STI CLASSIC FUNDS, 497, 1999-05-28

STI CLASSIC FUNDS
497, 1999-05-28

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<PAGE>
PROSPECTUS
HOW TO READ
THIS PROSPECTUS

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

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

28 U.S. TREASURY MONEY MARKET FUND
30 VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND*
32 VIRGINIA MUNICIPAL BOND FUND*

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
34 EACH FUND'S PRINCIPAL INVESTMENTS
35 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
38 PURCHASING, SELLING AND EXCHANGING FUND SHARES
39 HISTORICAL FINANCIAL INFORMATION
42 DIVIDENDS AND DISTRIBUTIONS

42 TAXES
TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC
FUNDS PLEASE REFER TO THE BACK COVER OF THE
PROSPECTUS
</TABLE>

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

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

FUND EXPENSES
FUND INVESTMENTS
INVESTMENT ADVISORS
PURCHASING FUND SHARES

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

OCTOBER 1, 1998 *MAY 24, 1999
(AS SUPPLEMENTED MAY 24, 1999)
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

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

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

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

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

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

SEI Investments Mutual Funds Services serves as Administrator to the Funds. The
fees paid for administrative services are included in the "Other Expenses"
figure of the "Fund Expenses" table on the following pages. In the course of
performing its many duties, the Administrator may select brokers, dealers and
other administrators, including affiliates of SunTrust Banks, Inc., to provide
distribution and/or other administrative services for which they will receive
fees from the Administrator. These fees are paid by the Administrator and are
not additional fees paid by the Funds.

SUNTRUST BANK, ATLANTA SERVES AS CUSTODIAN OF THE ASSETS OF THE FUNDS. SUNTRUST
BANK, ATLANTA AND THE ADVISORS ARE OWNED BY SUNTRUST BANKS, INC. THE FEES PAID
FOR CUSTODIAN SERVICES ARE INCLUDED IN THE "OTHER EXPENSES" FIGURE OF THE "FUND
EXPENSES" TABLE ON THE FOLLOWING PAGES. LAST FISCAL YEAR, THE FUNDS PAID
SUNTRUST BANK, ATLANTA $464,076.48 FOR SERVING AS CUSTODIAN.
<PAGE>
2 PROSPECTUS

FLORIDA TAX-EXEMPT BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOALS Current income exempt from federal income taxes
for Florida residents, with shares themselves
expected to be exempt from the Florida intangible
personal property tax
INVESTMENT FOCUS Florida municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest more Fund assets in undervalued
STRATEGY sectors and less in overvalued ones
INVESTOR PROFILE Florida residents who want income exempt
from federal income taxes
</TABLE>

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Jacksonville, Sales Tax
Revenue..................... 3.4%
Orlando, Florida.............. 3.2%
Florida State Div. Bd. Fin.... 3.1%
Brevard County, Florida....... 2.9%
Palm Beach Solid Waste........ 2.6%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Florida Tax-Exempt Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal income taxes, and
the shares themselves are expected to be exempt from the Florida intangible
personal property tax. Issuers of these securities can be located in Florida,
the District of Columbia, Puerto Rico and other U.S. territories and
possessions. In selecting investments for the Fund, we try to limit risk as much
as possible. Based on our analysis of municipalities, credit risk, market trends
and investment cycles, we attempt to invest more of the Fund's assets in
undervalued market sectors and less in overvalued sectors. We also try to
identify and invest in municipal issuers with improving credit and avoid those
with deteriorating credit. We anticipate that the Fund's average weighted
maturity will range from 6 to 25 years. Under unusual circumstances, such as a
national financial emergency or a temporary decline in availability of Florida
obligations, up to 20% of the Fund may be invested in securities relative to the
Florida intangible personal property tax and/or securities that generate income
subject to federal personal income taxes. These securities may include
short-term municipal securities outside Florida or certain taxable fixed income
securities.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in Florida debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Florida subjects the Fund to economic
conditions and government policies of Florida. The Fund is vulnerable to both
federal and Florida state tax law changes. Debt securities may decline in credit
quality due to economic or governmental events. In addition, an issuer may be
unable to make timely payments of principal or interest to the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.18% -1.41%
(3/31/95) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.31%.
<PAGE>
PROSPECTUS 3

FLORIDA TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS (1/25/94)
<S> <C> <C> <C>
FLORIDA TAX-EXEMPT BOND FUND 7.82% 9.09% 6.51%
LEHMAN BROTHERS 10-YEAR MUNICIPAL
BOND INDEX 9.23% 10.19% 6.38%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Brothers 10-Year
Municipal Bond Index is a widely recognized index of long-term investment
grade tax-exempt bonds with maturities between 8 and 12 years. The index
represents various market sectors and geographic locations.

FUND EXPENSES
This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .16%
---------
Total Annual Fund Operating Expenses .81%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$83 $259 $450 $1002
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .51%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
4 PROSPECTUS

GEORGIA TAX-EXEMPT BOND FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Henry County, Georgia......... 3.4%
Dalton Georgia Utilities,
RB.......................... 2.9%
Georgia State................. 2.9%
Henry County, Georgia......... 2.6%
Burke County, Georgia......... 2.6%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Georgia Tax-Exempt Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Georgia
income taxes. Issuers of these securities can be located in Georgia, the
District of Columbia, Puerto Rico and other U.S. territories and possessions. In
selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We try to diversify the Fund's
holdings within Georgia. We also try to identify and invest in municipal issuers
with improving credit and avoid those with deteriorating credit. We anticipate
that the Fund's average weighted maturity will range from 6 to 25 years.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in Georgia debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Georgia subjects the Fund to economic
conditions and government policies of Georgia. Debt securities may decline in
credit quality due to economic or governmental events. In addition, an issuer
may be unable to make timely payments of principal or interest to the Fund.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.02% -.79%
(3/31/95) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.02%.
<PAGE>
PROSPECTUS 5

GEORGIA TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (1/18/94)
<S> <C> <C> <C>
GEORGIA TAX-EXEMPT
BOND FUND 8.17% 8.33% 4.88%
LEHMAN BROTHERS 10-YEAR
MUNICIPAL BOND INDEX 9.23% 10.19% 6.38%
</TABLE>

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .17%
---------
Total Annual Fund Operating Expenses .82%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$84 $262 $455 $1014
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .50%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
6 PROSPECTUS

INVESTMENT GRADE BOND FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
United States Treasury Bond... 11.6%
United States Treasury Bond... 8.6%
United States Treasury Bond... 7.0%
Merrill Lynch................. 4.9%
FNMA.......................... 4.9%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Investment Grade Bond Fund invests primarily in investment grade
corporate debt securities, U.S. Treasury obligations and mortgage-backed
securities. In selecting investments for the Fund, we try to minimize risk while
attempting to outperform selected market indices. Currently, our selected index
is the Lehman Brothers Government/Corporate Bond Index, a widely recognized,
unmanaged index of investment grade government and corporate debt securities. We
seek to invest more in portions of the Index that seem relatively inexpensive,
and less in those that seem expensive. We allocate the Fund's investments among
various market sectors based on our analysis of historical data, yield
information and credit ratings. We anticipate that the Fund's average weighted
maturity will range from 4 to 10 years. Due to the Fund's investment strategy,
the Fund may buy and sell securities frequently. This may result in higher
transaction costs and additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in investment grade debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, an issuer may be unable to
make timely payments of principal or interest to the Fund. Some investment grade
debt securities have speculative characteristics. In addition, the Fund is
subject to the risk of investing in mortgage-backed securities. See
"Mortgage-Backed Securities" to the right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The mortgages
underlying mortgage-backed securities may mature or be paid off before the
stated maturity date. This has four drawbacks. First, the Fund may lose money
on its investment. Second, the monthly income payments to the Fund may
fluctuate. Third, we cannot predict the maturity of the Fund's investment with
certainty. Fourth, we would invest any resulting proceeds elsewhere, generally
at lower interest rates.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.11% -2.67%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 4.31%.
<PAGE>
PROSPECTUS 7

INVESTMENT GRADE BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (7/16/92)
<S> <C> <C> <C>
INVESTMENT GRADE
BOND FUND 9.08% 7.10% 6.96%
LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX 9.75% 7.61% 7.97%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Brothers Government/
Corporate Bond Index is a widely recognized index of government and
corporate debt securities rated investment grade or better, with maturities
of at least 1 year.

<TABLE>
<S> <C>
Investment Advisory Fees .74%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .87%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$89 $278 $482 $1073
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .64%
AND .77%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
8 PROSPECTUS

INVESTMENT GRADE TAX-EXEMPT BOND FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
New York Ser J, GO............ 4.7%
Washington State.............. 3.1%
Illinois State................ 3.0%
King County................... 2.7%
Allegheny Cnty, PA Airport
Rev......................... 2.3%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Investment Grade Tax-Exempt Bond Fund invests primarily in
investment grade tax-exempt obligations, like municipal securities. The issuers
of these securities may be located in any U.S. state, territory or possession.
In selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We also try to identify and
invest in municipal issuers with improving credit and avoid those with
deteriorating credit. We anticipate that the Fund's average weighted maturity
will range from 4 to 10 years. Due to the Fund's investment strategy, the Fund
may buy and sell securities frequently. This may result in higher transaction
costs and capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in investment grade debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. Debt securities may decline in credit
quality due to economic or governmental events. In addition, an issuer may be
unable to make timely payments of principal or interest to the Fund. Some
investment grade bonds may have speculative characteristics.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.07% -3.14%
(3/31/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.70%.
<PAGE>
PROSPECTUS 9

INVESTMENT GRADE TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR G.O. INDEX.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS (10/21/93)
<S> <C> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND 7.80% 9.36% 6.64%
LEHMAN BROTHERS 5-YEAR
G.O. INDEX 6.48% 7.54% 5.33%
</TABLE>

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

<TABLE>
<S> <C>
Investment Advisory Fees .74%
Other Expenses .15%
---------
Total Annual Fund Operating Expenses .89%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$91 $284 $493 $1096
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .62%
AND .77%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
10 PROSPECTUS

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
United States Treasury Note... 15.5%
FHLMC-GNMA Remic.............. 11.1%
FNMA.......................... 8.8%
FHLMC......................... 8.1%
FNMA.......................... 8.1%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY

The Limited-Term Federal Mortgage Securities Fund invests primarily
in U.S. government agency mortgage-backed securities, such as Fannie Mae, GNMA
and collateralized mortgage obligations. These securities typically have an
effective maturity from 1 to 5 years. In selecting investments for the Fund, we
try to identify securities that we expect to perform well in rising and falling
markets. We also attempt to reduce the risk that the underlying mortgages are
pre-paid by focusing on securities that we believe are less prone to this risk.
For example, Fannie Mae or GNMA securities that were issued years ago may be
less prone to pre-payment risk because there have been many opportunities for
pre-payment, but none have occurred. Due to the Fund's investment strategy, the
Fund may buy or sell securities frequently. This may result in higher
transaction costs and capital gains taxes.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. This risk is greater for long-term debt securities than for
short-term debt securities. In addition, the Fund is subject to the risk of
investing in mortgage-backed securities. See "Mortgage-Backed Securities" to the
right.

SIMPLY SPEAKING . . .

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

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
4.05% .32%
(3/31/95) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.84%.
<PAGE>
PROSPECTUS 11

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MERRILL LYNCH 1-5 YEAR
SHORT/INTERMEDIATE U.S. TREASURY INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (6/7/94)
<S> <C> <C> <C>
LIMITED-TERM FEDERAL MORTGAGE
SECURITIES FUND 6.74% 7.76% 6.57%
MERRILL LYNCH 1-5 YEAR SHORT/
INTERMEDIATE U.S. TREASURY INDEX 7.11% 8.08% 7.16%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Merrill Lynch 1-5 Year Short/
Intermediate U.S. Treasury Index is a widely recognized index of U.S.
Treasury securities with maturities 1 year or greater and no more than 5
years.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .78%
</TABLE>

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$80 $249 $433 $966
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .54%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
12 PROSPECTUS

MARYLAND MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income exempt from federal and Maryland income tax, consistent with
preservation of capital
INVESTMENT FOCUS Maryland municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest in investment grade municipal securities
STRATEGY
INVESTOR PROFILE Maryland residents who want income exempt from federal and state income taxes
</TABLE>

INVESTMENT STRATEGY

The Maryland Municipal Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Maryland
income taxes. Issuers of these securities can be located in Maryland, the
District of Columbia, Puerto Rico and other U.S. territories and possessions. In
selecting investments for the Fund, we try to limit risk by buying investment
grade securities. There are no limits on the Fund's average weighted maturity or
on the remaining maturities of individual securities.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in Maryland debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Maryland subjects the Fund to economic
conditions and government policies of Maryland. Because the Fund is
non-diversified the performance of any one holding may have a significant effect
on the whole Fund. Debt securities may decline in credit quality due to economic
or governmental events. In addition, an issuer may be unable to make timely
payments of principal or interest to the Fund.

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.58% -.70%
(6/30/97) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .39%.
<PAGE>
PROSPECTUS 13

MARYLAND MUNICIPAL BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS GENERAL OBLIGATION BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (3/1/96)
<S> <C> <C>
MARYLAND MUNICIPAL
BOND FUND 5.87% 5.11%
LEHMAN BROTHERS GENERAL
OBLIGATION BOND INDEX 6.68% 7.60%
</TABLE>

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .19%
---------
Total Annual Fund Operating Expenses .84%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$86 $268 $466 $1037
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .49%
AND .68%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
14 PROSPECTUS

PRIME QUALITY MONEY MARKET FUND

FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.37% .68%
(6/30/95) (6/30/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.56%.
<PAGE>
PROSPECTUS 15

PRIME QUALITY MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
PRIME QUALITY
MONEY MARKET FUND 5.15% 4.43% 4.28%
IBC/DONOGHUE FIRST
TIER AVERAGE 5.01% 4.32% 4.25%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue First Tier
Average is a widely recognized composite of money market funds that invest
in the highest credit quality short-term money market instruments.

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .78%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$80 $249 $433 $966
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor and Administrator are voluntarily
waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES, OTHER
EXPENSES AND TOTAL OPERATING EXPENSES ARE .51%, .09% AND .60%, RESPECTIVELY.
The Advisor and Administrator could discontinue these voluntary waivers at any
time. For more information about these fees, see "Investment Advisors."
<PAGE>
16 PROSPECTUS

SHORT-TERM BOND FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
United States Treasury Note... 7.1%
United States Treasury Note... 5.4%
U.S. Treasury Stripped........ 4.5%
United States Treasury Note... 4.0%
United States Treasury Note... 3.8%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Short-Term Bond Fund invests primarily in a diversified
portfolio of short- to medium-term investment grade U.S. Treasury, corporate
debt, mortgage-backed and asset-backed securities. The Fund expects that it will
normally maintain an average weighted maturity of approximately 3 years. In
selecting investments for the Fund, we attempt to identify securities that offer
a comparably better investment return for a given level of credit risk. For
example, short-term bonds generally have better returns than money market
instruments, with a fairly modest increase in credit risk and/or volatility. We
manage the Fund from a total return perspective. That is, we make day to day
investment decisions for the Fund with a view towards maximizing returns. We
analyze yields, market sectors and credit risk in an effort to identify
attractive investments with the best risk/reward trade-off.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. In addition, an issuer may be unable to make timely payments of
principal or interest to the Fund. Also, the Fund may invest in bonds rated
"investment grade." Some investment grade bonds may have speculative
characteristics. In addition, the Fund is subject to the risk of investing in
mortgage-backed and asset-backed securities. See "Mortgage-Backed and
Asset-Backed Securities" to the right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED AND
ASSET-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The owner of an
asset-backed security owns a share of the underlying pool of assets, such as
truck and auto loans, leases and credit card receivables. The mortgages,
receivables or other assets underlying these securities may mature or be paid
off before the stated maturity date. This has four drawbacks. First, the Fund
may lose money on its investment. Second, the monthly income payments to the
Fund may fluctuate. Third, we cannot predict the maturing of the Fund's
investment with certainty. Fourth, we would invest any resulting proceeds
elsewhere, generally at lower interest rates.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.76% -.58%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 3.00%.
<PAGE>
PROSPECTUS 17

SHORT-TERM BOND FUND

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

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS (3/15/93)
<S> <C> <C> <C>
SHORT-TERM BOND FUND 6.78% 7.44% 5.45%
SALOMON 1-3 YEAR TREASURY/ GOVERNMENT
SPONSORED/ CORPORATE INDEX 6.67% 7.54% 5.63%
SALOMON ONE YEAR TREASURY BENCHMARK
ON-THE-RUN INDEX 6.10% 6.61% 5.34%
</TABLE>

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .15%
---------
Total Annual Fund Operating Expenses .80%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$82 $255 $444 $990
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .52%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
18 PROSPECTUS

SHORT-TERM U.S. TREASURY SECURITIES FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
United States Treasury Note... 33.4%
United States Treasury Note... 25.0%
United States Treasury Note... 8.5%
United States Treasury Note... 4.9%
United States Treasury Note... 4.5%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Short-Term U.S. Treasury Securities Fund invests exclusively in
short-term U.S. Treasury securities (those with remaining maturities of 3 years
or less). The Fund intends to maintain an average weighted maturity from 1 to 2
years. The Fund offers investors the opportunity to capture the advantage of
investing in short-term bonds over money market instruments. Generally,
short-term bonds offer a comparably better return than money market instruments,
with a modest increase in interest rate risk. We manage the Fund from a total
return perspective. That is, we make day to day investment decisions for the
Fund with a view toward maximizing returns and yield. We try to select those
U.S. Treasury securities that offer the best risk/reward trade-off.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. Treasury securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.61% -.10%
(3/31/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.75%.
<PAGE>
PROSPECTUS 19

SHORT-TERM U.S. TREASURY SECURITIES FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (3/15/93)
<S> <C> <C> <C>
SHORT-TERM U.S. TREASURY SECURITIES
FUND 5.86% 6.31% 4.82%
SALOMON 1-3 YEAR TREASURY/ GOVERNMENT
SPONSORED/ CORPORATE INDEX 6.67% 7.54% 5.63%
SALOMON 6 MONTH TREASURY BILL INDEX 5.41% 5.53% 4.98%
</TABLE>

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

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .20%
---------
Total Annual Fund Operating Expenses .85%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$87 $271 $471 $1049
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .47%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
20 PROSPECTUS

TAX-EXEMPT MONEY MARKET FUND

FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
.92% .45%
(6/30/95) (3/31/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 1.53%.
<PAGE>
PROSPECTUS 21

TAX-EXEMPT MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
TAX-EXEMPT MONEY MARKET FUND 3.23% 2.85% 2.79%
IBC/DONOGHUE TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE 3.14% 2.77% 2.77%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue Tax-Free
Stockbroker & General Purpose Average is a widely recognized composite of
money market funds that invest in short-term municipal securities the income
from which is exempt from Federal taxation.

<TABLE>
<S> <C>
Investment Advisory Fees .55%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .68%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$69 $218 $379 $847
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .49%
AND .62%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
22 PROSPECTUS

TAX-FREE MONEY MARKET FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Tax-Free Money Market Fund invests substantially all of its
assets in money market instruments issued by municipalities and issuers that pay
income exempt from federal income taxes. In selecting investments for the Fund,
we analyze the credit quality and structure of each security to minimize risk.
We actively manage the Fund's average maturity based on current interest rates
and our outlook of the market.

The Fund may invest more than 25% of its assets in money market instruments
issued by issuers located in one or more of the following states: Arizona,
California, Maryland, New Jersey, New York and Pennsylvania, and will invest
more than 25% of its assets in money market instruments issued by issuers
located in Virginia.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

Money market funds invest in high quality, short-term debt securities, commonly
known as money market instruments. These include CDs, bankers' acceptances,
commercial paper, U.S. Treasury securities, some municipal securities, and
repurchase agreements. A money market fund follows strict rules about credit
risk, maturity and diversification of its investments. The Fund's concentration
of investments in securities of issuers located in Virginia subjects the Fund to
economic and government policies of Virginia. An investment in a money market
fund is not a bank deposit. Although a money market fund seeks to keep a
constant price per share of $1.00, you may lose money by investing in a money
market fund.

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.47% .43%
(6/30/90) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .58%.
<PAGE>
PROSPECTUS 23

TAX-FREE MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE IBC/ DONOGHUE FINANCIAL DATA ALL
TAX-FREE AVERAGE.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/15/89)
<S> <C> <C> <C>
TAX-FREE
MONEY MARKET FUND 2.93% 2.92% 3.45%
IBC/FINANCIAL DATA ALL
TAX-FREE AVERAGE 2.93% 2.96% 3.34%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .40%
Other Expenses .11%
----
Total Annual Fund Operating Expenses .51%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$52 $164 $285 $640
</TABLE>

SIMPLY SPEAKING . . .

U.S. GOVERNMENT SECURITIES FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
United States Treasury Note... 5.1%
United States Treasury Bond... 5.0%
GNMA.......................... 4.7%
FHLMC......................... 3.8%
FNMA Remic.................... 3.2%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The U.S. Government Securities Fund invests primarily in U.S.
government debt securities, such as mortgage-backed securities and U.S. Treasury
obligations. In an attempt to provide a consistently high dividend without
adding undue risk, the Fund focuses its investments in mortgage-backed
securities. The average maturity of the Fund's portfolio will typically range
from 7 to 14 years.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. government debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, the Fund is subject to the
risk of investing in mortgage-backed securities. See "Mortgage-Backed
Securities" to the right.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.89% -2.24%
(6/30/95) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 3.90%.
<PAGE>
PROSPECTUS 25

U.S. GOVERNMENT SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT
BOND INDEX.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 3 YEARS (7/31/94)
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES FUND 8.94% 9.44% 7.73%
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT BOND INDEX 7.72% 8.65% 7.55%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Brothers Intermediate
Government Bond Index is a widely recognized index of U.S. Treasury
securities and government agency securities with maturities ranging from 1
to 10 years.

<TABLE>
<S> <C>
Investment Advisory Fees .74%
Other Expenses .19%
---------
Total Annual Fund Operating Expenses .93%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$95 $296 $515 $1143
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .58%
AND .77%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
26 PROSPECTUS

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.36% .65%
(6/30/95) (6/30/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.45%.
<PAGE>
PROSPECTUS 27

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND 4.99% 4.29% 4.15%
IBC/DONOGHUE U.S. TREASURY & REPO
AVERAGE 4.89% 4.21% 4.13%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.
SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The IBC/Donoghue U.S. Treasury &
Repo Average is a widely recognized composite of money market funds that
invest in U.S. Treasury securities and repurchase agreements.

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .14%
---------
Total Annual Fund Operating Expenses .79%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$81 $252 $439 $978
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor and Administrator are voluntarily
waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES, OTHER
EXPENSES AND TOTAL OPERATING EXPENSES ARE .50%, .13% AND .63%, RESPECTIVELY.
The Advisor and Administrator could discontinue these voluntary waivers at any
time. For more information about these fees, see "Investment Advisors."
<PAGE>
28 PROSPECTUS

U.S. TREASURY MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income while maintaining liquidity
INVESTMENT FOCUS Money market instruments issued and guaranteed by the U.S. Treasury
PRINCIPAL INVESTMENT Investing in U.S. Treasury obligations and repurchase agreements
STRATEGY
INVESTOR PROFILE Conservative investors who want to receive current income from their investment
</TABLE>

INVESTMENT STRATEGY

The U.S. Treasury Money Market Fund invests solely in U.S. Treasury
obligations and repurchase agreements that are collateralized by obligations
issued or guaranteed by the U.S. Treasury. The Fund limits its investments so as
to obtain the highest investment quality rating by a nationally recognized
statistical rating organization (Standard and Poor's Corporation, AAA). The Fund
will maintain an average maturity of 90 days or less, and will only acquire
securities that have a remaining maturity of 397 days or less.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

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

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.92% .61%
(6/30/90) (12/31/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS 1.02%.
<PAGE>
PROSPECTUS 29

U.S. TREASURY MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE IBC/ FINANCIAL DATA U.S. TREASURY REPO
AVERAGE.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS (2/18/87)
<S> <C> <C> <C> <C>
U.S. TREASURY MONEY
MARKET FUND 4.82% 4.67% 5.15% 5.38%
IBC/FINANCIAL DATA U.S.
TREASURY REPO AVERAGE 4.81% 4.66% N/A N/A
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Salomon 1-3 Year Treasury/
Government Sponsored/ Corporate Index is a widely recognized index of U.S.
Treasury, government agency and investment grade corporate securities with
maturities greater than 1 year and less than 3 years. The IBC/Financial Data
U.S. Treasury Repo Average is a widely recognized composite of money market
funds that invest in U.S. Treasury securities and repurchase agreements.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .10%
---------
Total Annual Fund Operating Expenses .75%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$83 $259 $417 $930
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .53%
AND .63%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
30 PROSPECTUS

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income exempt from federal and Virginia income tax, consistent with
preservation of capital
INVESTMENT FOCUS Virginia municipal securities
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT Attempts to limit risk by investing in investment grade municipal securities with an
STRATEGY intermediate average maturity
INVESTOR PROFILE Virginia residents who want income exempt from federal and state income taxes
</TABLE>

INVESTMENT STRATEGY

The Virginia Intermediate Municipal Bond Fund invests substantially
all of its assets in municipal securities with income exempt from federal and
Virginia income taxes. Issuers of these securities can be located in Virginia,
the District of Columbia, Puerto Rico and other U.S. territories and
possessions. In selecting investments for the Fund, we try to limit risk by
buying investment grade securities. We also consider stability and growth of
principal. We expect that the Fund's average weighted maturity will range from 5
to 10 years but there is no limit on the maturities of individual securities.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in Virginia debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Virginia subjects the Fund to economic
conditions and government policies of Virginia. Because the Fund is
non-diversified the performance of any one holding may have a significant effect
on the whole Fund. Debt securities may decline in credit quality due to economic
or governmental events. In addition, an issuer may be unable to make timely
payments of principal or interest to the Fund.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.99% -6.80%
(3/31/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .63%.
<PAGE>
PROSPECTUS 31

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR G.O. BOND INDEX.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (1/11/93)
<S> <C> <C> <C>
VIRGINIA INTERMEDIATE MUNICIPAL BOND
FUND 5.22% 4.42% 5.29%
LEHMAN BROTHERS 5-YEAR G.O. BOND
INDEX 5.85% 5.36% 6.92%
</TABLE>

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

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .11%
---------
Total Annual Fund Operating Expenses .76%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$120 $375 $422 $942
</TABLE>

SIMPLY SPEAKING . . .

VIRGINIA MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High current income exempt from federal and Virginia income taxes, consistent with
preservation of capital
INVESTMENT FOCUS Virginia municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest in investment grade municipal securities
STRATEGY
INVESTOR PROFILE Virginia residents who want income exempt from federal and state income taxes
</TABLE>

INVESTMENT STRATEGY

The Virginia Municipal Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Virginia
income taxes. Issuers of these securities can be located in Virginia, the
District of Columbia, Puerto Rico and other U.S. territories and possessions. In
selecting investments for the Fund, we try to limit risk by buying investment
grade securities. There are no limits on the Fund's average weighted maturity or
on the remaining maturities of individual securities.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.41% -2.73%
(6/30/97) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .56%.
<PAGE>
PROSPECTUS 33

VIRGINIA MUNICIPAL BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS GENERAL OBLIGATION BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (4/4/95)
<S> <C> <C>
VIRGINIA MUNICIPAL BOND FUND 5.85% 6.71%
LEHMAN BROTHERS GENERAL OBLIGATION BOND INDEX 6.68% 7.99%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. Unlike a mutual fund, an index does not
have an investment advisor and does not pay any commissions or expenses. If
an index had expenses, its performance would be lower. The Lehman Brothers
General Obligation Bond Index is a widely recognized index of general
obligation securities issued in the last five years with maturities of over
one year.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .16%
---------
Total Annual Fund Operating Expenses .81%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$83 $259 $450 $1002
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .58%
AND .74%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
34 PROSPECTUS

EACH FUND'S PRINCIPAL INVESTMENTS

FUND INVESTMENTS

BOND FUNDS

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

MONEY MARKET FUNDS

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

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

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Bond Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations. In
addition, the Florida Tax-Exempt Bond Fund, Georgia Tax-Exempt Bond Fund,
Investment Grade Bond Fund, Investment Grade Tax-Exempt Bond Fund, Limited-Term
Federal Mortgage Securities Fund, Short-Term Bond Fund, Short-Term U.S. Treasury
Securities Fund, and the U.S. Government Securities Fund each may shorten its
average weighted maturity to as little as 90 days. When a Fund is investing for
temporary defensive purposes, it is not pursuing its investment goal.
<PAGE>
PROSPECTUS 35

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

INVESTMENT ADVISORS

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

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Investment Grade Bond, Limited-Term Federal
Mortgage Securities, Investment Grade Tax-Exempt Bond and Florida Tax-Exempt
Bond Funds. As of December 31, 1998, STI had approximately $14.7 billion in
assets under management. For the fiscal year ended May 31, 1998, STI received
advisory fees of:

<TABLE>
<S> <C>
FLORIDA TAX-EXEMPT BOND FUND............. .51%
INVESTMENT GRADE BOND FUND............... .64%
INVESTMENT GRADE TAX-EXEMPT BOND FUND.... .62%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES
FUND................................... .54%
</TABLE>

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Maryland Municipal Bond, Prime
Quality Money Market, Short-Term Bond, Short-Term U.S. Treasury Securities,
Tax-Exempt Money Market, Tax-Free Money Market, U.S. Government Securities, U.S.
Government Securities Money Market, U.S. Treasury Money Market, Virginia
Intermediate Municipal Bond, and Virginia Municipal Bond Funds. As of December
31, 1998, Trusco had approximately $23 billion in assets under management. For
the fiscal year ended May 31, 1998, Trusco received advisory fees of:

<TABLE>
<S> <C>
PRIME QUALITY MONEY MARKET FUND.......... .51%
SHORT-TERM BOND FUND..................... .52%
SHORT-TERM U.S. TREASURY SECURITIES
FUND................................... .47%
TAX-EXEMPT MONEY MARKET FUND............. .49%
U.S. GOVERNMENT SECURITIES FUND.......... .58%
U.S. GOVERNMENT SECURITIES MONEY MARKET
FUND................................... .50%
</TABLE>

Crestar Asset Management Company served as the Adviser to the predecessors of
the following Funds. For the fiscal year ended November 30, 1998, Crestar Asset
Management Company received advisory fees of:

<TABLE>
<S> <C>
MARYLAND MUNICIPAL BOND FUND............. .25%
TAX-FREE MONEY MARKET FUND............... .40%
U.S. TREASURY MONEY MARKET FUND.......... .40%
VIRGINIA INTERMEDIATE MUNICIPAL BOND
FUND................................... .50%
VIRGINIA MUNICIPAL BOND FUND............. .50%
</TABLE>

SunTrust Bank, Atlanta, 25 Park Place, Atlanta, Georgia 30303, serves as the
Advisor to the Georgia Tax-Exempt Bond Fund. As of December 31, 1998, SunTrust
Bank, Atlanta had approximately $34.1 billion under management. For the fiscal
year ended May 31, 1998, SunTrust Bank, Atlanta received advisory fees of .50%
for the Georgia Tax-Exempt Bond Fund.

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

PORTFOLIO MANAGERS

The Investment Grade Bond Fund is co-managed by Mr. L. Earl Denney, CFA, and Mr.
Dave E. West, CFA. Mr. Denney has served as Senior Vice President of STI since
1983. He has managed the Investment Grade Bond Fund since it began operating in
June 1992. He has more than 20 years of experience in fixed income investment
management. Mr. West has served as a Senior Vice President of STI since 1994,
and has served as a fixed-income portfolio manager with STI since 1989.

The U.S. Government Securities Fund has been co-managed by Mr. Charles B.
Leonard and Mr. Michael L. Ford since it began operating in June 1994. Mr.
Leonard, CFA, has served as Senior Vice President of Trusco since 1988, and has
more than 25 years of investment experience. Mr. Ford has been an Associate of
Trusco since April 1994, and has more than 11 years of investment experience.
Prior to joining Trusco, Mr. Ford served as a senior securities analyst at
Liberty Capital Advisors from 1992 to 1994 and served as a securities
<PAGE>
36 PROSPECTUS

THE ADVISORS AND THEIR PORTFOLIO MANAGERS
analyst at Southern Farm Bureau Life Insurance Company from 1990 to 1992.

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

Mr. David Yealy has served as a Vice President of Trusco since 1993. He has
managed the Short-Term U.S. Treasury Securities Fund since July 1996. He has
more than 13 years of investment experience.

Mr. Ronald Schwartz, CFA, has served as a Senior Vice President since 1992. He
has managed the Investment Grade Tax-Exempt Bond Fund and Florida Tax-Exempt
Bond Fund since each Fund began operating in June 1992 and January 1994,
respectively. He has more than 18 years of investment experience. Prior to
joining STI, he served as a trader at the Bank of Boston.

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

Ms. Cheryl L. Page, CFA, has served as Vice President of Trusco since January
1999 and Portfolio Manager, from 1991 to 1996, and Vice President, since 1996,
of Crestar Asset Management Company. She has managed the Virginia Intermediate
Municipal Bond Fund since July 1993. She also managed the Virginia Municipal
Bond Fund and the Maryland Municipal Bond Fund from their inception to 1998. Ms.
Page has over 12 years of investment experience.

Mr. Robert S. Bowman, CFA, has served as Vice President of Trusco since January
1999 and as an assistant trader from 1994 to 1995, and Vice President since
1995, of Crestar Asset Management Company. He has managed the Maryland Municipal
Bond Fund and Virginia Municipal Bond Fund since 1998. Mr. Bowman has over 5
years of investment experience.

Ms. Aki Pampush, CFA, has served as Vice President of Trusco since 1988. She has
managed the Short Term Bond Fund since February 1999. Ms. Pampush has over 16
years of investment experience.

PURCHASING FUND SHARES

HOW TO PURCHASE FUND SHARES
Generally you may not purchase Trust Shares directly. Rather, Trust Shares are
sold to financial institutions or intermediaries, including subsidiaries of
SunTrust Banks, Inc. (SunTrust) on behalf of accounts for which they act as
fiduciary, agent, investment advisor, or custodian. As a result, you, as a
customer of a financial institution, may purchase Trust Shares through accounts
maintained with financial institutions and potentially through the Preferred
Portfolio Account (an asset allocation account available through SunTrust
Securities, Inc.). Trust Shares will be held of record by (in the name of) your
financial institution. Depending upon the terms of your account, however, you
may have, or be given, the right to vote your Trust Shares. The Funds may reject
any purchase order if the Funds determine that accepting the order would not be
in the best interests of the STI Classic Funds or its shareholders.
<PAGE>
PROSPECTUS 37

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

SIMPLY SPEAKING . . .

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

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

- - the transfer agent must receive your order before 11:00 a.m. Eastern time for
the Tax-Exempt Money Market Fund, 12:00 p.m. for the Tax-Free Money Market
Fund or before 3:00 p.m. Eastern time for the Prime Quality, U.S. Treasury and
U.S. Government Securities Money Market Funds; and

- - the custodian receives federal funds (readily available) before NAV is
calculated (normally 4:00 p.m. Eastern time).

Otherwise, your purchase order will be effective the following Business Day, as
long as the custodian receives federal funds before the NAV is calculated on
that following day.

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES, AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE REQUESTS TO SUNTRUST OR OTHER
FINANCIAL INSTITUTIONS AT AN EARLIER TIME THAN THOSE LISTED ABOVE FOR YOUR
TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL
INSTITUTION TIME TO PROCESS YOUR REQUEST AND TRANSMIT IT TO THE TRANSFER AGENT
IN TIME TO MEET THE ABOVE STATED CUT OFF TIMES. FOR MORE INFORMATION ABOUT HOW
TO PURCHASE OR SELL FUND SHARES, INCLUDING SPECIFIC SUNTRUST OR OTHER
FINANCIAL INSTITUTIONS INTERNAL ORDER ENTRY CUT OFF TIMES, PLEASE CONTACT YOUR
FINANCIAL INSTITUTION DIRECTLY.

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

SIMPLY SPEAKING . . .

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

PURCHASING, SELLING AND EXCHANGING FUND SHARES

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

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

- - 12:00 p.m. Eastern time for the Tax-Free Money Marekt Fund; or

- - 3:00 p.m. Eastern time for the Prime Quality, U.S. Treasury and U.S.
Government Securities Money Market Funds.

SIMPLY SPEAKING . . .

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

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Funds may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in our Statement of Additional Information.
<PAGE>
PROSPECTUS 39

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

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

This information for the Funds other than the Maryland Municipal Bond, Tax-Free
Money Market, U.S. Treasury Money Market, Virginia Intermediate Municipal Bond
and Virginia Municipal Bond Funds has been audited by Arthur Andersen LLP,
independent public accountants. The information for the Maryland Municipal Bond,
Tax-Free Money Market, U.S. Treasury Money Market, Virginia Intermediate
Municipal Bond, and Virginia Municipal Bond Funds has been audited by Deloitte &
Touche, LLP, independent public accountants. These reports, along with each
Fund's financial statements, appear in the annual reports that accompany our
Statement of Additional Information. You can obtain an annual report, which
contains more performance information, at no charge by calling 1-800-874-4700.

SIMPLY SPEAKING . . .

* Annualized
** Return is for the period indicated and has not been annualized.
(1) Commenced operations on January 25, 1994.
(2) Commenced operations on January 18, 1994.
Amounts designated as "--" are either $0 or have been rounded to $0.
<PAGE>
40 PROSPECTUS

HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS NET ASSET NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END TOTAL END OF PERIOD
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (000)
--------- ---------- ------------ ------------- ------------- --------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------
INVESTMENT GRADE
TAX-EXEMPT BOND
FUND
- --------------------
Trust Shares
1998............ $11.22 $0.44 $ 0.50 $(0.44) $(0.32) $11.40 8.57% $ 146,606
1997............ 11.10 0.44 0.33 (0.44) (0.21) 11.22 7.13 139,144
1996............ 11.28 0.45 0.19 (0.45) (0.37) 11.10 5.82 124,507
1995............ 10.68 0.46 0.60 (0.46) -- 11.28 10.21 78,208
1994(3)......... 11.37 0.22 (0.34) (0.22) (0.35) 10.68 (1.10)** 44,595
- --------------------
LIMITED-TERM FEDERAL
MORTGAGE SECURITIES
FUND
- --------------------
Trust Shares
1998............ $10.02 $0.58 $ 0.11 $(0.58) $(0.01) $10.12 7.12% $ 137,488
1997............ 9.99 0.58 0.04 (0.58) (0.01) 10.02 6.43 123,903
1996............ 10.11 0.62 (0.14) (0.60) -- 9.99 4.84 73,370
1995(4)......... 10.00 0.58 0.13 (0.60) -- 10.11 7.50** 41,823
- --------------------
SHORT-TERM BOND FUND
- --------------------
Trust Shares
1998............ $ 9.90 $0.55 $ 0.16 $(0.55) $(0.01) $10.05 7.31% $ 120,422
1997............ 9.86 0.53 0.07 (0.53) (0.03) 9.90 6.30 89,701
1996............ 9.98 0.54 (0.10) (0.54) (0.02) 9.86 4.45 91,156
1995............ 9.79 0.53 0.19 (0.53) -- 9.98 7.60 60,952
1994............ 10.01 0.42 (0.21) (0.42) (0.01) 9.79 2.02 34,772
- --------------------
SHORT-TERM U.S.
TREASURY SECURITIES
FUND
- --------------------
Trust Shares
1998............ $ 9.88 $0.51 $ 0.10 $(0.52) $ -- $ 9.97 6.30% $ 46,920
1997............ 9.84 0.51 0.04 (0.51) -- 9.88 5.76 21,988
1996............ 9.93 0.55 (0.09) (0.55) -- 9.84 4.73 10,149
1995............ 9.82 0.47 0.11 (0.47) -- 9.93 6.11 9,599
1994............ 9.98 0.33 (0.11) (0.33) (0.05) 9.82 2.17 12,723
- --------------------
U.S. GOVERNMENT
SECURITIES FUND
- --------------------
Trust Shares
1998............ $10.02 $0.61 $ 0.44 $(0.61) $ -- $10.46 10.76% $ 34,899
1997............ 9.91 0.62 0.11 (0.62) -- 10.02 7.54 19,471
1996............ 10.27 0.62 (0.33) (0.62) (0.03) 9.91 2.77 10,277
1995(5)......... 9.98 0.53 0.29 (0.53) -- 10.27 8.64** 3,291
- --------------------
PRIME QUALITY MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ $ 1.00 $0.05 $ -- $(0.05) $ -- $ 1.00 5.22% $ 1,880,229
1997............ 1.00 0.05 -- (0.05) -- 1.00 5.01 1,086,555
1996............ 1.00 0.05 -- (0.05) -- 1.00 5.25 1,050,800
1995............ 1.00 0.05 -- (0.05) -- 1.00 4.79 799,189
1994............ 1.00 0.03 -- (0.03) -- 1.00 2.88 583,399
- --------------------
TAX-EXEMPT MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ $ 1.00 $0.03 $ -- $(0.03) $ -- $ 1.00 3.21% $ 448,023
1997............ 1.00 0.03 -- (0.03) -- 1.00 3.09 333,006
1996............ 1.00 0.03 -- (0.03) -- 1.00 3.28 273,613
1995............ 1.00 0.03 -- (0.03) -- 1.00 3.10 215,413
1994............ 1.00 0.02 -- (0.02) -- 1.00 2.08 143,982

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET AVERAGE NET AVERAGE NET
RATIO OF INVESTMENT ASSETS ASSETS
EXPENSES INCOME TO (EXCLUDING (EXCLUDING PORTFOLIO
TO AVERAGE AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
---------- ---------- --------------- --------------- --------
<S> <C> <C> <C> <C> <C>
- --------------------
INVESTMENT GRADE
TAX-EXEMPT BOND
FUND
- --------------------
Trust Shares
1998............ 0.76% 3.83% 0.88% 3.71% 378%
1997............ 0.75 3.96 0.86 3.85 489
1996............ 0.75 4.01 0.89 3.87 514
1995............ 0.75 4.34 0.91 4.18 592
1994(3)......... 0.75* 3.46* 0.95* 3.26* 432
- --------------------
LIMITED-TERM FEDERAL
MORTGAGE SECURITIES
FUND
- --------------------
Trust Shares
1998............ 0.66% 5.75% 0.77% 5.64% 163%
1997............ 0.65 5.81 0.78 5.68 133
1996............ 0.65 6.04 0.84 5.85 83
1995(4)......... 0.65* 6.43* 0.93* 6.15* 68
- --------------------
SHORT-TERM BOND FUND
- --------------------
Trust Shares
1998............ 0.66% 5.47% 0.79% 5.34% 87%
1997............ 0.65 5.37 0.78 5.24 118
1996............ 0.65 5.39 0.81 5.23 163
1995............ 0.65 5.49 0.85 5.29 200
1994............ 0.65 4.15 0.85 3.95 75
- --------------------
SHORT-TERM U.S.
TREASURY SECURITIES
FUND
- --------------------
Trust Shares
1998............ 0.66% 5.19% 0.84% 5.01% 39%
1997............ 0.65 5.23 0.92 4.96 93
1996............ 0.65 5.56 1.00 5.21 94
1995............ 0.65 4.91 1.08 4.48 88
1994............ 0.65 3.23 0.81 3.07 117
- --------------------
U.S. GOVERNMENT
SECURITIES FUND
- --------------------
Trust Shares
1998............ 0.76% 5.93% 0.92% 5.77% 14%
1997............ 0.75 6.19 1.02 5.92 21
1996............ 0.75 6.05 1.25 5.55 83
1995(5)......... 0.75* 6.67* 3.33* 4.09* 30
- --------------------
PRIME QUALITY MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ 0.59% 5.10% 0.77% 4.92% --
1997............ 0.58 4.90 0.76 4.72 --
1996............ 0.58 5.11 0.78 4.91 --
1995............ 0.58 4.77 0.79 4.56 --
1994............ 0.58 2.86 0.79 2.65 --
- --------------------
TAX-EXEMPT MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ 0.51% 3.14% 0.67% 2.98% --
1997............ 0.50 3.04 0.66 2.88 --
1996............ 0.50 3.23 0.68 3.05 --
1995............ 0.45 3.12 0.70 2.87 --
1994............ 0.42 2.05 0.71 1.76 --
</TABLE>

* Annualized
** Return is for the period indicated and has not been annualized.
(3) Commenced operations on October 21, 1993.
(4) Commenced operations on June 7, 1994.
(5) Commenced operations on July 31, 1994.
Amounts designated as "--" are either $0 or have been rounded to $0.
<PAGE>
PROSPECTUS 41

HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS NET ASSET NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END TOTAL END OF PERIOD
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN (000)
--------- ---------- ------------ ------------- ------------- --------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------
U.S. GOVERNMENT
SECURITIES MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ $ 1.00 $0.05 $ -- $(0.05) $ -- $ 1.00 5.04% $ 377,490
1997............ 1.00 0.05 -- (0.05) -- 1.00 4.83 344,350
1996............ 1.00 0.05 -- (0.05) -- 1.00 5.14 325,493
1995............ 1.00 0.05 -- (0.05) -- 1.00 4.67 434,111
1994............ 1.00 0.03 -- (0.03) -- 1.00 2.77 309,228
- --------------------
MARYLAND MUNICIPAL
BOND FUND (FORMERLY
CRESTFUNDS'
MARYLAND MUNICIPAL
BOND FUND)
- --------------------
Trust Class
For the years ended
November 30:
1998.......... $ 9.95 0.416 0.270 (0.416) -- $10.22 7.03% $ 19,115
1997.......... 9.76 0.426 0.190 (0.426) -- 9.95 6.50% 11,461
1996(6)....... 10.00 0.309 (0.240) (0.309) -- 9.76 1.07%* 5,808
- --------------------
TAX-FREE MONEY
MARKET FUND
(FORMERLY
CRESTFUNDS'
TAX-FREE MONEY
FUND)
- --------------------
Trust Class
For the years ended
November 30:
1998.......... $ 1.00 0.029 -- (0.029) -- $ 1.00 2.97% $ 270,899
1997.......... 1.00 0.030 -- (0.030) -- 1.00 3.06% 226,837
1996.......... 1.00 0.029 0.002 (0.029) (0.002) 1.00 3.14% 182,320
1995.......... 1.00 0.032 -- (0.032) -- 1.00 3.26% 202,333
1994.......... 1.00 0.021 -- (0.021) -- 1.00 2.07% 157,602
- --------------------
U.S. TREASURY MONEY
MARKET FUND
(FORMERLY
CRESTFUNDS' U.S.
TREASURY MONEY
FUND)
- --------------------
Trust Class
For the years ended
November 30:
1998.......... $ 1.00 0.048 -- (0.048) -- $ 1.00 4.89% $ 699,923
1997.......... 1.00 0.048 -- (0.048) -- 1.00 4.91% 632,381
1996.......... 1.00 0.047 -- (0.047) -- 1.00 4.80% 389,051
1995.......... 1.00 0.052 -- (0.052) -- 1.00 5.29% 370,454
1994.......... 1.00 0.033 -- (0.033) -- 1.00 3.30% 319,477
- --------------------
VIRGINIA
INTERMEDIATE
MUNICIPAL BOND FUND
(FORMERLY
CRESTFUNDS'
VIRGINIA
INTERMEDIATE
MUNICIPAL BOND
FUND)
- --------------------
Trust Class
For the years ended
November 30:
1998.......... $10.31 0.449 0.166 (0.450) (0.035) $10.44 6.10% $ 243,606
1997.......... 10.22 0.463 0.089 (0.462) -- 10.31 5.55% 237,096
1996.......... 10.24 0.419 (0.021) (0.418) -- 10.22 4.01% 243,137
1995.......... 9.21 0.428 1.030 (0.428) -- 10.24 16.09% 43,373
1994.......... 10.33 0.440 (1.100) (0.440) (0.020) 9.21 (6.53)% 41,365
- --------------------
VIRGINIA MUNICIPAL
BOND FUND (FORMERLY
CRESTFUNDS'
VIRGINIA MUNICIPAL
BOND FUND)
- --------------------
Trust Class
For the years ended
November 30:
1998.......... $10.44 0.468 0.267 (0.468) (0.026) $10.68 7.19% $ 29,252
1997.......... 10.28 0.475 0.168 (0.475) (0.008) 10.44 6.46% 20,044
1996.......... 10.40 0.465 (0.120) (0.465) -- 10.28 3.48% 15,911
1995(7)....... 10.00 0.309 0.445 (0.310) (0.044) 10.40 7.67%* 6,247

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET AVERAGE NET AVERAGE NET
RATIO OF INVESTMENT ASSETS ASSETS
EXPENSES INCOME TO (EXCLUDING (EXCLUDING PORTFOLIO
TO AVERAGE AVERAGE WAIVERS AND WAIVERS AND TURNOVER
NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
---------- ---------- --------------- --------------- --------
<S> <C> <C> <C> <C> <C>
- --------------------
U.S. GOVERNMENT
SECURITIES MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ 0.62% 4.92% 0.78% 4.76% --
1997............ 0.61 4.73 0.76 4.58 --
1996............ 0.61 5.02 0.78 4.85 --
1995............ 0.61 4.64 0.80 4.45 --
1994............ 0.61 2.69 0.77 2.53 --
- --------------------
MARYLAND MUNICIPAL
BOND FUND (FORMERLY
CRESTFUNDS'
MARYLAND MUNICIPAL
BOND FUND)
- --------------------
Trust Class
For the years en
November 30:
1998.......... 0.62% 1.15% 4.11% 3.58% 12%
1997.......... 0.63% 1.16% 4.38% 3.85% 5%
1996(6)....... 0.71%* 1.36%* 4.30%* 3.65%* 9%
- --------------------
TAX-FREE MONEY
MARKET FUND
(FORMERLY
CRESTFUNDS'
TAX-FREE MONEY
FUND)
- --------------------
Trust Class
For the years en
November 30:
1998.......... 0.66% 0.81% 2.92% 2.77% --
1997.......... 0.66% 0.81% 3.02% 2.87% --
1996.......... 0.66% 0.81% 2.88% 2.73% --
1995.......... 0.66% 0.81% 3.19% 3.04% --
1994.......... 0.67% 0.67% 2.06% 2.06% --
- --------------------
U.S. TREASURY MONEY
MARKET FUND
(FORMERLY
CRESTFUNDS' U.S.
TREASURY MONEY
FUND)
- --------------------
Trust Class
For the years en
November 30:
1998.......... 0.66% 0.81% 4.77% 4.62% --
1997.......... 0.65% 0.80% 4.82% 4.67% --
1996.......... 0.66% 0.81% 4.69% 4.54% --
1995.......... 0.66% 0.81% 5.16% 5.01% --
1994.......... 0.66% 0.66% 3.23% 3.23% --
- --------------------
VIRGINIA
INTERMEDIATE
MUNICIPAL BOND FUND
(FORMERLY
CRESTFUNDS'
VIRGINIA
INTERMEDIATE
MUNICIPAL BOND
FUND)
- --------------------
Trust Class
For the years en
November 30:
1998.......... 0.79% 0.97% 4.33% 4.15% 24%
1997.......... 0.78% 0.93% 4.57% 4.42% 30%
1996.......... 0.78% 0.93% 4.35% 4.20% 25%
1995.......... 0.72% 0.94% 4.34% 4.12% 28%
1994.......... 0.65% 0.77% 4.48% 4.36% 24%
- --------------------
VIRGINIA MUNICIPAL
BOND FUND (FORMERLY
CRESTFUNDS'
VIRGINIA MUNICIPAL
BOND FUND)
- --------------------
Trust Class
For the years en
November 30:
1998.......... 0.69% 1.10% 4.41% 4.00% 28%
1997.......... 0.69% 1.09% 4.65% 4.25% 39%
1996.......... 0.71% 1.11% 4.61% 4.21% 24%
1995(7)....... 0.71%* 1.11%* 4.61%* 4.21%* 35%
</TABLE>

* Annualized
** Return is for the period indicated and has not been annualized.
(6) Commencement of operations for this class March 1, 1996.
(7) Commencement of operations for this class April 5, 1995.
Amounts designated as "--" are either $0 or have been rounded to $0.
On May 24, 1999, the Maryland Municipal Bond, Tax Free Money, Virginia
Intermediate Municipal Bond, Virginia Municipal Bond, and U.S. Treasury Money
Funds, each a series of the CrestFunds, exchanged all of its assets and certain
liabilities for shares of the STI Maryland Municipal Bond, Tax-Free Money
Market, Virginia Intermediate Municipal Bond, Virginia Municipal Bond, and U.S.
Treasury Money Market Funds. Because each series of the CrestFunds is the
accounting survivor in this transaction, its basis of accounting for assets and
liabilities and its operating results for the periods prior to May 24, 1999 have
been carried forward in these financial highlights.
<PAGE>
42 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

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

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

SIMPLY SPEAKING . . .

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

TAXES

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

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

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

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

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

SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

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

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

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

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

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

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

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

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

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
26 EACH FUND'S PRINCIPAL INVESTMENTS
26 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
28 PURCHASING, SELLING AND EXCHANGING FUND SHARES
30 HISTORICAL FINANCIAL INFORMATION
32 DIVIDENDS AND DISTRIBUTIONS

32 TAXES
TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC
FUNDS PLEASE REFER TO THE BACK COVER OF THE
PROSPECTUS
</TABLE>

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

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

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

OCTOBER 1, 1998 *MAY 24, 1999
(AS SUPPLEMENTED MAY 24, 1999)
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

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

BALANCED FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
General Electric Company...... 1.9%
Bristol Myers Squibb
Company..................... 1.3%
Carnival Corporation, Class
A........................... 1.3%
United Technologies
Corporation................. 1.2%
CVS Corporation............... 1.1%
* HOLDINGS MAY VARY
</TABLE>

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.21% .80%
(6/30/97) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 12.62%.
<PAGE>
PROSPECTUS 3

BALANCED FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (1/3/94)
<S> <C> <C> <C>
BALANCED FUND 21.14% 19.46% 13.03%
S&P 500 INDEX 33.35% 31.13% 23.48%
LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX 9.75% 10.43% 6.92%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The S&P 500 Index is a widely
recognized index of 500 stocks designed to mimic the overall equity market's
industry weightings. The Lehman Brothers Government/ Corporate Bond Index is
a widely recognized index of government and corporate debt securities rated
investment grade or better, with maturities of at least 1 year.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .95%
Other Expenses .14%
---------
Total Annual Fund Operating Expenses 1.09%
</TABLE>

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$111 $347 $601 $1329
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .83%
AND .97%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
4 PROSPECTUS

CAPITAL APPRECIATION FUND
(FORMERLY CAPITAL GROWTH FUND)

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
General Electric Company...... 2.8%
Bristol Myers Squibb
Company..................... 1.9%
Carnival Corporation, Class
A........................... 1.9%
United Technologies
Corporation................. 1.8%
Microsoft Corporation......... 1.7%
* HOLDINGS MAY VARY
</TABLE>

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.09% -4.09%
(6/30/97) (12/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 17.25%.
<PAGE>
PROSPECTUS 5

CAPITAL APPRECIATION FUND
(FORMERLY CAPITAL GROWTH FUND)

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (7/1/92)
<S> <C> <C> <C>
CAPITAL APPRECIATION FUND 31.13% 16.05% 17.02%
S&P 500 INDEX 33.35% 20.25% 20.32%
</TABLE>

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses 1.28%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1545
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04%
AND 1.17%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
6 PROSPECTUS

EMERGING MARKETS EQUITY FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Banco Pinto & Sotto Mayor..... 4.3%
Telefonos De Mexico ADR....... 2.8%
Telebras ADR.................. 2.6%
Greek Telecom................. 2.3%
Telefoncia Del Peru ADR....... 2.2%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Emerging Markets Equity Fund invests primarily in common stocks
and other equity securities of foreign issuers located in emerging market
countries. An emerging market country is a country that the World Bank or the
United Nations considers to be emerging or developing. Our "bottom-up" strategy
focuses on individual stocks and companies. Through research, we attempt to
identify investments that we feel are attractively priced relative to the
current market.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. Investments in foreign markets may be
more volatile than investments in U.S. markets. Investments in emerging foreign
markets may be more volatile than investments in developed foreign markets.
Diplomatic, political or economic developments in a foreign country may cause
investments in that country to lose money. These developments may occur more
frequently in emerging market countries. Emerging market securities may be even
more susceptible to political or economic developments than those in more
developed countries. The value of the U.S. dollar may rise, causing reduced
returns for U.S. persons investing abroad. A foreign country may not have the
same accounting and financial reporting standards as the U.S. Some emerging
market countries may have little to no accounting or financial reporting
standards. Foreign stock markets, brokers and companies are generally subject to
less supervision and regulation than their U.S. counterparts. There may be
little to no supervision and regulation in some emerging market countries.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to January 31, 1997, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS THE FUND'S PERFORMANCE DURING 1997.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
10.29% -17.26%
(3/31/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS -6.26%.
<PAGE>
PROSPECTUS 7

EMERGING MARKETS EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
(MSCI) EMERGING MARKETS FREE INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (3/29/96)
<S> <C> <C>
EMERGING MARKETS EQUITY FUND -3.43% 5.67%
MSCI EMERGING MARKETS FREE INDEX -13.40% -8.51%
</TABLE>

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.30%
Other Expenses .49%
---------
Total Annual Fund Operating Expenses 1.79%
</TABLE>

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$182 $563 $970 $2105
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.08%
AND 1.57%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
8 PROSPECTUS

GROWTH AND INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL
PRIMARY Long-term capital appreciation
SECONDARY Current income
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify securities of companies with market capitalizations of at least $1
STRATEGY billion, low price/earnings ratios and above average earnings momentum
INVESTOR PROFILE Investors who are looking for capital appreciation potential and income with less
volatility than the equity markets as a whole
</TABLE>

INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in domestic and foreign
common stock of companies with market capitalizations of at least $1 billion.
However, the average market capitalization can vary throughout a full market
cycle and will be flexible to capturing market opportunities. We use a
quantitative screening process to select companies with a favorable price to
earnings ratio. Stocks of companies with strong financial quality and above
average earnings momentum are selected to secure the best relative values in
each economic sector.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in equity securities. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. The equity markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.38% -10.36%
(6/30/97) (9/30/98)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS 2.64%.
<PAGE>
PROSPECTUS 9

GROWTH AND INCOME FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 COMPOSITE INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (9/28/92)
<S> <C> <C> <C>
GROWTH AND INCOME FUND 18.20% 18.19% 17.26%
S&P 500 COMPOSITE INDEX 28.60% 24.05% 21.60%
</TABLE>

<TABLE>
<S> <C>
Investment Advisory Fees .90%
Other Expenses .11%
---------
Total Annual Fund Operating Expenses 1.01%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$103 $322 $558 $1236
</TABLE>

INTERNATIONAL EQUITY FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Ing Groep..................... 3.2%
Ubs Ag - Registered........... 2.6%
Novartis, Registered.......... 2.5%
Bank Of Ireland............... 2.5%
Nestle Sa Registered.......... 2.5%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks
and other equity securities of foreign companies. In selecting investments for
the Fund, we diversify the Fund's investments among at least three foreign
countries. The Fund invests primarily in developed countries, but may invest in
countries with emerging markets. Our "bottom-up" approach to stock selection
focuses on individual stocks and fundamental characteristics of companies. Our
goal is to find companies with top management, quality products and sound
financial positions, that are trading at a discount. Due to the Fund's
investment strategy, the Fund may buy and sell securities frequently. This may
result in higher transaction costs and additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments may cause foreign investments to lose money.
The value of the U.S. dollar may rise, causing reduced returns for U.S. persons
investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging markets securities may be even more susceptible to
these risks.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to December 1995, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
12.19% -7.79%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 16.44%.
<PAGE>
PROSPECTUS 11

INTERNATIONAL EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
EUROPE, AUSTRALASIA AND FAR EAST (MSCI EAFE) INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (2/2/95)
<S> <C> <C>
INTERNATIONAL EQUITY FUND 13.35% 24.95%
MSCI EAFE INDEX 1.78% 6.47%
</TABLE>

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.25%
Other Expenses .24%
---------
Total Annual Fund Operating Expenses 1.49%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$152 $471 $813 $1779
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.24%
AND 1.48%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
12 PROSPECTUS

INTERNATIONAL EQUITY INDEX FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Allianz....................... 2.2%
Assicurazioni Generali........ 2.1%
Tim........................... 1.8%
Telecom Italia Spa............ 1.4%
Daimler Benz.................. 1.4%
* HOLDINGS MAY VARY
</TABLE>

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.84% -5.5%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 23.22%.
<PAGE>
PROSPECTUS 13

INTERNATIONAL EQUITY INDEX FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (9/1/94)
<S> <C> <C> <C>
INTERNATIONAL EQUITY
INDEX FUND 8.99% 8.57% 6.39%
MSCI EAFE-GDP INDEX 4.35% 6.62% 5.26%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The MSCI EAFE-GDP Index is a
widely recognized index of over 900 securities listed on the stock exchanges
in Europe, Australia and the Far East. The index is weighted by the gross
domestic product of the various countries in the index.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .90%
Other Expenses .29%
---------
Total Annual Fund Operating Expenses 1.19%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$121 $378 $654 $1443
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .78%
AND 1.07%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
14 PROSPECTUS

MID-CAP EQUITY FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
U.S. Filter Corporation....... 3.8%
Allied Waste Industries
Incorporated................ 3.2%
Networks Associates
Incorporated................ 3.1%
Men's Wearhouse............... 3.1%
Harley-Davidson
Incorporated................ 3.0%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Mid-Cap Equity Fund invests primarily in a diversified portfolio
of common stocks and other equity securities of U.S. companies. In selecting
investments for the Fund, we choose companies that have small- to mid-sized
market capitalizations (i.e., companies with market capitalizations of $500
million to $10 billion) and that have above average growth potentials at
attractive prices. We evaluate companies based on their industry sectors and the
market in general. The Fund maintains large holdings in the industries that
appear to perform best during a given business cycle. We analyze companies that
are in favored industries based on their fundamental characteristics, such as
growth rates and earnings. We do not consider current income in selecting
investments for the Fund. Due to the Fund's investment strategy, the Fund may
buy and sell securities frequently. This may result in higher transaction costs
and additional capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in mid-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small- to mid-sized companies may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these companies may have somewhat limited product
lines, markets and financial resources, and may depend upon a relatively small-
to medium-sized management group.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
14.22% -2.89%
(9/30/97) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 6.66%.
<PAGE>
PROSPECTUS 15

MID-CAP EQUITY FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (1/3/94)
<S> <C> <C> <C>
MID-CAP EQUITY FUND 21.23% 22.45% 32.54%
S&P MIDCAP 400 INDEX 32.23% 27.32% 18.95%
</TABLE>

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

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses 1.28%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1545
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04%
AND 1.17%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
16 PROSPECTUS

SMALL CAP EQUITY FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Norrell Corporation........... 3.1%
Regal Beloit Corporation...... 2.9%
Harman International.......... 2.6%
Texas Industries Inc.......... 2.5%
Sotheby's Holdings
Incorporated - Class A...... 2.3%
* HOLDINGS MAY VARY
</TABLE>

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

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to January 1997, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
14.95% -2.11%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS -.08%.
<PAGE>
PROSPECTUS 17

SMALL CAP EQUITY FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (8/31/94)
<S> <C> <C> <C>
SMALL CAP EQUITY FUND 32.59% 32.60% 29.40%
FRANK RUSSELL 2000 SMALL STOCK INDEX 22.36% 22.34% 21.05%
FRANK RUSSELL 2000 VALUE INDEX 31.79% 26.23% 21.82%
</TABLE>

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .17%
---------
Total Annual Fund Operating Expenses 1.32%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$134 $418 $723 $1590
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.05%
AND 1.22%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
18 PROSPECTUS

SMALL CAP GROWTH STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS U.S. small-cap common stocks of growth companies
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT Identifies small-cap companies with above-average growth potential
STRATEGY
INVESTOR PROFILE Investors who want the value of their investment to grow, but do not need current income
</TABLE>

INVESTMENT STRATEGY
The Small Cap Growth Fund invests primarily in U.S. companies that
demonstrate above-average growth potential. We invest in companies with an
established operating history and a solid balance sheet. In selecting
investments for the Fund, we choose companies with market capitalizations of up
to about $3 billion. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transactions costs and
additional capital gains taxes.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of smaller U.S. companies. As a
result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in small- or
mid-cap companies involve greater risk than investments in larger, more
established companies because of the greater business risks of small size,
limited markets and financial resources, smaller product lines and lack of depth
of management. These securities are often traded over-the-counter and may not be
traded in high volumes. Consequently, securities prices could be less stable
than those of larger, more established companies.
<PAGE>
PROSPECTUS 19

SMALL CAP GROWTH STOCK FUND

FUND EXPENSES
This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses* .20%
---------
Total Annual Fund Operating Expenses 1.35%
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$137 $428
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.00%
AND 1.20%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
20 PROSPECTUS

SUNBELT EQUITY FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Hunt J B Transportation
Services Inc. .............. 3.0%
Fairfield Communities
Incorporated................ 2.6%
PMT Services, Incorporated.... 2.3%
Stone Energy Coporation....... 2.0%
SCB Computer Technology,
Incorporated................ 1.9%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Sunbelt Equity Fund invests substantially all of its assets in
common stocks and other equity securities of companies in the southern region of
the U.S. These companies are headquartered and/or conduct a substantial portion
of their business in the southern region of the U.S., which includes Texas,
Arkansas, Alabama, Mississippi, Tennessee, Kentucky, Florida, Virginia, Georgia,
North Carolina, South Carolina and Louisiana. Our investment strategy is based
on the belief that a portfolio of companies in this region with positive
earnings trends will generate above-average returns over time. This focus on
favorable earnings characteristics is the cornerstone of our philosophy. We do
not consider current income in selecting investments for the Fund.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in southern U.S. common stocks. As a result, the Fund
is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. Because the Fund focuses its investments in
southern companies, economic conditions in or government policies imposed by
southern states may cause the Fund to be more volatile than an equity fund that
invests in companies located across the U.S.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
21.62% -19.36%
(3/31/91) (12/31/87)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 5.98%.
<PAGE>
PROSPECTUS 21

SUNBELT EQUITY FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (12/1/80)
<S> <C> <C> <C> <C>
SUNBELT EQUITY FUND 21.34% 15.89% 18.81% 14.28%
FRANK RUSSELL 2000 GROWTH
INDEX 12.95% 12.74% 13.49% 8.11%
S&P SMALLCAP 600 INDEX 25.49% 17.48% 15.37% 9.35%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Frank Russell 2000 Index is a
widely recognized index of the 2,000 largest U.S. companies with higher
growth rates. The S&P SmallCap 600 Index is a widely recognized index of 600
U.S. small cap stocks.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses 1.28%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1545
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04%
AND 1.17%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
22 PROSPECTUS

TAX SENSITIVE GROWTH STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital growth, with nominal dividend income
INVESTMENT FOCUS U.S. common stocks of growth companies
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify companies that have above-average growth potential and uses a low
STRATEGY portfolio turnover strategy to reduce capital gains distributions.
INVESTOR PROFILE Taxable investors who want to increase the value of their investment while minimizing
taxable capital gains distributions.
</TABLE>

INVESTMENT STRATEGY
The Tax Sensitive Growth Stock Fund primarily invests in a
diversified portfolio of common stocks of financially strong U.S. growth
companies. Many of these companies have a history of stable or rising dividend
payout policies. We invest the Fund's assets across all market capitalizations.
We attempt to minimize the impact of capital gains taxes on investment returns
by using a low turnover rate (generally 50% or less) strategy, in conjunction
with other tax management strategies. These strategies may lead to lower capital
gains distributions and, therefore, lower capital gains taxes.
WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund primarily invests in common stocks. As a result, the Fund is subject to
the risk that stock prices will fall over short or extended periods of time.
Stock markets tend to move in cycles, with periods of rising prices and periods
of falling prices. This price volatility is the principal risk of investing in
the Fund. In addition, the Fund may invest in small-cap companies. These
companies involve greater risk than investments in larger, more established
companies because of the greater business risks of small size, limited markets
and financial resources, smaller product lines and lack of depth of management.
These securities are often traded over-the-counter and may not be traded in high
volumes. Consequently, securities prices could be less stable than those of
larger, more established companies.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to October 1998, when the Fund began operating, represent the performance of the
Advisor's similarly managed collective investment fund. This past performance
has been adjusted to reflect current expenses for Trust shares of the Fund. The
Advisor's collective fund was not a registered mutual fund so it was not subject
to the same investment and tax restrictions as the Fund. If it had been, the
collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.10% -0.04%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 14.54%.
<PAGE>
PROSPECTUS 23

TAX SENSITIVE GROWTH STOCK FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LIPPER GROWTH AND
INCOME FUNDS INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (12/31/95)
<S> <C> <C>
TAX SENSITIVE GROWTH STOCK FUND 28.76% 24.84%
S&P 500 INDEX 33.55% 28.04%
LIPPER GROWTH AND INCOME FUNDS INDEX 26.96% 23.78%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. Unlike a mutual fund, an index does not
have an investment advisor and does not pay any commissions or expenses. If
an index had expenses, its performance would be lower. The S&P 500 Index is
a widely recognized index of 500 stocks designed to mimic the overall equity
market's industry weightings. The Lipper Growth and Income Funds Index is a
widely recognized composite of mutual funds that have growth-of-earnings
orientations and income requirements for level and/or rising dividends.

FUND EXPENSES

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses* .20%
---------
Total Annual Fund Operating Expenses 1.35%
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$137 $428
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.00%
AND 1.20%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
24 PROSPECTUS

VALUE INCOME STOCK FUND

FUND SUMMARY

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

<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
AS OF 6/30/98*
<S> <C>
Pharmacia & Upjohn
Incorporated................ 2.5%
Ameritech Corporation......... 2.4%
Baxter International
Incorporated................ 2.3%
Unocal Corporation............ 2.3%
Kimberly-Clark Corporation.... 2.3%
* HOLDINGS MAY VARY
</TABLE>

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

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to February 1993, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.56% -14.86%
(3/31/91) (9/30/90)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 7.79%.
<PAGE>
PROSPECTUS 25

VALUE INCOME STOCK FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P BARRA VALUE 500 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (10/31/89)
<S> <C> <C> <C>
VALUE INCOME STOCK FUND 27.08% 18.88% 19.38%
S&P/BARRA VALUE 500 INDEX 29.98% 20.68% 15.43%
</TABLE>

<TABLE>
<S> <C>
Investment Advisory Fees .80%
Other Expenses .17%
---------
Total Annual Fund Operating Expenses .97%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$99 $309 $536 $1190
</TABLE>

EACH FUND'S PRINCIPAL INVESTMENTS

FUND INVESTMENTS

The table below shows each Fund's principal investments. In other words,
the table describes the type or types of investments that we believe will
most likely help each Fund achieve its investment goal.
<TABLE>
<CAPTION>
BALANCED CAPITAL EMERGING GROWTH INTERNATIONAL INTERNATIONAL MID-CAP
FUND APPRECIATION MARKETS AND EQUITY EQUITY EQUITY
FUND EQUITY INCOME FUND INDEX FUND
FUND FUND FUND
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bonds X
- -----------------------------------------------------------------------------------------------
U.S. Stocks X X X X
- -----------------------------------------------------------------------------------------------
Foreign Stocks X X X
- -----------------------------------------------------------------------------------------------

<CAPTION>
SMALL SMALL CAP SUNBELT TAX SENSITIVE VALUE
CAP GROWTH STOCK EQUITY GROWTH STOCK INCOME
EQUITY FUND FUND FUND STOCK
FUND FUND
- --------------------
<S> <C> <C> <C> <C> <C>
Bonds
- --------------------
U.S. Stocks X X X X X
- --------------------
Foreign Stocks
- --------------------
</TABLE>

INVESTMENT ADVISORS

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

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Balanced, Capital Growth, Emerging Markets Equity,
International Equity, Mid-Cap Equity, Small Cap Equity, and Value Income Stock
Funds. As of December 31, 1998, STI Capital had approximately $14.7 billion in
assets under management. For the fiscal year ended May 31, 1998, STI Capital
received advisory fees of:

<TABLE>
<S> <C>
BALANCED FUND............................ .83%
CAPITAL APPRECIATION FUND (FORMERLY
CAPITAL GROWTH FUND)................... 1.04%
EMERGING MARKETS EQUITY FUND............. 1.08%
INTERNATIONAL EQUITY FUND................ 1.24%
MID-CAP EQUITY FUND...................... 1.04%
SMALL CAP EQUITY FUND.................... 1.05%
VALUE INCOME STOCK FUND.................. .80%
</TABLE>

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Growth and Income, International
Equity Index, Small Cap Growth Stock, Sunbelt Equity and Tax Sensitive Growth
Stock Funds. As of December 31, 1998, Trusco had approximately $23 billion in
assets under management. For the fiscal year ended May 31, 1998, Trusco received
advisory fees of 1.04% for the Sunbelt Equity Fund and approximately .77% for
the International Equity Index Fund. The Small Cap Growth Stock and Tax
Sensitive Growth Stock Funds had not commenced operations as of May 31, 1998.

Crestar Asset Management Company served as the Adviser to the predecessor of the
Growth and Income Fund. For the fiscal year ended November 30, 1998, Crestar
Asset Management Company received advisory fees of .75% for the Growth and
Income Fund.

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

PORTFOLIO MANAGERS

Mr. Anthony Gray has served as Chairman and Chief Investment Officer of STI
since 1979. He has managed the Capital Appreciation Fund (formerly Capital
Growth
<PAGE>
PROSPECTUS 27

EACH FUND'S PRINCIPAL INVESTMENTS
Fund) since it began operating in June 1992. He has more than 30 years of
investment experience.

Mr. Mills Riddick, CFA, has served as Managing Director of STI since 1994. He
has managed the Value Income Stock Fund since April 1995. He has more than 15
years of investment experience, and has been a portfolio manager at STI since
1989. Prior to joining STI, Mr. Riddick served as a broker with Drexel Burnham
Lambert.

Mr. Brett Barner, CFA, has served as Managing Director of STI since 1994. He has
managed the Small Cap Equity Fund since it began operating in January 1997. He
has more than 10 years of investment experience and has been a portfolio manager
with STI since 1990. Prior to joining STI, Mr. Barner served as a consultant
with Drexel Burnham Lambert and Shearson Lehman Brothers.

Mr. John Hamlin joined STI as a portfolio manager in March 1999. Mr. Hamlin has
managed the Mid-Cap Equity Fund since April 1999. Prior to joining STI, he had
more than 19 years of experience as a portfolio manager at Phoenix Investment
Council, Inc.

The Balanced Fund is co-managed by Mr. Anthony R. Gray, Mr. L. Earl Denney, CFA
and Mr. Dave E. West, CFA. Mr. Gray manages the equity portion of the Fund. Mr.
Denney and Mr. West co-manage the fixed-income portion of the Fund. Mr. Denney
has served as Senior Vice President of STI since 1983, and has more than 20
years of investment experience. Mr. Denney also co-manages the Investment Grade
Bond Fund and Limited-Term Federal Mortgage Securities Fund with Mr. West. Mr.
West has served as Senior Vice President of STI since 1994, and has served as a
fixed-income portfolio manager with STI since 1989.

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

Mr. Ned Dau has served as Managing Director of STI since 1997. He has managed
the International Equity and Emerging Markets Equity Funds since May 1997. He
has more than 6 years of investment experience. Prior to joining STI, he was a
senior international equity analyst for American Express Financial Advisors from
1996 to 1997 and for the Principal Financial Group from 1992 to 1995.

Mr. Mark D. Garfinkel, CFA, has served as a portfolio manager at Trusco since
1994. He has managed the Small Cap Growth Stock Fund since it began operating in
October 1998. He has more than 10 years of investment experience and has been a
portfolio manager with SunTrust Banks or an affiliate since 1990.

Mr. Jonathan Mote, CFA, CFD, has served as a portfolio manager at Trusco since
August 1998. He has managed the Tax Sensitive Growth Stock Fund since it began
operating in December 1998. He has more than 13 years of investment experience.
Prior to joining Trusco, Mr. Mote served as a portfolio manager with SunTrust
Banks or an affiliate.

Mr. Jeffrey E. Markunas, CFA, has served as Senior Vice President of Trusco
since January 1999 and Senior Vice President and Director of Equity and Research
with Crestar Asset Management Company since 1992. He has managed the Growth and
Income Fund since 1992. Mr. Markunas has over 17 years of investment experience.
<PAGE>
28 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

PURCHASING FUND SHARES

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

SIMPLY SPEAKING . . .

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

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the transfer agent receives your purchase order. The
administrator calculates each Fund's NAV once each Business Day at the
regularly-scheduled close of normal trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time). So, to receive the current Business Day's
NAV, generally the transfer agent must receive your purchase order from your
financial institution before 4:00 p.m. Eastern time.

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES, AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE REQUESTS TO SUNTRUST OR OTHER
FINANCIAL INSTITUTIONS AT AN EARLIER TIME THAN THOSE LISTED ABOVE FOR YOUR
TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL
INSTITUTION TIME TO PROCESS YOUR REQUEST AND TRANSMIT IT TO THE ADMINISTRATOR
OR THE TRANSFER AGENT IN TIME TO MEET THE ABOVE STATED FUND CUT OFF TIMES. FOR
MORE INFORMATION ABOUT HOW TO PURCHASE OR SELL FUND SHARES, INCLUDING SPECIFIC
SUNTRUST OR OTHER FINANCIAL INSTITUTIONS INTERNAL ORDER ENTRY CUT OFF TIMES,
PLEASE CONTACT YOUR FINANCIAL INSTITUTION DIRECTLY.

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

SIMPLY SPEAKING . . .

NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.
<PAGE>
PROSPECTUS 29

PURCHASING, SELLING AND EXCHANGING FUND SHARES

SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting SunTrust or your financial institution. SunTrust or your financial
institution will give you information about how to sell your shares including
any specific cut off times required. The sale price of each share will be the
next NAV determined after the transfer agent receives your request from your
financial institution.

SIMPLY SPEAKING . . .

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

REDEMPTIONS IN KIND
The Funds generally pay sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Funds might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). Although it is highly unlikely that your
shares would ever be redeemed in kind, you would probably have to pay brokerage
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Funds may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in our Statement of Additional Information.
<PAGE>
30 PROSPECTUS

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

This information for the Funds other than the Growth and Income Fund has been
audited by Arthur Andersen, LLP, independent public accountants. The information
for the Growth and Income Fund has been audited by Deloitte & Touche, LLP,
independent public accountants. These reports, along with each Fund's financial
statements, appears in the annual reports that accompany our Statement of
Additional Information. You can obtain an annual report, which contains more
performance information, at no charge by calling 1-800-874-4700.

