investment company under provisions
of the Internal Revenue Code.
The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to 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 Funds, by a majority of the outstanding shares of the Funds, on
not less than 30 days' nor more than 60 days' written notice to the Advisor, or
by the Advisor on 90 days' written notice to the Trust.
Crestar Asset Management Company served as the Adviser to the predecessors of
the Classic Institutional Cash Management Money Market and Classic Institutional
U.S. Government Money Market Funds.
For the fiscal years ended January 31, 1999, January 31, 1998, January 31, 1997,
and January 31, 1996, the Funds paid the following advisory fees:
1-WA:1230248.1
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<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED OR REIMBURSED
FUND -------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Classic Institutional Cash $694,470 $444,000 $209,000 $694,470 $704,000 $629,000
Management Money Market Fund
(formerly Arbor Prime Obligations
Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S.
Government Securities Money
Market Fund (formerly Arbor U.S.
Government Money Fund)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BANKING LAWS
Current interpretations of federal banking laws and regulations:
- - prohibit SunTrust and the Advisor from sponsoring, organizing,
controlling, or distributing the Funds' shares; but
- - do not prohibit SunTrust or the Advisor generally from acting as an
investment advisor, transfer agent, or custodian to the Funds 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 Investment Mutual Funds Services (the "Administrator"), are
parties to an administration agreement (the "Administration Agreement") dated
May 29, 1992. The Administration Agreement provides that the Administrator shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the matters to which the Administration
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Administrator in the performance of its
duties or from reckless disregard by it of its duties and obligations
thereunder.
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<PAGE>
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 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
Funds, 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 Investments Trust, SEI
Institutional Managed Trust, SEI International Trust, SEI Liquid Asset Trust,
SEI Tax Exempt Trust, STI Classic Variable Trust, TIP Funds and Alpha Select
Funds.
For the fiscal years ended January 31, 1999, January 31, 1998 and January 31,
1997, the Funds paid the following administration fees:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
FEES WAIVED
FUND FEES PAID
--------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Classic Institutional Cash $377,964 $251,000 $209,000 $229,896 $210,000 $126,000
Management Money Market
Fund
- -------------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S.
Treasury Securities Money
Market Fund
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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.
1-WA:1230248.1
B-13
<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, 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 Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI
Classic Variable Trust, TIP Funds and Alpha Select Funds, each of which is an
open-end management investment company managed by SEI Investments Mutual
Funds Services or its affiliates and, except for Profit Funds Investment
Trust, and Santa Barbara Group of Mutual Funds, Inc., are 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.
1-WA:1230248.1
B-14
<PAGE>
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 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.
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.
1-WA:1230248.1
B-15
<PAGE>
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.
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.
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 - 2000 One Logan Square, 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 - 2000 One Logan Square,
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, and Cammack may be deemed to be an
"interested person" of the Trust as defined in the 1940 Act.
1-WA:1230248.1
B-16
<PAGE>
The Trustees and Officers of the Trust own, in the aggregate, less than 1% of
the outstanding shares of the Trust.
For the fiscal year end May 31, 1998, the Trust paid the following amounts to
Trustees and Officers of the Trust:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
ESTIMATED
PENSION OR ANNUAL TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS BENEFITS FROM FUND AND FUND
COMPENSATION ACCRUED AS 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 N/A N/A $15,000 for service on
two boards
- -----------------------------------------------------------------------------------------------------------------------------
Wilton Looney, Trustee $14,000 N/A N/A $14,000 for service on
two boards
- -----------------------------------------------------------------------------------------------------------------------------
Champney A. McNair, $17,000 N/A N/A $17,000 for service on
Trustee two boards
- -----------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $13,000 N/A N/A $13,000 for service on
two boards
- -----------------------------------------------------------------------------------------------------------------------------
T. Gordy Germany, $15,000 N/A N/A $15,000 for service on
Trustee two boards
- -----------------------------------------------------------------------------------------------------------------------------
Dr. Bernard F. Sliger, Trustee $15,000 N/A N/A $15,000 for service on
two boards
- -----------------------------------------------------------------------------------------------------------------------------
Jesse S. Hall, Trustee $14,000 N/A N/A $14,000 for service on
two boards
- -----------------------------------------------------------------------------------------------------------------------------
Jonathan T. Walton, Trustee $3,500 N/A N/A $ 3,500 for service on
two boards
- -----------------------------------------------------------------------------------------------------------------------------
William H. Cammack, N/A N/A N/A $ 0 for service on
Trustee two boards
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE INFORMATION
From time to time a Fund may advertise its performance. Performance figures are
based on historical earnings and are not intended to indicate future
performance.
PERFORMANCE COMPARISONS
Each 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
1-WA:1230248.1
B-17
<PAGE>
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 same period to obtain the base
period return and multiplying the result by (365/7). Realized and unrealized
gains and losses are not included in the calculation of the yield. The effective
compound yield of the Funds is determined by computing the net change, exclusive
of capital changes, in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
FUND 7-DAY YIELD 7-DAY EFFECTIVE YIELD
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Classic Institutional Cash Management Money Market Fund 4.92% 4.86%
- -----------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Government Securities Fund
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The yield of these Funds 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 Funds 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 Equity Funds 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
1-WA:1230248.1
B-18
<PAGE>
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.
Based on the foregoing, the average annual total returns for the Funds from
inception through January 31, 1999 and for one-year periods ended January 31,
1999 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
FUND AVERAGE ANNUAL TOTAL RETURN
------------------------------------------------------
ONE-YEAR THREE-YEAR SINCE
INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Classic Institutional Cash Management Money Market 5.46% 5.52% 5.55%
Fund
- -----------------------------------------------------------------------------------------------------------------------------
Classic Institutional U.S. Government Securities Money
Market Fund
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 Funds 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 Funds in lieu of cash. Shareholders may incur brokerage charges on the
sale of any such securities so received in payment of redemptions. A
1-WA:1230248.1
B-19
<PAGE>
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 a Fund's securities is not reasonably practicable, or
for such other periods as the Securities and Exchange Commission has by order
permitted. The Trust also reserves the right to suspend sales of shares of a
Fund for any period during which the NYSE, an Advisor, the Administrator and/or
the Custodian are not open for business. Investors will receive written
notification at least thirty days prior to any change in a 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 Funds 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 a Fund would receive if it sold the
instrument. During periods of declining interest rates, the daily yield of a
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 a Fund resulted in a lower aggregate portfolio value on
a particular day, a prospective investor in a Fund 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 a Fund would experience a lower
yield. The converse would apply in a period of rising interest rates.
