STI CLASSIC FUNDS, 485APOS, 1998-07-30

STI CLASSIC FUNDS
485APOS, 1998-07-30

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1998

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. 24 /X/
AND

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 26 /X/

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

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

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

MARK NAGLE
C/O SEI INVESTMENTS COMPANY
ONE FREEDOM VALLEY ROAD
OAKS, PENNSYLVANIA 19456
(NAME AND ADDRESS OF AGENT FOR SERVICE)

Copies to:

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

Title of Securities Being Registered...............Units of Beneficial Interest

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

____ Immediately upon filing pursuant to paragraph (b), or
____ 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 September 28, 1998 pursuant to paragraph (a) of Rule 485.

<PAGE>

[GRAPHIC]

STI CLASSIC FUNDS-MONEY MARKET
FUNDS INVESTOR SHARES

PROSPECTUS

October 1, 1998

PRIME QUALITY MONEY MARKET FUND

TAX-EXEMPT MONEY MARKET FUND

U.S. GOVERNMENT SECURITIES MONEY
MARKET FUND

INVESTMENT ADVISOR
TO THE FUNDS:

TRUSCO CAPITAL MANAGEMENT, INC.
(the "Advisor")

-----------------
STI Classic Funds
-----------------

The Securities and Exchange Commission has not approved any Fund shares or
determined whether this prospectus is accurate or complete. It is a crime
for anyone to tell you otherwise.
<PAGE>
PROSPECTUS
HOW TO READ
THIS PROSPECTUS

The STI Classic Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Investor Shares of the Money Market Funds that you should know before
investing. Please read this prospectus and keep it for future reference.

We arranged the prospectus into different sections so that you can easily review
this important information. On the next page, we discuss general information you
should know about investing in the Funds.

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 PRIME QUALITY MONEY MARKET FUND
4 TAX-EXEMPT MONEY MARKET FUND
6 U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
8 EACH FUND'S PRINCIPAL INVESTMENTS
8 THE ADVISOR
9 PURCHASING, SELLING AND EXCHANGING FUND SHARES
12 HISTORICAL FINANCIAL INFORMATION ABOUT EACH FUND
13 HOW FUND SHARES ARE DISTRIBUTED
14 DISTRIBUTIONS OF DIVIDENDS AND CAPITAL GAINS
14 TAXES
18 HOW TO OBTAIN MORE INFORMATION
ABOUT THE STI CLASSIC FUNDS
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR "SIMPLY SPEAKING"
EXPLANATIONS.
- --------------------------------------------------------------------------------

FUND SUMMARY
INVESTMENT STRATEGY
WHAT ARE THE RISKS OF INVESTING?
PERFORMANCE INFORMATION
WHAT IS AN INDEX?

FUND FEES AND EXPENSES
FUND INVESTMENTS
INVESTMENT ADVISORS
PURCHASING FUND SHARES

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

OCTOBER 1, 1998
<PAGE>
PROSPECTUS 1

INTRODUCTION

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities like stocks and
bonds. Before you invest, you should know a few things about investing in mutual
funds.

Like other investments, you could lose money on your investment in a Fund. Your
investment in a Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any government agency.

Each Money Market Fund tries to maintain a constant price per share of $1.00,
but we cannot guarantee this.

Each Fund has its own investment goal and strategies for reaching that goal.
But, we cannot guarantee that a Fund will achieve its goal. A Fund's goal may be
changed without shareholder approval. Before investing, make sure that the
Fund's goal matches your own.

The Investment Advisor invests each Fund's assets in a way that the Advisor
believes will help the Fund achieve its goal. The Advisor's judgments about the
stock markets, economy and companies, or selecting investments may not reflect
actual market movements, economic conditions or company performance.
<PAGE>
2 PROSPECTUS

PRIME QUALITY MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital and liquidity
INVESTMENT FOCUS Money market instruments
PRINCIPAL INVESTMENT Attempts to identify money market instruments with the most attractive risk/return
STRATEGY trade-of
INVESTOR PROFILE Conservative investors who want to receive current income from their investment
</TABLE>

INVESTMENT STRATEGY
The Prime Quality Money Market Fund invests exclusively in high
quality U.S. money market instruments and foreign money market instruments
denominated in U.S. dollars. In selecting investments for the Fund, we try to
increase income without adding undue risk. We analyze maturity, yields, market
sectors and credit risk. Investments are made in money market instruments with
the most attractive risk/return trade-off.
MONEY MARKET FUNDS
Money market funds invest in high quality, short-term debt securities,
commonly known as money market instruments. These include CDs, bankers'
acceptances, commercial paper, U.S. Treasury securities, some municipal
securities, and repurchase agreements. Money market funds follow strict rules
about credit risk, maturity and diversification of its investments. An
investment in a money market fund is not a bank deposit. Although a money market
fund seeks to keep a constant price per share of $1.00, you may lose money by
investing in a money market fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 3

PRIME QUALITY MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE IBC/ DONOGHUE FIRST TIER AVERAGE.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
PRIME QUALITY
MONEY MARKET FUND 00.0% 00.0% 00.0%
IBC/DONOGHUE
FIRST TIER AVERAGE 00.0% 00.0% 00.0%
</TABLE>

[INSERT 7-DAY YIELD OR PHONE NUMBER TO OBTAIN YIELD]
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue First Tier
Average is a widely recognized index of [ ].

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY
FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %] AND [ %],
RESPECTIVELY. The Advisor could discontinue these voluntary waivers at any time.
For more information about these fees, see "Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Distribution and Service (12b-1) Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns might be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, administration and custody services. These expenses are
deducted from the Fund's income. The expenses in the table above are shown as
a percentage of the Fund's net assets.
<PAGE>
4 PROSPECTUS

TAX-EXEMPT MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current interest income exempt from federal income taxes, while preserving capital
and liquidity
INVESTMENT FOCUS Municipal money market instruments
PRINCIPAL INVESTMENT Attempts to increase income without added risk by analyzing credit quality
STRATEGY
INVESTOR PROFILE Conservative investors who want to receive current tax-exempt income from their
investment
</TABLE>

INVESTMENT STRATEGY
The Tax-Exempt Money Market Fund invests substantially all of its
assets in money market instruments issued by municipalities and issuers that pay
income exempt from federal income taxes. In selecting investments for the Fund,
we analyze the credit quality and structure of each security to minimize risk.
We actively manage the Fund's average maturity based on current interest rates
and our outlook of the market.
MONEY MARKET FUNDS
Money market funds invest in high quality, short-term debt securities,
commonly known as money market instruments. These include CDs, bankers'
acceptances, commercial paper, U.S. Treasury securities, some municipal
securities, and repurchase agreements. Money market funds follow strict rules
about credit risk, maturity and diversification of its investments. An
investment in a money market fund is not a bank deposit. Although a money market
fund seeks to keep a constant price per share of $1.00, you may lose money by
investing in a money market fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 5

TAX-EXEMPT MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE IBC/ DONOGHUE TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
TAX-EXEMPT
MONEY MARKET FUND 00.0% 00.0% 00.0%
IBC/DONOGHUE
TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE 00.0% 00.0% 00.0%
</TABLE>

[INSERT 7-DAY YIELD OR PHONE NUMBER TO OBTAIN YIELD]
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue Tax-Free
Stockbroker & General Purpose Average is a widely recognized index of
[ ].

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Distribution and Service (12b-1) Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital and liquidity
INVESTMENT FOCUS U.S. Treasury and government agency securities, and repurchase agreements
PRINCIPAL INVESTMENT Attempts to increase income without adding undue risk by analyzing yields
STRATEGY
INVESTOR PROFILE Conservative investors who want to receive current income
</TABLE>

INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively
in U.S. Treasury bills, notes, bonds and components of these securities,
government agency securities, and repurchase agreements involving these
securities. In selecting investments for the Fund, we try to increase income
without adding undue risk by analyzing yields. We actively manage the maturity
of the Fund and its portfolio to maximize the Fund's yield based on current
market interest rates and our outlook on the market.
MONEY MARKET FUNDS
Money market funds invest in high quality, short-term debt securities,
commonly known as money market instruments. These include CDs, bankers'
acceptances, commercial paper, U.S. Treasury securities, some municipal
securities, and repurchase agreements. Money market funds follow strict rules
about credit risk, maturity and diversification of its investments. An
investment in a money market fund is not a bank deposit. Although a money market
fund seeks to keep a constant price per share of $1.00, you may lose money by
investing in a money market fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 7

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE IBC/ DONOGHUE U.S. TREASURY & REPO
AVERAGE.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND 00.0% 00.0% 00.0%
IBC/DONOGHUE
U.S. TREASURY & REPO AVERAGE 00.0% 00.0% 00.0%
</TABLE>

[INSERT 7-DAY YIELD OR PHONE NUMBER TO OBTAIN YIELD]
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue U.S. Treasury &
Repo Average is a widely recognized index of [ ].

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY
FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %] AND [ %],
RESPECTIVELY. The Advisor could discontinue these voluntary waivers at any time.
For more information about these fees, see "Investment Advisors" on page X.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Distribution and Service (12b-1) Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

EACH FUND'S PRINCIPAL INVESTMENT

FUND INVESTMENT

<TABLE>
<CAPTION>
PRIME QUALITY U.S. GOVERNMENT SECURITIES TAX-EXEMPT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Bank Obligations X
- ------------------------------------------------------------------------------------------------------------------------
Commercial Paper X X
- ------------------------------------------------------------------------------------------------------------------------
Corporate Obligations X
- ------------------------------------------------------------------------------------------------------------------------
Foreign Securities X
- ------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed Securities X
- ------------------------------------------------------------------------------------------------------------------------
Municipal Securities X
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities X X
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT ADVISOR

The Investment Advisor makes investment decisions for the Funds and continuously
reviews, supervises and administers its Funds' respective investment programs.
The Board of Trustees supervises the Advisor and establishes policies that the
Advisor must follow in its day-to-day management activities.

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Prime Quality Money Market Fund,
U.S. Government Securities Money Market Fund and Tax-Exempt Money Market Fund.
As of May 31, 1998, Trusco had approximately $[ ] billion in assets under
management. For the fiscal year ended May 31, 1998, Trusco received advisory
fees of:

<TABLE>
<S> <C>
PRIME QUALITY MONEY MARKET FUND.............. %
TAX-EXEMPT MONEY MARKET FUND................. %
U.S. GOVERNMENT SECURITIES MONEY MARKET
FUND....................................... %
</TABLE>

The Advisor may use their affiliates as brokers for Fund transactions.
<PAGE>
PROSPECTUS 9

PURCHASING, SELLING AND EXCHANGING FUND SHARES

PURCHASING FUND SHARES

HOW TO PURCHASE FUND SHARES
You may purchase Investor Shares directly from us by:

- - mail

- - telephone

- - wire

- - direct deposit, or

- - Automated Clearing House (ACH).

SIMPLY SPEAKING . . .

WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open
for business (a Business Day). But you may not purchase shares on federal
holidays.

To purchase shares directly from us, please call 1-800-874-4770. Write your
check, payable in U.S. dollars, to "STI CLASSIC FUNDS" and include the name of
the appropriate Fund(s) on the check. We cannot accept third-party checks,
credit cards, credit card checks or cash. You may also purchase shares through
Investment Consultants of certain correspondent banks of SunTrust Banks, Inc.
(SunTrust), or other financial institutions that have executed dealer agreements
with us. We may reject any purchase order if we determine that accepting the
order would not be in the best interests of the STI Classic Funds or its
shareholders.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. We expect that the
NAV of each Fund will remain constant at $1.00 per share. We calculate each
Fund's NAV once each Business Day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time). Your
purchase order will be effective on the Business Day we receive it if:

- - we receive your order before 11:00 a.m. Eastern time for the Tax-Exempt Money
Market Fund or before 1:00 p.m. Eastern time for the Prime Quality and U.S.
Government Securities Money Market Funds; and

- - we receive federal funds (readily available) before we calculate NAV (normally
4:00 p.m. Eastern time).

Otherwise, your purchase order will be effective the following Business Day, as
long as we receive funds before we calculate NAV the following day.
SIMPLY SPEAKING . . .

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS
If you purchase, sell or exchange Fund shares through a financial institution
(rather than directly from us), you may have to transmit your purchase, sale
and exchange requests to your financial institution at an earlier time for
your transaction to become effective that day. This allows the financial
institution time to process your request and transmit it to us. For more
information about how to purchase, sell or exchange Fund shares through your
financial institution, you should contact your financial institution directly.

HOW WE CALCULATE NAV
In calculating NAV, we generally value a Fund's portfolio using the amortized
cost valuation method, which is described in detail in our Statement of
Additional Information. If we think that amortized cost is unreliable, fair
value prices may be determined in good faith using methods approved by the Board
of Trustees. We expect each Fund's NAV to remain constant at $1.00 per share,
although we cannot guarantee this.
<PAGE>
10 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

SIMPLY SPEAKING . . .

NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

MINIMUM PURCHASES
To purchase Investor Shares for the first time, you must invest at least $2,000
in any Fund. To purchase additional shares of any Fund, you must invest at least
$1,000 or, if you pay by a statement coupon, $100. We may accept investments of
smaller amounts at our discretion.

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 Bank
Investment Consultant and complete the FUNDLINK application and authorization
agreements. Once you have signed up to use FUNDLINK, simply call us at
1-800-428-6970 to complete all of your purchase and redemption transactions.

SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a SunTrust affiliate bank, you
may purchase shares of either class automatically through regular deductions
from your account. With a $500 minimum initial investment, you may begin
regularly scheduled investments from $50 up to $100,000 once or twice a month.
The Distributor may close your account if you do not meet this minimum
investment requirement at the end of two years.

SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting us directly by mail or telephone. You may also sell your shares by
contacting your financial institution by mail or telephone. To sell your shares
by telephone, the amount of your sale must be at least $1,000. If you would like
to sell $25,000 or more of your shares, please notify us in writing and include
a signature guarantee (a notarized signature is not sufficient). The sale price
of each share will be the next NAV determined after we receive your request.
Your sale order will be effective that same Business Day if we receive your
order before:

- - 11:00 a.m. Eastern time for the Tax-Exempt Money Market Fund; or

- - 1:00 p.m. Eastern time for the Prime Quality Money Market and U.S. Government
Securities Money Market Funds.
SIMPLY SPEAKING . . .

TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although we have certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, we are not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you
or your financial institution transact with us over the telephone, you will
generally bear the risk of any loss.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

withdrawal will be mailed to you by check or, if you have an account with a
SunTrust affiliated bank, electronically transferred to your account.

RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within five Business Days after we
receive your request. Your proceeds can be wired to your bank account (subject
to a $7.00 fee) or sent to you by check. If you recently purchased your shares
by check or through ACH, redemption proceeds may not be available until your
check has cleared (which may take up to 15 Business Days).

REDEMPTIONS IN KIND
We generally pay sale proceeds in cash. However, under unusual conditions that
make the payment of cash unwise (and for the protection of the Fund's remaining
shareholders) we might 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 be redeemed in
kind, you would probably have to pay brokerage costs to sell the securities
distributed to you, as well as taxes on any capital gains from the sale as with
any redemption.

INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the $2,000 required minimum you may be
required to sell your shares. You will always be given at least 60 days' written
notice to give you time to add to your account and avoid selling your shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
We may suspend your right to sell your shares if the NYSE restricts trading, the
SEC declares an emergency or for other reasons. More information about this is
in our Statement of Additional Information.

EXCHANGING FUND SHARES
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting us directly by
mail or telephone. You may also exchange shares through your financial
institution by mail or telephone. Exchange requests must be for an amount of at
least $1,000. You may exchange your shares up to four times during a calendar
year. If you exchange your shares more than four times during a year, you may be
charged a $10.00 fee for each additional exchange. You will 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.

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). If you exchange shares into a
Fund with the same, lower or no sales charge there is no incremental sales
charge for the exchange.
SIMPLY SPEAKING . . .

EXCHANGES
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after we receive your exchange request.
<PAGE>
12 PROSPECTUS

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Investor Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned [or lost] on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.

This information has been audited by , independent public
accountants. Their report, along with each Fund's financial statements, appears
in our annual report that accompanies our Statement of Additional Information.
You can obtain our annual report, which contains more performance information,
at no charge by calling 1-800-874-4700.

Net Asset Value, Beginning of Period
Income From Investment Operations
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
Less Distributions
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
Total Return

Ratios/Supplemental Data
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate

<TABLE>
<S> <C>
1 Commencement of operations.
2 Total return excludes the effect of sales charge.
3 Annualized.
</TABLE>

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<PAGE>
PROSPECTUS 13

HOW FUND SHARES ARE DISTRIBUTED

DISTRIBUTION OF FUND SHARES

Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Distribution fees, as a percentage of average daily net assets, are as follows:

<TABLE>
<CAPTION>
MAXIMUM FOR FISCAL YEAR ENDING MAY 31, 1998
<S> <C> <C>
Prime Quality Money Market Fund .20%
Tax-Exempt Money Market Fund .15%
U.S. Government Securities Money Market Fund .17%
</TABLE>
<PAGE>
14 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

Each Fund declares daily and distributes its income monthly. The Funds make
distributions of capital gains, if any, at least annually.

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify us in writing prior to the date of the distribution. Your election
will be effective for dividends and distributions paid after we receive your
written notice. To cancel your election, simply send us written notice.
SIMPLY SPEAKING . . .

THE "RECORD DATE"
If you own Fund shares on a Fund's record date, you will be entitled to
receive the distribution.

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.

Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Capital gains
distributions may be taxable at different rates depending on the length of time
a Fund holds its portfolio securities. YOU MAY BE TAXED ON EACH SALE OR EXCHANGE
OF FUND SHARES.

The Tax-Exempt Money Market Fund intends to distribute federally tax-exempt
income. Each Fund may invest a portion of its assets in securities that generate
taxable income for federal or state income taxes. Income exempt from federal tax
may be subject to state and local taxes. Any capital gains by this Fund may be
taxable.

The Funds use a tax management technique known as "highest in, first out." Using
this technique, the portfolio holdings which experienced the smallest gain or
largest loss are sold first in an effort to minimize capital gains and enhance
after-tax returns.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
PROSPECTUS 15

NOTES

<PAGE>
16 PROSPECTUS

NOTES

<PAGE>
PROSPECTUS 17

NOTES
<PAGE>
18 PROSPECTUS

HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISOR

Trusco Capital Management, Inc.

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
More detailed information about the STI Classic Funds is included in our SAI.
The SAI has been filed with the SEC and is incorporated by reference into this
prospectus. This means that the SAI, for legal purposes, is a part of this
prospectus.

ANNUAL AND SEMIANNUAL REPORTS
These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

BY MAIL:
Write to us c/o
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY E-MAIL:
xxxxxxxxxxxxxxxx

BY INTERNET:
http://www.suntrust.com

FROM THE SEC: You can also obtain these documents, and other information about
the STI Classic Funds, from the SEC's website ("http://www.sec.gov"). You may
review and copy documents at the SEC Public Reference Room in Washington, DC
(for information call 1-800-SEC-0330). You may request documents by mail from
the SEC, upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, DC 20549-6009. The
Fund's Investment Company Act registration number is 811-06557.
<PAGE>

[GRAPHIC]

STI CLASSIC FUNDS
FOR THE SUNTRUST 401(K) PLAN

PROSPECTUS

October 1, 1998

CAPITAL GROWTH FUND

INVESTMENT GRADE BOND FUND

PRIME QUALITY MONEY MARKET FUND

SHORT-TERM BOND FUND

SUNBELT EQUITY FUND

VALUE INCOME STOCK FUND

INVESTMENT ADVISORS
TO THE FUNDS:

STI CAPITAL MANAGEMENT, N.A.

TRUSCO CAPITAL MANAGEMENT, INC.
(the "Advisors")

-----------------
STI Classic Funds
-----------------

The STI Classic Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Trust Shares of the Funds that you should know before investing.
Please read this prospectus and keep it for future reference.

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 CAPITAL GROWTH FUND
4 INVESTMENT GRADE BOND FUND
6 PRIME QUALITY MONEY MARKET FUND
8 SHORT-TERM BOND FUND
10 SUNBELT EQUITY FUND
12 VALUE INCOME STOCK FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
14 EACH FUND'S PRINCIPAL INVESTMENTS
15 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
16 PURCHASING, SELLING AND EXCHANGING FUND SHARES
18 HISTORICAL FINANCIAL INFORMATION
ABOUT EACH FUND
19 DISTRIBUTIONS OF DIVIDENDS AND CAPITAL GAINS
19 TAXES
22 HOW TO OBTAIN MORE INFORMATION
ABOUT THE STI CLASSIC FUNDS
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR "SIMPLY SPEAKING"
EXPLANATIONS.
- --------------------------------------------------------------------------------

[ICON] FUND SUMMARY
INVESTMENT STRATEGY
[ICON]
WHAT ARE THE RISKS OF INVESTING?
[ICON]
PERFORMANCE INFORMATION
[ICON]
WHAT IS AN INDEX?
[ICON]
FUND FEES AND EXPENSES
[ICON]
FUND INVESTMENTS
[ICON]
INVESTMENT ADVISORS
[ICON]
PURCHASING FUND SHARES
[ICON]

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

OCTOBER 1, 1998
<PAGE>
PROSPECTUS 1

INTRODUCTION

The value of your investment in a Fund (except the Prime Quality Money Market
Fund) is based on the market prices of the securities the Fund holds. These
prices change daily due to economic and other events that affect securities
markets generally, as well as those that affect particular companies or
governments. These price movements, sometimes called volatility, will vary
depending on the types of securities a Fund owns and the markets where these
securities trade. The Equity Funds invest primarily in common stocks and other
equity securities. Historically, equity securities have outperformed other types
of investments on a long-term basis, but have been more subject to price
fluctuation in the short run.

Like other investments, you could lose money on your investment in a Fund. Your
investment in a Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any government agency.

The Prime Quality Money Market Fund seeks to maintain a constant price per share
of $1.00, but we cannot guarantee this.

The Investment Advisors invest each Fund's assets in a way that the Advisor
believes will help the Fund achieve its goal. An Advisor's judgments about the
stock markets, economy and companies, or selecting investments may not reflect
actual market movements, economic conditions or company performance.
<PAGE>
2 PROSPECTUS

CAPITAL GROWTH FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify companies with above average
STRATEGY growth potential
INVESTOR PROFILE Investors who want the value of their investment to
grow, but do not need to receive income on their
investment
</TABLE>

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Capital Growth Fund invests primarily in U.S. common stocks and
other equity securities that we believe are undervalued by the stock market. In
selecting investments for the Fund, we choose companies that we believe have
above average growth potential. We rotate the Fund's investments among various
market sectors based on our research of business cycles. Our strategy focuses on
large-cap stocks with a strong growth history. Due to its investment strategy,
the Fund may buy and sell securities frequently. This may result in higher
transaction costs and additional capital gains taxes.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The Fund invests primarily in U.S. common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles and with periods of rising prices
and periods of falling prices. This price volatility the principal risk of
investing in the Fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 3

CAPITAL GROWTH FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LIPPER GROWTH
FUNDS AVERAGE. THE LIPPER GROWTH FUNDS AVERAGE IS A COMPOSITE OF MUTUAL FUNDS
WITH INVESTMENT GOALS SIMILAR TO THE FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
CAPITAL GROWTH FUND 00.0% 00.0% 00.0%
S&P 500 INDEX 00.0% 00.0% 00.0%
LIPPER GROWTH
FUNDS AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page xx.
- --------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

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

EXAMPLE
- --------------------------------------------------

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table above are shown as a percentage of the Fund's net
assets.
<PAGE>
4 PROSPECTUS

INVESTMENT GRADE BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High total return through current income and
capital appreciation, while preserving the
principal amount invested
INVESTMENT FOCUS Investment grade U.S. government and corporate debt
securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify relatively inexpensive
STRATEGY securities in a selected market index
INVESTOR PROFILE Investors who want to receive income from their
investment, as well as an increase in the value of
the investment
</TABLE>

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Investment Grade Bond Fund invests primarily in investment grade
corporate debt securities, U.S. Treasury obligations and mortgage-backed
securities. In selecting investments for the Fund, we try to minimize risk while
attempting to outperform selected market indices. Currently, our selected index
is the Lehman Government/Corporate Bond Index, a widely recognized, unmanaged
index of investment grade government and corporate debt securities. We seek to
invest more in portions of the Index that seem relatively inexpensive, and less
in those that seem expensive. We allocate the Fund's investments among various
market sectors based on our analysis of historical data, yield information and
credit ratings. Due to the Fund's investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and
additional capital gains taxes. We anticipate that the Fund's average weighted
maturity will range from four to ten years.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in investment grade debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, an issuer may be unable to
make timely payments of principal or interest to the Fund. Some investment grade
debt securities have speculative characteristics. In addition, the Fund is
subject to the risk of investing in mortgage-backed securities. See
"Mortgage-Backed Securities" to the right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 5

INVESTMENT GRADE BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN GOVERNMENT/CORPORATE BOND INDEX
AND THE LIPPER INTERMEDIATE INVESTMENT GRADE DEBT AVERAGE. THE LIPPER
INTERMEDIATE INVESTMENT GRADE DEBT AVERAGE IS A COMPOSITE OF MUTUAL FUNDS WITH
INVESTMENT GOALS SIMILAR TO THE FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (7/16/92)
<S> <C> <C> <C>
INVESTMENT GRADE BOND FUND 00.0% 00.0% 00.0%
LEHMAN GOVERNMENT/
CORPORATE BOND INDEX 00.0% 00.0% 00.0%
LIPPER INTERMEDIATE INVESTMENT
GRADE DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Government/Corporate
Bond Index is a widely recognized index of investment grade government and
corporate debt securities.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page xx.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from the Fund's income. The Fund's
expenses in the table above are shown as a percentage of the Fund's net
assets.
<PAGE>
6 PROSPECTUS

PRIME QUALITY MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital and liquidity
INVESTMENT FOCUS Money market instruments
PRINCIPAL INVESTMENT Attempts to identify money market instruments with the most attractive risk/return
STRATEGY trade-off
INVESTOR PROFILE Conservative investors who want to receive current income from their investment
</TABLE>

MONEY MARKET FUNDS
Money market funds invest in high quality, short-term debt securities, commonly
known as money market instruments. These include CDs, bankers' acceptances,
commercial paper, U.S. Treasury securities, some municipal securities, and
repurchase agreements. Money market funds follow strict rules about credit risk,
maturity and diversification of its investments. An investment in a money market
fund is not a bank deposit. Although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in a money
market fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 7

PRIME QUALITY MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE IBC/ DONOGHUE FIRST TIER AVERAGE.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
PRIME QUALITY
MONEY MARKET FUND 00.0% 00.0% 00.0%
IBC/DONOGHUE
FIRST TIER AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SHORT-TERM BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital
INVESTMENT FOCUS Investment grade U.S. government and corporate debt
securities
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT Attempts to identify securities that offer a
STRATEGY comparably better return than similar securities
for a given level of credit risk
INVESTOR PROFILE Income oriented investors who are willing to accept
increased risk for the possibility of returns
greater than money market investing
</TABLE>

INVESTMENT STRATEGY
The Short-Term Bond Fund invests primarily in a diversified
portfolio of short- to medium-term investment grade U.S. Treasury, corporate
debt, mortgage-backed and asset-backed securities. The Fund intends to maintain
an average weighted maturity of three years or less. In selecting investments
for the Fund, we attempt to identify securities that offer a comparably better
investment return for a given level of credit risk. For example, short-term
bonds generally have better returns than money market instruments, with a fairly
modest increase in credit risk. We manage the Fund from a total return
perspective. That is, we make day to day investment decisions for the Fund with
a view towards maximizing returns. We analyze yields, market sectors and credit
risk in an effort to identify attractive investments with the best risk/reward
trade-off.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. In addition, an issuer may be unable to make timely payments of
principal or interest to the Fund. Also, the Fund may invest in bonds rated
"investment grade." Some investment grade bonds may have speculative
characteristics. In addition, the Fund is subject to the risk of investing in
mortgage-backed and asset-backed securities. See "Mortgage-Backed and
Asset-Backed Securities" to the right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED AND
ASSET-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The owner of an
asset-backed security owns a share of the underlying pool of assets, such as
truck and auto loans, leases and credit card receivables.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 9

SHORT-TERM BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE SALOMON 1-3 YEAR TREASURY/GOVERNMENT
SPONSORED/CORPORATE INDEX AND THE SALOMON ONE YEAR TREASURY BENCHMARK ON-THE-RUN
INDEX.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (3/15/93)
<S> <C> <C> <C>
SHORT-TERM BOND FUND 00.0% 00.0% 00.0%
SALOMON 1-3 YEAR TREASURY/ GOVERNMENT
SPONSORED/
CORPORATE INDEX 00.0% 00.0% 00.0%
SALOMON ONE YEAR
TREASURY BENCHMARK
ON-THE-RUN INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Salomon 1-3 Year Treasury/
Government Sponsored/Corporate Index is a widely recognized index of U.S.
Treasury, government agency and investment grade securities with maturities
greater than one and less than three years. The Salomon One Year Treasury
Benchmark On-the-Run Index is a widely recognized index of [ ].

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

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

EXAMPLE
- --------------------------------------------------

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .

SUNBELT EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS Southern U.S. common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT Attempts to identify companies with positive
STRATEGY earnings trends
INVESTOR PROFILE Aggressive investors with long-term investment
goals who are willing to accept higher volatility
for the possibility of higher returns
</TABLE>

INVESTMENT STRATEGY

The Sunbelt Equity Fund invests substantially all of its assets in
common stocks and other equity securities of companies in the southern region of
the U.S. These companies are headquartered and/or conduct a substantial portion
of their business in the southern region of the U.S., which includes Texas,
Arkansas, Alabama, Mississippi, Tennessee, Kentucky, Florida, Virginia, Georgia,
North Carolina, South Carolina and Louisiana. Our investment strategy is based
on the belief that a portfolio of companies in this region with positive
earnings trends will generate above average returns over time. This focus on
favorable earnings characteristics is the cornerstone of our philosophy. We do
not consider current income in selecting investments for the Fund.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in southern U.S. common stocks. As a result, the Fund
is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. Because the Fund focuses its investments in
southern companies, economic conditions in or government policies imposed by
southern states may cause the Fund to be more volatile than an equity fund that
invests in companies located across the U.S.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to January 1994, when the Fund began operating, represent the performance of the
Advisor's similarly managed collective investment fund. This past performance
has been adjusted to reflect current expenses for Trust Shares of the Fund. The
Advisor's collective fund was not a registered mutual fund so it was not subject
to the same investment and tax restrictions as the Fund. If it had been, the
collective fund's performance would have been lower.

THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 11

SUNBELT EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE RUSSELL 2000 INDEX AND THE S&P SMALLCAP
600 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS 12/1/80
<S> <C> <C> <C>
SUNBELT EQUITY FUND 00.0% 00.0% 00.0%
RUSSELL 2000 INDEX 00.0% 00.0% 00.0%
S&P SMALLCAP 600 INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Russell 2000 Index is a widely
recognized index of U.S. small-cap common stock prices. The S&P SmallCap 600
Index is a widely recognized index of U.S. small cap common stock prices.

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

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

EXAMPLE
- --------------------------------------------------

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .

VALUE INCOME STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS
PRIMARY Current income
SECONDARY Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT Attempts to identify high dividend-paying,
STRATEGY undervalued stocks
INVESTOR PROFILE Investors who are looking for current income and
capital appreciation with less volatility than the
average stock fund
</TABLE>

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Value Income Stock Fund invests primarily in common stocks and
other equity securities of U.S. companies. In selecting investments for the
Fund, we primarily choose companies that have a market capitalization of at
least $500 million and that have a history of paying regular dividends. We focus
on high dividend-paying stocks that trade below their historical value. Our
"bottom-up" approach to stock selection emphasizes individual stocks over
economic trends. Due to the Fund's investment strategy, the Fund may buy and
sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The Fund invests primarily in U.S. common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, common stocks held by the Fund may stop
paying dividends or pay less in dividends than we expected.

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 13

VALUE INCOME STOCK FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LIPPER GROWTH
FUNDS AVERAGE. THE LIPPER EQUITY INCOME FUNDS AVERAGE IS A COMPOSITE OF MUTUAL
FUNDS WITH INVESTMENT GOALS SIMILAR TO THE FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (10/31/89)
<S> <C> <C> <C>
VALUE INCOME STOCK FUND 00.0% 00.0% 00.0%
S&P 500 INDEX 00.0% 00.0% 00.0%
LIPPER EQUITY INCOME
FUNDS AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES

ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

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

EXAMPLE
- --------------------------------------------------

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .

EACH FUND'S PRINCIPAL INVESTMENT

FUND INVESTMENT

<TABLE>
<CAPTION>
CAPITAL VALUE INCOME SUNBELT INVESTMENT GRADE SHORT-TERM PRIME QUALITY MONEY
GROWTH FUND STOCK FUND EQUITY FUND BOND FUND BOND FUND MARKET FUND
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Asset-Backed
Securities X
- ------------------------------------------------------------------------------------------------------------------------
Bank Obligations X
- ------------------------------------------------------------------------------------------------------------------------
Commercial Paper X
- ------------------------------------------------------------------------------------------------------------------------
Convertible
Securities X X X X
- ------------------------------------------------------------------------------------------------------------------------
Corporate Debt
Securities X X
- ------------------------------------------------------------------------------------------------------------------------
Equity Securities X X X
- ------------------------------------------------------------------------------------------------------------------------
Foreign Securities X
- ------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed
Securities X X
- ------------------------------------------------------------------------------------------------------------------------
U.S. Government
Securities X X X
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

Although the investments above are those that we believe are most likely to help
each Fund meet its investment goal, each Fund may invest in other securities,
use other strategies and engage in other investment practices, which are
described in detail in our Statement of Additional Information. Of course, we
cannot guarantee that any Fund will achieve its investment goal.

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Fund (except the Prime Quality Money Market Fund) may invest up
to 100% of its assets in cash, money market instruments, repurchase agreements
and short-term obligations. The Small Cap Equity Fund also may invest in
investment grade fixed income securities and mid- to large-cap common stocks. In
addition, the Investment Grade Bond and Short-Term Bond Funds may shorten its
average weighted maturity to as little as 90 days. When a Fund is investing for
temporary defensive purposes, it is not pursuing its investment goal.
<PAGE>
PROSPECTUS 15

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

INVESTMENT ADVISORS

The Investment Advisors make investment decisions for the Funds and continuously
review, supervise and administer their Funds' respective investment programs.
The Board of Trustees supervises the Advisors and establishes policies that the
Advisors must follow in their day to day management activities.

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Capital Growth, Value Income Stock and Investment
Grade Bond Funds. As of May 31, 1998, STI had approximately $ billion in
assets under management. For the fiscal year ended May 31, 1998, STI received
advisory fees of:

<TABLE>
<S> <C>
CAPITAL GROWTH FUND.......................... %
VALUE INCOME STOCK FUND...................... %
INVESTMENT GRADE BOND FUND................... %
</TABLE>

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Sunbelt Equity, Short-Term Bond and
Prime Quality Money Market Funds. As of May 31, 1998, Trusco had approximately
$ billion in assets under management. For the fiscal year ended May 31, 1998,
Trusco received advisory fees of:

<TABLE>
<S> <C>
SUNBELT EQUITY FUND.......................... %
SHORT-TERM BOND FUND......................... %
PRIME QUALITY MONEY MARKET FUND.............. %
</TABLE>

PORTFOLIO MANAGERS

Mr. Anthony Gray has served as Chairman and Chief Investment Officer of STI
since 1979. He has managed the Capital Growth Fund since it began operating in
June 1992. He has more than 30 years of investment experience. Prior to joining
STI, Mr. Gray served as .

Mr. Mills Riddick, CFA, has served as Senior Vice President of STI since .
He has managed the Value Income Stock Fund since April 1995. He has more than 15
years of investment experience, and has been a portfolio manager at STI since
1989. Prior to joining STI, Mr. Riddick served as a broker with Drexel Burnham
Lambert.

Mr. James Foster has served as Vice President of Trusco since 1989. He has
managed the Sunbelt Equity Fund since it began operating in January 1994. He has
more than 27 years of investment experience.

Mr. David Yealy has served as a Vice President of Trusco since . He
has managed the Short-Term Bond Fund since July 1996. He has more than years
of investment experience.

Mr. L. Earl Denney, CFA, has served as Senior Vice President of STI since 1983.
He has managed the Investment Grade Bond Fund since it began operating in June
1992. He has more than 20 years of experience in fixed income investment
management. Prior to joining STI, he was fixed income portfolio manager with
American National Bank.
<PAGE>
16 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

PURCHASING FUND SHARES

HOW TO PURCHASE FUND SHARES
Generally you may not purchase Trust Shares directly. Rather, Trust Shares are
sold to financial institutions or intermediaries, including subsidiaries of
SunTrust Banks, Inc. (SunTrust) on behalf of accounts for which they act as
fiduciary, agent, investment advisor, or custodian. As a result, you, as a
customer of a financial institution, may purchase Trust Shares through accounts
maintained with financial institutions and potentially through the Preferred
Portfolio Account (an asset allocation account available through SunTrust
Securities, Inc.). Trust Shares 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 your Trust Shares. We may reject any
purchase order if we determine that accepting the order would not be in the best
interests of the STI Classic Funds or its shareholders.

SIMPLY SPEAKING . . .
WHEN CAN YOU PURCHASE SHARES?
You may purchase on any day that the New York Stock Exchange is open for
business (a Business Day). But you may not do so for shares of the Prime
Quality Money Market Fund on federal holidays.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. We calculate each
Fund's NAV once each Business Day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time). So,
to receive the current Business Day's NAV for all Funds except the Prime Quality
Money Market Fund, generally we must receive your purchase order from your
financial institution before 4:00 p.m. Eastern time. For the Prime Quality Money
Market Fund, your purchase order will be effective on the Business Day we
receive it if:

- - we receive your order before 1:00 p.m. Eastern time; and

- - we receive federal funds (readily available) before we calculate NAV (normally
4:00 p.m., Eastern time).

Otherwise, your purchase order will be effective the following Business Day, as
long as we receive federal funds before we calculate NAV on that following day.

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF FINANCIAL INSTITUTIONS
You may have to transmit your purchase and sale requests to your financial
institution at an earlier time for your transaction to become effective that
day. This allows the financial institution time to process your request and
transmit it to us. For more information about how to purchase or sell Fund
shares through your financial institution, you should contact your financial
institution directly.

HOW WE CALCULATE NAV
In calculating NAV for all Funds except for the Prime Quality Money Market Fund,
we generally value a Fund's portfolio at market price. In calculating NAV for
the Prime Quality Money Market Fund, we value the Fund's portfolio using the
amortized cost valuation method, which is described in detail in our Statement
of Additional Information. If market prices are unavailable, or we think that
the market price or amortized cost valuation method is unreliable, fair value
prices may be determined in good faith using methods approved by the Board of
Trustees. We expect the NAV of the Prime Quality Money Market Fund to remain
constant at $1.00 per share, although we cannot guarantee this.
<PAGE>
PROSPECTUS 17

PURCHASING, SELLING AND EXCHANGING FUND SHARES

SIMPLY SPEAKING . . .

NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting your financial institution. Your financial institution will give you
information about how to sell your shares. The sale price of each share will be
the next NAV determined after we receive your request from your financial
institution. So, for all funds except the Prime Quality Money Market Fund, to
receive the current Business Day's NAV, generally we must receive your sale
order from your financial institution before 4:00 p.m. Eastern time. For the
Prime Quality Money Market Fund, your sale order will be effective that same
Business Day if we receive your order before 1:00 p.m. Eastern time.
SIMPLY SPEAKING . . .

TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. Although we have certain safeguards and procedures to
confirm the identity of callers and the authenticity of instructions, we are
not responsible for any losses or costs incurred by following telephone
instructions we reasonably believe to be genuine. If you or your financial
institution transact with us over the telephone, you will generally bear the
risk of any loss.

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Trust Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned [or lost] on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.

Ratios/Supplemental Data
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate

<TABLE>
<S> <C>
1 Commencement of operations.
2 Total return excludes the effect of sales charge.
3 Annualized.
</TABLE>

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<PAGE>
PROSPECTUS 19

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

The Capital Growth, Sunbelt Equity and Value Income Stock Funds each distribute
its income quarterly. The Investment Grade Bond, Short-Term Bond and Prime
Quality Money Market Funds declare dividends daily and distribute these
dividends monthly. The Funds make distributions of capital gains, if any, at
least annually.

SIMPLY SPEAKING . . .

THE "RECORD DATE"
If you own Fund shares on a Fund's record date, you will be entitled to
receive the distribution.

TAXES

The Funds use a tax management technique known as "highest in, first out." Using
this technique, the portfolio holdings that have experienced the smallest gain
or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.

SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
20 PROSPECTUS

NOTES

<PAGE>
PROSPECTUS 21

NOTES
<PAGE>
22 PROSPECTUS

HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

STI Capital Management, N.A.
Trusco Capital Management, Inc.

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

ANNUAL AND SEMIANNUAL REPORTS
These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

BY MAIL:
Write to us c/o
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY E-MAIL:
xxxxxxxxxxxxxxxx

BY INTERNET:
http://www.suntrust.com

[GRAPHIC]

STI CLASSIC FUNDS-BOND FUNDS
FLEX AND INVESTOR SHARES

PROSPECTUS

October 1, 1998

FLORIDA TAX-EXEMPT BOND FUND

GEORGIA TAX-EXEMPT BOND FUND

INVESTMENT GRADE BOND FUND

INVESTMENT GRADE TAX-EXEMPT
BOND FUND

LIMITED-TERM FEDERAL MORTGAGE
SECURITIES FUND

SHORT-TERM BOND FUND

SHORT-TERM U.S. TREASURY
SECURITIES FUND

U.S. GOVERNMENT SECURITIES FUND

INVESTMENT ADVISORS
TO THE FUNDS:

STI CAPITAL MANAGEMENT, N.A.

TRUSCO CAPITAL MANAGEMENT, INC.
(the "Advisors")

SUNTRUST BANK, ATLANTA

-----------------
STI Classic Funds
-----------------

The STI Classic Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Investor Shares and the Flex Shares of the Bond Funds that you should
know before investing. Please read this prospectus and keep it for future
reference.

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 FLORIDA TAX-EXEMPT BOND FUND
4 GEORGIA TAX-EXEMPT BOND FUND
6 INVESTMENT GRADE BOND FUND
8 INVESTMENT GRADE TAX-EXEMPT BOND FUND
10 LIMITED-TERM FEDERAL MORTGAGE
SECURITIES FUND
12 SHORT-TERM BOND FUND
14 SHORT-TERM U.S. SECURITIES FUND
16 U.S. GOVERNMENT SECURITIES FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
18 EACH FUND'S PRINCIPAL INVESTMENTS
19 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
20 PURCHASING, SELLING AND EXCHANGING FUND SHARES
25 HISTORICAL FINANCIAL INFORMATION
ABOUT EACH FUND
26 HOW FUND SHARES ARE DISTRIBUTED
27 DISTRIBUTIONS OF DIVIDENDS AND CAPITAL GAINS
27 TAXES
30 HOW TO OBTAIN MORE INFORMATION ABOUT THE STI
CLASSIC FUNDS
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR "SIMPLY SPEAKING"
EXPLANATIONS.
- --------------------------------------------------------------------------------

[ICON] FUND SUMMARY
INVESTMENT STRATEGY
[ICON]
WHAT ARE THE RISKS OF INVESTING?
[ICON]
PERFORMANCE INFORMATION
[ICON]
WHAT IS AN INDEX?
[ICON]

FUND FEES AND EXPENSES
[ICON]
SALES LOADS
[ICON]
FUND INVESTMENTS
[ICON]
INVESTMENT ADVISORS
[ICON]
PURCHASING FUND SHARES
[ICON]

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

OCTOBER 1, 1998
<PAGE>
PROSPECTUS 1

INTRODUCTION

Like other investments, you could lose money on your investment in a Fund. Your
investment in a Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any government agency.

CHOOSING INVESTOR OR FLEX SHARES

Investor Shares and Flex Shares have different expenses and other
characteristics, allowing you to choose the class that 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.

INVESTOR SHARES
- - Front-end sales charge
- - Lower annual expenses
- - $2,000 minimum initial investment

FLEX SHARES
- - Deferred sales charge
- - Higher annual expenses
- - $10,000 minimum initial investment

SALES LOADS

This table describes the shareholder fees and expenses that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from your
investment in a Fund. These fees are in addition to the fees and expenses that
you pay indirectly by holding Fund shares (see "Fund Fees and Expenses" for each
Fund).

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
SHAREHOLDER FEES
3.75% None
Maximum Sales Charge (Load) Imposed
on Purchases
(as a percentage of offering
price)*

None 2.00%
Maximum Deferred
Sales Charge (Load)
(as a percentage of net asset
value)**
</TABLE>

*THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST.
SEE "PURCHASING FUND SHARES."

**THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE. SEE "SELLING FUND SHARES."
<PAGE>
2 PROSPECTUS

FLORIDA TAX-EXEMPT BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income exempt from federal income taxes for
Florida residents without undue risk
INVESTMENT FOCUS Florida municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest more Fund assets in undervalued
STRATEGY sectors and less in overvalued ones
INVESTOR PROFILE Florida residents who want income exempt from
federal income taxes
</TABLE>

INVESTMENT STRATEGY
The Florida Tax-Exempt Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal income taxes.
Issuers of these securities can be located in Florida, the District of Columbia,
Puerto Rico and other U.S. territories and possessions. In selecting investments
for the Fund, we try to limit risk as much as possible. Based on our analysis of
municipalities, credit risk, market trends and investment cycles, we attempt to
invest more of the Fund's assets in undervalued market sectors and less in
overvalued sectors. We also try to identify and invest in municipal issuers with
improving credit and avoid those with deteriorating credit. It is anticipated
that the Fund's average weighted maturity will range from 6 to 25 years. Due to
the Fund's investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in Florida debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Florida subjects the Fund to economic
conditions and government policies of Florida. Debt securities may decline in
credit quality due to economic or governmental events. In addition, an issuer
may be unable to make timely payments of principal or interest to the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 3

FLORIDA TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN 10-YEAR MUNICIPAL BOND INDEX AND
THE LIPPER FLORIDA MUNICIPAL DEBT AVERAGE. THE LIPPER FLORIDA MUNICIPAL DEBT
AVERAGE IS A COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS SIMILAR TO THE
FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (1/18/94)
<S> <C> <C> <C>
FLORIDA TAX-EXEMPT
BOND FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
LEHMAN 10-YEAR
MUNICIPAL BOND INDEX 00.0% 00.0% 00.0%
LIPPER FLORIDA MUNICIPAL
DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman 10-Year Municipal Bond
Index is a widely recognized index of municipal bonds with maturities
ranging from 9 to 12 years. The Index represents various market sectors and
geographic locations.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. The Fund fees and expenses
below are in addition to the sales charges you may pay directly when you
purchase or sell Fund shares. Sales charges are discussed on pages X and
XX of this prospectus.
This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %],
[ %] AND [ %], RESPECTIVELY. The Advisor and Distributor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees 0.00% 0.00%
Distribution and Service (12b-1) Fees 0.00% 0.00%
Other Expenses 0.00% 0.00%
------ ------
Total Annual Fund Operating Expenses 0.00% 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
</TABLE>

GEORGIA TAX-EXEMPT BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income exempt from federal and Georgia
income taxes for Georgia residents without undue
risk
INVESTMENT FOCUS Georgia municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest more Fund assets in undervalued
STRATEGY sectors and less in overvalued ones
INVESTOR PROFILE Georgia residents who want income exempt from
federal and state income taxes
</TABLE>

INVESTMENT STRATEGY
The Georgia Tax-Exempt Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Georgia
income taxes. Issuers of these securities can be located in Georgia, the
District of Columbia, Puerto Rico and other U.S. territories and possessions. In
selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We try to diversify the Fund's
holdings within Georgia. We also try to identify and invest in municipal issuers
with improving credit and avoid those with deteriorating credit. It is
anticipated that the Fund's average weighted maturity will range from 6 to 25
years.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in Georgia debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Georgia subjects the Fund to economic
conditions and government policies of Georgia. Debt securities may decline in
credit quality due to economic or governmental events. In addition, an issuer
may be unable to make timely payments of principal or interest to the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 5

GEORGIA TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN 10-YEAR MUNICIPAL BOND INDEX AND
THE LIPPER GEORGIA MUNICIPAL DEBT AVERAGE. THE LIPPER GEORGIA MUNICIPAL DEBT
AVERAGE IS A COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS SIMILAR TO THE
FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (1/19/94)
<S> <C> <C> <C>
GEORGIA TAX-EXEMPT
BOND FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
LEHMAN 10-YEAR
MUNICIPAL BOND INDEX 00.0% 00.0% 00.0%
LIPPER GEORGIA MUNICIPAL
DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman 10-Year Municipal Bond
Index is a widely recognized index of municipal bonds with maturities
ranging from 9 to 12 years. The Index represents various market sectors and
geographic locations.

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

INVESTMENT GRADE BOND FUND

FUND SUMMARY

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 7

INVESTMENT GRADE BOND FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (6/11/92)
<S> <C> <C> <C>
INVESTMENT GRADE
BOND FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
LEHMAN GOVERNMENT/
CORPORATE BOND INDEX 00.0% 00.0% 00.0%
LIPPER INTERMEDIATE INVESTMENT
GRADE DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
</TABLE>

INVESTMENT GRADE TAX-EXEMPT BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High total return through (i) current income that
is exempt federal income taxes and (ii) capital
appreciation, while preserving the principal amount
invested
INVESTMENT FOCUS Investment grade municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest more Fund assets in undervalued
STRATEGY sectors and less in overvalued ones
INVESTOR PROFILE Investors who want to receive tax-free current
income and an increase in the value of their
investment
</TABLE>

INVESTMENT STRATEGY
The Investment Grade Tax-Exempt Bond Fund invests primarily in
investment grade tax-exempt obligations, like municipal securities. The issuers
of these securities may be located in any U.S. state, territory or possession.
In selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We also try to identify and
invest in municipal issuers with improving credit and avoid those with
deteriorating credit. Due to the Fund's investment strategy, the Fund may buy
and sell securities frequently. This may result in higher transaction costs and
capital gains taxes. It is anticipated that the Fund's average weighted maturity
will range from four to ten years.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in investment grade debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. Debt securities may decline in credit
quality due to economic or governmental events. In addition, an issuer may be
unable to make timely payments of principal or interest to the Fund. Some
investment grade bonds may have speculative characteristics.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 9

INVESTMENT GRADE TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN 5-YEAR MUNICIPAL BOND INDEX AND
THE LIPPER INTERMEDIATE MUNICIPAL DEBT AVERAGE. THE LIPPER INTERMEDIATE
MUNICIPAL DEBT AVERAGE IS A COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS
SIMILAR TO THE FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (6/21/92)
<S> <C> <C> <C>
INVESTMENT GRADE
TAX-EXEMPT BOND FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
LEHMAN 5-YEAR MUNICIPAL
BOND FUND INDEX 00.0% 00.0% 00.0%
LIPPER INTERMEDIATE
MUNICIPAL DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman 5-Year Municipal Bond
Index is a widely recognized index of municipal bonds with maturities
ranging from 4 to 6 years. The Index represents various market sectors and
geographic locations.

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
</TABLE>

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital
INVESTMENT FOCUS Mortgage-backed securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify securities that are less prone
STRATEGY to pre-payment risk
INVESTOR PROFILE Conservative investors who want to receive income
from their investment
</TABLE>

INVESTMENT STRATEGY
The Limited-Term Federal Mortgage Securities Fund invests primarily
in U.S. government agency mortgage-backed securities, such as Fannie Mae, GNMA
and collateralized mortgage obligations. These securities typically have an
average maturity from one to five years. In selecting investments for the Fund,
we try to identify securities that we expect to perform well in rising and
falling markets. We also attempt to reduce the risk that the underlying
mortgages are pre-paid by focusing on securities that we believe are less prone
to this risk. For example, Fannie Mae or GNMA securities that were issued years
ago may be less prone to pre-payment risk because there have been many
opportunities for pre-payment, but none have occurred.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. This risk is greater for long-term debt securities than for
short-term debt securities. In addition, the Fund is subject to the risk of
investing in mortgage-backed securities. See "Mortgage-Backed Securities" below.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.

SIMPLY SPEAKING . . . MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. Collateralized
mortgage obligations are a type of mortgage-backed security that are divided
into separate maturity classes. Mortgage income is applied first to the CMO
with the shortest maturity, second to the CMO with the next shortest, and so
on. The mortgages underlying mortgage-backed securities may mature or be paid
off before the stated maturity date. This has four drawbacks. First, the Fund
may lose money on its investment. Second, the monthly income payments to the
Fund may fluctuate. Third, we cannot predict the maturity of the Fund's
investment with certainty. Fourth, we would invest any resulting proceeds
elsewhere, generally at lower interest rates.
<PAGE>
PROSPECTUS 11

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MERRILL LYNCH 1-5 YEAR
SHORT/INTERMEDIATE U.S TREASURY INDEX AND THE LIPPER SHORT/INTERMEDIATE U.S.
GOVERNMENT AVERAGE. THE LIPPER SHORT/INTERMEDIATE U.S. GOVERNMENT AVERAGE IS A
COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS SIMILAR TO THE FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (7/17/94)
<S> <C> <C> <C>
LIMITED-TERM FEDERAL
MORTGAGE SECURITIES FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
MERRILL LYNCH 1-5 YEAR SHORT
INTERMEDIATE
U.S TREASURY INDEX 00.0% 00.0% 00.0%
LIPPER SHORT/INTERMEDIATE
U.S. GOVERNMENT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
</TABLE>

SHORT-TERM BOND FUND

FUND SUMMARY

INVESTMENT STRATEGY
The Short-Term Bond Fund invests primarily in a diversified
portfolio of short- to medium-term investment grade U.S. Treasury, corporate
debt, mortgage-backed and asset-backed securities. The Fund intends to maintain
an average weighted maturity of three years or less. In selecting investments
for the Fund, we attempt to identify securities that offer a comparably better
investment return for a given level of credit risk. For example, short-term
bonds generally have better returns than money market instruments, with a fairly
modest increase in credit risk. We manage the Fund from a total return
perspective. That is, we make day to day investment decisions for the Fund with
a view towards maximizing returns. We analyze yields, market sectors and credit
risk in an effort to identify attractive investments with the best risk/reward
trade-off.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. In addition, an issuer may be unable to make timely payments of
principal or interest to the Fund. Also, the Fund may invest in bonds rated
"investment grade." Some investment grade bonds may have speculative
characteristics. In addition, the Fund is subject to the risk of investing in
mortgage-backed and asset-backed securities. See "Mortgage-Backed and
Asset-Backed Securities" to the right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED AND
ASSET-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The owner of an
asset-backed security owns a share of the underlying pool of assets, such as
truck and auto loans, leases and credit card receivables.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 13

SHORT-TERM BOND FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (3/22/93)
<S> <C> <C> <C>
SHORT-TERM BOND FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
SALOMON 1-3 YEAR TREASURY/
GOVERNMENT SPONSORED/
CORPORATE INDEX 00.0% 00.0% 00.0%
SALOMON ONE YEAR
TREASURY BENCHMARK
ON-THE-RUN INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Salomon 1-3 Year Treasury/
Government Sponsored/Corporate Index is a widely recognized index of U.S.
Treasury, government agency and investment grade securities with maturities
greater than one and less than three years. The Salomon One Year Treasury
Benchmark On-the-Run Index is a widely recognized index of
[ ].

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
</TABLE>

SHORT-TERM U.S. TREASURY SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital
INVESTMENT FOCUS Short-term U.S. Treasury securities only
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT Attempts to identify Treasury securities with
STRATEGY maturities that offer a comparably better return
potential and yield than either shorter maturity or
longer maturity securities for a given level of
interest rate risk
INVESTOR PROFILE Income oriented investors who are willing to accept
increased risk for the possibility of returns
greater than money market investing
</TABLE>

INVESTMENT STRATEGY
The Short-Term U.S. Treasury Securities Fund invests exclusively in
short-term U.S. Treasury securities (those with remaining maturities of three
years or less). The Fund intends to maintain an average weighted maturity from
one to two years. The Fund offers investors the opportunity to capture the
advantage of investing in short-term bonds over money market instruments.
Generally, short-term bonds offer a comparably better return than money market
instruments, with a modest increase in interest rate risk. We manage the Fund
from a total return perspective. That is, we make day to day investment
decisions for the Fund with a view toward maximizing returns and yield. We try
to select those U.S. Treasury securities that offer the best risk/reward
trade-off.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. Treasury securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 15

SHORT-TERM U.S. TREASURY SECURITIES FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (3/18/93)
<S> <C> <C> <C>
SHORT-TERM U.S. TREASURY
SECURITIES FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
SALOMON 1-3 YEAR TREASURY/
GOVERNMENT SPONSORED/
CORPORATE INDEX 00.0% 00.0% 00.0%
SALOMON 6 MONTH
TREASURY BILL INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Salomon 1-3 Year Treasury/
Government Sponsored/Corporate Index is a widely recognized index of U.S.
Treasury, government agency and investment grade securities with maturities
greater than one and less than three years. The Salomon 6 Month Treasury
Bill Index is a widely recognized index of
[ ].

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
</TABLE>

U.S. GOVERNMENT SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital
INVESTMENT FOCUS Mortgage-backed securities and U.S. Treasury
obligations
SHARE PRICE VOLATILITY Low to medium
PRINCIPAL INVESTMENT Attempts to increase income without adding undue
STRATEGY risk
INVESTOR PROFILE Conservative investors who want to receive income
from their investment
</TABLE>

INVESTMENT STRATEGY
The U.S. Government Securities Fund invests primarily in U.S.
government debt securities, such as mortgage-backed securities and U.S. Treasury
obligations. In an attempt to provide a consistently high dividend without
adding undue risk, the Fund focuses its investments in mortgage-backed
securities. The average maturity of the Fund's portfolio will typically range
from seven to fourteen years.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. government debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, the Fund is subject to the
risk of investing in mortgage-backed securities. See "Mortgage-Backed
Securities" below.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.

SIMPLY SPEAKING . . . MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The mortgages
underlying mortgage-backed securities may mature or be paid off before the
stated maturity date. This has four drawbacks. First, the Fund may lose money
on its investment. Second, the monthly income payments to the Fund may
fluctuate. Third, we cannot predict the maturity of the Fund's investment with
certainty. Fourth, we would invest any resulting proceeds elsewhere, generally
at lower interest rate.
<PAGE>
PROSPECTUS 17

U.S. GOVERNMENT SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE [INSERT INDEX] AND THE LIPPER
INTERMEDIATE GOVERNMENT FUNDS AVERAGE. THE LIPPER INTERMEDIATE GOVERNMENT FUNDS
AVERAGE IS A COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS SIMILAR TO THE
FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (6/9/94)
<S> <C> <C> <C>
U.S. GOVERNMENT
SECURITIES FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
[INSERT INDEX] 00.0% 00.0% 00.0%
LIPPER INTERMEDIATE GOVERNMENT
FUNDS AVERAGE 00.0% 00.0% 00.0%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 0000 $ 0000 $ 0000 $ 0000
Flex Shares $ 0000 $ 0000 $ 0000 $ 0000
</TABLE>

EACH FUND'S PRINCIPAL INVESTMENT

FUND INVESTMENT

The table below shows each Fund's principal investments. In other words,
the table describes the type or types of investments that we believe will
most likely help each Fund achieve its investment goal.
<TABLE>
<CAPTION>
INVESTMENT U.S. GOVERNMENT LIMITED-TERM SHORT-TERM SHORT-TERM U.S. INVESTMENT GRADE FLORIDA TAX-
GRADE BOND SECURITIES FUND FEDERAL MORTGAGE BOND TREASURY TAX-EXEMPT EXEMPT BOND
FUND SECURITIES FUND FUND SECURITIES FUND BOND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Asset-Backed
Securities X
- --------------------------------------------------------------------------------------------------------------------------------
Corporate
Debt
Securities X X
- --------------------------------------------------------------------------------------------------------------------------------
Mortgage-
Backed
Securities X X X X
- --------------------------------------------------------------------------------------------------------------------------------
Municipal
Securities X X
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury
Securities X X X X
- --------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
GEORGIA
TAX-EXEMPT
BOND FUND
<S> <C>
- -------------
Asset-Backed
Securities
- -------------
Corporate
Debt
Securities
- -------------
Mortgage-
Backed
Securities
- -------------
Municipal
Securities X
- -------------
U.S. Treasury
Securities
- -------------
</TABLE>

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Fund may invest up to 100% of its assets in cash, money market
instruments, repurchase agreements and short-term obligations. In addition, the
Investment Grade Bond Fund, Investment Grade Tax-Exempt Bond Fund, Florida
Tax-Exempt Bond Fund, U.S. Government Securities Fund, Georgia Tax-Exempt Bond
Fund, Limited-Term Federal Mortgage Securities Fund, Short-Term Bond Fund and
the Short-Term U.S. Treasury Securities Fund each may shorten its average
weighted maturity to as little as 90 days. When a Fund is investing for
temporary defensive purposes, it is not pursuing its investment goal.