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<TABLE>
<CAPTION>
NET REALIZED
AND
NET ASSET UNREALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING OF INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END OF
PERIOD INCOME (LOSS) INVESTMENTS INCOME CAPITAL GAINS PERIOD TOTAL RETURN
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------
BALANCED FUND
- -------------
Trust Shares
1998............ $ 11.94 $ 0.31 $ 2.19 $ (0.32) $ (1.03) $ 13.09 22.15%
1997............ 11.55 0.33 1.47 (0.32) (1.09) 11.94 16.66
1996............ 10.26 0.33 1.41 (0.34) (0.11) 11.55 17.26
1995............ 9.76 0.33 0.49 (0.32) -- 10.26 8.72
1994(1)......... 10.00 0.11 (0.29) (0.06) -- 9.76 (1.78)**
- --------------------
CAPITAL APPRECIATION
FUND (FORMERLY
CAPITAL GROWTH FUND)
- --------------------
Trust Shares
1998............ $ 15.09 $ 0.09 $ 3.96 $ (0.09) $ (2.57) $ 16.48 29.51%
1997............ 14.90 0.12 3.13 (0.12) (2.94) 15.09 24.66
1996............ 12.18 0.12 3.32 (0.13) (0.59) 14.90 28.97
1995............ 11.99 0.16 0.57 (0.14) (0.40) 12.18 6.63
1994............ 11.95 0.16 0.31 (0.17) (0.26) 11.99 3.87
- --------------------
EMERGING MARKETS
EQUITY FUND
- --------------------
Trust Shares
1998............ $ 10.79 $ 0.16 $ (1.86) $ (0.08) $ (0.14) $ 8.87 (15.74%)
1997(2)......... 10.00 0.04 0.75 -- -- 10.79 7.90**
- --------------------
GROWTH AND INCOME
FUND (FORMERLY
CRESTFUNDS' VALUE
FUND)
- --------------------
Trust Class
For the years ended November 30:
1998............ $ 16.55 0.093 1.638 (0.095) (3.085) $ 15.10 13.64%
1997............ 13.39 0.137 3.237 (0.145) (0.070) 16.55 25.41%
1996............ 11.60 0.166 2.380 (0.165) (0.591) 13.39 22.68%
1995............ 10.73 0.245 2.619 (0.262) (1.732) 11.60 28.76%
1994............ 11.38 0.200 (0.240) (0.190) (0.420) 10.73 (0.49%)
- --------------------
INTERNATIONAL EQUITY
FUND
- --------------------
Trust Shares
1998............ $ 13.63 $ 0.04 $ 2.69 $ (0.04) $ (1.32) $ 15.00 21.87%
1997............ 11.40 0.03 2.57 (0.02) (0.35) 13.63 23.29
1996(3)......... 10.00 0.05 1.35 -- -- 11.40 14.00**

<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
NET ASSETS EXPENSES TO (LOSS) TO (EXCLUDING (EXCLUDING
END OF PERIOD AVERAGE NET AVERAGE NET WAIVERS AND WAIVERS AND PORTFOLIO
(000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS) TURNOVER RATE
------------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
- -------------
BALANCED FUND
- -------------
Trust Shares
1998............ $ 188,465 0.96% 2.51% 1.08% 2.39% 154%
1997............ 151,358 0.95 2.89 1.08 2.76 197
1996............ 111,638 0.95 3.00 1.09 2.86 155
1995............ 89,051 0.95 3.44 1.11 3.28 157
1994(1)......... 90,579 0.95* 2.76* 1.25* 2.46* 106
- --------------------
CAPITAL APPRECIATION
FUND (FORMERLY
CAPITAL GROWTH FUND)
- --------------------
Trust Shares
1998............ $ 1,532,587 1.16% 0.61% 1.27% 0.50% 194%
1997............ 1,085,128 1.15 0.83 1.25 0.73 141
1996............ 981,498 1.15 0.90 1.27 0.78 156
1995............ 984,205 1.15 1.38 1.28 1.25 128
1994............ 891,870 1.15 1.25 1.29 1.11 124
- --------------------
EMERGING MARKETS
EQUITY FUND
- --------------------
Trust Shares
1998............ $ 34,554 1.56% 1.14% 1.78% 0.92% 74%
1997(2)......... 39,495 1.55* 1.37* 2.04* 0.88* 24
- --------------------
GROWTH AND INCOME
FUND (FORMERLY
CRESTFUNDS' VALUE
FUND)
- --------------------
Trust Class
For the years end
1998............ $ 577,042 1.03% 1.21% 0.63% 0.43% 71%
1997............ 590,824 1.02% 1.17% 0.92% 0.77% 100%
1996............ 553,648 1.02% 1.17% 1.38% 1.23% 82%
1995............ 220,386 1.02% 1.17% 2.16% 2.01% 173%
1994............ 166,713 1.01% 1.01% 1.82% 1.82% 116%
- --------------------
INTERNATIONAL EQUITY
FUND
- --------------------
Trust Shares
1998............ $ 628,870 1.47% 0.61% 1.48% 0.60% 108%
1997............ 489,325 1.46 0.51 1.51 0.46 139
1996(3)......... 213,306 1.46* 1.36* 1.65* 1.17* 113
</TABLE>

* Annualized.
** Return is for period indicated and has not been annualized.
(1) Commenced operations on January 3, 1994.
(2) Commenced operations on January 31, 1997.
(3) Commenced operations on December 1, 1995.
Amounts designated as "--" are either $0 or have been rounded to $0.
<PAGE>
PROSPECTUS 31
<TABLE>
<CAPTION>
NET REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING OF INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL
PERIOD INCOME (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN
------------- ------------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------
INTERNATIONAL EQUITY
INDEX FUND
- --------------------
Trust Shares
1998............ $ 11.34 $ 0.11 $ 2.65 $ (0.11) $ (0.68) $ 13.31 25.82%
1997............ 10.96 0.10 0.69 (0.11) (0.30) 11.34 7.48
1996............ 10.24 0.10 0.84 (0.13) (0.09) 10.96 9.29
1995(4)......... 10.00 0.08 0.19 (0.02) (0.01) 10.24 2.69**
- --------------------
MID-CAP EQUITY FUND
(A)
- --------------------
Trust Shares
1998............ $ 13.21 $ -- $ 2.54 $ -- $ (1.96) $ 13.79 21.14%
1997............ 12.76 0.03 1.69 (0.05) (1.22) 13.21 14.23
1996............ 11.00 0.08 2.63 (0.08) (0.87) 12.76 25.54
1995............ 9.85 0.08 1.15 (0.08) -- 11.00 12.56
1994(5)......... 10.00 0.02 (0.16) (0.01) -- 9.85 (1.39)**
- --------------------
SMALL CAP EQUITY
FUND
- --------------------
Trust Shares
1998............ $ 11.07 $ 0.14 $ 2.41 $ (0.12) $ (0.62) $ 12.88 23.59%
1997(2)......... 10.00 0.05 1.04 (0.02) -- 11.07 10.97**
- -------------------
SUNBELT EQUITY FUND
- -------------------
Trust Shares
1998............ $ 13.28 $ 0.01 $ 3.03 $ -- $ (1.20) $ 15.12 23.86%
1997............ 14.11 (0.09) 0.25 -- (0.99) 13.28 1.48
1996............ 10.03 (0.04) 4.32 -- (0.20) 14.11 43.19
1995............ 9.70 (0.01) 0.38 -- (0.04) 10.03 3.81
1994(1)......... 10.00 -- (0.30) -- -- 9.70 (2.99)**
- --------------------
VALUE INCOME STOCK
FUND
- --------------------
Trust Shares
1998............ $ 13.71 $ 0.26 $ 2.62 $ (0.27) $ (2.42) $ 13.90 23.10%
1997............ 13.15 0.30 2.32 (0.30) (1.76) 13.71 22.18
1996............ 11.59 0.35 2.71 (0.34) (1.16) 13.15 27.91
1995............ 10.54 0.32 1.56 (0.32) (0.51) 11.59 19.06
1994............ 10.23 0.29 0.70 (0.32) (0.36) 10.54 9.95

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES TO INCOME (LOSS)
RATIO OF NET AVERAGE NET TO AVERAGE
RATIO OF INVESTMENT ASSETS NET ASSETS
NET ASSETS EXPENSES TO INCOME (LOSS) (EXCLUDING (EXCLUDING
END OF PERIOD AVERAGE NET TO AVERAGE WAIVERS AND WAIVERS AND PORTFOLIO
(000) ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) TURNOVER RATE
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------
INTERNATIONAL EQUITY
INDEX FUND
- --------------------
Trust Shares
1998............ $ 56,200 1.06% 0.88% 1.18% 0.76% 1%
1997............ 53,516 1.05 0.71 1.15 0.61 2
1996............ 90,980 1.05 0.84 1.19 0.70 30
1995(4)......... 89,446 1.05* 1.13* 1.31* 0.87* 10
- --------------------
MID-CAP EQUITY FUND
(A)
- --------------------
Trust Shares
1998............ $ 337,825 1.16% (0.29%) 1.27% (0.40%) 129%
1997............ 287,370 1.15 0.23 1.26 0.12 152
1996............ 253,905 1.15 0.70 1.29 0.56 116
1995............ 125,562 1.15 0.88 1.32 0.71 66
1994(5)......... 57,036 1.15* 1.20* 1.68* 0.67* 8
- --------------------
SMALL CAP EQUITY
FUND
- --------------------
Trust Shares
1998............ $ 390,841 1.21% 1.07% 1.31% 0.97% 55%
1997(2)......... 131,049 1.20* 1.86* 1.37* 1.69* 27
- -------------------
SUNBELT EQUITY FUND
- -------------------
Trust Shares
1998............ $ 431,921 1.16% (0.90%) 1.27% (1.01%) 70%
1997............ 381,371 1.15 (0.65) 1.26 (0.76) 72
1996............ 412,430 1.15 (0.34) 1.28 (0.47) 106
1995............ 258,908 1.15 (0.12) 1.30 (0.27) 80
1994(1)......... 128,280 1.15* (0.19)* 1.58* (0.62)* 21
- --------------------
VALUE INCOME STOCK
FUND
- --------------------
Trust Shares
1998............ $ 1,725,418 0.92% 1.85% 0.92% 1.85% 99%
1997............ 1,488,062 0.91 2.40 0.91 2.40 105
1996............ 1,244,399 0.92 2.86 0.92 2.86 134
1995............ 991,977 0.95 3.16 0.95 3.16 126
1994............ 573,082 0.88 3.21 0.97 3.12 149
</TABLE>

* Annualized.
** Return is for period indicated and has not been annualized.
(1) Commenced operations on January 3, 1994.
(2) Commenced operations on January 31, 1997.
(4) Commenced operations on June 6, 1994.
(5) Commenced operations on February 2, 1994.
(A) During the fiscal year ended May 31, 1996, the Aggressive Growth Fund
changed its name to the Mid-Cap Equity Fund.
Amounts designated as "--" are either $0 or have been rounded to $0.
On May 24, 1999, the Value Fund, a series of the CrestFunds, exchanged all of
its assets and certain liabilities for shares of the STI Growth and Income Fund.
Because the series of the CrestFunds is the accounting survivor of that
transaction, its basis of accounting for assets and liabilities and its
operating results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
<PAGE>
32 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

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

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

SIMPLY SPEAKING . . .

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

TAXES

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

SIMPLY SPEAKING . . .

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

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

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
24 EACH FUND'S PRINCIPAL INVESTMENTS
24 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
27 PURCHASING, SELLING AND EXCHANGING FUND SHARES
32 HISTORICAL FINANCIAL INFORMATION
35 HOW FUND SHARES ARE DISTRIBUTED
36 DIVIDENDS AND DISTRIBUTIONS

36 TAXES
TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC
FUNDS PLEASE REFER TO THE BACK COVER OF THE
PROSPECTUS
</TABLE>

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

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

FEES AND EXPENSES
FUND INVESTMENTS
INVESTMENT ADVISORS
PURCHASING FUND SHARES

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

OCTOBER 1, 1998 *MAY 24, 1999
(AS SUPPLEMENTED MAY 24, 1999)
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

CHOOSING INVESTOR OR FLEX SHARES

Investor Shares and Flex Shares have different expenses and other
characteristics, allowing you to choose the class that best suits your needs.
You should consider the amount you want to invest, how long you plan to have it
invested, and whether you plan to make additional investments.

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

FLEX SHARES
- - Deferred sales charge
- - Higher annual expenses
- - $5,000 minimum initial investment
<PAGE>
2 PROSPECTUS

FLORIDA TAX-EXEMPT BOND FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income exempt from federal income taxes for
Florida residents, with shares themselves expected
to be exempt from the Florida intangible personal
property tax
INVESTMENT FOCUS Florida municipal securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to invest more Fund assets in undervalued
STRATEGY sectors and less in overvalued ones
INVESTOR PROFILE Florida residents who want income exempt from
federal income taxes
</TABLE>

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Jacksonville, Sales Tax
Revenue..................... 3.4%
Orlando, Florida.............. 3.2%
Florida State Div Bd Fin...... 3.1%
Brevard County, Florida....... 2.9%
Palm Beech Solid Waste........ 2.6%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Florida Tax-Exempt Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal income taxes. And the
shares themselves are expected to be exempt from the Florida intangible personal
property tax. Issuers of these securities can be located in Florida, the
District of Columbia, Puerto Rico and other U.S. territories and possessions. In
selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We also try to identify and
invest in municipal issuers with improving credit and avoid those with
deteriorating credit. It is anticipated that the Fund's average weighted
maturity will range from 6 to 25 years. Under unusual circumstances, such as a
national financial emergency or a temporary decline in availability of Florida
obligations, up to 20% of the Fund may be invested in Securities subject to the
Florida intangible personal property tax and/or securities that generate income
subject to federal personal income taxes. These securities may include
short-term municipal securities outside Florida or certain taxable fixed income
securities.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in Florida debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Florida subjects the Fund to economic
conditions and government policies of Florida. The Fund is vulnerable to both
federal and state tax law changes. Debt securities may decline in credit quality
due to economic or governmental events. In addition, an issuer may be unable to
make timely payments of principal or interest to the Fund.

[ICON] PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
6.13% -1.56%
(3/31/95) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.21%.
<PAGE>
PROSPECTUS 3

FLORIDA TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (1/18/94)
<S> <C> <C> <C>
FLORIDA TAX-EXEMPT BOND FUND 3.60% 7.52% 5.28%
LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND INDEX 9.23% 10.19% 6.38%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/1/95)
<S> <C> <C> <C>
FLORIDA TAX-EXEMPT BOND FUND 5.09% 6.17%
LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND INDEX
9.23% 7.97%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The Lehman Brothers
10-Year Municipal Bond Index is a widely recognized index of long-term
investment grade tax-exempt bonds with maturities between 8 and 12 years.
The index represents various market sectors and geographic locations.

[ICON] FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you purchase or
sell Fund shares. You would pay these fees directly from your investment in a
Fund.
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
<S> <C> <C>
3.75% None
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)*
None 2.00%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)**
*THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE "PURCHASING FUND SHARES."
**THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR PURCHASE. SEE
"SELLING FUND SHARES."
</TABLE>

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .65% .65%
Distribution and Service (12b-1) Fees .18% 1.00%
Other Expenses .52% .37%
--- ---
Total Annual Fund Operating Expenses 1.35% 2.02%
</TABLE>

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 507 $ 787 $ 1087 $ 1938
Flex Shares $ 405 $ 634 $ 1088 $ 2348
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $ 507 $ 787 $ 1087 $ 1938
Flex Shares $ 205 $ 634 $ 1088 $ 2348
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .51%,
.00% AND .87%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .51%, .49% AND 1.37%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
4 PROSPECTUS

GEORGIA TAX-EXEMPT BOND FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Henry County, Georgia......... 3.4%
Dalton Georgia Utilities,
RS.......................... 2.9%
Georgia State................. 2.9%
Henry County, Georgia......... 2.6%
Burke County, Georgia......... 2.6%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Georgia Tax-Exempt Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Georgia income taxes.
Issuers of these securities can be located in Georgia, the District of Columbia,
Puerto Rico and other U.S. territories and possessions. In selecting investments
for the Fund, we try to limit risk as much as possible. Based on our analysis of
municipalities, credit risk, market trends and investment cycles, we attempt to
invest more of the Fund's assets in undervalued market sectors and less in
overvalued sectors. We try to diversify the Fund's holdings within Georgia. We
also try to identify and invest in municipal issuers with improving credit and
avoid those with deteriorating credit. It is anticipated that the Fund's average
weighted maturity will range from 6 to 25 years.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in Georgia debt securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates. This risk is greater for long-term debt securities than
for short-term debt securities. The Fund's concentration of investments in
securities of issuers located in Georgia subjects the Fund to economic
conditions and government policies of Georgia. Debt securities may decline in
credit quality due to economic or governmental events. In addition, an issuer
may be unable to make timely payments of principal or interest to the Fund.

[ICON] PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
4.84% -.73%
(3/31/95) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 1.92%.
<PAGE>
PROSPECTUS 5

GEORGIA TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (1/19/94)
<S> <C> <C> <C>
GEORGIA TAX-EXEMPT
BOND FUND 3.91% 6.72% 3.72%
LEHMAN BROTHERS 10-YEAR
MUNICIPAL BOND INDEX 9.23% 10.19% 6.38%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/6/95)
<S> <C> <C>
GEORGIA TAX-EXEMPT BOND FUND 5.32% 5.58%
LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND INDEX 9.23% 7.97%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

[ICON] FEES AND EXPENSES

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .65% .65%
Distribution and Service (12b-1) Fees .18% 1.00%
Other Expenses .48% .38%
--- ---
Total Annual Fund Operating Expenses 1.31% 2.03%
</TABLE>

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 503 $ 775 $ 1066 $ 1895
Flex Shares $ 406 $ 637 $ 1093 $ 2358
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $ 503 $ 775 $ 1066 $ 1895
Flex Shares $ 206 $ 637 $ 1093 $ 2358
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .50%,
.00% AND .87%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .50%, .49% AND 1.37%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
6 PROSPECTUS

INVESTMENT GRADE BOND FUND

[ICON] FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
United States Treasury Bond... 11.6%
United States Treasury Bond... 8.6%
United States Treasury Bond... 7.0%
Merrill Lynch................. 4.9%
FNMA.......................... 4.9%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Investment Grade Bond Fund invests primarily in investment grade corporate
debt securities, U.S. Treasury obligations and mortgage-backed securities. In
selecting investments for the Fund, we try to minimize risk while attempting to
outperform selected market indices. Currently, our selected index is the Lehman
Brothers Government/Corporate Bond Index, a widely recognized, unmanaged index
of investment grade government and corporate debt securities. We seek to invest
more in portions of the Index that seem relatively inexpensive, and less in
those that seem expensive. We allocate the Fund's investments among various
market sectors based on our analysis of historical data, yield information and
credit ratings. We anticipate that the Fund's average weighted maturity will
range from 4 to 10 years. Due to the Fund's investment strategy, the Fund may
buy and sell securities frequently. This may result in higher transaction costs
and additional capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in investment grade debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, an issuer may be unable to
make timely payments of principal or interest to the Fund. Some investment grade
debt securities have speculative characteristics. In addition, the Fund is
subject to the risk of investing in mortgage-backed securities. See
"Mortgage-Backed Securities" to the right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The mortgages
underlying mortgage-backed securities may mature or be paid off before the
stated maturity date. This has four drawbacks. First, the Fund may lose money
on its investment. Second, the monthly income payments to the Fund may
fluctuate. Third, we cannot predict the maturity of the Fund's investment
with certainty. Fourth, we would invest any resulting proceeds elsewhere,
generally at a lower interest rate.

[ICON] PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
6.02% -2.67%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 4.13%.
<PAGE>
PROSPECTUS 7

INVESTMENT GRADE BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (6/11/92)
<S> <C> <C> <C>
INVESTMENT GRADE
BOND FUND 4.56% 7.73% 5.93%
LEHMAN GOVERNMENT/
CORPORATE BOND INDEX 9.75% 10.43% 8.13%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/7/95)
<S> <C> <C>
INVESTMENT GRADE BOND FUND 6.14% 6.04%
LEHMAN GOVERNMENT/CORPORATE BOND INDEX 9.75% 8.08%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The Lehman Brothers
Government/Corporate Bond Index is a widely recognized index of government
and corporate debt securities rated investment grade or better, with
maturities of at least 1 year.

[ICON] FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you purchase or
sell Fund shares. You would pay these fees directly from your investment in a
Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.

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

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .74% .74%
Distribution and Service (12b-1) Fees .43% 1.00%
Other Expenses .22% .38%
--- ---
Total Annual Fund Operating Expenses 1.39% 2.12%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 511 $ 799 $ 1107 $ 1981
Flex Shares $ 415 $ 664 $ 1139 $ 2452
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $ 511 $ 799 $ 1107 $ 1981
Flex Shares $ 215 $ 664 $ 1139 $ 2452
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .64%,
.31% AND 1.17%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .64%, .64% AND 1.66%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
8 PROSPECTUS

INVESTMENT GRADE BOND FUND
<PAGE>
8 PROSPECTUS

INVESTMENT GRADE TAX-EXEMPT BOND FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
New York Ser J. GO............ 4.7%
Washington State.............. 3.1%
Illinois State................ 3.0%
King County................... 2.7%
Allegheny Cnty, PA Airport
Rev......................... 2.3%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Investment Grade Tax-Exempt Bond Fund invests primarily in investment grade
tax-exempt obligations, like municipal securities. The issuers of these
securities may be located in any U.S. state, territory or possession. In
selecting investments for the Fund, we try to limit risk as much as possible.
Based on our analysis of municipalities, credit risk, market trends and
investment cycles, we attempt to invest more of the Fund's assets in undervalued
market sectors and less in overvalued sectors. We also try to identify and
invest in municipal issuers with improving credit and avoid those with
deteriorating credit. We anticipate that the Fund's average weighted maturity
will range from 4 to 10 years. Due to the Fund's investment strategy, the Fund
may buy and sell securities frequently. This may result in higher transaction
costs and capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

[ICON] PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
5.87% -3.14%
(3/31/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.59%.
<PAGE>
PROSPECTUS 9

INVESTMENT GRADE TAX-EXEMPT BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR G.O. INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (6/9/92)
<S> <C> <C> <C>
INVESTMENT GRADE
TAX-EXEMPT BOND FUND 3.32% 7.51% 7.27%
LEHMAN BROTHERS 5-YEAR G.O. INDEX 6.48% 7.54% 6.38%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/1/95)
<S> <C> <C>
INVESTMENT GRADE TAX-EXEMPT BOND FUND 4.85% 6.38%
LEHMAN BROTHERS 5-YEAR G.O. INDEX 6.48% 6.35%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

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

[ICON] FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you purchase or
sell Fund shares. You would pay these fees directly from your investment in a
Fund.

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

SHAREHOLDER FEES
- --------------------------------------------------------------------------------

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .74% .74%
Distribution and Service (12b-1) Fees .43% 1.00%
Other Expenses .27% .37%
--- ---
Total Annual Fund Operating Expenses 1.44% 2.11%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE END OF
THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 516 $ 813 $ 1132 $ 2035
Flex Shares $ 414 $ 661 $ 1134 $ 2441
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $ 516 $ 813 $ 1132 $ 2035
Flex Shares $ 214 $ 661 $ 1134 $ 2441
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .62%,
.28% AND 1.17%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .62%, .66% AND 1.65%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
10 PROSPECTUS

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
United States Treasury Note... 15.5%
FHLMC-CNMA Remic.............. 11.1%
FNMA.......................... 8.8%
FHLMC......................... 8.1%
FNMA.......................... 8.1%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Limited-Term Federal Mortgage Securities Fund invests primarily in U.S.
government agency mortgage-backed securities, such as Fannie Mae, GNMA and
collateralized mortgage obligations. These securities typically have an
effective maturity from 1 to 5 years. In selecting investments for the Fund, we
try to identify securities that we expect to perform well in rising and falling
markets. We also attempt to reduce the risk that the underlying mortgages are
pre-paid by focusing on securities that we believe are less prone to this risk.
For example, Fannie Mae or GNMA securities that were issued years ago may be
less prone to pre-payment risk because there have been many opportunities for
pre-payment, but none have occurred. Due to the Fund's investment strategy, the
Fund may buy and sell securities frequently. This may result in higher
transaction costs and capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

SIMPLY SPEAKING . . .

MORTGAGE-BACKED SECURITIES

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

[ICON] PERFORMANCE INFORMATION

THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S INVESTOR SHARES
FROM YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*
<PAGE>
PROSPECTUS 11

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
4.01% .16%
(3/31/95) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.81%.
<PAGE>
12 PROSPECTUS

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MERRILL LYNCH 1-5 YEAR SHORT/
INTERMEDIATE U.S TREASURY INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (7/17/94)
<S> <C> <C> <C>
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND 3.69% 6.60% 5.80%
MERRILL LYNCH 1-5 YEAR SHORT INTERMEDIATE U.S TREASURY INDEX 7.11% 8.08% 7.28%
</TABLE>

<TABLE>
<CAPTION>
SINCE INCEPTION
FLEX SHARES 1 YEAR (6/7/95)
<S> <C> <C>
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND 4.11% 5.51%
MERRILL LYNCH 1-5 YEAR SHORT INTERMEDIATE U.S. TREASURY INDEX 7.11% 6.70%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The Merrill Lynch 1-5
Year Short/ Intermediate U.S. Treasury Index is a widely recognized index
of U.S. Treasury securities with maturities 1 year or greater and no more
than 5 years.

[ICON] FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you purchase or
sell Fund shares. You would pay these fees directly from your investment in a
Fund.

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

SHAREHOLDER FEES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
<S> <C> <C>
2.50% None
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)*
None 2.00%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)**
*THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE "PURCHASING FUND SHARES."
**THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR PURCHASE. SEE
"SELLING FUND SHARES."
</TABLE>

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .65% .65%
Distribution and Service (12b-1) Fees .23% 1.00%
Other Expenses .64% 1.08%
--- ---
Total Annual Fund Operating Expenses 1.52% 2.73%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE END OF
THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 401 $ 718 $ 1058 $ 2017
Flex Shares $ 476 $ 847 $ 1445 $ 3061
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $ 401 $ 718 $ 1058 $ 2017
Flex Shares $ 276 $ 847 $ 1445 $ 3061
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .54%,
.00% AND .92%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .54%, .00% AND 1.27%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
12 PROSPECTUS

MARYLAND MUNICIPAL BOND FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY

The Maryland Municipal Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Maryland income taxes.
Issuers of these securities can be located in Maryland, the District of
Columbia, Puerto Rico and other U.S. territories and possessions. In selecting
investments for the Fund, we try to limit risk by buying investment grade
securities. There are no limits on the Fund's average weighted maturity or on
the remaining maturities of individual securities.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

[ICON] PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
3.35% -.91%
(6/30/97) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .17%.
<PAGE>
PROSPECTUS 13

MARYLAND MUNICIPAL BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS GENERAL OBLIGATION BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (4/25/96)
<S> <C> <C>
MARYLAND MUNICIPAL BOND FUND -.09% 5.16%
LEHMAN BROTHERS GENERAL OBLIGATION BOND INDEX 6.68% 7.99%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The Lehman Brothers
General Obligation Bond Index is a widely recognized index of general
obligation issued in the last five years with maturies of over 1 year.

[ICON] FEES AND EXPENSES

SHAREHOLDER FEES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of the offering price) None

2.00%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)*
</TABLE>

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

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
Investment Advisory Fees .65%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses .51%
---
Total Annual Fund Operating Expenses 2.16%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Flex Shares $425 $676 $ 1159 $ 2493
IF YOU DO NOT SELL YOUR
SHARES:
Flex Shares $225 $676 $ 1159 $ 2493
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .49%, .59%
AND 1.59%, RESPECTIVELY. The Advisor and Distributor could discontinue these
voluntary waivers at any time. For more information about these fees, see
"Investment Advisors" and "How Fund Shares are Distributed."
<PAGE>
14 PROSPECTUS

SHORT-TERM BOND FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
United States Treasury Note... 7.1%
United States Treasury Note... 5.4%
U.S. Treasury Stripped........ 4.5%
United States Treasury Note... 4.0%
United States Treasury Note... 3.8%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Short-Term Bond Fund invests primarily in a diversified portfolio of short-
to medium-term investment grade U.S. Treasury, corporate debt, mortgage-backed
and asset-backed securities. The Fund expects that it will normally maintain an
average weighted maturity of approximately 3 years. In selecting investments for
the Fund, we attempt to identify securities that offer a comparably better
investment return for a given level of credit risk. For example, short-term
bonds generally have better returns than money market instruments, with a fairly
modest increase in credit risk and/or volatility. We manage the Fund from a
total return perspective. That is, we make day to day investment decisions for
the Fund with a view towards maximizing returns. We analyze yields, market
sectors and credit risk in an effort to identify attractive investments with the
best risk/reward trade-off.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. In addition, an issuer may be unable to make timely payments of
principal or interest to the Fund. Also, the Fund may invest in bonds rated
"investment grade." Some investment grade bonds may have speculative
characteristics. In addition, the Fund is subject to the risk of investing in
mortgage-backed and asset-backed securities. See "Mortgage-Backed and
Asset-Backed Securities" to the right.

SIMPLY SPEAKING . . .

MORTGAGE-BACKED AND
ASSET-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The owner of an
asset-backed security owns a share of the underlying pool of assets, such as
truck and auto loans, leases and credit card receivables. The mortgages
receivables, or other assets underlying mortgage-backed securities may mature
or be paid off before the stated maturity date. This has four drawbacks.
First, the Fund may lose money on its investment. Second, the monthly income
payments to the Fund may fluctuate. Third, we cannot predict the maturity of
the Fund's investment with certainty. Fourth, we would invest any resulting
proceeds elsewhere, generally at a lower interest rate.

[ICON] PERFORMANCE INFORMATION

SHORT-TERM BOND FUND

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
3.81% -.63%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 3.00%.
<PAGE>
16 PROSPECTUS

SHORT-TERM BOND FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (3/22/93)
<S> <C> <C> <C>
SHORT-TERM BOND FUND 4.36% 6.48% 4.66%
SALOMON 1-3 YEAR TREASURY/ GOVERNMENT SPONSORED/ CORPORATE INDEX 6.67% 7.54% 5.63%
SALOMON ONE YEAR TREASURY BENCHMARK ON-THE-RUN INDEX 6.10% 6.61% 5.34%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/20/95)
<S> <C> <C>
SHORT-TERM BOND FUND 4.21% 5.42%
SALOMON 1-3 YEAR TREASURY/GOVERNMENT SPONSORED/CORPORATE INDEX 6.67% 6.59%
SALOMON ONE YEAR TREASURY BENCHMARK ON-THE-RUN INDEX 6.10% 6.26%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

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

[ICON] FEES AND EXPENSES

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
<S> <C> <C>
2.00% None
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)*
None 2.00%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)**
*THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE "PURCHASING FUND SHARES."
**THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR PURCHASE. SEE
"SELLING FUND SHARES."
</TABLE>

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .65% .65%
Distribution and Service (12b-1) Fees .23% 1.00%
Other Expenses .84% 1.21%
--- ---
Total Annual Fund Operating Expenses 1.72% 2.86%
</TABLE>

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $371 $ 731 $1115 $2190
Flex Shares $489 $ 886 $1508 $3185
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $371 $ 731 $1115 $2190
Flex Shares $289 $ 886 $1508 $3185
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .52%,
.00% AND .87%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .52%, .00% AND 1.22%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
16 PROSPECTUS

SHORT-TERM U.S. TREASURY SECURITIES FUND

[ICON] FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
United States Treasury Note... 33.4%
United States Treasury Note... 25.0%
United States Treasury Note... 8.5%
United States Treasury Note... 4.9%
United States Treasury Note... 4.5%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Short-Term U.S. Treasury Securities Fund invests exclusively in short-term
U.S. Treasury securities (those with remaining maturities of 3 years or less).
The Fund intends to maintain an average weighted maturity from 1 to 2 years. The
Fund offers investors the opportunity to capture the advantage of investing in
short-term bonds over money market instruments. Generally, short-term bonds
offer a comparably better return than money market instruments, with a modest
increase in interest rate risk. We manage the Fund from a total return
perspective. That is, we make day to day investment decisions for the Fund with
a view toward maximizing returns and yield. We try to select those U.S. Treasury
securities that offer the best risk/reward trade-off.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in U.S. Treasury securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates.

[ICON] PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
2.60% -.13%
(3/31/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.68%.
<PAGE>
PROSPECTUS 17

SHORT-TERM U.S. TREASURY SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE SALOMON 1-3 YEAR TREASURY/ GOVERNMENT
SPONSORED/CORPORATE INDEX AND THE SALOMON 6 MONTH TREASURY INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (3/18/93)
<S> <C> <C> <C>
SHORT-TERM U.S. TREASURY SECURITIES FUND 4.64% 5.78% 4.44%
SALOMON 1-3 YEAR TREASURY/ GOVERNMENT SPONSORED/ CORPORATE INDEX 6.67% 7.54% 5.63%
SALOMON 6 MONTH TREASURY BILL INDEX 5.41% 5.53% 4.98%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/22/95)
<S> <C> <C>
SHORT-TERM U.S. TREASURY SECURITIES FUND 3.43% 4.95%
SALOMON 1-3 YEAR TREASURY/GOVERNMENT SPONSORED/CORPORATE INDEX 6.67% 6.59%
SALOMON 6 MONTH TREASURY BILL INDEX 5.41% 5.63%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

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

[ICON] FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you purchase or
sell Fund shares. You would pay these fees directly from your investment in a
Fund.

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

SHAREHOLDER FEES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR
SHARES FLEX SHARES
<S> <C> <C>
1.00% None
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)*
None 2.00%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value)**

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .65% .65%
Distribution and Service (12b-1) Fees .18% 1.00%
Other Expenses .51% 1.23%
--- ---
Total Annual Fund Operating Expenses 1.34% 2.88%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 235 $ 520 $ 827 $ 1697
Flex Shares $ 491 $ 892 $ 1518 $ 3204
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 235 $ 520 $ 827 $ 1697
Flex Shares $ 291 $ 892 $ 1518 $ 3204
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .47%,
.00% AND .82%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .47%, .00% AND 1.07%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
18 PROSPECTUS

U.S. GOVERNMENT SECURITIES FUND

[ICON] FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
United States Treasury Note... 5.1%
United States Treasury Bond... 5.0%
GNMA.......................... 4.7%
FHLMC......................... 3.8%
FNMA Remic.................... 3.2%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The U.S. Government Securities Fund invests primarily in U.S.
government debt securities, such as mortgage-backed securities and U.S. Treasury
obligations. In an attempt to provide a consistently high dividend without
adding undue risk, the Fund focuses its investments in mortgage-backed
securities. The average maturity of the Fund's portfolio will typically range
from 7 to 14 years.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in U.S. government debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, the Fund is subject to the
risk of investing in mortgage-backed securities. See "Mortgage-Backed
Securities" to the right.

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

[ICON] PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
5.81% -2.31%
(6/30/95) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 3.71%.
<PAGE>
PROSPECTUS 19

U.S. GOVERNMENT SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (6/9/94)
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES FUND 4.58% 7.67% 5.98%
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX 7.72% 8.65% 7.58%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/7/95)
<S> <C> <C>
U.S. GOVERNMENT SECURITIES FUND 5.96% 5.76%
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX 7.72% 6.98%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The Lehman Brothers
Intermediate Government Bond Index is a widely recognized index of U.S.
Treasury securities and government agency securities with maturities
ranging from 1 to 10 years.

[ICON] FEES AND EXPENSES

SHAREHOLDER FEES
- --------------------------------------------------------------------------------

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .74% .74%
Distribution and Service (12b-1) Fees .38% 1.00%
Other Expenses .65% .59%
--- ---
Total Annual Fund Operating Expenses 1.77% 2.33%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE END OF
THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 548 $ 911 $ 1298 $ 2381
Flex Shares $ 436 $ 727 $ 1245 $ 2666
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $ 548 $ 911 $ 1298 $ 2381
Flex Shares $ 236 $ 727 $ 1245 $ 2666
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .58%,
.00% AND 1.17%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .58%, .51% AND 1.68%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
20 PROSPECTUS

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY

The Virginia Intermediate Municipal Bond Fund invests substantially all of its
assets in municipal securities with income exempt from federal and Virginia
income taxes. Issuers of these securities can be located in Virginia, the
District of Columbia, Puerto Rico and other U.S. territories and possessions. In
selecting investments for the Fund, we try to limit risk by buying investment
grade securities. We also consider stability and growth of principal. We expect
that the Fund's average weighted maturity will range from 5 to 10 years but
there is no limit on the maturities of individual securities.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

[ICON] PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
6.10% -6.72%
(3/31/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .54%.
<PAGE>
PROSPECTUS 21

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS 5-YEAR G.O. BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (5/5/93)
<S> <C> <C> <C>
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND 1.59% 3.72% 4.27%
LEHMAN BROTHERS 5-YEAR G.O. BOND INDEX 5.85% 5.36% 5.67%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

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

[ICON] FEES AND EXPENSES

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

*THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR SHARES
<S> <C>
Investment Advisory Fees .65%
Distribution and Service (12b-1) Fees .15%
Other Expenses .29%
-----
Total Annual Fund Operating Expenses 1.09%
</TABLE>

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $443 $639 $ 953 $ 1654
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor and Distributor are voluntarily waiving
a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES
AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .65%, 0%, AND .79%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
22 PROSPECTUS

VIRGINIA MUNICIPAL BOND FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY

The Virginia Municipal Bond Fund invests substantially all of its assets in
municipal securities with income exempt from federal and Virginia income taxes.
Issuers of these securities can be located in Virginia, the District of
Columbia, Puerto Rico and other U.S. territories and possessions. In selecting
investments for the Fund, we try to limit risk by buying investment grade
securities. There are no limits on the Fund's average weighted maturity or on
the remaining maturities of individual securities.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

[ICON] PERFORMANCE INFORMATION

THIS BAR CHART SHOWS CHANGES IN THE PERFORMANCE OF THE FUND'S FLEX SHARES FROM
YEAR TO YEAR. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES HAD
BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
3.18% -2.93%
(6/30/97) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .34%.
<PAGE>
PROSPECTUS 23

VIRGINIA MUNICIPAL BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS GENERAL OBLIGATION BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (4/17/95)
<S> <C> <C>
VIRGINIA MUNICIPAL BOND FUND -.17% 4.96%
LEHMAN BROTHERS GENERAL OBLIGATION BOND INDEX 6.68% 7.99%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?

An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Brothers General
Obligation Bond Index is a widely recognized index of general obligation
securities issued in the last five years with maturities of over one year.

[ICON] FEES AND EXPENSES

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

*THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE. SEE "SELLING FUND SHARES."
The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
Investment Advisory Fees .65%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses .48%
---
Total Annual Fund Operating Expenses 2.13%
</TABLE>

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Flex Shares $ 442 $ 667 $ 1144 $ 2462
IF YOU DO NOT SELL YOUR SHARES:
Flex Shares $ 242 $ 667 $ 1144 $ 2462
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor and the Distributor are voluntarily
waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .58%, .59% AND 1.65%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "Distribution of Fund Shares."
<PAGE>
24 PROSPECTUS

EACH FUND'S PRINCIPAL INVESTMENTS

[ICON] FUND INVESTMENTS

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

<CAPTION>
U.S. VIRGINIA VIRGINIA
GOVERNMENT INTERMEDIATE MUNICIPAL
SECURITIES MUNICIPAL BOND FUND
FUND BOND FUND
- ----------------------------
<S> <C> <C> <C>
Asset-Backed Securities
- ----------------------------
Corporate Debt Securities
- ----------------------------
Mortgage-Backed Securities X
- ----------------------------
Municipal Securities X X
- ----------------------------
U.S. Government Securities X
- ----------------------------
</TABLE>

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

[ICON] INVESTMENT ADVISORS

<PAGE>
PROSPECTUS 25

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Maryland Municipal Bond, Short-Term
Bond, Short-Term U.S. Treasury Securities, U.S. Government Securities, Virginia
Intermediate Municipal Bond, and Virginia Municipal Bond Funds. As of December
31, 1998, Trusco had approximately $23 billion in assets under management. For
the fiscal year ended May 31, 1998, Trusco received advisory fees of:

<TABLE>
<S> <C>
SHORT-TERM BOND FUND..................... .52%
SHORT-TERM U.S. TREASURY SECURITIES
FUND................................... .47%
U.S. GOVERNMENT SECURITIES FUND.......... .58%
</TABLE>

<TABLE>
<S> <C>
MARYLAND MUNICIPAL BOND FUND............. .25%
VIRGINIA INTERMEDIATE MUNICIPAL BOND
FUND................................... .50%
VIRGINIA MUNICIPAL BOND FUND............. .50%
</TABLE>

SunTrust Bank, Atlanta, 25 Park Place, Atlanta, Georgia 30303, serves as the
Advisor to the Georgia Tax-Exempt Bond Fund. As of December 31, 1998, SunTrust
Bank, Atlanta had approximately $34 billion under management. For the fiscal
year ended May 31, 1998, SunTrust Bank, Atlanta received advisory fees of .50%
for the Georgia Tax-Exempt Bond Fund.

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

PORTFOLIO MANAGERS

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

Mr. David Yealy has served as a Vice President of Trusco since 1993. He has
managed the Short-Term U.S. Treasury Securities Fund since July 1996. He has
more than 13 years of investment experience.

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

Ms. Cheryl L. Page, CFA, has served as Vice President of Trusco since January
1999 and Portfolio Manager, from 1991 to 1996, and Vice President, since 1999,
of Crestar Asset Management Company. She has managed the Virginia Intermediate
Municipal Bond Fund since July 1993. She also managed the Virginia Municipal
Bond Fund and the Maryland Municipal Bond Fund from their inception to 1998. Ms.
Page has over 12 years of investment experience.

Ms. Aki Pampush, CFA, has served as Vice President of Trusco since 1988. She has
managed the Short Term Bond Fund since February 1999. Ms. Pampush has over 16
years of investment experience.
<PAGE>
PROSPECTUS 27

PURCHASING, SELLING AND EXCHANGING FUND SHARES

[ICON] PURCHASING FUND SHARES

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

SIMPLY SPEAKING . . .

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

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

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

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE, SALE AND EXCHANGE REQUESTS TO SUNTRUST
OR OTHER FINANCIAL INSTITUTIONS AT AN EARLIER TIME THAN THOSE LISTED ABOVE,
FOR YOUR TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL
INSTITUTION TIME TO PROCESS YOUR REQUEST AND TRANSMIT IT TO THE TRANSFER AGENT
IN TIME TO MEET THE ABOVE STATED FUND CUT OFF TIMES. FOR MORE INFORMATION
ABOUT HOW TO PURCHASE, SELL OR EXCHANGE FUND SHARES, INCLUDING SPECIFIC
SUNTRUST OR OTHER FINANCIAL INSTITUTION INTERNAL ORDER ENTRY CUT OFF TIMES,
PLEASE CONTACT YOUR FINANCIAL INSTITUTION DIRECTLY.

HOW THE FUNDS CALCULATE NAV
In calculating NAV, the administrator generally values a Fund's portfolio at
market price. If market prices are unavailable or the Funds think that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.

SIMPLY SPEAKING . . .

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

MINIMUM PURCHASES
To purchase Investor Shares for the first time, you must invest at least $2,000
in any Fund. To purchase Flex Shares for the first time, you must invest at
least $5,000 in any Fund ($2,000 for retirement plans). To purchase additional
shares of any Fund, you must invest at least $1,000 or, if you pay by a
statement coupon, $100. The Funds may accept investments of
<PAGE>
28 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES
smaller amounts, for either class of shares, at our discretion.

FUNDLINK
FUNDLINK is a telephone activated service that allows you to transfer money
quickly and easily between the STI Classic Funds and your SunTrust bank
account(s). To use FUNDLINK, you must first contact your SunTrust Bank
Investment Consultant and complete the FUNDLINK application and authorization
agreements. Once you have signed up to use FUNDLINK, simply call SunTrust at
1-800-428-6970 to complete all of your purchase and redemption transactions.

SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a SunTrust affiliate bank, you
may purchase shares of either class automatically through regular deductions
from your account. With a $500 minimum initial investment, you may begin
regularly scheduled investments from $50 up to $100,000 once or twice a month.
If you are buying Flex Shares, you should plan on investing at least $5,000 per
Fund during the first two years. The Distributor may close your account if you
do not meet this minimum investment requirement at the end of two years.

SALES CHARGES
FRONT-END SALES CHARGES - INVESTOR SHARES
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:

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

INVESTMENT GRADE TAX-EXEMPT BOND FUND $100,000 BUT LESS THAN $250,000 3.25% 3.36%

INVESTMENT GRADE BOND FUND $250,000 BUT LESS THAN $1,000,000 2.50% 2.56%

FLORIDA TAX-EXEMPT BOND FUND $1,000,000 AND OVER 1.50% 1.52%

GEORGIA TAX-EXEMPT BOND FUND

VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------------------------------------------------

LIMITED-TERM FEDERAL LESS THAN $100,000 2.50% 2.56%

MORTGAGE SECURITIES FUND $100,000 BUT LESS THAN $250,000 1.75% 1.78%

$250,000 BUT LESS THAN $1,000,000 1.25% 1.27%

$1,000,000 AND OVER NONE NONE
- --------------------------------------------------------------------------------------------------------------------------

SHORT-TERM BOND FUND LESS THAN $100,000 2.00% 2.04%

$100,000 BUT LESS THAN $250,000 1.50% 1.52%

$250,000 BUT LESS THAN $1,000,000 1.00% 1.01%

$1,000,000 AND OVER NONE NONE
- --------------------------------------------------------------------------------------------------------------------------

SHORT-TERM U.S. TREASURY LESS THAN $100,000 1.00% 1.01%

SECURITIES FUND $100,000 BUT LESS THAN $250,000 0.75% 0.76%

$250,000 BUT LESS THAN $1,000,000 0.50% 0.50%

$1,000,000 AND OVER NONE NONE
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
PROSPECTUS 29

PURCHASING, SELLING AND EXCHANGING FUND SHARES

WAIVER OF FRONT-END SALES CHARGE -
INVESTOR SHARES
The front-end sales charge will be waived on Investor Shares purchased: (1)
through reinvestment of dividends and distributions; (2) through a SunTrust
Securities, Inc. asset allocation account; (3) by persons repurchasing shares
they redeemed within the last 60 days (see Repurchase of Investor Shares); (4)
by current employees, and members of their immediate family, of SunTrust and its
affiliates; (5) by persons reinvesting distributions from qualified employee
benefit retirement plans and rollovers from individual retirement accounts
("IRAs") previously with the Trust department of a bank affiliated with
SunTrust; (6) by persons investing an amount less than or equal to the value of
an account distribution when an account for which a bank affiliated with
SunTrust acted in a fiduciary, administrative, custodial or investment advisory
capacity is closed; or (7) through dealers, retirement plans, asset allocation
programs and financial institutions that, under their dealer agreements with the
Distributor or otherwise, do not receive any or receive a reduced portion of the
front-end sales charge.

REPURCHASE OF INVESTOR SHARES
You may repurchase any amount of Investor Shares of any Fund at NAV (without the
normal front-end sales charge), equal to or less than the value of any amount of
Investor Shares (for which you paid a front-end sales charge) that you redeemed
within the past 60 days. In effect, this allows you to repurchase shares that
you may have had to redeem, without repaying the front-end sales charge. To
exercise this privilege, the transfer agent must receive your purchase order
within 60 days of your redemption. In addition, you must notify the Funds when
you send in your purchase order that you are repurchasing shares.

REDUCED SALES CHARGES - INVESTOR SHARES

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

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

You are not legally bound by the terms of your Letter of Intent to purchase the
amount of your shares stated in the Letter. The Letter does, however, authorize
the Funds to hold in escrow 3.75% of the total amount you intend to purchase. If
you do not complete the total intended purchase at the end of the 13-month
period, the transfer agent will redeem the necessary portion of the escrowed
shares to make up the difference between the reduced rate sales charge (based on
the amount you intended to
<PAGE>
30 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES
purchase) and the sales charge that would normally apply (based on the actual
amount you purchased).

COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the appropriate
sales charge rate, we will combine same day purchases of Investor Shares (that
are subject to a sales charge) made by you, your spouse and your minor children
(under age 21). This combination also applies to Investor Shares you purchase
with a Letter of Intent.

CONTINGENT DEFERRED SALES CHARGES - FLEX SHARES
You do not pay a front-end sales charge when you purchase Flex Shares. But if
you sell your shares within the first year after your purchase, you will pay a
contingent deferred sales charge equal to 2.00% of either (1) the NAV of the
shares at the time of purchase, or (2) NAV of the shares next calculated after
the transfer agent receives your sale request, whichever is less. The sales
charge does not apply to Flex Shares you purchase through reinvestment of
dividends or distributions. So, you never pay a deferred sales charge on any
increase in your investment above the initial offering price. This sales charge
does not apply to exchanges of Flex Shares of one Fund for Flex Shares of
another Fund.

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

SIMPLY SPEAKING . . .

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

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

SIMPLY SPEAKING . . .

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

SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have an account with a
SunTrust affiliated bank, electronically transferred to your account.

RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after
the transfer agent
<PAGE>
PROSPECTUS 31

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

INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the required minimum, $2,000 for Investor
Shares and $5,000 for Flex Shares, you may be required to sell your shares. You
will always be given at least 60 days' written notice to give you time to add to
your account and avoid selling your shares.

EXCHANGING FUND SHARES
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting the Funds
directly by mail or telephone. You may also exchange shares through your
financial institution by mail or telephone. Exchange requests must be for an
amount of at least $1,000. You may exchange your shares up to four times during
a calendar year. If you exchange your shares more than four times during a year,
you may be charged a $10.00 fee for each additional exchange. You will be
notified before any fee is charged. If you recently purchased shares by check or
through ACH, you may not be able to exchange your shares until your check has
cleared (which may take up to 15 Business Days). This exchange privilege may be
changed or canceled at any time upon 60 days' notice.

SIMPLY SPEAKING . . .

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

INVESTOR SHARES
You may exchange Investor Shares of any Fund for Investor Shares of any other
Fund. If you exchange shares that you purchased without a sales charge or with a
lower sales charge into a Fund with a sales charge or with a higher sales
charge, the exchange is subject to an incremental sales charge (e.g., the
difference between the lower and higher applicable sales charges). If you
exchange shares into a Fund with the same, lower or no sales charge there is no
incremental sales charge for the exchange.

FLEX SHARES
You may exchange Flex Shares of any Fund for Flex Shares of any other Fund, or
for Investor Shares of the Money Market Funds. No contingent deferred sales
charge is imposed on redemptions of Money Market Funds shares you acquire in an
exchange, provided you hold your shares for at least one year from your initial
purchase. If you exchange Flex Shares for Investor Shares of a Money Market
Fund, you may only exchange those Money Market Fund Investor Shares for Flex
Shares.
<PAGE>
32 PROSPECTUS

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Investor and Flex
Shares of each Fund. This information is intended to help you understand each
Fund's financial performance for the past five years, or, if shorter, the period
of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions.
The information for the Funds other than the Maryland Municipal Bond, Virginia
Intermediate Municipal Bond, and Virginia Municipal Bond Funds has been audited
by Arthur Andersen, LLP, independent public accountants. The information for the
Maryland Municipal Bond, Virginia Intermediate Municipal Bond, and Virginia
Municipal Bond Funds has been audited by Deloitte & Touche LLP, independent
accountants. These reports, along with each Fund's financial statements, appears
in the annual reports that accompany our Statement of Additional Information.
You can obtain our annual reports, which contain more performance information,
at no charge by calling 1-800-874-4700.
SIMPLY SPEAKING . . .
FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED NET
NET ASSET GAINS DISTRIBUTIONS ASSET
VALUE NET (LOSSES) FROM NET DISTRIBUTIONS VALUE
BEGINNING OF INVESTMENT ON INVESTMENT FROM REALIZED END OF
PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS PERIOD
------------ ------------- --------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------
FLORIDA TAX-EXEMPT BOND FUND
- -----------------------------
Investor Shares
1998.............................. $ 10.29 $ 0.42 $ 0.44 $ (0.42) $ (0.01) $ 10.72
1997.............................. 10.07 0.44 0.25 (0.44) (0.03) 10.29
1996.............................. 10.18 0.44 (0.06) (0.44) (0.05) 10.07
1995.............................. 9.75 0.42 0.43 (0.42) -- 10.18
1994(1)........................... 10.00 0.13 (0.25) (0.13) -- 9.75
Flex Shares
1998.............................. $ 10.30 $ 0.37 $ 0.45 $ (0.37) $ (0.01) $ 10.74
1997.............................. 10.08 0.39 0.25 (0.39) (0.03) 10.30
1996(2)........................... 10.19 0.39 (0.06) (0.39) (0.05) 10.08
- ------------------------------
GEORGIA TAX-EXEMPT BOND FUND
- ------------------------------
Investor Shares
1998.............................. $ 9.74 $ 0.39 $ 0.40 $ (0.39) $ (0.01) $ 10.13
1997.............................. 9.58 0.40 0.21 (0.40) (0.05) 9.74
1996.............................. 9.65 0.41 (0.05) (0.41) (0.02) 9.58
1995.............................. 9.44 0.40 0.21 (0.40) -- 9.65
1994(3)........................... 10.00 0.13 (0.56) (0.13) -- 9.44
Flex Shares
1998.............................. $ 9.73 $ 0.34 $ 0.40 $ (0.34) $ (0.01) $ 10.12
1997.............................. 9.56 0.35 0.22 (0.35) (0.05) 9.73
1996(4)........................... 9.72 0.36 (0.14) (0.36) (0.02) 9.56
- ----------------------------
INVESTMENT GRADE BOND FUND
- ----------------------------
Investor Shares
1998.............................. $ 10.16 $ 0.55 $ 0.49 $ (0.55) $ -- $ 10.65
1997.............................. 10.06 0.56 0.10 (0.56) -- 10.16
1996.............................. 10.26 0.56 (0.20) (0.56) -- 10.06
1995.............................. 9.89 0.57 0.38 (0.58) -- 10.26
1994.............................. 10.44 0.46 (0.35) (0.46) (0.20) 9.89
Flex Shares
1998.............................. $ 10.17 $ 0.51 $ 0.49 $ (0.51) $ -- $ 10.66
1997.............................. 10.07 0.51 0.10 (0.51) -- 10.17
1996(5)........................... 10.33 0.52 (0.26) (0.52) -- 10.07
- ----------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
- ----------------------------------------
Investor Shares
1998.............................. $ 11.24 $ 0.39 $ 0.49 $ (0.39) $ (0.32) $ 11.41
1997.............................. 11.12 0.40 0.33 (0.40) (0.21) 11.24
1996.............................. 11.30 0.41 0.19 (0.41) (0.37) 11.12
1995.............................. 10.69 0.42 0.61 (0.42) -- 11.30
1994.............................. 10.79 0.33 0.25 (0.33) (0.35) 10.69
Flex Shares
1998.............................. $ 11.23 $ 0.33 $ 0.49 $ (0.33) $ (0.32) $ 11.40
1997.............................. 11.11 0.35 0.33 (0.35) (0.21) 11.23
1996(2)........................... 11.30 0.37 0.18 (0.37) (0.37) 11.11

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET NET AVERAGE NET AVERAGE NET
ASSETS RATIO OF INVESTMENT ASSETS ASSETS
END OF EXPENSES TO INCOME TO (EXCLUDING (EXCLUDING
TOTAL PERIOD AVERAGE NET AVERAGE NET WAIVERS AND WAIVERS AND
RETURN(A) (000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS)
------------ --------- ----------- ----------- ---------------- ----------------
<S> <C>
- -----------------------------
FLORIDA TAX-EXEMPT BOND FUND
- -----------------------------
Investor Shares
1998.............................. 8.46% $ 3,381 0.86% 3.98% 1.34% 3.50%
1997.............................. 7.00 3,226 0.85 4.28 1.31 3.82
1996.............................. 3.76 4,025 0.85 4.28 1.36 3.77
1995.............................. 9.04 3,320 0.85 4.36 1.50 3.71
1994(1)........................... (1.22)** 2,280 0.85* 3.67* 3.20* 1.32*
Flex Shares
1998.............................. 8.04% $ 8,160 1.36% 3.45% 2.01% 2.80%
1997.............................. 6.48 3,000 1.35 3.78 2.28 2.85
1996(2)........................... 3.27* 2,692 1.35* 3.79* 2.54* 2.60*
- ------------------------------
GEORGIA TAX-EXEMPT BOND FUND
- ------------------------------
Investor Shares
1998.............................. 8.26% $ 3,975 0.86% 3.89% 1.30% 3.45%
1997.............................. 6.47 3,511 0.85 4.10 1.33 3.62
1996.............................. 3.69 3,418 0.85 4.17 1.41 3.61
1995.............................. 6.70 3,268 0.85 4.31 1.43 3.73
1994(3)........................... (4.29)** 3,300 0.85* 3.93* 2.36* 2.42*
Flex Shares
1998.............................. 7.74% $ 8,264 1.36% 3.39% 2.02% 2.73%
1997.............................. 6.06 4,662 1.35 3.60 2.07 2.88
1996(4)........................... 2.25* 4,207 1.35* 3.66* 2.35* 2.66*
- ----------------------------
INVESTMENT GRADE BOND FUND
- ----------------------------
Investor Shares
1998.............................. 10.49% $ 33,269 1.14% 5.29% 1.38% 5.05%
1997.............................. 6.66 33,165 1.15 5.48 1.41 5.22
1996.............................. 3.50 36,155 1.15 5.40 1.44 5.11
1995.............................. 10.04 33,772 1.15 5.79 1.49 5.45
1994.............................. 0.86 35,775 1.14 4.39 1.41 4.12
Flex Shares
1998.............................. 9.99% $ 13,111 1.65% 4.76% 2.11% 4.30%
1997.............................. 6.16 5,763 1.64 5.00 2.20 4.44
1996(5)........................... 2.50* 4,621 1.64* 4.84* 2.49* 3.99*
- --------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
- --------------------------------------
Investor Shares
1998.............................. 8.05% $ 28,159 1.16% 3.43% 1.43% 3.16%
1997.............................. 6.69 31,857 1.15 3.56 1.38 3.33
1996.............................. 5.40 37,427 1.15 3.61 1.42 3.34
1995.............................. 9.91 41,693 1.15 3.88 1.43 3.60
1994.............................. 5.37 46,182 1.14 2.96 1.51 2.59
Flex Shares
1998.............................. 7.50% $ 8,399 1.64% 2.95% 2.10% 2.49%
1997.............................. 6.19 4,681 1.63 3.08 2.15 2.56
1996(2)........................... 4.91* 5,536 1.63* 3.12* 2.25* 2.50*

PORTFOLIO
TURNOVER
RATE
---------
- -----------------------------
FLORIDA TAX-EXEMPT BOND FUND
- -----------------------------
Investor Shares
1998.............................. 69%
1997.............................. 135
1996.............................. 63
1995.............................. 105
1994(1)........................... 53
Flex Shares
1998.............................. 69%
1997.............................. 135
1996(2)........................... 63
- ------------------------------
GEORGIA TAX-EXEMPT BOND FUND
- ------------------------------
Investor Shares
1998.............................. 7%
1997.............................. 15
1996.............................. 60
1995.............................. 25
1994(3)........................... 26
Flex Shares
1998.............................. 7%
1997.............................. 15
1996(4)........................... 60
- ----------------------------
INVESTMENT GRADE BOND FUND
- ----------------------------
Investor Shares
1998.............................. 109%
1997.............................. 298
1996.............................. 184
1995.............................. 238
1994.............................. 259
Flex Shares
1998.............................. 109%
1997.............................. 298
1996(5)........................... 184
- --------------------------------------
INVESTMENT GRADE TAX-EXEMPT BOND FUND
- --------------------------------------
Investor Shares
1998.............................. 378%
1997.............................. 489
1996.............................. 514
1995.............................. 592
1994.............................. 432
Flex Shares
1998.............................. 378%
1997.............................. 489
1996(2)........................... 514
</TABLE>

* Annualized.
** Return is for the period indicated and has not been annualized.
(1) Commenced operations on January 18, 1994.
(2) Commenced operations on June 1, 1995.
(3) Commenced operations on January 19, 1994.
(4) Commenced operations on June 6, 1995.
(5) Commenced operations on June 7, 1995.
Amounts designated as "--" are either $0 or have been rounded to $0.
<PAGE>
PROSPECTUS 33

HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED
NET ASSET GAINS DISTRIBUTIONS
VALUE NET (LOSSES) FROM NET DISTRIBUTIONS NET ASSET
BEGINNING OF INVESTMENT ON INVESTMENT FROM REALIZED VALUE END
PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
------------ ------------- --------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
- ---------------------------------------------
Investor Shares
1998..................................... $ 10.00 $ 0.56 $ 0.12 $ (0.56) $ (0.01) $ 10.11
1997..................................... 9.97 0.56 0.04 (0.56) (0.01) 10.00
1996..................................... 10.11 0.60 (0.14) (0.60) -- 9.97
1995(6).................................. 9.98 0.58 0.13 (0.58) -- 10.11
Flex Shares
1998..................................... $ 10.02 $ 0.52 $ 0.11 $ (0.52) $ (0.01) $ 10.12
1997..................................... 9.99 0.52 0.04 (0.52) (0.01) 10.02
1996(7).................................. 10.14 0.55 (0.15) (0.55) -- 9.99
- -----------------------------------------
MARYLAND MUNICIPAL BOND FUND (FORMERLY
CRESTFUNDS' MARYLAND MUNICIPAL BOND FUND)
- ------------------------------------------
Flex Shares (**)
For the years ended November 30:
1998..................................... $ 9.96 0.325 0.281 (0.326) -- $ 10.24
1997..................................... 9.76 0.338 0.199 (0.337) -- 9.96
1996(8).................................. 9.53 0.200 0.226 (0.196) -- 9.76
- ----------------------
SHORT-TERM BOND FUND
- ----------------------
Investor Shares
1998..................................... $ 9.91 $ 0.53 $ 0.17 $ (0.53) $ (0.01) $ 10.07
1997..................................... 9.88 0.51 0.06 (0.51) (0.03) 9.91
1996..................................... 10.01 0.52 (0.10) (0.53) (0.02) 9.88
1995..................................... 9.81 0.51 0.19 (0.50) -- 10.01
1994..................................... 10.03 0.40 (0.21) (0.40) (0.01) 9.81
Flex Shares
1998..................................... $ 9.91 $ 0.50 $ 0.17 $ (0.50) $ (0.01) $ 10.07
1997..................................... 9.88 0.48 0.06 (0.48) (0.03) 9.91
1996(9).................................. 10.02 0.47 (0.12) (0.47) (0.02) 9.88
- ---------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
- ---------------------------------------
Investor Shares
1998..................................... $ 9.88 $ 0.49 $ 0.09 $ (0.50) $ -- $ 9.96
1997..................................... 9.84 0.50 0.04 (0.50) -- 9.88
1996..................................... 9.94 0.54 (0.10) (0.54) -- 9.84
1995..................................... 9.83 0.46 0.11 (0.46) -- 9.94
1994..................................... 9.99 0.32 (0.12) (0.31) (0.05) 9.83
Flex Shares
1998..................................... $ 9.85 $ 0.47 $ 0.10 $ (0.46) $ -- $ 9.94
1997..................................... 9.82 0.47 0.03 (0.47) -- 9.85
1996(10)................................. 9.96 0.48 (0.14) (0.48) -- 9.82
- -------------------------------
U.S. GOVERNMENT SECURITIES FUND
- -------------------------------
Investor Shares
1998..................................... $ 10.02 $ 0.57 $ 0.43 $ (0.57) $ -- $ 10.45
1997..................................... 9.90 0.58 0.12 (0.58) -- 10.02
1996..................................... 10.26 0.59 (0.33) (0.59) (0.03) 9.90
1995(11)................................. 10.00 0.56 0.26 (0.56) -- 10.26
Flex Shares
1998..................................... $ 10.02 $ 0.52 $ 0.44 $ (0.52) $ -- $ 10.46
1997..................................... 9.91 0.53 0.11 (0.53) -- 10.02
1996(7).................................. 10.31 0.52 (0.37) (0.52) (0.03) 9.91

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET NET AVERAGE NET AVERAGE NET
ASSETS RATIO OF INVESTMENT ASSETS ASSETS
END OF EXPENSES TO INCOME TO (EXCLUDING (EXCLUDING
TOTAL PERIOD AVERAGE NET AVERAGE NET WAIVERS AND WAIVERS AND
RETURN(A) (000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS)
------------ ------ ----------- ----------- ---------------- ----------------
<S> <C>
- ---------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
- ---------------------------------------------
Investor Shares
1998..................................... 6.95% $2,705 0.91% 5.50% 1.51% 4.90%
1997..................................... 6.17 2,426 0.90 5.55 1.48 4.97
1996..................................... 4.59 2,512 0.90 5.75 2.25 4.40
1995(6).................................. 7.45** 623 0.90* 6.27* 7.74* (0.57)*
Flex Shares
1998..................................... 6.49% $1,543 1.26% 5.16% 2.72% 3.70%
1997..................................... 5.80 1,409 1.25 5.20 2.66 3.79
1996(7).................................. 4.10* 1,349 1.25* 5.38* 3.59* 3.04*
- -----------------------------------------
MARYLAND MUNICIPAL BOND FUND (FORMERLY
CRESTFUNDS' MARYLAND MUNICIPAL BOND FUND)
- ------------------------------------------
Flex Shares (**)
For the years ended November 30:
1998..................................... 6.17% $3,246 1.57% 1.96% 3.16% 2.77%
1997..................................... 5.64% 561 1.54% 2.00% 3.43% 2.97%
1996(8).................................. 7.67%* 113 1.55%* 2.20%* 3.42%* 2.77%*
- ----------------------
SHORT-TERM BOND FUND
- ----------------------
Investor Shares
1998..................................... 7.19% $1,949 0.86% 5.27% 1.71% 4.42%
1997..................................... 5.97 2,182 0.85 5.16 1.58 4.43
1996..................................... 4.23 2,700 0.85 5.20 1.72 4.33
1995..................................... 7.44 2,609 0.85 5.24 1.56 4.53
1994..................................... 1.81 2,381 0.85 3.94 2.52 2.27
Flex Shares
1998..................................... 6.84% $2,110 1.21% 4.93% 2.85% 3.29%
1997..................................... 5.62 1,073 1.20 4.82 3.02 3.00
1996(9).................................. 3.73* 966 1.20* 4.77* 4.06* 1.91*
- ---------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
- ---------------------------------------
Investor Shares
1998..................................... 6.04% $3,277 0.81% 5.07% 1.33% 4.55%
1997..................................... 5.59 3,921 0.80 5.05 1.35 4.50
1996..................................... 4.52 4,192 0.80 5.43 1.32 4.91
1995..................................... 6.03 7,144 0.80 4.74 1.33 4.21
1994..................................... 2.01 4,841 0.78 3.11 1.41 2.48
Flex Shares
1998..................................... 5.90% $1,413 1.06% 4.81% 2.87% 3.00%
1997..................................... 5.19 1,091 1.05 4.75 2.51 3.29
1996(10)................................. 3.72* 2,423 1.05* 5.03* 2.97* 3.11*
- -------------------------------
U.S. GOVERNMENT SECURITIES FUND
- -------------------------------
Investor Shares
1998..................................... 10.23% $3,225 1.16% 5.53% 1.76% 4.93%
1997..................................... 7.21 2,243 1.15 5.76 1.79 5.12
1996..................................... 2.47 2,396 1.15 5.68 2.50 4.33
1995(11)................................. 8.61** 589 1.15* 6.08* 6.84* 0.39*
Flex Shares
1998..................................... 9.78% $4,022 1.67% 5.02% 2.32% 4.37%
1997..................................... 6.57 2,801 1.66 5.26 2.42 4.50
1996(7).................................. 1.42* 2,826 1.66* 5.18* 2.86* 3.98*

PORTFOLIO
TURNOVER
RATE
---------
- ---------------------------------------------
LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
- ---------------------------------------------
Investor Shares
1998..................................... 163%
1997..................................... 133
1996..................................... 83
1995(6).................................. 68
Flex Shares
1998..................................... 163%
1997..................................... 133
1996(7).................................. 83
- -----------------------------------------
MARYLAND MUNICIPAL BOND FUND (FORMERLY
CRESTFUNDS' MARYLAND MUNICIPAL BOND FUND)
- ------------------------------------------
Flex Shares (**)
For the years ended November 30:
1998..................................... 12%
1997..................................... 5%
1996(8).................................. 9%
- ----------------------
SHORT-TERM BOND FUND
- ----------------------
Investor Shares
1998..................................... 87%
1997..................................... 118
1996..................................... 163
1995..................................... 200
1994..................................... 75
Flex Shares
1998..................................... 87%
1997..................................... 118
1996(9).................................. 163
- ---------------------------------------
SHORT-TERM U.S. TREASURY SECURITIES FUND
- ---------------------------------------
Investor Shares
1998..................................... 39%
1997..................................... 93
1996..................................... 94
1995..................................... 88
1994..................................... 117
Flex Shares
1998..................................... 39%
1997..................................... 93
1996(10)................................. 94
- -------------------------------
U.S. GOVERNMENT SECURITIES FUND
- -------------------------------
Investor Shares
1998..................................... 14%
1997..................................... 21
1996..................................... 83
1995(11)................................. 30
Flex Shares
1998..................................... 14%
1997..................................... 21
1996(7).................................. 83
</TABLE>

* Annualized.

** Return is for the period indicated and has not been annualized.

(6) Commenced operations on July 17, 1994.

(7) Commenced operations on June 7, 1995.

(8) Commencement of operations for this class April 25, 1996.

(9) Commenced operations on June 20, 1995.

(10) Commenced operations on June 22, 1995.

(11) Commenced operations on June 9, 1994.

Amounts designated as "--" are either $0 or have been rounded to $0.
<PAGE>
34 PROSPECTUS

PORTFOLIO
TURNOVER
RATE
---------
- ---------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
(FORMERLY CRESTFUNDS' VIRGINIA
INTERMEDIATE MUNICIPAL BOND FUND)
- ---------------------------------------------
Investor Shares (**)
For the years ended November 30:
1998..................................... 24%
1997..................................... 30%
1996..................................... 25%
1995..................................... 28%
1994..................................... 24%
- -----------------------------------------
VIRGINIA MUNICIPAL BOND FUND (FORMERLY
CRESTFUNDS' VIRGINIA MUNICIPAL
BOND FUND)
- -----------------------------------------
Flex Shares (**)
For the years ended November 30:
1998..................................... 28%
1997..................................... 39%
1996..................................... 24%
1995(12)................................. 35%
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.
** Return is for the period indicated and has not been annualized.

(12) Commencement of operations for this class April 17, 1995.

On May 24, 1999, the Maryland Municipal Bond, Virginia Intermediate Municipal
Bond, and Virginia Municipal Bond Funds, each a series of the CrestFunds,
exchanged all of their assets and certain liabilities for shares of the STI
Maryland Municipal Bond, Virginia Intermediate Municipal Bond, and Virginia
Municipal Bond Funds, respectively. Because each series of the CrestFunds is the
accounting survivor in this transaction, its basis of accounting for assets and
liabilities and its operating results for the periods prior to May 24, 1999 have
been carried forward in these financial highlights.
<PAGE>
PROSPECTUS 35

HOW FUND SHARES ARE DISTRIBUTED

DISTRIBUTION OF FUND SHARES

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

<TABLE>
<S> <C>
Florida Tax-Exempt Bond Fund .18%
Georgia Tax-Exempt Bond Fund .18%
Investment Grade Bond Fund .43%
Investment Grade Tax-Exempt Bond Fund .43%
Limited-Term Federal Mortgage Securities Fund .23%
Short-Term Bond Fund .23%
Short-Term U.S. Treasury Securities Fund .18%
U.S. Government Securities Fund .38%
Virginia Intermediate Municipal Bond Fund .15%
</TABLE>

For Flex Shares, the maximum distribution fee is 1.00% of the average daily net
assets of each Fund.
<PAGE>
36 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

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

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

SIMPLY SPEAKING . . .

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

TAXES

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

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

SIMPLY SPEAKING . . .

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

How to Read
This Prospectus

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

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
10 EACH FUND'S PRINCIPAL INVESTMENTS
10 THE ADVISOR
11 PURCHASING, SELLING AND EXCHANGING FUND SHARES
14 HISTORICAL FINANCIAL INFORMATION
15 HOW FUND SHARES ARE DISTRIBUTED
16 DIVIDENDS AND DISTRIBUTIONS
16 TAXES
</TABLE>

TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS PLEASE REFER
TO THE BACK COVER OF THE PROSPECTUS

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

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

FUND EXPENSES
FUND INVESTMENTS
INVESTMENT ADVISOR
PURCHASING FUND SHARES

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

OCTOBER 1, 1998 *MAY 24, 1999
(AS SUPPLEMENTED MAY 24, 1999)
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

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

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

PRIME QUALITY MONEY MARKET FUND

FUND SUMMARY

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

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.33% .64%
(6/30/95) (6/30/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.47%.
<PAGE>
PROSPECTUS 3

PRIME QUALITY MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
PRIME QUALITY
MONEY MARKET FUND 4.97% 4.25% 4.11%
IBC/DONOGHUE
FIRST TIER AVERAGE 5.01% 4.32% 4.25%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.

SIMPLY SPEAKING . . .

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. An index does not have an investment advisor and does
not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The IBC/Donoghue First Tier Average is a widely
recognized composite of money market funds that invest in the highest credit
quality short-term money market instruments.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Distribution and Service (12b-1) Fees .20%
Other Expenses .17%
---------
Total Annual Fund Operating Expenses 1.02%
</TABLE>

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$104 $325 $563 $1248
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, administration and custody services. The expenses in
the table above are shown as a percentage of the Fund's net assets. These
expenses are deducted from Fund assets. The table shows the highest expenses
that could be currently charged to the Fund. Actual expenses are lower because
the Advisor, the Distributor and the Administrator are voluntarily waiving a
portion of their fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES,
OTHER EXPENSES AND TOTAL OPERATING EXPENSES ARE .51%, .13%, .13% AND .77%,
RESPECTIVELY. The Advisor, Distributor and Administrator could discontinue
these voluntary waivers at any time. For more information about these fees,
see "Investment Advisor" and "How Fund Shares are Distributed."
<PAGE>
4 PROSPECTUS

TAX-EXEMPT MONEY MARKET FUND

FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
.89% .42%
(6/30/95) (3/31/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 1.47%.
<PAGE>
PROSPECTUS 5

TAX-EXEMPT MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
TAX-EXEMPT
MONEY MARKET FUND 3.11% 2.73% 2.68%
IBC/DONOGHUE
TAX-FREE STOCKBROKER &
GENERAL PURPOSE AVERAGE 3.14% 2.77% 2.77%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397

SIMPLY SPEAKING . . .

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. An index does not have an investment advisor and does
not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The IBC/Donoghue Tax-Free Stockbroker & General
Purpose Average is a widely recognized composite of money market funds that
invest in short-term municipal securities the income from which is exempt
from Federal taxation.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .55%
Distribution and Service (12b-1) Fees .15%
Other Expenses .15%
---------
Total Annual Fund Operating Expenses .85%
</TABLE>

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$87 $271 $471 $1049
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, administration and custody services. The expenses in
the table above are shown as a percentage of the Fund's net assets. These
expenses are deducted from Fund assets. The table shows the highest expenses
that could be currently charged to the Fund. Actual expenses are lower because
the Advisor and the Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES ARE .49%, .10% AND .74%, RESPECTIVELY. The Advisor and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Advisor" and "How Fund Shares are
Distributed."
<PAGE>
6 PROSPECTUS

TAX-FREE MONEY MARKET FUND

FUND SUMMARY

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

INVESTMENT STRATEGY
The Tax-Free Money Market Fund invests substantially all of its
assets in money market instruments issued by municipalities and issuers that pay
income exempt from federal income taxes. In selecting investments for the Fund,
we analyze the credit quality and structure of each security to minimize risk.
We actively manage the Fund's average maturity based on current interest rates
and our outlook of the market. The Fund may invest more than 25% of its assets
in money market instruments issued by issuers located in one or more of the
following states: Arizona, California, Maryland, New Jersey, New York and
Pennsylvania and will invest more than 25% of its assets in money market
instruments issued by issuers located in Virginia.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
Money market funds invest in high quality, short-term debt securities, commonly
known as money market instruments. These include CDs, bankers' acceptances,
commercial paper, U.S. Treasury securities, some municipal securities, and
repurchase agreements. A money market fund follows strict rules about credit
risk, maturity and diversification of its investments. The Fund's concentration
of investments in securities of issuers located in Virginia subjects the Fund to
economic conditions and government policies of Virginia. An investment in a
money market fund is not a bank deposit. Although a money market fund seeks to
keep a constant price per share of $1.00, you may lose money by investing in a
money market fund.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
.91% .37%
(3/31/96) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .58%.
<PAGE>
PROSPECTUS 7

TAX-FREE MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE IBC/FINANCIAL DATA ALL TAX-FREE
AVERAGE.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (5/5/93)
<S> <C> <C> <C>
TAX-FREE
MONEY MARKET FUND 2.92% 2.89% 2.73%
IBC/FINANCIAL DATA ALL TAX-FREE
AVERAGE 2.93% 2.96% 2.86%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.

SIMPLY SPEAKING . . .

WHAT IS AN INDEX?
An index measures the market prices of aspecific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. An index does not have an investment advisor and does
not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The IBC/Financial Data All Tax-Free Average is a
widely recognized composite of the returns of all major tax-free money
market funds.

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

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

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
INVESTOR SHARES
<S> <C>
Investment Advisory Fees .40%
Distribution and Service (12b-1) Fees .40%
Other Expenses .31%
---
Total Annual Fund Operating Expenses 1.11%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE END OF
THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $113 $353 $612 $1352
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor and the Distributor are voluntarily
waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .40%, 0% AND .67%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
8 PROSPECTUS

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.32% .61%
(6/30/95) (6/30/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.38%.
<PAGE>
PROSPECTUS 9

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND 4.85% 4.15% 4.00%
IBC/DONOGHUE
U.S. TREASURY & REPO AVERAGE 4.89% 4.21% 4.13%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.

SIMPLY SPEAKING . . .

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest
directly in an index. An index does not have an investment advisor and does
not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The IBC/Donoghue U.S. Treasury & Repo Average is
a widely recognized composite of money market funds that invest in U.S.
Treasury securities and repurchase agreements.

FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Distribution and Service (12b-1) Fees .17%
Other Expenses .15%
---------
Total Annual Fund Operating Expenses .97%
</TABLE>

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$99 $309 $536 $1190
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, administration and custody services. The expenses in
the table above are shown as a percentage of the Fund's net assets. These
expenses are deducted from Fund assets. The table shows the highest expenses
that could be currently charged to the Fund. Actual expenses are lower because
the Advisor and the Distributor are voluntarily waiving a portion of their
fees. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION FEES AND TOTAL OPERATING
EXPENSES ARE .50%, .12% AND .77%, RESPECTIVELY. The Advisor and Distributor
could discontinue these voluntary waivers at any time. For more information
about these fees, see "Investment Advisor" and "How Fund Shares are
Distributed."
<PAGE>
10 PROSPECTUS

EACH FUND'S PRINCIPAL INVESTMENTS

FUND INVESTMENTS

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

INVESTMENT ADVISOR

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

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Prime Quality Money Market Fund,
Tax-Exempt Money Market Fund, Tax-Free Money Market Fund and U.S. Government
Securities Money Market Fund. As of December 31, 1998, Trusco had approximately
$23 billion in assets under management. For the fiscal year ended May 31, 1998,
Trusco received advisory fees of:

<TABLE>
<S> <C>
PRIME QUALITY MONEY MARKET FUND.......... .51%
TAX-EXEMPT MONEY MARKET FUND............. .49%
U.S. GOVERNMENT SECURITIES MONEY MARKET
FUND................................... .50%
</TABLE>

Crestar Asset Management Company served as the Adviser to the predecessor of the
Tax-Free Money Market Fund. For the fiscal year ended November 30, 1998, Crestar
Asset Management Company received advisory fees of .40% for the Tax-Free Money
Market Fund.

The Advisor may use its affiliates as brokers for Fund transactions.
<PAGE>
PROSPECTUS 11

PURCHASING, SELLING AND EXCHANGING FUND SHARES

PURCHASING FUND SHARES

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

- - mail

- - telephone

- - wire

- - direct deposit, or

- - Automated Clearing House (ACH).

SIMPLY SPEAKING . . .

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

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

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the transfer agent receives your purchase order plus
the applicable front-end sales charge. The Funds expect that the NAV of each
Fund will remain constant at $1.00 per share. The administrator calculates each
Fund's NAV once each Business Day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time). Your
purchase order will be effective on the Business Day the transfer agent receives
it if:

- - the transfer agent receives your order before 11:00 a.m. Eastern time for the
Tax-Exempt Money Market Fund, before 12:00 p.m. for the Tax-Free Money Market
Fund or before 3:00 p.m. Eastern time for the Prime Quality and U.S.
Government Securities Money Market Funds; and

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

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

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES, AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE, SALE AND EXCHANGE REQUESTS TO SUNTRUST
OR OTHER FINANCIAL INSTITUTIONS AT AN EARLIER TIME THAN THOSE LISTED ABOVE FOR
YOUR TRANSACTION TO BECOME 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 PURCHASE, SELL OR EXCHANGE FUND
SHARES, INCLUDING SPECIFIC SUNTRUST OR OTHER FINANCIAL INSTITUTIONS INTERNAL
CUT OFF TIMES, PLEASE CONTACT YOUR FINANCIAL INSTITUTION DIRECTLY.

HOW THE FUNDS CALCULATE NAV
In calculating NAV, the administrator generally values a Fund's portfolio using
the amortized cost valuation method, which is described in detail in our
Statement of Additional Information. If the administrator thinks that amortized
cost is unreliable, fair value prices may be determined in good faith using
methods
<PAGE>
12 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

approved by the Board of Trustees. The Funds expect each Fund's NAV to remain
constant at $1.00 per share, although the Funds cannot guarantee this.

SIMPLY SPEAKING . . .

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

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

FUNDLINK
FUNDLINK is a telephone activated service that allows you to transfer money
quickly and easily between the STI Classic Funds and your SunTrust bank
account(s). To use FUNDLINK, you must first contact your SunTrust Bank
Investment Consultant and complete the FUNDLINK application and authorization
agreements. Once you have signed up to use FUNDLINK, simply call us at
1-800-428-6970 to complete all of your purchase and redemption transactions.