A Fund's use of amortized cost and the maintenance of a 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 Funds. Such procedures include the
determination of the extent of deviation, if any, of the Funds current net asset
value per share calculated using available market quotations from the Funds
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
1-WA:1230248.1
B-20
<PAGE>
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 Funds incur a significant loss or liability, the
Trustees have the authority to reduce pro rata the number of shares of the Funds
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 each other 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 Funds' prospectus. No attempt is made to present a detailed explanation of
the Federal tax treatment of the Funds or their Shareholders, and the discussion
here and in the Funds' 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 Internal Revenue Code of 1986, as amended ("Code"), each Fund must
distribute annually to its Shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of a
Fund's gross income each taxable year must be derived from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities, or certain other income; (ii) at the close
of each quarter of a 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 a 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 a 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
1-WA:1230248.1
B-21
<PAGE>
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 addition, each Fund will distribute by the end of any calendar year 98% of
its ordinary income for that year and 98% of its capital gain net income for the
one-year period ending on October 31 of that calendar year, plus certain other
amounts. Each 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 a Fund's total assets consists of obligations the interest on which is
excludable from gross income, a Fund may pay "exempt-interest dividends," as
defined in Section 852(b)(5) of the Code, to its Shareholders.
Any gain or loss recognized on a sale or redemption of Shares of a Fund by a
Shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than
eighteen months, mid-term if the shares have been held for over one year but not
for over eighteen months, and short-term if for a year or less. If shares held
for six months or less are sold or redeemed for a loss, two special rules apply:
First, if shares on which a net capital gain distribution has been received are
subsequently sold or redeemed, and such shares have been held for six months or
less, any loss recognized will be treated as long-term capital loss to the
extent of the long-term capital gain distributions. Second, any loss recognized
by a Shareholder upon the sale or redemption of shares of a tax-exempt fund held
for six months or less will be disallowed to the extent of any exempt-interest
dividends received by the Shareholder with respect to such shares.
The Funds 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 a 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,
1-WA:1230248.1
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<PAGE>
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.
TRADING PRACTICES AND BROKERAGE
The Trust selects brokers or dealers to execute transactions for the purchase or
sale of portfolio securities on the basis of its judgment of their professional
capability to provide the service. The primary consideration is to have brokers
or dealers provide transactions at best price and execution for the Trust. Best
price and execution includes many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Trust's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is a
spread (the difference between the buy and sell price) which is the equivalent
of a commission.
The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by an Advisor, brokerage business to brokers
or dealers who provide brokerage and research services. These research services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends, assisting in
determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by an Advisor in connection with its investment
decision-making process with respect to one or more funds and accounts managed
by it, and may not be used exclusively with respect to the fund or account
generating the brokerage.
As provided in the Securities Exchange Act of 1934 (the "1934 Act") higher
commissions may be paid to broker-dealers who provide brokerage and research
services than to broker-dealers who do not provide such services if such higher
commissions are deemed reasonable in relation to the value of the brokerage and
research services provided. Although transactions are directed to broker-dealers
who provide such brokerage and research services, the Trust believes that the
commissions paid to such broker-dealers are not, in general, higher than
commissions that would be paid to broker-dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In addition, portfolio transactions which
generate commissions or their equivalent are directed to broker-dealers who
provide daily portfolio 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.
1-WA:1230248.1
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<PAGE>
An Advisor may place a combined order for two or more accounts or funds engaged
in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. It is believed that the ability
of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or Fund may obtain, it is the opinion
of each Advisor and the Trust's Board of Trustees that the advantages of
combined orders outweigh the possible disadvantages of separate transactions.
Consistent with the 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 an Advisor, both of which are
registered broker-dealers, for a commission in conformity with the 1940 Act, the
1934 Act and rules promulgated by the SEC. Under these provisions, the
Distributor or an affiliate of an Advisor is permitted to receive and retain
compensation for effecting portfolio transactions for the Trust on an exchange
if a written contract is in effect between the Distributor and the Trust
expressly permitting the Distributor or an affiliate of an Advisor to receive
and retain such compensation. These rules further require that commissions paid
to the Distributor by the Trust for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other renumeration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." In addition, the Trust may direct commission business to one or more
designated broker-dealers in connection with such broker/dealer's provision of
services to the Trust or payment of certain Trust expenses (e.g., custody,
pricing and professional fees). The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor, and will review these
procedures periodically.
For the fiscal year ended January 31, 1999, the Funds paid the following
brokerage commissions with respect to portfolio transactions:
1-WA:1230248.1
B-24
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Total $ Total $ Total $ Total $ % of Total % of Total
Amount of Amount of Amount of Amount of Brokerage Brokered
Brokered Brokered Brokerage Brokerage Commissions Transactions
Transactions Transactions Commissions Commissions Paid to Effected
for FYE Through Paid in FYE Paid to Affiliated Through
1/31/99 Affiliates for 1/31/99 Affiliates in Brokers in Affiliated
FYE 1/31/99 FYE 1/31/99 FYE 1/31/99 Brokers in
FYE
1/31/99
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Classic Institutional $6,482,386,575 $6,482,386,575 $77,315 $77,315 100% 100%
Cash Management
Money Market
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Classic Institutional
U.S. Government
Securities Money
Market Fund
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------
Portfolio Total
Brokerage
Commissions
Paid to SFS in
Connection
with
Repurchase
Agreement
Transactions
for FYE
1/31/99
- -----------------------------------------
<S> <C>
Classic Institutional $77,315
Cash Management
Money Market
Fund
- -----------------------------------------
Classic Institutional
U.S. Government
Securities Money
Market Fund
- -----------------------------------------
</TABLE>
For the fiscal year ended January 31, 1998, the Funds paid the following
brokerage commissions with respect to portoflio transactions:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Portfolio Total $ Total $ % of Total
Amount of Amount of Brokerage
Brokerage Brokerage Commissions
Commissions Commissions Paid to
Paid in FYE Paid to Affiliated
1/31/98 Affiliates in Brokers in
FYE 1/31/98 FYE 1/31/98
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Classic Institutional Cash
Management Money Market N/A N/A N/A
Fund
- ------------------------------------------------------------------------------------------------------
Classic Institutional U.S.
