<PAGE>
PROSPECTUS
GENERAL INFORMATION
AND CONTENTS
<TABLE>
<C> <S>
1 ABOUT THE TRUST
---
1 CAPITAL GROWTH FUND
---
3 VALUE INCOME STOCK FUND
---
6 SMALL CAP EQUITY FUND
---
8 MID-CAP EQUITY FUND
---
10 BALANCED FUND
---
13 SUNBELT EQUITY FUND
---
15 INTERNATIONAL EQUITY INDEX FUND
---
18 INTERNATIONAL EQUITY FUND
---
21 RISK CONSIDERATIONS
---
26 PURCHASING FUND SHARES
---
33 TAX INFORMATION
---
38 FUND INVESTMENTS
---
39 MORE ABOUT INVESTMENTS AND HEDGING TOOLS
---
</TABLE>
The STI Classic Funds (the Trust) is a mutual fund that offers shares in a
number of separate investment portfolios (each a Fund and, collectively, the
Funds). This Prospectus gives you important information about the Investor
Shares and Flex Shares of the Equity Funds that you should know before
investing. Please read this Prospectus, and keep it for future reference.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THE TRUST'S SHARES. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED OR
APPROVED OF THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY STATEMENT OR
INDICATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE FUNDS:
- ARE NOT BANK DEPOSITS
- ARE NOT FEDERALLY INSURED
- ARE NOT GUARANTEED BY ANY BANK OR GOVERNMENT AGENCY
- ARE NOT GUARANTEED TO ACHIEVE THEIR GOALS.
INVESTING IN THE FUNDS INVOLVES RISK. YOU COULD LOSE MONEY.
OCTOBER 1, 1997
(AS REVISED APRIL 10, 1998)
<PAGE>
PROSPECTUS 1
ABOUT THE TRUST
STI Classic Funds is a diversified, open-end management investment company.
The Funds provide a convenient and economical way for you to invest in a number
of professionally managed portfolios of securities. This Prospectus relates to
the Investor Shares and Flex Shares of the Capital Growth Fund, Value Income
Stock Fund, Small Cap Equity Fund, Mid-Cap Equity Fund, Balanced Fund, Sunbelt
Equity Fund, International Equity Index Fund, and International Equity Fund.
CHOOSING INVESTOR OR FLEX SHARES
Each class has its own expense structure and other characteristics, allowing
you to decide which class best suits your needs. You should consider the amount
you want to invest, how long you plan to have it invested, and whether you plan
to make additional investments.
INVESTOR SHARES
- - Front-end sales charge
- - Lower annual expenses
- - $2,000 minimum initial investment
FLEX SHARES
- - Deferred sales charge on shares redeemed within one year of purchase
- - Higher annual expenses
- - $10,000 minimum initial investment
FUND INFORMATION
CAPITAL GROWTH FUND
FUND OBJECTIVE
[LOGO]
The Capital Growth Fund seeks to provide capital appreciation by
investing primarily in a portfolio of common stocks, warrants, and securities
convertible into common stock which, in its Advisor's opinion, are undervalued
in the marketplace at the time of purchase.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund primarily invests in a diversified portfolio of undervalued
equity securities traded in the United States.
Based on its analysis of overall business cycles, the Advisor rotates the
Fund's investments between various market sectors.
The Fund may invest in securities of foreign issuers, high yield securities;
and shares of money market investment companies. To some extent, the Fund may
invest in other securities and engage in other investment practices. See "FUND
INVESTMENTS."
RISK CONSIDERATIONS
[LOGO]
The Capital Growth Fund is subject to the following types of risk:
- Fund Risk;
- Market Risk;
<PAGE>
2 PROSPECTUS
- Credit Risk;
- Event Risk;
- High-Yield Security Risks;
- Foreign Security Risks; and
- Currency Risk.
For a description of these risks, please see "RISK CONSIDERATIONS."
FUND MANAGEMENT
[LOGO]
Mr. Anthony Gray has managed the Capital Growth Fund since it began
operating. He has more than 30 years of investment experience, and has served as
Chairman and Chief Executive Officer of STI Capital Management, N.A. since 1979.
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Investor and Flex Shares of
the CAPITAL GROWTH FUND.
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases* 3.75% None
Maximum Deferred Sales Charge None 2.00%
</TABLE>
(*) SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees After Fee Waivers(1) 1.05% 1.05%
12b-1 Distribution & Service Fees After Reimbursements(2) .56% .95%
Other Expenses After Fee Waivers and Reimbursements(3) .21% .29%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(4) 1.82% 2.29%
</TABLE>
(1) ABSENT VOLUNTARY WAIVERS, INVESTMENT ADVISORY FEES WOULD BE 1.15%.
(2) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .68% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.
(3) ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE .30%
FOR FLEX SHARES.
(4) ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL FUND
OPERATING EXPENSES WOULD BE 2.04% FOR INVESTOR SHARES AND 2.45% FOR FLEX
SHARES. THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING OR REIMBURSING ITS FEE.
<TABLE>
<CAPTION>
10
EXAMPLE 1 YEAR 3 YEARS 5 YEARS YEARS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum:
front-end sales charge for INVESTOR SHARES $55 $93 $132 $243
contingent deferred sales charge* for FLEX
SHARES $43 $72 $123 $263
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
If you purchase shares through a financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
* IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
<PAGE>
PROSPECTUS 3
FINANCIAL AND PERFORMANCE HIGHLIGHTS
[LOGO]
The table that follows presents information about the investment results
of the Investor and Flex Shares of the CAPITAL GROWTH FUND. The financial
highlights for the Fund for the periods from inception through May 31,
1997 have been audited by Arthur Andersen LLP, independent public
accountants, whose report appears in STI Classic Fund's annual report and
accompanies the Statement of Additional Information. The annual report
for the Fund, which contains more information about performance, is available at
no charge by calling 1-800-874-4770.
- ---------------------
CAPITAL GROWTH FUND
- ---------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31,
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET NET UNREALIZED DISTRIBUTIONS
VALUE INVESTMENT NET GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM REALIZED VALUE END
OF PERIOD (LOSS) INVESTMENTS INCOME CAPITAL GAINS OF PERIOD TOTAL RETURN
--------- ---------- ------------ ------------- ------------- ---------- ------------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $14.89 $0.03 $3.10 $(0.02) $(2.94) $ 15.06 23.74%
1996 12.17 0.03 3.32 (0.04) (0.59) 14.89 28.18%
1995 11.98 0.09 0.57 (0.07) (0.40) 12.17 5.93%
1994 11.93 0.09 0.31 (0.09) (0.26) 11.98 3.26%
1993(1) 10.00 0.06 1.93 (0.06) -- 11.93 20.49%*
FLEX SHARES
1997 $14.84 $(0.01) $3.07 $-- $(2.94) $ 14.96 23.24%
1996(2) 12.20 0.02 3.26 (0.05) (0.59) 14.84 27.48%*
<CAPTION>
RATIO OF NET
INVESTMENT
RATIO OF RATIO OF EX- INCOME (LOSS)
NET PENSES TO AVER- TO AVERAGE NET
INVESTMENT AGE NET ASSETS ASSETS
RATIO OF INCOME (EXCLUDING (EXCLUDING
NET ASSETS EXPENSES (LOSS) TO WAIVERS AND WAIVERS AND PORTFOLIO AVERAGE
END OF TO AVERAGE AVERAGE REIM- REIM- TURNOVER COMMISSION
PERIOD (000) NET ASSETS NET ASSETS BURSEMENTS) BURSEMENTS) RATE(3) RATE**
------------ ---------- ---------- --------------- --------------- -------- --------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 218,660 1.80% 0.19% 2.02% (0.03)% 141% $0.0620
1996 191,078 1.80% 0.24% 2.08% (0.04)% 156% --
1995 160,875 1.80% 0.73% 2.10% 0.43% 128% --
1994 170,795 1.80% 0.64% 2.11% 0.33% 124% --
1993(1) 131,858 1.80%* 0.81%* 2.06%* 0.55%* 95% --
FLEX SHARES
1997 $ 36,753 2.27% (0.29)% 2.43% (0.45)% 141% $0.0620
1996(2) 10,969 2.27%* (0.29)%* 2.68%* (0.70)%* 156% --
</TABLE>
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED ONLY FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
(1) COMMENCED OPERATIONS ON JUNE 9, 1992.
(2) COMMENCED OPERATIONS ON JUNE 1, 1995.
(3) A PORTFOLIO TURNOVER RATE OF 100% OR MORE, IF CONTINUED, WILL LIKELY RESULT
IN HIGHER BROKERAGE COMMISSIONS, HIGHER LEVELS OF REALIZED CAPITAL GAINS
AND ADDITIONAL TAXES THAN IF THE TURNOVER RATE WAS LOWER.
VALUE INCOME STOCK FUND
FUND OBJECTIVE
[LOGO]
The Value Income Stock Fund seeks to provide current income with a
secondary goal of achieving capital appreciation by investing primarily in
equity securities.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund strives to provide a yield above that of the S&P 500 Stock
Index. The Fund primarily invests in equity
securities of companies that have a market capitalization of at least $500
million and that have a history of paying regular dividends.
The Fund may invest in securities of foreign issuers, high yield securities,
futures, options, and securities issued by companies with smaller market
capitalizations. To some extent, the Fund may invest in other securities and
engage in other investment practices. See "FUND INVESTMENTS."
<PAGE>
4 PROSPECTUS
RISK CONSIDERATIONS
[LOGO]
The Value Income Stock Fund is subject to the following types of risk:
- Fund Risk;
- Market Risk;
- Small Issuer Risk;
- Credit Risk;
- Event Risk;
- Hedging Risks;
- High-Yield Security Risks;
- Foreign Security Risks; and
- Currency Risk.
For a description of these risks, see "RISK CONSIDERATIONS."
FUND MANAGEMENT
[LOGO]
Mr. Mills Riddick, CFA, is Senior Vice President, STI Capital
Management, N.A. and has managed the Value Income Stock Fund since April 1995.
He has more than 15 years of investment experience, and has been a portfolio
manager at STI Capital Management since 1989. Prior to joining STI Capital
Management, N.A., Mr. Riddick served as a broker with Drexel Burnham Lambert.
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Investor and Flex Shares of
the VALUE INCOME STOCK FUND.
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases* 3.75% None
Maximum Deferred Sales Charge None 2.00%
</TABLE>
* SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees .80% .80%
12b-1 Distribution & Service Fees After Reimbursements(1) .31% .98%
Other Expenses After Fee Waivers and Reimbursements(2) .21% .24%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(3) 1.32% 2.02%
</TABLE>
(1) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICES FEES WOULD BE .33% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.
(2) ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE .25%
FOR FLEX SHARES.
(3) ABSENT THE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL FUND OPERATING
EXPENSES WOULD BE 1.34% FOR INVESTOR SHARES AND 2.05% FOR FLEX SHARES. THESE
WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME
AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING OR REIMBURSING ITS
FEE.
<TABLE>
<CAPTION>
10
EXAMPLE 1 YEAR 3 YEARS 5 YEARS YEARS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum:
front-end sales charge for INVESTOR SHARES $50 $78 $107 $191
contingent deferred sales charge* for FLEX
SHARES $41 $63 $109 $235
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
<PAGE>
PROSPECTUS 5
If you purchase shares through a financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
*IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
FINANCIAL AND PERFORMANCE HIGHLIGHTS
[LOGO]
The table that follows presents information about the investment results
of the Investor and Flex Shares of the VALUE INCOME STOCK FUND. The
financial highlights for the Fund for the periods from inception through
May 31, 1997 have been audited by Arthur Andersen LLP, independent public
accountants, whose report appears in STI Classic Fund's annual report and
accompanies the Statement of Additional Information. The annual report
for the Fund, which contains more information about performance, is available at
no charge by calling 1-800-874-4770.
- -------------------------
VALUE INCOME STOCK FUND
- -------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31,
<TABLE>
<CAPTION>
REALIZED
AND
NET UNREALIZED DISTRIBUTIONS NET
ASSET NET NET GAINS DISTRIBUTIONS FROM ASSET
VALUE INVESTMENT (LOSSES) FROM NET REALIZED VALUE
BEGINNING INCOME ON INVESTMENT CAPITAL END OF TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN
--------- ---------- ------------ ------------- ------------- ---------- ------------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $13.13 $0.25 $2.32 $(0.26) $(1.76) $13.68 21.69%
1996 11.58 0.30 1.71 (0.30) (1.16) 13.13 27.39%
1995 10.52 0.28 1.56 (0.27) (0.51) 11.58 18.71%
1994 10.23 0.26 0.67 (0.27) (0.37) 10.52 9.27%
1993(1) 9.73 0.09 0.44 (0.03) -- 10.23 19.42%*
FLEX SHARES
1997 $13.08 $0.18 $2.29 $(0.18) $(1.76) $13.61 20.91%*
1996(2) 11.59 0.26 2.65 (0.26) (1.16) 13.08 26.52%*
<CAPTION>
RATIO OF
RATIO OF NET
NET RATIO OF INVESTMENT
RATIO OF INVESTMENT EXPENSES TO INCOME (LOSS)
EXPENSES INCOME AVERAGE NET TO AVERAGE
NET TO (LOSS) TO ASSETS NET ASSETS
ASSETS AVERAGE AVERAGE (EXCLUDING (EXCLUDING PORTFOLIO AVERAGE
END OF NET NET WAIVERS AND WAIVERS AND TURNOVER COMMISSION
PERIOD (000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE(3) RATE**
------------ ---------- ---------- --------------- --------------- -------- --------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 165,999 1.30% 2.01% 1.31% 2.00% 105% 0.$0609
1996 130,597 1.30% 2.47% 1.37% 2.40% 134% --
1995 92,256 1.30% 2.80% 1.41% 2.69% 126% --
1994 60,589 1.25% 2.80% 1.44% 2.61% 149% --
1993(1) 24,779 1.15%* 4.51%* 1.63%* 4.04%* 35% --
FLEX SHARES
1997 $73,466 2.00% 1.33% 2.03% 1.30% 105% 0.$0609
1996(2) 26,298 2.00%* 1.72%* 2.15%* 1.57%* 134% --
</TABLE>
* ANNUALIZED.
