STI CLASSIC FUNDS, 485APOS, 1997-08-04

STI CLASSIC FUNDS
485APOS, 1997-08-04

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4,1997
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. 20 /X/
AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 22 /X/

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

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

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

DAVID G. LEE
C/O SEI 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
2000 ONE LOGAN SQUARE 1800 M STREET, N.W.
PHILADELPHIA, PA 19103 WASHINGTON, D.C. 20036

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

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

Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of units of beneficial interest is being registered
by this Registration Statement. Registrant has filed a Rule 24f-2 Notice on
July 29, 1997 for its fiscal year ended May 31, 1997.

<PAGE>

STI CLASSIC FUNDS
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT #20

N-1A ITEM NO. LOCATION
- ------------- --------
<S> <C>
PART A - ALL FUNDS
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Summary
Item 3. Condensed Financial Information *
Item 4. General Description of Registrant About the Trust; Portfolio Investments;
Risk Considerations; Investment Practices
Item 5. Management of the Fund Board of Trustees; Fund Management;
Investment Advisor;
Distribution; Administration
Item 5a. *
Item 6. Capital Stock and Other Securities Voting Rights; Shareholder Inquiries;
Dividends and Distributions; Tax
Information
Item 7. Purchase of Securities Being Offered Cover Page; Purchasing Fund Shares;
Redeeming Fund Shares
Item 8. Redemption or Repurchase Purchasing Fund Shares;
Redeeming Fund Shares; Distribution
Item 9. Pending Legal Proceedings *

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

</TABLE>

<PAGE>

PART C

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

* Not applicable

<PAGE>
PROSPECTUS

STI CLASSIC FUNDS

TRUST SHARES

CAPITAL GROWTH FUND
VALUE INCOME STOCK FUND
SMALL CAP EQUITY FUND
MID-CAP EQUITY FUND
BALANCED FUND
SUNBELT EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND

Investment Advisors to the Funds:
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
(THE ADVISORS)

The STI Classic Funds (the Trust) is a mutual fund that offers shares in a
number of separate investment portfolios (each a Fund and, collectively, the
Funds). This Prospectus gives you important information about the Trust Shares
of the Equity Funds listed above. Please read this Prospectus, and keep it for
future reference.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THESE
SECURITIES. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE TRUST'S SHARES ARE NOT SPONSORED, ENDORSED, OR GUARANTEED BY, AND DO NOT
CONSTITUTE OBLIGATIONS OR DEPOSITS OF, THE ADVISORS, OR ANY OF THEIR AFFILIATES
OR CORRESPONDENTS, INCLUDING SUNTRUST BANKS, INC. THE TRUST'S SHARES ARE NOT
GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN FUND SHARES
INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

OCTOBER 1, 1997
<PAGE>
2

ABOUT THE TRUST

STI Classic Funds is a diversified, open-end management investment company. The
Funds provide a convenient and economical way for you to invest in a number of
professionally managed portfolios of securities. You may purchase shares in each
non-Money Market Fund through three separate classes (Trust Shares, Investor
Shares, and Flex Shares). The separate classes provide for variations in
distribution and service fees, transfer agent fees, voting rights, and
dividends. This Prospectus relates to the Trust Shares of the Capital Growth
Fund, Value Income Stock Fund, Small Cap Equity Fund, Mid-Cap Equity Fund,
Balanced Fund, Sunbelt Equity Fund, International Equity Index Fund,
International Equity Fund, and Emerging Markets Fund (the Equity Funds).
<PAGE>
3

FUND INFORMATION -- EQUITY FUNDS

CAPITAL GROWTH FUND

OBJECTIVE

Capital Growth Fund seeks to provide capital appreciation by investing primarily
in a portfolio of common stocks, warrants, and securities convertible into
common stock which, in its Advisor's opinion, are undervalued in the marketplace
at the time of purchase.

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of undervalued equity
securities, including:

- common stocks;

- warrants; and

- securities convertible into, or exchangeable for, common stock.

In addition, the Fund may invest in:

- U.S. dollar denominated equity securities of foreign issuers, including
sponsored ADRs that are traded on exchanges or listed on NASDAQ;

- securities issued by money market mutual funds;

- pay-in-kind securities; and

- bonds, including bonds rated below BBB by Standard & Poor's Corporation
(S&P) or below Baa by Moody's Investors Service, Inc. (Moody's), or
unrated securities of comparable quality.

RISK CONSIDERATIONS

The Capital Growth Fund is subject to the following types of risk:

- - Fund Risk;
- - Market Risk;
- - Credit Risk;

- - High-Yield Security Risk; and
- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

FUND MANAGEMENT

Mr. Anthony Gray has managed the Capital Growth Fund since it began operating.
He has more than 30 years of investment experience, and has served as Chairman
and Chief Executive Officer of STI Capital Management, N.A. since 1979.
<PAGE>
4

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Capital Growth Fund. The financial highlights for the Fund
for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 12.18 11.99 11.95 10.36
Net Investment Income (Loss) $ 0.12 0.16 0.16 0.12
Realized and Unrealized Net Gains (Losses) on Investments $ 3.32 0.57 0.31 1.57
Distributions from Net Investment Income $ (0.13) (0.14) (0.17) (0.10)
Distributions from Realized Capital Gains $ (0.59) (0.40) (0.26) --
Net Asset Value, End of Period $ 14.90 12.18 11.99 11.95
Total Return 28.97% 6.63% 3.87% 17.90%*
Net Assets End of Period (000) $981,498 984,205 891,870 507,692
Ratio of Expenses to Average Net Assets 1.15% 1.15% 1.15% 1.15%*
Ratio of Net Investment Income (Loss) to Average Net Assets 0.90% 1.38% 1.25% 1.43%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 1.27% 1.28% 1.29% 1.28%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 0.78% 1.25% 1.11% 1.30%*
Portfolio Turnover Rate 156% 128% 124% 95%
</TABLE>

* Annualized.
(1) Commenced operations on June 8, 1992.
<PAGE>
5

TRANSACTION AND OPERATING EXPENSES

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

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.03%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers .12%

Total Fund Operating Expenses After 1.15%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.15% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.27%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming $ 12 $ 37 $ 63 $ 140
(1) a 5% annual return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
6

VALUE INCOME STOCK FUND

OBJECTIVE

Value Income Stock Fund seeks to provide current income with the secondary goal
of achieving capital appreciation by investing primarily in equity securities.

PORTFOLIO INVESTMENTS

The Fund primarily invests in companies that have a market capitalization of at
least $500 million, including:

- common stock issued by companies which have a history of paying regular
dividends;

- preferred stock; and

- securities convertible into, or exchangeable for, common stock.

The Fund also may invest in:

- U.S. dollar denominated equity securities of foreign issuers, including
sponsored ADRs that are traded on exchanges or listed on NASDAQ;

- debt securities, including corporate debt obligations rated below BBB by
S&P or below Baa by Moody's, or not rated by S&P or Moody's but which are
of comparable quality;

- U.S. Treasury obligations;

- futures and options; and

- stocks issued by companies with smaller market capitalizations.

RISK CONSIDERATIONS

The Value Income Stock Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Credit Risk;

- - Hedging Risk;

- - High-Yield Security Risk; and
- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

FUND MANAGEMENT

Mr. Mills Riddick, CFA, is Senior Vice President, STI Capital Management, N.A.
and has managed the Value Income Stock Fund since April, 1995. He has more than
15 years of investment experience, and has been a value portfolio manager at STI
Capital Management since 1989.
<PAGE>
7

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Value Income Stock Fund. The financial highlights for the
Fund for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in
STI Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 11.59 10.54 10.23 10.00
Net Investment Income (Loss) $ 0.35 0.32 0.29 0.11
Realized and Unrealized Net Gains (Losses) on Investments $ 2.71 1.56 0.70 0.16
Distributions from Net Investment Income $ (0.34) (0.32) (0.32) (0.04)
Distributions from Realized Capital Gains $ (1.16) (0.51) (0.36) --
Net Asset Value, End of Period $ 13.15 11.59 10.54 10.23
Total Return 27.91% 19.06% 9.95% 9.05%*
Net Assets End of Period (000) $1,244,399 991,977 573,082 137,761
Ratio of Expenses to Average Net Assets 0.92% 0.95% 0.88% 0.80%*
Ratio of Net Investment Income (Loss) to Average Net Assets 2.86% 3.16% 3.21% 4.32%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 0.92% 0.95% 0.97% 0.96%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 2.86% 3.16% 3.12% 4.16%*
Portfolio Turnover Rate 134% 126% 149% 35%
</TABLE>

* Annualized.
(1) Commenced operations on February 12, 1993.
<PAGE>
8

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees .80%

Other Expenses .15%

Total Fund Operating Expenses1 .95%
</TABLE>

(1)TOTAL FUND OPERATING EXPENSES HAVE BEEN RESTATED TO REFLECT CURRENT FEES.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming $ 10 $ 30 $ 53 $ 117
(1) a 5% annual return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
9

SMALL CAP EQUITY FUND

OBJECTIVE

The Small Cap Equity Fund seeks to provide capital appreciation with a secondary
goal of achieving current income.

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of equity securities of
undervalued companies with market capitalizations under $1 billion, including:

- common stock;

- preferred stock;

- warrants;

- rights to subscribe to common stock; and

- securities convertible into, or exchangeable for, common stock.

The Fund also may invest in:

- equity securities of companies with larger market capitalizations;

- investment grade fixed-income securities; and

- options transactions (for hedging purposes only).

RISK CONSIDERATIONS

The Small Cap Equity Fund may be subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Small Issuer Risk; and

- - Hedging Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

FUND MANAGEMENT

Brett Barner, CFA, is Vice President, STI Capital Management, N.A., and has
managed the Small Cap Equity Fund since it began operating. He has more than ten
years of investment experience, and has been a portfolio manager with STI since
1990.
<PAGE>
10

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Small Cap Equity Fund. The unaudited financial highlights
are for the Fund for the periods from inception through May 31, 1997.

<TABLE>
<CAPTION>
<S> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996(1)
Net Asset Value, Beginning of Period $ 10.00
Net Investment Income $ 0.05
Realized and Unrealized Net Gains on Investments $ 1.04
Distributions from Net Investment Income $ (0.02)
Net Asset Value, End of Period $ 11.07
Total Return $ 10.97%*
Net Assets End of Period (000) $131,049
Ratio of Expenses to Average Net Assets 1.20%**
Ratio of Net Investment Income to Average Net Assets 1.86%**
Ratio of Expenses to Average Net Assets (Excluding Waivers and Contributions) 1.37%**
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers and Contributions) 1.69%**
Portfolio Turnover Rate 27%
Average Commission Rate (A) $0.0523
</TABLE>

* Return is for the period indicated and has not been annualized.
** Annualized.
(A) Average commission rate paid per share for the security purchases and sales.
(1) Commenced operations on January 31, 1997.
<PAGE>
11

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.00%
Waivers and Contributions(1)

Other Expenses After Fee Waivers(2) .20%

Total Fund Operating Expenses After 1.20%
Fee Waivers and Contributions(3)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND CONTRIBUTIONS, INVESTMENT ADVISORY FEES WOULD BE
1.15% OF AVERAGE NET ASSETS.

(2)OTHER FUND EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

(3)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.35%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual return; and (2) $ 12 $ 37
redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
12

MID-CAP EQUITY FUND

OBJECTIVE

The Mid-Cap Equity Fund seeks to provide capital appreciation by investing
primarily in a diversified portfolio of common stocks, preferred stocks, and
securities convertible into common stock of small to mid-sized companies with
above-average growth of earnings. Current income will not be an important
criterion of investment selection and any such income should be considered
incidental.

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of equity securities of
small to mid-size companies (I.E., companies with market capitalizations of $500
million to $5 billion), including:

- common stocks;

- preferred stocks; and

- securities convertible into, or exchangeable for, common stocks.

The Fund also may invest in:

- U.S. dollar denominated equity securities of foreign issuers, including
sponsored ADRs that are traded on exchanges or listed on NASDAQ;

- bonds, including variable and floating rate instruments, rated B or better
by S&P or Moody's; and

- short-term obligations.

RISK CONSIDERATIONS

The Mid-Cap Equity Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Small Issuer Risk;

- - Credit Risk;

- - High-Yield Security Risk; and

- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

FUND MANAGEMENT

Mr. Elliott A. Perny has managed the Mid-Cap Equity Fund since October, 1996. He
has more than 25 years of investment experience. Mr. Perry has served as Senior
Executive Vice President of STI Capital Management, N.A. since September, 1992,
and has served as a portfolio manager with STI since 1991.
<PAGE>
13

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Mid-Cap Equity Fund. The financial highlights for the Fund
for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994(1)
Net Asset Value, Beginning of Period $ 11.00 9.85 10.00
Net Investment Income (Loss) $ 0.08 0.08 0.02
Realized and Unrealized Net Gains (Losses) on Investments $ 2.63 1.15 (0.16)
Distributions from Net Investment Income $ (0.08) (0.08) (0.01)
Distributions from Realized Capital Gains $ (0.87) -- --
Net Asset Value, End of Period $ 12.76 11.00 9.85
Total Return 25.54% 12.56% (1.39%)+
Net Assets End of Period (000) $253,905 125,562 57,036
Ratio of Expenses to Average Net Assets 1.15% 1.15% 1.15%*
Ratio of Net Investment Income (Loss) to Average Net Assets 0.70% 0.88% 1.20%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 1.29% 1.32% 1.68%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 0.56% 0.71% 0.67%*
Portfolio Turnover Rate 116% 66% 8%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on January 3, 1994.
<PAGE>
14

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
TRUST SHARES
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.00%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers .15%

Total Fund Operating Expenses After 1.15%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.15% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.30%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 12 $ 37 $ 63 $ 140
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
15

BALANCED FUND

OBJECTIVE

The Balanced Fund seeks to provide capital appreciation and current income by
investing in common and preferred stocks, warrants, securities convertible into
common stock, and investment grade fixed-income securities.

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of:

- common stocks;

- preferred stocks;

- warrants;

- securities convertible into, or exchangeable for, common stocks;

- investment grade fixed-income securities, including corporate debt
obligations, asset-backed securities, U.S. Government obligations, foreign
government securities, and obligations of supranational entities; and

- mortgage-backed securities.

Normally, no more than 70% of the Fund's total assets will be invested in common
stocks and other equity securities and at least 25% of the Fund's total assets
will be invested in senior fixed-income securities. No more than 60% of the
Fund's total assets will be invested in bonds and other fixed-income securities.

The Fund may also invest in:

- U.S. dollar denominated equity securities of foreign issuers (including
sponsored ADRs that are traded on exchanges or listed on NASDAQ); and

- securities issued by investment companies.

RISK CONSIDERATIONS

The Balanced Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Interest Rate Risk;

- - Credit Rate Risk;

- - Call Risk;

- - Event Risk;

- - Prepayment Risk; and

- - Hedging Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.
<PAGE>
16

FUND MANAGEMENT

The Balanced Fund is co-managed by Anthony R. Gray (equity portion), and L. Earl
Denney, CFA, (fixed income portion). Mr. Gray, Chairman and Chief Executive
Officer of STI Capital Management, N.A., has more than 30 years of investment
experience. Mr. Denney, Senior Vice President, STI Capital Management, N.A., has
more than 17 years of experience.
<PAGE>
17

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Balanced Fund. The financial highlights for the Fund for the
periods from inception through May 31, 1996 have been audited by
,independent public accountants, whose report appears in STI Classic
Fund's annual report which accompanies the Statement of Additional Information.
The annual report for the Fund is available to Shareholders at no charge by
calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994(1)
Net Asset Value, Beginning of Period $ 10.26 9.76 10.00
Net Investment Income (Loss) $ 0.33 0.33 0.11
Realized and Unrealized Net Gains (Losses) on Investments $ 1.41 0.49 (0.29)
Distributions from Net Investment Income $ (0.34) (0.32) (0.06)
Distributions from Realized Capital Gains $ (0.11) -- --
Net Asset Value, End of Period $ 11.55 10.26 9.76
Total Return 17.26% 8.72% (1.78%)+
Net Assets End of Period (000) $111,638 89,051 90,579
Ratio of Expenses to Average Net Assets 0.95% 0.95% 0.95%*
Ratio of Net Investment Income (Loss) to Average Net Assets 3.00% 3.44% 2.76%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 1.09% 1.11% 1.25%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 2.86% 3.28% 2.46%*
Portfolio Turnover Rate 155% 157% 106%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on January 3, 1994.
<PAGE>
18

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .79%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers .16%

Total Fund Operating Expenses After .95%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .95% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.11%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 10 $ 30 $ 53 $ 117
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
19

SUNBELT EQUITY FUND

OBJECTIVE

The Sunbelt Equity Fund seeks to provide capital appreciation by investing
substantially all, and under normal market conditions at least 65%, of its
assets in common stocks, preferred stocks, warrants, and securities convertible
into common stock of U.S. companies headquartered and/or conducting a
substantial portion of their operations in the southern region of the U.S.
Current income will not be an important criterion of investment selection and
any such income should be considered incidental.

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of equity securities of
U.S. companies headquartered and/or conducting a substantial portion of their
operations in the southern region of the U.S., including:

- common stocks;

- preferred stocks;

- warrants; and

- securities convertible into, or exchangeable for, common stock, including
securities rated lower than investment grade.

Stocks chosen for the Fund are primarily of U.S. companies headquartered and/or
operating in the following U.S. states:

- - Texas

- - Arkansas

- - Alabama

- - Mississippi

- - Tennessee

- - Kentucky

- - Florida

- - Virginia

- - Georgia

- - North Carolina

- - South Carolina

- - Louisiana

Because the Fund's investments are concentrated in this geographic area, the
Fund will be greatly affected by the economic conditions of these states.

RISK CONSIDERATIONS

The Sunbelt Equity Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Credit Risk;

- - Geographic Risk;

- - Hedging Risk; and

- - High-Yield Security Risk.
<PAGE>
20

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

FUND MANAGEMENT

Mr. James Foster has managed the Sunbelt Equity Fund since it began operating.
He has served as Vice President of Trusco Capital Management, Inc. since 1989,
and has more than 27 years of investment experience.
<PAGE>
21

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Sunbelt Equity Fund.The financial highlights for the Fund
for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994(1)
Net Asset Value, Beginning of Period $ 10.03 9.70 10.00
Net Investment Income (Loss) $ (0.04) (0.01) --
Realized and Unrealized Net Gains (Losses) on Investments $ 4.32 0.38 (0.30)
Distributions from Net Investment Income -- -- --
Distributions from Realized Capital Gains $ (0.20) (0.04) --
Net Asset Value, End of Period $ 14.11 10.03 9.70
Total Return 43.19% 3.81% (2.99%)+
Net Assets End of Period (000) $412,430 258,908 128,280
Ratio of Expenses to Average Net Assets 1.15% 1.15% 1.15%*
Ratio of Net Investment Income (Loss) to Average Net Assets (0.34%) (0.12%) (0.19%)*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 1.28% 1.30% 1.58%*
Ratio of Net Investment Income (Loss) to Average Net
Assets(Excluding Waivers and Reimbursements) (0.47%) (0.27%) (0.62%)*
Portfolio Turnover Rate 106% 80% 21%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on January 3, 1994.
<PAGE>
22

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.02%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers .13%

Total Fund Operating Expenses After 1.15%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.15% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.28%.THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 12 $ 37 $ 63 $ 140
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
23

INTERNATIONAL EQUITY INDEX FUND

OBJECTIVE

The International Equity Index Fund seeks to provide investment results that
correspond to the aggregate price and dividend performance of the securities
included in the Gross Domestic Product Weighted Morgan Stanley Capital
International Europe, Australasia and Far East Index (the MSCI EAFE-GDP Index or
EAFE-GDP Index).(1)

PORTFOLIO INVESTMENTS

The Fund primarily invests in equity securities of companies headquartered, or
based in, the approximately twenty foreign countries included in the EAFE-GDP
Index, including:

- common stocks;

- preferred stocks;

- warrants;

- options; and

- securities convertible into, or exchangeable for, common stock.

While the Fund is constructed to have overall investment characteristics similar
to those of the EAFE-GDP Index, it selects a representative sample of securities
in each country using a computerized statistically-based optimization process.

The Fund expects that there will be a close correlation between it's performance
and that of the EAFE-GDP Index. However, the Fund's ability to track the
EAFE-GDP Index may be affected by, among other things, transaction costs,
changes in either the composition of the Index, or number of shares outstanding
for the component companies of the EAFE-GDP Index, and the timing and amount of
purchases and redemptions.

RISK CONSIDERATIONS

The International Equity Index Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Hedging Risk; and

- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

- ------------
(1) "MSCI EAFE-GDP Index" is a registered service mark of Morgan Stanley Capital
International which does not sponsor, and is in no way affiliated with, the
International Equity Index Fund.
<PAGE>
24

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the International Equity Index Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information.The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995(1)
Net Asset Value, Beginning of Period $ 10.24 10.00
Net Investment Income (Loss) $ 0.10 0.08
Realized and Unrealized Net Gains (Losses) on Investments $ 0.84 0.19
Distributions from Net Investment Income $ (0.13) (0.02)
Distributions from Realized Capital Gains $ (0.09) (0.01)
Net Asset Value, End of Period $ 10.96 10.24
Total Return 9.29% 2.69%+
Net Assets End of Period (000) $90,980 89,446
Ratio of Expenses to Average Net Assets 1.05% 1.05%*
Ratio of Net Investment Income (Loss) to Average Net Assets 0.84% 1.13%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) 1.19% 1.31%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers and
Reimbursements) 0.70% 0.87%*
Portfolio Turnover Rate 30% 10%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 6, 1994.
<PAGE>
25

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .76%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers .29%

Total Fund Operating Expenses After 1.05%
Fee Waivers and Reimbursements(3)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .90% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.19%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 11 $ 33 $ 58 $ 128
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
26

INTERNATIONAL EQUITY FUND

OBJECTIVE

The International Equity Fund seeks to provide long-term capital appreciation by
investing primarily in a diversified portfolio of equity securities of foreign
issuers.

PORTFOLIO INVESTMENTS

The Fund invests primarily in equity securities of foreign issuers, including:

- common stocks;

- preferred stocks;

- warrants;

- options; and

- securities convertible into, or exchangeable for, common stock.

The Fund may also invest in:

- bonds and debentures issued by non-U.S. and U.S. companies, including
those rated below BBB by S&P or below Baa by Moody's, or securities not
rated by S&P or Moody's that are of comparable quality;

- foreign government securities or U.S. government obligations;

- foreign and U.S. commercial paper; and

- closed-end investment companies that invest in the securities of issuers
in a single country or region.

The Fund will invest in the securities of foreign issuers of at least three
different countries outside the United States. A foreign issuer:

- is a company organized under the laws of a specific country;

- principally trades its securities in a market or on an exchange in a
specific foreign country; or

- derives a significant proportion (at least 50 percent) of its revenues or
profits from goods produced or sold, investments made, or services
performed in a specific country, or which has at least 50 percent of its
assets situated in that country.

The Fund will invest primarily in developed countries (for example, Japan,
Canada, and the United Kingdom). The Fund may also invest in securities of
issuers whose principal activities are in countries with emerging markets. The
Fund defines an emerging market country whose economy and market are considered
to be emerging or developing by the World Bank or United Nations.
<PAGE>
27

RISK CONSIDERATIONS

The International Equity Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Credit Risk;

- - Hedging Risk;

- - High-Yield Security Risk; and

- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

FUND MANAGEMENT

Mr. Ned Dau, Vice President of STI Capital Management, N.A., has managed the
International Equity Fund since May, 1997. Prior to joining STI, he was a senior
international equity analyst for American Express Financial Advisors from 1996
to 1997, and the Principal Financial Group from 1992 to 1995.
<PAGE>
28

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the International Equity Fund. The financial highlights for the
Fund for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in
STI Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996(1)
Net Asset Value, Beginning of Period $ 10.00
Net Investment Income (Loss) $ 0.05
Realized and Unrealized Net Gains (Losses) on Investments $ 1.35
Distributions from Net Investment Income --
Distributions from Realized Capital Gains --
Net Asset Value, End of Period $ 11.40
Total Return 14.00%+
Net Assets End of Period (000) $213,306
Ratio of Expenses to Average Net Assets 1.46%*
Ratio of Net Investment Income (Loss) to Average Net Assets 1.36%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) 1.65%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers and Reimbursements) 1.17%*
Portfolio Turnover Rate 113%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on December 1, 1995.
<PAGE>
29

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.06%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers(2) .40%

Total Fund Operating Expenses After 1.46%
Fee Waivers and Reimbursements(3)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.25% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.65%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $15 $46 $80 $175
assuming (1) a 5% annual return; and (2)
redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
30

EMERGING MARKETS EQUITY FUND

OBJECTIVE

The Emerging Markets Equity Fund seeks to provide long-term capital appreciation
by investing primarily in equity securities of companies located in emerging
markets that appear undervalued relative to their global peers.

PORTFOLIO INVESTMENTS

The Fund primarily invests in equity securities of foreign issuers located in
emerging market countries, including:

- common stocks;

- preferred stocks;

- warrants;

- options; and

- securities convertible into, or exchangeable for, common stock.

Normally, the Fund invests at least 65% of its assets in equity securities of
foreign issuers located in emerging market countries. The Fund defines an
emerging market country as a country whose economy and market are considered to
be emerging or developing by the World Bank or the United Nations.

The Fund may also invest in:

- bonds and debentures issued by non-U.S. or U.S. companies, including those
rated below BBB by S&P or below Baa by Moody's, or securities not rated by
S&P or Moody's.

- foreign government securities or U.S. government obligations;

- mortgage-backed securities;

- foreign and U.S. commercial paper; and

- short-term obligations.

RISK CONSIDERATIONS

The Emerging Markets Equity Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Hedging Risk; and

- - Foreign Security Risks.
<PAGE>
31

For a description of these risks, please see "RISK CONSIDERATIONS" on page 21.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Emerging Markets Equity Fund. The unaudited financial
highlights are for the Fund for the periods from inception through May 31, 1997.

<TABLE>
<CAPTION>
<S> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996(1)
Net Asset Value, Beginning of Period $ 10.00
Net Investment Income (Loss) $ 0.04
Net Realized and Unrealized Gains on Investments $ 0.75
Distributions from Net Investment Income $ 0.00
Net Asset Value, End of Period $ 10.79
Total Return 7.90%*
Net Assets End of Period (000) $39,495
Ratio of Expenses to Average Net Assets 1.55%**
Ratio of Net Investment Income to Average Net Assets 1.37%**
Ratio of Expenses to Average Net Assets (Excluding Waivers and Contributions) 2.05%**
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers and Contributions) 0.87%**
Portfolio Turnover Rate 24%
Average Commission Rate (A) 0.0019
</TABLE>

* Return is for the period indicated and has not been annualized.
** Annualized.
(A) Average commission rate paid per share for the security purchases and sales
during the period.
(1) Commenced operations on January 31, 1997.

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
TRUST SHARES

SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.15%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers(2) .40%

Total Fund Operating Expenses After 1.55%
Fee Waivers and Contributions(3)
</TABLE>

(1)1ABSENT VOLUNTARY WAIVERS AND CONTRIBUTIONS, INVESTMENT ADVISORY FEES WOULD
BE 1.30% OF AVERAGE NET ASSETS.

(2)OTHER FUND EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

(3)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.80%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual return; and (2) $ 16 $ 49
redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
34

THERE CAN BE NO ASSURANCE THAT A FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.

THE INVESTMENT OBJECTIVE OF EACH FUND IS NON-FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.

RISK CONSIDERATIONS

<TABLE>
<CAPTION>
TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
FUND RISK -- The possibility that the Fund's performance during a specific All Funds
period may not meet, or exceed that of the market as a whole.
MARKET RISK -- The possibility that stock prices in general will decline over All Funds
short, or even extended, periods of time. This is because stock markets tend
to be cyclical, with periods when stock prices generally rise and periods when
stock prices generally decline.
SMALL ISSUER RISK -- Small and medium capitalization companies may be more Small Cap Equity Fund
vulnerable than larger, more established organizations to adverse business or Mid-Cap Equity Fund
economic developments. In particular, small capitalization companies may have
limited product lines, markets and financial resources and may be dependent
upon a relatively small management group. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
INTEREST RATE RISK -- The potential for a decline in the price of fixed-income Balanced Fund
securities due to rising interest rates. This risk will be greater for
long-term securities than for short-term securities.
CREDIT RISK -- The possibility that an issuer will be unable to make timely Capital Growth Fund
payments of either principal or interest. Value Income Stock Fund
Mid-Cap Equity Fund
Balanced Fund
Sunbelt Equity Fund
International Equity Fund
Emerging Markets Equity Fund
CALL RISK -- The possibility that securities with high interest rates will be Balanced Fund
prepaid (or "called") by the issuer, prior to maturity, during periods of
falling interest rates. This would require the Fund to invest the resulting
proceeds elsewhere, at generally lower interest rates.
EVENT RISK -- The possibility that corporate fixed-income securities may suffer Balanced Fund
substantial declines in credit quality and market value due to corporate
restructurings. While event risk may be high for certain corporate securities
held by the Fund, event risk overall should be low because of the Fund's
diversified holdings.
GEOGRAPHIC RISK -- The risk that a Fund's concentration of investments in Sunbelt Equity Fund
securities of issuers located in a single state or geographic region subject
the Fund to economic conditions and government policies of that state or
region that could adversely affect the value of the Fund.
PREPAYMENT RISK -- The risk that mortgage-backed and asset-backed securities Balanced Fund
may be retired substantially earlier than their stated maturities or final
distribution dates, resulting in a loss of all, or part, of any premium paid.
</TABLE>

<PAGE>
35

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
HEDGING RISK -- There are risks associated with hedging activities, including: Value Income Fund
- - The success of a hedging strategy may depend on an ability to predict Small Cap Equity Fund
movements in the prices of individual securities, fluctuations in markets, Balanced Fund
and movements in interest rates; Sunbelt Equity Fund
- - There may be an imperfect, or no correlation, between the changes in market International Equity Index
value of the securities held by the Fund and the prices of futures and Fund
options on futures; International Equity Fund
- - There may not be a liquid secondary market for a futures contract or option; Emerging Markets Equity Fund
- - Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
HIGH-YIELD, LOWER RATED BONDS -- There are risks associated with investing in Capital Growth Fund
high-yield securities, including: Value Income Stock Fund
- - High-yield, lower rated bonds ("junk bonds") involve greater risk of default Mid-Cap Equity Fund
or price declines than investments in investment grade securities (e.g., Sunbelt Equity Fund
securities rated BBB or higher by S&P or Baa or higher by Moody's) due to International Equity Fund
changes in the issuer's creditworthiness. Emerging Markets Equity Fund
- - The market for high risk, high-yield securities may be thinner and less
active, causing market price volatility and limited liquidity in the
secondary market. This may limit the ability of a Fund to sell these
securities at their fair market value either to meet redemption requests or
in response to changes in the economy or the financial markets.
- - Market prices for high risk, high-yield securities may also be affected by
investors' perception of the issuer's credit quality and the outlook for
economic growth. Thus, prices for high risk, high-yield securities may move
independently of interest rates and the overall bond market.
- - The market for high risk, high-yield securities may be adversely affected by
legislative and regulatory developments.
FOREIGN SECURITY RISKS -- There are risks associated with international Capital Growth Fund
investing, including: Value Income Stock Fund
CURRENCY RISK -- The possibility that changes in foreign exchange rates will Mid-Cap Equity Fund
affect, favorably or unfavorably, the value of foreign securities. International Equity Fund
VOLATILITY -- Investments in foreign stock markets can be more volatile than International Equity Index
investments in U.S. markets. Diplomatic, political, or economic developments Fund
could affect investments in foreign countries. Emerging Markets Equity Fund
EXPENSE CONSIDERATIONS -- Fixed commissions on many foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges. Expenses for
custodial arrangements of foreign securities may be somewhat greater than
typical expenses for custodial arrangements for handling U.S. securities of
equal value.
FOREIGN TAXES -- Certain foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes are recoverable, the non-recovered portion of foreign withholding taxes
will reduce the income received from the securities comprising the portfolio.
REGULATORY ENVIRONMENT -- Foreign companies generally are not subject to
uniform accounting, auditing, and financial reporting standards comparable to
those applicable to U.S. domestic companies. Foreign branches of U.S. banks,
foreign banks, and foreign issuers may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and
recordkeeping standards than those applicable to domestic branches of U.S.
banks and U.S., domestic issuers. There is generally less government
regulation of securities exchanges, brokers, and listed companies abroad than
in the U.S.
</TABLE>
<PAGE>
36

PERFORMANCE INFORMATION FOR PREDECESSOR COLLECTIVE FUNDS

The International Equity, Value Income Stock, Small Cap Equity, Sunbelt Equity
Fund, and Emerging Markets Funds are each the successor to collective investment
funds. These Funds were previously managed by STI Capital Management, Inc. and
Trusco Capital Management, Inc. A substantial portion of the assets of those
collective investment funds was transferred to these Funds when each Fund
started operating. Total return, a type of performance calculation, for the
predecessor collective investment funds, is presented below. You may find this
performance information helpful because the collective investment funds were
managed using virtually the same investment objectives, policies, and
restrictions as those used by each of these Funds.
TOTAL RETURN

The total return of a fund refers to the average compounded rate of return on a
hypothetical investment. This includes any sales charge imposed for designated
time periods, such as the period from which a fund started operating through a
specified date. When we compute total return, we assume that your entire
investment is redeemed at the end of each period and that you reinvest all
income dividends and capital gains distributions.

Please keep in mind that performance information, such as total return, is not
necessarily indicative of the future performance of each Fund. Also, the
predecessor collective investment funds were not subject to certain investment
limitations imposed on mutual funds. If these had been imposed, a collective
investment fund's performance may have been adversely affected. The predecessor
collective investment funds did not incur expenses that correspond to the
advisory, administrative, and other fees to which each Fund is now subject.
Accordingly, the following performance information has been adjusted by applying
the total expense ratios for the corresponding Fund, as disclosed in the
Prospectus at the time the Fund started operating. This adjustment reduced the
actual performance of the collective investment funds.

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

<TABLE>
<CAPTION>
FIVE TEN SINCE
ONE YEAR YEARS YEARS INCEPTION
--------- ------ ------ ---------
<S> <C> <C> <C> <C>
International Equity Collective Fund N/A N/A N/A 27.50%
(2/1/95-
11/30/95)
Value Income Stock Collective Fund 15.14% N/A N/A 14.93%
(ending (10/1/89-
12/31/92) 12/31/92)
Sunbelt Equity Collective Fund 17.72% 20.71% 15.89% 16.74%
(ending (12/1/80-
12/31/93) 12/31/93)
</TABLE>

<TABLE>
<CAPTION>
SINCE
ONE YEAR TWO YEARS INCEPTION
(ENDING (ENDING (9/1/94-
12/31/96) 12/31/96) 12/31/96)
--------- --------- ---------
<S> <C> <C> <C>
Small Cap Equity Collective Fund 30.77% 30.37% 25.80%
Emerging Markets Equity Collective Fund 13.71%
</TABLE>

The average annual total returns for the Funds (net of voluntary waivers and
reimbursements) for the following periods:

<TABLE>
<CAPTION>
THREE
ONE YEAR YEARS
(ENDING (ENDING SINCE
5/31/96) 5/31/96) INCEPTION
--------- --------- ---------
<S> <C> <C> <C>
International Equity Fund* N/A N/A 12.31%
( / /96-
5/31/96)
Value Income Stock Fund** 22.62% 16.73% 17.08%
(2/17/93-
5/31/96)
Sunbelt Equity Fund*** 37.21% N/A 14.06%
(1/4/94-
5/31/96)
Small Cap Equity Fund ( / / -
5/31/96)
</TABLE>

- ---------------
* Commenced operations on December 1, 1995
** Commenced operations on February 12, 1993
*** Commenced operations on January 3, 1994
<PAGE>
37

PURCHASING FUND SHARES

WHO MAY BUY TRUST SHARES OF THE FUNDS

Individuals generally may not purchase Trust Shares directly. Instead, Trust
Shares are sold to financial institutions or intermediaries, including
subsidiaries of SunTrust Banks, Inc. (SunTrust), for accounts for which they act
as fiduciary, agent, investment advisor, or custodian. As a result, you as a
customer of a financial institution, may own Trust Shares through accounts
maintained with financial institutions and potentially through the Preferred
Portfolio Account (an asset allocation account available through SunTrust
Securities, Inc.). Trust Share will be held of record by (in the name of) your
financial institution. Depending upon the terms of your account, however, you
may have, or be given, the right to vote the Trust Shares.

HOW TO BUY FUND SHARES

Trust Shares are offered continuously, and may be purchased on any day that the
New York Stock Exchange is open for business (a Business Day). Your price per
share (the offering price) will be the net asset value per share (NAV) next
determined after your purchase order is received by the Transfer Agent. NAV is
calculated by (1) taking the current market value of a Fund's total assets, (2)
subtracting the liabilities, and (3) dividing that amount by the total number of
shares owned by shareholders. The NAV is determined once each Business Day at
the close of the New York Stock Exchange (4:00 p.m. Eastern time). Thus, to
receive the current Business Day's NAV, purchase orders must be received before
4:00 p.m. Eastern time.

Trust Shares are sold without a sales charge. Certain financial institutions
may, however, charge for services provided in connection with the purchase of
Trust Shares. Financial institutions may also impose an earlier cutoff time for
a purchase order to become effective on the same day. This allows the financial
institution time to process your order and transmit it to the Transfer Agent.

THE TRUST RESERVES THE RIGHT TO REJECT ANY PURCHASE ORDER WHEN THE DISTRIBUTOR
DETERMINES THAT ACCEPTING THE ORDER WOULD NOT BE IN THE BEST INTERESTS OF THE
TRUST AND/OR SHAREHOLDERS.

REDEEMING FUND SHARES

HOW TO SELL YOUR SHARES

Redemption requests should be sent to the Transfer Agent by the financial
institution that is the record owner. Your financial institution will provide
you with information about how to request redemption of Trust Shares held in
your account with them. If you have any questions about these procedures, you
should contact your financial institution directly. Redemption requests must be
received by the Transfer Agent by 4:00 p.m. Eastern time to get that day's NAV.
The Trust reserves the right to wire redemption proceeds within five Business
Days of the Transfer Agent receiving the redemption request if, in the judgment
of the Advisor, an earlier payment could adversely impact a Fund.

REDEMPTIONS IN KIND

The Trust intends to pay redemption proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
remaining shareholders in the Fund) the Trust reserves the right to pay all, or
part, of your redemption proceeds in liquid securities with a market value equal
to the redemption price (redemption in kind). Although it is highly unlikely
that your shares would ever
<PAGE>
38
actually be redeemed in kind, if it did happen, you would probably have to pay
brokerage costs to sell the securities distributed to you.

TELEPHONE REDEMPTION AND EXCHANGE TRANSACTIONS ARE EXTREMELY CONVENIENT, BUT
NOT WITHOUT RISK. TO TRY TO KEEP YOUR TELEPHONE TRANSACTIONS AS SAFE, SECURE,
AND RISK FREE AS POSSIBLE, THE TRUST HAS DEVELOPED CERTAIN SAFEGUARDS AND
PROCEDURES FOR DETERMINING THE IDENTITY OF CALLERS AND AUTHENTICITY OF
INSTRUCTIONS. AS A RESULT, NEITHER THE TRUST NOR ITS TRANSFER AGENT WILL BE
RESPONSIBLE FOR ANY LOSS, LIABILITY, COST, OR EXPENSE FOR ACTING UPON
TELEPHONE OR WIRE INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE. IF YOU
CHOOSE TO MAKE TELEPHONE TRANSACTIONS, YOU WILL GENERALLY BEAR THE RISK OF ANY
LOSS.

DIVIDENDS AND DISTRIBUTIONS

Income dividends are declared and paid quarterly by each of the Funds, except
the International Equity Index Fund, International Equity Fund, and Emerging
Markets Equity Fund. These Funds declare and pay income dividends annually. If
you own Fund shares on the record date, you will be entitled to receive
dividends. The Funds make distributions of capital gains at least annually.

You will receive dividends and distributions in the form of additional Fund
shares unless you have elected to receive payment in cash. To elect cash
payment, you must notify the Transfer Agent in writing prior to the date of
distribution. Your election will become effective for dividends paid after the
Transfer Agent receives your written notice. To cancel your election, simply
send written notice to the Transfer Agent.

TAX INFORMATION

The following is a summary of some important tax issues that affect the Funds
and their shareholders. We have not tried to present a detailed explanation of
the tax treatment of the Funds or their Shareholders. WE URGE YOU TO CONSULT
YOUR TAX ADVISOR REGARDING SPECIFIC QUESTIONS AS TO FEDERAL, STATE, AND LOCAL
INCOME TAXES.

The following summary is based on current tax laws, which may be changed by
legislative, judicial or administrative action.

TAX STATUS OF EACH FUND

Each Fund is treated as a separate entity for federal tax purposes. Each Fund
intends to qualify for the special tax treatment afforded regulated investment
companies. As long as a Fund qualifies as a regulated investment company, it
pays no federal income tax on the earnings it distributes to Shareholders.

TAX STATUS OF DISTRIBUTIONS

Each sale, exchange or redemption of Fund Shares is a taxable event to the
Shareholder.

Each Fund will distribute substantially all of its income. The income dividends
you receive from the Funds will be taxed as ordinary income whether you receive
the dividends in cash or in additional shares.

Capital gains distributions will be taxed as long-term capital gains, regardless
of how long you have held your Fund Shares. Some distributions paid in January
may be taxable in the previous year. Corporations may be entitled to a
dividends-received deduction for a portion of dividends they receive.
<PAGE>
39

FOREIGN TAX CONSIDERATIONS

Shareholders of the International Equity Index, International Equity, and
Emerging Markets Equity Funds may be entitled to a foreign tax deduction or
credit.

STATE TAX CONSIDERATIONS

A portion of the distributions you receive may be exempt from state taxation.
Each year you will be notified of the percentage of income and distributions
that may be tax-exempt under state law. However, you should verify your tax
liability with your tax advisor.

Please refer to the Statement of Additional Information (SAI) for more tax
information.

STI CLASSIC FUNDS INFORMATION

THE TRUST

The Trust is organized as a Massachusetts business trust. The Trust is permitted
to offer separate portfolios of shares and different classes of each Fund. All
payments received by the Trust for shares of any Fund belong to that Fund. Each
Fund has its own assets and liabilities.

BOARD OF TRUSTEES

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.

GENERAL INFORMATION

VOTING RIGHTS

Shareholders of record receive one vote for every full Fund Share owned. Each
Fund or class of a Fund will vote separately on matters relating solely to that
Fund or class. If you are a customer of a financial institution that has
purchased shares of a Fund for your account, you may, depending on the nature of
your account, have certain voting rights.

As a Massachusetts business trust, the Trust is not required to hold annual
Shareholder meetings unless otherwise required by the Investment Company Act.
However, a meeting may be called by Shareholders owning at least 10% of the
outstanding shares of the Trust. If a meeting is requested by Shareholders, the
Trust will provide appropriate assistance and information to the Shareholders
who requested the meeting.

REPORTING

Shareholders of record will receive the Trust's unaudited financial information
and audited financial statements, proxy statements and other reports. If you are
a customer of a financial institution that has purchased shares of a Fund for
your account, you may, depending on the nature of your account, receive all or a
portion of this information directly form your financial institution.

SHAREHOLDER INQUIRIES

You may contact your financial institution's representative to obtain
information on account statements, procedures, and other related information.

INVESTMENT ADVISORS

The Advisors make investment decisions for the assets of the Funds and
continuously review, supervise, and administer their Fund's respective
investment program. The Trustees of the Trust supervise the Advisors and
establish policies that the Advisors must follow in their day-to-day management
activities.
<PAGE>
40

STI Capital Management, N.A. (STI Capital) serves as the Advisor to the Capital
Growth, Value Income, Small Cap Equity, Mid-Cap Equity, Balanced, International
Equity, and Emerging Markets Funds. As of , STI Capital had
approximately $ billion in assets under management. The principal business
address of STI Capital is P.O. Box 3808, Orlando, Florida 32802.

Trusco Capital Management, Inc. (Trusco) serves as the Advisor to the Sunbelt
Equity Fund. As of , Trusco had approximately $ billion in assets
under management. The principal business address of Trusco is 50 Hurt Plaza,
Suite 1400, Atlanta, Georgia 30303.

STI Capital and Trusco serve as joint advisors to the International Equity Index
Fund.

The Advisors are indirect wholly-owned subsidiaries of SunTrust Banks, Inc.
(SunTrust). SunTrust is a southeastern regional bank holding company with assets
of $ billion, as of , 1997. SunTrust is one of the 20 largest banking
companies in the U.S. Its three principal subsidiaries -- SunTrust Banks of
Florida, Inc., SunTrust Banks of Georgia, Inc. and SunTrust Banks of Tennessee,
Inc. -- provide a wide range of personal and corporate banking, trust, and
investment services through more than 600 locations in the tri-state area.
SunTrust Banks, Inc. has discretionary assets under management of approximately
$ billion, as of , 1997.

The Advisors may use their affiliates as brokers for the Funds' portfolio
transactions.

DISTRIBUTION

SEI Investments Distribution Co. (the Distributor), a wholly-owned subsidiary of
SEI Investments Company (SEI), serves as each Fund's distributor under a
Distribution Agreement. The Distributor receives no compensation for
distribution services rendered to the Trust Shares of each Fund.

Each Fund may use the Distributor as its broker for portfolio transactions. The
Distributor receives compensation from the Funds for its brokerage services.

Flex and Investor Shares are offered primarily to individual investors, and are
described in a separate prospectus. Flex Shares are offered subject to a
contingent deferred sales charge. Investor Shares are offered subject to a
front-end sales charge. You may call 1-800-874-4770 to receive more information
about Investor Shares or Flex Shares. It is possible that a financial
institution may offer different classes of shares to its customers. As a result,
the financial institution may receive different compensation with respect to
different classes of shares.