Government Securities
Money Market Fund
- ------------------------------------------------------------------------------------------------------
</TABLE>
For the fiscal year ended January 31, 1997, the Funds paid the following
brokerage fees:
B-25
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Portfolio Total $ Total $
Amount of Amount of
Brokerage Brokerage
Commissions Commissions
Paid in FYE Paid to
1/31/97 Affiliates in
FYE 1/31/97
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Classic Institutional Cash Management
Money Market Fund N/A N/A
- -----------------------------------------------------------------------------------------------------
Classic Institutional U.S. Government
Securities Money Market Fund
- -----------------------------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares and classes of shares of the Funds each of which represents an equal
proportionate interest in that Fund with each other share. Shares are entitled
upon liquidation to a PRO RATA share in the net assets of the Funds.
Shareholders have no preemptive rights. The Declaration of Trust provides that
the Trustees of the Trust may create additional series of shares or classes of
series. All consideration received by the Trust for shares of any additional
series and all assets in which such consideration is invested would belong to
that series and would be subject to the liabilities related thereto. Share
certificates representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the Shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of Shareholder liability for obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any Shareholder held personally liable for the
obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisors, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in
1-WA:1230248.1
B-26
<PAGE>
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.
5% AND 25% SHAREHOLDERS
As of May 5, 1999, the following persons were the only persons who were record
owners (or to the knowledge of the Trust, beneficial owners) of 5% and 25% or
more of the shares of the Funds. Persons who owned of record or beneficially
more than 25% of a Fund's outstanding shares may be deemed to control the Fund
within the meaning of the Act. The Trust believes that most of the shares of the
Trust Class of the Funds were held for the record owner's fiduciary, agency or
custodial customers.
<TABLE>
<S> <C> <C> <C> <C> <C>
31450005-0 SUNTRUST CAPITAL MARKETS ACE ACCT ###-##-#### 186/0188 094 961,857,828.9400
ATTN: ANITA WOODS CTR 3910
303 PEACHTREE ST 24TH FL 94.61%
ATLANTA, GA 30308-3201
400040-4 SUNTUST BANKS ###-##-#### 34900/000 054 54,767,394.8200
ATTN: SUSAN GRIDER
MAIL CENTER 3133 5.39%
PO BOX 105504
ATLANTA, GA 30348-5504
</TABLE>
EXPERTS
The financial statements as of January 31, 1999 have been audited by
PricewaterhouseCoopers LLP, Independent Public Accountants, as indicated in
their report dated March 15, 1999 with respect thereto, and are included herein
in reliance upon the authority of said firm as experts in giving said report.
1-WA:1230248.1
B-27
<PAGE>
STATEMENT OF NET ASSETS THE ARBOR FUND
January 31, 1999
<TABLE>
<CAPTION>
Face
Amount Value
(000) U.S. GOVERNMENT SECURITIES MONEY FUND (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 87.6%
FFCB
$ 25,000 5.500%, 04/01/99 ..................................... $ 24,994
25,000 4.750%, 04/05/99 ..................................... 24,792
FHLB
25,000 4.940%, 03/18/99 ..................................... 24,846
35,000 4.700%, 04/30/99 ..................................... 34,598
35,000 4.750%, 06/04/99 ..................................... 34,432
20,000 5.630%, 06/15/99 ..................................... 20,002
10,000 4.406%, 07/02/99 ..................................... 9,815
FHLB (A)
30,000 4.850%, 02/01/99 ..................................... 30,000
35,000 4.706%, 02/03/99 ..................................... 34,997
20,000 4.847%, 02/03/99 ..................................... 19,999
FNMA
35,000 5.000%, 02/05/99 ..................................... 34,981
20,000 5.165%, 03/15/99 ..................................... 19,879
25,000 4.900%, 05/03/99 ..................................... 24,700
35,000 4.720%, 05/10/99 ..................................... 34,550
10,000 4.790%, 06/11/99 ..................................... 9,827
10,000 4.780%, 07/02/99 ..................................... 9,799
20,000 5.540%, 07/16/99 ..................................... 19,994
FNMA MTN
20,000 5.410%, 02/23/99 ..................................... 19,998
20,000 5.570%, 05/07/99 ..................................... 19,994
FNMA MTN (A)
25,500 4.782%, 02/02/99 ..................................... 25,472
FHLMC
35,000 5.090%, 02/12/99 ..................................... 34,946
20,000 5.505%, 03/12/99 19,998
FHLMC (A)
50,000 4.736%, 02/02/99 ..................................... 50,000
SLMA (A)
20,000 4.632%, 02/02/99 ..................................... 19,997
- --------------------------------------------------------------------------------
Total U.S. Government Agency Obligations (Cost $602,610) ........ 602,610
- --------------------------------------------------------------------------------
CASH EQUIVALENT -- 3.6%
25,000 Financial Square Government Portfolio ....................... 25,000
- --------------------------------------------------------------------------------
Total Cash Equivalent (Cost $25,000) .............. 25,000
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 8.6%
FirstBoston Securities, 4.83%, dated 01/29/99,
matures 02/01/99, repurchase price
$25,010,063 (collateralized by various
U.S. Government Agency obligations:
25,000 total market value $25,754,893) ........................ 25,000
Greenwich Securities, 4.74%, dated 01/29/99,
matures 02/01/99, repurchase price
$22,778,436 (collateralized by various
U.S. Government Agency obligations: .................... 22,769
Merrill Lynch Securities, 4.74%, dated 01/29/99,
matures 02/01/99, repurchase price
$7,970,000 (collateralized by various
U.S. Government Agency obligations:
7,967 total market value $8,126,915) ......................... 7,967
</TABLE>
2
<PAGE>
STATEMENT OF NET ASSETS THE ARBOR FUND
January 31, 1999
<TABLE>
<CAPTION>
Face
Amount Value
(000) U.S. GOVERNMENT SECURITIES MONEY FUND (concluded) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS (continued)
PaineWebber, 4.74%, dated 01/29/99,
matures 02/01/99, repurchase
price $3,536,707 (collateralized
by U.S. Government Agency obligation:
$ 3,535 total market value $3,610,186) ....................... $ 3,535