** AVERAGE COMMISSIONS RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED ONLY FOR FISCAL
YEARS BEGINNING AFTER SEPTEMBER 1, 1995.
(1) COMMENCED OPERATIONS ON FEBRUARY 17, 1993.
(2) COMMENCED OPERATIONS ON JUNE 1, 1995.
(3) A PORTFOLIO TURNOVER RATE OF 100% OR MORE, IF CONTINUED, WILL LIKELY RESULT
IN HIGHER BROKERAGE COMMISSIONS, HIGHER LEVELS OF REALIZED CAPITAL GAINS
AND ADDITIONAL TAXES THAN IF THE TURNOVER RATE WAS LOWER.
<PAGE>
6 PROSPECTUS
SMALL CAP EQUITY FUND
FUND OBJECTIVE
[LOGO]
The Small Cap Equity Fund seeks to provide capital appreciation with
a secondary goal of achieving current income.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund primarily invests in a diversified portfolio of equity
securities of undervalued companies with market capitalizations under
$1 billion.
The Fund may invest in securities of foreign issuers and options. To some
extent, the Fund may invest in other securities and engage in other investment
practices. See "FUND INVESTMENTS."
RISK CONSIDERATIONS
[LOGO]
The Small Cap Equity Fund is subject to the following types of risk:
- Fund Risk;
- Market Risk;
- Small Issuer Risk;
- Hedging Risks;
- Foreign Security Risks; and
- Currency Risk.
For a description of these risks, please see "RISK CONSIDERATIONS."
FUND MANAGEMENT
[LOGO]
Brett Barner, CFA, is Vice President, STI Capital Management, N.A.,
and has managed the Small Cap Equity Fund since it began operating in
1997. He has more than ten years of investment experience, and has been a
portfolio manager with STI since 1990. Prior to joining STI Capital Management,
N.A., Mr. Barner served as a consultant with Drexel Burnham Lambert and Shearson
Lehman Brothers.
<PAGE>
PROSPECTUS 7
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Flex Shares of the SMALL CAP
EQUITY FUND. Investor Shares of the Fund are not currently available
for purchase.
<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
- ----------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases* 2.00%
</TABLE>
* SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees After Fee Waivers(1) 0.97%
12b-1 Distribution & Service Fees After Reimbursements(2) 0.73%
Other Expenses(3) 0.57%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(4) 2.27%
</TABLE>
(1) ABSENT VOLUNTARY WAIVERS, INVESTMENT ADVISORY FEES WOULD BE 1.15%.
(2) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICE FEES WOULD 1.00%.
(3) OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.
(4) ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, THE ESTIMATED
TOTAL FUND OPERATING EXPENSES WOULD BE 2.72%. THESE FEE WAIVERS AND
REIMBURSEMENTS ARE VOLUNTARY AND MAY BE DISCONTINUED AT ANY TIME AT THE
DISCRETION OF THE SERVICE PROVIDER THAT IS WAIVING OR REIMBURSING ITS FEE.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum contingent deferred sales charge* for FLEX
SHARES $ 43 $ 71
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
If you purchase shares through a financial institution, you may be charged
seperate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
* IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
<PAGE>
8 PROSPECTUS
MID-CAP EQUITY FUND
FUND OBJECTIVE
[LOGO]
The Mid-Cap Equity Fund seeks to provide capital appreciation by
investing primarily in a diversified portfolio of common stocks, preferred
stocks, and securities convertible into common stock of small to mid-sized
companies with above-average growth of earnings. Current income will not be an
important factor in selecting investments and any such income should be
considered incidental.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund primarily invests in a diversified portfolio of equity
securities of small to mid-size companies (I.E., companies with market
capitalizations of $500 million to $5 billion).
The Fund may invest in securities of foreign issuers, high yield securities
and variable and floating rate instruments. To some extent, the Fund may invest
in other securities and engage in other investment practices. See "FUND
INVESTMENTS."
RISK CONSIDERATIONS
[LOGO]
The Mid-Cap Equity Fund is subject to the following types of risk:
- Fund Risk;
- Market Risk;
- Small Issuer Risk;
- Credit Risk;
- Event Risk;
- Hedging Risks;
- High-Yield Security Risks;
- Foreign Security Risks; and
- Currency Risk.
For a description of these risks, please see "RISK CONSIDERATIONS."
FUND MANAGEMENT
[LOGO]
Mr. Elliott A. Perny has managed the Mid-Cap Equity Fund since
October, 1996. He has more than 25 years of investment experience.
Mr. Perny has served as Senior Executive Vice President of STI Capital
Management, N.A. since September, 1992, and has served as a portfolio manager
with STI since 1991. Prior to joining STI Capital Management, N.A., Mr. Perny
served as a portfolio manager at Florida National Bank and Atlantic Bank.
<PAGE>
PROSPECTUS 9
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Investor and Flex Shares of
the Mid-Cap Equity Fund.
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases* 3.75% None
Maximum Deferred Sales Charge None 2.00%*
</TABLE>
(*) SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees After Fee Waivers(1) 1.04% 1.04%
12b-1 Distribution & Service Fees After Reimbursements(2) .30% .73%
Other Expenses After Fee Waivers and Reimbursments(3) .28% .45%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(4) 1.62% 2.22%
</TABLE>
(1) ABSENT VOLUNTARY WAIVERS, INVESTMENT ADVISORY FEES WOULD BE 1.15%.
(2) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .43% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.
(3) ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE .29%
FOR INVESTOR SHARES.
(4) ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL FUND
OPERATING EXPENSES WOULD BE 1.87% FOR INVESTOR SHARES AND 2.60% FOR FLEX
SHARES. THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING OR REIMBURSING ITS FEE.
<TABLE>
<CAPTION>
10
EXAMPLE 1 YEAR 3 YEARS 5 YEARS YEARS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum:
front-end sales charge for INVESTOR SHARES $53 $87 $122 $222
contingent deferred sales charge* for FLEX
SHARES $43 $69 $119 $255
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
If you purchase shares through a financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
* IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
<PAGE>
10 PROSPECTUS
FINANCIAL AND PERFORMANCE HIGHLIGHTS
[LOGO]
The table that follows presents information about the investment results
of the Investor and Flex Shares of the MID-CAP EQUITY FUND. The financial
highlights for the Fund for the periods from inception through May 31,
1997 have been audited by Arthur Andersen LLP, independent public
accountants, whose report appears in STI Classic Fund's annual report and
accompanies the Statement of Additional Information. The annual report
for the Fund, which contains more information about performance, is available at
no charge by calling 1-800-874-4770.
- ---------------------
MID-CAP EQUITY FUND
- ---------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31,
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET NET UNREALIZED DISTRIBUTIONS NET ASSETS
VALUE INVESTMENT NET GAINS FROM NET DISTRIBUTIONS NET ASSET END OF
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM REALIZED VALUE END PERIOD
OF PERIOD (LOSS) INVESTMENTS INCOME CAPITAL GAINS OF PERIOD TOTAL RETURN (000)
--------- ---------- ------------ ------------- ------------- ---------- ------------ ----------
INVESTOR
SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $12.74 $(0.03) $1.69 $(0.01) $(1.22) $13.17 13.76% 2$0,245
1996 10.99 0.03 2.62 (0.03) (0.87) 12.74 24.93% 17,971
1995 9.84 0.03 1.15 (0.03) -- 10.99 11.96% 7,345
1994(1) 10.00 0.01 (0.17) -- -- 9.84 (1.60)%+ 3,004
FLEX
SHARES
1997 $12.69 $(0.07) $1.64 $-- $(1.22) $13.04 13.06% 1$0,120
1996(2) 11.13 -- 2.45 (0.02) (0.87) 12.69 23.00%* 5,029
<CAPTION>
RATIO OF
NET
INVESTMENT
RATIO OF RATIO OF INCOME
NET EXPENSES TO (LOSS) TO
INVESTMENT AVERAGE NET AVERAGE NET
RATIO OF INCOME ASSETS ASSETS
EXPENSES (LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO AVERAGE
TO AVERAGE AVERAGE NET WAIVERS AND WAIVERS AND TURNOVER COMMISSION
NET ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE(3) RATE**
---------- ----------- ------------ ----------- -------- --------
INVESTOR
SHARES
<S> <C> <C> <C> <C> <C> <C>
1997 1.60% (0.21%) 1.85% (0.46)% 152% $0.0587
1996 1.60% 0.25% 1.96% (0.11)% 116% --
1995 1.60% 0.43% 2.27% (0.24)% 66% --
1994(1) 1.60%* 0.74%* 4.60%* (2.26)%* 8% --
FLEX
SHARES
1997 2.20% (0.85%) 2.58% (1.23%) 152% $0.0587
1996(2) 2.20%* (0.37%)* 3.04%* (1.21%)* 116% --
</TABLE>
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED ONLY FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
+ CUMULATIVE SINCE COMMENCEMENT OF OPERATIONS.
(1) COMMENCED OPERATIONS ON FEBRUARY 1, 1994.
(2) COMMENCED OPERATIONS ON JUNE 5, 1995.
(3) A PORTFOLIO TURNOVER RATE OF 100% OR MORE, IF CONTINUED, WILL LIKELY RESULT
IN HIGHER BROKERAGE COMMISSIONS, HIGHER LEVELS OF REALIZED CAPITAL GAINS
AND ADDITIONAL TAXES THAN IF THE TURNOVER RATE WAS LOWER.
BALANCED FUND
FUND OBJECTIVE
[LOGO]
The Balanced Fund seeks to provide capital appreciation and current
income by investing in common and preferred stocks, warrants, securities
convertible into common stock, and investment grade fixed-income securities.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund primarily invests in a diversified portfolio of equity
securities and debt obligations.
<PAGE>
PROSPECTUS 11
The Fund may invest in securities of foreign issuers, investment grade
obligations, variable and floating rate instruments, mortgage- and asset-backed
securities, and shares of investment companies. To some extent, the Fund may
invest in other securities and engage in other investment practices. See "FUND
INVESTMENTS."
RISK CONSIDERATIONS
[LOGO]
The Balanced Fund is subject to the following types of risk:
- Fund Risk;
- Market Risk;
- Interest Rate Risk;
- Credit Risk;
- Call Risk;
- Event Risk;
- Prepayment Risk;
- Hedging Risks;
- Foreign Securities Risk; and
- Currency Risk.
For a description of these risks, please see "RISK CONSIDERATIONS."
FUND MANAGEMENT
[LOGO]
The Balanced Fund is co-managed by Anthony R. Gray (equity portion),
and L. Earl Denney, CFA, (fixed income portion). Mr. Gray, Chairman and Chief
Executive Officer of STI Capital Management, N.A., since 1979, has more than 30
years of investment experience. Mr. Denney, Senior Vice President, STI Capital
Management, N.A., since 1983, has more than 17 years of experience. Prior to
joining STI Capital Management, N.A., Mr. Denney served as a fixed income
portfolio manager with American National Bank.
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Investor and Flex Shares of
the BALANCED FUND.
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charges Imposed on Purchases* 3.75% None
Maximum Deferred Sales Charge None 2.00%
</TABLE>
* SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees After Fee Waivers(1) .83% .83%
12b-1 Distribution & Service Fees After Reimbursements(2) .04% .67%
Other Expenses After Fee Waivers and Reimbursements(3) .40% .53%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(4) 1.27% 2.03%
</TABLE>
(1) ABSENT VOLUNTARY WAIVERS, INVESTMENT ADVISORY FEES WOULD BE .95%.
(2) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .28% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.
(3) ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE .43%
FOR INVESTOR SHARES.
(4) ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL FUND
OPERATING EXPENSES WOULD BE 1.66% FOR INVESTOR SHARES AND 2.48% FOR FLEX
SHARES. THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING OR REIMBURSING ITS FEE.
<PAGE>
12 PROSPECTUS
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum:
front-end sales charge for INVESTOR SHARES $ 50 $ 76 $ 105 $ 185
contingent deferred sales charge* for FLEX SHARES $ 41 $ 64 $ 109 $ 236
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
If you purchase shares through a financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
* IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
FINANCIAL AND PERFORMANCE HIGHLIGHTS
[LOGO]
The table that follows presents information about the investment results
of the Investor and Flex Shares of the BALANCED FUND. The financial
highlights for the Fund for the periods from inception through May 31,
1997 have been audited by Arthur Andersen LLP, independent public
accountants, whose report appears in STI Classic Fund's annual report and
accompanies the Statement of Additional Information. The annual report
for the Fund, which contains more information about performance, is available at
no charge by calling 1-800-874-4770.