INVESTMENT ADVISORS

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Investment Grade Bond, Limited-Term Federal

Mortgage Securities, Investment Grade Tax-Exempt Bond and Florida Tax-Exempt
Bond Funds. As of May 31, 1998, STI had approximately $ billion in assets
under management. For the fiscal year ended May 31, 1998, STI received advisory
fees of:

<TABLE>
<S> <C>
INVESTMENT GRADE BOND FUND................... %
INVESTMENT GRADE TAX-EXEMPT BOND FUND........ %
LIMITED-TERM FEDERAL MORTGAGE SECURITIES
FUND....................................... %
FLORIDA TAX-EXEMPT BOND FUND................. %
</TABLE>

<PAGE>
PROSPECTUS 19

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the U.S. Government Securities,
Short-Term Bond, and Short-Term U.S. Treasury Securities Funds. As of May 31,
1998, Trusco had approximately $
billion in assets under management. For the fiscal year ended May 31, 1998,
Trusco received advisory fees of:

<TABLE>
<S> <C>
U.S. GOVERNMENT SECURITIES FUND.............. %
SHORT-TERM U.S. TREASURY SECURITIES FUND..... %
SHORT-TERM BOND FUND......................... %
</TABLE>

SunTrust Bank, Atlanta, 25 Park Place, Atlanta, Georgia 30303, serves as the
Advisor to the Georgia Tax-Exempt Bond Fund. As of May 31, 1998, SunTrust Bank,
Atlanta had approximately $40 billion under management. For the fiscal year
ended May 31, 1998, SunTrust Bank, Atlanta received advisory fees of [ ]% for
the Georgia Tax-Exempt Bond Fund.

The Advisors may use their affiliates as brokers for Fund transactions.

PORTFOLIO MANAGERS

The U.S. Government Securities Fund has been co-managed by Mr. Charles B.
Leonard and Mr. Michael L. Ford since it began operating in June 1994. Mr.
Leonard, CFA, has served as First Vice President of Trusco since , and has
more than 25 years of investment experience. Mr. Ford has been an Associate of
Trusco since April 1994, and has more than 11 years of investment experience.
Prior to joining Trusco, Mr. Ford served as a senior securities analyst at
Liberty Capital Advisors from 1992 to 1994 and served as a securities analyst at
Southern Farm Bureau Life Insurance Company from 1990 to 1992.

The Limited-Term Federal Mortgage Securities Fund has been co-managed by Mr. L.
Earl Denney, CFA, and Mr. Dave E. West, CFA, since it began operating in June
1994. Mr. Denney has served as Senior Vice President of STI since 1983. Mr.
Denney has more than 20 years of experience in fixed income investment
management. Prior to joining STI, he was fixed income portfolio manager with
American National Bank. Mr. West has served as a Vice President of STI since
, and has served as a fixed-income portfolio manager with STI since 1989.

Mr. David Yealy has served as a Vice President of Trusco since . He has
managed the Short-Term Bond Fund and Short-Term U.S. Treasury Securities Fund
since July 1996. He has more than years of investment experience.

Mr. Ronald Schwartz, CFA, has served as a Senior Vice President since . He
has managed the Investment Grade Tax-Exempt Bond Fund and Florida Tax-Exempt
Bond Fund since each Fund began operating in June 1992 and January 1994,
respectively. He has more than years of investment experience. Prior to
joining STI, he served as a trader at the Bank of Boston.

Ms. Gay Cash has served as a Vice President of SunTrust Bank, Atlanta since
1987. She has managed Georgia Tax-Exempt Bond Fund since it began operating in
January 1994. She has more than 18 years of investment experience.
<PAGE>
20 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

PURCHASING FUND SHARES

HOW TO PURCHASE FUND SHARES
You may purchase Investor and Flex Shares directly from us by:
- - mail
- - telephone
- - wire
- - direct deposit, or
- - Automated Clearing House (ACH).
SIMPLY SPEAKING . . .

WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open
for business (a Business Day).

To purchase shares directly from us, please call 1-800-874-4770. Write your
check, payable in U.S. dollars, to "STI Classic Funds" and include the name of
the appropriate Fund(s) on the check. We cannot accept third-party checks,
credit cards, credit card checks, or cash. You may also purchase shares through
Investment Consultants of certain correspondent banks of SunTrust Banks, Inc.
(SunTrust), or other financial institutions that have executed dealer agreements
with us. We may reject any purchase order if we determine that accepting the
order would not be in the best interests of the STI Classic Funds or its
shareholders.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order plus, in the case of
Investor Shares, the applicable front-end sales charge. We calculate each Fund's
NAV once each Business Day at the regularly-scheduled close of normal trading on
the New York Stock Exchange (normally, 4:00 p.m. Eastern time). So, if you want
to receive the current Business Day's NAV, generally we must receive your
purchase order before 4:00 p.m. Eastern time.
SIMPLY SPEAKING . . .

NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

MINIMUM PURCHASES
To purchase Investor Shares for the first time, you must invest at least $2,000
in any Fund. To purchase Flex Shares for the first time, you must invest at
least $10,000 in any Fund ($2,000 for retirement plans). To purchase additional
shares of any Fund, you must invest at least $1,000 or, if you pay by a
statement coupon, $100. We may accept investments of smaller amounts, for either
class of shares, at our discretion.
<PAGE>
PROSPECTUS 21

PURCHASING, SELLING AND EXCHANGING FUND SHARES

SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a SunTrust affiliate bank, you
may purchase shares of either class automatically through regular deductions
from your account. With a $500 minimum initial investment, you may begin
regularly scheduled investments from $50 up to $100,000 once or twice a month.
If you are buying Flex Shares, you should plan on investing at least $10,000 per
Fund during the first two years. The Distributor may close your account if you
do not meet this minimum investment requirement at the end of two years.

SALES CHARGES
FRONT-END SALES CHARGES - INVESTOR SHARES
THE AMOUNT OF ANY FRONT-END SALES CHARGE INCLUDED IN YOUR OFFERING PRICE VARIES,
DEPENDING ON THE AMOUNT OF YOUR INVESTMENT:

<TABLE>
<CAPTION>
FUND IF YOUR INVESTMENT IS: YOUR SALES CHARGE YOUR SALES CHARGE
AS A PERCENTAGE AS A PERCENTAGE OF
OF YOUR NET INVESTMENT
OFFERING PRICE
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund Less than $100,000 3.75% 3.90%
Investment Grade Tax-Exempt Bond Fund $100,000 but less than $250,000 3.25% 3.36%
Investment Grade Bond Fund $250,000 but less than $1,000,000 2.50% 2.56%
Florida Tax-Exempt Bond Fund $1,000,000 and over 1.50% 1.52%
Georgia Tax Exempt Bond Fund
- --------------------------------------------------------------------------------------------------------------------

Limited-Term Federal Less than $100,000 2.50% 2.56%
Mortgage Securities Fund $100,000 but less than $250,000 1.75% 1.78%
$250,000 but less than $1,000,000 1.25% 1.27%
$1,000,000 and over None None
- --------------------------------------------------------------------------------------------------------------------

Short-Term Bond Fund Less than $100,000 2.00% 2.04%
$100,000 but less than $250,000 1.50% 1.52%
$250,000 but less than $1,000,000 1.00% 1.01%
$1,000,000 and over None None
- --------------------------------------------------------------------------------------------------------------------

Short-Term U.S. Treasury Less than $100,000 1.00% 1.01%
Securities Fund $100,000 but less than $250,000 0.75% 0.76%
$250,000 but less than $1,000,000 0.50% 0.50%
$1,000,000 and over None None
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
22 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

WAIVER OF FRONT-END SALES CHARGE -
INVESTOR SHARES
The front-end sales charge will be waived on Investor Shares purchased: (1)
through reinvestment of dividends and distributions; (2) through a SunTrust
Securities, Inc. asset allocation account; (3) by persons repurchasing shares
they redeemed within the last 60 days (see Repurchase of Investor Shares); (4)
by employees, and members of their immediate family, of SunTrust and its
affiliates; (5) 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; (6) 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 acted in a fiduciary, administrative, custodial or investment advisory
capacity is closed; or (7) through dealers, retirement plans, asset allocation
programs and financial institutions that, under their dealer agreements with the
Distributor or otherwise, do not receive any or receive a reduced portion of the
front-end sales charge.

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, we must receive your purchase order within 60 days of
your redemption. In addition, you must notify us when you send in your purchase
order that you are repurchasing shares.

REDUCED SALES CHARGES - INVESTOR SHARES

RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate, this
right allows you to add the value of the Investor Shares you already own to the
amount that you are currently purchasing. We 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. We will only consider the value
of Investor Shares purchased previously that were sold subject to a sales
charge. To be entitled to a reduced sales charge based on shares already owned,
you must ask us for the reduction at the time of purchase. You must provide us
with your account number(s) and, if applicable, the account numbers for your
spouse and/or children (and provide the children's ages). We may amend or
terminate this right of accumulation at any time.

LETTER OF INTENT. You may purchase Investor Shares at the sales charge rate
applicable to the total amount of the purchases you intend to make over a
13-month period. In other words, a Letter of Intent allows you to purchase
Investor Shares of a Fund over a 13-month period and receive the same sales
charge as if you had purchased all the shares at the same time. We will only
consider the value of Investor Shares sold subject to a sales charge. To be
entitled to a reduced sales charge based on shares you intend to purchase over
the 13-month period, you must send us a Letter of Intent. As a result, neither
Investor Shares of the Money Market Funds nor Investor Shares purchased with
dividends or distributions will be included in the calculation. In calculating
the total amount of purchases you may include in your letter purchases made up
to 90 days before the date of the Letter. The 13-month period begins on the date
of the first purchase, including those purchases made in the 90-day period
before the date of the Letter. Please note that the purchase price of these
prior purchases will not be adjusted.

You are not legally bound by the terms of your Letter of Intent to purchase the
amount of your shares stated in the Letter. The Letter does, however, authorize
us to hold in escrow 3.75% of the total amount you intend to purchase. If you do
not complete the total intended purchase at the end of the 13-month period, the
transfer agent will redeem the necessary portion of the escrowed
<PAGE>
PROSPECTUS 23

PURCHASING, SELLING AND EXCHANGING FUND SHARES
shares to make up the difference between the reduced rate sales charge (based on
the amount you intended to purchase) and the sales charge that would normally
apply (based on the actual amount you purchased).

COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the appropriate
sales charge rate, we 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 a front-end sales charge when you purchase Flex Shares. But if
you sell your shares within the first year after your purchase, you will pay a
contingent deferred sales charge equal to 2.00% of either (1) the NAV of the
shares at the time of purchase, or (2) NAV of the shares next calculated after
we receive your sale request, whichever is less. The maximum deferred sales
charge as a percentage of the net amount invested is [ ]%. The sales charge
does not apply to Flex Shares you purchase through reinvestment of dividends or
distributions. So, you never pay a deferred sales charge on any increase in your
investment above the initial offering price. This sales charge does not apply to
exchanges of Flex Shares of one Fund for Flex Shares of another Fund.

The contingent deferred sales charge will be waived if you sell your Flex Shares
for the following reasons: (1) to make certain withdrawals from a retirement
plan (not including IRAs); (2) because of death or disability; or (3) for
certain payments under the Systematic Withdrawal Plan (which is discussed
below).
SIMPLY SPEAKING . . .

OFFERING PRICE OF FUND SHARES
The offering price of Investor Shares is the NAV next calculated after we
receive your request, plus the front-end sales load. The offering price of
Flex Shares is simply the next calculated NAV.

SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting us directly by mail or telephone. You may also sell your shares by
contacting your financial institution by mail or telephone. To sell your shares
by telephone, the amount of your sale must be at least $1,000. If you would like
to sell $25,000 or more of your shares, please notify us in writing and include
a signature guarantee (a notarized signature is not sufficient). The sale price
of each share will be the next NAV determined after we receive your request
less, in the case of Flex Shares, any applicable deferred sales charge.
SIMPLY SPEAKING . . .

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 monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have an account with a
SunTrust affiliated bank, electronically transferred to your account.

RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within five Business Days after we
receive your request.
<PAGE>
24 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES
Your proceeds can be wired to your bank account (subject to a $7.00 fee) or sent
to you by check. If you recently purchased your shares by check or through ACH,
redemption proceeds may not be available until your check has cleared (which may
take up to 15 Business Days).

INVOLUNTARY SALES OF YOUR SHARES
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 sell your shares. You
will always be given at least 60 days' written notice to give you time to add to
your account and avoid selling your shares.

INVESTOR SHARES
You may exchange Investor Shares of any Fund for Investor Shares of any other
Fund. If you exchange shares that you purchased without a sales charge or with a
lower sales charge into a Fund with a sales charge or with a higher sales
charge, the exchange is subject to an incremental sales charge (e.g., the
difference between the lower and higher applicable sales charges). If you
exchange shares into a Fund with the same, lower or no sales charge there is no
incremental 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. No contingent deferred sales
charge is imposed on redemptions of Money Market Funds shares you acquire in an
exchange, provided you hold your shares for at least one year from your initial
purchase. If you exchange Flex Shares for Investor Shares of a Money Market
Fund, you may only exchange those Money Market Fund Investor Shares for Flex
Shares.
<PAGE>
PROSPECTUS 25

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Investor and Flex
Shares of each Fund. This information is intended to help you understand each
Fund's financial performance for the past five years, or, if shorter, the period
of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned [or lost] on an investment in a Fund,
assuming you reinvested all of your dividends and distributions.

- ----------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate

<TABLE>
<S> <C>
1 Commencement of operations.
2 Total return excludes the effect of sales charge.
3 Annualized.
</TABLE>

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<PAGE>
26 PROSPECTUS

HOW FUND SHARES ARE DISTRIBUTED

DISTRIBUTION OF FUND SHARES

Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges. For
Investor Shares, distribution fees, as a percentage of average daily net assets,
are as follows:

<TABLE>
<CAPTION>
MAXIMUM FOR FISCAL YEAR ENDING MAY 31, 1998
<S> <C> <C>
Investment Grade Bond Fund .43%
U.S. Government Securities Fund .38%
Limited-Term Federal Mortgage Securities Fund .23%
Short-Term Bond Fund .23%
Short-Term U.S. Treasury Securities Fund .18%
Investment Grade Tax-Exempt Bond Fund .43%
Florida Tax-Exempt Bond Fund .18%
Georgia Tax-Exempt Bond Fund .18%
</TABLE>

For Flex Shares, the maximum distribution fee is .75% of the average daily net
assets of each Fund. For fiscal year ending May 31, 1998, distribution fees
were:

<TABLE>
<CAPTION>
Investment Grade Bond Fund .XX%
<S> <C> <C>
U.S. Government Securities Fund .XX%
Limited-Term Federal Mortgage Securities Fund .XX%
Short-Term Bond Fund .XX%
Short-Term U.S. Treasury Securities Fund .XX%
Investment Grade Tax-Exempt Bond Fund .XX%
Florida Tax-Exempt Bond Fund .XX%
Georgia Tax-Exempt Bond Fund .XX%
</TABLE>
<PAGE>
PROSPECTUS 27

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

Each Fund declares income dividends daily and pays these dividends monthly. The
Funds make distributions of capital gains, if any, at least annually.

THE "RECORD DATE"
If you own Fund shares on a Fund's record date, you will be entitled to
receive the distribution.

TAXES

The Investment Grade Tax-Exempt Bond, Florida Tax-Exempt Bond and Georgia
Tax-Exempt Bond Funds intend to distribute federally tax-exempt income. Each
Fund may invest a portion of its assets in securities that generate taxable
income for federal or state income taxes. Income exempt from federal tax may be
subject to state and local taxes. Any capital gains distributed by these Funds
may be taxable.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
28 PROSPECTUS

NOTES

<PAGE>
PROSPECTUS 29

NOTES
<PAGE>
30 PROSPECTUS

HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

STI Capital Management, N.A.
Trusco Capital Management, Inc.
SunTrust Bank, Atlanta

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

ANNUAL AND SEMIANNUAL REPORTS
These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

BY MAIL:
Write to us c/o
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY E-MAIL:
xxxxxxxxxxxxxxxx

BY INTERNET:
http://www.suntrust.com

[GRAPHIC]

STI CLASSIC FUNDS--BOND AND MONEY
MARKET FUNDS TRUST SHARES

PROSPECTUS

October 1, 1998

BOND FUNDS

FLORIDA TAX-EXEMPT BOND FUND

GEORGIA TAX-EXEMPT BOND FUND

INVESTMENT GRADE BOND FUND

INVESTMENT GRADE TAX-EXEMPT
BOND FUND

LIMITED-TERM FEDERAL MORTGAGE
SECURITIES FUND

SHORT-TERM BOND FUND

SHORT-TERM U.S. TREASURY
SECURITIES FUND

U.S. GOVERNMENT SECURITIES FUND

MONEY MARKET FUNDS

PRIME QUALITY MONEY MARKET FUND

TAX-EXEMPT MONEY MARKET FUND

U.S. GOVERNMENT SECURITIES

MONEY MARKET FUND

INVESTMENT ADVISORS
TO THE FUNDS:

STI CAPITAL MANAGEMENT, N.A.

TRUSCO CAPITAL MANAGEMENT, INC.
(the "Advisors")

SUNTRUST BANK, ATLANTA

----------------
STI Classic Fund
----------------

The STI Classic Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Investor Shares and Flex Shares of the Equity Funds that you should
know before investing. Please read this prospectus and keep it for future
reference.

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 FLORIDA TAX-EXEMPT BOND FUND
4 GEORGIA TAX-EXEMPT BOND FUND
6 INVESTMENT GRADE BOND FUND
8 INVESTMENT GRADE TAX-EXEMPT BOND FUND
10 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
12 PRIME QUALITY MONEY MARKET FUND
14 SHORT-TERM BOND FUND
16 SHORT-TERM U.S. SECURITIES FUND
18 TAX-EXEMPT MONEY MARKET FUND
20 U.S. GOVERNMENT SECURITIES FUND
22 U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
24 EACH FUND'S PRINCIPAL INVESTMENTS
25 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
26 PURCHASING, SELLING AND EXCHANGING FUND SHARES
28 HISTORICAL FINANCIAL INFORMATION
ABOUT EACH FUND
29 DISTRIBUTIONS OF DIVIDENDS AND CAPITAL GAINS
29 TAXES
30 HOW TO OBTAIN MORE INFORMATION
ABOUT THE STI CLASSIC FUNDS
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR "SIMPLY SPEAKING"
EXPLANATIONS.
- --------------------------------------------------------------------------------

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

OCTOBER 1, 1998
<PAGE>
PROSPECTUS 1

INTRODUCTION

The value of your investment in a Fund (except a Money Market Fund) is based on
the market prices of the securities the Fund holds. These prices change daily
due to economic and other events that affect securities markets generally, as
well as those that affect particular companies or governments. These price
movements, sometimes called volatility, will vary depending on the types of
securities a Fund owns and the markets where these securities trade.

Like other investments, you could lose money on your investment in a Fund. Your
investment in a Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any government agency.

Each Money Market Fund tries to maintain a constant price per share of $1.00,
but we cannot guarantee this.

FLORIDA TAX-EXEMPT BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS Current income exempt from federal income taxes
for Florida residents without undue risk
INVESTMENT FOCUS Florida municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest more Fund assets in undervalued
STRATEGY sectors and less in overvalued ones
INVESTOR PROFILE Florida residents who want income exempt
from federal income taxes
</TABLE>

INVESTMENT STRATEGY
The Florida Tax-Exempt Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal income taxes.
Issuers of these securities can be located in Florida, the District of Columbia,
Puerto Rico and other U.S. territories and possessions. In selecting investments
for the Fund, we try to limit risk as much as possible. Based on our analysis of
municipalities, credit risk, market trends and investment cycles, we attempt to
invest more of the Fund's assets in undervalued market sectors and less in
overvalued sectors. We also try to identify and invest in municipal issuers with
improving credit and avoid those with deteriorating credit. It is anticipated
that the Fund's average weighted maturity will range from 6 to 25 years. Due to
the Fund's investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in Florida debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Florida subjects the Fund to economic
conditions and government policies of Florida. Debt securities may decline in
credit quality due to economic or governmental events. In addition, an issuer
may be unable to make timely payments of principal or interest to the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 3

FLORIDA TAX-EXEMPT BOND FUND

<TABLE>
<CAPTION>
INCEPTION
1 YEAR 3 YEARS (1/25/94)
<S> <C> <C> <C>
FLORIDA TAX-EXEMPT BOND FUND 00.0% 00.0% 00.0%
LEHMAN 10-YEAR MUNICIPAL BOND INDEX 00.0% 00.0% 00.0%
LIPPER FLORIDA MUNICIPAL DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman 10-Year Municipal Bond
Index is a widely recognized index of municipal bonds with maturities
ranging from 9 to 12 years. The Index represents various market sectors and
geographic locations.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of their fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

GEORGIA TAX-EXEMPT BOND FUND

FUND SUMMARY

INVESTMENT STRATEGY
The Georgia Tax-Exempt Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Georgia
income taxes. Issuers of these securities can be located in Georgia, the
District of Columbia, Puerto Rico and other U.S. territories and possessions. In
selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We try to diversify the Fund's
holdings within Georgia. We also try to identify and invest in municipal issuers
with improving credit and avoid those with deteriorating credit. It is
anticipated that the Fund's average weighted maturity will range from 6 to 25
years.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in Georgia debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Georgia subjects the Fund to economic
conditions and government policies of Georgia. Debt securities may decline in
credit quality due to economic or governmental events. In addition, an issuer
may be unable to make timely payments of principal or interest to the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 5

GEORGIA TAX-EXEMPT BOND FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (1/18/94)
<S> <C> <C> <C>
GEORGE TAX-EXEMPT
BOND FUND 00.0% 00.0% 00.0%
LEHMAN 10-YEAR
MUNICIPAL BOND INDEX 00.0% 00.0% 00.0%
LIPPER GEORGE MUNICIPAL DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman 10-Year Municipal Bond
Index is a widely recognized index of municipal bonds with maturities
ranging from 9 to 12 years. The Index represents various market sectors and
geographic locations.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

INVESTMENT GRADE BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High total return through current income and
capital appreciation, while preserving the
principal amount invested
INVESTMENT FOCUS Investment grade U.S. government and corporate
debt securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify relatively inexpensive
STRATEGY securities in a selected market index
INVESTOR PROFILE Investors who want to receive income from their
investment, as well as an increase in the value of
the investment
</TABLE>

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 7

INVESTMENT GRADE BOND FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (7/16/92)
<S> <C> <C> <C>
INVESTMENT GRADE
BOND FUND 00.0% 00.0% 00.0%
LEHMAN GOVERNMENT/
CORPORATE BOND INDEX 00.0% 00.0% 00.0%
LIPPER INTERMEDIATE INVESTMENT
GRADE DEBT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

INVESTMENT GRADE TAX-EXEMPT BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High total return through (i) current income that
is exempt from federal income taxes and (ii)
capital appreciation, while preserving the
principal amount invested
INVESTMENT FOCUS Investment grade municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest more Fund assets in undervalued
STRATEGY sectors and less in overvalued ones
INVESTOR PROFILE Investors who want to receive tax-free current
income and an increase in the value of their
investment
</TABLE>

INVESTMENT STRATEGY
The Investment Grade Tax-Exempt Bond Fund invests primarily in
investment grade tax-exempt obligations, like municipal securities. The issuers
of these securities may be located in any U.S. state, territory or possession.
In selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We also try to identify and
invest in municipal issuers with improving credit and avoid those with
deteriorating credit. Due to the Fund's investment strategy, the Fund may buy
and sell securities frequently. This may result in higher transaction costs and
capital gains taxes. It is anticipated that the Fund's average weighted maturity
will range from four to ten years.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in investment grade debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. Debt securities may decline in credit
quality due to economic or governmental events. In addition, an issuer may be
unable to make timely payments of principal or interest to the Fund. Some
investment grade bonds may have speculative characteristics.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 9

INVESTMENT GRADE TAX-EXEMPT BOND FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (10/21/93)
<S> <C> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND 00.0% 00.0% 00.0%
LEHMAN 5-YEAR
MUNICIPAL BOND INDEX 00.0% 00.0% 00.0%
LIPPER INTERMEDIATE MUNICIPAL DEBT
AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman 5-Year Municipal Bond
Index is a widely recognized index of municipal bonds with maturities
ranging from 4 to 6 years. The Index represents various market sectors and
geographic locations.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

FUND SUMMARY

INVESTMENT STRATEGY
The Limited-Term Federal Mortgage Securities Fund invests primarily
in U.S. government agency mortgage-backed securities, such as Fannie Mae, GNMA
and collateralized mortgage obligations. These securities typically have an
average maturity from one to five years. In selecting investments for the Fund,
we try to identify securities that we expect to perform well in rising and
falling markets. We also attempt to reduce the risk that the underlying
mortgages are pre-paid by focusing on securities that we believe are less prone
to this risk. For example, Fannie Mae or GNMA securities that were issued years
ago may be less prone to pre-payment risk because there have been many
opportunities for pre-payment, but none have occurred.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. This risk is greater for long-term debt securities than for
short-term debt securities. In addition, the Fund is subject to the risk of
investing in mortgage-backed securities. See "Mortgage-Backed Securities" to the
right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. Collateralized
mortgage obligations are a type of mortgage-backed security that are divided
into separate maturity classes. Mortgage income is applied first to the CMO
with the shortest maturity, second to the CMO with the next shortest, and so
on. The mortgages underlying mortgage-backed securities may mature or be paid
off before the stated maturity date. This has four drawbacks. First, the Fund
may lose money on its investment. Second, the monthly income payments to the
Fund may fluctuate. Third, we cannot predict the maturity of the Fund's
investment with certainty. Fourth, we would invest any resulting proceeds
elsewhere, generally at lower interest rates.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 11

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MERRILL LYNCH 1-5 YEAR
SHORT/INTERMEDIATE U.S. TREASURY INDEX AND THE LIPPER SHORT/INTERMEDIATE U.S.
GOVERNMENT AVERAGE. THE LIPPER SHORT/INTERMEDIATE U.S. GOVERNMENT AVERAGE IS A
COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS SIMILAR TO THE FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (6/7/94)
<S> <C> <C> <C>
LIMITED-TERM FEDERAL
MORTGAGE SECURITIES FUND 00.0% 00.0% 00.0%
MERRILL LYNCH 1-5 YEAR
SHORT/INTERMEDIATE
U.S. TREASURY INDEX 00.0% 00.0% 00.0%
LIPPER SHORT/INTERMEDIATE
U.S. GOVERNMENT AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

PRIME QUALITY MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income, while preserving capital and liquidity
INVESTMENT FOCUS Money market instruments
PRINCIPAL INVESTMENT Attempts to identify money market instruments with the most attractive risk/return
STRATEGY trade-off
INVESTOR PROFILE Conservative investors who want to receive current income from their investment
</TABLE>

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 13

PRIME QUALITY MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE IBC/ DONOGHUE FIRST TIER AVERAGE.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
PRIME QUALITY
MONEY MARKET FUND 00.0% 00.0% 00.0%
IBC/DONOGHUE FIRST
TIER AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SHORT-TERM BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 15

SHORT-TERM BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE SALOMON 1-3 YEAR TREASURY/GOVERNMENT
SPONSORED/ CORPORATE INDEX AND THE SALOMON ONE YEAR TREASURY BENCHMARK
ON-THE-RUN INDEX.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (3/15/93)
<S> <C> <C> <C>
SHORT-TERM BOND FUND 00.0% 00.0% 00.0%
SALOMON 1-3 YEAR TREASURY/
GOVERNMENT SPONSORED/
CORPORATE INDEX 00.0% 00.0% 00.0%
SALOMON ONE YEAR TREASURY
BENCHMARK
ON-THE-RUN INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Salomon 1-3 Year Treasury/
Government Sponsored/ Corporate Index is a widely recognized index of U.S.
Treasury, government agency and investment grade securities with maturities
greater than one and less than three years. The Salomon One Year Treasury
Benchmark On-the-Run Index is a widely recognized index of [ ].