- --------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $59,271) ...... 59,271
- --------------------------------------------------------------------------------
Total Investments--99.8% (Cost $686,881) .................. 686,881
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.2%
Other Assets and Liabilities, Net ......................... 1,150
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares (unlimited authorization --
no par value) based on 688,071,153
outstanding shares of beneficial interest ............... 688,071
Distribution in excess of net investment income ........... (15)
Accumulated net realized loss on investments .............. (25)
- --------------------------------------------------------------------------------
Total Net Assets--100.0% .........................$688,031
- --------------------------------------------------------------------------------
Net Asset Value, Offering and
Redemption Price Per Share ................... $1.00
- --------------------------------------------------------------------------------
</TABLE>
(A) Adjustable Rate Security -- The rate reported on the Statement of Net Assets
is the rate in effect on January 31, 1999. The date shown is the next
scheduled reset date.
FFCB -- Federal Farm Credit Bank
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
MTN -- Medium Term Note
SLMA -- Student Loan Marketing Association
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATEMENT OF NET ASSETS THE ARBOR FUND
January 31, 1999
<TABLE>
<CAPTION>
Face
Amount Value
(000) PRIME OBLIGATIONS FUND (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER -- 40.9%
ELECTRICAL UTILITIES -- 2.0%
Aes Shady Point
$ 18,000 4.790%, 06/01/99 ..................................... $ 17,713
- --------------------------------------------------------------------------------
Total Electrical Utilities ....................... 17,713
- --------------------------------------------------------------------------------
ENTERTAINMENT -- 4.4%
Walt Disney
40,000 4.460%, 07/13/99 ..................................... 39,197
- --------------------------------------------------------------------------------
Total Entertainment .............................. 39,197
- --------------------------------------------------------------------------------
FINANCIAL SERVICES -- 34.5%
Associates
25,000 4.800%, 06/14/99 ..................................... 24,557
CS First Boston
10,000 5.800%, 05/06/99 ..................................... 10,000
10,000 4.875%, 05/07/99 ..................................... 9,871
Den Norske
30,000 5.380%, 05/04/99 ..................................... 29,588
15,000 4.860%, 08/10/99 ..................................... 14,615
Ford Motor Credit
20,000 4.730%, 08/31/99 ..................................... 19,446
General Electric Capital
10,000 5.410%, 02/22/99 ..................................... 9,968
30,000 4.730%, 08/19/99 ..................................... 29,216
General Motors Acceptance
45,000 4.670%, 10/20/99 ..................................... 43,476
Goldman Sachs
10,000 5.480%, 02/09/99 ..................................... 9,988
30,000 5.000%, 04/20/99 ..................................... 29,675
Merrill Lynch
10,000 5.470%, 02/26/99 ..................................... 9,962
30,000 4.820%, 06/17/99 ..................................... 29,454
Morgan Stanley Dean Witter
35,000 5.170%, 03/26/99 ..................................... 34,734
- --------------------------------------------------------------------------------
Total Financial Services ......................... 304,550
- --------------------------------------------------------------------------------
Total Commercial Paper (Cost $361,460) ........... 361,460
- --------------------------------------------------------------------------------
CORPORATE BONDS -- 16.4%
BANKING -- 5.7%
First Union Bank (A)
20,000 5.427%, 02/17/99 ..................................... 20,000
PNC Bank (A)
10,000 4.790%, 02/01/99 ..................................... 9,997
20,000 4.800%, 02/01/99 ..................................... 19,997
- --------------------------------------------------------------------------------
Total Banking .................................... 49,994
- --------------------------------------------------------------------------------
FINANCIAL SERVICES -- 9.6%
Associates MTN
5,000 6.750%, 06/28/99 ..................................... 5,017
Bear Stearns MTN
15,000 5.100%, 02/18/99 ..................................... 15,000
10,000 5.700%, 03/02/99 ..................................... 10,000
15,000 5.715%, 07/30/99 ..................................... 15,000
</TABLE>
4
<PAGE>
STATEMENT OF NET ASSETS (continued) THE ARBOR FUND
January 31, 1999
<TABLE>
<CAPTION>
Face
Amount Value
(000) PRIME OBLIGATIONS FUND (continued) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Beta Finance (A)
$ 25,000 4.850%, 02/01/99 ..................................... $ 25,000
CS First Boston (A)
15,000 4.860%, 02/01/99 ..................................... 15,000
- --------------------------------------------------------------------------------
Total Financial Services ......................... 85,017
- --------------------------------------------------------------------------------
INDUSTRIAL -- 1.1%
PHH MTN (A)
10,000 4.860%, 02/01/99 ..................................... 10,000
- --------------------------------------------------------------------------------
Total Industrial ................................. 10,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (Cost $145,011) ............ 145,011
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 9.6%
FHLB (A)
45,000 4.840%, 02/01/99 ..................................... 45,000
FHLMC
10,000 4.935%, 06/04/99 ..................................... 9,838
FNMA
30,000 5.165%, 03/15/99 ..................................... 29,819
- --------------------------------------------------------------------------------
Total U.S. Government Agency Obligations (Cost $84,657) ........... 84,657
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT/BANK NOTES -- 11.4%
Bankers Trust (A)
10,000 4.850%, 02/01/99 ..................................... 9,999
Barclay's Bank
15,000 5.645%, 03/02/99 ..................................... 14,999
First Union
20,000 5.660%, 04/15/99 ..................................... 20,000
NationsBank
30,000 4.880%, 10/18/99 ..................................... 30,000
Societe Generale
5,000 5.670%, 03/11/99 ..................................... 5,000
Swiss Bank