- --------------
BALANCED FUND
- --------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31,
<TABLE>
<CAPTION>
REALIZED
AND DISTRIBUTIONS
NET ASSET NET UNREALIZED DISTRIBUTIONS FROM NET ASSETS RATIO OF
VALUE INVESTMENT NET GAINS FROM NET REALIZED NET ASSET END OF EXPENSES
BEGINNING INCOME (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL PERIOD TO AVERAGE
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS
----------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------
INVESTOR
SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $ 11.60 $ 0.29 $ 1.48 $ (0.29 ) $ (1.09 ) $ 11.99 16.27 % $ 6,012 1.25%
1996 10.30 0.30 1.41 (0.30 ) (0.11 ) 11.60 16.88 % 4,896 1.25%
1995 9.79 0.28 0.51 (0.28 ) -- 10.30 8.29 % 3,765 1.25%
1994(1) 10.00 0.03 (0.24 ) -- -- 9.79 (2.10 )%+ 2,311 1.25%*
FLEX
SHARES
1997 $ 11.53 $ 0.22 $ 1.45 $ (0.21 ) $ (1.09 ) $ 11.90 15.40 % $ 6,067 2.01%
1996(2) 10.36 0.24 1.29 (0.25 ) (0.11 ) 11.53 15.58 %* 3,131 2.00%*
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
INCOME ASSETS ASSETS
(LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO AVERAGE
AVERAGE NET WAIVERS AND WAIVERS AND TURNOVER COMMISSION
ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE(3) RATE**
----------- ------------ -------------- ----------- -----------
INVESTOR
SHARES
<S> <C> <C> <C> <C> <C>
1997 2.58 % 1.64% 2.19 % 197% $ 0.0608
1996 2.70 % 1.89% 2.06 % 155% --
1995 3.17 % 1.80% 2.62 % 157% --
1994(1) 2.46 %* 4.91% * (1.20 )%* 106% --
FLEX
SHARES
1997 1.84 % 2.45% 1.40 % 197% $ 0.0608
1996(2) 1.85 %* 2.97% * 0.88 %* 155% --
</TABLE>
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED ONLY FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
+ CUMULATIVE SINCE COMMENCEMENT OF OPERATIONS.
(1) COMMENCED OPERATIONS ON JANUARY 4, 1994.
(2) COMMENCED OPERATIONS ON JUNE 14, 1995.
(3) A PORTFOLIO TURNOVER RATE OF 100% OR MORE, IF CONTINUED, WILL LIKELY RESULT
IN HIGHER BROKERAGE COMMISSIONS, HIGHER LEVELS OF REALIZED CAPITAL GAINS
AND ADDITIONAL TAXES THAN IF THE TURNOVER RATE WAS LOWER. THE PORTFOLIO
TURNOVER RATE WAS 135% FOR THE EQUITY PORTION OF THE FUND AND 286% FOR THE
FIXED INCOME PORTION OF THE FUND.
<PAGE>
PROSPECTUS 13
SUNBELT EQUITY FUND
FUND OBJECTIVE
[LOGO]
The Sunbelt Equity Fund seeks to provide capital appreciation by
investing substantially all, and under normal market conditions at least 65%, of
its assets in common stocks, preferred stocks, warrants, and securities
convertible into common stock of U.S. companies headquartered and/or conducting
a substantial portion of their operations in the southern region of the U.S.
Current income will not be an important criterion of investment selection and
any such income should be considered incidental.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund primarily invests in a diversified portfolio of equity
securities of U.S. companies headquartered and/or conducting a
substantial portion of their operations in the southern region of the U.S.
Stocks chosen for the Fund are primarily of U.S. companies headquartered and/or
operating in the following U.S. states:
- Texas
- Arkansas
- Alabama
- Mississippi
- Tennessee
- Kentucky
- Florida
- Virginia
- Georgia
- North Carolina
- South Carolina
- Louisiana
The Fund may invest in high yield securities, futures, and options. To some
extent, the Fund may invest in other securities and engage in other investment
practices. See "FUND INVESTMENTS."
RISK CONSIDERATIONS
[LOGO]
The Sunbelt Equity Fund is subject to the following types of risk:
- Fund Risk;
- Market Risk;
- Credit Risk;
- Geographic Risk;
- Hedging Risks; and
- High-Yield Security Risks.
For a description of these risks, please see "RISK CONSIDERATIONS."
FUND MANAGEMENT
[LOGO]
Mr. James Foster has managed the Sunbelt Equity Fund since it began
operating. He has served as Vice President of Trusco Capital Management, Inc.
since 1989, and has more than 27 years of investment experience.
<PAGE>
14 PROSPECTUS
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Investor and Flex Shares of
the SUNBELT EQUITY FUND.
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases* 3.75% None
Maximum Deferred Sales Charge None 2.00%
</TABLE>
* SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees After Fee Waivers(1) 1.04% 1.04%
12b-1 Distribution & Service Fees After Reimbursements(2) .29% .61%
Other Expenses .29% .57%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(3) 1.62% 2.22%
</TABLE>
(1) ABSENT VOLUNTARY WAIVERS, INVESTMENT ADVISORY FEES WOULD BE 1.15%.
(2) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .45% FOR INVESTOR SHARES AND 1.02% FOR FLEX SHARES.
(3) ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL FUND
OPERATING EXPENSES WOULD BE 1.87% FOR INVESTOR SHARES AND 2.72% FOR FLEX
SHARES. THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING OR REIMBURSING ITS FEE.
<TABLE>
<CAPTION>
10
EXAMPLE 1 YEAR 3 YEARS 5 YEARS YEARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum:
front-end sales charge for INVESTOR SHARES $53 $87 $122 $222
contingent deferred sales charge* for FLEX
SHARES $43 $69 $119 $255
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
If you purchase shares through a financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
* IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
<PAGE>
PROSPECTUS 15
FINANCIAL AND PERFORMANCE HIGHLIGHTS
[LOGO]
The table that follows presents information about the investment results
of the Investor and Flex Shares of the SUNBELT EQUITY FUND. The financial
highlights for the Fund for the periods from inception through May 31,
1997 have been audited by Arthur Andersen LLP independent public
accountants, whose report appears in STI Classic Fund's annual report and
accompanies the Statement of Additional Information. The annual report
for the Fund, which contains more information about performance, is available at
no charge by calling 1-800-874-4770.
- --------------------
SUNBELT EQUITY FUND
- --------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31,
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET NET UNREALIZED DISTRIBUTIONS
VALUE INVESTMENT NET GAINS FROM NET DISTRIBUTIONS NET ASSET NET ASSETS
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM REALIZED VALUE END END OF
OF PERIOD (LOSS) INVESTMENTS INCOME CAPITAL GAINS OF PERIOD TOTAL RETURN PERIOD (000)
--------- ---------- ------------ ------------- ------------- ---------- ------------ ------------
INVESTOR
SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $13.95 $(0.14) $ 0.24 -- $(0.99) $ 13.06 1.05% $28,095
1996 9.96 (0.11) 4.30 -- (0.20) 13.95 42.58% 29,002
1995 9.69 (0.05) 0.36 -- (0.04) 9.96 3.20% 22,180
1994(1) 10.00 (0.02) (0.29) -- -- 9.69 (3.10)%+ 16,077
FLEX
SHARES
1997 $13.97 $(0.14) $ 0.16 -- $(0.99) $ 13.00 0.46% $ 5,689
1996(2) 10.20 (0.07) 4.04 -- (0.20) 13.97 39.86%* 2,705
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME(LOSS) TO
INVESTMENT AVERAGE NET AVERAGE NET
RATIO OF INCOME ASSETS ASSETS
EXPENSES (LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO AVERAGE
TO AVERAGE AVERAGE WAIVERS AND WAIVERS AND TURNOVER COMMISSION
NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE(3) RATE**
---------- ---------- --------------- --------------- -------- --------
INVESTOR
SHARES
<S> <C> <C> <C> <C> <C> <C>
1997 1.60% (1.10)% 1.84% (1.34)% 72% $0.0674
1996 1.60% (0.79)% 1.93% (1.12)% 106% --
1995 1.60% (0.57)% 1.98% (0.95)% 80% --
1994(1) 1.60%* (0.63)%* 2.04%* (1.07)%* 21% --
FLEX
SHARES
1997 2.20% (1.72)% 2.69% (2.21)% 72% $0.0674
1996(2) 2.20% (1.43)%* 3.62%* (2.85)%* 106% --
</TABLE>
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED ONLY FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
+ CUMULATIVE SINCE COMMENCEMENT OF OPERATIONS.
(1) COMMENCED OPERATIONS ON JANUARY 4, 1994.
(2) COMMENCED OPERATIONS ON JUNE 5, 1995.
(3) A PORTFOLIO TURNOVER RATE OF 100% OR MORE, IF CONTINUED, WILL LIKELY RESULT
IN HIGHER BROKERAGE COMMISSIONS, HIGHER LEVELS OF REALIZED CAPITAL GAINS
AND ADDITIONAL TAXES THAN IF THE TURNOVER RATE WAS LOWER.
INTERNATIONAL EQUITY INDEX FUND
FUND OBJECTIVE
[LOGO]
The International Equity Index Fund seeks to provide investment
results that correspond to the aggregate price and dividend
performance of the securities included in the Gross Domestic Product Weighted
Morgan Stanley Capital International Europe, Australasia and Far East Index (the
MSCI EAFE-GDP Index or EAFE-GDP Index).(1)
- ----------
(1)"MSCI EAFE-GDP Index" is a registered service mark of Morgan Stanley Capital
International which does not sponsor, and is in no way affiliated with, the
International Equity Index Fund.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund primarily invests in equity securities of companies
headquartered, or based in, the approximately twenty foreign countries included
in the EAFE-GDP Index.
While the Fund is structured to have overall investment characteristics
similar to those of the EAFE-GDP Index, it selects a representative sample of
securities in each country using a statistically-based optimization process.
The Fund expects that there will be a close correlation between it's
performance and that of
<PAGE>
16 PROSPECTUS
the EAFE-GDP Index. However, the Fund's ability to track the EAFE-GDP Index may
be affected by, among other things, transaction costs, changes in either the
composition of the Index or number of shares outstanding for the component
companies of the EAFE-GDP Index, and the timing and amount of purchases and
redemptions.
The Fund may invest in securities of foreign issuers, futures, options, and
forward foreign currency contracts. To some extent, the Fund may invest in other
securities and engage in other investment practices. See "FUND INVESTMENTS."
RISK CONSIDERATIONS
[LOGO]
The International Equity Index Fund is subject to the following types
of risk:
- Fund Risk;
- Market Risk;
- Hedging Risks;
- Foreign Security Risks; and
- Currency Risk.
For a description of these risks, please see "RISK CONSIDERATIONS."
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Investor and Flex Shares of
the INTERNATIONAL EQUITY INDEX FUND.
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases* 3.75% None
Maximum Deferred Sales Charge None 2.00%
</TABLE>
* SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees After Fee Waivers(1) .80% .80%
12b-1 Distribution & Service Fees After Reimbursements(2) .14% .00%
Other Expenses After Fee Waivers and Reimbursements(3) .53% 1.32%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(4) 1.47% 2.12%
</TABLE>
(1) ABSENT VOLUNTARY WAIVERS, INVESTMENT ADVISORY FEES WOULD BE .90%.
(2) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .38% FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES
(3) ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE .62%
FOR INVESTOR SHARES AND 1.81% FOR FLEX SHARES.
(4) ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL FUND
OPERATING EXPENSES WOULD BE 1.90% FOR INVESTOR SHARES AND 3.71% FOR FLEX
SHARES. THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING OR REIMBURSING ITS FEE.
<PAGE>
PROSPECTUS 17
<TABLE>
<CAPTION>
10
EXAMPLE 1 YEAR 3 YEARS 5 YEARS YEARS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum:
front-end sales charge for INVESTOR SHARES $52 $82 $115 $207
contingent deferred sales charge* for FLEX
SHARES $42 $66 $114 $245
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
If you purchase shares through a financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
* IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
FINANCIAL AND PERFORMANCE HIGHLIGHTS
[LOGO]
The table that follows presents information about the investment results
of the Investor and Flex Shares of the INTERNATIONAL EQUITY INDEX FUND.
The financial highlights for the Fund for the periods from inception
through May 31, 1997 have been audited by Arthur Andersen LLP,
independent public accountants, whose report appears in STI Classic
Fund's annual report and accompanies the Statement of Additional
Information. The annual report for the Fund, which contains more information
about performance, is available at no charge by calling 1-800-874-4770.