ADMINISTRATION

SEI Fund Resources acts as the Trust's Administrator. For its administrative
services, the Administrator is entitled to a fee from each Fund, which is
calculated daily and paid monthly, at an annual rate as follows:

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

At times, the Administrator may voluntarily waive all or a portion of its
administration fees.
<PAGE>
41

INVESTMENT PRACTICES -- EQUITY FUNDS

CAPITAL VALUE MID-CAP SUNBELT SMALL CAP INTERNATIONAL EMERGING
GROWTH INCOME EQUITY BALANCED EQUITY EQUITY EQUITY INDEX INTERNATIONAL MARKETS
SECURITY OR PRACTICE FUND FUND FUND FUND FUND FUND FUND EQUITY FUND EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADRs X X X X -- X(8) *(3) X(3) X
Bank Obligations X(9) X(9) X(9) X X(9) X(9) X X X
Borrowing (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Convertible Securities X X X X X X X X X
Corporate Debt Securities (35%)(2) (35%)(2) (35%)(2) (60%) (35%)(2) *(9) -- (35%)(2) (35%)(7)
Forward Foreign Currency Contracts -- -- -- -- -- -- X X X
Futures and Options on Futures -- X -- X (20%) -- (20%) X X
Illiquid Securities (15%) (15%) (15%) (15%) (15%) (15%) (15%) (15%) (15%)
Investment Company Shares (10%) (10%)(5) (10%) (10%) (10%)(5) (10%)(5) (10%)(5) (10%)(5) (10%)
Mortgage-Backed Securities -- -- -- (25%)(1) -- -- -- -- X
Options -- X -- X -- X X X(4) X(4)
Pay-In-Kind Securities X -- -- X -- -- -- -- --
Repurchase Agreements X(9) X(9) X X(9) X(9) X(9) X X(9) X(9)
Securities Lending (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Securities of Foreign Issuers -- -- X X -- -- X X X
Supranational Agency Obligations -- -- X X -- X -- -- --
Swaps, Caps, Floors and Collars -- -- -- X -- -- -- -- --
U.S. Treasury and Agency X X X X X(9) X(9) X X(9) X
Obligations
When Issued Securities X X X X X X X X X
Zero Coupon Obligations -- -- -- X -- -- -- -- --
</TABLE>

(1) Including up to 25% privately-issued mortgage-backed securities. The
Balanced Fund may also purchase asset-backed securities without limitation.
(2) May invest up to 10% of its assets in debt securities rated below investment
grade.
(3) May also invest in EDRs.
(4) Includes options on currencies.
(5) May purchase shares of money market mutual funds only for temporary or
liquidity purposes.
(6) May purchase up to 25% rated BBB or Baa.
(7) May invest up to 20% of its assets in debt securities below investment
grade.
(8) May invest up to 20% in unsponsored ADRs.
(9) For temporary or liquidity purposes.
<PAGE>
42

(%) = Maximum percentage permissible. Except for Illiquid Securities, all
percentages shown are of total assets.
X = No policy limitation; Fund may be using currently.
* = Permitted, but not typically used.
- -- = Not permitted.
<TABLE>
<CAPTION>
CAPITAL VALUE MID-CAP SUNBELT SMALL CAP INTERNATIONAL EMERGING
GROWTH INCOME EQUITY BALANCED EQUITY EQUITY EQUITY INDEX INTERNATIONAL MARKETS
TEMPORARY INVESTMENTS FUND FUND FUND FUND FUND FUND FUND EQUITY FUND EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash X X X X X X X X X
Money Market Investments X X X X X X X X X
Short-Term Obligations X X X X X X X X X

EQUITY FUNDS FOR TEMPORARY OR LIQUIDITY PURPOSES.
CAPITAL VALUE MID-CAP SUNBELT SMALL CAP INTERNATIONAL EMERGING
GROWTH INCOME EQUITY BALANCED EQUITY EQUITY EQUITY INDEX INTERNATIONAL MARKETS
INVESTMENT RESTRICTIONS FUND FUND FUND FUND FUND FUND FUND EQUITY FUND EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities of Any One Issuer(1) 5% 5% 5% 5% 5% 5% 5% 5% 5%
Outstanding Voting Securities of 10% 10% 10% 10% 10% 10% 10% 10% 10%
Any One Issuer
Securities of Issuers in Any One 25% 25% 25% 25% 25% 25% 25% 25% 25%
Industry(2)
Expected Annual Portfolio Turnover % % % % % % % % %
</TABLE>

(1) A Fund may invest up to 25% of its total assets without regard to this
restriction as permitted by applicable law.
(2) Additional information relating to industry classifications can be found in
the SAI.
<PAGE>
43

MORE ABOUT INVESTMENT PRACTICES

The following is a description of some of the permitted investments for the
Funds. Further discussion is contained in the SAI.

AMERICAN DEPOSITARY RECEIPTS (ADRs) AND EUROPEAN DEPOSITARY RECEIPTS (EDRs) are
securities, typically issued by a U.S. financial institution (or a non-U.S.
financial institution in the case of an EDR) (a "depositary"). The institution
has ownership interests in a security, or a pool of securities, issued by a
foreign issuer and deposited with the depositary. ADRs and EDRs may be available
through "sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the security underlying the receipt and a
depositary. An unsponsored facility may be established by a depositary without
participation by the issuer of the underlying security.

ASSET-BACKED SECURITIES are securities backed by non-mortgage assets such as
company receivables, truck and auto loans, leases, and credit card receivables.
These securities are generally issued as pass-through certificates, which
represent undivided fractional ownership interests in the underlying pools of
assets. Asset-backed securities may also 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 these assets and issuing these debt.

BANK OBLIGATIONS are SHORT-TERM CORPORATE OBLIGATIONS issued by U.S. and foreign
banks, including bankers' acceptances, certificates of deposit (CDs), custodial
receipts, and time deposits.

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

EQUITY SECURITIES include common and preferred stocks, warrants, rights to
subscribe to common stock, and convertible securities and may be publicly or
privately issued.

FORWARD FOREIGN CURRENCY CONTRACTS involve an obligation to purchase or sell a
specific currency amount at a future date, agreed upon by the parties, at a
price set at the time of the contract. A Fund may also enter into a contract to
sell, for a fixed amount of U.S. dollars or other appropriate currency, the
amount of foreign currency approximating the value of some or all of the Fund's
securities denominated in the foreign currency. The Fund may realize a gain or
loss from currency transactions.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS provide for the future sale
by one party and purchase by another party of a specified amount of a specific
security at a specified future time and at a specified price. An option on a
futures contract gives the purchaser the right, in exchange for a premium, to
assume a position in a futures contract at a specified exercise price during the
term of the option.

A Fund may use futures contracts, and related options for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired. They may also be used to minimize fluctuations in foreign currencies
or to gain exposure to a particular market or instrument. A Fund will minimize
the risk that it will be unable to close out a futures
<PAGE>
44
contract by only entering into futures contracts which are traded on national
futures exchanges.

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

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.

INVESTMENT COMPANY SHARES -- Shares of other mutual funds may be purchased by
the Funds to the extent consistent with applicable law.

MONEY MARKET INSTRUMENTS are high quality, dollar-denominated, short-term debt
instruments, including BANK OBLIGATIONS, U.S. TREASURY OBLIGATIONS and
obligations issued or guaranteed by the agencies or instrumentalities of the
U.S. Government, and SHORT-TERM CORPORATE OBLIGATIONS.

MORTGAGE-BACKED SECURITIES are instruments that entitle the holder to a share of
all interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional fifteen- and thirty-year
fixed rate mortgages, graduated payment mortgages, adjustable rate mortgages,
and floating rate mortgages.

During periods of declining interest rates, prepayment of mortgages underlying
mortgage-backed securities can be expected to accelerate. It is often not
possible to predict accurately the average life or realized yield of a
particular issue.

GOVERNMENT PASS-THROUGH SECURITIES are securities issued or guaranteed by a U.S.
Government agency representing an interest in a pool of mortgage loans.
Government and private guarantees do not extend to the securities' value, which
is likely to vary inversely with fluctuations in interest rates.

PRIVATE PASS-THROUGH SECURITIES are mortgage-backed securities issued by a non-
governmental entity, such as a trust. While they are generally structured with
one or more types of credit enhancement, private pass-through securities
typically lack a guarantee by an entity having the credit status of a
governmental agency or instrumentality.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) are debt obligations or multi-class
pass-through certificates issued by agencies or instrumentalities of the U.S.
Government, or by private originators, or investors in mortgage loans. Each
class of a CMO is issued with a specific fixed or floating interest rate and has
a stated maturity or final distribution date. Principal payments on the
underlying mortgage assets may cause CMOs to be retired substantially earlier
then their stated maturities or final distribution dates. This can result in a
loss of all, or part, of any premium paid.

REMICS are CMOs that qualify for special tax treatment under the Internal
Revenue Code. They invest in certain mortgages that are principally secured by
interests in real property. These securities are often guaranteed as to the
payment of principal and/or interest as payments are required to be made on the
underlying mortgage participation certificates.

STRIPPED MORTGAGE-BACKED SECURITIES (SMBS) are usually structured with two
classes that
<PAGE>
45
receive specified proportions of the monthly interest and principal payments
from a pool of mortgage securities. One class may receive all of the interest
payments, and the other class may receive all of the principal payments. SMBs
are extremely sensitive to changes in interest rates because of the impact of
prepayment of principal on the underlying mortgage securities.

OBLIGATIONS OF SUPRANATIONAL ENTITIES -- Obligations of supranational entities
are established through the joint participation of several governments,
including the Asian Development Bank, the Inter-American Development Bank,
International Bank for Reconstruction and Development (World Bank), African
Development Bank, European Economic Community, European Investment Bank, and the
Nordic Investment Bank.

OPTIONS -- All options written by a Fund will be "covered," which means that the
Fund will own an equal amount of the underlying currency or security. With
respect to put options written by the Fund, the Fund will establish a segregated
account with its custodian bank consisting of cash or liquid securities in an
amount equal to the amount the Fund would be required to pay upon exercise of
the put.

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

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.

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. The Trust's Board of Trustees has adopted procedures for
determining the liquidity of restricted securities.

SECURITIES LENDING -- To generate additional income, a Fund may lend securities
which it owns pursuant to agreements requiring that the loan be continuously
secured by collateral equal to at least 100% of the market value of the loaned
securities. A Fund continues to receive interest on the loaned securities while
simultaneously earning interest on the investment of cash collateral.

SECURITIES OF FOREIGN ISSUERS are securities issued by foreign corporations,
including foreign branches of U.S. banks and foreign banks, and by foreign
governments or their agencies or instrumentalities. There are special risk
considerations associated with foreign securities. (See "Foreign Securities
Risks" on page .)

SHORT-TERM CORPORATE OBLIGATIONS are corporate obligations maturing in 397 days
or less, including commercial paper and other short-term corporation
obligations.

STANDBY COMMITMENTS AND PUTS -- Securities subject to standby commitments or
puts permit the holder 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.
<PAGE>
46

SWAPS, CAPS, FLOORS, and COLLARS -- Swaps, caps, floors, and collars are hedging
tools designed to permit the purchaser to preserve a return or spread on a
particular investment or portion of its portfolio. They are also used to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. Swap agreements are sophisticated hedging instruments that
typically involve a small investment of cash relative to the magnitude of risk
assumed. As a result, swaps can be highly volatile and have a considerable
impact on the Fund's performance.

TEMPORARY DEFENSIVE INVESTMENTS -- For temporary defensive purposes, the Funds
may invest up to 100% of their assets in MONEY MARKET INSTRUMENTS and SHORT-TERM
CORPORATE OBLIGATIONS or hold cash. To the extent that the Funds are investing
for temporary defensive purposes, they will not be pursuing their respective
investment objectives.

U.S. GOVERNMENT AGENCY OBLIGATIONS are obligations issued or guaranteed by
agencies or instrumentalities of the U.S. Government. Some of these securities
are supported by the full faith and credit of the U.S. Treasury, others are
supported by the right of the issuer to borrow from the Treasury, and others are
supported only by the credit of the instrumentality.

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

VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain obligations may 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.

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

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES involve the purchase of an
instrument with payment and delivery taking place in the future. Delivery of,
and payment for, these securities may occur a month or more after the date of
the purchase commitment. The interest rate realized on these securities is fixed
as of the purchase date and no interest accrues to the Fund before settlement.

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 accumulated. Such
obligations will not result in the payment of interest until maturity, and will
have greater price volatility than similar securities that are issued at par and
pay interest periodically.
<PAGE>

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

* INVESTMENT ADVISORS

Trusco Capital Management, Inc. 50 Hurt Plaza
Suite 1400
Atlanta, GA 30303

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

* DISTRIBUTOR

SEI Investments Distribution Co. Oaks, PA 19456

* ADMINISTRATOR

SEI Fund Resources 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

The Bank of New York One Wall Street
(International Equity Fund only) New York, New York 10286

* LEGAL COUNSEL

Morgan, Lewis & Bockius LLP 1800 M Street, N.W.
Washington, D.C. 20036

* INDEPENDENT PUBLIC ACCOUNTANTS
</TABLE>
<PAGE>
WHY INVEST IN MUTUAL FUNDS?

How you invest for your future is one of the most important decisions you will
ever make. The investments you select today can make a big difference when it
comes time to pay for your children's educations or for your own comfortable
retirement. But with so many investments to choose from, it's hard to know where
to start.

Mutual funds may be the answer. A mutual fund is an investment company that
pools money from its shareholders and invests it in a variety of securities,
including stocks, bonds and money market securities. When you become a
shareholder, you own a proportionate share of the assets of the funds. The value
of your shares increases or decreases in line with the performance of the
investments in the fund. Many funds pay regular dividends that may be reinvested
to purchase additional shares of the fund. This may help your investment to grow
even faster.

BENEFITS OF MUTUAL FUNDS

There are many benefits to mutual fund investing. When you invest in individual
stocks or bonds you are on your own. You must do the research. You choose the
security. You time the purchase and, you decide when to sell. Perhaps you have a
stockbroker to help you. Then, you pay the commission on each transaction.

With a mutual fund investment, you have a professional portfolio manager with
the expertise and resources needed to choose investments that meet the
objectives of the fund's investors. When you invest in individual securities,
you alone bear the costs of investing. With a mutual fund investment, trading
costs are shared by all fund investors. When you invest in individual
securities, you need to purchase a wide range of securities to truly diversify
your portfolio. With a mutual fund investment, you experience immediate
diversification. With individual securities, it may be difficult to liquidate
your investment. Mutual fund shares are easily sold at their current value.

ABOUT STI CLASSIC FUNDS

But, there are thousands of mutual funds to choose from. How do you know which
to choose? The name you trust for your banking today can offer you the
investment expertise you need to plan for your future.

STI Classic Funds offers you a wide range of investment strategies. Your money
will be managed by professional portfolio managers with many years of investment
experience in equity, fixed-income funds, and money market funds.

The STI Classic Funds are advised by STI Capital Management, N.A., Trusco
Capital Management, Inc., SunTrust Bank, Atlanta, and SunTrust Bank,
Chattanooga, N.A. These advisory units are affiliates of SunTrust Banks, Inc., a
super-regional bank holding company with approximately $ billion in
discretionary assets under management. Currently, these advisors collectively
manage more than $ billion in equity and fixed-income mutual fund assets.
<PAGE>
Additional information about the Funds is included in a Statement of Additional
Information dated (the SAI). The SAI has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. You may obtain a copy of the SAI, or of the annual or semi-annual
reports, without charge by calling 1-800-874-4770, or by contacting the
Distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456.

NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE TRUST'S SAI IN
CONNECTION WITH THE OFFERING OF FUND SHARES. DO NOT RELY ON ANY SUCH INFORMATION
OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY THE TRUST OR SEI INVESTMENTS
DISTRIBUTION CO. (THE DISTRIBUTOR).
<PAGE>
PROSPECTUS

STI CLASSIC FUNDS

TRUST SHARES

INVESTMENT GRADE BOND FUND
U.S. GOVERNMENT SECURITIES FUND
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
SHORT-TERM BOND FUND
SHORT-TERM U.S. TREASURY SECURITIES FUND
INVESTMENT GRADE TAX-EXEMPT BOND FUND
FLORIDA TAX-EXEMPT BOND FUND
GEORGIA TAX-EXEMPT BOND FUND
TENNESSEE TAX-EXEMPT BOND FUND
PRIME QUALITY MONEY MARKET FUND
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND

Investment Advisors to the Funds:
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
SUNTRUST BANK, ATLANTA
SUNTRUST BANK, CHATTANOOGA, N.A.
(THE ADVISORS)

The STI Classic Funds (the Trust) is a mutual fund that offers shares in a
number of separate investment portfolios (each a Fund and, collectively, the
Funds). This Prospectus gives you important information about the Trust Shares
of the Fixed-Income Funds and Money Market Funds listed above. Please read this
Prospectus, and keep it for future reference.

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 CONSTANT VALUE OF $1.00 PER SHARE.

OCTOBER 1, 1997
<PAGE>
2

ABOUT THE TRUST

STI Classic Funds is a diversified, open-end management investment company. The
Funds provide a convenient and economical way for you to invest in a number of
professionally managed portfolios of securities. You may purchase shares in each
non-Money Market Fund through three separate classes (Trust Shares, Investor
Shares, and Flex Shares). You may purchase each Money Market Fund through two
separate classes (Trust Shares and Investor Shares). The separate classes
provide for variations in distribution and service fees, transfer agent fees,
voting rights, and dividends. This Prospectus relates to the Trust Shares of
the:

Investment Grade Bond Fund, U.S. Government Securities Fund, Limited-Term
Federal Mortgage Securities Fund, Short-Term Bond Fund, Short-Term U.S.
Treasury Securities Fund, Investment Grade Tax-Exempt Bond Fund (the
Fixed-Income Funds);

Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund, and Tennessee
Tax-Exempt Bond Fund (the State Tax-Exempt Funds);

Prime Quality Money Market Fund, U.S. Government Securities Money Market
Fund, and Tax-Exempt Money Market Fund (the Money Market Funds).

ABOUT MONEY MARKET FUNDS

The Money Market Funds are governed by SEC Rules which impose certain quality,
maturity, and diversification requirements. Each Fund's assets are valued using
the amortized cost method, which enables a Money Market Fund to maintain a
stable net asset value per share. All securities purchased by a Money Market
Fund must have remaining maturities of 13 months or less.
<PAGE>
3

FUND INFORMATION -- FIXED-INCOME FUNDS

INVESTMENT GRADE BOND FUND

OBJECTIVE

The Investment Grade Bond Fund seeks to provide as high a level of total return
through current income and capital appreciation as is consistent with the
preservation of capital primarily through investment in investment grade
fixed-income securities.

PORTFOLIO INVESTMENTS

The Fund primarily invests in bonds, including debentures. The Fund invests only
in investment grade obligations, including:

- corporate debt obligations;

- mortgage-backed securities;

- asset-backed securities;

- U.S. Government obligations;

- custodial receipts;

- foreign government securities;

- obligations of supranational entities;

- sponsored American Depositary Receipts (ADRs); and

- short-term obligations.

It is anticipated that the Fund's average weighted maturity will range from four
to ten years, which may impact the Fund's exposure to interest rate risk. The
Fund may shorten its average weighted maturity to as little as 90 days for
temporary defensive purposes.

RISK CONSIDERATIONS

The Investment Grade Bond Fund is subject to the following types of risk:

- - Fund Risk;
- - Interest Rate Risk;
- - Credit Risk;
- - Call Risk;

- - Event Risk;
- - Prepayment Risk;
- - Hedging Risk; and
- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Mr. L. Earl Denney, CFA, has managed the Investment Grade Bond Fund since it
began operating. He has been Senior Vice President of STI Capital Management,
N.A. since 1983.
<PAGE>
4

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Investment Grade Bond Fund. The financial highlights for the
Fund for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED
MAY 31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 10.26 9.89 10.45 10.09
Net Investment Income (Loss) $ 0.60 0.61 0.50 0.45
Realized and Unrealized Net Gains (Losses) on
Investments $ (0.19 ) 0.37 (0.36 ) 0.36
Distributions from Net Investment Income $ (0.60 ) (0.61 ) (0.50 ) (0.45 )
Distributions from Realized Capital Gains -- -- $ (0.20 ) --
Net Asset Value, End of Period $ 10.07 10.26 9.89 10.45
Total Return 4.02% 10.39% 1.17% 9.34%*
Net Assets End of Period (000) $ 599,514 543,308 460,538 336,132
Ratio of Expenses to Average Net Assets 0.75% 0.75% 0.75% 0.74%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 5.81% 6.22% 4.77% 5.14%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 0.87% 0.88% 0.88% 0.87%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 5.69% 6.09% 4.64% 5.01%*
Portfolio Turnover Rate 184% 238% 259% 299%
</TABLE>

* Annualized.
(1) Commenced operations on July 16, 1992.
<PAGE>
5

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .63%
Waivers and Reimbursements(1)

Other Expenses .12%

Total Fund Operating Expenses After .75%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .74% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .86%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 8 $ 24 $ 42 $ 93
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
6

U.S. GOVERNMENT SECURITIES FUND

OBJECTIVE

The U.S. Government Securities Fund seeks to provide as high a level of current
income as is consistent with the preservation of capital by investing primarily
in obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

PORTFOLIO INVESTMENTS

The Fund primarily invests in:

- mortgage-backed securities issued or guaranteed by U.S. Government
agencies such as the Government National Mortgage Association (GNMA),
Fannie Mae, or the Federal Home Loan Mortgage Corporation (FHLMC); and

- mortgage-backed securities consisting of CMOs and real estate mortgage
investment conduits (REMICs) issued or guaranteed as to payment of
principal and interest by the U.S. Government, its agencies or
instrumentalities or, issued by private issuers.

The average maturity of the Fund's portfolio will typically range from 7 to 14
years, which may impact the Fund's exposure to interest rate risk.

The Fund also may invest in:

- U.S. Government obligations;

- bank obligations;

- short-term corporate obligations; and

- repurchase agreements.

RISK CONSIDERATIONS

The U.S. Government Securities Fund is subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk; and

- - Prepayment Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Mr. Charles B. Leonard, CFA, First Vice President of Trusco Capital Management,
Inc., and Michael L. Ford, an Associate of Trusco, have co-managed the U.S.
Government Securities Fund since it began operating. Mr. Leonard, who has more
than 25 years of investment experience, has been with Trusco since 1986 as the
senior fixed income manager. Mr. Ford, who has more than 11 years of investment
experience, has been with Trusco since April 1994. Prior to joining Trusco, he
served as a senior securities analyst with Liberty Capital Advisors from 1992 to
1994 and has served as a securities analyst at Southern Farm Bureau Life
Insurance Company from 1990 to 1992.
<PAGE>
7

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the U.S. Government Securities Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report appears in
STI Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995(1)
Net Asset Value, Beginning of Period $ 10.27 9.98
Net Investment Income (Loss) $ 0.62 0.53
Realized and Unrealized Net Gains (Losses) on Investments $ (0.33 ) 0.29
Distributions from Net Investment Income $ (0.62 ) (0.53 )
Distributions from Realized Capital Gains $ (0.03 ) --
Net Asset Value, End of Period $ 9.91 10.27
Total Return 2.77% 8.64%*+
Net Assets End of Period (000) $ 10,277 3,291
Ratio of Expenses to Average Net Assets 0.75% 0.75%
Ratio of Net Investment Income (Loss) to Average Net Assets 6.05% 6.67%
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) 1.25% 3.33%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers and
Reimbursements) 5.55% 4.09%
Portfolio Turnover Rate 83% 30%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on July 31, 1994.
<PAGE>
8

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .16%
Waivers and Reimbursements(1)

Other Expenses .59%

Total Fund Operating Expenses After .75%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .74% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.33%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 8 $ 24 $ 42 $ 93
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
9

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

OBJECTIVE

The Limited-Term Federal Mortgage Securities Fund seeks to provide as high a
level of current income as is consistent with the preservation of capital by
investing primarily in mortgage-related securities issued or guaranteed by U.S.
Government agencies and instrumentalities.

PORTFOLIO INVESTMENTS

The Fund primarily invests in mortgage-backed securities issued or guaranteed by
U.S. Government agencies, such as GNMA, Fannie Mae, or FHLMC. These securities
typically have an average life of from one to five years.

The Fund also may invest in:

- bank obligations;

- asset-backed securities;

- short-term corporate obligations;

- U.S. Government obligations; and

- repurchase agreements.

RISK CONSIDERATIONS

The Limited-Term Federal Mortgage Securities Fund is subject to the following
types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk; and

- - Prepayment Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Mr. L. Earl Denney, CFA, and Mr. Dave E. West, CFA, have co-managed the
Limited-Term Federal Mortgage Securities Fund since it began operating. Mr.
Denney has served as Senior Vice President of STI Capital Management, N.A. since
1983. Mr. West, a Vice President of STI Capital Management, N.A., has served as
a fixed-income portfolio manager with STI since 1989.
<PAGE>
10

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Limited-Term Federal Mortgage Securities Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995(1)
Net Asset Value, Beginning of Period $ 10.11 10.00
Net Investment Income (Loss) $ 0.62 0.58
Realized and Unrealized Net Gains (Losses) on Investments $ (0.14 ) 0.13
Distributions from Net Investment Income $ (0.60 ) (0.60 )
Distributions from Realized Capital Gains -- --
Net Asset Value, End of Period $ 9.99 10.11
Total Return 4.84% 7.50%+
Net Assets End of Period (000) $ 73,370 41,823
Ratio of Expenses to Average Net Assets 0.65% 0.65%
Ratio of Net Investment Income (Loss) to Average Net Assets 6.04% 6.43%
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) 0.84% 0.93%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers and
Reimbursements) 5.85% 6.15%
Portfolio Turnover Rate 83% 68%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 7, 1994.
<PAGE>
11

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .43%
Waivers and Reimbursements(1)

Other Expenses .22%

Total Fund Operating Expenses After .65%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .87%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 8 $ 24 $ 42 $ 93
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
12

SHORT-TERM BOND FUND

OBJECTIVE

The Short-Term Bond Fund seeks to provide as high a level of current income,
relative to funds with like investment objectives, as is consistent with the
preservation of capital primarily through investment in short- to
intermediate-term investment grade fixed-income securities.

PORTFOLIO INVESTMENTS

The Fund primarily invests in corporate and government bonds, including
debentures. The Fund invests only in investment grade obligations, including:

- debt obligations of U.S. and foreign corporations;

- mortgage-backed securities;

- asset-backed securities;

- U.S. Government obligations; and

- custodial receipts.

The Fund also may invest in investment grade municipal bonds and high quality
municipal notes

- where both principal and interest are backed by the full faith and credit
of the United States; or

- which are rated in the two highest rating categories.

The Fund intends to maintain a dollar-weighted average maturity of three years
or less, which may impact the Fund's exposure to interest rate risk. The Fund
may shorten its average weighted maturity to as little as 90 days for temporary
defensive purposes.

RISK CONSIDERATIONS

The Short-Term Bond Fund is subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk;

- - Prepayment Risk; and

- - Foreign Security Risk.

For a description of these risks, see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Mr. David Yealy has managed the Short-Term Bond Fund since July, 1996. He joined
Trusco Capital Management, Inc. in 1991, and currently serves as a Vice
President.
<PAGE>
13

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Short-Term Bond Fund. The financial highlights for the Fund
for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 9.98 9.79 10.01 10.00
Net Investment Income (Loss) $ 0.54 0.53 0.42 0.08
Realized and Unrealized Net Gains (Losses) on Investments $ (0.10 ) 0.19 (0.21 ) 0.01
Distributions from Net Investment Income $ (0.54 ) (0.53 ) (0.42 ) (0.08 )
Distributions from Realized Capital Gains $ (0.02 ) -- (0.01 ) --
Net Asset Value, End of Period $ 9.86 9.98 9.79 10.01
Total Return 4.45% 7.60% 2.02% 4.45%*
Net Assets End of Period (000) $ 91,156 60,952 34,772 25,334
Ratio of Expenses to Average Net Assets 0.65% 0.65% 0.65% 0.64%*
Ratio of Net Investment Income (Loss) to Average Net Assets 5.39% 5.49% 4.15% 3.88%*
Ratio of Expenses to Average Net Assets (Excluding Waivers
and Reimbursements) 0.81% 0.85% 0.85% 1.11%*
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers and Reimbursements) 5.23% 5.29% 3.95% 3.41%*
Portfolio Turnover Rate 163% 200% 75% 64%
</TABLE>

* Annualized.
(1) Commenced operations on March 15, 1993.
<PAGE>
14

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .46%
Waiver and Reimbursements(1)

Other Expenses .19%

Total Fund Operating Expenses After .65%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .84%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 8 $ 24 $ 42 $ 93
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
15

SHORT-TERM U.S. TREASURY SECURITIES FUND

OBJECTIVE

The Short-Term U.S. Treasury Securities Fund seeks to provide as high a level of
current income, relative to funds with like investment objectives, as is
consistent with the preservation of capital through investment exclusively in
short-term U.S. Treasury securities.

PORTFOLIO INVESTMENTS

The Fund invests exclusively in obligations issued by the U.S. Treasury with
remaining maturities of three years or less. The Fund will not invest in
repurchase agreements.

Under normal market conditions, it is anticipated that the Fund's average
maturity will range from one to two years, which may impact the Fund's exposure
to interest rate risk.

RISK CONSIDERATIONS

The Short-Term U.S. Treasury Securities Fund is subject to the following types
of risk:

- Fund Risk; and

- Interest Rate Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Mr. David Yealy, has managed the Short-Term U.S. Treasury Securities Fund since
July, 1996. He joined Trusco Capital Management, Inc. in 199 and currently
serves as a Vice President.
<PAGE>
16

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Short-Term U.S. Treasury Securities Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose
report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 9.93 9.82 9.98 10.00
Net Investment Income (Loss) $ 0.55 0.47 0.33 0.07
Realized and Unrealized Net Gains (Losses) on Investments $ (0.09) 0.11 (0.11) (0.02)
Distributions from Net Investment Income $ (0.55) (0.47) (0.33) (0.07)
Distributions from Realized Capital Gains -- -- (0.05) --
Net Asset Value, End of Period $ 9.84 9.93 9.82 9.98
Total Return 4.73% 6.11% 2.17% 2.22%*
Net Assets End of Period (000) $10,149 9,599 12,723 30,336
Ratio of Expenses to Average Net Assets 0.65 % 0.65 % 0.65 % 0.63 %*
Ratio of Net Investment Income (Loss) to Average Net Assets 5.56 % 4.91 % 3.23 % 3.34 %+
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 1.00 % 1.08 % 0.81 % 1.04 %*
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers and Reimbursements) 5.21 % 4.48 % 3.07 % 2.93 %
Portfolio Turnover Rate 94 % 88 % 117 % 36 %
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on March 15, 1992.
<PAGE>
17

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .22%
Waivers and Reimbursements(1)

Other Expenses .43%

Total Fund Operating Expenses After .65%
Fee Waivers and Reimbursements(1)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.08%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 7 $ 21 $ 36 $ 81
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
18

INVESTMENT GRADE TAX-EXEMPT BOND FUND

OBJECTIVE

The Investment Grade Tax-Exempt Bond Fund seeks to provide as high a level of
total return through federally tax-exempt current income and capital
appreciation as is consistent with the preservation of capital primarily through
investment in investment grade tax-exempt obligations.

PORTFOLIO INVESTMENTS

The Fund invests primarily in investment-grade municipal bonds and debentures
issued by:

- any of the fifty states;

- District of Columbia; and

- Puerto Rico and other U.S. territories and possessions.

The Fund also may invest in notes, tax-exempt commercial paper, and variable
rate demand obligations. These securities must be rated in the highest two
ratings categories. The Fund will only acquire unrated securities that are of
comparable quality.

At least 80% of the Fund's total assets are invested in securities with income
exempt from regular federal income tax and not treated as a preference item for
purposes of the federal alternative minimum tax. The Fund also may invest in
investment grade taxable debt securities, repurchase agreements, and securities
subject to the federal alternative minimum tax (up to a maximum 20% of its total
assets).

Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from four to ten years, which may impact the Fund's
exposure to interest rate risk. The Fund may shorten its average weighted
maturity to as little as 90 days for temporary defensive purposes.

RISK CONSIDERATIONS

The Investment Grade Tax-Exempt Bond Fund is subject to the following types of
risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk; and

- - Hedging Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Mr. Ronald Schwartz, CFA, has managed the Investment Grade Tax-Exempt Bond Fund
since the Fund began operations. He joined STI Capital Management, N.A. in 1988,
and currently serves as a Senior Vice President.
<PAGE>
19

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Investment Grade Tax-Exempt Bond Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994(1)
Net Asset Value, Beginning of Period $ 11.28 10.68 11.37
Net Investment Income (Loss) $ 0.45 0.46 0.22
Realized and Unrealized Net Gains (Losses) on Investments $ 0.19 0.60 (0.34 )
Distributions from Net Investment Income $ (0.45 ) (0.46 ) (0.22 )
Distributions from Realized Capital Gains $ (0.37 ) -- (0.35 )
Net Asset Value, End of Period $ 11.10 11.28 10.68
Total Return 5.82% 10.21% (1.10 )%+
Net Assets End of Period (000) $ 124,507 78,208 44,595
Ratio of Expenses to Average Net Assets 0.75% 0.75% 0.75%
Ratio of Net Investment Income (Loss) to Average Net Assets 4.01% 4.34% 3.46%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 0.89% 0.91% 0.95%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 3.87% 4.18% 3.26%*
Portfolio Turnover Rate 514% 592% 432%
</TABLE>

* Annualized.
(1) Commenced operations on October 21, 1993.
<PAGE>
20

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .61%
Waivers and Reimbursements(1)

Other Expenses .14%

Total Fund Operating Expenses After .75%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .74% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .88%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 8 $ 24 $ 42 $ 93
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
21

FUND INFORMATION -- STATE TAX-EXEMPT BOND FUNDS

FLORIDA TAX-EXEMPT BOND FUND

OBJECTIVE

The Florida Tax-Exempt Bond Fund seeks to provide current income exempt from
regular federal income tax for Florida residents without undue investment risk.

PORTFOLIO INVESTMENTS

The Fund primarily invests in Florida municipal bonds and debentures. The Fund
intends to be fully invested in municipal securities with income exempt from
regular federal income tax. The issuers of these securities can be located in:

- Florida;

- District of Columbia; and

- Puerto Rico and other U.S. territories and possessions.

At least 80% of the Fund's total assets will be invested in securities with
income exempt from regular federal income tax and not treated as a preference
item for purposes of the federal alternative minimum tax.

Municipal bonds must be rated investment grade or better. The Fund also may
invest in notes, tax-exempt commercial paper, and variable rate demand
obligations. These securities must be rated in the two highest ratings
categories. No more than 25% of the Fund's total assets will be invested in
securities rated BBB by Standard & Poor's Corporation (S&P) or Baa by Moody's
Investors Services, Inc. (Moody's). The Fund will only acquire unrated
securities that are of comparable quality.

The Fund also may invest in investment grade taxable debt securities, repurchase
agreements, and securities subject to the federal alternative minimum tax (up to
a maximum 20% of its total assets).

Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from 6 to 25 years, which may impact the Fund's
exposure to interest rate risk. The Fund may shorten its average weighted
maturity to as little as 90 days for temporary defensive purposes.

RISK CONSIDERATIONS

The Florida Tax-Exempt Bond Fund is subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk;

- - Geographic Risk; and

- - Hedging Risk.

<PAGE>
22

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Mr. Ronald Schwartz, CFA, has managed the Florida Tax-Exempt Bond Fund since the
Fund began operations. He joined STI Capital Management, N.A. in 1988, and
currently serves as Senior Vice President.
<PAGE>
23

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Florida Tax-Exempt Bond Fund. The financial highlights for
the Fund for the periods from inception through May 31, 1996 have been audited
by , independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994(1)
Net Asset Value, Beginning of Period $ 10.18 9.75 10.00
Net Investment Income (Loss) $ 0.46 0.44 0.13
Realized and Unrealized Net Gains (Losses) on Investments $ (0.07) 0.43 (0.25)
Distributions from Net Investment Income (0.46) (0.44) (0.13)
Distributions from Realized Capital Gains $ (0.05) -- --
Net Asset Value, End of Period $ 10.06 10.18 9.75
Total Return 3.87% 9.26% (1.19)%+
Net Assets End of Period (000) $30,790 10,118 3,192
Ratio of Expenses to Average Net Assets 0.65% 0.65% 0.65%*
Ratio of Net Investment Income (Loss) to Average Net Assets 4.49% 4.63% 3.86%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 0.88% 1.13% 1.12%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 4.26% 4.15% 3.39%*
Portfolio Turnover Rate 63% 105% 53%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on January 25, 1994.
<PAGE>
24

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .38%
Waivers and Reimbursements(1)

Other Expenses .27%

Total Fund Operating Expenses After .65%
Fee Waivers and Reimbursements(2)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .92%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 7 $ 21 $ 36 $ 81
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
25

GEORGIA TAX-EXEMPT BOND FUND

OBJECTIVE

The Georgia Tax-Exempt Bond Fund seeks to provide current income exempt from
regular federal income tax for Georgia residents without undue investment risk.

PORTFOLIO INVESTMENTS

The Fund primarily invests in Georgia municipal bonds and debentures. The Fund
intends to be fully invested in municipal securities with income exempt from
regular federal income tax and substantially exempt from State of Georgia income
tax. The issuers of these securities can be located in:

- Georgia;

- District of Columbia; and

- Puerto Rico and other U.S. territories and possessions.

At least 80% of the Fund's total assets will be invested in securities the
income from which is exempt from regular federal income tax and not treated as a
preference item for purposes of the federal alternative minimum tax.

Municipal securities must be rated investment grade or better. The Fund also may
invest in notes, tax-exempt commercial paper, and variable rate demand
obligations. These securities must be rated in the highest two ratings
categories. No more than 25% of the Fund's assets may be invested in securities
rated BBB by S&P or Baa by Moody's. The Fund will only acquire unrated
securities that are of comparable quality.

The Fund may invest in commitments to purchase the above securities on a
when-issued or delayed delivery basis, floating or variable rate securities, and
may purchase municipal forwards, putable securities, medium term notes, and zero
coupon securities. The Fund also may invest in investment grade taxable debt
securities, repurchase agreements, and securities subject to the federal
alternative minimum tax (up to a maximum of 20% of its total assets).

RISK CONSIDERATIONS

The Georgia Tax-Exempt Bond Fund is subject to the following types of risk:

- Fund Risk;

- Interest Rate Risk;

- Credit Risk;

- Call Risk;

- Event Risk;

- Geographic Risk; and

- Hedging Risk.
<PAGE>
26

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.

FUND MANAGEMENT

Ms. Gay Cash has managed the Georgia Tax-Exempt Bond Fund since it began
operating. She has more than 16 years of investment experience and has served as
a Vice President of SunTrust Bank, Atlanta since 1987.
<PAGE>
27

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Georgia Tax-Exempt Bond Fund. The financial highlights for
the Fund for the periods from inception through May 31, 1996 have been audited
by , independent public accountants, whose report appears
in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994(1)
Net Asset Value, Beginning of Period $ 9.63 9.42 10.00
Net Investment Income (Loss) $ 0.43 0.42 0.14
Realized and Unrealized Net Gains (Losses) on Investments $ (0.05) 0.21 (0.58)
Distributions from Net Investment Income $ (0.46) (0.44) (0.13)
Distributions from Realized Capital Gains $ (0.05) -- --
Net Asset Value, End of Period $ 10.00 10.18 9.75
Total Return 3.87% 9.26% (1.19)%+
Net Assets End of Period (000) $30,790 10,118 3,192
Ratio of Expenses to Average Net Assets 0.65% 0.65% 0.65%*
Ratio of Net Investment Income (Loss) to Average Net Assets 4.36% 4.56% 4.12%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) 0.89% 0.98% 1.06%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers and
Reimbursements) 4.12% 4.23% 3.71%
Portfolio Turnover Rate 60% 25% 26%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on January 18, 1994.
<PAGE>
28

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .37%
Waivers and Reimbursements(1)

Other Expenses .28%

Total Fund Operating Expenses After .65%
Fee Waivers and Reimbursements(1)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .93%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 7 $ 21 $ 36 $ 81
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
29

TENNESSEE TAX-EXEMPT BOND FUND

OBJECTIVE

The Tennessee Tax-Exempt Bond Fund seeks to provide current income exempt from
regular federal income tax for Tennessee residents without undue investment
risk.

PORTFOLIO INVESTMENTS

The Fund primarily invests in Tennessee municipal bonds and debentures. The Fund
intends to be fully invested in municipal securities the income on which is
exempt from regular federal income tax and substantially exempt from State of
Tennessee income tax. The issuers of these securities can be located in:

- Tennessee;

- District of Columbia;

- Puerto Rico and other U.S. territories and possessions.

The Fund also may invest in taxable debt securities, repurchase agreements, and
securities subject to the federal alternative minimum tax (up to a maximum 20%
of its total assets).

RISK CONSIDERATIONS

The Tennessee Tax-Exempt Bond Fund is subject to the following types of risk:

- Fund Risk;

- Interest Rate Risk;

- Credit Risk;

- Call Risk;

- Event Risk;

- Geographic Risk; and

- Hedging Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.
<PAGE>
30

FUND MANAGEMENT

Mr. Ronald Schwartz, CFA, has managed the Tennessee Tax-Exempt Bond Fund since
the Fund began operating. He joined STI Capital in 1988, and currently serves as
Vice President and Trust Investment Officer of SunTrust Bank, Chattanooga.
<PAGE>
31

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Tennessee Tax-Exempt Bond Fund. The financial highlights for
the Fund for the periods from inception through May 31, 1996 have been audited
by , independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994(1)
Net Asset Value, Beginning of Period $ 9.50 9.22 10.00
Net Investment Income (Loss) $ 0.43 0.44 0.12
Realized and Unrealized Net Gains (Losses) on Investments $ (0.11) 0.28 (0.77)
Distributions from Net Investment Income $ (0.42) (0.44) (0.13)
Distributions from Realized Capital Gains -- -- --
Net Asset Value, End of Period $ 9.40 9.50 9.22
Total Return 3.43% 8.17% (6.52)%+
Net Assets End of Period (000) $ 1,828 1,664 594
Ratio of Expenses to Average Net Assets 0.65% 0.65% 0.65%*
Ratio of Net Investment Income (Loss) to Average Net Assets 4.49% 4.90% 4.24%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) 1.68% 2.65% 1.43%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers and
Reimbursements) 3.46% 2.90% 3.46%*
Portfolio Turnover Rate 41% 28% 13%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on January 27, 1994.
<PAGE>
32

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .00%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers(2) .65%

Total Fund Operating Expenses After .65%
Fee Waivers and Reimbursements(3)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE 1.05% OF AVERAGE
NET ASSETS.

(3)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.68%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 7 $ 21 $ 36 $ 81
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
33

FUND INFORMATION -- MONEY MARKET FUNDS

PRIME QUALITY MONEY MARKET FUND

OBJECTIVE

The Prime Quality 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.

PORTFOLIO INVESTMENTS

The Fund invests in short-term, high quality instruments denominated in U.S.
dollars, including:

- U.S. Treasury obligations;

- U.S. Government obligations;

- commercial paper issued by domestic and foreign issuers;

- obligations of U.S. commercial banks (including foreign branches of these
banks), U.S. and London branches of foreign banks, or savings and loan and
thrift institutions;

- corporate obligations issued by companies with commercial paper rated in
the highest short-term ratings category;

- obligations of supranational entities rated in the highest short-term
ratings category.

Although the Fund is managed to maintain a stable price per share of $1.00,
there is no guarantee that price will be constantly maintained.

RISK CONSIDERATIONS

The Prime Quality Money Market Fund is subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk; and

- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.
<PAGE>
34

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Prime Quality Money Market Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report appears in
STI Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 1.00 1.00 1.00 1.00
Net Investment Income (Loss) $ 0.05 0.05 0.03 0.03
Realized and Unrealized Net Gains (Losses) on Investments -- -- -- --
Distributions from Net Investment Income $ (0.05) (0.05) (0.03) (0.03)
Distributions from Realized Capital Gains -- -- -- --
Net Asset Value, End of Period $ 1.00 1.00 1.00 1.00
Total Return 5.25% 4.79% 2.88% 2.92%*
Net Assets End of Period (000) $1,050,800 799,189 583,399 410,991
Ratio of Expenses to Average Net Assets 0.58% 0.58% 0.58% 0.58%*
Ratio of Net Investment Income (Loss) to Average Net Assets 5.11% 4.77% 2.86% 2.85%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and Reimbursements) 0.78% 0.79% 0.79% 0.78%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers
and Reimbursements) 4.91% 4.56% 2.65% 2.65%*
</TABLE>

* Annualized.
(1) Commenced operations on June 8, 1992.
<PAGE>
35

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .50%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers(2) .08%

Total Fund Operating Expenses After .58%
Fee Waivers and Reimbursements(3)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY WAIVERS BY THE ADMINISTRATOR; OTHER EXPENSES WOULD BE .13%
OF AVERAGE NET ASSETS.

(3)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .78%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 6 $ 19 $ 32 $ 73
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
36

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

OBJECTIVE

The U.S. Government Securities 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 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 Reserve Book-Entry System
(U.S. Treasury Obligations), securities of wholly-owned corporations of the U.S.
Government that are backed by the full faith and credit of the U.S. Government
and repurchase agreements with approved dealers collateralized by U.S. Treasury
obligations, and U.S. Government Subsidiary Corporation securities.

PORTFOLIO INVESTMENTS

The Fund invests exclusively in:

- U.S. Treasury Obligations;

- securities of wholly-owned corporations of the U.S. Government that are
backed by the full faith and credit of the U.S. Government; and

- repurchase agreements.

Although the Fund is managed to maintain a stable price per share of $1.00,
there is no guarantee that price will be constantly maintained.

RISK CONSIDERATIONS

The U.S. Government Securities Money Market Fund is subject to the following
types of risk:

- Fund Risk;

- Interest Rate Risk;

- Credit Risk; and

- Call Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.
<PAGE>
37

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the U.S. Government Securities Money Market Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY
31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 1.00 1.00 1.00 1.00
Net Investment Income (Loss) $ 0.05 0.05 0.03 0.03
Realized and Unrealized Net Gains (Losses) on
Investments -- -- -- --
Distributions from Net Investment Income (0.05 ) (0.05 ) (0.03 ) (0.03 )
Distributions from Realized Capital Gains -- -- -- --
Net Asset Value, End of Period $ 1.00 1.00 1.00 1.00
Total Return 5.14% 4.67% 2.77% 2.79%*
Net Assets End of Period (000) $ 325,493 434,111 309,228 453,567
Ratio of Expenses to Average Net Assets 0.61% 0.61% 0.61% 0.61%*
Ratio of Net Investment Income (Loss) to Average Net
Assets 5.02% 4.64% 2.69% 2.71%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 0.78% 0.80% 0.77% 1.78%*
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers and Reimbursements) 4.85% 4.45% 2.53% 2.54%
</TABLE>

* Annualized.
(1) Commenced operations on June 8, 1992.
<PAGE>
38

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .51%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers(2) .10%

Total Fund Operating Expenses After .61%
Fee Waivers and Reimbursements(1)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY WAIVERS BY THE ADMINISTRATOR, OTHER EXPENSES WOULD BE .13%
OF AVERAGE NET ASSETS.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 6 $ 20 $ 34 $ 76
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
39

TAX-EXEMPT MONEY MARKET FUND

OBJECTIVE

The Tax-Exempt Money Market Fund seeks to provide as high a level of current
interest income exempt from regular federal income tax as is consistent with
preservation of capital and liquidity.

PORTFOLIO INVESTMENTS

The Fund intends to be fully invested in securities the interest on which is
exempt from regular federal income taxes. The Fund primarily invests in high
quality short-term municipal obligations of issuers located in:

- all fifty states;

- District of Columbia; and

- Puerto Rico and other U.S. territories.