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

SELLING FUND SHARES

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

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

- - 12:00 p.m. for the Tax-Free Money Market Fund; or

- - 3:00 p.m. Eastern time for the Prime Quality Money Market and U.S. Government
Securities Money Market Funds.

SIMPLY SPEAKING . . .

TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Funds have certain safeguards
and procedures to confirm the identity of callers and the authenticity of
instructions, the Funds are not responsible for any losses or costs incurred
by following telephone instructions the Funds reasonably believe to be
genuine. If you or your financial institution transact with the Funds over the
telephone, you will generally bear the risk of any loss.
<PAGE>
PROSPECTUS 13

PURCHASING, SELLING AND EXCHANGING FUND SHARES

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

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

EXCHANGING FUND SHARES

HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting the Funds
directly by mail or telephone. You may also exchange shares through your
financial institution by mail or telephone. Exchange requests must be for an
amount of at least $1,000. You may exchange your shares up to four times during
a calendar year. If you exchange your shares more than four times during a year,
you may be charged a $10.00 fee for each additional exchange. You will be
notified before any fee is charged. If you recently purchased shares by check or
through ACH, you may not be able to exchange your shares until your check has
cleared (which may take up to 15 Business Days). This exchange privilege may be
changed or canceled at any time upon 60 days' notice.

Shares you exchange for the first time from a Money Market Fund (which has no
sales charge) into a Fund with a sales charge are subject to that sales charge.
Similarly, shares you exchange for the first time into a Fund with a higher
sales charge are subject to an incremental sales charge (the difference between
the lower and higher applicable sales charges). If you exchange shares into a
Fund with the same, lower or no sales charge there is no incremental sales
charge for the exchange.

SIMPLY SPEAKING . . .

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Investor Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.
The information for the Funds except the Tax-Free Money Market Fund has been
audited by Arthur Andersen LLP, independent public accountants. The information
for the Tax-Free Money Market Fund was audited by Deloitte & Touche LLP,
independent public accountants. These reports, along with each Fund's financial
statements, appears in the annual reports that accompany our Statement of
Additional Information. You can obtain the annual reports, which contain more
performance information, at no charge by calling 1-800-874-4700.

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING OF INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END
PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS OF PERIOD
------------ --------- ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------
PRIME QUALITY MONEY MARKET FUND
- ---------------------------------
Investor Shares
1998..................................... $ 1.00 $0.05 $ -- $(0.05) $ -- $1.00
1997..................................... 1.00 0.05 -- (0.05) -- 1.00
1996..................................... 1.00 0.05 -- (0.05) -- 1.00
1995..................................... 1.00 0.05 -- (0.05) -- 1.00
1994..................................... 1.00 0.03 -- (0.03) -- 1.00
- -------------------------------
TAX-EXEMPT MONEY MARKET FUND
- -------------------------------
Investor Shares
1998..................................... $ 1.00 $0.03 $ -- $(0.03) $ -- $1.00
1997..................................... 1.00 0.03 -- (0.03) -- 1.00
1996..................................... 1.00 0.03 -- (0.03) -- 1.00
1995..................................... 1.00 0.03 -- (0.03) -- 1.00
1994..................................... 1.00 0.02 -- (0.02) -- 1.00
- ----------------------------
TAX-FREE MONEY MARKET FUND (FORMERLY CRESTFUNDS TAX FREE MONEY FUND)
- ----------------------------
Investor Shares
For the years ended November 30,:
1998..................................... $ 1.00 0.030 -- (0.030) -- $1.00
1997..................................... 1.00 0.030 -- (0.030) -- 1.00
1996..................................... 1.00 0.029 0.002 (0.029) (0.002) 1.00
1995..................................... 1.00 0.031 -- (0.031) -- 1.00
1994..................................... 1.00 0.020 -- (0.020) -- 1.00
- ----------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
- ----------------------------------------------
Investor Shares
1998..................................... $ 1.00 $0.05 $ -- $(0.05) $ -- $1.00
1997..................................... 1.00 0.05 -- (0.05) -- 1.00
1996..................................... 1.00 0.05 -- (0.05) -- 1.00
1995..................................... 1.00 0.04 -- (0.04) -- 1.00
1994..................................... 1.00 0.03 -- (0.03) -- 1.00

<CAPTION>
RATIO OF RATIO OF NET
NET RATIO OF INVESTMENT
RATIO OF INVESTMENT EXPENSES TO INCOME TO
EXPENSES INCOME AVERAGE NET AVERAGE NET
NET ASSETS TO TO ASSETS ASSETS
END OF AVERAGE AVERAGE (EXCLUDING (EXCLUDING
TOTAL PERIOD NET NET WAIVERS AND WAIVERS AND
RETURN (000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS)

------ ----------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------
PRIME QUALITY MONEY MARKET FUND
- ---------------------------------
Investor Shares
1998..................................... 5.04% $411,821 0.76% 4.93% 0.98% 4.71%
1997..................................... 4.84 283,544 0.75 4.74 0.97 4.52
1996..................................... 5.08 215,696 0.75 4.94 1.00 4.69
1995..................................... 4.62 157,616 0.75 4.55 1.01 4.29
1994..................................... 2.71 129,415 0.75 2.67 0.99 2.43
- -------------------------------
TAX-EXEMPT MONEY MARKET FUND
- -------------------------------
Investor Shares
1998..................................... 3.09% $134,538 0.62% 3.04% 0.83% 2.83%
1997..................................... 2.97 102,013 0.62 2.92 0.83 2.71
1996..................................... 3.16 95,223 0.62 3.10 0.85 2.87
1995..................................... 3.00 87,647 0.55 3.00 0.87 2.68
1994..................................... 1.96 61,675 0.54 1.93 0.88 1.59
- ----------------------------
TAX-FREE MONEY MARKET FUND (FORMERLY CRESTFUN
- ----------------------------
Investor Shares
For the years ended November 30,:
1998..................................... 2.96% $ 8,851 0.67% 1.07% 2.92% 2.52%
1997..................................... 3.05% 7,634 0.68% 1.08% 3.42% 3.02%
1996..................................... 3.13% 2,994 0.67% 1.07% 2.86% 2.46%
1995..................................... 3.25% 1,627 0.67% 1.07% 3.16% 2.76%
1994..................................... 1.98% 757 0.76% 1.44% 1.97% 1.29%
- ---------------------------------------------
U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
- ---------------------------------------------
Investor Shares
1998..................................... 4.90% $ 58,753 0.76% 4.79% 0.96% 4.59%
1997..................................... 4.69 63,178 0.75 4.59 0.96 4.38
1996..................................... 4.99 58,608 0.75 4.88 0.99 4.64
1995..................................... 4.51 46,639 0.75 4.51 1.02 4.24
1994..................................... 2.63 32,395 0.75 2.54 0.97 2.32
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.

On May 24, 1999, the Tax Free Money Fund, a series of the CrestFunds, exchanged
all of its assets and certain liabilities for shares of the STI Tax-Free Money
Market Fund. Because the series of the CrestFunds is the accounting survivor in
this transaction, its basis of accounting for assets and liabilities and its
operating results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
<PAGE>
PROSPECTUS 15

HOW FUND SHARES ARE DISTRIBUTED

DISTRIBUTION OF FUND SHARES

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

<TABLE>
<S> <C>
Prime Quality Money Market Fund .20%
Tax-Exempt Money Market Fund .15%
Tax-Free Money Market Fund .40%
U.S. Government Securities Money Market Fund .17%
</TABLE>
<PAGE>
16 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

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

SIMPLY SPEAKING . . .

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

TAXES

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

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

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

SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISOR

Trusco Capital Management, Inc.

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

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

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

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

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

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

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

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 BALANCED FUND
4 CAPITAL APPRECIATION FUND (FORMERLY CAPITAL
GROWTH FUND)
6 GROWTH AND INCOME FUND*
8 INTERNATIONAL EQUITY FUND
10 INTERNATIONAL EQUITY INDEX FUND
12 MID-CAP EQUITY FUND
14 SMALL CAP EQUITY FUND
16 SMALL CAP GROWTH STOCK FUND
18 SUNBELT EQUITY FUND
20 TAX SENSITIVE GROWTH STOCK FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
22 VALUE INCOME STOCK FUND
24 EACH FUND'S PRINCIPAL INVESTMENTS
24 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
26 PURCHASING, SELLING AND EXCHANGING FUND SHARES
31 HISTORICAL FINANCIAL INFORMATION
33 HOW FUND SHARES ARE DISTRIBUTED
34 DIVIDENDS AND DISTRIBUTIONS
34 TAXES

TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC
FUNDS PLEASE REFER TO THE BACK COVER OF THE
PROSPECTUS
</TABLE>

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

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

FEES AND EXPENSES
FUND INVESTMENTS
INVESTMENT ADVISORS
PURCHASING FUND SHARES

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

OCTOBER 1, 1998 *MAY 24, 1999
(AS SUPPLEMENTED MAY 24, 1999)
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

CHOOSING INVESTOR OR FLEX SHARES

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

FLEX SHARES
- - Deferred sales charge
- - Higher annual expenses
- - $5,000 minimum initial investment
<PAGE>
2 PROSPECTUS

BALANCED FUND

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
General Electric
Company...................... 1.9%
Bristol Myers
Squibb Company............... 1.3%
Carnival Corporation,
Class A...................... 1.3%
United Technologies
Corporation.................. 1.2%
CVS Corporation................ 1.1%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY
The Balanced Fund invests in common and preferred stocks,
convertible securities, U.S. government obligations and investment grade
corporate bonds. In selecting stocks for the Fund, we attempt to identify high-
quality companies with a history of earnings growth. In selecting bonds, we try
to minimize risk while attempting to outperform selected market indices. Due to
its investment strategy, the Fund may buy and sell securities frequently. This
may result in higher transaction costs and additional capital gains taxes.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests in both common stocks and bonds. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, the value of bonds held by the Fund may
decline due to rising interest rates. An issuer may be unable to make timely
payments of principal or interest. The Fund may have more assets than usual
invested in bonds during periods of rising interest rates or less assets than
usual invested in bonds during falling interest rates. Some investment grade
bonds may have speculative characteristics. Fixed income securities regardless
of credit quality, also experience price volatility, especially in response to
interest rate changes.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.19% 0.64%
(6/30/97) (3/31/97)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 12.48%.
<PAGE>
PROSPECTUS 3

BALANCED FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (1/4/94)
<S> <C> <C> <C>
BALANCED FUND 16.23% 17.59% 11.52%
S&P 500 INDEX 33.35% 31.13% 23.48%
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND
INDEX 9.75% 10.43% 6.92%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/14/95)
<S> <C> <C>
BALANCED FUND 17.86% 16.42%
S&P 500 INDEX 33.35% 29.81%
LEHMAN BROTHERS GOVERNMENT/ CORPORATE BOND
INDEX 9.75% 8.08%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The S&P 500 Index is a
widely recognized index of 500 stocks designed to mimic the overall equity
market's industry weightings. The Lehman Brothers Government/ Corporate
Bond Index is a widely recognized index of government and corporate debt
securities rated investment grade or better with maturities of at least 1
year.

FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .95% .95%
Distribution and Service
(12b-1) Fees .28% 1.00%
Other Expenses .37% .29%
--- ---
Total Annual Fund Operating
Expenses 1.60% 2.24%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $532 $861 $1213 $2204
Flex Shares $627 $700 $1200 $2575

IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $532 $861 $1213 $2204
Flex Shares $427 $700 $1200 $2575
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .83%,
.07% AND 1.27%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .83%, .91%, AND 2.03%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
4 PROSPECTUS

CAPITAL APPRECIATION FUND
(FORMERLY CAPITAL GROWTH FUND)

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
General Electric Company....... 2.8%
Bristol Myers Squibb
Company....................... 1.9%
Carnival Corporation,
Class A....................... 1.9%
United Technologies
Corporation................... 1.8%
Microsoft Corporation.......... 1.7%
* HOLDINGS MAY VARY
</TABLE>

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
16.84% -4.33%
(6/30/97) (12/31/94)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 16.80%.
<PAGE>
PROSPECTUS 5

CAPITAL APPRECIATION FUND
(FORMERLY CAPITAL GROWTH FUND)

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 5 YEARS (6/9/92)
<S> <C> <C> <C>
CAPITAL APPRECIATION FUND 25.50% 14.46% 16.04%
S&P 500 INDEX 33.35% 20.25% 19.65%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/1/95)
<S> <C> <C>
CAPITAL APPRECIATION FUND 27.77% 25.26%
S&P 500 INDEX 33.35% 29.81%
</TABLE>

FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees .68% 1.00%
Other Expenses .19% .25%
--- ---
Total Annual Fund Operating Expenses 2.02% 2.40%
</TABLE>

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 572 $ 985 $ 1422 $ 2635
Flex Shares $ 448 $ 748 $ 1280 $ 2736
IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 572 $ 985 $ 1422 $ 2635
Flex Shares $ 248 $ 748 $ 1280 $ 2736
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE 1.04%,
.59% AND 1.82%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE 1.04%, 1.00% AND 2.29%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
6 PROSPECTUS

GROWTH AND INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL
PRIMARY Long-term capital appreciation
SECONDARY Current income
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Attempts to identify securities of companies with market
capitalizations of at least $1 billion and low
price/earnings ratios and above average earnings momentum
INVESTOR PROFILE Investors who are looking for capital appreciation potential
and income with less volatility than the equity markets as a
whole
</TABLE>

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
17.35% -10.35%
(6/30/97) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS 2.64%.
<PAGE>
PROSPECTUS 7

GROWTH AND INCOME FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 COMPOSITE INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 5 YEARS (5/7/93)
<S> <C> <C> <C>
GROWTH AND INCOME FUND 12.90% 17.10% 16.06%
S&P 500 COMPOSITE INDEX 28.60% 24.05% 22.40%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (4/19/95)
<S> <C> <C>
GROWTH AND INCOME FUND 12.28% 21.02%
S&P 500 COMPOSITE INDEX 28.60% 29.32%
</TABLE>

SIMPLY SPEAKING . . .

WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. Unlike a mutual fund, an
index does not have an investment advisor and does not pay any commissions
or expenses. If an index had expenses, its performance would be lower. The
S&P 500 Composite Index is a widely recognized index of 500 stocks
designed to mimic the overall equity market's industry weightings.

*THIS SALES CHARGE VARIES DEPENDING UPON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."
**THIS SALES CHARGE IS IMPOSED IF YOU SELL FLEX SHARES WITHIN ONE YEAR OF YOUR
PURCHASE. SEE "SELLING FUND SHARES."
The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .90% .90%
Distribution and Service (12b-1) Fees .25% 1.00%
Other Expenses .20% .22%
--- ---
Total Annual Fund Operating Expenses 1.35% 2.12%
</TABLE>

- ---------------------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $507 $787 $1087 $2452
Flex Shares $421 $664 $1139 $2493

<CAPTION>
IF YOU DO NOT SELL YOUR
SHARES:
<S> <C> <C> <C> <C>
Investor Shares $507 $787 $1087 $2452
Flex Shares $221 $664 $1139 $2493
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .90%,
.08% AND 1.18%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .90%, .81% AND 1.93%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
8 PROSPECTUS

INTERNATIONAL EQUITY FUND

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Ing Groep...................... 3.2%
Ubs Ag-Registered.............. 2.6%
Novartis, Registered........... 2.5%
Bank of Ireland................ 2.5%
Nestle Sa Registered........... 2.5%
* HOLDINGS MAY VARY
</TABLE>

INVESTMENT STRATEGY

The International Equity Fund invests primarily in common stocks
and other equity securities of foreign companies. In selecting investments for
the Fund, we diversify the Fund's investments among at least three foreign
countries. The Fund invests primarily in developed countries, but may invest in
countries with emerging markets. Our "bottom-up" approach to stock selection
focuses on individual stocks and fundamental characteristics of companies. Our
goal is to find companies with top management, quality products and sound
financial positions, that are trading at a discount. Due to the Fund's
investment strategy, the Fund may buy and sell securities frequently. This may
result in higher transaction costs and additional capital gains taxes.

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments may cause foreign investments to lose money.
The value of the U.S. dollar may rise, causing reduced returns for U.S. persons
investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging markets securities may be even more susceptible to
these risks.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
performance of Flex Shares and Investor Shares will differ slightly due to
differences in expenses. The periods prior to December 1995, when the Fund began
operating, represent the performance of the Advisor's similarly managed
collective investment fund. This past performance has been adjusted to reflect
current expenses for Trust Shares of the Fund. The periods from December 1995 to
January 1996 represent the performance of Trust Shares of the Fund. Trust Shares
have lower expenses than Investor and Flex Shares, which results in higher
performance shown below. The Advisor's collective fund was not a registered
mutual fund so it was not subject to the same investment and tax restrictions as
the Fund. If it had been, the collective fund's performance would have been
lower.

THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR. THE
PERIODS FROM JANUARY 1996 TO THE PRESENT REPRESENT THE PERFORMANCE OF INVESTOR
SHARES OF THE FUND. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
12.07% -7.80%
(6/30/97) (12/31/97)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 16.10%.
<PAGE>
PROSPECTUS 9

INTERNATIONAL EQUITY FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (2/2/95)
<S> <C> <C>
INTERNATIONAL EQUITY FUND
Investor Shares 8.76% 23.04%
Flex Shares 10.24% 24.12%
MSCI EAFE INDEX 1.78% 6.47%
</TABLE>

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees 1.25% 1.25%
Distribution and Service (12b-1) Fees .33% 1.00%
Other Expenses .34% .34%
--- ---
Total Annual Fund Operating Expenses 1.92% 2.59%
</TABLE>

- ---------------------------------------------------------------
EXAMPLE
- --------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $563 $955 $1373 $2534
Flex Shares $462 $805 $1375 $2925

<CAPTION>
IF YOU DO NOT SELL YOUR
SHARES:
<S> <C> <C> <C> <C>
Investor Shares $563 $955 $1373 $2534
Flex Shares $262 $805 $1375 $2925
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE 1.24%,
.24% AND 1.83%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE 1.24%, .95% AND 2.53%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
10 PROSPECTUS

INTERNATIONAL EQUITY INDEX FUND

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Allianz........................ 2.2%
Assicurazioni Generali......... 2.1%
Tim............................ 1.8%
Telecom Italia Spa............. 1.4%
Daimler Benz................... 1.4%
* HOLDINGS MAY VARY
</TABLE>

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments may cause foreign investments to lose money.
The value of the U.S. dollar may rise, causing reduced returns for U.S. persons
investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging markets securities may be even more susceptible to
these risks.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.64% -5.59%
(6/30/97) (12/31/97)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 23.11%.
<PAGE>
PROSPECTUS 11

INTERNATIONAL EQUITY INDEX FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (6/6/94)
<S> <C> <C> <C>
INTERNATIONAL EQUITY INDEX FUND 4.35% 6.75% 4.80%
MSCI EAFE-GDP INDEX 4.35% 6.62% 5.26%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/8/95)
<S> <C> <C>
INTERNATIONAL EQUITY INDEX
FUND 5.84% 6.75%
MSCI EAFE-GDP INDEX 4.35% 6.08%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The MSCI EAFE-GDP
Index is a widely recognized index of over 900 securities listed on the
stock exchanges in Europe, Australia, and the Far East. The index is
weighted by the gross domestic product of the various countries in the
index.

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

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

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .90% .90%
Distribution and Service (12b-1) Fees .38% 1.00%
Other Expenses .57% 1.63%
--- ---
Total Annual Fund Operating Expenses 1.85% 3.53%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $556 $935 $1338 $2463
Flex Shares $556 $1083 $1831 $3801

IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $556 $935 $1338 $2463
Flex Shares $356 $1083 $1831 $3801
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE .78%,
.12% AND 1.47%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE .78%, .21% AND 2.12%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
12 PROSPECTUS

MID-CAP EQUITY FUND

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
U.S. Filter Corporation........ 3.8%
Allied Waste Industries
Incorporated................. 3.2%
Networks Associates
Incorporated................. 3.1%
Men's Wearhouse................ 3.1%
Harley-Davidson Incorporated... 3.0%
* HOLDINGS MAY VARY
</TABLE>

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in mid-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small- to mid-sized companies may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these companies may have somewhat limited product
lines, markets and financial resources, and may depend upon a relatively small-
to medium-sized management group.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
14.13% -3.00%
(9/30/97) (3/31/97)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 6.39%.
<PAGE>
PROSPECTUS 13

MID-CAP EQUITY FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
INVESTOR SHARES 1 YEAR 3 YEARS (2/1/94)
<S> <C> <C> <C>
MID-CAP EQUITY FUND 16.15% 20.34% 14.61%
S&P MIDCAP 400 INDEX 32.23% 27.32% 19.20%
</TABLE>

<TABLE>
<CAPTION>
SINCE
INCEPTION
FLEX SHARES 1 YEAR (6/5/95)
<S> <C> <C>
MID-CAP EQUITY FUND 17.92% 19.01%
S&P MIDCAP 400 INDEX 32.23% 27.23%
</TABLE>

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees .43% 1.00%
Other Expenses .27% .33%
--- ---
Total Annual Fund Operating Expenses 1.85% 2.48%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $ 556 $ 935 $ 1338 $ 2463
Flex Shares $ 451 $ 773 $ 1321 $ 2816

IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $ 556 $ 935 $ 1338 $ 2463
Flex Shares $ 251 $ 773 $ 1321 $ 2816
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE 1.04%,
.31% AND 1.62%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE 1.04%, .85% AND 2.22%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
14 PROSPECTUS

SMALL CAP EQUITY FUND

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Norrell Corporation............ 3.1%
Regal Beloit Corporation....... 2.9%
Harman International........... 2.6%
Texas Industries Inc........... 2.5%
Sotheby's Holdings
Incorporated-
Class A.................... 2.3%
* HOLDINGS MAY VARY
</TABLE>

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in small-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small-sized companies may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, small-sized companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to January 1997, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The periods from January 1997 to June 1997 represent the
performance of Trust Shares of the Fund. The periods from June 1997 to the
present represent the performance of Flex Shares of the Fund. Trust Shares have
lower expenses than Flex Shares, which results in higher performance shown
below. The Advisor's collective fund was not a registered mutual fund so it was
not subject to the same investment and tax restrictions as the Fund. If it had
been the collective fund's performance would have been lower.

THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR. THE
BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES HAD BEEN REFLECTED,
RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
14.91% -2.39%
(6/30/97) (12/31/97)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS -.59%.
<PAGE>
PROSPECTUS 15

SMALL CAP EQUITY FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (8/31/94)
<S> <C> <C> <C>
SMALL CAP EQUITY FUND 29.79% 32.34% 10.96%
FRANK RUSSELL 2000 SMALL STOCK INDEX 22.36% 22.34% 21.05%
FRANK RUSSELL 2000 VALUE INDEX 31.79% 26.23% 21.82%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. An index does not have an
investment advisor and does not pay any commissions or expenses. If an
index had expenses, its performance would be lower. The Frank Russell 2000
Small Stock Index and the Frank Russell 2000 Value Index are a widely
recognized indices of the 2,000 smallest U.S. companies out of the 3,000
largest companies.

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
Investment Advisory Fees 1.15%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses .40%
---
Total Annual Fund Operating Expenses 2.55%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Flex Shares $ 458 $ 793 $ 1355 $ 2885

IF YOU DO NOT SELL YOUR
SHARES:
Flex Shares $ 258 $ 793 $ 1355 $ 2885
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES ARE 1.05%, .82% AND 2.27%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
16 PROSPECTUS

SMALL CAP GROWTH STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT FOCUS U.S. small-cap common stocks of growth companies
- ---------------------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ---------------------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT Identifies small-cap companies with above-average growth potential
STRATEGY
- ---------------------------------------------------------------------------------------------------------------------
INVESTOR PROFILE Investors who want the value of their investment to grow, but who do not need current
income
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of smaller U.S. companies. As a
result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in small-or
mid-cap companies involve greater risk than investments in larger, more
established companies because of the greater business risks of small size,
limited markets and financial resources, smaller product lines and lack of depth
of management. These securities are often traded over-the-counter and may not be
traded in high volumes. Consequently, securities prices could be less stable
than those of large, more established companies.

<PAGE>
PROSPECTUS 17

SMALL CAP GROWTH STOCK FUND

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

This table describes the Fund's expenses that you may pay indirectly if you hold
Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
Investment Advisory Fees 1.15%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses* .25%
---
Total Annual Fund Operating Expenses 2.40%
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE END OF
THE PERIOD: 1 YEAR 3 YEARS
<S> <C> <C>
Flex Shares $443 $748
IF YOU DO NOT SELL YOUR SHARES:
Flex Shares $243 $748
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.00%
AND 2.25%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
18 PROSPECTUS

SUNBELT EQUITY FUND

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Hunt J B Transportation
Services Inc................. 3.0%
Fairfield Communities
Incorporated................. 2.6%
PMT Services, Incorporated..... 2.3%
Stone Energy Corporation....... 2.0%
SCB Computer Technology,
Incorporated................. 1.9%
* HOLDINGS MAY VARY
</TABLE>

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

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

THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR. THE
PERIODS FROM JANUARY 1994 TO THE PRESENT REPRESENT THE PERFORMANCE OF THE
INVESTOR SHARES OF THE FUND. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF
SALES CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
21.67% -19.18%
(3/31/91) (12/31/87)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 5.75%.
<PAGE>
PROSPECTUS 19

SUNBELT EQUITY FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (12/1/80)
<S> <C> <C> <C> <C>
SUNBELT EQUITY FUND
Investor Shares 16.25% 14.41% 17.69% 12.67%
Flex Shares* 18.04% 15.27% 18.49% 20.60%
FRANK RUSSELL 2000
GROWTH INDEX 12.95% 12.74% 13.49% 8.11%
S&P SMALLCAP 600 INDEX 25.49% 17.48% 15.37% 9.35%
</TABLE>

*THE PERIODS FROM JANUARY 1994 TO JUNE 1995 REPRESENT THE PERFORMANCE OF
INVESTOR SHARES OF THE FUND.

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular
market or securities in a market sector. You cannot invest directly in an
index. An index does not have an investment advisor and does not pay any
commissions or expenses. If an index had expenses, its performance would
be lower. The Frank Russell 2000 Growth Index is a widely recognized index
of the 2,000 largest U.S. companies with higher growth rates. The S&P
SmallCap 600 Index is a widely recognized index of 600 U.S. small cap
stocks.

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

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

The table below describes the Fund's expenses that you may pay indirectly if you
hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees 1.15% 1.15%
Distribution and Service (12b-1) Fees .43% 1.00%
Other Expenses .29% .44%
--- ---
Total Annual Fund Operating Expenses 1.87% 2.59%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE
END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $558 $941 $1348 $2483
Flex Shares $462 $805 $1375 $2925
IF YOU DO NOT SELL YOUR SHARES:
Investor Shares $558 $941 $1348 $2483
Flex Shares $262 $805 $1375 $2925
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The
table shows the highest expenses that could be currently charged to the Fund.
Actual expenses are lower because the Advisor and the Distributor are
voluntarily waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES,
DISTRIBUTION FEES AND TOTAL OPERATING EXPENSES FOR INVESTOR SHARES ARE 1.04%,
.29% AND 1.62%, RESPECTIVELY. ACTUAL INVESTMENT ADVISORY FEES, DISTRIBUTION
FEES AND TOTAL OPERATING EXPENSES FOR FLEX SHARES ARE 1.04%, .74% AND 2.22%,
RESPECTIVELY. The Advisor and Distributor could discontinue these voluntary
waivers at any time. For more information about these fees, see "Investment
Advisors" and "How Fund Shares are Distributed."
<PAGE>
20 PROSPECTUS

TAX SENSITIVE GROWTH STOCK FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital growth, with nominal dividend income
INVESTMENT FOCUS U.S. common stocks of growth companies
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Attempts to identify companies that have above-average
growth potential and uses a low portfolio turnover strategy
to reduce capital gains distributions.
INVESTOR PROFILE Taxable investors who want to increase the value of their
investment while minimizing taxable capital gains
distributions.
</TABLE>

WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund primarily invests in common stocks. As a result, the Fund is subject to
the risk that stock prices will fall over short or extended periods of time.
Stock markets tend to move in cycles, with periods of rising prices and periods
of falling prices. This price volatility is the principal risk of investing in
the Fund. In addition, the Fund may invest in small-cap companies. These
companies involve greater risk than investments in larger, more established
companies because of the greater business risks of small size, limited markets
and financial resources, smaller product lines and lack of depth of management.
These securities are often traded over-the-counter and may not be traded in high
volumes. Consequently, securities prices could be less stable than those of
larger, more established companies.

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to October 1998, when the Fund began operating, represent the performance of the
Advisor's similarly managed collective investment fund. This past performance
has been adjusted to reflect current expenses for Flex shares of the Fund. The
Advisor's collective fund was not a registered mutual fund so it was not subject
to the same investment and tax restrictions as the Fund. If it had been, the
collective fund's performance would have been lower.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
17.78% -0.35%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 13.88%.
<PAGE>
PROSPECTUS 21

TAX SENSITIVE GROWTH STOCK FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LIPPER GROWTH AND
INCOME FUNDS INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (12/31/95)
<S> <C> <C>
TAX SENSITIVE GROWTH STOCK FUND 25.31% 23.48%
S&P 500 INDEX 33.35% 28.04%
LIPPER GROWTH AND INCOME FUNDS INDEX 26.96% 23.78%
</TABLE>

SIMPLY SPEAKING . . .
WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market
sector. You cannot invest directly in an index. Unlike a mutual fund, an
index does not have an investment advisor and does not pay any commissions
or expenses. If an index had expenses, its performance would be lower. The
S&P 500 Index is a widely recognized index of 500 stocks designed to mimic
the overall equity market's industry weightings. The Lipper Growth and
Income Funds Index is a widely recognized composite of mutual funds that
have growth-of-earnings orientations and income requirements for level
and/or rising dividends.

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

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

This table describes the Fund's expenses that you may pay indirectly if you hold
Fund shares.

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

<TABLE>
<CAPTION>
FLEX SHARES
<S> <C>
Investment Advisory Fees 1.15%
Distribution and Service (12b-1) Fees 1.00%
Other Expenses* .25%
---
Total Annual Fund Operating Expenses 2.40%
*OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD: 1 YEAR 3 YEARS
<S> <C> <C>
Flex Shares $443 $748
IF YOU DO NOT SELL YOUR SHARES:
Flex Shares $243 $748
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.00%
AND 2.25%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
22 PROSPECTUS

VALUE INCOME STOCK FUND

FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Pharmacia & Upjohn
Incorporated................. 2.5%
Ameritech Corporation.......... 2.4%
Baxter International
Incorporated................. 2.3%
Unocal Corporation............. 2.3%
Kimberly-Clark Corporation..... 2.3%
* HOLDINGS MAY VARY
</TABLE>

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
performance of Flex Shares and Investor Shares will differ slightly due to
differences in expenses. The periods prior to February 1993, when the Fund began
operating, represent the performance of the Advisor's similarly managed
collective investment fund. This past performance has been adjusted to reflect
current expenses for Investor Shares of the Fund. The Advisor's collective fund
was not a registered mutual fund so it was not subject to the same investment
and tax restrictions as the Fund. If it had been, the collective fund's
performance would have been lower.

THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR. THE
PERIODS FROM FEBRUARY 1993 TO THE PRESENT REPRESENT THE PERFORMANCE OF THE
FUND'S INVESTOR SHARES. THE BAR CHART DOES NOT REFLECT SALES CHARGES. IF SALES
CHARGES HAD BEEN REFLECTED, RETURNS WOULD BE LESS THAN THOSE SHOWN BELOW.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
18.56% -14.86%
(3/31/91) (9/30/90)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 7.56%.
<PAGE>
PROSPECTUS 23

VALUE INCOME STOCK FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (10/31/89)
<S> <C> <C> <C>
VALUE INCOME STOCK FUND
Investor Shares 21.80% 17.52% 18.69%
Flex Shares* 23.65% 18.22% 23.28%
S&P/BARRA VALUE INDEX 29.98% 20.68% 15.43%
</TABLE>

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

FEES AND EXPENSES

This table describes the shareholder fees that you may pay if you
purchase or sell Fund shares. You would pay these fees directly from
your investment in a Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES
- --------------------------------------------------------------------------------

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

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

<TABLE>
<CAPTION>
INVESTOR SHARES FLEX SHARES
<S> <C> <C>
Investment Advisory Fees .80% .80%
Distribution and Service (12b-1) Fees .33% 1.00%
Other Expenses .19% .22%
--- ---
Total Annual Fund Operating Expenses 1.32% 2.02%
</TABLE>

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

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

<TABLE>
<CAPTION>
IF YOU SELL YOUR SHARES AT
THE END OF THE PERIOD: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Investor Shares $504 $778 $1071 $1906
Flex Shares $405 $634 $1088 $2348

IF YOU DO NOT SELL YOUR
SHARES:
Investor Shares $504 $778 $1071 $1906
Flex Shares $205 $634 $1088 $2348
</TABLE>

SIMPLY SPEAKING . . .

EACH FUND'S PRINCIPAL INVESTMENTS

FUND INVESTMENTS

THE TABLE BELOW SHOWS EACH FUND'S PRINCIPAL INVESTMENTS. IN OTHER WORDS,
THE TABLE DESCRIBES THE TYPE OR TYPES OF INVESTMENTS THAT WE BELIEVE WILL
MOST LIKELY HELP EACH FUND ACHIEVE ITS INVESTMENT GOAL.
<TABLE>
<CAPTION>
BALANCED CAPITAL GROWTH INTERNATIONAL INTERNATIONAL MID-CAP SMALL CAP SMALL CAP SUNBELT
FUND APPRECIATION AND EQUITY FUND EQUITY INDEX EQUITY EQUITY GROWTH EQUITY
FUND INCOME FUND FUND FUND STOCK FUND FUND
FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Bonds X
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Stocks X X X X X X X
- -------------------------------------------------------------------------------------------------------------------------------
Foreign
Stocks X X
- -------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
TAX SENSITIVE VALUE INCOME
GROWTH STOCK STOCK FUND
FUND

<S> <C> <C>
- -------------
Bonds
- -------------
U.S. Stocks X X
- -------------
Foreign
Stocks
- -------------
</TABLE>

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

INVESTMENT ADVISORS

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Capital Appreciation, Value Income Stock, Small Cap
Equity, Mid-Cap Equity, Balanced, and International Equity Funds. As of December
31, 1998, STI Capital had approximately $14.7 billion in assets under
management. For the fiscal year ended May 31, 1998, STI Capital received
advisory fees of:

<TABLE>
<S> <C>
BALANCED FUND............................ .83%
CAPITAL APPRECIATION FUND (FORMERLY
CAPITAL GROWTH FUND)................... 1.04%
INTERNATIONAL EQUITY FUND................ 1.24%
MID-CAP EQUITY FUND...................... 1.04%
SMALL CAP EQUITY FUND.................... 1.05%
VALUE INCOME STOCK FUND.................. .80%
</TABLE>

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Growth and Income, International
Equity Index, Small Cap Growth Stock, Sunbelt Equity and Tax Sensitive Growth
Stock Funds. As of December 31, 1998, Trusco had approximately $23 billion in
assets under management. For the fiscal year ended May 31, 1998, Trusco received
advisory fees of 1.04% for the Sunbelt Equity Fund and .77% for the
International Equity Index Fund. The Small Cap Growth Stock and Tax Sensitive
Growth Stock Funds had not commenced operations as of May 31, 1998.

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

PORTFOLIO MANAGERS

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

EACH FUND'S PRINCIPAL INVESTMENTS
STI, Mr. Riddick served as a broker with Drexel Burnham Lambert.

Mr. John Hamlin joined STI in March 1999. Mr. Hamlin has managed the Mid-Cap
Equity Fund since April 1999. Prior to joining STI, he had more than 19 years of
investment experience as a portfolio manager at Phoenix Investment Counsel, Inc.

Mr. Ned Dau has served as Managing Director of STI since 1997. He has managed
the International Equity Fund since May 1997. He has more than 6 years of
investment experience. Prior to joining STI, he was a senior international
equity analyst for American Express Financial Advisors from 1996 to 1997 and for
the Principal Financial Group from 1992 to 1995.

Mr. Jonathan Mote, CFA, CFP, has served as a portfolio manager at Trusco since
August 1998. He has managed the Tax Sensitive Growth Stock Fund since it began
operating in December 1998. He has more than 13 years of investment experience.
Prior to joining Trusco, Mr. Mote served as a portfolio manager with SunTrust
Banks or an affiliate.

PURCHASING FUND SHARES

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

SIMPLY SPEAKING . . .

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

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

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the transfer agent receives your purchase order
plus, in the case of Investor Shares, the applicable front-end sales charge. The
Administrator calculates each Fund's NAV once each Business Day at the
regularly-scheduled close of normal trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time). So, to receive the current Business Day's
NAV, generally the transfer agent must receive your purchase order before 4:00
p.m. Eastern time.
<PAGE>
26 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES, AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE, SALE AND EXCHANGE REQUESTS TO SUNTRUST
OR OTHER FINANCIAL INSTITUTIONS AT AN EARLIER TIME FOR YOUR TRANSACTION TO
BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL INSTITUTION TIME TO
PROCESS YOUR REQUEST AND TRANSMIT IT TO THE TRANSFER AGENT IN TIME TO MEET THE
ABOVE STATED CUT OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO PURCHASE, SELL
OR EXCHANGE FUND SHARES, INCLUDING SPECIFIC SUNTRUST OR OTHER FINANCIAL
INSTITUTIONS INTERNAL ORDER ENTRY CUT OFF TIMES, PLEASE CONTACT YOUR FINANCIAL
INSTITUTION DIRECTLY.

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

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

FUNDLINK
FUNDLINK is a telephone activated service that allows you to transfer money
quickly and easily between the STI Classic Funds and your SunTrust bank
account(s). To use FUNDLINK, you must first contact your SunTrust Bank
Investment Consultant and complete the FUNDLINK application and authorization
agreements. Once you have signed up to use FUNDLINK, simply call the Funds at
1-800-428-6970 to complete all of your purchase and redemption transactions.

SALES CHARGES
FRONT-END SALES CHARGES - INVESTOR SHARES
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:

<TABLE>
<CAPTION>
YOUR SALES CHARGE
AS A PERCENTAGE YOUR SALES CHARGE
OF AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OFFERING PRICE YOUR NET INVESTMENT
<S> <C> <C>
- -------------------------------------------------------------------
LESS THAN $100,000 3.75% 3.90%
$100,000 BUT LESS
THAN $250,000 3.25% 3.36%
$250,000 BUT LESS
THAN $1,000,000 2.50% 2.56%
$1,000,000 AND OVER 1.50% 1.52%
</TABLE>

<PAGE>
PROSPECTUS 27

PURCHASING, SELLING AND EXCHANGING FUND SHARES

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

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

You are not legally bound by the terms of your Letter of Intent to purchase the
amount of your shares stated in the Letter. The Letter does, however,
<PAGE>
28 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES
authorize us to hold in escrow 3.75% of the total amount you intend to purchase.
If you do not complete the total intended purchase at the end of the 13-month
period, the transfer agent will redeem the necessary portion of the escrowed
shares to make up the difference between the reduced rate sales charge (based on
the amount you intended to purchase) and the sales charge that would normally
apply (based on the actual amount you purchased).

COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the appropriate
sales charge rate, the Funds will combine same day purchases of Investor Shares
(that are subject to a sales charge) made by you, your spouse and your minor
children (under age 21). This combination also applies to Investor Shares you
purchase with a Letter of Intent.

SIMPLY SPEAKING . . .

SELLING FUND SHARES

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

SIMPLY SPEAKING . . .

TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Funds have certain safeguards
and procedures to confirm the identity of callers and the authenticity of
instructions, the Funds are not responsible for any losses or costs incurred
by following telephone instructions the Funds reasonably believe to be
genuine. If you or your financial institution transact with the Funds over the
telephone, you will generally bear the risk of any loss.
<PAGE>
PROSPECTUS 29

PURCHASING, SELLING AND EXCHANGING FUND SHARES

EXCHANGING FUND SHARES

SIMPLY SPEAKING . . .

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

PURCHASING, SELLING AND EXCHANGING FUND SHARES
difference between the lower and higher applicable sales charges). If you
exchange shares into a Fund with the same, lower or no sales charge there is no
incremental sales charge for the exchange.

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Investor and Flex
Shares of the Funds. This information is intended to help you understand each
Fund's financial performance for the past five years, or, if shorter, the period
of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions. As of May 31,
1998, the Small Cap Growth Stock and Tax Sensitive Growth Stock Funds had not
commenced operations.

The information for the Funds except the Growth and Income Fund has been audited
by Arthur Andersen LLP, independent public accountants. The information for the
Growth and Income Fund has been audited by Deloitte & Touche LLP, independent
public accountants. These reports, along with each Fund's financial statements,
appear in the annual reports that accompanies our Statement of Additional
Information. You can obtain an annual report, which contains more performance
information, at no charge by calling 1-800-874-4700.

SIMPLY SPEAKING . . .

FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED DISTRIBUTIONS
NET ASSET NET GAINS DISTRIBUTIONS FROM
VALUE INVESTMENT (LOSSES) FROM NET REALIZED NET ASSET
BEGINNING INCOME ON INVESTMENT CAPITAL VALUE END TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN (A)
---------- ---------- ---------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------
BALANCED FUND
- -------------
Investor Shares
1998........................... $11.99 $ 0.28 $ 2.19 $ (0.29) $ (1.03) $13.14 21.72%
1997........................... 11.60 0.29 1.48 (0.29) (1.09) 11.99 16.27
1996........................... 10.30 0.30 1.41 (0.30) (0.11) 11.60 16.88
1995........................... 9.79 0.28 0.51 (0.28) -- 10.30 8.29
1994(1)........................ 10.00 0.03 (0.24) -- -- 9.79 (2.10)**
Flex Shares
1998........................... $11.90 $ 0.20 $ 2.16 $ (0.21) $ (1.03) $13.02 20.85%
1997........................... 11.53 0.22 1.45 (0.21) (1.09) 11.90 15.40
1996(2)........................ 10.36 0.24 1.29 (0.25) (0.11) 11.53 15.58*
- -------------------------
CAPITAL APPRECIATION FUND
- -------------------------
Investor Shares
1998........................... $15.06 $(0.01) $ 3.95 $ -- $ (2.57) $16.43 28.71%
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
Flex Shares
1998........................... $14.96 $(0.04) $ 3.87 $ -- $ (2.57) $16.22 28.12%
1997........................... 14.84 (0.01) 3.07 -- (2.94) 14.96 23.24
1996(3)........................ 12.20 0.02 3.26 (0.05) (0.59) 14.84 27.48*
- ------------------------
GROWTH AND INCOME FUND
- ------------------------
Investor Shares (**)
For the years ended November 30:
1998........................... $16.64 $0.096 $1.655 $(0.096) $(3.085) $15.21 13.69%
1997........................... 13.47 0.136 3.248 (0.143) (0.070) 16.64 25.42%
1996........................... 11.66 0.169 2.396 (0.164) (0.591) 13.47 22.63%
1995........................... 10.78 0.250 2.623 (0.261) (1.732) 11.66 28.71%
1994........................... 11.42 0.180 (0.220) (0.180) (0.420) 10.78 (0.45)%
Flex Shares (**)
For the years ended November 30:
1998........................... $16.59 $(0.007) $1.642 $ -- $(3.085) $15.14 12.78%
1997........................... 13.44 0.037 3.234 (0.051) (0.070) 16.59 24.63%
1996........................... 11.64 0.091 2.384 (0.084) (0.591) 13.44 21.81%
1995(4)........................ 11.11 0.120 1.618 (0.136) (1.072) 11.64 15.78%*
- ------------------------
INTERNATIONAL EQUITY FUND
- ------------------------
Investor Shares
1998........................... $13.58 $ 0.02 $ 2.64 $ -- $ (1.32) $14.92 21.39%
1997........................... 11.38 (0.01) 2.56 -- (0.35) 13.58 22.85
1996(5)........................ 10.44 0.04 0.90 -- -- 11.38 9.00**
Flex Shares
1998........................... $13.47 $ 0.07 $ 2.46 $ -- $ (1.32) $14.68 20.54%
1997........................... 11.37 (0.04) 2.49 -- (0.35) 13.47 21.98
1996(5)........................ 10.44 0.02 0.91 -- -- 11.37 8.91**

<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 TO (LOSS) TO (EXCLUDING (EXCLUDING PORTFOLIO
END OF AVERAGE NET AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ------------ ---------- -------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
- -------------
BALANCED FUND
- -------------
Investor Shares
1998........................... $ 8,313 1.26% 2.21% 1.59% 1.88% 154%
1997........................... 6,012 1.25 2.58 1.64 2.19 197
1996........................... 4,896 1.25 2.70 1.89 2.06 155
1995........................... 3,765 1.25 3.17 1.80 2.62 157
1994(1)........................ 2,311 1.25* 2.46* 4.91* (1.20)* 106
Flex Shares
1998........................... $ 27,625 2.02% 1.41% 2.23% 1.20% 154%
1997........................... 6,067 2.01 1.84 2.45 1.40 197
1996(2)........................ 3,131 2.00* 1.85* 2.97* 0.88* 155
- -------------------------
CAPITAL APPRECIATION FUND
- -------------------------
Investor Shares
1998........................... $271,044 1.81% (0.03%) 2.01% (0.23%) 194%
1997........................... 218,660 1.80 0.19 2.02 (0.03) 141
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
Flex Shares
1998........................... $106,670 2.26% (0.46%) 2.37% (0.57%) 194%
1997........................... 36,753 2.27 (0.29) 2.43 (0.45) 141
1996(3)........................ 10,969 2.27* (0.29)* 2.68* (0.70)* 156
- ------------------------
GROWTH AND INCOME FUND
- ------------------------
Investor Shares (**)
For the years ended November 30:
1998........................... $ 34,434 1.03% 1.18% 0.63% 0.48% 71%
1997........................... 28,112 1.03% 1.18% 0.89% 0.74% 100%
1996........................... 17,997 1.03% 1.18% 1.35% 1.20% 82%
1995........................... 12,633 1.03% 1.18% 2.14% 1.99% 175%
1994........................... 8,115 1.02% 1.04% 1.81% 1.79% 116%
Flex Shares (**)
For the years ended November 30:
1998........................... $ 25,656 1.78% 2.03% (0.13)% (0.38)% 71%
1997........................... 13,269 1.73% 2.09% 0.15% (0.20)% 100%
1996........................... 5,131 1.68% 2.03% 0.71% 0.36% 82%
1995(4)........................ 2,086 1.68%* 2.03%* 1.13%* 0.78%* 175%
- ------------------------
INTERNATIONAL EQUITY FUND
- ------------------------
Investor Shares
1998........................... $ 17,383 1.82% 0.24% 1.91% 0.15% 108%
1997........................... 10,674 1.81 0.18 2.05 (0.06) 139
1996(5)........................ 3,448 1.81* 1.73* 3.14* 0.40* 113
Flex Shares
1998........................... $ 21,164 2.52% (0.46%) 2.58% (0.52%) 108%
1997........................... 8,375 2.51 (0.27) 3.03 (0.79) 139
1996(5)........................ 953 2.51* 1.08* 5.86* (2.27)* 113
</TABLE>

* Annualized.
** Return is for period indicated and has not been annualized.
(1) Commenced operations on January 4, 1994.
(2) Commenced operations on June 14, 1995.
(3) Commenced operations on June 1, 1995.
(4) Commencement of operations for this class April 19, 1995.
(5) Commenced operations on January 2, 1996.
Amounts designated as "--" are either $0 or have been rounded to $0.

<PAGE>
32 PROSPECTUS

HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED DISTRIBUTIONS
NET ASSET NET GAINS DISTRIBUTIONS FROM
VALUE INVESTMENT (LOSSES) FROM NET REALIZED NET ASSET
BEGINNING INCOME ON INVESTMENT CAPITAL VALUE END TOTAL
OF PERIOD (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN (A)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------
INTERNATIONAL EQUITY INDEX FUND
- ------------------------------
Investor Shares
1998........................... $11.26 $ 0.16 $ 2.53 $(0.07) $(0.68) $13.20 25.25%
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(6)........................ 10.00 0.05 0.17 (0.01) (0.01) 10.20 2.18**
Flex Shares
1998........................... $11.24 $ 0.17 $ 2.44 $ -- $(0.68) $13.17 24.50%
1997........................... 10.87 (0.05) 0.72 -- (0.30) 11.24 6.41
1996(7)........................ 10.24 -- 0.82 (0.10) (0.09) 10.87 8.32**
- ------------------------
MID-CAP EQUITY FUND (A)
- ------------------------
Investor Shares
1998........................... $13.17 $(0.03) $ 2.49 $ -- $(1.96) $13.67 20.56%
1997........................... 12.74 (0.03) 1.69 (0.01) (1.22) 13.17 13.76
1996........................... 10.99 0.03 2.62 (0.03) (0.87) 12.74 24.93
1995........................... 9.84 0.03 1.15 (0.03) -- 10.99 11.96
1994(8)........................ 10.00 0.01 (0.17) -- -- 9.84 (1.60)**
Flex Shares
1998........................... $13.04 $(0.04) $ 2.38 $ -- $(1.96) $13.42 19.80%
1997........................... 12.69 (0.07) 1.64 -- (1.22) 13.04 13.06
1996(9)........................ 11.13 -- 2.45 (0.02) (0.87) 12.69 23.00*
- ---------------------
SMALL CAP EQUITY FUND
- ---------------------
Flex Shares
1998(10)....................... $11.28 $ 0.03 $ 2.17 $(0.06) $(0.62) $12.80 22.29%**
- -------------------
SUNBELT EQUITY FUND
- -------------------
Investor Shares
1998........................... $13.06 $(0.07) $ 2.98 $ -- $(1.20) $14.77 23.25%
1997........................... 13.95 (0.14) 0.24 -- (0.99) 13.06 1.05
1996........................... 9.96 (0.11) 4.30 -- (0.20) 13.95 2.58
1995........................... 9.69 (0.05) 0.36 -- (0.04) 9.96 3.20
1994(11)....................... 10.00 (0.02) (0.29) -- -- 9.69 (3.10)**
Flex Shares
1998........................... $13.00 $(0.09) $ 2.89 $ -- $(1.20) $14.60 22.48
1997........................... 13.97 (0.14) 0.16 -- (0.99) 13.00 0.46
1996(9)........................ 10.20 (0.07) 4.04 -- (0.20) 13.97 39.86*
- ------------------------
VALUE INCOME STOCK FUND
- ------------------------
Investor Shares
1998........................... $13.68 $ 0.20 $ 2.62 $(0.21) $(2.42) $13.87 22.71%
1997........................... 13.13 0.25 2.32 (0.26) (1.76) 13.68 21.69
1996........................... 11.58 0.30 2.71 (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
Flex Shares
1998........................... $13.61 $ 0.12 $ 2.57 $(0.13) $(2.42) $13.75 21.76%
1997........................... 13.08 0.18 2.29 (0.18) (1.76) 13.61 20.91
1996(12)....................... 11.59 0.26 2.65 (0.26) (1.16) 13.08 26.52*

<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
END OF TO AVERAGE AVERAGE WAIVERS AND WAIVERS AND TURNOVER
PERIOD (000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------ ---------- ---------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------
INTERNATIONAL EQUITY INDEX FUND
- ------------------------------
Investor Shares
1998........................... $ 7,141 1.46% 0.50% 1.84% 0.12% 1%
1997........................... 5,592 1.45 0.28 1.88 (0.15) 2
1996........................... 5,597 1.45 0.48 2.06 (0.13) 30
1995(6)........................ 3,960 1.45* 0.67* 2.44* (0.32)* 10
Flex Shares
1998........................... $ 1,469 2.11% (0.03%) 3.52% (1.44%) 1%
1997........................... 900 2.10 (0.39) 3.69 (1.98) 2
1996(7)........................ 917 2.10* (0.24)* 4.14* (2.28)* 30
- ------------------------
MID-CAP EQUITY FUND (A)
- ------------------------
Investor Shares
1998........................... $ 24,930 1.61% (0.75%) 1.84% (0.98%) 129%
1997........................... 20,245 1.60 (0.21) 1.85 (0.46) 152
1996........................... 17,971 1.60 0.25 1.96 (0.11) 116
1995........................... 7,345 1.60 0.43 2.27 (0.24) 66
1994(8)........................ 3,004 1.60* 0.74* 4.60* (2.26)* 8
Flex Shares
1998........................... $ 19,042 2.21% (1.37%) 2.47% (1.63%) 129%
1997........................... 10,120 2.20 (0.85) 2.58 (1.23) 152
1996(9)........................ 5,029 2.20* (0.37)* 3.04* (1.21)* 116
- ---------------------
SMALL CAP EQUITY FUND
- ---------------------
Flex Shares
1998(10)....................... $ 40,613 2.06%* 0.01%* 2.35%* (0.28%)* 55%
- -------------------
SUNBELT EQUITY FUND
- -------------------
Investor Shares
1998........................... $ 30,860 1.61% (1.35%) 1.86% (1.60%) 70%
1997........................... 28,095 1.60 (1.10) 1.84 (1.34) 72
1996........................... 29,002 1.60 (0.79) 1.93 (1.12)* 106
1995........................... 22,180 1.60 (0.57) 1.98 (0.95) 80
1994(11)....................... 16,077 1.60* (0.63)* 2.04* (1.07)* 21
Flex Shares
1998........................... $ 8,070 2.21% (1.96%) 2.58% (2.33%) 70%
1997........................... 5,689 2.20 (1.72) 2.69 (2.21) 72
1996(9)........................ 2,705 2.20* (1.43)* 3.62* (2.85)* 106
- ------------------------
VALUE INCOME STOCK FUND
- ------------------------
Investor Shares
1998........................... $210,591 1.27% 1.47% 1.27% 1.47% 99%
1997........................... 165,999 1.30 2.01 1.31 2.00 105
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
Flex Shares
1998........................... $180,530 2.01% 0.78% 2.01% 0.78% 99%
1997........................... 73,466 2.00 1.33 2.03 1.30 105
1996(12)....................... 26,298 2.00* 1.72* 2.15* 1.57* 134
</TABLE>

* Annualized.
** Return is for the period indicated and has not been annualized.
(6) Commenced operations on June 6, 1994.
(7) Commenced operations on June 8, 1995.
(8) Commenced operations on February 1, 1994.
(9) Commenced operations on June 5, 1995.
(10) Commenced operations on June 5, 1997.
(11) Commenced operations on January 4, 1994.
(12) Commenced operations on June 1, 1995.
(A) During the fiscal year ended May 31, 1996, the Aggressive Growth Fund
changed its name to the Mid-Cap Equity Fund.
Amounts designated as "--" are either $0 or have been rounded to $0.

On May 24, 1999, the Value Fund, a series of the CrestFunds, exchanged all of
its assets and certain liabilities for shares of the STI Growth and Income Fund.
Because the series of the CrestFunds is the accounting survivor in this
transaction, its basis of accounting for assets and liabilities and its
operating results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
<PAGE>
PROSPECTUS 33

HOW FUND SHARES ARE DISTRIBUTED

DISTRIBUTION OF FUND SHARES

<TABLE>
<S> <C>
Balanced Fund .28%
Capital Appreciation Fund .68%
Growth and Income Fund .25%
International Equity Fund .33%
International Equity Index Fund .38%
Mid-Cap Equity Fund .43%
Sunbelt Equity Fund .43%
Value Income Stock Fund .33%
</TABLE>

For Flex Shares, the maximum distribution fee is 1.00% of the average daily net
assets of each Fund.
<PAGE>
34 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes its income quarterly, except the International Equity and
International Equity Index Funds. These Funds distribute income annually. The
Funds make distributions of capital gains, if any, at least annually. You will
receive dividends and distributions in the form of additional Fund shares unless
you elect to receive payment in cash. To elect cash payment, you must notify us
in writing prior to the date of the distribution. Your election will be
effective for dividends and distributions paid after the Funds receive your
written notice. To cancel your election, simply send the Funds written notice.

SIMPLY SPEAKING . . .

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

TAXES

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

SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

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

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

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

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

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

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

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

HOW TO READ
THIS PROSPECTUS

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 BALANCED FUND
4 CAPITAL APPRECIATION FUND (FORMERLY CAPITAL
GROWTH FUND)
6 EMERGING MARKETS EQUITY FUND
8 GROWTH AND INCOME FUND*
10 INTERNATIONAL EQUITY FUND
12 INTERNATIONAL EQUITY INDEX FUND
14 INVESTMENT GRADE BOND FUND
16 LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND
18 MID-CAP EQUITY FUND
20 SHORT-TERM BOND FUND
22 SHORT-TERM U.S. TREASURY SECURITIES FUND
24 SMALL CAP EQUITY FUND
26 SMALL CAP GROWTH STOCK FUND
28 SUNBELT EQUITY FUND
30 TAX SENSITIVE GROWTH STOCK FUND
32 U.S. GOVERNMENT SECURITIES FUND
34 VALUE INCOME STOCK FUND
36 PRIME QUALITY MONEY MARKET FUND
38 U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
40 U.S. TREASURY MONEY MARKET FUND*
44 LIFE VISION BALANCED PORTFOLIO*
46 LIFE VISION GROWTH AND INCOME PORTFOLIO*
48 LIFE VISION MAXIMUM GROWTH PORTFOLIO*
</TABLE>

<PAGE>

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
50 EACH FUND'S PRINCIPAL INVESTMENTS
51 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
53 PURCHASING, SELLING AND EXCHANGING FUND SHARES
55 HISTORICAL FINANCIAL INFORMATION
57 DIVIDENDS AND DISTRIBUTIONS
57 TAXES

TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC
FUNDS PLEASE REFER TO THE BACK COVER OF THE
PROSPECTUS
</TABLE>

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

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

- --------------------------------------------------------------------------------
OCTOBER 1, 1998 *MAY 24, 1999
(AS SUPPLEMENTED MAY 24, 1999)
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

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

The Money Market Funds seek to maintain a constant price per share of $1.00, but
we cannot guarantee this.

BALANCED FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The Balanced Fund invests in common and preferred stocks,
convertible securities, U.S. government obligations and investment grade
corporate (bonds). In selecting stocks for the Fund, we attempt to identify
high-quality companies with a history of earnings growth. In selecting bonds, we
try to minimize risk while attempting to outperform selected market indices. Due
to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests in both common stocks and bonds. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, the value of bonds held by the Fund may
decline due to rising interest rates. An issuer may be unable to make timely
payments of principal or interest. The Fund may have more assets than usual
invested in bonds during periods of rising interest rates or less assets than
usual invested in bonds during falling interest rates. Some investment grade
bonds may have speculative characteristics. Fixed income securities, regardless
of credit quality, also experience price volatility, especially in response to
interest rate changes.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.21% .80%
(6/30/97) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 12.62%.
<PAGE>
PROSPECTUS 3

BALANCED FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LEHMAN BROTHERS
GOVERNMENT/ CORPORATE BOND INDEX.

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The S&P 500 Index is a widely
recognized index of 500 stocks designed to mimic the overall equity market's
industry weightings. The Lehman Brothers Government/ Corporate Bond Index is
a widely recognized index of government and corporate debt securities rated
investment grade or better, with maturities of at least 1 year.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .95%
Other Expenses .14%
---------
Total Annual Fund Operating Expenses 1.09%
</TABLE>

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$111 $347 $601 $1329
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .83%
AND .97%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
4 PROSPECTUS

CAPITAL APPRECIATION FUND
(FORMERLY THE CAPITAL GROWTH
FUND)

[ICON] FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.09% -4.09%
(6/30/97) (12/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 17.25%.
<PAGE>
PROSPECTUS 5

CAPITAL APPRECIATION FUND
(FORMERLY THE CAPITAL GROWTH
FUND)

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
CAPITAL APPRECIATION FUND 31.13% 16.05% 17.02%
S&P 500 INDEX 33.35% 20.25% 20.32%
</TABLE>

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses 1.28%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1545
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04%
AND 1.17%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
6 PROSPECTUS

EMERGING MARKETS EQUITY FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The Emerging Markets Equity Fund invests primarily in common stocks
and other equity securities of foreign issuers located in emerging market
countries. An emerging market country is a country that the World Bank or the
United Nations considers to be emerging or developing. Our "bottom-up" strategy
focuses on individual stocks and companies. Through research, we attempt to
identify investments that we feel are attractively priced relative to the
current market.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of foreign companies. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. Investments in foreign markets may be
more volatile than investments in U.S. markets. Investments in emerging foreign
markets may be more volatile than investments in developed foreign markets.
Diplomatic, political or economic developments in a foreign country may cause
investments in that country to lose money. These developments may occur more
frequently in emerging market countries. Emerging market securities may be even
more susceptible to political or economic developments than those in more
developed countries. The value of the U.S. dollar may rise, causing reduced
returns for U.S. persons investing abroad. A foreign country may not have the
same accounting and financial reporting standards as the U.S. Some emerging
market countries may have little to no accounting or financial reporting
standards. Foreign stock markets, brokers and companies are generally subject to
less supervision and regulation than their U.S. counterparts. There may be
little to no supervision and regulation in some emerging market countries.

[ICON] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to January 31, 1997, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.

THIS BAR CHART SHOWS THE FUND'S PERFORMANCE DURING 1997.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
10.29% -17.26%
(3/31/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS -6.26%.
<PAGE>
PROSPECTUS 7

EMERGING MARKETS EQUITY FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MORGAN STANLEY CAPITAL INTERNATIONAL
(MSCI) EMERGING MARKETS FREE INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (3/29/96)
<S> <C> <C>
EMERGING MARKETS EQUITY FUND -3.43% 5.67%
MSCI EMERGING MARKETS FREE INDEX -13.40% -8.51%
</TABLE>

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.30%
Other Expenses .49%
---------
Total Annual Fund Operating Expenses 1.79%
</TABLE>

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$182 $563 $970 $2105
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.08%
AND 1.57%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
8 PROSPECTUS

GROWTH AND INCOME FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL
PRIMARY Long-term capital appreciation
SECONDARY Current income
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify securities of companies with market capitalizations of at least $1
STRATEGY billion with low price/earnings ratios and above average earnings momentum
INVESTOR PROFILE Investors who are looking for capital appreciation potential and income with less
volatility than the equity markets as a whole
</TABLE>

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.38% -10.36%
(6/30/97) (9/30/98)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS 2.64%.
<PAGE>
PROSPECTUS 9

GROWTH AND INCOME FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 COMPOSITE INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (9/28/92)
<S> <C> <C> <C>
GROWTH AND INCOME FUND 18.20% 18.19% 17.26%
S&P 500 COMPOSITE INDEX 28.60% 24.05% 21.60%
</TABLE>

[ICON] FUND EXPENSES
This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees .90%
Other Expenses .11%
---------
Total Annual Fund Operating Expenses 1.01%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$103 $322 $558 $1236
</TABLE>

SIMPLY SPEAKING . . .

INTERNATIONAL EQUITY FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The International Equity Fund invests primarily in common stocks
and other equity securities of foreign companies. In selecting investments for
the Fund, we diversify the Fund's investments among at least three foreign
countries. The Fund invests primarily in developed countries, but may invest in
countries with emerging markets. Our "bottom-up" approach to stock selection
focuses on individual stocks and fundamental characteristics of companies. Our
goal is to find companies with top management, quality products and sound
financial positions, that are trading at a discount. Due to the Fund's
investment strategy, the Fund may buy and sell securities frequently. This may
result in higher transaction costs and additional capital gains taxes.

[ICON] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to December 1995, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
12.19% -7.79%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 16.44%.
<PAGE>
PROSPECTUS 11

INTERNATIONAL EQUITY FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (2/2/95)
<S> <C> <C>
INTERNATIONAL EQUITY FUND 13.35% 24.95%
MSCI EAFE INDEX 1.78% 6.47%
</TABLE>

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.25%
Other Expenses .24%
---------
Total Annual Fund Operating Expenses 1.49%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$152 $471 $813 $1779
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.24%
AND 1.48%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
12 PROSPECTUS

INTERNATIONAL EQUITY INDEX FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The International Equity Index Fund invests primarily in common
stocks of foreign companies. In selecting investments for the Fund, we choose
companies included in the MSCI EAFE-GDP Index, an index of equity securities of
companies located in Europe, Australia and the Far East. While the Fund is
structured to have overall investment characteristics similar to those of the
Index, it selects a sample of stocks within the index using a statistical
process. So, the Fund will not hold all stocks included in the index.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.84% -5.5%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 23.22%.
<PAGE>
PROSPECTUS 13

INTERNATIONAL EQUITY INDEX FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (9/1/94)
<S> <C> <C> <C>
INTERNATIONAL EQUITY
INDEX FUND 8.99% 8.57% 6.39%
MSCI EAFE-GDP INDEX 4.35% 6.62% 5.26%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The MSCI EAFE-GDP Index is a
widely recognized index of over 900 securities listed on the stock exchanges
in Europe, Australia and the Far East. The index is weighted by the gross
domestic product of the various countries in the index.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .90%
Other Expenses .29%
---------
Total Annual Fund Operating Expenses 1.19%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$121 $378 $654 $1443
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .78%
AND 1.07%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
14 PROSPECTUS

INVESTMENT GRADE BOND FUND

[ICON] FUND SUMMARY

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

[ICON] INVESTMENT STRATEGY

The Investment Grade Bond Fund invests primarily in investment grade
corporate debt securities, U.S. Treasury obligations and mortgage-backed
securities. In selecting investments for the Fund, we try to minimize risk while
attempting to outperform selected market indices. Currently, our selected index
is the Lehman Brothers Government/Corporate Bond Index, a widely recognized,
unmanaged index of investment grade government and corporate debt securities. We
seek to invest more in portions of the Index that seem relatively inexpensive,
and less in those that seem expensive. We allocate the Fund's investments among
various market sectors based on our analysis of historical data, yield
information and credit ratings. Due to the Fund's investment strategy, the Fund
may buy and sell securities frequently. This may result in higher transaction
costs and additional capital gains taxes. We anticipate that the Fund's average
weighted maturity will range from 4 to 10 years.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Fund invests primarily in investment grade debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, an issuer may be unable to
make timely payments of principal or interest to the Fund. Some investment grade
debt securities have speculative characteristics. In addition, the Fund is
subject to the risk of investing in mortgage-backed securities. See
"Mortgage-Backed Securities" to the right.
SIMPLY SPEAKING . . .
MORTGAGE-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The mortgages
underlying mortgage-backed securities may mature or be paid off before the
stated maturity date. This has four drawbacks. First, the Fund may lose money
on its investment. Second, the monthly income payments to the Fund may
fluctuate. Third, we cannot predict the maturity of the Fund's investment with
certainty. Fourth, we would invest any resulting proceeds elsewhere, generally
at lower interest rates.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
6.11% -2.67%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 4.31%.
<PAGE>
PROSPECTUS 15

INVESTMENT GRADE BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (7/16/92)
<S> <C> <C> <C>
INVESTMENT GRADE BOND FUND 9.08% 7.10% 6.96%
LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX 9.75% 7.61% 7.97%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Brothers Government/
Corporate Bond Index is a widely recognized index of investment grade
government and corporate debt securities rated investment grade or better,
with maturities of at least 1 year.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .74%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .87%
</TABLE>

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$89 $278 $482 $1073
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .64%
AND .77%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
16 PROSPECTUS

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

SIMPLY SPEAKING . . .

[ICON] PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
4.05% .32%
(3/31/95) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.84%.
<PAGE>
PROSPECTUS 17

LIMITED-TERM FEDERAL MORTGAGE SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE MERRILL LYNCH 1-5 YEAR
SHORT/INTERMEDIATE U.S. TREASURY INDEX.

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Merrill Lynch 1-5 Year Short/
Intermediate U.S. Treasury Index is a widely recognized index of U.S.
Treasury securities with maturities 1 year or greater and no more than 5
years.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .78%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$80 $249 $433 $966
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .54%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
18 PROSPECTUS

MID-CAP EQUITY FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The Mid-Cap Equity Fund invests primarily in a diversified portfolio
of common stocks and other equity securities of U.S. companies. In selecting
investments for the Fund, we choose companies that have small- to mid-sized
market capitalizations (i.e., companies with market capitalizations of $500
million to $10 billion) and that have above average growth potentials at
attractive prices. We evaluate companies based on their industry sectors and the
market in general. The Fund maintains large holdings in the industries that
appear to perform best during a given business cycle. We analyze companies that
are in favored industries based on their fundamental characteristics, such as
growth rates and earnings. We do not consider current income in selecting
investments for the Fund. Due to the Fund's investment strategy, the Fund may
buy and sell securities frequently. This may result in higher transaction costs
and additional capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in mid-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small- to mid-sized companies may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these companies may have somewhat limited product
lines, markets and financial resources, and may depend upon a relatively small-
to medium-sized management group.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
14.22% -2.89%
(9/30/97) (3/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 6.66%.
<PAGE>
PROSPECTUS 19

MID-CAP EQUITY FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (1/3/94)
<S> <C> <C> <C>
MID-CAP EQUITY FUND 21.23% 22.45% 32.54%
S&P MIDCAP 400 INDEX 32.23% 27.32% 18.95%
</TABLE>

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

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses 1.28%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1545
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04%
AND 1.17%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
20 PROSPECTUS

SHORT-TERM BOND FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The Short-Term Bond Fund invests primarily in a diversified
portfolio of short- to medium-term investment grade U.S. Treasury, corporate
debt, mortgage-backed and asset-backed securities. The Fund expects that it will
normally maintain an average weighted maturity of approximately 3 years. In
selecting investments for the Fund, we attempt to identify securities that offer
a comparably better investment return for a given level of credit risk. For
example, short-term bonds generally have better returns than money market
instruments, with a fairly modest increase in credit risk and/or volatility. We
manage the Fund from a total return perspective. That is, we make day to day
investment decisions for the Fund with a view towards maximizing returns. We
analyze yields, market sectors and credit risk in an effort to identify
attractive investments with the best risk/reward trade-off.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in debt securities. As a result, the Fund is subject
to the risk that the prices of debt securities will decline due to rising
interest rates. In addition, an issuer may be unable to make timely payments of
principal or interest to the Fund. Also, the Fund may invest in bonds rated
"investment grade." Some investment grade bonds may have speculative
characteristics. In addition, the Fund is subject to the risk of investing in
mortgage-backed and asset-backed securities. See "Mortgage-Backed and
Asset-Backed Securities" to the right.

SIMPLY SPEAKING . . .
MORTGAGE-BACKED AND
ASSET-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The owner of an
asset-backed security owns a share of the underlying pool of assets, such as
truck and auto loans, leases and credit card receivables. The mortgages,
receivables or other assets underlying these securities may mature or be paid
off before the stated maturity date. This has four drawbacks. First, the Fund
may lose money on its investment. Second, the monthly income payments to the
Fund may fluctuate. Third, we cannot predict the maturing of the Fund's
investment with certainty. Fourth, we would invest any resulting proceeds
elsewhere, generally at lower interest rates.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.76% -.58%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 3.00%.
<PAGE>
PROSPECTUS 21

SHORT-TERM BOND FUND

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .15%
---------
Total Annual Fund Operating Expenses .80%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$82 $255 $444 $990
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .52%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
22 PROSPECTUS

SHORT-TERM U.S. TREASURY SECURITIES FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The Short-Term U.S. Treasury Securities Fund invests exclusively in
short-term U.S. Treasury securities (those with remaining maturities of 3 years
or less). The Fund intends to maintain an average weighted maturity from 1 to 2
years. The Fund offers investors the opportunity to capture the advantage of
investing in short-term bonds over money market instruments. Generally,
short-term bonds offer a comparably better return than money market instruments,
with a modest increase in interest rate risk. We manage the Fund from a total
return perspective. That is, we make day to day investment decisions for the
Fund with a view toward maximizing returns and yield. We try to select those
U.S. Treasury securities that offer the best risk/reward trade-off.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. Treasury securities. As a result, the Fund is
subject to the risk that the prices of debt securities will decline due to
rising interest rates.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.61% -.10%
(3/31/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.75%.
<PAGE>
PROSPECTUS 23

SHORT-TERM U.S. TREASURY SECURITIES FUND

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

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .20%
---------
Total Annual Fund Operating Expenses .85%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$87 $271 $471 $1049
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .47%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
24 PROSPECTUS

SMALL CAP EQUITY FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The Small Cap Equity Fund invests primarily in common stocks of U.S.
companies. In selecting investments for the Fund, we choose common stocks of
small sized companies (i.e., companies with market capitalizations under $1
billion) that we believe are undervalued in the market.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in small-cap common stocks. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. This price volatility is the principal risk of
investing in the Fund. In addition, small sized companies may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, small-sized companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.

[ICON] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to January 1997, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
14.95% -2.11%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS -.08%.
<PAGE>
PROSPECTUS 25

SMALL CAP EQUITY FUND

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

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Frank Russell 2000 Small Stock
Index and the Frank Russell 2000 Value Index are widely recognized indices
of the 2,000 smallest U.S. companies out of the 3,000 largest companies.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .17%
---------
Total Annual Fund Operating Expenses 1.32%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$134 $418 $723 $1590
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.05%
AND 1.22%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
26 PROSPECTUS

SMALL CAP GROWTH STOCK FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS U.S. small-cap common stocks of growth companies
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Identifies small-cap companies with above-average growth potential
INVESTOR PROFILE Investors who want the value of their investment to grow, but do not need
current income
</TABLE>

[ICON] INVESTMENT STRATEGY
The Small Cap Growth Fund invests primarily in U.S. companies that
demonstrate above-average growth potential. We invest in companies with an
established operating history and a solid balance sheet. In selecting
investments for the Fund, we choose companies with market capitalizations of up
to about $3 billion. Due to its investment strategy, the Fund may buy and sell
securities frequently. This may result in higher transactions costs and
additional capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of smaller U.S. companies. As a
result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in small- or
mid-cap companies involve greater risk than investments in larger, more
established companies because of the greater business risks of small size,
limited markets and financial resources, smaller product lines and lack of depth
of management. These securities are often traded over-the-counter and may not be
traded in high volumes. Consequently, securities prices could be less stable
than those of larger, more established companies.
<PAGE>
PROSPECTUS 27

SMALL CAP GROWTH STOCK FUND

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses* .20%
---------
Total Annual Fund Operating Expenses 1.35%
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$137 $428
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.00%
AND 1.20%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
28 PROSPECTUS

SUNBELT EQUITY FUND

[ICON] FUND SUMMARY

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

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

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
21.62% -19.36%
(3/31/91) (12/31/87)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 5.98%.
<PAGE>
PROSPECTUS 29

SUNBELT EQUITY FUND

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

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Frank Russell 2000 Index is a
widely recognized index of the 2,000 largest U.S. companies with higher
growth rates. The S&P SmallCap 600 Index is a widely recognized index of 600
U.S. small cap stocks.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses 1.28%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1545
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04%
AND 1.17%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
30 PROSPECTUS

TAX SENSITIVE GROWTH STOCK FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The Tax Sensitive Growth Stock Fund primarily invests in a
diversified portfolio of common stocks of financially strong U.S. growth
companies. Many of these companies have a history of stable or rising dividend
payout policies. We invest the Fund's assets across all market capitalizations.
We attempt to minimize the impact of capital gains taxes on investment returns
by using a low turnover rate (generally 50% or less) strategy, in conjunction
with other tax management strategies. These strategies may lead to lower capital
gains distributions and, therefore, lower capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund primarily invests in common stocks. As a result, the Fund is subject to
the risk that stock prices will fall over short or extended periods of time.
Stock markets tend to move in cycles, with periods of rising prices and periods
of falling prices. This price volatility is the principal risk of investing in
the Fund. In addition, the Fund may invest in small-cap companies. These
companies involve greater risk than investments in larger, more established
companies because of the greater business risks of small size, limited markets
and financial resources, smaller product lines and lack of depth of management.
These securities are often traded over-the-counter and may not be traded in high
volumes. Consequently, securities prices could be less stable than those of
larger, more established companies.

[ICON] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility
of an investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future. The periods prior
to October 1998, when the Fund began operating, represent the performance of the
Advisor's similarly managed collective investment fund. This past performance
has been adjusted to reflect current expenses for Trust shares of the Fund. The
Advisor's collective fund was not a registered mutual fund so it was not subject
to the same investment and tax restrictions as the Fund. If it had been, the
collective fund's performance would have been lower.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.10% -0.04%
(6/30/97) (12/31/97)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 14.54%.
<PAGE>
PROSPECTUS 31

TAX SENSITIVE GROWTH STOCK FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX AND THE LIPPER GROWTH AND
INCOME FUNDS INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (12/31/95)
<S> <C> <C>
TAX SENSITIVE GROWTH STOCK FUND 28.76% 24.84%
S&P 500 INDEX 33.55% 28.04%
LIPPER GROWTH AND INCOME FUNDS INDEX 26.96% 23.78%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. Unlike a mutual fund, an index does not
have an investment advisor and does not pay any commissions or expenses. If
an index had expenses, its performance would be lower. The S&P 500 Index is
a widely recognized index of 500 stocks designed to mimic the overall equity
market's industry weightings. The Lipper Growth and Income Funds Index is a
widely recognized composite of mutual funds that have growth-of-earnings
orientations and income requirements for level and/or rising dividends.

[ICON] FUND EXPENSES

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses* .20%
---------
Total Annual Fund Operating Expenses 1.35%
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$137 $428
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.00%
AND 1.20%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
32 PROSPECTUS

U.S. GOVERNMENT SECURITIES FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The U.S. Government Securities Fund invests primarily in U.S.
government debt securities, such as mortgage-backed securities and U.S. Treasury
obligations. In an attempt to provide a consistently high dividend without
adding undue risk, the Fund focuses its investments in mortgage-backed
securities. The average maturity of the Fund's portfolio will typically range
from 7 to 14 years.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in U.S. government debt securities. As a result, the
Fund is subject to the risk that the prices of debt securities will decline due
to rising interest rates. This risk is greater for long-term debt securities
than for short-term debt securities. In addition, the Fund is subject to the
risk of investing in mortgage-backed securities. See "Mortgage-Backed
Securities" to the right.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.89% -2.24%
(6/30/95) (3/31/96)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 3.90%.
<PAGE>
PROSPECTUS 33

U.S. GOVERNMENT SECURITIES FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT
BOND INDEX.

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Brothers Intermediate
Government Bond Index is a widely recognized index of U.S. Treasury
securities and government agency securities with maturities ranging from 1
to 10 years.

<TABLE>
<S> <C>
Investment Advisory Fees .74%
Other Expenses .19%
---------
Total Annual Fund Operating Expenses .93%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$95 $296 $515 $1143
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .58%
AND .77%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
34 PROSPECTUS

VALUE INCOME STOCK FUND

[ICON] FUND SUMMARY

[ICON] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to February 1993, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.56% -14.86%
(3/31/91) (9/30/90)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 7.79%.
<PAGE>
PROSPECTUS 35

VALUE INCOME STOCK FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P BARRA VALUE 500 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (10/31/89)
<S> <C> <C> <C>
VALUE INCOME STOCK FUND 27.08% 18.88% 19.38%
S&P/BARRA VALUE 500 INDEX 29.98% 20.68% 15.43%
</TABLE>

<TABLE>
<S> <C>
Investment Advisory Fees .80%
Other Expenses .17%
---------
Total Annual Fund Operating Expenses .97%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$99 $309 $536 $1190
</TABLE>

PRIME QUALITY MONEY MARKET FUND

[ICON] FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.37% .68%
(6/30/95) (6/30/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.56%.
<PAGE>
PROSPECTUS 37

PRIME QUALITY MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
PRIME QUALITY
MONEY MARKET FUND 5.15% 4.43% 4.28%
IBC/DONOGHUE
FIRST TIER AVERAGE 5.01% 4.32% 4.25%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.

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

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .78%
</TABLE>

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$80 $249 $433 $966
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, administration and custody services. The expenses in
the table above are shown as a percentage of the Fund's net assets. These
expenses are deducted from Fund assets. The table shows the highest expenses
that could be currently charged to the Fund. Actual expenses are lower because
the Advisor and Administrator are voluntarily waiving a portion of their fees.
ACTUAL INVESTMENT ADVISORY FEES, OTHER EXPENSES AND TOTAL OPERATING EXPENSES
ARE .51%, .09% AND .60%, RESPECTIVELY. The Advisor and Administrator could
discontinue this voluntary waiver at any time. For more information about
these fees, see "Investment Advisors."
<PAGE>
38 PROSPECTUS

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY
The U.S. Government Securities Money Market Fund invests exclusively
in U.S. Treasury bills, notes, bonds and components of these securities,
government agency securities, and repurchase agreements involving these
securities. In selecting investments for the Fund, we try to increase income
without adding undue risk by analyzing yields. We actively manage the maturity
of the Fund and its portfolio to maximize the Fund's yield based on current
market interest rates and our outlook on the market.