- --------------------------------
INTERNATIONAL EQUITY INDEX FUND
- --------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31,
<TABLE>
<CAPTION>
REALIZED AND
NET ASSET NET UNREALIZED DISTRIBUTIONS
VALUE INVESTMENT NET GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM REALIZED VALUE END
OF PERIOD (LOSS) INVESTMENTS INCOME CAPITAL GAINS OF PERIOD TOTAL RETURN
--------- ---------- ------------ ------------- ------------- ---------- ------------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 10.88 $ 0.03 $0.72 $ (0.07 ) $ (0.30 ) $ 11.26 7.12 %
1996 10.20 0.05 0.85 (0.13 ) (0.09 ) 10.88 8.90 %
1995(1) 10.00 0.05 0.17 (0.01 ) (0.01 ) 10.20 2.18 %+
FLEX SHARES
1997 $ 10.87 $ (0.05 ) $0.72 -- $ (0.30 ) $ 11.24 6.41 %
1996(2) 10.24 -- 0.82 (0.10 ) (0.09 ) 10.87 8.32 %+
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
RATIO OF INCOME ASSETS ASSETS
NET ASSETS EXPENSES (LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO AVERAGE
END OF TO AVERAGE AVERAGE WAIVERS AND WAIVERS AND TURNOVER COMMISSION
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE RATE**
------------ ---------- ---------- --------------- --------------- -------- -----------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
1997 $ 5,592 1.45% 0.28 % 1.88% (0.15)% 2 % $ 0.0244
1996 5,597 1.45% 0.48 % 2.06% (0.13)% 30 % --
1995(1) 3,960 1.45% * 0.67 %* 2.44% * (0.32)% * 10 %* --
FLEX SHARES
1997 $ 900 2.10% (0.39 )% 3.69% (1.98)% 2 % $ 0.0244
1996(2) 917 2.10% * (0.24 )%* 4.14% * (2.28)% * 30 % --
</TABLE>
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED ONLY FOR FISCAL YEARS
BEGINNING AFTER SEPTEMBER 1, 1995.
+ CUMULATIVE SINCE COMMENCEMENT OF OPERATIONS.
(1) COMMENCED OPERATIONS ON JUNE 6, 1994.
(2) COMMENCED OPERATIONS ON JUNE 8, 1995.
<PAGE>
18 PROSPECTUS
INTERNATIONAL EQUITY FUND
FUND OBJECTIVE
[LOGO]
The International Equity Fund seeks to provide long-term capital
appreciation by investing primarily in a diversified portfolio of equity
securities of foreign issuers.
PORTFOLIO INVESTMENTS
[LOGO]
The Fund invests primarily in equity securities of foreign issuers.
The Fund will invest in the securities of foreign issuers of at least three
different countries outside the United States. A foreign issuer:
- is a company organized under the laws of a specific country;
- principally trades its securities in a market or on an exchange in a
specific foreign country; or
- derives a significant proportion (at least 50 percent) of its revenues or
profits from goods produced or sold, investments made, or services
performed in a specific country or which has at least 50 percent of its
assets situated in that country.
The Fund will invest primarily in developed countries (for example, Japan,
Canada, and the United Kingdom). The Fund may also invest in securities of
issuers whose principal activities are in countries with emerging markets. The
Fund defines an emerging market country as any country whose economy and market
are considered to be emerging or developing by the World Bank or the United
Nations.
The Fund may invest in options, futures, forward foreign currency contracts,
and high yield securities. To some extent, the Fund may invest in other
securities and engage in other investment practices. See "FUND INVESTMENTS."
RISK CONSIDERATIONS
[LOGO]
The International Equity Fund is subject to the following types of
risk:
- Fund Risk;
- Market Risk;
- Credit Risk;
- Event Risk;
- Hedging Risks;
- High-Yield Security Risks;
- Foreign Security Risks; and
- Currency Risk.
For a description of these risks, please see "RISK CONSIDERATIONS."
FUND MANAGEMENT
[LOGO]
Mr. Ned Dau, Vice President of STI Capital Management, N.A., has
managed the International Equity Fund since May, 1997. Prior to joining STI, he
was a senior international equity analyst for American Express Financial
Advisors from 1996 to 1997, and the Principal Financial Group from 1992 to 1995.
<PAGE>
PROSPECTUS 19
TRANSACTION AND OPERATING EXPENSES
[LOGO]
The purpose of the following table is to help you understand the
various costs and expenses that you, as a shareholder, will bear
directly or indirectly when you invest in Investor and Flex Shares of
the INTERNATIONAL EQUITY FUND.
<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases* 3.75% None
Maximum Deferred Sales Charge None 2.00%
</TABLE>
* SEE "PURCHASING FUND SHARES."
<TABLE>
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Investment Advisory Fees After Fee Waivers(1) 1.20% 1.20%
12b-1 Distribution & Service Fees After Reimbursements(2) .17% .56%
Other Expenses After Fee Waivers and Reimbursements(3) .46% .77%
Total Fund Operating Expenses After Fee Waivers and Reimbursements(4) 1.83% 2.53%
</TABLE>
(1) ABSENT VOLUNTARY WAIVERS, INVESTMENT ADVISORY FEES WOULD BE 1.25%.
(2) ABSENT VOLUNTARY REIMBURSEMENTS BY THE DISTRIBUTOR, 12b-1 DISTRIBUTION AND
SERVICE FEES WOULD BE .33 FOR INVESTOR SHARES AND 1.00% FOR FLEX SHARES.
(3) ABSENT VOLUNTARY WAIVERS AND REIMBURSEMENTS, OTHER EXPENSES WOULD BE .49%
FOR INVESTOR SHARES AND .80% FOR FLEX SHARES.
(4) ABSENT THE FEE WAIVERS AND REIMBURSEMENTS DESCRIBED ABOVE, TOTAL FUND
OPERATING EXPENSES WOULD BE 2.07% OF INVESTOR SHARES AND 3.05% OF FLEX
SHARES. THESE FEE WAIVERS AND REIMBURSEMENTS ARE VOLUNTARY AND MAY BE
DISCONTINUED AT ANY TIME AT THE DISCRETION OF THE SERVICE PROVIDER THAT IS
WAIVING OR REIMBURSING ITS FEE.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming
(1) a 5% annual return;
(2) redemption at the end of each time period; and
(3) the imposition of the maximum:
front-end sales charge for INVESTOR SHARES $55 $93 $133 $244
contingent deferred sales charge* for FLEX
SHARES $46 $79 $135 $287
</TABLE>
YOU SHOULD NOT USE THE INFORMATION CONTAINED IN THIS TABLE AS AN INDICATOR
OF PAST OR FUTURE EXPENSES. ACTUAL FUND EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.
If you purchase shares through a financial institution, you may be charged
separate fees by the financial institution. The EXAMPLE reflects the imposition
of the maximum sales charge. However, you may qualify for a reduced sales
charge. See "Purchasing Fund Shares." Over the long-term you may indirectly pay
more than the equivalent of the maximum permitted front-end sales charges.
* IMPOSED ON REDEMPTIONS WITHIN ONE YEAR OF PURCHASE. SEE "PURCHASING FUND
SHARES."
<PAGE>
20 PROSPECTUS
FINANCIAL AND PERFORMANCE HIGHLIGHTS
[LOGO]
The table that follows presents information about the investment results
of the Investor and Flex Shares of the INTERNATIONAL EQUITY FUND. The
financial highlights for the Fund for the periods from inception through
May 31, 1997 have been audited by Arthur Andersen LLP, independent public
accountants, whose report appears in STI Classic Fund's annual report and
accompanies the Statement of Additional Information. The annual report
for the Fund, which contains more information about performance, is available to
Shareholders at no charge by calling 1-800-874-4770.
- --------------------------
INTERNATIONAL EQUITY FUND
- --------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED MAY 31,
<TABLE>
<CAPTION>
REALIZED
AND NET
NET ASSET NET UNREALIZED DISTRIBUTIONS ASSET
VALUE INVESTMENT NET GAINS FROM NET DISTRIBUTIONS VALUE NET ASSETS
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM REALIZED END OF TOTAL END OF
OF PERIOD (LOSS) INVESTMENTS INCOME CAPITAL GAINS PERIOD RETURN PERIOD (000)
--------- ---------- ----------- ------------- ------------- ------ ------ ------------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $11.38 $(0.01) $2.56 -$- $(0.35) $13.58 22.85% $10,674
1996(1) 10.44 0.04 0.90 -- -- 11.38 9.00%+ 3,448
FLEX SHARES
1997 $11.37 $(0.04) $2.49 -$- $(0.35) $13.47 21.98% $ 8,375
1996(1) 10.44 0.02 0.91 -- -- 11.37 8.91%+ 953
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES TO INCOME (LOSS)
INVESTMENT AVERAGE NET TO AVERAGE NET
RATIO OF INCOME ASSETS ASSETS
EXPENSES (LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO AVERAGE
TO AVERAGE AVERAGE WAIVERS AND WAIVERS AND TURNOVER COMMISSION
NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE(2) RATE**
---------- ---------- --------------- --------------- -------- ----------
INVESTOR SHARES
<S> <C> <C> <C> <C> <C> <C>
1997 1.81% 0.18% 2.05% (0.06)% 139% $0.0313
1996(1) 1.81%* 1.73%* 3.14%* 0.40%* 113% --
FLEX SHARES
1997 2.51% (0.27)% 3.03% (0.79)% 139% $0.0313
1996(1) 2.51%* 1.08%* 5.86%* (2.27)%* 113% --
</TABLE>
* ANNUALIZED.
** AVERAGE COMMISSION RATE PAID PER SHARE FOR SECURITY PURCHASES AND SALES
DURING THE PERIOD. PRESENTATION OF THE RATE IS REQUIRED ONLY FOR FISCAL
YEARS BEGINNING AFTER SEPTEMBER 1, 1995.
+ CUMULATIVE SINCE COMMENCEMENT OF OPERATIONS.
(1) COMMENCED OPERATIONS ON JANUARY 2, 1996.
(2) A PORTFOLIO TURNOVER RATE OF 100% OR MORE, IF CONTINUED, WILL LIKELY RESULT
IN HIGHER BROKERAGE COMMISSIONS, HIGHER LEVELS OF REALIZED CAPITAL GAINS
AND ADDITIONAL TAXES THAN IF THE TURNOVER RATE WAS LOWER.
THERE CAN BE NO ASSURANCE THAT A FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE.
THE INVESTMENT OBJECTIVE OF EACH FUND IS NON-FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
<PAGE>
PROSPECTUS 21
RISK CONSIDERATIONS
<TABLE>
<CAPTION>
TYPE OF RISK FUNDS SUBJECT TO RISK
<S> <C>
- -----------------------------------------------------------------------------------------------
<CAPTION>
<S> <C>
FUND RISK -- The possibility that a Fund's performance during a All Funds
specific period may not meet or exceed that of the market as a
whole.
MARKET RISK -- The possibility that stock prices in general will All Funds
decline over short, or even extended, periods of time. Stock
markets tend to be cyclical, with periods when stock prices
generally rise and periods when stock prices generally decline.
SMALL ISSUER RISK -- Small and medium capitalization companies may Value Income Stock Fund
be more vulnerable than larger, more established organizations Small Cap Equity Fund
to adverse business or economic developments. In particular, Mid-Cap Equity Fund
small capitalization companies may have limited product lines,
markets, and financial resources and may be dependent upon a
relatively small management group. These securities may be
traded over-the-counter or listed on an exchange and may or may
not pay dividends.
INTEREST RATE RISK -- The potential for a decline in the price of Balanced Fund
fixed income securities due to rising interest rates. This risk
will be greater for long-term securities than for short-term
securities.
CREDIT RISK -- The possibility that an issuer will be unable to make Capital Growth Fund
timely payments of either principal or interest. Value Income Stock Fund
Mid-Cap Equity Fund
Balanced Fund
Sunbelt Equity Fund
International Equity Fund
CALL RISK -- The possibility that securities with high interest Balanced Fund
rates will be prepaid (or "called") by the issuer prior to
maturity during periods of falling interest rates. This would
require a Fund to invest the resulting proceeds elsewhere, at
generally lower interest rates.
</TABLE>
<PAGE>
22 PROSPECTUS
<TABLE>
<CAPTION>
TYPE OF RISK FUNDS SUBJECT TO RISK
- -----------------------------------------------------------------------------------------------
<S> <C>
EVENT RISK -- The possibility that corporate debt securities may Capital Growth Fund
suffer substantial declines in credit quality and market value Value Income Stock Fund
due to corporate restructurings. While event risk may be high Mid-Cap Equity Fund
for certain corporate securities held by a Fund, event risk in Balanced Fund
the aggregate should be low because of the Fund's diversified International Equity Fund
holdings.
GEOGRAPHIC RISK -- The risk that a Fund's concentration of Sunbelt Equity Fund
investments in securities of issuers located in a single state
or geographic region subject a Fund to economic conditions and
government policies of that state or region that could
adversely affect the value of a Fund.
PREPAYMENT RISK -- The risk that mortgage-backed and asset-backed Balanced Fund
securities may be retired substantially earlier than their
stated maturities or final distribution dates, resulting in a
loss of all or part of any premium paid.
HEDGING RISKS -- Hedging is a strategy designed to offset investment All Funds (except Capital
risks. Hedging activities include, among other things, the use Growth Fund)
of options and futures. There are risks associated with hedging
activities, including:
- The success of a hedging strategy may depend on an ability to
predict movements in the prices of individual securities,
fluctuations in markets, and movements in interest rates;
- 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 options on futures;
- There may not be a liquid secondary market for a futures
contract or option;
- Trading restrictions or limitations may be imposed by an
exchange, and government regulations may restrict trading in
futures contracts and options.
</TABLE>
<PAGE>
PROSPECTUS 23
<TABLE>
<CAPTION>
TYPE OF RISK FUNDS SUBJECT TO RISK
- -----------------------------------------------------------------------------------------------
<S> <C>
HIGH-YIELD SECURITY RISKS -- There are risks associated with Capital Growth Fund
investing in high-yield securities, including: Value Income Stock Fund
- High-yield, lower rated bonds ("junk bonds") involve greater Mid-Cap Equity Fund
risk of default or price declines than investments in Sunbelt Equity Fund
investment grade securities (e.g., securities rated BBB or International Equity Fund
higher by S&P or Baa or higher by Moody's) due to changes in
the issuer's creditworthiness.