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SHORT-TERM U.S. TREASURY SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS High current income, while preserving capital
INVESTMENT FOCUS Short-term U.S. Treasury securities only
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT Attempts to identify Treasury securities with
STRATEGY maturities that offer a comparably better return
potential and yield than either shorter maturity or
longer maturity securities for a given level of
interest rate risk
INVESTOR PROFILE Income oriented investors who are willing to accept
increased risk for the possibility of returns
greater than money market investing
</TABLE>

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 17

SHORT-TERM U.S. TREASURY SECURITIES FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (3/15/93)
<S> <C> <C> <C>
SHORT-TERM U.S. TREASURY SECURITIES
FUND 00.0% 00.0% 00.0%
SALOMON 1-3 YEAR TREASURY/ GOVERNMENT
SPONSORED/ CORPORATE INDEX 00.0% 00.0% 00.0%
SALOMON 6 MONTH TREASURY BILL INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Salomon 1-3 Year Treasury/
Government Sponsored/Corporate Index is a widely recognized index of U.S.
Treasury, government agency and investment grade securities with maturities
greater than one and less than three years. The Salomon 6 Month Treasury
Bill Index is a widely recognized index of [ ].

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

TAX-EXEMPT MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS High current interest income exempt from federal income taxes, while preserving capital
and liquidity
INVESTMENT FOCUS Municipal money market instruments
PRINCIPAL INVESTMENT Attempts to increase income without added risk by analyzing credit quality
STRATEGY
INVESTOR PROFILE Conservative investors who want to receive current tax-exempt income from their
investment
</TABLE>

INVESTMENT STRATEGY
The Tax-Exempt Money Market Fund invests substantially all of its
assets in money market instruments issued by municipalities and issuers that pay
income exempt from federal income taxes. In selecting investments for the Fund,
we analyze the credit quality and structure of each security to minimize risk.
We actively manage the Fund's average maturity based on current interest rates
and our outlook of the market.
MONEY MARKET FUNDS
Money market funds invest in high quality, short-term debt securities,
commonly known as money market instruments. These include CDs, bankers'
acceptances, U.S. Treasury securities, some municipal securities, commercial
paper, and repurchase agreements. Money market funds follow strict rules about
credit risk, maturity and diversification of its investments. An investment in a
money market fund is not a bank deposit. Although a money market fund seeks to
keep a constant share price of $1.00, you may lose money by investing in a money
market fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 19

TAX-EXEMPT MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE IBC/ DONOGHUE TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
TAX-EXEMPT MONEY MARKET FUND 00.0% 00.0% 00.0%
IBC/DONOGHUE TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE 00.0% 00.0% 00.0%
</TABLE>

[INSERT 7-DAY YIELD OR PHONE NUMBER TO OBTAIN YIELD]
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue Tax-Free
Stockbroker & General Purpose Average is a widely recognized index of
[ ].

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

U.S. GOVERNMENT SECURITIES FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS High current income, while preserving capital
INVESTMENT FOCUS Mortgage-backed securities and U.S. Treasury
obligations
SHARE PRICE VOLATILITY Low to medium
PRINCIPAL INVESTMENT Attempts to increase income without adding undue
STRATEGY risk
INVESTOR PROFILE Conservative investors who want to receive income
from their investment
</TABLE>

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. government debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, the Fund is subject to the
risk of investing in mortgage-backed securities. See "Mortgage-Backed
Securities" below.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.

SIMPLY SPEAKING . . . MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The mortgages
underlying mortgage-backed securities may mature or be paid off before the
stated maturity date. This has four drawbacks. First, the Fund may lose money
on its investment. Second, the monthly income payments to the Fund may
fluctuate. Third, we cannot predict the maturity of the Fund's investment with
certainty. Fourth, we would invest any resulting proceeds elsewhere, generally
at lower interest rate.
<PAGE>
PROSPECTUS 21

U.S. GOVERNMENT SECURITIES FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (7/31/94)
<S> <C> <C> <C>
U.S. GOVERNMENT
SECURITIES FUND 00.0% 00.0% 00.0%
[INSERT INDEX] 00.0% 00.0% 00.0%
LIPPER INTERMEDIATE
GOVERNMENT FUNDS
AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS High current income, while preserving capital and liquidity
INVESTMENT FOCUS U.S. Treasury and government agency securities, and repurchase agreements
PRINCIPAL INVESTMENT Attempts to increase income without adding undue risk by analyzing yields
STRATEGY
INVESTOR PROFILE Conservative investors who want to receive current income
</TABLE>

INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively
in U.S. Treasury bills, notes, bonds and components of these securities,
government agency securities, and repurchase agreements involving these
securities. In selecting investments for the Fund, we try to increase income
without adding undue risk by analyzing yields. We actively manage the maturity
of the Fund and its portfolio to maximize the Fund's yield based on current
market interest rates and our outlook on the market.
MONEY MARKET FUNDS
Money market funds invest in high quality, short-term debt securities,
commonly known as money market instruments. These include CDs, bankers'
acceptances, U.S. Treasury securities, some municipal securities, commercial
paper, and repurchase agreements. Money market funds follow strict rules about
credit risk, maturity and diversification of its investments. An investment in a
money market fund is not a bank deposit. Although a money market fund seeks to
keep a constant share price of $1.00, you may lose money by investing in a money
market fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 23

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE IBC/ DONOGHUE U.S. TREASURY & REPO
AVERAGE.

[INSERT 7-DAY YIELD OR PHONE NUMBER TO OBTAIN YIELD]
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue U.S. Treasury &
Repo Average is a widely recognized index of [ ].

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

EACH FUND'S PRINCIPAL INVESTMENT

FUND INVESTMENT

BOND FUNDS

<TABLE>
<CAPTION>
INVESTMENT U.S. LIMITED- SHORT- SHORT-TERM INVESTMENT FLORIDA GEORGIA
GRADE BOND GOVERNMENT TERM FEDERAL TERM BOND U.S. GRADE TAX- TAX- TAX-
FUND SECURITIES MORTGAGE FUND TREASURY EXEMPT EXEMPT EXEMPT
FUND SECURITIES SECURITIES BOND BOND BOND
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Asset-Backed
Securities X
- ----------------------------------------------------------------------------------------------------------------------------
Corporate
Debt Securities X X
- ----------------------------------------------------------------------------------------------------------------------------
Mortgage-
Backed Securities X X X X
- ----------------------------------------------------------------------------------------------------------------------------
Municipal Securities X X X
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Government
Securities X X X X
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

MONEY MARKET FUNDS

<TABLE>
<CAPTION>
PRIME QUALITY MONEY U.S. GOVERNMENT SECURITIES TAX-EXEMPT MONEY
MARKET FUND MONEY MARKET FUND MARKET FUND
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Bank Obligations X
- -----------------------------------------------------------------------------------------------------------
Commercial Paper X X
- -----------------------------------------------------------------------------------------------------------
Corporate Obligations X
- -----------------------------------------------------------------------------------------------------------
Foreign Securities X
- -----------------------------------------------------------------------------------------------------------
Mortgage-Backed Securities X
- -----------------------------------------------------------------------------------------------------------
Municipal Securities X
- -----------------------------------------------------------------------------------------------------------
U.S.Treasury Securities X X
- -----------------------------------------------------------------------------------------------------------
</TABLE>

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Bond Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations. In
addition, the Investment Grade Bond Fund, Investment Grade Tax-Exempt Bond Fund,
Florida Tax-Exempt Bond Fund, U.S. Government Securities Fund, Limited-Term
Federal Mortgage Securities Fund, Georgia Tax-Exempt Bond Fund, Short-Term Bond
Fund and the Short-Term U.S. Treasury Securities Fund each may shorten its
average weighted maturity to as little as 90 days. When a Fund is investing for
temporary defensive purposes, it is not pursuing its investment goal.
<PAGE>
PROSPECTUS 25

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

INVESTMENT ADVISORS

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Investment Grade Bond, Limited-Term Federal
Mortgage Securities, Investment Grade Tax-Exempt Bond and Florida Tax-Exempt
Bond Funds. As of May 31, 1998, STI had approximately $ billion in assets
under management. For the fiscal year ended May 31, 1998, STI received advisory
fees of:

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the U.S. Government Securities,
Short-Term Bond, Short-Term U.S. Treasury Securities, Prime Quality Money
Market, U.S. Government Securities Money Market, and Tax-Exempt Money Market
Funds. As of May 31, 1998, Trusco had approximately $ billion in assets under
management. For the fiscal year ended May 31, 1998, Trusco received advisory
fees of:

<TABLE>
<S> <C>
U.S. GOVERNMENT SECURITIES FUND.............. %
PRIME QUALITY MONEY MARKET FUND.............. %
SHORT-TERM BOND FUND......................... %
U.S. GOVERNMENT SECURITIES MONEY MARKET
FUND....................................... %
SHORT-TERM U.S. TREASURY SECURITIES FUND..... %
TAX-EXEMPT MONEY MARKET FUND................. %
</TABLE>

The Advisors may use their affiliates as brokers for Fund transactions.

PORTFOLIO MANAGERS

The U.S. Government Securities Fund has been co-managed by Mr. Charles B.
Leonard and Mr. Michael L. Ford since it began operating in June 1994. Mr.
Leonard, CFA, has served as First Vice President of Trusco since ,
and has more than 25 years of investment experience. Mr. Ford has been an
Associate of Trusco since April 1994, and has more than 11 years of investment
experience. Prior to joining Trusco, Mr. Ford served as a senior securities
analyst at Liberty Capital Advisors from 1992 to 1994 and served as a securities
analyst at Southern Farm Bureau Life Insurance Company from 1990 to 1992.

Mr. David Yealy has served as a Vice President of Trusco since . He
has managed the Short-
<PAGE>
26 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

Term Bond Fund and Short-Term U.S. Treasury Securities Fund since July 1996. He
has more than years of investment experience.

Mr. Ronald Schwartz, CFA, has served as a Senior Vice President since
. He has managed the Investment Grade Tax-Exempt Bond Fund and
Florida Tax-Exempt Bond Fund since each Fund began operating in June 1992 and
January 1994, respectively. He has more than years of investment experience.
Prior to joining STI, he served as a trader at the Bank of Boston.

PURCHASING FUND SHARES

SIMPLY SPEAKING . . .

WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open
for business (a Business Day). But you may not purchase shares of a Money
Market Fund on federal holidays.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. We calculate each
Fund's NAV once each Business Day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time). So,
for the Bond Funds, to receive the current Business Day's NAV, generally we must
receive your purchase order from your financial institution before 4:00 p.m.
Eastern time. For the Money Market Funds, your purchase order will be effective
on the Business Day we receive it if:

- - we receive federal funds (readily available) before we calculate NAV (normally
4:00 p.m. Eastern time).

Otherwise, your purchase order will be effective the following Business Day, as
long as we receive federal funds before we calculate NAV on that following day.
SIMPLY SPEAKING . . .

PURCHASING, SELLING AND EXCHANGING FUND SHARES

HOW WE CALCULATE NAV
In calculating NAV for the Bond Funds, we generally value a Fund's portfolio at
market price. In calculating NAV for the Money Market Funds, we generally value
a Fund's portfolio using the amortized cost valuation method, which is described
in detail in our Statement of Additional Information. If market prices are
unavailable, or we think that the market prices or the amortized cost valuation
method are unreliable, fair value prices may be determined in good faith using
methods approved by the Board of Trustees. We expect the NAV of each Money
Market Fund to remain constant at $1.00 per share, although we cannot guarantee
this.
SIMPLY SPEAKING . . .

NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting your financial institution. Your financial institution will give you
information about how to sell your shares. The sale price of each share will be
the next NAV determined after we receive your request from your financial
institution. So, for the Bond Funds, to receive the current Business Day's NAV,
generally we must receive your sale order from your financial institution before
4:00 p.m. Eastern time. For the Money Market Funds, your sale order will be
effective on that same Business Day if we receive your order before:

- - 11:00 a.m. Eastern time for the Tax-Exempt Money Market Fund; or

- - 1:00 p.m. Eastern time for the Prime Quality Money Market and U.S. Government
Securities Money Market Funds.

SIMPLY SPEAKING . . .

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Trust Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned [or lost] on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.

Ratios/Supplemental Data
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate

<TABLE>
<S> <C>
1 Commencement of operations.
2 Total return excludes the effect of sales charge.
3 Annualized.
</TABLE>

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<PAGE>
PROSPECTUS 29

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

Each Fund declares income dividends daily and pays these dividends monthly. The
Funds make distributions of capital gains, if any, at least annually.

THE "RECORD DATE"
If you own Fund shares on a Fund's record date, you will be entitled to
receive the distribution.

TAXES

The Investment Grade Tax-Exempt Bond, Florida Tax-Exempt Bond, Georgia
Tax-Exempt Bond, and Tax-Exempt Money Market Funds intend to distribute
federally tax-exempt income. Each Fund may invest a portion of its assets in
securities that generate taxable income for federal or state income taxes.
Income exempt from federal tax may be subject to state and local taxes. Any
capital gains distributed by these Funds may be taxable.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
30 PROSPECTUS

HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

STI Capital Management, N.A.
Trusco Capital Management, Inc.
SunTrust Bank, Atlanta

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

ANNUAL AND SEMIANNUAL REPORTS
These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

BY MAIL:
Write to us c/o
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY E-MAIL:
xxxxxxxxxxxxxxxx

BY INTERNET:
http://www.suntrust.com

FROM THE SEC: You can also obtain these documents, and other information about
the STI Classic Funds, from the SEC's website
("http://www.sec.gov"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for information call 1-800-SEC-0330). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-6009. The Fund's Investment Company Act registration number
is 811-06557.
<PAGE>

[GRAPHIC]

STI CLASSIC FUNDS-EQUITY FUNDS
TRUST SHARES

PROSPECTUS

October 1, 1998

BALANCED FUND

CAPITAL GROWTH FUND

EMERGING MARKETS EQUITY FUND

INTERNATIONAL EQUITY FUND

INTERNATIONAL EQUITY INDEX FUND

MID-CAP EQUITY FUND

SMALL CAP EQUITY FUND

SUNBELT EQUITY FUND

VALUE INCOME STOCK FUND

INVESTMENT ADVISORS
TO THE FUNDS:

STI CAPITAL MANAGEMENT, N.A.

TRUSCO CAPITAL MANAGEMENT, INC.
(the "Advisors")

-----------------
STI Classic Funds
-----------------

The STI Classic Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Trust Shares of the Equity Funds that you should know before
investing. Please read this prospectus and keep it for future reference.

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 BALANCED FUND
4 CAPITAL GROWTH FUND
6 EMERGING MARKETS EQUITY FUND
8 INTERNATIONAL EQUITY FUND
10 INTERNATIONAL EQUITY INDEX FUND
12 MID-CAP EQUITY FUND
14 SMALL CAP EQUITY FUND
16 SUNBELT EQUITY FUND
18 VALUE INCOME STOCK FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
20 EACH FUND'S PRINCIPAL INVESTMENTS
20 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
21 PURCHASING, SELLING AND EXCHANGING FUND SHARES
23 HISTORICAL FINANCIAL INFORMATION
ABOUT EACH FUND
24 DISTRIBUTIONS OF DIVIDENDS AND CAPITAL GAINS
24 TAXES
26 HOW TO OBTAIN MORE INFORMATION
ABOUT THE STI CLASSIC FUNDS
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR "SIMPLY SPEAKING"
EXPLANATIONS.
- --------------------------------------------------------------------------------

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

OCTOBER 1, 1998
<PAGE>
PROSPECTUS 1

INTRODUCTION

The value of your investment in a Fund is based on the market prices of the
securities the Fund holds. These prices change daily due to economic and other
events that affect securities markets generally, as well as those that affect
particular companies or governments. These price movements, sometimes called
volatility, will vary depending on the types of securities a Fund owns and the
markets where these securities trade. The Equity Funds invest primarily in
common stocks and other equity securities. Historically, equity securities have
outperformed other types of investments on a long-term basis, but have been more
subject to price fluctuation in the short run.

Like other investments, you could lose money on your investment in a Fund. Your
investment in a Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any government agency.

BALANCED FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS Capital appreciation and current income
INVESTMENT FOCUS
PRIMARY U.S. common stocks
SECONDARY Bonds
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT Attempts to identify companies with a history of
STRATEGY earnings growth and bonds with minimal risk
INVESTOR PROFILE Investors who want income from their investment as
well as an increase in its value
</TABLE>

INVESTMENT STRATEGY
The Balanced Fund invests in common stocks of U.S. companies,
convertible securities, and investment grade fixed income obligations (bonds).
In selecting stocks for the Fund, we attempt to identify high-quality companies
with a history of earnings growth. In selecting bonds, we try to minimize risk
while attempting to outperform selected market indices.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests in both common stocks and bonds. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, the value of bonds held by the Fund may
decline due to rising interest rates. An issuer may be unable to make timely
payments of principal or interest. The Fund may have more assets than usual
invested in bonds during periods of rising interest rates or less assets than
usual invested in bonds during falling interest rates. Some investment grade
bonds may have speculative characteristics. Fixed income securities, regardless
of credit quality, also experience price volatility, especially in response to
interest rate changes.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 3

BALANCED FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERFORMANCE
OF THE FUND'S TRUST TO THOSE OF THE S&P 500 INDEX, LEHMAN GOVERNMENT/CORPORATE
BOND INDEX AND THE LIPPER BALANCED FUNDS AVERAGE.THE LIPPER BALANCED FUNDS
AVERAGE IS A COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS SIMILAR TO THE
FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (1/3/94)
<S> <C> <C> <C>
BALANCED FUND 00.0% 00.0% 00.0%
S&P 500 INDEX 00.0% 00.0% 00.0%
LEHMAN GOVERNMENT/ CORPORATE BOND
INDEX 00.0% 00.0% 00.0%
LIPPER BALANCED FUNDS AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The S&P 500 Index is a widely
recognized index of U.S. common stock prices. The Lehman
Government/Corporate Bond Index is a widely recognized index of U.S.
government and corporate bond prices.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

CAPITAL GROWTH FUND

FUND SUMMARY

INVESTMENT STRATEGY
The Capital Growth Fund invests primarily in U.S. common stocks and
other equity securities that we believe are undervalued by the stock market. In
selecting investments for the Fund, we choose companies that we believe have
above average growth potential. We rotate the Fund's investments among various
market sectors based on our research of business cycles. Our strategy focuses on
large-cap stocks with a strong growth history. Due to its investment strategy,
the Fund may buy and sell securities frequently. This may result in higher
transaction costs and additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 5

CAPITAL GROWTH FUND

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

EMERGING MARKETS EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long term capital appreciation
INVESTMENT FOCUS Undervalued foreign common stocks
SHARE PRICE VOLATILITY Very High
PRINCIPAL INVESTMENT Focus on individual stocks and companies in an
STRATEGY attempt to identify attractively priced investments
INVESTOR PROFILE Aggressive long-term investors who are willing to
accept the volatility of of emerging markets for
the possibility of higher returns
</TABLE>

INVESTMENT STRATEGY
The Emerging Markets Equity Fund invests primarily in common stocks
and other equity securities of foreign issuers located in emerging market
countries. An emerging market country is a country that the World Bank or the
United Nations considers to be emerging or developing. Our "bottom-up" strategy
focuses on individual stocks and companies. Through research, we attempt to
identify investments that we feel are attractively priced relative to the
current market. Due to the Fund's investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. Investments in foreign markets may be
more volatile than investments in U.S. markets. Investments in emerging foreign
markets may be more volatile than investments in developed foreign markets.
Diplomatic, political or economic developments in a foreign country may cause
investments in that country to lose money. These developments may occur more
frequently in emerging market countries. Emerging market securities may be even
more susceptible to political or economic developments than those in more
developed countries. The value of the U.S. dollar may rise, causing reduced
returns for U.S. persons investing abroad. A foreign country may not have the
same accounting and financial reporting standards as the U.S. Some emerging
market countries may have little to no accounting or financial reporting
standards. Foreign stock markets, brokers and companies are generally subject to
less supervision and regulation than their U.S. counterparts. There may be
little to no supervision and regulation in some emerging market countries.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to January 1997, when the Fund began operating, represent the performance of the
Advisor's similarly managed collective investment fund. This past performance
has been adjusted to reflect current expenses for Trust Shares of the Fund. The
Advisor's collective fund was not a registered mutual fund so it was not subject
to the same investment and tax restrictions as the Fund. If it had been, the
collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 7

EMERGING MARKETS EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERFORMANCE
OF THE TRUST SHARES FOR THE PERIODS ENDING DECEMBER 31, 1997 TO THOSE OF THE
MSCI EMERGING MARKETS FREE INDEX.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (3/29/96)
<S> <C> <C>
EMERGING MARKETS EQUITY FUND 00.0% 00.0%
MSCI EMERGING MARKETS FREE INDEX 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The MSCI Emerging Markets Free
Index is a widely recognized index of equity securities of companies from
emerging market countries.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

INTERNATIONAL EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Foreign common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT Attempts to identify undervalued companies with
STRATEGY good fundamentals
INVESTOR PROFILE Investors who want an increase in the value of
their investment without regard to income; are
willing to accept the increased risks of
international investing for the possibility of
higher returns; and want exposure to a diversified
portfolio of international stocks
</TABLE>

INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks
and other equity securities of foreign companies. In selecting investments for
the Fund, we diversify the Fund's investments among at least three foreign
countries. The Fund invests primarily in developed countries, but may invest in
countries with emerging markets. Our "bottom-up" approach to stock selection
focuses on individual stocks and fundamental characteristics of companies. Our
goal is to find companies with top management, quality products and sound
financial positions, that are trading at a discount. Due to the Fund's
investment strategy, the Fund may buy and sell securities frequently. This may
result in higher transaction costs and additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments may cause foreign investments to lose money.
The value of the U.S. dollar may rise, causing reduced returns for U.S. persons
investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging markets securities may be even more susceptible to
these risks.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to December 1995, when the Fund began operating, represent the performance of
the Advisor's similarly managed collective investment fund. This past
performance has been adjusted to reflect current expenses for Trust Shares of
the Fund. The Advisor's collective fund was not a registered mutual fund so it
was not subject to the same investment and tax restrictions as the Fund. If it
had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 9

INTERNATIONAL EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MSCI EAFE INDEX.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (2/2/95)
<S> <C> <C>
INTERNATIONAL EQUITY FUND 00.0% 00.0%
MSCI EAFE INDEX 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The MSCI EAFE Index is a widely
recognized index of equity securities of companies located in Europe,
Australia and the Far East.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

INTERNATIONAL EQUITY INDEX FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL To provide investment results that correspond to
the performance of the MSCI EAFE-GDP Index
INVESTMENT FOCUS Foreign common stocks in MSCI EAFE-GDP Index
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT Statistical analysis to track the Index
STRATEGY
INVESTOR PROFILE Aggressive investors who want exposure to foreign
markets and are willing to accept the increased
risks of foreign investing for the possibility of
higher returns
</TABLE>

INVESTMENT STRATEGY
The International Equity Index Fund invests primarily in common
stocks of foreign companies. In selecting investments for the Fund, we choose
companies included in the MSCI EAFE-GDP Index, an index of equity securities of
companies located in Europe, Australia and the Far East. While the Fund is
structured to have overall investment characteristics similar to those of the
Index, it selects a sample of stocks within the Index using a statistical
process. So, the Fund will not hold all stocks included in the Index.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments in a may cause foreign investments to lose
money. The value of the U.S. dollar may rise, causing reduced returns for U.S.
persons investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging markets securities may be even more susceptible to
these risks.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 11

INTERNATIONAL EQUITY INDEX FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MSCI EAFE-GDP INDEX.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (9/1/94)
<S> <C> <C> <C>
INTERNATIONAL EQUITY
INDEX FUND 00.0% 00.0% 00.0%
MSCI EAFE-GDP INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The MSCI EAFE-GDP Index is a
widely recognized index of equity securities of companies located in Europe,
Australia and the Far East.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

MID-CAP EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. mid-cap common stocks
SHARE PRICE VOLATILITY Moderate to high
PRINCIPAL INVESTMENT Attempts to identify companies with above average
STRATEGY growth potential at an attractive price
INVESTOR PROFILE Investors who want the value of their investment to
grow and who are willing to accept more volatility
for the possibility of higher returns
</TABLE>

INVESTMENT STRATEGY
The Mid-Cap Equity Fund invests primarily in a diversified portfolio
of common stocks and other equity securities of U.S. companies. In selecting
investments for the Fund, we choose companies that have small- to mid-sized
market capitalizations (i.e., companies with market capitalizations of $500
million to $7 billion) and that have above average growth potentials at
attractive prices. We evaluate companies based on their industry sectors and the
market in general. The Fund maintains large holdings in the industries that
appear to perform best during a given business cycle. We analyze companies that
are in favored industries based on their fundamental characteristics, such as
growth rates and earnings. We do not consider current income in selecting
investments for the Fund. Due to the Fund's investment strategy, the Fund may
buy and sell securities frequently. This may result in higher transaction costs
and additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in mid-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small- to mid-sized companies may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these companies may have somewhat limited product
lines, markets and financial resources, and may depend upon a relatively small-
to medium-sized management group.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 13

MID-CAP EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P MIDCAP 400 INDEX.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 3 YEARS (1/3/94)
<S> <C> <C> <C>
MID-CAP EQUITY FUND 00.0% 00.0% 00.0%
S&P MIDCAP 400 INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of securities in a particular
market or market sector. You cannot invest directly in an index. An index
does not have an investment advisor and does not pay any commissions or
expenses. If an index had expenses, its performance would be lower. The S&P
MidCap 400 Index is a widely recognized index of U.S. mid-cap common stock
prices.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SMALL CAP EQUITY FUND
(CURRENTLY CLOSED TO
NEW INVESTORS)

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS
PRIMARY Capital appreciation
SECONDARY Current income
INVESTMENT FOCUS U.S. small-cap common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT Attempts to identify undervalued small-cap stocks
STRATEGY
INVESTOR PROFILE Investors who primarily want the value of their
investment to grow, but want to receive some income
from their investment
</TABLE>

INVESTMENT STRATEGY
The Small Cap Equity Fund invests primarily in common stocks of U.S.
companies. In selecting investments for the Fund, we choose common stocks of
small sized companies (i.e., companies with market capitalizations under $1
billion) that we believe are undervalued in the market.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in small-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small sized companies may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, small-sized companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 15

SMALL CAP EQUITY FUND
(CURRENTLY CLOSED TO NEW INVESTORS)

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE RUSSELL 2000 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (8/31/94)
<S> <C> <C> <C>
SMALL CAP EQUITY FUND 00.0% 00.0% 00.0%
RUSSELL 2000 INDEX 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES

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

ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .

SUNBELT EQUITY FUND

FUND SUMMARY

INVESTMENT STRATEGY
The Sunbelt Equity Fund invests substantially all of its assets in
common stocks and other equity securities of companies in the southern region of
the U.S. These companies are headquartered and/or conduct a substantial portion
of their business in the southern region of the U.S., which includes Texas,
Arkansas, Alabama, Mississippi, Tennessee, Kentucky, Florida, Virginia, Georgia,
North Carolina, South Carolina and Louisiana. Our investment strategy is based
on the belief that a portfolio of companies in this region with positive
earnings trends will generate above-average returns over time. This focus on
favorable earnings characteristics is the cornerstone of our philosophy. We do
not consider current income in selecting investments for the Fund.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in southern U.S. common stocks. As a result, the Fund
is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. Because the Fund focuses its investments in
southern companies, economic conditions in or government policies imposed by
southern states may cause the Fund to be more volatile than an equity fund that
invests in companies located across the U.S.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to January 1994, when the Fund began operating, represent the performance of the
Advisor's similarly managed collective investment fund. This past performance
has been adjusted to reflect current expenses for Trust Shares of the Fund. The
Advisor's collective fund was not a registered mutual fund so it was not subject
to the same investment and tax restrictions as the Fund. If it had been, the
collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 17

SUNBELT EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE RUSSELL 2000 INDEX AND THE S&P SMALLCAP
600 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (12/1/80)
<S> <C> <C> <C>
SUNBELT EQUITY FUND 00.0% 00.0% 00.0%
RUSSELL 2000 INDEX 00.0% 00.0% 00.0%
S&P SMALLCAP 600 INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Russell 2000 Index is a widely
recognized index of U.S. small-cap common stock prices. The S&P SmallCap 600
Index is a widely recognized index of U.S. small cap common stock prices.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

VALUE INCOME STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Value Income Stock Fund invests primarily in common stocks and
other equity securities of U.S. companies. In selecting investments for the
Fund, we primarily choose companies that have a market capitalization of at
least $500 million and that have a history of paying regular dividends. We focus
on high dividend-paying stocks that trade below their historical value. Our
"bottom-up" approach to stock selection emphasizes individual stocks over
economic trends. Due to the Fund's investment strategy, the Fund may buy and
sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, common stocks held by the Fund may stop
paying dividends or pay less in dividends than we expected.

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 19

VALUE INCOME STOCK FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LIPPER EQUITY
INCOME FUNDS AVERAGE. THE LIPPER EQUITY INCOME FUNDS AVERAGE IS A COMPOSITE OF
MUTUAL FUNDS WITH INVESTMENT GOALS SIMILAR TO THE FUND'S GOAL.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. It shows the highest fees and
expenses that could be currently charged to the Fund. Actual fees and
expenses are lower because the Advisor is voluntarily waiving a portion
of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING
EXPENSES ARE [ %] AND [ %], RESPECTIVELY. The Advisor could discontinue
these voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" on page XX.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees 0.00%
Other Expenses 0.00%
---------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period. The Example also assumes that each year your
investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns may be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$0000 $0000 $0000 $0000
</TABLE>

EACH FUND'S PRINCIPAL INVESTMENT

FUND INVESTMENT
The table below shows each Fund's principal investments. In other words,
the table describes the type or types of investments that we believe will
most likely help each Fund achieve its investment goal.
<TABLE>
<CAPTION>
CAPITAL VALUE SMALL CAP MID-CAP BALANCED SUNBELT INTERNATIONAL INTERNATIONAL
GROWTH INCOME EQUITY EQUITY FUND EQUITY EQUITY EQUITY
FUND STOCK FUND FUND FUND FUND INDEX
FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Fixed Income Obligations X
- -------------------------------------------------------------------------------------------------------------------------------
Equity Securities X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
EMERGING
MARKETS
EQUITY
FUND
<S> <C>
- -------------------------------
Fixed Income Obligations
- -------------------------------
Equity Securities X
- -------------------------------
</TABLE>

Each Fund also may invest in other securities, use other strategies and engage
in other investment practices, which are described in detail in our Statement of
Additional Information. Of course, we cannot guarantee that any Fund will
achieve its investment goal.
The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Fund may invest up to 100% of its assets in cash, money market
instruments, repurchase agreements and short-term obligations. The Small Cap
Equity Fund also may invest in investment grade fixed income securities and mid-
to large-cap common stocks. When a Fund is investing for temporary defensive
purposes, it is not pursuing its investment goal.