21,000 5.750%, 05/07/99 ..................................... 20,999
- --------------------------------------------------------------------------------
Total Certificates of Deposit/Bank Notes (Cost $100,997) ........ 100,997
- --------------------------------------------------------------------------------
INSURANCE FUNDING AGREEMENTS -- 10.2%
General American Life Insurance GIC (A) (B)
45,000 5.780% ............................................... 45,000
Integrity Life Insurance GIC (A) (B)
45,000 5.780% ............................................... 45,000
- --------------------------------------------------------------------------------
Total Insurance Funding Agreements (Cost $90,000) ............... 90,000
- --------------------------------------------------------------------------------
TAXABLE MUNICIPAL BOND -- 5.1%
Tampa Bay Devil Rays (A)
45,000 4.950%, 02/01/99 ..................................... 45,000
- --------------------------------------------------------------------------------
Total Taxable Municipal Bond (Cost $45,000) ..................... 45,000
- --------------------------------------------------------------------------------
CASH EQUIVALENT -- 4.5%
40,000 Financial Square Money Market Portfolio ................... 40,000
- --------------------------------------------------------------------------------
Total Cash Equivalent (Cost $40,000) ............................ 40,000
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 6.7%
Greenwich Securities, 4.74%, dated 01/29/99,
matures 02/01/99, repurchase price
$15,595,837 (collateralized by various
U.S.Government Agency obligations:
15,590 total market value $15,902,250) ...................... 15,590
</TABLE>
5
<PAGE>
STATEMENT OF NET ASSETS (concluded) THE ARBOR FUND
January 31, 1999
<TABLE>
<CAPTION>
Face
Amount Value
(000) PRIME OBLIGATIONS FUND (concluded) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch Securities, 4.74%, dated 01/29/99,
matures 02/01/99, repurchase price $19,498,071
(collateralized by various U.S.
Government Agency obligations:
$ 19,490 total market value $19,881,374) ......................$ 19,490
Paine Webber, 4.74%, dated 01/29/99, matures
02/01/99, repurchase price $24,718,282
(collateralized by various U.S. Government
Agency obligations: total market
24,708 value $25,206,710) ................................... 24,708
- --------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $59,788) ....... 59,788
- --------------------------------------------------------------------------------
Total Investments-- 104.8% (Cost $926,913) ................ 926,913
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- (4.8%)
Other Assets and Liabilities, Net ......................... (42,423)
- --------------------------------------------------------------------------------
NET ASSETS:
Portfolio Shares (unlimited authorization --
no par value) based on 884,505,593 outstanding
shares of beneficial interest ........................... 884,506
Distribution in excess of net investment income ........... (13)
Accumulated net realized loss on investments .............. (3)
- --------------------------------------------------------------------------------
Total Net Assets-- 100.0% ...............................$884,490
- --------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per share $1.00
- --------------------------------------------------------------------------------
</TABLE>
(A) Adjustable Rate Security -- The rate reported on the Statement of Net Assets
is the rate in effect on January 31, 1999. The date shown is the next
scheduled reset date.
(B) The contract has no stated maturity date, but may be terminated
unconditionally by the fund at anytime upon at least 7 days notice
to the issuer.
GIC -- Guaranteed Investment Contract
MTN -- Medium Term Note
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS THE ARBOR FUND
For the Year Ended January 31, 1999
(IN THOUSANDS)
------------------------------
U.S. GOVERNMENT PRIME
SECURITIES OBLIGATIONS
MONEY FUND FUND
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Interest Income $35,773 $44,755
- --------------------------------------------------------------------------------
Expenses:
Management Fees 529 646
Waiver of Management Fees (220) (268)
Investment Advisory Fees 1,323 1,616
Waiver of Advisory Fees (629) (689)
Custodian Fees 265 290
Transfer Agent Fees 198 240
Professional Fees 27 22
Registration Fees 1 1
Insurance Expense 5 3
Directors Fees 1 1
Printing Fees 32 27
Pricing Fees 1 1
Amortization of Deferred Organizational Costs 4 3
Other 1 1
- --------------------------------------------------------------------------------
Total Expenses 1,538 1,894
- --------------------------------------------------------------------------------
Net Investment Income 34,235 42,861
- --------------------------------------------------------------------------------
Increase in Net Assets Resulting from Operations $34,235 $42,861
- --------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS THE ARBOR FUND
(IN THOUSANDS)
---------------------------------------------------
U.S. GOVERNMENT PRIME
SECURITIES OBLIGATIONS
MONEY FUND FUND
--------------------------------------------------------
02/01/98 02/01/97 02/01/98 02/01/97
TO 01/31/99 TO 01/31/98 TO 01/31/99 TO 01/31/98
- -------------------------------------------------------------------------------------------------------------------
Investment Activities:
<S> <C> <C> <C> <C>
Net Investment Income $ 34,235 $ 37,262 $ 42,861 $ 31,705
Net Realized Gain (Loss) on Investments -- 3 -- (3)
- -------------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting from Operations 34,235 37,265 42,861 31,702
- -------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income (34,250) (37,262) (42,874) (31,704)
Capital Gains -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (34,250) (37,262) (42,874) (31,704)
- -------------------------------------------------------------------------------------------------------------------
Capital Share Transactions (all at $1.00 per share):
Proceeds from Shares Issued 6,897,369 7,090,197 7,764,540 6,369,124
Reinvestment of Distributions 13,467 9,939 10,074 5,066
Cost of Shares Redeemed (7,012,200) (6,897,460) (7,630,948) (6,110,786)
- -------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
from Capital Share Transactions (101,364) 202,676 143,666 263,404
- -------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (101,379) 202,679 143,653 263,402
- -------------------------------------------------------------------------------------------------------------------