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.36% .65%
(6/30/95) (6/30/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.45%.
<PAGE>
PROSPECTUS 39

U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

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

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .14%
---------
Total Annual Fund Operating Expenses .79%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$81 $252 $439 $978
</TABLE>

SIMPLY SPEAKING . . .
FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor and Administrator are voluntarily
waiving a portion of their fees. ACTUAL INVESTMENT ADVISORY FEES, OTHER
EXPENSES AND TOTAL OPERATING EXPENSES ARE .50%, .13% AND .63%, RESPECTIVELY.
The Advisor and Administrator could discontinue these voluntary waivers at any
time. For more information about these fees, see "Investment Advisors."
<PAGE>
40 PROSPECTUS

U.S. TREASURY MONEY MARKET FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

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

[ICON] PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.92% .61%
(6/30/90) (12/31/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS 1.02%.
<PAGE>
PROSPECTUS 41

U.S. TREASURY MONEY MARKET FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE IBC/ FINANCIAL DATA U.S. TREASURY REPO
AVERAGE.

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Salomon 1-3 Year Treasury/
Government Sponsored/ Corporate Index is a widely recognized index of U.S.
Treasury, government agency and investment grade corporate securities with
maturities greater than 1 year and less than 3 years. The IBC/Financial Data
U.S. Treasury Repo Average is a widely recognized composite of money market
funds that invest in U.S. Treasury securities and repurchase agreements.

[ICON] FUND EXPENSES

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .10%
---------
Total Annual Fund Operating Expenses .75%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$83 $259 $417 $930
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .53%
AND .63%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
42 PROSPECTUS

INTRODUCTION TO THE PORTFOLIOS

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

The value of your investment in a Portfolio is based on the market prices of the
securities the underlying Fund holds. These prices change daily due to economic
and other events that affect particular companies and other issuers. These price
movements, sometimes called volatility, will vary depending on the types of
securities the underlying Fund owns and the markets where these securities
trade. The effect on a Portfolio of a change in the value of a single security
will depend on how widely the Portfolio and the underlying Funds diversify their
holdings.

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

The Portfolios provide investors with the opportunity to purchase three distinct
asset allocations strategies implemented through investments in Trust Class
Shares of selected Funds. By investing in the Portfolios, investors have the
opportunity to diversify and allocate their assets among the broad range of
Funds in STI Classic Funds.

The assets of each Portfolio will be allocated among underlying Funds in
accordance with its investment objective, the Advisor's outlook for the economy,
the financial markets and the relative market valuations of the underlying
Funds. Each Portfolio has the ability to invest its assets allocated to a
particular asset class in one or more of the underlying Funds, which have
different investment objectives, policies and risk characteristics. Although the
Portfolios currently expect to invest in one or more of the underlying Funds,
the Advisor has the discretion to change the particular Funds used as underlying
investments for the Portfolios. If determined to be in the best interest of the
Portfolios, the Advisor reserves the right to substitute or include other
underlying Funds, including Funds that do not currently exist. A Portfolio's
goal may be changed without shareholder approval. Before investing, make sure
that the Portfolio's goal matches your own.
<PAGE>
PROSPECTUS 43

LIFE VISION BALANCED PORTFOLIO

[ICON] PORTFOLIO SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation and current income
INVESTMENT FOCUS Equity and bond funds
SHARE PRICE VOLATILITY Low
PRINCIPAL INVESTMENT Investing pursuant to an asset allocation strategy in a combination of STI Classic
STRATEGY Equity and Bond Funds
INVESTOR PROFILE Investors who want income from their investment, as well as an increase in its value,
and are willing to be subject to the risks of equity securities
</TABLE>

[ICON] INVESTMENT STRATEGY

The Life Vision Balanced Portfolio principally invests in STI
Classic Funds that invest primarily in equity securities, but invest at least
25% of the Portfolio's total assets in STI Classic Funds that invest primarily
in fixed income securities. The Portfolio's remaining assets may be invested in
shares of underlying STI Classic Funds that are money market funds, securities
issued by the U.S. Government, its agencies or instrumentalities, repurchase
agreements and short-term paper. In selecting a diversified portfolio of
underlying STI Classic Funds, the Advisor analyzes many factors, including the
underlying STI Classic Funds' investment objectives, total return, volatility
and expenses.

THE PORTFOLIO CURRENTLY PLANS TO INVEST IN SHARES OF THE FOLLOWING UNDERLYING
STI CLASSIC FUNDS WITHIN THE PERCENTAGE RANGES INDICATED:

<TABLE>
<CAPTION>
INVESTMENT RANGE
(PERCENTAGE OF THE LIFE
VISION BALANCED
ASSET CLASS: PORTFOLIO'S ASSETS)
<S> <C>
EQUITY FUNDS 40-70%
GROWTH AND INCOME FUND
CAPITAL APPRECIATION FUND
SMALL CAP GROWTH STOCK FUND
BOND FUNDS 30-60%
SHORT-TERM BOND FUND
INVESTMENT GRADE BOND FUND
U.S. GOVERNMENT SECURITIES FUND
MONEY MARKET FUNDS 0-20%
PRIME QUALITY MONEY MARKET FUND
</TABLE>

Due to its investment strategy, the Portfolio holds STI Classic Funds that buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS PORTFOLIO?

The Portfolio invests in Funds that invest in common stocks and bonds. As a
result, the Portfolio is subject to the risk that stock prices will fall over
short or extended periods of time. Stock markets tend to move in cycles, with
periods of rising prices and periods of falling prices. This price volatility is
the principal risk of investing in the Portfolio. In addition, the value of
bonds held by the underlying Bond Funds may decline due to rising interest
rates. An issuer may be unable to make timely payments of principal or interest.
The Portfolio may have more assets than usual invested in Bond Funds during
periods of rising interest rates or less assets than usual invested in Bond
Funds during falling interest rates. Some investment grade bonds may have
speculative characteristics. Fixed income securities, regardless of credit
quality, also experience price volatility, especially in response to interest
rate changes. Of course, the risks associated with investing in the Portfolio
will vary depending upon how the assets are allocated among the underlying STI
Classic Funds.

[ICON] PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, the Portfolio's past
performance does not necessarily indicate how the Portfolio will perform in the
future.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.24% -7.99%
(12/31/98) (9/30/98)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
PORTFOLIO'S TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .52%.
<PAGE>
44 PROSPECTUS

LIFE VISION BALANCED PORTFOLIO

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 COMPOSITE INDEX, LEHMAN
AGGREGATE BOND INDEX, RUSSELL 2000 INDEX AND THE SALOMON 3 MONTH TREASURY BILL
INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (12/31/92)
<S> <C> <C> <C>
BALANCED PORTFOLIO 11.15% 10.83% 10.56%
LEHMAN AGGREGATE BOND INDEX 8.67% 7.27% 7.68%
S&P 500 COMPOSITE INDEX 28.60% 24.05% 21.60%
SALOMON 3 MONTH TREASURY BILL INDEX 5.05% 5.10% 4.76%
RUSSELL 2000 INDEX -2.55% 11.87% 13.01%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The S&P 500 Composite Index is a
widely recognized index of 500 stocks designed to mimic the overall equity
market's industry weightings. The Lehman Aggregate Bond Index is a widely
recognized index of all U.S. investment grade fixed income securities with
maturities of over one year. The Salomon 3 Month Treasury Bill Index is a
widely recognized index of U.S. Treasury bills.

[ICON] PORTFOLIO EXPENSES

This table describes the Portfolio's expenses that you may pay
indirectly if you hold Portfolio shares. The table does not reflect any
of the operating costs and investment advisory fees of the underlying
STI Classic Funds. The Portfolio and its shareholders will indirectly
bear a pro-rata share of the expenses of the underlying STI Classic
Funds.
- --------------------------------------------------------------------------------
ANNUAL PORTFOLIO OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees .25%
Other Expenses .13%
---------
Total Annual Portfolio Operating Expenses .38%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$143 $443 $766 $1680
</TABLE>

SIMPLY SPEAKING . . .

PORTFOLIO EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The
Portfolio's expenses in the table above are shown as a percentage of the
Portfolio's net assets. These expenses are deducted from Portfolio assets. The
table shows the highest expenses that could be currently charged to the
Portfolio. Actual expenses are lower because the Advisor is voluntarily
waiving a portion of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL
OPERATING EXPENSES ARE .12% AND .25%, RESPECTIVELY. The Advisor could
discontinue this voluntary waiver at any time. For more information about
these fees, see "Investment Advisors."
<PAGE>
PROSPECTUS 45

LIFE VISION GROWTH AND INCOME PORTFOLIO

[ICON] PORTFOLIO SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Equity and bond funds
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT Investing pursuant to an asset allocation strategy in a combination of STI Classic
STRATEGY Equity and, to a lesser extent, Bond Funds
INVESTOR PROFILE Investors who want their assets to grow, but want to moderate the risks of equity
securities through investment of a portion of their assets in bonds
</TABLE>

[ICON] INVESTMENT STRATEGY

The Life Vision Growth and Income Portfolio invests at least 80% of
the Portfolio's total assets in STI Classic Funds that invest primarily in
either equity securities or fixed income securities. The Portfolio's remaining
assets may be invested in shares of underlying STI Classic Money Market Funds,
securities issued by the U.S. Government, its agencies or instrumentalities,
repurchase agreements and short-term paper. In selecting a diversified portfolio
of underlying STI Classic Funds, the Advisor analyzes many factors, including
the underlying STI Classic Funds' investment objectives, total return,
volatility and expenses.

THE PORTFOLIO CURRENTLY PLANS TO INVEST IN SHARES OF THE FOLLOWING UNDERLYING
STI CLASSIC FUNDS WITHIN THE PERCENTAGE RANGES INDICATED:

<TABLE>
<CAPTION>
INVESTMENT RANGE
(PERCENTAGE OF THE LIFE
VISION GROWTH AND
INCOME PORTFOLIO'S
ASSET CLASS: ASSETS)
<S> <C>
EQUITY FUNDS 60-80%
GROWTH AND INCOME FUND
CAPITAL APPRECIATION FUND
SMALL CAP GROWTH STOCK FUND
BOND FUNDS 20-40%
SHORT-TERM BOND FUND
INVESTMENT GRADE BOND FUND
U.S. GOVERNMENT SECURITIES FUND
MONEY MARKET FUNDS 0-20%
PRIME QUALITY MONEY MARKET FUND
</TABLE>

Due to its investment strategy, the Portfolio holds STI Classic Funds that buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS PORTFOLIO?

The Portfolio invests in Funds that invest in common stocks and bonds. As a
result, the Portfolio is subject to the risk that stock prices will fall over
short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Portfolio. In addition, the value of bonds held by the
underlying Bond Funds may decline due to rising interest rates. An issuer may be
unable to make timely payments of principal or interest. The Portfolio may have
more assets than usual invested in Bond Funds during periods of rising interest
rates or less assets than usual invested in Bond Funds during falling interest
rates. Some investment grade bonds may have speculative characteristics. Fixed
income securities, regardless of credit quality, also experience price
volatility, especially in response to interest rate changes. Of course, the
risks associated with investing in the Portfolio will vary depending upon how
the assets are allocated among the underlying STI Classic Funds.

[ICON] PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
13.65% -10.20%
(12/31/98) (9/30/98)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
PORTFOLIO'S TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS .48%.
<PAGE>
46 PROSPECTUS

LIFE VISION GROWTH AND INCOME PORTFOLIO

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (12/31/92)
<S> <C> <C> <C>
GROWTH AND INCOME PORTFOLIO 11.16% 11.75% 11.45%
S&P 500 INDEX 28.60% 24.05% 21.60%
LEHMAN AGGREGATE BOND INDEX 8.67% 7.27 % 7.68%
RUSSELL 2000 INDEX -2.55% 11.87 % 13.01%
SALOMON 3 MONTH TREASURY BILL INDEX 5.05% 5.10 % 4.76%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The S&P 500 Composite Index is a
widely recognized index of 500 stocks designed to mimic the overall equity
market's industry weightings. The Russell 2000 Index is a widely recognized
index of the 2,000 smallest U.S. companies out of the 3,000 largest
companies. The Salomon 3 Month Treasury Bill Index is a widely recognized
index of U.S. Treasury bills.

[ICON] PORTFOLIO EXPENSES

<TABLE>
<S> <C>
Investment Advisory Fees .25%
Other Expenses .21%
---------
Total Annual Portfolio Operating Expenses .46%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$156 $483 $834 $1824
</TABLE>

SIMPLY SPEAKING . . .

PORTFOLIO EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The
Portfolio's expenses in the table above are shown as a percentage of the
Portfolio's net assets. These expenses are deducted from Portfolio assets. The
table shows the highest expenses that could be currently charged to the
Portfolio. Actual expenses are lower because the Advisor is voluntarily
waiving a portion of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL
OPERATING EXPENSES ARE .04% AND .25%, RESPECTIVELY. The Advisor could
discontinue this voluntary waiver at any time. For more information about
these fees, see "Investment Advisors."
<PAGE>
PROSPECTUS 47

LIFE VISION MAXIMUM GROWTH PORTFOLIO

[ICON] PORTFOLIO SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High capital appreciation
INVESTMENT FOCUS Equity and money market Funds
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT Investing at least 80% of the Portfolio's total assets in STI Classic Equity Funds
STRATEGY
INVESTOR PROFILE Investors who want the value of their investment to grow, but do not need to receive
income on their investment, and are willing to be subject to the risks of equity
securities
</TABLE>

[ICON] INVESTMENT STRATEGY

The Portfolio invests at least 80% of the Portfolio's total assets
in STI Classic Funds that invest primarily in equity securities. The Portfolio's
remaining assets may be invested in STI Classic Funds that invest primarily in
fixed income securities, STI Classic Money Market Funds, securities issued by
the U.S. Government, its agencies or instrumentalities, repurchase agreements
and short-term paper. In selecting a diversified portfolio of underlying STI
Classic Funds, the Advisor analyzes many factors, including the underlying STI
Classic Funds' investment objectives, total return, volatility and expenses.

The Portfolio currently plans to invest in shares of the following underlying
STI Classic Funds within the percentage ranges indicated:

<TABLE>
<CAPTION>
INVESTMENT RANGE
(PERCENTAGE OF THE LIFE
VISION MAXIMUM GROWTH
ASSET CLASS PORTFOLIO'S ASSETS)
<S> <C>
EQUITY FUNDS 80-100%
GROWTH AND INCOME FUND
CAPITAL APPRECIATION FUND
SMALL CAP GROWTH STOCK FUND
MONEY MARKET FUNDS 0-20%
PRIME QUALITY MONEY MARKET FUND
</TABLE>

Due to its investment strategy, the Portfolio holds STI Classic Funds that buy
and sell securities frequently. This may result in higher transaction costs and
additional capital gains taxes.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

The Portfolio invests in Funds that invest in U.S. common stocks. As a result,
the portfolio is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Portfolio. Of course, the risks associated
with investing in the Portfolio will vary depending upon how the assets are
allocated among the underlying STI Classic Funds.

[ICON] PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
18.72% -15.23%
(12/31/98) (9/30/98)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
PORTFOLIO'S TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS 1.21%.
<PAGE>
48 PROSPECTUS

LIFE VISION MAXIMUM GROWTH PORTFOLIO

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 COMPOSITE INDEX, THE RUSSELL
2000 INDEX AND THE SALOMON 3 MONTH TREASURY BILL INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (12/31/92)
<S> <C> <C> <C>
MAXIMUM GROWTH PORTFOLIO 12.31% 13.96% 13.65%
S&P 500 COMPOSITE INDEX 28.60% 24.05% 21.60%
RUSSELL 2000 INDEX -2.55% 11.87% 13.01%
SALOMON 3 MONTH TREASURY BILL INDEX 5.05% 5.10% 4.76%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The S&P 500 Composite Index is a
widely recognized index of 500 stocks designed to mimic the overall equity
market's industry weightings. The Russell 2000 Index is a widely recognized
index of the 2,000 smallest U.S. companies out of the 3,000 largest
companies. The Salomon 3 Month Treasury Bill Index is a widely recognized
index of U.S. Treasury bills.

[ICON] PORTFOLIO EXPENSES

This table describes the Portfolio's expenses that you may pay
indirectly if you own Portfolio shares. The table does not reflect any
of the operating costs and investment advisory fees of the underlying
STI Classic Funds. The Portfolio and its shareholders will indirectly
bear a pro-rata share of the expenses of the underlying STI Classic
Funds.
- --------------------------------------------------------------------------------

ANNUAL PORTFOLIO OPERATING EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
Investment Advisory Fees .25%
Other Expenses .23%
----
Total Annual Portfolio Operating Expenses .48%
</TABLE>

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$166 $514 $887 $1933
</TABLE>

SIMPLY SPEAKING . . .

PORTFOLIO EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The
Portfolio's expenses in the table above are shown as a percentage of the
Portfolio's net assets. These expenses are deducted from Portfolio assets. The
table shows the highest expenses that could be currently charged to the
Portfolio. Actual expenses are lower because the Advisor is voluntarily
waiving a portion of its fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL
OPERATING EXPENSES ARE .02% AND .25%, RESPECTIVELY. The Advisor could
discontinue this voluntary waiver at any time. For more information about
these fees, see "Investment Advisors."
<PAGE>
PROSPECTUS 49

EACH FUND'S PRINCIPAL INVESTMENTS

[ICON] FUND INVESTMENTS

BOND FUNDS

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

EQUITY FUNDS
<TABLE>
<CAPTION>
BALANCED CAPITAL EMERGING GROWTH INTERNATIONAL INTERNATIONAL MID-CAP SMALL CAP SMALL CAP
FUND APPRECIATION MARKETS AND EQUITY FUND EQUITY INDEX EQUITY EQUITY GROWTH
FUND EQUITY INCOME FUND FUND FUND STOCK
FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Bonds X
- ----------------------------------------------------------------------------------------------------------------------
Foreign Stocks X X X X X X
- ----------------------------------------------------------------------------------------------------------------------
U.S. Stocks X X X
- ----------------------------------------------------------------------------------------------------------------------

<CAPTION>
SUNBELT TAX VALUE
EQUITY SENSITIVE INCOME
FUND GROWTH STOCK
STOCK FUND
<S> <C> <C> <C>
- ---------------
Bonds
- ---------------
Foreign Stocks X X X
- ---------------
U.S. Stocks
- ---------------
</TABLE>

MONEY MARKET FUNDS

<TABLE>
<CAPTION>
PRIME QUALITY U.S. GOVERNMENT U.S. TREASURY MONEY
MONEY MARKET FUND SECURITIES MONEY MARKET MARKET FUND
FUND
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Bank Obligations X
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Paper X
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate Obligations X
- -----------------------------------------------------------------------------------------------------------------------------------
Foreign Securities (U.S. Dollar denominated) X
- -----------------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed Securities X
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities X X
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities X
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

[ICON] INVESTMENT ADVISORS

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Balanced, Capital Appreciation, Emerging Markets
Equity, International Equity, Investment Grade Bond, Limited-Term Federal
Mortgage Securities, Mid-Cap Equity, Small Cap Equity, and Value Income Stock
Funds. As of December 31, 1998, STI had approximately $14.7 billion in assets
under management. For the fiscal year ended May 31, 1998, STI received advisory
fees of:

<TABLE>
<S> <C>
BALANCED FUND............................ .83%
CAPITAL APPRECIATION FUND (FORMERLY
CAPITAL GROWTH FUND)................... 1.04%
EMERGING MARKETS EQUITY FUND............. 1.08%
INTERNATIONAL EQUITY FUND................ 1.24%
INVESTMENT GRADE BOND FUND............... .64%
LIMITED-TERM FEDERAL MORTGAGE SECURITIES
FUND................................... .54%
MID-CAP EQUITY FUND...................... 1.04%
SMALL CAP EQUITY FUND.................... 1.05%
VALUE INCOME STOCK FUND.................. .80%
</TABLE>

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Growth and Income, Tax Sensitive
Growth Stock, International Equity Index Fund, Life Vision Balanced, Life Vision
Growth and Income, Life Vision Maximum Growth Portfolios, Prime Quality Money
Market, Short-Term Bond, Short-Term U.S. Treasury Securities, Small Cap Growth
Stock, Sunbelt Equity, U.S. Government Securities Money Market, U.S. Government
Securities and U.S. Treasury Money Market Funds. As of December 31, 1998, Trusco
had approximately $23 billion in assets under management. For the fiscal year
ended May 31, 1998, Trusco received advisory fees of:

<TABLE>
<S> <C>
INTERNATIONAL EQUITY INDEX FUND......... .77%
PRIME QUALITY MONEY MARKET FUND......... .51%
SHORT-TERM BOND FUND.................... .52%
SHORT-TERM U.S. TREASURY SECURITIES
FUND.................................. .47%
SUNBELT EQUITY FUND..................... 1.04%
U.S. GOVERNMENT SECURITIES FUND......... .58%
U.S. GOVERNMENT SECURITIES MONEY MARKET
FUND ................................. .50%
</TABLE>

The Small Cap Growth Stock and Tax Sensitive Growth Stock Funds had not
commenced operations as of May 31, 1998.

<TABLE>
<S> <C>
GROWTH AND INCOME FUND................... .75%
U.S. TREASURY MONEY MARKET FUND.......... .38%
LIFE VISION BALANCED PORTFOLIO........... .12%
LIFE VISION GROWTH AND INCOME PORTFOLIO.. .10%
LIVE VISION MAXIMUM GROWTH PORTFOLIO..... .09%
</TABLE>

The Advisors may use their affiliates as brokers for Fund transactions.
<PAGE>
PROSPECTUS 51

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

PORTFOLIO MANAGERS

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

Mr. David Yealy has served as a Vice President of Trusco since 1993. He has
managed the Short-Term U.S. Treasury Securities Fund since July 1996. He has
more than 13 years of investment experience.

Mr. John Hamlin joined STI as a portfolio manager in March 1999. Mr. Hamlin has
managed the Mid-Cap Equity Fund since April 1999. Prior to joining STI, he had
more than 19 years of investment experience as a Portfolio manager at Phoenix
Investment Counsel, Inc.

Ms. Aki Pampush, CFA, has served as Vice President of Trusco since 1988. She has
managed the Short Term Bond Fund since February 1999. Ms. Pampush has over 16
years of investment experience.

The Life Vision Balanced, Life Vision Growth and Income, and Life Vision Maximum
Growth Portfolios are managed by the following team of investment professionals:
David West, John Carr, Boyce Reid, Jeff Markunas, and Janice Augustine.
<PAGE>
52 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

[ICON] PURCHASING FUND SHARES

HOW TO PURCHASE FUND SHARES
Generally you may not purchase Trust Shares directly. Rather, Trust Shares are
sold to financial institutions or intermediaries, including subsidiaries of
SunTrust Banks, Inc. (SunTrust) on behalf of accounts for which they act as
fiduciary, agent, investment advisor, or custodian. As a result, you, as a
customer of a financial institution, may purchase Trust Shares through accounts
maintained with financial institutions and potentially through the Preferred
Portfolio Account (an asset allocation account available through SunTrust
Securities, Inc.). Trust Shares will be held of record by (in the name of) your
financial institution. Depending upon the terms of your account, however, you
may have, or be given, the right to vote your Trust Shares. The Funds may reject
any purchase order if determined that accepting the order would not be in the
best interests of the STI Classic Funds or its shareholders. If you are no
longer eligible to participate in a 401(k) plan that holds Trust Shares of a
Life Vision Portfolio on your behalf, you may exchange those shares for Investor
Shares of the underlying Funds held by that Portfolio. There is no sales charge
for such an exchange.

SIMPLY SPEAKING . . .

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

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

For the Money Market Funds, your purchase order will be effective on the
Business Day the transfer agent receives it if:

- - the transfer agent receives your order before 3:00 p.m. Eastern time; and

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

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

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES,
AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE REQUESTS TO SUNTRUST OR OTHER
FINANCIAL INSTITUTIONS AT AN EARLIER TIME THAN LISTED ABOVE FOR YOUR
TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL
INSTITUTION TIME TO PROCESS YOUR REQUEST AND TRANSMIT IT TO THE TRANSFER AGENT
IN TIME TO MEET THE ABOVE STATED FUND CUT OFF TIMES. FOR MORE INFORMATION
ABOUT HOW TO PURCHASE OR SELL FUND SHARES, INCLUDING SPECIFIC SUNTRUST OR
OTHER FINANCIAL INSTITUTIONS INTERNAL ORDER ENTRY CUT OFF TIMES, PLEASE
CONTACT YOUR FINANCIAL INSTITUTION DIRECTLY.

HOW WE CALCULATE NAV
In calculating NAV for all Funds except for the Money Market Funds, the
administrator generally values a Fund's portfolio at market price. In
calculating NAV for the Money Market Funds, the administrator values the Fund's
portfolio using the amortized cost valuation method, which is described
<PAGE>
PROSPECTUS 53

PURCHASING, SELLING AND EXCHANGING FUND SHARES
in detail in our Statement of Additional Information. If market prices are
unavailable, or the administrator thinks that the market price or amortized cost
valuation method is unreliable, fair value prices may be determined in good
faith using methods approved by the Board of Trustees. The Funds expect the NAV
of the Money Market Funds to remain constant at $1.00 per share, although the
Funds cannot guarantee this.

SIMPLY SPEAKING . . .

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

SELLING FUND SHARES

HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting SunTrust or your financial institution. SunTrust or your financial
institution will give you information about how to sell your shares including
any specific cut off time required. The sale price of each share will be the
next NAV determined after the transfer agent receives your request. So, for all
funds except the Money Market Funds, to receive the current Business Day's NAV,
generally the transfer agent must receive your sale order from your financial
institution before 4:00 p.m. Eastern time. For the Money Market Funds, your sale
order will be effective that same Business Day if the transfer agent receives
your order before 3:00 p.m. Eastern time.

SIMPLY SPEAKING . . .

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

HISTORICAL FINANCIAL INFORMATION

SIMPLY SPEAKING . . .
FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS
--------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
- -------------
BALANCED FUND
- -------------
Trust Shares
1998.................................................. $11.94 $0.31 $ 2.19 $(0.32) $(1.03)
1997.................................................. 11.55 0.33 1.47 (0.32) (1.09)
1996.................................................. 10.26 0.33 1.41 (0.34) (0.11)
1995.................................................. 9.76 0.33 0.49 (0.32) --
1994(1)............................................... 10.00 0.11 (0.29) (0.06) --
- --------------------------------------------------------
CAPITAL APPRECIATION FUND (FORMERLY CAPITAL GROWTH FUND)
- --------------------------------------------------------
Trust Shares
1998.................................................. $15.09 $0.09 $ 3.96 $(0.09) $(2.57)
1997.................................................. 14.90 0.12 3.13 (0.12) (2.94)
1996.................................................. 12.18 0.12 3.32 (0.13) (0.59)
1995.................................................. 11.99 0.16 0.57 (0.14) (0.40)
1994.................................................. 11.95 0.16 0.31 (0.17) (0.26)
- -----------------------------
EMERGING MARKETS EQUITY FUND
- -----------------------------
Trust Shares
1998.................................................. $10.79 $0.16 $(1.86) $(0.08) $(0.14)
1997(2)............................................... 10.00 0.04 0.75 -- --
- ----------------------------------------------------------
GROWTH AND INCOME FUND (FORMERLY CRESTFUNDS' VALUE FUND)
- ----------------------------------------------------------
Trust Class
For the years ended November 30:
1998................................................ $16.55 0.093 1.638 (0.095) (3.085)
1997................................................ 13.39 0.137 3.237 (0.145) (0.070)
1996................................................ 11.60 0.166 2.380 (0.165) (0.591)
1995................................................ 10.73 0.245 2.619 (0.262) (1.732)
1994................................................ 11.38 0.200 (0.240) (0.190) (0.420)
- ------------------------
INTERNATIONAL EQUITY FUND
- ------------------------
Trust Shares
1998.................................................. $13.63 $0.04 $ 2.69 $(0.04) $(1.32)
1997.................................................. 11.40 0.03 2.57 (0.02) (0.35)
1996(3)............................................... 10.00 0.05 1.35 -- --
- ------------------------------
INTERNATIONAL EQUITY INDEX FUND
- ------------------------------
Trust Shares
1998.................................................. $11.34 $0.11 $ 2.65 $(0.11) $(0.68)
1997.................................................. 10.96 0.10 0.69 (0.11) (0.30)
1996.................................................. 10.24 0.10 0.84 (0.13) (0.09)
1995(4)............................................... 10.00 0.08 0.19 (0.02) (0.01)
- ----------------------------
INVESTMENT GRADE BOND FUND
- ----------------------------
Trust Shares
1998.................................................. $10.16 $0.60 $ 0.49 $(0.60) $ --
1997.................................................. 10.07 0.60 0.09 (0.60) --
1996.................................................. 10.26 0.60 (0.19) (0.60) --
1995.................................................. 9.89 0.61 0.37 (0.61) --
1994.................................................. 10.45 0.50 (0.36) (0.50) (0.20)

RATIO OF
NET
RATIO OF INVESTMENT
NET ASSET NET ASSETS EXPENSES INCOME TO
VALUE END TOTAL END OF PERIOD TO AVERAGE AVERAGE
OF PERIOD RETURN (000) NET ASSETS NET ASSETS
--------- --------- ------------- ---------- ----------
<S> <C> <C> <C>
- -------------
BALANCED FUND
- -------------
Trust Shares
1998.................................................. $13.09 22.15% $ 188,465 0.96% 2.51%
1997.................................................. 11.94 16.66 151,358 0.95 2.89
1996.................................................. 11.55 17.26 111,638 0.95 3.00
1995.................................................. 10.26 8.72 89,051 0.95 3.44
1994(1)............................................... 9.76 (1.78)** 90,579 0.95* 2.76*
- --------------------------------------------------------
CAPITAL APPRECIATION FUND (FORMERLY CAPITAL GROWTH FUND)
- --------------------------------------------------------
Trust Shares
1998.................................................. $16.48 29.51% $ 1,532,587 1.16% 0.61%
1997.................................................. 15.09 24.66 1,085,128 1.15 0.83
1996.................................................. 14.90 28.97 981,498 1.15 0.90
1995.................................................. 12.18 6.63 984,205 1.15 1.38
1994.................................................. 11.99 3.87 891,870 1.15 1.25
- -----------------------------
EMERGING MARKETS EQUITY FUND
- -----------------------------
Trust Shares
1998.................................................. $ 8.87 (15.74)% $ 34,554 1.56% 1.14%
1997(2)............................................... 10.79 7.90** 39,495 1.55* 1.37*
- ----------------------------------------------------------
GROWTH AND INCOME FUND (FORMERLY CRESTFUNDS' VALUE FUND)
- ----------------------------------------------------------
Trust Class
For the years ended November 30:
1998................................................ $15.10 13.64% $ 577,042 1.03% 1.21%
1997................................................ 16.55 25.41 590,824 1.02 1.17
1996................................................ 13.39 22.68 553,648 1.02 1.17
1995................................................ 11.60 28.76 220,386 1.02 1.17
1994................................................ 10.73 (0.49) 166,713 1.01 1.01
- ------------------------
INTERNATIONAL EQUITY FUND
- ------------------------
Trust Shares
1998.................................................. $15.00 21.87% $ 628,870 1.47% 0.61%
1997.................................................. 13.63 23.29 489,325 1.46 0.51
1996(3)............................................... 11.40 14.00** 213,306 1.46* 1.36*
- ------------------------------
INTERNATIONAL EQUITY INDEX FUND
- ------------------------------
Trust Shares
1998.................................................. $13.31 25.82% $ 56,200 1.06% 0.88%
1997.................................................. 11.34 7.48 53,516 1.05 0.71
1996.................................................. 10.96 9.29 90,980 1.05 0.84
1995(4)............................................... 10.24 2.69** 89,446 1.05* 1.13*
- ----------------------------
INVESTMENT GRADE BOND FUND
- ----------------------------
Trust Shares
1998.................................................. $10.65 10.92% $ 793,488 0.76% 5.67%
1997.................................................. 10.16 6.99 633,646 0.75 5.89
1996.................................................. 10.07 4.02 599,514 0.75 5.81
1995.................................................. 10.26 10.39 543,308 0.75 6.22
1994.................................................. 9.89 1.17 460,538 0.75 4.77

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES TO INCOME TO
AVERAGE NET AVERAGE NET
ASSETS ASSETS
(EXCLUDING (EXCLUDING PORTFOLIO
WAIVERS AND WAIVERS AND TURNOVER
REIMBURSEMENTS) REIMBURSEMENTS) RATE
--------------- --------------- ---------
- -------------
BALANCED FUND
- -------------
Trust Shares
1998.................................................. 1.08% 2.39% 154%
1997.................................................. 1.08 2.76 197
1996.................................................. 1.09 2.86 155
1995.................................................. 1.11 3.28 157
1994(1)............................................... 1.25* 2.46* 106
- --------------------------------------------------------
CAPITAL APPRECIATION FUND (FORMERLY CAPITAL GROWTH FUND)
- --------------------------------------------------------
Trust Shares
1998.................................................. 1.27% 0.50% 194%
1997.................................................. 1.25 0.73 141
1996.................................................. 1.27 0.78 156
1995.................................................. 1.28 1.25 128
1994.................................................. 1.29 1.11 124
- -----------------------------
EMERGING MARKETS EQUITY FUND
- -----------------------------
Trust Shares
1998.................................................. 1.78% 0.92% 74%
1997(2)............................................... 2.04* 0.88* 24
- ----------------------------------------------------------
GROWTH AND INCOME FUND (FORMERLY CRESTFUNDS' VALUE FUND)
- ----------------------------------------------------------
Trust Class
For the years ended November 30:
1998................................................ 0.63% 0.43% 71%
1997................................................ 0.92 0.77 100
1996................................................ 1.38 1.23 82
1995................................................ 2.16 2.01 173
1994................................................ 1.82 1.82 116
- ------------------------
INTERNATIONAL EQUITY FUND
- ------------------------
Trust Shares
1998.................................................. 1.48% 0.60% 108%
1997.................................................. 1.51 0.46 139
1996(3)............................................... 1.65* 1.17* 113
- ------------------------------
INTERNATIONAL EQUITY INDEX FUND
- ------------------------------
Trust Shares
1998.................................................. 1.18% 0.76% 1%
1997.................................................. 1.15 0.61 2
1996.................................................. 1.19 0.70 30
1995(4)............................................... 1.31* 0.87* 10
- ----------------------------
INVESTMENT GRADE BOND FUND
- ----------------------------
Trust Shares
1998.................................................. 0.86% 5.57% 109%
1997.................................................. 0.85 5.79 298
1996.................................................. 0.87 5.69 184
1995.................................................. 0.88 6.09 238
1994.................................................. 0.88 4.64 259
</TABLE>

* Annualized
** Return is for period indicated and has not been annualized.
(1) Commenced operations on January 3, 1994.
(2) Commenced operations on January 31, 1997.
(3) Commenced operations on December 1, 1995.
(4) Commenced operations on June 6, 1994.
<PAGE>
PROSPECTUS 55

HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END TOTAL
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN
--------- ---------- ------------ ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------
LIFE VISION BALANCED PORTFOLIO
(FORMERLY CRESTFUNDS'
BALANCED PORTFOLIO)
- --------------------------------------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $10.46 0.239 0.579 (0.240) (0.028) $11.01 7.90%
1997(1)....................... 10.00 0.116 0.454 (0.110) -- 10.46 5.70%
- -----------------------------------------------------------------------------------------
LIFE VISION GROWTH AND INCOME
PORTFOLIO (FORMERLY
CRESTFUNDS' GROWTH AND
INCOME PORTFOLIO)
- -----------------------------------------------------------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $10.51 0.183 0.561 (0.184) (0.010) $11.06 7.12%
1997(1)....................... 10.00 0.091 0.506 (0.087) -- 10.51 5.97%
- --------------------------------------------------------------------------------------
LIFE VISION MAXIMUM GROWTH
PORTFOLIO (FORMERLY
CRESTFUNDS' MAXIMUM
GROWTH PORTFOLIO)
- --------------------------------------------------------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $10.65 0.025 0.670 (0.025) -- $11.32 6.53%
1997(1)....................... 10.00 0.032 0.650 (0.032) -- 10.65 6.82
- -----------------------
MID-CAP EQUITY FUND (A)
- ------------------------
Trust Shares
1998............................ $13.21 $ -- $ 2.54 $ -- $(1.96) $13.79 21.14%
1997............................ 12.76 0.03 1.69 (0.05) (1.22) 13.21 14.23
1996............................ 11.00 0.08 2.63 (0.08) (0.87) 12.76 25.54
1995............................ 9.85 0.08 1.15 (0.08) -- 11.00 12.56
1994(4)......................... 10.00 0.02 (0.16) (0.01) -- 9.85 (1.39)**
- ---------------------------------
PRIME QUALITY MONEY MARKET
FUND
- ---------------------------------
Trust Shares
1998............................ $ 1.00 $0.05 $ -- $(0.05) $ -- $ 1.00 5.22%
1997............................ 1.00 0.05 -- (0.05) -- 1.00 5.01
1996............................ 1.00 0.05 -- (0.05) -- 1.00 5.25
1995............................ 1.00 0.05 -- (0.05) -- 1.00 4.79
1994............................ 1.00 0.03 -- (0.03) -- 1.00 2.88
- ----------------------
SHORT-TERM BOND FUND
- ----------------------
Trust Shares
1998............................ $ 9.90 $0.55 $ 0.16 $(0.55) $(0.01) $10.05 7.31%
1997............................ 9.86 0.53 0.07 (0.53) (0.03) 9.90 6.30
1996............................ 9.98 0.54 (0.10) (0.54) (0.02) 9.86 4.45
1995............................ 9.79 0.53 0.19 (0.53) -- 9.98 7.60
1994............................ 10.01 0.42 (0.21) (0.42) (0.01) 9.79 2.02
- ---------------------
SMALL-CAP EQUITY FUND
- ---------------------
Trust Shares
1998............................ $11.07 $0.14 $ 2.41 $(0.12) $(0.62) $12.88 23.59%
1997(2)......................... 10.00 0.05 1.04 (0.02) -- 11.07 10.97**
- -------------------
SUNBELT EQUITY FUND
- -------------------
Trust Shares
1998............................ $13.28 $0.01 $ 3.03 $ -- $(1.20) $15.12 23.86%
1997............................ 14.11 (0.09) 0.25 -- (0.99) 13.28 1.48
1996............................ 10.03 (0.04) 4.32 -- (0.20) 14.11 43.19
1995............................ 9.70 (0.01) 0.38 -- (0.04) 10.03 3.81
1994(1)......................... 10.00 -- (0.30) -- -- 9.70 (2.99)**
- ----------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET
FUND (FORMERLY CRESTFUNDS' U.S.
TREASURY MONEY FUND)
- ----------------------------------------------------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $ 1.00 0.048 -- (0.048) -- $ 1.00 4.89%
1997.......................... 1.00 0.048 -- (0.048) -- 1.00 4.91
1996.......................... 1.00 0.047 -- (0.047) -- 1.00 4.80
1995.......................... 1.00 0.052 -- (0.052) -- 1.00 5.29
1994.......................... 1.00 0.033 -- (0.033) -- 1.00 3.30
- ------------------------
VALUE INCOME STOCK FUND
- ------------------------
Trust Shares
1998............................ $13.71 $0.26 $ 2.62 $(0.27) $(2.42) $13.90 23.10%
1997............................ 13.15 0.30 2.32 (0.30) (1.76) 13.71 22.18
1996............................ 11.59 0.35 2.71 (0.34) (1.16) 13.15 27.91
1995............................ 10.54 0.32 1.56 (0.32) (0.51) 11.59 19.06
1994............................ 10.23 0.29 0.70 (0.32) (0.36) 10.54 9.95

<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
RATIO OF EXPENSES TO INCOME TO
NET AVERAGE NET AVERAGE NET
RATIO OF INVESTMENT ASSETS ASSETS
NET ASSETS EXPENSES INCOME TO (EXCLUDING (EXCLUDING PORTFOLIO
END OF PERIOD TO AVERAGE AVERAGE WAIVERS AND WAIVERS AND TURNOVER
(000) NET ASSETS NET ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------- ---------- ---------- --------------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------
LIFE VISION BALANCED PORTFOLIO
(FORMERLY CRESTFUNDS'
BALANCED PORTFOLIO)
- ------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $ 93,211 0.25% 0.42% 2.21% 2.04% 52%
1997(1)....................... 89,442 0.25%* 0.42%* 2.66%* 2.49%* 43%
- ------------------------------------
LIFE VISION GROWTH AND INCOME
PORTFOLIO (FORMERLY
CRESTFUNDS' GROWTH AND
INCOME PORTFOLIO)
- ------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $ 19,042 0.25% 0.59% 1.68% 1.34% 57%
1997(1)....................... 22,521 0.25%* 0.59%* 2.11%* 1.77%* 25%
- ------------------------------------
LIFE VISION MAXIMUM GROWTH
PORTFOLIO (FORMERLY
CRESTFUNDS' MAXIMUM
GROWTH PORTFOLIO)
- ------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $ 16,230 0.25% 0.66% 0.23% (0.18)% 75%
1997(1)....................... 13,712 0.25* 0.73%* 0.72* 0.24* 34
- -----------------------
MID-CAP EQUITY FUND (A)
- ------------------------
Trust Shares
1998............................ $ 337,825 1.16% (0.29%) 1.27% (0.40%) 129%
1997............................ 287,370 1.15 0.23 1.26 0.12 152
1996............................ 253,905 1.15 0.70 1.29 0.56 116
1995............................ 125,562 1.15 0.88 1.32 0.71 66
1994(4)......................... 57,036 1.15* 1.20* 1.68* 0.67* 8
- ---------------------------------
PRIME QUALITY MONEY MARKET
FUND
- ---------------------------------
Trust Shares
1998............................ $ 1,880,229 0.59% 5.10% 0.77% 4.92%
1997............................ 1,086,555 0.58 4.90 0.76 4.72
1996............................ 1,050,800 0.58 5.11 0.78 4.91
1995............................ 799,189 0.58 4.77 0.79 4.56
1994............................ 583,399 0.58 2.86 0.79 2.65
- ----------------------
SHORT-TERM BOND FUND
- ----------------------
Trust Shares
1998............................ $ 120,422 0.66% 5.47% 0.79% 5.34% 87%
1997............................ 89,701 0.65 5.37 0.78 5.24 118
1996............................ 91,156 0.65 5.39 0.81 5.23 163
1995............................ 60,952 0.65 5.49 0.85 5.29 200
1994............................ 34,772 0.65 4.15 0.85 3.95 75
- ---------------------
SMALL-CAP EQUITY FUND
- ---------------------
Trust Shares
1998............................ $ 390,841 1.21% 1.07% 1.31% 0.97% 55%
1997(2)......................... 131,049 1.20* 1.86* 1.37* 1.69* 27
- -------------------
SUNBELT EQUITY FUND
- -------------------
Trust Shares
1998............................ $ 431,921 1.16% (0.90%) 1.27% (1.01%) 70%
1997............................ 381,371 1.15 (0.65) 1.26 (0.76) 72
1996............................ 412,430 1.15 (0.34) 1.28 (0.47) 106
1995............................ 258,908 1.15 (0.12) 1.30 (0.27) 80
1994(1)......................... 128,280 1.15* (0.19)* 1.58* (0.62)* 21
- ------------------------------------
U.S. TREASURY MONEY MARKET
FUND (FORMERLY CRESTFUNDS' U.S.
TREASURY MONEY FUND)
- ------------------------------------
Trust Class
For the years ended November 30:
1998.......................... $ 699,923 0.66% 0.81% 4.77% 4.62% --
1997.......................... 632,381 0.65 0.80 4.82 4.67 --
1996.......................... 389,051 0.66 0.81 4.69 4.54 --
1995.......................... 370,454 0.66 0.81 5.16 5.01 --
1994.......................... 319,477 0.66 0.66 3.23 3.23 --
- ------------------------
VALUE INCOME STOCK FUND
- ------------------------
Trust Shares
1998............................ $ 1,725,418 0.92% 1.85% 0.92% 1.85% 99%
1997............................ 1,488,062 0.91 2.40 0.91 2.40 105
1996............................ 1,244,399 0.92 2.86 0.92 2.86 134
1995............................ 991,977 0.95 3.16 0.95 3.16 126
1994............................ 573,082 0.88 3.21 0.97 3.12 149
</TABLE>

On May 24, 1998, the Value Fund, U.S. Treasury Money Fund, Maximum Growth
Portfolio, Growth and Income Portfolio, and Balanced Portfolio, each a series of
the CrestFunds, exchanged all of their assets and certain liabilities for shares
of the STI Growth and Income Fund, U.S. Treasury Money Market Fund, Life Vision
Maximum Growth Portfolio, Life Vision Growth and Income Portfolio and Life
Vision Balanced Portfolio, respectively. Because each series of the CrestFunds
is the accounting survivor of that transaction, its basis of accounting for
assets and liabilities and its operating results for the periods prior to May
24, 1999 have been carried forward in these financial highlights.
<PAGE>
56 PROSPECTUS

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

The Equity Funds distribute income quarterly, except for the International
Equity, International Equity Index and Emerging Markets Equity Funds. These
Funds distribute income annually. The Bond and Money Market Funds declare
dividends daily and pays these dividends monthly, and the Life Vision Portfolios
distribute income quarterly. The Funds make distributions of capital gains, if
any, at least annually.

SIMPLY SPEAKING . . .

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

TAXES

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

SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

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

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

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

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

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

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

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

The STI Classic Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Trust Shares of the Funds that you should know before investing.
Please read this prospectus and keep it for future reference.
We arranged the prospectus into different sections so that you can easily review
this important information. On the next page, we discuss general information you
should know about investing in the Funds.

<TABLE>
<C> <S>
IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:
2 CAPITAL APPRECIATION FUND (FORMERLY CAPITAL
GROWTH FUND)
4 GROWTH AND INCOME FUND*
6 INVESTMENT GRADE BOND FUND
8 PRIME QUALITY MONEY MARKET FUND
10 SHORT-TERM BOND FUND
12 SMALL CAP GROWTH STOCK FUND
14 VALUE INCOME STOCK FUND

IF YOU WOULD LIKE MORE INFORMATION ABOUT THE
FOLLOWING TOPICS, PLEASE SEE:
16 EACH FUND'S PRINCIPAL INVESTMENTS
17 THE ADVISORS AND THEIR PORTFOLIO MANAGERS
18 PURCHASING, SELLING AND EXCHANGING FUND SHARES
20 HISTORICAL FINANCIAL INFORMATION
21 DIVIDENDS AND DISTRIBUTIONS
21 TAXES
TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC
FUNDS PLEASE REFER TO THE BACK COVER OF THE
PROSPECTUS
</TABLE>

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

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

[ICON] FUND EXPENSES
[ICON] FUND INVESTMENTS
[ICON] INVESTMENT ADVISORS
[ICON] PURCHASING FUND SHARES

- --------------------------------------------------------------------------------
OCTOBER 1, 1998 *MAY 24, 1999
(AS SUPPLEMENTED MAY 24, 1999)
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

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

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

SEI Investments Mutual Funds Services serves as Administrator to the Funds. The
fees paid for administrative services are included in the "Other Expenses"
figure of the "Fund Expenses" table on the following pages. In the course of
performing its many duties, the Administrator may select brokers, dealers and
other administrators, including affiliates of SunTrust Banks, Inc. to provide
distribution and/or other administrative services for which they will receive
fees from the Administrator. These fees are paid by the Administrator and are
not additional fees paid by the Funds.

CAPITAL APPRECIATION FUND
(FORMERLY CAPITAL GROWTH FUND)

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
General Electric Company...... 2.8%
Bristol Myers Squibb
Company..................... 1.9%
Carnival Corporation, Class
A........................... 1.9%
United Technologies
Corporation................. 1.8%
Microsoft Corporation......... 1.7%
* HOLDINGS MAY VARY
</TABLE>

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.09% -4.09%
(6/30/97) (12/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 17.25%.
<PAGE>
PROSPECTUS 3

CAPITAL APPRECIATION FUND
(FORMERLY CAPITAL GROWTH FUND)

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
CAPITAL APPRECIATION FUND 31.13% 16.05% 17.02%
S&P 500 INDEX 33.35% 20.25% 20.32%
</TABLE>

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses .13%
------
Total Annual Fund Operating Expenses 1.28%
</TABLE>

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

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

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$130 $406 $702 $1545
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.04%
AND 1.17%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver
at any time. For more information about these fees, see "Investment Advisors."
<PAGE>
4 PROSPECTUS

GROWTH AND INCOME FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL
PRIMARY Long-term capital appreciation
SECONDARY Current income
INVESTMENT FOCUS Equity securities
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify securities with market capitalizations of at least $1 billion of
STRATEGY companies with low price/earnings ratios and above average earnings momentum
INVESTOR PROFILE Investors who are looking for capital appreciation potential and income with less
volatility than the equity markets as a whole
</TABLE>

[ICON] INVESTMENT STRATEGY
The Growth and Income Fund invests primarily in domestic and foreign
common stock of companies with market capitalizations of at least $1 billion.
However, the average market capitalization can vary throughout a full market
cycle and will be flexible to capturing market opportunities. We use a
quantitative screening process to select companies with a favorable price to
earnings ratio. Stocks of companies with strong financial quality and above
average earnings momentum are selected to secure the best relative values in
each economic sector.
[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in equity securities. As a result, the Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. The equity markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund.

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.38% -10.36%
(6/30/97) (9/30/98)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/99 TO 3/31/99 WAS 2.64%.
<PAGE>
PROSPECTUS 5

GROWTH AND INCOME FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 COMPOSITE INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (9/28/92)
<S> <C> <C> <C>
GROWTH AND INCOME FUND 18.20% 18.19% 17.26%
S&P 500 COMPOSITE INDEX 28.60% 24.05% 21.60%
</TABLE>

<TABLE>
<S> <C>
Investment Advisory Fees .90%
Other Expenses .11%
---------
Total Annual Fund Operating Expenses 1.01%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$103 $322 $558 $1236
</TABLE>

INVESTMENT GRADE BOND FUND

[ICON] FUND SUMMARY

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

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*

United States Treasury Bond... 11.6%

United States Treasury Bond... 8.6%

United States Treasury Bond... 7.0%

Merrill Lynch................. 4.9%

FNMA.......................... 4.9%
* HOLDINGS MAY VARY
</TABLE>

[ICON] INVESTMENT STRATEGY

The Investment Grade Bond Fund invests primarily in investment grade
corporate debt securities, U.S. Treasury obligations and mortgage-backed
securities. In selecting investments for the Fund, we try to minimize risk while
attempting to outperform selected market indices. Currently, our selected index
is the Lehman Brothers Government/Corporate Bond Index, a widely recognized,
unmanaged index of investment grade government and corporate debt securities. We
seek to invest more in portions of the Index that seem relatively inexpensive,
and less in those that seem expensive. We allocate the Fund's investments among
various market sectors based on our analysis of historical data, yield
information and credit ratings. Due to the Fund's investment strategy, the Fund
may buy and sell securities frequently. This may result in higher transaction
costs and additional capital gains taxes. We anticipate that the Fund's average
weighted maturity will range from 4 to 10 years.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

SIMPLY SPEAKING . . .

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

[ICON] PERFORMANCE INFORMATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
6.11% -2.67%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 4.31%.
<PAGE>
PROSPECTUS 7

INVESTMENT GRADE BOND FUND

THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1997 TO THOSE OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (7/16/92)
<S> <C> <C> <C>
INVESTMENT GRADE BOND FUND 9.08% 7.10% 6.96%
LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX 9.75% 7.61% 7.97%
</TABLE>

SIMPLY SPEAKING . . .
[ICON] WHAT IS AN INDEX?
An index measures the market prices of a specific group of
securities in a particular market or securities in a market sector. You
cannot invest directly in an index. An index does not have an investment
advisor and does not pay any commissions or expenses. If an index had
expenses, its performance would be lower. The Lehman Brothers Government/
Corporate Bond Index is a widely recognized index of investment grade
government and corporate debt securities rated investment grade or better,
with maturities of at least 1 year.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .74%
Other Expenses .13%
----
Total Annual Fund Operating Expenses .87%
</TABLE>

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$89 $278 $482 $1073
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .64%
AND .77%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
8 PROSPECTUS

PRIME QUALITY MONEY MARKET FUND

[ICON] FUND SUMMARY

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.37% .68%
(6/30/95) (6/30/93)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 2.56%.
<PAGE>
PROSPECTUS 9

PRIME QUALITY MONEY MARKET FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (6/8/92)
<S> <C> <C> <C>
PRIME QUALITY
MONEY MARKET FUND 5.15% 4.43% 4.28%
IBC/DONOGHUE
FIRST TIER AVERAGE 5.01% 4.32% 4.25%
</TABLE>

TO OBTAIN INFORMATION ABOUT THE FUND'S YIELD, CALL 1-800-814-3397.

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.

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

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .13%
---------
Total Annual Fund Operating Expenses .78%
</TABLE>

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$80 $249 $433 $966
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, administration and custody services. The expenses in
the table above are shown as a percentage of the Fund's net assets. These
expenses are deducted from Fund assets. The table shows the highest expenses
that could be currently charged to the Fund. Actual expenses are lower because
the Advisor and Administrator are voluntarily waiving a portion of their fees.
ACTUAL INVESTMENT ADVISORY FEES, OTHER EXPENSES AND TOTAL OPERATING EXPENSES
ARE .51%, .09% AND .60%, RESPECTIVELY. The Advisor and Administrator could
discontinue this voluntary waiver at any time. For more information about
these fees, see "Investment Advisors."
<PAGE>
10 PROSPECTUS

SHORT-TERM BOND FUND

[ICON] FUND SUMMARY

[ICON] INVESTMENT STRATEGY

The Short-Term Bond Fund invests primarily in a diversified
portfolio of short- to medium-term investment grade U.S. Treasury, corporate
debt, mortgage-backed and asset-backed securities. The Fund expects that it will
normally maintain an average weighted maturity of approximately 3 years. In
selecting investments for the Fund, we attempt to identify securities that offer
a comparably better investment return for a given level of credit risk. For
example, short-term bonds generally have better returns than money market
instruments, with a fairly modest increase in credit risk. We manage the Fund
from a total return perspective. That is, we make day to day investment
decisions for the Fund with a view towards maximizing returns. We analyze
yields, market sectors and credit risk in an effort to identify attractive
investments with the best risk/reward trade-off.

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?

SIMPLY SPEAKING . . .

MORTGAGE-BACKED AND
ASSET-BACKED SECURITIES
A mortgage-backed security pools all interest and principal payments from the
underlying mortgages and pays it to the security's owner. The owner of an
asset-backed security owns a share of the underlying pool of assets, such as
truck and auto loans, leases and credit card receivables. The mortgages,
receivables or other assets underlying these securities may mature or be paid
off before the stated maturity date. This has four drawbacks. First, the Fund
may lose money on its investment. Second, the monthly income payments to the
Fund may fluctuate. Third, we cannot predict the maturity of the Fund's
investment with certainty. Fourth, we would invest any resulting proceeds
elsewhere, generally at lower interest rates.

[ICON] PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.76% -.58%
(6/30/95) (3/31/94)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 3.00%.
<PAGE>
PROSPECTUS 11

SHORT-TERM BOND FUND

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 3 YEARS (3/15/93)
<S> <C> <C> <C>
SHORT-TERM BOND FUND 6.78% 7.44% 5.45%
SALOMON 1-3 YEAR TREASURY/ GOVERNMENT
SPONSORED/
CORPORATE INDEX 6.67% 7.54% 5.63%
SALOMON ONE YEAR
TREASURY BENCHMARK
ON-THE-RUN INDEX 6.10% 6.61% 5.34%
</TABLE>

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

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees .65%
Other Expenses .15%
----
Total Annual Fund Operating Expenses .80%
</TABLE>

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$82 $255 $444 $990
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The table
shows the highest expenses that could be currently charged to the Fund. Actual
expenses are lower because the Advisor is voluntarily waiving a portion of its
fees. ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE .52%
AND .67%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
12 PROSPECTUS

SMALL CAP GROWTH STOCK FUND

[ICON] FUND SUMMARY

[ICON] WHAT ARE THE RISKS OF
INVESTING IN THIS FUND?
The Fund invests primarily in common stocks of smaller U.S. companies. As a
result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund. In addition, investments in small-or
mid-cap companies involve greater risk than investments in larger, more
established companies because of the greater business risks of small size,
limited markets and financial resources, smaller product lines and lack of depth
of management. These securities are often traded over-the-counter and may not be
traded in high volumes. Consequently, securities prices could be less stable
than those of larger, more established companies.
<PAGE>
PROSPECTUS 13

SMALL CAP GROWTH STOCK FUND

[ICON] FUND EXPENSES
This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
Investment Advisory Fees 1.15%
Other Expenses* .20%
------
Total Annual Fund Operating Expenses 1.35%
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT YEAR.

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$137 $428
</TABLE>

SIMPLY SPEAKING . . .

FUND EXPENSES
Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services. The Fund's
expenses in the table above are shown as a percentage of the Fund's net
assets. These expenses are deducted from Fund assets. The table shows the
highest expenses that could be currently charged to the Fund. Actual expenses
are lower because the Advisor is voluntarily waiving a portion of its fees.
ACTUAL INVESTMENT ADVISORY FEES AND TOTAL OPERATING EXPENSES ARE 1.00% AND
1.20%, RESPECTIVELY. The Advisor could discontinue this voluntary waiver at
any time. For more information about these fees, see "Investment Advisors."
<PAGE>
14 PROSPECTUS

VALUE INCOME STOCK FUND

[ICON] FUND SUMMARY

<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 6/30/98*
Pharmacia & Upjohn
Incorporated................ 2.5%
Ameritech Corporation......... 2.4%
Baxter International
Incorporated................ 2.3%
Unocal Corporation............ 2.3%
Kimberly-Clark Corporation.... 2.3%
* HOLDINGS MAY VARY
</TABLE>

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

[ICON] PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future. The
periods prior to February 1993, when the Fund began operating, represent the
performance of the Advisor's similarly managed collective investment fund. This
past performance has been adjusted to reflect current expenses for Trust Shares
of the Fund. The Advisor's collective fund was not a registered mutual fund so
it was not subject to the same investment and tax restrictions as the Fund. If
it had been, the collective fund's performance would have been lower.
THIS BAR CHART SHOWS CHANGES IN THE FUND'S PERFORMANCE FROM YEAR TO YEAR.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
18.56% -14.86%
(3/31/91) (9/30/90)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND'S
TOTAL RETURN FROM 1/1/98 TO 6/30/98 WAS 7.79%.
<PAGE>
PROSPECTUS 15

VALUE INCOME STOCK FUND

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS (10/31/89)
<S> <C> <C> <C>
VALUE INCOME STOCK FUND 27.08% 18.88% 19.38%
S&P/BARRA VALUE 500 INDEX 29.98% 20.68% 15.43%
</TABLE>

[ICON] FUND EXPENSES

This table describes the Fund's expenses that you may pay indirectly if
you hold Fund shares.

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

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

<TABLE>
<S> <C>
Investment Advisory Fees .80%
Other Expenses .17%
----
Total Annual Fund Operating Expenses .97%
</TABLE>

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

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

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

<TABLE>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$99 $309 $536 $1190
</TABLE>

SIMPLY SPEAKING . . .

EACH FUND'S PRINCIPAL INVESTMENTS

[ICON] FUND INVESTMENTS

<TABLE>
<CAPTION>
CAPITAL GROWTH AND INVESTMENT PRIME QUALITY SHORT-TERM SMALL CAP VALUE
APPRECIATION INCOME FUND GRADE BOND MONEY MARKET BOND FUND GROWTH STOCK INCOME
FUND FUND FUND FUND STOCK FUND
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Asset-Backed
Securities X
- -------------------------------------------------------------------------------------------------------------------------
Bank
Obligations X
- -------------------------------------------------------------------------------------------------------------------------
Commercial
Paper X
- -------------------------------------------------------------------------------------------------------------------------
Convertible
Securities X X X X
- -------------------------------------------------------------------------------------------------------------------------
Corporate Debt
Securities X X X
- -------------------------------------------------------------------------------------------------------------------------
U.S. Stocks X X X X
- -------------------------------------------------------------------------------------------------------------------------
Foreign
Securities
(U.S. Dollar
denominated) X
- -------------------------------------------------------------------------------------------------------------------------
Mortgage-
Backed
Securities X X
- -------------------------------------------------------------------------------------------------------------------------
U.S.
Government
Securities X X X
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Fund (except the Prime Quality Money Market Fund) may invest up
to 100% of its assets in cash, money market instruments, repurchase agreements
and short-term obligations. In addition, the Investment Grade Bond and
Short-Term Bond Funds each may shorten its average weighted maturity to as
little as 90 days. When a Fund is investing for temporary defensive purposes, it
is not pursuing its investment goal.
<PAGE>
PROSPECTUS 17

THE ADVISORS AND THEIR PORTFOLIO MANAGERS

[ICON] INVESTMENT ADVISORS

STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Capital Appreciation, Value Income Stock and
Investment Grade Bond Funds. As of December 31, 1998, STI had approximately
$14.7 billion in assets under management. For the fiscal year ended May 31,
1998, STI received advisory fees of:

<TABLE>
<S> <C>
CAPITAL APPRECIATION FUND................ 1.04%
VALUE INCOME STOCK FUND.................. .80%
INVESTMENT GRADE BOND FUND............... .64%
</TABLE>

Trusco Capital Management, Inc. (Trusco), 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Advisor to the Growth and Income, Prime Quality
Money Market, Short-Term Bond and Small Cap Growth Stock Funds. As of December
31, 1998, Trusco had approximately $23 billion in assets under management. For
the fiscal year ended May 31, 1998, Trusco received advisory fees of:

<TABLE>
<S> <C>
SHORT-TERM BOND FUND..................... .52%
PRIME QUALITY MONEY MARKET FUND.......... .51%
</TABLE>

The Small Cap Growth Stock Fund had not commenced operations as of May 31, 1998.

PORTFOLIO MANAGERS

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

Ms. Aki Pampush, CFA, has served as Vice President of Trusco since 1988. She has
managed the Short Term Bond Fund since February 1999. Ms. Pampush has over 16
years of investment experience.

Mr. Jeffrey E. Markunas, CFA, has served as Senior Vice President of Trusco
since January 1999 and Senior Vice President and Director of Equity and Research
with Crestar Asset Management Company since 1992. He has managed the Growth and
Income Fund (formerly CrestFunds Value Fund) since 1992. Mr. Markunas has over
17 years of investment experience.

The Investment Grade Bond Fund is co-managed by Mr. L. Earl Denney, CFA, and Mr.
Dave E. West, CFA. Mr. Denney has served as Senior Vice President of STI since
1983. He has managed the Investment Grade Bond Fund since it began operating in
June 1992. He has more than 20 years of experience in fixed-income management.
Mr. West has served as a Senior Vice President of STI since 1994, and has served
as a fixed-income portfolio manager with STI since 1989.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

[ICON] PURCHASING FUND SHARES

SIMPLY SPEAKING . . .

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

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

- - the Transfer Agent receives your order before 3:00 p.m. Eastern time; and

- - the custodian receive federal funds (readily available) before NAV is
calculated (normally 4:00 p.m., Eastern time).

Otherwise, your purchase order will be effective the following Business Day, as
long as the transfer agent receives federal funds before the NAV is calculated
on that following day.

SIMPLY SPEAKING . . .

FOR CUSTOMERS OF SUNTRUST, ITS AFFILIATES AND OTHER FINANCIAL INSTITUTIONS
YOU MAY HAVE TO TRANSMIT YOUR PURCHASE AND SALE REQUESTS TO SUNTRUST OR YOUR
FINANCIAL INSTITUTION AT AN EARLIER TIME THAN LISTED ABOVE FOR YOUR
TRANSACTION TO BECOME EFFECTIVE THAT DAY. THIS ALLOWS THE FINANCIAL
INSTITUTION TIME TO PROCESS YOUR REQUEST AND TRANSMIT IT TO THE TRANSFER AGENT
IN TIME TO MEET THE ABOVE CUT OFF TIMES. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE OR SELL FUND SHARES, INCLUDING SPECIFIC SUNTRUST OR OTHER FINANCIAL
INSTITUTIONS INTERNAL ORDER ENTRY CUT OFF TIMES, PLEASE CONTACT YOUR FINANCIAL
INSTITUTION DIRECTLY.

HOW THE FUNDS CALCULATE NAV
In calculating NAV for all Funds except for the Prime Quality Money Market Fund,
the administrator generally values a Fund's portfolio at market price. In
calculating NAV for the Prime Quality Money Market Fund, the administrator
values the Fund's portfolio using the amortized cost valuation method, which is
described in detail in our Statement of Additional Information. If market prices
are unavailable, or the
<PAGE>
PROSPECTUS 19

PURCHASING, SELLING AND EXCHANGING FUND SHARES

Funds think that the market price or amortized cost valuation method is
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees. The Funds expect the NAV of the Prime Quality
Money Market Fund to remain constant at $1.00 per share, although the Funds
cannot guarantee this.

SIMPLY SPEAKING . . .

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

SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting SunTrust Banks or your financial institution. SunTrust or your
financial institution will give you information about how to sell your shares
including any specific cut off times required. The sale price of each share will
be the next NAV determined after the transfer agent receives your request from
your financial institution. So, for all funds except the Prime Quality Money
Market Fund, to receive the current Business Day's NAV, generally the transfer
agent must receive your sale order from your financial institution before 4:00
p.m. Eastern time. For the Prime Quality Money Market Fund, your sale order will
be effective that same Business Day if the Transfer Agent receives your order
before 3:00 p.m. Eastern time.

SIMPLY SPEAKING . . .

HISTORICAL FINANCIAL INFORMATION

FINANCIAL HIGHLIGHTS
The tables that follow present performance information about Trust Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table represent the rate that you
would have earned (or lost) on an investment in a Fund, assuming you reinvested
all of your dividends and distributions. As of May 31, 1998, the Small Cap
Growth Stock Fund had not commenced operations.
The information for the Funds other than the Growth and Income Fund has been
audited by Arthur Andersen LLP, independent public accountants. The information
for the Growth and Income Fund has been audited by Deloitte & Touche, LLP,
independent public accountants. These reports along with each Fund's financial
statements, appears in the annual report that accompanies our Statement of
Additional Information. You can obtain the annual reports, which contain more
performance information, at no charge by calling 1-800-874-4700.
SIMPLY SPEAKING . . .
FINANCIAL HIGHLIGHTS
Study these tables to see how each Fund performed since it began investment
operations.
<TABLE>
<CAPTION>
NET
ASSET NET DISTRIBUTIONS
VALUE REALIZED DISTRIBUTIONS FROM
BEGINNING NET GAINS FROM NET REALIZED NET ASSET
OF INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END TOTAL
PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN
------- -------- ----------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------
CAPITAL APPRECIATION
FUND (FORMERLY
CAPITAL GROWTH FUND)
- --------------------
Trust Shares
1998............ $15.09 $0.09 $ 3.96 $(0.09) $(2.57) $16.48 29.51%
1997............ 14.90 0.12 3.13 (0.12) (2.94) 15.09 24.66
1996............ 12.18 0.12 3.32 (0.13) (0.59) 14.90 28.97
1995............ 11.99 0.16 0.57 (0.14) (0.40) 12.18 6.63
1994............ 11.95 0.16 0.31 (0.17) (0.26) 11.99 3.87
- --------------------
GROWTH AND INCOME
FUND (FORMERLY
CRESTFUNDS' VALUE
FUND)
- --------------------
Trust Class
For the years ended
November 30:
1998.......... $16.55 $0.093 $1.638 $(0.095) $(3.085) $15.10 13.64%
1997.......... 13.39 0.137 3.237 (0.145) (0.070) 16.55 25.41
1996.......... 11.60 0.166 2.380 (0.165) (0.591) 13.39 22.68
1995.......... 10.73 0.245 2.619 (0.262) (1.732) 11.60 28.76
1994.......... 11.38 0.200 (0.240) (0.190) (0.420) 10.73 (0.49)
- --------------------
INVESTMENT GRADE
BOND FUND
- --------------------
Trust Shares
1998............ $10.16 $0.60 $ 0.49 $(0.60) $ -- $10.65 10.92%
1997............ 10.07 0.60 0.09 (0.60) -- 10.16 6.99
1996............ 10.26 0.60 (0.19) (0.60) -- 10.07 4.02
1995............ 9.89 0.61 0.37 (0.61) -- 10.26 10.39
1994............ 10.45 0.50 (0.36) (0.50) (0.20) 9.89 1.17
- --------------------
PRIME QUALITY MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ $1.00 $0.05 $ -- $(0.05) $ -- $ 1.00 5.22%
1997............ 1.00 0.05 -- (0.05) -- 1.00 5.01
1996............ 1.00 0.05 -- (0.05) -- 1.00 5.25
1995............ 1.00 0.05 -- (0.05) -- 1.00 4.79
1994............ 1.00 0.03 -- (0.03) -- 1.00 2.88
- --------------------
SHORT-TERM BOND FUND
- --------------------
Trust Shares
1998............ $9.90 $0.55 $ 0.16 $(0.55) $(0.01) $10.05 7.31%
1997............ 9.86 0.53 0.07 (0.53) (0.03) 9.90 6.30
1996............ 9.98 0.54 (0.10) (0.54) (0.02) 9.86 4.45
1995............ 9.79 0.53 0.19 (0.53) -- 9.98 7.60
1994............ 10.01 0.42 (0.21) (0.42) (0.01) 9.79 2.02
- --------------------
VALUE INCOME STOCK
FUND
- --------------------
Trust Shares
1998............ $13.71 $0.26 $ 2.62 $(0.27) $(2.42) $13.90 23.10%
1997............ 13.15 0.30 2.32 (0.30) (1.76) 13.71 22.18
1996............ 11.59 0.35 2.71 (0.34) (1.16) 13.15 27.91
1995............ 10.54 0.32 1.56 (0.32) (0.51) 11.59 19.06
1994............ 10.23 0.29 0.70 (0.32) (0.36) 10.54 9.95

<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
RATIO OF NET EXPENSES TO INCOME TO
EXPENSES INVESTMENT AVERAGE NET AVERAGE NET
TO INCOME TO ASSETS ASSETS
NET ASSETS AVERAGE AVERAGE (EXCLUDING (EXCLUDING PORTFOLIO
END OF PERIOD NET NET WAIVERS AND WAIVERS AND TURNOVER
(000) ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE
------------- -------- --------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
- --------------------
CAPITAL APPRECIATION
FUND (FORMERLY
CAPITAL GROWTH FUND)
- --------------------
Trust Shares
1998............ $ 1,532,587 1.16% 0.61% 1.27% 0.50% 194%
1997............ 1,085,128 1.15 0.83 1.25 0.73 141
1996............ 981,498 1.15 0.90 1.27 0.78 156
1995............ 984,205 1.15 1.38 1.28 1.25 128
1994............ 891,870 1.15 1.25 1.29 1.11 124
- --------------------
GROWTH AND INCOME
FUND (FORMERLY
CRESTFUNDS' VALUE
FUND)
- --------------------
Trust Class
For the years en
November 30:
1998.......... $ 577,042 1.03% 1.21% 0.63% 0.43% 71%
1997.......... 590,824 1.02 1.17 0.92 0.77 100
1996.......... 553,648 1.02 1.17 1.38 1.23 82
1995.......... 220,386 1.02 1.17 2.16 2.01 173
1994.......... 166,713 1.01 1.01 1.82 1.82 116
- --------------------
INVESTMENT GRADE
BOND FUND
- --------------------
Trust Shares
1998............ $ 793,488 0.76% 5.67% 0.86% 5.57% 109%
1997............ 633,646 0.75 5.89 0.85 5.79 298
1996............ 599,514 0.75 5.81 0.87 5.69 184
1995............ 543,308 0.75 6.22 0.88 6.09 238
1994............ 460,538 0.75 4.77 0.88 4.64 259
- --------------------
PRIME QUALITY MONEY
MARKET FUND
- --------------------
Trust Shares
1998............ $ 1,880,229 0.59% 5.10% 0.77% 4.92% --
1997............ 1,086,555 0.58 4.90 0.76 4.72 --
1996............ 1,050,800 0.58 5.11 0.78 4.91 --
1995............ 799,189 0.58 4.77 0.79 4.56 --
1994............ 583,399 0.58 2.86 0.79 2.65 --
- --------------------
SHORT-TERM BOND FUND
- --------------------
Trust Shares
1998............ $ 120,422 0.66% 5.47% 0.79% 5.34% 87%
1997............ 89,701 0.65 5.37 0.78 5.24 118
1996............ 91,156 0.65 5.39 0.81 5.23 163
1995............ 60,952 0.65 5.49 0.85 5.29 200
1994............ 34,772 0.65 4.15 0.85 3.95 75
- --------------------
VALUE INCOME STOCK
FUND
- --------------------
Trust Shares
1998............ $ 1,725,418 0.92% 1.85% 0.92% 1.85% 99%
1997............ 1,488,062 0.91 2.40 0.91 2.40 105
1996............ 1,244,399 0.92 2.86 0.92 2.86 134
1995............ 991,977 0.95 3.16 0.95 3.16 126
1994............ 573,082 0.88 3.21 0.97 3.12 149
</TABLE>

* Annualized.

** Return is for the period the indicated and has not been annualized.

Amount designated as "--" are either $0 or have been rounded to $0.

On May 24, 1999, the Value Fund, a series of the CrestFunds, exchanged all of
its assets and certain liabilities for shares of the STI Growth and Income Fund.
Because the series of the CrestFunds is the accounting survivor in this
transaction, its basis of accounting for these assets and its operating results
for the periods prior to May 24, 1999 have been carried forward in these
financial highlights.
<PAGE>
PROSPECTUS 21

OTHER INFORMATION

DIVIDENDS AND DISTRIBUTIONS

The Capital Appreciation (formerly Capital Growth), Growth and Income, Small Cap
Growth Stock and Value Income Stock Funds distribute income quarterly. The
Investment Grade Bond, Short-Term Bond and Prime Quality Money Market Funds
declare dividends daily and pay these dividends monthly. The Funds make
distributions of capital gains, if any, at least annually.

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

SIMPLY SPEAKING . . .

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

TAXES

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

SIMPLY SPEAKING . . .

FUND DISTRIBUTIONS
Distributions you receive from a Fund may be taxable whether or not you
reinvest them.
<PAGE>
HOW TO OBTAIN MORE INFORMATION

INVESTMENT ADVISORS

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

DISTRIBUTOR

SEI Investments Distribution Co.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

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

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

TO OBTAIN MORE INFORMATION:

BY TELEPHONE:
Call 1-800-874-4770

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

FROM THE SEC: You can also obtain these documents, and other information about
the STI Classic Funds, from the SEC's website ("http://www.sec.gov"). You may
review and copy documents at the SEC Public Reference Room in Washington, DC
(for information call 1-800-SEC-0330). You may request documents by mail from
the SEC, upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, DC 20549-6009. The
Fund's Investment Company Act registration number is 811-06557.
<PAGE>
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES
MONEY MARKET FUND*
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES
MONEY MARKET FUND
INVESTMENT ADVISOR TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.

The STI Classic Funds (the "Trust") is a mutual fund that offers shares in a
number of separate investment portfolios. This Prospectus sets forth concisely
the information about the Institutional Shares of the Classic Institutional Cash
Management Money Market Fund, the Classic Institutional U.S. Treasury Securities
Money Market Fund and the Classic Institutional U.S. Government Securities Money
Market Fund (each a "Fund" and, together, the "Classic Institutional Money
Market Funds"). THE CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET
FUND SEEKS TO MANAGE ITS INVESTMENTS IN A MANNER CONSISTENT WITH THE CRITERIA
FOR OBTAINING AN Aaa RATING BY MOODY'S INVESTORS SERVICE AND/OR AN AAA RATING BY
STANDARD & POOR'S CORPORATION. Investors are advised to read this Prospectus and
retain it for future reference.

A Statement of Additional Information relating to the Funds dated the same
date as this Prospectus has been filed with the Securities and Exchange
Commission and is available without charge through the Distributor, SEI
Investments Distribution Co., Oaks, Pennsylvania 19456 or by calling
1-800-874-4770. The Statement of Additional Information is incorporated into
this Prospectus by reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

THE TRUST'S SHARES ARE NOT SPONSORED, ENDORSED, OR GUARANTEED BY, AND DO NOT
CONSTITUTE OBLIGATIONS OR DEPOSITS OF, THE ADVISOR OR ANY OF ITS AFFILIATES OR
CORRESPONDENTS INCLUDING SUNTRUST BANKS, INC., ARE NOT GUARANTEED OR INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY, AND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.

*OCTOBER 1, 1998,
AS SUPPLEMENTED ON MAY 24, 1999
MAY 24, 1999
<PAGE>
2

(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>
3

No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in the Trust's Statement of
Additional Information in connection with the offering made by this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Trust or SEI Investments Distribution Co.
(the "Distributor"). This Prospectus does not constitute an offering by the
Trust or by the Distributor in any jurisdiction in which such offering may not
lawfully be made.

Institutional Shares of the Classic Institutional Money Market Funds are offered
primarily to various types of institutional investors ("Shareholders"),
including SunTrust Banks, Inc. and its affiliates and correspondents, for the
investment of funds for which they act in a fiduciary, agency, investment
advisory or custodial capacity.

TABLE OF CONTENTS

<TABLE>
<S> <C>
Expense Summary...................... 4
Financial Highlights................. 5
The Trust............................ 6
Funds and Investment Objectives...... 6
Investment Policies and Strategies... 6
General Investment Policies and
Strategies.......................... 7
Investment Risks..................... 8
Investment Limitations............... 8
Performance Information.............. 9
Purchase of Fund Shares.............. 9
Redemption of Fund Shares............ 10
Dividends and Distributions.......... 11
Tax Information...................... 11
STI Classic Funds Information........ 12
The Trust............................ 12
Board of Trustees.................... 12
Investment Advisor................... 12
Banking Laws......................... 13
Distribution......................... 14
Administration....................... 14
Transfer Agent and Dividend
Disbursing Agent.................... 14
Custodian............................ 14
Legal Counsel........................ 14
Independent Public Accountants....... 14
Other Information.................... 15
Voting Rights........................ 15
Reporting............................ 15
Shareholder Inquiries................ 15
Description of Permitted
Investments......................... 15
Appendix............................. A-1
</TABLE>
<PAGE>
4

EXPENSE SUMMARY

Below is a summary of the estimated annual operating expenses for shares of each
Classic Institutional Money Market Fund. A hypothetical example based on the
summary is also shown. Actual expenses may vary.

ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)

<TABLE>
<CAPTION>
CLASSIC CLASSIC INSTITUTIONAL
INSTITUTIONAL CLASSIC INSTITUTIONAL U.S. TREASURY
CASH MANAGEMENT U.S. GOVERNMENT SECURITIES SECURITIES
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Management Fees (after
voluntary reductions)(1)...... .17% .17% .15%
All Other Expenses (after
voluntary reductions)(2)...... .08% .08% .10%
- -------------------------------------------------------------------------------------------------------
Total Operating Expenses
(after voluntary
reductions)(3)................ .25% .25% .25%
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Advisor is waiving, on a voluntary basis, a portion of its fee from each
Fund. The Advisor reserves the right to terminate its waiver at any time in
its sole discretion. Absent such waivers and reimbursements, Advisory Fees
for the Funds would be as follows: Classic Institutional Cash Management
Money Market Fund--.20%, Classic Institutional U.S. Government Securities
Money Market Fund--.20%, Classic Institutional U.S. Treasury Securities
Money Market Fund--.20%. See "Investment Advisors." A person that purchases
shares through an account with a financial institution may be charged
separate fees by the financial institution.

(2) The Administrator is waiving, on a voluntary basis, a portion of its fee
from each Fund. The Administrator reserves the right to terminate its waiver
at any time in its sole discretion. Absent such waivers and reimbursements,
Other Expenses for the Funds would be as follows: Classic Institutional Cash
Management Money Market Fund--.11%, Classic Institutional U.S. Government
Securities Money Market Fund--.10%, Classic Institutional U.S. Treasury
Securities Money Market Fund--.12%.

(3) Absent the voluntary waivers described above, Total Operating Expenses for
the Funds would be as follows: Classic Institutional Cash Management Money
Market Fund--.30%, Classic U.S. Government Securities Money Market
Fund--.30%, Classic Institutional U.S. Treasury Securities Money Market
Fund--.32%.