- The market for high risk, high-yield securities may be
thinner and less active, causing market price volatility and
limited liquidity in the secondary market. This may limit the
ability of a Fund to sell these securities at their fair
market values either to meet redemption requests, or in
response to changes in the economy or the financial markets.
- Market prices for high risk, high-yield securities may also
be affected by investors' perception of the issuer's credit
quality and the outlook for economic growth. Thus, prices for
high risk, high-yield securities may move independently of
interest rates and the overall bond market.
- The market for high risk, high-yield securities may be
adversely affected by legislative and regulatory
developments.
FOREIGN SECURITY RISKS -- There are risks associated with
international investing, including:
CURRENCY RISK -- The possibility that changes in foreign
exchange rates will affect, favorably or unfavorably, the value
of foreign securities or the U.S. dollar amount of income or
gain received on such securities.
VOLATILITY -- Investments in foreign stock markets can be more
volatile than investments in U.S. markets. Diplomatic,
political, or economic developments could affect investments in
foreign countries.
</TABLE>
<PAGE>
24 PROSPECTUS
<TABLE>
<CAPTION>
TYPE OF RISK FUNDS SUBJECT TO RISK
- -----------------------------------------------------------------------------------------------
<S> <C>
EXPENSE CONSIDERATIONS -- Fixed commissions on many foreign All Funds (except Sunbelt
stock exchanges are generally higher than negotiated Equity Fund)
commissions on U.S. exchanges. Expenses for custodial
arrangements of foreign securities may be somewhat greater than
typical expenses for custodial arrangements for handling U.S.
securities of equal value.
FOREIGN TAXES -- Certain foreign governments levy withholding
taxes against dividend and interest income. Although in some
countries a portion of these taxes are recoverable, the
non-recovered portion of foreign withholding taxes will reduce
the income received from the securities comprising the
portfolio.
REGULATORY ENVIRONMENT -- Foreign companies generally are not
subject to uniform accounting, auditing, and financial
reporting standards comparable to those applicable to U.S.
domestic companies. Foreign branches of U.S. banks, foreign
banks and foreign issuers may be subject to less stringent
reserve requirements and to different accounting, auditing,
reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks and U.S. domestic issuers.
There is generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the U.S.
CURRENCY RISK -- The possibility that changes in foreign exchange All Funds (except Sunbelt
rates will affect, favorably or unfavorably, the value of foreign Equity Fund)
securities or the U.S. dollar amount of income or gain received on
such securities.
</TABLE>
<PAGE>
PROSPECTUS 25
PERFORMANCE INFORMATION FOR PREDECESSOR COLLECTIVE FUNDS
The International Equity, Value Income Stock, Small Cap Equity, and Sunbelt
Equity Funds are each the successor to collective investment funds. The
collective investment funds were previously managed by STI Capital Management,
Inc. and Trusco Capital Management, Inc. Substantially all of the assets of
those collective investment funds were transferred to the Funds when each Fund
started operating. Total return, a type of performance calculation, for the
predecessor collective investment funds, is presented below. You may find this
performance information helpful because the collective investment funds were
managed using the same investment objectives, policies, and restrictions as
those used by each of the Funds. The performance information relates to a period
of time before the effective date of each Fund's registration.
The total return of a fund refers to the average compounded rate of return
on a hypothetical investment. This includes any sales charge imposed for
designated time periods, such as the period from which a fund started operating
through a specified date. When we compute total return, we assume that your
entire investment is redeemed at the end of each period and that you reinvest
all income dividends and capital gains distributions.
Please keep in mind that performance information, such as total return, is
not necessarily indicative of the future performance of a Fund. Also, keep in
mind that the performance of the collective investment funds does not represent
the historical performance of any fund. The predecessor collective investment
funds were not subject to certain investment limitations, diversification
requirements, and other restrictions imposed by the 1940 Act and the Internal
Revenue Code. If these had been imposed, a collective investment fund's
performance would have been adversely affected. The predecessor collective
investment funds did not incur expenses that correspond to the advisory,
administrative, and other fees to which each Fund is now subject. Accordingly,
the following performance information has been adjusted by applying the total
expense ratios for the Trust Shares of the Funds, as disclosed in the Prospectus
at the time the Funds started operating. This adjustment reduced the actual
performance of the collective investment funds.
The total expense ratios for the Trust Shares of the Funds are lower than
those for Investor and Flex Shares of the Funds. As a result, the performance
you see below is higher than if the total expense ratios for Investor or Flex
Shares were applied to the performance information.
<PAGE>
26 PROSPECTUS
The average annual total returns (adjusted to reflect Fund expenses, before
voluntary waivers and reimbursements) for the following periods:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS SINCE INCEPTION
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
International Equity N/A N/A N/A N/A 33.16%
Collective Fund (2/2/95-11/30/95)
Value Income Stock 15.87% 18.70% N/A N/A 16.31%
Collective Fund (ending 1/31/93) (ending 1/31/93) (10/31/89-1/31/93)
Sunbelt Equity 22.70% 29.73% 21.29% 16.14% 16.94%
Collective Fund (ending (ending (ending (ending (12/1/80-12/31/93)
12/31/93) 12/31/93) 12/31/93) 12/31/93)
Small Cap Equity 36.43% N/A N/A N/A 27.97%
Collective Fund (ending 1/31/97) (8/31/94-1/31/97)
</TABLE>
FUND PERFORMANCE
The average annual total returns for the Funds (net of voluntary waivers and
reimbursements) for the following periods ended May 31, 1997:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
International Equity Fund
Investor Shares* 18.28% N/A N/A N/A
Flex Shares** 19.98% N/A N/A N/A
Value Income Stock Fund
Investor Shares* 17.14% 20.99% N/A N/A
Flex Shares** 18.91% N/A N/A N/A
Sunbelt Equity Fund
Investor Shares* (2.71)% 12.68% N/A N/A
Flex Shares** (1.40)% N/A N/A N/A
<CAPTION>
SINCE INCEPTION
<S> <C>
- --------------------------------------------------
International Equity Fund
Investor Shares* 19.68%
Flex Shares** 22.30%
Value Income Stock Fund
Investor Shares* 18.14%
Flex Shares** 23.68%
Sunbelt Equity Fund
Investor Shares* 10.08%
Flex Shares** 18.46%
</TABLE>
- ----------
* COMMENCED FUND OPERATIONS ON JANUARY 2, 1996; FEBRUARY 12, 1993; AND JANUARY
4, 1994, RESPECTIVELY.
** COMMENCED FUND OPERATIONS ON JANUARY 2, 1996; JUNE 1, 1995; AND JUNE 5,
1995, RESPECTIVELY.
The performance relating to Trust Shares will normally be higher than
Investor Shares or Flex Shares because Trust Shares are not subject to the
service fees and other expenses charged to the Investor Shares and Flex Shares.
<PAGE>
PROSPECTUS 27
PURCHASING FUND SHARES
HOW TO BUY FUND SHARES
You may buy either Investor or Flex Shares (and fractions of shares) by
mail, telephone or wire directly from the Transfer Agent, Federated Services
Company. You also may purchase shares through Investment Consultants of certain
correspondent banks of SunTrust Banks, Inc., or other financial institutions
that have executed dealer agreements with the Trust's Distributor. Shares are
offered continuously, and may be purchased on any day that the New York Stock
Exchange is open for business (a Business Day).
The price per share (the offering price) will be the net asset value per
share (NAV) next determined after your purchase order is received by the
Transfer Agent plus, in the case of Investor Shares, the applicable front-end
sales charge. NAV is calculated by (1) taking the current market value of a
Fund's total assets for that class of shares (either Investor or Flex), (2)
subtracting the liabilities applicable to that class of shares, and (3) dividing
that amount by the total number of shares of that class owned by shareholders.
The NAV is calculated once each Business Day at the close of the New York Stock
Exchange (4:00 p.m. Eastern time). So, to receive the current Business Day's
NAV, the Transfer Agent must receive your purchase order before 4:00 p.m.
Eastern time. If you purchase shares through a financial institution (rather
than directly through the Transfer Agent), you may have to transmit your
purchase order to your financial institution at an earlier time for your
purchase to be effective that day. This allows the financial institution time to
process your order and transmit it to the Transfer Agent. For more information
about how to purchase shares through your financial institution, you should
contact your financial institution directly.
If you decide to buy shares directly call 1-800-874-4770. Make your check
out to "STI Classic Funds" and include the name of the appropriate Fund(s) on
the check. The check must be payable in U.S. dollars. Third-party checks, credit
cards, credit card checks, and cash are not accepted. PLEASE NOTE, IF YOU BUY
SHARES WITH A CHECK, AND THEN SELL THOSE SHARES IN A SHORT PERIOD OF TIME, THE
TRUST CAN DELAY PAYMENT TO YOU UNTIL YOUR CHECK CLEARS, OR FOR UP TO 15 BUSINESS
DAYS, WHICHEVER COMES FIRST.
FUNDLINK
FUNDLINK is a telephone-activated service that allows you to transfer money
quickly and easily between the STI Classic Funds and your SunTrust bank
account(s). To use FUNDLINK you must first contact your SunTrust Investment
Consultant and complete the FUNDLINK application and authorization agreements.
Once you have signed up to use FUNDLINK, simply call the Transfer Agent at
1-800-428-6970 to complete all your purchase and redemption transactions.
<PAGE>
28 PROSPECTUS
FRONT-END SALES CHARGES -- INVESTOR SHARES
The following table shows: (1) the sales charge you pay (i) as a percentage
of the offering price and (ii) as a percentage of your net investment (NAV
multiplied by the number of shares you purchase); and (2) the amount that is
paid to your Investment Consultant (Dealer) as a percentage of the offering
price. The front-end sales charge may be waived or reduced on Investor Shares
purchased 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.
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER'S
AS A AS A REALLOWANCE
PERCENTAGE PERCENTAGE OF AS A % OF
OF OFFERING YOUR NET OFFERING
YOUR INVESTMENT PRICE INVESTMENT PRICE
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Less than $100,000 3.75% 3.90% 3.375%
$100,000 but less than $250,000 3.25% 3.36% 2.925%
$250,000 but less than $1,000,000 2.50% 2.56% 2.250%
$1,000,000 and over 1.50% 1.52% 1.350%
</TABLE>
The front-end sales charge will be waived on Investor Shares purchased:
- - through reinvestment of dividends and distributions;
- - through a SunTrust Securities, Inc. asset allocation account;
- - by persons repurchasing shares they redeemed within the last 60 days (see
REPURCHASE OF INVESTOR SHARES, below).
- - by employees, and members of their immediate family, of SunTrust Banks, Inc.
and its affiliates;
- - by persons reinvesting distributions from qualified employee benefit
retirement plans and rollovers from individual retirement accounts (IRAs)
previously with the trust department of a bank affiliated with SunTrust Banks,
Inc.; or
- - by persons investing an amount less than or equal to the value of an account
distribution, when an account for which a bank affiliated with SunTrust Banks,
Inc. acted in a fiduciary, administrative, custodial, or investment advisory
capacity is closed.
REPURCHASE OF INVESTOR SHARES
You may repurchase any amount of Investor Shares of any Fund at NAV (without
the normal front-end sales charge), equal to or less than the value of any
amount of Investor Shares (for which you paid a front-end sales charge) that you
redeemed within the past 60 days. In effect, this allows you to repurchase
shares that you may have had to redeem, without repaying the front-end sales
charge. To exercise this privilege, your purchase order must be received by the
Transfer Agent within
<PAGE>
PROSPECTUS 29
60 days after your redemption. IN ADDITION, YOU MUST NOTIFY THE TRANSFER AGENT,
WHEN YOU SEND IN YOUR PURCHASE ORDER, THAT YOU ARE REPURCHASING SHARES.
REDUCED SALES CHARGES -- INVESTOR SHARES
- - RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate, (see
"Front-End Sales Charges"), this right allows you to add the value of Investor
Shares you already own to the amount you are currently purchasing. The Trust
will combine the value of your current purchases with the current value of any
Investor Shares you purchased previously for (i) your account, (ii) your
spouse's account, (iii) a joint account with your spouse, or (iv) your minor
children's trust or custodial accounts. A fiduciary purchasing shares for the
same fiduciary account, trust or estate, may also use this right of
accumulation. The Trust will only consider the value of Investor Shares
purchased previously that were sold subject to a sales charge. TO BE ENTITLED
TO A REDUCED SALES CHARGE BASED ON SHARES ALREADY OWNED, YOU MUST ASK THE
DISTRIBUTOR FOR THE REDUCTION AT THE TIME OF PURCHASE. You must provide the
Distributor with your account number(s) and, if applicable, the account
numbers for your spouse and/or children (and provide children's ages). The
Trust may amend or terminate this right of accumulation at any time.
- - LETTER OF INTENT. You may purchase 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. The Trust will only consider the
value of Investor Shares sold subject to a sales charge. As a result, neither
Investor Shares of STI Classic Money Market Funds nor Investor Shares
purchased with dividends or distributions will be included in the calculation.
TO BE ENTITLED TO A REDUCED SALES CHARGE BASED ON SHARES YOU INTEND TO
PURCHASE OVER A 13-MONTH PERIOD, YOU MUST SEND A LETTER OF INTENT TO THE
TRANSFER AGENT. 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, the purchase price of these prior purchases will not be adjusted.