INVESTMENT ADVISORS
The Investment Advisors make investment decisions for the Funds and continuously
review, supervise and administer their Funds' respective investment program. The
Board of Trustees supervises the Advisors and establishes policies that the
Advisors must follow in their management activities.
STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Capital Growth, Value Income Stock, Small Cap
Equity, Mid-Cap Equity, Balanced, International Equity and Emerging Markets
Equity Funds. As of May 31, 1998, STI Capital had approximately billion in
assets under management. For the fiscal year ended May 31, 1998, STI Capital
received advisory fees of:

<TABLE>
<S> <C>
CAPITAL GROWTH FUND.......................... %
VALUE INCOME STOCK FUND...................... %
SMALL CAP EQUITY FUND........................ %
MID-CAP EQUITY FUND.......................... %
BALANCED FUND................................ %
INTERNATIONAL EQUITY FUND.................... %
EMERGING MARKETS EQUITY FUND................. %
</TABLE>

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Sunbelt Equity Fund. As of May 31,
1998, Trusco had approximately billion in assets under management. For the
fiscal year ended May 31, 1998, Trusco received advisory fees of [ ]%.
STI and Trusco co-manage the International Equity Index Fund. For the fiscal
year ended May 31, 1998, STI and Trusco received and shared advisory fees of
%.
The Advisors may use their affiliates as brokers for Fund transactions.
PORTFOLIO MANAGERS
Mr. Anthony Gray has served as Chairman and Chief Investment Officer of STI
since 1979. He has managed the Capital Growth Fund since it began operating in
June 1992. He has more than 30 years of investment experience. Prior to joining
STI, Mr. Gray served as .
Mr. Mills Riddick, CFA, has served as Senior Vice President of STI since .
He has managed the Value Income Stock Fund since April 1995. He has more than 15
years of investment experience, and has been a portfolio manager at STI since
1989. Prior to joining STI, Mr. Riddick served as a broker with Drexel Burnham
Lambert.
<PAGE>
PROSPECTUS 21

PURCHASING, SELLING AND EXCHANGING FUND SHARES

Mr. Brett Barner, CFA, has served as Vice President of STI since . He has
managed the Small Cap Equity Fund since it began operating in January 1997. He
has more than 10 years of investment experience and has been a portfolio manager
with STI since 1990. Prior to joining STI, Mr. Barner served as a consultant
with Drexel Burnham Lambert and Shearson Lehman Brothers.

Mr. Elliott A. Perny has served as Senior Executive Vice President of STI since
September 1992. He has managed the Mid-Cap Equity Fund since October 1996. He
has more than 25 years of investment experience, and has served as a portfolio
manager at STI since 1991. Prior to joining STI, Mr. Perny served as a portfolio
manager at Florida National Bank and Atlantic Bank.

The Balanced Fund is co-managed by Mr. Anthony R. Gray and Mr. L. Earl Denney,
CFA. Mr. Gray manages the equity portion of the Fund. Mr. Denney, CFA, has
served as Senior Vice President of STI since 1983, has more than 20 years of
investment experience. Prior to joining STI, Mr. Denney served as a fixed income
portfolio manager with American National Bank.

Mr. Ned Dau has served as Vice President of STI since . He has managed the
International Equity and Emerging Markets Equity Funds since May 1997. He has
more than years of investment experience. Prior to joining STI, he was a
senior international equity analyst for American Express Financial Advisors from
1996 to 1997 and for the Principal Financial Group from 1992 to 1995.

PURCHASING FUND SHARES

SIMPLY SPEAKING . . .

WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open
for business (a Business Day).

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. We calculate each
Fund's NAV once each Business Day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time). So,
if you want to receive the current Business Day's NAV, generally we must receive
your purchase order from your financial institution before 4:00 p.m. Eastern
time.
<PAGE>
22 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

SIMPLY SPEAKING . . .

HOW WE CALCULATE NAV
In calculating NAV, we generally value a Fund's portfolio at market price. If
market prices are unavailable or we think that they are unreliable, fair value
prices may be determined in good faith using methods approved by the Board of
Trustees. Some Funds hold portfolio securities that are listed on foreign
exchanges. These securities may trade on weekends or other days when the Funds
do not calculate NAV. As a result, the NAV of these Funds' shares may change on
days when you cannot purchase or sell Fund shares.
SIMPLY SPEAKING . . .

NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

Ratios/Supplemental Data
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate

<TABLE>
<S> <C>
1 Commencement of operations.
2 Total return excludes the effect of sales charge.
3 Annualized.
</TABLE>

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<PAGE>
24 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes its income quarterly, except the International Equity,
International Equity Index and Emerging Markets Equity Funds. These Funds
distribute income annually. The Funds make distributions of capital gains, if
any, at least annually.

THE "RECORD DATE"
If you own Fund shares on a Fund's record date, you will be entitled to
receive the distribution.

TAXES

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
PROSPECTUS 25

NOTES
<PAGE>
26 PROSPECTUS

HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

STI Capital Management, N.A.
Trusco Capital Management, Inc.

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

ANNUAL AND SEMIANNUAL REPORTS
These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

BY MAIL:
Write to us c/o
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY E-MAIL:
xxxxxxxxxxxxxxxx

BY INTERNET:
http://www.suntrust.com

[GRAPHIC]

STI CLASSIC FUNDS--EQUITY FUNDS
FLEX AND INVESTOR SHARES

PROSPECTUS

October 1, 1998

BALANCED FUND

CAPITAL GROWTH FUND

INTERNATIONAL EQUITY FUND

INTERNATIONAL EQUITY INDEX FUND

MID-CAP EQUITY FUND

SMALL CAP EQUITY FUND

SUNBELT EQUITY FUND

VALUE INCOME STOCK FUND

INVESTMENT ADVISORS
TO THE FUNDS:

STI CAPITAL MANAGEMENT, N.A.

TRUSCO CAPITAL MANAGEMENT, INC.
(the "Advisors")

-----------------
STI Classic Funds
-----------------

The STI Classic Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Investor Shares and Flex Shares of the Equity Funds that you should
know before investing. Please read this prospectus and keep it for future
reference.

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 BALANCED FUND
4 CAPITAL GROWTH FUND
6 INTERNATIONAL EQUITY FUND
8 INTERNATIONAL EQUITY INDEX FUND
10 MID-CAP EQUITY FUND
12 SMALL CAP EQUITY FUND
14 SUNBELT EQUITY FUND
16 VALUE INCOME STOCK FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
18 EACH FUND'S PRINCIPAL INVESTMENTS
18 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
19 PURCHASING, SELLING AND EXCHANGING FUND SHARES
24 HISTORICAL FINANCIAL INFORMATION ABOUT EACH FUND
25 HOW FUND SHARES ARE DISTRIBUTED
26 DISTRIBUTIONS OF DIVIDENDS AND CAPITAL GAINS
26 TAXES
30 HOW TO OBTAIN MORE INFORMATION ABOUT THE STI
CLASSIC FUNDS
</TABLE>

FOR INFORMATION ABOUT KEY TERMS AND CONCEPTS, LOOK FOR OUR "SIMPLY SPEAKING"
EXPLANATIONS.
- --------------------------------------------------------------------------------

[ICON] FUND SUMMARY
INVESTMENT STRATEGY
[ICON]
WHAT ARE THE RISKS OF INVESTING?
[ICON]
PERFORMANCE INFORMATION
[ICON]
WHAT IS AN INDEX?
[ICON]

FUND FEES AND EXPENSES
[ICON]
SALES LOADS
[ICON]
FUND INVESTMENTS
[ICON]
INVESTMENT ADVISORS
[ICON]
PURCHASING FUND SHARES
[ICON]

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

OCTOBER 1, 1998
<PAGE>
PROSPECTUS 1

INTRODUCTION

Like other investments, you could lose money on your investment in a Fund. Your
investment in a Fund is not a bank deposit. It is not insured or guaranteed by
the FDIC or any government agency.

CHOOSING INVESTOR OR FLEX SHARES

INVESTOR SHARES
- - Front-end sales charge
- - Lower annual expenses
- - $2,000 minimum initial investment

FLEX SHARES
- - Deferred sales charge
- - Higher annual expenses
- - $10,000 minimum initial investment

SALES LOADS

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
SHAREHOLDER FEES
3.75% None
Maximum Sales Charge
(Load) Imposed on Purchases
(as a percentage of offering
price)*
None 2.00%
Maximum Deferred
Sales Charge (Load)
(as a percentage of net asset
value)**
</TABLE>

* THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."

** THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE. SEE "SELLING FUND SHARES."
<PAGE>
2 PROSPECTUS

BALANCED FUND

FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Balanced Fund invests in common stocks of U.S. companies,
convertible securities, and investment grade fixed income obligations (bonds).
In selecting stocks for the Fund, we attempt to identify high-quality companies
with a history of earnings growth. In selecting bonds, we try to minimize risk
while attempting to outperform selected market indices.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests in both common stocks and bonds. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, the value of bonds held by the Fund may
decline due to rising interest rates. An issuer may be unable to make timely
payments of principal or interest. The Fund may have more assets than usual
invested in bonds during periods of rising interest rates or less assets than
usual invested in bonds during falling interest rates. Some investment grade
bonds may have speculative characteristics. Fixed income securities regardless
of credit quality, also experience price volatility, especially in response to
interest rate changes.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 3

BALANCED FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX, LEHMAN
GOVERNMENT/CORPORATE BOND INDEX AND THE LIPPER GROWTH FUNDS AVERAGE. THE LIPPER
BALANCED FUNDS AVERAGE IS A COMPOSITE OF MUTUAL FUNDS WITH INVESTMENT GOALS
SIMILAR TO THE FUND'S GOAL.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (1/4/94)
<S> <C> <C> <C>
BALANCED FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
S&P 500 INDEX 00.0% 00.0% 00.0%
LEHMAN GOVERNMENT/
CORPORATE BOND INDEX 00.0% 00.0% 00.0%
LIPPER BALANCED
FUNDS AVERAGE 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The S&P 500 Index is a widely
recognized index of U.S. common stock prices. The Lehman
Government/Corporate Bond Index is a widely recognized index of U.S.
government and corporate bond prices.

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR
SHARES AT
THE END OF THE
PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
IF YOU DO NOT
SELL YOUR SHARES:
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

CAPITAL GROWTH FUND

FUND SUMMARY

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles and with periods of rising prices
and periods of falling prices. This price volatility the principal risk of
investing in the Fund.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 5

CAPITAL GROWTH FUND

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/9/92)
<S> <C> <C> <C>
CAPITAL GROWTH FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
S&P 500 INDEX 00.0% 00.0% 00.0%
LIPPER GROWTH
FUNDS AVERAGE 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. The Fund fees and expenses
below are in addition to the sales charges you may pay directly when you
purchase or sell Fund shares. Sales charges are discussed on pages X and
XX of this prospectus.
This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %] AND
[ %], RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

INTERNATIONAL EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments may cause foreign investments to lose money.
The value of the U.S. dollar may rise, causing reduced returns for U.S. persons
investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging markets securities may be even more susceptible to
these risks.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses. The periods prior to December 1995, when the Fund began operating,
represent the performance of the Advisor's similarly managed collective
investment fund. This past performance has been adjusted to reflect current
expenses for Trust Shares of the Fund. The periods from December 1995 to January
1996 represent the performance of Trust Shares of the Fund. Trust Shares have
lower expenses than Investor and Flex Shares, which results in higher
performance shown below. The Advisor's collective fund was not a registered
mutual fund so it was not subject to the same investment and tax restrictions as
the Fund. If it had been, the collective fund's performance would have been
lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR. THE
PERIODS FROM JANUARY 1996 TO THE PRESENT REPRESENT THE PERFORMANCE OF INVESTOR
SHARES OF THE FUND. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% (XX/XX/XX) XX.XX% (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 7

INTERNATIONAL EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MSCI EAFE INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEARS (2/2/95)
<S> <C> <C>
INTERNATIONAL EQUITY FUND
Investor Shares 00.0% 00.0%
Flex Shares 00.0% 00.0%
MSCI EAFE INDEX 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The MSCI EAFE Index is a widely
recognized index of equity securities of companies located in Europe,
Australia and the Far East.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. The Fund fees and expenses
below are in addition to the sales charges you may pay directly when you
purchase or sell Fund shares. Sales charges are discussed on pages X and
XX of this prospectus.
This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %]
AND [ %], RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000

<CAPTION>
IF YOU DO NOT SELL YOUR
SHARES:
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

INTERNATIONAL EQUITY INDEX FUND

FUND SUMMARY

INVESTMENT STRATEGY
The International Equity Index Fund invests primarily in common
stocks of foreign companies. In selecting investments for the Fund, we choose
companies included in the MSCI EAFE-GDP Index, an index of equity securities of
companies located in Europe, Australia and the Far East. While the Fund is
structured to have overall investment characteristics similar to those of the
Index, it selects a sample of stocks within the Index using a statistical
process. So, the Fund will not hold all stocks included in the Index.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments may cause foreign investments to lose money.
The value of the U.S. dollar may rise, causing reduced returns for U.S. persons
investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging markets securities may be even more susceptible to
these risks.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 9

INTERNATIONAL EQUITY INDEX FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MSCI EAFE-GDP INDEX.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (6/6/94)
<S> <C> <C> <C>
INTERNATIONAL EQUITY INDEX FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
MSCI EAFE-GDP INDEX 00.0% 00.0% 00.0%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The MSCI EAFE-GDP Index is a
widely recognized index of equity securities of companies located in Europe,
Australia and the Far East.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. The Fund fees and expenses
below are in addition to the sales charges you may pay directly when you
purchase or sell Fund shares. Sales charges are discussed on pages X and
XX of this prospectus.
This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %] AND
[ %], RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

MID-CAP EQUITY FUND

FUND SUMMARY

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses.
THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 11

MID-CAP EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P MIDCAP 400 INDEX.

<TABLE>
<CAPTION>
SINCE FUND
INCEPTION
1 YEAR 5 YEARS (2/1/94)
<S> <C> <C> <C>
MID-CAP EQUITY FUND Investor
Shares 00.0% 00.0% 00.0%
Flex Shares 00.0% 00.0% 00.0%
S&P MIDCAP 400 INDEX 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. The Fund fees and expenses
below are in addition to the sales charges you may pay directly when you
purchase or sell Fund shares. Sales charges are discussed on pages X and
XX of this prospectus.
This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %] AND
[ %], RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

SMALL CAP EQUITY FUND
(CURRENTLY CLOSED TO
NEW INVESTORS)

FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Small Cap Equity Fund invests primarily in common stocks of U.S.
companies. In selecting investments for the Fund, we choose common stocks of
small sized companies (i.e., companies with market capitalizations under $1
billion) that we believe are undervalued in the market.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in small-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small-sized companies may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, small-sized companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to January 1997, when the Fund began operating, represent the performance of the
Advisor's similarly managed collective investment fund. This past performance
has been adjusted to reflect current expenses for Trust Shares of the Fund. The
periods from January 1997 to June 1997 represent the performance of Trust Shares
of the Fund. The periods from June 1997 to the present represent the performance
of Flex Shares of the Fund. Trust Shares have lower expenses than Flex Shares,
which results in higher performance shown below. The Advisor's collective fund
was not a registered mutual fund so it was not subject to the same investment
and tax restrictions as the Fund. If it had been the collective fund's
performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR. THE
BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES HAD BEEN REFLECTED,
RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 13

SMALL CAP EQUITY FUND
(CURRENTLY CLOSED TO NEW INVESTORS)

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE RUSSELL 2000 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (8/31/94)
<S> <C> <C> <C>
SMALL CAP EQUITY FUND 00.0% 00.0% 00.0%
RUSSELL 2000 INDEX 00.0% 00.0% 00.0%
</TABLE>

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. The Fund fees and expenses
below are in addition to the sales charges you may pay directly when you
purchase or sell Fund shares. Sales charges are discussed on pages X and
XX of this prospectus.
This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %] AND
[ %], RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
Investment Advisory Fees 0.00%
Distribution and Service (12b-1) Fees 0.00%
Other Expenses 0.00%
------------
Total Annual Fund Operating Expenses 0.00%
</TABLE>

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Flex Shares $0000 $0000 $0000 $0000
IF YOU DO NOT SELL YOUR
SHARES:
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

SUNBELT EQUITY FUND

FUND SUMMARY

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses. The periods prior to January 1994, when the Fund began operating,
represent the performance of the Advisor's similarly managed collective
investment fund. This past performance has been adjusted to reflect current
expenses for Investor Shares of the Fund. The Advisor's collective fund was not
a registered mutual fund so it was not subject to the same investment and tax
restrictions as the Fund. If it had been, the collective fund's performance
would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR. THE
PERIODS FROM JANUARY 1994 TO THE PRESENT REPRESENT THE PERFORMANCE OF THE
INVESTOR SHARES OF THE FUND. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF
SALES CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 15

SUNBELT EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE RUSSELL 2000 INDEX AND THE S&P SMALLCAP
600 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (12/1/80)
<S> <C> <C> <C>
SUNBELT EQUITY FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares* 00.0% 00.0% 00.0%
RUSSELL 2000 INDEX 00.0% 00.0% 00.0%
S&P SMALLCAP 600 INDEX 00.0% 00.0% 00.0%
</TABLE>

* THE PERIODS FROM JANUARY 1994 TO JUNE 1995 REPRESENT THE PERFORMANCE OF
INVESTOR SHARES OF THE FUND.
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Russell 2000 Index is a widely
recognized index of U.S. small-cap common stock prices. The S&P SmallCap 600
Index is a widely recognized index of U.S. small cap common stock prices.

FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay
indirectly if you hold shares of the Fund. The Fund fees and expenses
below are in addition to the sales charges you may pay directly when you
purchase or sell Fund shares. Sales charges are discussed on pages X and
XX of this prospectus.
This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %]
AND [ %], RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

- --------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

VALUE INCOME STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF X/XX/XX*
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name
Copy To Come................... 00%
Holding Name Copy To Come...... 00%
Holding Name Copy To Come...... 00%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Value Income Stock Fund invests primarily in common stocks and
other equity securities of U.S. companies. In selecting investments for the
Fund, we primarily choose companies that have a market capitalization of at
least $500 million and that have a history of paying regular dividends. We focus
on high dividend-paying stocks that trade below their historical value. Our
"bottom-up" approach to stock selection emphasizes individual stocks over
economic trends. Due to the Fund's investment strategy, the Fund may buy and
sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, common stocks held by the Fund may stop
paying dividends or pay less in dividends than we expected.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The performance of
Flex Shares and Investor Shares will differ slightly due to differences in
expenses. The periods prior to February 1993, when the Fund began operating,
represent the performance of the Advisor's similarly managed collective
investment fund. This past performance has been adjusted to reflect current
expenses for Investor Shares of the Fund. The Advisor's collective fund was not
a registered mutual fund so it was not subject to the same investment and tax
restrictions as the Fund. If it had been, the collective fund's performance
would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE OF THE FUND'S INVESTOR
SHARES FROM YEAR TO YEAR. THE PERIODS FROM FEBRUARY 1993 TO THE PRESENT
REPRESENT THE PERFORMANCE OF THE FUND'S INVESTOR SHARES. THE BAR CHART DOES NOT
REFLECT SALES CHARGES. IF SALES CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE
LESS THAN THOSE SHOWN BELOW.*

[CHART]

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS XX.X%.
<PAGE>
PROSPECTUS 17

VALUE INCOME STOCK FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (10/31/80)
<S> <C> <C> <C>
VALUE INCOME STOCK FUND
Investor Shares 00.0% 00.0% 00.0%
Flex Shares* 00.0% 00.0% 00.0%
S&P 500 INDEX 00.0% 00.0% 00.0%
LIPPER EQUITY INCOME
FUNDS AVERAGE 00.0% 00.0% 00.0%
</TABLE>

* THE PERIODS FROM FEBRUARY 1993 TO JUNE 1995 REPRESENT THE PERFORMANCE OF
INVESTOR SHARES OF THE FUND.

This table shows the highest fees and expenses that could be currently charged
to the Fund. Actual fees and expenses are lower because the Advisor and the
Distributor are voluntarily waiving a portion of their fees. ACTUAL INVESTMENT
ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE [ %], [ %] AND
[ %], RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "Distribution of Fund Shares."
- --------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

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

EXAMPLE
- --------------------------------------------------

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000

IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $0000 $0000 $0000 $0000
Flex Shares $0000 $0000 $0000 $0000
</TABLE>

SIMPLY SPEAKING . . .

EACH FUND'S PRINCIPAL INVESTMENT

FUND INVESTMENT

<TABLE>
<CAPTION>
CAPITAL VALUE INCOME SMALL CAP MID-CAP BALANCED SUNBELT INTERNATIONAL INTERNATIONAL
GROWTH STOCK FUND EQUITY EQUITY FUND EQUITY EQUITY FUND EQUITY INDEX
FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Fixed Income
Obligations X
- -------------------------------------------------------------------------------------------------------------------------
Equity Securities X X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Each Fund may also may invest in other securities, use other strategies and
engage in other investment practices, which are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.

INVESTMENT ADVISORS

The Investment Advisors make investment decisions for the Funds and continuously
review, supervise and administer their Funds' respective investment program. The
Board of Trustees supervises the Advisors and establishes policies that the
Advisors must follow in their management activities.

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Capital Growth, Value Income Stock, Small Cap
Equity, Mid-Cap Equity, Balanced, and International Equity Funds. As of May 31,
1998, STI Capital had approximately $ billion in assets under management. For
the fiscal year ended May 31, 1998, STI Capital received advisory fees of:

<TABLE>
<S> <C>
BALANCED FUND................................ %
CAPITAL GROWTH FUND.......................... %
INTERNATIONAL EQUITY FUND.................... %
MID-CAP EQUITY FUND.......................... %
SMALL CAP EQUITY FUND........................ %
VALUE INCOME STOCK FUND...................... %
</TABLE>

STI and Trusco co-manage the International Equity Index Fund. For the fiscal
year ended May 31, 1998, STI and Trusco received and shared advisory fees of
%.

The Advisors may use their affiliates as brokers for Fund transactions.

PORTFOLIO MANAGERS

Mr. Mills Riddick, CFA, has served as Senior Vice President of STI since
. He has managed the Value Income Stock Fund since April 1995.
<PAGE>
PROSPECTUS 19

EACH FUND'S PRINCIPAL INVESTMENT

He has more than 15 years of investment experience, and has been a portfolio
manager at STI since 1989. Prior to joining STI, Mr. Riddick served as a broker
with Drexel Burnham Lambert.

Mr. Brett Barner, CFA, has served as Vice President of STI since .
He has managed the Small Cap Equity Fund since it began operating in January
1997. He has more than 10 years of investment experience and has been a
portfolio manager with STI since 1990. Prior to joining STI, Mr. Barner served
as a consultant with Drexel Burnham Lambert and Shearson Lehman Brothers.

Mr. Ned Dau has served as Vice President of STI since . He has
managed the International Equity Fund since May 1997. He has more than
years of investment experience. Prior to joining STI, he was a senior
international equity analyst for American Express Financial Advisors from 1996
to 1997 and for the Principal Financial Group from 1992 to 1995.

PURCHASING FUND SHARES

HOW TO PURCHASE FUND SHARES
You may purchase Investor and Flex Shares directly from us by:
- - mail
- - telephone
- - wire
- - direct deposit, or
- - Automated Clearing House (ACH).

SIMPLY SPEAKING . . .

WHEN CAN YOU PURCHASE SHARES?
You may purchase shares on any day that the New York Stock Exchange is open
for business (a Business Day).

To purchase shares directly from us, please call 1-800-874-4770. Write your
check, payable in U.S. dollars, to "STI Classic Funds" and include the name of
the appropriate Fund(s) on the check. We cannot accept third-party checks,
credit cards, credit card checks or cash. You may also purchase shares through
Investment Consultants of certain correspondent banks of SunTrust Banks, Inc.
(SunTrust), or other financial institutions that have executed dealer agreements
with us. We may reject any purchase order if we determine that accepting the
order would not be in the best interests of the STI Classic Funds or its
shareholders.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

SIMPLY SPEAKING . . .

HOW WE CALCULATE NAV

In calculating NAV, we generally value a Fund's portfolio at market price. If
market prices are unavailable or we think that they are unreliable, fair value
prices may be determined in good faith using methods approved by the Board of
Trustees. Some Funds hold portfolio securities that are listed on foreign
exchanges. These securities may trade on weekends or other days when the Funds
do not calculate NAV. As a result, the NAV of these Funds' shares may change on
days when you cannot purchase or sell Fund shares.

SIMPLY SPEAKING . . .

NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.

MINIMUM PURCHASES

To purchase Investor Shares for the first time, you must invest at least $2,000
in any Fund. To purchase Flex Shares for the first time, you must invest at
least $10,000 in any Fund ($2,000 for retirement plans). To purchase additional
shares of any Fund, you must invest at least $1,000 or, if you pay by a
statement coupon, $100. We may accept investments of smaller amounts, for either
class of shares, at our discretion.

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 Bank
Investment Consultant and complete the FUNDLINK application and authorization
agreements. Once you have signed up to use FUNDLINK, simply call us at
1-800-428-6970 to complete all of your purchase and redemption transactions.

SYSTEMATIC INVESTMENT PLAN

If you have a checking or savings account with a SunTrust affiliate bank, you
may purchase shares of either class automatically through regular deductions
from your account. With a $500 minimum initial investment, you may begin
regularly scheduled investments from $50 up to $100,000 once or twice a month.
If you are buying Flex Shares, you should plan on investing at least $10,000 per
Fund during the first two years. The Distributor may close your account if you
do not meet this minimum investment requirement at the end of two years.

SALES CHARGES
FRONT-END SALES CHARGES - INVESTOR SHARES

The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:

<TABLE>
<CAPTION>
YOUR SALES CHARGE
AS A PERCENTAGE YOUR SALES CHARGE
OF AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
<S> <C> <C>
- -------------------------------------------------------------------
LESS THAN $100,000 3.75% 3.90%

$100,000 BUT LESS
THAN $250,000 3.25% 3.36%

$250,000 BUT LESS
THAN $1,000,000 2.50% 2.56%

$1,000,000 AND OVER 1.50% 1.52%
</TABLE>

<PAGE>
PROSPECTUS 21

PURCHASING, SELLING AND EXCHANGING FUND SHARES

REDUCED SALES CHARGES - INVESTOR SHARES
RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate, this
right allows you to add the value of the Investor Shares you already own to the
amount that you are currently purchasing. We 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. We will only consider the value
of Investor Shares purchased previously that were sold subject to a sales
charge. To be entitled to a reduced sales charge based on shares already owned,
you must ask us for the reduction at the time of purchase. You must provide us
with your account number(s) and, if applicable, the account numbers for your
spouse and/or children (and provide the children's ages). We may amend or
terminate this right of accumulation at any time.

PURCHASING, SELLING AND EXCHANGING FUND SHARES
amount you intend to purchase. If you do not complete the total intended
purchase at the end of the 13-month period, 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 amount you intended to purchase) and the
sales charge that would normally apply (based on the actual amount you
purchased).

SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting us directly by mail or telephone. You may also sell your shares by
contacting your financial institution by mail or telephone. To sell your shares
by telephone, the amount of your sale must be at least $1,000. If you would like
to sell $25,000 or more of your shares, please notify us in writing and include
a signature guarantee (a notarized signature is not sufficient). The sale price
of each share will be the next NAV determined after we receive your request
less, in the case of Flex Shares, any applicable deferred sales charge.
SIMPLY SPEAKING . . .

PURCHASING, SELLING AND EXCHANGING FUND SHARES

EXCHANGES
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will based on the NAV next
calculated after we receive your exchange request.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

Ratios/Supplemental Data
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate

<TABLE>
<S> <C>
1 Commencement of operations.
2 Total return excludes the effect of sales charge.
3 Annualized.
</TABLE>

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<PAGE>
26 PROSPECTUS

HOW FUND SHARES ARE DISTRIBUTED

DISTRIBUTION OF FUND SHARES

Each Fund has adopted a distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges. For
Investor Shares, distribution fees, as a percentage of average daily net assets,
are as follows:

<TABLE>
<CAPTION>
MAXIMUM FOR FISCAL YEAR ENDING MAY 31, 1998
<S> <C> <C>
Capital Growth Fund .68%
Value Income Stock Fund .33%
Mid-Cap Equity Fund .43%
Balanced Fund .28%
Sunbelt Equity Fund .43%
International Equity Fund .33%
International Equity Index Fund .38%
</TABLE>

For Flex Shares, the maximum distribution fee is .75% of the average daily net
assets of each Fund. For fiscal year ending May 31, 1998, distribution fees
were:

<TABLE>
<S> <C> <C>
Capital Growth Fund .XX%
Value Income Stock Fund .XX%
Small Cap Equity Fund .XX%
Mid-Cap Equity Fund .XX%
Balanced Fund .XX%
Sunbelt Equity Fund .XX%
International Equity Fund .XX%
International Equity Index Fund .XX%
</TABLE>
<PAGE>
PROSPECTUS 27

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes its income quarterly, except the International Equity and
International Equity Index Funds. These Funds distribute income annually. The
Funds make distributions of capital gains, if any, at least annually. You will
receive dividends and distributions in the form of additional Fund shares unless
you elect to receive payment in cash. To elect cash payment, you must notify us
in writing prior to the date of the distribution. Your election will be
effective for dividends and distributions paid after we receive your written
notice. To cancel your election, simply send us written notice.
SIMPLY SPEAKING . . .

THE "RECORD DATE"
If you own Fund shares on a Fund's record date, you will be entitled to
receive the distribution.