At least 80% of the Fund's total assets will be invested in securities with
income exempt from regular federal income taxes and not treated as a preference
item for purposes of the federal alternative minimum tax.

The Fund also may invest in U.S. dollar denominated:

- taxable money market instruments;

- U.S. Government obligations;

- repurchase agreements; and

- securities subject to the federal alternative minimum tax (up to a maximum
20% of its total assets).

Although the Fund is managed to maintain a stable price per share of $1.00,
there is no guarantee that price will be constantly maintained.

RISK CONSIDERATIONS

The Tax-Exempt Money Market Fund is subject to the following types of risk:

- Fund Risk;

- Interest Rate Risk;

- Credit Risk; and

- Call Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 22.
<PAGE>
40

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Trust Shares of the Tax-Exempt Money Market Fund. The financial highlights for
the Fund for the periods from inception through May 31, 1996 have been audited
by , independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
Net Asset Value, Beginning of Period $ 1.00 1.00 1.00 1.00
Net Investment Income (Loss) $ 0.03 0.03 0.02 0.02
Realized and Unrealized Net Gains (Losses) on Investments -- -- -- --
Distributions from Net Investment Income $ (0.03) (0.03) (0.02) (0.02)
Distributions from Realized Capital Gains -- -- -- --
Net Asset Value, End of Period $ 1.00 1.00 1.00 1.00
Total Return 3.28% 3.10% 2.08% 2.12%*
Net Assets End of Period (000) $273,613 215,413 143,982 78,416
Ratio of Expenses to Average Net Assets 0.50% 0.45% 0.42% 0.41%*
Ratio of Net Investment Income (Loss) to Average Net Assets 3.23% 3.12% 2.05% 2.07%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 0.68% 0.70% 0.71% 0.70%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 3.05% 2.87% 1.76% 1.78%*
</TABLE>

* Annualized.
(1) Commenced operations on June 8, 1992.
<PAGE>
41

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .47%
Waivers and Reimbursements(1)

Other Expenses After Fee Waivers(2) .13%

Total Fund Operating Expenses After .60%
Fee Waivers(3,4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .55% OF AVERAGE NET ASSETS.

(2)ABSENT WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE 1.03% OF AVERAGE
NET ASSETS.

(3)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .68%. THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING ITS FEE.

(4)TOTAL OPERATING EXPENSES HAVE BEEN RESTATED TO REFLECT CURRENT FEES.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual $ 6 $ 19 $ 33 $ 75
return; and (2) redemption at the end of each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
42

THERE CAN BE NO ASSURANCE THAT A FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.

THE INVESTMENT OBJECTIVES OF THE INVESTMENT GRADE BOND FUND, U.S. GOVERNMENT
SECURITIES FUND, LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND, SHORT-TERM BOND
FUND, AND SHORT-TERM U.S. TREASURY SECURITIES FUND ARE NONFUNDAMENTAL AND MAY BE
CHANGED WITHOUT A SHAREHOLDER.

RISK CONSIDERATIONS

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
FUND RISK -- The possibility that the Fund's performance during a specific All Funds
period may not meet, or exceed, that of the market as a whole.
INTEREST RATE RISK -- The potential for a decline in the price of fixed-income All Funds
securities due to rising interest rates. This risk will be greater for
long-term securities than for short-term securities.
CREDIT RISK -- The possibility that an issuer will be unable to make timely All Funds
payments of either principal or interest.
CALL RISK -- The possibility that securities with high interest rates will be All Funds
prepaid (or "called") by the issuer, prior to maturity, during periods of
falling interest rates.This would require the Fund to invest the resulting
proceeds elsewhere, at generally lower interest rates.
EVENT RISK -- The possibility that corporate fixed-income securities may suffer All Funds
substantial declines in credit quality and market value due to corporate
restructurings. While event risk may be high for certain corporate securities
held by the Fund, event risk overall should be low because of the Fund's
diversified holdings.
GEOGRAPHIC RISK -- The risk that a Fund's concentration of investments in State Tax-Exempt Funds
securities of issuers located in a single state or geographic region subject
the Fund to economic conditions and government policies of that state or
region that could adversely affect the value of the Fund.
PREPAYMENT RISK -- The risk that mortgage-backed and asset-backed securities Investment Grade Bond Fund
may be retired substantially earlier than their stated maturities or final U.S. Government Securities
distribution dates, resulting in a loss of all, or part, of any premium paid. Fund
Short-Term Bond Fund
Limited-Term Federal Mortgage
Securities Fund
Short-Term Bond Fund
HEDGING RISK -- There are risks associated with hedging activities, including: Investment Grade Bond Fund
- - The success of a hedging strategy may depend on an ability to predict Short-Term Bond Fund
movements in the prices of individual securities, fluctuations in markets, Investment Grade Tax-Exempt
and movements in interest rates; Bond Fund
- - There may be an imperfect or no correlation between the changes in market State Tax-Exempt Funds
value of the securities held by the Fund and the prices of futures and
options on futures;
- - There may not be a liquid secondary market for a futures contract or option;
- - Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
</TABLE>

<PAGE>
43

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
FOREIGN SECURITY RISKS -- There are risks associated with international Investment Grade Bond Fund
investing, including: Prime Quality Money Market
CURRENCY RISK -- The possibility that changes in foreign exchange rates will Fund
affect, favorably or unfavorably, the value of foreign securities. Short-Term Bond Fund
VOLATILITY -- Investments in foreign stock markets can be more volatile than
investments in U.S. markets. Diplomatic, political, or economic developments
could affect investments in foreign countries.
EXPENSE CONSIDERATIONS -- Fixed commissions on many foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges. Expenses for
custodial arrangements of foreign securities may be somewhat greater than
typical expenses for custodial arrangements for handling U.S. securities of
equal value.
FOREIGN TAXES -- Certain foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes are recoverable, the non-recovered portion of foreign withholding taxes
will reduce the income received from the securities comprising the portfolio.
REGULATORY ENVIRONMENT -- Foreign companies generally are not subject to
uniform accounting, auditing, and financial reporting standards comparable to
those applicable to U.S. domestic companies. Foreign branches of U.S. banks,
foreign banks, and foreign issuers may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and
recordkeeping standards than those applicable to domestic branches of U.S.
banks and U.S. domestic issuers. There is generally less government regulation
of securities exchanges, brokers, and listed companies abroad than in the U.S.
</TABLE>

PURCHASING FUND SHARES

WHO MAY BUY TRUST SHARES OF THE FUNDS

Individuals generally may not purchase Trust Shares directly. Instead, Trust
Shares are sold to financial institutions or intermediaries, including
subsidiaries of SunTrust Banks, Inc. (SunTrust), for accounts for which they act
as a fiduciary, agent, investment advisor or custodian. As a result, you as a
customer of a financial institution may own Trust Shares through accounts
maintained with financial institutions and potentially through the Preferred
Portfolio Account (an asset allocation account available through SunTrust
Securities, Inc.). Trust Shares will be held of record by (in the name of) your
financial institution. Depending upon the terms of your account, however, you
may have, or be given, the right to vote the Trust Shares.

HOW TO BUY FUND SHARES

Trust Shares are offered continuously, and may be purchased on any day that the
New York Stock Exchange is open for business (a Business Day). However, you may
not purchase or redeem shares of a Money Market Fund on days that the Federal
Reserve is closed (Federal holidays).

- MONEY MARKET FUNDS. Your price per share (the offering price) will be the
net asset value per share (NAV) next determined after your purchase order
is received by the Trust. The Trust expects the NAV of each Money Market
Fund to remain constant at $1.00 per share. NAV for the Money Market Funds
is calculated by (1) taking the current market value of a Fund's total
assets using the amortized cost method of valuing securities, (2)
subtracting the
<PAGE>
44

liabilities, and (3) dividing that amount by the total number of shares of
that class owned by shareholders. The NAV is determined once each Business
Day at the close of the New York Stock Exchange (4:00 p.m. Eastern time).
All money market funds are required to use the amortized cost valuation
method, which is described in detail in the Statement of Additional
Information (SAI).

Your purchase order will be effective as of the Business Day it is received
by the Transfer Agent. You will be eligible to receive dividends declared
the same day if (1) the Transfer Agent receives the order (i) before 11:00
a.m. Eastern time for the Tax-Exempt Money Market Fund, or (ii) before 1:00
p.m. Eastern time for the Prime Quality Money Market Fund and the U.S.
Government Securities Money Market Fund; and (2) the Custodian receives
federal funds (readily available funds) before 4:00 p.m. Eastern time on
the same day. Otherwise your purchase order will be effective the next
Business Day provided the Custodian receives readily available funds before
4:00 p.m. Eastern time on the next Business Day.

- NON-MONEY MARKET FUNDS. Your price per share (the offering price) will be
the net asset value per share (NAV) next determined after your purchase
order is received by the Transfer Agent. NAV for the non-Money Market
Funds is calculated by (1) taking the current market value of a Fund's
total assets, (2) subtracting the liabilities, and (3) dividing that
amount by the total number of shares owned by shareholders. In determining
the market value of a Fund's assets, the Trust may use a pricing service
to provide market quotations or valuations for certain securities owned by
a Fund. The NAV is determined once each Business Day at the close of the
New York Stock Exchange (4:00 p.m. Eastern time). Thus, to receive the
current Business Day's NAV, purchase orders must be received before 4:00
p.m. Eastern time.

THE TRUST RESERVES THE RIGHT TO REJECT ANY PURCHASE ORDER WHEN THE DISTRIBUTOR
DETERMINES THAT ACCEPTING THE ORDER WOULD NOT BE IN THE BEST INTERESTS OF THE
TRUST AND/OR SHAREHOLDERS.

REDEEMING FUND SHARES

HOW TO SELL YOUR SHARES

- MONEY MARKET FUNDS. For Money Market Funds, a redemption request will be
effective as of the Business Day it is received by the Trust's transfer
agent (1) before 11:00 a.m. Eastern time for the Tax-Exempt Money Market
Fund, or (2) before 1:00 p.m. Eastern time for the Prime Quality Money
Market Fund and the U.S. Government Securities Money Market Funds.
<PAGE>
45

- NON-MONEY MARKET FUNDS. Redemption requests for non-Money Market Funds
must be received by the Transfer Agent by 4:00 p.m. Eastern time to get
that day's NAV.

Requests received after these times will normally be executed the next Business
Day. The Trust reserves the right to wire redemption proceeds within five
Business Days of the Transfer Agent receiving the redemption request if, in the
judgment of the Advisor, an earlier payment could adversely impact a Fund.

REDEMPTIONS IN KIND

The Trust intends to pay redemption proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
remaining shareholders in the Fund) the Trust reserves the right to pay all or
part of your redemption proceeds in liquid securities with a market value equal
to the redemption price (redemption in kind). Although it is highly unlikely
that your shares would ever actually be redeemed in kind, if it did happen, you
would probably have to pay brokerage cost to sell the securities distributed to
you.

TELEPHONE REDEMPTION AND EXCHANGE TRANSACTIONS ARE EXTREMELY CONVENIENT, BUT
NOT WITHOUT RISK. TO TRY AND KEEP YOUR TELEPHONE TRANSACTIONS AS SAFE, SECURE
AND RISK FREE AS POSSIBLE, THE TRUST HAS DEVELOPED CERTAIN SAFEGUARDS AND
PROCEDURES FOR ASCERTAINING THE IDENTITY OF CALLERS AND AUTHENTICITY OF
INSTRUCTIONS. AS A RESULT, NEITHER THE TRUST NOR ITS TRANSFER AGENT WILL BE
RESPONSIBLE FOR ANY LOSS, LIABILITY, COST OR EXPENSE FOR ACTING UPON TELEPHONE
OR WIRE INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE. IF YOU CHOOSE TO MAKE
TELEPHONE TRANSACTIONS, YOU WILL GENERALLY BEAR THE RISK OF ANY LOSS.

DIVIDENDS AND DISTRIBUTIONS

Income dividends of each Fund are declared daily and paid monthly. If you own
Fund shares on the record date, you will be entitled to receive dividends. The
Funds make distributions of capital gains at least annually.

You will receive dividends and distributions in the form of additional shares
unless the you have elected to receive payment in cash. To elect cash payment,
you must notify the Transfer Agent in writing prior to the date of distribution.
Your election will become effective for dividends paid after the Transfer Agent
receives your written notice. To cancel your election, simply send written
notice to the Transfer Agent.

TAX INFORMATION

The following is a summary of some important tax issues that affect the Funds
and their Shareholders. We have not tried to present a detailed explanation of
the tax treatment of the Funds or their Shareholders. WE URGE YOU TO CONSULT
YOUR TAX ADVISOR REGARDING SPECIFIC QUESTIONS AS TO FEDERAL, STATE, AND LOCAL
INCOME TAXES.

The following summary is based on current tax laws, which may be changed by
legislative, judicial, or administrative action.

TAX STATUS OF EACH FUND

TAX STATUS OF DISTRIBUTIONS

EACH SALE, EXCHANGE, OR REDEMPTION OF FUND SHARES IS A TAXABLE EVENT TO THE
SHAREHOLDER. Each Fund will distribute substantially all of its income. THE
INCOME DIVIDENDS YOU RECEIVE FROM THE FUNDS WILL BE TAXED AS ORDINARY INCOME
WHETHER YOU RECEIVE THE DIVIDENDS IN CASH OR IN ADDITIONAL SHARES.

Capital gains distributions will be taxed as long-term capital gains, regardless
of how long you have held your Fund shares. Some distributions paid in January
may be taxable in the previous year. Corporations may be entitled to a
dividends-received deduction for a portion of dividends they receive.

TAX-EXEMPT DISTRIBUTIONS

The State Tax-Exempt Funds, the Tax-Exempt Money Market Fund, and the Investment
Grade Tax-Exempt Bond Fund may pay exempt-interest dividends. Exempt-interest
dividends are excludable from your gross income for federal income tax purposes,
but may have alternative minimum tax consequences. Current federal tax laws
limit the types and number of bonds that pay exempt interest. This may hinder a
Fund's ability to pay exempt-interest dividends.

STATE TAX CONSIDERATIONS

A portion of the distributions you receive may be exempt from state taxation.
Each year you will be notified of the percentage of income and distributions
that may be tax exempt under state law. However, you should verify your tax
liability with your tax advisor.

Please refer to the SAI for more tax information.

STI CLASSIC FUNDS INFORMATION

THE TRUST

BOARD OF TRUSTEES

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.

GENERAL INFORMATION

VOTING RIGHTS

Shareholders of record receive one vote for every full Fund share owned. Each
Fund or class of a Fund will vote separately on matters relating solely to that
Fund or class. If you are a customer of a financial institution or intermediary,
you may have certain voting rights depending on the nature of your account.

As a Massachusetts business trust, the Trust is not required to hold annual
Shareholder meetings unless otherwise required by the Investment Company Act
requires the shareholders to elect Trustees. However, a meeting may be called by
Shareholders owning at least 10% of the outstanding shares of the Trust. If a
meeting is requested by Shareholders, the Trust will provide appropriate
assistance and information to the Shareholders who requested the meeting.
<PAGE>
47

REPORTING

Shareholders of record, generally a financial institution or intermediary, will
receive the Trust's unaudited financial information and audited financial
statements, as well as proxy statements and other reports. If you are a customer
of a financial institution, you may receive this information directly from the
financial institution, depending on the nature of your account.

SHAREHOLDER INQUIRIES

You may contact your financial institution's representative to obtain
information on account statements, procedures, and other related information.

INVESTMENT ADVISORS

The Advisors make investment decisions for the assets of the Funds they advise
and continuously review, supervise, and administer their respective Fund's
investment program. The Trustees of the Trust supervise the Advisors and
establish policies that the Advisors must follow in their day-to-day management
activities.

Trusco Capital Management, Inc. serves as the Advisor to the Prime Quality Money
Market, U.S. Government Securities Money Market, Tax-Exempt Money Market,
Short-Term U.S. Treasury Securities, Short-Term Bond, and U.S. Government
Securities Funds. As of , 1997, Trusco had approximately $ billion
in assets under management. The principal business address of Trusco is 50 Hurt
Plaza, Suite 1400, Atlanta, Georgia 30303.

STI Capital Management, N.A. serves as the Advisor to the Limited-Term Federal
Mortgage Securities, Investment Grade Bond, Investment Grade Tax-Exempt Bond,
and Florida Tax-Exempt Bond Funds. As of , 1997, STI Capital had
approximately $ billion in assets under management. The principal business
address of STI is P.O. Box 3808, Orlando, Florida 32802.

SunTrust Bank, Chattanooga, N.A. serves as the Advisor to the Tennessee
Tax-Exempt Bond Fund. As of , 1997, SunTrust Bank, Chattanooga, N.A.
had approximately $ billion in assets under management. The principal
business address of SunTrust Bank, Chattanooga, N.A. is 736 Market Street,
Chattanooga, Tennessee 37402.

SunTrust Bank, Atlanta serves as the Advisor to the Georgia Tax-Exempt Bond
Fund. As of , 1997, SunTrust Bank, Atlanta had approximately $
billion in assets under management. The principal address for SunTrust Bank,
Atlanta is 25 Park Place, Atlanta, Georgia 30303.

The Advisors are indirect wholly-owned subsidiaries of SunTrust Banks, Inc.
("SunTrust"). SunTrust is a southeastern regional bank holding company with
assets of $ billion, as of , 1997. SunTrust is one of the 20
largest banking companies in the U.S. Its three principal subsidiaries --
SunTrust Banks of Florida, Inc., SunTrust Banks of Georgia, Inc. and SunTrust
Banks of Tennessee, Inc. -- provide a wide range of personal and corporate
banking, trust, and investment services through more than 600 locations in the
tri-state area. SunTrust Banks, Inc. has discretionary assets under management
of approximately $ billion, as of , 1997.

The Advisors may use their affiliates as brokers for the Funds' portfolio
transactions.
<PAGE>
48

DISTRIBUTION

Each Fund may use the Distributor as its broker for portfolio transactions. The
Distributor receives compensation from the Funds for its brokerage services.
Flex and Investor Shares are offered primarily to individual investors, and are
described in a separate prospectus. Flex Shares are subject to a contingent
deferred sales charge. Investor Shares are subject to a front-end sales charge.
You may call 1-800-874-4770 to receive more information about Flex or Investor
Shares. It is possible that a financial institution may offer different classes
of shares to its customers. As a result, the financial institution may receive
different compensation with respect to different classes of shares.

ADMINISTRATION

At times, the Administrator may voluntarily waive all or a portion of its
administration fees.
<PAGE>
49

INVESTMENT PRACTICES -- FIXED INCOME AND MONEY MARKET FUNDS

SHORT-TERM
LIMITED-TERM U.S. TREASURY INVESTMENT GRADE
INVESTMENT GRADE U.S. GOVERNMENT FEDERAL MORTGAGE SHORT-TERM SECURITIES TAX-EXEMPT BOND
SECURITY OR PRACTICE BOND FUND SECURITIES FUND SECURITIES FUND BOND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ADRs X -- -- -- -- --
Asset-Backed Securities X -- X -- -- --
Bank Obligations -- X X -- -- X(1)
Borrowing (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Commercial Paper (Highest Quality) -- -- X -- -- --
Corporate Debt Obligations X(7) (35%) (35%) X -- (20%)
(Investment Grade)
Dollar Rolls -- X X -- -- --
Futures and Options on Futures X * * * -- X
Illiquid Securities (15%) (15%) (15%) (15%) (15%) (15%)
Mortgage-Backed Securities X(3) X X X(4) -- --
Municipal Securities -- -- -- X(7) -- X(5)
Puts X * * X * X
Repurchase Agreements * X X X -- (20%)
Securities Lending (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Securities of Foreign Issuers X -- -- X -- --
Standby Commitments X -- -- X -- X
Supranational Agency Obligations X -- -- X -- --
Swaps, Caps, Floors and Collars X -- -- -- -- --
U.S. Treasury and Agency X X X X X (20%)
Obligations
When-Issued Securities X X X X X X
Zero Coupon Obligations X -- -- X -- X
</TABLE>

(1) For temporary, defensive purposes only.
(2) Including up to 20% taxable commercial paper.
(3) Including up to 35% privately-issued mortgage-backed securities.
(4) Including up to 25% privately-issued mortgage-backed securities.
(5) Fund must invest at least 65% of its assets in municipal securities. Of this
65%, 75% must be rated A or better.
(6) Includes only obligations issued by foreign branches of U.S. banks and by
London branches of foreign banks.
(7) May purchase up to 25% rated BBB or Baa.
<PAGE>
50

INVESTMENT PRACTICES -- FIXED INCOME AND MONEY MARKET FUNDS

<TABLE>
<CAPTION>
U.S. GOVERNMENT TAX-EXEMPT
FLORIDA GEORGIA TENNESSEE PRIME QUALITY SECURITIES MONEY
TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT MONEY MARKET MONEY MARKET MARKET
SECURITY OR PRACTICE BOND FUND BOND FUND BOND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ADRs -- -- -- -- -- --
Asset-Backed Securities -- -- -- -- -- --
Bank Obligations X(1) X(1) X(1) X -- (20%)
Borrowing (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Commercial Paper (Highest Quality) X(1) X(1) X(1) X -- X(2)
Corporate Debt Obligations (Investment Grade) (20%) (20%) (20%) -- -- --
Dollar Rolls -- -- -- -- -- --
Futures and Options on Futures X X X -- -- --
Illiquid Securities (15%) (15%) (15%) (10%) (10%) (10%)
Mortgage-Backed Securities -- -- -- -- -- --
Municipal Securities X(5,7) X(5,7) X(5,7) -- -- X
Puts X X X -- -- --
Repurchase Agreements (20%) (20%) (20%) X X X
Securities Lending (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Securities of Foreign Issuers -- -- -- (25%)(6) -- --
Standby Commitments X X X X -- --
Supranational Agency Obligations -- -- -- -- -- --
Swaps, Caps, Floors and Collars -- -- -- -- -- --
U.S. Treasury and Agency Obligations (20%) (20%) (20%) X X (20%)
When-Issued Securities X X X (33 1/3%) (33 1/3%) (33 1/3%)
Zero Coupon Obligations X X -- -- -- --
</TABLE>

SHORT-TERM
INVESTMENT GRADE LIMITED-TERM U.S. TREASURY
INVESTMENT GRADE TAX-EXEMPT BOND U.S. GOVERNMENT FEDERAL MORTGAGE SHORT-TERM SECURITIES
INVESTMENT RESTRICTIONS BOND FUND FUND SECURITIES FUND SECURITIES FUND BOND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Securities of Any One Issuer(1) 5% 5% 5% 5% 5% 5%
Outstanding Voting Securities of 10% 10% 10% 10% 10% 10%
Any One Issuer
Securities of Issuers in Any One 25% 25% 25% 25% 25% 25%
Industry(2)
Expected Annual Portfolio Turnover % % % % % %
</TABLE>

(1)A Fund may invest up to 25% of its total assets without regard to this
restriction as permitted by applicable law.
(2)Additional information relating to industry classifications can be found in
the SAI.
<TABLE>
<CAPTION>

SHORT-TERM
INVESTMENT GRADE LIMITED-TERM U.S. TREASURY
INVESTMENT GRADE TAX-EXEMPT BOND U.S. GOVERNMENT FEDERAL MORTGAGE SHORT-TERM SECURITIES
TEMPORARY INVESTMENTS BOND FUND FUND SECURITIES FUND SECURITIES FUND BOND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Securities of Any One Issuer 5% 5% 5% 5% 5% 5%
Outstanding Voting Securities of 10% 10% 10% 10% 10% 10%
Any One Issuer
Securities of Issuers in Any One 25% 25% 25% 25% 25% 25%
Industry
Expected Annual Portfolio Turnover % % % % % %
</TABLE>
<PAGE>
52

MORE ABOUT INVESTMENT PRACTICES

The following is a description of some of the permitted investments for the
Funds. Further discussion is contained in the SAI.

AMERICAN DEPOSITARY RECEIPTS (ADRs) are securities, typically issued by a U.S.
financial institution (a "depositary"). The institution has ownership interests
in a security, or a pool of securities, issued by a foreign issuer and deposited
with the depositary. ADRs may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary. An unsponsored facility may be
established by a depositary without the participation of the issuer of the
underlying security.

BANK OBLIGATIONS are SHORT-TERM CORPORATE OBLIGATIONS issued by U.S. and foreign
banks, including bankers' acceptances, certificates of deposit (CDs), custodial
receipts, and time deposits.

DOLLAR ROLLS are transactions in which securities are sold for delivery in the
current month and the seller contracts to repurchase substantially similar
securities on a specified future date. Any difference between the sale price and
the purchase price (plus interest earned on the cash proceeds of the sale) is
applied against the past interest income on the securities sold to arrive at an
implied borrowing rate.

EQUITY SECURITIES include common and preferred stocks, warrants, rights to
subscribe to common stock, and convertible securities and may be publicly or
privately issued.

EURODOLLAR AND YANKEE BANK OBLIGATIONS are U.S. dollar-denominated certificates
of deposit or time deposits issued outside the U.S. by foreign branches of U.S.
banks or by foreign banks. Yankee bank obligations are U.S. dollar denominated
obligations issued in the U.S. by foreign banks.

A Fund may use futures contracts, and related options, for bona fide hedging
purposes to offset changes in the value of securities held or expected to be
acquired. They may also be used to minimize fluctuations in foreign currencies
or to gain exposure to a particular market or instrument. A Fund will minimize
the risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges.

Index futures are futures contracts for various indices that are traded on
registered securities exchanges. An index futures contract obligates the seller
to deliver (and the purchaser to take)
<PAGE>
53
an amount of cash equal to a specific dollar amount times the difference between
the value of a specific index at the close of the last trading day of the
contract and the price at which the agreement is made.

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.

INVESTMENT COMPANY SHARES -- Shares of other mutual funds may be purchased by
the Funds to the extent consistent with applicable law.

LOAN PARTICIPATIONS are interests in loans to U.S. corporations which are
administered by the lending bank or agent for a syndicate of lending banks. In a
loan participation, the borrower corporation is the issuer of the participation
interest except to the extent the Fund derives its rights from the intermediary
bank. Because the intermediary bank does not guarantee a loan participation, a
loan participation is subject to the credit risks associated with the underlying
corporate borrower.

MONEY MARKET INSTRUMENTS are high quality, dollar-denominated, short-term debt
instruments, including BANK OBLIGATIONS, U.S. TREASURY OBLIGATIONS, U.S.
Government Agencies, and SHORT-TERM CORPORATE OBLIGATIONS.

MORTGAGE-BACKED SECURITIES are instruments that entitle the holder to a share of
all interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional thirty-year fixed rate
mortgages, graduated payment mortgages, adjustable rate mortgages, and floating
rate mortgages.

STRIPPED MORTGAGE-BACKED SECURITIES (SMBS) are usually structured with two
classes that receive specified proportions of the monthly interest and principal
payments from a pool of mortgage securities. One class may receive all of the
interest payments, and the other class may receive all of the principal
payments. SMBs are extremely sensitive to changes in interest rates because of
the impact of prepayment of principal on the underlying mortgage securities.

MUNICIPAL FORWARDS are forward commitments for the purchase of tax-exempt bonds
with a specified coupon to be delivered by an issuer at a future date, typically
exceeding 45 days but normally less than one year after the commitment date.
Municipal forwards are normally used as a refunding mechanism for bonds that may
only be redeemed on a designated future date.

MUNICIPAL LEASE OBLIGATIONS are securities issued by state and local governments
and authorities to finance the acquisition of equipment and facilities. They may
take the form of a lease, an installment purchase contract, a conditional sales
contract, or a participation interest in any of the above.

MUNICIPAL SECURITIES consist of :

- 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 operating expenses, and for lending these funds
to other public institutions and facilities; and

- 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.

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
(for example, tolls from a bridge). 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 totally
dependent 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 the
payment.

OBLIGATIONS OF SUPRANATIONAL ENTITIES -- Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, the Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank, and the Nordic Investment
Bank.

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.
A Fund will enter into repurchase agreements only with financial institutions
judged to present minimal risk of bankruptcy during the term of the agreement
based on established guidelines.

RESTRICTED SECURITIES are securities that may not be sold freely to the public
without registering under the Securities Act of 1933 or an exemption from
registration. The Trust's Board of Trustees has adopted procedures for
determining the liquidity of restricted securities.

SECURITIES LENDING -- To generate additional income, a Fund may lend securities
<PAGE>
55
which it owns pursuant to agreements requiring that the loan be continuously
secured by collateral equal to at least 100% of the market value of the loaned
securities. A Fund continues to receive interest on the loaned securities while
simultaneously earning interest on the investment of cash collateral.

SECURITIES OF FOREIGN ISSUERS are securities issued by foreign corporation,
including foreign branches of U.S. banks and foreign banks, and by foreign
governments or their agencies or instrumentalities. There are special risk
considerations associated with foreign securities. (See "Foreign Securities
Risks" on page .)

SHORT-TERM CORPORATE OBLIGATIONS are corporate obligations maturing in 397 days
or less, including commercial paper and other short-term corporation
obligations.

VARIABLE AND FLOATING RATE INSTRUMENTS involve certain obligations that 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.

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

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

* INVESTMENT ADVISORS

Trusco Capital Management, Inc. 50 Hurt Plaza
Suite 1400
Atlanta, GA 30303

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

SunTrust Bank, Atlanta 25 Park Place
Atlanta, GA 30303

SunTrust Bank, Chattanooga, N.A. 736 Market Street
Chattanooga, TN 37402

* DISTRIBUTOR

SEI Investments Distribution Co. Oaks, PA 19456

* ADMINISTRATOR

SEI Fund Resources 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
</TABLE>
<PAGE>
WHY INVEST IN MUTUAL FUNDS?

Mutual funds may be the answer. A mutual fund is an investment company that
pools money from its shareholders and invests it in a variety of securities,
including stocks, bonds and money market securities. When you become a
shareholder, you own a proportionate number of the funds. The value of your
shares increases or decreases in line with the performance of the investments in
the fund. Many funds pay regular dividends that may be reinvested to purchase
additional shares of the fund. This may help your investment to grow even
faster.

BENEFITS OF MUTUAL FUNDS

There are many benefits to mutual fund investing. When you invest in individual
stocks or bonds you are on your own. You must do the research. You choose the
security. You time the purchase and you decide when to sell. Perhaps you have a
stockbroker to help you. Then, you pay the commission.

ABOUT STI CLASSIC FUNDS

The STI Classic Funds are advised by STI Capital Management, N.A., Trusco
Capital Management, Inc., SunTrust Bank, Atlanta, and SunTrust Bank,
Chattanooga, N.A. These advisory units are affiliates of SunTrust Banks, Inc., a
super-regional bank holding company with approximately $ billion in
discretionary assets under management. Currently, these advisors collectively
manage more than $ billion in equity and fixed-income mutual fund assets.
<PAGE>
Additional information about the Funds is included in a Statement of Additional
Information dated , (the SAI). The SAI has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. You may obtain a copy of the SAI, or the annual or semi-annual
report, without charge by calling 1-800-874-4770 or by contacting the
Distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456.

STI CLASSIC FUNDS

INVESTOR SHARES AND FLEX SHARES

CAPITAL GROWTH FUND
VALUE INCOME STOCK FUND
SMALL CAP EQUITY FUND
MID-CAP EQUITY FUND
BALANCED FUND
SUNBELT EQUITY FUND
INTERNATIONAL EQUITY INDEX FUND
INTERNATIONAL EQUITY FUND

Investment Advisors to the Funds:
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
(THE ADVISORS)

The STI Classic Funds (the Trust) is a mutual fund that offers shares in a
number of separate investment portfolios (each a Fund and, collectively, the
Funds). This Prospectus gives you important information about the Investor
Shares and Flex Shares of the Equity Funds listed above. Please read this
Prospectus, and keep it for future reference.

OCTOBER 1, 1997
<PAGE>
2

ABOUT THE TRUST

STI Classic Funds is a diversified, open-end management investment company. The
Funds provide a convenient and economical way for you to invest in a number of
professionally managed portfolios of securities. You may purchase shares in each
non-Money Market Fund through three separate classes (Trust Shares, Investor
Shares, and Flex Shares). The separate classes provide for variations in
distribution and service fees, transfer agent fees, voting rights, and
dividends. This Prospectus relates to the Investor Shares and Flex Shares of the
Capital Growth Fund, Value Income Stock Fund, Small Cap Equity Fund, Mid-Cap
Equity Fund, Balanced Fund, Sunbelt Equity Fund, International Equity Index
Fund, and International Equity Fund (the Equity Funds).
<PAGE>
3

FUND INFORMATION -- EQUITY FUNDS

CAPITAL GROWTH FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of undervalued equity
securities, including:

- common stocks;

- warrants; and

- securities convertible into, or exchangeable for, common stock.

In addition, the Fund may invest in:

- U.S. dollar denominated equity securities of foreign issuers, including
sponsored ADRs that are traded on exchanges or listed on NASDAQ;

- securities issued by money market mutual funds;

- pay-in-kind securities; and

- bonds, including bonds rated below BBB by Standard & Poor's Corporation
(S&P) or below Baa by Moody's Investors Service, Inc. (Moody's), or
unrated securities of comparable quality.

RISK CONSIDERATIONS

The Capital Growth Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Credit Risk;

- - High-Yield Security Risk; and

- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 19.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Capital Growth Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report appears in
STI Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX) INVESTOR INVESTOR INVESTOR)
ENDED MAY 31, SHARES SHARES(1 SHARES SHARES SHARES(2
Net Asset Value, Beginning of Period $ 12.17 12.20 11.98 11.93 10.00
Net Investment Income (Loss) $ 0.03 0.02 0.09 0.09 0.06
Realized and Unrealized Net Gains (Losses) on
Investments $ 3.32 3.26 0.57 0.31 1.93
Distributions from Net Investment Income $ (0.04) (0.05) (0.07) (0.09) (0.06)
Distributions from Realized Capital Gains $ (0.59) (0.59) (0.40) (0.26) --
Net Asset Value, End of Period $ 14.89 14.84 12.17 11.98 11.93
Total Return 28.18% 27.48%* 5.93% 3.26% 20.49%*
Net Assets End of Period (000) $191,078 10,969 160,875 170,795 131,858
Ratio of Expenses to Average Net Assets 1.80% 2.27%* 1.80% 1.80% 1.80%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.24% (0.29%)* 0.73% 0.64% 0.81%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 2.08% 2.68%* 2.10% 2.11% 2.06%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) (0.04%) (0.70%)* 0.43% 0.33% 0.55%*
Portfolio Turnover Rate 156.46% 156.46% 127.79% 123.87% 95.02%
</TABLE>

* Annualized.
(1) Commenced operations on June 1, 1995.
(2) Commenced operations on June 9, 1992.
<PAGE>
5

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.03% 1.03%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .52% .76%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .25% .48%

Total Fund Operating Expenses After 1.80% 2.27%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.15% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .68% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .25% FOR INVESTOR SHARES
AND .53% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 2.08% FOR INVESTOR SHARES AND 2.68% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, $55 $43 $92 $71 $131 $122 $241 $261
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more than the
economic equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.
<PAGE>
6

VALUE INCOME STOCK FUND

OBJECTIVE

Value Income Stock Fund seeks to provide current income with the secondary goal
of achieving capital appreciation by investing primarily in equity securities.

PORTFOLIO INVESTMENTS

The Fund primarily invests in companies that have a market capitalization of at
least $500 million, including:

- common stock issued by companies which have a history of paying regular
dividends;

- preferred stock; and

- securities convertible into, or exchangeable for, common stock.

The Fund also may invest in:

- U.S. dollar denominated equity securities of foreign issuers, including
sponsored ADRs that are traded on exchanges or listed on NASDAQ;

- debt securities, including corporate debt obligations rated below BBB by
S&P or below Baa by Moody's, or not rated by S&P or Moody's but which are
of comparable quality;

- U.S. Treasury obligations;

- futures and options; and

- stock issued by companies with smaller market capitalizations.

RISK CONSIDERATIONS

The Value Income Stock Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Credit Risk;

- - Hedging Risk;

- - High-Yield Security Risk; and

- - Foreign Security Risks.

For a description of these risks, see "RISK CONSIDERATIONS" on page 19.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Value Income Stock Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX) INVESTOR INVESTOR INVESTOR)
ENDED MAY 31, SHARES SHARES(1 SHARES SHARES SHARES(2
Net Asset Value, Beginning of Period $ 11.58 11.59 10.52 10.23 9.73
Net Investment Income (Loss) $ 0.30 0.26 0.28 0.26 0.09
Realized and Unrealized Net Gains (Losses) on
Investments $ 2.71 2.65 1.56 0.67 0.44
Distributions from Net Investment Income $ (0.30) (0.26) (0.27) (0.27) (0.03)
Distributions from Realized Capital Gains $ (1.16) (1.16) (0.51) (0.37) --
Net Asset Value, End of Period $ 13.13 13.08 11.58 10.52 10.23
Total Return 27.39% 26.52%* 18.71% 9.27% 19.42%*
Net Assets End of Period (000) $130,597 26,298 92,256 60,589 24,779
Ratio of Expenses to Average Net Assets 1.30% 2.00%* 1.30% 1.25% 1.15%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 2.47% 1.72%* 2.80% 2.80% 4.51%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 1.37% 2.15%* 1.41% 1.44% 1.63%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 2.40% 1.57%* 2.69% 2.61% 4.04%*
Portfolio Turnover Rate 134% 134% 126% 149% 35%
</TABLE>

* Annualized.
(1) Commenced operations on June 1, 1995.
(2) Commenced operations on February 17, 1993.
<PAGE>
8

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .80% .80%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .28% .86%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .22% .34%

Total Fund Operating Expenses After 1.30% 2.00%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .80% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .33% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .24% FOR INVESTOR SHARES
AND .35% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.37% FOR INVESTOR SHARES AND 2.15% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, $50 $40 $77 $63 $106 $108 $188 $233
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

* Reflects the imposition of the Maximum Contingent Deferred Sales Charges.
<PAGE>
9

SMALL CAP EQUITY FUND

OBJECTIVE

The Small Cap Equity Fund seeks to provide capital appreciation with a secondary
goal of achieving current income.

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of equity securities of
undervalued companies with market capitalizations under $1 billion, including:

- common stock;

- preferred stock;

- warrants;

- rights to subscribe to common stock; and

- securities convertible into, or exchangeable for, common stock.

The Fund also may invest in:

- equity securities of companies with larger market capitalizations;

- investment grade fixed-income securities; and

- options transactions (for hedging purposes only).

RISK CONSIDERATIONS

The Small Cap Equity Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Small Issuer Risk; and

- - Hedging Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 19.

FUND MANAGEMENT

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
FLEX SHARES

SHAREHOLDER TRANSACTION EXPENSES 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.00%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees 0.93%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) 0.32%

Total Fund Operating Expenses After 2.25%
Fee Waivers and Reimbursements(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.15% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICE FEES WOULD 1.00%.

(3)OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

(4)ABSENT THE VOLUNTARY WAIVERS DESCRIBED ABOVE, THE ESTIMATED TOTAL OPERATING
EXPENSES WOULD BE 2.47%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED
AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, assuming (1) a 5% annual return; (2) the $ 43 $ 70
imposition of the maximum front-end sales charge; and (3) redemption at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.
<PAGE>
11

MID-CAP EQUITY FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of equity securities of
small to mid-size companies (I.E., companies with market capitalizations of $500
million to $5 billion), including:

- common stocks;

- preferred stocks; and

- securities convertible into, or exchangeable for, common stocks.

The Fund also may invest in:

- U.S. dollar denominated equity securities of foreign issuers, including
sponsored ADRs that are traded on exchanges or listed on NASDAQ;

- bonds, including variable and floating rate instruments, rated B or better
by S&P or Moody's; and

- short-term obligations.

RISK CONSIDERATIONS

The Mid-Cap Equity Fund is subject to the following market risk:

- - Fund Risk;

- - Market Risk;

- - Small Issuer Risk;
- - Credit Risk;

- - High-Yield Security Risks; and

- - Foreign Security Risk;

For a description of these risks, please see "RISK CONSIDERATIONS" on page 19.

FUND MANAGEMENT

Mr. Elliott A. Perny has managed the Mid-Cap Equity Fund since October, 1996. He
has more than 25 years of investment experience. Mr. Perny has served as Senior
Executive Vice President of STI Capital Management, N.A. since September, 1992,
and has served as a portfolio manager with STI since 1991.
<PAGE>
12

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Mid-Cap Equity Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.
<TABLE>
<CAPTION>

1996 1995 1994
<S> <C> <C> <C> <C>

<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES SHARES(2)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.99 11.13 9.84 10.00
Net Investment Income (Loss) $ 0.03 -- 0.03 0.01
Realized and Unrealized Net Gains (Losses) on
Investments $ 2.62 2.45 1.15 (0.17)
Distributions from Net Investment Income $ (0.03) (0.02) (0.03) --
Distributions from Realized Capital Gains $ (0.87) (0.87) -- --
Net Asset Value, End of Period $ 12.74 12.69 10.99 9.84
Total Return 24.93% 23.00%* 11.96% (1.60%)
Net Assets End of Period (000) $ 17,971 5,029 7,345 3,004
Ratio of Expenses to Average Net Assets 1.60% 2.20%* 1.60% 1.60%*
Ratio of Net Investment Income (Loss) to
Average Net Assets 0.25% (0.37%)* 0.43% 0.74%*
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Reimbursements) 1.96% 3.04 %* 2.27% 4.60%*
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers and
Reimbursements) (0.11%) (1.21 %)* (0.24 )% (2.26%)*
Portfolio Turnover Rate 115.62% 115.62 % 65.63% 7.99%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 5, 1995.
(2) Commenced operations on February 1, 1994.
<PAGE>
13

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.00% 1.00%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .40% .46%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .20% .74%

Total Fund Operating Expenses After 1.60% 2.20%
Fee Waivers(4)
</TABLE>

1ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD BE
1.15% OF AVERAGE NET ASSETS.

2ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .43% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES..

3ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .38% FOR INVESTOR SHARES AND
.89% FOR FLEX SHARES.

4ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.96% FOR INVESTOR SHARES AND 3.04% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, $53 $42 $86 $69 $121 $118 $220 $253
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.
<PAGE>
14

BALANCED FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund primarily invests in a diversified portfolio of:

- common stocks;

- preferred stocks;

- warrants;

- securities convertible into, or exchangeable for, common stocks;

- mortgage-backed securities.

The Fund may also invest in:

- U.S. dollar denominated equity securities of foreign issuers (including
sponsored ADRs that are traded on exchanges or listed on NASDAQ); and

- securities issued by investment companies.

The Fund may purchase mortgage-backed securities issued or guaranteed as to
payment and interest by the U.S. Government, its agencies or instrumentalities.

RISK CONSIDERATIONS

The Balanced Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk;

- - Prepayment Risk; and

- - Hedging Risk.
<PAGE>
15

For a description of these risks, please see "RISK CONSIDERATIONS" on page 19.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Balanced Fund. The financial highlights for the
Fund for the periods from inception through May 31, 1996 have been audited by
, independent public accountants, whose report appears in STI
Classic Fund's annual report which accompanies the Statement of Additional
Information. The annual report for the Fund is available to Shareholders at no
charge by calling 1-800-474-4770.

1996 1995 1994
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES SHARES(2)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.30 10.36 9.79 10.00
Net Investment Income (Loss) $ 0.30 0.24 0.28 0.03
Realized and Unrealized Net Gains (Losses) on
Investments $ 1.41 1.29 0.51 (0.24)
Distributions from Net Investment Income $ (0.30) (0.25) (0.28) --
Distributions from Realized Capital Gains $ (0.11) (0.11) -- --
Net Asset Value, End of Period $ 11.60 11.53 10.30 9.79
Total Return 16.88% 15.58%* 8.29% (2.10%)
Net Assets End of Period (000) $4,896 3,131 3,765 2,311
Ratio of Expenses to Average Net Assets 1.25% 2.00%* 1.25% 1.25%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 2.70% 1.85%* 3.17% 2.46%*
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Reimbursements) 1.89% 2.97%* 1.80% 4.91%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and
Reimbursements) 2.06% 0.88%* 2.62% (1.20%)*
Portfolio Turnover Rate 154.63% 154.63% 156.61% 105.65%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 14, 1995.
(2) Commenced operations on January 4, 1994.
<PAGE>
17

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .79% .79%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .25% .43%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .21% .79%

Total Fund Operating Expenses After 1.25% 2.01%**
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .95%OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .28% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .66% FOR INVESTOR SHARES
AND 1.02% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.89% FOR INVESTOR SHARES AND 2.97% FOR FLEX
SHARES.THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, $50 $40 $76 $63 $104 $108 $183 $234
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

**Total Expenses have been restated to reflect current expenses.
<PAGE>
18

SUNBELT EQUITY FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

- common stocks;

- preferred stocks;

- warrants; and

- securities convertible into, or exchangeable for, common stock, including
securities rated lower than investment grade.

Stocks chosen for the Fund are primarily of U.S. companies headquartered and/or
operating in the following U.S. states:

- - Texas

- - Arkansas

- - Alabama

- - Mississippi

- - Tennessee

- - Kentucky

- - Florida

- - Virginia

- - Georgia

- - North Carolina

- - South Carolina

- - Louisiana

Because the Fund's investments are concentrated in this geographic area, the
Fund will be greatly affected by the economic conditions of these states.

RISK CONSIDERATIONS

The Sunbelt Equity Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Credit Risk;

- - Geographic Risk;

- - Hedging Risk; and

- - High-Yield Security Risk.
<PAGE>
19

For a description of these risks, please see "RISK CONSIDERATIONS" on page 19.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Sunbelt Equity Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES SHARES(2)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.96 10.20 9.69 10.00
Net Investment Income (Loss) $ (0.11) (0.07) (0.05) (0.02)
Realized and Unrealized Net Gains (Losses) on
Investments $ 4.30 4.04 0.36 (0.29)
Distributions from Net Investment Income $ -- -- -- --
Distributions from Realized Capital Gains $ (0.20) (0.20) (0.04) --
Net Asset Value, End of Period $ 13.95 13.97 9.96 9.69
Total Return 42.58% 39.86%* 3.20% (3.10%)
Net Assets End of Period (000) $29,002 2,705 22,180 16,077
Ratio of Expenses to Average Net Assets 1.60% 2.20%* 1.60% 1.60%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.79%) (1.43%)* (0.57%) (0.63%)*
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Reimbursements) 1.93% 3.62%* 1.98% 2.04%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and
Reimbursements) (1.12%) (2.85%)* (0.95%) (1.07%)*
Portfolio Turnover Rate 106.27% 106.27% 80.03% 21.42%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 5, 1995.
(2) Commenced operations on January 4, 1994.
<PAGE>
21

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.02% 1.02%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .40% .16%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .18% 1.02%

Total Fund Operating Expenses After 1.60 2.20%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.15% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .43% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .35% FOR INVESTOR SHARES
AND 1.47% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.93% FOR INVESTOR SHARES AND 3.62% FOR FLEX
SHARES.THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000, $53 $42 $86 $69 $121 $118 $220 $253
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.
<PAGE>
22

INTERNATIONAL EQUITY INDEX FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund primarily invests in equity securities of companies headquartered, or
based in, the approximately twenty foreign countries included in the EAFE-GDP
Index, including:

- common stocks;

- preferred stocks;

- warrants;

- options; and

- securities convertible into, or exchangeable for, common stock.