Net Assets: Beginning of Period 789,410 586,731 740,837 477,435
- -------------------------------------------------------------------------------------------------------------------
Net Assets: End of Period $ 688,031 $ 789,410 $ 884,490 $ 740,837
- -------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS THE ARBOR FUND
For a Share Outstanding Throughout the Period or Year
RATIO RATIO OF
RATIO OF EXPENSES NET INCOME
NET ASSET DISTRIBUTIONS NET NET RATIO OF NET TO AVERAGE TO AVERAGE
VALUE NET FROM ASSET VALUE ASSETS OF EXPENSES INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT NET INVESTMENT END TOTAL END OF PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INCOME OF PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------
U.S. GOVERNMENT SECURITIES MONEY FUND
- -------------------------------------
For the Year Ended January 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 0.05 (0.05) $1.00 5.30% $688,031 0.23% 5.18% 0.36% 5.05%
1998 $1.00 0.05 (0.05) $1.00 5.52% $789,410 0.20% 5.39% 0.37% 5.22%
1997 $1.00 0.05 (0.05) $1.00 5.29% $586,731 0.20% 5.17% 0.37% 5.00%
1996 $1.00 0.06 (0.06) $1.00 5.88% $514,870 0.20% 5.72% 0.37% 5.55%
1995(1) $1.00 0.03 (0.03) $1.00 4.98%* $579,422 0.20%* 4.98%* 0.38%* 4.80%*
- ----------------------
PRIME OBLIGATIONS FUND
- ----------------------
For the Year Ended January 31,:
1999 $1.00 0.05 (0.05) $1.00 5.46% $884,490 0.23% 5.31% 0.35% 5.19%
1998 $1.00 0.06 (0.06) $1.00 5.66% $740,837 0.20% 5.52% 0.36% 5.36%
1997 $1.00 0.05 (0.05) $1.00 5.45% $477,435 0.20% 5.33% 0.38% 5.15%
1996(2) $1.00 0.02 (0.02) $1.00 5.82%* $382,632 0.20%* 5.61%* 0.40%* 5.41%*
(1) Commenced operations on August 1, 1994
(2) Commenced operations on October 25, 1995
* Annualized
The accompanying notes are an integral part of the financial statements.
</TABLE>
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS THE ARBOR FUND
January 31, 1999
1. Organization:
THE U. S. GOVERNMENT SECURITIES MONEY AND PRIME OBLIGATIONS FUNDS (the "Funds")
are separate investment portfolios of The Arbor Fund (the "Trust"), an open-end
management investment company. The Trust was organized as a Massachusetts
business trust under a Declaration of Trust dated July 24, 1992. The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management company. The financial statements included herein relate only to the
U.S Government Securities Money and Prime Obligations Funds. The Funds'
prospectus provides a description of the Funds' investment objectives, policies
and strategies.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies followed by
the Funds. The policies are in conformity with generally accepted accounting
principles.
SECURITY VALUATION--Investment securities
held by the Funds are stated at amortized cost, which approximates market
value. Under this method, purchase discounts and premiums are accreted and
amortized ratably to maturity and are included in interest income.
FEDERAL INCOME TAXES--It is the Funds' intention to continue to qualify as
regulated investment companies for Federal income tax purposes by complying
with the appropriate provisions of the Internal Revenue Code of 1986, as
amended. Accordingly, no provision for Federal income taxes is required in
the financial statements.
SECURITY TRANSACTIONS AND RELATED INCOME--Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Interest income is recognized using the accrual method of accounting. Costs
used in determining realized gains and losses on sales of investment
securities are those of the specific securities sold adjusted for the
accretion and amortization of purchase discounts and premiums during the
respective holding periods.
REPURCHASE AGREEMENTS--The Funds invest in tri-party repurchase agreements.
Securities held as collateral for tri-party repurchase agreements are
maintained in a segregated account by the broker's custodian bank until
maturity of the repurchase agreement. Provisions of the repurchase
agreements require that the market value of the collateral, including
accrued interest thereon, is sufficient in the event of default of the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters an insolvency proceeding,
realization and/or retention of the collateral by the Fund may be delayed
or limited.
NET ASSET VALUE PER SHARE--The net asset value per share of the Funds is
calculated on each business day. In general, it is computed by dividing the
assets of each Fund, less its liabilities, by the number of outstanding
shares of each Fund.
DISTRIBUTIONS TO SHAREHOLDERS--Distributions from net investment income are
declared and recorded daily and paid monthly to shareholders. Any net
realized capital gains on sales of securities are distributed to
shareholders at least annually.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS--The Financial
Statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements. Actual results may
differ from these estimates.
3. Administration, Transfer Agent and Distribution Agreements:
SEI Investments Mutual Fund Services
(the "Administrator"), a Delaware business trust, serves as administrator to the
Funds. SEI Investments Management Corporation, a wholly-owned subsidiary of SEI
Investments Company, is the owner of all beneficial interest in the
Administrator. The Trust and the Administrator have entered into an
administration agreement dated August 1, 1994. Under terms of the Administration
Agreement, the Administrator is entitled to a fee which is calculated daily and
paid monthly at an annual rate of .08% of the average daily net assets of each
Fund. The Administrator and Crestar Asset Management Company (the "Advisor")
have agreed to waive a portion of their respective fees to the extent necessary
so that the total operating expenses of the Funds did not exceed an annual rate
of .20% of average daily net assets through June 1, 1998 and .25% of average
daily net assets thereafter. During the period from February 1, 1998 to January
31, 1999, the Administrator received net administration fees totaling
approximately .05% and .05% of the average daily net assets for U.S. Government
Securities Money and Prime Obligations Funds, respectively. Fee waivers and
expense reimbursements are voluntary and may be terminated at any time.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) THE ARBOR FUND
January 31, 1999
Crestar Bank (the "Transfer Agent") serves as the transfer agent and dividend
disbursing agent for each Fund. The Transfer Agent also acts as the shareholder
servicing agent and custodian of the Funds.