<TABLE>
<CAPTION>
CLASSIC CLASSIC INSTITUTIONAL
INSTITUTIONAL CLASSIC INSTITUTIONAL U.S. TREASURY
CASH MANAGEMENT U.S. GOVERNMENT SECURITIES SECURITIES
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
An investor would pay the
following expenses on a $1,000
investment assuming: (1) a 5%
annual return and (2)
redemption at the end of each
time period:
One Year.................. $ 3 $ 3 $ 3
Three Years............... 8 8 8
Five Years................ 14 14 14
Ten Years................. 32 32 32
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>

THE EXAMPLE IS BASED UPON THE ESTIMATED TOTAL OPERATING EXPENSES OF A FUND AND
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose of this table is
to assist the investor in understanding the various costs and expenses that may
be directly or indirectly borne by investors in the Trust.
<PAGE>
5

FINANCIAL HIGHLIGHTS

The table that follows presents information about the investment results of the
Classic Institutional Money Market Funds. The financial highlights for the
Classic Institutional U.S. Treasury Securities Money Market Fund for the periods
from inception through May 31, 1998 have been audited by Arthur Andersen LLP,
independent public accountants. The financial highlights for the Classic
Institutional Cash Management Money Market Fund (successor to the Prime
Obligations Fund, a series of The Arbor Fund) and the Classic Institutional U.S.
Government Securities Money Market Fund (formerly U.S. Government Securities
Fund, a series of The Arbor Fund) for the periods from inception through January
31, 1999 have been audited by PricewaterhouseCoopers LLP, independent public
accountants. Both reports appear in the annual reports and accompany the
Statement of Additional Information. The annual report for each Fund, which
contains more information about performance, is available at no charge by
calling 1-800-874-4770.

For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DISTRIBUTIONS
VALUE NET GAINS FROM NET DISTRIBUTIONS NET ASSET NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END TOTAL END OF
OF PERIOD INCOME INVESTMENTS INCOME CAPITAL GAINS OF PERIOD RETURN PERIOD (000)
--------- ---------- ------------ ------------- ------------- --------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------
CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND
- ---------------------------------------------------------
Institutional Shares
1999................... $ 1.00 $ 0.05 $ -- $ (0.05) $ -- $ 1.00 5.46% $ 884,490
1998................... 1.00 0.06 -- (0.06) -- 1.00 5.66 740,837
1997................... 1.00 0.05 -- (0.05) -- 1.00 5.45 477,435
1996(2)................ 1.00 0.02 -- (0.02) -- 1.00 5.82* 382,632
- --------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND
- --------------------------------------------------------------
Institutional Shares
1998................... $ 1.00 $ 0.05 $ -- $ (0.05) $ -- $ 1.00 5.50% $ 140,334
1997(A)................ 1.00 0.02 -- (0.02) -- 1.00 2.46* 20,238
- -----------------------------------------------------------------
CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND
- -----------------------------------------------------------------
Institutional Shares
1999................... $ 1.00 $ 0.05 $ -- $ (0.05) $ -- $ 1.00 5.30% $ 608,031
1998................... 1.00 0.05 -- (0.05) -- 1.00 5.52** 789,410
1997................... 1.00 0.05 -- (0.05) -- 1.00 5.29 586,731
1996................... 1.00 0.06 -- (0.06) -- 1.00 5.88 514,870
1995(1)................ 1.00 0.03 -- (0.03) -- 1.00 4.98** 579,422

<CAPTION>
RATIO OF NET
RATIO OF NET RATIO OF EXPENSES INVESTMENT INCOME
RATIO OF INVESTMENT TO AVERAGE NET TO AVERAGE NET
EXPENSES TO INCOME TO ASSETS (EXCLUDING ASSETS (EXCLUDING
AVERAGE NET AVERAGE NET WAIVERS AND WAIVERS AND
ASSETS ASSETS REIMBURSEMENTS) REIMBURSEMENTS)
----------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
- ---------------------------
CLASSIC INSTITUTIONAL CASH
- ---------------------------
Institutional Shares
1999................... 0.23% 5.31% 0.35% 5.19%
1998................... 0.20% 5.52% 0.36% 5.36%
1997................... 0.20% 5.33% 0.38% 5.15%
1996(2)................ 0.20% 5.61%** 0.40% 5.41%
- ---------------------------
CLASSIC INSTITUTIONAL U.S.
- ---------------------------
Institutional Shares
1998................... 0.18% 5.34% 0.38% 5.14%
1997(A)................ 0.09 5.27 0.51 4.85
- ---------------------------
CLASSIC INSTITUTIONAL U.S.
- ---------------------------
Institutional Shares
1999................... 0.23% 5.18% 0.36% 5.05%
1998................... 0.20 5.39 0.37 5.22
1997................... 0.20 5.17 0.37 5.00
1996................... 0.20 5.72 0.37 5.55
1995(1)................ 0.20* 4.98* 0.38* 4.80*
</TABLE>

* Annualized
(1) Commenced operations on August 1, 1994.
(2) Commenced operations on October 25, 1995.
(A) Commenced operations on December 12, 1996.
** Total return is for the period indicated and has not been annualized.

On May 24, 1999, the Prime Obligations Fund and the U.S. Government Securities
Money Market Fund, each a series of The Arbor Fund, each exchanged all of its
assets and certain liabilities for shares of the Classic Institutional Cash
Management Money Market Fund and the Classic Institutional U.S. Government
Securities Money Market Fund, respectively. As the Prime Obligations Fund and
the U.S. Government Securities Money Market Fund are each the respective
accounting survivor, its basis of accounting for assets and liabilities and its
operating results for the periods prior to May 24, 1999 have been carried
forward in these financial highlights.
<PAGE>
6

THE TRUST

STI CLASSIC FUNDS (the "Trust") is a diversified, open-end management investment
company that provides a convenient and economical means of investing in several
professionally managed portfolios of securities. The Trust currently offers
units of beneficial interest ("shares") in a number of separate Funds. This
Prospectus relates to the Classic Institutional Money Market Funds described
below.

FUNDS AND INVESTMENT OBJECTIVES

THE CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND seeks to provide as
high a level of current income as is consistent with preservation of capital and
liquidity by investing exclusively in high quality money market instruments
issued by corporations and the U.S. Government.

THE CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND seeks to
provide high current income consistent with preservation of capital and the
maintenance of liquidity.

THE CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND seeks to
provide as high a level of current income as is consistent with preservation of
capital and liquidity by investing exclusively in bills, notes and bonds issued
by the U.S. Treasury and repurchase agreements ("U.S. Treasury obligations")
with approved dealers collateralized by U.S. Treasury obligations.

It is a fundamental policy of each Classic Institutional Money Market Fund to
use its best efforts to maintain a constant net asset value of $1.00 per share.
There can be no assurance that either Fund will achieve its investment objective
or maintain a net asset value of $1.00 per share on a continuous basis.

Each Classic Institutional Money Market Fund intends to comply with federal
regulations applicable to money market funds using the amortized cost method for
calculating net asset value, which require each Fund to invest only in U.S.
dollar denominated obligations, to maintain an average maturity on a
dollar-weighted basis of 90 days or less and to acquire eligible securities that
present minimal credit risk and have a maturity of 397 days or less. The Classic
Institutional U.S. Treasury Securities Money Market Fund seeks to manage its
investments in a manner consistent with the criteria for obtaining an Aaa rating
by Moody's Investors Service ("Moody's") and/or an AAA rating by Standard &
Poor's Corporation ("S&P"). These requirements will also limit the Classic
Institutional U.S. Treasury Securities Money Market Fund's ability to generate
high current income. For a further discussion of these rules, see "Description
of Permitted Investments."

INVESTMENT POLICIES AND STRATEGIES

CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY MARKET FUND

The Classic Institutional Cash Management Money Market Fund will invest in money
market instruments denominated in U.S. dollars consisting of: (i) U.S. Treasury
obligations; (ii) receipts; (iii) obligations issued or guaranteed as to
principal and interest by agencies and instrumentalities of the U.S. Government;
(iv) commercial paper issued by domestic and foreign issuers rated in the
highest short-term rating category by one or more nationally recognized
statistical rating organizations (an "NRSRO") as described in the "Appendix" or,
if not rated, determined by the Advisor to be of comparable quality; (v) high
quality obligations (including certificates of deposit, time deposits, bankers'
<PAGE>
7
acceptances, Eurodollar and Yankee bank obligations) of U.S. commercial banks
(including foreign branches of such banks), and U.S. and London branches of
foreign banks or savings and loan and thrift institutions that are members of
the Federal Reserve System, the Federal Deposit Insurance Corporation, or
savings and loan associations; (vi) high quality short-term corporate
obligations issued by companies with commercial paper meeting the ratings
indicated in (iv) above, or, if not rated, determined by the Advisor to be of
comparable quality; (vii) repurchase agreements involving such obligations;
(viii) high quality obligations of supranational entities satisfying the credit
ratings described in (iv) above, or, if not rated, determined by the Advisor to
be of comparable quality; (ix) high quality medium term notes; (x) municipal
securities; (xi) mortgage-backed securities; and (xii) asset-backed securities.
The Fund may not invest more than 25% of its total assets in obligations issued
by foreign branches of U.S. banks and London branches of foreign banks. The Fund
may purchase securities subject to standby commitments. The Fund may also
purchase restricted securities. As a money market fund, the Fund is subject to
limitations on the percentage of its assets that may be invested in any one
issuer and on the percentage that may be invested in securities carrying the
second highest rating assigned by the requisite NRSROs.

CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES MONEY MARKET FUND

The Classic Institutional U.S. Government Securities Money Market Fund will
invest solely in (i) U.S. Treasury Obligations; (ii) obligations issued or
guaranteed as to principal and interest by agencies or instrumentalities of the
U.S. Government; (iii) repurchase agreements involving and of the foregoing
obligations; and (iv) shares of registered money market funds that invest in the
foregoing.

CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND

The Classic U.S. Treasury Securities Money Market Fund will invest exclusively
in U.S. Treasury obligations and any repurchase agreements with dealers will be
selected pursuant to guidelines adopted by the Trust's Board of Trustees and
collateralized by U.S. Treasury obligations.

The Fund, however, seeks to invest exclusively in securities that would qualify
to be rated in the highest ratings category of an NRSRO, such as S&P or Moody's.
As a result, the Fund's ability to maintain an average dollar-weighted portfolio
maturity to the maximum extent permitted by Rule 2a-7 will be limited, and the
Fund's performance may be affected adversely.

GENERAL INVESTMENT POLICIES AND STRATEGIES

In the event that a security owned by a Fund is downgraded below the stated
rating categories, the Advisor will review and take appropriate action with
regard to the security.

Each of the Funds may engage in securities lending and will limit such practice
to 33 1/3% of its total assets. No Fund may purchase additional securities while
its outstanding borrowings exceed 5% of its assets.

It is a non-fundamental policy of each Fund to invest no more than 10% of its
net assets in illiquid securities. An illiquid security is a security which
cannot be disposed of in the usual course of business within seven days at a
price approximating its carrying value.
<PAGE>
8
Rule 144A securities and Section 4(2) commercial paper that meet the criteria
established by the Board of Trustees of the Trust may be considered liquid.

For additional information regarding permitted investments, see "Description of
Permitted Investments" in this Prospectus and in the Statement of Additional
Information.

INVESTMENT RISKS

FOREIGN SECURITIES

Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
risks and considerations include differences in accounting, auditing and
financial reporting standards, generally higher commission rates on foreign
portfolio transactions, the possibility of expropriation or confiscatory
taxation, adverse changes in investment or exchange control regulations,
political instability which could affect U.S. investment in foreign countries
and potential restrictions of the flow of international capital and currencies.
Foreign companies may also be subject to less government regulation than U.S.
companies. Moreover, the dividends payable on the foreign securities may be
subject to foreign withholding taxes, thus reducing the net amount of income
available for distribution to the Fund's Shareholders. Foreign securities often
trade with less frequency and volume than domestic securities and, therefore,
may exhibit greater price volatility.

GOVERNMENT SECURITIES

Guarantees of a Fund's securities by the U.S. Government, its agencies or
instrumentalities guarantee only the payment of principal and interest on the
guaranteed securities, and do not guarantee the securities' yield or value or
the yield or value of a Fund's shares.

MORTGAGE-BACKED SECURITIES

Mortgage-backed securities are subject to the risk of prepayment of the
underlying mortgages. During periods of declining interest rates, prepayment of
mortgages underlying these securities can be expected to accelerate. When the
mortgage-backed securities held by a Fund are prepaid, the Fund generally will
reinvest the proceeds in securities with a yield that reflects prevailing
interest rates, which may be lower than the prepaid security.

ZERO COUPON OBLIGATIONS

Each Fund may invest, subject to its investment objective and policies, in zero
coupon obligations. Zero coupon obligations are sold at original issue discount
and do not make periodic payments. Zero coupon obligations may be subject to
greater fluctuations in value due to interest rate changes than interest bearing
obligations. A Fund will be required to include the imputed interest in zero
coupon obligations in its current income. Because each Fund distributes all of
its net investment income to Shareholders, the Fund may have to sell portfolio
securities to distribute the income attributable to these obligations and
securities at a time when the Advisor would not have chosen to sell such
obligations or securities.

INVESTMENT LIMITATIONS

The following investment limitations constitute fundamental policies of each
Fund. Fundamental policies cannot be changed with respect to a Fund without the
consent of the holders of a majority of the Fund's outstanding shares. The term
"majority of the outstanding
<PAGE>
9
shares" means the vote of (i) 67% or more of a Fund's shares present at a
meeting, if more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of a Fund's outstanding shares,
whichever is less.

Each Fund may not:

1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if as a result more than 5% of the total assets of a
Fund would be invested in the securities of such issuer; provided, however, that
a Fund may invest up to 25% of its assets in "first tier" securities of a single
issuer for a period of up to three business days.

2. Purchase any securities which would cause more than 25% of the total assets
of a Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in obligations issued or guaranteed by
the U.S. Government, its agencies and instrumentalities, repurchase agreements
involving such securities and, with respect to only the Classic Institutional
Cash Management Money Market Fund, obligations issued by domestic branches of
U.S. banks or U.S. branches of foreign banks subject to the same regulations as
U.S. banks. For purposes of this limitation, (i) utility companies will be
divided according to their services, for example, gas, gas transmission,
electric and telephone will each be considered a separate industry; (ii)
financial service companies will be classified according to the end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; and (iii) supranational
entities will be considered to be a separate industry.

The foregoing percentages will apply at the time of the purchase of a security.

Additional investment limitations are set forth in the Statement of Additional
Information.

PERFORMANCE INFORMATION

From time to time each Classic Institutional Money Market Fund may advertise its
"current yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"current yield" of a Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the advertisement).
This income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
a Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment.

PURCHASE OF FUND SHARES

Shares of the Fund are sold primarily to various types of institutional
investors, including subsidiaries of SunTrust Banks, Inc. ("SunTrust"), for the
investment of funds for which they act in a fiduciary, agency, investment
advisory or custodial capacity. Shares are sold without a sales charge, although
the institutional investors may charge their customer accounts for services
provided in connection with the purchase of shares. The minimum initial
investment is $10,000,000. INSTITUTIONAL INVESTORS INCLUDING SUBSIDIARIES OF
SUNTRUST BANKS, INC., AND
<PAGE>
10
ITS AFFILIATES MAY IMPOSE AN EARLIER CUT-OFF TIME FOR RECEIPT OF PURCHASE AND
REDEMPTION ORDERS DIRECTED THROUGH THEM TO ALLOW FOR PROCESSING AND TRANSMITTAL
OF THE REORDERS TO FEDERATED SERVICES COMPANY (THE "TRANSFER AGENT") FOR
EFFECTIVENESS THE SAME DAY. Cut-off times, information concerning these services
and any charges will be provided to customers by the institutional investors.
Shares will be held of record by the institutional investors, although customers
may have or be given the right to vote the shares depending upon the terms of
their relationship with the institutional investor. Confirmations of share
purchases and redemptions will be sent to the institutional investor as the
shareholder of record.

Shares may be purchased on days on which the New York Stock Exchange is open for
business (a "Business Day"). However, shares cannot be purchased or redeemed for
same day settlement on days the Federal Reserve is closed.

Purchase orders for the Funds will be effective as of the Business Day received
by the Transfer Agent and eligible to receive dividends declared the same day if
the Transfer Agent receives the order before 3:00 p.m. Eastern time, and the
Custodian receives federal funds before 4:00 p.m. Eastern time on such day.
Otherwise, purchase orders for the Funds will be effective the next Business Day
provided the Custodian receives readily available funds before 4:00 p.m. Eastern
time on the next such Business Day. The purchase price is the net asset value
per share next computed after the order is received and accepted by the Trust.
The net asset value per share is calculated as of the regularly scheduled close
of normal trading on the New York Stock Exchange (currently 4:00 p.m. Eastern
time) each Business Day based on the amortized cost method described in the
Statement of Additional Information and is expected to remain constant at $1.00
per share.

The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or
Shareholder(s).

Neither the Trust's Transfer Agent nor the Trust will be responsible for any
loss, liability, cost or expense for acting upon telephone or wire instructions
reasonably believed to be genuine. The Trust maintains procedures, including
identification methods and other means, for ascertaining the identity of callers
and authenticity of instructions.

REDEMPTION OF FUND SHARES

An order to redeem shares must be transmitted to the Transfer Agent by the
institutional investor as the record owner of shares. Institutional investors
may establish procedures for their customers to request redemption of shares
held in their account with the institutional investor. Customers should contact
their institutional investor for information concerning these procedures.

Redemption orders must be received by the Transfer Agent on a Business Day
before 3:00 p.m. Eastern time. Redemption orders received after the time noted
above will be executed the following day. The Trust reserves the right to wire
redemption proceeds within five Business Days after receiving the redemption
orders if, in the judgment of the Advisor, an earlier payment could adversely
impact a Fund.

The Trust intends to pay cash for all shares redeemed, but under abnormal
conditions which make payment in cash unwise, payment may be made wholly or
partly in liquid portfolio securities with a market value equal to the
<PAGE>
11
redemption price. In such circumstances, an investor may incur brokerage costs
in converting such securities to cash.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income (exclusive of capital gains) of each of the
Classic Institutional Money Market Funds are declared on each Business Day to
Shareholders at the close of business on the day of declaration. Net income for
dividend purposes consists of: (i) interest accrued and original issue discount
earned on the Fund's assets, (ii) plus the amortization of market discount and
minus the amortization of market premium on such assets, (iii) less accrued
expenses directly attributable to the Fund and the general expenses of the Trust
prorated to the Fund on the basis of its relative net assets. Shares begin
earning dividends on the Business Day the purchase order is effective and
continue earning dividends through and including the Business Day before the
redemption order is effective. Dividends are paid within ten Business Days after
the end of each month in the form of additional shares of the same Fund unless
the Shareholder has elected prior to the date of distribution to receive payment
in cash. Such election, or any revocation thereof, must be made in writing at
least 15 days prior to the date of distribution to the Transfer Agent and will
become effective with respect to dividends paid after its receipt. Dividends are
paid within ten Business Days after a Shareholder's complete redemption of its
shares in a Fund.

TAX INFORMATION

The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal, state, or local income tax treatment of each Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisors regarding specific questions as to federal, state and local income
taxes.

TAX STATUS OF EACH FUND

Each Fund is treated as a separate entity for federal tax purposes, and is not
combined with the Trust's other Funds. Each Fund intends to qualify for the
special tax treatment afforded regulated investment companies by the Internal
Revenue Code of 1986, as amended (the "Code"), so that it will be relieved of
federal income tax on that part of its net investment income and net capital
gains (the excess of long-term capital gains over net short-term capital loss)
which is distributed to Shareholders. Each Fund intends to make sufficient
distributions prior to the end of each calendar year to avoid liability for the
federal excise tax applicable to regulated investment companies.

TAX STATUS OF DISTRIBUTIONS

The Institutional Money Market Funds will each distribute all of their net
investment income (including, for this purpose, net short-term capital gains) to
Shareholders. Dividends from net investment income will be taxable to
Shareholders as ordinary income whether received in cash or in additional
shares. Each Fund will make annual reports to Shareholders of the federal income
tax status of all distributions. Dividends declared by a Fund in October,
November or December of any year and payable to Shareholders of record on a date
in that month will be deemed to have been paid by the Fund and received by the
<PAGE>
12
Shareholders on December 31, of that year, if paid by the Fund any time during
the following January.

Income received on direct U.S. obligations is exempt from tax at the state level
when received directly by a Fund and may be exempt, depending on the state, when
received by a Shareholder provided certain state specific conditions are
satisfied. Not all states permit such income dividends to be tax-exempt and some
require that a certain minimum percentage of an investment company's income be
derived from state tax-exempt interest. Each Fund will inform Shareholders
annually of the percentage of income and distributions derived from direct U.S.
obligations. Shareholders should consult their tax advisors to determine whether
any portion of the income dividends received from a Fund is considered tax
exempt in their particular states.

A sale, exchange or redemption of Fund shares is a taxable event to the
Shareholder.

STI CLASSIC FUNDS INFORMATION

THE TRUST

The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated January 15, 1992. The Declaration of Trust permits the Trust to
offer separate portfolios of shares and different classes of each Fund. All
consideration received by the Trust for shares of any Fund and all assets of
such Fund belong to that Fund and would be subject to liabilities related
thereto.

The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.

BOARD OF TRUSTEES

The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described below, certain
companies provide essential management services to the Trust.

INVESTMENT ADVISOR

Trusco Capital Management, Inc. ("Trusco") serves as the Advisor to the
Institutional Money Market Funds. As of December 31, 1998, Trusco had
approximately $23 billion in assets under management. The principal business
address of Trusco is 50 Hurt Plaza, Suite 1400, Atlanta, Georgia 30303.

The Advisor is an indirect wholly-owned subsidiary of SunTrust Banks, Inc.
("SunTrust"), a bank holding company with assets of $93.2 billion as of December
31, 1998. SunTrust ranks among the ten largest U.S. banking companies. Total
discretionary assets under management with SunTrust Banks, Inc. equalled
approximately $90.8 billion as of December 31, 1998.

The Trust and the Advisor have entered into an advisory agreement (the "Advisory
Agreement"). Under the Advisory Agreement, the Advisor makes the investment
decisions for the assets of the Funds and continuously reviews, supervises and
administers each Fund's investment program. The Advisor discharges its
responsibilities subject to the supervision of, and policies established by, the
Trustees of the Trust. STI CLASSIC FUNDS ARE
<PAGE>
13
NOT DEPOSITS, ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT
AGENCY, AND ARE NOT ENDORSED OR GUARANTEED BY AND DO NOT CONSTITUTE OBLIGATIONS
OF SUNTRUST BANKS, INC. OR ANY OF ITS AFFILIATES. INVESTMENTS IN THE FUNDS
INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. RETURNS AND PRINCIPAL
VALUES WILL FLUCTUATE AND SHARES AT REDEMPTION MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST. THERE IS NO GUARANTEE THAT ANY STI CLASSIC FUND WILL
ACHIEVE ITS INVESTMENT OBJECTIVE. With respect to each Fund, the Advisor may
execute brokerage or other agency transactions through affiliates of the
Advisor.

For the services provided and expenses incurred pursuant to the Advisory
Agreement: Trusco is entitled to receive advisory fees computed daily and paid
monthly at the annual rate of .20% of the average daily net assets of each Fund.

From time to time, the Advisor may waive (either voluntarily or pursuant to
applicable state limitations) advisory fees payable by a Fund. Currently, the
Advisor has agreed to voluntary reductions in its fees in amounts necessary to
maintain the total operating expenses at the amounts set forth in the Expense
Summary. Voluntary reductions of fees may be terminated at anytime.

For the fiscal year ended May 31, 1998, the Advisor received advisory fees
computed daily and paid monthly at the annual rate of .01% of the Institutional
U.S. Treasury Securities Money Market Fund.

Crestar Asset Management Company served as the Adviser to the predecessors of
the Classic Institutional Cash Management and Classic Institutional U.S.
Government Securities Money Market Funds. For the fiscal year ended January 31,
1999, Crestar Asset Management received advisory fees of .11% for the Classic
Institutional Cash Management Money Market Fund and .10% for the Classic
Institutional U.S. Government Securities Money Market Fund.

BANKING LAWS

Banking laws and regulations, including the Glass-Steagall Act as presently
interpreted by the Board of Governors of the Federal Reserve System, currently
(a) prohibit a bank holding company registered under the Federal Bank Holding
Company Act of 1956 or its affiliates from sponsoring, organizing, controlling,
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and generally prohibit banks
from underwriting securities, but (b) do not prohibit such a bank holding
company or affiliate or banks generally from acting as an investment advisor,
transfer agent, or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of a customer. The
Advisor believes that it may perform the services for STI Classic Funds
contemplated by its Advisory Agreement described in this Prospectus without
violation of applicable banking laws or regulations. However, future changes in
legal requirements relating to the permissible activities of banks and their
affiliates, as well as future interpretations of present requirements, could
prevent the Advisor from continuing to perform services for the Funds. If the
Advisor was prohibited from providing services to the Funds, the Board of
Trustees would consider selecting another qualified firm. Any new investment
advisory agreements would be subject to Shareholder approval.

If current restrictions preventing a bank or its affiliates from legally
sponsoring, organizing, controlling, or distributing shares of an investment
company were relaxed, the Advisor,
<PAGE>
14
or its affiliates, would consider the possibility of offering to perform
additional services for STI Classic Funds. It is not possible, of course, to
predict whether or in what form such legislation might be enacted or the terms
upon which the Advisor, or such affiliates, might offer to provide such
services.

In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.

DISTRIBUTION

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments Company ("SEI Investments"), and the Trust are parties to a
distribution agreement. No compensation is paid to the Distributor for
distribution services. Shares of the Classic Institutional Money Market Funds
are offered primarily to institutional investors, including affiliates and
correspondents for the investment of funds in which they act in a fiduciary,
agency or custodial capacity.

Each Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor receives compensation.

ADMINISTRATION

SEI Investments Mutual Funds Services (the "Administrator") serves as
Administrator to the Trust. The Administrator provides the Trust with certain
administrative services, other than investment advisory services, including
regulatory reporting, all necessary office space, equipment, personnel, and
facilities.

The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate as follows:

<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET ASSETS FEE
- --------------------------------------------- ---------
<S> <C>
$1 - $1 billion .12%
over $1 billion to $5 billion .09%
over $5 billion to $8 billion .07%
over $8 billion to $10 billion .065%
over $10 billion .06%
</TABLE>

From time to time, the Administrator may voluntarily waive all or a portion of
its fee to limit the net expenses of the Funds to the amounts in the Funds'
Expense Summary.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Services Company, Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779 is the transfer agent for the shares of the Trust and dividend
disbursing agent for the Trust.

CUSTODIAN

SunTrust Bank, Atlanta, c/o STI Trust & Investment Operations, Inc., 303
Peachtree Street N.E., 14th Floor, Atlanta, Georgia 30308 serves as custodian of
the assets of each Fund. The custodian holds cash, securities and other assets
of the Funds as required by the Investment Company Act of 1940.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, serves as legal counsel to the Trust.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants to the Trust are Arthur Andersen LLP,
Philadelphia, Pennsylvania.
<PAGE>
15

OTHER INFORMATION

VOTING RIGHTS

Each share held entitles the Shareholder of record to one vote. Each Fund or
class of a Fund will vote separately on matters relating solely to that Fund or
class. As a Massachusetts business trust, the Trust is not required to hold
annual meetings of Shareholders but approval will be sought for certain changes
in the operation of the Trust and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by the remaining Trustees
or by Shareholders at a special meeting called upon written request of
Shareholders owning at least 10% of the outstanding shares of the Trust. In the
event that such a meeting is requested the Trust will provide appropriate
assistance and information to the Shareholders requesting the meeting.

REPORTING

The Trust issues unaudited financial information and audited financial
statements annually. The Trust furnishes proxy statements and other reports to
Shareholders of record.

SHAREHOLDER INQUIRIES

Shareholders may contact their financial institution's representative in order
to obtain information on account statements, procedures and other related
information.

DESCRIPTION OF PERMITTED INVESTMENTS

The following is a description of the permitted investments for the Funds.
Further discussion is contained in the Statement of Additional Information.

ASSET-BACKED SECURITIES -- Asset-backed securities are securities secured by
non-mortgage assets such as company receivables, truck and auto loans, leases
and credit card receivables. Such securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pools of assets. Such securities also may be debt
instruments, which are also known as collateralized obligations and are
generally issued as the debt of a special purpose entity, such as a trust,
organized solely for the purpose of owning such assets and issuing such debt.

Asset-backed securities are not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and for a
certain period by a letter of credit issued by a financial institution (such as
a bank or insurance company) unaffiliated with the issuers of such securities.
The purchase of asset-backed securities raises risk considerations peculiar to
the financing of the instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in the obligations
superior to that of the holders of the asset-backed securities. There also is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. Asset-backed
securities entail prepayment risk, which may vary depending on the type of
asset, but is generally less than the prepayment risk associated with
mortgage-backed securities. In addition, credit card receivables are unsecured
obligations of the card holder.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.
<PAGE>
16

BANKERS' ACCEPTANCES -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. Bankers' acceptances are used
by corporations to finance the shipment and storage of goods. Maturities are
generally six months or less.

CERTIFICATES OF DEPOSIT -- Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.

COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entities. Maturities on these issues vary from a few to 270 days.

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

ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. An illiquid security includes a demand
instrument with a demand notice period exceeding seven days, where there is no
secondary market for such security, and repurchase agreements with durations (or
maturities) over seven days in length.

MEDIUM TERM NOTES -- Medium term notes are periodically or continuously offered
corporate or agency debt that differs from traditionally underwritten corporate
bonds only in the process by which they are issued.

MORTGAGE-BACKED SECURITIES -- Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional thirty-year fixed rate mortgages, graduated payment
mortgages, and adjustable rate mortgages. During periods of declining interest
rates, prepayment of mortgages underlying mortgage-backed securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield of a particular issue.

GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are GNMA, FNMA and FHLMC. FNMA and FHLMC obligations are not backed
by the full faith and credit of the U.S. Government as GNMA certificates are,
but FNMA and FHLMC securities are supported by the instrumentalities' right to
borrow from the U.S. Treasury. GNMA, FNMA and FHLMC each guarantees timely
distributions of interest to certificate holders. GNMA and FNMA also each
guarantees timely distributions of scheduled principal. FHLMC has in the past
guaranteed only the ultimate collection of principal of the underlying mortgage
loan; however, FHLMC
<PAGE>
17
now issues mortgage-backed securities (FHLMC Gold PCs) which also guarantee
timely payment of monthly principal reductions. Government and private
guarantees do not extend to the securities' value, which is likely to vary
inversely with fluctuations in interest rates.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"): CMOs are debt obligations or
multiclass pass-through certificates issued by agencies or instrumentalities of
the U.S. Government or by private originators or investors in mortgage loans. In
a CMO, series of bonds or certificates are usually issued in multiple classes.
Principal and interest paid on the underlying mortgage assets may be allocated
among the several classes of a series of a CMO in a variety of ways. Each class
of a CMO, often referred to as a "tranche," is issued with a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal payments on the underlying mortgage assets may cause CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates, resulting in a loss of all or part of any premium paid.

REMICS: A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and investes in certain mortgages principally secured by
interests in real property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or "residual" interests.
Guaranteed REMIC pass-through certificates ("REMIC Certificates") issued by FNMA
or FHLMC represent beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or FNMA, FHLMC or GNMA-guaranteed mortgage
pass-through certificates. For FHLMC REMIC Certificates, FHLMC guarantees the
timely payment of interest, and also guarantees the payment of principal as
payments are required to be made on the underlying mortgage participation
certificates. FNMA REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA.

MUNICIPAL SECURITIES -- Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
operating expenses, and for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial development bonds
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair or improvement of privately operated facilities.

Municipal securities include both municipal notes and municipal bonds. Municipal
notes include general obligation notes, tax-exempt commercial paper tax
anticipation notes, revenue anticipation notes, bond anticipation notes,
certificates of indebtedness, demand notes and construction loan notes and
participation interests in municipal notes. Municipal bonds include general
obligation bonds, revenue or special obligation bonds, private activity and
industrial development bonds and participation interests in municipal bonds.

General obligation bonds are backed by the taxing power of the issuing
municipality. Revenue bonds are backed by the revenues of a project or facility
(tolls from a bridge, for example). Certificates of participation represent an
interest in an underlying obligation or commitment, such as an obligation issued
in connection with a leasing arrangement. The payment of principal and interest
on private activity and industrial development bonds generally is dependent
solely on the ability of a facility's user to meet its financial obligations and
the pledge, if any, of real and personal property as security for such payment.
<PAGE>
18

TAXABLE MUNICIPAL SECURITIES -- Taxable municipal securities are municipal
securities the interest on which is not exempt from federal income tax. Taxable
municipal securities include "private activity bonds" that are issued by or on
behalf of states or political subdivisions thereof to finance privately-owned or
operated facilities for business and manufacturing, housing, sports, and
pollution control and to finance activities of and facilities for charitable
institutions. Private activity bonds are also used to finance public facilities
such as airports, mass transit systems, ports, parking lots, and low income
housing. The payment of the principal and interest on private activity bonds is
not backed by a pledge of tax revenues, and is dependent solely on the ability
of the facility's user to meet its financial obligations, and may be secured by
a pledge of real and personal property so financed. Interest on these bonds may
not be exempt from federal income tax.

RECEIPTS -- Receipts are interests in separately traded interest and principal
component parts of U.S. Treasury obligations that are issued by banks and
brokerage firms and are created by depositing U.S. Treasury obligations into a
special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts are sold as
zero coupon securities which means that they are sold at a substantial discount
and redeemed at face value at their maturity date without interim cash payments
of interest or principal. This discount is amortized over the life of the
security and such amortization will constitute the income earned on the security
for both accounting and tax purposes. Because of these features, receipts may be
subject to greater price volatility than interest paying U.S. Treasury
obligations. See also "Taxes".

REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The custodian will hold the security as collateral
for the repurchase agreement. A Fund bears a risk of loss in the event the other
party defaults on its obligations and the Fund is delayed or prevented from
exercising its right to dispose of the collateral or if the Fund realizes a loss
on the sale of the collateral. A Fund will enter into repurchase agreements only
with financial institutions deemed to present minimal risk of bankruptcy during
the term of the agreement based on established guidelines. Repurchase agreements
are considered loans under the Investment Company Act of 1940.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS -- Investments by a money market
fund are subject to limitations imposed under regulations adopted by the
Securities and Exchange Commission. Under these regulations, money market funds
may only acquire obligations that present minimal credit risk and that are
"eligible securities," which means they are (i) rated, at the time of
investment, by at least two NRSROs organizations (one if it is the only
organization rating such obligation) in the highest rating category or, if
unrated, determined to be of comparable quality (a "first tier security"), or
(ii) rated according to the foregoing criteria in the second highest rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). A security is not considered to be unrated if its issuer has
outstanding obligations of comparable priority and securities that have a
short-term rating. In
<PAGE>
19
the case of taxable money market funds, investments in second tier securities
are subject to the further constraints in that (i) no more than 5% of a Fund's
assets may be invested in second tier securities and (ii) any investment in
securities of any one such issuer is limited to the greater of 1% of the Fund's
total assets or $1 million. A taxable money market fund may also hold more than
5% of its assets in first tier securities of a single issuer for three "business
days" (that is, any day other than a Saturday, Sunday or customary business
holiday).

RESTRICTED SECURITIES -- Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933
or an exemption from registration. Rule 144A securities are securities that have
not been registered under the Securities Act of 1933 but which may be traded
between certain institutional investors including investment companies. The
Trust's Board of Trustees is responsible for developing guidelines and
procedures for determining the liquidity of restricted securities, and for
monitoring the Advisor's implementation of the guidelines and procedures.

SECURITIES LENDING -- In order to generate additional income, a Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash, securities of the U.S.
Government or its agencies equal to at least 100% of the market value of the
securities lent. A Fund continues to receive interest on the securities lent
while simultaneously earning interest on the investment of cash collateral.
Collateral is marked to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral should the borrower of
the securities fail financially or become insolvent.

STANDBY COMMITMENTS AND PUTS -- Securities subject to standby commitments or
puts permit the holder thereof to sell the securities at a fixed price prior to
maturity. Securities subject to a standby commitment or put may be sold at any
time at the current market price. However, unless the standby commitment or put
was an integral part of the security as originally issued, it may not be
marketable or assignable; therefore, the standby commitment or put would only
have value to the Fund owning the security to which it relates. In certain
cases, a premium may be paid for a standby commitment or put, which premium will
have the effect of reducing the yield otherwise payable on the underlying
security. The Fund will limit standby commitment or put transactions to
institutions believed to present minimal credit risk.

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

TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits are considered to be illiquid
securities.

U.S. GOVERNMENT AGENCIES -- Obligations issued or guaranteed by agencies of the
U.S. Government, including, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business
<PAGE>
20
Administration, and obligations issued or guaranteed by instrumentalities of the
U.S. Government, including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal Service. Some of these
securities are supported by the full faith and credit of the U.S. Treasury
(e.g., Government National Mortgage Association securities), others are
supported by the right of the issuer to borrow from the Treasury (e.g., Federal
Farm Credit Bank securities), while still others are supported only by the
credit of the instrumentality (e.g., Fannie Mae securities). Guarantees of
principal by agencies or instrumentalities of the U.S. Government may be a
guarantee of payment at the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and thus no means of
realizing on the obligation prior to maturity. Guarantees as to the timely
payment of principal and interest do not extend to the value or yield of these
securities nor to the value of the Fund's shares.

U.S. TREASURY OBLIGATIONS -- U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS") and Coupon Under Book Entry Safekeeping
("CUBES").

VARIABLE AND FLOATING RATE INSTRUMENTS -- Certain obligations may carry variable
or floating rates of interest, and may involve a conditional or unconditional
demand feature. Such instruments bear interest at rates which are not fixed, but
which vary with changes in specified market rates or indices. The interest rates
on these securities may be reset daily, weekly, quarterly or some other reset
period, and may have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such security.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
A Fund will segregate liquid high grade debt securities or cash in an amount at
least equal to these commitments. The interest rate realized on these securities
is fixed as of the purchase date and no interest accrues to the Fund before
settlement. These securities are subject to market fluctuation due to changes in
market interest rates and it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the general level
of interest rates has changed. Although a Fund generally purchases securities on
a when-issued or forward commitment basis with the intention of actually
acquiring securities for its portfolio, a Fund may dispose of a when-issued
security or forward commitment prior to settlement if it deems appropriate.

ZERO COUPON OBLIGATIONS -- Zero coupon obligations are debt securities that do
not bear any interest, but instead are issued at a deep discount from par. The
value of a zero coupon obligation increases over time to reflect the interest
accreted. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at par and pay interest periodically.
<PAGE>
A-1

APPENDIX
X. COMMERCIAL PAPER AND SHORT-TERM RATINGS

The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Services, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff and Phelps ("Duff")
and IBCA Limited ("IBCA"), respectively.

Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+ and 1. Issues rated A-1+ are those with an "overwhelming degree" of
credit protection. Those rated A-1 reflect a "very strong" degree of safety
regarding timely payment. Those rated A-2 reflect a safety regarding timely
payment but not as high as A-1.

Commercial paper issues rated Prime-1 and Prime-2 by Moody's are judged by
Moody's to have superior ability and strong ability for repayment, respectively.

The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second
highest commercial paper rating assigned by Fitch which reflects an assurance of
timely payment only slightly less in degree than the strongest issues.

The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by ample asset protection. Risk
factors are minor. Paper rated Duff-2 is regarded as having good certainty of
timely payment, good access to capital markets and sound liquidity factors and
company fundamentals. Risk factors are small.

The designation A1 by IBCA indicates that the obligation is supported by a very
strong capacity for timely repayment. Those obligations rated A1+ are supported
by the highest capacity for timely repayment. Obligations rated A2 are supported
by a strong capacity for timely repayment, although such capacity may be
susceptible to adverse changes in business, economic or financial conditions.
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE>

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

* INVESTMENT ADVISOR

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

* DISTRIBUTOR

SEI Investments Distribution Co. Oaks, PA 19456

* ADMINISTRATOR

SEI Investments Mutual Funds Services Oaks, PA 19456

* TRANSFER AGENT

Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779

* CUSTODIAN

SunTrust Bank, Atlanta c/o STI Trust & Investment
Operations, Inc.
303 Peachtree Street N.E.
14th Floor
Atlanta, GA 30308

* LEGAL COUNSEL

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

* INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen, LLP 1601 Market Street
Philadelphia, PA 19103
</TABLE>
<PAGE>
PROSPECTUS
CORPORATE TRUST SHARES

CLASSIC INSTITUTIONAL
U.S. TREASURY SECURITIES
MONEY MARKET FUND

JUNE 1, 1999

ADVISOR TO THE FUND: TRUSCO CAPITAL MANAGEMENT, INC.
<PAGE>
CLASSIC INSTITUTIONAL U.S. TREASURY SECURITIES
MONEY MARKET FUND
CORPORATE TRUST SHARES

INVESTMENT ADVISOR TO THE FUND:
TRUSCO CAPITAL MANAGEMENT, INC.

The STI Classic Funds (the "Trust") is a mutual fund that offers shares in a
number of separate investment portfolios. This Prospectus sets forth concisely
the information about the Corporate Trust Shares of the Classic Institutional
U.S. Treasury Securities Money Market Fund (the "Fund"). THE CLASSIC
INSTITUTIONAL U.S. TREASURY SECURITIES MONEY MARKET FUND SEEKS TO MANAGE ITS
INVESTMENTS IN A MANNER CONSISTENT WITH THE CRITERIA FOR OBTAINING AN AAA RATING
BY MOODY'S INVESTORS SERVICE AND/OR AN AAA RATING BY STANDARD & POOR'S
CORPORATION. Investors are advised to read this Prospectus and retain it for
future reference.

A Statement of Additional Information relating to the Corporate Trust Shares
of the Fund dated the same date as this Prospectus has been filed with the
Securities and Exchange Commission and is available without charge through the
Distributor, SEI Investments Distribution Co., Oaks, Pennsylvania 19456 or by
calling 1-800-874-4770. The Statement of Additional Information is incorporated
into this Prospectus by reference.

JUNE 1, 1999
<PAGE>
2

Corporate Trust Shares of the Classic Institutional U.S. Treasury Securities
Money Market Fund are offered primarily to various types of institutional
investors ("Shareholders").

TABLE OF CONTENTS

<TABLE>
<S> <C>
Expense Summary...................... 3
The Trust............................ 4
The Fund and Its Investment
Objective........................... 4
Investment Policies and Strategies... 4
General Investment Policies and
Strategies.......................... 4
Investment Risks..................... 5
Investment Limitations............... 5
Performance Information.............. 5
Purchase of Fund Shares.............. 6
Redemption of Fund Shares............ 6
Dividends and Distributions.......... 7
Tax Information...................... 7
STI Classic Funds Information........ 8
The Trust............................ 8
Board of Trustees.................... 8
Investment Advisor................... 8
Banking Laws......................... 9
Distribution......................... 10
Administration....................... 10
Transfer Agent and Dividend
Disbursing Agent.................... 10
Custodian............................ 10
Legal Counsel........................ 10
Independent Public Accountants....... 10
Other Information.................... 11
Voting Rights........................ 11
Reporting............................ 11
Shareholder Inquiries................ 11
Description of Permitted
Investments......................... 11
</TABLE>
<PAGE>
3

EXPENSE SUMMARY

Below is a summary of the estimated annual operating expenses for Corporate
Trust Shares of the Fund. A hypothetical example based on the summary is also
shown. Actual expenses may vary.

ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
<S> <C>
Management Fees (after voluntary reductions)(1)............. .15%
All Other Expenses (after voluntary reductions)(2).......... .30%
- --------------------------------------------------------------------------------------
Total Operating Expenses (after voluntary reductions)(3).... .45%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>

(1) The Advisor is waiving, on a voluntary basis, a portion of its fee from each
Fund. The Advisor reserves the right to terminate its waiver at any time in
its sole discretion. Absent such waivers and reimbursements, Advisory Fees
for the Fund would be .20%. See "Investment Advisors." A person that
purchases shares through an account with a financial institution may be
charged separate fees by the financial institution.

(3) Absent the voluntary waivers described above, Total Operating Expenses for
the Funds would be .52%.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
<S> <C>
An investor would pay the following expenses on a $1,000
investment assuming:
(1) a 5% annual return and (2) redemption at the end of
each time period:
One Year................................................ $ 5
Three Years............................................. 14
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>

THE TRUST

STI CLASSIC FUNDS (the "Trust") is an open-end management investment company
that provides a convenient and economical means of investing in several
professionally managed portfolios of securities. The Trust currently offers
units of beneficial interest ("shares") in a number of separate Funds. This
Prospectus relates to Corporate Trust Shares of the Classic Institutional U.S.
Treasury Securities Money Market Fund (the "Fund") described below.

THE FUND AND ITS INVESTMENT OBJECTIVE

The Fund seeks to provide as high a level of current income as is consistent
with preservation of capital and liquidity by investing exclusively in bills,
notes and bonds issued by the U.S. Treasury and repurchase agreements ("U.S.
Treasury obligations") with approved dealers collateralized by U.S. Treasury
obligations.

It is a fundamental policy of the Fund to use its best efforts to maintain a
constant net asset value of $1.00 per share. There can be no assurance that
either Fund will achieve its investment objective or maintain a net asset value
of $1.00 per share on a continuous basis.

The Fund intends to comply with federal regulations applicable to money market
funds using the amortized cost method for calculating net asset value, which
require each Fund to invest only in U.S. dollar denominated obligations, to
maintain an average maturity on a dollar-weighted basis of 90 days or less and
to acquire eligible securities that present minimal credit risk and have a
maturity of 397 days or less. The Fund seeks to manage its investments in a
manner consistent with the criteria for obtaining an Aaa rating by Moody's
Investors Service ("Moody's") and/or an AAA rating by Standard & Poor's
Corporation ("S&P"). These requirements will also limit the Fund's ability to
generate high current income. For a further discussion of these rules, see
"Description of Permitted Investments."

INVESTMENT POLICIES AND STRATEGIES

The Fund will invest exclusively in U.S. Treasury obligations and any repurchase
agreements with dealers will be selected pursuant to guidelines adopted by the
Trust's Board of Trustees and collateralized by U.S. Treasury obligations.

GENERAL INVESTMENT POLICIES AND STRATEGIES

In the event that a security owned by the Fund is downgraded below the stated
rating categories, the Advisor will review and take appropriate action with
regard to the security.

The Fund may engage in securities lending and will limit such practice to 33
1/3% of its total assets. The Fund may not purchase additional securities while
its outstanding borrowings exceed 5% of its assets.

It is a non-fundamental policy of the Fund to invest no more than 10% of its net
assets in illiquid securities. An illiquid security is a security which cannot
be disposed of in the usual course of business within seven days at a price
approximating its carrying value.
<PAGE>
5
Rule 144A securities and Section 4(2) commercial paper that meet the criteria
established by the Board of Trustees of the Trust may be considered liquid.

For additional information regarding permitted investments, see "Description of
Permitted Investments" in this Prospectus and in the Statement of Additional
Information.

INVESTMENT RISKS
GOVERNMENT SECURITIES

Guarantees of the Fund's securities by the U.S. Government, its agencies or
instrumentalities guarantee only the payment of principal and interest on the
guaranteed securities, and do not guarantee the securities' yield or value or
the yield or value of the Fund's shares.

ZERO COUPON OBLIGATIONS

The Fund may invest, subject to its investment objective and policies, in zero
coupon obligations. Zero coupon obligations are sold at original issue discount
and do not make periodic payments. Zero coupon obligations may be subject to
greater fluctuations in value due to interest rate changes than interest bearing
obligations. The Fund will be required to include the imputed interest in zero
coupon obligations in its current income. Because each Fund distributes all of
its net investment income to Shareholders, the Fund may have to sell portfolio
securities to distribute the income attributable to these obligations and
securities at a time when the Advisor would not have chosen to sell such
obligations or securities.

INVESTMENT LIMITATIONS

The following investment limitations constitute fundamental policies of the
Fund. Fundamental policies cannot be changed with respect to the Fund without
the consent of the holders of a majority of the Fund's outstanding shares. The
term "majority of the outstanding shares" means the vote of (i) 67% or more of a
Fund's shares present at a meeting, if more than 50% of the outstanding shares
of the Fund are present or represented by proxy, or (ii) more than 50% of a
Fund's outstanding shares, whichever is less.

The Fund may not:

1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if as a result more than 5% of the total assets of
the Fund would be invested in the securities of such issuer; provided, however,
that the Fund may invest up to 25% of its assets in "first tier" securities of a
single issuer for a period of up to three business days.

2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in obligations issued or guaranteed by
the U.S. Government, its agencies and instrumentalities, repurchase agreements
involving such securities.

The foregoing percentages will apply at the time of the purchase of a security.

Additional investment limitations are set forth in the Statement of Additional
Information.

PERFORMANCE INFORMATION

From time to time the Fund may advertise its "current yield" and "effective
yield." Both yield figures are based on historical earnings and are
<PAGE>
6

not intended to indicate future performance. The "current yield" of a Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in a Fund is
assumed to be reinvested. The "effective yield" will be slightly higher than the
"current yield" because of the compounding effect of this assumed reinvestment.

PURCHASE OF FUND SHARES

Corporate Trust Shares of the Fund are offered and sold only to accounts of
various banking subsidiaries of SunTrust Banks, Inc. which are administered by
the Corporate Trust Division ("SunTrust"). Corporate Trust Shares are sold
without a sales charge. There is no minimum investment required. INSTITUTIONAL
INVESTORS INCLUDING SUBSIDIARIES OF SUNTRUST BANKS, INC. AND ITS AFFILIATES MAY
IMPOSE AN EARLIER CUT-OFF TIME FOR RECEIPT OF PURCHASE AND REDEMPTION ORDERS
DIRECTED THROUGH THEM TO ALLOW FOR PROCESSING AND TRANSMITTAL OF THE REORDERS TO
FEDERATED SERVICES COMPANY (THE "TRANSFER AGENT") FOR EFFECTIVENESS THE SAME
DAY. Cut-off times, information concerning these services and any charges will
be provided to customers by the institutional investors. Corporate Trust Shares
will be held of record by SunTrust, although customers may have or be given the
right to vote the shares depending upon the terms of their relationship with
SunTrust. Confirmations of share purchases and redemptions will be sent to
SunTrust as the shareholder of record.

Corporate Trust Shares may be purchased on days on which the New York Stock
Exchange is open for business (a "Business Day"). However, shares cannot be
purchased or redeemed for same day settlement on days the Federal Reserve is
closed.

Purchase orders for the Fund will be effective as of the Business Day received
by Federated Services Company (the "Transfer Agent") and eligible to receive
dividends declared the same day if the Transfer Agent receives the order before
3:00 p.m. Eastern time, and the Custodian receives federal funds before 4:00
p.m. Eastern time on such day. Otherwise, purchase orders for the Funds will be
effective the next Business Day provided the Custodian receives readily
available funds before 4:00 p.m. Eastern time on the next such Business Day. The
purchase price is the net asset value per share next computed after the order is
received and accepted by the Trust. The net asset value per share is calculated
as of the regularly scheduled close of normal trading on the New York Stock
Exchange (currently 4:00 p.m. Eastern time) each Business Day based on the
amortized cost method described in the Statement of Additional Information and
is expected to remain constant at $1.00 per share.

The Trust reserves the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the Trust and/or
Shareholder(s).

REDEMPTION OF FUND SHARES

An order to redeem shares must be transmitted to the Transfer Agent by SunTrust
as the record owner of shares. SunTrust may establish procedures for their
customers to request
<PAGE>
7
redemption of shares held in their account with SunTrust. Customers should
contact SunTrust for information concerning these procedures.

The Trust intends to pay cash for all shares redeemed, but under abnormal
conditions which make payment in cash unwise, payment may be made wholly or
partly in liquid portfolio securities with a market value equal to the
redemption price. In such circumstances, an investor may incur brokerage costs
in converting such securities to cash.

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income (exclusive of capital gains) of the Fund
are declared on each Business Day to Shareholders at the close of business on
the day of declaration. Net income for dividend purposes consists of: (i)
interest accrued and original issue discount earned on the Fund's assets, (ii)
plus the amortization of market discount and minus the amortization of market
premium on such assets, (iii) less accrued expenses directly attributable to the
Fund and the general expenses of the Trust prorated to the Fund on the basis of
its relative net assets. Shares begin earning dividends on the Business Day the
purchase order is effective and continue earning dividends through and including
the Business Day before the redemption order is effective. Dividends are paid
within ten Business Days after the end of each month in the form of additional
shares of the same Fund unless the Shareholder has elected prior to the date of
distribution to receive payment in cash. Such election, or any revocation
thereof, must be made in writing at least 15 days prior to the date of
distribution to the Transfer Agent and will become effective with respect to
dividends paid after its receipt. Dividends are paid within ten Business Days
after a Shareholder's complete redemption of its shares in the Fund.

TAX INFORMATION

TAX STATUS OF EACH FUND

The Fund is treated as a separate entity for federal tax purposes, and is not
combined with the Trust's other Funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies by the Internal
Revenue Code of 1986, as amended (the "Code"), so that it will be relieved of
federal income tax on that part of its net investment income and net capital
gains (the excess of long-term capital gains over net short-term capital loss)
which is distributed to Shareholders. The Fund intends to make sufficient
distributions prior to the end of each calendar year to avoid liability for the
federal excise tax applicable to regulated investment companies.
<PAGE>
8

TAX STATUS OF DISTRIBUTIONS

The Fund will each distribute all of its net investment income (including, for
this purpose, net short-term capital gains) to Shareholders. Dividends from net
investment income will be taxable to Shareholders as ordinary income whether
received in cash or in additional shares. The Fund will make annual reports to
Shareholders of the federal income tax status of all distributions. Dividends
declared by the Fund in October, November or December of any year and payable to
Shareholders of record on a date in that month will be deemed to have been paid
by the Fund and received by the Shareholders on December 31, of that year, if
paid by the Fund any time during the following January.

Income received on direct U.S. obligations is exempt from tax at the state level
when received directly by the Fund and may be exempt, depending on the state,
when received by a Shareholder provided certain state specific conditions are
satisfied. Not all states permit such income dividends to be tax-exempt and some
require that a certain minimum percentage of an investment company's income be
derived from state tax-exempt interest. The Fund will inform Shareholders
annually of the percentage of income and distributions derived from direct U.S.
obligations. Shareholders should consult their tax advisors to determine whether
any portion of the income dividends received from the Fund is considered tax
exempt in their particular states.

A sale, exchange or redemption of Fund shares is a taxable event to the
Shareholder.

STI CLASSIC FUNDS INFORMATION
THE TRUST

BOARD OF TRUSTEES

INVESTMENT ADVISOR

The Advisor is an indirect wholly-owned subsidiary of SunTrust Banks, Inc.
("SunTrust"), a bank holding company with assets of $90.8 billion as of December
31, 1998. SunTrust ranks among the ten largest U.S. banking companies. Total
discretionary assets under management with SunTrust Banks, Inc. equalled
approximately $93.2 billion as of December 31, 1998.

The Trust and the Advisor have entered into an advisory agreement (the "Advisory
Agreement"). Under the Advisory Agreement, the Advisor makes the investment
decisions for the assets of the Funds and continuously reviews, supervises and
administers each Fund's investment program. The Advisor discharges its
responsibilities subject to the supervision of, and policies established by, the
Trustees of the Trust. STI CLASSIC FUNDS ARE NOT DEPOSITS, ARE NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY, AND ARE NOT ENDORSED OR
GUARANTEED BY AND DO NOT CONSTITUTE OBLIGATIONS OF SUNTRUST BANKS, INC. OR ANY
OF ITS AFFILIATES. INVESTMENTS IN THE FUNDS INVOLVE RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL. RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE AND SHARES AT
REDEMPTION MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THERE IS NO
GUARANTEE THAT ANY STI CLASSIC FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. With
respect to the Fund, the Advisor may execute brokerage or other agency
transactions through affiliates of the Advisor.

BANKING LAWS

If current restrictions preventing a bank or its affiliates from legally
sponsoring, organizing, controlling, or distributing shares of an investment
company were relaxed, the Advisor, or its affiliates, would consider the
possibility of offering to perform additional services for STI Classic Funds. It
is not possible, of course, to predict whether or in what form such legislation
might be enacted or the terms upon which the Advisor, or such affiliates, might
offer to provide such services.

DISTRIBUTION

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments Company ("SEI Investments"), and the Trust are parties to a
distribution agreement. No compensation is paid to the Distributor for
distribution services. Corporate Trust Shares of the Fund are offered and sold
only to accounts administered by the Corporate Trust Division of SunTrust.

The Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor receives compensation.

ADMINISTRATION

SEI Investment Mutual Funds Services (the "Administrator") serves as
Administrator to the Trust. The Administrator provides the Trust with certain
administrative services, other than investment advisory services, including
regulatory reporting, all necessary office space, equipment, personnel, and
facilities.

The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate as follows:

From time to time, the Administrator may voluntarily waive all or a portion of
its fee to limit the net expenses of the Funds to the amounts in the Funds'
Expense Summary.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Services Company, Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779 is the transfer agent for the shares of the Trust and dividend
disbursing agent for the Trust.

CUSTODIAN

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as legal counsel to the Trust.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants to the Trust are Arthur Andersen LLP,
Philadelphia, Pennsylvania.
<PAGE>
11

OTHER INFORMATION
VOTING RIGHTS

REPORTING

The Trust issues unaudited financial information and audited financial
statements annually. The Trust furnishes proxy statements and other reports to
Shareholders of record.

SHAREHOLDER INQUIRIES

Shareholders may contact their financial institution's representative in order
to obtain information on account statements, procedures and other related
information.

DESCRIPTION OF PERMITTED INVESTMENTS

The following is a description of the permitted investments for the Funds.
Further discussion is contained in the Statement of Additional Information.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS -- Investments by a money market
fund are subject to limitations imposed under regulations adopted by the
Securities and Exchange Commission. Under these regulations, money market funds
may only acquire obligations that present minimal credit
<PAGE>
12
risk and that are "eligible securities," which means they are (i) rated, at the
time of investment, by at least two NRSROs organizations (one if it is the only
organization rating such obligation) in the highest rating category or, if
unrated, determined to be of comparable quality (a "first tier security"), or
(ii) rated according to the foregoing criteria in the second highest rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). A security is not considered to be unrated if its issuer has
outstanding obligations of comparable priority and securities that have a
short-term rating. In the case of taxable money market funds, investments in
second tier securities are subject to the further constraints in that (i) no
more than 5% of a Fund's assets may be invested in second tier securities and
(ii) any investment in securities of any one such issuer is limited to the
greater of 1% of the Fund's total assets or $1 million. A taxable money market
fund may also hold more than 5% of its assets in first tier securities of a
single issuer for three "business days" (that is, any day other than a Saturday,
Sunday or customary business holiday).

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
basis transactions involve the purchase
<PAGE>
13
of an instrument with payment and delivery taking place in the future. Delivery
of and payment for these securities may occur a month or more after the date of
the purchase commitment. A Fund will segregate liquid high grade debt securities
or cash in an amount at least equal to these commitments. The interest rate
realized on these securities is fixed as of the purchase date and no interest
accrues to the Fund before settlement. These securities are subject to market
fluctuation due to changes in market interest rates and it is possible that the
market value at the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has changed. Although a
Fund generally purchases securities on a when-issued or forward commitment basis
with the intention of actually acquiring securities for its portfolio, a Fund
may dispose of a when-issued security or forward commitment prior to settlement
if it deems appropriate.

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

* INVESTMENT ADVISOR

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

* DISTRIBUTOR

SEI Investments Distribution Co. Oaks, PA 19456

* ADMINISTRATOR

SEI Investments Mutual Funds Services Oaks, PA 19456

* TRANSFER AGENT

Federated Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779

* CUSTODIAN

SunTrust Bank, Atlanta c/o STI Trust & Investment
Operations, Inc.
303 Peachtree Street N.E.
14th Floor
Atlanta, GA 30308

* LEGAL COUNSEL

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

* INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen, LLP 1601 Market Street
Philadelphia, PA 19103
</TABLE>
<PAGE>

STI CLASSIC FUNDS

INVESTMENT ADVISORS:

TRUSCO CAPITAL MANAGEMENT, INC.

This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
STI Classic Funds (the "Trust") and should be read in conjunction with the
Trust's prospectuses dated May 24, 1999. Prospectuses may be obtained through
the Distributor, SEI Investments Distribution Co., One Freedom Valley Drive,
Oaks, Pennsylvania 19456.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE TRUST................................................................B-2
INVESTMENT OBJECTIVES AND POLICIES.......................................B-2
INVESTMENT PRACTICES OF THE UNDERLYING STI CLASSIC FUNDS.................B-4
DESCRIPTION OF PERMITTED INVESTMENTS.....................................B-4
INVESTMENT LIMITATIONS..................................................B-21
THE INVESTMENT ADVISOR..................................................B-22
THE ADMINISTRATOR.......................................................B-23
THE DISTRIBUTOR.........................................................B-24
THE TRANSFER AGENT......................................................B-24
THE CUSTODIAN...........................................................B-24
INDEPENDENT PUBLIC ACCOUNTANTS..........................................B-24
LEGAL COUNSEL...........................................................B-24
TRUSTEES AND OFFICERS OF THE TRUST......................................B-24
PERFORMANCE INFORMATION.................................................B-24
COMPUTATION OF YIELD....................................................B-24
CALCULATION OF TOTAL RETURN.............................................B-27
PURCHASING SHARES.......................................................B-28
REDEEMING SHARES........................................................B-29
DETERMINATION OF NET ASSET VALUE........................................B-29
TAXES...................................................................B-31
PORTFOLIO TRANSACTIONS..................................................B-31
TRADING PRACTICES AND BROKERAGE.........................................B-31
DESCRIPTION OF SHARES...................................................B-32
SHAREHOLDER LIABILITY...................................................B-32
LIMITATION OF TRUSTEES' LIABILITY.......................................B-33
YEAR 2000...............................................................B-33
5% AND 25% SHAREHOLDERS.................................................B-33
EXPERTS.................................................................B-34
APPENDIX A: FINANCIAL STATEMENTS........................................B-35
</TABLE>

May 24, 1999

<PAGE>

THE TRUST

STI Classic Funds (the "Trust") is a diversified, open-end management investment
company established under Massachusetts law as a Massachusetts business trust
under a Declaration of Trust dated January 15, 1992. The Declaration of Trust
permits the Trust to offer separate series ("funds") of units of beneficial
interest ("shares") and different classes of shares of each fund. Shareholders
at present may purchase (through financial institutions or intermediaries) Trust
Shares of the Trust's funds. Each Trust Share of each fund represents an equal
proportionate interest in that portfolio. See "Description of Shares." This
Statement of Additional Information relates to the STI Maximum Growth Portfolio,
STI Growth and Income Portfolio and STI Balanced Portfolio. These various series
are collectively referred to herein as the "Portfolios."

The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to shareholders, costs of custodial services, and registering the
shares under federal and state securities laws, pricing, insurance expenses,
litigation, and other extraordinary expenses, brokerage costs, interest charges,
taxes, and organization expenses.

INVESTMENT OBJECTIVES AND POLICIES

The Portfolios provide investors with the opportunity to pursue three distinct
asset allocation strategies implemented through investments in shares of
selected STI Classic Funds. By investing in the Portfolios, investors have the
opportunity to diversify and allocate their assets among the broad range of
funds in STI Classic Funds. The Adviser simplifies the diversification and asset
allocation process by reviewing, analyzing, selecting, monitoring, reallocating
and rebalancing each Portfolio's holdings of STI Classic Funds for investors.

The assets of each Portfolio will be allocated among underlying STI Classic
Funds in accordance with its investment objective, the Adviser's outlook for the
economy, the financial markets and the relative market valuations of the
underlying STI Classic Funds. Each Portfolio has the ability to invest its
assets allocated to a particular asset class in one or more of the underlying
STI Classic Funds, which have differing investment objectives, policies and risk
characteristics (see "Investments in Shares of the Underlying STI Classic
Funds"). The risks associated with investing in a Portfolio will vary depending
upon how the assets within its asset classes are allocated from time to time
among the underlying STI Classic Funds. Although the Portfolios currently expect
to invest in one or more of the underlying STI Classic Funds identified below,
the Adviser has the discretion to change the particular STI Classic Funds used
as underlying investments for the Portfolios. If the Adviser determines in the
future that it is in a Portfolio's best interest, the Adviser may substitute or
include other underlying STI Classic Funds, including STI Classic Funds that do
not currently exist.

STI PRIME QUALITY FUND
STI SHORT-TERM BOND FUND
STI INVESTMENT GRADE BOND FUND
STI U.S. GOVERNMENT SECURITIES FUND
STI CAPITAL APPRECIATION FUND
STI SMALL CAP GROWTH STOCK FUND
STI GROWTH AND INCOME FUND

B-2
<PAGE>

The investment objective of each Portfolio is set forth below. Each Portfolio's
objective, the asset allocation percentage ranges described below, the list of
underlying STI Classic Funds described above, and those policies identified as
non-fundamental may be changed by the Company's Board of Directors without
shareholder approval. A Portfolio's investment policies identified as
fundamental may not be changed except by approval of the majority of the
outstanding shares of that Portfolio. The Adviser will manage each Portfolio
consistent with that Portfolio's investment objective and policies. There is no
assurance that a Portfolio will achieve its investment objective.

STI MAXIMUM GROWTH PORTFOLIO

The STI Maximum Growth Portfolio seeks to provide a high level of capital
appreciation, without regard to current income. Under normal market conditions,
at least 80% of the Portfolio's total assets will be invested in shares of
underlying STI Classic Funds that invest primarily in equity securities that
seek capital appreciation. The Portfolio's remaining assets may be invested in
shares of underlying STI Classic Funds that invest primarily in fixed-income
securities, shares of underlying STI Classic Funds that are money market funds,
securities issued by the U.S. Government, its agencies or instrumentalities,
repurchase agreements and short-term paper.

In general, relative to the other Portfolios, the STI Maximum Growth Portfolio
should offer investors the potential for a high level of capital growth, and the
potential for a lower level of current income, while subjecting investors to a
medium to high level of principal risk.

STI GROWTH AND INCOME PORTFOLIO

The STI Growth and Income Portfolio seeks to provide long-term capital
appreciation, with current income as a secondary objective. Under normal market
conditions, at least 80% of the Portfolio's total assets will be invested in
shares of underlying STI Classic Funds that invest primarily in either equity
securities that seek capital appreciation, or invest primarily in fixed-income
securities that seek income. The Portfolio's remaining assets may be invested in
shares of underlying STI Classic Funds that are money market funds, securities
issued by the U.S. Government, its agencies or instrumentalities, repurchase
agreements and short-term paper.

In general, relative to the other Portfolios, the STI Growth and Income
Portfolio should offer investors the potential for a medium to high level of
capital growth and the potential for a medium level of income, while subjecting
investors to a medium level of principal risk.

STI BALANCED PORTFOLIO

The STI Balanced Portfolio seeks both capital appreciation and current income.
Under normal market conditions, the Portfolio will invest primarily in shares of
underlying STI Classic Funds that invest primarily in equity securities, but at
least 25% of the Portfolio's total assets will be invested in shares of
underlying STI Classic Funds that invest primarily in fixed-income securities.
The Portfolio's remaining assets may be invested in shares of underlying STI
Classic Funds that are money market funds, securities issued by the U.S.
Government, its agencies or instrumentalities, repurchase agreements and
short-term paper.

In general, relative to the other Portfolios, the STI Balanced Portfolio should
offer investors a balanced level of income and capital appreciation, while
subjecting investors to a lower level of principal risk.

GENERAL INVESTMENT POLICIES OF THE PORTFOLIOS

To achieve each Portfolio's investment objective, the Adviser will attempt to
identify and select a diversified portfolio of underlying STI Classic Funds. In
the selection process, the Adviser analyzes many factors, including

B-3
<PAGE>

the underlying STI Classic Funds' investment objectives, total return,
volatility and expenses. Each Portfolio invests a percentage of its assets,
within percentage ranges the Adviser believes appropriate, in select underlying
STI Classic Funds, which are separately-managed series of the Company. The
percentages will reflect the extent to which each Portfolio invests in the
particular market segment represented by each underlying fund in STI Classic
Funds, and the varying degrees of potential investment risk and reward
represented by each Portfolio's investments in those corresponding underlying
funds. These percentage ranges may change when it is appropriate in light of
each Portfolio's investment objective. Each Portfolio may invest up to 100% of
its assets in shares of the underlying STI Classic Funds. In addition, when the
Adviser deems it appropriate, for temporary defensive purposes, each Portfolio
may invest 100% of its assets directly in securities issued by the U.S.
Government or its agencies or instrumentalities, repurchase agreements,
short-term paper and shares of underlying STI Classic Funds that are money
market funds (and shares of unaffiliated money market funds, as permitted by the
SEC). To the extent that a Portfolio is engaged in temporary defensive
investing, it will not be pursuing its investment objective. When the adviser
deems it appropriate, in order to meet liquidity needs, each Portfolio may
invest its assets directly in securities issued by the U.S. Government or its
agencies or instrumentalities, repurchase agreements, short-term paper and
shares of underlying STI Classic Funds that are money market funds (and shares
of unaffiliated money market funds, as permitted by the SEC).

INVESTMENT PRACTICES OF THE UNDERLYING STI CLASSIC FUNDS

The following briefly describes the securities in which the underlying STI
Classic Funds (the "Funds") may invest and the transactions they may make. The
Funds are not limited by this discussion, however, and may purchase other types
of securities and enter into other types of transactions if they meet each
Fund's respective quality, maturity, and liquidity requirements.

Each Fund investments must be consistent with its investment objective and
policies. Accordingly, not all of the security types and investment techniques
discussed below are eligible investments for each of the Funds.

DESCRIPTION OF PERMITTED INVESTMENTS

AMERICAN DEPOSITARY RECEIPTS (ADRS), EUROPEAN DEPOSITARY RECEIPTS (EDRS) AND
GLOBAL DEPOSITARY RECEIPTS (GDRS)

ADRs, EDRs, and GDRs are securities, typically issued by a U.S. financial
institution or a non-U.S. financial institution in the case of an EDR or GDR (a
Adepositary"). The institution has ownership interests in a security, or a pool
of securities, issued by a foreign issuer and deposited with the depositary.
ADRs, EDRs and GDRs may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary. An unsponsored facility may be
established by a depositary without participation by the issuer of the
underlying security. Holders of unsponsored depositary receipts generally bear
all the costs of the unsponsored facility. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities.

ASSET-BACKED SECURITIES

B-4
<PAGE>

These securities are generally issued as pass-through certificates, which
represent undivided fractional ownership interests in the underlying pool of
assets. Asset-backed securities may also be debt obligations, which are known as
collateralized obligations and are generally issued as the debt of a special
purpose entity, such as a trust, organized solely for the purpose of owning
these assets and issuing debt obligations.

Asset-backed securities are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and, for a certain
period, by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities. The
purchase of asset-backed securities raises risk considerations peculiar to the
financing of the instruments underlying such securities. For example, there is a
risk that another party could acquire an interest in the obligations superior to
that of the holders of the asset-backed securities. There also is the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on those securities.

Asset-backed securities entail prepayment risk, which may vary depending on the
type of asset, but is generally less than the prepayment risk associated with
mortgage-backed securities. In addition, credit card receivables are unsecured
obligations of the card holder.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

BANK OBLIGATIONS

Bank obligations are short-term obligations issued by U.S. and foreign banks,
including bankers' acceptances, certificates of deposit, custodial receipts, and
time deposits. Eurodollar and Yankee Bank Obligations are U.S.
dollar-denominated certificates of deposit or time deposits issued outside the
U.S. by foreign branches of U.S. banks or by foreign banks.

COMMON AND PREFERRED STOCKS

Common and preferred stocks represent units of ownership in a corporation.
Owners of common stock typically are entitled to vote on important matters.
Owners of preferred stock ordinarily do not have voting rights, but are entitled
to dividends at a specified rate. Preferred stock has a prior claim to common
stockholders with respect to dividends.

CONVERTIBLE SECURITIES

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

CUSTODIAL RECEIPTS

The custodian arranges for the issuance of the certificates or receipts
evidencing ownership and maintains the register. Receipts include "Treasury
Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"), and
"Certificates of Accrual on Treasury Securities" ("CATS"). TRs, TIGRs and CATS
are sold as zero coupon securities.

DEBT SECURITIES

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Debt securities represent money borrowed that obligates the issuer (E.G., a
corporation, municipality, government, government agency) to repay the borrowed
amount at maturity (when the obligation is due and payable) and usually to pay
the holder interest at specific times (E.G., bonds, notes, debentures).

DELAYED DELIVERY TRANSACTIONS

These transactions involve a commitment by a Fund to purchase or sell specific
securities at a predetermined price and/or yield, with payment and delivery
taking place after a period longer than the customary settlement period for that
type of security (and more than seven days in the future). Typically, no
interest accrues to the purchaser until the security is delivered. Each money
market and bond fund may receive fees for entering into delayed delivery
transactions.

When purchasing securities on a delayed delivery basis, a Fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because a Fund is not required to pay for securities until the
delivery date, these risks are in addition to the risks associated with the
Fund's other investments. If a Fund remains substantially fully invested at a
time when delayed delivery purchases are outstanding, the delayed delivery
purchases may result in a form of leverage. When delayed delivery purchases are
outstanding, a Fund will set aside cash or other appropriate liquid assets such
as U.S. Government securities, or other high grade debt securities in a
segregated custodial account to cover its purchase obligations. When a Fund has
sold a security on a delayed delivery basis, the Fund does not participate in
further gains or losses with respect to the security. If the other party to a
delayed delivery transaction fails to deliver or pay for the securities, the
Fund could miss a favorable price or yield opportunity, or could suffer a loss.
A Fund may renegotiate delayed delivery transactions after they are entered
into, and may sell underlying securities before they are delivered, which may
result in capital gains or losses.

DOLLAR ROLLS

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

Dollar rolls may be renewed prior to cash settlement and initially may involve
only a firm commitment agreement by the Fund to buy a security.

If the broker-dealer to whom the Fund sells the security becomes insolvent, the
Fund's, right to repurchase the security may be restricted. Other risks involved
in entering into dollar rolls include the risk that the value of the security
may change adversely over the term of the dollar roll and that the security the
Fund is required to repurchase may be worth less than the security that the Fund
originally held. To avoid any leveraging concerns, the Fund will place U.S.
Government or other liquid, high grade assets in a segregated account in an
amount sufficient to cover its repurchase obligation.

THE EURO

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On January 1, 1999, the European Monetary Union (EMU) implemented a new
currency unit, the Euro, which is expected to reshape financial markets,
banking systems and monetary policies in Europe and other parts of the world.
The countries converting or tying their currencies to the Euro included
Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Ireland,
Finland, Italy, Portugal, and Spain. Financial transactions and market
information, including share quotations and company accounts, in
participating countries are denominated in Euros. Approximately 46% of the
stock exchange capitalization of the total European market may now be
reflected in Euros, and participating governments will issue their bonds in
Euros. Monetary policy for participating countries will be uniformly managed
by a new central bank, the European Central Bank (ECB).

Although it is not possible to predict the impact of the Euro implementation
plan on the Funds, the transition to the Euro may change the economic
environment and behavior of investors, particularly in European markets. For
example, investors may begin to view those countries participating in the EMU as
a single entity, and the Advisors may need to adapt investment strategies
accordingly. The process of implementing the Euro also may adversely affect
financial markets worldwide and may result in changes in the relative strength
and value of the U.S. dollar or other major currencies, as well as possible
adverse tax consequences. The transition to the Euro is likely to have a
significant impact on fiscal and monetary policy in the participating countries
and may produce unpredictable effects on trade and commerce generally. These
resulting uncertainties could create increased volatility in financial markets
world-wide.

FOREIGN SECURITIES

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Foreign securities include equity securities of foreign entities, obligations of
foreign branches of U.S. banks and of foreign banks, including, without
limitation, European Certificates of Deposit, European Time Deposits, European
Bankers' Acceptances, Canadian Time Deposits, Europaper and Yankee Certificates
of Deposit, and investments in Canadian Commercial Paper and foreign securities.
These instruments have investment risks that differ in some respects from those
related to investments in obligations of U.S. domestic issuers. Such risks
include future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible seizure,
nationalization, or expropriation of foreign deposits, the possible
establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks.

In making investment decisions for the Fund, the Advisor evaluates the risks
associated with investing Fund assets in a particular country, including risks
stemming from a country's financial infrastructure and settlement practices; the
likelihood of expropriation, nationalization or confiscation of invested assets;
prevailing or developing custodial practices in the country; the country's laws
and regulations regarding the safekeeping, maintenance and recovery of invested
assets, the likelihood of government-imposed exchange control restrictions which
could impair the liquidity of Fund assets maintained with custodians in that
country, as well as risks from political acts of foreign governments ("country
risks"). Of course, the Advisor cannot assure that the Fund will not suffer
losses resulting from investing in foreign countries.

Holding Fund assets in foreign countries through specific foreign custodians
presents additional risks, including but not limited to the risks that a
particular foreign custodian or depository will not exercise proper care with
respect to Fund assets or will not have the financial strength or adequate
practices and procedures to properly safeguard Fund assets.

By investing in foreign securities, the Funds attempt to take advantage of
differences between both economic trends and the performance of securities
markets in the various countries, regions and geographic areas as prescribed by
each Fund's investment objective and policies. During certain periods the
investment return on securities in some or all countries may exceed the return
on similar investments in the United States, while at other times the investment
return may be less than that on similar U.S. securities. Shares of the
International Equity Index, International Equity and Emerging Markets Equity
Funds, when included in appropriate amounts in a portfolio otherwise consisting
of domestic securities, may provide a source of increased diversification. The
International Equity Index, International Equity and Emerging Markets Equity
Funds seek increased diversification by combining securities from various
countries and geographic areas that offer different investment opportunities and
are affected by different economic trends. The international investments of the
International Equity Index, International Equity and Emerging Markets Equity
Funds may reduce the effect that events in any one country or geographic area
will have on its investment holdings. Of course, negative movement by a Fund's
investments in one foreign market represented in its portfolio may offset
potential gains from the Fund's investments in another country's markets.

Emerging countries are all countries that are considered to be developing or
emerging countries by the World Bank or the International Finance Corporation,
as well as countries classified by the United Nations or otherwise regarded by
the international financial community as developing. Currently, the countries
excluded from this category are Ireland, Spain, New Zealand, Australia, the
United Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada,
Germany, Denmark, the United States, Sweden, Finland, Norway, Japan, and
Switzerland.

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FORWARD FOREIGN CURRENCY CONTRACTS

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

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

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

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

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

Although futures contracts by their terms call for actual delivery or acceptance
of the underlying securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out an
open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract which has
previously been "purchased") in an identical contract to terminate the position.
Brokerage commissions are incurred when a futures contract is bought or sold.

Futures traders are required to make a good faith margin deposit in cash or
government securities with or for the account of a broker or custodian to
initiate and maintain open secondary market will exist for any particular
futures contract at any specific time. Thus, it may not be possible to close a
futures position. In the event of adverse price movements, a Fund would continue
to be required to make daily cash payments to maintain its required margin. In
such situations, if a Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Funds may be required to make
delivery of the instruments underlying the futures contracts they hold. The
inability to close options and futures positions also could have an adverse
impact on the ability to effectively hedge the underlying securities.

The risk of loss in trading futures contracts can be substantial, due both to
the low margin deposits required and the extremely high degree of leverage
involved in futures pricing. As a result, a relatively small price movement in a
futures contract may result in immediate and substantial loss (or gain) to a
Fund. For example, if at the time of purchase, 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of the
futures contract would result in a total loss of the margin deposit, before any
deduction for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin deposit if
the contract were closed out. Thus, a purchase or sale of a futures contract may
result in losses in excess of the amount invested in the contract. However,
because the Funds will be engaged in

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futures transactions only for hedging purposes, the Advisors do not believe that
the Funds will generally be subject to the risks of loss frequently associated
with futures transactions. The Funds presumably would have sustained comparable
losses if, instead of the futures contract, they had invested in the underlying
financial instrument and sold it after the decline. The risk of loss from the
purchase of options is less as compared with the purchase or sale of futures
contracts because the maximum amount at risk is the premium paid for the option.

Utilization of futures transactions by the Funds does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the Fund securities being hedged. It is also
possible that the Funds could both lose money on futures contracts and
experience a decline in value of its fund securities. There is also the risk of
loss by the Funds of margin deposits in the event of the bankruptcy of a broker
with whom the Funds have an open position in a futures contract or related
option.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some futures
traders to substantial losses.