RISK CONSIDERATIONS

The Inernational Equity Index Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Hedging Risk; and

- - Foreign Security Risks.

For a description of these risks, please see "RISK CONSIDERATION" on page 19.

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the International Equity Index Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose
report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996 1995

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES(2)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.20 10.24 10.00
Net Investment Income (Loss) $ 0.05 -- 0.05
Realized and Unrealized Net Gains (Losses) on
Investments $ 0.85 0.82 0.17
Distributions from Net Investment Income $ (0.13) (0.10) (0.01)
Distributions from Realized Capital Gains $ (0.09) (0.09) (0.01)
Net Asset Value, End of Period $ 10.88 10.87 10.20
Total Return 8.90% 8.32%+* 2.18%+
Net Assets End of Period (000) $ 5,597 917 3,960
Ratio of Expenses to Average Net Assets 1.45% 2.10%* 1.45%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.48% (0.24%)* 0.67%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 2.06% 4.14%* 2.44%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) (0.13%) (2.28%)* (0.32%)*
Portfolio Turnover Rate 30.46% 30.46% 10.37%*
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 8, 1995.
(2) Commenced operations on June 6, 1994.
<PAGE>
24

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .76% .76%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .01% .10%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .68% 1.24%

Total Fund Operating Expenses After 1.45% 2.10%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .90% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .38% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE 1.18% FOR INVESTOR SHARES
AND 2.24% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 2.06% FOR INVESTOR SHARES AND 4.14% FOR FLEX
SHARES.THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $52 $41 $82 $66 $114 $113 $205 $243
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.
<PAGE>
25

INTERNATIONAL EQUITY FUND

OBJECTIVE

The International Equity Fund seeks to provide long-term capital appreciation by
investing primarily in a diversified portfolio of equity securities of foreign
issuers.

PORTFOLIO INVESTMENTS

The Fund invests primarily in equity securities of foreign issuers, including:

- common stocks;

- preferred stocks;

- warrants;

- options; and

- securities convertible into, or exchangeable for, common stock.

The Fund may also invest in:

- bonds and debentures issued by non-U.S. and U.S. companies, including
those rated below BBB by S&P or below Baa by Moody's, or securities not
rated by S&P or Moody's that are of comparable quality;

- securities issued or guaranteed by foreign or U.S. governments;

- foreign and U.S. commercial paper; and

- closed-end investment companies that invest in the securities of issuers
in a single country or region.

The Fund will invest in the securities of foreign issuers of at least three
different countries outside the United States. A foreign issuer:

- is a company organized under the laws of a specific country;

- principally trades its securities in a market or on an exchange in a
specific foreign country; or

- derives a significant proportion (at least 50 percent) of its revenues or
profits from goods produced or sold, investments made, or services
performed in a specific country or which has at least 50 percent of its
assets situated in that country.

The Fund will invest primarily in developed countries (for example, Japan,
Canada, and the United Kingdom). The Fund may also invest in securities of
issuers whose principal activities are in countries with emerging markets. The
Fund defines an emerging market country as any country whose economy and market
are considered to be emerging or developing by the World Bank or the United
Nations.
<PAGE>
26

RISK CONSIDERATIONS

The International Equity Fund is subject to the following types of risk:

- - Fund Risk;

- - Market Risk;

- - Credit Risk;

- - Hedging Risk;

- - High-Yield Security Risk; and

- - Foreign Security Risks;

For a description of these risks, please see "RISK CONSIDERATIONS" on page .

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the International Equity Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose
report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX
ENDED MAY 31, SHARES(1) SHARES1
<S> <C> <C>
Net Asset Value, Beginning of Period $ 10.44 10.44
Net Investment Income (Loss) $ 0.04 0.02
Realized and Unrealized Net Gains (Losses) on
Investments $ 0.90 0.91
Distributions from Net Investment Income -- --
Distributions from Realized Capital Gains -- --
Net Asset Value, End of Period $ 11.38 11.37
Total Return 9.00%+ 8.91%+
Net Assets End of Period (000) $ 3,448 953
Ratio of Expenses to Average Net Assets 1.81%* 2.51%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 1.73%* 1.08%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 3.14%* 5.86%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 0.40%* (2.27%)*
Portfolio Turnover Rate 113.34% 113.34%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on January 2, 1996.
<PAGE>
28

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee 1.06%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .00% .00%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .75% .75%

Total Fund Operating Expenses After 1.81% 2.51%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE 1.25% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .33 FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE 1.56% FOR INVESTOR SHARES
AND 3.61% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 3.14% OF INVESTOR SHARES AND 5.86% OF FLEX SHARES.THESE
FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES(4) SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $55 $45 $92 $78 $132 $134 $242 $285
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemp-tion at the end of each time
period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.
<PAGE>
29

THERE CAN BE NO ASSURANCE THAT A FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.

THE INVESTMENT OBJECTIVE OF EACH FUND IS NON-FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.

RISK CONSIDERATIONS

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
FUND RISK -- The possibility that the Fund's performance during a specific All Funds
period may not meet or exceed that of the market as a whole.
MARKET RISK -- The possibility that stock prices in general will decline over All Funds
short, or even extended, periods of time. This is because stock markets tend
to be cyclical, with periods when stock prices generally rise and periods when
stock prices generally decline.
SMALL ISSUER RISK -- Small and medium capitalization companies may be more Mid-Cap Equity Fund
vulnerable than larger, more established organizations to adverse business or Small Cap Equity Fund
economic developments. In particular, small capitalization companies may have
limited product lines, markets, and financial resources and may be dependent
upon a relatively small management group. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
INTEREST RATE RISK -- The potential for a decline in the price of fixed income Balanced Fund
securities due to rising interest rates. This risk will be greater for
long-term securities than for short-term securities.
CREDIT RISK -- The possibility that an issuer will be unable to make timely Capital Growth Fund
payments of either principal or interest. Value Income Stock Fund
Mid-Cap Equity Fund
Balanced Fund
Sunbelt Equity Fund
International Equity Fund
CALL RISK -- The possibility that securities with high interest rates will be Balanced Fund
prepaid (or "called") by the issuer prior to maturity during periods of
falling interest rates. This would require the Fund to invest the resulting
proceeds elsewhere, at generally lower interest rates.
EVENT RISK -- The possibility that corporate fixed income securities may suffer Balanced Fund
substantial declines in credit quality and market value due to corporate
restructurings. While event risk may be high for certain corporate securities
held by the Fund, event risk in the aggregate should be low because of the
Fund's diversified holdings.
GEOGRAPHIC RISK -- The risk that a Fund's concentration of investments in Sunbelt Equity Fund
securities of issuers located in a single state or geographic region subject
the Fund to economic conditions and government policies of that state or
region that could adversely affect the value of the Fund.
PREPAYMENT RISK -- The risk that mortgage-backed and asset-backed securities Balanced Fund
may be retired substantially earlier than their stated maturities or final
distribution dates, resulting in a loss of all or part of any premium paid.
</TABLE>

<PAGE>
30

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
HEDGING RISK -- There are risks associated with hedging activities, including: Value Income Fund
- - The success of a hedging strategy may depend on an ability to predict Small Cap Equity Fund
movements in the prices of individual securities, fluctuations in markets, Balanced Fund
and movements in interest rates; Sunbelt Equity Fund
- - There may be an imperfect or no correlation between the changes in market International Equity Index
value of the securities held by the Fund and the prices of futures and Fund
options on futures; International Equity Fund
- - There may not be a liquid secondary market for a futures contract or option;
- - Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
HIGH-YIELD, LOWER RATED BONDS -- There are risks associated with investing in Capital Growth Fund
high-yield securities, including: Value Income Stock Fund
- - High-yield, lower rated bonds ("junk bonds") involve greater risk of default Mid-Cap Equity Fund
or price declines than investments in investment grade securities (e.g., Sunbelt Equity Fund
securities rated BBB or higher by S&P or Baa or higher by Moody's) due to International Equity Fund
changes in the issuer's creditworthiness.
- - The market for high risk, high-yield securities may be thinner and less
active, causing market price volatility and limited liquidity in the
secondary market. This may limit the ability of a Fund to sell these
securities at their fair market values either to meet redemption requests,
or in response to changes in the economy or the financial markets.
- - Market prices for high risk, high-yield securities may also be affected by
investors' perception of the issuer's credit quality and the outlook for
economic growth. Thus, prices for high risk, high-yield securities may move
independently of interest rates and the overall bond market.
- - The market for high risk, high-yield securities may be adversely affected by
legislative and regulatory developments.
FOREIGN SECURITY RISKS -- There are risks associated with international Capital Growth Fund
investing, including: Value Income Stock Fund
CURRENCY RISK -- The possibility that changes in foreign exchange rates will Mid-Cap Equity Fund
affect, favorably or unfavorably, the value of foreign securities. International Equity Fund
VOLATILITY -- Investments in foreign stock markets can be more volatile than International Equity Index
investments in U.S. markets. Diplomatic, political, or economic developments Fund
could affect investments in foreign countries.
EXPENSE CONSIDERATIONS -- Fixed commissions on many foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges. Expenses for
custodial arrangements of foreign securities may be somewhat greater than
typical expenses for custodial arrangements for handling U.S. securities of
equal value.
FOREIGN TAXES -- Certain foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes are recoverable, the non-recovered portion of foreign withholding taxes
will reduce the income received from the securities comprising the portfolio.
REGULATORY ENVIRONMENT -- Foreign companies generally are not subject to
uniform accounting, auditing, and financial reporting standards comparable to
those applicable to U.S. domestic companies. Foreign branches of U.S. banks,
foreign banks and foreign issuers may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting, and
recordkeeping standards than those applicable to domestic branches of U.S.
banks and U.S. domestic issuers. There is generally less government regulation
of securities exchanges, brokers and listed companies abroad than in the U.S.
</TABLE>

<PAGE>
31

PERFORMANCE INFORMATION FOR PREDECESSOR COLLECTIVE FUNDS

The International Equity, Value Income Stock, Small Cap Equity, and Sunbelt
Equity Funds are each the successor to collective investment funds. These Funds
were previously managed by STI Capital Management, Inc. and Trusco Capital
Management, Inc. A substantial portion of the assets of those collective
investment funds was transferred to these Funds when each Fund started
operating. Total return, a type of performance calculation, for the predecessor
collective investment funds, is presented below. You may find this performance
information helpful because the collective investment funds were managed using
virtually the same investment objectives, policies, and restrictions as those
used by each of these Funds.

TOTAL RETURN

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

<TABLE>
<CAPTION>
FIVE SINCE
ONE YEAR YEARS TEN YEARS INCEPTION
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
International Equity N/A N/A N/A 27.50%
Collective Fund (2/1/95-
11/30/95)
Value Income Stock 15.14% N/A N/A 14.93%
Collective Fund (ending (10/1/89-
12/31/92) 12/31/92)
Sunbelt Equity 17.72% 20.71% 15.89% 16.74%
Collective Fund (ending (12/1/80-
12/31/93) 12/31/93)
</TABLE>

<TABLE>
<CAPTION>
SINCE
ONE YEAR TWO YEARS INCEPTION
(ENDING (ENDING (9/1/94-
12/31/96) 12/31/96) 12/31/96)
--------- --------- ---------
<S> <C> <C> <C>
Small Cap Equity 30.77% 30.37% 25.80%
Collective Fund
</TABLE>

The average annual total returns for the Funds (net of voluntary waivers and
reimbursements) for the following periods:

<TABLE>
<CAPTION>
THREE
ONE YEAR YEARS
(ENDING (ENDING SINCE
5/31/96) 5/31/96) INCEPTION
--------- --------- ---------
<S> <C> <C> <C>
International Equity N/A N/A 12.31%
Fund* (1/2/96-
5/31/96)
Value Income Stock 22.62% 16.73% 17.08%
Fund** (2/17/93-
5/31/96)
Sunbelt Equity 37.21% N/A 14.06%
Fund*** (1/4/94-
5/31/96)
Small Cap Equity ( / / -
Fund 5/31/96)
</TABLE>

- ---------------
* Commenced operations on December 1, 1995
** Commenced operations on February 12, 1993
*** Commenced operations on January 3, 1994
<PAGE>
32

PURCHASING FUND SHARES

CHOOSING INVESTOR OR FLEX SHARES

Each Fund offers two classes of shares in this Prospecus -- Investor Shares and
Flex Shares. Each class has its own expense structure and other characteristics,
allowing you to decide which class best suits your needs. You should consider
the amount you want to invest, how long you plan to have it invested, and
whether you plan to make additional investments. To help you in making this
decision, an analysis program is available upon request through your local
SunTrust Investment Consultant.

INVESTOR SHARES

- Front-end sales charge

- Lower annual expenses

- $2,000 minimum initial investment

FLEX SHARES

- Deferred sales charge on shares redeemed within one year of purchase

- Higher annual expenses

- $10,000 minimum initial investment

HOW TO BUY FUND SHARES

You may buy either Investor or Flex Shares (and fractions of shares) by mail,
telephone or wire directly from Federated Services Company, the Trust's Transfer
Agent. You may also purchase shares through Investment Consultants of a certain
correspondent banks of SunTrust Banks, Inc., or other financial institutions
that have executed dealer agreements with the Trust's Distributor. Shares are
offered continuously, and may be purchased on any day that the New York Stock
Exchange is open for business (a Business Day). Your price per share (the
offering price) will be the net asset value per share (NAV) next determined
after your purchase order is received by the Transfer Agent plus, in the case of
Investor Shares, the applicable front-end sales charge.

NAV is calculated by (1) taking the current market value of a Fund's total
assets for that class of shares (either Investor or Flex), (2) subtracting the
liabilities applicable to that class of shares, and (3) dividing that amount by
the total number of shares of that class owned by shareholders. Although the NAV
for each class of shares is calculated the same way, the NAVs for the classes
may, and are expected to, differ due to different expenses charged to each
class. The NAV is determined once each Business Day at the close of the New York
Stock Exchange (4:00 p.m. Eastern time). Thus, to receive the current Business
Day's NAV, purchase orders must be received before 4:00 p.m. Eastern time. If
you purchase shares through a financial institution (rather than directly
through the Transfer Agent), your order may have to be received by the financial
institution at an earlier cutoff time for your purchase to become effective that
day. This allows the financial institution time to process your order and
transmit it to the Transfer Agent.

IF YOU DECIDE TO BUY SHARES DIRECTLY FROM THE TRANSFER AGENT, FIRST CALL
1-800-874-4770. MAKE YOUR CHECK OUT TO "STI CLASSIC FUNDS" AND INCLUDE THE NAME
OF THE APPROPRIATE FUND(S) ON THE CHECK. THE CHECK MUST BE PAYABLE IN U.S.
DOLLARS. Third-party checks, credit cards, credit card checks, and cash will not
be accepted. Please note, if you buy shares with a check, and then sell those
shares in a short period of time, the Trust can delay payment to you until your
check clears, or for up to 15 Business Days, whichever comes first.
<PAGE>
33

FUNDLINK

FUNDLINK is a telephone-activated service that allows you to transfer money
quickly and easily between the STI Classic Funds and your SunTrust bank
account(s). To use FUNDLINK you must first contact your SunTrust Investment
Consultant and complete the FUNDLINK application and authorization agreements.
Once you have signed up to use FUNDLINK, simply call the Transfer Agent at
1-800-428-6970 to complete all your purchase and redemption transactions.

FRONT-END SALES CHARGES -- INVESTOR SHARES

The following table shows: (1) the sales charge you pay (i) as a percentage of
the offering price and (ii) as a percentage of your net investment (NAV
multiplied by the number of shares you purchase); and (2) the amount that is
paid to your Investment Consultant (Dealer) as a percentage of the offering
price.

<TABLE>
<CAPTION>
SALES
CHARGE SALES
AS A CHARGE DEALER'S
PERCENTAGE AS A REALLOWANCE
OF PERCENTAGE AS A % OF
YOUR OFFERING OF YOUR NET OFFERING
INVESTMENT PRICE INVESTMENT PRICE
- -------------- ----------- ----------- -------------
<S> <C> <C> <C>
Less than
$100,000 3.75% 3.90% 3.375%
$100,000 but
less than
$250,000 3.25% 3.36% 2.925%
$250,000 but
less than
$1,000,000 2.50% 2.56% 2.250%
$1,000,000 and
over 1.50% 1.52% 1.350%
</TABLE>

The front-end sales charge will be waived on Investor Shares purchased:

- through reinvestment of dividends and distributions;

- through a SunTrust Securities, Inc. asset allocation account;

- by persons repurchasing shares they redeemed within the last 60 days (see
REPURCHASE OF INVESTOR SHARES, below).

- by employees, and members of their immediate family, of SunTrust Banks,
Inc. and its affiliates;

- by persons reinvesting distributions from qualified employee benefit
retirement plans and rollovers from individual retirement accounts (IRAs)
previously with the trust department of a bank affiliated with SunTrust
Banks, Inc.; or

- by persons investing an amount less than or equal to the value of an
account distribution, when an account for which a bank affiliated with
SunTrust Banks, Inc. acted in a fiduciary, administrative, custodial, or
investment advisory capacity is closed.

REPURCHASE OF INVESTOR SHARES

You may repurchase any amount of Investor Shares of any Fund at NAV (without the
normal front-end sales charge), equal to or less than the value of any amount of
Investor Shares (for which you paid a front-end sales charge) that you redeemed
within the past 60 days. In effect, this allows you to repurchase shares that
you may have had to redeem, without repaying the front-end sales charge. To
exercise this privilege, your purchase order must be received by the Transfer
Agent within 60 days after your redemption. IN ADDITION, YOU MUST NOTIFY THE
TRANSFER AGENT, WHEN YOU SEND IN YOUR PURCHASE ORDER, THAT YOU ARE REPURCHASING
SHARES.
<PAGE>
34

REDUCED SALES CHARGES -- INVESTOR SHARES

- RIGHTS OF ACCUMULATION. When calculating the sales charge applicable to
your current purchase of Investor Shares, the Trust will combine the value
of your current purchases with the current value of any Investor Shares
you purchased previously for (i) your account, (ii) your spouse's account,
(iii) a joint account with your spouse, or (iv) your minor children's
trust or custodial accounts. A fiduciary purchasing shares for the same
fiduciary account, trust or estate, may also use this right of
accumulation. The Trust will only consider the value of Investor Shares
purchased previously that were sold subject to a sales charge. As a
result, neither Investor Shares of STI Classic Money Market Funds nor
Investor Shares purchased with dividends or distributions will be included
in the calculation. TO BE ENTITLED TO A REDUCED SALES CHARGE BASED ON
SHARES ALREADY OWNED, YOU MUST ASK THE DISTRIBUTOR FOR THE REDUCTION AT
THE TIME OF PURCHASE. You must provide the Distributor with your account
number(s) and, if applicable, the account numbers for your spouse and/or
children (and provide children's ages). The Trust may amend or terminate
this right of accumulation at any time.

- LETTER OF INTENT. By submitting a Letter of Intent to the Transfer Agent,
you may purchase Investor Shares for a 13-month period at the sales charge
rate applicable to the total amount of your intended purchases. The Trust
will only consider the value of Investor Shares sold subject to a sales
charge. The Letter of Intent may, however, include purchases up to 90 days
before the date of the Letter (although the purchase price of these prior
purchases will not be adjusted).

You are not legally bound by the terms of the Letter of Intent to purchase the
intended amount of shares stated in the Letter. The Letter does, however,
authorize the Transfer Agent to hold in escrow 3.75% of the total amount to be
purchased. If the intended investment is not completed at the end of the 13
months (which begins on the date of the first purchase), the Transfer Agent will
redeem the necessary portion of the escrowed shares to make up the difference
between the reduced rate sales charge (based on the intended amount to be
purchased) and the sales charge that would normally apply (based on the actual
amount purchased).

- COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the
appropriate sales charge, the Trust will combine same day purchases of
Investor Shares (that are subject to a sales charge) made by you, your
spouse and your minor children (under age 21). This combination also
applies to Investor Shares you purchase with a Letter of Intent.

CONTINGENT DEFERRED SALES CHARGES -- FLEX SHARES

You do not pay an initial sales charge when you purchase Flex Shares. If,
however, you redeem (sell) your shares within the first year after your
purchase, you will pay a contingent deferred sales charge (CDSC) equal to 2.00%
of either (1) NAV of the shares at the time of purchase, or (2) NAV of the
shares at the time of redemption, whichever is less. The CDSC does not apply to
shares you purchase through
<PAGE>
35
reinvestment of dividends or distributions. Thus, you never pay a CDSC on any
increase in your investment above the initial purchase price. In addition, the
CDSC does not apply to exchanges of Flex Shares of one Fund for Flex Shares of
another Fund.

The CDSC will be waived on Flex Shares you sell for the following reasons:

- to make certain distributions from a retirement plan;

- because of death or disability; or

- for certain payments under the Systematic Withdrawal Plan (discussed
below).

MINIMUM PURCHASE -- INVESTOR SHARES

Your minimum initial purchase and any subsequent purchase of Investor Shares of
any Fund must be at least $2,000 and $1,000 (or $100 via a statement coupon),
respectively. Employees of SunTrust Banks, Inc., and members of their immediate
family, however, may buy Investor Shares with an initial purchase of $1,000.

MINIMUM PURCHASE -- FLEX SHARES

Your minimum initial purchase and any subsequent purchase must be at least
$10,000 and $1,000 (or $100 via a statement coupon), respectively. If you invest
through the Systematic Investment Plan, described below, you will be subject to
lower minimum purchase amounts.

MINIMUM PURCHASE -- RETIREMENT PLANS

A retirement plan may purchase either Investor Shares or Flex Shares with a
minimum initial investment of $2,000.

SYSTEMATIC INVESTMENT PLAN

You may purchase shares of either class of each Fund systematically through
regular deductions from your checking or savings account (with a SunTrust Banks,
Inc. affiliated bank). With a $500 minimum initial investment, you may begin
making regularly scheduled investments of at least $50 and up to $100,000 once
or twice a month. If you are buying Flex Shares, you should plan on investing at
least $10,000 during the first two years. The Distributor may close your account
if you do not meet the minimum investment requirement at the end of two years.

THE DISTRIBUTOR MAY ACCEPT INVESTMENTS OF SMALLER AMOUNTS, FOR EITHER CLASS OF
SHARES, AT ITS DISCRETION. IN ADDITION, THE TRUST RESERVES THE RIGHT TO REJECT
ANY PURCHASE ORDER WHEN THE DISTRIBUTOR DETERMINES THAT ACCEPTING THE ORDER
WOULD NOT BE IN THE BEST INTERESTS OF THE TRUST AND/OR SHAREHOLDERS.

REDEEMING FUND SHARES

HOW TO SELL YOUR FUND SHARES

You may sell (redeem) your Investor or Flex Shares on any day that NAV is
calculated, by contacting the Transfer Agent directly by mail, telephone or, if
eligible, via FUNDLINK. You may also make redemption requests (in writing or by
telephone) through a SunTrust Investment Consultant, and through certain
correspondent banks of SunTrust Banks, Inc. Redemption requests made via
telephone or FUNDLINK (1-800-428-6970) must be for at least $1,000. Redemption
requests of $25,000 or more must be in writing and must include a signature
guarantee (a notarized signature is not sufficient). The price of each share
will be the next NAV determined after receipt of your
<PAGE>
36
redemption request less, in the case of Flex Shares, any applicable CDSC.
Redemption requests must be received by the Transfer Agent by 4:00 p.m. Eastern
time to get that day's NAV.

RECEIVING YOUR MONEY

Your redemption proceeds will normally be sent within five Business Days of the
Transfer Agent receiving your request. Your proceeds can be wired to your bank
account (subject to a $7.00 fee), transferred to your bank account via FUNDLINK,
or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR
THROUGH AUTOMATED CLEARING HOUSE (ACH), REDEMPTION PROCEEDS MAY NOT BE AVAILABLE
FOR UP TO 15 BUSINESS DAYS.

The Trust intends to pay your redemption proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the remaining shareholders of the Fund) the Trust reserves the right to pay
all, or part, of your redemption proceeds in liquid securities with a market
value equal to the redemption price ("redemption in kind"). Although it is
highly unlikely that your shares would ever actually be redeemed in kind, if it
did happen, you would probably have to pay brokerage costs to sell the
securities distributed to you.

INVOLUNTARY REDEMPTIONS

If your account balance drops below the required minimum, $2,000 for Investor
Shares and $10,000 for Flex Shares, you may be required to redeem your shares.
You will always be given at least 60 days' written notice to give you time to
add to your account and avoid the redemption.

SYSTEMATIC WITHDRAWAL PLAN

If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange to make monthly, quarterly,
semi-annual, or annual withdrawals of at least $50 from any Fund. The proceeds
of each withdrawal will be mailed to you by check or electronically transferred
to your account with a SunTrust Banks, Inc. affiliated bank.

EXCHANGES

You may exchange your Investor or Flex Shares by contacting an Investment
Consultant of a SunTrust Banks, Inc. affiliated bank, SunTrust Securities, Inc.,
or certain correspondent banks of SunTrust Banks, Inc. in writing or by
telephone, or by contacting the Transfer Agent directly via FUNDLINK. Exchange
requests must be for at least $1,000. You may exchange your shares for shares of
another Fund in the Trust up to four times during a calendar year without
restriction. More than four exchanges during a year may be viewed as abuse of
the exchange privilege. In such a case, the Trust may charge you a $10.00 fee
for each additional exchange. You will, however, be notified before any fee is
charged. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT
BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP
TO 15 BUSINESS DAYS). This exchange privilege may be changed or canceled at any
time upon 60 days' notice.

INVESTOR SHARES

You may exchange Investor Shares of any Fund for Investor Shares of any other
Fund. Shares you exchange for the first time from a Money Market Fund (which has
no sales charge) into a
<PAGE>
37
Fund with a sales charge are subject to that sales charge. Similarly, shares you
exchange for the first time into a Fund with a higher sales charge are subject
to an incremental sales charge (the difference between the lower and higher
applicable sales charges). Should you exchange shares into a Fund with the same,
lower or no sales charge (a Money Market Fund), there is no sales charge for the
exchange.

FLEX SHARES

You may exchange Flex Shares of any Fund for Flex Shares of any other Fund or
for Investor Shares of the Money Market Funds of the Trust. No CDSC is imposed
on redemptions of Money Market Fund shares you acquire in an exchange, provided
you hold your shares for at least one year from your initial purchase date. If
you exchange Flex Shares of any Fund for Investor Shares of a Money Market Fund,
you may then, subsequently, only exchange those Money Market Fund Investor
Shares for Flex Shares.

TELEPHONE REDEMPTION AND EXCHANGE TRANSACTIONS ARE EXTREMELY CONVENIENT, BUT
NOT WITHOUT RISK. TO TRY TO KEEP YOUR TELEPHONE TRANSACTIONS AS SAFE, SECURED,
AND RISK FREE AS POSSIBLE, THE TRUST HAS DEVELOPED CERTAIN SAFEGUARDS AND
PROCEDURES FOR DETERMINING THE IDENTITY OF CALLERS AND AUTHENTICITY OF
INSTRUCTIONS. AS A RESULT, NEITHER THE TRUST NOR ITS TRANSFER AGENT WILL BE
RESPONSIBLE FOR ANY LOSS, LIABILITY, COST, OR EXPENSE FOR ACTING UPON
TELEPHONE OR WIRE INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE. IF YOU
CHOOSE TO MAKE TELEPHONE TRANSACTIONS, YOU WILL GENERALLY BEAR THE RISK OF ANY
LOSS.

DIVIDENDS AND DISTRIBUTIONS

Income dividends are paid quarterly by each of the Funds, except the
International Equity Index Fund and International Equity Fund. These Funds pay
income dividends annually. If you own Fund shares on the record date, you will
be entitled to receive dividends. The Funds make distributions of capital gains
at least annually.

TAX INFORMATION

The following summary is based on current tax laws, which may be changed by
legislative, judicial or administrative action.

TAX STATUS OF EACH FUND

Each Fund is treated as a separate entity for federal tax purposes. Each Fund
intends to qualify for the special tax treatment afforded regulated investment
companies. As long as a
<PAGE>
38
Fund qualifies as a regulated investment company, it pays no federal income tax
on the earnings it distributes to Shareholders.

TAX STATUS OF DISTRIBUTIONS

EACH SALE, EXCHANGE, OR REDEMPTION OF FUND SHARES IS A TAXABLE EVENT TO THE
SHAREHOLDER.

Each Fund will distribute substantially all of its income. THE INCOME DIVIDENDS
YOU RECEIVE FROM THE FUNDS WILL BE TAXED AS ORDINARY INCOME WHETHER YOU RECEIVE
THE DIVIDENDS IN CASH OR IN ADDITIONAL SHARES.

FOREIGN TAX CONSIDERATIONS

Shareholders of the International Equity Index and International Equity Funds
may be entitled to a foreign tax deduction or credit.

STATE TAX CONSIDERATIONS

Please refer to the SAI for more tax information.

STI CLASSIC FUNDS INFORMATION

THE TRUST

BOARD OF TRUSTEES

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.

GENERAL INFORMATION

VOTING RIGHTS

You receive one vote for every full Fund share owned. Each Fund or class of a
Fund will vote separately on matters relating solely to that Fund or class.

REPORTING

You will receive the Trust's unaudited financial information and audited
financial statements. In addition, the Trust will send you proxy state-
ments and other reports.
<PAGE>
39

SHAREHOLDER INQUIRIES

You may contact the Transfer Agent to obtain information on account statements,
procedures, and other related information by calling 1-800-874-4770.

INVESTMENT ADVISORS

An investment advisor manages a Fund's investment activities, makes decisions
about purchases and sales of portfolio securities, and places orders on behalf
of a Fund.

STI Capital Management, N.A. (STI Capital) serves as the Advisor to the Capital
Growth, Value Income, Small Cap Equity, Mid-Cap Equity, Balanced and
International Equity Funds. As of , STI Capital had approximately
$ billion in assets under management. The principal business address of STI
Capital is P.O. Box 3808, Orlando, Florida 32802.

STI Capital and Trusco serve as joint advisors to the International Equity Index
Fund.

The Advisors are indirect wholly-owned subsidiaries of SunTrust Banks, Inc.
(SunTrust). SunTrust is a southeastern regional bank holding company with assets
of $ billion, as of , 1997. SunTrust is one of the 20 largest
banking companies in the U.S. Its three principal subsidiaries -- SunTrust Banks
of Florida, Inc., SunTrust Banks of Georgia, Inc., and SunTrust Banks of
Tennessee, Inc. -- provide a wide range of personal and corporate banking,
trust, and investment services through more than 600 locations in the tri-state
area. SunTrust Banks, Inc. has discretionary assets under management of
approximately $ billion, as of , 1997.

The Advisors may use their affiliates as brokers for the Funds' portfolio
transactions.

DISTRIBUTION

SEI Investments Distribution Co. (the Distributor), a wholly-owned subsidiary of
SEI Investments Company (SEI), serves as each Fund's distributor under a
Distribution Agreement.

The Investor Shares of each fund have a Distribution Plan. Under the
Distribution Agreement and Plan, the Distributor is entitled to receive an
annual fee of up to:

- .68% of the average daily net assets of the Capital Growth Fund;

- .33% of the average daily net assets of the Value Income Stock and
International Equity Funds;

- .43% of the average daily net assets of the Mid-Cap Equity and Sunbelt
Equity Funds;

- .28% of the average daily net assets of the Balanced Fund;

- .38% of the average daily net assets of the International Equity Index
Fund; and

- . % of the average daily net assets of the Small Cap Equity Fund.
<PAGE>
40

The Distributor may use this fee:

- as compensation for its distribution-related services or shareholder
services; or to compensate financial institutions and intermediaries, such
as banks (including SunTrust Banks, Inc.'s affiliate and correspondent
banks), savings and loan associations, insurance companies, investment
counselors, broker-dealers, and the Distributor's affiliates and
subsidiaries for performing distribution-related or shareholder services.

The Distributor may waive all, or a portion of its fee to limit the net expenses
of the Funds to the amounts set forth in each Fund's Expense Summary.

It is possible that a financial institution may offer different classes of
shares to its customers. As a result, the financial institution may receive
different compensation with respect to different classes of shares.

A prospective investor may visit any one of the Investment Services offices of
SunTrust Banks, Inc.'s affiliate banks (as listed on the last pages of this
Prospectus), SunTrust Securities, Inc., or certain correspondent banks of
SunTrust Banks, Inc. to receive copies of the Prospectuses for the Investor and
Flex Shares of the Trust and application forms.

Each Fund may use the Distributor as its broker for portfolio transactions. The
Distributor receives compensation for its brokerage services.

At times, the Distributor may use its own funds to provide promotional
incentives, in the form of cash or other compensation, to financial institutions
whose representatives have sold or are expected to sell significant amounts of
Fund shares.

Trust Shares of the Fund are offered without a sales charge or distribution fee
primarily to financial institutions, and are described in a separate prospectus.
You may call 1-800-874-4770 to receive more information about Trust Shares.

ADMINISTRATION

At times, the Administrator may voluntarily waive all or a portion of its
administration fees.
<PAGE>
41

INVESTMENT PRACTICES -- EQUITY FUNDS

CAPITAL VALUE MID-CAP SUNBELT SMALL CAP INTERNATIONAL
GROWTH INCOME EQUITY BALANCED EQUITY EQUITY EQUITY INDEX INTERNATIONAL
SECURITY OR PRACTICE FUND FUND FUND FUND FUND FUND FUND EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADRs X X X X -- X(8) *(3) X(3)
Bank Obligations X(9) X(9) X(9) X X(9) X(9) X X
Borrowing (33 1/3%) (33 1/3%) (33 1/3%) (33%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Convertible Securities X X X X X X X X
Corporate Debt Securities (35%)(2) (35%)(2) (35%)(2) (60%)(2) (35%)(2) *(9) -- (35%)(2)
Forward Foreign Currency Contracts -- -- -- -- -- -- X X
Futures and Options on Futures -- X -- X (20%) -- (20%) X
Illiquid Securities (15%) (15%) (15%) (15%) (15%) (15%) (15%) (15%)
Investment Company Shares (10%) (10%)(5) (10%) (10%) (10%)(5) (10%)(5) (10%)(5) (10%)(5)
Mortgage-Backed Securities -- -- -- (25%)(1) -- * -- --
Options -- X -- X X X X X(4)
Pay-In-Kind Securities X -- -- X -- -- -- --
Repurchase Agreements X(9) X(9) X X(9) X(9) X(9) X X(9)
Securities Lending (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Securities of Foreign Issuers -- -- X X -- -- X X
Supranational Agency Obligations -- -- X X -- X -- --
Swaps, Caps, Floors, and Collars -- -- -- X -- -- -- --
U.S. Treasury and Agency Obligations X X X X X(9) X(9) X X(9)
When Issued Securities X X X X X X X X
Zero Coupon Obligations -- -- -- X -- -- -- --
</TABLE>

(%) = Maximum percentage permissible. Except for Illiquid Securities, all
percentages shown are of total assets.
X = No policy limitation; Fund may be using currently.
* = Permitted, but not typically used.
- -- = Not permitted.
<TABLE>
<CAPTION>
CAPITAL VALUE MID-CAP SUNBELT SMALL CAP INTERNATIONAL
GROWTH INCOME EQUITY BALANCED EQUITY EQUITY EQUITY INDEX INTERNATIONAL
TEMPORARY INVESTMENTS FUND FUND FUND FUND FUND FUND FUND EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash X X X X X X X X
Money Market Investments X X X X X X X X
Short-Term Obligations X X X X X X X X

CAPITAL VALUE MID-CAP SUNBELT SMALL CAP INTERNATIONAL
GROWTH INCOME EQUITY BALANCED EQUITY EQUITY EQUITY INDEX INTERNATIONAL
INVESTMENT RESTRICTIONS FUND FUND FUND FUND FUND FUND FUND EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities of Any One Issuer(1) 5% 5% 5% 5% 5% 5% 5% 5%
Outstanding Voting Securities of Any One 10% 10% 10% 10% 10% 10% 10% 10%
Issuer
Securities of Issuers in Any One Industry(2) 25% 25% 25% 25% 25% 25% 25% 25%
Expected Annual Portfolio Turnover % % % % % % % %
</TABLE>

MORE ABOUT INVESTMENT PRACTICES

The following is a description of some of the permitted investments for the
Funds. Further discussion is contained in the SAI.

AMERICAN DEPOSITARY RECEIPTS (ADRs) AND EUROPEAN DEPOSITARY RECEIPTS (EDRs) are
securities, typically issued by a U.S. financial institution (or a non-U.S.
financial institution in the case of an EDR) (a depositary). The institution has
ownership interests in a security, or a pool of securities, issued by a foreign
issuer and deposited with the depositary. ADRs and EDRs may be available through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the security underlying the receipt and a depositary.
An unsponsored facility may be established by a depositary without participation
by the issuer of the underlying security.

BANK OBLIGATIONS are SHORT-TERM OBLIGATIONS issued by U.S. and foreign banks,
including bankers' acceptances, certificates of deposit (CDs), custodial
receipts, and time deposits.

EQUITY SECURITIES include common and preferred stocks, warrants, rights to
subscribe to common stock and convertible securities and may be publicly and
privately issued.

A Fund may use futures contracts, and related options, for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired. They may also be used to minimize fluctuations in foreign currencies
or to gain exposure to a particular market or instrument. A Fund will minimize
the risk that it will be unable to close out a futures
<PAGE>
44
contract by only entering into futures contracts which are traded on national
futures exchanges.

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.

INVESTMENT COMPANY SHARES -- Shares of other mutual funds may be purchased by
the Funds to the extent consistent with applicable law.

OBLIGATIONS OF SUPRANATIONAL
ENTITIES -- Obligations of supranational entities established through the joint
participation of several governments, including the Asian Development Bank, the
Inter-American Development Bank, International Bank for Reconstruction and
Development (World Bank), African Development Bank, European Economic Community,
European Investment Bank, and the Nordic Investment Bank.

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

REPURCHASE AGREEMENTS 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.
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.

SECURITIES OF FOREIGN ISSUERS are securities issued by foreign corporations,
including foreign branches of U.S. banks and foreign banks, and by foreign
governments or their agencies or instrumentalities. There are special risks
considerations associated with foreign securities. (See "Foreign Securities
Risks on page .)

SHORT-TERM CORPORATE OBLIGATIONS are corporate obligations maturing in 397 days
or less, including commercial paper and other short-term corporation
obligations.

SWAPS, CAPS, FLOORS, and COLLARS -- Swaps, caps, floors, and collars are hedging
tools designed to permit the purchaser to preserve a return or spread on a
particular
<PAGE>
46
investment or portion of its portfolio. They are also used to protect against
any increase in the price of securities the Fund anticipates purchasing at a
later date. Swap agreements are sophisticated hedging instruments that typically
involve a small investment of cash relative to the magnitude of risk assumed. As
a result, swaps can be highly volatile and have a considerable impact on the
Fund's performance.

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

TRUST AND INVESTMENT SERVICES OFFICES OF SUNTRUST BANKS, INC. AFFILIATE BANKS:

FLORIDA: (STATEWIDE TOLL FREE) 1-800-526-1177

SUNTRUST SECURITIES, INC. -- FLORIDA

200 S. Orange Avenue
Tower 10
Orlando, FL 32801
(407) 237-4380
1-800-432-4760, ext. 4380

501 E. Las Olas Boulevard
Ft. Lauderdale, FL 33301
(954) 765-7422

Boca Raton Office
800 S. Federal Highway
Boca Raton, FL 33435
(561) 243-6707

Coral Ridge Office
2626 E. Oakland Park Blvd.
Ft. Lauderdale, FL 33306
(954) 765-2155

Delray Beach Office
302 E. Atlantic Avenue
Delray Beach, FL 33483
(561) 243-6750

5200 W. Atlantic Ave.
Delray Beach, FL 33484
(561) 243-6743

Hollywood Office
2001 Hollywood Blvd.
Hollywood, FL 33021
(954) 765-7062

Palm Beach Office
303 Royal Poinciana Plaza
Palm Beach, FL 33480
(561) 835-2855

PGA Office
4500 PGA Blvd.
Palm Beach Gardens, FL 33410
(561) 835-2802

8200 W. Broward Blvd.
Plantation, FL 33324
(954) 765-7661

777 Brickell Avenue
Miami, FL 33131
(305) 579-7450

401 E. Jackson Street
Tampa, FL 33602
(813) 224-2517

700 Virginia Avenue
Ft. Pierce, FL 34982
(407) 467-6459

Osceola Office
111 E. Osceola Street
Stuart, FL 34994
(407) 223-6012

Belnova Office
120 S. Ridgewood Avenue
Daytona Beach, FL 32114
(904) 258-2390

Bill France Office
4900 Clyde Morris Blvd.
Port Orange, FL 32119
(904) 258-2654

Deland Office
302 E. New York Avenue
Deland, FL 32724
(904) 822-5891

200 W. Forsyth Street
Jacksonville, FL 32202
(904) 632-2534
<PAGE>
48

1612 E. Cape Coral Parkway
Cape Coral, FL 33904
(941) 540-6128

Pelican Bay Office
801 Laurel Oak Drive
Naples, FL 33963
(941) 598-0515

South Gate Office
3400 S. Tamiami Trail
Sarasota, FL 34230
(941) 316-4027

Port Charlotte Office
18501 Murdock Circle
Port Charlotte, FL 33949
(941) 625-9286

5899 Whitfield Avenue
Sarasota, FL 34243
(941) 359-7415

North Beneva Office
3577 Fruitville Road
Sarasota, FL 34237
(941) 316-4003

South Beneva Office
8181 S. Tamiami Trail
Sarasota, FL 34231
(941) 927-7903

Venice Office
200 Nokomis Avenue South
Venice, FL 34285
(941) 486-4417

210 Security Square
Winter Haven, FL 33880
(941) 297-6855

One East Jefferson Street
Brooksville, FL 34601
(352) 754-5798

Crystal River Office
1502 SE Highway 19
Crystal River, FL 34428
(352) 795-8214

5435 Gall Blvd.
Zephyrhills, FL 33541
(813) 780-4154

6335 U.S. Highway 19
New Port Richey, FL 34652
(813) 861-4375

Seven Hills Office
1170 Mariner Blvd.
Spring Hill, FL 34609
(352) 754-5779

203 E. Silver Springs Blvd.
Ocala, FL 34470
(352) 368-6477

3522 Thomasville Road
Tallahassee, FL 32308
(904) 298-5064

511 W. 23rd Street
Panama City, FL 32405
(904) 872-6086

11 Hoffman Drive
Gulf Breeze, FL 32561
(904) 435-1264

GEORGIA:

SUNTRUST SECURITIES, INC. -- GEORGIA

55 Park Place
First Floor
Atlanta, GA 30303
(404) 588-8108
1-800-600-6350

101 N. Lumpkin Street
Athens, GA 30601
(706) 354-5346
<PAGE>
49

Gainesville Branch
427 Oak Street
Gainesville, GA 30501
(770) 503-8674

100 East Second Avenue
Rome, GA 30161
(706) 236-4325

2815 Wrightsboro Road
Augusta, GA 30909
(706) 821-2015

606 Cherry Street
Macon, GA 31201
(912) 755-5175

1246 First Avenue
Columbus, GA 31901
(706) 649-3631

33 Bull Street, Suite 208
Savannah, GA 31401
(912) 944-1165

410 W. Broad Avenue
Albany, GA 31701
(912) 430-5468

Coffee County Branch
201 S. Peterson Avenue
Douglas, GA 31533
(912) 383-5242

510 Gloucester Street
Brunswick, GA 31520
(912) 262-5322

Sea Island Road Branch
701 Sea Island Road
St. Simons Island, GA 31522
(912) 638-3620
(912) 262-2227

TENNESSEE:

SUNTRUST SECURITIES, INC. -- TENNESSEE

424 Church Street
4th Floor
Nashville, TN 37219
(615) 748-4477
1-800-932-2652

736 Market Street
Chattanooga, TN 37402
(423) 757-3005
TN WATS 1-800-572-7306, Ext. 3005
Bordering States WATS
1-800-874-1083, Ext. 3005 Out of
State WATS
1-800-251-6266, Ext. 3005

9950 Kingston Pike
Knoxville, TN 37997
(423) 544-2181
1-800-456-1177

207 Mockingbird Lane
Johnson City, TN 37604
(423) 461-1005

25 Public Square
Lawrenceburg, TN 38464
(615) 762-3511

ALABAMA:

SUNTRUST SECURITIES, INC. -- ALABAMA

201 South Court Street
Florence, AL 35630
(205) 767-8537
<PAGE>

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

* INVESTMENT ADVISORS

Trusco Capital Management, Inc. 50 Hurt Plaza
Suite 1400
Atlanta, GA 30303

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

* DISTRIBUTOR

SEI Investments Distribution Co. Oaks, PA 19456

* ADMINISTRATOR

SEI Fund Resources 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

The Bank of New York One Wall Street
(International Equity Fund only) New York, New York 10286

* LEGAL COUNSEL

Morgan, Lewis & Bockius LLP 1800 M Street, N.W.
Washington, D.C. 20036

* INDEPENDENT PUBLIC ACCOUNTANTS
</TABLE>
<PAGE>
WHY INVEST IN MUTUAL FUNDS?

BENEFITS OF MUTUAL FUNDS

With a mutual fund investment, you have a professional portfolio manager with
the expertise and resources to choose appropriate investments that meet the
objectives of the fund's investors. When you invest in individual securities,
you alone bear the costs of investing. With a mutual fund investment, trading
costs are shared by all fund investors. When you invest in individual
securities, you need to purchase a wide range of securities to truly diversify
your portfolio. With a mutual fund investment, you experience immediate
diversification. With individual securities, it may be difficult to liquidate
your investment. Mutual fund shares are easily sold at their current value.

ABOUT STI CLASSIC FUNDS

STI CLASSIC FUNDS

INVESTOR SHARES AND FLEX SHARES

Investment Advisors to the Funds:
STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
SUNTRUST BANK, ATLANTA
SUNTRUST BANK, CHATTANOOGA, N.A.
(THE ADVISORS)

The STI Classic Funds (the Trust) is a mutual fund that offers shares in a
number of separate investment portfolios (each a Fund and, collectively, the
Funds). This Prospectus gives you important information about the Investor
Shares and Flex Shares of the Fixed-Income Funds listed above. Please read this
Prospectus, and keep it for future reference.