You are not legally bound by the terms of a Letter of Intent to purchase the
amount of shares you stated in the Letter. The Letter does, however,
authorize the Transfer Agent to hold in escrow 3.75% of the total amount you
intend to purchase to be purchased. If you do not complete the total
intended purchases 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 purchased).
- - COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the
appropriate sales charge rate, the Trust will combine same day purchases of
Investor Shares (that are subject to a
<PAGE>
30 PROSPECTUS
sales charge) made by you, your spouse and your minor children (under age 21).
This combination also applies to Investor Shares you purchase with a Letter of
Intent.
CONTINGENT DEFERRED SALES CHARGES -- FLEX SHARES
You do not pay an initial sales charge when you purchase Flex Shares. If,
however, you redeem (sell) your shares within the first year after your
purchase, you will pay a contingent deferred sales charge (CDSC) equal to 2.00%
of either (1) NAV of the shares at the time of purchase, or (2) NAV of the
shares at the time of redemption, whichever is less. The CDSC does not apply to
shares you purchase through reinvestment of dividends or distributions. So, you
never pay a CDSC on any increase in your investment above the initial purchase
price. In addition, the CDSC does not apply to exchanges of Flex Shares of one
Fund for Flex Shares of another Fund.
The CDSC will be waived if you sell your Flex Shares for the following
reasons:
- to make withdrawals from a retirement plan (excluding IRAs);
- because of death or disability; or
- for certain payments under the Systematic Withdrawal Plan (discussed
below).
MINIMUM PURCHASE
To purchase Investor Shares for the first time, you must invest at least
$2,000 in any Fund. Employees of SunTrust Banks, Inc., and members of their
immediate family, however, may buy Investor Shares with an initial purchase of
$1,000. To purchase Flex Shares for the first time, you must invest at least
$10,000 in any Fund. To purchase additional shares of any Fund, you must invest
at least $1,000 or, via a statement coupon, $100.
MINIMUM PURCHASE -- RETIREMENT PLANS
A retirement plan may purchase either Investor Shares or Flex Shares for the
first time with an investment of at least $2,000 in any Fund.
If you invest through the Systematic Investment Plan, described below, you
will be subject to lower minimum purchase amounts.
SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a SunTrust Banks, Inc.
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.
<PAGE>
PROSPECTUS 31
PURCHASING SHARES -- THE DISTRIBUTOR
The Distributor may accept investments of smaller amounts, for either class
of shares, at its discretion. In addition, the Trust reserves the right to
reject any purchase order when the Distributor determines that accepting the
order would not be in the best interests of the Trust and/or Shareholders.
REDEEMING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (redeem) your Investor or Flex Shares on any day that NAV is
calculated, by contacting the Transfer Agent directly by mail, telephone or, if
eligible, via FUNDLINK. You may also make redemption requests (in writing or by
telephone) through a SunTrust Investment Consultant, and through certain
correspondent banks of SunTrust Banks, Inc. Redemption requests made via
telephone or FUNDLINK (1-800-428-6970) must be for a redemption amount of at
least $1,000. Redemption requests for $25,000 or more must be in writing and
must include a signature guarantee (a notarized signature is not sufficient).
The redemption price of each share will be the next NAV determined after receipt
of your redemption request less, in the case of Flex Shares, any applicable
CDSC. Redemption requests must be received by the Transfer Agent by 4:00 p.m.
Eastern time to get that day's NAV. If you redeem your shares through a
financial institution (rather than directly through the Transfer Agent), you may
have to transmit your redemption request to the financial institution at an
earlier time for your redemption to be effective that day. This allows the
financial institution time to process your request and transmit it to the
Transfer Agent. For more information about how to request redemptions through
your financial institution, you should contact your financial institution
directly.
RECEIVING YOUR MONEY
Your redemption proceeds normally will be sent within five Business Days of
the Transfer Agent receiving your request. Your proceeds can be wired to your
bank account (subject to a $7.00 fee), transferred to your bank account via
FUNDLINK, or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY
CHECK OR THROUGH AUTOMATED CLEARING HOUSE (ACH), REDEMPTION PROCEEDS MAY NOT BE
AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 BUSINESS DAYS).
REDEMPTIONS IN KIND
The Trust intends to pay your redemption proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the remaining shareholders of the Fund) the Trust reserves the right to pay
all, or part, of your redemption proceeds in liquid securities that have a
market value equal to the redemption price (redemption in kind). Although it is
highly
<PAGE>
32 PROSPECTUS
unlikely that your shares would ever actually be redeemed in kind, if it did
happen, you would probably have to pay brokerage costs to sell the securities
distributed to you.
INVOLUNTARY REDEMPTIONS
If your account balance drops below the required minimum, $2,000 for
Investor Shares and $10,000 for Flex Shares, you may be required to redeem your
shares. You will always be given at least 60 days' written notice to give you
time to add to your account and avoid the redemption.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange 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 Banks, Inc. affiliated bank, electronically transferred to your
account.
EXCHANGES
You may exchange your Investor or Flex Shares by contacting (1) an
Investment Consultant of a SunTrust Banks, Inc. affiliated bank, SunTrust
Securities, Inc., or certain correspondent banks of SunTrust Banks, Inc. in
writing or by telephone, or (2) the Transfer Agent directly via FUNDLINK.
Exchange requests must be for an exchange amount of at least $1,000. You may
exchange your shares up to four times during a calendar year without
restriction. More than four exchanges during a year may be viewed as abuse of
the exchange privilege. In such a case, the Trust may charge you a $10.00 fee
for each additional exchange. You will, however, be notified before any fee is
charged. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT
BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP
TO 15 BUSINESS DAYS). This exchange privilege may be changed or canceled at any
time upon 60 days' notice.
INVESTOR SHARES
You may exchange Investor Shares of any Fund for Investor Shares of any
other Fund. Shares you exchange for the first time from a Money Market Fund
(which has no sales charge) into a Fund with a sales charge are subject to that
sales charge. Similarly, shares you exchange for the first time into a Fund with
a higher sales charge are subject to an incremental sales charge (the difference
between the lower and higher applicable sales charges). Should you exchange
shares into a Fund with the same, lower or no sales charge (a Money Market
Fund), there is no sales charge for the exchange.
FLEX SHARES
You may exchange Flex Shares of any Fund for Flex Shares of any other Fund
or for Investor Shares of the Money Market Funds of the Trust. No CDSC is
imposed on redemptions of Money
<PAGE>
PROSPECTUS 33
Market Fund shares you acquire in an exchange, provided you hold your shares for
at least one year from your initial purchase date. If you exchange Flex Shares
of any Fund for Investor Shares of a Money Market Fund, you may only exchange
those Money Market Fund Investor Shares for Flex Shares.
TRANSACTIONS OVER THE TELEPHONE
Telephone redemption and exchange transactions are extremely convenient, but
not without risk. To try to keep your telephone transactions as safe, secure,
and risk free as possible, the Trust has developed certain safeguards and
procedures for determining the identity of callers and authenticity of
instructions. As a result, neither the Trust nor its Transfer Agent will be
responsible for any loss, liability, cost, or expense for following telephone or
wire instructions they reasonably believed to be genuine. If you choose to make
telephone transactions, you will generally bear the risk of any loss.
DIVIDENDS AND DISTRIBUTIONS
Income dividends are paid quarterly by each of the Funds, except the
International Equity Index Fund and International Equity Fund. These Funds pay
income dividends annually. If you own Fund shares on a Fund's record date, you
will be entitled to receive dividends. The Funds make distributions of capital
gains at least annually.
You will receive dividends and distributions in the form of additional Fund
shares unless you have elected to receive payment in cash. To elect cash
payment, you must notify the Transfer Agent in writing prior to the date of
distribution. Your election will be effective for dividends paid after the
Transfer Agent receives your written notice. To cancel your election, simply
send written notice to the Transfer Agent.
TAX INFORMATION
The following is a summary of some important tax issues that affect the
Funds and their Shareholders. The summary is based on current tax laws, which
may be changed by legislative, judicial or administrative action. We have not
tried to present a detailed explanation of the tax treatment of the Funds or
their Shareholders. MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF
ADDITIONAL INFORMATION. WE URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING
SPECIFIC QUESTIONS AS TO FEDERAL, STATE, AND LOCAL INCOME TAXES.
TAX STATUS OF EACH FUND
Each Fund is treated as a separate entity for Federal income tax purposes
and intends to qualify for the special tax treatment afforded regulated
investment companies. As long as a Fund qualifies as a regulated investment
company, it pays no Federal income tax on the earnings it distributes to
Shareholders.
<PAGE>
34 PROSPECTUS
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute substantially all of its income. THE INCOME
DIVIDENDS YOU RECEIVE FROM THE FUNDS WILL BE TAXED AS ORDINARY INCOME WHETHER
YOU RECEIVE THE DIVIDENDS IN CASH OR IN ADDITIONAL SHARES.
Corporate shareholders may be entitled to a dividends-received deduction for
the portion of dividends they receive which are attributable to dividends
received by a Fund from U.S. corporations.
Capital gains dividends will be treated as gain from the sale or exchange of
a capital asset held for more than 1 year.
Distributions paid in January but declared as dividends by a Fund in
October, November or December of the previous year, may be taxable to you in the
previous year.
TAX STATUS OF SHARE TRANSACTIONS
EACH SALE, EXCHANGE, OR REDEMPTION OF FUND SHARES IS A TAXABLE EVENT TO YOU.
TAX MANAGEMENT
The Funds use a tax management technique known as "highest in, first out."
Through this technique, a Fund's portfolio holdings which have experienced the
smallest gain or largest loss are sold first in an effort to minimize capital
gains and enhance after-tax returns.
FOREIGN TAX CONSIDERATIONS
Shareholders of the International Equity Index and International Equity
Funds may be entitled to a foreign tax deduction or credit.
STATE TAX CONSIDERATIONS
A Fund is not liable for any income or franchise tax in Massachusetts as
long as it qualifies as a regulated investment company for Federal income tax
purposes.
Distributions by the Funds to you may be subject to state and local
taxation. You should verify your tax liability with your tax advisor.
STI CLASSIC FUNDS INFORMATION
THE TRUST
The Trust is organized as a Massachusetts business trust. The Trust is
permitted to offer separate portfolios of shares and different classes of each
Fund. All payments received by the Trust for shares of any Fund belong to that
Fund. Each Fund has its own assets and liabilities.
BOARD OF TRUSTEES
The Trustees supervise the management and affairs of the Trust. The Trustees
have approved contracts with certain companies that provide the Trust with
essential management services.
<PAGE>
PROSPECTUS 35
GENERAL INFORMATION
VOTING RIGHTS
You receive one vote for every full Fund share owned. Each Fund or class of
a Fund will vote separately on matters relating solely to that Fund or class.
As a Massachusetts business trust, the Trust is not required to hold annual
Shareholder meetings unless otherwise required by the Investment Company Act.
However, a meeting may be called by Shareholders owning at least 10% of the
outstanding shares of the Trust. If a meeting is requested by Shareholders, the
Trust will provide appropriate assistance and information to the Shareholders
who requested the meeting.
REPORTING
You will receive the Trust's unaudited financial information and audited
financial statements. In addition, the Trust will send you proxy statements and
other reports. If you are a customer of a financial institution that has
purchased shares of a Fund for your account, you may, depending upon the nature
of your account, receive all or a portion of this information directly from your
financial institution.
SHAREHOLDER INQUIRIES
You may call your financial institution or 1-800-874-4770 to obtain
information on account statements, procedures, and other related information.
INVESTMENT ADVISORS
The Advisors make investment decisions for the assets of the Funds and
continuously review, supervise, and administer their Fund's respective
investment program. The Trustees of the Trust supervise the Advisors and
establish policies that the Advisors must follow in their day-to-day management
activities.
STI Capital Management, N.A. (STI Capital) 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, 1997, STI Capital had
approximately $12.4 billion in assets under management. The principal business
address of STI Capital is P.O. Box 3808, Orlando, Florida 32802. For the fiscal
year ended May 31, 1997, STI Capital received advisory fees computed daily and
paid monthly at the annual rate included in each Fund's ANNUAL FUND OPERATING
EXPENSES summary.
Trusco Capital Management, Inc. (Trusco) serves as the Advisor to the
Sunbelt Equity Fund. As of May 31, 1997, Trusco had approximately $17.4 billion
in assets under management. The principal business address of Trusco is 50 Hurt
Plaza, Suite 1400, Atlanta, Georgia 30303. For the fiscal year ended May 31,
1997, Trusco received advisory fees computed daily and paid monthly at the
annual rate included in each Fund's ANNUAL FUND OPERATING EXPENSES summary.
<PAGE>
36 PROSPECTUS
STI Capital and Trusco serve as joint advisors to the International Equity
Index Fund.
The Advisors are indirect wholly-owned subsidiaries of SunTrust Banks, Inc.
(SunTrust). SunTrust is a southeastern regional bank holding company with assets
of $52.5 billion, as of December 31, 1996. SunTrust is one of the 20 largest
banking companies in the U.S. Its three principal subsidiaries, SunTrust Banks
of Florida, Inc., SunTrust Banks of Georgia, Inc., and SunTrust Banks of
Tennessee, Inc., provide a wide range of personal and corporate banking, trust,
and investment services through more than 600 locations in the tri-state area.
SunTrust Banks, Inc. has discretionary assets under management of approximately
$53.4 billion, as of December 31, 1996.