GICS

A GIC is a general obligation of the issuing insurance company and not a
separate account. The purchase price paid for a GIC becomes part of the general
assets of the issuer, and the contract is paid at maturity from the general
assets of the issuer. Generally, GICs are not assignable or transferable without
the permission of the issuing insurance company. For this reason, an active
secondary market in GICs does not currently exist and GICs are considered to be
illiquid investments.

HIGH YIELD SECURITIES

High yield securities, commonly referred to as junk bonds, are debt obligations
rated below investment grade, I.E., below BBB by Standard & Poor's Corporation
("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's"), or their unrated
equivalents. The risks associated with investing in high yield securities
include:

(1) High yield, lower rated bonds involve greater risk of default or price
declines than investments in investment grade securities (E.G., securities
rated BBB or higher by S&P or Baa or higher by Moody's) due to changes in
the issuer's creditworthiness.

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<PAGE>

(2) The market for high risk, high yield securities may be thinner and less
active, causing market price volatility and limited liquidity in the
secondary market. This may limit the ability of a Fund to sell these
securities at their fair market values either to meet redemption requests,
or in response to changes in the economy or the financial markets.

(3) Market prices for high risk, high yield securities may also be affected
by investors' perception of the issuer's credit quality and the outlook for
economic growth. Thus, prices for high risk, high yield securities may move
independently of interest rates and the overall bond market.

(4) The market for high risk, high yield securities may be adversely
affected by legislative and regulatory developments.

HEDGING TECHNIQUES

Hedging in an investment strategy designed to offset investment risks. Hedging
activities include, among other things, the use of options and futures. There
are risks associated with hedging activities, including: (1) the success of a
hedging strategy may depend on an ability to predict movements in the prices of
individual securities, fluctuations in markets, and movements in interest rates;
(2) there may be an imperfect or no correlation between the changes in market
value of the securities held by a Fund and the prices of futures and option on
futures; (3) there may not be a liquid secondary market for a futures contract
or option; and (4) trading restrictions or limitations may be imposed by an
exchange, and government regulations may restrict trading in futures contracts
and options.

INDEXED SECURITIES

A Fund may purchase securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other
commodities, or other financial indicators. Indexed securities typically, but
not always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic.
Gold-indexed securities, for example, typically provide for a maturity value
that depends on the price of gold, resulting in a security whose price tends to
rise and fall together with gold prices.

The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed, and
may also be influenced by interest rate changes. At the same time, indexed
securities are subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities have
included banks, corporations, and certain U.S. Government agencies. Indexed
securities may be more volatile than the underlying instruments.

ILLIQUID SECURITIES

Illiquid securities are securities that cannot be disposed of within seven days
at approximately the price at which they are being carried on a Fund's books.

INVESTMENT COMPANY SHARES

The Funds may purchase shares of other mutual funds to the extent consistent
with applicable law. Investment companies typically incur fees that are separate
from those fees incurred directly by the Funds. A Fund's purchase of such
investment company securities results in the layering of expenses, such that you
would indirectly bear a proportionate share of investment company operating
expenses, such as advisory fees.

INVESTMENT GRADE OBLIGATIONS

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Investment grade obligations are debt obligations rated BBB by S&P or Baa by
Moody's, or their unrated equivalents. These securities are deemed to have
speculative characteristics.

LOAN PARTICIPATIONS

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

In the event of bankruptcy or insolvency of the corporate borrower, a loan
participation may be subject to certain defenses that can be asserted by the
borrower as a result of improper conduct by the intermediary bank. In addition,
in the event the underlying corporate borrower fails to pay principal and
interest when due, the Fund may be subject to delays, expenses, and risks that
are greater than those that would have been involved if the Fund had purchased a
direct obligation of the borrower. Under the terms of a Loan Participation, the
Fund may be regarded as a creditor of the intermediary bank (rather than of the
underlying corporate borrower), so that the Fund may also be subject to the risk
that the intermediary bank may become insolvent.

The secondary market for loan participations is limited and any such
participation purchased by the Fund may be regarded as illiquid.

MORTGAGE-BACKED SECURITIES

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

GOVERNMENT PASS-THROUGH SECURITIES

These are securities that are issued or guaranteed by a U.S. Government agency
representing an interest in a pool of mortgage loans. The primary issuers or
guarantors of these mortgage-backed securities are the Government National
Mortgage Association ("GNMA"), Fannie Mae, and the Federal Home Loan Mortgage
Corporation ("FHLMC"). Fannie Mae and FHLMC obligations are not backed by the
full faith and credit of the U.S. Government as GNMA certificates are, but
Fannie Mae and FHLMC securities are supported by the instrumentalities' right to
borrow from the U.S. Treasury. GNMA, Fannie Mae, and FHLMC each guarantees
timely distributions of interest to certificate holders. GNMA and Fannie Mae
also guarantee timely distributions of scheduled principal. In the past, FHLMC
has only guaranteed the ultimate collection of principal of the underlying
mortgage loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold
PCS) which also guarantee timely payment of monthly principal reductions.
Government and private guarantees do not extend to the securities' value, which
is likely to vary inversely with fluctuations in interest rates.

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therefore, less principal volatility than a comparable 30-year bond. Since
prepayment rates vary widely, it is not possible to accurately predict the
average maturity of a particular mortgage-backed security. The scheduled monthly
interest and principal payments relating to mortgages in the pool will be
"passed through" to investors. Government mortgage-backed securities differ from
conventional bonds in that principal is paid back to the certificate holders
over the life of the loan rather than at maturity. As a result, there will be
monthly scheduled payments of principal and interest. In addition, there may be
unscheduled principal payments representing prepayments on the underlying
mortgages. Although these securities may offer yields higher than those
available from other types of U.S. Government securities, mortgage-backed
securities may be less effective than other types of securities as a means of
"locking in" attractive long-term rates because of the prepayment feature. For
instance, when interest rates decline, the value of these securities likely will
not rise as much as comparable debt securities due to the prepayment feature. In
addition, these prepayments can cause the price of a mortgage-backed security
originally purchased at a premium to decline in price to its par value, which
may result in a loss.

PRIVATE PASS-THROUGH SECURITIES

Private pass-through securities are mortgage-backed securities issued by a
non-governmental agency, such as a trust. While they are generally structured
with one or more types of credit enhancement, private pass-through securities
generally lack a guarantee by an entity having the credit status of a
governmental agency or instrumentality. The two principal types of private
mortgage-backed securities are collateralized mortgage obligations ("CMOs") and
real estate mortgage investment conduits ("REMICs").

CMOs

CMOs are securities collateralized by mortgages, mortgage pass-throughs,
mortgage pay-through bonds (bonds representing an interest in a pool of
mortgages where the cash flow generated from the mortgage collateral pool is
dedicated to bond repayment), and mortgage-backed bonds (general obligations of
the issuers payable out of the issuers' general funds and additionally secured
by a first lien on a pool of single family detached properties). CMOs are rated
in one of the two highest categories by S&P or Moody's. Many CMOs are issued
with a number of classes or series which have different expected maturities.
Investors purchasing such CMOs are credited with their portion of the scheduled
payments of interest and principal on the underlying mortgages plus all
unscheduled prepayments of principal based on a predetermined priority schedule.
Accordingly, the CMOs in the longer maturity series are less likely than other
mortgage pass-throughs to be prepaid prior to their stated maturity. Although
some of the mortgages underlying CMOs may be supported by various types of
insurance, and some CMOs may be backed by GNMA certificates or other mortgage
pass-throughs issued or guaranteed by U.S. Government agencies or
instrumentalities, the CMOs themselves are not generally guaranteed.

REMICs

REMICs are private entities formed for the purpose of holding a fixed pool of
mortgages secured by an interest in real property. REMICs are similar to CMOs in
that they issue multiple classes of securities and are rated in one of the two
highest categories by S&P or Moody's.

Investors may purchase beneficial interests in REMICs, which are known as
"regular" interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by Fannie Mae or FHLMC represent
beneficial ownership interests in a REMIC trust consisting principally of
mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed mortgage pass-through
certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely payment
of interest. GNMA REMIC Certificates are backed by the full faith and credit of
the U.S. Government.

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STRIPPED MORTGAGE-BACKED SECURITIES

Stripped mortgage-backed securities are securities that are created when a U.S.
Government agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while the
holder of the "interest-only" security (IO) receives interest payments from the
same underlying security.

The prices of stripped mortgage-backed securities may be particularly affected
by changes in interest rates. As interest rates fall, prepayment rates tend to
increase, which tends to reduce prices of IOs and increase prices of POs. Rising
interest rates can have the opposite effect.

DETERMINING MATURITIES OF MORTGAGE-BACKED SECURITIES

Due to prepayments of the underlying mortgage instruments, mortgage-backed
securities do not have a known actual maturity. In the absence of a known
maturity, market participants generally refer to an estimated average life. The
Advisors believe that the estimated average life is the most appropriate measure
of the maturity of a mortgage-backed security. Accordingly, in order to
determine whether such security is a permissible investment for a Fund, it will
be deemed to have a remaining maturity equal to its average life as estimated by
that Fund's Advisor. An average life estimate is a function of an assumption
regarding anticipated prepayment patterns. The assumption is based upon current
interest rates, current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus different market
participants could produce somewhat different average life estimates with regard
to the same security. There can be no assurance that the average life as
estimated by an Advisor will be the actual average life.

MUNICIPAL FORWARDS

Municipal forwards are forward commitments for the purchase of tax-exempt bonds
with a specified coupon to be delivered by an issuer at a future date, typically
exceeding 45 days but normally less than one year after the commitment date.
Municipal forwards are normally used as a refunding mechanism for bonds that may
only be redeemed on a designated future date (see "When-Issued Securities and
Municipal Forwards" for more information).

MUNICIPAL LEASE OBLIGATIONS

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

MUNICIPAL SECURITIES

MUNICIPAL BONDS

Municipal bonds include general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds and participation
interests in municipal bonds. General obligation bonds are backed by the taxing
power of the issuing municipality. Revenue bonds are backed by the revenues of a
project or facility (for example, tolls from a bridge). Certificates of
participation represent an interest in an underlying obligation or commitment,
such as an obligation issued in connection with a leasing arrangement. The
payment of principal and interest on private activity and industrial development
bonds generally is totally dependent on

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the ability of a facility's user to meet its financial obligations and the
pledge, if any, of real and personal property as security for the payment.

MUNICIPAL NOTES

Municipal notes consist of general obligation notes, tax anticipation notes
(notes sold to finance working capital needs of the issuer in anticipation of
receiving taxes on a future date), revenue anticipation notes (notes sold to
provide needed cash prior to receipt of expected non-tax revenues from a
specific source), bond anticipation notes, certificates of indebtedness, demand
notes and construction loan notes. A Fund's investments in any of the notes
described above will be limited to those obligations (i) where both principal
and interest are backed by the full faith and credit of the United States, (ii)
which are rated MIG-2 or V-MIG-2 at the time of investment by Moody's, (iii)
which are rated SP-2 at the time of investment by S&P, or (iv) which, if not
rated by S&P or Moody's, are in the Advisor's judgement, of at least comparable
quality to MIG-2, VMIG-2 or SP-2.

Municipal bonds must be rated at least BBB or better by S&P or at least Baa or
better by Moody's at the time of purchase for the Tax-Exempt Bond Funds or in
one of the two highest short-term rating categories by S&P or Moody's for the
Tax-Exempt Money Market Funds or, if not rated by S&P or Moody's, must be deemed
by the Advisor to have essentially the same characteristics and quality as bonds
having the above ratings. A Fund may purchase industrial development and
pollution control bonds if the interest paid is exempt from Federal income tax.
These bonds are issued by or on behalf of public authorities to raise money to
finance various privately-operated facilities for business and manufacturing,
housing, sports and pollution control. These bonds are also used to finance
public facilities such as airports, mass transit systems, ports and parking. The
payment of the principal and interest on such bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and the pledge,
if any, of real and personal property so financed as security for such payment.

OTHER TYPES OF TAX-EXEMPT INSTRUMENTS which are permissible investments include
floating rate notes. Investments in such floating rate instruments will normally
involve industrial development or revenue bonds which provide that the rate of
interest is set as a specific percentage of a designated base rate (such as the
prime rate) at a major commercial bank, and that the Fund can demand payment of
the obligation at all times or at stipulated dates on short notice (not to
exceed 30 days) at par plus accrued interest. Such obligations are frequently
secured by letters of credit or other credit support arrangements provided by
banks. The quality of the underlying credit or of the bank, as the case may be,
must, in the Advisor's opinion be equivalent to the long-term bond or commercial
paper ratings stated above. The Advisor will monitor the earning power, cash
flow and liquidity ratios of the issuers of such instruments and the ability of
an issuer of a demand instrument to pay principal and interest on demand. The
Funds may also purchase participation interests in municipal securities (such as
industrial development bonds and municipal lease/purchase agreements). A
participation interest gives a Fund an undivided interest in the underlying
municipal security. If it is unrated, the participation interest will be backed
by an irrevocable letter of credit or guarantee of a credit-worthy financial
institution or the payment obligations otherwise will be collateralized by U.S.
Government securities. Participation interests may have fixed, variable or
floating rates of interest and may include a demand feature. A participation
interest without a demand feature or with a demand feature exceeding seven days
may be deemed to be an illiquid security subject to the Funds' investment
limitations restricting their purchases of illiquid securities. A Fund may
purchase other types of tax-exempt instruments as long as they are of a quality
equivalent to the bond or commercial paper ratings stated above.

Opinions relating to the validity of municipal securities and to the exemption
of interest thereon from federal income tax are rendered by bond counsel to the
respective issuers at the time of issuance. Neither the Funds nor an Advisor
will review the proceedings relating to the issuance of municipal securities or
the basis for such opinions.

B-15
<PAGE>

OPTIONS

A Fund may write call options on a covered basis only, and will not engage in
option writing strategies for speculative purposes. A call option gives the
purchaser of such option the right to buy, and the writer, in this case the
Fund, the obligation to sell the underlying security at the exercise price
during the option period. The advantage to the Funds of writing covered calls is
that the Funds receive a premium which is additional income. However, if the
security rises in value, the Funds may not fully participate in the market
appreciation.

During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction is one in which the Fund, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written.

A closing purchase transaction cannot be effected with respect to an option once
the option writer has received an exercise notice for such option.

Closing purchase transactions will ordinarily be effected to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
to permit the sale of the underlying security or to enable a Fund to write
another call option on the underlying security with either a different exercise
price or expiration date or both. A Fund may realize a net gain or loss from a
closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security.

If a call option expires unexercised, a Fund will realize a short-term capital
gain in the amount of the premium on the option, less the commission paid. Such
a gain, however, may be offset by depreciation in the market value of the
underlying security during the option period. If a call option is exercised, a
Fund will realize a gain or loss from the sale of the underlying security equal
to the difference between the cost of the underlying security, and the proceeds
of the sale of the security plus the amount of the premium on the option, less
the commission paid.

The market value of a call option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the price volatility of the underlying
security, and the time remaining until the expiration date.

The Fund will write call options only on a covered basis, which means that a
Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected, a
Fund would be required to continue to hold a security which it might otherwise
wish to sell, or deliver a security it would want to hold. Options written by
the Funds will normally have expiration dates between one and nine months from
the date written. The exercise price of a call option may be below, equal to, or
above the current market value of the underlying security at the time the option
is written.

OTHER INVESTMENTS

B-16
<PAGE>

The Funds are not prohibited from investing in bank obligations issued by
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Administrator and the Distributor. The purchase of Fund shares by these
banks or their customers will not be a consideration in deciding which bank
obligations the Fund will purchase. The Funds will not purchase obligations
issued by the Advisors.

PAY-IN-KIND SECURITIES

Pay-In-Kind securities are debt obligations or preferred stock, that pay
interest or dividends in the form of additional debt obligations or preferred
stock.

REPURCHASE AGREEMENTS

Repurchase agreements are agreements by which a person (E.G., a Fund) obtains a
security and simultaneously commits to return the security to the seller (a
primary securities dealer as recognized by the Federal Reserve Bank of New York
or a national member bank as defined in Section 3(d)(1) of the Federal Deposit
Insurance Act, as amended) at an agreed upon price (including principal and
interest) on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is, in
effect, secured by the value of the underlying security.

Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Advisors monitor
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the appropriate Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, a Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
the sale including accrued interest are less than the resale price provided in
the agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and required to return
the underlying security to the seller's estate.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS

B-17
<PAGE>

Investments by a money market fund are subject to limitations imposed under
regulations adopted by the SEC. Under these regulations, money market funds may
only acquire obligations that present minimal credit risk and that are "eligible
securities," which means they are (i) rated, at the time of investment, by at
least two nationally recognized security rating organizations (one if it is the
only organization rating such obligation) in the highest rating category or, if
unrated, determined to be of comparable quality (a "first tier security"), or
(ii) rated according to the foregoing criteria in the second highest rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). A security is not considered to be unrated if its issuer has
outstanding obligations of comparable priority and security that have a
short-term rating. In the case of taxable money market funds, investments in
second tier securities are subject to the further constraints in that (i) not
more than 5% of a Fund's assets may be invested in second tier securities and
(ii) any investment in securities of any one such issuer is limited to the
greater of 1% of a Fund's total assets or $1 million. A taxable money market
fund may also hold more than 5% of its assets in first tier securities of a
single issuer for three "business days" (That is, any day other than a Saturday,
Sunday or customary business holiday).

RESTRICTED SECURITIES

Restricted securities are securities that may not be sold to the public without
registration under the Securities Act of 1933 (the "1933 Act") or an exemption
from registration. Permitted investments for the Funds include restricted
securities, and each such Fund may invest up to 15% of its net assets (10% for
the Money Market Funds) in illiquid securities, subject to each Fund's
investment limitations on the purchase of illiquid securities. Restricted
securities, including securities eligible for re-sale under 1933 Act Rule 144A,
that are determined to be liquid are not subject to this limitation. This
determination is to be made by a Fund's Advisor pursuant to guidelines adopted
by the Board of Trustees. Under these guidelines, the particular Advisor will
consider the frequency of trades and quotes for the security, the number of
dealers in, and potential purchasers for, the securities, dealer undertakings to
make a market in the security, and the nature of the security and of the
marketplace trades. In purchasing such Restricted Securities, each Advisor
intends to purchase securities that are exempt from registration under Rule 144A
under the 1933 Act.

REVERSE REPURCHASE AGREEMENTS

In a reverse repurchase agreement a Fund sells a portfolio instrument to
another party, such as a bank or broker-dealer, in return for cash and agrees
to repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, a Fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under the
agreement. A Fund will enter into reverse repurchase agreements only with
parties whose creditworthiness has been found satisfactory by the Adviser.
Such transactions may increase fluctuations in the market value of a Fund's
assets and may be viewed as a form of leverage.

SECURITIES LENDING

Each Fund may lend securities pursuant to agreements which require that the
loans be continuously secured by collateral at all times equal to 100% of the
market value of the loaned securities which consists of: cash, securities of the
U.S. Government or its agencies, or any combination of cash and such securities.
Such loans will not be made if, as a result, the aggregate amount of all
outstanding securities loans for

B-18
<PAGE>

a Fund exceed one-third of the value of a Fund, total assets taken at fair
market value. A Fund will continue to receive interest on the securities lent
while simultaneously earning interest on the investment of the cash collateral
in U.S. Government securities. However, the Fund will normally pay lending fees
to such broker-dealers and related expenses from the interest earned on invested
collateral. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans are made only to borrowers deemed by the appropriate Advisor to be of good
standing and when, in the judgment of that Advisor, the consideration which can
be earned currently from such securities loans justifies the attendant risk. Any
loan may be terminated by either party upon reasonable notice to the other
party. The Funds may use the Distributor or a broker-dealer affiliate of an
Advisor as a broker in these transactions.

SHORT-TERM OBLIGATIONS

Short-term obligations are debt obligations maturing (becoming payable) in 397
days or less, including commercial paper and short-term corporate obligations.
Short-term corporate obligations are short-term obligations issued by
corporations.

STANDBY COMMITMENTS AND PUTS

The Funds may purchase securities at a price which would result in a yield to
maturity lower than that generally offered by the seller at the time of purchase
when they can simultaneously acquire the right to sell the securities back to
the seller, the issuer or a third party (the "writer") at an agreed-upon price
at any time during a stated period or on a certain date. Such a right is
generally denoted as a "standby commitment" or a "put." The purpose of engaging
in transactions involving puts is to maintain flexibility and liquidity to
permit the Funds to meet redemptions and remain as fully invested as possible in
municipal securities. The Funds reserve the right to engage in put transactions.
The right to put the securities depends on the writer's ability to pay for the
securities at the time the put is exercised. A Fund would limit its put
transactions to institutions which the Advisor believes present minimal credit
risks, and the Advisor would use its best efforts to initially determine and
continue to monitor the financial strength of the sellers of the options by
evaluating their financial statements and such other information as is available
in the marketplace. It may, however be difficult to monitor the financial
strength of the writers because adequate current financial information may not
be available. In the event that any writer is unable to honor a put for
financial reasons, a Fund would be a general creditor (I.E., on a parity with
all other unsecured creditors) of the writer. Furthermore, particular provisions
of the contract between the Fund and the writer may excuse the writer from
repurchasing the securities; for example, a change in the published rating of
the underlying securities or any similar event that has an adverse effect on the
issuer's credit or a provision in the contract that the put will not be
exercised except in certain special cases, for example, to maintain portfolio
liquidity. The Fund could, however, at any time sell the underlying portfolio
security in the open market or wait until the portfolio security matures, at
which time it should realize the full par value of the security.

The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Fund.
Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could, of course, sell the portfolio
security. The maturity of the underlying security will generally be different
from that of the put. There will be no limit to the percentage of portfolio
securities that the Fund may purchase subject to a standby commitment or put,
but the amount paid directly or indirectly for all standby commitments or
puts which are not integral parts of the security as originally issued held
in the Fund will not exceed 1/2 of 1% of the value of the total assets of
such Fund calculated immediately after any such put is acquired.

B-19
<PAGE>

STRIPS

Separately Traded Interest and Principal Securities ("STRIPS") are component
parts of U.S. Treasury Securities traded through the Federal Book-Entry System.
An Advisor will only purchase STRIPS that it determines are liquid or, if
illiquid, do not violate the affected Fund's investment policy concerning
investments in illiquid securities. Consistent with Rule 2a-7 under the
Investment Company Act of 1940, as amended, (the "1940 Act"), the Money Market
Funds' Advisor will only purchase STRIPS for Money Market Funds that have a
remaining maturity of 397 days or less; therefore, the Money Market Funds
currently may only purchase interest component parts of U.S. Treasury
securities. While there is no limitation on the percentage of a Fund's assets
that may be comprised of STRIPS, the Money Market Funds' Advisor will monitor
the level of such holdings to avoid the risk of impairing shareholders'
redemption rights and of deviations in the value of shares of the Funds.

SUPRANATIONAL AGENCY OBLIGATIONS

Supranational agency obligations are obligations of supranational entities
established through the joint participation of several governments, including
the Asian Development Bank, Inter-American Development Bank, International Bank
for Reconstruction and Development (also known as the "World Bank"), African
Development Bank, European Economic Community, European Investment Bank, and the
Nordic Investment Bank.

SWAPS, CAPS, FLOORS, COLLARS

Swaps, caps, floors and collars are hedging tools designed to permit the
purchaser to preserve a return or spread on a particular investment or portion
of its portfolio. They are also used to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date. In a
typical interest rate swap, one party agrees to make regular payments equal to a
floating interest rate times a "notional principal amount." This is done in
return for payments equal to a fixed rate times the same amount, for a specific
period of time. If a swap agreement provides for payment in different
currencies, the parties might agree to exchange the notional principal amount as
well. Swaps may also depend on other prices or rates, such as the value of an
index or mortgage prepayment rates.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances. This is usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specific interest rate exceeds an
agreed-upon level. Meanwhile, the seller of an interest rate floor is obligated
to make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.

Swap agreements are subject to risks related to the counterparty's ability to
perform, and may decline in value if the counterparty's creditworthiness
deteriorates. The Fund may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation the Fund may have under these types of arrangements
will be covered by setting aside liquid high-grade securities in a segregated
account. The Fund will enter into swaps only with counterparties believed to be
creditworthy.

B-20
<PAGE>

TENDER OPTION BONDS

Tender Option Bonds are created by coupling an intermediate or long-term
tax-exempt bond (generally held pursuant to a custodial agreement) with a tender
agreement that gives the holder the option to tender the bond at its face value.
As consideration for providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees equal to
the difference between the bond's fixed coupon rate and the rate (determined by
a remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After payment
of the tender option fee, a Fund effectively holds a demand obligation that
bears interest at the prevailing short-term tax-exempt rate. Subject to
applicable regulatory requirements, the money market Funds may buy tender option
bonds if the agreement gives a Fund the right to tender the bond to its sponsor
no less frequently than once every 397 days. In selecting tender option bonds
for the Funds, the Adviser will, pursuant to procedures established by the Board
of Directors, consider the creditworthiness of the issuer of the underlying
bond, the custodian, and the third party provider of the tender option. In
certain instances, a sponsor may terminate a tender option if, for example, the
issuer of the underlying bond defaults on interest payments.

TIME DEPOSITS

Time deposits are non-negotiable deposits in a banking institution earning a
specified interest rate over a given period of time. Time deposits with a
maturity of seven business days or more are considered illiquid.

U.S. GOVERNMENT AGENCY OBLIGATIONS

U.S. Government agency obligations are obligations issued or guaranteed by
agencies or instrumentalities of the U.S. Government. Agencies of the United
States Government which issue obligations consist of, among others, the Export
Import Bank of the United States, Farmers Home Administration, Federal Farm
Credit Bank, Federal Housing Administration, Government National Mortgage
Association ("GNMA"), Maritime Administration, Small Business Administration and
The Tennessee Valley Authority. Obligations of instrumentalities of the United
States Government include securities issued by, among others, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Intermediate
Credit Banks, Federal Land Banks, Fannie Mae and the United States Postal
Service as well as government trust certificates. Some of these securities are
supported by the full faith and credit of the United States Treasury, others are
supported by the right of the issuer to borrow from the Treasury and still
others are supported only by the credit of the instrumentality. Guarantees of
principal by agencies or instrumentalities of the U.S. Government may be a
guarantee of payment at the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and thus no means of
realizing the value of the obligation prior to maturity.

U.S. TREASURY OBLIGATIONS

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

VARIABLE AND FLOATING RATE SECURITIES

Variable and floating rate instruments involve certain obligations that may
carry variable or floating rates of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly, or
some other reset period, and may have a set floor or ceiling on interest rate
changes. There is a risk that the current interest rate on such obligations may
not accurately reflect

B-21
<PAGE>

existing market interest rates. A demand instrument with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such security.

VARIABLE RATE MASTER DEMAND NOTES

Variable rate master demand notes permit the investment of fluctuating amounts
at varying market rates of interest pursuant to direct arrangements between a
Fund, as lender, and a borrower. Such notes provide that the interest rate on
the amount outstanding varies on a daily, weekly or monthly basis depending upon
a stated short-term interest rate index. Both the lender and the borrower have
the right to reduce the amount of outstanding indebtedness at any time. There is
no secondary market for the notes and it is not generally contemplated that such
instruments will be traded. The quality of the note or the underlying credit
must, in the opinion of the appropriate Advisor, be equivalent to the ratings
applicable to permitted investments for the particular Fund. The appropriate
Advisor will monitor on an ongoing basis the earning power, cash flow and
liquidity ratios of the issuers of such instruments and will similarly monitor
the ability of an issuer of a demand instrument to pay principal and interest on
demand. Variable rate master demand notes may or may not be backed by bank
letters of credit.

WARRANTS

Warrants give holders the right, but not the obligation, to buy shares of a
company at a given price, usually higher than the market price, during a
specified period.

WHEN-ISSUED SECURITIES AND MUNICIPAL FORWARDS

When-issued securities are securities that are delivered and paid for normally
within 45 days after the date of commitment to purchase. Municipal forwards call
for delivery of the underlying municipal security normally after 45 days but
before one year after the commitment date.

Although a Fund will only make commitments to purchase when-issued securities
and municipal forwards with the intention of actually acquiring the securities,
a Fund may sell them before the settlement date. When-issued securities are
subject to market fluctuation, and accrue no interest to the purchaser during
this pre-settlement period. The payment obligation and the interest rate that
will be received on the securities are each fixed at the time the purchaser
enters into the commitment. Purchasing municipal forwards and when-issued
securities entails leveraging and can involve a risk that the yields available
in the market when the delivery takes place may actually be higher than those
obtained in the transaction itself. In that case, there could be an unrealized
loss at the time of delivery.

Segregated accounts will be established with the appropriate custodian, and a
Fund will maintain high quality, liquid assets in an amount at least equal in
value to its commitments to purchase when-issued securities and municipal
forwards. If the value of these assets declines, the Fund will place additional
liquid assets in the account on a daily basis so that the value of the assets in
the account is equal to the amount of such commitments.

ZERO COUPON OBLIGATIONS

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

B-22
<PAGE>

Investors will receive written notification at least thirty days prior to any
change in a Fund's investment objective. The phrase "principally invests" as
used in the prospectus means that the Fund invests at least 65% of its assets in
the securities as described in the sentence. Each tax-exempt fund invests at
least 80% of its total assets in securities with income exempt from federal
income and alternative minimum taxes.

INVESTMENT LIMITATIONS

The following are fundamental policies of each Portfolio and cannot be changed
with respect to a Portfolio without the consent of the holders of a majority of
that Portfolio's outstanding shares. The term "majority of the outstanding
shares" means the vote of (i) 67% or more of a Portfolio's shares present at a
meeting, if more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of a Portfolio's outstanding shares,
whichever is less.

A Fund may not:

1 Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities or securities issued by investment companies) if, as a
result, more than 5% of the total assets of a Fund would be invested in
the securities of such issuer; provided, however, that a Fund may invest
more than 25% of its assets without regard to this restrictions
permitted by applicable law.

2. Borrow money, except that a Portfolio (a) may borrow money for temporary
or emergency purposes in an amount not exceeding 5% of the Portfolio's
total assets determined at the time of the borrowing and (b) may borrow
money from banks or by engaging in reverse repurchase agreements. Asset
coverage of at least 300% is required for all borrowings, except where a
Portfolio has borrowed money for temporary purposes in amounts not
exceeding 5% of its total assets;

3. Underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the
Securities Act of 1933 (the "Securities Act") in the disposition of
restricted securities;

4. Issue senior securities (as defined in the 1940 Act), except as
permitted by rule, regulation or order of the Securities and Exchange
Commission (the "SEC");

B-23
<PAGE>

5. Purchase the securities of any issuer (other than securities issuued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities or securities issued by investment companies) if, as a
result, more than 25% of the Portfolio's total assets would be invested
in the securities of companies whose principal business activities are
in the same industry. In addition, each Portfolio may not invest more
than 25% of its assets inunderlying STI Classic Fund that, as a matter
of policy, concentrate their assets in any one industry. However, a
Portfolio may indirectly invest more than 25% of its total assets in one
industry through its investments in the underlying STI Classic Funds.
Each Portoflio may invest up to 100% of its assets in securities issued
by investment companies;

6. Purchase or sell real estate, unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent a
Portfolio from investing in securities or other instruments either
issued by companies that invest in real estate, backed by real estate or
securities of companies engaged in the real estate business);

7. Purchase or sell physical commodities, unless acquired as a result of
ownership of securities or other instruments; and

B-24
<PAGE>

8. Lend any security or make any other loan, except as permitted by the
1940 Act.

NON-FUNDAMENTAL POLICIES

No Portfolio may purchase or hold illiquid securities, I.E., securities that
cannot be disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in more
than seven days) if, in the aggregate, more than 15% of its net assets would be
invested in illiquid securities.

Each Portfolio does not currently intend to purchase securities on margin,
except that a Portfolio may obtain such short-term credits as are necessary for
the clearance of transactions.

Each Portfolio does not currently intend to sell securities short.

Each fund does not currently intend to purchase or sell futures contracts or put
or call options.

Each Portfolio may not invest in shares of unaffiliated money market funds,
except as permitted by the SEC.

B-25
<PAGE>

With the exception of the limitations on liquidity standards, the foregoing
percentages will apply at the time of the purchase of a security and shall not
be considered violated unless an excess occurs or exists immediately after and
as a result of a purchase of such security.

THE INVESTMENT ADVISOR

The Trust and Trusco Capital Management, Inc. (the "Advisor") has entered
into an advisory agreement with the Trust (the "Advisory Agreement"). The
Advisor is an indirect wholly-owned subsidiary of SunTrust Banks, Inc.
("SunTrust"). SunTrust is a bank holding company with assets of $93.2 billion
as of December 31, 1998. The Advisory Agreement provides that the Advisor
shall not be protected against any liability to the Trust or its Shareholders
by reason of willful misfeasance, bad faith or gross negligence on its part
in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.

The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of any fund (including amounts payable to an Advisor but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by certain states, the Advisor and/or the
Administrator will bear the amount of such excess. The Advisor will not be
required to bear expenses of the Trust to an extent which would result in a
Portfolio's inability to qualify as a regulated investment company under
provisions of the Internal Revenue Code.

The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to each
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. Each Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Portfolios, by a majority of the outstanding shares of the
Portfolios, on not less than 30 days' nor more than 60 days' written notice to
the Advisor, or by the Advisor on 90 days' written notice to the Trust.

Crestar Asset Management Company served as the Adviser to the predecessors of
the Life Vision Balanced, Life Vision Growth and Income, and Life Vision Maximum
Growth Portfolios.

For the fiscal years ended November 30, 1998, and 1997, the Portfolios paid the
following advisory fees:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
FEES PAID FEES WAIVED OR REIMBURSED
---------------------------------------------------------------------------------
FUND 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Life Vision Balanced Portfolio $233,180 $ 93,141 $ 119,987 $ 48,499
- ----------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and Income Portfolio $ 53,342 $ 22,542 $ 32,109 $ 13,685
- ----------------------------------------------------------------------------------------------------------------------------
Life Vision Maximum Growth Portfolio $ 39,508 $ 13,269 $ 25,574 $ 9,042
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

B-26
<PAGE>

BANKING LAWS

Current interpretations of federal banking laws and regulations:

- - prohibit SunTrust and the Advisor from sponsoring, organizing,
controlling, or distributing the Portfolios' shares; but

- - do not prohibit SunTrust or the Advisor generally from acting as an
investment advisor, transfer agent, or custodian to the Portfolios or
from purchasing Fund shares as agent for and upon the order of a
customer.

The Advisor believes that it may perform advisory and related services for
the Trust without violating applicable banking laws or regulations. However,
the legal requirements and interpretations about the permissible activities
of banks and their affiliates may change in the future. These changes could
prevent the Advisor from continuing to perform services for the Trust. If
this happens, the Board of Trustees would consider selecting other qualified
firms. Shareholders would approve any new investment advisory agreements
would be subject to Shareholder approval.

If current restrictions on bank activities with mutual funds were relaxed,
the Advisor, or its affiliates, would consider performing additional services
for the Trust. We cannot predict whether these changes will be enacted. We
also cannot predict the terms that the Advisors, or their affiliates, might
offer to provide additional services.

THE ADMINISTRATOR

The Trust and SEI Investments Mutual Funds Services (the "Administrator") are
parties to the Administration Agreement. The Administration Agreement provides
that the Administrator shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust in connection with the matters to
which the Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Administrator in
the performance of its duties or from reckless disregard by it of its duties and
obligations thereunder. The Administration Agreement shall remain in effect for
a period of five years after the date of the Agreement and shall continue in
effect for successive periods of two years subject to review at least annually
by the Trustees of the Trust unless terminated by either party on not less than
ninety days' written notice to the other party.

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator.
SEI Investments and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers. The Administrator
and its affiliates also serve as administrator or sub-administrator to the
following other mutual funds: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Monitor Funds, The Nevis Fund,
Inc., Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
International Trust, SEI Institutional International Investments Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Variable Trust, TIP Funds and Alpha Select Funds.

B-27
<PAGE>

average aggregate net assets, .07% of the next $3 billion of average
aggregate net assets, .065% of the next $2 billion of average aggregate net
assets, and .06% thereafter.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI, and the Trust have entered into a distribution agreement (the
"Distribution Agreement") dated May 29, 1992. Under the Distribution Agreement,
the Distributor must use all reasonable efforts, consistent with its other
business, in connection with the continuous offering of Shares of the Trust. The
Distributor will receive no compensation for distribution of Trust Shares.

THE TRANSFER AGENT

Federated Services Company, Federated Investors Tower, Pittsburgh, PA 15222-3779
serves as the Trust's transfer agent.

THE CUSTODIAN

SunTrust Bank, Atlanta, 303 Peachtree Street N.E., 14th Floor, Atlanta, GA
30308 serves as the custodian for the all of the Portfolios.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP serves as independent public accountants for the Trust.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as legal counsel to the Trust.

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees supervise the management and affairs of the Trust. The Trustees
have approved contracts with certain companies that provide the Trust with
essential management services. The Trustees and Executive Officers of the
Trust, their respective dates of birth, and their principal occupations for
the last five years are set forth below. Each may have held other positions
with the named companies during that period. The business address of each
Trustee and each Executive Officer is SEI Investments Company, Oaks,
Pennsylvania 19456. Certain officers of the Trust also serve as officers of
some or all of the following: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Monitor Funds, Morgan Grenfell
Investment Trust, The Nevis Fund, Inc., Oak Associates Funds, The PBHG Funds,
Inc., PBHG Advisor Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds,
SEI Institutional International Trust, SEI

B-28
<PAGE>

Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Variable Trust, TIP Funds and
Alpha Select Funds, each of which is an open-end management investment company
managed by SEI Fund Management or its affiliates and, except for PBHG Advisor
Funds, Inc., are distributed by SEI Investments Distribution Co.

DANIEL S. GOODRUM (7/11/26) - Trustee* - Chairman & CEO, SunBank/South Florida,
N.A., 1985-1991; Chairman Audit Committee and Director, Holy Cross Hospital;
Executive Committee Member and Director, Honda Classic Foundation; Director,
Broward Community College Foundation.

WILTON LOONEY (4/18/19) - Trustee* - President of Genuine Parts Company,
1961-1964; Chairman of the Board, 1964-1990; Honorary Chairman of the Board,
1990 to present. Director, Rollins, Inc.; Director, RPC Energy Services, Inc.

CHAMPNEY A. MCNAIR (10/30/24) - Trustee* - Director and Chairman of Investment
Committee and member of Executive Committee, Cotton States Life and Health
Insurance Company; Director and Chairman of Investment Committee and member of
Executive Committee, Cotton States Mutual Insurance Company; Chairman, Trust
Company of Georgia Advisory Council.

F. WENDELL GOOCH (12/3/32) - Trustee - Retired. President, Orange County
Publishing Co., Inc., 1981-1997, publisher of the Paoli News and the Paoli
Republican and Editor of the Paoli Republican, 1981-1997, President, H & W
Distribution, Inc., 1984-1997. Current Trustee on the Board of Trustees for the
SEI Family of Funds and The Capitol Mutual Funds. Executive Vice President,
Trust Department, Harris Trust and Savings Bank and Chairman of the Board of
Directors of The Harris Trust Company of Arizona before January 1981.

T. GORDY GERMANY (11/28/25) -Trustee - Retired President, Chairman, and CEO of
Crawford & Company; held these positions, 1973-1987. Member of the Board of
Directors, 1970-1990, joined company in 1948; spent entire career at Crawford,
currently serves on Boards of Norrell Corporation and Mercy Health Services, the
latter being the holding company of St. Joseph's Hospitals.

DR. BERNARD F. SLIGER (9/30/24) - Trustee - Director, Stavros Center for
Economic Education, Florida State University, 1991-present. President of Florida
State University, 1976-91; previous four years EVP and Chief Academic Officer.
During educational career, taught at Florida State, Michigan State, Louisiana
State and Southern University. Spent 19 years as faculty member and
administrator at Louisiana State University and served as Head of Economics
Department, member and Chairman of the Graduate Council, Dean of Academic
Affairs and Vice Chancellor. Member of Board of Directors of Federal Reserve
Bank of Atlanta, 1983-1988.

JONATHAN T. WALTON (3/28/30) - Trustee - Retired. Executive Vice President,
NBD Bank, N.A. and NBD Bancorp, October 1956 to March 1995. Trustee, W.K.
Kellogg Trust.

WILLIAM H. CAMMACK (11/24/29) - Trustee* - Chairman & Director, SunTrust
Equitable Securities Corporation, January, 1998-present. Chairman and CEO,
Equitable Asset Management, Inc., December 1993-present. Chairman & CEO,
Equitable Trust Company, June 1991-present. Chairman, Equitable Securities
Corporation, July 1972 - January 1998.

MARK NAGLE (10/20/59) - President, Controller, and Chief Executive Officer
- -Vice President and Controller, Funds Accounting since 1996. Vice President
of the Administrator and Distributor since 1996. Vice President of Fund
Accounting - BISYS Fund Services 1995-1996. Senior Vice President - Fidelity
Investments 1981-1995.

B-29
<PAGE>

TODD CIPPERMAN (2/14/66) - Vice President, Assistant Secretary - Vice President
and Assistant Secretary of the Administrator and the Distributor since 1995.
Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston & Strawn
(law firm), 1991-1994.

LYDIA A. GAVALIS (6/5/64) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor
since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange, 1989-1998.

JOSEPH M. O'DONNELL (11/13/54) - Vice President and Assistant Secretary -
Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Vice President and General Counsel, FPS Services,
Inc., 1993-1997.

SANDRA K. ORLOW (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1983.

LYNDA J. STRIEGEL (10/30/48) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor
since 1998. Senior Asset Management Counsel, Barnett Banks, Inc., 1997-1998.
Partner, Groom and Nordberg, Chartered, 1996-1997. Associate General
Counsel, Riggs Bank, N.A., 1991-1995.

KEVIN P. ROBINS (4/15/61) - Vice President, Assistant Secretary - Senior Vice
President & General Counsel of SEI Investments, the Administrator and the
Distributor since 1994. Vice President of SEI, the Administrator and the
Distributor, 1992-1994.

KATHRYN L. STANTON (11/19/58) - Vice President, Assistant Secretary - Vice
President, Assistant Secretary of SEI Investments, the Administrator and
Distributor since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1989-1994.

RICHARD W. GRANT (10/25/45) - Secretary - 1701 Market Street, Philadelphia,
Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to
the Trust, Administrator and Distributor, since 1989.

JOHN H. GRADY, JR. (6/1/61) - Assistant Secretary - 1701 Market Street,
Philadelphia, Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP (law
firm) since 1995, counsel to the Trust, Administrator and Distributor.
Associate, Morgan, Lewis & Bockius LLP, 1993-1995.

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

* Messrs. Looney, Goodrum, McNair, and Cammack may be deemed to be
"interested persons" of the Trust as defined in the Investment Company Act
of 1940.

The Trustees and Officers of the Trust own, in the aggregate, less than 1% of
the outstanding shares of the Trust.

B-30
<PAGE>

For the fiscal year end 5/31/98, the Trust paid the following amounts to
Trustees and Officers of the Trust:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
AGGREGATE PENSION OR RETIREMENT ESTIMATED TOTAL COMPENSATION FROM
COMPENSATION BENEFITS ACCRUED AS ANNUAL BENEFITS FUND AND FUND COMPLEX PAID
NAME OF PERSON, POSITION FROM FUND PART OF FUND EXPENSES UPON RETIREMENT TO TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum, Trustee $15,000 N/A N/A $15,000 for service on two
boards
- ----------------------------------------------------------------------------------------------------------------------------
Wilton Looney, Trustee $14,000 N/A N/A $14,000 for service on two
boards
- ----------------------------------------------------------------------------------------------------------------------------
Champney A. McNair, Trustee $17,000 N/A N/A $17,000 for service on two
boards
- ----------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $13,000 N/A N/A $13,000 for service on two
boards
- ----------------------------------------------------------------------------------------------------------------------------
T. Gordy Germany, $15,000 N/A N/A $15,000 for service on two
Trustee boards
- ----------------------------------------------------------------------------------------------------------------------------
Dr. Bernard F. Sliger, Trustee $15,000 N/A N/A $15,000 for service on two
boards
- ----------------------------------------------------------------------------------------------------------------------------
Jonathan T. Walton, Trustee* $3,500 N/A N/A $ 3,500 for service on
two boards
- ----------------------------------------------------------------------------------------------------------------------------
William H. Cammack, Trustee N/A N/A N/A $ 0 for service on
two boards
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Messr. Walton's compensation reflects a starting date of June 19, 1998.

PERFORMANCE INFORMATION

From time to time a Fund may advertise its performance. Performance figures are
based on historical earnings and are not intended to indicate future
performance.

B-31
<PAGE>

PERFORMANCE COMPARISONS

Each Portfolio may periodically compare its performance to other mutual funds
tracked by mutual fund rating services, to broad groups of comparable mutual
funds, or to unmanaged indices. These comparisons may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.

COMPUTATION OF YIELD

B-32
<PAGE>

THIRTY-DAY YIELD

The Portfolios may advertise a 30-day yield. In particular, yield will be
calculated according to the following formula:

6
Yield = (2 (a-b/cd + 1) - 1) where a = dividends and interest earned during the
period; b = expenses accrued for the period (net of reimbursement); c = the
average daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.

CALCULATION OF TOTAL RETURN

From time to time, the Portfolios may advertise total return. In particular,
total return will be calculated according to the following formula: P (1 + T) TO
THE POWER OF n = ERV, where P = a hypothetical initial payment of $1,000; T =
average annual total return; n = number of years; and ERV = ending redeemable
value of a hypothetical $1,000 payment made at the beginning of the designated
time period as of the end of such period.

From time to time, the Trust may include the names of clients of the Advisors in
advertisements and/or sales literature for the Trust. The SEI Funds Evaluation
database tracks the total return of numerous tax-exempt pension accounts. The
range of returns in these accounts determines the percentile rankings. SunTrust
Bank's investment advisory affiliates, STI Capital Management, N.A. and Trusco
Capital Management, have been in the top 1% of the SEI Funds Evaluation database
for equity managers over the past ten years. SEI Investment's database includes
research data on over 1,000 investment managers responsible for over $450
billion in assets.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO 1 YEAR LIFE OF FUND*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Life Vision Balanced Portfolio 7.90% 9.71%
- ----------------------------------------------------------------------------------------------------------------------------

B-33
<PAGE>

- ----------------------------------------------------------------------------------------------------------------------------
Life Vision Growth and Income Portfolio 7.12% 9.34%
- ----------------------------------------------------------------------------------------------------------------------------
Life Vision Maximum Growth Portfolio 6.53% 9.53%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

*Life of Fund figures are from commencement of operations to the period ended
November 30, 1998.

PURCHASING SHARES

Purchases and redemptions of shares of the Portfolios may be made on any day the
New York Stock Exchange ("NYSE") is open for business. Currently, the NYSE is
closed on: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

REDEEMING SHARES

A Shareholder will at all times be entitled to aggregate cash redemptions from
all Portfolios of the Trust during any 90-day period of up to the lesser of
$250,000 or 1% of the Trust's net assets.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the NYSE is restricted, or during the existence of an emergency (as determined
by the Securities and Exchange Commission by rule or regulation) as a result of
disposal or valuation of a Portfolio's securities is not reasonably practicable,
or for such other periods as the Securities and Exchange Commission has by order
permitted. The Trust also reserves the right to suspend sales of shares of a
Fund for any period during which the NYSE, an Advisor, the Administrator and/or,
the Custodian are not open for business.

A number of Fund shareholders are institutions with significant share holdings
that may be redeemed at any time. If a substantial number or amount of
redemptions should occur within a relatively short period of time, a Fund may
have to sell portfolio securities it would otherwise hold and incur the
additional transaction costs. The sale of portfolio securities may result in the
recognition of capital gains, which will be distributed annually and generally
will be taxable to shareholders as ordinary income or capital gains.
Shareholders are notified annually regarding the federal tax status of
distributions they receive (see "Taxes").

B-34
<PAGE>

TAXES

The following is a summary of certain Federal income tax considerations
generally affecting the Portfolios and their shareholders that are not described
in the Portfolios' prospectus. No attempt is made to present a detailed
explanation of the Federal tax treatment of the Portfolios or their
Shareholders, and the discussion here and in the Portfolios' prospectus is not
intended as a substitute for careful tax planning.

This discussion of Federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
change the conclusions expressed herein, and may have a retroactive effect with
respect to the transactions contemplated herein.

FEDERAL INCOME TAX

B-35
<PAGE>

In order to qualify for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended ("Code"), each fund must
distribute annually to its Shareholders at least the sum of 90% of its net
investment income excludable from gross income plus 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of a
Portfolio's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, or certain other income; (ii) at the
close of each quarter of a Portfolio's taxable year, at least 50% of the value
of its total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RIC's and other securities, with such other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of a Portfolio's assets and that does not represent more
than 10% of the outstanding voting securities of such issuer; and (iii) at the
close of each quarter of a Portfolio's taxable year, not more than 25% of the
value of its assets may be invested in securities (other than U.S. Government
securities or the securities of other RIC's) of any one issuer, or of two or
more issuers engaged in same or similar businesses if the Fund owns at least 20%
of the voting power of such issuers.

In addition, each fund will distribute by the end of any calendar year 98% of
its ordinary income for that year and 98% of its capital gain net income for the
one-year period ending on October 31 of that calendar year, plus certain other
amounts. Each fund intends to make sufficient distributions prior to the end of
each calendar year to avoid liability for the federal excise tax applicable to
regulated investment companies.

If, at the close of each quarter of its taxable year, at least 50% of the value
of a Portfolio's total assets consists of obligations the interest on which is
excludable from gross income, a Fund may pay "exempt-interest dividends," as
defined in Section 852(b)(5) of the Code, to its shareholders.

B-36
<PAGE>

Any gain or loss recognized on a sale or redemption of shares of a Fund by a
Shareholder who is not a dealer in securities will generally be treated as
long-term capital gain or loss if the shares have been held for more than
eighteen months, mid-term if the shares have been held for over one year but not
for over eighteen months, and short-term if for a year or less. If shares held
for six months or less are sold or redeemed for a loss, two special rules apply:
First, if shares on which a net capital gain distribution has been received are
subsequently sold or redeemed, and such shares have been held for six months or
less, any loss recognized will be treated as long-term capital loss to the
extent of the long-term capital gain distributions. Second, any loss recognized
by a Shareholder upon the sale or redemption of shares of a Tax-Exempt Fund held
for six months or less will be disallowed to the extent of any exempt-interest
dividends received by the Shareholder with respect to such shares.

The Portfolios will make annual reports to Shareholders of the Federal income
tax status of all distributions.

B-37
<PAGE>

B-38
<PAGE>

FOREIGN TAXES

Dividends and interests received by a Fund may be subject to income, withholding
or other taxes imposed by foreign countries and U.S. possessions that would
reduce the yield on the Portfolio's stock or securities. Tax conventions between
certain countries and the United States may reduce or eliminate these taxes.
Foreign countries generally do not impose taxes on capital gains with respect to
investments by foreign investors.

PORTFOLIO TRANSACTIONS

The Portfolios will primarily invest in shares of the underlying CrestFunds.
Orders for transactions in these underlying funds will be placed with SEI
Investments Distribution Co., distributor for the underlying CrestFunds and the
Portfolios.

TRADING PRACTICES AND BROKERAGE

The Trust selects brokers or dealers to execute transactions for the purchase or
sale of portfolio securities on the basis of its judgment of their professional
capability to provide the service. The primary consideration is to have brokers
or dealers provide transactions at best price and execution for the Trust. Best
price and execution includes many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Trust's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances,

B-39
<PAGE>

there is no direct commission charged but there is a spread (the difference
between the buy and sell price) which is the equivalent of a commission.

The Trust may allocate out of all commission business generated by all of the
Portfolios and accounts under management by an Advisor, brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include advice, either directly or through publications or writings, as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends, assisting
in determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by an Advisor in connection with its investment
decision-making process with respect to one or more Portfolios and accounts
managed by it, and may not be used exclusively with respect to the fund or
account generating the brokerage.

As provided in the Securities Exchange Act of 1934 (the "1934 Act") higher
commissions may be paid to broker-dealers who provide brokerage and research
services than to broker-dealers who do not provide such services if such higher
commissions are deemed reasonable in relation to the value of the brokerage and
research services provided. Although transactions are directed to broker-dealers
who provide such brokerage and research services, the Trust believes that the
commissions paid to such broker-dealers are not, in general, higher than
commissions that would be paid to broker-dealers not providing such services and
that such commissions are reasonable in relation to the value of the brokerage
and research services provided. In addition, portfolio transactions which
generate commissions or their equivalent are directed to broker-dealers who
provide daily portfolio pricing services to the Trust. Subject to best price and
execution, commissions used for pricing may or may not be generated by the
Portfolios receiving the pricing service.

An Advisor may place a combined order for two or more accounts or Portfolios
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. It is believed that the ability
of the accounts to participate in volume transactions will generally be
beneficial to the accounts and Portfolios. Although it is recognized that, in
some cases, the joint execution of orders could adversely affect the price or
volume of the security that a particular account or Fund may obtain, it is the
opinion of each Advisor and the Trust's Board of Trustees that the advantages of
combined orders outweigh the possible disadvantages of separate transactions.

Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Portfolios,
at the request of the Distributor, give consideration to sales of shares of the
Trust as a factor in the selection of brokers and dealers to execute Trust
portfolio transactions.

It is expected that the Trust may execute brokerage or other agency transactions
through the Distributor or an affiliate of an Advisor, both of which are
registered broker-dealers, for a commission in conformity with the 1940 Act, the
1934 Act and rules promulgated by the SEC. Under these provisions, the
Distributor or an affiliate of an Advisor is permitted to receive and retain
compensation for effecting portfolio transactions for the Trust on an exchange
if a written contract is in effect between the Distributor and the Trust
expressly permitting the Distributor or an affiliate of an Advisor to receive
and retain such compensation. These rules further require that commissions paid
to the Distributor by the Trust for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other enumeration received or to be received by other brokers
in connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of time."
In addition, the Trust may direct commission business to one or more designated
broker-dealers in connection with such broker/dealer's

B-40
<PAGE>

provision of services to the Trust or payment of certain Trust expenses
(E.G., custody, pricing and professional fees). The Trustees, including those
who are not "interested persons" of the Trust, have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor, and
will review these procedures periodically.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares and classes of shares of the Portfolios each of which represents an equal
proportionate interest in that Fund with each other share. Shares are entitled
upon liquidation to a PRO RATA share in the net assets of the Portfolios.
Shareholders have no preemptive rights. The Declaration of Trust provides that
the Trustees of the Trust may create additional series of shares or classes of
series. All consideration received by the Trust for shares of any additional
series and all assets in which such consideration is invested would belong to
that series and would be subject to the liabilities related thereto. Share
certificates representing shares will not be issued.

SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the Shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of Shareholder liability for obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any Shareholder held personally liable for the
obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisors, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.

YEAR 2000

The Trust depends on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Trust could be adversely affected if the computer systems
used by its service providers do not properly process dates on and after January
1, 2000 and distinguish between the year 2000 and the year 1900. The Trust has
asked its service providers whether they expect to have their computer systems
adjusted for the year 2000 transition, and received assurances from each from
each that its system is expected to accommodate the year 2000 without material
adverse consequences to the Trust. The Trust and its shareholders may experience
losses if these assurances prove to be incorrect or as a result of year 2000
computer difficulties experienced by issuers of portfolio securities or third
parties, such as custodians, banks, broker-dealers or others with which the
Trust does business.

B-41
<PAGE>

5% AND 25% SHAREHOLDERS

As of May 5, 1999, the following persons were the only persons who were record
owners (or to the knowledge of the Trust, beneficial owners) of 5% and 25% or
more of the shares of the Portfolios. Persons who owned of record or
beneficially more than 25% of a Portfolio's outstanding shares may be deemed to
control the Fund within the meaning of the Act. The Trust believes that most of
the shares of the Trust Class of the Portfolios were held for the record owner's
fiduciary, agency or custodial customers.

Fund Name and Address % of Class
- ---- ---------------- ----------

Life Vision Maximum Luck Stone 401(k) - Maximum Growth 20.18%
Growth Portfolio - Luck Stone Corporation
Trust Class Ms. Gail Farmer
P.O. Box 29682
Richmond, VA 23224-0682

Medical Practice Management 10.35%
Medical Practice Management, Inc.
Attn: Bob Pollard
5711 Chamberlayne Road
Richmond, VA 23227

Ronils, Inc. - LV Max Growth - 6/30 10.09%
Ms. Elinor H. Essig
P.O. Box 1059
Rocky Mount, VA 24151-8059

Sentry Equip - 401K - Max Gro Port-9/30 9.63%
Sentry Erectors Inc.
Attn: Mrs. Carole J. Vinoskey
Rt. 1 Box 509
Forest, VA 24551-9714

Wayne-Tex S/P 401K Expediter 5.32%
Attn: Mrs. Wanda Edwards
901 S. Delphine Ave.
Waynesboro, VA 22980

Life Vision Growth Miller & Long PSP -- Fund A 6.12%
and Income Miller & Long Co. Inc.
Portfolio - Attn: Mr. Michael G. Simpson
Trust Class 4824 Rugby Ave.
Bethesda, MD 20814-3054

Conmat Group - 401(K)P5R4W*-PST- 8.75%
12/31
Conmat Group Inc.
Attn: Alan Delecuwerk
P.O. Box 1347
Harrisonburg, VA 22801

B-42

<PAGE>

Fund Name and Address % of Class
- ---- ---------------- ----------
Reamco Inc. PST 7.66%
Reamco Incorporated
Attn: Mr. Van Reames
P.O. Box 510
Lofton, VA 22199-0510

Miller & Long PSP -- Fund B 9.83%
Miller & Long Co. Inc.
Attn: Steve Mecelhaney
P.O. Box 27506
Richmond, VA 23261-4506

Katherine Martin 6.10%
Williamsburg Merchants
223 Parkway Drive Suite C
Williamsburg, VA 23185-4551

William M. Mercer Inc. 7.19%
Attn: Steve Mecelhaney
P.O. Box 27506
Richmond, VA 23261-4551

Perlin Benefits Resource Group 19.05%
3400 Building Suite 102
397 Little Neck Road
Virginia Beach, VA 23451

Life Vision National Fruit Product Hourly 6/30 8.99%
Balanced Portfolio - National Fruit Product
Trust Class P.O. Box 2040
Winchester, VA 22604

Gordon Paper Co. PST 12/31 6.40%
Gordon Paper Company
Attn: Mr. Daniel Gordon
P.O. Box 1806
Norfolk, VA 23501-1806

RBI Corp 9/30 5.54%
RBI Corporation
Attn: Mr. William T. Miller, President
P.O. Box 9318
Richmond, VA 23227-0318

B-43
<PAGE>

EXPERTS

The financial statements as of November 30, 1998 have been audited by Deloitte &
Touche LLP, Independent Public Accountants, as indicated in their report dated
January 15, 1999 with respect thereto, and are included herein in reliance
upon the authority of said firm as experts in giving said report.

B-44
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
U.S. TREASURY MONEY FUND

Face
Amount Value
(000) (000)
------ ------
U.S. TREASURY OBLIGATIONS (17.7%)
U.S. Treasury Bills
4.425%, 03/04/99 ................ $ 30,000 $ 29,657
4.435%, 05/27/99 ................ 30,000 29,346
U.S. Treasury Notes
5.000%, 01/31/99 ................ 10,000 9,960
5.000%, 02/15/99 ................ 10,000 9,989
6.250%, 03/31/99 ................ 10,000 10,023
6.375%, 04/30/99 ................ 10,000 10,034
6.250%, 05/31/99 ................ 10,000 10,032
6.750%, 06/30/99 ................ 15,000 15,105
- ------------------------------------------------------------
Total U.S. Treasury Obligations
(Cost $124,146) ............. 124,146
- ------------------------------------------------------------
REPURCHASE AGREEMENTS (82.6%)
Barclays
5.24%, dated 11/30/98, matures
12/01/98, repurchase price
$31,688,305 (collateralized by
U.S. Treasury Note: total market
value $32,317,888) ............... 31,684 31,684
Deutsche Bank
5.24%, dated 11/30/98, matures
12/01/98, repurchase price
$28,500,331 (collateralized by
various U.S. Treasury obligations:
total market value $29,067,044) . 28,496 28,496
Greenwich Bank
5.24%, dated 11/30/98, matures
12/01/98, repurchase price
$168,520,187 (collateralized by
various U.S. Treasury obligations:
total market value $171,866,836) 168,496 168,496
J.P. Morgan
5.24%, dated 11/30/98, matures
12/01/98, repurchase price
$31,110,384 (collateralized by
U.S. Treasury Bond: total market
value $31,728,686) .............. 31,106 31,106
Lehman Brothers
5.24%, dated 11/30/98, matures
12/01/98, repurchase price $30,874,021
(collateralized by various U.S.
Treasury obligations:
total market value $31,484,512) 30,870 30,870
Merrill Lynch
5.24%, dated 11/30/98, matures
12/01/98, repurchase price
$30,494,381 (collateralized by
various U.S. Treasury obligations:
total market value $31,100,391) 30,490 30,490

Face
Amount Value
(000) (000)
------ ------
Morgan Stanley
5.24%, dated 11/30/98, matures
12/01/98, repurchase price
$28,010,408 (collateralized by
U.S. Treasury Note: total market
value $28,567,661) ............ $ 28,006 $ 28,006
Prudential Bache
5.24%, dated 11/30/98, matures
12/01/98, repurchase price
$30,543,563 (collateralized by
U.S. Treasury Note: total market
value $31,150,099) ............. 30,539 30,539
Salomon Brothers
5.24%, dated 11/30/98, matures
12/01/98, repurchase price $30,026,517
(collateralized by various U.S.
Treasury obligations:
total market value $30,799,426) 30,022 30,022
Warburg
5.24%, dated 11/30/98, matures
12/01/98, repurchase price $168,036,560
(collateralized by various U.S.
Treasury obligations:
total market value $171,419,708) 168,012 168,012
- ------------------------------------------------------------
Total Repurchase Agreements
(Cost $577,721) ............... 577,721
- ------------------------------------------------------------
Total Investments (100.3%)
(Cost $701,867) ............... 701,867
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (-0.3%) (1,944)
- ------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- 3.75 billion shares
authorized) based on 699,922,404
outstanding shares ................. 699,924
Distribution in excess of net investment income (1)
- ------------------------------------------------------------
Total Net Assets: (100.0%) ...... $699,923
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(699,922,949 / 699,922,404
SHARES OUTSTANDING) .................. $1.00
- ------------------------------------------------------------
- ------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
TAX-FREE MONEY FUND

Face
Amount Value
(000) (000)
------ ------
MUNICIPAL BONDS (98.5%)
COLORADO (1.3%)
Denver, Public Facility Improvements,
Major League Baseball Stadium Project,
Ser A, RB, FGIC
5.900%, 10/01/99 ................. $ 3,500 $ 3,573
- ------------------------------------------------------------
DISTRICT OF COLUMBIA (0.4%)
District of Columbia, Healthcare Facility,
St. John's Child Development Center, RB (A)
3.350%, 12/02/98 ................. 1,125 1,125
- ------------------------------------------------------------
HAWAII (0.9%)
Hawaii State, Housing Finance &
Development Authority, Single
Family Housing, AMT, RB (A)
3.400%, 12/03/98 ................. 2,600 2,600
- ------------------------------------------------------------
ILLINOIS (6.1%)
Chicago, GO (A)
3.300%, 12/03/98 ................. 7,000 7,000
Chicago, O'Hare International Airport,
AMT, RB (A)
3.350%, 12/03/98 ................. 5,000 5,000
Chicago, Public Improvements,
GO, Ser C (B)
3.050%, 10/31/99 ................. 5,000 5,000
- ------------------------------------------------------------
17,000
- ------------------------------------------------------------
KANSAS (0.9%)
Johnson County, School Improvements,
GO, AMBAC
8.000%, 09/01/99 ................. 2,525 2,615
- ------------------------------------------------------------
LOUISIANA (2.8%)
Jefferson Parish, Home Mortgage, RB (A)
3.400%, 12/03/98 ................. 7,720 7,720
- ------------------------------------------------------------
MARYLAND (6.7%)
Montgomery County, Housing Opportunity
Commission, Issue 1, AMT, RB (A) (B)
3.350%, 12/02/98 ................. 10,000 10,000
Montgomery County, TECP
3.350%, 02/24/99 ................. 2,850 2,850
3.200%, 03/12/99 ................. 6,000 6,000
- ------------------------------------------------------------
18,850
- ------------------------------------------------------------
MASSACHUSETTS (3.6%)
Massachusetts, Puttable
Tax Exempt Receipts (A) (B)
3.450%, 12/03/98 ................. 10,000 10,000
- ------------------------------------------------------------
NEW YORK (8.9%)
Long Island, Power Authority,
Electric System Project, RB (A)
3.400%, 12/03/98 ................. 4,000 4,000
New York City, GO (A)
3.350%, 12/03/98 ................. 11,960 11,960

Face
Amount Value
(000) (000)
------ ------
New York City, Water & Sewer
Finance Authority, RB (A)
3.350%, 12/03/98 ................. $ 9,000 $ 9,000
- ------------------------------------------------------------
24,960
- ------------------------------------------------------------
NORTH CAROLINA (5.7%)
Charlotte, Housing Authority,
Multi Family Housing, Merrywood
Senior Adult Project, RB (A) (B)
3.250%, 12/02/98 ................. 2,000 2,000
North Carolina State, Medical Care
Community Hospital Pooled Finance
Project, Ser A, RB (A) (B)
3.350%, 12/01/98 ................. 9,800 9,800
Wake County, Public Improvements, GO
4.400%, 03/01/99 ................. 4,000 4,008
- ------------------------------------------------------------
15,808
- ------------------------------------------------------------
PENNSYLVANIA (8.7%)
Emmaus, General Authority, RB, FSA (A)
3.150%, 12/02/98 ................. 12,000 12,000
Philadelphia, Redevelopment Housing
Authority, Courts Project, Ser A, RB (A) (B)
3.100%, 12/03/98 ................. 4,425 4,425
Pittsburgh, GO (A)
3.250%, 12/03/98 ................. 8,000 8,000
- ------------------------------------------------------------
24,425
- ------------------------------------------------------------
SOUTH CAROLINA (2.9%)
Florence County, McLeod Regional Medical
Center Project, Ser A, RB, FGIC (A)
3.450%, 12/03/98 ................. 8,200 8,200
- ------------------------------------------------------------
SOUTH DAKOTA (1.8%)
Heartland Consumers Power District,
RB, FSA (A)
3.300%, 12/03/98 ................. 5,035 5,035
- ------------------------------------------------------------
TENNESSEE (1.8%)
Shelby County, Health, Educational &
Housing Facilities, Multi Family Housing,
AMT, Ser A, RB (A) (B)
3.500%, 12/02/98 ................. 5,000 5,000
- ------------------------------------------------------------
TEXAS (7.5%)
Houston, Water & Sewer System,
RB, FGIC (A)
3.300%, 12/03/98 ................. 5,000 5,000
Plano, TECP, MBIA
3.100%, 01/22/99 ................. 7,000 7,000
San Antonio, Electric & Gas, RB,
Partially Prerefunded
02/01/07 @101 (A) (B)
3.300%, 12/03/98 ................. 9,000 9,000
- ------------------------------------------------------------
21,000
- ------------------------------------------------------------

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
TAX-FREE MONEY FUND (CONTINUED)

Face
Amount Value
(000) (000)
------ ------
VIRGINIA (34.9%)
Alexandria, Redevelopment & Housing
Authority, Goodwin House Project,
Ser B, RB (A) (B)
3.350%, 12/01/98 ................. $ 2,500 $ 2,500
Fairfax County, Public
Improvements, GO (A)
3.300%, 12/03/98 ................. 3,300 3,300
King George County, Industrial
Development Authority,
Birchwood Power Partners,
Ser A, RB (A) (B)
3.450%, 12/01/98 ................. 2,600 2,600
King George County, Industrial
Development Authority,
Birchwood Power Partners,
Ser B, RB (A) (B)
3.450%, 12/01/98 ................. 7,400 7,400
Louisa County, Industrial
Development Authority, RB (A) (B)
3.200%, 12/03/98 ................. 2,000 2,000
Norfolk, Industrial Development
Authority, Childrens Hospital
Project (A) (B)
3.200%, 12/03/98 ................. 4,000 4,000
Petersburg, Hospital Authority,
Southside Regional Project,
RB (A) (B)
3.350%, 12/01/98 ................. 4,125 4,125
Pulaski County, Industrial Development
Authority, Pulaski Furniture Project,
Ser A, RB (A)
3.350%, 12/02/98 ................. 4,219 4,219
Pulaski County, Industrial Development
Authority, Pulaski Furniture Project,
Ser B, RB (A)
3.350%, 12/02/98 ................. 500 500
Richmond, Redevelopment &
Housing Authority, Multi Family
Housing, RB (A)
3.350%, 12/03/98 ................. 13,000 13,000
Spotsylvania, Industrial Development
Authority, Residential Care Facility,
Chancellors Village Project, RB (A) (B)
3.150%, 12/02/98 ................. 2,465 2,465
Suffolk, Redevelopment & Housing
Authority, Multi Family Housing,
Windsor Fieldstone Project, RB (A)
3.350%, 12/02/98 ................. 4,288 4,288

Face
Amount Value
(000) (000)
------ ------
Virginia State College, Building
Authority, Public Higher Education
Financing, Ser A, RB
3.150%, 09/01/99 ................. $ 1,850 $ 1,850
Virginia State, Polytechnic
Institute & University, RB (A)
3.400%, 12/03/98 ................. 650 650
Virginia State, Polytechnic
Institute & University, RB (A) (B)
3.400%, 12/03/98 ................. 3,475 3,475
Virginia State, Port Authority Facility,
AMT, RB, MBIA (A)
3.350%, 12/03/98 ................. 10,100 10,100
Virginia State, Public Building
Authority, RB
5.100%, 08/01/99 ................. 7,115 7,212
Virginia State, Public School
Authority, School Equipment
Financing, Issue V, RB
3.600%, 04/01/99 ................. 5,000 5,000
Waynesboro, Residential
Care Facilities, Sunnyside
Presbyterian Project, RB (A) (B)
3.350%, 12/01/98 ................. 10,240 10,240
York County, TECP
3.400%, 02/18/99 ................. 8,800 8,800
- ------------------------------------------------------------
97,724
- ------------------------------------------------------------
WASHINGTON (3.6%)
Washington State, Public Power Supply
System, Nuclear Project Number 1,
Prerefunded 07/01/99 @ 100
6.000%, 07/01/17 ................. 10,000 10,131
- ------------------------------------------------------------
Total Municipal Bonds
(Cost $275,766) .............. 275,766
- ------------------------------------------------------------
CASH EQUIVALENTS (0.9%)
Financial Square Tax Free Portfolio . 1,118 1,118
SEI Institutional Tax Free Portfolio 1,277 1,277
- ------------------------------------------------------------
Total Cash Equivalents
(Cost $2,395) ................ 2,395
- ------------------------------------------------------------
Total Investments (99.4%)
(Cost $278,161) .............. 278,161
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (0.6%) 1,589
- ------------------------------------------------------------

35
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
TAX-FREE MONEYFUND (CONCLUDED)

Value
(000)
------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- .9 billion shares
authorized) based on 270,909,225
outstanding shares ........................ $270,911
Portfolio Shares of Investor Class A
($.001 par value -- .1 billion shares
authorized) based on 8,849,887
outstanding shares ........................ 8,850
Distribution in excess of net investment income (2)
Accumulated net realized loss on investments (9)
- ------------------------------------------------------------
Total Net Assets: (100.0%) ............. $279,750
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(270,899,215 / 270,909,225
SHARES OUTSTANDING) ......................... $1.00
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INVESTOR CLASS A
(8,851,371 / 8,849,887
SHARES OUTSTANDING) ......................... $1.00
- ------------------------------------------------------------
- ------------------------------------------------------------
(A) Adjustable Rate Security--The rate reflected on the Statement of Net Assets
is the rate in effect on November 30, 1998. The date reported on the
Statement of Net Assets is the later of the date on which the security can be
redeemed at par or the next date on which the rate of interest is adjusted.
(B) Security backed by letter of credit or credit support.
AMBAC--American Municipal Bond Assurance Corporation
AMT--Alternative Minimum Tax
FGIC--Financial Guaranty Insurance Company
FSA--Financial Securities Assurance, Inc.
GO--General Obligation
MBIA--Municipal Bond Insurance Association
RB--Revenue Bond
Ser--Series
TECP--Tax Exempt Commercial Paper

The accompanying notes are an integral part of the financial statements.