OCTOBER 1, 1997
<PAGE>
2

ABOUT THE TRUST

- Investment Grade Bond Fund, U.S. Government Securities Fund, Limited-Term
Federal Mortgage Securities Fund, Short-Term Bond Fund, Short-Term U.S.
Treasury Securities Fund, and Investment Grade Tax-Exempt Bond Fund (the
Fixed-Income Funds); and

- Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund, and Tennessee
Tax-Exempt Bond Fund (the State Tax-Exempt Funds).
<PAGE>
3

FUND INFORMATION -- FIXED-INCOME FUNDS

INVESTMENT GRADE BOND FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund primarily invests in bonds, including debentures. The Fund invests only
in investment grade obligations, including:

- corporate debt obligations;

- mortgage-backed securities;

- asset-backed securities;

- U.S. Government obligations;

- custodial receipts;

- foreign government securities;

- obligations of supranational entities;

- sponsored American Depositary Receipts (ADRs); and

- short-term corporate obligations.

RISK CONSIDERATIONS

The Investment Grade Bond Fund is subject to the following types of risk:

- - Fund Risk;
- - Interest Rate Risk;
- - Credit Risk;
- - Call Risk;

- - Event Risk;
- - Prepayment Risk;
- - Hedging Risk; and
- - Foreign Security Risks.

<PAGE>
4

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

Mr. L. Earl Denney, CFA, has managed the Investment Grade Bond Fund since it
began operations. He has been Senior Vice President of STI Capital Management,
N.A. since 1983.
<PAGE>
5

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Investment Grade Bond Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose
report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994 1993
FOR A SHARE OUTSTANDING THROUGHOUT THE INVESTOR FLEX INVESTOR INVESTOR INVESTOR
PERIOD ENDED MAY 31, SHARES SHARES(1) SHARES SHARES SHARES(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.26 10.33 9.89 10.44 10.00
Net Investment Income (Loss) $ 0.56 0.52 0.57 0.46 0.44
Realized and Unrealized Net Gains
(Losses) on Investments $ (0.20) (0.26) 0.38 (0.35) 0.44
Distributions from Net Investment Income $ (0.56) (0.52) (0.58) (0.46) (0.44)
Distributions from Realized Capital Gains -- -- -- (0.20) --
Net Asset Value, End of Period $ 10.06 10.07 10.26 9.89 10.44
Total Return 3.50% 2.50%* 10.04% 0.86% 9.21%*
Net Assets End of Period (000) $36,155 4,621 33,772 35,775 24,375
Ratio of Expenses to Average Net Assets 1.15 % 1.64 %* 1.15 % 1.14 %* 1.14 %
Ratio of Net Investment Income (Loss) to
Average Net Assets 5.40 % 4.84 %* 5.79 % 4.39 % 4.75 %*
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Reimbursements) 1.44 % 2.49 %* 1.49 % 1.41 % 1.46 %*
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers
and Reimbursements) 5.11 % 3.99 %* 5.45 % 4.12 % 4.43 %*
Portfolio Turnover Rate 184 % 184 % 237 % 259 % 299 %
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 7, 1995.
(2) Commenced operations on June 11, 1992.
<PAGE>
6

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .63% .63%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .22% .39%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .30% .62%

Total Fund Operating Expenses After 1.15% 1.64%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .74% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .43% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .30% FOR INVESTOR SHARES
AND .75% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.47% FOR INVESTOR SHARES AND 2.49% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
You would pay the following $ 49 $ 37 $ 73 $ 52 $ 98 $ 89 $ 172
expenses on a $1,000, assuming
(1) a 5% annual return; (2) the
imposition of the maximum front-
end sales charge; and (3)
redemption at the end of each
time period.

<CAPTION>
<S> <C>
FLEX
EXAMPLE SHARES
- ---------------------------------
- ---------------------------------
You would pay the following $ 194
expenses on a $1,000, assuming
(1) a 5% annual return; (2) the
imposition of the maximum front-
end sales charge; and (3)
redemption at the end of each
time period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
7

U.S. GOVERNMENT SECURITIES FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund primarily invests in:

The average maturity of the Fund's portfolio will typically range from 7 to 14
years, which may impact the Fund's exposure to interest rate risk.

The Fund also may invest in:

- U.S. Government obligations;

- bank obligations;

- short-term corporate obligations; and

- repurchase agreements.

RISK CONSIDERATIONS

The U.S. Government Securities Fund is subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk; and

- - Prepayment Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

Mr. Charles B. Leonard, CFA, First Vice President of Trusco Capital Management,
Inc., and Michael L. Ford, an Associate of Trusco, have co-managed the U.S.
Government Securities Fund since it began operating. Mr. Leonard, who has more
than 25 years of investment experience, has been with Trusco
<PAGE>
8
since 1986. Mr. Ford, who has more than 11 years of investment experience, has
been with Trusco since April 1994. Prior to joining Trusco, he served as a
senior securities analyst with Liberty Capital Advisors from 1992 to 1994 and
has served as a securities analyst at Southern Farm Bureau Life Insurance
Company from 1990 to 1992.
<PAGE>
9

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the U.S. Government Securities Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose
report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996 1995

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES(2)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.26 10.31 10.00
Net Investment Income (Loss) $ 0.59 0.52 0.56
Realized and Unrealized Net Gains (Losses) on
Investments $(0.33) (0.37) 0.26
Distributions from Net Investment Income $(0.59) (0.52) (0.56)
Distributions from Realized Capital Gains $(0.03) -- --
Net Asset Value, End of Period $ 9.90 9.91 10.26
Total Return 2.47% 1.42%* 8.61%+
Net Assets End of Period (000) $2,396 2,826 589
Ratio of Expenses to Average Net Assets 1.15% 1.66%* 1.15%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 5.68% 5.18%* 6.08%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 2.50% 2.86%* 6.84%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 4.33% 3.98%* 0.39%*
Portfolio Turnover Rate 83% 83% 30%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 7, 1995.
(2) Commenced operations on June 9, 1994.
<PAGE>
10

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .16% .16%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .35% .28%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .64% 1.22%

Total Fund Operating Expenses After 1.15% 1.66%
Fee Waivers and Reimbursements(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .74% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .38% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS BY THE ADMINISTRATOR, OTHER EXPENSES WOULD BE 1.38%
FOR INVESTOR SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 2.50% FOR INVESTOR SHARES AND 2.96% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $49 $37 $73 $52 $98 $90 $172 $197
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

* Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
11

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund also may invest in:

- bank obligations;

- asset-backed securities;

- short-term corporate obligations;

- U.S. Government obligations; and

- repurchase agreements.

RISK CONSIDERATIONS

The Limited-Term Federal Mortgage Securities Fund is subject to the following
types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk; and

- - Prepayment Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Limited-Term Federal Mortgage Securities Fund.
The financial highlights for the Fund for the periods from inception through May
31, 1996 have been audited by , independent public
accountants, whose report appears in STI Classic Fund's annual report which
accompanies the Statement of Additional Information. The annual report for the
Fund is available to Shareholders at no charge by calling 1-800-474-4770.

1996 1995

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES(2)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.11 10.14 9.98
Net Investment Income (Loss) $ 0.60 0.55 0.58
Realized and Unrealized Net Gains (Losses) on
Investments $(0.14) (0.15) 0.13
Distributions from Net Investment Income $(0.60) (0.55) (0.58)
Distributions from Realized Capital Gains -- -- --
Net Asset Value, End of Period $ 9.76 9.99 10.11
Total Return 4.59% 4.10%* 7.45%+
Net Assets End of Period (000) $2,512 1,349 623
Ratio of Expenses to Average Net Assets 0.90% 1.25%* 0.90%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 5.75% 5.38%* 6.27%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 2.25% 3.59%* 7.74%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 4.40% 3.04%* (0.57%)*
Portfolio Turnover Rate 83% 83% 68%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 7, 1995.
(2) Commenced operations on July 17, 1994.
<PAGE>
13

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 2.50% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .43% .43%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .20% .02%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .27% .80%

Total Fund Operating Expenses After .90% 1.25%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .23% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE 1.37% FOR INVESTOR SHARES
AND 1.94% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 2.25% FOR INVESTOR SHARES AND 3.59% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $34 $33 $53 $40 $74 $69 $133 $151
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
14

SHORT-TERM BOND FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund primarily invests in corporate and government bonds, including
debentures. The Fund invests only in investment grade obligations, including:

- debt obligations of U.S. and foreign corporations;

- mortgage-backed securities;

- asset-backed securities;

- U.S. Government obligations; and

- custodial receipts.

The Fund also may invest in investment grade municipal bonds and high quality
municipal notes:

- where both principal and interest are backed by the full faith and credit
of the United States; or

- which are rated in the two highest rating categories.

RISK CONSIDERATIONS

The Short-Term Bond Fund is subject to the following types of risk:

- - Fund Risk;
- - Interest Rate Risk;
- - Credit Risk;
- - Call Risk;
- - Event Risk;
- - Prepayment Risk; and
- - Foreign Security Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

Mr. David Yealy has managed the Short-Term Bond Fund since July, 1996. He joined
Trusco Capital Management, Inc. in 1991, and currently serves as a Vice
President.
<PAGE>
15

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Short-Term Bond Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994 1993
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR INVESTOR INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES SHARES SHARES(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.01 10.02 9.81 10.03 10.06
Net Investment Income (Loss) $ 0.52 0.47 0.51 0.40 0.06
Realized and Unrealized Net Gains (Losses) on
Investments $(0.10) (0.12) 0.19 (0.21) 0.03
Distributions from Net Investment Income $(0.53) (0.47) (0.50) (0.40) (0.06)
Distributions from Realized Capital Gains $(0.02) (0.02) -- (0.01) --
Net Asset Value, End of Period $ 9.88 9.88 10.01 9.81 10.03
Total Return 4.23% 3.73%* 7.44% 1.81% 1.65%*
Net Assets End of Period (000) $2,700 966 2,609 2,381 716
Ratio of Expenses to Average Net Assets 0.85% 1.20%* 0.85% 0.85% 0.85%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 5.20% 4.77%* 5.24% 3.94% 3.85%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 1.72% 4.06%* 1.56% 2.52% 7.22%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 4.33% 1.91%* 4.53% 2.27% (2.52%)*
Portfolio Turnover Rate 163% 163% 200% 75% 64%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 20, 1995.
(2) Commenced operations on March 22, 1993.
<PAGE>
16

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 2.00% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .46% .46%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .20% .00%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .19% .74%

Total Fund Operating Expenses After .85% 1.20%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .23% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .84% FOR INVESTOR SHARES
AND 2.41% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.72% FOR INVESTOR SHARES AND 4.06% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $29 $32 $47 $38 $66 $66 $123 $145
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
17

SHORT-TERM U.S. TREASURY SECURITIES FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund invests exclusively in obligations issued by the U.S. Treasury with
remaining maturities of three years or less. The Fund will not invest in
repurchase agreements.

Under normal market conditions, it is anticipated that the Fund's average
maturity will range from one to two years, which may impact the Fund's exposure
to interest rate risk.

RISK CONSIDERATIONS

The Short-Term U.S. Treasury Securities Fund is subject to the following types
of risk:

- Fund Risk; and

- Interest Rate Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

Mr. David Yealy has managed the Short-Term U.S. Treasury Securities Fund since
July, 1996. He joined Trusco Capital Management, Inc. in 1991 and currently
serves as a Vice President.
<PAGE>
18

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Short-Term U.S. Treasury Securities Fund. The
financial highlights for the Fund for the periods from inception through May 31,
1996 have been audited by , independent public accountants,
whose report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994 1993
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR INVESTOR INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES SHARES SHARES(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.94 9.96 9.83 9.99 10.01
Net Investment Income (Loss) $ 0.54 0.48 0.46 0.32 0.06
Realized and Unrealized Net Gains (Losses) on
Investments $ (0.10) (0.14) 0.11 (0.12) (0.02)
Distributions from Net Investment Income $ (0.54) (0.48) (0.46) (0.31) (0.06)
Distributions from Realized Capital Gains -- -- -- (0.05) --
Net Asset Value, End of Period $ 9.84 9.82 9.94 9.83 9.99
Total Return 4.52% 3.72%* 6.03% 2.01% 1.84%*
Net Assets End of Period (000) $4,192 2,423 7,144 4,841 2,423
Ratio of Expenses to Average Net Assets 0.80% 1.05%* 0.80% 0.78% 0.80%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 5.43% 5.03%* 4.74% 3.11% 3.16%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 1.32% 2.97%* 1.33% 1.41% 3.42%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 4.91% 3.11%* 4.21% 2.48% 0.54%*
Portfolio Turnover Rate 94% 94% 88% 117% 36%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 22, 1995.
(2) Commenced operations on March 18, 1993.
<PAGE>
19

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 1.00% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .22% .22%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .15% .03%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .43% .80%

Total Fund Operating Expenses After .80% 1.05%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .18% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .49% FOR INVESTOR SHARES
AND 1.32% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.32% FOR INVESTOR SHARES AND 2.97% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $18 $31 $35 $34 $54 $58 $108 $128
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
20

INVESTMENT GRADE TAX-EXEMPT BOND FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund invests primarily in investment-grade municipal bonds and debentures
issued by:

- any of the fifty states;

- District of Columbia; and

- Puerto Rico and other U.S. territories and possessions.

The Fund may also invest in notes, tax-exempt commercial paper, and variable
rate demand obligations. These securities must be rated in the highest two
ratings categories. The Fund will only acquire unrated securities that are of
comparable quality.

RISK CONSIDERATIONS

The Investment Grade Tax-Exempt Bond Fund is subject to the following types of
risk:

- - Fund Risk;
- - Interest Rate Risk;
- - Credit Risk;
- - Call Risk;
- - Event Risk; and
- - Hedging Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Investment Grade Tax-Exempt Bond Fund. The
financial highlights for the Fund for the periods from inception through May 31,
1996 have been audited by , independent public accountants,
whose report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994 1993
INVESTOR FLEX INVESTOR INVESTOR INVESTOR
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, SHARES SHARES(1) SHARES SHARES SHARES(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.30 11.30 10.69 10.79 10.00
Net Investment Income (Loss) $ 0.41 0.37 0.42 0.33 0.35
Realized and Unrealized Net Gains (Losses) on Investments $ 0.19 0.18 0.61 0.25 0.82
Distributions from Net Investment Income $ (0.41) (0.37) (0.42) (0.33) (0.35)
Distributions from Realized Capital Gains $ (0.37) (0.37) -- (0.35) (0.03)
Net Asset Value, End of Period $ 11.12 11.11 11.30 10.69 10.79
Total Return 5.40% 4.91%* 9.91% 5.37% 11.88%*
Net Assets End of Period (000) $37,427 5,536 41,693 46,182 15,844
Ratio of Expenses to Average Net Assets 1.15% 1.63%* 1.15% 1.14% 1.12%*
Ratio of Net Investment Income (Loss) to Average Net Assets 3.61% 3.12%* 3.88% 2.96% 3.61%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 1.42% 2.25%* 1.43% 1.51% 1.83%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 3.34% 2.50%* 3.60% 2.59% 2.90%*
Portfolio Turnover Rate 514% 514% 592% 432% 345%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 1, 1995.
(2) Commenced operations on June 9, 1992.
<PAGE>
22

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .61% .61%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .28% .56%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .26% .46%

Total Fund Operating Expenses After 1.15% 1.63%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .74% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .43% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .26% FOR INVESTOR SHARES
AND .51% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.43% FOR INVESTOR SHARES AND 2.25% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $49 $37 $73 $51 $98 $89 $172 $193
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
23

FUND INFORMATION -- STATE TAX-EXEMPT BOND FUNDS

FLORIDA TAX-EXEMPT BOND FUND

OBJECTIVE

The Florida Tax-Exempt Bond Fund seeks to provide current income exempt from
regular federal income tax for Florida residents without undue investment risk.

PORTFOLIO INVESTMENTS

- Florida;

- District of Columbia; and

- Puerto Rico and other U.S. territories and possessions.

The Fund also may invest in investment grade taxable debt securities, repurchase
agreements, and securities subject to the federal alternative minimum tax (up to
a maximum 20% of its total assets).

RISK CONSIDERATIONS

The Florida Tax-Exempt Bond Fund is subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk;

- - Geographic Risk; and

- - Hedging Risk.
<PAGE>
24

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

Mr. Ronald Schwartz, CFA, has managed of the Florida Tax-Exempt Bond Fund since
it began operating. He joined STI Capital Management, N.A. in 1988, and
currently serves as Senior Vice President.
<PAGE>
25

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Florida Tax-Exempt Bond Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994
INVESTOR FLEX INVESTOR INVESTOR
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31, SHARES SHARES(1) SHARES SHARES(2)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.18 10.19 9.75 10.00
Net Investment Income (Loss) $0.44 0.39 0.42 0.13
Realized and Unrealized Net Gains (Losses) on Investments $(0.06) (0.06) 0.43 (0.25)
Distributions from Net Investment Income $(0.44) (0.39) (0.42) (0.13)
Distributions from Realized Capital Gains $(0.05) (0.05) -- --
Net Asset Value, End of Period $10.07 10.08 10.18 9.75
Total Return 3.76% 3.27%* 9.04% (1.22)+
Net Assets End of Period (000) $4,025 2,692 3,320 2,280
Ratio of Expenses to Average Net Assets 0.85% 1.35%* 0.85% 0.85%*
Ratio of Net Investment Income (Loss) to Average Net Assets 4.28% 3.79%* 4.36% 3.67%*
Ratio of Expenses to Average Net Assets (Excluding Waivers and
Reimbursements) 1.36% 2.54%* 1.50% 3.20%*
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers and Reimbursements) 3.77% 2.60%* 3.71% 1.32%*
Portfolio Turnover Rate 63% 63% 105% 53%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 1, 1995.
(2) Commenced operations on January 18, 1994.
<PAGE>
26

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .38% .38%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .15% .16%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .32% .81%

Total Fund Operating Expenses After .85% 1.35%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .18% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .53% FOR INVESTOR SHARES
AND .89% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.36% FOR INVESTOR SHARES AND 2.54% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $46 $34 $64 $43 $83 $74 $138 $162
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
27

GEORGIA TAX-EXEMPT BOND FUND

OBJECTIVE

The Georgia Tax-Exempt Bond Fund seeks to provide current income exempt from
regular federal income tax for Georgia residents without undue investment risk.

PORTFOLIO INVESTMENTS

- Georgia;

- District of Columbia; and

- Puerto Rico and other U.S. territories and possessions.

RISK CONSIDERATIONS

The Georgia Tax-Exempt Bond Fund is subject to the following types of risk:

- - Fund Risk;
- - Interest Rate Risk;
- - Credit Risk;
- - Call Risk;
- - Event Risk;
- - Geographic Risk; and
- - Hedging Risk.
<PAGE>
28

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.

FUND MANAGEMENT

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Georgia Tax-Exempt Bond Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose
report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES SHARES(2)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.65 9.72 9.44 10.00
Net Investment Income (Loss) $ 0.41 0.36 0.40 0.13
Realized and Unrealized Net Gains (Losses) on
Investments $(0.05) (0.14) 0.21 (0.56)
Distributions from Net Investment Income $(0.41) (0.36) (0.40) (0.13)
Distributions from Realized Capital Gains $(0.02) (0.02) -- --
Net Asset Value, End of Period $ 9.58 9.56 9.65 9.44
Total Return 3.69% 2.25%* 6.70% (4.29%)+
Net Assets End of Period (000) $3,418 4,207 3,268 3,300
Ratio of Expenses to Average Net Assets 0.85% 1.35%* 0.85% 0.85%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 4.17% 3.66%* 4.31% 3.93%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 1.41% 2.35%* 1.43% 2.36%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 1.61% 2.66%* 3.73% 2.42%*
Portfolio Turnover Rate 60% 60% 25% 26%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 6, 1995.
(2) Commenced operations on January 19, 1994.
<PAGE>
30

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .37% .37%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .15% .30%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .33% .68%

Total Fund Operating Expenses After .85% 1.35%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .18% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .58% FOR INVESTOR SHARES
AND .70% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 1.41% FOR INVESTOR SHARES AND 2.35% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $46 $34 $64 $43 $83 $74 $138 $162
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " ." Over the long-term, you may eventually pay more
than the economic equivalent of the maximum front-end sales charges permitted by
the National Association of Securities Dealers, Inc.'s Conduct Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
31

TENNESSEE TAX-EXEMPT BOND FUND

OBJECTIVE

The Tennessee Tax-Exempt Bond Fund seeks to provide current income exempt from
regular federal income tax for Tennessee residents without undue investment
risk.

PORTFOLIO INVESTMENTS

The Fund primarily invests in Tennessee municipal bonds and debentures. The Fund
intends to be fully invested in municipal securities with income exempt from
regular federal income tax and substantially exempt from State of Tennessee
income tax. The issuers of these securities can be located in:

- Tennessee;

- District of Columbia; and

- Puerto Rico and other U.S. territories and possessions.

The Fund also may invest in taxable debt securities, repurchase agreements, and
securities subject to the federal alternative minimum tax (up to a maximum 20%
of its total assets).

Under normal market conditions, it is anticipated that the Fund's average
weighted maturity will range from six to 25 years, which may impact the Fund's
exposure to interest rate risk. The Fund may shorten its average weighted
maturity to as little as 90 days for temporary defensive purposes.

RISK CONSIDERATIONS

The Tennesee Tax-Exempt Bond Fund is subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk;

- - Call Risk;

- - Event Risk;

- - Geographic Risk; and

- - Hedging Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 20.
<PAGE>
32

FUND MANAGEMENT

Mr. Ronald Schwartz, CFA, has managed of the Tennessee Tax-Exempt Bond Fund
since the Fund began operating. He joined STI Capital in 1988 and currently
serves as Vice President and Trust Investment Officer of SunTrust Bank,
Chattanooga.
<PAGE>
33

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor and Flex Shares of the Tennessee Tax-Exempt Bond Fund. The financial
highlights for the Fund for the periods from inception through May 31, 1996 have
been audited by , independent public accountants, whose
report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

1996 1995 1994
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INVESTOR FLEX INVESTOR INVESTOR
ENDED MAY 31, SHARES SHARES(1) SHARES SHARES(2)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.53 9.59 9.23 10.00
Net Investment Income (Loss) $ 0.41 0.37 0.44 0.13
Realized and Unrealized Net Gains (Losses) on
Investments $(0.10) (0.18) 0.29 (0.77)
Distributions from Net Investment Income $(0.42) (0.37) (0.43) (0.13)
Distributions from Realized Capital Gains -- -- -- --
Net Asset Value, End of Period $ 9.42 9.41 9.53 9.23
Total Return 3.28% 1.98%* 8.24% (6.39%)+
Net Assets End of Period (000) $1,523 2,017 1,170 1,127
Ratio of Expenses to Average Net Assets 0.85% 1.34%* 0.85% 0.85%*
Ratio of Net Investment Income (Loss) to Average
Net Assets 4.29% 3.80%* 4.70%* 3.74%*
Ratio of Expenses to Average Net Assets (Excluding
Waivers and Reimbursements) 2.08% 2.74%* 2.10% 6.60%*
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers and Reimbursements) 3.06% 2.40%* 3.45% (2.01%)*
Portfolio Turnover Rate 41% 41% 28% 13%
</TABLE>

* Annualized.
+ Cumulative since commencement of operations.
(1) Commenced operations on June 5, 1995.
(2) Commenced operations on January 19, 1994.
<PAGE>
34

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
------------ ------------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES 3.75% 2.00%*

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .00% .00%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .10% .54%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .75% .81%

Total Fund Operating Expenses After .85% 1.35%
Fee Waivers(4)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .18% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE 1.25% FOR INVESTOR SHARES
AND 1.09% FOR FLEX SHARES.

(4)ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL OPERATING
EXPENSES WOULD HAVE BEEN 2.08% FOR INVESTOR SHARES AND 2.74% FOR FLEX SHARES.
THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT
ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX INVESTOR FLEX
EXAMPLE SHARES SHARES* SHARES SHARES SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, $46 $34 $64 $43 $83 $74 $138 $162
assuming (1) a 5% annual return; (2) the
imposition of the maximum front-end sales charge;
and (3) redemption at the end of each time
period.
</TABLE>

If you purchase shares through your financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for reduced sales charge.
See " " Over the long-term, you may eventually pay
more than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers, Inc.'s Conduct
Rules.

*Reflects the imposition of the Maximum Contingent Deferred Sales Charges.

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
35

THERE CAN BE NO ASSURANCE THAT A FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.

RISK CONSIDERATIONS

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
FUND RISK -- The possibility that the Fund's performance during a specific All Funds
period may not meet, or exceed, that of the market as a whole.
INTEREST RATE RISK -- The potential for a decline in the price of fixed-income All Funds
securities due to rising interest rates. This risk will be greater for
long-term securities than for short-term securities.
CREDIT RISK -- The possibility that an issuer will be unable to make timely All Funds
payments of either principal or interest.
CALL RISK -- The possibility that securities with high interest rates will be All Funds
prepaid (or "called") by the issuer, prior to maturity, during periods of
falling interest rates. This would require the Fund to invest the resulting
proceeds elsewhere, at generally lower interest rates.
EVENT RISK -- The possibility that corporate fixed-income securities may suffer All Funds
substantial declines in credit quality and market value due to corporate
restructurings. While event risk may be high for certain corporate securities
held by the Fund, event risk overall should be low because of the Fund's
diversified holdings.
GEOGRAPHIC RISK -- The risk that a Fund's concentration of investments in State Tax-Exempt Funds
securities of issuers located in a single state or geographic region subject
the Fund to economic conditions and government policies of that state or
region that could adversely affect the value of the Fund.
PREPAYMENT RISK -- The risk that mortgage-backed and asset-backed securities Investment Grade Bond Fund
may be retired substantially earlier than their stated maturities or final U.S. Government Securities
distribution dates, resulting in a loss of all, or part, of any premium paid. Fund
Limited-Term Federal Mortgage
Securities Fund
Short-Term Bond Fund
HEDGING RISK -- There are risks associated with hedging activities, including: Investment Grade Bond Fund
- - The success of a hedging strategy may depend on an ability to predict Short-Term Bond Fund
movements in the prices of individual securities, fluctuations in markets, Investment Grade Tax-Exempt
and movements in interest rates; Bond Fund
- - There may be an imperfect, or no, correlation between the changes in market State Tax-Exempt Funds
value of the securities held by the Fund and the prices of futures and
options on futures;
- - There may not be a liquid secondary market for a futures contract or option;
- - Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
</TABLE>

<PAGE>
36

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
FOREIGN SECURITY RISKS -- There are risks associated with international Investment Grade Bond Fund
investing, including: Short-Term Bond Fund
CURRENCY RISK -- The possibility that changes in foreign exchange rates will
affect, favorably or unfavorably, the value of foreign securities.
VOLATILITY -- Investments in foreign stock markets can be more volatile than
investments in U.S. markets. Diplomatic, political, or economic developments
could affect investments in foreign countries.
EXPENSE CONSIDERATIONS -- Fixed commissions on many foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges. Expenses for
custodial arrangements of foreign securities may be somewhat greater than
typical expenses for custodial arrangements for handling U.S. securities of
equal value.
FOREIGN TAXES -- Certain foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes are recoverable, the non-recovered portion of foreign withholding taxes
will reduce the income received from the securities comprising the portfolio.
REGULATORY ENVIRONMENT -- Foreign companies generally are not subject to
uniform accounting, auditing, and financial reporting standards comparable to
those applicable to U.S. domestic companies. Foreign branches of U.S. banks,
foreign banks, and foreign issuers may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting, and
recordkeeping standards than those applicable to domestic branches of U.S.
banks and U.S. domestic issuers. There is generally less government regulation
of securities exchanges, brokers and listed companies abroad than in the U.S.
</TABLE>
<PAGE>
37

PURCHASING FUND SHARES

CHOOSING INVESTOR OR FLEX SHARES

Each Fund offers two classes of shares in this Prospectus -- Investor Shares and
Flex Shares. Each class has its own expense structure and other characteristics,
allowing you to decide which class best suits your needs. You should consider
the amount you want to invest, how long you plan to have it invested and whether
you plan to make additional investments. To help you in making this decision, an
analysis program is available upon request through your local SunTrust
Securities Investment Consultant.

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
- ------------------------- -------------------------
<S> <C>
- - Front-end sales charge - Deferred sales charge
on shares redeemed
within one year of
purchase
- - Lower annual expenses - Higher annual expenses
- - $2,000 minimum initial - $10,000 minimum initial
investment investment
</TABLE>

HOW TO BUY FUND SHARES

You may buy either Investor or Flex Shares (and fractions of shares) by mail,
telephone, or wire directly from the Transfer Agent, Federated Services Company.
You may also purchase shares through a SunTrust Investment Consultant, certain
correspondent banks of SunTrust Banks, Inc. or other financial institutions that
have executed dealer agreements with the Trust's Distributor. Shares are offered
continuously, and may be purchased on any day that the New York Stock Exchange
is open for business (a Business Day).

Your price per share (the offering price) will be the net asset value per share
(NAV) next determined after your purchase order is received by the Transfer
Agent plus, in the case of Investor Shares, the applicable front-end sales
charge. NAV for the Funds is calculated by (1) taking the current market value
of a Fund's total assets for that class of shares (either Investor or Flex), (2)
subtracting the liabilities applicable to that class of shares, and (3) dividing
that amount by the total number of shares of that class owned by shareholders.
In determining the market value of a Fund's assets, the Trust may use a pricing
service to provide market quotations or valuations for certain securities owned
by a Fund. Although the NAV for each class of shares is calculated the same way,
the NAVs for the classes may, and are expected to, differ due to the different
expenses charged to each class. The NAV is determined once each Business Day at
the close of the New York Stock Exchange (4:00 p.m. Eastern time). Thus, to
receive the current Business Day's NAV, purchase orders must be received before
4:00 p.m. Eastern time. If you purchase shares through a financial institution
(rather than directly through the Transfer Agent), your order may have to be
received by the financial institution at an earlier cutoff time for your
purchase to become effective that day. This allows the financial institution
time to process your order and transmit it to the Transfer Agent.

If you decide to buy shares directly from the Transfer Agent, first call
1-800-874-4770. Make your check out to "STI Classic Funds" and include the name
of the appropriate Fund(s) on the check. The check must be payable in U.S.
dollars. Third-party checks, credit cards, credit card checks and cash will not
be accepted. Please note, if you buy shares with a check, and then sell those
shares in a short period of time, the Trust can delay payment to you until your
check clears, or for up to 15 Business Days, whichever comes first.

FUNDLINK

FUNDLINK is a telephone activated service that allows you to transfer money
quickly and easily
<PAGE>
38
between the STI Classic Funds and your SunTrust bank account(s). To use
FUNDLINK, you must first contact your SunTrust Bank Investment Consultant and
complete the FUNDLINK application and authorization agreements. Once you have
signed up to use FUNDLINK, simply call the Transfer Agent at 1-800-428-6970 to
complete all your purchase and redemption transactions.

FRONT-END SALES CHARGES -- INVESTOR SHARES
The following table shows: (1) the sales charge you pay (i) as a percentage of
the offering price and (ii) as a percentage of your net investment (NAV
multiplied by the number of shares you purchase); and (2) the amount that is
paid to your dealer as a percentage of the offering price.

<TABLE>
<CAPTION>
SALES CHARGE AS DEALERS'
SALES CHARGE AS A PERCENTAGE OF REALLOWANCE AS
A PERCENTAGE OF YOUR NET A % OF OFFERING
OFFERING PRICE INVESTMENT PRICE
--------------- --------------- ---------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES, INVESTMENT GRADE TAX-EXEMPT BOND,
INVESTMENT GRADE BOND, AND STATE TAX-EXEMPT BOND FUNDS
Less than $100,000.............................................. 3.75% 3.90% 3.375%
$100,000 but less than $250,000................................. 3.25% 3.36% 2.925%
250,000 but less than $1,000,000................................ 2.50% 2.56% 2.250%
$1,000,000 and over............................................. 1.50% 1.52% 1.350%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
Less than $100,000.............................................. 2.50% 2.56% 2.250%
$100,000 but less than $250,000................................. 1.75% 1.78% 1.575%
$250,000 but less than $1,000,000............................... 1.25% 1.27% 1.125%
$1,000,000 and over............................................. None None None
SHORT-TERM BOND FUND
Less than $100,000.............................................. 2.00% 2.04% 1.800%
$100,000 but less than $250,000................................. 1.50% 1.52% 1.350%
$250,000 but less than $1,000,000............................... 1.00% 1.01% 0.900%
$1,000,000 and over............................................. None None None
SHORT-TERM U.S. TREASURY SECURITIES FUND
Less than $100,000.............................................. 1.00% 1.01% 0.900%
$100,000 but less than $250,000................................. 0.75% 0.76% 0.675%
$250,000 but less than $500,000................................. 0.50% 0.50% 0.450%
$500,000 and over............................................... None None None
</TABLE>

The front-end sales charge will be waived on Investor Shares purchased:

- through reinvestment of dividends and distributions;

- through a SunTrust Securities, Inc. asset allocation account;

- by persons repurchasing shares they redeemed within the last 60 days (see
REPURCHASE OF INVESTOR SHARES, below).

- by employees, and members of their immediate family, of SunTrust Banks,
Inc. and its affiliates;

- by persons reinvesting distributions from qualified employee benefit
retirement plans and rollovers from individual retirement accounts
("IRAs") previously with the trust department of a bank affiliated with
SunTrust Banks, Inc.; or
<PAGE>
39

REPURCHASE OF INVESTOR SHARES

REDUCED SALES CHARGES -- INVESTOR SHARES

- - RIGHTS OF ACCUMULATION. When calculating the sales charge applicable to your
current purchase of Investor Shares, the Trust will combine the value of your
current purchases with the current value of any Investor Shares you purchased
previously for (i) your account, (ii) your spouse's account, (iii) a joint
account with your spouse, or (iv) your minor children's trust or custodial
accounts. A fiduciary purchasing shares for the same fiduciary account, trust
or estate, may also use this right of accumulation. The Trust will only
consider the value of Investor Shares purchased previously that were sold
subject to a sales charge. As a result, neither Investor Shares of STI Classic
Money Market Funds nor Investor Shares purchased with dividends or
distributions will be included in the calculation. TO BE ENTITLED TO A REDUCED
SALES CHARGE BASED ON SHARES ALREADY OWNED, YOU MUST ASK THE DISTRIBUTOR FOR
THE REDUCTION AT THE TIME OF PURCHASE. You must provide the Distributor with
your account number(s) and, if applicable, the account numbers for your spouse
and/or children (and provide children's ages). The Trust may amend or
terminate this right of accumulation at any time.

- - LETTER OF INTENT. By submitting a Letter of Intent to the Transfer Agent, you
may purchase Investor Shares for a 13-month period at the sales charge rate
applicable to the total amount of your intended purchases. The Trust will only
consider the value of Investor Shares sold subject to a sales charge. The
Letter of Intent may, however, include purchases up to 90 days before the date
of the Letter (although the purchase price of these prior purchases will not
be adjusted).

You are not legally bound by the terms of the Letter of Intent to purchase the
intended amount of shares stated in the Letter. The Letter does, however,
authorize the Transfer Agent to hold in escrow 3.75% of the total amount to be
purchased. If the intended investment is not completed at the end of the 13
months (which begins on the date of the first purchase), the transfer agent
will redeem the necessary portion of the escrowed shares to make up the
difference between the reduced rate sales charge (based on the intended amount
to be purchased) and the sales charge that would normally apply (based on the
actual amount purchased).

- - COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the
appropriate sales charge, the Trust will combine same
<PAGE>
40
day purchases of Investor Shares (that are subject to a sales charge) made by
you, your spouse and your minor children (under age 21). This combination also
applies to Investor Shares you purchase with a Letter of Intent.

CONTINGENT DEFERRED SALES CHARGES -- FLEX SHARES

You do not pay an initial sales charge when you purchase Flex Shares. If,
however, you redeem (sell) your shares within the first year after your
purchase, you will pay a contingent deferred sales charge (CDSC) equal to 2.00%
of either (1) NAV of the shares at the time of purchase, or (2) NAV of the
shares at the time of redemption, whichever is less. The CDSC does not apply to
shares you purchase through reinvestment of dividends or distributions. Thus,
you never pay a CDSC on any increase in your investment above the initial
purchase price. In addition, the CDSC does not apply to exchanges of Flex Shares
of one Fund for Flex Shares of another Fund.

The CDSC will be waived on Flex Shares you sell for the following reasons:

- to make certain distributions from a retirement plan;

- because of death or disability; or

- for certain payments under the Systematic Withdrawal Plan (discussed
below).
MINIMUM PURCHASE -- INVESTOR SHARES

MINIMUM PURCHASE -- FLEX SHARES

Your minimum initial purchase and any subsequent purchase must be at least
$10,000 and $1,000 (or $100 via a statement coupon), respectively. If you
investment through the Systematic Investment Plan, described below, you will be
subject to lower minimum purchase amounts.

MINIMUM PURCHASE -- RETIREMENT PLANS

A retirement plan may purchase either Investor Shares or Flex Shares of any Fund
with a minimum initial investment of $2,000.

SYSTEMATIC INVESTMENT PLAN

REDEEMING FUND SHARES

HOW TO SELL YOUR FUND SHARES

You may sell (redeem) your Investor or Flex Shares on any day that NAV is
calculated, by contacting the Transfer Agent directly by mail, telephone or, if
eligible, via FUNDLINK. You may also make redemption requests (in writing or by
telephone) through SunTrust Investment Consultants and through certain
correspondent banks of SunTrust Banks, Inc. Redemption requests made via
telephone or FUNDLINK (1-800-428-6970) must be for at least $1,000. Redemption
requests of $25,000 or more must be in writing and must include a signature
guarantee (a notarized signature is not sufficient). The price of each share
will be the next NAV determined after receipt of your redemption request less,
in the case of Flex Shares, any applicable CDSC. Redemption requests must be
received by the transfer agent by 4:00 p.m. Eastern time to get that day's NAV.

RECEIVING YOUR MONEY

Your redemption proceeds will normally be sent within five Business Days of the
Transfer Agent receiving your request. Your proceeds can be wired to your bank
account (subject to a $7.00 fee), transferred to your bank account via FUNDLINK,
or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR
THROUGH AUTOMATED CLEARING HOUSE ("ACH"), REDEMPTION PROCEEDS MAY NOT BE
AVAILABLE FOR UP TO 15 BUSINESS DAYS.

The Trust intends to pay your redemption proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the remaining shareholders of the Fund) the Trust reserves the right to pay
all or part of your redemption proceeds in liquid securities with a market value
equal to the redemption price ("redemption in kind"). Although it is highly
unlikely that your shares would ever actually be redeemed in kind, if it did
happen, you would probably have to pay brokerage costs to sell the securities
distributed to you.

INVOLUNTARY REDEMPTIONS

SYSTEMATIC WITHDRAWAL PLAN

EXCHANGES

You may exchange your Investor or Flex Shares by contacting an Investment
Consultant of a SunTrust Banks, Inc. affiliated bank, SunTrust Securities, Inc.,
or certain correspondent banks of SunTrust Banks, Inc. in writing or by
telephone, or by contacting the Transfer Agent directly via FUNDLINK. Exchange
requests must be for at least $1,000. You may exchange your shares for shares of
another Fund in the Trust up to four times during a calendar year without
restriction. More than four exchanges during a year may be viewed as abuse of
the exchange privilege. In such a case, the Trust may charge you a $10.00 fee
for each additional exchange. You will, however, be
<PAGE>
42
notified before any fee is charged. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR
THROUGH ACH, YOU MAY NOT BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS
CLEARED (WHICH MAY TAKE UP TO 15 BUSINESS DAYS). This exchange privilege may be
changed or canceled at any time upon 60 days' notice.

INVESTOR SHARES

You may exchange Investor Shares of any Fund for Investor Shares of any other
Fund. Shares you exchange for the first time from a Money Market Fund (which has
no sales charge) into a Fund with a sales charge are subject to that sales
charge. Similarly, shares you exchange for the first time into a Fund with a
higher sales charge are subject to an incremental sales charge (the difference
between the lower and higher applicable sales charges). Should you exchange
shares into a Fund with the same, lower or no sales charge (a Money Market
Fund), there is no sales charge for the exchange.

FLEX SHARES

You may exchange Flex Shares of any Fund for Flex Shares of any other Fund or
for Investor Shares of the Money Market Funds of the Trust. No CDSC is imposed
on redemptions of Money Market Fund share you acquire in an exchange, provide
you hold your shares for at least one year from your initial purchase date. If
you exchange Flex Shares of any Fund for Investor Shares of a Money Market Fund,
you may then, subsequently, only exchange those Money Market Fund Investor
Shares for Flex Shares.

TELEPHONE REDEMPTION AND EXCHANGE TRANSACTIONS ARE EXTREMELY CONVENIENT, BUT
NOT WITHOUT RISK. TO TRY TO KEEP YOUR TELEPHONE TRANSACTIONS AS SAFE, SECURE
AND RISK FREE AS POSSIBLE, THE TRUST HAS DEVELOPED CERTAIN SAFEGUARDS AND
PROCEDURES FOR DETERMINING THE IDENTITY OF CALLERS AND AUTHENTICITY OF
INSTRUCTIONS. AS A RESULT, NEITHER THE TRUST NOR ITS TRANSFER AGENT WILL BE
RESPONSIBLE FOR ANY LOSS, LIABILITY, COST, OR EXPENSE FOR ACTING UPON
TELEPHONE OR WIRE INSTRUCTIONS REASONABLY BELIEVED TO BE GENUINE. IF YOU
CHOOSE TO MAKE TELEPHONE TRANSACTIONS, YOU WILL GENERALLY BEAR THE RISK OF ANY
LOSS.

DIVIDENDS AND DISTRIBUTIONS

Income dividends of each Fund are declared daily and paid monthly. If you own
Fund shares on the record date, you will be entitled to receive dividends. The
Funds make capital gains distributions at least annually.

You will receive dividends and distributions in the form of additional Shares
unless you have elected to receive payment in cash. To elect cash payment, you
must notify the Transfer Agent in writing prior to the date of distribution.
Your election will become effective for dividends paid after the Transfer Agent
receives your written notice. To cancel your election, simply send written
notice to the Transfer Agent.

TAX INFORMATION

The following is a summary of some important tax issues that affect the Funds
and their Shareholders. We have not tried to present a detailed explanation of
the tax treatment of the Funds or their Shareholders. WE URGE YOU TO
<PAGE>
43
CONSULT YOUR TAX ADVISOR REGARDING SPECIFIC QUESTIONS AS TO FEDERAL, STATE, AND
LOCAL INCOME TAXES.

The following summary is based on current tax laws, which may be changed by
legislative, judicial, or administrative action.

TAX STATUS OF EACH FUND

TAX STATUS OF DISTRIBUTIONS

EACH SALE, EXCHANGE, OR REDEMPTION OF FUND SHARES IS A TAXABLE EVENT TO THE
SHAREHOLDER.

TAX-EXEMPT DISTRIBUTIONS

STATE TAX CONSIDERATIONS

Please refer to the SAI for more tax information.

STI CLASSIC FUNDS INFORMATION

THE TRUST

BOARD OF TRUSTEES

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.

GENERAL INFORMATION

VOTING RIGHTS

You receive one vote for every full Fund share owned. 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
Shareholder meetings unless otherwise required by the Investment Company Act.
However, a meeting
<PAGE>
44
may be called by Shareholders owning at least 10% of the outstanding shares of
the Trust. If a meeting is requested by Shareholders, the Trust will provide
appropriate assistance and information to the Shareholders who requested the
meeting.

REPORTING

You will receive the Trust's unaudited financial information and audited
financial statements. In addition, the Trust will send you proxy statements and
other reports.

SHAREHOLDER INQUIRIES

You may contact the Transfer Agent to obtain information on account statements,
procedures, and other related information by calling 1-800-874-4770.

INVESTMENT ADVISORS

Trusco Capital Management, Inc. serves as the Advisor to the Short-Term U.S.
Treasury Securities, Short-Term Bond, and U.S. Government Securities Funds. As
of , 1997, Trusco had approximately $ billion in assets under
management. The principal business address of Trusco is 50 Hurt Plaza, Suite
1400, Atlanta, Georgia 30303.

SunTrust Bank, Chattanooga, N.A. serves as the Advisor to the Tennessee
Tax-Exempt Bond Fund. As of , 1997, SunTrust Bank, Chattanooga, N.A.
had approximately $ billion in assets under management. The principal business
address of SunTrust Bank, Chattanooga, N.A. is 736 Market Street, Chattanooga,
Tennessee 37402.

The Advisors are indirect wholly-owned subsidiaries of SunTrust Banks,
Inc.("SunTrust"). SunTrust is a southeastern regional bank holding company with
assets of $ billion, as of , 1997. SunTrust is one of the 20
largest banking companies in the U.S. Its three principal subsidiaries --
SunTrust Banks of Florida, Inc., SunTrust Banks of Georgia, Inc. and SunTrust
Banks of Tennessee, Inc. -- provide a wide range of personal and corporate
banking, trust, and investment services through more than 600 locations in the
tri-state area. SunTrust Banks, Inc. has discretionary assets under management
of approximately $ billion, as of , 1997.

The Advisors may use their affiliates as brokers for the Funds' portfolio
transactions.

DISTRIBUTION

SEI Investments Distribution Co. (the Distributor), a wholly-owned subsidiary of
SEI
<PAGE>
45
Investments Company (SEI), serves as each Fund's distributor under a
Distribution Agreement.

The Investor Shares of each Fund have a Distribution Plan. Under the
Distribution Plan, the Distributor is entitled to receive an annual fee of up
to:

- .18% of the average daily net assets of the Short-Term U.S. Treasury
Securities Fund, Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond
Fund, and Tennessee Tax-Exempt Bond Fund;

- .23% of the average daily net assets of the Short-Term Bond Fund and
Limited-Term Federal Mortgage Securities Fund;

- .43% of the average daily net assets of the Investment Grade Bond Fund and
Investment Grade Tax-Exempt Bond Fund; and

- .38% of the average daily net assets of the U.S. Government Securities
Fund.

The Distributor may use this fee:

- as compensation for its distribution-related services or shareholder
services; or

- to compensate financial institutions and intermediaries, such as banks
(including SunTrust Banks, Inc.'s affiliate and correspondent banks),
savings and loan associations, insurance companies, investment counselors,
broker-dealers, and the Distributor's affiliates and subsidiaries for
performing distribution-related or shareholder services.

The Distributor may waive all, or a portion of its fee to limit the net expenses
of the Funds to the amounts set forth in each Fund's Transaction and Operating
Expenses.

It is possible that a financial institution may offer different classes of
shares to its customers and thus receive different compensation with respect to
different classes of shares. A prospective investor may visit any one of the
Investment Services offices of SunTrust Banks, Inc.'s affiliate banks (as listed
on the last pages of this Prospectus), SunTrust Securities, Inc. or certain
correspondent banks of SunTrust Banks, Inc. to receive copies of the
Prospectuses for the Investor Shares and Flex Shares of the Trust and
application forms.

Each Fund may use the Distributor as its broker for portfolio transactions. The
Distributor receives compensation from the Funds for its brokerage services.