TAXES

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.
SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
28 PROSPECTUS

NOTES

<PAGE>
PROSPECTUS 29

NOTES

<PAGE>
30 PROSPECTUS

NOTES
<PAGE>
PROSPECTUS 31

HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

STI Capital Management, N.A.
Trusco Capital Management, Inc.

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

More information about the Funds is available without charge through the
following:

ANNUAL AND SEMIANNUAL REPORTS
These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

BY MAIL:
Write to us c/o
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY E-MAIL:
xxxxxxxxxxxxxxxx

BY INTERNET:
http://www.suntrust.com

<PAGE>

STI CLASSIC FUNDS

Investment Advisors:

STI Capital Management, N.A.
Trusco Capital Management, Inc.
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
STI Classic Funds (the "Trust") and should be read in conjunction with the
Trust's prospectuses dated October 1, 1998. Prospectuses may be obtained through
the Distributor, SEI Investments Distribution Co., One Freedom Valley Road,
Oaks, Pennsylvania 19456.

TABLE OF CONTENTS
<TABLE>
<CAPTION>

PAGE

<S> <C>
THE TRUST..................................................................B-2
DESCRIPTION OF PERMITTED INVESTMENTS.......................................B-3
INVESTMENT LIMITATIONS....................................................B-19
INVESTMENT ADVISORS.......................................................B-21
THE ADMINISTRATOR.........................................................B-24
THE DISTRIBUTOR...........................................................B-25
THE TRANSFER AGENT........................................................B-31
THE CUSTODIAN.............................................................B-31
INDEPENDENT PUBLIC ACCOUNTANTS............................................B-31
LEGAL COUNSEL.............................................................B-31
TRUSTEES AND OFFICERS OF THE TRUST........................................B-31
PERFORMANCE INFORMATION...................................................B-35
COMPUTATION OF YIELD......................................................B-35
CALCULATION OF TOTAL RETURN...............................................B-39
PURCHASING SHARES.........................................................B-43
REDEEMING SHARES..........................................................B-44
DETERMINATION OF NET ASSET VALUE..........................................B-44
TAXES .................................................................B-45
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
YEAR 2000.................................................................B-54
5% AND 25% SHAREHOLDERS...................................................B-55
EXPERTS .................................................................B-64
</TABLE>

October 1, 1998

<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 Investor Shares Flex Shares
<S> <C> <C> <C>
Money Market Funds
- ------------------
Prime Quality Money Market Fund X X
U.S. Government Securities Money Market Fund X X
Tax-Exempt Money Market Fund X X

Bond Funds
- ----------
Investment Grade Tax-Exempt Bond Fund X X X
Short-Term U.S. Treasury Securities Fund X X X
Short-Term Bond Fund X X X
U.S. Government Securities Fund X X X
Limited-Term Federal Mortgage Securities Fund X X X

Tax-Exempt Bond Funds
- ---------------------
Investment Grade Tax-Exempt Bond Fund X X X
Florida Tax-Exempt Bond Fund X X X
Georgia Tax-Exempt Bond Fund X X X

Equity Funds
- ------------
Capital Growth Fund X X X
Value Income Stock Fund X X X
Mid-Cap Equity Fund X X X
Sunbelt Equity Fund X X X
International Equity Index Fund X X X
International Equity Fund X X X
Small Cap Equity Fund X X
Emerging Markets Equity Fund X

Balanced Fund
- -------------
Balanced Fund X X X

</TABLE>

B-2
<PAGE>

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

American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) and
Global Depository Receipts (GDRs)

ADRs, EDRs, and GDRs are securities, typically issued by a U.S. financial
institution or a non-U.S. financial institution in the case of an EDR or GDR (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, EDRs and GDRs 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. 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.

Asset-Backed Securities

Asset-backed securities are securities backed by non-mortgage assets such as
company receivables, truck and auto loans, leases and credit card receivables.
Other asset-backed securities may be created in the future. These securities 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. These securities are
generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pool of assets. Asset-backed
securities may also be debt obligations, which are 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 obligations.

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 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.

B-3

<PAGE>

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.

Bank Obligations

Bank obligations are short-term obligations issued by U.S. and foreign banks,
including bankers' acceptances, certificates of deposit, custodial receipts, and
time deposits. 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.

Common and Preferred Stocks

Common and preferred stocks represent units of ownership in a corporation.
Owners of common stock typically are entitled to vote on important matters.
Owners of preferred stock ordinarily do not have voting rights, but are entitled
to dividends at a specified rate. Preferred stock has a prior claim to common
stockholders with respect to dividends.

Convertible Securities

Convertible securities are securities issued by corporations that are
exchangeable for a set number of another security at a prestated price. 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 option
provisions.

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.

Debt Securities

Debt securities represent money borrowed that obligates the issuer (e.g., a
corporation, municipality, government, government agency) to repay the borrowed
amount at maturity (when the obligation is due and payable) and usually to pay
the holder interest at specific times (e.g., bonds, notes, debentures).

Dollar Rolls

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.

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.

B-4

<PAGE>

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.

The Euro

On January 1, 1999, the European Monetary Union (EMU) plans to implement a new
currency unit, the Euro, which is expected to reshape financial markets, banking
systems and monetary policies in Europe and other parts of the world. The
countries initially expected to convert or tie their currencies to the Euro
include Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Ireland,
Finland, Italy, Portugal, and Spain. Implementation of this plan will mean that
financial transactions and market information, including share quotations and
company accounts, in participating countries will be denominated in Euros.
Approximately 46% of the stock exchange capitalization of the total European
market may be reflected in Euros, and participating governments will issue their
bonds in Euros. Monetary policy for participating countries will be uniformly
managed by a new central bank, the European Central Bank (ECB).

Although it is not possible to predict the impact of the Euro implementation
plan on the Funds, the transition to the Euro may change the economic
environment and behavior of investors, particularly in European markets. For
example, investors may begin to view those countries participating in the EMU as
a single entity, and the Advisors may need to adapt investment strategies
accordingly. The process of implementing the Euro also may adversely affect
financial markets worldwide and may result in changes in the relative strength
and value of the U.S. dollar or other major currencies, as well as possible
adverse tax consequences. The transition to the Euro is likely to have a
significant impact on fiscal and monetary policy in the participating countries
and may produce unpredictable effects on trade and commerce generally. These
resulting uncertainties could create increased volatility in financial markets
world-wide.

Foreign Securities

Foreign securities 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, Europaper and Yankee Certificates
of Deposit, and investments in Canadian Commercial Paper and foreign securities.
These instruments have 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.

B-5

<PAGE>

In making investment decisions for the Fund, the Advisor evaluates the risks
associated with investing Fund assets in a particular country, including risks
stemming from a country's financial infrastructure and settlement practices; the
likelihood of expropriation, nationalization or confiscation of invested assets;
prevailing or developing custodial practices in the country; the country's laws
and regulations regarding the safekeeping, maintenance and recovery of invested
assets, the likelihood of government-imposed exchange control restrictions which
could impair the liquidity of Fund assets maintained with custodians in that
country, as well as risks from political acts of foreign governments ("country
risks"). Of course, the Advisor cannot assure that the Fund will not suffer
losses resulting from investing in foreign countries.

Holding Fund assets in foreign countries through specific foreign custodians
presents additional risks, including but not limited to the risks that a
particular foreign custodian or depository will not exercise proper care with
respect to Fund assets or will not have the financial strength or adequate
practices and procedures to properly safeguard Fund assets.

By investing in foreign securities, the 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 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, International Equity, and Emerging Markets 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, International Equity, and Emerging Markets 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, International Equity, and Emerging Markets 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.

Emerging countries are all countries that are considered to be developing or
emerging countries by the World Bank or the International Finance Corporation,
as well as countries classified by the United Nations or otherwise regarded by
the international financial community as developing. Currently, the countries
excluded from this category are Ireland, Spain, New Zealand, Australia, the
United Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada,
Germany, Denmark, the United States, Sweden, Finland, Norway, Japan, and
Switzerland.

Forward Foreign Currency Contracts

Forward foreign currency contracts involve obligations 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. A Fund may realize a gain or
loss from currency transactions.

B-6

<PAGE>

Futures Contracts and Options on Futures Contracts

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchase 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 contract by only entering
into futures contracts which are traded on national futures exchanges and for
which there appears to be a liquid secondary market.

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.

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 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 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.

B-7

<PAGE>

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.

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.

High Yield Securities

High yield securities, commonly referred to as junk bonds, are debt obligations
rated below investment grade, i.e., below BBB by Standard & Poor's Corporation
("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's"), or their unrated
equivalents. The risks associated with investing in high yield securities
include:

(1) High yield, lower rated bonds involve greater risk of default or
price declines than investments in investment grade securities (e.g.,
securities rated BBB or higher by S&P or Baa or higher by Moody's) due
to changes in the issuer's creditworthiness.

(2) 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.

(3) 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.

(4) The market for high risk, high yield securities may be adversely
affected by legislative and regulatory developments.

Hedging Techniques

Hedging in an investment strategy designed to offset investment risks. Hedging
activities include, among other things, the use of options and futures. There
are risks associated with hedging activities, including: (1) the success of a
hedging strategy may depend on an ability to predict movements in the prices of
individual

B-8

<PAGE>

securities, fluctuations in markets, and movements in interest rates; (2) there
may be an imperfect or no correlation between the changes in market value of the
securities held by a Fund and the prices of futures and option on futures; (3)
there may not be a liquid secondary market for a futures contract or option; and
(4) trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and options.

Illiquid Securities

Illiquid securities are securities that cannot be disposed of within seven days
at approximately the price at which they are being carried on a Fund's books.

Investment Company Shares

The Funds may purchase shares of other mutual funds to the extent consistent
with applicable law. Investment companies typically incur fees that are separate
from those fees incurred directly by the Funds. A Fund's purchase of such
investment company securities results in the layering of expenses, such that you
would indirectly bear a proportionate share of investment company operating
expenses, such as advisory fees.

Investment Grade Obligations

Investment grade obligations are debt obligations rated BBB or better by S&P or
Baa or better by Moody's, or their unrated equivalents. These securities are
deemed to have speculative characteristics.

Loan Participations

Loan participations are interest 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.

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.

Mortgage-Backed Securities

Mortgage-backed securities are instruments that entitle the holder to a share of
all interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional

B-9

<PAGE>

thirty-year fixed rate mortgages, graduated payment mortgages, adjustable rate
mortgages, and floating mortgages.

Government Pass-Through Securities

These are securities that are issued or guaranteed by a U.S. Government
agency representing an interest in a pool of mortgage loans. The
primary issuers or guarantors of these mortgage-backed securities are
the Government National Mortgage Association ("GNMA"), 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. Government and private guarantees do not
extend to the securities' value, which is likely to vary inversely with
fluctuations in interest rates.

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 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.

Private Pass-Through Securities

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

B-10

<PAGE>

are collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs").

CMOs

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). CMOs are rated in one
of the two highest categories by S&P or Moody's. 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.

REMICs

REMICs 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 and
are rated in one of the two highest categories by S&P or Moody's.

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. GNMA
REMIC Certificates are backed by the full faith and credit of the U.S.
Government.

Stripped Mortgage-Backed Securities

Stripped mortgage-backed securities 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.

B-11

<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.

Municipal Forwards

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 (see "When-Issued Securities and
Municipal Forwards" for more information).

Municipal Lease Obligations

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

Municipal Securities

Municipal bonds include general obligation bonds, revenue or special
obligation bonds, private activity and industrial development bonds and
participation interests in municipal bonds. General obligation bonds
are backed by the taxing power of the issuing municipality. Revenue
bonds are backed by the revenues of a project or facility (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.

Municipal notes consist of general obligation notes, tax anticipation
notes (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

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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
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 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.

Options

A Fund may write call options on a covered basis only, and will not engage in
option writing strategies for speculative purposes. A call option gives the
purchaser of such option the right to buy, and the writer, in this case the
Fund, the obligation to sell the underlying security at the exercise price
during the option period. The

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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.

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.

Other Investments

The Funds are not prohibited from investing in bank obligations issued by
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Administrator and the Distributor. The purchase of Fund shares by these
banks or their customers will not be a consideration in deciding which bank
obligations the Funds will purchase. The Funds will not purchase obligations
issued by the Advisors.

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Pay-In-Kind Securities

Pay-In-Kind securities are debt obligations or preferred stock, that pay
interest or dividends in the form of additional debt obligations or preferred
stock.

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.

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") or an exemption
from registration. Permitted investments for the Funds include restricted
securities, and each such Fund may invest up to 15% of its net assets (10% for
the Money Market Funds) 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

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<PAGE>

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 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.

Short-Term Obligations

Short-term obligations are debt obligations maturing (becoming payable) in 397
days or less, including commercial paper and short-term corporate obligations.
Short-term corporate obligations are short-term obligations issued by
corporations.

Standby Commitments and Puts

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

The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Fund. Sale
of the securities to third parties or lapse of time with the put unexercised may
terminate the right to put the securities. Prior to the expiration of any put
option, the Fund could seek to negotiate terms for the extension of such an
option. If such a renewal cannot be negotiated on terms satisfactory to the
Fund, the Fund could, of course, sell the portfolio security. The maturity of
the underlying security will generally be different from that of the put. There
will be

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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.

STRIPS

Separately Traded Interest and Principal Securities ("STRIPS") 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.

Supranational Agency Obligations

Supranational agency obligations are obligations of supranational entities
established through the joint participation of several governments, including
the Asian Development Bank, Inter-American Development Bank, International Bank
for Reconstruction and Development (also known as the "World Bank"), African
Development Bank, European Economic Community, European Investment Bank, and the
Nordic Investment Bank.

Swaps, Caps, Floors, 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. 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.

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

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may have under these types of arrangements will be covered by setting aside
liquid high-grade securities in a segregated account. The Fund will enter into
swaps only with counterparties believed to be creditworthy.

U.S. Government Agency Obligations

U.S. Government agency obligations are obligations issued or guaranteed by
agencies or instrumentalities of the U.S. Government. 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, Fannie Mae and the United States Postal
Service as well as government trust certificates. Some of these securities are
supported by the full faith and credit of the United States Treasury, others are
supported by the right of the issuer to borrow from the Treasury and still
others are supported only by the credit of the instrumentality. Guarantees of
principal by agencies or instrumentalities of the U.S. Government may be a
guarantee of payment at the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and thus no means of
realizing the value of the obligation prior to maturity.

U.S. Treasury Obligations

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 Securities

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. The
interest rates on these securities may be reset daily, weekly, quarterly, or
some other reset period, and may have a set floor or ceiling on interest rate
changes. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A demand instrument with
a demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such security.

Variable Rate Master Demand Notes

Variable rate master demand 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

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<PAGE>

instrument to pay principal and interest on demand. Variable rate master demand
notes may or may not be backed by bank letters of credit.

Warrants

Warrants give holders the right, but not the obligation, to buy shares of a
company at a given price, usually higher than the market price, during a
specified period.

When-Issued Securities and Municipal Forwards

When-issued securities are securities that are delivered and paid for normally
within 45 days after the date of commitment to purchase. Municipal forwards call
for delivery of the underlying municipal security normally after 45 days but
before one year after the commitment date.

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

Segregated accounts will be established with the 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.

Zero Coupon Obligations

Zero coupon obligations are debt obligations that do not bear any interest, but
instead are issued at a deep discount from face value or 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
face value or par and pay interest periodically.

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

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. The term "majority of the outstanding shares" means
the vote of (i) 67% or more of a Fund's shares present at a meeting, if more
than 50% of the outstanding shares of the Fund are present or represented by
proxy, or (ii) more than 50% of a Fund's outstanding shares, whichever is less.

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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 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, 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

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<PAGE>

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.

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

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

Non-Fundamental Policies

No Fund may purchase or hold illiquid securities (i.e., securities that cannot
be disposed of for their approximate carrying value in seven days or less (which
term includes repurchase agreements and time deposits maturing in more than
seven days) if, in the aggregate, more than 15% of its net assets (10% for the
Prime Quality Money Market, U.S. Government Securities Money Market, and
Tax-Exempt Money Market Funds) would be invested in illiquid securities.

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

INVESTMENT ADVISORS

The Trust and STI Capital Management, N.A., Trusco Capital Management, Inc., and
SunTrust Bank, Atlanta (the "Advisors") have entered into advisory agreements
with the Trust (the "Advisory Agreements"). 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
_________, 1998. The Advisory

B-21

<PAGE>

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, 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, 1998, 1997, and 1996, the Funds paid the
following advisory fees:

Fees Paid Fees Waived or Reimbursed
--------------------------------------------------- ------------------------------------------------
Fund 1998 1997 1996 1998 1997 1996
----------------------------- --------------- ----------------- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Prime Quality Money Market $7,586,108 $5,346,850 $2,181,008 $1,602,546
Fund

U.S. Government Securities $1,935,898 $2,068,133 $ 518,656 $ 577,384
Money Market Fund

Tax-Exempt Money Market $1,687,976 $1,422,777 $ 673,486 $ 685,205
Fund
Investment Grade Bond Fund $4,147,888 $3,868,222 $ 644,859 $ 709,139

Investment Grade Tax-Exempt $1,081,635 $ 917,948 $ 190,250 $ 202,552
Bond Fund

Short-Term Bond Fund $ 485,613 $ 361,936 $ 138,732 $ 149,827

Florida Tax-Exempt Bond Fund1 $ 220,701 $ 107,618 $ 72,605 $ 72,476

Georgia Tax-Exempt Bond $ 181,715 $ 83,243 $ 63,837 $ 63,991
Fund2

U.S. Government Securities $ 91,748 $ 16,097 $ 58,637 $ 53,312
Fund3

Short-Term U.S. Treasury $ 83,694 $ 36,729 $ 72,064 $ 72,116
Securities Fund
</TABLE>

B-22

<PAGE>

Fees Paid Fees Waived or Reimbursed
----------------------------------------------- -------------------------------------------
Fund 1998 1997 1996 1998 1997 1996
- --------------------------------- ------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> C>
Limited-Term Federal Mortgage $ 540,017 $ 224,595 $ 150,604 $ 119,538
Securities Fund

Capital Growth Fund $ 12,775,800 $ 12,099,047 $ 1,227,247 $ 1,408,275

Sunbelt Equity Fund $ 4,399,351 $ 3,424,453 $ 442,535 $ 465,317

Value Income Stock Fund $ 12,025,425 $ 9,447,738 $ 392 $ 318,958

Mid-Cap Equity Fund $ 3,008,690 $ 2,057,932 $ 318,871 $ 318,958

Balanced Fund $ 1,025,089 $ 823,692 $ 151,557 $ 166,361
- --------------------------------- ----------- ------------ ------------ ----------- ----------- -----------
Small Cap Equity Fund $ 273,710 * $ 48,251 *

Emerging Markets Equity Fund $ 84,210 * $ 52,769 *
- --------------------------------- ----------- ------------ ------------ ----------- ----------- -----------

International Equity Fund $ 4,336,172 $ 746,780 $ 157,567 $ 151,947
- --------------------------------- ----------- ------------ ------------ ----------- ----------- -----------

International Equity Index Fund $ 578,197 $ 740,676 $ 80,147 $ 144,349
- --------------------------------- ----------- ------------ ------------ ----------- ----------- -----------
- --------------------------------- ----------- ------------ ------------ ----------- ----------- -----------
</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 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:

o prohibit SunTrust and the Advisors from sponsoring, organizing,
controlling, or distributing the Funds' shares; but

o 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 the
Trust without violating applicable banking laws or regulations. However, the
legal requirements and interpretations about the permissible activities of banks
and their affiliates may change in the future. These changes could prevent the
Advisors from continuing to perform services for the Trust. If this happens, the
Board of Trustees would consider selecting other qualified firms. Shareholders
would approve any new investment advisory agreements would be subject to
Shareholder approval.

If current restrictions on bank activities with mutual funds were relaxed, the
Advisors, or their affiliates, would consider performing additional services for
the Trust. We cannot predict whether these changes will be enacted. We also
cannot predict the terms that the Advisors, or their affiliates, might offer to
provide additional services.

B-23

<PAGE>

THE ADMINISTRATOR

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

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator.
SEI Investments and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers. The Administrator
and its affiliates also serve as administrator or sub-administrator to the
following other mutual funds: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds(-Registered Trademark-), 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 Nevis Funds, Oak
Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, 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 Variable Trust, TIP Funds and TIP Institutional Funds.

For its administrative services, the Administrator is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of: .12% of the first $1
billion of average aggregate net assets, .09% on the next $4 billion of average
aggregate net assets, .07% of the next $3 billion of average aggregate net
assets, .065% of the next $2 billion of average aggregate net assets, and .06%
thereafter.

For the fiscal years ended May 31, 1998, 1997, and 1996, the Funds paid the
following administration fees:

<TABLE>
<CAPTION>
Fees Paid Fees Waived
----------------------------------------------- ---------------------------------------------
Fund 1998 1997 1996 1998 1997 1996
- -------------------------------------- --------------- ---------------- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Prime Quality Money Market $ 661,962 $315,880 $347,518 $449,492
Fund

U.S. Government Securities $ 212,454 $219,380 $ 41,257 $ 72,463
Money Market Fund

Tax-Exempt Money Market Fund $ 288,647 $274,701 $ 0 $ 0

Investment Grade Bond Fund $ 435,278 $443,569 $ 0 $ 0
</TABLE>

B-24

<PAGE>

Fees Paid Fees Waived
----------------------------------------------- ---------------------------------------------
Fund 1998 1997 1996 1998 1997 1996
- -------------------------------------- --------------- ---------------- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Tax-Exempt $ 115,500 $108,204 $ 0 $ 0
Bond Fund
Florida Tax-Exempt Bond Fund $ 30,279 $ 19,989 $ 0 $ 0
Georgia Tax-Exempt Bond Fund $ 25,353 $ 16,304 $ 0 $ 0
Short-Term Bond Fund $ 64,664 $ 56,317 $ 0 $ 0
U.S. Government Securities Fund $ 13,641 $ 7,311 $ 0 $ 0
Short-Term U.S. Treasury $ 16,075 $ 12,012 $ 0 $ 0
Securities Fund
Limited-Term Federal Mortgage $ 71,264 $ 37,854 $ 0 $ 0
Securities Fund
Capital Growth Fund $ 817,905 $842,411 $ 0 $ 0
Sunbelt Equity Fund $ 283,101 $842,411 $ 0 $ 0
Value Income Stock Fund $1,009,167 $845,706 $ 0 $ 0
Mid-Cap Equity Fund $ 194,430 $147,613 $ 0 $ 0
Balanced Fund $ 83,063 $ 74,634 $ 0 $ 0
Small Cap Equity Fund $ 18,406 * $ 0 *
Emerging Markets Equity Fund $ 6,932 * $ 0 *
International Equity Fund $ 240,114 $ 50,404 $ 0 $ 0
International Equity Index Fund $ 48,464 $ 70,690 $ 0 $ 0
- -------------------------------------- --------------- ---------------- --------------- --------------- -------------- -------------
- -------------------------------------- --------------- ---------------- --------------- --------------- -------------- -------------
</TABLE>

* Not in operation during the period.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI, and the Trust have entered into a distribution agreement (the
"Distribution Agreement") dated May 29, 1992. Under the Distribution Agreement,
the Distributor must use all reasonable efforts, consistent with its other
business, in connection with the continuous offering of Shares of the Trust. The
Distributor will receive no compensation for distribution of Trust Shares. In
addition, the Investor Shares of the Funds have a distribution plan (the
"Investor Plan"), and the Flex Shares of the Funds have a distribution and
service plan (the "Flex Plan").

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

B-25

<PAGE>

For the fiscal years ended May 31, 1998, 1997, and 1996, the aggregate sales
charges payable to the Distributor with respect to the Investor Shares of the
Funds were as follows:

Aggregate Sales Charge Payable to Amount Retained by Distributor
Distributor
Fund 1998 1997 1996 1998 1997 1996
- -------------------------------------- --------------- ---------------- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Bond Fund $ 32,358 $ 50,016 $ 62 $ 143
Georgia Tax-Exempt Bond Fund $ 6,999 $ 1,208 $ 97 $ 6
Florida Tax-Exempt Bond Fund $ 3,657 $ 1,386 $ 24 $ 14
Short-Term Bond Fund $ 617 $ 1,204 $ 0 $ 0
Investment Grade Tax-Exempt
Bond Fund $ 14,487 $ 12,005 $ 20 $ 30
U.S. Government Securities Fund
$ 766 $ 7,279 $ 3 $ 0
Short-Term U.S. Treasury
Securities Fund $ 796 $ 2,641 $ 0 $ 9
Limited-Term Federal Mortgage
Securities Fund $ 882 $ 4,067 $ 11 $ 50
Capital Growth Fund $ 264,747 $ 258,267 $ 958 $ 243
Sunbelt Equity Fund $ 36,784 $ 46,854 $ 47 $ 61
Value Income Stock Fund $ 335,991 $ 306,061 $ 100 $ 3,104
International Equity Fund -- $ 29,032 -- $ 85
International Equity Index Fund -- $ 19,058 -- $ 50
Mid-Cap Equity Fund $ 31,167 $ 91,344 $ 61 $ 197
Balanced Fund $ 13,525 $ 16,540 $ 0 $ 22
- -------------------------------------- --------------- ---------------- --------------- --------------- -------------- -------------
- -------------------------------------- --------------- ---------------- --------------- --------------- -------------- -------------
</TABLE>

*Not in operation during the period.

B-26

<PAGE>

The following table shows the amount of front-end sales charge that is paid to
Investment Consultants (Dealers) as a percentage of the offering price of those
Shares:

<TABLE>
<CAPTION>
Dealers' Reallowance As a Percentage of Offering Price
------------------------------------------------------
Fund(s) $100,000 but $250,000 but
Less than less than less than $1,000,000
$100,000 $250,000 $1,000,000 and over
- ----------------------------------------------------- ----------------- ----------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Capital Growth, Value Income Stock, Small Cap 3.375% 2.925% 2.250% 1.350%
Equity, Mid-Cap Equity, Balanced, Sunbelt
Equity, International Equity Index, International
Equity, U.S. Government Securities, Investment
Grade Tax-Exempt Bond, Investment Grade
Bond, and State Tax-Exempt Bond Funds

Limited-Term Federal Mortgage Securities Fund 2.250% 1.575% 1.125% None

Short-Term Bond Fund 1.800% 1.350% 0.900% None

Short-Term U.S. Treasury Securities Fund 0.900% 0.675% 0.450% None
</TABLE>

For the fiscal years ended May 31, 1998, 1997 and 1996, the aggregate sales
charges payable to the Distributor with respect to the Flex Shares of the Funds
were as follows:

Aggregate Sales Charge Payable to Amount Retained by Distributor
Fund Distributor
- --------------------------------------- ------------------------------------------------ -----------------------------------------
1998 1997 1996 1998 1997 1996
- --------------------------------------- -------------- --------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Bond Fund $ 5,684 $ 4,329 $ 0 $ 0
Georgia Tax-Exempt Bond Fund $ 2,915 $ 2,896 $ 0 $ 0
Florida Tax-Exempt Bond Fund $ 1,632 $ 153 $ 0 $ 0
Short-Term Bond Fund $ 1,678 $ 344 $ 0 $ 0
Investment Grade Tax-Exempt $ 10,407 $ 2,782 $ 0 $ 0
Bond Fund
U.S. Government Securities Fund $ 2,823 $ 1,067 $ 0 $ 0
Short-Term U.S. Treasury $ 8,261 $ 3,687 $ 0 $ 0
Securities Fund
Limited-Term Federal Mortgage $ 2,067 $ 1,442 $ 0 $ 0
Securities Fund
Capital Growth Fund $ 18,958 $ 6,283 $ 0 $ 0
Sunbelt Equity Fund $ 8,144 $ 324 $ 0 $ 0
</TABLE>

B-27

<PAGE>

Aggregate Sales Charge Payable to Amount Retained by Distributor
Fund Distributor
- --------------------------------------- ------------------------------------------------ -----------------------------------------
1998 1997 1996 1998 1997 1996
- --------------------------------------- -------------- --------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Value Income Stock Fund $41,778 $ 10,574 $ 0 $ 0
International Equity Fund -- $ 60 -- $ 0
International Equity Index Fund -- $ 392 -- $ 0
Mid-Cap Equity Fund $10,239 $ 5,222 $ 0 $ 0
Balanced Fund $ 4,299 $ 713 $ 0 $ 0
- --------------------------------------- -------------- --------------- --------------- ------------- ------------- -------------
- --------------------------------------- -------------- --------------- --------------- ------------- ------------- -------------
</TABLE>

*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; .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 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,

B-28

<PAGE>

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 disinterested Trustees.
The Investor Plan and the Flex Plan require that quarterly written reports of
amounts spent under the Investor Plan and the Flex Plan, respectively, and the
purposes of such expenditures be furnished to and reviewed by the Trustees. The
Investor Plan and the Flex Plan may not be amended to increase materially the
amount which may be spent thereunder without approval by a majority of the
outstanding shares of the affected class of shares of the Trust. All material
amendments of the Plans will require approval by a majority of the Trustees of
the Trust and of the disinterested 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', 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, 1998, 1997 and 1996, the Funds paid the
following amounts pursuant to the Investor Plan:

U.S. Government Securities Money Market Fund $ 66,016 $ 44,107

Tax-Exempt Money Market Fund $ 89,912 $ 80,845

Investment Grade Bond Fund $ 94,495 $ 78,963

Investment Grade Tax-Exempt Bond Fund $ 100,819 $ 113,467

Short-Term Bond Fund $ 0 $ 5,067

Florida Tax-Exempt Bond Fund $ 0 $ 6,021

Georgia Tax-Exempt Bond Fund $ 0 $ 5,001

</TABLE>

B-29

<PAGE>

Distribution Fees - Amount Paid
-------------------------------
Fund 1998 1997 1996
- ------------------------------------------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C>
U.S. Government Securities Fund $ 1,150 $ 4,218
Short-Term U.S. Treasury Securities Fund $ 0 $ 8,499
Limited-Term Federal Mortgage Securities Fund $ 0 $ 2,360
Capital Growth Fund $ 1,109,436 $ 912,685
Sunbelt Equity Fund $ 80,282 $ 99,366
Value Income Stock Fund $ 437,882 $ 304,282
Mid-Cap Equity Fund $ 56,187 $ 51,485
Balanced Fund $ 2,390 $ 10,808
- -------------------------------------------------------- ---------------------- --------------------- ---------------------
International Equity Fund $ 10,778 $ 0
International Equity Index Fund $ 8,005 $ 369
- -------------------------------------------------------- ---------------------- --------------------- ---------------------
- -------------------------------------------------------- ---------------------- --------------------- ---------------------
</TABLE>

*Not in operation during the period.