36
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND

Face Market
Amount Value
(000) (000)
------ ------
MUNICIPAL BONDS (97.8%)
VIRGINIA (97.8%)
Abingdon, Industrial Development
Authority, Johnston Memorial
Hospital Project, RB,
Callable 07/01/08 @102
5.250%, 07/01/16 .................. $2,000 $2,020
Arlington County, Industrial
Development Authority, Ogden
Martin Systems Project, Resource
Recovery Alexandria/Arlington,
Ser A, RB, FSA
5.250%, 01/01/05 .................. 4,000 4,260
Arlington County, Refunding Bond,
Public Improvements, GO,
Callable 10/01/08 @ 101
5.000%, 10/01/11 .................. 3,220 3,401
Chesapeake Bay, Bridge &
Tunnel Authority, RB,
Callable 07/01/05 @ 102 MBIA
5.000%, 07/01/22 .................. 2,000 1,992
Chesapeake Bay, Bridge &
Tunnel Authority, RB,
Prerefunded 07/01/01 @ 102 MBIA
6.375%, 07/01/22 .................. 7,000 7,604
Chesapeake, Hospital Authority,
General Hospital Project, RB,
Callable 07/01/00 @ 102
8.200%, 07/01/05 .................. 1,000 1,076
Chesapeake, Public Improvements, GO
5.800%, 08/01/02 .................. 2,000 2,140
Chesapeake, Refunding Bond, GO
5.400%, 12/01/08 .................. 2,500 2,741
Chesterfield County, Health Center
Community Project, Lucy Corr
Nursing Home Project, RB,
Callable 12/01/06 @ 102 (B)
5.875%, 12/01/21 .................. 500 532
Chesterfield County, Public Improvements,
Ser A, GO, Callable 01/01/08 @ 100 (B)
4.400%, 01/01/09 .................. 2,000 2,032
4.700%, 01/01/12 .................. 3,215 3,259
Chesterfield County, Refunding Bond, GO
5.650%, 07/15/00 .................. 3,000 3,105
Danville, Industrial Development Authority,
Danville Regional Medical Center
Project, RB AMBAC
5.250%, 10/01/28 .................. 4,250 4,478
Fairfax County, Economic Development
Authority, Resource Recovery, Ogden
Martin Systems Project, Ser A, AMT, RB,
Callable 02/01/99 @ 103
7.750%, 02/01/11 .................. 1,000 1,036

Face Market
Amount Value
(000) (000)
------ ------
Fairfax County, Industrial Development
Authority, Inova Health System Project,
RB, Callable 08/15/06 @ 102
5.300%, 08/15/07 .................. $1,500 $1,601
Fairfax County, Industrial Development
Authority, Inova Health System Project,
Ser A, RB, Callable 02/15/08 @ 101
5.000%, 08/15/10 .................. 2,890 2,991
Fairfax County, School & Transit Improvements,
Ser B, GO, Callable 06/01/01 @ 102 (B)
5.200%, 06/01/13 .................. 5,000 5,169
Fairfax County, Sewer Authority Refunding,
RB, Callable 11/15/03 @ 102 AMBAC
5.500%, 11/15/09 .................. 3,000 3,202
Fluvanna County, Industrial Development
Authority, Elementary School Project,
RB, Callable 04/01/99 @ 100
4.150%, 01/15/01 .................. 4,000 4,001
Fredericksburg, Industrial Development
Authority, Hospital Facilities Project,
Medicorp Health System, RB,
Callable 06/15/07 @ 102 AMBAC
5.250%, 06/15/16 .................. 5,000 5,137
Hampton Roads Sanitation District,
Wastewater Authority, Capital
Improvements, RB,
Callable 10/01/03 @ 102
4.900%, 10/01/06 .................. 2,000 2,092
Harrisonburg, Industrial Development
Authority, Rockingham Memorial
Hospital Project, RB,
Callable 12/01/02 @ 102 MBIA
5.750%, 12/01/13 .................. 3,000 3,206
Henrico County, Industrial Development
Authority, Solid Waste Facility
Browning Ferris Project, RB,
Mandatory Put 12/01/05 @ 100 (A)
5.300%, 12/01/98 .................. 1,000 1,049
Henrico County, Industrial Development
Authority, Government Projects, RB,
Callable 06/01/06 @ 102
5.150%, 06/01/07 .................. 2,500 2,681
Henrico County, Industrial Development
Authority, Residential & Health Care Facility,
Our Lady of Hope Project, RB,
Callable 07/01/03 @ 102 (B)
6.150%, 07/01/26 .................. 2,000 2,020
Henrico County, Industrial Development
Authority, Residential Care Facility
Westminister-Canterbury Project,
RB, Callable 02/17/99 @ 100.5
7.300%, 10/01/99 .................. 1,060 1,072

46
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (continued)

Face Market
Amount Value
(000) (000)
------ ------
Henry County, Public Improvements, GO,
Callable 07/15/04 @ 102
6.000%, 07/15/14 .................. $1,000 $1,082
Loudoun County, Sanitation Authority,
Water & Sewer Project, RB,
Callable 01/01/03 @ 102 FGIC
6.100%, 01/01/04 .................. 1,250 1,373
Loudoun County, Sanitation Authority,
Water & Sewer Project, RB,
Callable 01/01/07 @ 102 FGIC
5.125%, 01/01/26 .................. 3,250 3,287
Loudoun County, Sanitation Authority,
Water & Sewer Project, RB FGIC
5.900%, 01/01/02 .................. 1,000 1,062
Loudoun County, School & Public
Improvement, Ser A, GO,
Callable 08/01/07 @ 102 (B)
5.000%, 08/01/17 .................. 2,000 2,030
Lynchburg, Refunding Bond, GO,
Callable 04/01/03 @ 102
5.250%, 04/01/08 .................. 2,000 2,122
Newport News, Recreational Facility
Improvements, Ser A, GO,
Callable 07/01/05 @ 102 MBIA
5.500%, 07/01/12 .................. 2,500 2,697
Newport News, Refunding &
Improvements Bond, Ser B, GO,
Callable 07/01/99 @ 101.50
5.700%, 07/01/05 .................. 2,000 2,054
Newport News, Water, Utility & Public
Improvements, GO,
Callable 01/15/07 @ 102
5.250%, 01/15/14 .................. 3,530 3,689
Norfolk, Capital Improvements, GO,
Callable 06/01/07 @ 101 FGIC
5.375%, 06/01/09 .................. 1,000 1,089
Norfolk, Industrial Development Authority,
Bon Secours Health Project, RB,
Callable 08/15/07 @ 102 MBIA
5.250%, 08/15/26 .................. 4,200 4,289
Norfolk, Industrial Development Authority,
Children's Hospital Project, RB AMBAC
6.900%, 06/01/06 .................. 1,000 1,176
Norfolk, Industrial Development Authority,
Children's Hospital Project, RB,
Callable 06/01/04 @ 102 AMBAC
5.100%, 06/01/07 .................. 1,000 1,055
Norfolk, Industrial Development Authority,
Public Health Center Project, RB,
Callable 09/15/06 @ 102
5.625%, 09/15/17 .................. 1,600 1,682

Face Market
Amount Value
(000) (000)
------ ------
Norfolk, Industrial Development Authority,
Sentara Hospital Project, Ser A, RB,
Callable 11/01/04 @ 102
4.900%, 11/01/07 .................. $ 2,500 $ 2,578
5.000%, 11/01/08 .................. 2,500 2,575
Norfolk, Redevelopment & Housing
Authority, Educational Facilities Revenue,
Tidewater Community College Campus
Project, RB, Callable 11/01/05 @ 102
5.800%, 11/01/08 .................. 700 776
Norfolk, Refunding & Improvement
Bond, Ser A, GO
5.100%, 02/01/00 .................. 4,000 4,075
Peninsula Ports, Hospital Authority,
Mary Immaculate Project, RB,
Escrowed to Maturity
8.000%, 08/01/99 .................. 245 250
Peninsula Ports, Industrial Development
Authority, Olde Hampton Hotel Project,
RB, Mandatory Put 07/01/99 @ 100 (B)
4.875%, 07/01/16 .................. 480 482
Peumansend Creek, Regional Jail Authority,
Grant Anticipation Note, RB,
Callable 04/01/99 @ 100
4.550%, 04/01/00 .................. 5,000 5,017
Portsmouth, Refunding Bond, GO,
Callable 08/01/03 @ 102
5.450%, 08/01/07 .................. 2,000 2,135
Portsmouth, Public Improvements, GO,
Prerefunded 08/01/00 @ 102
6.750%, 08/01/04 .................. 1,500 1,607
Prince William County, Park Authority,
Recreational Facility Improvement, RB
5.500%, 10/15/99 .................. 500 510
5.800%, 10/15/01 .................. 500 524
Prince William County, Park Authority,
Recreational Facility Improvement, RB,
Callable 10/15/04 @ 102
6.200%, 10/15/05 .................. 500 552
Prince William County, Refunding Bond,
Ser C, RB, Callable 08/01/03 @ 102 (B)
5.000%, 08/01/07 .................. 5,000 5,269
Prince William County, Water & Sewer
Authority, Water & Sewer Improvements,
RB, Prerefunded 07/01/01 @ 102 FGIC
6.500%, 07/01/21 .................. 1,000 1,089
Richmond, Metropolitan Expressway
Authority, Ser A, RB,
Callable 07/15/02 @ 102 FGIC
5.900%, 07/15/03 .................. 1,500 1,627
Richmond, Public Improvements,
Ser A, GO
6.100%, 01/15/01 .................. 2,750 2,887

47
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (continued)

Face Market
Amount Value
(000) (000)
------ ------
Richmond, Public Improvements,
Ser A, GO, Callable 01/15/05 @ 102
5.300%, 01/15/09 ................ $ 1,500 $ 1,614
Richmond, Public Utility, Ser A, RB
5.250%, 01/15/06 ................ 2,200 2,348
Richmond, Redevelopment & Housing
Authority, Richmeade Project, AMT, RB (A)
4.000%, 12/24/98 ................ 500 500
Roanoke Valley, Solid Waste System
Authority, Resource Recovery
Improvements, RB
5.400%, 09/01/02 ................ 1,450 1,504
Roanoke, Industrial Development Authority,
Roanoke Memorial Hospital Project,
Ser B, RB, Callable 07/01/02 @ 102
5.900%, 07/01/06 ................ 2,500 2,669
Roanoke, Public Improvements, GO
4.900%, 02/01/06 ................ 1,000 1,051
Roanoke, Public Improvements, GO,
Callable 02/01/06 @ 102
5.000%, 02/01/12 ................ 3,165 3,276
Southeastern Public Service Authority,
Ser A, RB, MBIA
5.150%, 07/01/09 ................ 5,000 5,350
Spotsylvania County, Refunding Bond,
Special Assessments, GO, FSA
4.500%, 07/15/09 ................ 1,375 1,402
Suffolk, Refunding & Improvement
Bond, GO
5.200%, 08/01/02 ................ 1,500 1,575
Suffolk, Refunding Bond, GO,
Callable 08/01/03 @ 102
5.600%, 08/01/06 ................ 2,000 2,170
5.700%, 08/01/07 ................ 2,000 2,175
Tazewell County, Industrial Development
Authority, Courthouse Project, RB,
Callable 01/01/07 @ 102 MBIA
5.300%, 01/01/27 ................ 1,000 1,029
Virginia Beach, Development Authority,
Residential & Health Care Facility Project,
1st Mortgage, Our Lady of Perpetual Hope
Project, RB, Callable 07/01/07 @102
6.050%, 07/01/20 ................ 1,500 1,536
Virginia Beach, Development Authority,
Sentara Bayside Hospital Project, RB,
Callable 11/01/01 @ 102
6.300%, 11/01/21 ................ 1,750 1,873
Virginia Beach, Refunding Bond, GO
5.000%, 07/15/03 ................ 1,000 1,050
5.300%, 07/15/07 ................ 2,000 2,165
5.250%, 08/01/08 ................ 2,000 2,165
5.450%, 07/15/11 ................ 1,000 1,098
Virginia Beach, Refunding Bond, GO,
Prerefunded 11/01/04 @ 102 (B)
5.750%, 11/01/10 ................ 3,500 3,885

Face Market
Amount Value
(000) (000)
------ ------
Virginia State, College Building Authority,
Public Higher Education Financing,
Ser A, RB, Callable 09/01/08 @ 100
4.800%, 09/01/17 ................ $1,500 $ 1,463
Virginia State, College Building Authority,
Public Higher Education Financing,
Ser A, RB, Callable 09/01/08 @ 100
4.625%, 09/01/15 ................ 3,080 2,972
Virginia State, College Building Authority,
University of Richmond Project, RB,
Callable 11/01/02 @ 102
6.250%, 11/01/12 ................ 2,000 2,178
Virginia State, College Building Authority,
University of Richmond Project, RB,
Optional Put 11/01/04 @ 100
5.550%, 11/01/19 ................ 6,500 7,053
Virginia State, Commonwealth Transportation
Board, Northern Transit District, RB,
Callable 05/15/07 @ 101
5.125%, 05/15/19 ................ 2,250 2,261
Virginia State, Commonwealth Transportation
Board, Oak Grove Connector Project,
Ser A, RB, Callable 05/15/07 @ 101
5.250%, 05/15/22 ................ 2,250 2,292
Virginia State, Education Loan Authority,
AMT, Ser B, RB, Prerefunded to Various
Call Dates @ 100 (B)
5.550%, 09/01/10 ................ 1,800 1,897
Virginia State, Education Loan Authority,
Refunding Bond, Student Loan Program,
AMT, Ser B, RB, Escrowed to Maturity
4.850%, 09/01/01 ................ 520 535
Virginia State, Education Loan Authority,
Refunding Bond, Student Loan Program,
AMT, Ser D, RB, Escrowed to Maturity
5.600%, 03/01/03 ................ 2,500 2,659
Virginia State, Housing Development Authority,
Commonwealth Mortgage, Ser B,
SubSer B-3, RB, Callable 01/01/06 @ 102
6.350%, 01/01/15 ................ 3,000 3,206
Virginia State, Housing Development Authority,
Commonwealth Mortgage, Ser E,
SubSer E-1, RB, Callable 07/01/08 @ 101
4.950%, 01/01/11 ................ 1,250 1,261
Virginia State, Housing Development Authority,
Multi Family Housing, AMT, Ser I, RB,
Callable 01/01/09 @ 101
4.875%, 11/01/12 ................ 1,950 1,931
Virginia State, Housing Development Authority,
Multi Family Housing, RB,
Callable 01/01/2008 @ 102
5.350%, 11/01/11 ................ 1,250 1,313
Virginia State, Housing Development Authority,
Multi Family Housing, Ser B, RB,
Callable 05/01/00 @ 102
7.375%, 05/01/05 ................ 1,000 1,038

48
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND (concluded)

Face Market
Amount Value
(000) (000)
------ ------
Virginia State, Housing Development
Authority, Multi Family Housing,
Ser C, RB, Callable 05/01/04 @ 102
5.700%, 05/01/05 ................. $1,000 $ 1,068
Virginia State, Housing Development
Authority, Multi Family Mortgage,
Ser I, RB, Callable 01/01/08 @ 102
5.450%, 05/01/18 ................. 2,000 2,053
Virginia State, Housing Development
Authority, Ser C, SubSer C-8,
RB, Callable
01/01/02 @ 102
6.000%, 07/01/06 ................. 2,000 2,095
Virginia State, Housing Development
Authority, Single Family Housing, Ser C,
SubSer C-4, RB, Callable 01/01/02 @ 102
5.550%, 01/01/11 ................. 3,000 3,086
Virginia State, Polytechnic Institute &
University, University & College
Improvements, Ser A, RB,
Callable 06/01/06 @ 102
5.350%, 06/01/09 ................. 2,000 2,143
Virginia State, Public Building Authority,
RB, Callable 08/01/05 @ 101
5.200%, 08/01/15 ................. 1,500 1,532
Virginia State, Public Building Authority,
Ser A, RB
6.000%, 08/01/06 ................. 6,000 6,758
Virginia State, Public Building Authority,
Ser B, RB
5.600%, 08/01/01 ................. 4,000 4,195
Virginia State, Public School Authority,
Refunding Bond, RB,
Callable 01/01/02 @ 102
6.250%, 01/01/08 ................. 2,000 2,165
Virginia State, Public School Authority,
Refunding Bond, Ser B, RB
5.000%, 01/01/04 ................. 2,000 2,100
Virginia State, Public School Authority,
School Financing, Ser B, RB,
Callable 01/01/03 @ 102 (B)
5.600%, 01/01/05 ................. 1,880 2,033
Virginia State, Public School Authority,
School Improvements, Ser B, RB,
Callable 01/01/00 @ 102
5.850%, 01/01/02 ................. 1,500 1,564
Virginia State, Refunding Bond, GO
5.600%, 06/01/02 ................. 4,750 5,041
Virginia State University, Virginia
Commonwealth University, Ser A, RB,
Callable 05/01/06 @ 102
5.625%, 05/01/16 ................. 2,500 2,606
Winchester, Public Improvements, GO
6.050%, 03/01/00 ................. 500 516
- ------------------------------------------------------------
Total Municipal Bonds
(Cost $235,408) .............. 245,986
- ------------------------------------------------------------

Face Market
Amount Value
(000) (000)
------ ------
CASH EQUIVALENTS (0.9%)
Aim Tax Free Institutional
Cash Reserve $2,324 $ 2,324
Federated Virginia Municipal Cash Trust 47 47
- ------------------------------------------------------------
Total Cash Equivalents
(Cost $2,371) ................ 2,371
- ------------------------------------------------------------
Total Investments (98.7%)
(Cost $237,779) .............. 248,357
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (1.3%) 3,148
- ------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- .75 billion shares
authorized) based on 23,324,262
outstanding shares ................ 231,400
Portfolio Shares of Investor Class A
($.001 par value -- .25 billion shares
authorized) based on 756,065
outstanding shares ................ 7,758
Undistributed net investment income . 44
Accumulated net realized gain on investments 1,725
Net unrealized appreciation on investments 10,578
- ------------------------------------------------------------
Total Net Assets: (100.0%) ..... $251,505
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(243,606,173 / 23,324,262
SHARES OUTSTANDING) ................. $10.44
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INVESTOR CLASS A
(7,898,816 / 756,065
SHARES OUTSTANDING) ................. $10.45
- ------------------------------------------------------------
OFFER PRICE PER SHARE -- INVESTOR CLASS A
($10.45 / 96.5%) .................... $10.83
- ------------------------------------------------------------
- ------------------------------------------------------------
(A) Adjustable Rate Security--The rate reflected on the Statement of Net Assets
is the rate in effect on November 30, 1998. The date reported on the
Statement of Net Assets is the later of the date on which the security can
be redeemed at par or the next date on which the rate of interest is
adjusted.
(B) Security backed by letter of credit or credit support.
AMBAC--American Municipal Bond Assurance Corporation
AMT--Alternative Minimum Tax
FGIC--Financial Guaranty Insurance Company
FSA--Financial Securities Assurance
GO--General Obligation
MBIA--Municipal Bond Insurance Association
RB--Revenue Bond
Ser--Series

The accompanying notes are an integral part of the financial statements.

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VIRGINIA MUNICIPAL BOND FUND

Face Market
Amount Value
(000) (000)
------ ------
MUNICIPAL BONDS (94.0%)
VIRGINIA (94.0%)
Albemarle County, Industrial Development
Authority, Martha Jefferson Hospital
Project, RB, Callable 10/01/03 @ 102
5.800%, 10/01/09 ................... $500 $527
Albemarle County, Industrial Development
Authority, Our Lady of Peace Project,
Ser A, RB, Callable 07/01/05 @102
5.800%, 07/01/25 ................... 500 496
Alexandria, Industrial Development Authority,
Episcopal High School Project, RB,
Callable 01/01/06 @ 102
5.300%, 01/01/11 ................... 500 525
Alexandria, Industrial Development Authority,
Potomac Electric Project, Ser A, RB,
Callable 02/15/04 @ 102 MBIA
5.375%, 02/15/24 ................... 400 410
Alexandria, Redevelopment & Housing
Authority, Buckingham Village Apartments
Project, RB, Callable 01/01/06 @ 102
6.050%, 07/01/16 ................... 250 263
Alexandria, Redevelopment & Housing
Authority, Essex House Project,
Ser A, AMT, RB, Callable 01/01/08 @ 102
5.550%, 07/01/28 ................... 1,000 1,015
Arlington County, Industrial Development
Authority, Headquarters Facility Project,
Ser A, RB, Callable 07/01/07 @ 102
5.250%, 07/01/12 ................... 300 313
Arlington County, Public Improvements,
GO, Callable 06/01/05 @ 101.50
5.400%, 06/01/12 ................... 250 267
Brunswick County, Industrial Development
Authority, Correctional Facility Lease,
RB, Callable 07/01/06 @ 102 MBIA
5.500%, 07/01/17 ................... 400 420
Chesapeake, Refunding Bond, GO
5.250%, 12/01/06 ................... 500 541
Chesapeake, Water & Sewer, Ser A, GO,
Callable 12/01/05 @ 102
5.000%, 12/01/25 ................... 475 475
Chesapeake Bay, Bridge & Tunnel Commission,
RB, Callable 07/01/05 @ 102 MBIA
5.000%, 07/01/22 ................... 1,000 996
Dinwiddie County, Industrial Development
Authority, County School Completion Project,
Ser A, RB, Callable 02/01/08 @ 102 MBIA
5.000%, 02/01/19 ................... 1,500 1,506
Fairfax County, Industrial Development
Authority, Inova Health System
Project, RB FSA
5.250%, 08/15/19 ................... 500 522

Face Market
Amount Value
(000) (000)
------ ------
Fairfax County, Industrial Development
Authority, Inova Health System Project,
Ser A, RB, Callable 02/15/08 @ 101
5.000%, 08/15/25 ................... $500 $490
Fairfax County, Public Improvements,
Ser A, GO, Callable 06/01/03 @ 102
5.000%, 06/01/07 ................... 500 526
Fairfax County, Redevelopment & Housing
Authority, Mott & Gum Springs Community
Centers, RB, Callable 06/01/06 @ 102
5.500%, 06/01/12 ................... 425 444
Fairfax County, Redevelopment & Housing
Authority, Paul Spring Center Project,
Ser A, RB, Callable 12/01/06 @ 103 (A)
5.900%, 06/15/17 ................... 250 268
Fairfax County, Water Authority, Refunding
Bond, RB, Callable 04/01/07 @ 102 AMBAC
6.000%, 04/01/22 ................... 315 352
Fredericksburg, Industrial Development
Authority, Hospital Facilities Project,
Medicorp Health System Obligation,
RB, Callable 06/15/07 @ 102 AMBAC
5.300%, 06/15/10 ................... 500 539
5.250%, 06/15/23 ................... 300 306
Henrico County, Industrial Development
Authority, Our Lady of Hope Project,
RB, Callable 07/01/03 @102 (A)
6.100%, 07/01/20 ................... 1,000 1,010
Henry County, Industrial Development
Authority, Martinsville & Henry Hospital
Project, RB, Callable 01/01/07 @ 101
6.000%, 01/01/17 ................... 500 534
James City County, Public Improvements,
GO, Callable 12/15/05 @ 102 FGIC
5.250%, 12/15/14 ................... 250 261
Leesburg, Public Improvements, GO,
Callable 06/01/05 @ 102 AMBAC
5.400%, 06/01/10 ................... 250 269
Leesburg, Utility Systems, RB,
Callable 07/01/07 @ 102 MBIA
5.000%, 07/01/10 ................... 750 787
Loudoun County, Sanitation Authority,
Water & Sewer Project, RB,
Callable 01/01/07 @ 102 FGIC
5.125%, 01/01/26 ................... 750 758
Loudoun County, School Improvements,
Ser A, GO, Callable 06/01/06 @ 102 (A)
5.600%, 06/01/10 ................... 250 275
Lynchburg, Industrial Development Authority,
Healthcare Facility, Centra Health Project,
RB, Callable 01/01/08 @ 101
5.200%, 01/01/23 ................... 500 500
5.200%, 01/01/28 ................... 1,000 994

50
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VIRGINIA MUNICIPAL BOND FUND (continued)

Face Market
Amount Value
(000) (000)
------ ------

Lynchburg, Public Improvements, GO,
Callable 05/01/06 @ 102
5.100%, 05/01/11 ................. $ 500 $ 526
Manassas, Water Utility Improvements,
Ser A, GO, Callable 01/01/08 @ 102
5.000%, 01/01/18 ................. 500 507
Newport News, Redevelopment & Housing
Authority, GNMA Mortgage Financing,
Ser A, RB, Callable 08/20/07 @102 GNMA (A)
5.850%, 12/20/30 ................. 500 517
Norfolk, Industrial Development Authority,
Bon Secours Health Care Project, RB,
Callable 08/15/07 @ 102 MBIA
5.250%, 08/15/17 ................. 750 771
Norfolk, Public Improvements, GO,
Callable 06/01/06 @ 101
5.250%, 06/01/09 ................. 500 539
Portsmouth, Public Improvements, GO,
Callable 08/01/06 @ 101 FGIC
5.250%, 08/01/21 ................. 500 511
Rappahannock, Regional Jail Authority, RB,
Callable 12/01/08 @102 MBIA
5.000%, 12/01/30 ................. 1,000 986
Roanoke, Public Improvements, GO,
Callable 08/01/04 @ 102
5.150%, 08/01/12 ................. 250 260
Spotsylvania County, Refunding Bond,
GO, FSA
5.000%, 07/15/14 ................. 1,000 1,029
Spotsylvania County, Water & Sewer System,
RB, Callable 06/01/07 @ 102 MBIA
5.250%, 06/01/12 ................. 500 526
5.250%, 06/01/22 ................. 250 257
Upper Occoquan, Sewer Authority, Regional
Sewer Project, Ser A, RB,
Callable 07/01/06 @ 102 MBIA
5.000%, 07/01/25 ................. 500 498
Virginia Beach, Industrial Development
Authority, Our Lady of Perpetual Hope
Project, RB, Callable 07/01/07 @ 102
6.150%, 07/01/27 ................. 250 256
Virginia Beach, Refunding Bond, GO
5.450%, 07/15/11 ................. 200 219
Virginia State, College Building Authority,
Educational Facilites, Marymount University
Project, RB, Callable 07/01/08 (A)
5.100%, 07/01/18 ................. 1,000 1,005
Virginia Polytechnic Institute & State
University, University Service Systems,
RB, Callable 06/01/06 @ 102
5.500%, 06/01/16 ................. 200 206

Face Market
Amount Value
(000) (000)
------ ------
Virginia State, Biotechnology Research Park
Authority, Biotech Two Project, RB,
Callable 09/01/06 @ 101
5.250%, 09/01/18 ................. $ 500 $ 509
Virginia State, Housing Development
Authority, Commonwealth Mortgage
Project, GO, Ser E
5.125%, 07/01/17 ................. 2,000 2,003
Virginia State, Housing Development
Authority, Commonwealth Mortgage
Project, Ser A, SubSer A-4, AMT, RB,
Callable 01/01/06 @ 102 MBIA
6.350%, 07/01/18 ................. 150 159
Virginia State, Housing Development
Authority, Commonwealth Mortgage
Project, Ser A, SubSer A-4, RB,
Callable 01/01/03 @ 102
6.400%, 07/01/17 ................. 985 1,047
Virginia State, Public Building Authority,
Public Improvements, RB,
Callable 08/01/05 @ 101
5.200%, 08/01/16 ................. 300 306
Virginia State, Public School Authority,
School Financing, Ser A, RB,
Callable 08/01/07 @ 102 (A)
5.375%, 08/01/18 ................. 500 526
Virginia State University, University &
College Improvements, Ser A, RB,
Callable 05/01/06 @ 102
5.625%, 05/01/16 ................. 1,000 1,043
West Point, Industrial Development
Authority, Chesapeake Corporation
Project, Ser B, RB,
Callable 03/01/04 @ 102
6.250%, 03/01/19 ................. 165 178
- ------------------------------------------------------------
Total Municipal Bonds
(Cost $29,891) ............... 30,973
- ------------------------------------------------------------
CASH EQUIVALENT (4.0%)
Aim Tax Free Institutional Cash Reserve 1,320 1,320
- ------------------------------------------------------------
Total Cash Equivalent
(Cost $1,320) ................ 1,320
- ------------------------------------------------------------
Total Investments (98.0%)
(Cost $31,211) ............... 32,293
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (2.0%) 656
- ------------------------------------------------------------

51
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VIRGINIA MUNICIPAL BOND FUND (concluded)

Market
Value
(000)
------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- .75 billion shares
authorized) based on 2,738,566
outstanding shares ...................... $28,098
Portfolio Shares of Investor Class B
($.001 par value -- .125 billion shares
authorized) based on 344,686
outstanding shares ...................... 3,593
Undistributed net investment income ....... 1
Accumulated net realized gain on investments 175
Net unrealized appreciation on investments 1,082
- ------------------------------------------------------------
Total Net Assets: (100.0%) ........... $32,949
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(29,251,597 / 2,738,566
SHARES OUTSTANDING) ....................... $10.68
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INVESTOR CLASS B (1)
(3,697,582 / 344,686
SHARES OUTSTANDING) ....................... $10.73
- ------------------------------------------------------------
- ------------------------------------------------------------
(A) Security backed by letter of credit or credit support.
(1) Investors Class B has a contingent deferrred sales charge. For description
of a possible redemption charge, see the notes to the financial statements.
AMBAC--American Municipal Bond Assurance Corporation
AMT--Alternative Minimum Tax
FGIC--Financial Guaranty Insurance Company
FSA--Financial Securities Assurance
GNMA--Government National Mortgage Association
GO--General Obligation
MBIA--Municipal Bond Insurance Association
RB--Revenue Bond
Ser--Series

The accompanying notes are an integral part of the financial statements.

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
MARYLAND MUNICIPAL BOND FUND

Face Market
Amount Value
(000) (000)
------ ------
MUNICIPAL BONDS (88.5%)
MARYLAND (81.7%)
Annapolis, Public Improvements, Refunding
Bond, GO, Callable 11/01/08 @ 101
4.800%, 11/01/13 ................... $500 $507
Anne Arundel County, Water Utility
Improvements, Refunding Bond, GO,
Callable 02/01/08 @ 101
5.125%, 02/01/24 ................... 750 767
Baltimore County, Construction & Public
Improvements, GO,
Callable 06/01/06 @ 101
5.500%, 06/01/16 ................... 250 264
Baltimore County, Pension Funding, GO,
Callable 08/01/08 @ 101
5.125%, 08/01/15 ................... 500 519
Baltimore County, Public Improvements,
GO, RB Callable 07/01/08 @101
4.750%, 07/01/09 ................... 500 526
Baltimore County, Revenue Authority, RB,
Prerefunded 07/01/99 @ 102
7.200%, 07/01/19 ................... 200 209
Baltimore, Emergency Telecommunication
Facilities, Certificate of Participation,
Ser A, Callable 10/01/07 @ 102 AMBAC
5.000%, 10/01/17 ................... 400 405
Baltimore, Parking Authority, City Parking
System Facilities, RB FGIC
4.350%, 07/01/02 ................... 200 204
Baltimore, Pollution Control, General Motors
Corporate Project, RB
5.350%, 04/01/08 ................... 250 269
Calvert County, Economic Development
Authority, Asbury-Solomons Project, RB,
Callable 01/01/08 @ 102 MBIA
5.000%, 01/01/17 ................... 250 252
5.000%, 01/01/27 ................... 250 250
Calvert County, Pollution Control, Baltimore
Gas & Electric Company Project, RB,
Callable 07/15/04 @ 102
5.550%, 07/15/14 ................... 250 262
Carroll County, Public Improvements, GO,
Callable 12/01/06 @ 101
5.125%, 12/01/14 ................... 500 516
Harford County, Public Improvements, GO,
Callable 12/01/07 @ 102
4.900%, 12/01/11 ................... 500 519
Howard County, Metropolitan District,
Public Improvements, Ser A, GO,
Prerefunded 02/15/05 @ 101
5.650%, 02/15/16 ................... 100 110
Howard County, Public Improvements,
Ser A, GO
4.750%, 02/15/13 ................... 250 253

Face Market
Amount Value
(000) (000)
------ ------
Maryland State, Department of Housing &
Community Development, Ser B, AMT, RB,
Callable 03/01/07 @ 101.50 (B)
5.875%, 09/01/25 ................... $ 500 $ 518
Maryland State, Department of Housing
& Community Development, Single
Family Housing, First Ser, RB,
Callable 04/01/07 @ 101.50 (B)
5.600%, 04/01/18 ................... 430 445
Maryland State, GO (A)
3.580%, 12/03/98 ................... 200 200
Maryland State, Health & Higher
Educational Facilities Authority,
Anne Arundel Medical Center Project,
RB, FSA Callable 7/01/08 @ 101
5.125%, 07/01/28 ................... 1,500 1,519
Maryland State, Health & Higher
Educational Facilities Authority,
Broadmead Project, RB,
Callable 07/01/07 @ 102
5.500%, 07/01/17 ................... 300 301
Maryland State, Health & Higher
Educational Facilities Authority,
Calvert Memorial Hospital Project,
RB, Callable @ 102 7/01/08
5.000%, 07/01/13 ................... 400 398
Maryland State, Health & Higher
Educational Facilities Authority, Johns
Hopkins Health System Project, RB,
Callable 07/01/07 @ 102 AMBAC
5.250%, 07/01/17 ................... 350 362
Maryland State, Health & Higher
Educational Facilities Authority,
Loyola College Project, Ser A, RB,
Callable 10/01/06 @ 102 MBIA
5.500%, 10/01/16 ................... 250 268
Maryland State, Health & Higher
Educational Facilities Authority,
Pickersgill Project, Ser A, RB,
Callable 01/01/07 @ 102
6.000%, 01/01/15 ................... 350 373
Maryland State, Health & Higher
Educational Facilities Authority,
University of Maryland Medical
Systems Project, Ser A, RB,
Prerefunded 07/01/01 @ 100 FGIC
6.500%, 07/01/21 ................... 200 214
Maryland State, Health & Higher
Educational Facilities Authority,
Upper Chesapeake Hospital Project,
RB, FSA Callable 01/01/08 @ 101
5.125%, 01/01/33 ................... 1,500 1,511

53
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
MARYLAND MUNICIPAL BOND FUND (continued)

Face Market
Amount Value
(000) (000)
------ ------
Maryland State, Industrial Development
Authority, Holy Cross Health System,
RB, Callable 12/01/03 @ 102
5.500%, 12/01/15 .................... $100 $103
Maryland State, Park & Planning Commission,
Prince George County, BAN (A)
3.350%, 12/01/98 .................... 200 200
Maryland State, Public Improvements,
First Ser, GO, Callable 02/15/06 @ 101.50
4.700%, 02/15/10 .................... 300 310
Maryland State, Public Improvements,
Third Ser, GO
5.500%, 10/15/04 .................... 500 543
Maryland State, Stadium Authority,
Sports Facility Project, RB,
Callable 03/01/06 @ 101 AMBAC
5.800%, 03/01/26 .................... 250 268
Maryland State, Transportation Authority,
Transportation Facilities Project, RB,
Escrowed to Maturity
6.800%, 07/01/16 .................... 120 145
Montgomery County, Pollution Control,
Potomac Electric Power Company Project,
RB, Callable 02/15/04 @ 102
5.375%, 02/15/24 .................... 100 102
Montgomery County, Refunding Bond,
Ser A, GO
5.800%, 07/01/07 .................... 500 564
Montgomery County, Revenue Authority,
Human Services Headquarters Project, RB
5.400%, 08/01/06 .................... 200 218
Northeast Maryland, Waste Disposal Authority,
Montgomery County Resource Recovery
Project, RB, Callable 07/01/03 @ 102
6.200%, 07/01/10 .................... 275 299
Prince Georges County, Dimensions Health
Project, RB, Callable 07/01/04 @ 102
5.375%, 07/01/14 .................... 250 254
5.300%, 07/01/24 .................... 250 251
Prince Georges County, Public Improvements,
Ser A, GO, Callable 03/01/02 @ 102 MBIA
5.625%, 09/01/04 .................... 250 267
Queen Annes County, School Improvements,
GO, FGIC
5.125%, 11/15/06 .................... 350 375
Saint Mary's County, Public Facilities, GO,
Callable 11/01/03 @ 102 AMBAC
5.500%, 11/01/07 .................... 150 162
Saint Mary's County, Public Improvements,
GO, MBIA
4.500%, 09/01/00 .................... 500 509
University of Maryland, System Auxiliary
Facility & Tuition Revenue, Ser A, RB,
Callable 04/01/08 @ 100
5.000%, 04/01/19 .................... 500 504

Face Market
Amount Value
(000) (000)
------ ------
University of Maryland, University &
College Improvements, Ser A, RB
5.000%, 04/01/05 .................... $ 400 $ 423
University of Maryland, University &
College Improvements, Ser A, RB,
Callable 04/01/05 @ 102
5.400%, 04/01/09 .................... 100 108
University of Maryland, University &
College Improvements, Ser A, RB,
Callable 04/01/06 @ 101
5.500%, 04/01/08 .................... 100 108
University of Maryland, University &
College Improvements, Ser C, RB
4.350%, 10/01/03 .................... 250 256
Washington County, Public Improvements,
GO, Callable 01/01/03 @ 102 FGIC
5.250%, 01/01/07 .................... 100 106
Washington County, Suburban Sanitation
District, GO, Callable 06/01/06 @ 100
5.600%, 06/01/19 .................... 250 263
- ------------------------------------------------------------
18,279
- ------------------------------------------------------------
PUERTO RICO (5.9%)
Commonwealth Highway & Transportation
Authority, Ser Y, RB, Callable 07/01/06 @
101.50
5.500%, 07/01/26 .................... 300 313
Electric Power Authority, RB, Ser DD,
MBIA Callable On 7/01/08 @ 101.50
5.000%, 07/01/28 .................... 1,000 1,005
- ------------------------------------------------------------
1,318
- ------------------------------------------------------------
TEXAS (0.9%)
Grapevine, Industrial Development Authority,
American Airlines Project, Ser A2, RB (A) (B)
3.250%, 12/01/98 .................... 200 200
- ------------------------------------------------------------
Total Municipal Bonds
(Cost $19,105) .................. 19,797
- ------------------------------------------------------------
CASH EQUIVALENTS (9.8%)
Aim Tax Free Institutional Cash Reserve 1,101 1,101
Federated Maryland Municipal Cash Trust 1,094 1,094
- ------------------------------------------------------------
Total Cash Equivalents
(Cost $2,195) ................... 2,195
- ------------------------------------------------------------
Total Investments (98.3% )
(Cost $21,300) .................. 21,992
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (1.7%) 369
- ------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

54
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
MARYLAND MUNICIPAL BOND FUND (concluded)

Market
Value
(000)
------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- .9 billion shares
authorized) based on 1,869,654
outstanding shares ......................... $18,460
Portfolio Shares of Investor Class B
($.001 par value -- 50 million shares
authorized) based on 316,865
outstanding shares ......................... 3,181
Accumulated net realized gain on investments . 28
Net unrealized appreciation on investments ... 692
- ------------------------------------------------------------
Total Net Assets: (100.0%) .............. $22,361
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(19,115,472 / 1,869,654
SHARES OUTSTANDING) .......................... $10.22
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INVESTOR CLASS B (1)
(3,245,845 / 316,865
SHARES OUTSTANDING) .......................... $10.24
- ------------------------------------------------------------
- ------------------------------------------------------------
(A) Adjustable Rate Security--The rate reflected on the Statement of Net Assets
is the rate in effect on November 30, 1998. The date reported on the
Statement of Net Assets is the later of the date on which the security can
be redeemed at par or the next date on which the rate of interest is
adjusted.
(B) Security backed by letter of credit or credit support.
(1) Investors Class B has a contingent deferrred sales charge. For description
of a possible redemption charge, see the notes to the financial statements.
AMBAC--American Municipal Bond Assurance Corporation
AMT--Alternative Minimum Tax
BAN--Bond Anticipation Note
FGIC--Financial Guaranty Insurance Company
FSA--Financial Securities Assurance
GO--General Obligation
MBIA--Municipal Bond Insurance Association
RB--Revenue Bond
Ser--Series

The accompanying notes are an integral part of the financial statements.

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VALUE FUND

Market
Value
Shares (000)
------ ------
COMMON STOCKS (92.7%)
BANKS (5.3%)
BankAmerica ......................... 300,000 $19,556
BankBoston .......................... 150,000 6,244
KeyCorp ............................. 250,000 7,672
- ------------------------------------------------------------
33,472
- ------------------------------------------------------------
CHEMICALS (2.2%)
Great Lakes Chemical ................ 350,000 13,978
- ------------------------------------------------------------
COMPUTERS, SOFTWARE & SERVICES (14.6%)
Advanced Micro Devices* ............. 300,000 8,306
Cisco Systems* ...................... 200,000 15,075
Hewlett Packard ..................... 50,000 3,137
IBM ................................. 100,000 16,500
Intel ............................... 150,000 16,144
Microsoft* .......................... 100,000 12,200
Quantum* ............................ 325,000 7,191
Sun Microsystems* ................... 200,000 14,812
- ------------------------------------------------------------
93,365
- ------------------------------------------------------------
CONSUMER PRODUCTS (1.8%)
Fort James .......................... 300,000 11,737
- ------------------------------------------------------------
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (6.0%)
General Electric .................... 140,000 12,670
Philips Electronics, ADR ............ 225,000 14,245
Textron ............................. 150,000 11,653
- ------------------------------------------------------------
38,568
- ------------------------------------------------------------
FINANCIAL SERVICES (3.3%)
Fannie Mae .......................... 200,000 14,550
Morgan Stanley, Dean Witter, Discover 90,000 6,277
- ------------------------------------------------------------
20,827
- ------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO (10.0%)
Coca-Cola ........................... 125,000 8,758
Kellogg ............................. 225,000 8,241
PepsiCo ............................. 300,000 11,606
Philip Morris ....................... 350,000 19,578
Quaker Oats ......................... 250,000 15,344
- ------------------------------------------------------------
63,527
- ------------------------------------------------------------
GAS/NATURAL GAS (1.8%)
Columbia Energy Group ............... 200,000 11,350
- ------------------------------------------------------------
INSURANCE (7.2%)
American International Group ........ 150,000 14,100
Cigna ............................... 180,000 14,006
General RE .......................... 75,000 17,512
- ------------------------------------------------------------
45,618
- ------------------------------------------------------------
MACHINERY (1.6%)
Ingersoll-Rand ...................... 225,000 10,533
- ------------------------------------------------------------

Market
Value
Shares (000)
------ ------
MEDICAL PRODUCTS & SERVICES (10.7%)
Aetna ............................... 125,000 $ 9,664
Amgen* .............................. 175,000 13,169
Johnson & Johnson ................... 175,000 14,219
Merck ............................... 45,000 6,969
Schering Plough ..................... 135,000 14,361
Tenet Healthcare* ................... 325,000 9,608
- ------------------------------------------------------------
67,990
- ------------------------------------------------------------
MISCELLANEOUS BUSINESS SERVICES (0.7%)
Modis Professional Services* ........ 400,000 4,775
- ------------------------------------------------------------
PAPER & PAPER PRODUCTS (1.9%)
International Paper ................. 275,000 11,945
- ------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS (8.5%)
Exxon ............................... 200,000 15,013
Helmerich & Payne ................... 300,000 5,175
Mobil ............................... 155,000 13,359
Schlumberger ........................ 275,000 12,289
USX-Marathon Group .................. 300,000 8,513
- ------------------------------------------------------------
54,349
- ------------------------------------------------------------
RAILROADS (1.4%)
Canadian Pacific Limited ............ 400,000 8,825
- ------------------------------------------------------------
RECREATIONAL PRODUCTS & SERVICES (1.0%)
Walt Disney ......................... 200,000 6,438
- ------------------------------------------------------------
RETAIL (6.3%)
Federated Department Stores* ........ 325,000 13,548
Lowes ............................... 200,000 8,450
Warnaco Group, Cl A ................. 400,000 9,900
Wendy's International ............... 400,000 8,000
- ------------------------------------------------------------
39,898
- ------------------------------------------------------------
SAVINGS & LOANS (1.8%)
Washington Mutual ................... 300,000 11,625
- ------------------------------------------------------------
TELEPHONES & TELECOMMUNICATION (3.7%)
AT&T ................................ 225,000 14,020
SBC Communications .................. 200,000 9,588
- ------------------------------------------------------------
23,608
- ------------------------------------------------------------
UTILITIES, ELECTRIC, & GAS (2.9%)
Calenergy ........................... 300,000 9,394
Southern ............................ 300,000 8,850
- ------------------------------------------------------------
18,244
- ------------------------------------------------------------
Total Common Stocks
(Cost $453,258) .............. 590,672
- ------------------------------------------------------------

56
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
VALUE FUND (concluded)

Shares/
Face Market
Amount Value
(000) (000)
------ ------
PREFERRED STOCK (0.5%)
Calenergy Cap Trust III .............. 75,000 $ 3,338
- ------------------------------------------------------------
Total Preferred Stock
(Cost $3,253) ................. 3,338
- ------------------------------------------------------------
CASH EQUIVALENT (3.7%)
Aim Liquid Assets Portfolio .......... $23,524 23,524
- ------------------------------------------------------------
Total Cash Equivalent
(Cost $23,524) ................ 23,524
- ------------------------------------------------------------
REPURCHASE AGREEMENT (2.0%)
J.P. Morgan
5.45%, dated 11/30/98, matures
12/01/98, repurchase price $12,711,933
(collateralized by various GNMA obligations:
total market value $12,964,210) .... 12,710 12,710
- ------------------------------------------------------------
Total Repurchase Agreement
(Cost $12,710) ................ 12,710
- ------------------------------------------------------------
Total Investments (98.9%)
(Cost $492,745) ............... 630,244
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (1.1%) 6,888
- ------------------------------------------------------------

Market
Value
(000)
------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- 1.0 billion shares
authorized) based on 38,219,356
outstanding shares ...................... $405,499
Portfolio Shares of Investor Class A
($.001 par value -- .25 billion shares
authorized) based on 2,264,619
outstanding shares ...................... 28,536
Portfolio Shares of Investor Class B
($.001 par value -- .25 billion shares
authorized) based on 1,694,820
outstanding shares ...................... 23,958
Accumulated net realized gain on investments 41,640
Net unrealized appreciation on investments 137,499
- ------------------------------------------------------------
Total Net Assets: (100.0%) ........... $637,132
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(577,042,313 / 38,219,356
SHARES OUTSTANDING) ....................... $15.10
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INVESTOR CLASS A
(34,434,153 / 2,264,619
SHARES OUTSTANDING) ....................... $15.21
- ------------------------------------------------------------
OFFER PRICE PER SHARE -- INVESTOR CLASS A
($15.21 / 95.5%) .......................... $15.93
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- INVESTOR CLASS B (1)
(25,655,880 / 1,694,820
SHARES OUTSTANDING) ....................... $15.14
- ------------------------------------------------------------
(1) Investors Class B has a contingent deferrred sales charge. For description
of a possible redemption charge, see the notes to the financial statements.
* Non-income producing security.
ADR--American Depository Receipt
Cl--Class
GNMA--Government National Mortgage Association

The accompanying notes are an integral part of the financial statements.

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
LIFE VISION MAXIMUM GROWTH PORTFOLIO

Market
Value
Shares (000)
------ ------
EQUITY FUNDS (91.1%)
CrestFunds Capital Appreciation Fund,
Trust Class ...................... 281,391 $ 5,003
CrestFunds Special Equity Fund,
Trust Class ...................... 268,833 3,293
CrestFunds Value Fund,
Trust Class ...................... 430,072 6,494
- ------------------------------------------------------------
Total Equity Funds
(Cost $14,276) ............... 14,790
- ------------------------------------------------------------
MONEY MARKET FUND (8.9%)
CrestFunds Cash Reserve Fund,
Trust Class ....................... 1,442,904 1,443
- ------------------------------------------------------------
Total Money Market Fund
(Cost $1,443) ................ 1,443
- ------------------------------------------------------------
Total Investments (100.0%)
(Cost $15,719) ............... 16,233
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (0.0%) (3)
- ------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- 3.75 billion shares
authorized) based on 1,433,532
outstanding shares ................ 14,439
Undistributed net investment income . 2
Accumulated net realized gain on investments 1,275
Net unrealized appreciation on investments 514
- ------------------------------------------------------------
Total Net Assets: (100.0%) ..... $16,230
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(16,229,858 / 1,433,532
SHARES OUTSTANDING) ................. $11.32
- ------------------------------------------------------------
- ------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

63
<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
LIFE VISION GROWTH AND INCOME PORTFOLIO

Market
Value
Shares (000)
------ ------
EQUITY FUNDS (69.9%)
CrestFunds Capital Appreciation Fund,
Trust Class ...................... 227,116 $ 4,038
CrestFunds Special Equity Fund,
Trust Class ...................... 275,908 3,380
CrestFunds Value Fund,
Trust Class ...................... 390,419 5,895
- ------------------------------------------------------------
Total Equity Funds
(Cost $13,035) ............... 13,313
- ------------------------------------------------------------
FIXED INCOME FUNDS (25.7%)
CrestFunds Government Bond Fund,
Trust Class ....................... 147,900 1,574
CrestFunds Intermediate Bond Fund,
Trust Class ....................... 172,078 1,743
CrestFunds Limited Term Bond Fund,
Trust Class ....................... 157,865 1,575
- ------------------------------------------------------------
Total Fixed Income Funds
(Cost $4,747) ................ 4,892
- ------------------------------------------------------------
MONEY MARKET FUND (4.4%)
CrestFunds Cash Reserve Fund,
Trust Class ....................... 827,861 828
- ------------------------------------------------------------
Total Money Market Fund
(Cost $828) .................. 828
- ------------------------------------------------------------
Total Investments (100.0%)
(Cost $18,610) ............... 19,033
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (0.0%) 9
- ------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- 3.75 billion shares
authorized) based on 1,721,538
outstanding shares ................ 16,538
Undistributed net investment income . 7
Accumulated net realized gain on investments 2,074
Net unrealized appreciation on investments 423
- ------------------------------------------------------------
Total Net Assets: (100.0%) ..... $19,042
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(19,042,401 / 1,721,538
SHARES OUTSTANDING) ................. $11.06
- ------------------------------------------------------------
- ------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
LIFE VISION BALANCED PORTFOLIO

Market
Value
Shares (000)
------ ------
EQUITY FUNDS (58.1%)
CrestFunds Capital Appreciation Fund,
Trust Class .......................1,122,821 $19,964
CrestFunds Special Equity Fund,
Trust Class ....................... 805,630 9,869
CrestFunds Value Fund,
Trust Class .......................1,609,481 24,303
- ------------------------------------------------------------
Total Equity Funds
(Cost $52,452) ................ 54,136
- ------------------------------------------------------------
FIXED INCOME FUNDS (37.2%)
CrestFunds Government Bond Fund,
Trust Class ........................ 816,058 8,683
CrestFunds Intermediate Bond Fund,
Trust Class ........................1,710,187 17,324
CrestFunds Limited Term Bond Fund,
Trust Class ........................ 870,654 8,689
- ------------------------------------------------------------
Total Fixed Income Funds
(Cost $33,674) ................ 34,696
- ------------------------------------------------------------
MONEY MARKET FUND (4.6%)
CrestFunds Cash Reserve Fund,
Trust Class ........................4,288,154 4,288
- ------------------------------------------------------------
Total Money Market Fund
(Cost $4,288) 4,288
- ------------------------------------------------------------
Total Investments (99.9%)
(Cost $90,414) ....................... 93,120
- ------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (0.1%) .... 91
- ------------------------------------------------------------
NET ASSETS:
Portfolio Shares of Trust Class
($.001 par value -- 3.75 billion shares
authorized) based on 8,465,539
outstanding shares ........................ 84,549
Undistributed net investment income ......... 42
Accumulated net realized gain on investments 5,914
Net unrealized appreciation on investments .. 2,706
- ------------------------------------------------------------
Total Net Assets: (100.0%) ............. $93,211
- ------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- TRUST CLASS
(93,210,589 / 8,465,539
SHARES OUTSTANDING) ......................... $11.01
- ------------------------------------------------------------
- ------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

<PAGE>

<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS CRESTFUNDS, INC.
For the Year Ended November 30, 1998
(IN THOUSANDS)
--------------------------
U.S. TREASURY TAX FREE
MONEY FUND MONEY FUND
- --------------------------------------------------------------------------------
<S> <C> <C>
Interest Income: .................................. $33,565 $8,624
- --------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ....................... 2,412 963
Waiver of Investment Advisory Fees ............. -- --
Administrative Fees ............................ 927 361
Waiver of Administrative Fees .................. -- --
Custodian/Transfer Agent Fees .................. 539 216
Professional Fees .............................. 65 24
Director Fees .................................. 9 3
Registration & Filing Fees ..................... 68 21
Insurance Expense .............................. 4 2
Distribution Fees--Trust Class ................. 927 349
Waiver of Distribution Fees--Trust Class ....... (927) (349)
Distribution Fees--Investors Class A ........... -- 33
Waiver of Distribution Fees--Investors Class A . -- (33)
Distribution Fees--Investors Class B ........... -- --
Waiver of Distribution Fees--Investors Class B . -- --
Printing Fees .................................. 24 9
Miscellaneous Fees ............................. 36 1
- --------------------------------------------------------------------------------
Total Expenses ............................... 4,084 1,600
- --------------------------------------------------------------------------------
Net Investment Income ............................. 29,481 7,024
- --------------------------------------------------------------------------------
Net Realized Gain (Loss) on Investments ........... -- (9)
Change in Net Unrealized Appreciation (Depreciation)
of Investments ................................. -- --
- --------------------------------------------------------------------------------
Change in Net Realized and Unrealized Gain (Loss)
on Investments ................................. -- (9)
- --------------------------------------------------------------------------------
Increase in Net Assets Resulting
from Operations ................................ $29,481 $7,015
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.

66
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS CRESTFUNDS, INC.
For the Year Ended November 30, 1998
(IN THOUSANDS)
-------------------------------------------------------
VIRGINIA
INTERMEDIATE VIRGINIA MARYLAND
MUNICIPAL MUNICIPAL MUNICIPAL VALUE
BOND FUND BOND FUND BOND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income: ................................... $12,776 $1,419 $826 $ 1,915
Dividend Income: ................................... -- -- -- 8,628
- -------------------------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ........................ 1,248 167 105 4,749
Waiver of Investment Advisory Fees .............. -- (28) (61) --
Administrative Fees ............................. 375 42 26 950
Waiver of Administrative Fees ................... -- (36) -- --
Custodian/Transfer Agent Fees ................... 218 24 14 555
Professional Fees ............................... 29 5 2 70
Director Fees ................................... 6 -- -- 10
Registration & Filing Fees ...................... 11 5 4 42
Insurance Expense ............................... 1 -- -- 3
Distribution Fees--Trust Class .................. 464 48 30 1,116
Waiver of Distribution Fees--Trust Class ........ (445) (46) (29) (1,029)
Distribution Fees--Investors Class A ............ 13 -- -- 50
Waiver of Distribution Fees--Investors Class A .. (13) -- -- (50)
Distribution Fees--Investors Class B ............ -- 26 18 203
Waiver of Distribution Fees--Investors Class B .. -- (1) (1) (51)
Printing Fees ................................... 24 1 1 39
Miscellaneous Fees .............................. 36 9 16 27
- -------------------------------------------------------------------------------------------------------------
Total Expenses ................................ 1,967 216 125 6,684
- -------------------------------------------------------------------------------------------------------------
Net Investment Income .............................. 10,809 1,203 701 3,859
- -------------------------------------------------------------------------------------------------------------
Net Realized Gain on Investments ................... 1,725 175 58 42,161
Change in Net Unrealized Appreciation
of Investments .................................. 2,380 507 406 33,416
- -------------------------------------------------------------------------------------------------------------
Change in Net Realized and Unrealized Gain
on Investments .................................. 4,105 682 464 75,577
- -------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting
from Operations ................................. $14,914 $1,885 $1,165 $79,436
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
67

<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS CRESTFUNDS, INC.
For the Year Ended November 30, 1998
(IN THOUSANDS)
---------------------------------------------
LIFE VISION LIFE VISION LIFE VISION
MAXIMUM GROWTH AND BALANCED
GROWTH PORTFOLIO INCOME PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest Income: .................................. $ -- $ -- $ --
Dividend Income: .................................. 76 410 2,295
- ---------------------------------------------------------------------------------------------------
Expenses:
Investment Advisory Fees ....................... 40 53 233
Waiver of Investment Advisory Fees ............. (26) (32) (120)
Administrative Fees ............................ 40 40 40
Waiver of Administrative Fees .................. (40) (40) (40)
Custodian/Transfer Agent Fees .................. 13 17 75
Professional Fees .............................. 2 2 10
Director Fees .................................. -- -- 1
Registration & Filing Fees ..................... 4 5 19
Insurance Expense .............................. -- -- --
Distribution Fees--Trust Class ................. -- -- --
Waiver of Distribution Fees--Trust Class ....... -- -- --
Distribution Fees--Investors Class A ........... -- -- --
Waiver of Distribution Fees--Investors Class A . -- -- --
Distribution Fees--Investors Class B ........... -- -- --
Waiver of Distribution Fees--Investors Class B . -- -- --
Printing Fees .................................. 1 1 5
Miscellaneous Fees ............................. 6 7 10
- ---------------------------------------------------------------------------------------------------
Total Expenses ............................... 40 53 233
- ---------------------------------------------------------------------------------------------------
Net Investment Income (Loss) ...................... 36 357 2,062
- ---------------------------------------------------------------------------------------------------
Capital Gain Received from Investments ............ 1,739 2,121 6,921
Net Realized Loss on Investments .................. (463) (45) (1,004)
Change in Net Unrealized Appreciation (Depreciation)
of Investments ................................. (226) (580) (1,024)
- ---------------------------------------------------------------------------------------------------
Change in Net Realized and Unrealized Gain (Loss)
on Investments ................................. 1,050 1,496 4,893
- ---------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting
from Operations ................................ $1,086 $1,853 $6,955
- ---------------------------------------------------------------------------------------------------
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
68
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS CRESTFUNDS, INC.
For the Year Ended November 30, 1998
(IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------
U.S. TREASURY U.S. TREASURY TAX FREE TAX FREE
MONEY FUND MONEY FUND MONEY FUND MONEY FUND
------------- ------------- ---------- ----------
12/01/97 12/01/96 12/01/97 12/01/96
TO 11/30/98 TO 11/30/97 TO 11/30/98 TO 11/30/97
- ---------------------------------------------------------------------------------------------------
Investment Activities:
<S> <C> <C> <C> <C>
Net Investment Income .................... $ 29,481 $ 24,451 $ 7,024 $ 6,505
Net Realized Gain (Loss) on Investments .. -- -- (9) 3
- -------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting From Operations 29,481 24,451 7,015 6,508
- -------------------------------------------------------------------------------------------------
Distribution to Shareholders:
Net Investment Income
Trust Class .............................. (29,476) (24,456) (6,778) (6,352)
Investors Class A ........................ -- -- (239) (161)
Investors Class B ........................ -- -- -- --
Capital Gains
Trust Class .............................. -- -- -- --
Investors Class A ........................ -- -- -- --
Investors Class B ........................ -- -- -- --
- -------------------------------------------------------------------------------------------------
Total Distributions .................... (29,476) (24,456) (7,017) (6,513)
- -------------------------------------------------------------------------------------------------
Change in Net Assets .......................... 5 (5) (2) (5)
- -------------------------------------------------------------------------------------------------
Capital Share Transactions (All at $1.00 Per Share):
Trust Class:
Proceeds from Shares Issued .............. 1,131,937 1,251,595 369,536 393,449
Reinvestment of Cash Distributions ....... 4 146 -- --
Cost of Shares Redeemed .................. 1,064,404) (1,008,406) (325,471) (348,927)
--------- --------- ------- -------
Total Trust Class Transactions ......... 67,537 243,335 44,065 44,522
--------- --------- ------- -------
Investors Class A:
Proceeds from Shares Issued .............. -- -- 22,060 16,177
Reinvestment of Cash Distributions ....... -- -- 237 144
Cost of Shares Redeemed .................. -- -- (21,081) (11,681)
--------- --------- ------- -------
Total Investors Class A Transactions ... -- -- 1,216 4,640
--------- --------- ------- -------
Investors Class B:
Proceeds from Shares Issued .............. -- -- -- --
Reinvestment of Cash Distributions ....... -- -- -- --
Cost of Shares Redeemed .................. -- -- -- --
--------- --------- ------- -------
Total Investors Class B Transactions ... -- -- -- --
- -------------------------------------------------------------------------------------------------
Net Increase in Net Assets from
Capital Share Transactions ................. 67,537 243,335 45,281 49,162
- -------------------------------------------------------------------------------------------------
Total Increase in Net Assets ........... 67,542 243,330 45,279 49,157
- -------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period ........................ 632,381 389,051 234,471 185,314
- -------------------------------------------------------------------------------------------------
Net Assets:
End of Period .............................. $ 699,923 $ 632,381 $279,750 $ 234,471
=================================================================================================
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.
69
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS CRESTFUNDS, INC.
For the Year Ended November 30, 1998
(IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------------
VIRGINIA VIRGINIA
INTERMEDIATE INTERMEDIATE VIRGINIA VIRGINIA MARYLAND MARYLAND
MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
------------ ------------ --------- --------- --------- -----------
12/01/97 12/01/96 12/01/97 12/01/96 12/01/97 12/01/96
TO 11/30/98 TO 11/30/97 TO 11/30/98 TO 11/30/97 TO 11/30/98 TO 11/30/97
- ---------------------------------------------------------------------------------------------------------------------------
Investment Activities:
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income .............. $ 10,809 $ 11,260 $ 1,203 $ 832 $ 701 $ 374
Net Realized Gain (Loss) on Investments 1,725 1,641 175 67 58 (5)
Change in Net Unrealized Appreciation
of Investments ................... 2,380 490 507 278 406 241
- ---------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting
From Operations .................... 14,914 13,391 1,885 1,177 1,165 610
- ---------------------------------------------------------------------------------------------------------------------------
Distribution to Shareholders:
Net Investment Income
Trust Class ........................ (10,471) (10,835) (1,116) (792) (645) (363)
Investors Class A .................. (364) (353) -- -- -- --
Investors Class B .................. -- -- (87) (40) (56) (11)
Capital Gains
Trust Class ........................ (793) -- (50) (12) -- --
Investors Class A .................. (28) -- -- -- -- --
Investors Class B .................. -- -- (4) (1) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions .............. (11,656) (11,188) (1,257) (845) (701) (374)
- ---------------------------------------------------------------------------------------------------------------------------
Change in Net Assets .................... 3,258 2,203 628 332 464 236
- ---------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Trust Class:
Proceeds from Shares Issued ........ 36,891 35,373 13,751 9,497 13,041 6,495
Reinvestment of Cash Distributions . 629 22 60 26 11 2
Cost of Shares Redeemed ............ (34,155) (43,571) (5,172) (5,693) (5,813) (1,067)
------- -------- -------- ------ ------ ------
Total Trust Class Transactions ... 3,365 (8,176) 8,639 3,830 7,239 5,430
------- -------- -------- ------ ------ ------
Investors Class A:
Proceeds from Shares Issued ........ 2,174 938 -- -- -- --
Reinvestment of Cash Distributions . 289 274 -- -- -- --
Cost of Shares Redeemed ............ (2,503) (1,639) -- -- -- --
------- -------- -------- ------ ------ ------
Total Investors Class A Transactions (40) (427) -- -- -- --
------- -------- -------- ------ ------ ------
Investors Class B:
Proceeds from Shares Issued ........ -- -- 2,474 743 2,772 518
Reinvestment of Cash Distributions . -- -- 64 31 41 9
Cost of Shares Redeemed ............ -- -- (376) (115) (177) (92)
------- -------- -------- ------ ------ ------
Total Investors Class B Transactions -- -- 2,162 659 2,636 435
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions ........... 3,325 (8,603) 10,801 4,489 9,875 5,865
- ---------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 6,583 (6,400) 11,429 4,821 10,339 6,101
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period .................. 244,922 251,322 21,520 16,699 12,022 5,921
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets:
End of Period ........................ $251,505 $244,922 $32,949 $21,520 $22,361 $12,022
===========================================================================================================================
Shares Issued and Redeemed:
Trust Class:
Shares Issued ...................... 3,557 3,476 1,302 928 1,292 667
Shares Issued in Lieu of Cash Distributions 61 2 6 2 1 --
Shares Redeemed .................... (3,293) (4,278) (488) (559) (575) (110)
-------- -------- -------- ------ ------ ------
Total Trust Class Share Transactions 325 (800) 820 371 718 557
-------- -------- -------- ------ ------ ------
Investors Class A:
Shares Issued ...................... 210 92 -- -- -- --
Shares Issued in Lieu of Cash Distributions 28 27 -- -- -- --
Shares Redeemed .................... (241) (161) -- -- -- --
-------- -------- -------- ------ ------ ------
Total Investors Class A Share Transactions (3) (42) -- -- -- --
-------- -------- -------- ------ ------ ------
Investors Class B:
Shares Issued ...................... -- -- 233 73 274 53
Shares Issued in Lieu of Cash Distributions -- -- 6 3 4 1
Shares Redeemed .................... -- -- (35) (11) (17) (9)
-------- -------- -------- ------ ------ ------
Total Investors Class B Share Transactions -- -- 204 65 261 45
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from Capital
Share Transactions ................. 322 (842) 1,024 436 979 602
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
71

<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS CRESTFUNDS, INC.
For the Year Ended November 30, 1998

(IN THOUSANDS)
--------------------------

VALUE VALUE
FUND FUND
----------- -----------
12/01/97 12/01/96
TO 11/30/98 TO 11/30/97
- ---------------------------------------------------------------------
Investment Activities:
<S> <C> <C>
Net Investment Income (Loss) ........ $ 3,859 $ 5,276
Net Realized Gain (Loss) on Investments 42,161 118,138
Change in Net Unrealized Appreciation
(Depreciation) of investments ..... 33,416 7,024
- ---------------------------------------------------------------------
Increase (Decrease) in Net Assets Resulting
From Operations ....................... 79,436 130,438
- ---------------------------------------------------------------------
Distribution to Shareholders:
Trust Class ......................... (3,768) (5,360)
Investors Class A ................... (212) (214)
Investors Class B ................... -- (24)
Capital Gains
Trust Class ......................... (110,281) (2,857)
Investors Class A ................... (5,275) (96)
Investors Class B ................... (2,562) (27)
- ---------------------------------------------------------------------
Total Distributions ............... (122,098) (8,578)
- ---------------------------------------------------------------------
Change in Net Assets ..................... (42,662) 121,860
- ---------------------------------------------------------------------
Capital Share Transactions:
Trust Class:
Proceeds from Shares Issued ......... 92,390 86,500
Reinvestment of Cash Distributions .. 88,294 2,679
Cost of Shares Redeemed ............. (153,783) (167,444)
------- -------
Total Trust Class Transactions .... 26,901 (78,265)
------- -------
Investors Class A:
Proceeds from Shares Issued ......... 11,222 9,602
Reinvestment of Cash Distributions .. 5,277 303
Cost of Shares Redeemed ............. (8,617) (4,558)
------ -------
Total Investors Class A Transactions 7,882 5,347
------ -------
Investors Class B:
Proceeds from Shares Issued ......... 12,797 7,216
Reinvestment of Cash Distributions .. 2,504 51
Cost of Shares Redeemed ............. (2,494) (782)
------ -------
Total Investors Class B Transactions 12,807 6,485
- ---------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions ............ 47,590 (66,433)
- ---------------------------------------------------------------------
Total Increase (Decrease) in Net
Assets 4,928 55,427
- ---------------------------------------------------------------------
Net Assets:
Beginning of Period ................... 632,204 576,777
- ---------------------------------------------------------------------
Net Assets:
End of Period ......................... $637,132 $632,204
=====================================================================
Shares Issued and Redeemed:
Trust Class:
Shares Issued ....................... 10,513 6,467
Shares Issued in Lieu of Cash
Distributions 6,789 193
Shares Redeemed ..................... (14,789) (12,286)
------ -------
Total Trust Class Share Transactions 2,513 (5,626)
------ -------
Investors Class A:
Shares Issued ....................... 764 636
Shares Issued in Lieu of Cash Distributions 402 21
Shares Redeemed ..................... (591) (304)
------ -------
Total Investors Class A Share Transactions 575 353
------ -------
Investors Class B:
Shares Issued ....................... 874 467
Shares Issued in Lieu of Cash Distributions 192 4
Shares Redeemed ..................... (171) (53)
------ -------
Total Investors Class B Share Transactions 895 418
- ---------------------------------------------------------------------
Net Increase (Decrease) from Capital
Share Transactions 3,983 (4,855)
=====================================================================
<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
72

<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS CRESTFUNDS, INC.
For the Period Ended November 30, 1998
(IN THOUSANDS)
----------------------------------------------------------------------------------------

LIFE VISION LIFE VISION LIFE VISION LIFE VISION LIFE VISION
MAXIMUM MAXIMUM GROWTH AND GROWTH AND BALANCED
GROWTH PORTFOLIO GROWTH PORTFOLIO INCOME PORTFOLIO INCOME PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------------
12/01/97 07/01/97 12/01/97 07/01/97 12/01/97
TO 11/30/98 TO 11/30/97* TO 11/30/98 TO 11/30/97* TO 11/30/98
- --------------------------------------------------------------------------------------------------------------------------------
Investment Activities:
<S> <C> <C> <C> <C> <C>
Net Investment Income $ 36 $ 39 $ 357 $ 190 $ 2,062
Capital Gain Received from Investments 1,739 -- 2,121 -- 6,921
Net Realized Gain (Loss) on Investments (463) (1) (45) 20 (1,004)
Change in Net Unrealized Appreciation
(Depreciation) of investments (226) 740 (580) 1,003 (1,024)
- --------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting From
Operations 1,086 778 1,853 1,213 6,955
- --------------------------------------------------------------------------------------------------------------------------------
Distribution to Shareholders:
Trust Class (35) (38) (360) (180) ( 2,072)
Capital Gains
Trust Class -- -- (22) -- (238)
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (35) (38) (382) (180) (2,310)
- --------------------------------------------------------------------------------------------------------------------------------
Change in Net Assets 1,051 740 1,471 1,033 4,645
- --------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Trust Class:
Proceeds from Shares Issued 5,852 13,614 2,591 21,846 15,849
Reinvestment of Cash Distributions 36 38 382 180 2,310
Cost of Shares Redeemed (4,421) (680) (7,923) (538) (19,035)
----- ------ ------ ------ ------
Total Trust Class Transactions 1,467 12,972 (4,950) 21,488 (876)
----- ------ ------ ------ ------
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 1,467 12,972 (4,950) 21,488 (876)
- --------------------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net
Assets 2,518 13,712 (3,479) 22,521 3,769
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Beginning of Period 13,712 -- 22,521 -- 89,442
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets:
End of Period $ 16,230 $ 13,712 $ 19,042 $ 22,521 $ 93,211
================================================================================================================================
Shares Issued and Redeemed:
Trust Class:
Shares Issued 599 1,350 239 2,177 1,449
Shares Issued in Lieu of Cash Distributions 3 4 35 17 214
Shares Redeemed (456) (66) (695) (52) (1,743)
----- ------ ------ ------ ------
Total Trust Class Share Transactions 146 1,288 (421) 2,142 (80)
----- ------ ------ ------ ------
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) from Capital Share
Transactions 146 1,288 (421) 2,142 (80)
================================================================================================================================

(IN THOUSANDS)
----------------
LIFE VISION
BALANCED
PORTFOLIO
- --------------------------------------------------------------
07/01/97
TO 11/30/97*
- --------------------------------------------------------------
Investment Activities:
<S> <C>
Net Investment Income $ 993
Capital Gain Received from Investments --
Net Realized Gain (Loss) on Investments 235
Change in Net Unrealized Appreciation
(Depreciation) of investments 3,730
- --------------------------------------------------------------
Increase in Net Assets Resulting From
Operations 4,958
- --------------------------------------------------------------
Distribution to Shareholders:
Trust Class (941)
Capital Gains
Trust Class --
- --------------------------------------------------------------
Total Distributions (941)
- --------------------------------------------------------------
Change in Net Assets 4,017
- --------------------------------------------------------------
Capital Share Transactions:
Trust Class:
Proceeds from Shares Issued 94,371
Reinvestment of Cash Distributions 941
Cost of Shares Redeemed (9,887)
-----
Total Trust Class Transactions 85,425
-----
- --------------------------------------------------------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 85,425
- --------------------------------------------------------------
Total Increase (Decrease) in Net
Assets 89,442
- --------------------------------------------------------------
Net Assets:
Beginning of Period --
- --------------------------------------------------------------
Net Assets:
End of Period $ 89,442
==============================================================
Shares Issued and Redeemed:
Trust Class:
Shares Issued 9,446
Shares Issued in Lieu of Cash Distributions 90
Shares Redeemed (990)
-----
Total Trust Class Share Transactions 8,546
-----
- --------------------------------------------------------------
Net Increase (Decrease) from Capital Share
Transactions 8,546
==============================================================

<FN>
*Commenced Operations on June 30, 1997.
Amounts designated as "--" are either $0 or have been rounded to $0.
</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.
73

<PAGE>
<TABLE>
<CAPTION>
<S><C>
FINANCIAL HIGHLIGHTS CRESTFUNDS, INC.
For a Share Outstanding Throughout the Year

INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET -------------------------------------------------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------
U.S. TREASURY MONEY FUND
- ------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $1.00 0.048 -- (0.048) -- $1.00 4.89% $ 699,923 0.66% 0.81%
1997 1.00 0.048 -- (0.048) -- 1.00 4.91% 632,381 0.65% 0.80%
1996 1.00 0.047 -- (0.047) -- 1.00 4.80% 389,051 0.66% 0.81%
1995 1.00 0.052 -- (0.052) -- 1.00 5.29% 370,454 0.66% 0.81%
1994 1.00 0.033 -- (0.033) -- 1.00 3.30% 319,477 0.66% 0.66%
INVESTORS CLASS A (2)
FOR THE YEARS ENDED NOVEMBER 30,:
1994 $1.00 0.008 -- (0.008) -- $1.00 0.79% $ -- 0.92%* 29.16%*
- -------------------
TAX-FREE MONEY FUND
- -------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $1.00 0.029 -- (0.029) -- $1.00 2.97% $ 270,899 0.66% 0.81%
1997 1.00 0.030 -- (0.030) -- 1.00 3.06% 226,837 0.66% 0.81%
1996 1.00 0.029 0.002 (0.029) (0.002) 1.00 3.14% 182,320 0.66% 0.81%
1995 1.00 0.032 -- (0.032) -- 1.00 3.26% 202,333 0.66% 0.81%
1994 1.00 0.021 -- (0.021) -- 1.00 2.07% 157,602 0.67% 0.67%
INVESTORS CLASS A
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $1.00 0.030 -- (0.030) -- $1.00 2.96% $ 8,851 0.67% 1.07%
1997 1.00 0.030 -- (0.030) -- 1.00 3.05% 7,634 0.68% 1.08%
1996 1.00 0.029 0.002 (0.029) (0.002) 1.00 3.13% 2,994 0.67% 1.07%
1995 1.00 0.031 -- (0.031) -- 1.00 3.25% 1,627 0.67% 1.07%
1994 1.00 0.020 -- (0.020) -- 1.00 1.98% 757 0.76% 1.44%

RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
- --------------------------------------------------
- ------------------------
U.S. TREASURY MONEY FUND
- ------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 4.77% 4.62% --
1997 4.82% 4.67% --
1996 4.69% 4.54% --
1995 5.16% 5.01% --
1994 3.23% 3.23% --
INVESTORS CLASS A (2)
FOR THE YEARS ENDED NOVEMBER 30,:
1994 2.31%* (25.93%)* --
- -------------------
TAX-FREE MONEY FUND
- -------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 2.92% 2.77% --
1997 3.02% 2.87% --
1996 2.88% 2.73% --
1995 3.19% 3.04% --
1994 2.06% 2.06% --
INVESTORS CLASS A
FOR THE YEARS ENDED NOVEMBER 30,:
1998 2.92% 2.52% --
1997 3.42% 3.02% --
1996 2.86% 2.46% --
1995 3.16% 2.76% --
1994 1.97% 1.29% --

<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commencement of operations for this class April 19, 1995.
(2) Ceased operations March 31, 1994.
* Annualized.
** Total return does not reflect the sales charge or redemption charge, where applicable.
</FN>

</TABLE>
The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CRESTFUNDS, INC.
For a Share Outstanding Throughout the Year

INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET -------------------------------------------------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
- -----------------------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 $10.31 0.449 0.166 (0.450) (0.035) $10.44 6.10% $243,606 0.79% 0.97%
1997 10.22 0.463 0.089 (0.462) -- 10.31 5.55% 237,096 0.78% 0.93%
1996 10.24 0.419 (0.021) (0.418) -- 10.22 4.01% 243,137 0.78% 0.93%
1995 9.21 0.428 1.030 (0.428) -- 10.24 16.09% 43,373 0.72% 0.94%
1994 10.33 0.440 (1.100) (0.440) (0.020) 9.21 (6.53%) 41,365 0.65% 0.77%
INVESTORS CLASS A (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $10.31 0.454 0.171 (0.450) (0.035) $10.45 6.19% $ 7,899 0.79% 0.94%
1997 10.21 0.468 0.093 (0.461) -- 10.31 5.65% 7,826 0.79% 0.94%
1996 10.23 0.415 (0.018) (0.417) -- 10.21 4.01% 8,185 0.79% 0.94%
1995 9.20 0.428 1.029 (0.427) -- 10.23 16.10% 8,649 0.73% 0.95%
1994 10.32 0.440 (1.100) (0.440) (0.020) 9.20 (6.56%) 7,481 0.66% 0.80%

- ----------------------------
VIRGINIA MUNICIPAL BOND FUND
- ----------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $10.44 0.468 0.267 (0.468) (0.026) $10.68 7.19% $ 29,252 0.69% 1.10%
1997 10.28 0.475 0.168 (0.475) (0.008) 10.44 6.46% 20,044 0.69% 1.09%
1996 10.40 0.465 (0.120) (0.465) -- 10.28 3.48% 15,911 0.71% 1.11%
1995 (1) 10.00 0.309 0.445 (0.310) (0.044) 10.40 7.67%* 6,247 0.71%* 1.11%*
INVESTORS CLASS B (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $10.48 0.367 0.276 (0.367) (0.026) $10.73 6.24% $ 3,697 1.64% 1.92%
1997 10.31 0.387 0.176 (0.385) (0.008) 10.48 5.58% 1,476 1.60% 2.00%
1996 10.43 0.378 (0.121) (0.377) -- 10.31 2.58% 787 1.57% 1.97%
1995 (2) 10.06 0.237 0.409 (0.232) (0.044) 10.43 6.51%* 628 1.57%* 1.97%*

- ----------------------------
MARYLAND MUNICIPAL BOND FUND
- ----------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $ 9.95 0.416 0.270 (0.416) -- $10.22 7.03% $ 19,115 0.62% 1.15%
1997 9.76 0.426 0.190 (0.426) -- 9.95 6.50% 11,461 0.63% 1.16%
1996 (3) 10.00 0.309 (0.240) (0.309) -- 9.76 1.07%* 5,808 0.71%* 1.36%*
INVESTORS CLASS B (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $ 9.96 0.325 0.281 (0.326) -- $10.24 6.17% $ 3,246 1.57% 1.96%
1997 9.76 0.338 0.199 (0.337) -- 9.96 5.64% 561 1.54% 2.00%
1996 (4) 9.53 0.200 0.226 (0.196) -- 9.76 7.67%* 113 1.55%* 2.20%*

- ----------
VALUE FUND
- ----------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $16.55 0.093 1.638 (0.095) (3.085) $15.10 13.64% $577,042 1.03% 1.21%
1997 13.39 0.137 3.237 (0.145) (0.070) 16.55 25.41% 590,824 1.02% 1.17%
1996 11.60 0.166 2.380 (0.165) (0.591) 13.39 22.68% 553,648 1.02% 1.17%
1995 10.73 0.245 2.619 (0.262) (1.732) 11.60 28.76% 220,386 1.02% 1.17%
1994 11.38 0.200 (0.240) (0.190) (0.420) 10.73 (0.49%) 166,713 1.01% 1.01%

RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
- ---------------------------------------------------
- -----------------------------------------
VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND
- -----------------------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 4.33% 4.15% 24%
1997 4.57% 4.42% 30%
1996 4.35% 4.20% 25%
1995 4.34% 4.12% 28%
1994 4.48% 4.36% 24%
INVESTORS CLASS A (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 4.33% 4.18% 24%
1997 4.56% 4.41% 30%
1996 4.12% 3.97% 25%
1995 4.33% 4.11% 28%
1994 4.47% 4.33% 24%

- ----------------------------
VIRGINIA MUNICIPAL BOND FUND
- ----------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 4.41% 4.00% 28%
1997 4.65% 4.25% 39%
1996 4.61% 4.21% 24%
1995 (1) 4.61%* 4.21%* 35%
INVESTORS CLASS B (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 3.46% 3.18% 28%
1997 3.73% 3.33% 39%
1996 3.73% 3.33% 24%
1995 (2) 3.76%* 3.36%* 35%

- ----------------------------
MARYLAND MUNICIPAL BOND FUND
- ----------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 4.11% 3.58% 12%
1997 4.38% 3.85% 5%
1996 (3) 4.30%* 3.65%* 9%
INVESTORS CLASS B (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 3.16% 2.77% 12%
1997 3.43% 2.97% 5%
1996 (4) 3.42%* 2.77%* 9%

- ----------
VALUE FUND
- ----------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 0.63% 0.45% 71%
1997 0.92% 0.77% 100%
1996 1.38% 1.23% 82%
1995 2.16% 2.01% 175%
1994 1.82% 1.82% 116%

<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commencement of operations for this class April 5, 1995
(2) Commencement of operations for this class April 17, 1995
(3) Commencement of operations for this class March 1, 1996.
(4) Commencement of operations for this class April 25, 1996
* Annualized.
** Total return does not reflect the sales charge or redemption charge, where applicable.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
76

<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CRESTFUNDS, INC.
For a Share Outstanding Throughout the Year

INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET -------------------------------------------------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------------
VALUE FUND (CONTINUED)
- ----------------------
INVESTORS CLASS A (**)
FOR THE YEARS ENDED NOVEMBER 30,:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 $16.64 0.096 1.655 (0.096) (3.085) $15.21 13.69% $ 34,434 1.03% 1.18%
1997 13.47 0.136 3.248 (0.143) (0.070) 16.64 25.42% 28,112 1.03% 1.18%
1996 11.66 0.169 2.396 (0.164) (0.591) 13.47 22.63% 17,997 1.03% 1.18%
1995 10.78 0.250 2.623 (0.261) (1.732) 11.66 28.71% 12,633 1.03% 1.18%
1994 11.42 0.180 (0.220) (0.180) (0.420) 10.78 (0.45%) 8,115 1.02% 1.04%
INVESTORS CLASS B (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $16.59 (0.007) 1.642 -- (3.085) $15.14 12.78% $ 25,656 1.78% 2.03%
1997 13.44 0.037 3.234 (0.051) (0.070) 16.59 24.63% 13,269 1.73% 2.09%
1996 11.64 0.091 2.384 (0.084) (0.591) 13.44 21.81% 5,131 1.68% 2.03%
1995 (1) 11.11 0.120 1.618 (0.136) (1.072) 11.64 15.78%* 2,086 1.68%* 2.03%*

RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
- ---------------------------------------------------
- ----------------------
VALUE FUND (CONTINUED)
- ----------------------
INVESTORS CLASS A (**)
FOR THE YEARS ENDED NOVEMBER 30,:
<S> <C> <C> <C>
1998 0.63% 0.48% 71%
1997 0.89% 0.74% 100%
1996 1.35% 1.20% 82%
1995 2.14% 1.99% 175%
1994 1.81% 1.79% 116%
INVESTORS CLASS B (**)
FOR THE YEARS ENDED NOVEMBER 30,:
1998 (0.13%) (0.38%) 71%
1997 0.15% (0.20%) 100%
1996 0.71% 0.36% 82%
1995 (1) 1.13%* 0.78%* 175%

<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commencement of operations for this class April 19, 1995.
* Annualized.
** Total return does not reflect the sales charge or redemption charge,
where applicable.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CRESTFUNDS, INC.
For a Share Outstanding Throughout the Year

- ---------------------------------------
LIFE VISION GROWTH AND INCOME PORTFOLIO
- ---------------------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $ 10.51 0.183 0.561 (0.184) (0.010) $11.06 7.12% $19,042 0.25% 0.59%
1997(1) 10.00 0.091 0.506 (0.087) -- 10.51 5.97% 22,521 0.25%* 0.59%*

- ------------------------------
LIFE VISION BALANCED PORTFOLIO
- ------------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 $ 10.46 0.239 0.579 (0.240) (0.028) $11.01 7.90% $93,211 0.25% 0.42%
1997(1) 10.00 0.116 0.454 (0.110) -- 10.46 5.70% 89,442 0.25%* 0.42%*

- ------------------------------
LIFE VISION BALANCED PORTFOLIO
- ------------------------------
TRUST CLASS
FOR THE YEARS ENDED NOVEMBER 30,:
1998 2.21% 2.04% 52%
1997(1) 2.66%* 2.49%* 43%

<FN>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commencement of operations June 30, 1997.
* Annualized.
** Total return does not reflect the sales charge or redemption charge,
where applicable.
</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
NOTES TO FINANCIAL STATEMENTS CRESTFUNDS, INC.
November 30, 1998

1. ORGANIZATION
CrestFunds, Inc. (the Company) is registered under the Investment Company Act of
1940 ( the "1940 Act"), as amended, as an open-end, management investment
company organized as a Maryland corporation. The Company currently has fifteen
investment portfolios (individually a "Fund" and collectively the "Funds"). The
Funds offer one or more of three classes of shares, the Trust Class Shares, the
Investors Class A Shares and the Investors Class B Shares. The Funds include:

EQUITY FUNDS
Value Fund

BOND FUNDS
Virginia Intermediate Municipal Bond Fund
Virginia Municipal Bond Fund
Maryland Municipal Bond Fund

MONEY MARKET FUNDS

U.S. Treasury Money Fund
Tax Free Money Fund

LIFE VISION PORTFOLIOS
Life Vision Maximum Growth Portfolio
Life Vision Growth and Income Portfolio
Life Vision Balanced Portfolio

The Funds' prospectus provides a description of each Fund's investment
objectives, policies and strategies.

2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds:

SECURITY VALUATION--Investment securities held by the Money Market Funds
are stated at amortized cost, which approximates market value. Under this
valuation method, purchase discount and premiums are accreted and amortized
ratably to maturity and are included in interest income.

Investments in equity securities held by the Non-Money Market Funds which
are traded on a national securities exchange (or reported on the NASDAQ
national market system) are stated at the last quoted sale price if readily
available for each equity security on each business day; other equity
securities traded in the over-the-counter markets and listed equity
securities for which no sale was reported on that date are stated at the
last quoted bid price. Debt obligations exceeding sixty days to maturity
for which market quotations are readily available are valued at the most
recent quoted bid price. Debt obligations with sixty days or less remaining
until maturity are valued at their amortized cost. Restricted securities
for which quotations are not readily available are valued at fair value
using methods determined in good faith under general supervision of the
Funds' Directors.

FEDERAL INCOME TAXES--It is each Fund's intention to continue to qualify as
a regulated investment company for Federal income tax purposes and
distribute all of its taxable income and net capital gains. Accordingly, no
provision for Federal income taxes is required.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--Distribution from net
investment income for the Money Market Funds and Bond Funds are declared
daily and paid monthly. Each of the Equity Funds declare and pay dividends
from net investment income monthly. Any net realized capital gains will be
distributed at least annually for all Funds. Dividends and distributions
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. To the extent these
differences are permanent, adjustments are made to the appropriate equity
accounts in the period that the difference arises. Accordingly, the
following permanent differences, primarily attributable to certain net
operating losses, equalization, and other distribution classes, which for
tax purposes have been used to offset net short-term capital gains, have
been reclassified to the following accounts:

ACCUMULATED UNDISTRIBUTED
PAID-IN- REALIZED NET INVESTMENT
CAPITAL GAIN (LOSS) INCOME
FUND (000) (000) (000)
------------------ --------- ----------- --------------
U.S. Treasury 1 -- (1)
Tax Free Money 2 (1) (1)
Virginia Intermediate
Municipal Bond -- 2 (2)
Virginia Municipal Bond -- (1) 1
Value 3 (100) 97

79
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) CRESTFUNDS, INC.
November 30, 1998

CLASSES--Class specific expenses are borne by that class. Income, non-class
specific expenses and realized/unrealized gains and losses are allocated to
the respective classes on the basis of the relative daily net assets.