Trust Shares of each Fund are offered without a sales charge primarily to
financial institutions, and are described in a separate prospectus. You may call
1-800-874-4770 to receive more information about Trust Shares.

ADMINISTRATION

At times, the Administrator may voluntarily waive all or a portion of its
administration fees.
<PAGE>
46

INVESTMENT PRACTICES -- FIXED-INCOME FUNDS

LIMITED-TERM
U.S. FEDERAL SHORT-TERM INVESTMENT
INVESTMENT GOVERNMENT MORTGAGE U.S. TREASURY GRADE TAX-
GRADE BOND SECURITIES SECURITIES SHORT-TERM SECURITIES EXEMPT BOND
SECURITY OR PRACTICE FUND FUND FUND BOND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ADRs X -- -- -- -- --
Asset-Backed Securities X -- -- X X --
Bank Obligations X X --
Borrowing (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Commercial Paper (Highest Quality) X --
Corporate Debt Obligations (Investment Grade) X(6) (35%) (35%) X(6) -- (20%)
Dollar Rolls -- X X -- -- --
Futures and Options on Futures X * * X -- X
Illiquid Securities (15%) (15%) (15%) (15%) (15%) (15%)
Mortgage-Backed Securities X(2) X X X(3) -- --
Municipal Securities -- -- -- X(6) -- X(4)
Puts X * * X -- X
Repurchase Agreements * X X X -- (20%)
Securities Lending (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Securities of Foreign Issuers X -- -- X -- --
Standby Commitments X -- -- X -- X
Supranational Agency Obligations X -- -- X -- --
Swaps, Caps, Floors and Collars X -- -- -- -- --
U.S. Treasury and Agency Obligations X X X X X (20%)
When-Issued Securities (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%) (33 1/3%)
Zero Coupon Obligations X -- -- X -- X

<CAPTION>
FLORIDA GEORGIA TENNESSEE
TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
SECURITY OR PRACTICE BOND FUND BOND FUND BOND FUND
<S> <C> <C> <C>
ADRs -- -- --
Asset-Backed Securities -- -- --
Bank Obligations X(1) X(1) X(1)
Borrowing (33 1/3%) (33 1/3%) (33 1/3%)
Commercial Paper (Highest Quality) X(1) X(1) X(1)
Corporate Debt Obligations (Investment Grade) (20%) (20%) (20%)
Dollar Rolls -- -- --
Futures and Options on Futures X X X
Illiquid Securities (15%) (15%) (15%)
Mortgage-Backed Securities -- -- --
Municipal Securities X(6) X(6) X(6)
Puts X X X
Repurchase Agreements (20%) (20%) (20%)
Securities Lending (33 1/3%) (33 1/3%) (33 1/3%)
Securities of Foreign Issuers -- -- --
Standby Commitments X X X
Supranational Agency Obligations -- -- --
Swaps, Caps, Floors and Collars -- -- --
U.S. Treasury and Agency Obligations (20%) (20%) (20%)
When-Issued Securities (33 1/3%) (33 1/3%) (33 1/3%)
Zero Coupon Obligations X X --
</TABLE>

(1) For temporary, defensive purposes only.
(2) Including purchase up to 35% privately-issued mortgage-backed securities.
(3) Including purchase up to 25% privately-issued mortgage-backed securities.
(4) Fund must invest at least 65% of its assets in municipal securities. Of this
65%, 75% must be rated A or better.
(5) Includes only obligations issued by foreign branches of U.S. banks and by
London branches of foreign banks.
(6) May purchase up to 25% rated BBB or Baa.
<PAGE>
47

(%) = Maximum percentage permissible. Except for Illiquid Securities, all
percentages shown are of total assets.
X = No policy limitation; Fund may be using currently.
* = Permitted, but not typically used.
- -- = Not permitted.
<TABLE>
<CAPTION>
LIMITED-TERM
U.S. FEDERAL SHORT-TERM INVESTMENT
INVESTMENT GOVERNMENT MORTGAGE U.S. TREASURY GRADE TAX- FLORIDA GEORGIA
TEMPORARY GRADE BOND SECURITIES SECURITIES SHORT-TERM SECURITIES EXEMPT BOND TAX-EXEMPT TAX-EXEMPT
INVESTMENTS FUND FUND FUND BOND FUND FUND FUND BOND FUND BOND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash X X X X X X X X
Money Market X X X X X X X X
Instruments
Short-Term X X X X X X X X
Obligations

<CAPTION>
LIMITED-TERM
U.S. FEDERAL SHORT-TERM INVESTMENT
INVESTMENT GOVERNMENT MORTGAGE U.S. TREASURY GRADE TAX- FLORIDA GEORGIA
INVESTMENT GRADE BOND SECURITIES SECURITIES SHORT-TERM SECURITIES EXEMPT BOND TAX-EXEMPT TAX-EXEMPT
RESTRICTIONS FUND FUND FUND BOND FUND FUND FUND BOND FUND BOND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities of 5% 5% 5% 5% 5% 5% 5% 5%
Any One
Issuer(1)
Outstanding 10% 10% 10% 10% 10% 10% 10% 10%
Voting
Securities of
Any One
Issuer
Securities of 25% 25% 25% 25% 25% 25% 25% 25%
Issuers in
Any One
Industry(2)
Expected % % % % % % % %
Annual
Portfolio
Turnover

<CAPTION>
U.S.
GOVERNMENT
TENNESSEE SECURITIES TAX-EXEMPT
TEMPORARY TAX-EXEMPT MONEY MARKET MONEY
INVESTMENTS BOND FUND FUND MARKET FUND
<S> <C> <C> <C>
Cash X X X
Money Market X X X
Instruments
Short-Term X X X
Obligations
U.S.
GOVERNMENT
SECURITIES TAX-EXEMPT
INVESTMENT MONEY MARKET MONEY MARKET
RESTRICTIONS FUND FUND
<S> <C> <C> <C>
Securities of 5% 5%
Any One
Issuer(1)
Outstanding 10% 10%
Voting
Securities of
Any One
Issuer
Securities of 25% 25%
Issuers in
Any One
Industry(2)
Expected % %
Annual
Portfolio
Turnover
</TABLE>

MORE ABOUT INVESTMENT PRACTICES

The following is a description of some of the permitted investments for the
Funds. Further discussion is contained in the SAI.

ASSET-BACKED SECURITIES are backed by non-mortgage assets such as company
receivables, truck and auto loans, leases, and credit card receivables. These
securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets.
Asset-backed securities may also 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
these assets and issuing debt.

BANK OBLIGATIONS are SHORT-TERM CORPORATE OBLIGATIONS issued by U.S. and foreign
banks, including bankers' acceptances, certificates of deposit (CDs), custodial
receipts, and time deposits.

DOLLAR ROLLS are transactions in which securities are sold for delivery in the
current month and the seller contracts to repurchase substantially similar
securities on a specified future date. Any difference between the sale price and
the purchase price (plus interest earned on the cash proceeds of the sale) is
against the past interest income on the securities sold to arrive at an implied
borrowing rate.

EQUITY SECURITIES include common and preferred stocks, warrants, rights to
subscribe to common stock, and convertible securities and may be publicly or
privately issued.

Index futures are futures contracts for various indices that are traded on
registered securities exchanges. An index futures contract obligates the seller
to deliver (and the purchaser to take)
<PAGE>
49
an amount of cash equal to a specific dollar amount times the difference between
the value of a specific index at the close of the last trading day of the
contract and the price at which the agreement is made.

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.

INVESTMENT COMPANY SHARES -- Shares of other mutual funds may be purchased by
the Funds to the extent consistent with applicable law.

MORTGAGE-BACKED SECURITIES are instruments that entitle the holder to a share of
all interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional fifteen- and thirty-year
fixed rate mortgages, graduated payment mortgages, and adjustable rate
mortgages, and floating rate mortgages.

MUNICIPAL SECURITIES consist of:

OBLIGATIONS OF SUPRANATIONAL ENTITIES -- Obligations of supranational entities
are established through the joint participation of several governments, and
including the Asian Development Bank, the Inter-American Development Bank,
International Bank for Reconstruction and Development (World Bank), African
Development Bank, European Economic Community, European Investment Bank, and the
Nordic Investment Bank.

SHORT-TERM CORPORATE OBLIGATIONS are corporate obligations maturing in 397 days
or less, including commercial paper and other short-term corporation
obligations.

SUNTRUST AND INVESTMENT SERVICES OFFICES OF SUNTRUST BANKS, INC. AFFILIATE
BANKS:

FLORIDA: (STATEWIDE TOLL FREE) 1-800-526-1177

SUNTRUST SECURITIES, INC. -- FLORIDA

200 S. Orange Avenue
Tower 10
Orlando, FL 32801
(407) 237-4380
1-800-432-4760, ext. 4380

501 E. Las Olas Boulevard
Ft. Lauderdale, FL 33301
(954) 765-7422

Boca Raton Office
800 S. Federal Highway
Boca Raton, FL 33435
(561) 243-6707

Coral Ridge Office
2626 E. Oakland Park Blvd.
Ft. Lauderdale, FL 33306
(954) 765-2155

Delray Beach Office
302 E. Atlantic Avenue
Delray Beach, FL 33483
(561) 243-6750

5200 W. Atlantic Ave.
Delray Beach, FL 33484
(561) 243-6743

Hollywood Office
2001 Hollywood Blvd.
Hollywood, FL 33021
(954) 765-7062

Palm Beach Office
303 Royal Poinciana Plaza
Palm Beach, FL 33480
(561) 835-2855

PGA Office
4500 PGA Blvd.
Palm Beach Gardens, FL 33410
(561) 835-2802

8200 W. Broward Blvd.
Plantation, FL 33324
(954) 765-7661

777 Brickell Avenue
Miami, FL 33131
(305) 579-7450

401 E. Jackson Street
Tampa, FL 33602
(813) 224-2517

700 Virginia Avenue
Ft. Pierce, FL 34982
(407) 467-6459

Osceola Office
111 E. Osceola Street
Stuart, FL 34994
(407) 223-6012

Belnova Office
120 S. Ridgewood Avenue
Daytona Beach, FL 32114
(904) 258-2390

Bill France Office
4900 Clyde Morris Blvd.
Port Orange, FL 32119
(904) 258-2654

Deland Office
302 E. New York Avenue
Deland, FL 32724
(904) 822-5891

200 W. Forsyth Street
Jacksonville, FL 32202
(904) 632-2534
<PAGE>
53

1612 E. Cape Coral Parkway
Cape Coral, FL 33904
(941) 540-6128

Pelican Bay Office
801 Laurel Oak Drive
Naples, FL 33963
(941) 598-0515

South Gate Office
3400 S. Tamiami Trail
Sarasota, FL 34230
(941) 316-4027

Port Charlotte Office
18501 Murdock Circle
Port Charlotte, FL 33949
(941) 625-9286

5899 Whitfield Avenue
Sarasota, FL 34243
(941) 359-7415

North Beneva Office
3577 Fruitville Road
Sarasota, FL 34237
(941) 316-4003

South Beneva Office
8181 S. Tamiami Trail
Sarasota, FL 34231
(941) 927-7903

Venice Office
200 Nokomis Avenue South
Venice, FL 34285
(941) 486-4417

210 Security Square
Winter Haven, FL 33880
(941) 297-6855

One East Jefferson Street
Brooksville, FL 34601
(352) 754-5798

Crystal River Office
1502 SE Highway 19
Crystal River, FL 34428
(352) 795-8214

5435 Gall Blvd.
Zephyrhills, FL 33541
(813) 780-4154

6335 U.S. Highway 19
New Port Richey, FL 34652
(813) 861-4375

Seven Hills Office
1170 Mariner Blvd.
Spring Hill, FL 34609
(352) 754-5779

203 E. Silver Springs Blvd.
Ocala, FL 34470
(352) 368-6477

3522 Thomasville Road
Tallahassee, FL 32308
(904) 298-5064

511 W. 23rd Street
Panama City, FL 32405
(904) 872-6086

11 Hoffman Drive
Gulf Breeze, FL 32561
(904) 435-1264

GEORGIA:

SUNTRUST SECURITIES, INC. -- GEORGIA

55 Park Place
First Floor
Atlanta, GA 30303
(404) 588-8108
1-800-600-6350

101 N. Lumpkin Street
Athens, GA 30601
(706) 354-5346
<PAGE>
54

Gainesville Branch
427 Oak Street
Gainesville, GA 30501
(770) 503-8674

100 East Second Avenue
Rome, GA 30161
(706) 236-4325

2815 Wrightsboro Road
Augusta, GA 30909
(706) 821-2015

606 Cherry Street
Macon, GA 31201
(912) 755-5175

1246 First Avenue
Columbus, GA 31901
(706) 649-3631

33 Bull Street, Suite 208
Savannah, GA 31401
(912) 944-1165

410 W. Broad Avenue
Albany, GA 31701
(912) 430-5468

Coffee County Branch
201 S. Peterson Avenue
Douglas, GA 31533
(912) 383-5242

510 Gloucester Street
Brunswick, GA 31520
(912) 262-5322

Sea Island Road Branch
701 Sea Island Road
St. Simons Island, GA 31522
(912) 638-3620
(912) 262-2227

TENNESSEE:

SUNTRUST SECURITIES, INC. -- TENNESSEE

424 Church Street
4th Floor
Nashville, TN 37219
(615) 748-4477
1-800-932-2652

736 Market Street
Chattanooga, TN 37402
(423) 757-3005
TN WATS 1-800-572-7306, Ext. 3005
Bordering States WATS
1-800-874-1083, Ext. 3005
Out of State WATS
1-800-251-6266, Ext. 3005

9950 Kingston Pike
Knoxville, TN 37997
(423) 544-2181
1-800-456-1177

207 Mockingbird Lane
Johnson City, TN 37604
(423) 461-1005

25 Public Square
Lawrenceburg, TN 38464
(615) 762-3511

ALABAMA:

SUNTRUST SECURITIES, INC. -- ALABAMA

201 South Court Street
Florence, AL 35630
(205) 767-8537
<PAGE>

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

* INVESTMENT ADVISORS

Trusco Capital Management, Inc. 50 Hurt Plaza
Suite 1400
Atlanta, GA 30303

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

SunTrust Bank, Atlanta 25 Park Place
Atlanta, GA 30303

SunTrust Bank, Chattanooga, N.A. 736 Market Street
Chattanooga, TN 37402

* DISTRIBUTOR

SEI Investments Distribution Co. Oaks, PA 19456

* ADMINISTRATOR

SEI Fund Resources 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
</TABLE>
<PAGE>
WHY INVEST IN MUTUAL FUNDS?

BENEFITS OF MUTUAL FUNDS

There are many benefits to mutual fund investing. When you invest in individual
stocks or bonds you are on your own. You must do the research. You choose the
security. You time the purchase and you decide when to sell. Perhaps you have a
stockbroker to help you. Then, you pay the commission on each transaction.

With a mutual fund investment, you have a professional portfolio manager with
the expertise and resources needed to choose appropriate investments that meet
the objectives of the fund's investors. When you invest in individual
securities, you alone bear the costs of investing. With a mutual fund
investment, trading costs are shared by all fund investors. When you invest in
individual securities, you need to purchase a wide range of securities to truly
diversify your portfolio. With a mutual fund investment, you experience
immediate diversification. With individual securities, it may be difficult to
liquidate your investment. Mutual fund shares are easily sold at their current
value.

ABOUT STI CLASSIC FUNDS

The STI Classic Funds are advised by STI Capital Management, N.A., Trusco
Capital Management, Inc., SunTrust Bank, Atlanta, and SunTrust Bank,
Chattanooga, N.A. These advisory units are affiliates of SunTrust Banks, Inc., a
super-regional bank holding company with approximately $ billion in
discretionary assets under management. Currently, these advisors collectively
manage more than $ billion in equity and fixed-income mutual fund assets.
<PAGE>
Additional information about the Funds is included in a Statement of Additional
Information dated (the SAI). The SAI has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. You may obtain a copy of the SAI, or of the annual or semi-annual
report, without charge by calling 1-800-874-4770, or by contacting the
Distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456.

STI CLASSIC FUNDS

INVESTOR SHARES

PRIME QUALITY MONEY MARKET FUND
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND

Investment Advisor to the Funds:
TRUSCO CAPITAL MANAGEMENT, INC.
(THE ADVISOR)

The STI Classic Funds (the Trust) is a mutual fund that offers shares in a
number of separate investment portfolios (each a Fund and, collectively, the
Funds). This Prospectus gives you important information about the Investor
Shares of the Money Market Funds listed above. Please read this Prospectus, and
keep it for future reference.

OCTOBER 1, 1997
<PAGE>
2

ABOUT THE TRUST

STI Classic Funds is a diversified, open-end management investment company. The
Funds provide a convenient and economical way for you to invest in a number of
professionally managed portfolios of securities. You may purchase shares in each
money market fund through two separate classes (Trust Shares and Investor
Shares). The separate classes provide for variations in distribution and service
fees, transfer agent fees, voting rights, and dividends. This Prospectus relates
to the Investor Shares of the Prime Quality Money Market Fund, U.S. Government
Securities Money Market Fund, and Tax-Exempt Money Market Fund (the Money Market
Funds).

ABOUT MONEY MARKET FUNDS

The Money Market Funds are governed by SEC Rules which impose certain quality,
maturity, and diversification requirements. Each Fund's assets are valued using
the amortized cost method, which enables the Fund to maintain a stable net asset
value per share. All securities purchased by the Funds must have remaining
maturities of 13 months or less.
<PAGE>
3

FUND INFORMATION -- MONEY MARKET FUNDS

PRIME QUALITY MONEY MARKET FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund will invest in short-term, high quality instruments denominated in U.S.
dollars, including:

- U.S. Treasury obligations;

- U.S. Government obligations;

- commercial paper issued by domestic and foreign issuers;

- obligations of U.S. commercial banks (including foreign branches of these
banks), U.S. and London branches of foreign banks, or savings and loan and
thrift institutions;

- corporate obligations issued by companies with commercial paper rated in
the highest short-term ratings category;

- obligations of supranational entities rated in the highest short-term
ratings category.

Although the Fund is managed to maintain a stable price per share of $1.00,
there is no guarantee that price will be constantly maintained.

RISK CONSIDERATIONS

The Prime Quality Money Market Fund is subject to the following types of risk:

- - Fund Risk;
- - Interest Rate Risk;
- - Credit Risk;

- - Call Risk;
- - Event Risk; and
- - Foreign Security Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 8.
<PAGE>
4

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor Shares of the Prime Quality Money Market Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE
PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 1.00 1.00 1.00
Net Investment Income (Loss) $ 0.05 0.05 0.03 0.03
Realized and Unrealized Net Gains (Losses)
on Investments -- -- -- --
Distributions from Net Investment Income (0.05) (0.05) (0.03) (0.03)
Distributions from Realized Capital Gains -- -- -- --
Net Asset Value, End of Period $ 1.00 1.00 1.00 1.00
Total Return 5.08% 4.62% 2.71% 2.75%*
Net Assets End of Period (000) $215,696 157,616 129,415 61,578
Ratio of Expenses to Average Net Assets 0.75% 0.75% 0.75% 0.75%*
Ratio of Net Investment Income (Loss) to
Average Net Assets 4.94% 4.55% 2.67% 2.68%*
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Reimbursements) 1.00% 1.01% 0.99% 1.02%*
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers and
Reimbursements) 4.69% 4.29% 2.43% 2.41%
</TABLE>

* Annualized.
(1) Commenced operations on June 8, 1992.
<PAGE>
5

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .50%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .14%
After Reimbursements(2)

Other Expenses After Fee Waivers(2) .11%

Total Fund Operating Expenses After .75%
Fee Waivers and Reimbursements(3)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
.65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .20%.

(3)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .15%.

(4)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN 1.00%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, assuming $ 8 $ 24 $ 42 $ 93
(1) a 5% annual return; and (2) redemption at the end of
each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
6

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

OBJECTIVE

PORTFOLIO INVESTMENTS

The Fund will invest exclusively in:

- U.S. Treasury Obligations;

- securities of wholly-owned corporations of the U.S. Government that are
backed by the full faith and credit of the U.S. Government; and

- repurchase agreements.

Although the Fund is managed to maintain a stable price per share of $1.00,
there is no guarantee that price will be constantly maintained.

RISK CONSIDERATIONS

The U.S. Government Securities Money Market Fund is subject to the following
types of risk:

- - Fund Risk;
- - Interest Rate Risk;

- - Credit Risk; and
- - Call Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 8.
<PAGE>
7

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor Shares of the U.S. Government Securities Money Market Fund. The
financial highlights for the Fund for the periods from inception through May 31,
1996 have been audited by , independent public accountants,
whose report appears in STI Classic Fund's annual report which accompanies the
Statement of Additional Information. The annual report for the Fund is available
to Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE
PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 1.00 1.00 1.00
Net Investment Income (Loss) $ 0.05 0.04 0.03 0.03
Realized and Unrealized Net Gains (Losses)
on Investments -- -- -- --
Distributions from Net Investment Income (0.05) (0.04) (0.03) (0.03)
Distributions from Realized Capital Gains -- -- -- --
Net Asset Value, End of Period $ 1.00 1.00 1.00 1.00
Total Return 4.99% 4.51% 2.63% 2.65%*
Net Assets End of Period (000) $58,608 46,639 32,395 16,688
Ratio of Expenses to Average Net Assets 0.75% 0.75% 0.75% 0.75%*
Ratio of Net Investment Income (Loss) to
Average Net Assets 4.88% 4.51% 2.54% 2.57%*
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Reimbursements) 0.99% 1.02% 0.97% 1.11%*
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers and
Reimbursements) 4.64% 4.24% 2.32% 2.21%
</TABLE>

* Annualized.
(1) Commenced operations on June 8, 1992.
<PAGE>
8

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
TRUST SHARES

SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .51%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .08%
After Reimbursements2

Other Expenses After Fee Waivers(3) .16%

Total Fund Operating Expenses After .72%
Fee Waivers and Reimbursements(3)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
.65% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .17%.

(2)ABSENT VOLUNTARY WAIVERS, OTHER EXPENSES WOULD BE .17%.

(3)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .99%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, assuming $ 8 $ 24 $ 42 $ 93
(1) a 5% annual return; and (2) redemption at the end of
each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
9

TAX-EXEMPT MONEY MARKET FUND

OBJECTIVE

The Tax-Exempt Money Market Fund seeks to provide as high a level of current
interest income exempt from regular federal income tax as is consistent with
preservation of capital and liquidity.

PORTFOLIO INVESTMENTS

The Fund intends to be fully invested in securities the interest on which is
exempt from regular federal income taxes. The Fund primarily invests in high
quality, short-term municipal obligations of issuers located in:

- all fifty states;

- District of Columbia; and

- Puerto Rico and other U.S. territories.

The Fund also may invest in U.S. dollar denominated:

- taxable money market instruments;

- U.S. Government obligations;

- repurchase agreements; and

- securities subject to the federal alternative minimum tax (up to a maximum
of 20% of its total assets).

Although the Fund is managed to maintain a stable price per share of $1.00,
there is no guarantee that price will be constantly maintained.

RISK CONSIDERATIONS

The Tax-Exempt Money Market Fund subject to the following types of risk:

- - Fund Risk;

- - Interest Rate Risk;

- - Credit Risk; and

- - Call Risk.

For a description of these risks, please see "RISK CONSIDERATIONS" on page 8.
<PAGE>
10

PERFORMANCE HIGHLIGHTS

The table that follows presents information about the investment results of the
Investor Shares of the Tax-Exempt Money Market Fund. The financial highlights
for the Fund for the periods from inception through May 31, 1996 have been
audited by , independent public accountants, whose report
appears in STI Classic Fund's annual report which accompanies the Statement of
Additional Information. The annual report for the Fund is available to
Shareholders at no charge by calling 1-800-474-4770.

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE
PERIOD ENDED MAY 31, 1996 1995 1994 1993(1)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 1.00 1.00 1.00
Net Investment Income (Loss) $ 0.03 0.03 0.02 0.02
Realized and Unrealized Net Gains (Losses)
on Investments -- -- -- --
Distributions from Net Investment Income (0.03) (0.03) (0.02) (0.02)
Distributions from Realized Capital Gains -- -- -- --
Net Asset Value, End of Period $ 1.00 1.00 1.00 1.00
Total Return 3.16% 3.00% 1.96% 2.00%*
Net Assets End of Period (000) $95,223 87,647 61,675 35,209
Ratio of Expenses to Average Net Assets 0.62% 0.55% 0.54% 0.53%*
Ratio of Net Investment Income (Loss) to
Average Net Assets 3.10% 3.00% 1.93% 1.95%*
Ratio of Expenses to Average Net Assets
(Excluding Waivers and Reimbursements) 0.85% 0.87% 0.88% 0.95%*
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers and
Reimbursements) 2.87% 2.68% 1.59% 1.53%
</TABLE>

* Annualized.
(1) Commenced operations on June 8, 1992.
<PAGE>
11

TRANSACTION AND OPERATING EXPENSES

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF NET ASSETS)

Investment Advisory Fees After Fee .47%
Waivers and Reimbursements(1)

12b-1 Distribution & Service Fees .09%
After Reimbursements(2)

Other Expenses After Fee Waivers(3) .16%

Total Fund Operating Expenses After .72%
Fee Waivers and
Reimbursements(4)(,)(5)
</TABLE>

(1)ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, INVESTMENT ADVISORY FEES WOULD
BE .55% OF AVERAGE NET ASSETS.

(2)ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12B-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .15%.

(3)ABSENT WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE .16% OF AVERAGE
NET ASSETS.

(4)ABSENT THE FEE WAIVERS DESCRIBED ABOVE, TOTAL OPERATING EXPENSES WOULD HAVE
BEEN .86%. THESE FEE WAIVERS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING ITS FEE.

(5)TOTAL OPERATING EXPENSES HAVE BEEN RESTATED TO REFLECT CURRENT FEES.

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000, assuming $ 7 $ 23 $ 40 $ 89
(1) a 5% annual return; and (2) redemption at the end of
each time period.
</TABLE>

THE INFORMATION CONTAINED IN THIS TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
<PAGE>
12

THERE CAN BE NO ASSURANCE THAT A FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE.

RISK CONSIDERATIONS

TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
FUND RISK -- The possibility that the Fund's performance during a specific All Funds
period may not meet, or exceed, that of the market as a whole.
INTEREST RATE RISK -- The potential for a decline in the price of fixed-income All Funds
securities due to rising interest rates. This risk will be greater for
long-term securities than for short-term securities.
CREDIT RISK -- The possibility that an issuer will be unable to make timely All Funds
payments of either principal or interest.
CALL RISK -- The possibility that securities with high interest rates will be All Funds
prepaid (or "called") by the issuer, prior to maturity, during periods of
falling interest rates. This would require the Fund to invest the resulting
proceeds elsewhere, at generally lower interest rates.
EVENT RISK -- The possibility that corporate fixed-income securities may suffer Prime Quality Money Market
substantial declines in credit quality and market value due to corporate Fund
restructurings. While event risk may be high for certain corporate securities
held by the Fund, event risk overall should be low because of the Fund's
diversified holdings.
FOREIGN SECURITY RISKS -- There are risks associated with international Prime Quality Money Market
investing, including: Fund
CURRENCY RISK -- The possibility that changes in foreign exchange rates will
affect, favorably or unfavorably, the value of foreign securities.
VOLATILITY -- Investments in foreign stock markets can be more volatile than
investments in U.S. markets. Diplomatic, political, or economic developments
could affect investments in foreign countries.
EXPENSE CONSIDERATIONS -- Fixed commissions on many foreign stock exchanges are
generally higher than negotiated commissions on U.S. exchanges. Expenses for
custodial arrangements of foreign securities may be somewhat greater than
typical expenses for custodial arrangements for handling U.S. securities of
equal value.
FOREIGN TAXES -- Certain foreign governments levy withholding taxes against
dividend and interest income. Although in some countries a portion of these
taxes are recoverable, the non-recovered portion of foreign withholding taxes
will reduce the income received from the securities comprising the portfolio.
REGULATORY ENVIRONMENT -- Foreign companies generally are not subject to
uniform accounting, auditing, and financial reporting standards comparable to
those applicable to U.S. domestic companies. Foreign branches of U.S. banks,
foreign banks, and foreign issuers may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and
recordkeeping standards than those applicable to domestic branches of U.S.
banks and U.S. domestic issuers. There is generally less government regulation
of securities exchanges, brokers, and listed companies abroad than in the U.S.
</TABLE>
<PAGE>
13

PURCHASING FUND SHARES

HOW TO BUY FUND SHARES

You may buy Investor Shares (and fractions of shares) by mail, telephone, or
wire directly from the Transfer Agent, Federated Services Company. You may also
purchase shares through a SunTrust Investment Consultant, certain correspondent
banks of SunTrust Banks, Inc. or other financial institutions that have executed
dealer agreements with the Trust's Distributor. Shares are offered continuously,
and may be purchased on any day that the New York Stock Exchange and the Federal
Reserve are open for business (a Business Day).

Your price per share (the offering price) will be the net asset value per share
(NAV) next determined after your purchase order is received by the Trust. The
Trust expects the NAV of each Money Market Fund to remain constant at $1.00 per
share. NAV for the Money Market Funds is calculated by (1) taking the current
market value of a Fund's total assets using the amortized cost method of valuing
securities, (2) subtracting the liabilities, and (3) dividing that amount by the
total number of shares of that class owned by shareholders. The NAV is
determined once each Business Day at the close of the New York Stock Exchange
(4:00 p.m. Eastern time). All money market funds are required to use the
amortized cost valuation method, which is described in detail in the Trust's
Statement of Additional Information (SAI).

Your purchase order will be effective as of the Business Day it is received by
the Transfer Agent. You will be eligible to receive dividends declared the same
day if (1) the Transfer Agent receives the order (i) before 11:00 a.m. Eastern
time for the Tax-Exempt Money Market Fund, or (ii) before 1:00 p.m. Eastern time
for the Prime Quality Money Market Fund and U.S. Government Securities Money
Market Fund; and (2) the Custodian receives federal funds (readily available
funds) before 4:00 p.m. Eastern time on the same day. Otherwise your purchase
order will be effective the next Business Day, provided the Custodian receives
readily available funds before 4:00 p.m. Eastern time on the next Business Day.

If you decide to buy shares directly from the Transfer Agent, first call
1-800-874-4770. Make your check out to "STI Classic Funds" and include the name
of the appropriate Fund(s) on the check. Your check must be payable in U.S.
dollars. Third-party checks, credit cards, credit card checks and cash will not
be accepted. PLEASE NOTE, IF YOU BUY SHARES WITH A CHECK, AND THEN SELL THOSE
SHARES IN A SHORT PERIOD OF TIME, THE TRUST CAN DELAY PAYMENT TO YOU UNTIL YOUR
CHECK CLEARS, OR FOR UP TO 15 BUSINESS DAYS, WHICHEVER COMES FIRST.

FUNDLINK

FUNDLINK is a telephone-activated service that allows you to transfer money
quickly and easily between the STI Classic Funds and your SunTrust bank
account(s). To use FUNDLINK, you must first contact your SunTrust Investment
Consultant and complete the FUNDLINK application and authorization agreements.
Once you have signed up to use FUNDLINK, simply call the Transfer Agent at
1-800-428-6970 to complete all your purchase and redemption transactions.

MINIMUM PURCHASE

Your minimum initial purchase, and any subsequent purchase, of Investor Shares
of any Money Market Fund must be at least $5,000 and $1,000 (or $100 via a
statement coupon), respectively.
<PAGE>
14

SYSTEMATIC INVESTMENT PLAN

You may purchase shares of the Money Market Funds systematically through regular
deductions from your checking or savings account (with a SunTrust Banks, Inc.
affiliated bank). With a $500 minimum initial investment, you may begin making
regularly scheduled investments of at least $50 and up to $100,000 once or twice
a month.

THE DISTRIBUTOR MAY ACCEPT INVESTMENTS OF SMALLER AMOUNTS AT ITS DISCRETION.
IN ADDITION, THE TRUST RESERVES THE RIGHT TO REJECT ANY PURCHASE ORDER WHEN
THE DISTRIBUTOR DETERMINES THAT ACCEPTING THE ORDER WOULD NOT BE IN THE BEST
INTERESTS OF THE TRUST AND/OR SHAREHOLDERS.

REDEEMING FUND SHARES

HOW TO SELL YOUR FUND SHARES

You may sell (redeem) your Shares on any day that NAV is calculated, by
contacting the Transfer Agent directly by mail, telephone or, if eligible, via
FUNDLINK. You may also make redemption requests (in writing or by telephone)
through Investment Consultants of a SunTrust Banks, Inc. affiliated bank,
SunTrust Securities, Inc., and through certain correspondent banks of SunTrust
Banks, Inc. Redemption requests made via telephone or FUNDLINK (1-800-428-6970)
must be for at least $1,000. Your redemption request will be effective as of the
Business Day it is received by the Transfer Agent (1) before 11:00 a.m. Eastern
time for the Tax-Exempt Money Market Fund, or (2) before 1:00 p.m. Eastern time
for the Prime Quality Money Market Fund and U.S. Government Securities Money
Market Fund.

RECEIVING YOUR MONEY

REDEMPTIONS IN KIND

The Trust intends to pay your redemption proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the remaining shareholders in the Fund) the Trust reserves the right to pay
all or part of your redemption proceeds in liquid securities with a market value
equal to the redemption price (redemption in kind). Although it is highly
unlikely that your shares would ever actually be redeemed in kind, if it did
happen, you would probably have to pay brokerage costs to sell the securities
distributed to you.

INVOLUNTARY REDEMPTIONS

If your account balance drops below the $5,000 required minimum, you may be
required to redeem your shares. You will always be given at least 60 days'
written notice to give you time to add to your account and avoid the redemption.

SYSTEMATIC WITHDRAWAL PLAN

If you have at least $10,000 in your Fund account, you may use the systematic
withdrawal plan. Under the plan you may arrange to make monthly, quarterly,
semi-
<PAGE>
15
annual, or annual withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or electronically transferred to
your account with a SunTrust Banks, Inc. affiliated bank.

EXCHANGES

You may exchange Investor Shares of any Fund for Investor Shares of any other
Fund. Shares you exchange for the first time from a Money Market Fund (which has
no sales charge) into a Fund with a sales charge are subject to that sales
charge. Similarly, shares you exchange for the first time into a Fund with a
higher sales charge are subject to an incremental sales charge (the difference
between the lower and higher applicable sales charges). Should you exchange
shares into a Fund with the same, lower, or no sales charge (a Money Market
Fund), there is no sales charge for the exchange.

You may exchange your Investor Shares by contacting an Investment Consultant of
a SunTrust Banks, Inc. affiliated bank, SunTrust Securities, Inc., or certain
correspondent banks of SunTrust Banks, Inc. in writing or by telephone, or by
contacting the Transfer Agent directly via FUNDLINK. Exchange requests must be
for at least $1,000. You may exchange your shares for shares of another Fund in
the Trust up to four times during a calendar year without restriction. More than
four exchanges during a year may be viewed as abuse of the exchange privilege.
In such a case, the Trust may charge you a $10.00 fee for each additional
exchange. You will, however, be notified before any fee is charged. IF YOU
RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO
EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15
BUSINESS DAYS). This exchange privilege may be changed or canceled at any time
upon 60 days' notice.

DIVIDENDS AND DISTRIBUTIONS

Income dividends of each Fund are declared daily and paid monthly. The Funds
make capital gains distributions at least annually.

TAX INFORMATION

The following is a summary of some important tax issues that affect the Funds
and their Shareholders. We have not tried to present a
<PAGE>
16
detailed explanation of the tax treatment of the Funds or their Shareholders. WE
URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING SPECIFIC QUESTIONS AS TO FEDERAL,
STATE, AND LOCAL INCOME TAXES.

The following summary is based on current tax laws, which may be changed by
legislative, judicial, or administrative action.

TAX STATUS OF EACH FUND

TAX STATUS OF DISTRIBUTIONS

A SALE, EXCHANGE OR REDEMPTION OF FUND SHARES IS A TAXABLE EVENT TO THE
SHAREHOLDER. Each Fund will distribute substantially all of its income. THE
INCOME DIVIDENDS YOU RECEIVE FROM THE FUNDS WILL BE TAXED AS ORDINARY INCOME
WHETHER YOU RECEIVE THE DIVIDEND IN CASH OR IN ADDITIONAL SHARES.

TAX-EXEMPT DISTRIBUTIONS

The Tax-Exempt Money Market Fund may pay exempt-interest dividends.
Exempt-interest dividends are excludable from your gross income for regular
federal income tax purposes, but may have alternate minimum tax consequences.

Current federal tax laws limit the types and number of bonds that pay exempt
interest. This may hinder a Fund's ability to pay exempt-interest dividends.

STATE TAX CONSIDERATIONS

Please refer to the SAI for more tax information.

STI CLASSIC FUNDS INFORMATION

THE TRUST

BOARD OF TRUSTEES

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.
<PAGE>
17

GENERAL INFORMATION

VOTING RIGHTS

You receive one vote for every full Fund share owned. 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
Shareholder meetings unless otherwise required by the Investment Company Act of
1940. However, a meeting may be called by Shareholders owning at least 10% of
the outstanding shares of the Trust. If a meeting is requested by Shareholders,
the Trust will provide appropriate assistance and information to the
Shareholders who requested the meeting.

REPORTING

You will receive the Trust's unaudited financial information and audited
financial statements. In addition, the Trust will send you proxy statements and
other reports.

SHAREHOLDER INQUIRIES

You may contact the Transfer Agent to obtain information on account statements,
procedures, and other related information by calling 1-800-874-4770.

INVESTMENT ADVISOR

The Advisor makes investment decisions for the assets of the Funds it advises
and continuously reviews, supervises, and administers each Fund's investment
program. The Trustees of the Trust supervise the Advisor and establish policies
that the Advisor must follow in its day-to-day management activities.

Trusco Capital Management, Inc. serves as the Advisor to the Prime Quality Money
Market, U.S. Government Securities Money Market, and Tax-Exempt Money Market
Fund. As of , 1997, Trusco had approximately $ billion in assets under
management. The principal business address of Trusco is 50 Hurt Plaza, Suite
1400, Atlanta, Georgia 30303.

The Advisor is an indirect wholly-owned subsidiary of SunTrust Banks, Inc.
(SunTrust). SunTrust is a southeastern regional bank holding company with assets
of $ billion, as of , 1997. SunTrust is one of the 20 largest
banking companies in the U.S. Its three principal subsidiaries -- SunTrust Banks
of Florida, Inc., SunTrust Banks of Georgia, Inc. and SunTrust Banks of
Tennessee, Inc. -- provide a wide range of personal and corporate banking,
trust, and investment services through more than 600 locations in the tri-state
area. SunTrust Banks, Inc. has discretionary assets under management of
approximately $ billion, as of , 1997.

The Advisor may use its affiliates as brokers for the Funds' portfolio
transactions.

DISTRIBUTION

SEI Investments Distribution Co. (the Distributor), a wholly-owned subsidiary of
SEI Investments Company (SEI), serves as each Fund's distributor under a
Distribution Agreement. The Investor Shares of each Fund have a Distribution
Plan. Under the Distribution Plan, the Distributor is entitled to receive an
annual fee of up to:

- 20% of the average daily net assets of the Prime Quality Money Market
Fund;

- 17% of the average daily net assets of the U.S. Government Securities
Money Market Fund; and

- 15% of the average daily net assets of the Tax-Exempt Money Market Fund.
<PAGE>
18

The Distributor may use this fee:

- as compensation for its distribution-related services or shareholder
services; or

The Distributor may waive all, or a portion of its fee to limit the net expenses
of the Funds to the amounts set forth in each Fund's Transaction and Operating
Expenses.

It is possible that a financial institution may offer different classes of
shares to its customers and thus receive different compensation with respect to
different classes of shares.

You may visit any one of the Investment Services offices of SunTrust Banks,
Inc.'s affiliate banks (as listed on the last pages of this Prospectus),
SunTrust Securities, Inc. or certain correspondent banks of SunTrust Banks, Inc.
to receive copies of the Prospectuses for the Investor Shares and Flex Shares of
the Trust and application forms.

Each Fund may use the Distributor as its broker for portfolio transactions. The
Distributor receives compensation from the Funds for its brokerage services.

ADMINISTRATION

At times, the Administrator may voluntarily waive all or a portion of its
administration fees.
<PAGE>
19

INVESTMENT PRACTICES -- MONEY MARKET FUNDS

PRIME QUALITY MONEY U.S. GOVERNMENT SECURITIES TAX-EXEMPT MONEY
SECURITY OR PRACTICE MARKET FUND MONEY MARKET FUND MARKET FUND
<S> <C> <C> <C>
Bank Obligations X -- (20%)
Borrowing (33 1/3%) (33 1/3%) (33 1/3%)
Commercial Paper (Highest Quality) X -- X
Illiquid Securities (10%) (10%) (10%)
Repurchase Agreements X X X
Securities Lending (33 1/3%) (33 1/3%) (33 1/3%)
Securities of Foreign Issuers (25%)(2) -- --
Standby Commitments X -- --
Supranational Agency Obligations X -- --
U.S. Treasury and Agency Obligations X X (20%)
When-Issued Securities (33 1/3%) (33 1/3%) (33 1/3%)
</TABLE>

(1) May purchase up to 20% taxable commercial paper.
(2) Includes only obligations issued by foreign branches of U.S. banks and by
London branches of foreign banks.

<TABLE>
<CAPTION>
PRIME QUALITY MONEY U.S. GOVERNMENT SECURITIES TAX-EXEMPT MONEY
TEMPORARY INVESTMENTS MARKET FUND MONEY MARKET FUND MARKET FUND
<S> <C> <C> <C>
Cash X X X
Money Market Instruments X X X
Short-Term Obligations X X X
</TABLE>

<TABLE>
<CAPTION>
PRIME QUALITY MONEY U.S. GOVERNMENT SECURITIES TAX-EXEMPT MONEY
INVESTMENT RESTRICTIONS MARKET FUND MONEY MARKET FUND MARKET FUND
<S> <C> <C> <C>
Securities of Any One Issuer(1) 5% 5% 5%
Outstanding Voting Securities of Any One Issuer 10% 10% 10%
Securities of Issuers in Any One Industry(2) 25% 25% 25%
</TABLE>

MORE ABOUT INVESTMENT PRACTICES

The following is a description of some of the permitted investments for the
Funds. Further discussion is contained in the SAI.

BANK OBLIGATIONS are SHORT-TERM CORPORATE OBLIGATIONS issued by U.S. and foreign
banks, including bankers' acceptances, certificates of deposit (CDs), custodial
receipts, and time deposits.

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.

MUNICIPAL SECURITIES consist of:

- 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 operating expenses, and for lending such funds to
other public institutions and facilities, and;

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 totally
dependent 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 the
payment.

OBLIGATIONS OF SUPRANATIONAL ENTITIES -- Supranational entities are established
through the joint participation of several governments, including the Asian
Development Bank, the Inter-American Development Bank, International Bank for
Reconstruction and Development (World Bank), African Development Bank, European
Economic Community, European Investment Bank, and the Nordic Investment Bank.

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 equal to at least 100% of the market value of
the loaned securities. A Fund continues to receive interest on the securities
loaned while simultaneously earning interest on the investment of cash
collateral.

SHORT-TERM CORPORATE OBLIGATIONS are corporate obligations maturing in 397 days
or less, including commercial paper and other short-term corporation
obligations.

SUNTRUST AND INVESTMENT SERVICES OFFICES OF SUNTRUST BANKS, INC. AFFILIATE
BANKS:

FLORIDA: (STATEWIDE TOLL FREE) 1-800-526-1177

SUNTRUST SECURITIES, INC. -- FLORIDA

200 S. Orange Avenue
Tower 10
Orlando, FL 32801
(407) 237-4380
1-800-432-4760, ext. 4380

501 E. Las Olas Boulevard
Ft. Lauderdale, FL 33301
(954) 765-7422

Boca Raton Office
800 S. Federal Highway
Boca Raton, FL 33435
(561) 243-6707

Coral Ridge Office
2626 E. Oakland Park Blvd.
Ft. Lauderdale, FL 33306
(954) 765-2155

Delray Beach Office
302 E. Atlantic Avenue
Delray Beach, FL 33483
(561) 243-6750

5200 W. Atlantic Ave.
Delray Beach, FL 33484
(561) 243-6743

Hollywood Office
2001 Hollywood Blvd.
Hollywood, FL 33021
(954) 765-7062

Palm Beach Office
303 Royal Poinciana Plaza
Palm Beach, FL 33480
(561) 835-2855

PGA Office
4500 PGA Blvd.
Palm Beach Gardens, FL 33410
(561) 835-2802

8200 W. Broward Blvd.
Plantation, FL 33324
(954) 765-7661

777 Brickell Avenue
Miami, FL 33131
(305) 579-7450

401 E. Jackson Street
Tampa, FL 33602
(813) 224-2517

700 Virginia Avenue
Ft. Pierce, FL 34982
(407) 467-6459

Osceola Office
111 E. Osceola Street
Stuart, FL 34994
(407) 223-6012

Belnova Office
120 S. Ridgewood Avenue
Daytona Beach, FL 32114
(904) 258-2390

Bill France Office
4900 Clyde Morris Blvd.
Port Orange, FL 32119
(904) 258-2654

Deland Office
302 E. New York Avenue
Deland, FL 32724
(904) 822-5891

200 W. Forsyth Street
Jacksonville, FL 32202
(904) 632-2534
<PAGE>
23

1612 E. Cape Coral Parkway
Cape Coral, FL 33904
(941) 540-6128

Pelican Bay Office
801 Laurel Oak Drive
Naples, FL 33963
(941) 598-0515

South Gate Office
3400 S. Tamiami Trail
Sarasota, FL 34230
(941) 316-4027

Port Charlotte Office
18501 Murdock Circle
Port Charlotte, FL 33949
(941) 625-9286

5899 Whitfield Avenue
Sarasota, FL 34243
(941) 359-7415

North Beneva Office
3577 Fruitville Road
Sarasota, FL 34237
(941) 316-4003

South Beneva Office
8181 S. Tamiami Trail
Sarasota, FL 34231
(941) 927-7903

Venice Office
200 Nokomis Avenue South
Venice, FL 34285
(941) 486-4417

210 Security Square
Winter Haven, FL 33880
(941) 297-6855

One East Jefferson Street
Brooksville, FL 34601
(352) 754-5798

Crystal River Office
1502 SE Highway 19
Crystal River, FL 34428
(352) 795-8214

5435 Gall Blvd.
Zephyrhills, FL 33541
(813) 780-4154

6335 U.S. Highway 19
New Port Richey, FL 34652
(813) 861-4375

Seven Hills Office
1170 Mariner Blvd.
Spring Hill, FL 34609
(352) 754-5779

203 E. Silver Springs Blvd.
Ocala, FL 34470
(352) 368-6477

3522 Thomasville Road
Tallahassee, FL 32308
(904) 298-5064

511 W. 23rd Street
Panama City, FL 32405
(904) 872-6086

11 Hoffman Drive
Gulf Breeze, FL 32561
(904) 435-1264

GEORGIA:

SUNTRUST SECURITIES, INC. -- GEORGIA

55 Park Place
First Floor
Atlanta, GA 30303
(404) 588-8108
1-800-600-6350

101 N. Lumpkin Street
Athens, GA 30601
(706) 354-5346
<PAGE>
24

Gainesville Branch
427 Oak Street
Gainesville, GA 30501
(770) 503-8674

100 East Second Avenue
Rome, GA 30161
(706) 236-4325

2815 Wrightsboro Road
Augusta, GA 30909
(706) 821-2015

606 Cherry Street
Macon, GA 31201
(912) 755-5175

1246 First Avenue
Columbus, GA 31901
(706) 649-3631

33 Bull Street, Suite 208
Savannah, GA 31401
(912) 944-1165

410 W. Broad Avenue
Albany, GA 31701
(912) 430-5468

Coffee County Branch
201 S. Peterson Avenue
Douglas, GA 31533
(912) 383-5242

510 Gloucester Street
Brunswick, GA 31520
(912) 262-5322

Sea Island Road Branch
701 Sea Island Road
St. Simons Island, GA 31522
(912) 638-3620
(912) 262-2227

TENNESSEE:

SUNTRUST SECURITIES, INC. -- TENNESSEE

424 Church Street
4th Floor
Nashville, TN 37219
(615) 748-4477
1-800-932-2652

736 Market Street
Chattanooga, TN 37402
(423) 757-3005
TN WATS 1-800-572-7306, Ext. 3005
Bordering States WATS
1-800-874-1083, Ext. 3005
Out of State WATS
1-800-251-6266, Ext. 3005

9950 Kingston Pike
Knoxville, TN 37997
(423) 544-2181
1-800-456-1177

207 Mockingbird Lane
Johnson City, TN 37604
(423) 461-1005

25 Public Square
Lawrenceburg, TN 38464
(615) 762-3511

ALABAMA:

SUNTRUST SECURITIES, INC. -- ALABAMA

201 South Court Street
Florence, AL 35630
(205) 767-8537
<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 Fund Resources 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
</TABLE>
<PAGE>
WHY INVEST IN MUTUAL FUNDS?