The Trust and SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company and an affiliate of the
Administrator, have entered into a distribution agreement (the "Distribution
Agreement") dated August 1, 1994. The Distributor receives no fees for its
distribution services under the Distribution Agreement. For the year ended
January 31, 1999, the Funds paid commissions of $178,468 to affiliated
broker-dealers.
4. Investment Advisory Agreement:
The Trust has entered into an investment advisory agreement with the Advisor
dated August 1, 1994 under which the Advisor is entitled to a fee which is
calculated daily and paid monthly, at an annual rate of .20% of the average
daily net assets of each Fund. During the period from February 1, 1998 to
January 31, 1999, the Advisor received net fees totaling approximately .10% and
.11% of the average daily net assets for U.S. Government Securities Money and
Prime Obligations Funds, respectively. Fee waivers and expense reimbursements
are voluntary and may be terminated at any time. The Advisor is a wholly-owned
subsidiary of Crestar Bank, which is a wholly-owned subsidiary of Crestar
Financial Corporation.
The acquisition of Crestar by SunTrust was completed on December 31, 1998. On
January 28, 1999, the Arbor Fund filed an exemptive application with the
Securities and Exchange Commission to permit the combination (the "Proposed
Combination") of each of the Funds with two of the STI Classic Funds (mutual
funds that are served by investment advisers that are subsidiaries of SunTrust).
On February 22, 1999, the Board of Trustees of the Funds unanimously approved
the Proposed Combinations and recommended that the shareholders of the Funds
approve the Proposed Combinations. The Proposed Combinations are intended to be
a tax free reorganization. The Board of Trustees of the Funds also anticipates
holding a special meeting of the shareholders in May of 1999 so that the
shareholders of the Funds can vote on the Proposed Combinations. Shareholders of
the Funds will receive additional written materials about the Proposed
Combinations through the mail. The Proposed Combinations are still subject to
certain regulatory approvals and the approval of the shareholders of the Funds.
5. Organizational Costs and Transactions with Affiliates:
Organizational costs have been capitalized by the Trust and are being amortized
over sixty months beginning with the commencement of operations. In the event
any of the initial shares of the Trust are redeemed by any holder thereof during
the period that the Trust is amortizing its organizational costs, the redemption
proceeds payable to the holder thereof by the Trust will be reduced by the
unamortized organizational costs in the same ratio as the number of initial
shares being redeemed bears to the number of initial shares outstanding at the
time of redemption. These costs include legal fees of $24,600 for organizational
work performed by a law firm of which two officers and a trustee of the Trust
are partners.
Certain officers and a trustee of the Trust are also officers of the
Administrator and/or Distributor. Such officers and trustee are paid no fees by
the Trust for serving in their respective roles.
6. Concentration of Credit Risk:
The Funds invest primarily in money market instruments maturing in 397 days or
less whose ratings are within the highest ratings category assigned by a
nationally recognized statistical rating agency or, if not rated, are believed
to be of comparable quality. The ability of the issuers of the securities held
by the Fund to meet their obligations may be affected by economic and political
developments in a specific industry, state or region.
7. Capital Loss Carryovers:
As of January 31, 1999, the U.S. Government Securities Money Fund had a capital
loss carryover, to the extent provided in the regulations, for Federal Income
tax purposes as follows:
$11,641 expiring in 2004
$13,848 expiring in 2005
As of January 31, 1999, the Prime Obligations Fund had a capital loss carryover,
to the extent provided in the regulations, for Federal Income tax purposes as
follows:
$3,520 expiring in 2007
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
of The Arbor Fund
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
U.S. Government Securities Money Fund and Prime Obligations Fund (separately
managed portfolios of The Arbor Fund, hereafter referred to as the "Trust") at
January 31, 1999, the results of each of their operations for the year then
ended, the changes in each of their net assets for the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at January
31, 1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, PA
March 15, 1999
12
<PAGE>
NOTICE TO SHAREHOLDERS THE ARBOR FUND
January 31, 1999
For shareholders that do not have a January 31, 1999 tax year end, this notice
is for informational purposes only. For shareholders with a January 31, 1999 tax
year end, please consult your tax advisor as to the pertinence of this notice.
For the fiscal year ended January 31, 1999, each portfolio is designating the
following items with regard to distributions paid during the year.
(A) (B) (C)
LONG TERM ORDINARY INCOME TOTAL
CAPITAL GAINS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
- --------------------------------------------------------------------------------
U.S. Government Securities Money Fund .. 0% 100% 100%
Prime Obligations Fund ................. 0% 100% 100%
- --------------------------------------------------------------------------------
(D) (E) (F)
QUALIFYING TAX EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
- --------------------------------------------------------------------------------
U.S. Government Securities Money Fund .. 0% 0% 0%
Prime Obligations Fund ................. 0% 0% 0%
- --------------------------------------------------------------------------------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on a percentage of each
portfolio's total distributions.
** Items (D), (E) and (F) are based on a percentage of
ordinary income distributions of each portfolio.
None of the Arbor Funds satisfy California's, Connecticut's, or New York's
statutory requirements to pass through income from Federal obligations.
Accordingly, the pro rata portion of income from Federal obligations will not be
exempt from these states' respective income tax.