SECURITY TRANSACTIONS AND INVESTMENT INCOME--Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Costs used in determining realized gains and losses on the sale of
investment securities are those of the specific securities sold adjusted
for the accretion and amortization of purchase discounts and premiums
during the respective holding periods. Interest income is recorded on the
accrual basis; dividend income is recorded on the ex-dividend date.

REPURCHASE AGREEMENTS--Each Fund, with the exception of Tax Free Money
Fund, Virginia Intermediate Municipal Bond Fund, Virginia Municipal Bond
Fund, and Maryland Municipal Bond Fund may invest in repurchase agreements.
The Funds, through their sub-custodian, receive delivery of the underlying
securities, whose market value including interest is required to be at
least 102% of the resale price. The Funds' investment advisor, Crestar
Asset Management Company, (formerly Capitoline Investment Services,
Incorporated), is responsible for determining that the value of these
underlying securities remains at least 102% of the resale price. If the
seller defaults, the Fund would suffer a loss to the extent that the
proceeds from the sale of the underlying securities were less than the
resale price.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS--The Financial
Statements have been prepared in conformity with generally accepted
accounting principles which require management to make certain estimates
and assumptions at the date of the financial statements.

3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES

MANAGEMENT FEES--The Company's investment advisor is Crestar Asset
Management Company (the Advisor), a wholly-owned subsidiary of Crestar
Bank. Pursuant to an Investment Advisory Agreement, the Advisor is paid for
advisory services to each Fund at the annual rate based on the following
fee schedule; Cash Reserve Fund, U.S. Treasury Money Fund and Tax Free
Money Fund; .40% of each Fund's average daily net assets for the first $500
million of net assets; .35% of each Fund's average daily net assets on the
next $500 million of net assets; .30% of each Fund's average daily net
assets on all remaining net assets; Capital Appreciation Fund, Value Fund
and Special Equity Fund; .75% of each Fund's average daily net assets;
Limited Term Bond Fund and Virginia Intermediate Municipal Bond Fund; .50%
of each Fund's average daily net assets; Intermediate Bond Fund, Government
Bond Fund, Maryland Municipal Bond Fund and Virginia Municipal Bond Fund;
.60% of each Fund's average daily net assets; Maximum Growth Portfolio,
Growth and Income Portfolio, and Balanced Portfolio; .25% of each
Portfolio's average daily net assets. The Advisor has voluntarily agreed to
waive a portion of its fee for Virginia Municipal Bond Fund and Government
Bond Fund in order to limit Advisory Fee to .50% for each Fund.

On July 20, 1998 it was announced that Crestar Financial Corporation
("Crestar"), the parent of Crestar Bank which is the parent of Crestar
Asset Management Company ("CAMCO"), the Funds' investment adviser, and
SunTrust Banks, Inc. ("SunTrust"), had signed a definitive agreement for
the acquisition of Crestar by SunTrust. The acquisition of Crestar by
SunTrust was completed on December 31, 1998. It is currently the intention
of Crestar and SunTrust to file an exemptive application with the
Securities and Exchange Commission to permit the combination of certain of
the CrestFunds with certain of the STI Classic Funds (mutual funds that are
served by investment advisers that are subsidiaries of SunTrust). Any
combination of CrestFunds and STI Classic Funds would require the approval
of the board of directors and the shareholders of the CrestFunds.

ADMINISTRATION AND DISTRIBUTION FEES--SEI Investments Mutual Fund Services
(the Administrator), a Delaware business trust, serves as administrator to
the Company. SEI Investments Management Corporation, a wholly-owned
subsidiary of SEI Investments Company (SEI), is the owner of all beneficial
interest in the Administrator. The Administrator provides the Company with
administrative services, including fund accounting, and regulatory
reporting and is entitled to receive a fee at an annual rate of .15% of the
average daily net assets of the Equity, Bond, and Money Market

<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) CRESTFUNDS, INC.
November 30, 1998

Funds. The Administrator has voluntarily agreed to waive a portion of its
fee for Government Bond Fund and Virginia Municipal Bond Fund in order to
limit operating expenses. The Administrator is entitled to receive a fee of
$40,000 annually for each Life Vision Portfolio. The Administrator has
voluntarily agreed to have its fee waived for each Life Vision Portfolio
for the period ending November 30, 1998.

SEI Investments Distribution Co. (the Distributor), a wholly-owned
subsidiary of SEI, serves as distributor of each Fund's shares pursuant to
a distribution agreement with the Company. The Trust Class and Investors
Class A shares of the Funds have a separate distribution plan (the 12b-1
Plan) pursuant to Rule 12b-1 under the 1940 Act. As provided in the 12b-1
Plan, the Trust Class and Investors Class A shares of the Funds pay the
Distributor as compensation for its services .15% of the aggregate average
daily net assets of such classes of the Funds. The Distributor has agreed
to waive any fees payable pursuant to the 12b-1 Plan.

In addition, the Investors Class A shares of the Money Market Funds have a
distribution plan (the Investors Class A Plan) pursuant to Rule 12b-1 under
the 1940 Act. As provided in the Investors Class A Plan, the Investors
Class A shares of the Money Market Funds pay the Distributor as
compensation for its services .25% of such Class average daily net assets.
The Distributor has agreed to waive any fees payable pursuant to the
Investors Class A Plan.

The Investors Class B shares of the Funds have a distribution plan (the B
Shares Plan) pursuant to Rule 12b-1 under the 1940 Act. As provided in the
B Shares Plan, the Investors Class B shares of the Funds pay the
Distributor as compensation for its services .75% of the aggregate average
daily net assets of such class of the Funds. In addition, pursuant to the B
Shares Plan, the Distributor is compensated at an annual rate of .25% of
the B shares' average net assets for providing ongoing Shareholder support
services to investors in B shares. The Distributor has agreed to waive a
portion of its fees pursuant to the B Shares Plan in order to limit
Distribution Fees to .95% for each Fund, except for the Value Fund for
which the limit is .75%.

On July 20, 1998, the CrestFunds, Inc. adopted a shareholder service plan
(the "Plan") for Trust Class shares of the following Portfolios of the
Fund: Limited Term Bond Fund; Intermediate Bond Fund; Government Bond Fund;
Maryland Municipal Bond Fund; Virginia Intermediate Municipal Bond Fund;
Virginia Municipal Bond Fund; (the "Bond Funds"), Value Fund; Capital
Appreciation Fund; and Special Equity Fund (the "Equity Funds" and,
together with the Bond Funds, the "Portfolios").

Under the Plan, a Portfolio may pay the Distributor a negotiated fee at a
rate of up to .25% annually of the average daily net assets of such
Portfolio attributable to the Shares that are subject to the arrangement in
return for provision of a broad range of shareholder and administrative
services. The Distributor has agreed to waive a portion of its shareholder
service plan for trust class shares in order to limit shareholder service
fees to .05% for bond funds and .10% for equity funds.

TRANSFER AGENT AND CUSTODIAN FEES--Crestar Bank serves as the Company's
transfer agent and dividend disbursing agent and is compensated for those
services monthly by each Fund at an annual rate of .05% of the Fund's
average daily net assets for the Trust Class and .06% of the Fund's average
daily net assets for the Investors Class A and Investors Class B. In
addition, Crestar Bank serves as the Company's custodian and is compensated
at an annual rate of up to .04% of the Equity, Bond, and Money Market
Fund's average daily net assets and up to .03% of each LifeVision
Portfolio's average net assets.

CONTINGENT DEFERRED SALES CHARGE (CDSC)--
A CDSC is imposed on certain redemptions of Investors Class B shares. The
CDSC varies depending on the number of years from the time of payment for
the purchase of Investors Class B shares until the redemption of such
shares.

CONTINGENT
FROM DATE OF DEFERRED SALES
PURCHASE CHARGE
-------------- -----------------
Year 1 ........................ 5.00%
Year 2 ........................ 4.00%
Year 3 ........................ 3.00%
Year 4 ........................ 3.00%
Year 5 ........................ 2.00%
Year 6 ........................ 1.00%
Year 7 ........................ 0.00%
Year 8 ........................Conversion to A shares

81
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) CRESTFUNDS, INC.
November 30, 1998

4. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
including U.S. Government securities, other than temporary cash investments,
during the period ended November 30, 1998, for each Fund is as follows:

PURCHASES SALES
(000) (000)
---------- ----------
Virginia Intermediate Municipal Bond 56,454 59,640
Virginia Municipal Bond ........... 17,674 7,473
Maryland Municipal Bond ........... 9,650 1,903
Value ............................. 420,448 508,508
Maximum Growth .................... 15,142 11,930
Growth and Income ................. 12,061 14,927
Balanced .......................... 54,310 48,445

At November 30, 1998, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation on securities at November 30,
1998, for each Fund is as follows:

NET
APPRECIATION DEPRECIATION APPRECIATION
(000) (000) (000)
------------ ------------ ------------
Virginia Intermediate
Municipal Bond .. 10,734 (156) 10,578
Virginia Municipal
Bond ............ 1,091 (9) 1,082
Maryland Municipal
Bond ............ 692 -- 692
Value .............. 154,168 (16,669) 137,499
Maximum Growth ..... 1,232 (718) 514
Growth and Income .. 1,168 (745) 423
Balanced ........... 5,258 (2,552) 2,706

The Funds had capital losses carryforward at November 30, 1998, to the extent
provided in the regulations for Federal income tax as follows:

CAPITAL LOSS
CARRYOVER EXPIRES
11/30/98 2002
------------ ----------
Tax Free ........... 8,746 --

EXPIRES EXPIRES EXPIRES EXPIRES
2003 2004 2005 2006
---------- ---------- ---------- ------------
Tax Free ........... -- -- -- 8,746

5. CONCENTRATION OF CREDIT RISK
The Virginia Intermediate Municipal Bond Fund, the Virginia Municipal Bond Fund,
and the Maryland Municipal Bond Fund invest in debt securities in their
respective states. The ability of the issuers of the securities held by the
Funds to meet their obligations may be affected by economic or political
conditions in that state.

- --------------------------------------------------------------------------------
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF THE COMPANY. THE REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE COMPANY, UNLESS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER THE COMPANY NOR SEI
INVESTMENTS DISTRIBUTION CO. IS A BANK AND COMPANY SHARES ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR
ANY OTHER AGENCY. INVESTING IN MUTUAL FUNDS INVOLVES RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. AN INVESTMENT IN A MONEY MARKET FUND
IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO
ASSURANCE THAT A MONEY MARKET FUND WILL MAINTAIN A STABLE $1.00 SHARE PRICE. SEI
INVESTMENTS DISTRIBUTION CO. AND CRESTAR BANK ARE NOT AFFILIATED.
- --------------------------------------------------------------------------------

82
<PAGE>
NOTICE TO SHAREHOLDERS OF
THE CRESTFUNDS, INC.
(Unaudited)

For Shareholders that do not have a November 30, 1998 taxable year end, this
notice is for informational purposes only. For shareholders with a November 30,
1998 taxable year end, please consult your tax advisor as to the pertinence of
the notice.

For the fiscal year ended November 30, 1998, each fund has designated the
following items with regard to distributions paid during the year:

<TABLE>
<CAPTION>
(A) (B) (C)
LONG TERM MID TERM ORDINARY
CAPITAL GAINS CAPITAL GAIN INCOME
DISTRIBUTIONS DISTRIBUTION DISTRIBUTIONS
FUND (TAX BASIS) (TAX BASIS) (TAX BASIS)
-------------- -------------- ---------------
<S> <C> <C> <C>
U.S. Treasury.............................................. 0% 0% 100%
Tax Free Money Market...................................... 0% 0% 0%
Virginia Intermediate Municipal Bond....................... 0% 7% 0%
Virginia Municipal Bond.................................... 2% 3% 0%
Maryland Municipal Bond.................................... 0% 0% 0%
Value...................................................... 30% 32% 38%
Life Vision Maximum Growth................................. 0% 0% 100%

LIFE VISION GROWTH AND INCOME.............................. 0% 0% 100%
Life Vision Balanced....................................... 0% 0% 100%
</TABLE>

<TABLE>
<CAPTION>
(E)
(A+B+C+D)
(D) TOTAL (F)
TAX EXEMPT DISTRIBUTION QUALIFYING
FUND INTEREST (TAX BASIS) DIVIDENDS (1)
---- ----------- ----------- ----------
<S> <C> <C> <C>

U.S. Treasury.............................................. 0% 100% 0%
Tax Free Money Market...................................... 100% 100% 0%
Virginia Intermediate Municipal Bond....................... 93% 100% 0%
Virginia Municipal Bond.................................... 95% 100% 0%
Maryland Municipal Bond.................................... 100% 100% 0%
Value...................................................... 0% 100% 97%
Life Vision Maximum Growth................................. 0% 100% 86%
Life Vision Growth and Income.............................. 0% 100% 48%
Life Vision Balanced....................................... 0% 100% 48%
<FN>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A), (B), (C) and (D) are based on a percentage of each fund's
total distributions.
</FN>
</TABLE>

83
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors of CrestFunds, Inc.:

We have audited the accompanying statements of net assets of CrestFunds, Inc.
(comprised of the Cash Reserve Fund, U.S. Treasury Money Fund, Tax Free Money
Fund, Limited Term Bond Fund, Intermediate Bond Fund, Government Bond Fund,
Virginia Intermediate Municipal Bond Fund, Virginia Municipal Bond Fund,
Maryland Municipal Bond Fund, Value Fund, Capital Appreciation Fund, Special
Equity Fund, Life Vision Maximum Growth Portfolio, Life Vision Growth and
Income Portfolio and Life Vision Balanced Portfolio) as of November 30, 1998
and the related statement of operations and of changes in net assets and the
financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express our opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1998 by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
portfolios constituting the CrestFunds, Inc. as of November 30, 1998, the
results of their operations, the changes in their net assets and the
financial highlights for the periods presented in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP
New York, New York
January 15, 1999

<PAGE>

CREST
-----
FUNDS

A FAMILY OF MUTUAL FUNDS
MANAGED BY
CRESTAR ASSET MANAGEMENT COMPANY

<PAGE>

STI CLASSIC FUNDS

INVESTMENT ADVISORS:

TRUSCO CAPITAL MANAGEMENT, INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
THE TRUST..........................................................B-2
DESCRIPTION OF PERMITTED INVESTMENTS...............................B-2
INVESTMENT LIMITATIONS............................................B-20
THE INVESTMENT ADVISOR............................................B-23
THE ADMINISTRATOR.................................................B-24
THE DISTRIBUTOR...................................................B-24
THE TRANSFER AGENT................................................B-24
THE CUSTODIAN.....................................................B-25
INDEPENDENT PUBLIC ACCOUNTANTS....................................B-25
LEGAL COUNSEL.....................................................B-25
TRUSTEES AND OFFICERS OF THE TRUST................................B-28
PERFORMANCE INFORMATION...........................................B-28
COMPUTATION OF YIELD..............................................B-29
CALCULATION OF TOTAL RETURN.......................................B-30
PURCHASING SHARES.................................................B-30
REDEEMING SHARES..................................................B-31
DETERMINATION OF NET ASSET VALUE..................................B-31
TAXES.............................................................B-32
FUND TRANSACTIONS.................................................B-36
TRADING PRACTICES AND BROKERAGE...................................B-36
DESCRIPTION OF SHARES.............................................B-37
SHAREHOLDER LIABILITY.............................................B-38
LIMITATION OF TRUSTEES' LIABILITY.................................B-38
YEAR 2000.........................................................B-39
EXPERTS...........................................................B-40
APPENDIX A: FINANCIAL STATEMENTS..................................B-40
</TABLE>

May 24, 1999

<PAGE>

THE TRUST

STI Classic Funds (the "Trust") is a diversified, open-end management investment
company established under Massachusetts law as a Massachusetts business trust
under a Declaration of Trust dated January 15, 1992. The Declaration of Trust
permits the Trust to offer separate series ("Funds") of units of beneficial
interest ("shares") and different classes of shares of each Fund. Shareholders
at present may purchase (through financial institutions or intermediaries) Trust
Shares of each Fund. Each Trust Share of each Fund represents an equal
proportionate interest in that portfolio. See "Description of Shares." This
Statement of Additional Information relates to the STI Maryland Municipal Bond
Fund, STI Virginia Intermediate Municipal Bond Fund, STI Virginia Municipal Bond
Fund, STI Tax-Free Money Market Fund and STI Value Funds. These various series
are collectively referred to herein as the "Funds."

The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to shareholders, costs of custodial services, and registering the
shares under federal and state securities laws, pricing, insurance expenses,
litigation, and other extraordinary expenses, brokerage costs, interest charges,
taxes, and organization expenses.

DESCRIPTION OF PERMITTED INVESTMENTS

AMERICAN DEPOSITARY RECEIPTS (ADRs), EUROPEAN DEPOSITARY RECEIPTS (EDRs) AND
GLOBAL DEPOSITORY RECEIPTS (GDRs)

ADRs, EDRs, and GDRs are securities, typically issued by a U.S. financial
institution or a non-U.S. financial institution in the case of an EDR or GDR (a
"depositary"). The institution has ownership interests in a security, or a pool
of securities, issued by a foreign issuer and deposited with the depositary.
ADRs, EDRs and GDRs may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary. An unsponsored facility may be
established by a depositary without participation by the issuer of the
underlying security. Holders of unsponsored depositary receipts generally bear
all the costs of the unsponsored facility. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities.

ASSET-BACKED SECURITIES

Asset-backed securities are securities backed by non-mortgage assets such as
company receivables, truck and auto loans, leases and credit card receivables.
Other asset-backed securities may be created in the future. These securities may
be traded over-the-counter and typically have a short-intermediate maturity
structure depending on the paydown characteristics of the underlying financial
assets which are passed through to the security holder. These securities are
generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pool of assets. Asset-backed
securities may also be debt obligations, which are known as collateralized
obligations and are generally issued as the debt of a special purpose entity,
such as a trust, organized solely for the purpose of owning these assets and
issuing debt obligations.

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The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

BANK OBLIGATIONS

COMMON AND PREFERRED STOCKS

CONVERTIBLE SECURITIES

CUSTODIAL RECEIPTS

DEBT SECURITIES

DELAYED DELIVERY TRANSACTIONS

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transactions after they are entered into, and may sell underlying securities
before they are delivered, which may result in capital gains or losses.

DEMAND FEATURE

A put that entities the security holder to repayment of the principal amount of
the underlying security on no more than 30 days' notice at any time or at
specified intervals is a demand feature. With respect to the money market funds,
such intervals may not exceed 397 days. A standby commitment is a put that
entities the security holder to dame-day settlement at amortized cost plus
accrued interest.

DOLLAR ROLLS

Dollar rolls may be renewed prior to cash settlement and initially may involve
only a firm commitment agreement by the Fund to buy a security.

If the broker-dealer to whom the Fund sells the security becomes insolvent, the
Fund's right to repurchase the security may be restricted. Other risks involved
in entering into dollar rolls include the risk that the value of the security
may change adversely over the term of the dollar roll and that the security the
Fund is required to repurchase may be worth less than the security that the Fund
originally held. To avoid any leveraging concerns, the Fund will place U.S.
Government or other liquid, high grade assets in a segregated account in an
amount sufficient to cover its repurchase obligation.

THE EURO

On January 1, 1999, the European Monetary Union (EMU) implemented a new
currency unit, the Euro, which is expected to reshape financial markets,
banking systems and monetary policies in Europe and other parts of the world.
The countries converting or tying their currencies to the Euro include
Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Ireland,
Finland, Italy, Portugal, and Spain. Financial transactions and market
information, including share quotations and company accounts, in
participating countries are denominated in Euros. Approximately 46% of the
stock exchange capitalization of the total European market may now be
reflected in Euros, and participating governments will issue their bonds in
Euros. Monetary policy for participating countries will be uniformly managed
by a new central bank, the European Central Bank (ECB).

FEDERALLY TAXABLE OBLIGATIONS

The municipal bond funds do not intend to invest in securities whose interest is
taxable; however, from time to time each such Fund may invest a portion of its
assets in fixed-income obligations whose interest is subject to federal income
tax. For example, each such Fund may invest in obligations whose interest is
taxable pending the investment or reinvestment in municipal securities of
proceeds from the sale of its shares or sales of portfolio securities.

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Should a municipal bond fund invest in taxable obligations, it would purchase
securities that in the Adviser's judgment are of high quality. These include
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; obligations of domestic banks; and repurchase agreements. The
bond funds' standards for high quality taxable obligations are essentially the
same as those described by Moody's Investors Service, Inc. in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and those
described by Standard and Poor's Corporation in rating corporate obligations
within its two highest ratings of A-1 and A-2. Additionally, each Fund will
purchase such obligations only in accordance with the quality standards as set
forth in the Prospectus.

Proposals to restrict or eliminate the federal income tax exemption for interest
on municipal obligations are introduced before Congress from time to time.
Proposals may also be introduced before state legislatures that would affect the
state tax treatment of a Fund's distributions. If such proposals were enacted,
the availability of municipal obligations and the value of each Funds' holdings
would be affected and the Board of Directors would reevaluate the Funds'
objectives and policies.

Each municipal bond fund anticipates being as fully invested as practicable in
municipal securities; however, there may be occasions when as a result of
maturities of portfolio securities, or sales of Fund shares, or in order to meet
redemption requests, a Fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions or to preserve credit quality, a Fund may be required to sell
securities at a loss.

FOREIGN SECURITIES

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opportunities and are affected by different economic trends. The international
investments of the International Equity Index, International Equity, and
Emerging Markets Equity Funds may reduce the effect that events in any one
country or geographic area will have on its investment holdings. Of course,
negative movement by a Fund's investments in one foreign market represented in
its portfolio may offset potential gains from the Fund's investments in another
country's markets.

FORWARD FOREIGN CURRENCY CONTRACTS

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

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result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
Funds will be engaged in futures transactions only for hedging purposes, the
Advisors do not believe that the Funds will generally be subject to the risks of
loss frequently associated with futures transactions. The Funds presumably would
have sustained comparable losses if, instead of the futures contract, they had
invested in the underlying financial instrument and sold it after the decline.
The risk of loss from the purchase of options is less as compared with the
purchase or sale of futures contracts because the maximum amount at risk is the
premium paid for the option.

Utilization of futures transactions by the Funds does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the fund securities being hedged. It is also
possible that the Funds could both lose money on futures contracts and
experience a decline in value of its fund securities. There is also the risk of
loss by the Funds of margin deposits in the event of the bankruptcy of a broker
with whom the Funds have an open position in a futures contract or related
option.

GOVERNMENT SECURITIES

Securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities am to as government securities. They may be backed by the
credit of the U.S. Government as a whole or only by the issuing agency. For
example, securities issued by the Federal Home Loan Banks and the Federal Home
Loan Mortgage Corporation are supported only by the credit of the issuing
agency, and not by the U.S. Government. Securities issued by the Federal Farm
Credit System, the Federal Land Banks and the Federal National Mortgage
Association are supported by the agency's right to borrow money from the U.S.
Treasury under certain circumstances. U.S. Treasury securities and some agency
securities, such as those issued by the Federal Housing Administration and the
Government National Mortgage Association, are backed by the full faith and
credit of the U.S. Government and are the highest quality government securities.

GICS

HIGH YIELD SECURITIES

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(3) Market prices for high risk, high yield securities may also be
affected by investors' perception of the issuer's credit quality and the
outlook for economic growth. Thus, prices for high risk, high yield
securities may move independently of interest rates and the overall bond
market.
(4) The market for high risk, high yield securities may be adversely
affected by legislative and regulatory developments.

HEDGING TECHNIQUES

INDEXED SECURITIES

ILLIQUID SECURITIES

Illiquid securities are securities that cannot be disposed of within seven days
at approximately the price at which they are being carried on a Fund's books.

INVESTMENT COMPANY SHARES

INVESTMENT GRADE OBLIGATIONS

Investment grade obligations are debt obligations rated BBB by S&P or Baa by
Moody's, or their unrated equivalents. These securities are deemed to have
speculative characteristics.

LOAN PARTICIPATIONS

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The secondary market for loan participations is limited and any such
participation purchased by the Fund may be regarded as illiquid.

MORTGAGE-BACKED SECURITIES

GOVERNMENT PASS-THROUGH SECURITIES

Obligations of GNMA are backed by the full faith and credit of the United States
Government. Obligations of Fannie Mae and FHLMC are not backed by the full faith
and credit of the United States Government but are considered to be of high
quality since they are considered to be instrumentalities of the United States.
The market value and interest yield of these mortgage-backed securities can vary
due to market interest rate fluctuations and early prepayments of underlying
mortgages. These securities represent ownership in a pool of federally insured
mortgage loans with a maximum maturity of 30 years. However, due to scheduled
and unscheduled principal payments on the underlying loans, these securities
have a shorter average maturity and, therefore, less principal volatility than a
comparable 30-year bond. Since prepayment rates vary widely, it is not possible
to accurately predict the average maturity of a particular mortgage-backed
security. The scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. Government
mortgage-backed securities differ from conventional bonds in that principal is
paid back to the certificate holders over the life of the loan rather than at
maturity. As a result, there will be monthly scheduled payments of principal and
interest. In addition, there may be unscheduled principal payments representing
prepayments on the underlying mortgages. Although these securities may offer
yields higher than those available from other types of U.S. Government
securities, mortgage-backed securities may be less effective than other types of
securities as a means of "locking in" attractive long-term rates because of the
prepayment feature. For instance, when interest rates decline, the value of
these securities likely will not rise as much as comparable debt securities due
to the prepayment feature. In addition, these prepayments can cause the price of
a mortgage-backed security originally purchased at a premium to decline in price
to its par value, which may result in a loss.

PRIVATE PASS-THROUGH SECURITIES

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private mortgage-backed securities are collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs").

CMOS

REMICS

Investors may purchase beneficial interests in REMICs, which are known as
"regular" interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by Fannie Mae or FHLMC represent
beneficial ownership interests in a REMIC trust consisting principally of
mortgage loans or Fannie Mae, FHLMC or GNMA- guaranteed mortgage pass-through
certificates. For FHLMC REMIC Certificates, FHLMC guarantees the timely payment
of interest. GNMA REMIC Certificates are backed by the full faith and credit of
the U.S. Government.

STRIPPED MORTGAGE-BACKED SECURITIES

DETERMINING MATURITIES OF MORTGAGE-BACKED SECURITIES

MUNICIPAL FORWARDS

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MUNICIPAL LEASE OBLIGATIONS

MUNICIPAL SECURITIES

MUNICIPAL BONDS include general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds and participation
interests in municipal bonds. General obligation bonds are backed by the taxing
power of the issuing municipality. Revenue bonds are backed by the revenues of a
project or facility (for example, tolls from a bridge). Certificates of
participation represent an interest in an underlying obligation or commitment,
such as an obligation issued in connection with a leasing arrangement. The
payment of principal and interest on private activity and industrial development
bonds generally is totally dependent on the ability of a facility's user to meet
its financial obligations and the pledge, if any, of real and personal property
as security for the payment.

MUNICIPAL NOTES consist of general obligation notes, tax anticipation notes
(notes sold to finance working capital needs of the issuer in anticipation of
receiving taxes on a future date), revenue anticipation notes (notes sold to
provide needed cash prior to receipt of expected non-tax revenues from a
specific source), bond anticipation notes, certificates of indebtedness, demand
notes and construction loan notes. A Fund's investments in any of the notes
described above will be limited to those obligations (i) where both principal
and interest are backed by the full faith and credit of the United States, (ii)
which are rated MIG-2 or V-MIG-2 at the time of investment by Moody's, (iii)
which are rated SP-2 at the time of investment by S&P, or (iv) which, if not
rated by S&P or Moody's, are in the Advisor's judgement, of at least comparable
quality to MIG-2, VMIG-2 or SP-2.

Municipal bonds must be rated at least BBB or better by S&P or at least Baa or
better by Moody's at the time of purchase for the Tax-Exempt Bond Funds or in
one of the two highest short-term rating categories by S&P or Moody's for the
Tax-Exempt Money Market Fund or, if not rated by S&P or Moody's, must be deemed
by the Advisor to have essentially the same characteristics and quality as bonds
having the above ratings. A Fund may purchase industrial development and
pollution control bonds if the interest paid is exempt from Federal income tax.
These bonds are issued by or on behalf of public authorities to raise money to
finance various privately-operated facilities for business and manufacturing,
housing, sports and pollution control. These bonds are also used to finance
public facilities such as airports, mass transit systems, ports and parking. The
payment of the principal and interest on such bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and the pledge,
if any, of real and personal property so financed as security for such payment.

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demand feature. A participation interest without a demand feature or with a
demand feature exceeding seven days may be deemed to be an illiquid security
subject to the Funds' investment limitations restricting their purchases of
illiquid securities. A Fund may purchase other types of tax-exempt
instruments as long as they are of a quality equivalent to the bond or
commercial paper ratings stated above.

OPTIONS

A closing purchase transaction cannot be effected with respect to an option once
the option writer has received an exercise notice for such option.

The Funds will write call options only on a covered basis, which means that a
Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected, a
Fund would be required to continue to hold a security which it might otherwise
wish to sell, or deliver a security it would want to hold. Options written by
the Funds will normally have expiration dates between one and nine months from
the date written. The exercise price of a call option may be below, equal to, or
above the current market value of the underlying security at the time the option
is written.

OTHER INVESTMENTS

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The Funds are not prohibited from investing in bank obligations issued by
clients of SEI Investments Company ("SEI Investments"), the parent company of
the Administrator and the Distributor. The purchase of Fund shares by these
banks or their customers will not be a consideration in deciding which bank
obligations the Funds will purchase. The Funds will not purchase obligations
issued by the Advisors.

PAY-IN-KIND SECURITIES

Pay-In-Kind securities are debt obligations or preferred stock, that pay
interest or dividends in the form of additional debt obligations or preferred
stock.

REFUNDING CONTRACTS

A Fund may purchase securities on a when-issued basis in connection with the
refinancing of an issuer's outstanding indebtedness. Refunding contracts require
the issuer to sell and the Fund to buy refunded municipal obligations at a
stated price and yield on a settlement date that may be several months or
several years in the future. A Fund generally will not be obligated to pay the
full purchase price if it fails to perform under a refunding contract. Instead,
refunding contracts generally provide for payment of liquidated damages to the
issuer (currently 15-20% of the purchase price). A Fund may secure its
obligations under a refunding contract by depositing collateral or a letter of
credit equal to the liquidated damages provisions of the refunding contract.
When required by SEC guidelines, a Fund will place liquid assets such as cash,
U.S. Government securities, or other high grade debt securities in a segregated
custodial account equal in amount to its obligations under refunding contracts.

REPURCHASE AGREEMENTS

RESOURCE RECOVERY BONDS

The municipal bond funds may purchase resource recovery bonds, which are a type
of revenue bond issued to build facilities such as solid waste incinerators or
waste-to-energy plaints. Typically, a private corporation will be involved, at
least during the construction phase, and the revenue stream will be secured by
fees or rents paid by municipalities for use of the facilities. The viability of
a resource recovery project, environmental protection regulations, and project
operator tax incentives may affect the value and credit quality of resource
recovery bonds. Refunding Contracts. The municipal bond funds may invest in
refunding contracts which require the issuer to sell and a Fund to buy refunded
municipal obligations at a stated price and yield on a settlement date that may
be several months or several years in the future.

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RESTRICTED SECURITIES

REVERSE REPURCHASE AGREEMENTS

In a reverse repurchase agreement a Fund sells a portfolio instrument to another
party, such as a bank or broker-dealer, in return for cash and agrees to
repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, a Fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under the
agreement. A Fund will enter into reverse repurchase agreements only with
parties whose creditworthiness has been found satisfactory by the Adviser. Such
transactions may increase fluctuations in the market value of a Fund's assets
and may be viewed as a form of leverage.

SECURITIES LENDING

The STI Value Fund may lend securities pursuant to agreements which require that
the loans be continuously secured by collateral at all times equal to 100% of
the market value of the loaned securities which consists of: cash, securities of
the U.S. Government or its agencies, or any combination of cash and such
securities. Such loans will not be made if, as a result, the aggregate amount of
all outstanding securities loans for a Fund exceed one-third of the value of the
Fund's total assets taken at fair market value. A Fund will continue to receive
interest on the securities lent while simultaneously earning interest on the
investment of the cash collateral in U.S. Government securities. However, a Fund
will normally pay lending fees to such broker-dealers and related expenses from
the interest earned on invested collateral. There may be risks of delay in
receiving additional collateral or risks of delay in recovery of the securities
or even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans are made only to borrowers deemed by the
appropriate Advisor to be of good standing and when, in the judgment of that
Advisor, the consideration which can be earned currently from such securities
loans justifies the attendant risk. Any loan may be terminated by either party
upon reasonable notice to the other party. The Funds may use the Distributor or
a broker-dealer affiliate of an Advisor as a broker in these transactions.

SHORT-TERM OBLIGATIONS

STANDBY COMMITMENTS AND PUTS

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because adequate current financial information may not be available. In the
event that any writer is unable to honor a put for financial reasons, a Fund
would be a general creditor (I.E., on a parity with all other unsecured
creditors) of the writer. Furthermore, particular provisions of the contract
between the Fund and the writer may excuse the writer from repurchasing the
securities; for example, a change in the published rating of the underlying
securities or any similar event that has an adverse effect on the issuer's
credit or a provision in the contract that the put will not be exercised except
in certain special cases, for example, to maintain portfolio liquidity. The Fund
could, however, at any time sell the underlying portfolio security in the open
market or wait until the portfolio security matures, at which time it should
realize the full par value of the security.

The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Fund. Sale
of the securities to third parties or lapse of time with the put unexercised may
terminate the right to put the securities. Prior to the expiration of any put
option, the Fund could seek to negotiate terms for the extension of such an
option. If such a renewal cannot be negotiated on terms satisfactory to the
Fund, the Fund could, of course, sell the portfolio security. The maturity of
the underlying security will generally be different from that of the put. There
will be no limit to the percentage of portfolio securities that the Fund may
purchase subject to a standby commitment or put, but the amount paid directly or
indirectly for all standby commitments or puts which are not integral parts of
the security as originally issued held in the Fund will not exceed 1/2 of 1% of
the value of the total assets of such Fund calculated immediately after any such
put is acquired.

STRIPS

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SUPRANATIONAL AGENCY OBLIGATIONS

SWAPS, CAPS, FLOORS, COLLARS

TAX AND REVENUE ANTICIPATION NOTE

Tax and revenue anticipation notes are issued by municipalities in expectation
of future tax or other revenues, and are payable from those specific taxes or
revenues. Bond anticipation notes normally provide interim financing in advance
of an issue of bonds or notes, the proceeds of which are used to repay the
anticipation notes. Tax-exempt commercial paper is issued by municipalities to
help finance short-term capital or operating needs.

TENDER OPTION BONDS

are created by coupling an intermediate or long-term tax-exempt bond (generally
held pursuant to a custodial agreement) with a tender agreement that gives the
holder the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank, broker-dealer, or
other financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a remarketing
or similar agent) that would cause the bond, coupled with the tender option, to
trade at par on the date of such determination. After payment of the tender
option fee, a Fund effectively holds a demand obligation that bears interest at
the prevailing short-term tax-exempt rate. Subject to applicable regulatory
requirements, the money market funds may buy tender option bonds if the
agreement gives the Fund the right to tender the bond to its sponsor no less
frequently than once every 397 days. In selecting tender option bonds for the
Funds, the Adviser will, pursuant to procedures established by the Board of
Directors, consider the creditworthiness of the issuer of the underlying bond,
the custodian, and the third party provider of the tender option. In certain
instances, a sponsor may terminate a tender option if, for example, the issuer
of the underlying bond defaults on interest payments.

TIME DEPOSITS

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U.S. GOVERNMENT AGENCY OBLIGATIONS

U.S. TREASURY OBLIGATIONS

VARIABLE AND FLOATING RATE SECURITIES

VARIABLE RATE MASTER DEMAND NOTES

WARRANTS

Warrants give holders the right, but not the obligation, to buy shares of a
company at a given price, usually higher than the market price, during a
specified period.

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WHEN-ISSUED SECURITIES AND MUNICIPAL FORWARDS

ZERO COUPON OBLIGATIONS

INVESTMENT LIMITATIONS

The following are fundamental policies of each Fund and cannot be changed with
respect to a Fund without the consent of the holders of a majority of that
Fund's outstanding shares. The term "majority of the outstanding shares" means
the vote of (i) 67% or more of a Fund's shares present at a meeting, if more
than 50% of the outstanding shares of the Fund are present or represented by
proxy, or (ii) more than 50% of a Fund's outstanding shares, whichever is less.

A Fund may not:

1. Purchase securities of any issuer (except securities issued or guaranteed
by the United States, its agencies or instrumentalities and repurchase
agreements including such securities) if as a result more than 5% of the
total assets of the Fund would be invested in the securities of that
issuer; provided, however, that a Fund may invest up to 25% of its total
assets without regard to this restriction as permitted by applicable law.

2. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. Any borrowing
will be done from a bank and, to the extent that such borrowing exceeds 5%
of the value of the Fund's assets, asset coverage of at least 300% is
required. In the event that such asset

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coverage shall at any time fall below 300%, the Fund shall, within three
days thereafter or such longer period as the Securities and Exchange
Commission may prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such borrowings
shall be at least 300%. This borrowing provision is included solely to
facilitate the orderly sale of portfolio securities to accommodate heavy
redemption requests if they should occur and is not for investment
purposes. All borrowings in excess of 5% of the value of a Fund's total
assets will be repaid before making additional investments and any interest
paid on such borrowings will reduce income.

3. Make loans except that (a) a Fund may purchase or hold debt instruments in
accordance with its investment objective and policies; (b) a Fund may enter
into repurchase agreements, and (c) the STI Growth and Income Fund may
engage in securities lending as permitted by applicable law.

4. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (2) above in aggregate amounts not to exceed 10% of
the Fund's total assets, taken at current value at the time of the
incurrence of such loan, except as permitted with respect to securities
lending.

5. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts(EXCEPT FOR FINANCIAL FUTURES
CONTRACTS) and interests in a pool of securities that are secured by
interests in real estate. However, subject to their permitted investment
spectrum, any Fund may invest in companies which invest in real estate,
commodities or commodities contracts.

6. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.

7. Purchase any securities which would cause more than 25% of the total assets
of a Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, repurchase agreements involving such securities and,
with respect to only Tax-Free Money Market Fund, U.S. Treasury Money Market
Fund, Maryland Municipal Bond Fund, Virginia Intermediate Municipal Bond
Fund and Virginia Municipal Bond Fund, tax-exempt securities issued by
governments or political subdivisions of governments. For purposes of this
limitation, (i) utility companies will be divided to according to their
services, for example, gas, gas transmission, electric and telephone will
each be

B-19
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considered a separate industry; (ii) financial service companies will be
classified according to the end users of their services, for example,
automobile finance, bank finance and diversified finance will each be
considered a separate industry; and (iii) supranational entities will be
considered to be a separate industry.

NON-FUNDAMENTAL POLICIES

No Fund may purchase or hold illiquid securities (i.e., securities that cannot
be disposed of for their approximate carrying value in seven days or less (which
term includes repurchase agreements and time deposits maturing in more than
seven days) if, in the aggregate, more than 15% of its net assets (10% for the
STI Tax-Free Money Market Fund) would be invested in illiquid securities.

Each Fund does not currently intend to purchase or sell futures contracts or put
or call options. This limitation does not apply to options attached to, or
acquired or traded together with, their underlying securities, and does not
apply to securities that incorporate features similar to options or futures
contracts.

To meet federal requirements for qualification as a "regulated investment
company" the STI Tax-Free Money Market Fund limit its investments so that at the
close of each quarter of its taxable year: (A) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the securities of
a single issuer, and (b) no more than 25% of total assets are invested in the
securities of a single issuer. These limitations do not apply to "government
securities" as defined for federal tax purposes.

1. No Fund may make short sales of securities, maintain a short position or
purchase securities on margin, except that the Trust may obtain short-term
credits as necessary for the clearnace of security transactions.

2. No Fund may act as an underwriter of securities of other issuers except as
it may be deemed an underwriter in selling a security.

3. No Fund may purchase securities of other investment companies exceppt as
permitted by the Investment Company Act of 1940 (the "1940 Act") and the
rules and regulations thereunder.

THE INVESTMENT ADVISOR

Trusco Capital Management, Inc. (the "Advisor") has entered into an advisory
agreement with the Trust (the "Advisory Agreements"). The Advisor is an indirect
wholly-owned subsidiary of SunTrust Banks, Inc. ("SunTrust"). SunTrust is a bank
holding company with assets of $ 93.2 billion as of December 31, 1998. The
Advisory Agreement provides that each Advisor shall not be protected against any
liability to the Trust or its Shareholders by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties thereunder.

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<PAGE>

such approval. Each Advisory Agreement will terminate automatically in the event
of its assignment, and is terminable at any time without penalty by the Trustees
of the Trust or, with respect to the Funds, by a majority of the outstanding
shares of the Funds, on not less than 30 days' nor more than 60 days' written
notice to the Advisor, or by the Advisor on 90 days' written notice to the
Trust.

The Advisor has agreed to waive its fees or reimburse expenses in order to limit
Fund expenses.

Crestar Asset Management Company, an indirect wholly-owned subsidiary of
SunTrust, served as the Adviser to the predecessors of the Growth and Income,
Maryland Municipal Bond, Tax-Free Money Market, U.S. Treasury Money Market,
Virginia Intermediate Municipal Bond, and Virginia Municipal Bond Funds.

For the fiscal years ended November 30, 1998, November 30, 1997, and November
30, 1996, the Funds paid the following advisory fees:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
FUND FEES PAID FEES WAIVED OR REIMBURSED
1998 1997 1996 1998 1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth and Income $4,748,698 $4,336,987 $2,617,223 $0 $0 $0
Fund
- ------------------------------------------------------------------------------------------------
Maryland Municipal $104,506 $50,300 $18,497 $60,691 $50,300 $15,422
Bond Fund
- ------------------------------------------------------------------------------------------------
Tax-Free Money $963,089 $861,325 $732,401 $0 $0 $0
Market Fund
- ------------------------------------------------------------------------------------------------
U.S. Treasury Money $2,412,519 $861,325 $732,401 $0 $0 $0
Market Fund
- ------------------------------------------------------------------------------------------------
Virginia Intermediate $1,248,320 $1,232,770 $430,612 $0 $0 $0
Bond Fund
- ------------------------------------------------------------------------------------------------
Virginia Municipal $166,644 $107,969 $72,398 $27,777 $17,385 $12,074
Bond Fund
- ------------------------------------------------------------------------------------------------
</TABLE>

BANKING LAWS

Current interpretations of federal banking laws and regulations:
- - prohibit SunTrust and the Advisors from sponsoring, organizing,
controlling, or distributing the Funds' shares; but
- - do not prohibit SunTrust or the Advisors generally from acting as an
investment advisor, transfer agent, or custodian to the Funds or from
purchasing Fund shares as agent for and upon the order of a customer.

The Advisor believes that they may perform advisory and related services for the
Trust without violating applicable banking laws or regulations. However, the
legal requirements and interpretations about the permissible activities of banks
and their affiliates may change in the future. These changes could prevent the
Advisor from continuing to perform services for the Trust. If this happens, the
Board of Trustees would consider selecting other qualified firms. Any new
investment advisory agreements would be subject to Shareholder approval.

If current restrictions on bank activities with mutual funds were relaxed, the
Advisor, or its affiliates, would consider performing additional services for
the Trust. We cannot predict whether these changes will be enacted. We also
cannot predict the terms that the Advisor, or its affiliates, might offer to
provide additional services.

B-21
<PAGE>

THE ADMINISTRATOR

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator.
SEI Investments and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers. The Administrator
and its affiliates also serve as administrator or sub-administrator to the
following other mutual funds: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis
Fund, Inc., Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds,
Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
International Trust, SEI Institutional International Investments Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Variable Trust, TIP Funds and Alpha Select Funds.

For its administrative services, the Administrator is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of: .12% of the first $1
billion of average aggregate net assets, .09% on the next $4 billion of average
aggregate net assets, .07% of the next $3 billion of average aggregate net
assets, .065% of the next $2 billion of average aggregate net assets, and .06%
thereafter. Prior to May 14, 1999, the predecessor of each Fund was subject to a
separate Administration Agreement between the CrestFunds, Inc. and the
Administrator (the "Predecessor Administration Agreement"). Under the
Predecessor Agreement, the Administrator was entitled to a fee, calculated daily
and paid monthly, at an annual rate of 0.15% of average daily net assets of each
of the Funds.

For the fiscal years ended November 30, 1998, 1997, and 1996, the Administrator
was compensated for its services under the Predecessor Administration Agreement
as follows:

- -----------------------------------------------------------------------------------------------
FUND FEES PAID FEES WAIVED OR REIMBURSED
1998 1997 1996 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth and Income $949,744 $867,402 $523,446 $0 $0 $0
Fund
- -----------------------------------------------------------------------------------------------
Maryland Municipal $26,127 $10,561 $4,627 $0 $0 $4,627
Bond Fund
- -----------------------------------------------------------------------------------------------
Tax-Free Money $361,160 $323,063 $275,026 $0 $65 $0
Market Fund
- -----------------------------------------------------------------------------------------------
U.S. Treasury Money $926,797 $761,282 $592,194 $0 $0 $0
Market Fund
- -----------------------------------------------------------------------------------------------
Virginia Intermediate $374,498 $370,217 $138,184 $0 $384 $0
Bond Fund
- -----------------------------------------------------------------------------------------------
</TABLE>

B-22
<PAGE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
FUND FEES PAID FEES WAIVED OR REIMBURSED
1998 1997 1996 1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Virginia Municipal $41,661 $32,181 $18,111 $36,010 $27,381 $18,111
Bond Fund
- -----------------------------------------------------------------------------------------------
</TABLE>

THE DISTRIBUTOR

The Distribution Agreement is renewable annually and may be terminated by the
Distributor, the disinterested Trustees, or by a majority vote of the
outstanding securities of the Trust upon not more than 60 days' written notice
by either party.

For the fixcal years ended November 30, 1998, 1997, and 1996, the aggregate
sales charges payable to the Distributor with respect to the Investor Shares of
the Funds were as follows:

The Distribution Agreement and the Investor Plan adopted by the Trust provide
that Investor Shares of the Fund will pay the Distributor fees of up to the
following respective levels: .40% of the average daily net assets of the
Tax-Free Money Market Fund,.15% of the average daily net assets of the Growth
and Income Fund; and .15% of the average daily net assets of theVirginia
Intermediate Municipal Bond Fund.

The Distribution Agreement and the Flex Plan adopted by the Trust provide that
each Flex Shares Fund will pay the Distributor a fee of up to .75% of the
average daily net assets of that Fund. The Distributor can use these fees to
compensate broker-dealers and service providers, including SunTrust and its
affiliates, which provide administrative and/or distribution services to
Investor Shares or Flex Shares Shareholders or their customers who beneficially
own Investor Shares or Flex Shares. In addition, Flex Shares are subject to a
service fee of up to .25% of the average daily net assets of the Flex Shares of
each Fund. This service fee will be used for services provided and expenses
incurred in maintaining shareholder accounts, responding to shareholder
inquiries and providing information on their investments.

Services for which broker-dealers and service providers may be compensated
include establishing and maintaining customer accounts and records; aggregating
and processing purchase and redemption requests from customers; placing net
purchase and redemption orders with the Distributor; automatically investing
customer account cash balances; providing periodic statements to customers;
arranging for wires; answering customer inquiries concerning their investments;
assisting customers in changing dividend options, account designations, and
addresses; performing sub-accounting functions; processing dividend payments
from the Trust on behalf of customers; and forwarding Shareholder communications
from the Trust (such as proxies, Shareholder reports, and dividend distribution
and tax notices) to these customers with respect to investments in the Trust.
Certain state securities laws may require those financial institutions providing
such distribution services to register as dealers pursuant to state law.
Although banking laws and regulations prohibit banks from distributing shares of
open-end investment companies such as the Trust, according to an opinion issued
to the staff of the SEC by the Office of the Comptroller of the Currency,
financial institutions are not prohibited from acting in other capacities for
investment companies, such as providing shareholder services. Should future
legislative, judicial, or administrative action prohibit or restrict the
activities of financial institutions in connection with providing shareholder
services, the Trust may be required to alter materially or discontinue its
arrangements with such financial institutions.

The Trust has adopted the Investor Plan and the Flex Plan in each case in
accordance with the provisions of Rule 12b-1 under the 1940 Act, which Rule
regulates circumstances under which an investment company may directly or
indirectly bear

B-23
<PAGE>

expenses relating to the distribution of its shares. Continuance
of the Investor Plan and the Flex Plan must be approved annually by a majority
of the Trustees of the Trust and by a majority of the disinterested Trustees.
The Investor Plan and the Flex Plan require that quarterly written reports of
amounts spent under the Investor Plan and the Flex Plan, respectively, and the
purposes of such expenditures be furnished to and reviewed by the Trustees. The
Investor Plan and the Flex Plan may not be amended to increase materially the
amount which may be spent thereunder without approval by a majority of the
outstanding shares of the affected class of shares of the Trust. All material
amendments of the Plans will require approval by a majority of the Trustees of
the Trust and of the disinterested Trustees.

There is no sales charge on purchases of Flex Shares, but Flex Shares are
subject to a contingent deferred sales charge if they are redeemed within one
year of purchase. Pursuant to the Distribution Agreement and the Flex Plan, Flex
Shares are subject to an ongoing distribution and service fee calculated on each
of the Tax-Exempt Bond Funds' aggregate average daily net assets attributable to
its Flex Shares.

For periods prior to May 24, 1999, the predecessors of each Fund were subject to
a distribution agreement between SEI Investments Distribution Co. And
CrestFunds, Inc (the "Predecessor Distribution Agreement").

For the fiscal years ended November 30, 1998, 1997, and 1996, the aggregate
dollar amounts of commissions paid under the Predecessor Distribution Agreement
and the amounts retained by SEI Investments Distribution Com. during such years
were as follows:

Dollar Amounts of Commissions Commissions Retained by Underwriter
- ---------------------------------------------------------------------------------------------------------
Fund Name Class 1998 1997 1996 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Virginia
Intermediate Investor
Bond Fund 26,260.88 25,357.93 33,050.62 3,006.81 2,315.57 3,291.12
- ---------------------------------------------------------------------------------------------------------
Growth and Investor
Income Fund 199,046.93 323,214.57 188,031.26 22,097.71 28,268.32 19,044.13
- ---------------------------------------------------------------------------------------------------------
Growth and Flex
Income Fund 0 0 0 57,744.99 22,970.48 9,197.61
- ---------------------------------------------------------------------------------------------------------
Virginia
Municipal Flex
Bond Fund 0 0 0 16,061.27 4,362.23 8,286.99
- ---------------------------------------------------------------------------------------------------------
Maryland
Municipal Flex
Bond Fund 0 0 0 5,718.96 1,644.33 0
- ---------------------------------------------------------------------------------------------------------
</TABLE>

B-24
<PAGE>

TRUSTEES AND OFFICERS OF THE TRUST

Certain officers of the Trust also serve as officers of some or all of the
following: The Achievement Funds Trust, The Advisors' Inner Circle Fund, The
Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-), CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, Oak
Associates Funds, The Parkstone Group of Funds, The PBHG Funds, Inc., PBHG
Advisor Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional International Trust, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Variable Trust, TIP Funds and Alpha Select Funds, each of which
is an open-end management investment company managed by SEI Investments Fund
Management or its affiliates and, except for PBHG Advisor Funds, Inc., are
distributed by SEI Investments Distribution Co.

B-25
<PAGE>

JONATHAN T. WALTON (3/28/30) - Trustee - Retired. Executive Vice President, NBD
Bank, N.A. and NBD Bancorp, October 1956 to March 1995. Trustee, W.K. Kellogg
Trust.

MARK NAGLE (10/20/59) - President, Controller, Treasurer and Chief Executive
Officer - Vice President and Controller, Funds Accounting since 1996. Vice
President of the Administrator and Distributor since 1996. Vice President of
Fund Accounting - BISYS Fund Services 1995-1996. Senior Vice President -
Fidelity Investments 1981-1995.

LYDIA A. GAVALIS (6/5/64) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Assistant General Counsel and Director of Arbitration, Philadelphia Stock
Exchange, 1989-1998.

KATHY HEILIG (12/21/58) - Vice President and Assistant Secretary - Treasurer of
SEI Investments Company since 1997. Assistant Controller of SEI Investments
Company since 1995.

JOSEPH M. O'DONNELL (11/13/54) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Vice President and General Counsel, FPS Services, Inc., 1993-1997.

SANDRA K. ORLOW (10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and Distributor since
1983.

LYNDA J. STRIEGEL (10/30/48) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Senior Asset Management Counsel, Barnett Banks, Inc., 1997-1998. Partner,
Groom and Nordberg, Chartered, 1996-1997. Associate General Counsel, Riggs Bank,
N.A., 1991-1995.

KATHRYN L. STANTON (11/19/58) - Vice President, Assistant Secretary - Vice
President, Assistant Secretary of SEI Investments, the Administrator and
Distributor since 1994.

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

B-26
<PAGE>

* Messrs. Looney, Goodrum, McNair, and Cammack may be deemed to be
"interested persons" of the Trust as defined in the Investment Company Act
of 1940.

The Trustees and Officers of the Trust own, in the aggregate, less than 1% of
the outstanding shares of the Trust.

For the fiscal year end 5/30/98, the Trust paid the following amounts to
Trustees and Officers of the Trust:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PENSION OR ESTIMATED TOTAL COMPENSATION
RETIREMENT ANNUAL FROM FUND AND FUND
AGGREGATE BENEFITS ACCRUED BENEFITS COMPLEX PAID TO
COMPENSATION AS PART OF FUND UPON TRUSTEES
NAME OF PERSON, POSITION FROM FUND EXPENSES RETIREMENT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel S. Goodrum, Trustee $16,000 $ 0 $16,000 $16,000 for service on
two boards
- -------------------------------------------------------------------------------------------------------------------
Wilton Looney, Trustee $19,000 $ 0 $19,000 $19,000 for service on
two boards
- -------------------------------------------------------------------------------------------------------------------
Champney A. McNair, $16,000 $ 0 $16,000 $16,000 for service on
Trustee two boards
- -------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $17,500 $ 0 $17,500 $17,500 for service on
two boards
- -------------------------------------------------------------------------------------------------------------------
T. Gordy Germany, $17,500 $ 0 $17,500 $17,500 for service on
Trustee two boards
- -------------------------------------------------------------------------------------------------------------------
Dr. Bernard F. Sliger, Trustee $17,500 $ 0 $17,500 $17,500 for service on
two boards
- -------------------------------------------------------------------------------------------------------------------
Jonathan T. Walton, Trustee* $10,500 $ 0 $10,500 $10,500 for service on
two boards
- -------------------------------------------------------------------------------------------------------------------
William H. Cammack, $19,000 $ 0 $19,000 $19,000 for service on
Trustee two boards
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

*Messr. Walton's compensation reflects a starting date of June 19, 1998.

THE TRANSFER AGENT

Federated Services Company, Federated Investors Tower, Pittsburgh, PA 15222-3779
serves as the Trust's transfer agent.

THE CUSTODIAN

SunTrust Bank, Atlanta, 303 Peachtree Street N.E., 14th Floor, Atlanta, GA 30308
serves as the custodian for the all of the Funds.

INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen, LLP serves as independent public accountants for the Trust.

B-27
<PAGE>

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP, serves as legal counsel to the Trust.

PERFORMANCE INFORMATION

From time to time a Fund may advertise its performance. Performance figures are
based on historical earnings and are not intended to indicate future
performance.

CLASSES OF SHARES AND PERFORMANCE

The performance of the Trust's Investor Shares and Flex Shares will normally be
lower than for Trust Shares because Investor Shares and Flex Shares are subject
to distribution, service, and certain transfer agent fees not charged to Trust
Shares. Because of their differing distribution expense arrangements, the
performance of Flex Shares in comparison to Investor Shares will vary depending
upon the investor's investment time horizon.

PERFORMANCE COMPARISONS
Each Fund may periodically compare its performance to other mutual funds tracked
by mutual fund rating services, to broad groups of comparable mutual funds, or
to unmanaged indices. These comparisons may assume reinvestment of dividends but
generally do not reflect deductions for administrative and management costs.

COMPUTATION OF YIELD

SEVEN-DAY YIELD

The current yield of the STI Tax-Free Money Market Fund will be calculated daily
based upon the seven days ending on the date of calculation (the "base period").
The yield is computed by determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing shareholder account having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing such net change by the value of the account at the beginning of the
same period to obtain the base period return and multiplying the result by
(365/7). Realized and unrealized gains and losses are not included in the
calculation of the yield. The effective compound yield of the Fund is determined
by computing the net change (exclusive of capital changes) in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula: Effective Yield = [(Base Period Return + 1)TO THE POWER OF
365/7] - 1. The current and the effective yields reflect the reinvestment of net
income earned daily on portfolio assets.

The STI Tax-Free Money Market Fund's "tax equivalent yield" and "tax equivalent
effective yield" are calculated by determining the rate of return that would
have to be achieved on a fully taxable investment to produce the after-tax
equivalent of the Fund's yield, assuming certain tax brackets for a Shareholder.
Tax-exempt yield is calculated according to the same formula except that E
equals the interest exempt from federal income tax earned during the period.
This tax-exempt yield is then translated into tax-equivalent yield according to
the following formula:

TAX EQUIVALENT YIELD = ( E ) + T
(------)
( 1-P )
E = the portion of the yield which is tax-exempt
P = stated income tax rate

B-28
<PAGE>

T = the portion of the yield which is taxable

The yields of this Fund fluctuate, and the annualization of a week's dividend is
not a representation by the Trust as to what an investment in the Fund will
actually yield in the future. Actual yields will depend on such variables as
asset quality, average asset maturity, the type of instruments the Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.

THIRTY-DAY YIELD

The Bond and Equity Funds may advertise a 30-day yield. In particular, yield
will be calculated according to the following formula:

Yield = (2 (a-b/cd + 1)TO THE POWER OF 6 - 1) where a = dividends and interest
earned during the period; b = expenses accrued for the period (net of
reimbursement); c = the average daily number of shares outstanding during the
period that were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period.

The Tax-Exempt Bond Funds "tax equivalent yield" and "tax equivalent effective
yield" are calculated by determining the rate of return that would have to be
achieved on a fully taxable investment to produce the after-tax equivalent of
the Fund's yield, assuming certain tax brackets for a Shareholder. Tax-exempt
yield is calculated according to the same formula except that E equals the
interest exempt from federal income tax earned during the period. This
tax-exempt yield is then translated into tax-equivalent yield according to the
following formula:

TAX EQUIVALENT YIELD = ( E ) + T
(-------)
( 1-P )

E = the portion of the yield which is tax-exempt
P = stated income tax rate
T = the portion of the yield which is taxable

Tax equivalent yields assume the payment of federal income taxes at a rate of
39.6% and, for the Maryland Municipal Bond Fund, Maryland income taxes at a rate
of 7.92% and for the STI Virginia Municipal Bond Fund, and STI Virginia
Intermediate Municipal Bond Fund, Virginia income taxes at a rate of 5.75%.

Yields are one basis upon which investors may compare the Funds with other money
market funds; however, yields of other money market funds and other investment
vehicles may not be comparable because of the factors set forth above and
differences in the methods used in valuing portfolio instruments.

The following table shows tax equivalent yields for the Bond and Money Market
Funds for the 30-day period ended November 30, 1998.

- ---------------------------------------------------------------------------------------------------
FUND TRUST SHARES' YIELD INVESTOR SHARES' YIELD FLEX SHARES' YIELD
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maryland Municipal Bond 4.09% n/a 5.22%
Fund
- ---------------------------------------------------------------------------------------------------
Tax-Free Money Market 4.52% 4.50% n/a
Fund
- ---------------------------------------------------------------------------------------------------
U.S. Treasury Money n/a n/a n/a
Market Fund
- ---------------------------------------------------------------------------------------------------

B-29
<PAGE>

- ---------------------------------------------------------------------------------------------------
FUND TRUST SHARES' YIELD INVESTOR SHARES' YIELD FLEX SHARES' YIELD
- ---------------------------------------------------------------------------------------------------
Virginia Intermediate 6.89% 6.49% n/a
Municipal Bond Fund
- ---------------------------------------------------------------------------------------------------
Virginia Municipal Bond 7.20% n/a 5.66%
Fund
- ---------------------------------------------------------------------------------------------------

</TABLE>

CALCULATION OF TOTAL RETURN

From time to time, the Bond and Equity Funds may advertise total return. In
particular, total return will be calculated according to the following formula:
P (1 + T) TO THE POWER OF n = ERV, where P = a hypothetical initial payment of
$1,000; T = average annual total return; n = number of years; and ERV = ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
designated time period as of the end of such period.

Based on the foregoing, the average annual total returns for the Funds from
inception through November 30, 1998 and for the one year, three year, and five
year periods ended November 30, 1998 were as follows:

- ------------------------------------------------------------------------------------------------------------------------------------
FUND 1 YEAR 3 YEARS 5 YEARS 10 LIFE OF FUND*
YEARS
- ------------------------------------------------------------------------------------------------------------------------------------
Trust Investor Flex Trust Investor Flex Trust Investor Flex Trust Trust Investor Flex
Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares Shares
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth 13.64% 8.60% 8.22% 20.47% 18.64% 18.93% 17.50% n/a n/a n/a 16.70% 15.43% 20.09%
and
Income
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Maryland 7.03% n/a 1.17% n/a n/a n/a n/a n/a n/a n/a 5.18% n/a 5.25%
Municipal
Bond
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Free 2.93% 2.92% n/a 3.04% 3.03% 2.89% 2.92% 2.89% n/a n/a 3.45% 2.73% n/a
Money
Market
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. 4.82% n/a n/a 4.84% n/a n/a 4.67% n/a n/a 5.15% 5.38% n/a n/a
Treasury
Money
Market
Fund
- ------------------------------------------------------------------------------------------------------------------------------------

B-30
<PAGE>

* Life of Fund figures are from commencement of operations per class to the
period ended November 30, 1998.

PURCHASING SHARES

Purchases and redemptions of shares of the Funds may be made on any day the New
York Stock Exchange ("NYSE") is open for business. Currently, the NYSE is closed
on: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

REDEEMING SHARES

A Shareholder will at all times be entitled to aggregate cash redemptions from
all Funds of the Trust during any 90-day period of up to the lesser of $250,000
or 1% of the Trust's net assets.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the NYSE is restricted, or during the existence of an emergency (as determined
by the Securities and Exchange Commission by rule or regulation) as a result of
disposal or valuation of a Fund's securities is not reasonably practicable, or
for such other periods as the Securities and Exchange Commission has by order
permitted. The Trust also reserves the right to suspend sales of shares of a
Fund for any period during which the NYSE, an Advisor, the Administrator and/or,
the Custodian are not open for business.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of the STI Tax-Free Money Market Fund is
calculated daily by the Administrator by adding the value of securities and
other assets, subtracting liabilities and dividing by the number of outstanding
shares. Securities will be valued by the amortized cost method which involves
valuing a security at its cost on the date of purchase and thereafter (absent
unusual circumstances) assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuations in general market
rates of interest on the value of the instrument. While this method provides
certainty in valuation, it may result in periods during which a security's
value, as determined by this method, is higher or lower than the price a Fund
would receive if it sold the instrument. During periods of declining interest
rates, the daily yield of a Fund may tend to be higher than a like computation
made by a company with identical investments utilizing a method of valuation

B-31
<PAGE>

based upon market prices and estimates of market prices for all of its portfolio
securities. Thus, if the use of amortized cost by a Fund resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in a Fund
would be able to obtain a somewhat higher yield than would result from
investment in a company utilizing solely market values, and existing investors
in a Fund would experience a lower yield. The converse would apply in a period
of rising interest rates.

A Fund's use of amortized cost and the maintenance of a Fund's net asset value
at $1.00 are permitted by regulations promulgated by Rule 2a-7 under the 1940
Act, provided that certain conditions are met. The regulations also require the
Trustees to establish procedures which are reasonably designed to stabilize the
net asset value per share at $1.00 for the Funds. Such procedures include the
determination of the extent of deviation, if any, of the Funds current net asset
value per share calculated using available market quotations from the Funds
amortized cost price per share at such intervals as the Trustees deem
appropriate and reasonable in light of market conditions and periodic reviews of
the amount of the deviation and the methods used to calculate such deviation. In
the event that such deviation exceeds 1/2 of 1%, the Trustees are required to
consider promptly what action, if any, should be initiated, and, if the Trustees
believe that the extent of any deviation may result in material dilution or
other unfair results to Shareholders, the Trustees are required to take such
corrective action as they deem appropriate to eliminate or reduce such dilution
or unfair results to the extent reasonably practicable. Such actions may include
the sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; or establishing a net asset value per share by using
available market quotations. In addition, if the Funds incur a significant loss
or liability, the Trustees have the authority to reduce pro rata the number of
shares of the Funds in each Shareholder's account and to offset each
Shareholder's pro rata portion of such loss or liability from the Shareholder's
accrued but unpaid dividends or from future dividends while each other Fund must
annually distribute at least 90% of its investment company taxable income.

The securities of the Bond and Equity Funds are valued by the Administrator
pursuant to valuations provided by an independent pricing service. The pricing
service relies primarily on prices of actual market transactions as well as
trader quotations. However, the service may also use a matrix system to
determine valuations of fixed income securities, which system considers such
factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.

Although the methodology and procedures are identical, the net asset value per
share of Trust Shares of the Bond and Equity Funds may differ because of
variations in the distribution and service fees and transfer agent fees charged
to Investor Shares.

TAXES

The following is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders that are not described in
the Funds' prospectus. No attempt is made to present a detailed explanation of
the Federal tax treatment of the funds or their Shareholders, and the discussion
here and in the Funds' prospectus is not intended as a substitute for careful
tax planning.

FEDERAL INCOME TAX

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<PAGE>

total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RIC's and other securities, with such other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of a Fund's assets and that does not represent more than
10% of the outstanding voting securities of such issuer; and (iii) at the close
of each quarter of a Fund's taxable year, not more than 25% of the value of its
assets may be invested in securities (other than U.S. Government securities or
the securities of other RIC's) of any one issuer, or of two or more issuers
engaged in same or similar businesses if the Fund owns at least 20% of the
voting power of such issuers.

In addition, each Fund will distribute by the end of any calendar year 98% of
its ordinary income for that year and 98% of its capital gain net income for the
one-year period ending on October 31 of that calendar year, plus certain other
amounts. Each Fund intends to make sufficient distributions prior to the end of
each calendar year to avoid liability for the federal excise tax applicable to
regulated investment companies.

If, at the close of each quarter of its taxable year, at least 50% of the value
of a Fund's total assets consists of obligations the interest on which is
excludable from gross income, a Fund may pay "exempt-interest dividends," as
defined in Section 852(b)(5) of the Code, to its shareholders.

As noted in the Prospectus, the State Tax-Exempt Bond Funds intend to pay
exempt-interest dividends. Exempt-interest dividends are excludable from a
Shareholder's gross income for regular Federal income tax purposes, but may
nevertheless be subject to the alternative minimum tax (the "Alternative Minimum
Tax") imposed by Section 55 of the Code or the environmental tax (the
"Environmental Tax") imposed by Section 59A of the Code. The Alternative Minimum
Tax is imposed at the rate of 26% (with a maximum rate of 28%) in the case of
non-corporate taxpayers and at the rate of 20% in the case of corporate
taxpayers, to the extent it exceeds the taxpayer's regular tax liability. The
Alternative Minimum Tax and the Environmental Tax may be imposed in two
circumstances. First, exempt-interest dividends derived from certain "private
activity bonds" issued after August 7, 1986, will generally be an item of tax
preference and therefore potentially subject to the Alternative Minimum Tax for
both corporate and non-corporate taxpayers and the Environmental Tax for
corporate taxpayers only. Second, in the case of exempt-interest dividends
received by corporate Shareholders, all exempt-interest dividends, regardless of
when the bonds from which they are derived were issued or whether they are
derived from private activity bonds, will be included in the corporation's
"adjusted current earnings," as defined in Section 56(g) of the Code, in
calculating the corporation's alternative minimum taxable income for purposes of
determining the Alternative Minimum Tax and the Environmental Tax. For tax years
beginning after December 31, 1997, the Alternative Minimum Tax is repealed for
certain corporations.

Distributions of exempt-interest dividends may result in additional Federal
income tax consequences to shareholders in Tax-Exempt Funds. For example,
interest on indebtedness incurred by Shareholders to purchase or carry shares of
a Tax-Exempt Fund will not be deductible for Federal income tax purposes to the
extent that the Fund distributes exempt interest dividends during the taxable
year. The deduction otherwise allowable to property and casualty insurance
companies for "losses incurred" will be reduced by an amount equal to a portion
of exempt-interest dividends received or accrued during any taxable year.
Certain foreign corporations engaged in a trade or business in the United States
will be subject to a "branch profits tax" on their "dividend equivalent amount"
for the taxable year, which will include exempt-interest dividends. Certain
Subchapter S corporations may also be subject to taxes on their "passive
investment income," which could include exempt-interest dividends. Up to 85% of
the Social Security benefits or railroad retirement benefits received by an
individual during any taxable year will be included in the gross income of such
individual if the individual's "modified adjusted gross income" (which includes
exempt-interest dividends) plus one-half of the Social Security benefits or
railroad retirement benefits received by such individual during that taxable
year exceeds the base amount described in Section 86 of the Code.

A tax-exempt fund may not be an appropriate investment for persons (including
corporations and other business entities) who are "substantial users" (or
persons related to such users) of facilities financed by industrial development
or private activity bonds. A "substantial user" is defined generally to include
certain persons who regularly use in a trade or business a facility financed
from the proceeds of industrial development bonds or private activity bonds.
Such entities or persons should consult their tax advisors before purchasing
shares of a Tax-Exempt Fund.

Issuers of bonds purchased by a tax-exempt fund (or the beneficiary of such
bonds) may have made certain representations or covenants in connection with the
issuance of such bonds to satisfy certain requirements of the Code that must be
satisfied

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<PAGE>

subsequent to the issuance of such bonds. Investors should be aware
that exempt-interest dividends derived from such bonds may become subject to
Federal income taxation retroactively to the date of issuance of the bonds to
which such dividends are attributable thereof if such representations are
determined to have been inaccurate or if the issuer of such bonds (or the
beneficiary of such bonds) fails to comply with such covenants.

The Funds will make annual reports to Shareholders of the Federal income tax
status of all distributions.

STATE AND LOCAL TAXES

In addition to federal taxes, shareholders may be subject to state or local
taxes on their investment, depending on state law.

STATE OF MARYLAND. To the extent the Maryland Municipal Bond Fund qualifies as a
regulated investment company under the Code, it will be subject to tax only on
(1) that portion of its income on which tax is imposed for federal income tax
purposes under Section 852(b)(1) of the Code and (2) that portion of its income
which consists of federally tax exempt interest on obligations other than
Maryland Exempt Obligations (hereinafter defined) to the extent such interest is
not paid to Maryland Municipal Bond Fund shareholders in the form of
exempt-interest dividends. To the extent dividends paid by the Maryland
Municipal Bond Fund represent interest excludable from gross income for federal
income tax purposes, that portion of exempt-interest dividends that represents
interest received by the Maryland Municipal Bond Fund on obligations issued by
the State of Maryland, its political subdivisions, Puerto Rico, the U.S. Virgin
Islands, or Guam and their respective authorities or municipalities ("Maryland
Exempt Obligations"), will be exempt from Maryland state and local income taxes
when allocated or distributed to a shareholder of the Maryland Municipal Bond
Fund except in the case of a shareholder that is a financial institution. Except
as noted below, all other dividend distributions will be subject to Maryland
state and local income taxes.

Capital gains distributed by the Maryland Municipal Bond Fund to a shareholder
or any gains realized by a shareholder from a redemption or sale of shares must
be recognized for Maryland state and local income tax purposes to the extent
recognized for federal income tax purposes. However, capital gains distributions
included in the gross income of shareholders for federal income tax purposes are
subtracted from capital gains income for Maryland income tax purposes to the
extent such distributions are derived from the disposition by the Maryland
Municipal Bond Fund of debt obligations issued by the State of Maryland, its
political subdivisions and authorities.

Except in the case of a shareholder that is a financial institution, dividends
received by a shareholder from the Maryland Municipal Bond Fund that are derived
from interest on U.S. Government obligations will be exempt from Maryland state
and local income taxes.

In the case of individuals, Maryland presently imposes an income tax on certain
items of tax preference with reference to such items as defined in the Code for
purposes of calculating the federal alternative minimum tax. Interest paid on
certain private activity bonds ("AMT Bonds") is a preference item for purposes
of calculating the federal alternative minimum tax. Accordingly, if the Maryland
Municipal Bond Fund holds AMT Bonds of an issuer other than the State of
Maryland or one of its political subdivisions, agencies or authorities
("Non-Maryland AMT Bonds"), the excess of 50% of that portion of exempt interest
dividends which is attributable to interest on Non-Maryland AMT Bonds over a
threshold amount is subject to Maryland income tax. Interest on indebtedness
incurred or continued (directly or indirectly) by a shareholder in order to
purchase or carry shares of the Maryland Municipal Bond Fund will not be
deductible for Maryland state and local income tax purposes. Individuals will
not be subject to personal property tax on their shares of the Maryland
Municipal Bond Fund.

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<PAGE>

Shares of the Maryland Municipal Bond Fund held by a Maryland resident at
death may be subject to Maryland inheritance and estate taxes.

COMMONWEALTH OF VIRGINIA. Under existing Virginia law, distributions from
Virginia Intermediate Municipal Bond Fund and Virginia Municipal Bond Fund will
not be subject to Virginia individual, trust, estate, or corporate income
taxation to the extent that such distributions are either (i) excludable from
federal gross income and attributable to interest on obligations of Virginia,
its political subdivisions, or its instrumentalities, or Puerto Rico, United
States Virgin Islands, or Guam or (ii) attributable to interest on direct
obligations of the United States. These Virginia income tax exemptions will be
available only if a Fund (i) qualifies as a separate "regulated investment
company" under the Internal Revenue Code and (ii) complies with the requirement
of the Internal Revenue Code that at least 50% of the value of its assets at the
close of each quarter of its taxable year is invested in state, municipal, or
other obligations described in Section 103(a) of the Internal Revenue Code.
These Funds intend to comply with those requirements.

Other distributions from these Funds, including capital gains, generally will
not be exempt from Virginia income taxation.

Interest on indebtedness incurred (or continued) by a shareholder of Virginia
Intermediate Municipal Bond Fund or Virginia Municipal Bond Fund to purchase or
carry shares of these Funds will not be deductible for Virginia income tax
purposes to the extent such interest expense relates to the portions of
distributions exempt from Virginia income taxation. These Funds will not be
subject to any Virginia intangible personal property tax on any obligations in a
Fund. In addition, shares of a Fund held for investment purposes will not be
subject to any Virginia intangible personal property tax.

To be entitled to the exemption described above for distributions attributable
to certain interest on Virginia obligations, obligations of certain United
States possessions or direct United States obligations, a shareholder must be
able to substantiate the exempt portions of each distribution with reasonable
certainty. The determination of exempt portions must be made on a monthly
(rather than annual or quarterly) basis if, as planned, Virginia Intermediate
Municipal Bond Fund and Virginia Municipal Bond Fund each makes monthly
distributions. Accordingly, shareholders should retain their statements from
these Funds, which are to be issued at least annually, showing the percentages
of each monthly distribution attributable to interest on Virginia obligations,
possessions obligations and United States obligations.

FOREIGN TAXES

Dividends and interests received by a Fund may be subject to income, withholding
or other taxes imposed by foreign countries and U.S. possessions that would
reduce the yield on the Fund's stock or securities. Tax conventions between
certain countries and the United States may reduce or eliminate these taxes.
Foreign countries generally do not impose taxes on capital gains with respect to
investments by foreign investors.

FUND TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, an Advisor is responsible for placing the orders to
execute transactions for a Fund. In placing orders, it is the policy of the
Trust to seek to obtain the best net results taking into account such factors as
price (including the applicable dealer spread), the size, type and difficulty of
the transaction involved, the firm's general execution and operational
facilities, and the firm's risk in positioning the securities involved. While an
Advisor generally seeks reasonably competitive spreads or commissions, the Trust
will not necessarily be paying the lowest spread or commission available.

The money market securities in which the Funds invest are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, an Advisor
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.

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<PAGE>

TRADING PRACTICES AND BROKERAGE

The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by an Advisor, brokerage business to brokers
or dealers who provide brokerage and research services. These research services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends, assisting in
determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by an Advisor in connection with its investment
decision-making process with respect to one or more funds and accounts managed
by it, and may not be used exclusively with respect to the fund or account
generating the brokerage.

An Advisor may place a combined order for two or more accounts or funds engaged
in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. It is believed that the ability
of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or Fund may obtain, it is the opinion
of each Advisor and the Trust's Board of Trustees that the advantages of
combined orders outweigh the possible disadvantages of separate transactions.

Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Funds, at
the request of the Distributor, give consideration to sales of shares of the
Trust as a factor in the selection of brokers and dealers to execute Trust
portfolio transactions.

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<PAGE>

commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other renumeration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." In addition, the Trust may direct commission business to one or more
designated broker-dealers in connection with such broker/dealer's provision of
services to the Trust or payment of certain Trust expenses (E.G., custody,
pricing and professional fees). The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor, and will review these
procedures periodically.

Brokerage commissions paid by the Growth and Income Fund for the fiscal years
ended 1998, 1997, and 1996 were:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth and Income Fund $1,031,949 $1,248,896 $813,371
- --------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares and classes of shares of the Funds each of which represents an equal
proportionate interest in that Fund with each other share. Shares are entitled
upon liquidation to a PRO RATA share in the net assets of the Funds.
Shareholders have no preemptive rights. The Declaration of Trust provides that
the Trustees of the Trust may create additional series of shares or classes of
series. All consideration received by the Trust for shares of any additional
series and all assets in which such consideration is invested would belong to
that series and would be subject to the liabilities related thereto. Share
certificates representing shares will not be issued.

SHAREHOLDER LIABILITY

LIMITATION OF TRUSTEES' LIABILITY

YEAR 2000

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<PAGE>

year 1900. The Trust has asked its service providers whether they expect to have
their computer systems adjusted for the year 2000 transition, and received
assurances from each from each that its system is expected to accommodate the
year 2000 without material adverse consequences to the Trust. The Trust and its
shareholders may experience losses if these assurances prove to be incorrect or
as a result of year 2000 computer difficulties experienced by issuers of
portfolio securities or third parties, such as custodians, banks, broker-dealers
or others with which the Trust does business.

5% AND 25% SHAREHOLDERS

As of May 5, 1999, the following persons were the only persons who were record
owners (or to the knowledge of the Trust, beneficial owners) of 5% and 25% or
more of the shares of the Funds. Persons who owned of record or beneficially
more than 25% of a Fund's outstanding shares may be deemed to control the Fund
within the meaning of the Act. The Trust believes that most of the shares of the
Trust Class of the Funds were held for the record owner's fiduciary, agency or
custodial customers.

Fund Name and Address Percentage Of Shares
- ---- ---------------- --------------------
<S> <C> <C>
Tax-Free Money Market National Financial Services Corp. 98%
Fund (Investor Shares) For Exclusive Benefit of Our
Customers
Church Street Station
P.O. Box 3752
New York, NY 10008

Virginia Municipal NFSC FEBO A1F-628107 5.7%
Bond Fund (Flex Shares) Nancy Holdmann
23 Winster Fax
Williamsburg, VA 23185

Virginia Municipal NFSC FEBO H3E-050865 7.2%
Bond Fund (Flex Shares) Virginia E. White
311 Desota Drive
Richmond, VA 23229

Maryland Municipal David & Linda Wirnsatt 9.93%
Bond Fund-Trust Class C/O Bold Concepts
814 W. Diamond Avenue 2nd Floor
Gaithersburg, MD 20878

Value Fund-Trust Class Crestar Thr - Daily 12/31 12.47%
Crestar Thrist Plan
Attn: Bonnie Huffman TOC 8200
919 East Main Street
Richmond, VA 23219

</TABLE>

EXPERTS

The financial statements as of November 30, 1998, have been audited by Deloitte
& Touche LLP, Independent Public Accountants, as indicated in their report dated
January 15, 1999, with respect thereto, and are included herein in reliance upon
the authority of said firm as experts in giving said report.

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<PAGE>

<PAGE>
STATEMENT OF NET ASSETS CRESTFUNDS, INC.
November 30, 1998
- --------------------------------------------------------------------------------
U.S. TREASURY MONEY FUND