BENEFITS OF MUTUAL FUNDS

ABOUT STI CLASSIC FUNDS

The STI Classic Funds are advised by STI Capital Management, N.A., Trusco
Capital Management, Inc., SunTrust Bank, Atlanta, and SunTrust Bank,
Chattanooga, N.A. These advisory units are affiliates of SunTrust Banks, Inc., a
super-regional bank holding company with approximately $ billion in
discretionary assets under management. Currently, these advisors collectively
manage more than $ billion in equity and fixed-income mutual fund assets.
<PAGE>
Additional information about the Funds is included in a Statement of Additional
Information dated (the SAI). The SAI has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. You may obtain a copy of the SAI, or of the annual or semi-annual
report, without charge by calling 1-800-874-4770, or by contacting the
Distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456.

STI CLASSIC FUNDS

INVESTMENT ADVISORS:

STI CAPITAL MANAGEMENT, N.A.
TRUSCO CAPITAL MANAGEMENT, INC.
SUNTRUST BANK, CHATTANOOGA, N.A.
SUNTRUST BANK, ATLANTA

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 prospectuses dated
____________, 1997. Prospectuses may be obtained through the Distributor, SEI
Financial Services Company, 680 E. Swedesford Road, Wayne, Pennsylvania
19087-1658.

TABLE OF CONTENTS
PAGE

THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . B-2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . B-18
INVESTMENT ADVISORS. . . . . . . . . . . . . . . . . . . . . . . . . . . B-20
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-22
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-24
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . B-30
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . B-33
COMPUTATION OF YIELD . . . . . . . . . . . . . . . . . . . . . . . . . . B-34
CALCULATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . B-38
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . B-42
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . B-43
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-44
FUND TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-48
TRADING PRACTICES AND BROKERAGE. . . . . . . . . . . . . . . . . . . . . B-48
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . B-53
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . B-53
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . B-54
5% AND 25% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . B-54
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-64

____________, 1997

<PAGE>

THE TRUST

STI Classic Funds (the "Trust") is a diversified, open-end management investment
company established under Massachusetts law as a Massachusetts business trust
under a Declaration of Trust dated January 15, 1992. The Declaration of Trust
permits the Trust to offer separate series ("Funds") of units of beneficial
interest ("shares") and different classes of shares of each Fund. Shareholders
at present may purchase shares of the Trust's money market funds through two
separate classes (Trust Shares and Investor Shares) and shares of the Trust's
other funds through three separate classes (Trust Shares, Investor Shares and
Flex Shares), which provide for variations in sales charges, distribution costs,
transfer agent fees, voting rights and dividends. Except for these differences,
each Trust Share, Investor Share and Flex Share, if any, of each Fund represents
an equal proportionate interest in that portfolio. See "Description of Shares."
This Statement of Additional Information relates to the Trust Shares and
Investor Shares of the Trust's Prime Quality Money Market Fund, U.S. Government
Securities Money Market Fund and Tax-Exempt Money Market Fund (the "Money Market
Funds") and the Trust Shares, Investor Shares and Flex Shares of the Trust's
Investment Grade Bond Fund, Short-Term U.S. Treasury Securities Fund, Short-Term
Bond Fund, U.S. Government Securities Fund and Limited-Term Federal Mortgage
Securities Fund (the "Bond Funds"); Investment Grade Tax-Exempt Bond Fund,
Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund and Tennessee
Tax-Exempt Bond Fund (the "Tax-Exempt Bond Funds"); Capital Growth Fund, Value
Income Stock Fund, Mid-Cap Equity Fund, Sunbelt Equity Fund, International
Equity Index Fund, International Equity Fund and Small Cap Equity Fund and
Emerging Markets Equity Fund (the "Equity Funds"); and the Balanced Fund. These
various series are collectively referred to herein as the "Funds."

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

DESCRIPTION OF PERMITTED INVESTMENTS

CUSTODIAL RECEIPTS

The custodian arranges for the issuance of the certificates or receipts
evidencing ownership and maintains the register. Receipts include "Treasury
Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"), and
"Certificates of Accrual on Treasury Securities" ("CATS"). TRs, TIGRs and CATS
are sold as zero coupon securities.

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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. An Advisor will only purchase STRIPS that it
determines are liquid or, if illiquid, do not violate the affected 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 Money Market Funds' Advisor will only purchase STRIPS for Money
Market Funds that have a remaining maturity of 397 days or less; therefore, the
Money Market 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 Money Market Funds' 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 Money Market
Funds.

VARIABLE RATE MASTER DEMAND NOTES

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

U.S. GOVERNMENT AGENCY SECURITIES

Certain investments of each of the Funds except the Short-Term U.S. Treasury
Securities Fund may include U.S. Government Agency Securities. Agencies of the
United States Government which issue obligations consist of, among others, the
Export Import Bank of the United States, Farmers Home Administration, Federal
Farm Credit Bank, Federal Housing Administration, Government National Mortgage
Association ("GNMA"), Maritime Administration, Small Business Administration and
The Tennessee Valley Authority. Obligations of instrumentalities of the United
States Government include securities issued by, among others, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Intermediate
Credit Banks, Federal Land Banks, Federal National Mortgage Association

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<PAGE>

("FNMA") and the United States Postal Service as well as government trust
certificates. Some of these securities are supported by the full faith and
credit of the United States Treasury (E.G., GNMA securities), others are
supported by the right of the issuer to borrow from the Treasury and still
others are supported only by the credit of the instrumentality (E.G., FNMA
securities). Guarantees of principal by agencies or instrumentalities of the
U.S. Government may be a guarantee of payment at the maturity of the obligation
so that in the event of a default prior to maturity there might not be a market
and thus no means of realizing the value of the obligation prior to maturity.

MORTGAGE-BACKED SECURITIES

MORTGAGE-BACKED SECURITIES--GOVERNMENT PASSTHROUGH SECURITIES

The primary issuers or guarantors of these mortgage-backed securities are the
Government National Mortgage Association ("GNMA"), Fannie Mae, and the Federal
Home Loan Mortgage Corporation ("FHLMC"). Fannie Mae and FHLMC obligations are
not backed by the full faith and credit of the U.S. Government as GNMA
certificates are, but Fannie Mae and FHLMC securities are supported by the
instrumentalities' right to borrow from the U.S. Treasury. GNMA, Fannie Mae,
and FHLMC each guarantees timely distributions of interest to certificate
holders. GNMA and Fannie Mae also guarantee timely distributions of scheduled
principal. In the past, FHLMC has only guaranteed 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.

Obligations of GNMA are backed by the full faith and credit of the United
States Government. Obligations of Fannie Mae and FHLMC are not backed by the
full faith and credit of the United States Government but are considered to
be of high quality since they are considered to be instrumentalities of the
United States. The market value and interest yield of these mortgage-backed
securities can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in
a pool of federally insured mortgage loans with a maximum maturity of 30
years. However, due to scheduled and unscheduled principal payments on the
underlying loans, these securities have a shorter average maturity and,
therefore, less principal volatility than a comparable 30-year bond. Since
prepayment rates vary widely, it is not possible to accurately predict the
average maturity of a particular mortgage-backed security. The scheduled
monthly interest and principal payments relating to mortgages in the pool
will be "passed through" to investors. Government mortgage-backed securities
differ from conventional bonds in that principal is paid back to the
certificate holders over the life of the loan rather than at maturity. As a
result, there will be monthly scheduled payments of principal and interest.
In addition, there may be unscheduled principal payments representing

B-4
<PAGE>

prepayments on the underlying mortgages. Although these securities may offer
yields higher than those available from other types of U.S. Government
securities, mortgage-backed securities may be less effective than other types of
securities as a means of "locking in" attractive long-term rates because of the
prepayment feature. For instance, when interest rates decline, the value of
these securities likely will not rise as much as comparable debt securities due
to the prepayment feature. In addition, these prepayments can cause the price
of a mortgage-backed security originally purchased at a premium to decline in
price to its par value, which may result in a loss.

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

MORTGAGE-BACKED SECURITIES--REMICs

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

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 Fannie Mae or FHLMC represent
beneficial ownership interests in a REMIC trust consisting principally of
mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed mortgage pass-through
certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely payment
of interest.

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<PAGE>

DETERMINING MATURITIES OF MORTGAGE-BACKED SECURITIES

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

STRIPPED MORTGAGE-BACKED SECURITIES

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

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

DOLLAR ROLLS

Dollar rolls may be renewed prior to cash settlement and initially may involve
only a firm commitment agreement by the Fund to buy a security.

If the broker-dealer to whom the Fund sells the security becomes insolvent, the
Fund's right to repurchase the security may be restricted. Other risks involved
in entering into dollar rolls include the risk that the value of the security
may change adversely over the term of the dollar roll and that the security the
Fund is required to repurchase may be worth less than the security that the Fund
originally held. To avoid any leveraging concerns, the Fund will place U.S.
Government or other liquid, high grade assets in a segregated account in an
amount sufficient to cover its repurchase obligation.

B-6
<PAGE>

GICS

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 considered to be illiquid investments.

LOAN PARTICIPATIONS

In the event of bankruptcy or insolvency of the corporate borrower, a loan
participation may be subject to certain defenses that can be asserted by the
borrower as a result of improper conduct by the intermediary bank. In addition,
in the event the underlying corporate borrower fails to pay principal and
interest when due, the Fund may be subject to delays, expenses, and risks that
are greater than those that would have been involved if the Fund had purchased a
direct obligation of the borrower. Under the terms of a Loan Participation, the
Fund may be regarded as a creditor of the intermediary bank (rather than of the
underlying corporate borrower), so that the Fund may also be subject to the risk
that the intermediary bank may become insolvent.

The secondary market for loan participations is limited and any such
participation purchased by the Fund may be regarded as illiquid.

ASSET-BACKED SECURITIES

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

Asset-backed securities are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and, for a certain
period, by a letter of credit issued by a financial institution (such as 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

B-7
<PAGE>

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.

REPURCHASE AGREEMENTS

Each of the Funds except the Short-Term U.S. Treasury Securities 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 Advisors monitor
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the appropriate 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 the Fund is treated as an unsecured creditor and required to return
the underlying security to the seller's estate.

MUNICIPAL SECURITIES

MUNICIPAL NOTES in which the Short-Term Bond Fund, Tax-Exempt Money Market Fund
and Tax-Exempt Bond Funds may invest, consist of general obligation notes, tax
anticipation notes

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<PAGE>

(notes sold to finance working capital needs of the issuer in anticipation of
receiving taxes on a future date), revenue anticipation notes (notes sold to
provide needed cash prior to receipt of expected non-tax revenues from a
specific source), bond anticipation notes, certificates of indebtedness, demand
notes and construction loan notes. A Fund's investments in any of the notes
described above will be limited to those obligations (i) where both principal
and interest are backed by the full faith and credit of the United States, (ii)
which are rated MIG-2 or V-MIG-2 at the time of investment by Moody's, (iii)
which are rated SP-2 at the time of investment by S&P, or (iv) which, if not
rated by S&P or Moody's, are in the Advisor's judgement, of at least comparable
quality to MIG-2, VMIG-2 or SP-2.

MUNICIPAL BONDS must be rated at least BBB or better by S&P or at least Baa or
better by Moody's at the time of purchase for the Tax-Exempt Bond Funds or in
one of the two highest short-term rating categories by S&P or Moody's for the
Tax-Exempt Money Market Fund or, if not rated by S&P or Moody's, must be deemed
by the Advisor to have essentially the same characteristics and quality as bonds
having the above ratings. A Fund may purchase industrial development and
pollution control bonds if the interest paid is exempt from Federal income tax.
These bonds are issued by or on behalf of public authorities to raise money to
finance various privately-operated facilities for business and manufacturing,
housing, sports and pollution control. These bonds are also used to finance
public facilities such as airports, mass transit systems, ports and parking.
The payment of the principal and interest on such bonds is dependent solely on
the ability of the facility's user to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment.

OTHER TYPES OF TAX-EXEMPT INSTRUMENTS which are permissible investments for the
Short-Term Bond Fund, Tax-Exempt Money Market Fund and Tax-Exempt Bond Funds
include floating rate notes. Investments in such floating rate instruments will
normally involve industrial development or revenue bonds which provide that the
rate of interest is set as a specific percentage of a designated base rate (such
as the prime rate) at a major commercial bank, and that the Fund can demand
payment of the obligation at all times or at stipulated dates on short notice
(not to exceed 30 days) at par plus accrued interest. Such obligations are
frequently secured by letters of credit or other credit support arrangements
provided by banks. The quality of the underlying credit or of the bank, as the
case may be, must, in the Advisor's opinion be equivalent to the long-term bond
or commercial paper ratings stated above. The Advisor will monitor the earning
power, cash flow and liquidity ratios of the issuers of such instruments and the
ability of an issuer of a demand instrument to pay principal and interest on
demand. The Funds may also purchase participation interests in municipal
securities (such as industrial development bonds and municipal lease/purchase
agreements). A participation interest gives a Fund an undivided interest in the
underlying municipal security. If it is unrated, the participation interest
will be backed by an irrevocable letter of credit or guarantee of a
credit-worthy financial institution or the payment obligations otherwise will be
collateralized by U.S. Government Securities. Participation interests may have
fixed, variable or floating rates of interest and may include a demand feature.
A participation interest without a demand feature or with a demand feature
exceeding seven

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<PAGE>

days may be deemed to be an illiquid security subject to the Funds' investment
limitations restricting their purchases of illiquid securities. A Fund may
purchase other types of tax-exempt instruments as long as they are of a quality
equivalent to the bond or commercial paper ratings stated above.

Opinions relating to the validity of municipal securities and to the exemption
of interest thereon from federal income tax are rendered by bond counsel to the
respective issuers at the time of issuance. Neither the Funds nor an Advisor
will review the proceedings relating to the issuance of municipal securities or
the basis for such opinions.

STANDBY COMMITMENTS AND PUTS

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

The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Fund.
Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put

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<PAGE>

option, the Fund could seek to negotiate terms for the extension of such an
option. If such a renewal cannot be negotiated on terms satisfactory to the
Fund, the Fund could, of course, sell the portfolio security. The maturity of
the underlying security will generally be different from that of the put. There
will be no limit to the percentage of portfolio securities that the Fund may
purchase subject to a standby commitment or put, but the amount paid directly or
indirectly for all standby commitments or puts which are not integral parts of
the security as originally issued held in the Fund will not exceed 1/2 of 1% of
the value of the total assets of such Fund calculated immediately after any such
put is acquired.

FOREIGN SECURITIES

The Prime Quality Money Market Fund, Investment Grade Bond Fund, Short-Term Bond
Fund, Balanced Fund and each of the Equity Funds, except the Sunbelt Equity
Fund, may invest in U.S. dollar denominated obligations or securities of foreign
issuers. The International Equity Index and International Equity Funds will
invest primarily in certain obligations or securities of foreign issuers.
Possible investments include equity securities of foreign entities, obligations
of foreign branches of U.S. banks and of foreign banks, 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 and foreign securities.
Permissible investments may consist of obligations of foreign branches of U.S.
banks and of foreign banks, including European Certificates of Deposit, European
Time Deposits, Canadian Time Deposits and Yankee Certificates of Deposits,
Canadian Commercial Paper, and Europaper. In addition, each of the
above-mentioned Funds except for the Short-Term Bond Fund may invest in American
Depositary Receipts. These instruments may subject the Funds to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to changes
in exchange rates, or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. Such investments may also entail higher custodial fees and sales
commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar
securities or obligations. Foreign branches of U.S. banks and foreign banks
may be subject to less stringent reserve requirements than those applicable to
domestic branches of U.S. banks.

By investing in foreign securities, the International Equity Index and
International Equity Funds attempt to take advantage of differences between both
economic trends and the performance of securities markets in the various
countries, regions and geographic areas as prescribed by each Fund's investment
objective and policies. During certain periods the investment return on
securities in some or all countries may exceed the return on similar

B-11
<PAGE>

investments in the United States, while at other times the investment return may
be less than that on similar U.S. securities. Shares of the International
Equity Index and International Equity Funds, when included in appropriate
amounts in a portfolio otherwise consisting of domestic securities, may provide
a source of increased diversification. The International Equity Index and
International Equity Funds seek increased diversification by combining
securities from various countries and geographic areas that offer different
investment opportunities and are affected by different economic trends. The
international investments of the International Equity Index and International
Equity Funds may reduce the effect that events in any one country or geographic
area will have on its investment holdings. Of course, negative movement by a
Fund's investments in one foreign market represented in its portfolio may offset
potential gains from the Fund's investments in another country's markets.

ADRs

Holders of unsponsored depositary receipts generally bear all the costs of the
unsponsored facility. The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through, to the holders of the
receipts, voting rights with respect to the deposited securities.

OBLIGATIONS OF SUPRANATIONAL AGENCIES

The Prime Quality Money Market Fund, U.S. Government Securities Fund, Investment
Grade Bond Fund, Balanced Fund and Short-Term Bond Fund may purchase obligations
of supranational agencies. Currently these Funds intend 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.

WHEN-ISSUED SECURITIES AND MUNICIPAL FORWARDS

Delivery and payment of when-issued securities normally take place within 45
days (90 days with respect to the Limited-Term Federal Mortgage Security
Fund) after the date of commitment to purchase. In addition, a Fund may
purchase municipal forwards for which delivery of the underlying municipal
security normally occurs after 45 days but before one year after the
commitment date. A Fund will only make commitments to purchase when-issued
securities and municipal forwards with the intention of actually acquiring
the securities, but may sell them before the settlement date. When-issued
securities are subject to market fluctuation, and accrue no interest to the
purchaser during this pre-settlement period. The payment obligation

B-12
<PAGE>

and the interest rate that will be received on the securities are each fixed at
the time the purchaser enters into the commitment. Purchasing municipal
forwards and when-issued securities entails leveraging and can involve a risk
that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself. In that case,
there could be an unrealized loss at the time of delivery.

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

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. Each Fund may invest up to 15% of its total
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 a Fund's Advisor pursuant to guidelines adopted by the Board of
Trustees. Under these guidelines, the particular 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, each Advisor intends to
purchase securities that are exempt from registration under Rule 144A under
the 1933 Act.

SECURITIES LENDING

Each Fund may lend securities pursuant to agreements which require that the
loans be continuously secured by collateral at all times equal to 100% of the
market value of the loaned securities which consists of: cash, securities of
the U.S. Government or its agencies, or any combination of cash and such
securities. Such loans will not be made if, as a result, the aggregate amount
of all outstanding securities loans for 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
appropriate Advisor to

B-13
<PAGE>

be of good standing and when, in the judgment of that Advisor, the consideration
which can be earned currently from such securities loans justifies the attendant
risk. Any loan may be terminated by either party upon reasonable notice to the
other party. The Funds may use the Distributor or a broker-dealer affiliate of
an Advisor as a broker in these transactions.

FUTURES CONTRACTS AND OPTIONS ON FUTURES

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

Futures traders are required to make a good faith margin deposit in cash or
government securities with or for the account of a broker or custodian to
initiate and maintain open secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close a
futures position. In the event of adverse price movements, a Fund would
continue to be required to make daily cash payments to maintain its required
margin. In such situations, if a Fund has insufficient cash, it may have to
sell portfolio securities to meet daily margin requirements at a time when it
may be disadvantageous to do so. In addition, the Funds may be required to make
delivery of the instruments underlying the futures contracts they hold. The
inability to close options and futures positions also could have an adverse
impact on the ability to effectively hedge the underlying securities.

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

The risk of loss in trading futures contracts can be substantial, due both to
the low margin deposits required and the extremely high degree of leverage
involved in futures pricing. As a result, a relatively small price movement in
a futures contract may result in immediate and substantial loss (or gain) to a
Fund. For example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of the
futures contract would result in a total loss of the margin deposit, before any
deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit if
the contract were closed out. Thus, a purchase or sale of a futures contract
may result in losses in excess of the amount invested in the contract. However,
because the Funds will be engaged in futures transactions only for hedging
purposes, the Advisors do not believe that the Funds will generally be subject
to the

B-14
<PAGE>

risks of loss frequently associated with futures transactions. The Funds
presumably would have sustained comparable losses if, instead of the futures
contract, they had invested in the underlying financial instrument and sold it
after the decline. The risk of loss from the purchase of options is less as
compared with the purchase or sale of futures contracts because the maximum
amount at risk is the premium paid for the option.

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

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

OPTIONS

A call option gives the purchaser of such option the right to buy, and the
writer, in this case the Fund, the obligation to sell the underlying security
at the exercise price during the option period. The advantage to the Funds of
writing covered calls is that the Funds receive a premium which is additional
income. However, if the security rises in value, the Funds may not fully
participate in the market appreciation.

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

B-15
<PAGE>

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

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

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

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

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

SWAPS/FLOORS/COLLARS

In a typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate times a "notional principal amount." This is done
in return for payments equal to a fixed rate times the same amount, for a
specific period of time. If a swap agreement provides for payment in different
currencies, the parties might agree to exchange the notional principal amount as
well. Swaps may also depend on other prices or rates, such as the value of an
index or mortgage prepayment rates.

B-16

<PAGE>

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

Swap agreements are subject to risks related to the counterparty's ability to
perform, and may decline in value if the counterparty's creditworthiness
deteriorates. The Fund may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation the Fund may have under these types of
arrangements will be covered by setting aside liquid high-grade securities in a
segregated account. The Fund will enter into swaps only with counterparties
believed to be creditworthy.

INVESTMENT COMPANY SHARES

Investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. 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.

OTHER INVESTMENTS

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

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

B-17
<PAGE>

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 that
Fund's outstanding shares.

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) the Bond Funds, Balanced Fund, U.S.
Government Securities Fund, Limited-Term Federal Mortgage Securities Fund,
International Equity Index Fund, International Equity Fund, Value Income
Stock Fund, Small Cap Equity Fund and Emerging Markets Equity Fund may
engage in securities lending as described in the Prospectuses and in this
Statement of Additional Information.

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

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

B-18
<PAGE>

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 Investment Company Act of 1940 (the "1940 Act") and the
rules and regulations thereunder, except that the Mid-Cap Equity, Sunbelt
Equity, Balanced, Georgia Tax-Exempt Bond, Florida Tax-Exempt Bond,
Tennessee Tax-Exempt Bond, U.S. Government Securities, Limited-Term Federal
Mortgage Securities, International Equity Index, International Equity,
Small Cap Equity and Emerging Market Equity Funds' purchases of investment
company shares are not limited to money market funds. 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 retain securities of an issuer if, to the knowledge of
the Trust, an officer, trustee, partner or director of the Trust or any Advisor
of the Trust owns beneficially more than 1/2 of 1% of the shares or securities
of such issuer and all such officers, trustees, partners and directors owning
more than 1/2 of 1% of such shares or securities together own more than 5% of
such shares or securities.

No Fund may invest in warrants except that the Value Income Stock, Mid-Cap
Equity, Sunbelt Equity, Capital Growth, International Equity Index,
International Equity, Balanced, Small Cap Equity and Emerging Markets Equity,
Funds may each invest in warrants in an amount not exceeding 5% of its net
assets as valued at the lower of cost or market value. Included in that amount,
but not to exceed 2% of the Fund's net assets, may be warrants not listed on the
New York Stock Exchange or American Stock Exchange.

B-19
<PAGE>

No Fund may invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of a Fund's assets (10% for the Prime Quality Money Market, U.S.
Government Securities Money Market and Tax-Exempt Money Market Funds). An
illiquid security is a security which cannot be disposed of promptly (within
seven days), and in the usual course of business without a loss, and includes
repurchase agreements maturing in excess of seven days, time deposits with a
withdrawal penalty, non-negotiable instruments and instruments for which no
market exists.

No Fund may invest in interests in oil, gas or other mineral exploration or
development programs and oil, gas or mineral leases.

No Fund may write or purchase puts, calls, options or combinations thereof,
except that the Balanced Fund, Bond Funds, Tax-Exempt Bond Funds, International
Equity Index Fund, International Equity Fund, Value Income Stock Fund, Small Cap
Equity Fund and Emerging Markets Equity Fund, may write covered call options
with respect to any or all parts of their Fund securities and engage in futures
transactions, and the Prime, Tax-Exempt Money Market, Balanced, Short Term Bond
and Tax-Exempt Bond Funds may purchase putable securities. Funds may sell
options previously purchased and enter into closing transactions with respect to
covered call options.

No Fund, except the Emerging Markets Equity Fund, may invest in securities of
issuers which together with predecessors have a record of less than three years
continuous operation or equity securities of issuers which are not readily
marketable if such investments will exceed 5% of the Fund's total assets.

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

The Prime Quality Money Market Fund may not invest in guaranteed investment
contracts.

INVESTMENT ADVISORS

The Trust and STI Capital Management, N.A., Trusco Capital Management, Inc.,
SunTrust Bank, Atlanta and SunTrust Bank, Chattanooga, N.A. (the "Advisors")
have entered into advisory agreements with the Trust (the "Advisory
Agreements"). The Advisory Agreements provide that each 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.

Each Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of any Fund (including amounts payable to an Advisor but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by certain states,

B-20
<PAGE>

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 each 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. Each 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.

For the fiscal years ended May 31, 1996, 1995, and 1994, the Funds paid the
following advisory fees:

- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
FUND FEES PAID FEES WAIVED
OR REIMBURSED
-------------------------------------------------------------------------------------
1996 1995 1994 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Bond Fund $ 3,868,222 $ 3,274,146 $2,855,556 $ 709,139 $ 636,033 $ 664,188
- ----------------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund(1) $ 107,618 $ 10,562 $ 0 $ 72,476 $ 45,986 $ 7,414
- ----------------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund(2) $ 83,243 $ 35,579 $ 0 $ 63,991 $ 50,699 $ 12,260
- ----------------------------------------------------------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond Fund(3) $ 0 $ 0 $ 0 $ 46,809 $ 14,014 $ 2,016
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 361,936 $ 212,070 $ 114,825 $ 149,827 $ 118,030 $ 85,482
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund $ 917,948 $ 627,607 $ 280,656 $ 202,552 $ 138,553 $ 69,202
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund(4) $ 16,097 $ 0 * $ 53,312 $ 7,817 *
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities $ 36,729 $ 26,399 $ 124,578 $ 72,116 $ 64,786 $ 75,823
Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage $ 224,595 $ 78,778 * $ 119,538 $ 74,494 *
Securities Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Prime Quality Money Market Fund $ 5,346,850 $ 4,052,982 $3,099,410 $1,602,546 $1,215,895 $ 929,822
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Money $ 2,068,133 $ 1,729,860 $1,807,117 $ 577,384 $ 507,624 $ 474,434
Market Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $ 1,422,777 $ 910,742 $ 492,172 $ 685,205 $ 583,588 $ 464,333
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Growth Fund $12,099,047 $11,023,563 $8,819,976 $1,408,275 $1,393,475 $1,255,835
- ----------------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 3,424,453 $ 2,353,943 $ 236,512 $ 465,317 $ 407,677 $ 143,666
- ----------------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $ 9,447,738 $ 6,976,518 $2,998,756 $ 318,958 $ 28,394 $ 426,576
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

B-21
<PAGE>
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C> <C> <C>
International Equity Fund $ 746,780 * * $ 0 * *
- ----------------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund $ 0 $ 340,065 * $ 0 $ 135,043 *
- ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 2,057,932 $ 940,045 $ 52,988 $ 318,958 $ 195,873 $ 68,285
- ----------------------------------------------------------------------------------------------------------------------------------
Balanced Fund $ 823,692 $ 823,692 $ 209,237 $ 166,361 $ 149,133 $ 118,661
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

*Not in operation during the period.

(1) STI Capital Management, advisor to the Florida Tax Exempt Bond Fund
reimbursed expenses of $7,846 for the fiscal year ended May 31, 1994.
(2) SunTrust Bank, Atlanta, advisor to the Georgia Tax-Exempt Bond Fund
reimbursed expenses of $4,536 for the fiscal year ended May 31, 1994.
(3) SunTrust Bank, Chattanooga, advisor to the Tennessee Tax-Exempt Bond Fund,
reimbursed expenses of $10,011 for the fiscal year ended May 31, 1994,
$19,803 for the fiscal year ended May 31, 1995 and $17,277 for the fiscal
year ended May 31, 1996.
(4) Trusco Capital Management, Inc., advisor to the U.S. Government Securities
Fund, reimbursed expenses of $27,216.

BANKING LAWS
Current interpretations of federal banking laws and regulations:
- - prohibit SunTrust and the Advisors from sponsoring, organizing,
controlling, or distributing the Funds' shares;
- - prohibit SunTrust and the Advisors;
- - but, do not prohibit SunTrust or the Advisors 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 Advisors believe that they may perform advisory and related services for
STI Classic Funds 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 Advisors from continuing to perform services for STI
Classic Funds. 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
Advisors, or their affiliates, would consider performing additional services
for STI Classic Funds. We cannot predict whether these changes will be
enacted. We also cannot predict the terms that the Advisors, or their
affiliates, might offer to provide additional services.

THE ADMINISTRATOR

The Trust and SEI Fund Resources (the "Administrator") are parties to an
Administrative Agreement. The Administration Agreement provides that the
Administrator shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in

B-22
<PAGE>

connection with the matters to which the Administration Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Administrator in the performance of its duties or from
reckless disregard by it of its duties and obligations thereunder. The
Administration Agreement shall remain in effect for a period of five years
after the date of the Agreement and shall continue in effect for successive
periods of two years subject to review at least annually by the Trustees of the
Trust unless terminated by either party on not less than ninety days' written
notice to the other party.

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI"), is the
owner of all beneficial interest in the Administrator. SEI and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors, and
money managers. The Administrator and its affiliates also serve as
administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop
Street Funds, Boston 1784 Funds-Registered Trademark-,CoreFunds, Inc.,
CrestFunds, Inc., CUFUND, The Expedition Funds, FMB Funds, Inc., First American
Funds, Inc., First American Investment Funds, Inc., First American Strategy
Funds, Inc., HighMark Funds, Marquis Funds-Registered Trademark-, Monitor
Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., The Pillar
Funds, Profit Funds Investment Trust, Rembrandt Funds-Registered Trademark-,
Santa Barbara Group of Mutual Funds, Inc., 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 Funds, STI Classic Variable Trust, and TIP
Funds.

<S> <C> <C> <C> <C> <C> <C>
Investment Grade Bond Fund $443,569 $404,413 $379,548 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 16,304 $ 10,140 $ 1,473 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 19,989 $ 6,645 $ 885 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond Fund $ 3,148 $ 1,648 $ 241 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 56,317 $ 38,813 $ 24,575 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt $108,204 $ 77,499 $ (8,955) $ 0 $ 1,745 $ 46,343
Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund $ 7,311 $ 807 * $ 0 $ 0 *
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund $ 12,012 $ 10,761 $ 24,738 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

B-23
<PAGE>

Limited-Term Federal Mortgage $ 37,854 $ 17,962 * $ 0 $ 0 *
Securities Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Prime Quality Money Market Fund $315,880 $155,054 $131,571 $449,492 $465,158 $363,160
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Money $219,380 $129,165 $197,818 $ 72,463 $134,192 $ 83,382
Market Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $274,701 $128,912 $ 93,437 $ 0 $ 79,032 $ 45,179
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Growth Fund $842,411 $826,735 $680,627 $ 0 $ 0 $ 17,482
- ----------------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $842,411 $183,657 $ 25,851 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $845,706 $669,692 $340,218 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 50,404 * * $ 0 * *
- ----------------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund $ 70,690 $ 40,223 * $ 0 $ 0 *
- ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $147,613 $ 75,507 $ 8,225 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Balanced Fund $ 74,634 $ 64,645 $ 27,056 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

*Not in operation during the period.

THE DISTRIBUTOR

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

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

For the fiscal years ended May 31, 1996, 1995 and 1994, the aggregate sales
charges payable to the Distributor with respect to the Investor Shares of the
Funds were as follows:

B-24
<PAGE>

AGGREGATE SALES
CHARGE PAYABLE TO AMOUNT RETAINED BY
FUND DISTRIBUTOR DISTRIBUTOR

1996 1995 1994 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Bond Fund $ 50,016 $ 61,948 $352,000 $ 143 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond
Fund $ 1,208 $ 1,495 $ 0 $ 6 $ 762 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 1,386 $ 8,271 $ 1,000 $ 14 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond
Fund $ 515 $ 0 $ 0 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Fund $ 1,204 $ 0 $ 6,000 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt
Bond Fund $ 12,005 $ 13,613 $ 61,000 $ 30 $2,133 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities
Fund $ 7,279 $ 4,006 * $ 0 $ 0 *
- ----------------------------------------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury
Securities Fund $ 2,641 $ 4,241 $ 3,000 $ 9 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage
Securities Fund $ 4,067 $ 1,541 * $ 50 $ 100 *
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Growth Fund $258,267 $373,314 $974,000 $ 243 $2,078 $1,000
- ----------------------------------------------------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 46,854 $135,566 $159,000 $ 61 $1,981 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Value Income Stock Fund $306,061 $406,633 $583,000 $3,104 $3,774 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 29,032 * * $ 85 * *
- ----------------------------------------------------------------------------------------------------------------------------------
International Equity Index Fund $ 19,058 $ 59,784 * $ 50 $1,620 *
- ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 91,344 $ 63,337 $ 24,000 $ 197 $ 858 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
Balanced Fund $ 16,540 $ 37,732 $ 31,000 $ 22 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

*Not in operation during the period.

For the fiscal years ended May 31, 1996 and 1995, the aggregate sales charges
payable to the Distributor with respect to the Flex Shares of the Funds were as
follows:

B-25
<PAGE>

FUND AGGREGATE SALES CHARGE AMOUNT RETAINED BY
PAYABLE TO DISTRIBUTOR DISTRIBUTOR
1996 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 153 $ 0
- -------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond Fund $ 1,008 $ 0
- -------------------------------------------------------------------------------
Short-Term Bond Fund $ 344 $ 0
- -------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund $ 2,782 $ 0
- -------------------------------------------------------------------------------
U.S. Government Securities Fund $ 1,067 $ 0
- -------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities
Fund $ 3,687 $ 0
- -------------------------------------------------------------------------------
Limited-Term Federal Mortgage
Securities Fund $ 1,442 $ 0
- -------------------------------------------------------------------------------
Capital Growth Fund $ 6,283 $ 0
- -------------------------------------------------------------------------------
Sunbelt Equity Fund $ 324 $ 0
- -------------------------------------------------------------------------------
Value Income Stock Fund $ 10,574 $ 0
- -------------------------------------------------------------------------------
International Equity Fund $ 60 $ 0
- -------------------------------------------------------------------------------
International Equity Index Fund $ 392 $ 0
- -------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 5,222 $ 0
- -------------------------------------------------------------------------------
Balanced Fund $ 713 $ 0
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

*Not in operation during the period.

INVESTOR SHARES AND FLEX SHARES DISTRIBUTION PLANS

The Distribution Agreement and the Investor Plan adopted by the Trust provide
that Investor Shares of the Fund will pay the Distributor fees of up to the
following respective levels: .20% of the average daily net assets of the Prime
Quality Money Market Fund; .17% of the average daily net assets of the U.S.
Government Securities Money Market Fund; .15% of the average daily net assets
of the Tax-Exempt Money Market Fund; .18% of the average daily net assets of
the Short-Term U.S. Treasury Securities Fund; .23% of the average daily net
assets of the Short-Term Bond Fund; .43% of the average daily net assets of the
Investment Grade Bond Fund; .43% of the average daily net assets of the
Investment Grade Tax-Exempt Bond Fund; .68% of the average daily net assets of
the Capital Growth Fund; .33% of the average daily net assets of the Value
Income Stock Fund; .43% of the average daily net assets of the Mid-Cap Equity
Fund; .43% of the average daily net assets of the Sunbelt Equity Fund; .28% of
the average daily net assets of the Balanced Fund; .18% of the average daily
net assets of the Florida Tax-Exempt Bond Fund; .18% of the average daily net
assets of the Georgia Tax-Exempt Bond Fund; .18% of the average daily net
assets of the Tennessee Tax-Exempt Bond Fund; .38% of the average daily net
assets of the U.S. Government Securities Fund; .38% of the average daily net
assets of the International Equity Index Fund; .33% of the average daily

B-26
<PAGE>

net assets of the International Equity Fund; and .23% of the average daily net
assets of the Limited-Term Federal Mortgage Securities Fund.

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

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

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

B-27
<PAGE>

shares of the Trust. All material amendments of the Plans will require
approval by a majority of the Trustees of the Trust and of the Qualified
Trustees.

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

For the fiscal years ended May 31, 1996, 1995, and 1994, the Funds paid the
following amounts pursuant to the Investor Plan:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
DISTRIBUTION FEES
AMOUNT PAID
--------------------------------------
FUND 1996 1995 1994
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Grade Bond Fund $ 78,963 $ 54,455 $102,671
- -------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund $ 5,001 $ 1,548 $ 1,256
- -------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund $ 6,021 $ 1,471 $ 765
- -------------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond Fund $ 1,266 $ 1,347 $ 277
- -------------------------------------------------------------------------------------
Short-Term Bond Fund $ 5,067 $ 2,141 $ 3,297
- -------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund $113,467 $107,645 $110,695
- -------------------------------------------------------------------------------------
U.S. Government Securities Fund $ 4,218 $ 386 *
- -------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund $ 8,499 $ 5,291 $ 9,246
- -------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund $ 2,360 $ 241 *
- -------------------------------------------------------------------------------------
Prime Quality Money Market Fund $273,316 $179,128 $207,428
- -------------------------------------------------------------------------------------
U.S. Government Securities Money Market Fund $ 44,107 $ 16,661 $ 43,328
- -------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $ 80,845 $ 44,182 $ 56,471
- -------------------------------------------------------------------------------------
Capital Growth Fund $912,685 $806,373 $847,998
- -------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 99,366 $ 49,826 $ 14,508
- -------------------------------------------------------------------------------------
Value Income Stock Fund $304,282 $217,152 $136,086
- -------------------------------------------------------------------------------------
International Equity Fund $ 0 * *
- -------------------------------------------------------------------------------------
International Equity Index Fund $ 369 $ 1,649 *
- -------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 51,485 $ 8,123 $ 2,150
- -------------------------------------------------------------------------------------

</TABLE>

B-28
<PAGE>

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
DISTRIBUTION FEES
AMOUNT PAID
--------------------------------------
FUND 1996 1995 1994
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>

Balanced Fund $ 10,808 $ 3,233 $ 1,220
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------

</TABLE>

*Not in operation during the period.

For the fiscal years ended May 31, 1996, the Funds paid the following amounts
pursuant to the Flex Plan:

*Not in operation during the period.

B-29
<PAGE>

TRUSTEES AND OFFICERS OF THE TRUST

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. Unless otherwise noted, 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, Bishop Street Funds, Boston 1784 Funds-Registered
Trademark-, CoreFunds, Inc., CrestFunds, Inc., CUFUND, The Expedition Funds,
FMB Funds, Inc., First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, Marquis
Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell Investment Trust,
The PBHG Funds, Inc., The Pillar Funds, Profit Funds Investment Trust,
Rembrandt Funds-Registered Trademark-, Santa Barbara Group of Mutual Funds,
Inc., 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
Funds, STI Classic Variable Trust and TIP Funds, each of which is an open-end
management investment company managed by SEI Fund Resources or its affiliates
and, except for Profit Funds Investment Trust, Rembrandt Funds-Registered
Trademark-, and Santa Barbara Group of Mutual Funds, Inc., are distributed by
SEI Investments Distribution Co.

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

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

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

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

B-30
<PAGE>

Harris Trust and Savings Bank and Chairman of the Board of Directors of The
Harris Trust Company of Arizona before January 1981.

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

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

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

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

CAROL ROONEY ( ) -

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

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

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

B-31
<PAGE>

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

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

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

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

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

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

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

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

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

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

</TABLE>

B-32
<PAGE>

Wilton Looney, $16,000 N/A N/A $16,000 for service on
Trustee two boards
- --------------------------------------------------------------------------------------------------------------
Champney A. McNair, $13,500 N/A N/A $13,500 for service on
Trustee two boards
- --------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, $13,500 N/A N/A $13,500 for service on
Trustee two boards
- --------------------------------------------------------------------------------------------------------------
T. Gordy Germany, $13,500 N/A N/A $13,500 for service on
Trustee two boards
- --------------------------------------------------------------------------------------------------------------
Dr. Bernard F. Sliger, $13,500 N/A N/A $13,500 for service on
Trustee two boards
- --------------------------------------------------------------------------------------------------------------
Jesse S. Hall, $13,500 N/A N/A $13,500 for service on
Trustee two boards
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------

</TABLE>

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.

CLASSES OF SHARES AND PERFORMANCE

The performance of the Trust's Investor Shares and Flex Shares will normally be
lower than for Trust Shares because Investor Shares and Flex Shares are subject
to distribution, service, and certain transfer agent fees not charged to Trust
Shares. Because of their differing distribution expense arrangements, the
performance of Flex Shares in comparison to Investor Shares will vary depending
upon the investor's investment time horizon.

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 comparisons may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.

B-33

<PAGE>

COMPUTATION OF YIELD

The current yield of the Money Market Funds will be calculated daily based upon
the seven days ending on the date of calculation ("base period"). The yield is
computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing shareholder account having a balance of one
share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing such net change by
the value of the account at the beginning of the same period to obtain the base
period return and multiplying the result by (365/7). Realized and unrealized
gains and losses are not included in the calculation of the yield. The
effective compound yield of the Funds is determined by computing the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula: Effective Yield = [Base Period Return + 1) 365/7] - 1. The
current and the effective yields reflect the reinvestment of net income earned
daily on portfolio assets.

For the 7-day period ended May 31, 1996, the Money Market Funds' current
effective and tax-equivalent yields were as follows:

- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
7-DAY 7-DAY
7-DAY TAX-EQUIVALENT TAX-
FUND CLASS 7-DAY YIELD EFFECTIVE YIELD EQUIVALENT
YIELD EFFECTIVE YIELD
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime Quality Money Investor 4.63% 4.74% N/A N/A
------------------------------------------------------------------------
Market Fund Trust 4.80% 4.92% N/A N/A

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

U.S. Government Investor 4.45% 4.55% N/A N/A
Securities Money ------------------------------------------------------------------------
Market Fund Trust 4.59% 4.70% N/A N/A
- -------------------------------------------------------------------------------------------------

Tax-Exempt Money Investor 3.03% 3.08% 5.02% 5.10%
------------------------------------------------------------------------
Market Fund Trust 3.15% 3.20% 5.22% 5.30%

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

</TABLE>

The yields of these Funds fluctuate, 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 a Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.

B-34
<PAGE>

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.

The Tax-Exempt Money Market and Tax-Exempt Bond Fund's "tax equivalent yield" is
calculated by determining the rate of return that would have to be achieved on a
fully taxable investment to produce the after-tax equivalent of the Fund's
yield, assuming certain tax brackets for a Shareholder. Tax-exempt yield is
calculated according to the same formula except that a = interest exempt from
federal income tax earned during the period. This tax-exempt yield is then
translated into tax-equivalent yield according to the following formula:

TAX-EQUIVALENT YIELD = ( E ) + t
---
1-P
E = tax-exempt yield
p = stated income tax rate
t = taxable yield

Tax equivalent yields assume the payment of federal income taxes at a rate of
39.6% and, for the Georgia Tax-Exempt Bond Fund, Georgia income taxes at a rate
of 6.0% and, for the Tennessee Tax-Exempt Bond Fund, Tennessee income taxes at a
rate of 6.0%.

For the 30-day period ended May 31, 1996, the Tax-Equivalent yield for the Trust
Shares were as follows: for the Investment Grade Tax-Exempt Bond Fund - 6.5%,
Georgia Tax-Exempt Bond Fund - 8.40%, Florida Tax-Exempt Bond Fund - 7.68% and
Tennessee Tax-Exempt Bond Fund - 8.62%.

For the 30-day period ended May 31, 1996, the Tax-Equivalent Yields for the
Investor Shares of the Tax-Exempt Funds were as follows: for the Investment
Grade Tax-Exempt Bond Fund - 5.68%, Georgia Tax-Exempt Bond Fund -7.78%, Florida
Tax-Exempt Bond Fund - 7.05% and Tennessee Tax-Exempt Bond Fund - 7.92%.

For the 30-day period ended May 31, 1996, the Tax-Equivalent Yields for the Flex
Shares of the Tax-Exempt Funds were as follows: for the Investment Grade
Tax-Exempt Bond Fund - 5.12%, Georgia Tax-Exempt Bond Fund - 7.11%, Florida
Tax-Exempt Bond Fund - 6.54% and Tennessee Tax-Exempt Bond Fund - 7.32%.