The Advisors may use their affiliates as brokers for the Funds' portfolio
transactions.
DISTRIBUTION
SEI Investments Distribution Co. (the Distributor), a wholly-owned
subsidiary of SEI Investments Company, serves as each Fund's distributor under a
Distribution Agreement.
The Investor Shares of each fund have a Distribution Plan. Under the
Distribution Agreement and Plan, the Distributor is entitled to receive an
annual fee of up to:
- .68% of the average daily net assets of the Capital Growth Fund;
- .33% of the average daily net assets of the Value Income Stock and
International Equity Funds;
- .43% of the average daily net assets of the Mid-Cap Equity and Sunbelt
Equity Funds;
- .28% of the average daily net assets of the Balanced Fund; and
- .38% of the average daily net assets of the International Equity Index
Fund.
The Distributor may use this fee:
- as compensation for its distribution-related services or shareholder
services or
- to compensate financial institutions and intermediaries, such as banks
(including SunTrust Banks, Inc.'s affiliate and correspondent banks),
savings and loan associations, insurance companies, investment counselors,
broker-dealers, and the Distributor's affiliates and subsidiaries for
performing distribution-related or shareholder services.
Flex Shares of each Fund have a Distribution Plan. Under the Distribution
Agreement and Plan, the Distributor is entitled to recover up to .75% of the
average daily assets of the Flex Shares of each Fund.
The Distributor may use these fees:
- as compensation for its distribution-related services or shareholder
services; or
- to compensate financial institutions and intermediaries, such as banks
(including Suntrust Banks, Inc.'s affiliates and subsidiaries) for
performing distribution-related or shareholder services.
The Distributor may waive all, or a portion of its fees to limit Total Fund
Operating Expenses.
<PAGE>
PROSPECTUS 37
Flex Shares also have a service fee of up to .25% of the average daily net
assets of the Flex Shares of each Fund. The service fee may be used for personal
service and maintenance of shareholder accounts.
The Distributor may waive all, or a portion of its fee to limit Total Fund
Operating Expenses.
A prospective investor may visit any one of the Investment Services offices
of SunTrust Banks, Inc.'s affiliate banks (as listed on the last pages of this
Prospectus), SunTrust Securities, Inc., or certain correspondent banks of
SunTrust Banks, Inc. to receive copies of the Prospectuses for the Investor and
Flex Shares of the Trust and application forms.
Each Fund may use the Distributor as its broker for portfolio transactions.
The Distributor receives compensation for its brokerage services.
At times, the Distributor may use its own funds to provide promotional
incentives, in the form of cash or other compensation, to financial institutions
whose representatives have sold or are expected to sell significant amounts of
Fund shares.
Trust Shares of the Funds are offered without a sales charge or distribution
fee primarily to financial institutions, and are described in a separate
prospectus. You may call 1-800-874-4770 to receive more information about Trust
Shares. Certain financial institutions may offer different classes of shares to
their customers. As a result, financial institutions may receive different
compensation with respect to different classes of shares.
ADMINISTRATION
SEI Fund Resources acts as the Trust's Administrator. For its administrative
services, the Administrator is entitled to a fee, which is calculated daily and
paid monthly, at an annual rate as follows:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE NET ASSETS FEE
<S> <C>
- -----------------------------------------------------------------------------------------------------
$1 -- $1 billion 0.12%
over $1 billion to $5 billion 0.09%
over $5 billion to $8 billion 0.07%
over $8 billion to $10 billion 0.065%
over $10 billion 0.06%
</TABLE>
The Administrator may voluntarily waive all or a portion of its fees to
limit Total Fund Operating Expenses.
<PAGE>
38 PROSPECTUS
FUND INVESTMENTS
% = Maximum percentage permissible. All percentages shown are of total assets,
except for illiquid securities, which are shown as a percentage of net assets.
X = No policy limitation; Fund may be using currently.
* = Permitted, but not typically used.
- -- = Not permitted.
<TABLE>
<CAPTION>
CAPITAL VALUE SMALL CAP MID-CAP SUNBELT INTERNATIONAL INTERNATIONAL
GROWTH INCOME EQUITY EQUITY EQUITY EQUITY INDEX EQUITY
FUND FUND FUND FUND BALANCED FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TRADITIONAL INVESTMENTS
ADRs 35% 35% X(6) 35% 75% -- X(3) X(3)
Bank Obligations -- -- -- -- 60% -- 35% 35%
Covertible Securities X 35% X X 70% X(2) X X
Corporate Debt Obligations 35%(2) 20%(2) -- 20%(2) 60%(5)(,)(7) -- -- 35%(2)
Equity Securities X X X X 70% X X X
Investment Company Shares 10% 10% 10% 10% 10% 10% 10% 10%
Mortgage-Backed Securities -- * * * 60%(1) -- -- *
Pay-In-Kind Securities 35% -- -- -- 75% -- -- --
Repurchase Agreements 35% 35% * 20% 75% 35% 35% *
Restricted Securities 15% 15% 15% 15% 15% 15% 15% 15%
Securities of Foreign * * X 35%(2) 60% -- X X
Issuers
Supranational Agency -- -- X 20%(2) 60% -- -- --
Obligations
U.S. Treasury and -- 20% -- -- 60% -- -- 35%
Government Agency
Obligations
Zero Coupon Obligations -- -- -- -- 60% -- -- --
INVESTMENT PRACTICES
Borrowing 33 1/3 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3%
Illiquid Securities 15% 15% 15% 15% 15% 15% 15% 15%
Securities Lending 33 1/3 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3%
When Issued Securities 33 1/3 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3%
Standby Commitments X X X X X X X X
LEVERAGING AND HEDGING TOOLS
Forward Foreign Currency -- -- -- -- -- -- X X
Contracts
Futures and Options on -- 20% -- -- 75% 20% 20% 35%
Futures
Options -- 20% 35% -- 75% 35% X(4) X(4)
Swaps, Caps, Floors, and -- -- -- -- 75% -- -- --
Collars
Variable and Floating Rate -- * -- X X -- -- --
Instruments
</TABLE>
(1) INCLUDING UP TO 25% PRIVATELY-ISSUED MORTGAGE-BACKED SECURITIES. THE
BALANCED FUND MAY ALSO PURCHASE ASSET-BACKED SECURITIES.
(2) MAY INVEST UP TO 10% OF ITS ASSETS IN HIGH YIELD SECURITIES.
(3) MAY ALSO INVEST IN EDRS.
(4) INCLUDES OPTIONS ON CURRENCIES.
(5) UP TO 25% OF ITS ASSETS MAY BE INVESTED IN SECURITIES RATED BBB OR Baa, OR
THEIR UNRELATED EQUIVALENTS.
(6) MAY INVEST UP TO 20% IN UNSPONSORED ADRS.
(7) WILL INVEST AT LEAST 25% IN SENIOR FIXED-INCOME SECURITIES.
Under normal market conditions, the Funds will follow the practices and
policies outlined above. However, for temporary defensive purposes during
periods when its Adviser determines that market conditions warrant 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 senior fixed income securities rated investment grade and securities issued
by mid- to large-cap companies. When the Funds are investing for temporary
defensive purposes, they will not be pursuing their respective investment
objectives.
<PAGE>
PROSPECTUS 39
INVESTMENT RESTRICTIONS
Each Fund will not invest more than 25% of its assets in any one industry.
With respect to 75% of its assets, each Fund will not:
- invest more than 5% of its assets in the securities of any one issuer.
- purchase more than 10% of the outstanding voting securities of any one
issuer.
MORE ABOUT INVESTMENTS AND HEDGING TOOLS
The following is a description of some of the permitted investments for the
Funds. Further discussion is contained in the SAI.
AMERICAN DEPOSITARY RECEIPTS (ADRs) AND EUROPEAN DEPOSITARY RECEIPTS (EDRs)
are securities, typically issued by a U.S. financial institution or a non-U.S.
financial institution in the case of an EDR (a depositary). The institution has
ownership interests in a security, or a pool of securities, issued by a foreign
issuer and deposited with the depositary. ADRs and EDRs may be available through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the security underlying the receipt and a depositary.
An unsponsored facility may be established by a depositary without participation
by the issuer of the underlying security.
ASSET-BACKED SECURITIES are securities backed by non-mortgage assets such as
company receivables, truck and auto loans, leases, and credit card receivables.
These securities are generally issued as pass-through certificates, which
represent undivided fractional ownership interests in the underlying pools of
assets. Asset-backed securities may also be DEBT OBLIGATIONS, which are also
known as collateralized obligations and are generally issued as the debt of a
special purpose entity, such as a trust, organized solely for the purpose of
owning these assets and issuing DEBT 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.
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 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.
CORPORATE DEBT SECURITIES are DEBT OBLIGATIONS issued by corporations with
maturities exceeding 270 days.
DEBT OBLIGATIONS represent money borrowed that obligates the issuer, (E.G.,
a corporation, municipality, government, government agency) to repay the
borrowed amount at maturity (when the
<PAGE>
40 PROSPECTUS
obligation is due and payable) and usually to pay the holder interest at
specific times E.G., bonds, notes, debentures).
EQUITY SECURITIES include COMMON AND PREFERRED STOCKS, WARRANTS, RIGHTS to
subscribe to common stock and CONVERTIBLE SECURITIES. These securities may be
publicly and privately issued.
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. The Fund may realize a gain or
loss from currency transactions.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS provide for the future
sale by one party and purchase by another party of a specified amount of a
specific security at a specified future time and at a specified price. An option
on a futures contract gives the purchaser the right, in exchange for a premium,
to assume a position in a futures contract at a specified exercise price during
the term of the option.
A Fund may use futures contracts, and related options, for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired. They may also be used to minimize fluctuations in foreign currencies
or to gain exposure to a particular market or instrument. A Fund will minimize
the risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges.
Index futures are futures contracts for various indices that are traded on
registered securities exchanges. An index futures contract obligates the seller
to deliver (and the purchaser to take) an amount of cash equal to a specific
dollar amount times the difference between the value of a specific index at the
close of the last trading day of the contract and the price at which the
agreement is made.
HIGH YIELD SECURITIES are DEBT OBLIGATIONS rated below INVESTMENT GRADE,
I.E., below BBB by S&P or Baa by Moody's or their unrated equivalents. See "Risk
Considerations: High Yield Securities" for more information.
ILLIQUID SECURITIES are securities that cannot be disposed of within seven
business days at approximately the price at which they are being carried on the
Fund's books.
INVESTMENT COMPANY SHARES are shares of other mutual funds which may be
purchased by the Funds to the extent consistent with applicable law. Closed-end
mutual funds usually trade at a discount from net asset value.
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.
<PAGE>
PROSPECTUS 41
MONEY MARKET INSTRUMENTS are high quality, dollar-denominated, SHORT-TERM
OBLIGATIONS, including BANK OBLIGATIONS, U.S. TREASURY OBLIGATIONS, U.S.
GOVERNMENT AGENCY OBLIGATIONS issued or guaranteed by the agencies or
instrumentalities of the U.S. Government, and SHORT-TERM CORPORATE OBLIGATIONS.
MORTGAGE-BACKED SECURITIES are instruments that entitle the holder to a
share of all interest and principal payments from mortgages underlying the
security. The mortgages backing these securities include conventional fifteen-
and thirty-year fixed rate mortgages, graduated payment mortgages, adjustable
rate mortgages, and floating rate mortgages.
During periods of declining interest rates, prepayment of mortgages
underlying mortgage-backed securities may accelerate. It is often not possible
to predict accurately the average life or realized yield of a particular issue.
GOVERNMENT PASS-THROUGH SECURITIES are securities issued or guaranteed by a
U.S. Government agency representing an interest in a pool of mortgage loans.
Government and private guarantees do not extend to the securities' value, which
is likely to vary inversely with fluctuations in interest rates.
PRIVATE PASS-THROUGH SECURITIES are mortgage-backed securities issued by a
non-governmental entity, such as a trust. While they are generally structured
with one or more types of credit enhancement, private pass-through securities
typically lack a guarantee by an entity having the credit status of a
governmental agency or instrumentality.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS) are DEBT OBLIGATIONS or
multi-class pass-through certificates issued by agencies or instrumentalities of
the U.S. Government, or by private originators, or investors in mortgage loans.
Each class of a CMO is issued with a specific fixed or floating interest rate
and has a stated maturity or final distribution date.
REMICS are CMOs that qualify for special tax treatment under the Internal
Revenue Code. They invest in certain mortgages that are principally secured by
interests in real property. These securities are often guaranteed as to the
payment of principal and/or interest as payments are required to be made on the
underlying mortgage participation certificates.
STRIPPED MORTGAGE-BACKED SECURITIES (SMBS) are usually structured with two
classes that receive specified proportions of the monthly interest and principal
payments from a pool of mortgage securities. One class may receive all of the
interest payments, and the other class may receive all of the principal
payments. SMBs are extremely sensitive to changes in interest rates because of
the impact of prepayment of principal on the underlying mortgage securities.
OPTIONS -- The buyer of an option acquires the right to buy (a call option)
or sell (a put option) a certain quantity of a security (the underlying
security) or instrument at a certain price up to a specified point in time. The
seller or writer of an option is obligated to sell (a call option) or buy (a put
option) the underlying security. All options written by a Fund will be
"covered," which means that the Fund will own an equal amount of the underlying
currency ("options on currencies") or security. With respect to put options
written by the Fund, the Fund will establish a segregated
<PAGE>
42 PROSPECTUS
account with its custodian bank consisting of cash or cash equivalents in an
amount equal to the amount the Fund would be required to pay upon exercise of
the put option.