For the fiscal years ended May 31, 1998, 1997 and 1996, the Funds paid the
following amounts pursuant to the Flex Plan:

</TABLE>

B-30

<PAGE>

Distribution Fees - Amount Paid
-------------------------------
Fund 1998 1997 1996
- ------------------------------------------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C>
Mid-Cap Equity Fund $ 53,907 $10,115
Balanced Fund $ 28,723 $ 6,985
- -------------------------------------------------------- ---------------------- --------------------- ---------------------
Small Cap Equity Fund N/A *
International Equity Fund $ 18,519 $ 0
International Equity Index Fund $ 0 $ 580
- -------------------------------------------------------- ---------------------- --------------------- ---------------------
- -------------------------------------------------------- ---------------------- --------------------- ---------------------
</TABLE>

*Not in operation during the period.

THE TRANSFER AGENT

Federated Services Company, Federated Investors Tower, Pittsburgh, PA 15222-3779
serves as the Trust's transfer agent.

THE CUSTODIAN

SunTrust Bank, Atlanta, 303 Peachtree Street N.E., 14th Floor, Atlanta, GA 30308
serves as the custodian for the all of the Funds except for the International
Equity, International Equity Index and Emerging Markets Equity Funds. The Bank
of New York, One Wall Street, New York, NY 10286 serves as custodian for the
International Equity, International Equity Index and Emerging Markets Equity
Funds.

INDEPENDENT PUBLIC ACCOUNTANTS

, serves as independent public accountants for the Trust.
- -------- -------------

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, 1800 M Street, N.W., Washington, D.C. serves as
legal counsel to the Trust.

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees supervise the management and affairs of the Trust. The Trustees
have approved contracts with certain companies that provide the Trust with
essential management services. The Trustees and Executive Officers of the Trust,
their respective dates of birth, and their principal occupations for the last
five years are set forth below. Each may have held other positions with the
named companies during that period. The business address of each Trustee and
each Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456.

B-31

<PAGE>

Certain officers of the Trust also serve as officers of some or all of the
following: The Achievement Funds Trust, The Advisors' Inner Circle Fund, The
Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds(-Registered Trademark-), 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, Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor
Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, 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 Variable Trust, TIP Funds and TIP
Institutional Funds, each of which is an open-end management investment
company managed by SEI Investments Mutual Funds Services or its affiliates
and, except for Profit Funds Investment Trust, and Santa Barbara Group of
Mutual Funds, Inc., are distributed by SEI Investments Distribution Co.

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

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

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

F. WENDELL GOOCH (12/3/32) - Trustee - Retired. President, Orange County
Publishing Co., Inc., 1981- 1997, publisher of the Paoli News and the Paoli
Republican and Editor of the Paoli Republican, 1981-1997, President, H & W
Distribution, Inc., 1984-1997. Current Trustee on the Board of Trustees for the
SEI Family of Funds and The Capitol Mutual Funds. Executive Vice President,
Trust Department, Harris Trust and Savings Bank and Chairman of the Board of
Directors of The Harris Trust Company of Arizona before January 1981.

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

DR. BERNARD F. SLIGER (9/30/24) - Trustee - Director, Stavros Center for
Economic Education, Florida State University, 1991-present. President of Florida
State University, 1976-91; previous four years EVP and Chief Academic Officer.
During educational career, taught at Florida State, Michigan State, Louisiana
State and Southern University. Spent 19 years as faculty member and
administrator at Louisiana State University and served as Head of Economics
Department, member and Chairman of the Graduate Council, Dean of Academic
Affairs and Vice Chancellor. Member of Board of Directors of Federal Reserve
Bank of Atlanta, 1983-1988.

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

B-32

<PAGE>

JONATHAN T. WALTON (3/28/30) - Trustee - Retired. Executive Vice President, NBD
Bank, N.A. and NBD Bancorp, October 1956 to March 1995. Trustee, W.K. Kellogg
Trust.

WILLIAM H. CAMMACK (11/24/29) - Trustee* - Chairman & Director, SunTrust
Equitable Securities Corporation, January, 1998-present. Chairman and CEO,
Equitable Asset Management, Inc., December 1993- present. Chairman & CEO,
Equitable Trust Company, June 1991-present. Chairman, Equitable Securities
Corporation, July 1972 - January 1998.

MARK NAGLE (10/20/59) - President and Chief Executive Officer - Vice President
and Controller, Funds Accounting since 1996. Vice President of the Administrator
and Distributor since 1996. Vice President of Fund Accounting - BISYS Fund
Services 1995-1996. Senior Vice President - Fidelity Investments 1981-1995.

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

LYDIA A. GAVALIS (6/5/64) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Assistant General Counsel and Director of Arbitration, Philadelphia Stock
Exchange, 1989-1998.

KATHY HEILIG (12/21/58) - Vice President and Assistant Secretary - Treasurer of
SEI Investments Company since 1997. Assistant Controller of SEI Investments
Company since 1995. Vice President of SEI Investments Company since 1991.
Director of Taxes of SEI Investments Company, 1987-1991. Tax Manager - Arthur
Anderson LLP prior to 1987.

JOSEPH M. O'DONNELL (11/13/54) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Vice President and General Counsel, FPS Services, Inc., 1993-1997. Staff
Counsel and Secretary, Provident Mutual Family of Funds, 1990-1993.

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

LYNDA J. STRIEGEL (10/30/48) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Senior Asset Management Counsel, Barnett Banks, Inc., 1997-1998. Partner,
Groom and Nordberg, Chartered, 1996-1997. Associate General Counsel, Riggs Bank,
N.A., 1991-1995.

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

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

CAROL ROONEY (5/8/64) - Controller, Chief Financial Officer - A Director of SEI
Investments Mutual Funds Services since 1992.

B-33

<PAGE>

RICHARD W. GRANT (10/25/45) - Secretary - 2000 One Logan Square, Philadelphia,
Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to
the Trust, Administrator and Distributor, since 1989.

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, counsel to the Trust, Administrator and Distributor. Associate, Morgan,
Lewis & Bockius LLP, 1993-1995. Associate, Ropes & Gray (law firm), 1988-1993.

* Messrs. Looney, Goodrum, McNair, Hall and Cammack may be deemed to be
"interested persons" 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, 1998, the Trust paid the following amounts to
Trustees and Officers of the Trust:

Estimated
Pension or Annual Total Compensation
Aggregate Retirement Benefits Benefits from Fund and Fund
Compensation Accrued as Part of Upon Complex Paid to
Name of Person, Position From Fund Fund Expenses Retirement Trustees
- ------------------------------- ------------ ------------------ ------------- ------------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum, Trustee $__,____ N/A N/A $__,____ for service on
two boards
Wilton Looney, Trustee $__,____ N/A N/A $__,____ for service on
two boards
Champney A. McNair, $__,____ N/A N/A $__,____ for service on
Trustee two boards

F. Wendell Gooch, Trustee $__,____ N/A N/A $__,____ for service on
two boards
T. Gordy Germany, $__,____ N/A N/A $__,____ for service on
Trustee two boards

Dr. Bernard F. Sliger, Trustee $__,____ N/A N/A $__,____ for service on
two boards
Jesse S. Hall, Trustee $__,____ N/A N/A $__,____ for service on
two boards
Jonathan T. Walton, Trustee $__,____ N/A N/A $__,____ for service on
two boards
William H. Cammack, $__,____ N/A N/A $__,____ for service on
Trustee two boards
- ------------------------------- ------------ ------------------ ------------- --------------------------------
- ------------------------------- ------------ ------------------ ------------- --------------------------------

</TABLE>

B-34

<PAGE>

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.

COMPUTATION OF YIELD

Seven-Day Yield

The current yield of the Money Market Funds will be calculated daily based upon
the seven days ending on the date of calculation (the "base period"). The yield
is computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing shareholder account having a balance of one
share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing such net change by
the value of the account at the beginning of the same period to obtain the base
period return and multiplying the result by (365/7). Realized and unrealized
gains and losses are not included in the calculation of the yield. The effective
compound yield of the Funds is determined by computing the net change (exclusive
of capital changes) in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from shareholder accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula: Effective Yield = [(Base
Period Return + 1)365/7] - 1. The current and the effective yields reflect the
reinvestment of net income earned daily on portfolio assets.

The Tax-Exempt Money Market Fund's "tax equivalent yield" and "tax equivalent
effective yield" are 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 E
equals the 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:

B-35

<PAGE>

TAX EQUIVALENT YIELD = E
(-----) + T
1-P

E = the portion of the yield which is tax-exempt
P = stated income tax rate
T = the portion of the yield which is taxable

For the 7-day period ended May 31, 1998, the Money Market Funds' current
effective and tax equivalent yields were as follows:

7-Day 7-Day
7-Day Tax Equivalent Tax Equivalent
Fund Class 7-Day Yield Effective Yield Yield Effective Yield
- ---------------------- ------------------ --------------- ---------------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
Prime Quality Money Investor _.__% _.__% N/A N/A
Market Fund Trust _.__% _.__% N/A N/A

U.S. Government Investor _.__% _.__% N/A N/A
Securities Money
Market Fund Trust _.__% _.__% N/A N/A

Tax-Exempt Money Investor _.__% _.__% _.__% _.__%
Market Fund Trust _.__% _.__% _.__% _.__%

</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.

Thirty-Day Yield

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:

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

For the 30-day period ended May 31, 1998, yields on the Funds other than the
Money Market Funds were as follows:

Fund Class Yield
- ------------------------------------ ---------------------------------------- ----------------------------------
<S> <C> <C>
Investment Grade Bond Fund Trust Class _.__%

Investor Class _.__%

Flex Shares _.__%

</TABLE>

B-37

<PAGE>

Fund Class Yield
- ------------------------------------ ---------------------------------------- ----------------------------------
<S> <C> <C>
Investment Grade Tax-Exempt Bond Trust Class _.__%
Fund
Investor Class _.__%
Flex Shares _.__%
Short-Term Bond Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
Florida Tax-Exempt Bond Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
Georgia Tax-Exempt Bond Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
Short-Term U.S. Treasury Securities Trust Class _.__%
Fund
Investor Class _.__%
Flex Shares _.__%
U.S. Government Securities Fund Trust Class _.__%

Investor Class _.__%
Flex Shares _.__%
Limited-Term Federal Mortgage Trust Class _.__%
Securities Fund
Investor Class _.__%
Flex Shares _.__%
Capital Growth Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
Sunbelt Equity Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
</TABLE>

B-37

<PAGE>

Fund Class Yield
- ------------------------------------ ---------------------------------------- ----------------------------------
<S> <C> <C>
Value Income Stock Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
Mid-Cap Equity Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
Balanced Fund Trust Class _.__%
Investor Class _.__%
Flex Shares _.__%
Small Cap Equity Fund Trust Class _.__%
Investor Class N/A
Flex Class N/A
Emerging Markets Equity Fund Trust Class N/A
International Equity Fund Trust Class N/A
Investor Class N/A
Flex Shares N/A
International Equity Index Fund Trust Class N/A
Investor Class N/A
Flex Shares N/A
- ------------------------------------ ---------------------------------------- ----------------------------------
- ------------------------------------ ---------------------------------------- ----------------------------------
</TABLE>

*Not in operation during the period.

The Tax-Exempt Bond Funds' "tax equivalent yield" and "tax equivalent effective
yield" are 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 E equals the
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 = the portion of the yield which is tax-exempt
P = stated income tax rate
T = the portion of the yield which is taxable

B-38

<PAGE>

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%.

For the 30-day period ended May 31, 1998, the tax-equivalent yields for the
Trust Shares were as follows: for the Investment Grade Tax-Exempt Bond Fund -
_.__%, Georgia Tax-Exempt Bond Fund - _.__%, and Florida Tax-Exempt Bond Fund
- -_.__%.

For the 30-day period ended May 31, 1998, the tax-equivalent yields for the
Investor Shares of the Tax-Exempt Funds were as follows: for the Investment
Grade Tax-Exempt Bond Fund - _.__%, Georgia Tax-Exempt Bond Fund - _.__%, and
Florida Tax-Exempt Bond Fund -_.__%.

For the 30-day period ended May 31, 1998, the tax-equivalent yields for the Flex
Shares of the Tax-Exempt Funds were as follows: for the Investment Grade
Tax-Exempt Bond Fund - _.__%, Georgia Tax-Exempt Bond Fund - _.__%, and Florida
Tax-Exempt Bond Fund -_.__%.

Yields are one basis upon which investors may compare the Funds with other money
market funds; however, yields of other money market funds and other investment
vehicles may not be comparable because of the factors set forth above and
differences in the methods used in valuing portfolio instruments.

CALCULATION OF TOTAL RETURN

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

From time to time, the Trust may include the names of clients of the 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 top 1% of the SEI Funds Evaluation database
for equity managers over the past ten years. SEI Investment's database includes
research data on over 1,000 investment managers responsible for over $450
billion in assets.

Based on the foregoing, the average annual total returns for the Funds from
inception through May 31, 1998 and for the one-year and five-year periods ended
May 31, 1998 were as follows:

</TABLE>

B-39

<PAGE>

Investor1 _.__% _.__% _.__%
Investment Grade Bond Fund Trust3 _.__% _.__% _.__%
Investor--With Sales Load2 _.__% _.__% _.__%

Investor--Without Sales Load2 _.__% _.__% _.__%
Flex--With Sales Load25 _.__% _.__% _.__%
Flex--Without Sales Load25 _.__% _.__% _.__%
Investment Grade Tax-Exempt Bond Trust5 _.__% _.__% _.__%
Fund
Investor--With Sales Load4 _.__% _.__% _.__%
Investor--Without Sales Load4 _.__% _.__% _.__%
Flex--With Sales Load26 _.__% _.__% _.__%
Flex--Without Sales Load26 _.__% _.__% _.__%
Short-Term Bond Fund Trust7 _.__% _.__% _.__%

Investor--With Sales Load8 _.__% _.__% _.__%
Investor--Without Sales Load8 _.__% _.__% _.__%
Flex--With Sales Load28 _.__% _.__% _.__%
Flex-Without Sales Load28 _.__% _.__% _.__%
Florida Tax-Exempt Bond Fund Trust10 _.__% _.__% _.__%

Investor--With Sales Load9 _.__% _.__% _.__%
Investor--Without Sales Load9 _.__% _.__% _.__%
Flex--With Sales Load26 _.__% _.__% _.__%

Flex--Without Sales Load26 _.__% _.__% _.__%

</TABLE>

B-40

<PAGE>

Average Annual Total Return
---------------------------
Fund Class One Year Five Since
Years Inception
- ---------------------------------------- ------------------------------ ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Georgia Tax-Exempt Bond Fund Trust9 _.__% _.__% _.__%
Investor--With Sales Load11 _.__% _.__% _.__%
Investor--Without Sales Load11 _.__% _.__% _.__%
Flex--With Sales Load31 _.__% _.__% _.__%
Flex--Without Sales Load31 _.__% _.__% _.__%
Short-Term U.S. Treasury Securities Trust7 _.__% _.__% _.__%
Fund
Investor--With Sales Load6 _.__% _.__% _.__%
Investor--Without Sales Load6 _.__% _.__% _.__%
Flex--With Sales Load27 _.__% _.__% _.__%
Flex--Without Sales Load27 _.__% _.__% _.__%
U.S. Government Securities Fund Trust21 _.__% _.__% _.__%
Investor--With Sales Load20 _.__% _.__% _.__%
Investor--Without Sales Load20 _.__% _.__% _.__%
Flex-With Sales Load25 _.__% _.__% _.__%
Flex--Without Sales Load25 _.__% _.__% _.__%
Limited-Term Federal Mortgage Trust23 _.__% _.__% _.__%
Securities Fund

Investor--With Sales Load22 _.__% _.__% _.__%
Investor--Without Sales Load22 _.__% _.__% _.__%
Flex--With Sales Load25 _.__% _.__% _.__%
Flex--Without Sales Load25 _.__% _.__% _.__%
Capital Growth Fund Trust13 _.__% _.__% _.__%
Investor--With Sales Load4 _.__% _.__% _.__%
Investor--Without Sales Load4 _.__% _.__% _.__%
Flex--With Sales Load26 _.__% _.__% _.__%
Flex--Without Sales Load26 _.__% _.__% _.__%

</TABLE>

B-41

<PAGE>

Average Annual Total Return
---------------------------
Fund Class One Year Five Since
Years Inception
- ---------------------------------------- ------------------------------ ------------- ------------- -----------------
<S> <C> <C> <C> <C>
Sunbelt Equity Fund Trust19 _.__% _.__% _.__%
Investor--With Sales Load18 _.__% _.__% _.__%
Investor--Without Sales Load18 _.__% _.__% _.__%
Flex--With Sales Load29 _.__% _.__% _.__%
Flex--Without Sales Load29 _.__% _.__% _.__%
Value Income Stock Fund Trust15 _.__% _.__% _.__%
Investor--With Sales Load14 _.__% _.__% _.__%
Investor--Without Sales Load14 _.__% _.__% _.__%
Flex--With Sales Load26 _.__% _.__% _.__%
Flex--Without Sales Load26 _.__% _.__% _.__%
Mid-Cap Equity Fund Trust17 _.__% _.__% _.__%
Investor--With Sales Load16 _.__% _.__% _.__%
Investor--Without Sales Load16 _.__% _.__% _.__%
Flex--With Sales Load29 _.__% _.__% _.__%
Flex--Without Sales Load29 _.__% _.__% _.__%
Balanced Fund Trust19 _.__% _.__% _.__%

Investor--With Sales Load18 _.__% _.__% _.__%
Investor--Without Sales Load18 _.__% _.__% _.__%
Flex--With Sales Load30 _.__% _.__% _.__%
Flex--Without Sales Load30 _.__% _.__% _.__%

</TABLE>

B-42

<PAGE>

Flex--Without Sales Load _.__% _.__% _.__%

Emerging Markets Equity Fund Trust12 _.__% _.__% _.__%

International Equity Fund Trust33 _.__% _.__% _.__%
Investor--With Sales Load32 _.__% _.__% _.__%
Investor--Without Sales Load32 _.__% _.__% _.__%
Flex--With Sales Load32 _.__% _.__% _.__%
Flex--Without Sales Load32 _.__% _.__% _.__%

International Equity Index Fund Trust24 _.__% _.__% _.__%
Investor--With Sales Load24 _.__% _.__% _.__%
Investor--Without Sales Load24 _.__% _.__% _.__%
Flex--With Sales Load34 _.__% _.__% _.__%
Flex--Without Sales Load34 _.__% _.__% _.__%
- ---------------------------------------- ------------------------------ ------------- ------------- -----------------
- ---------------------------------------- ------------------------------ ------------- ------------- -----------------
</TABLE>

<TABLE>

<S> <C> <C>
1 Commenced operations 6/8/92 13 Commenced operations 7/1/92 25 Commenced operations 6/2/95
2 Commenced operations 6/11/92 14 Commenced operations 2/17/93 26 Commenced operations 6/2/95
3 Commenced operations 7/16/92 15 Commenced operations 2/12/93 27 Commenced operations 6/23/95
4 Commenced operations 6/9/92 16 Commenced operations 2/1/94 28 Commenced operations 6/21/95
5 Commenced operations 10/21/93 17 Commenced operations 2/2/94 29 Commenced operations 6/6/95
6 Commenced operations 3/18/93 18 Commenced operations 1/4/94 30 Commenced operations 6/15/95
7 Commenced operations 3/15/93 19 Commenced operations 1/3/94 31 Commenced operations 6/7/95
8 Commenced operations 3/22/93 20 Commenced operations 6/9/94 31 Commenced operations 6/7/95
9 Commenced operations 1/18/94 21 Commenced operations 7/31/94 32 Commenced operations 1/2/96
10 Commenced operations 1/25/94 22 Commenced operations 7/17/94 33 Commenced operations 12/1/95
11 Commenced operations 1/19/94 23 Commenced operations 6/7/94 34 Commenced operations 6/8/95
12 Commenced operations 1/31/97 24 Commenced operations 6/6/94

</TABLE>

*Not in operation during period.

PURCHASING 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: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

B-43

<PAGE>

REDEEMING SHARES

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.

A number of Fund shareholders are institutions with significant share holdings
that may be redeemed at any time. If a substantial number or amount of
redemptions should occur within a relatively short period of time, a Fund may
have to sell portfolio securities it would otherwise hold and incur the
additional transaction costs. The sale of portfolio securities may result in the
recognition of capital gains, which will be distributed annually and generally
will be taxable to shareholders as ordinary income or capital gains.
Shareholders are notified annually regarding the federal tax status of
distributions they receive (see "Taxes").

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. 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

B-44

<PAGE>

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

The following is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders that are not described in
the Funds' prospectus. No attempt is made to present a detailed explanation of
the Federal tax treatment of the funds or their Shareholders, and the discussion
here and in the Funds' prospectus is not intended as a substitute for careful
tax planning.

This discussion of Federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
change the conclusions expressed herein, and may have a retroactive effect with
respect to the transactions contemplated herein.

Federal Income Tax

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

B-45

<PAGE>

assets and that does not represent more than 10% of the outstanding voting
securities of such issuer; and (iii) at the close of each quarter of a Fund's
taxable year, not more than 25% of the value of its assets may be invested in
securities (other than U.S. Government securities or the securities of other
RIC's) of any one issuer, or of two or more issuers engaged in same or similar
businesses if the Fund owns at least 20% of the voting power of such issuers.

In addition, each Fund will distribute by the end of any calendar year 98% of
its ordinary income for that year and 98% of its capital gain net income for the
one-year period ending on October 31 of that calendar year, plus certain other
amounts. Each Fund intends to make sufficient distributions prior to the end of
each calendar year to avoid liability for the federal excise tax applicable to
regulated investment companies.

If, at the close of each quarter of its taxable year, at least 50% of the value
of a Fund's total assets consists of obligations the interest on which is
excludable from gross income, a Fund may pay "exempt-interest dividends," as
defined in Section 852(b)(5) of the Code, to its shareholders.

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 Minimum
Tax for both corporate and non-corporate taxpayers and the Environmental Tax for
corporate taxpayers only. 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. For tax years
beginning after December 31, 1997, the Alternative Minimum Tax is repealed for
certain corporations.

Distributions of exempt-interest dividends may result in additional Federal
income tax consequences to shareholders in Tax-Exempt Funds. For example,
interest on indebtedness incurred by Shareholders to purchase or carry shares of
a Tax-Exempt 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% 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

B-46

<PAGE>

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-Exempt 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 in a trade or business a facility financed
from the proceeds of industrial development bonds or private activity bonds.
Such entities or persons should consult their tax advisors before purchasing
shares of a Tax-Exempt Fund.

Issuers of bonds purchased by a Tax-Exempt 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 of issuance of the bonds to
which such dividends are attributable 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.

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
long-term capital gain or loss if the shares have been held for more than
eighteen months, mid-term if the shares have been held for over one year but not
for over eighteen months, and short-term if for a year or less. If shares held
for six months or less are sold or redeemed for a loss, two special rules apply:
First, if shares on which a net capital gain distribution has been received are
subsequently sold or redeemed, and such shares have been held for six months or
less, any loss recognized will be treated as long-term capital loss to the
extent of the long-term capital gain distributions. Second, any loss recognized
by a Shareholder upon the sale or redemption of shares of a Tax-Exempt Fund held
for six months or less will be disallowed to the extent of any exempt-interest
dividends received by the Shareholder with respect to such shares.

The Funds will make annual reports to Shareholders of the Federal income tax
status of all distributions.

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 stock or 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 any of the International Equity Index, International Equity, and Emerging
Markets Equity Funds meets the Distribution Requirement, and if more than 50% of
the value of such Fund's total assets at the close of its taxable year consists
of stock or securities of foreign corporations, such Fund will be eligible to,
and will, file an election with the Internal Revenue Service that will enable
Shareholders, in effect, to receive the benefit of the foreign tax credit with
respect to any foreign and U.S. possessions income taxes paid by the Fund.
Pursuant to the election, 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

B-47

<PAGE>

the foregoing information in calculating the foreign tax credit against the
Shareholders' Federal income tax. In no event shall a Shareholder be allowed a
foreign tax credit with respect to shares in a Fund if such shares are held by
the Shareholder for 15 days or less during the 30-day period beginning on the
date which is 15 days before the date on which such shares become ex-dividend
with respect to such dividend. If any of the three above-mentioned 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, International Equity, and Emerging Markets
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, 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 RIC 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

B-48

<PAGE>

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

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

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

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

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

It is expected that the Trust may execute brokerage or other agency transactions
through the Distributor or an affiliate of an Advisor, both of which are
registered broker-dealers, for a commission in conformity with the

B-49

<PAGE>

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, 1998, the Funds paid the following brokerage
commissions with respect to portfolio transactions:

Total $ Amount Total $ Amount of Total $ % of Total % of Total Total Brokerage
of Brokered Brokerage Amount of Brokerage Brokered Commissions Paid
Transactions Commissions Paid Brokerage Commissions Transactions to SFS in
Through in FYE 5/31/98 Commissions Paid to Effected Connection with
Affiliates for Paid to Affiliated Through Repurchase
FYE 5/31/98 Affiliates in Brokers in Affiliated Agreement
FYE 5/31/98 FYE 5/31/98 Brokers Transactions for
Fund FYE 5/31/98 FYE 5/31/98
- --------------------- ------------------ ------------------ ---------------- ----------------- -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Prime Quality Money
Market Fund

U.S. Government
Securities Money
Market Fund

Tax-Exempt Money
Market Fund

Investment Grade
Bond Fund

Investment Grade Tax-
Exempt Bond Fund

Capital Growth Fund
Value Income Stock
Fund

Short-Term Bond
Fund

Short-Term U.S.
Treasury Securities
Fund

Sunbelt Equity Fund

</TABLE>

B-50

<PAGE>

Total $ Amount Total $ Amount of Total $ % of Total % of Total Total Brokerage
of Brokered Brokerage Amount of Brokerage Brokered Commissions Paid
Transactions Commissions Paid Brokerage Commissions Transactions to SFS in
Through in FYE 5/31/98 Commissions Paid to Effected Connection with
Affiliates for Paid to Affiliated Through Repurchase
FYE 5/31/98 Affiliates in Brokers in Affiliated Agreement
FYE 5/31/98 FYE 5/31/98 Brokers Transactions for
Fund FYE 5/31/98 FYE 5/31/98
- ---------------------- ----------------- ------------------ ---------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund
Mid-Cap Equity Fund

Florida Tax-Exempt
Bond Fund

Georgia Tax-Exempt
Bond Fund

U.S. Government
Securities Fund

Limited-Term Federal
Mortgage Securities
Fund

Small Cap Equity
Fund

Emerging Markets
Equity Fund

International Equity
Index Fund

International Equity
Fund
- ---------------------- ----------------- ------------------ ---------------- ----------------- -------------- -----------------
- ---------------------- ----------------- ------------------ ---------------- ----------------- -------------- -----------------
</TABLE>

For the fiscal years ended May 31, 1998, 1997 and 1996, the Funds paid the
following brokerage commissions with respect to portfolio transactions:

<TABLE>
<CAPTION>
Total $ Amount of Brokerage Total $ Amount of Brokered
Commissions Paid Commissions Paid to Affiliates
Fund
1997 1996 1997 1996
- ----------------------------------- ---------------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Prime Quality Money Market Fund

U.S. Government Securities Money
Market Fund

Tax-Exempt Money Market Fund
Investment Grade Bond Fund

</TABLE>

B-51

<PAGE>

<TABLE>
<CAPTION>
Total $ Amount of Brokerage Total $ Amount of Brokered
Commissions Paid Commissions Paid to Affiliates
Fund 1997 1996 1997 1996
- ---------------------------------------- ------------- ---------------- -------------- -----------------
<S> <C> <C> <C> <C>
Investment Grade Tax-Exempt Bond Fund

Short-Term Bond Fund

Short-Term U.S. Treasury Securities Fund

Florida Tax-Exempt Bond Fund

Georgia Tax-Exempt Bond Fund

U.S. Government Securities Fund

Limited-Term Federal Mortgage Securities Fund

Capital Growth Fund

Sunbelt Equity Fund

Value Income Stock Fund

Mid-Cap Equity Fund

Balanced Fund

Small Cap Equity Fund

Emerging Markets Equity Fund

International Equity Index Fund

International Equity Fund
- ----------------------------------------- --------------------- --------------------- --------------------- --------------------
</TABLE>

*Not in operation during the period.

For the fiscal years ended May 31, 1998 and 1997, the portfolio turnover rate
for each of the non-money market Funds was as follows:

<TABLE>
<CAPTION>
Turnover Rate
-------------------------------------------
Fund 1998 1997
- ------------------------------------------- ------------------ -----------------
<S> <C> <C>
Investment Grade Bond Fund 298%

Investment Grade Tax-Exempt Bond Fund 489%

Short-Term U.S. Treasury Securities Fund 93%

Short-Term Bond Fund 118%

</TABLE>

B-52

<PAGE>

Limited-Term Federal Mortgage Securities Fund 133%

Florida Tax-Exempt Bond Fund 135%

Georgia Tax-Exempt Bond Fund 15%

Capital Growth Fund 141%

Value Income Stock Fund 105%

Mid-Cap Equity Fund 152%

Balanced Fund 197%

Sunbelt Equity Fund 72%

Emerging Markets Equity 24%

International Equity Fund 139%

International Equity Index Fund 2%
- ------------------------------------------- ------------------ -----------------
</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 on behalf of

B-53

<PAGE>

the Trust or the Trustees, and because the Declaration of Trust provides for
indemnification out of the Trust property for any Shareholder held personally
liable for the obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

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

YEAR 2000

The Trust depends on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Trust could be adversely affected if the computer systems
used by its service providers do not properly process dates on and after January
1, 2000 and distinguish between the year 2000 and the year 1900. The Trust has
asked its service providers whether they expect to have their computer systems
adjusted for the year 2000 transition, and received assurances from each from
each that its system is expected to accommodate the year 2000 without material
adverse consequences to the Trust. The Trust and its shareholders may experience
losses if these assurances prove to be incorrect or as a result of year 2000
computer difficulties experienced by issuers of portfolio securities or third
parties, such as custodians, banks, broker-dealers or others with which the
Trust does business.