The Bond, Short-Term U.S. Treasury, Tax-Exempt Bond and Equity Funds may
advertise a 30-day yield. In particular, yield will be calculated according to
the following formula:

6
Yield = (2 (a-b/cd + 1) - 1) where a = dividends and interest earned during the
period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of

B-35
<PAGE>

shares outstanding during the period that were entitled to receive dividends;
and d = the maximum offering price per share on the last day of the period.

For the 30-day period ended May 31, 1996, yields on the Funds other than the
Money Market Funds were as follows:

B-36
<PAGE>

Investment Grade Bond Fund Investor Class 5.47%
-----------------------------
Trust Class 6.09%
-----------------------------
Flex Shares 5.23%
- -------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund Investor Class 5.21%
-----------------------------
Trust Class 5.42%
-----------------------------
Flex Shares 5.02%
- -------------------------------------------------------------------------------
Short-Term Bond Fund Investor Class 5.42%
-----------------------------
Trust Class 5.73%
-----------------------------
Flex Shares 5.18%
- -------------------------------------------------------------------------------
U.S. Government Securities Fund Investor Class 5.59%
-----------------------------
Trust Class 6.14%
-----------------------------
Flex Shares 5.25%
- -------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund Investor Class 5.45%
-----------------------------
Trust Class 5.78%
-----------------------------
Flex Shares 5.24%
- -------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund Investor Class 4.26%
-----------------------------
Trust Class 4.64%
-----------------------------
Flex Shares 3.95%
- -------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund Investor Class 4.23%
-----------------------------
Trust Class 4.57%
-----------------------------
Flex Shares 3.87%
- -------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond Fund Investor Class 4.31%
-----------------------------
Trust Class 4.69%
-----------------------------
Flex Shares 3.98%
- -------------------------------------------------------------------------------
Capital Growth Fund Investor Class 0%
-----------------------------
Trust Class .53%
-----------------------------
Flex Shares 0%
- -------------------------------------------------------------------------------

B-37
<PAGE>

*Not in operation during the period.

CALCULATION OF TOTAL RETURN

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

From time to time, the Trust may include the names of clients of the Advisors in
advertisements and/or sales literature for the Trust. The SEI Funds Evaluation
database tracks the total return of numerous tax-exempt pension accounts. The
range of returns in these accounts determines the percentile rankings. SunTrust
Bank's investment advisory affiliates, STI Capital Management, N.A. and Trusco
Capital Management, have been in the

B-38
<PAGE>

top 1% of the SEI Funds Evaluation database for equity managers over the past
ten years. SEI's database includes research data on over 1,000 investment
managers responsible for over $450 billion in assets.

Based on the foregoing, the average annual total returns for the Funds from
inception through May 31, 1996 and for the one year period ended May 31, 1996
were as follows:

- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
------------------------------
FUND CLASS ONE YEAR SINCE
INCEPTION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Prime Quality Money Market Fund Investor(1) 5.08% 3.79%
-------------------------------------------------------------
Trust(1) 5.25% 3.96%
- ----------------------------------------------------------------------------------------------------
U.S. Government Securities Money Investor(1) 4.99% 3.70%
-------------------------------------------------------------
Market Fund Trust(1) 5.14% 3.84%
- ----------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund Investor(1) 3.16% 2.53%
-------------------------------------------------------------
Trust(1) 3.28% 2.65%
- ----------------------------------------------------------------------------------------------------
Investment Grade Bond Fund Investor--Offering Price(2) (.38)% 4.81%
-------------------------------------------------------------
Investor--Net Asset Value(2) 3.50% 5.82%
-------------------------------------------------------------
Trust(3) 4.02% 6.07%
-------------------------------------------------------------
Flex--Offering Price(25) N/A .51%
-------------------------------------------------------------
Flex--Net Asset Value(25) N/A 2.50%
- ----------------------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Investor--Offering Price(4) 1.45% 7.05%
Fund
-------------------------------------------------------------
Investor--Net Asset Value(4) 5.40% 8.08%
-------------------------------------------------------------
Trust(5) 5.82% 5.63%
-------------------------------------------------------------
Flex--Offering Price(26) N/A 2.95%
-------------------------------------------------------------
Flex--Net Asset Value(26) N/A 4.91%
- ----------------------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Investor--Offering Price(6) 3.58% 3.70%
-------------------------------------------------------------
Fund Investor--Net Asset Value(6) 4.52% 4.03%
-------------------------------------------------------------
Trust(7) 4.73% 4.19%
-------------------------------------------------------------
Flex--Offering Price(27) N/A 1.64%
-------------------------------------------------------------
Flex--Net Asset Value(27) N/A 3.74%
- ----------------------------------------------------------------------------------------------------

B-39
<PAGE>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
------------------------------
FUND CLASS ONE YEAR SINCE
INCEPTION
- ----------------------------------------------------------------------------------------------------

Short-Term Bond Fund Investor--Offering Price(8) 2.19% 3.62%
-------------------------------------------------------------
Investor--Net Asset Value(8) 4.23% 4.30%
-------------------------------------------------------------
Trust(7) 4.45% 4.66%
-------------------------------------------------------------
Flex--Offering Price(28) N/A 1.65%
-------------------------------------------------------------
Flex-Net Asset Value(28) N/A 3.73%
- ----------------------------------------------------------------------------------------------------
U.S. Government Securities Fund Investor--Offering Price(20) (1.38)% 3.52%
-------------------------------------------------------------
Investor--Net Asset Value(20) 2.47% 5.54%
-------------------------------------------------------------
Trust(21) 2.77% 6.21%
-------------------------------------------------------------
Flex-Offering Price(25) N/A (.54)%
-------------------------------------------------------------
Flex--Net Asset Value(25) N/A 1.42%
- ----------------------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Investor--Offering Price(22) 1.97% 4.99%
-------------------------------------------------------------
Fund Investor--Net Asset Value(22) 4.59% 6.45%
-------------------------------------------------------------
Trust(23) 4.84% 6.21%
-------------------------------------------------------------
Flex--Offering Price(25) N/A 2.09%
-------------------------------------------------------------
Flex--Net Asset Value(25) N/A 4.10%
- ----------------------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund Investor--Offering Price(9) (.16)% 3.13%
-------------------------------------------------------------
Investor--Net Asset Value(9) 3.76% 4.82%
-------------------------------------------------------------
Trust(10) 3.87% 5.01%
-------------------------------------------------------------
Flex--Offering Price(26) N/A 1.29%
-------------------------------------------------------------
Flex--Net Asset Value(26) N/A 3.27%
- ----------------------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund Investor--Offering Price(11) (.24)% .81%
-------------------------------------------------------------
Investor--Net Asset Value(11) 3.69% 2.46%
-------------------------------------------------------------
Trust(9) 3.89% 2.57%
-------------------------------------------------------------
Flex--Offering Price(31) N/A .26%
-------------------------------------------------------------
Flex--Net Asset Value(31) N/A 2.26%
- ----------------------------------------------------------------------------------------------------

B-40
<PAGE>

- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
------------------------------
FUND CLASS ONE YEAR SINCE
INCEPTION
- ----------------------------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond Fund Investor--Offering Price(11) (.58)% .30%
-------------------------------------------------------------
Investor--Net Asset Value(11) 3.28% 1.94%
-------------------------------------------------------------
Trust(12) 3.43% 1.94%
-------------------------------------------------------------
Flex--Offering Price(29) N/A .00%
-------------------------------------------------------------
Flex--Net Asset Value(29) N/A 1.98%
- ----------------------------------------------------------------------------------------------------
Capital Growth Fund Investor--Offering Price(4) 23.41% 12.87%
-------------------------------------------------------------
Investor--Net Asset Value(4) 28.18% 13.96%
-------------------------------------------------------------
Trust(13) 28.97% 13.86%
-------------------------------------------------------------
Flex--Offering Price(26) N/A 25.55%
-------------------------------------------------------------
Flex--Net Asset Value(26) N/A 27.56%
- ----------------------------------------------------------------------------------------------------
Value Income Stock Fund Investor--Offering Price(14) 22.62% 17.08%
-------------------------------------------------------------
Investor--Net Asset Value(14) 27.39% 18.46%
-------------------------------------------------------------
Trust(15) 27.91% 17.89%
-------------------------------------------------------------
Flex--Offering Price(26) N/A 24.52%
-------------------------------------------------------------
Flex--Net Asset Value(26) N/A 26.60%
- ----------------------------------------------------------------------------------------------------
Mid-Cap Equity Fund Investor--Offering Price(16) 20.23% 12.84%
-------------------------------------------------------------
Investor--Net Asset Value(16) 24.93% 14.71%
-------------------------------------------------------------
Trust(17) 25.54% 15.35%
-------------------------------------------------------------
Flex--Offering Price(29) N/A 21.00%
-------------------------------------------------------------
Flex--Net Asset Value(29) N/A 23.03%
- ----------------------------------------------------------------------------------------------------
Balanced Fund Investor--Offering Price(18) 12.51% 7.60%
-------------------------------------------------------------
Investor--Net Asset Value(18) 16.88% 9.32%
-------------------------------------------------------------
Trust(19) 17.26% 9.80%
-------------------------------------------------------------
Flex--Offering Price(30) N/A 13.58%
-------------------------------------------------------------
Flex--Net Asset Value(30) N/A 15.67%
- ----------------------------------------------------------------------------------------------------

B-41
<PAGE>

</TABLE>

<S><C>
1 Commenced operations 6/8/92 11 Commenced operations 1/19/94 21 Commenced operations 7/31/94
2 Commenced operations 6/11/92 12 Commenced operations 1/27/94 22 Commenced operations 7/17/94
3 Commenced operations 7/16/92 13 Commenced operations 7/1/92 23 Commenced operations 6/7/94
4 Commenced operations 6/9/92 14 Commenced operations 2/17/93 24 Commenced operations 6/6/94
5 Commenced operations 10/21/93 15 Commenced operations 2/12/93 25 Commenced operations 6/2/95
6 Commenced operations 3/18/93 16 Commenced operations 2/1/94 26 Commenced operations 6/2/95
7 Commenced operations 3/15/93 17 Commenced operations 2/2/94 27 Commenced operations 6/23/95
8 Commenced operations 3/22/93 18 Commenced operations 1/4/94 28 Commenced operations 6/21/95
9 Commenced operations 1/18/94 19 Commenced operations 1/3/94 29 Commenced operations 6/6/95
10 Commenced operations 1/25/94 20 Commenced operations 6/9/94 30 Commenced operations 6/15/95
31 Commenced operations 6/7/95
32 Commenced operations 1/2/96
33 Commenced operations 12/1/95
34 Commenced operations 6/8/95

</TABLE>

*Not in operation during period.

Flex Shares of the Trust commenced operations after May 31, 1995.

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 the following holidays are observed: New Year's Day, MARTIN
LUTHER KING DAY, Presidents'

B-42
<PAGE>

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 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.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of the Money Market 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.

B-43
<PAGE>

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 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.

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

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

TAXES

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.

The funds will make annual reports to Shareholders of the federal income tax
status of all distributions.

B-44
<PAGE>

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) a Fund
must derive less than 30% of its gross income each taxable year from the sale or
other disposition of stocks or securities held for less than three months; (iii)
at the close of each quarter of 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 to 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 (iv) 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 issuers
engaged in same or similar businesses if the Fund owns at least 20% of the
voting power of such issuers.

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

As noted in the Prospectus, the Tax-Exempt Money Market Fund, the Investment
Grade Tax-Exempt Bond Fund, and the State Tax-Exempt Bond Funds intend to pay
exempt-interest dividends. Exempt-interest dividends are excludable from a
Shareholder's gross income for regular federal income tax purposes, but may
nevertheless be subject to the alternative minimum tax (the "Alternative Minimum
Tax") imposed by Section 55 of the Code or the environmental tax (the
"Environmental Tax") imposed by Section 59A of the Code. The Alternative
Minimum Tax is imposed at the rate of 26% (with a maximum rate of 28%) in the
case of non-corporate taxpayers and at the rate of 20% in the case of corporate
taxpayers, to the extent it exceeds the taxpayer's regular tax liability. The
Environmental Tax is imposed at the rate of 0.12% and applies only to corporate
taxpayers. The Alternative Minimum Tax and the Environmental Tax may be
imposed in two circumstances. First, exempt-interest dividends derived from
certain "private activity bonds" issued after August 7, 1986, will generally be
an item of tax preference (and therefore potentially subject to the Alternative

B-45
<PAGE>

Minimum Tax and the Environmental Tax) for both corporate and non-corporate
taxpayers. Second, in the case of exempt-interest dividends received by
corporate Shareholders, all exempt-interest dividends, regardless of when the
bonds from which they are derived were issued or whether they are derived from
private activity bonds, will be included in the corporation's "adjusted current
earnings," as defined in Section 56(g) of the Code, in calculating the
corporation's alternative minimum taxable income for purposes of determining the
Alternative Minimum Tax and the Environmental Tax.

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 twelve
months and otherwise will be generally treated as a short-term capital gain or
loss. Any loss recognized by a Shareholder upon the sale or redemption of
shares of a tax-free Fund held for six months or less, however, will be
disallowed to the extent of any exempt-interest dividends received by the
Shareholder with respect to such shares. If shares on which a net capital gain
distribution has been received are subsequently sold or redeemed and such shares
have been held for six months or less, any loss recognized will be treated as a
long-term capital loss to the extent of the long-term capital gain distribution.

Interest on indebtedness incurred by Shareholders to purchase or carry shares of
a tax-free Fund will not be deductible for federal income tax purposes to the
extent that the Fund distributes exempt interest dividends during the taxable
year. The deduction otherwise allowable to property and casualty insurance
companies for "losses incurred" will be reduced by an amount equal to a portion
of exempt-interest dividends received or accrued during any taxable year.
Certain foreign corporations engaged in a trade or business in the United States
will be subject to a "branch profits tax" on their "dividend equivalent amount"
for the taxable year, which will include exempt-interest dividends. Certain
Subchapter S corporations may also be subject to taxes on their "passive
investment income," which could include exempt-interest dividends. Up to 85%
(up to 50% for years prior to 1994) of the Social Security benefits or railroad
retirement benefits received by an individual during any taxable year will be
included in the gross income of such individual if the individual's "modified
adjusted gross income" (which includes exempt-interest dividends) plus one-half
of the Social Security benefits or railroad retirement benefits received by such
individual during that taxable year exceeds the base amount described in Section
86 of the Code.

A tax-free Fund may not be an appropriate investment for persons (including
corporations and other business entities) who are "substantial users" (or
persons related to such users) of facilities financed by industrial development
or private activity bonds. A "substantial user" is defined generally to include
certain persons who regularly use a facility in their trade or business. Such
entities or persons should consult their tax advisors before purchasing shares
of a tax-free Fund.

B-46
<PAGE>

Issuers of bonds purchased by a tax-free fund (or the beneficiary of such bonds)
may have made certain representations or covenants in connection with the
issuance of such bonds to satisfy certain requirements of the Code that must be
satisfied subsequent to the issuance of such bonds. Investors should be aware
that exempt-interest dividends derived from such bonds may become subject to
federal income taxation retroactively to the date thereof if such
representations are determined to have been inaccurate or if the issuer of such
bonds (or the beneficiary of such bonds) fails to comply with such covenants.

STATE TAXES

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

FOREIGN TAXES

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

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

The International Equity Index and International Equity Funds' transactions in
foreign currencies and forward foreign currency contracts will be subject to
special provisions of the Code that, among other things, may affect the
character of gains and losses realized by Funds (I.E., may effect whether gains
or losses are ordinary or capital), accelerate recognition of income to the fund
and defer Fund losses. These rules could therefore affect the character,

B-47
<PAGE>

amount and timing of distributions to Shareholders. These provisions also may
require the Funds to mark-to-market certain types of the positions in its
portfolio (I.E., treat them as if they were closed out) which may cause the
Funds to recognize income without receiving cash with which to make
distributions in amounts necessary to satisfy the 90% and 98% distribution
requirements for avoiding income and excise taxes. Each Fund will monitor its
transactions, will make the appropriate tax elections, and will make the
appropriate entries in the books and records when it acquires any foreign
currency or forward foreign currency contract in order to mitigate the effect of
these rules and prevent disqualification of the Fund as a regulated investment
company and minimize the imposition of income and excise taxes.

FUND TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, an 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
an 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, an Advisor
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.

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

B-48
<PAGE>

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.

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.

B-49

<PAGE>

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

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

For the fiscal year ended May 31, 1996, the Funds paid the following brokerage
commissions .50
with respect to portfolio transactions:

B-50
<PAGE>

- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ AMOUNT TOTAL $
OF BROKERED TOTAL $ AMOUNT OF TOTAL $ AMOUNT
TOTAL $ AMOUNT TRANSACTIONS AMOUNT OF BROKERAGE TOTAL $ OF BROKERAGE
OF THROUGH BROKERAGE COMMISSIONS AMOUNT OF COMMISSIONS
BROKERED AFFILIATES FOR COMMISSIONS PAID TO BROKERAGE PAID FOR
TRANSACTIONS FYE 5/31/96 PAID IN FYE AFFILIATES IN TRANSACTIONS RESEARCH
PORTFOLIO FOR FYE 5/31/96 5/31/96 FYE 5/31/96 FOR RESEARCH
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment
Grade Bond
Fund $3,917,308,841 $1,597,915,449 $ 0 $ 18,536 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Investment
Grade Tax-
Exempt Bond
Fund $2,432,012,487 $ 604,899,058 $ 0 $ 3,392 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Capital Growth
Fund $1,392,191,063 $1,426,392,445 $3,399,393 $ 34,827 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Value Income
Stock Fund $1,773,007,196 $1,662,823,629 $4,325,977 $ 37,379 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Short-Term
Bond Fund $ 394,165,379 $ 0 $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Short-Term U.S.
Treasury
Securities Fund $ 47,038,183 $ 0 $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Sunbelt Equity
Fund $ 818,595,159 $ 436,071,109 $ 904,698 $ 5,202 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Balanced Fund $ 379,763,192 $ 207,714,650 $ 169,222 $ 4,280 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Mid-Cap Equity
Fund $ 434,829,138 $ 283,836,941 $ 528,220 $ 18,224 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Florida Tax-
Exempt Bond
Fund $ 147,449,991 $ 38,144,634 $ 0 $ 200 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Georgia Tax-
Exempt Bond
Fund $ 85,645,251 $ 9,916,819 $ 0 $ 135 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Tennessee Tax-
Exempt Bond
Fund $ 17,455,638 $ 5,454,080 $ 0 $ 69 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
U.S.
Government
Securities Fund $ 51,183,076 $ 0 $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Limited-Term
Federal
Mortgage
Securities Fund $ 253,894,488 $ 97,256,140 $ 0 $ 73 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
International
Equity Fund $ 456,530,733 $ 27,781,590 $1,532,834 $ 71 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------

B-51
<PAGE>

</TABLE>

For the fiscal years ended May 31, 1995 and 1994, the Funds paid the following
brokerage commissions with respect to portfolio transactions:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
TOTAL $ AMOUNT OF TOTAL $ AMOUNT OF
BROKERAGE BROKERED COMMISSIONS
COMMISSIONS PAID PAID TO AFFILIATES
FUND ---------------------------------------------------------------
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Growth Fund $ 2,641,999 $2,636,443 $ 46,411 $ 212,766
- ----------------------------------------------------------------------------------------
Sunbelt Equity Fund $ 654,499 $ 173,919 $ 4,802 $ 7,229
- ----------------------------------------------------------------------------------------
Value Income Stock
Fund $ 3,542,773 $2,235,841 $ 17,510 $ 162,405
- ----------------------------------------------------------------------------------------
International Equity
Index Fund $ 176,784 * $ 0 *
- ----------------------------------------------------------------------------------------
Mid-Cap Equity Fund $ 191,298 $ 58,527 $ 11,418 $ 5,267
- ----------------------------------------------------------------------------------------
International Equity
Fund * * * *
- ----------------------------------------------------------------------------------------
Balanced Fund $ 140,109 $ 73,119 $ 4,063 $ 18,103
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------

</TABLE>

*Not in operation during the period.

For the fiscal years ended May 31, 1996 and 1995, the portfolio turnover rate
for each of the non-money market Funds was as follows:

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

TURNOVER RATE
-----------------------

FUND 1996 1995
- ----------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------
Investment Grade Bond Fund 184% 238%
- ----------------------------------------------------------------------------------------
Investment Grade Tax-Exempt Bond Fund 514% 592%
- ----------------------------------------------------------------------------------------
Short-Term U.S. Treasury Securities Fund 94% 88%
- ----------------------------------------------------------------------------------------
Short-Term Bond Fund 163% 201%
- ----------------------------------------------------------------------------------------

B-52
<PAGE>

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

TURNOVER RATE
-----------------------
<S> <C> <C>
FUND 1996 1995
- ----------------------------------------------------------------------------------------
U.S. Government Securities Fund 83% 30%
- ----------------------------------------------------------------------------------------
Limited-Term Federal Mortgage Securities Fund 83% 68%
- ----------------------------------------------------------------------------------------
Florida Tax-Exempt Bond Fund 63% 105%
- ----------------------------------------------------------------------------------------
Georgia Tax-Exempt Bond Fund 60% 25%
- ----------------------------------------------------------------------------------------
Tennessee Tax-Exempt Bond Fund 41% 28%
- ----------------------------------------------------------------------------------------
Capital Growth Fund 156% 128%
- ----------------------------------------------------------------------------------------
Value Income Stock Fund 134% 126%
- ----------------------------------------------------------------------------------------
Mid-Cap Equity Fund 116% 66%
- ----------------------------------------------------------------------------------------
Balanced Fund 155% 157%
- ----------------------------------------------------------------------------------------
Sunbelt Equity Fund 106% 80%
- ----------------------------------------------------------------------------------------
International Equity Fund 113% *
- ----------------------------------------------------------------------------------------
International Equity Index Fund 30% 10%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------

</TABLE>

*Not in operation during the period.

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

B-53
<PAGE>

on behalf of the Trust or the Trustees, and because the Declaration of Trust
provides for indemnification out of the Trust property for any Shareholder held
personally liable for the obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

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

5% AND 25% SHAREHOLDERS

As of July 5, 1996, 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.

TRUST SHARES
- ------------

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Prime Obligation Money Market Fund SunTrust Bank, Atlanta 1,017,340,735.9800 96.78%
P.O. Box 105504
Atlanta, GA 30348

US Government Securities Money Market Fund SunTrust Bank, Atlanta 320,058,711.3200 98.23%
P.O. Box 105504
Atlanta, GA 30348

Tax Exempt Money Market Fund SunTrust Bank, Atlanta 273,617,174.8600 100.00%
P.O. Box 105504
Atlanta, GA 30348

Investment Grade Bond Fund Trustman
Mail Code 3144 48,083,117.4740 80.69%
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman
Mail Code 3144 3,440,058.7660 5.77%
P.O. Box 105870
Atlanta, GA 30348-5870

</TABLE>
B-54

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Investment Grade Bond Fund Trustman 48,083,117.4740 80.69%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 3,440,058.7660 5.77%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 8,067,193.7390 13.54%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Investment Grade Tax Exempt Bond Trustman 2,854,065.5280 26.61%
Fund Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 2,571,660.2110 23.98%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 5,300,111.4770 49.41%
Mail Code 3144
P.O. Box 105504
Atlanta, GA 30348

Capital Growth Fund Trustman 51,607,779.7980 78.44%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 11,363,691.9550 17.27%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Value Income Stock Fund Trustman 70,173,646.4320 74.21%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 18,135,163.4630 19.18%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Short-Term U.S. Treasury Trustman 429,216.7160 43.59%
Securities Fund Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 257,751.4080 26.18%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 297,590.5360 30.23%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Short-Term Bond Fund Trustman 5,836,666.2750 63.15%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,004,117.0210 10.86%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

B-55
<PAGE>
<CAPTION>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Trustman 2,401,162.8160 25.98%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Sunbelt Equity Fund Trustman 20,649,993.7390 70.69%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,582,327.4770 5.42%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 6,977,764.6800 23.89%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Mid-Cap Equity Fund Trustman 12,293,386.9360 61.85%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 6,088,060.0450 30.63%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,495,048.9880 7.52%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Balanced Fund Trustman 9,475,264.5430 98.03%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Florida Tax-Exempt Bond Fund Trustman 403,555.6470 13.50%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 790,165.4270 26.43%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,796,356.2170 60.08%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Georgia Tax-Exempt Bond Fund Trustman 1,187,392.0830 49.37%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 653,344.7550 27.17%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

B-56
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Trustman 564,318.9730 23.46%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Tennessee Tax-Exempt Bond Fund Trustman 90,545.0710 46.63%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 21,867.1410 11.26%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 81,749.3740 42.10%
Mail Stop 3144
P.O. Box 105870
Atlanta, GA 30348-5870

International Equity Index Fund Trustman 5,851,225.2770 70.46%
Mail Stop 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 578,664.7100 6.97%
Mail Stop 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,874,150.7710 22.57%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

International Equity Fund Trustman 12,470,861.1530 66.75%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 5,570,530.5350 29.82%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

U.S. Government Securities Fund Trustman 396,590.0730 38.16%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 445,930.0890 42.91%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 196,765.0530 18.93%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Limited Term Federal Mortgage Trustman 5,100,466.6770 69.67%
Securities Fund Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

B-57
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Trustman 471,486.3110 6.44%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,749,245.0220 23.89%
Mail Code 3144
P.O. Box 105870
Atlanta, GA 30348-5870

INVESTOR SHARES

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Prime Quality Money Market Fund BHC Securities Inc 136,822,323.1200 62.23%
Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square
11th Floor
Philadelphia, PA 19103-7042

U.S. Government Securities BHC Securities Inc 16,793,888.1900 28.56%
Money Market Fund Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square
11th Floor
Philadelphia, PA 19103-7042

Tax Exempt Money Market Fund BHC Securities Inc 48,161,150.5900 50.25%
Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square
11th Floor
Philadelphia, PA 19103-7042

Rock-Tenn Company 8,002,157.2300 8.39%
P.O. Box 4098
Chattanooga, TN 30091-4098

Investment Grade Bond Fund BHC Securities Inc. 660,890.3710 18.32%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Investment Grade Tax-Exempt BHC Securities Inc. 466,047.6580 13.81%
Bond Fund Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Capital Growth Fund BHC Securities Inc. 1,703,780.4660 13.28%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

B-58
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Value Income Stock Fund BHC Securities Inc. 2,258,542.8990 22.71%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Short-Term U.S. Treasury BHC Securities Inc. 71,826.3790 16.78%
Securities Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Clarence A. Rittenhouse 57,816.3280 13.51%
Margaret S. Rittenhouse JT WROS
700 Golden Beach Blvd #126
Venice, FL 34285-3311

International Investment 44,811.0180 10.47%
Conference Inc
9100 South Dadeland Blvd.
Suite 702
Miami, FL 33156-7815

Georgia Academy for Children 39,274.4700 9.18%
and Youth Prof
260 Peachtree Street
Suite 800
Atlanta, GA 30303-1237

Cal Sadler & Ronda Sadler JTTEN 27,155.9580 6.35%
P.O. Box 770482
Winter Garden, FL 34777-0482

Short-Term Bond Fund SunTrust Bank, Atlanta. Cust for 40,000.0000 14.59%
Rollover IRA of Dewey L. Haggard
549 Hollydale Court NW
Atlanta, GA 30342-3633

Atlanta Convention & Visitors 25,237.4270 9.21%
Bureau
233 Peachtree Street NE
Suite 2000
Atlanta, GA 30303-1508

Betty H. Anderson 13,901.6960 5.07%
207 Suburban Drive
Brunswick, GA 31520-2920

BHC Securities Inc. 53,504.9300 19.52%
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Rex Packaging Inc 14,230.5460 5.19%
Attn: Tom Wilson
P.O. Box 18247
Jacksonville, FL 32229-0247

Sunbelt Equity Fund BHC Securities Inc. 507,393.6580 24.41%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

B-59
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Mid-Cap Equity Fund Anthony R. Gray 76,591.8150 5.44%
460 Virginia Drive
Winter Park, FL 32789-5805

BHC Securities Inc. 485,406.6920 34.46%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

BHC Securities Inc. 86,221.8130 20.42%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Florida Tax-Exempt Bond Fund Philip O. Deputy 25,597.6670 6.39%
Antoinette M. Grasselli JTWROS
12534 S Lake Mary Jane Road
Orlando, FL 32832-6405

Mildred Meinhart Rast 23,898.860 5.96%
1303 South 8th Street
Leesburg, FL 34748-6822

BHC Securities Inc. 101,675.0800 25.37%
Trad House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Georgia Tax-Exempt Bond Fund Patrick J. Doran & 27,962.0110 7.81%
Norma R. Doran JTTEN
2024 Fisher Trail NE
Atlanta, GA 30345-3429

BHC Securities Inc. 128,066.4710 35.77%
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Tennessee Tax-Exempt Bond Fund Grace M. Bryan 18,894.1970 11.65%
P.O. Box 176
St. Joseph, TN 38481-0176

Ralph Laine 13,213.5310 8.15%
2823 Lumar Lane
Nashville, TN 37214-1834

Claude M. Pitman & 10,742.8000 6.62%
Mildred Pitman JTTEN
2730 New Lake Road
Spring City, TN 37381-5478

BHC Securities, Inc. 69,526.8140 42.87%
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

B-60
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
International Equity Index Fund BHC Securities Inc. 207,023.5460 40.22%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

International Equity Fund Anthony R. Gray 28,449.8200 9.39%
460 Virginia Drive
Winter Park, FL 32789-5805

BHC Securities Inc. 159,855.1590 52.78%
Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

U.S. Government Securities Fund BHC Securities, Inc. 191,709.4610 78.92%
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Limited Term Federal Mortgage BHC Securities Inc. 178,232.5950 70.48%
Securities Fund Trade House Account
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

FLEX SHARES

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Investment Grade Bond Fund Jesse Palmer TTEE 24,963.9380 5.43%
The First National Bank
P.O. Box 647
Waynesboro, GA 30830

Investment Grade Tax-Exempt Donald D. Lorberbaum 33,237.3700 6.65%
Bond Fund 165 E. 72nd Street
Apt. 10G
New York, NY 10021

Short-Term U.S. Treasury Gene Lotti 20,101.7610 8.12%
Securities Fund Stella Lotti Jt WROS
2648 Van Buren Street
Hollywood, FL 33020-4818

Stuart's Sales & Service Inc. 33,367.3190 13.48%
401-K Profit Sharing Plan
3810 Hollywood Boulevard
Hollywood, FL 33021-6730

BHC Securities Inc. 20,952.1260 8.47%
FAO 21618707
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

B-61
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
BHC Securities Inc. 20,566.2080 8.31%
FAO 21523219
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

BHC Securities Inc. 19,478.3390 7.87%
FAO 21627702
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Short-Term Bond Fund Dorothy S. McAlpin, Trustee U/A 5,026.5160 5.12%
of William J. McAlpin
Dtd 09-16-89
382 Pineland Road NW
Atlanta, GA 30342-4021

Rex Miller TTEE 33,590.0600 34.21%
Nale Inc. 401(K) Profit Sharing
Plan
P.O. Box 2410
Kennesaw, GA 30144-9106

BHC Securities Inc. 6,914.7090 7.04%
FAO 21305136
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

BHC Securities Inc. 6,364.0270 6.48%
FAO 21707586
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

BHC Securities Inc. 5,255.5410 5.35%
FAO 21421126
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Sunbelt Equity Fund Rex Miller TTEE 19,124.8750 9.93%
Nale Inc. 401(K) Profit Sharing
Plan
P.O. Box 2410
Kennesaw, GA 30144-9106

Balanced Fund BHC Securities Inc. 14,406.4070 5.31%
FAO 21616586
Attn: Mutual Funds
One Commerce Square
2005 Market Square
Philadelphia, PA 19103-7042

Braxton Greer TTEE 15,150.7640 5.59%
Banner Ford Inc. Cash or
Deferred
Retirement Plan
1665 Scott Boulevard
Decatur, GA 30033

B-62
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
Rex Miller TTEE 19,539.3200 7.21%
Nale Inc. 401(K) Profit Sharing
Plan
P.O. Box 2410
Kennesaw, GA 30144

Florida Tax-Exempt Bond Fund H. Lorene Kleinlein TTE 28,183.2200 10.53%
H. Lorene Kleinlein Trust
9519 Sun Point Drive
Boynton Beach, FL 33437-3343

Anthony Mason 20,515.8220 7.66%
1525 Lands End Road
Manalapan, FL 33462-4740

BHC Securities Inc. 15,795.8090 5.90%
FAO 21815996
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Georgia Tax-Exempt Bond Fund Yasmin N. Dharamsi 33,552.6820 7.60%
1255 Vineyard Drive
Conyers, GA 30208-2467

Tennessee Tax-Exempt Bond Fund SunTrust Bank Nashville NA 17,638.4770 8.21%
Collateral Account
FO Leslie Cappama
3606 Hamilton Church
Antioch, TN 37013-1417

Allen Zang 10,981.5600 5.11%
Nancy Zang JT WROS
108 Savoy Circle
Nashville, TN 37205-5013

BHC Securities Inc. 21,381.3170 9.95%
FAO 21610240
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

BHC Securities Inc. 41,152.2630 19.15%
FAO 21627721
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

International Equity Index Fund Braxton Greer TTEE 6,159.4530 7.36%
Banner Ford Inc. Cash or
Deferred
Retirement Plan
1665 Scott Boulevard
Decatur, GA 30033-5604

BHC Securities Inc. 4,248.7980 5.08%
FAO 21810258
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

B-63
<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF FUND
---- ---------------- ---------------- ---------
<S> <C> <C> <C>
International Equity Fund BHC Securities Inc. 9,425.0710 11.24%
FAO 21525567
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

U.S. Government Securities Fund Jesse Palmer TTEE 25,220.9870 8.81%
The First National Bank
P.O. Box 647
Waynesboro, GA 30830-0647

Ralph L. Struever 14,519.5660 5.07%
5350 Woodland Lakes Drive
Palm Beach Gardens, FL 33418

BHC Securities Inc. 19,933.7090 6.98%
FAO 21531479
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Limited-Term Federal Mortgage Viola T. High 10,319.2840 7.61%
Security Fund Richard T. High TEN ENT
254 British Woods Drive
Nashville, TN 37217-3339

BHC Securities Inc. 9,961.4900 7.35%
FAO 21838525
Attn: Mutual Funds
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
</TABLE>

EXPERTS

The financial statements as of May 31, 1996 have been audited by Arthur Andersen
LLP, Independent Public Accountants, as indicated in their report dated July 12,
1996 with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.

B-64
<PAGE>

<PAGE>

STI CLASSIC FUNDS
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 20

Item 24. Financial Statements and Exhibits:

Financial Statements

(a) Part A - FINANCIAL HIGHLIGHTS
Part B - To be filed by amendment.

(b) Additional Exhibits
(1) Declaration of Trust--as originally filed with Registrant's
Registration Statement on Form N-1A filed February 12, 1992 and
incorporated by reference to Post-Effective Amendment No. 15
filed July 31, 1996.
(2) By-Laws--as originally filed with Registrant's Pre-Effective
Amendment No. 1 filed April 23, 1992 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(3) Not applicable.
(4) Not applicable.
(5)(c) Revised Investment Advisory Agreement with Trusco Capital
Management--as originally filed with Registrant's Post-Effective
Amendment No. 5 filed August 2, 1993 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(5)(d) Investment Advisory Agreement with American National Bank and
Trust Company--as originally filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and
incorporated by reference to Post-Effective Amendment No. 15
filed July 31, 1996.
(5)(e) Investment Advisory Agreement with Trust Company Bank--as
originally filed with Registrant's Post-Effective Amendment No. 6
filed October 22, 1993 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(6) Distribution Agreement incorporated by reference to
Post-Effective Amendment No. 16 filed September 10, 1996.
(7) Not applicable.
(8)(a) Custodian Agreement with Trust Company Bank dated February 1,
1994--as originally filed with Registrant's Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(8)(b) Custodian Agreement with the Bank of California incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(8)(c) Transfer Agent Agreement with Federated Services Company dated
May 14, 1994--as originally filed with Post-Effective Amendment
No. 9 filed September 22, 1994 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(9)(a) Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 as originally filed with
Post-Effective Amendment No. 12 filed August 17, 1995 and
incorporated by reference to Post-Effective Amendment No. 15
filed July 31, 1996.
(10) Opinion and Consent of Counsel (Incorporated by reference to
Pre-Effective Amendment No. 2 filed May 22, 1992).

C-1
<PAGE>

(11) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Plan - Investor Class incorporated by reference to
Post-Effective Amendment No. 16 filed September 10, 1996.
(15)(a) Distribution and Service Agreement relating to Flex Shares dated
May 29, 1995--as originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to
Post-Effective Amendment No. 15 filed July 31, 1996.
(16) Performance Quotation Computation (Incorporated by reference to
Post-Effective Amendment No. 9 filed September 22, 1994).
(17) Not applicable.
(18) Rule 18f-3 Plan incorporated by reference to Post-Effective
Amendment No. 16 filed September 10, 1996.
(24) Powers of Attorney--as originally filed with Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Post-Effective Amendment No. 15 filed July 31, 1996.
(24)(a) Power of Attorney for Carol Rooney incorporated by reference to
Post-Effective Amendment No. 18 filed on June 30, 1996.

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

See the Prospectuses and Statement of Additional Information regarding the
Trust's control relationships. The Administrator is a subsidiary of SEI
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 26. Number of Holders of Securities:

As of June 20, 1997:
NUMBER OF
TITLE OF CLASS RECORD HOLDERS

Units of beneficial interest, without par value

Balanced Fund
Trust Shares..............................................................7
Investor Shares.........................................................415
Flex Shares.............................................................408
Capital Growth Fund
Trust Shares..............................................................9
Investor Shares......................................................11,461

C-2
<PAGE>

Flex Shares...........................................................3,024
Classic Institutional Cash Management Money Market Fund.......................8
Classic Institutional U.S. Treasury Securities Money Market Fund..............7
Emerging Markets Equity Fund..................................................0
Florida Tax-Exempt Bond Fund
Trust Shares..............................................................6
Investor Shares.........................................................122
Flex Shares.............................................................103
Georgia Tax-Exempt Bond Fund
Trust Shares..............................................................6
Investor Shares..........................................................91
Flex Shares.............................................................136
International Equity Index Fund
Trust Shares..............................................................5
Investor Shares.........................................................754
Flex Shares.............................................................184
International Equity Fund
Trust Shares..............................................................7
Investor Shares.........................................................471
Flex Shares.............................................................987
Investment Grade Bond Fund
Trust Shares..............................................................6
Investor Shares.......................................................2,126
Flex Shares.............................................................540
Investment Grade Tax-Exempt Bond Fund
Trust Shares..............................................................5
Investor Shares.......................................................1,265
Flex Shares.............................................................230
Limited-Term Federal Mortgage Securities Fund
Trust Shares..............................................................6
Investor Shares..........................................................66
Flex Shares.............................................................103
Mid-Cap Equity Fund
Trust Shares..............................................................7
Investor Shares.......................................................1,435
Flex Shares...........................................................1,002
Prime Quality Money Market Fund
Trust Shares.............................................................35
Investor Shares.......................................................2,105
Short-Term Bond Fund
Trust Shares..............................................................6
Investor Shares.........................................................123
Flex Shares..............................................................73

C-3
<PAGE>

Short-Term U.S. Treasury Securities Fund
Trust Shares..............................................................6
Investor Shares.........................................................147
Flex Shares.............................................................108
Small Cap Equity Fund
Trust Shares..............................................................0
Flex Shares..............................................................85
Sunbelt Equity Fund
Trust Shares..............................................................6
Investor Shares.......................................................2,567
Flex Shares.............................................................633
Tax-Exempt Money Market Fund
Trust Shares..............................................................5
Investor Shares.........................................................459
Tennessee Tax-Exempt Bond Fund
Trust Shares..............................................................6
Investor Shares..........................................................40
Flex Shares..............................................................61
U.S. Government Securities Fund
Trust Shares..............................................................6
Investor Shares..........................................................53
Flex Shares.............................................................171
U.S. Government Securities Money Market Fund
Trust Shares..............................................................5
Investor Shares.........................................................940
Value Income Stock Fund
Trust Shares..............................................................9
Investor Shares.......................................................7,030
Flex Shares...........................................................4,952

Item 27. Indemnification:

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

C-4
<PAGE>

indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issues.

Item 28. Business and Other Connections of Investment Advisors:

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

NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------
<S> <C> <C>
STI CAPITAL MANAGEMENT, N.A.
E. Jenner Wood III -- --
Director

Hunting F. Deutsch -- --
Director

Anthony R. Gray -- --
Chairman & Chief Investment
Officer
James R. Wood -- --
President

Daniel Jaworski -- --
Senior Vice President

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

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

Jonathan D. Rich -- --
Director

Robert Buhrmann -- --
Senior Vice President

Larry M. Cole -- --
Senior Vice President

C-5
<PAGE>

<CAPTION>
NAME OF CONNECTION WITH
NAME OTHER COMPANY OTHER COMPANY
---- ------------- ---------------
<S> <C> <C>
L. Earl Denney -- --
Executive Vice President

Thomas A. Edgar -- --
Senior Vice President

Daniel G. Shannon -- --
Senior Vice President

Ronald Schwartz -- --
Senior Vice President

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

Mills A. Riddick -- --
Senior Vice President

Christopher A. Jones -- --
Senior Vice President

David E. West -- --
Vice President

</TABLE>

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

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

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

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

C-6
<PAGE>

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

Andrew G. Cope The Johnston Company Managing Partner
Director

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

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

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

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

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

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

Zan Guerry Chattem, Inc. Chairman & CEO
Director

James L.E. Hill The Tennessee Aquarium President
Director

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

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

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

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

C-7
<PAGE>

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

Jack C. McKee McKee Baking Company Executive Vice
Director President

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

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

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

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

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

Winston W. Walker -- --
Director

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

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

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

Ronald S. Crowding -- --

A.W. Dahlberg The Southern Company President
Director

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

C-8
<PAGE>

Charles B. Ginden -- --
Director

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

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

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

Jesse Hill, Jr. Atlanta Life Insurance President
Director Company

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

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

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

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

Robert R. Long Trust Company Bank President
Director

Arthur L. Montgomery -- --
Director

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

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

R. Randall Rollins Rollins, Inc. Chairman of the Board
Director Lor, Inc. Director

C-9
<PAGE>

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

Robert W. Scherer -- --
Director

Charles R. Shufeldt -- --
Executive Vice President

Donald Wayne Thurmond -- --
Senior Vice President

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

Gerald T. Adams -- --
Senior Vice President

James R. Albach -- --
Group Vice President

Virginia D. Anderson -- --
Assistant Vice President

C-10
<PAGE>

Christina Bird -- --
First Vice President

Edward Burgess -- --
Vice President

Gay Cash -- --
Vice President

Krista Lee Cosgrove -- --
Trust Officer

Mark Elam -- --
Vice President

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

Thomas R. Frisbie -- --
Group Vice President

Molly Guenther -- --
Assistant Vice President

Benjamin S. Harris -- --
Vice President

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

V. Jere Koser -- --
Group Vice President

Richard A. Makepeace -- --
Assistant Vice President

Sally S. McKinley -- --
Assistant Vice President

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

C-11
<PAGE>

James E. Russell -- --
Vice President

Mark Stancil -- --
Assistant Vice President

David E. Thompson -- --
Vice President

Charles C. Watson -- --
Group Vice President

</TABLE>

Item 29. Principal Underwriters:

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

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 International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds-Registered Trademark- August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995

C-12
<PAGE>

Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 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 Feburary 15, 1997
Armada Funds March 8, 1997
Expedition Funds June 9, 1997

SEI Investments 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, Pennsylvania 19456.

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

Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President, President-
Investment Advisory Group --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President-Investment
Services Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
David G. Lee Senior Vice President President & Chief Executive
Officer
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Executive 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 Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --

</TABLE>

C-13
<PAGE>

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

Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary Vice President & Assistant
Secretary
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President & Assistant
Secretary
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President & Treasurer --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & Assistant Secretary Vice President & Assistant
Secretary
Sandra K. Orlow Vice President & Assistant Secretary Vice President & Assistant
Secretary
Donald Pepin Vice President & Managing Director --
Kim Rainey Vice President --

Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
James Dougherty Director of Brokerage Services --

</TABLE>

Item 30. Location of Accounts and Records:

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

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

C-14
<PAGE>

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

Bank of New York (International Equity Index Fund)
One Wall Street
New York, New York

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

SEI Fund Resources
One Freedom Valley Road
Oaks, Pennsylvania 19456

(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, Chattanooga
736 Market Street
Chattanooga, Tennessee 37402

SunTrust Bank, Atlanta
25 Park Place
Atlanta, Georgia 30303

Item 31. Management Services: None.

Item 32. Undertakings:

Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the Trust,
the Trustees will inform such Shareholders as to the

C-15
<PAGE>

approximate number of Shareholders of record and the approximate costs of
mailing or afford said Shareholders access to a list of Shareholders.

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

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

Registrant hereby undertakes to file a post-effective amendment, including
financial statements which need not be audited, within 4-6 months from the later
of the commencement of operations of the Contrarian Equity Fund and Tax Free
Income Fund of the Registrant or the effective date of Post-Effective Amendment
No. 19 to the Registrant's 1933 Act Registration Statement.

C-16
<PAGE>

NOTICE

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

C-17
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 (the "Securities
Act") and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this Post-Effective Amendment No. 20 to Registration Statement No.
33-45671 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wayne, Commonwealth of Pennsylvania on the 31st day
of July, 1997.

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

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

* Trustee July 31, 1997
- ------------------------------- ----
F. Wendell Gooch

* Trustee July 31, 1997
- ------------------------------- ----
Daniel S. Goodrum

* Trustee July 31, 1997
- ------------------------------- ----
Jesse S. Hall

* Trustee July 31, 1997
- ------------------------------- ----
Wilton Looney

* Trustee July 31, 1997
- ------------------------------- ----
Champney A. McNair

* Trustee July 31, 1997
- ------------------------------- ----
T. Gordy Germany

* Trustee July 31, 1997
- ------------------------------- ----
Bernard F. Sliger

/s/ Carol Rooney Controller, July 31, 1997
- ------------------------------- Treasurer & ----
Carol Rooney Chief Financial
Officer
/s/ David G. Lee
- ------------------------------- President & Chief July 31, 1997
David G. Lee Executive Officer ----

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

<PAGE>

EXHIBIT INDEX

NUMBER EXHIBIT

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

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

EX-99.B3 Not applicable.

EX-99.B4 Not applicable.

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

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

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

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

EX-99.B7 Not applicable.

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

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

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

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

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

EX-99.B11 Consent of Independent Public Accountants

EX-99.B12 Not applicable.

EX-99.B13 Not applicable.

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<PAGE>

EX-99.B14 Not applicable.

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

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

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

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

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

EX-99.B24a Power of attorney for Carol Rooney incorporated by reference to
Post-Effective Amendment No. 18 as filed June 30, 1997.

EX-99.27 Not Applicable

C-20