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 are agreements by which a Fund obtains a security and
simultaneously agrees to return the security to the seller at an agreed upon
price on an agreed upon date within a number of days from the date of purchase.
A Fund will enter into repurchase agreements only with financial institutions
deemed to present minimal risk of bankruptcy during the term of the agreement
based on established guidelines.
RESTRICTED SECURITIES are securities that may not be sold freely to the
public absent registration under the Securities Act of 1933 or an exemption from
registration. The Trust's Board of Trustees has adopted procedures for
determining the liquidity of restricted securities.
RIGHTS give existing shareholders of a corporation the right, but not the
obligation, to buy shares of the corporation at a given price, usually below the
offering price, during a specified period.
SECURITIES LENDING -- To generate additional income, a Fund may lend
securities which it owns under agreements requiring that the loan be
continuously secured by collateral equal to at least 100% of the market value of
the loaned securities. A Fund continues to receive interest on the loaned
securities while simultaneously earning interest on the investment of cash
collateral.
SECURITIES OF FOREIGN ISSUERS are securities issued by foreign corporations,
including foreign branches of U.S. banks and foreign banks, and by foreign
governments or their agencies or instrumentalities.
SENIOR FIXED INCOME SECURITIES are DEBT OBLIGATIONS that pay a fixed rate of
return.
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 -- Securities subject to standby commitments or
puts permit the holder to sell the securities at a fixed price prior to
maturity. Securities subject to a standby commitment or put may be sold at any
time at the current market price. However, unless the standby commitment or put
was an integral part of the security as originally issued, it may not be
marketable or assignable.
SUPRANATIONAL AGENCY OBLIGATIONS are obligations established through the
joint participation of several governments, including the Asian Development
Bank, the Inter-American Development Bank, International Bank for Reconstruction
and Development (World Bank), African Development Bank, European Economic
Community, European Investment Bank, and the Nordic Investment Bank.
SWAPS, CAPS, FLOORS, and COLLARS -- Swaps, caps, floors, and collars are
hedging tools designed to permit the purchaser to preserve a return or spread on
a particular investment or portion
<PAGE>
PROSPECTUS 43
of its portfolio. They are also used to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date. Swap
agreements are sophisticated hedging instruments that typically involve a small
investment of cash relative to the magnitude of risk assumed. As a result, swaps
can be highly volatile and have a considerable impact on a Fund's performance.
U.S. GOVERNMENT AGENCY OBLIGATIONS are obligations issued or guaranteed by
agencies or instrumentalities of the U.S. Government. Some of these securities
are supported by the full faith and credit of the U.S. Treasury, others are
supported by the right of the issuer to borrow from the Treasury, and others are
supported only by the credit of the agency or instrumentality.
U.S. TREASURY OBLIGATIONS consist of bills, notes, and bonds issued by the
U.S. Treasury. They also consist of separately traded interest and principal
component parts of these obligations that are transferable through the Federal
book-entry system known as Separately Traded Registered Interest and Principal
Securities (STRIPS).
VARIABLE AND FLOATING RATE INSTRUMENTS 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.
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 AND DELAYED DELIVERY SECURITIES involve the purchase of an
instrument with payment and delivery taking place in the future. Delivery of,
and payment for, these securities may occur a month or more after the date of
the purchase commitment. The interest rate realized on these securities is fixed
as of the purchase date and no interest accrues to the Fund before settlement.
ZERO COUPON OBLIGATIONS are DEBT 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.
<PAGE>
44 PROSPECTUS
UPDATED DIRECTORY
TRUST AND INVESTMENT SERVICES OFFICES OF SUNTRUST BANKS, INC. AFFILIATE BANKS:
FLORIDA: (STATEWIDE TOLL FREE) 1-800-526-1177
SUNTRUST SECURITIES, INC. --
FLORIDA
200 S. Orange Avenue
Tower 1
Orlando, FL 32801
(407) 237-4380
1-800-432-4760, ext. 4380
501 E. Las Olas Boulevard
Ft. Lauderdale, FL 33301
(954) 765-7575
777 Brickell Avenue
Miami, FL 33131
(305) 579-7331
401 E. Jackson Street
Tampa, FL 33602
(813) 224-2484
111 E. Osceola Street
Stuart, FL 34994
(561) 223-6005
120 S. Ridgewood Avenue
Daytona Beach, FL 32114
(904) 258-2546
200 W. Forsyth Street
Jacksonville, FL 32202
(904) 632-2852
801 Laurel Oak Drive
Naples, FL 34108
(941) 598-0515
1777 Main Street
Sarasota, FL 34236
(941) 951-3218
210 Security Square
Winter Haven, FL 33880
(941) 297-6855
One East Jefferson Street
Brooksville, FL 34601
(352) 754-5798
203 E. Silver Springs Boulevard
Ocala, FL 34470
(352) 368-6477
3522 Thomasville Road
Suite 500
Tallahassee, FL 32308
(850) 298-1537
11 Hoffman Drive
Gulf Breeze, FL 32561
(850) 435-1264
GEORGIA:
SUNTRUST SECURITIES, INC. -- GEORGIA
55 Park Place
First Floor
Atlanta, GA 30303
(404) 588-8108
1-800-600-6350
101 N. Lumpkin Street
Athens, GA 30601
(706) 354-5347
100 East Second Avenue
Rome, GA 30161
(706) 236-4325
2815 Wrightsboro Road
Augusta, GA 30909
(706) 821-2155
606 Cherry Street
Macon, GA 31201
(912) 755-5175
1246 First Avenue
Columbus, GA 31901
(706) 649-3645
33 Bull Street, Suite 208
Savannah, GA 31401
(912) 944-1165
<PAGE>
PROSPECTUS 45
410 W. Broad Avenue
Albany, GA 31701
(912) 430-5468
510 Gloucester Street
Brunswick, GA 31520
(912) 262-5322
TENNESSEE:
SUNTRUST SECURITIES, INC. -- TENNESSEE
424 Church Street
4th Floor
Nashville, TN 37219
(615) 748-4471
1-800-932-2652
736 Market Street
13th Floor
Chattanooga, TN 37402
(423) 757-3085
TN WATS 1-800-572-7306, Ext. 3085
Bordering States WATS
1-800-874-1083, Ext. 3085
Out of State WATS
1-800-251-6266, Ext. 3085
9950 Kingston Pike
Knoxville, TN 37922
(423) 544-2201
1-800-526-1177
207 Mockingbird Lane
Johnson City, TN 37604
(423) 461-1005
25 Public Square
Lawrenceburg, TN 38464
(615) 766-1336
ALABAMA:
SUNTRUST SECURITIES, INC. -- ALABAMA
201 South Court Street
Florence, AL 35630
(205) 767-8507
<PAGE>
46 PROSPECTUS
<TABLE>
<S> <C> <C>
STI CLASSIC FUNDS ORGANIZATIONAL OVERVIEW
* INVESTMENT ADVISORS
Trusco Capital Management, Inc. 50 Hurt Plaza
Suite 1400
Atlanta, GA 30303
STI Capital Management, N.A. P.O. Box 3808
Orlando, FL 32802
* DISTRIBUTOR
SEI Investments Distribution Co. Oaks, PA 19456
* ADMINISTRATOR
SEI Fund Resources Oaks, PA 19456
* TRANSFER AGENT
Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779
* CUSTODIAN
SunTrust Bank, Atlanta c/o STI Trust & Investment
Operations, Inc.
303 Peachtree Street N.E.
14th Floor
Atlanta, GA 30308
The Bank of New York One Wall Street
(International Equity Fund and New York, New York 10286
International Equity Index Fund only)
* LEGAL COUNSEL
Morgan, Lewis & Bockius LLP 1800 M Street, N.W.
Washington, D.C. 20036
* INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen, LLP 1601 Market Street
Philadelphia, PA 19103
</TABLE>
<PAGE>
PROSPECTUS 47
Additional information about the Funds is included in the SAI dated October
1, 1997. The SAI has been filed with the SEC and is incorporated by reference
into this Prospectus. You may obtain a copy of the SAI, or of the annual or
semi-annual reports, without charge by calling 1-800-874-4770, or by contacting
the Distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456.
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE TRUST'S SAI IN
CONNECTION WITH THE OFFERING OF FUND SHARES. DO NOT RELY ON ANY SUCH INFORMATION
OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE DISTRIBUTOR.
<PAGE>
Blank Page
<PAGE>
STI CLASSIC FUNDS
SUPPLEMENT DATED APRIL 10, 1998 TO
THE STATEMENT OF ADDITIONAL INFORMATION DATED OCTOBER 1, 1997
THIS SUPPLEMENT SUPERSEDES AND REPLACES ANY EXISTING SUPPLEMENTS TO THE
STATEMENT OF ADDITIONAL INFORMATION, AND PROVIDES NEW AND ADDITIONAL INFORMATION
BEYOND THAT CONTAINED IN THE STATEMENT OF ADDITIONAL AND SHOULD BE RETAINED AND
READ IN CONJUNCTION WITH THE STATEMENT OF ADDITIONAL INFORMATION.
At a meeting held on February 18, 1998, the Trustees of the STI Classic
Funds elected two new Trustees to the Board. The following two paragraphs should
be added to page 26 in the Statement of Additional Information:
"Jonathan T. Walton (3/28/30) - Trustee-Retired. Executive Vice President,
NBD Bank, N.A. and NDB Bancorp, October 1956-March 1995. Trustee, W.K.
Kellogg Trust.
"William H. Cammack (11/24/29) - Trustee*-Chairman & Director, SunTrust
Equitable Securities Corporation, January 1998-present. Chairman & CEO,
Equitable Asset Management, Inc., December 1993-present. Chairman & CEO,
Equitable Trust Company, June 1991-present. Chairman, Equitable Securities
Corporation, July 1972-January 1998."
Messrs. Looney, Goodrum, McNair, Hall, and Cammack Trustees of the STI
Classic Funds (the "Trust"), may be deemed "interested persons" of the Trust as
defined in the Investment Company Act of 1940. The remaining Trustees, Messrs.
Germany, Gooch, and Walton, and Professor Sliger, are not considered "interested
persons" of the Trust. Accordingly, an asterisk (*) should be added on page B-25
of the Statement of Additional Information after the word "Trustee" with respect
to Messrs. Looney, Goodrum, and McNair.
In addition, the biographical information on page 26 for Professor Sliger
should be replaced with the following information:
"DR. BERNARD F. SLIGER (9/30/24) - Trustee-Director, Stavros Center for
Economic Education, Florida State University, 1991-present. President of
Florida State University, 1976-1991; previous 4 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."
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
STI CLASSIC FUNDS
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
SUPPLEMENT DATED APRIL 9, 1998 TO
THE STATEMENT OF ADDITIONAL INFORMATION DATED OCTOBER 1, 1997
THIS SUPPLEMENT SUPERSEDES AND REPLACES ANY EXISTING SUPPLEMENTS TO THE
STATEMENT OF ADDITIONAL INFORMATION, AND PROVIDES NEW AND ADDITIONAL INFORMATION
BEYOND THAT CONTAINED IN THE STATEMENT OF ADDITIONAL AND SHOULD BE RETAINED AND
READ IN CONJUNCTION WITH THE STATEMENT OF ADDITIONAL INFORMATION.
At a meeting held on February 18, 1998, the Trustees of the STI Classic
Funds elected two new Trustees to the Board. The following two paragraphs should
be added to page 12 in the Statement of Additional Information:
"Jonathan T. Walton (3/28/30) - Trustee-Retired. Executive Vice President,
NBD Bank, N.A. and NDB Bancorp, October 1956-March 1995. Trustee, W.K.
Kellogg Trust.
"William H. Cammack (11/24/29) - Trustee*-Chairman & Director, SunTrust
Equitable Securities Corporation, January 1998-present. Chairman & CEO,
Equitable Asset Management, Inc., December 1993-present. Chairman & CEO,
Equitable Trust Company, June 1991-present. Chairman, Equitable Securities
Corporation, July 1972-January 1998."
Messrs. Looney, Goodrum, McNair, Hall, and Cammack Trustees of the STI
Classic Funds (the "Trust"), may be deemed "interested persons" of the Trust as
defined in the Investment Company Act of 1940. The remaining Trustees, Messrs.
Germany, Gooch, and Walton, and Professor Sliger, are not considered "interested
persons" of the Trust. Accordingly, an asterisk (*) should be added on page B-25
of the Statement of Additional Information after the word "Trustee" with respect
to Messrs. Looney, Goodrum, and McNair.
In addition, the biographical information on page 12 for Professor Sliger
should be replaced with the following information:
"DR. BERNARD F. SLIGER (9/30/24) - Trustee-Director, Stavros Center for
Economic Education, Florida State University, 1991-present. President of
Florida State University, 1976-1991; previous 4 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."
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
<PAGE>
STI CLASSIC FUNDS
SUPPLEMENT DATED APRIL 10, 1998
TENNESSEE TAX-EXEMPT BOND FUND
THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT
CONTAINED IN THE PROSPECTUSES AND SHOULD BE RETAINED AND READ IN CONJUNCTION
WITH THE PROSPECTUSES.
Effective April 13, 1998, the STI Classic Funds Tennessee Tax-Exempt
Bond Fund will cease operations and will be closed to all investors.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE.