13
<PAGE>
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the Funds. The report is not
authorized for distribution to prospective investors in the Funds unless
preceded or accompanied by an effective prospectus. Shares in the Funds are
not deposits or obligations of, or guaranteed or endorsed by Crestar Bank,
the parent corporation of the Funds' investment adviser. Such shares are
also not federally insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other agency.
<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
C-1
<PAGE>
Accession 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)(1) Consent of Arthur Andersen LLP, independent public accountants, is
filed herewith.
(J)(2) Consent of PricewaterhouseCoopers LLP, independent public accountants,
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) Financial Data Schedule is filed herewith as Exhibit 27.1
(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.
(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
C-2
<PAGE>
governed by the final adjudication of such issues.
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:
<TABLE>
<CAPTION>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
<S> <C> <C>
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 -- --
C-3
<PAGE>
<CAPTION>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
<S> <C> <C>
Senior Vice President
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>
<CAPTION>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
<S> <C> <C>
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 President
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 President
Executive Vice President
C-5
<PAGE>
<CAPTION>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
<S> <C> <C>
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, Chairman &
Director CEO
L. Phillip Humann SunTrust Banks, Inc. President, Chairman & CEO
Director Services Corporation
William B. Johnson The Ritz Carlton Hotel Chairman of the Board
Director
J. Hicks Lanier Oxford Industries, Inc. Chairman of the Board
Director Director & President
Pinehill Development Co. 30% owner
Joseph L. Lanier, Jr. Dan River, Inc. Chairman of the Board
Director Chairman
Larry L. Prince Genuine Parts Company Chairman of the Board
Director
R. Randall Rollins Rollins, Inc. Chairman of the Board
Director Lor, Inc. Director
Maran, Inc. Director
Gutterworld, Inc. Director
Dabora, Inc. Director & Secretary
Simpson, Nance & Graham Director
Auto Parts Wholesale, Inc. Director
C-6
<PAGE>
<CAPTION>
Name of Connection with
Name Other Company Other Company
---- ------------- -------------
<S> <C> <C>
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 of the Board & CEO
Director
Dennis M. Love Printpack, Inc. President & Ceo
Director
Charles H. McTier Robert Woodruff Foundation President
Director
</TABLE>
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(R) 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>
<CAPTION>
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:
Trust Company Bank
Park Place
P.O. Box 105504
Atlanta, Georgia 30348
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 Road
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, the
Registrant certifies that it meets all of the requirements for the effectiveness
of this Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 as amended and has duly caused this Post-Effective Amendment No. 28 to
Registration Statement No. 33-91476 to be signed on its behalf by the
undersigned, duly authorized, in the City of Oaks, Commonwealth of Pennsylvania
on the 13th day of May, 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.
<TABLE>
<S> <C> <C>
* Trustee May 13, 1999
- ---------------------------------
F. Wendell Gooch
* Trustee May 13, 1999
- ---------------------------------
Daniel S. Goodrum
* Trustee May 13, 1999
- ---------------------------------
Wilton Looney
* Trustee May 13, 1999
- ---------------------------------
Champney A. McNair
* Trustee May 13, 1999
- ---------------------------------
T. Gordy Germany
* Trustee May 13, 1999
- ---------------------------------
Bernard F. Sliger
* Trustee May 13, 1999
- ---------------------------------
Jonathan T. Walton
* Trustee May 13, 1999
- ---------------------------------
William H. Cammack
* Controller, Treasurer & May 13, 1999
- --------------------------------- Chief Financial Officer
Carol Rooney
/s/ Mark Nagle President & Chief May 13, 1999
- --------------------------------- Executive Officer
Mark Nagle
* By: /s/ Kevin P. Robins
---------------------------
Kevin P. Robins, With
Power of Attorney
</TABLE>
C-12
<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.J1 Consent of Arthur Andersen LLP, independent public accountants is
filed herewith.
EX-99.J2 Consent of PricewaterhouseCoopers LLP, independent public
accountants 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 Financial Data Schedule are filed herewith as Exhibit 27.1.
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.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.
C-14
<PAGE>
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. 28 to the Registration
Statement on Form N-1A of the The STI Classic Funds (File No. 33-45671), and
to all references to our firm included in this Registration Statement.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania
May 13, 1999
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 28 to the
Registration Statement (File No. 33-45671) and Amendment No. 30 to the
Registration Statement (File No. 811-6557) of the STI Classic Funds
(comprising the Classic Institutional Cash Management Money Market Fund and
Classic Institutional U.S. Government Securities Money Market Fund) on
Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940 respectively, of our report dated March 15, 1999 on our audit of the
financial statements and financial highlights of the Prime Obligations Fund
(a series of The Arbor Fund), which report is incorporated by reference in
the Annual Report to Shareholders for the year ended January 31, 1999, which
is included in the Post-Effective Amendment to the Registration Statement. We
also consent to the reference to our Firm under the caption "Financial
Highlights" in the Prospectus and under the caption "Experts" in the
Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 14, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000883939
<NAME> ARBOR
<SERIES>
<NUMBER> 130
<NAME> PRIME OBLIGATION FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> JAN-31-1999
<INVESTMENTS-AT-COST> 926913
<INVESTMENTS-AT-VALUE> 926913
<RECEIVABLES> 5668
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 153
<TOTAL-ASSETS> 932734
<PAYABLE-FOR-SECURITIES> 45000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3244
<TOTAL-LIABILITIES> 48244
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 884506
<SHARES-COMMON-STOCK> 884506
<SHARES-COMMON-PRIOR> 740839
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (13)
<ACCUMULATED-NET-GAINS> (3)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 884490
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 44755
<OTHER-INCOME> 0
<EXPENSES-NET> 1894
<NET-INVESTMENT-INCOME> 42861
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 42861
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 42874
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7764540
<NUMBER-OF-SHARES-REDEEMED> 7630948
<SHARES-REINVESTED> 10074
<NET-CHANGE-IN-ASSETS> 143653
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> (3)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 646
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2851
<AVERAGE-NET-ASSETS> 808051
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