B-54

<PAGE>

5% AND 25% SHAREHOLDERS

As of July 14, 1998, 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 CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Prime Quality Money Market Fund SunTrust Bank, Atlanta 1,609,356,679.020 94.99
P.O. Box 105504
Atlanta, GA 30348

US Government Securities Money SunTrust Bank, Atlanta 325,412,698.650 97.67
Market Fund P.O. Box 105504
Atlanta, GA 30348

Tax Exempt Money Market Fund SunTrust Bank, Atlanta 511,730,988.060 100.00
P.O. Box 105504
Atlanta, GA 30348

Investment Grade Bond Fund Trustman 49,952,014.275 67.29
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 16,189,007.837 21.81
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 4,796,379.599 6.46
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Investment Grade Tax Exempt Trustman 7,778,515.440 60.93
Bond Fund Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 3,145,851.016 24.64
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,842,376.829 14.43
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Capital Growth Fund Trustman 60,428,509.341 64.85
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

</TABLE>

B-55

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>

Trustman 19,249,301.684 20.66
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Value Income Stock Fund Trustman 73,908,310.191 60.34
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 28,900,428.203 23.60
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Short-Term U.S. Treasury Trustman 2,135,263.630 44.91
Securities Fund Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,809,873.671 38.07
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 697,950.907 14.68
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Short-Term Bond Fund Trustman 5,597,859.576 45.13
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 5,510,881.475 44.42
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Sunbelt Equity Fund Trustman 16,558,968.368 59.48
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 6,596,438.825 23.69
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,439,008.331 5.17
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

</TABLE>

B-56

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Mid-Cap Equity Fund Trustman 12,940,561.465 53.72
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 9,033,341.051 37.50
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Balanced Fund Trustman 9,085,673.015 63.09
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Florida Tax-Exempt Bond Fund Trustman 6,210,155.500 70.01
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,657,401.093 18.68
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 1,003,322.930 11.31
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Georgia Tax-Exempt Bond Fund Trustman 3,233,025.424 47.88
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 2,531,185.346 37.49
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 987,710.942 14.63
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

International Equity Index Fund Trustman 3,423,005.906 80.81
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 317,819.726 7.50
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

</TABLE>

B-57

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
International Equity Fund Trustman 25,113,006.213 59.19
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 14,120,157.945 33.28
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 2,443,377.267 5.76
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

U.S. Government Securities Fund Trustman 1,630,225.728 48.73
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 920,281.854 27.51
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 765,646.506 22.89
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Limited Term Federal Mortgage Trustman 8,568,251.366 63.42
Securities Fund Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 4,259,794.585 31.53
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Emerging Markets Equity Fund Trustman 3,192,092.592 84.58
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 523,921.957 13.88
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Small Cap Equity Fund Trustman 17,708,443.010 58.94
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870

Trustman 9,873,263.085 32.86
Mail Center 3144
P.O. Box 105870
Atlanta, GA 30348-5870
</TABLE>

B-58

<PAGE>

INVESTOR SHARES
- ---------------

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Prime Quality Money Market BHC Securities Inc 390,278,936.760 87.15
Fund Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square, 11th
Floor
Philadelphia, PA 19103-7042

U.S. Government Securities BHC Securities Inc 28,641,582.200 50.73
Money Market Fund Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square, 11th
Floor
Philadelphia, PA 19103-7042

Akerman, Senterfitt & Eidson 4,592,405.150 8.13
Attorney Account
P.O. Box 231
Orlando, FL 32802-0231

Tax Exempt Money Market Fund BHC Securities Inc 101,481,993.560 71.96
Attn: Cash Sweeps Dept.
2005 Market Street
One Commerce Square, 11th
Floor
Philadelphia, PA 19103-7042

STCM 14,275,000.000 10.12
Omnibus Account
P.O. Box 4418, Ctr.3910
Atlanta, GA 30302-4418

Investment Grade Bond Fund BHC Securities Inc. 1,641,162.068 53.64
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square,
2005 Market Street
Philadelphia, PA 19103-7042

Investment Grade Tax-Exempt BHC Securities Inc. 744,706.225 30.51
Bond Fund Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Capital Growth Fund BHC Securities Inc. 6,801,975.339 41.43
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
</TABLE>

B-59

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Value Income Stock Fund BHC Securities Inc. 8,556,241.295 56.25
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Short-Term U.S. Treasury BHC Securities Inc. 108,166.820 39.37
Securities Fund Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Clarence A. Rittenhouse & 64,212.090 23.37
Margaret S. Rittenhouse
JT WROS
12993 Lampadaire Drive
Creve Coeur, MO 63141-7361

International Investment 49,768.123 18.11
Conference Inc.
Attn: Sandy Lawrence
6310 Sunset Drive
Miami, FL 33143-4823

Short-Term Bond Fund BHC Securities Inc. 131,806.543 70.21
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Bartow Memorial Hospital 12,744.755 6.79
Foundation Inc.
1239 East Main Street
Bartow, FL 33830-5005

Sunbelt Equity Fund BHC Securities Inc. 1,163,757.889 55.49
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Mid-Cap Equity Fund BHC Securities Inc. 1,244,190.233 69.06
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Balanced Fund BHC Securities Inc. 389,831.548 60.08
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
</TABLE>

B-60

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Florida Tax-Exempt Bond Fund BHC Securities Inc. 99,392.323 31.95
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Dexter Hawks & 33,203.647 10.67
Joanne Hawks JT WROS
26 Sea Lane - Cornfield Point
Old Saybrook, CT 06745-1923

Mildred Meinhart Rast 31,192.296 10.03
821 Lake Port Boulevard
Apt. #A404
Leesburg, FL 34748-7698

Georgia Tax-Exempt Bond Fund BHC Securities Inc. 212,520.534 58.09
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Patrick J. Doran & 30,574.457 8.36
Norma R. Doran JTTEN
2024 Fisher Trail NE
Atlanta, GA 30345-3429

International Equity Index Fund BHC Securities Inc. 343,691.086 65.13
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

Community First National 35,525.557 6.73
Bank
RPO Tyler 401(k) RSP
Attn: Kathy Lindstrom
Main At Broadway
Fargo, ND 58103-1906

International Equity Fund BHC Securities Inc. 892,500.100 75.33
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

U.S. Government Securities Fund BHC Securities, Inc. 291,194.746 95.95
Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

</TABLE>

B-61

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>

Limited-Term Federal Mortgage BHC Securities Inc. 232,245.669 88.43
Securities Fund Trade House Account
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042

</TABLE>

FLEX SHARES
- -----------

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Short-Term U.S. Treasury BHC Securities Inc. 16,061.583 11.10
Securities Fund FAO 21558256
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

BHC Securities Inc. 11,296.628 7.81
FAO 20216122
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

BHC Securities Inc. 7,717.534 5.34
FAO 21180400
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

BHC Securities Inc. 7,473.131 5.17
FAO 20834830
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

Short-Term Bond Fund BHC Securities Inc. 22,672.641 13.51
FAO 21549889
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

BHC Securities Inc. 9,569.326 5.70
FAO 21180400
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

</TABLE>

B-62

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
BHC Securities Inc. 8,452.666 5.04
FAO 21107805
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

Florida Tax-Exempt Bond Fund BHC Securities, Inc. 49,928.948 5.39
FAO 20951046
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

BHC Securities Inc. 149,253.731 16.10
FAO 20439207
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

Georgia Tax-Exempt Bond Fund BHC Securities Inc. 70,097.430 8.27
FAO 21141197
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

International Equity Index Fund BHC Securities Inc. 28,461.638 26.79
FAO 20519082
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

BHC Securities, Inc. 5,833.097 5.49
FAO 21119083
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

BHC Securities, Inc. 5,550.052 5.22
FAO 21549889
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042

U.S. Government Securities Fund BHC Securities, Inc. 23,786.547 5.88
FAO 21180443
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
</TABLE>

B-63

<PAGE>

FUND NAME AND ADDRESS NUMBER OF SHARES % OF CLASS
---- ---------------- ---------------- ----------
<S> <C> <C> <C>
Limited-Term Federal Mortgage BHC Securities Inc. 11,124.956 7.24
Securities Fund FAO 21838525
Attn: Mutual Funds Dept
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
</TABLE>

EXPERTS
- -------

The financial statements as of May 31, 1998 have been audited by
_________________, Independent Public Accountants, as indicated in their report
dated July ___, 1998 with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving said report.

B-64
<PAGE>

STI CLASSIC FUNDS
PART C: OTHER INFORMATION
Post-Effective Amendment No. 24

Item 23. Exhibits:

(a) Declaration of Trust--originally filed with Registrant's Registration
Statement on Form N-1A filed February 12, 1992 and incorporated by
reference to Exhibit 1 of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.

(b)(1) By-Laws--originally filed with Registrant's Pre-Effective Amendment
No. 1 filed April 23, 1992 and incorporated by reference to Exhibit 2
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

(b)(2) Amended By-Laws--incorporated by reference to Exhibit (b)(2) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.

(d)(1) Revised Investment Advisory Agreement with Trusco Capital Management,
Inc.--as originally filed with Registrant's Post-Effective Amendment
No. 5 filed August 2, 1993 and incorporated by reference to Exhibit
5(c) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

(d)(2) Investment Advisory Agreement with American National Bank and Trust
Company--as originally filed with Registrant's Post-Effective
Amendment No. 6 filed October 22, 1993 and as Exhibit 5(d) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

(d)(3) Investment Advisory Agreement with Sun Bank Capital Management,
National Association (now STI Capital Management, N.A.--as originally
filed with Registrant's Post-Effective Amendment No. 6 filed October
22, 1993 and incorporated by reference to Exhibit 5(e) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

(d)(4) Investment Advisory Agreement with Trust Company Bank (now SunTrust
Bank, Atlanta)--as originally filed with Registrant's Post-Effective
Amendment No. 6 filed October 22, 1993 and filed herewith.

(e) Distribution Agreement--incorporated by reference to Exhibit 6 of
Post-Effective Amendment No. 16 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.

(f) Not applicable.

(g)(1) Custodian Agreement with Trust Company Bank dated February 1,
1994--originally filed with Registrant's Post-Effective Amendment
No. 13 filed September 28, 1995 and incorporated by reference to
Exhibit 8(b) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

(g)(2) Custodian Agreement with the Bank of California--incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.

(g)(3) Fourth Amendment to Custodian Agreement by and between STI Trust &
Investment Operations, Inc. and The Bank of New York dated May 6,
1997--incorporated by reference to Exhibit 8(d) of Post-Effective
Amendment No. 21 to the Registrant's Registration Statement filed with
the SEC via EDGAR Accession No. 0000912057-97-032207 on September 30,
1997.

(h)(1) Transfer Agent Agreement with Federated Services Company dated May 14,
1994--originally filed with Post-Effective Amendment No. 9 filed
September 22, 1994 and incorporated by reference to Exhibit 8(c) of
Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

C-1

<PAGE>

(h)(2) Administration Agreement with SEI Financial Management Corporation
dated May 29, 1995--originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to Exhibit
9(a) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

(h)(3) Consent to Assignment and Assumption of the Administration
Agreement between STI Classic Funds and SEI Financial Management
Corporation--incorporated by reference to Exhibit 9(b) of
Post-Effective Amendment No. 21 to the Registrant's Registration
Statement filed with the SEC via EDGAR Assession No.
0000912057-97-032207 on September 30, 1997.

(i) Opinion and Consent of Counsel--originally filed with Pre-Effective
Amendment No. 2 to the Registrant's Registration Statement on May 22,
1992 and incorporated by reference to Exhibit (i) of Post-Effective
Amendment No. 23 to the Registrant's Registration Statement filed with
the SEC via EDGAR Accession No. 0001047469-98-027407 on July 15, 1998.

(j) Not applicable

(k) Not applicable.

(l) Not applicable.

(m)(1) Distribution Plan - Investor Class--incorporated by reference to
Exhibit 15 of Post-Effective Amendment No. 16 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.

(m)(2) Distribution and Service Agreement relating to Flex Shares dated May
29, 1995--originally filed with Post-Effective Amendment No. 12
filed August 17, 1995 and incorporated by reference to Exhibit 15(a)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

(n) Not applicable.

(o) Rule 18f-3 Plan--incorporated by reference to Exhibit (o) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.

(p) Powers of Attorney filed herewith.

Item 24. Persons Controlled by or under Common Control with Registrant:

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

Item 25. Indemnification:

Article VIII of the Agreement of Declaration of Trust filed as Exhibit (a) to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate

C-2

<PAGE>

jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issues.

Item 26. Business and Other Connections of Investment Advisors:

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

Name of Connection with
Name Other Company Other Company
---- ------------- ---------------

<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

L. Earl Denney -- --
Executive Vice President

Thomas A. Edgar -- --
Senior Vice President

</TABLE>

C-3

<PAGE>

Name of Connection with
Name Other Company Other Company
---- ------------- ---------------

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>

Trusco Capital Management, Inc.

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, 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

Charles B. Ginden -- --
Director

</TABLE>

C-4
<PAGE>

Name of Connection with
Name Other Company Other Company
---- ------------- ---------------

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

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

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

Jesse Hill, Jr. Atlanta Life Insurance President
Director Company

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

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

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

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

Robert R. Long Trust Company Bank President
Director

Arthur L. Montgomery -- --
Director

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

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

R. Randall Rollins Rollins, Inc. Chairman of the
Director Board
Lor, Inc. Director
Maran, Inc. Director
Gutterworld, Inc. Director
Dabora, Inc. Director & Secretary
Simpson, Nance & Graham Director
Auto Parts Wholesale, Inc. Director
Global Expanded Metal, Inc. Director
Rollins Holding Co. Director
Rol, Ltd. Partner

</TABLE>

C-5
<PAGE>

Name of Connection with
Name Other Company Other Company
---- ------------- ---------------

<S> <C> <C>
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
Director Board

Gerald T. Adams -- --
Senior Vice President

James R. Albach -- --
Group Vice President

Virginia D. Anderson -- --
Assistant Vice President

Christina Bird -- --
First Vice President

Edward Burgess -- --
Vice President

Gay Cash -- --
Vice President

Krista Lee Cosgrove -- --
Trust Officer

Mark Elam -- --
Vice President

</TABLE>

C-6
<PAGE>

Name of Connection with
Name Other Company Other Company
---- ------------- ---------------

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

James E. Russell -- --
Vice President

Mark Stancil -- --
Assistant Vice President

David E. Thompson -- --
Vice President

Charles C. Watson -- --
Group Vice President

</TABLE>

C-7
<PAGE>

C-8
<PAGE>

Item 27. Principal Underwriters:

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

Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:

<TABLE>

<S> <C>
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
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996

</TABLE>

C-9
<PAGE>

<TABLE>

<S> <C>
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
TIP Institutional Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Funds June 29, 1998

</TABLE>

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

(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456.

Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------

<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board
of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating
Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer &
Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Vice President &
Counsel Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Vice President &
Secretary Assistant Secretary
S. Courtney E. Collier Vice President & Assistant --
Secretary
Robert Crudup Vice President & Managing
Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing --
Director
Lydia A. Gavalis Vice President & Assistant Vice President &
Secretary Assistant Secretary
Greg Gettinger Vice President & Assistant
Secretary --

</TABLE>

C-10
<PAGE>

Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------

<S> <C> <C>
Kathy Heilig Vice President Vice President &
Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing --
Director
John Krzeminski Vice President & Managing --
Director
Carolyn McLaurin Vice President & Managing --
Director
W. Kelso Morrill Vice President --
Mark Nagle Vice President President & Chief
Executive Officer
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Vice President &
Secretary Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President &
Assistant Secretary
Cynthia M. Parrish Vice President & Assistant
Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing --
Director
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Vice President &
Secretary Assistant Secretary
Lynda J. Striegel Vice President & Assistant Vice President &
Secretary Assistant Secretary
Lori L. White Vice President & Assistant
Secretary --
Wayne M. Withrow Vice President & Managing
Director --

</TABLE>

Item 28. Location of Accounts and Records:

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

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

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

Bank of New York
One Wall Street
New York, New York
(International Equity Index Fund, International Equity Fund, Emerging
Markets Equity Fund)

C-11

<PAGE>

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

SEI Investments Mutual Funds Services
One Freedom Valley Road
Oaks, Pennsylvania 19456

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

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

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

SunTrust Bank, Atlanta
25 Park Place
Atlanta, Georgia 30303

Item 29. Management Services: None.

Item 30. Undertakings: None.

NOTICE

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

C-12

<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. 24 to Registration Statement No.
33-45671 to be signed on its behalf by the undersigned, duly authorized, in the
City of Oaks, Commonwealth of Pennsylvania on the 29th day of July, 1998.

By: /s/ Mark Nagle
--------------------------------------------
Mark Nagle, President and Chief Executive Officer

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

* Trustee July 29, 1998
- ------------------------------
F. Wendell Gooch

* Trustee July 29, 1998
- ------------------------------
Daniel S. Goodrum

* Trustee July 29, 1998
- ------------------------------
Jesse S. Hall

* Trustee July 29, 1998
- ------------------------------
Wilton Looney

* Trustee July 29, 1998
- ------------------------------
Champney A. McNair

* Trustee July 29, 1998
- ------------------------------
T. Gordy Germany

* Trustee July 29, 1998
- ------------------------------
Bernard F. Sliger

* Trustee July 29, 1998
- ------------------------------
Jonathan T. Walton

* Trustee July 29, 1998
- ------------------------------
William H. Cammack

* Controller, Treasurer & July 29, 1998
- ------------------------------ Chief Financial Officer
Carol Rooney

/s/ Mark Nagle President & Chief July 29, 1998
- ------------------------------ Executive Officer
Mark Nagle

* By: /s/ Kevin P. Robins
-------------------------------------
Kevin P. Robins, As Power of Attorney

<PAGE>

EXHIBIT INDEX

Number Exhibit

EX-99.A Declaration of Trust originally filed with Registrant's
Registration Statement on Form N-1A filed February 12, 1992 and
incorporated by reference to Exhibit 1 of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement filed
with the SEC via EDGAR Accession No. 0000912057-96-015938 on July
31, 1996.

EX-99.B1 By-Laws originally filed with Registrant's Pre-Effective
Amendment No. 1 filed April 23, 1992 and incorporated by
reference to Exhibit 2 of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.

EX-99.B2 Amended By-Laws - incorporated by reference to Exhibit (b)(2) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.

EX-99.C Not applicable.

EX-99.D1 Revised Investment Advisory Agreement with Trusco Capital
Management, Inc. as originally filed with Registrant's
Post-Effective Amendment No. 5 filed August 2, 1993 and
incorporated by reference to Exhibit 5(c) of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement filed
with the SEC via EDGAR Accession No. 0000912057-96-015938 on July
31, 1996.

EX-99.D2 Investment Advisory Agreement with American National Bank and
Trust Company as originally filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and as
Exhibit 5(d) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.

EX-99.D3 Investment Advisory Agreement with Sun Bank Capital Management,
National Association (now STI Capital Management, N.A. as
originally filed with Registrant's Post-Effective Amendment No. 6
filed October 22, 1993 and incorporated by reference to Exhibit
5(e) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.

EX-99.D4 Investment Advisory Agreement with Trust Company Bank (now
SunTrust Bank, Atlanta) as originally filed with Registrant's
Post-Effective Amendment No. 6 filed October 22, 1993 and filed
herewith.

EX-99.E Distribution Agreement incorporated by reference to Exhibit 6
of Post-Effective Amendment No. 16 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.

EX-99.F Not applicable.

EX-99.G1 Custodian Agreement with Trust Company Bank dated February 1,
1994 originally filed with Registrant's Post-Effective
Amendment No. 13 filed September 28, 1995 and incorporated by
reference to Exhibit 8(b) of Post-Effective Amendment No. 15 to
the Registrant's Registration Statement filed with the SEC via
EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.

EX-99.G2 Custodian Agreement with the Bank of California incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 15 to
the Registrant's Registration Statement filed with the SEC via
EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.

EX-99.G3 Fourth Amendment to Custodian Agreement by and between STI Trust
& Investment Operations, Inc. and The Bank of New York dated May
6, 1997 incorporated by reference to Exhibit 8(d) of
Post-Effective Amendment No. 21 to the Registrant's Registration

C-14

<PAGE>

Statement filed with the SEC via EDGAR Accession No.
0000912057-97-032207 on September 30, 1997.

EX-99.H1 Transfer Agent Agreement with Federated Services Company dated
May 14, 1994 originally filed with Post-Effective Amendment
No. 9 filed September 22, 1994 and incorporated by reference to
Exhibit 8(c) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.

EX-99.H2 Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 originally filed with
Post-Effective Amendment No. 12 filed August 17, 1995 and
incorporated by reference to Exhibit 9(a) of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement filed
with the SEC via EDGAR Accession No. 0000912057-96-015938 on July
31, 1996.

EX-99.H3 Consent to Assignment and Assumption of the Administration
Agreement between STI Classic Funds and SEI Financial Management
Corporation incorporated by reference to Exhibit 9(b) of
Post-Effective Amendment No. 21 to the Registrant's Registration
Statement filed with the SEC via EDGAR Assession No.
0000912057-97-032207 on September 30, 1997.

EX-99.I Opinion and Consent of Counsel originally filed with
Pre-Effective Amendment No. 2 to the Registrant's Registration
Statement on May 22, 1992 and incorporated by reference to
Exhibit (i) of Post-Effective Amendment No. 23 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0001047469-98-027407 on July 15, 1998.

EX-99.J Not applicable.

EX-99.K Not applicable.

EX-99.L Not applicable.

EX-99.M1 Distribution Plan - Investor Class incorporated by reference to
Exhibit 15 of Post-Effective Amendment No. 16 to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.

EX-99.M2 Distribution and Service Agreement relating to Flex Shares dated
May 29, 1995 originally filed with Post-Effective Amendment
No. 12 filed August 17, 1995 and incorporated by reference to
Exhibit 15(a) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.

EX-99.N Not applicable

EX-99.O Rule 18f-3 Plan incorporated by reference to Exhibit (i) of
Post-Effective Amendment No. 23 to the Registrant's Registration
Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.

EX-99.P Powers of Attorney filed herewith

C-15

<PAGE>

Exhibit 99.D4

INVESTMENT ADVISORY AGREEMENT

AGREEMENT made this 20th day of December, 1993, by and between STI Classic
Funds, a Massachusetts business trust (the "Trust"), and Trust Company Bank,
(the "Adviser").

WHEREAS, the Trust is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended, consisting of
several series of shares, each having its own investment policies; and

WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Administrator") to provide administration of the Trust's operations, subject to
the control of the Board of Trustees;

WHEREAS, the Trust desires to retain the Adviser to render investment management
services with respect to its Georgia Tax-Exempt Bond Fund and such other funds
as the Trust and the Adviser may agree upon (the "Portfolios"), and the Adviser
is willing to render such services:

NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:

1. Duties of Adviser. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's Officers
and Trustees concerning the Adviser's discharge of the foregoing
responsibilities.

The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish, and
in compliance with the objectives, policies, and limitations for each
such Portfolio set forth in the Trust's prospectus and statement of
additional information as amended from time to time, and applicable
laws and regulations.

The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.

2. Portfolio Transactions. The Adviser is authorized to select the brokers
or dealers that will execute the purchases and sales of portfolio
securities for the Portfolios and is directed to use its best efforts
to obtain the best net results as described in the Trust's prospectus
and statement of additional information from time to time. The Adviser
will

<PAGE>

promptly communicate to the Administrator and to the officers and the
Trustees of the Trust such information relating to portfolio
transactions as they may reasonably request.

It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, solely by reason of its having directed a securities
transaction on behalf of the Trust to a broker-dealer in compliance
with the provisions of Section 28(e) of the Securities Exchange Act of
1934.

3. Compensation of the Adviser. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in the
Schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end of
each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the daily net assets for the
month involved.

All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.

4. Other Expenses. The Adviser shall pay all expenses of preparing
(including typesetting), printing and mailing reports, prospectuses,
statements of additional information, and sales literature to
prospective clients to the extent these expenses are not borne by the
Trust under a distribution plan adopted pursuant to Rule 12b-1.

5. Excess Expenses. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but excluding
interest, taxes, brokerage costs, litigation, and other extraordinary
costs) as calculated every business day would exceed the expense
limitations imposed on investment companies by any applicable statute
or regulatory authority of any jurisdiction in which Shares are
qualified for offer and sale, the Adviser shall bear such excess cost.

However, the Adviser will not bear expenses of the Trust or any
Portfolio which would result in the Trust's inability to qualify as a
regulated investment company under provisions of the Internal Revenue
Code. Payment of expenses by the Adviser pursuant to this Section 5
shall be settled on a monthly basis (subject to fiscal year end
reconciliation) by a reduction in the fee payable to the Adviser for
such month pursuant to Section 3 and, if such reduction shall be
insufficient to offset such expenses, by reimbursing the Trust.

6. Reports. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.

<PAGE>

7. Status of Adviser. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not
impaired thereby. The Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust.

8. Certain Records. Any records required to be maintained and preserved
pursuant to the provision of Rule 31a-1 and Rule 31a-2 promulgated
under the Investment Company Act of 1940 which are prepared or
maintained by the Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request.

9. Limitation of Liability of Adviser. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Adviser hereunder. The
Adviser shall not be liable for any error of judgment or mistake of law
or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable state law which cannot be waived or
modified hereby. (As used in this Paragraph 9, the term "Adviser" shall
include directors, officers, employees and other corporate agents of
the Adviser as well as that corporation itself).

10. Permissible Interests. Trustees, agents, and shareholders of the Trust
are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the Adviser
are or may be interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be interested
in the Trust as a shareholder or otherwise. In addition, brokerage
transactions for the trust may be effected through affiliates of the
Adviser if approved by the Board of Trustees, subject to the rules and
regulations of the Securities and Exchange Commission.

11. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until [two years from date of
execution], and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a majority
of the outstanding voting securities of each Portfolio; provided,
however, that if the shareholders of any Portfolio fail to approve the
Agreement as provided herein, the Adviser may continue to serve
hereunder in the manner and to the extent permitted by the Investment
Company Act of 1940 and rules and regulations thereunder. The foregoing
requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent
with the Investment Company Act of 1940 and the rules and regulations
thereunder.

<PAGE>

This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately terminate
in the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postpaid, to
the other party at any office of such party.

As used in this section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder; subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.

12. Notice. Any notice required or permitted to be given by either party to
the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the
party giving notice: if to the Trust, at 680 East Swedesford Road,
Wayne, PA and if to the Adviser at

13. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.

14. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts.

A copy of the Declaration of Trust of the Trust is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees, and
is not binding upon any of the Trustees, officers, or shareholders of the Trust
individually but binding only upon the assets and property of the Trust.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.

STI Classic Funds
By: /s/ Kevin P. Robins
-------------------

Trust Company Bank
By: /s/ Gerard T. Adams
-------------------

<PAGE>

Amended Schedule A
to the
Investment Advisory Agreement
between
STI CLASSIC FUNDS

and

Trust Company Bank

Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:

Portfolio Fee (in basis points)

Georgia Tax-Exempt Bond Fund .65%

<PAGE>

Exhibit 99.P

STI CLASSIC FUNDS

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Trustee of STI
Classic Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts, hereby constitutes and appoints Mark Nagle,
Joseph M. O'Donnell and Kevin Robins, and each of them singly, a true and lawful
attorney-in-fact and agent with full power of substitution and re-substitution,
to sign for and in the name of the undersigned, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the U.S. Securities and
Exchange Commission, and any appropriate securities commission of the several
states, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ William H. Cammack July 9, 1998
- --------------------------------- -------------------
Signature of Trustee Date

William H. Cammack
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ Jonathan T. Walton July 3, 1998
- --------------------------------- -------------------
Signature of Trustee Date

Jonathan T. Walton
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ Jesse Hall July 4, 1998
- --------------------------------- -------------------
Signature of Trustee Date

Jesse Hall
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ F. W. Gooch July 6, 1998
- --------------------------------- -------------------
Signature of Trustee Date

F. W. Gooch
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ Bernard F. Sliger July 6, 1998
- --------------------------------- -------------------
Signature of Trustee Date

Bernard F. Sliger
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ T. Gordy Germany July 3, 1998
- --------------------------------- -------------------
Signature of Trustee Date

T. Gordy Germany
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ Champney A. McNair July 11, 1998
- --------------------------------- -------------------
Signature of Trustee Date

Champney A. McNair
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ Wilton D. Looney July 6, 1998
- --------------------------------- -------------------
Signature of Trustee Date

Wilton D. Looney
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto executed and sealed
this document as of the date set forth below.

/s/ Daniel S. Goodrum July 3, 1998
- --------------------------------- -------------------
Signature of Trustee Date

Daneil S. Goodrum
- ---------------------------------
Print Name

<PAGE>

STI CLASSIC FUNDS

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of STI Classic Funds (the "Trust"), a business trust organized under the
laws of The Commonwealth of Massachusetts, hereby constitutes and appoints David
G. Lee and Kevin P. Robins, and each of them singly, his or her true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him or her and in his or her name, place and stead, and in the
capacity indicated below, to sign any or all amendments (including
post-effective amendments) to the Fund's Registration Statement on Form N-1A
under the provisions of the Investment Company Act of 1940 and the Securities
Act of 1933, each such Act as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.

/s/ Carol Rooney Date: 6/24/97
- ---------------------------------------- -------
Carol Rooney
Controller, Treasurer & Chief
Financial Officer