<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
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
- --------------------------------------------------------------------------------
APRIL 15, 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 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.
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.
<PAGE>
2 PROSPECTUS
CAPITAL APPRECIATION FUND
(FORMERLY CAPITAL GROWTH FUND)
[ICON] FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT Attempts to identify companies with above average
STRATEGY growth potential
INVESTOR PROFILE Investors who want the value of their investment to
grow, but do not need to receive income on their
investment
</TABLE>
<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 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 PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1993 9.89%
1994 -7.41%
1995 31.15%
1996 20.31%
1997 31.13%
</TABLE>
<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 GROWTH FUND 31.13% 16.05% 17.02%
S&P 500 INDEX 33.35% 20.25% 20.32%
</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.
[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
(AVAILABLE FOR PURCHASE ON
MAY 24, 1999)
[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 income producing securities 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 volatily 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. We
use a qualitative screening to select companies with a favorable price to
earnings ratio and to create a portfolio with low risk characteristics. 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 risking
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund.
<PAGE>
PROSPECTUS 5
GROWTH AND INCOME FUND
(AVAILABLE FOR PURCHASE ON
MAY 24, 1999)
[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 $1,236
</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. For more
information about these fees, see "Investment Advisors."
<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. 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 PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1993 10.84
1994 -3.32
1995 17.80
1996 2.34
1997 9.08
</TABLE>
<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
- --------------------------------------------------
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
$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
<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>
[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 PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1993 2.77
1994 3.77
1995 5.47
1996 4.99
1997 5.15
</TABLE>
<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.
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 IBC/Donoghue First Tier
Average is a widely recognized composite of mutual funds that invest in the
highest credit quality short-term money market instruments.
[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
- --------------------------------------------------
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
$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
<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>
<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 intends to maintain
an average weighted maturity of 3 years or less. In selecting investments for
the Fund, we attempt to identify securities that offer a comparably better
investment return for a given level of credit risk. For example, short-term
bonds generally have better returns than money market instruments, with a fairly
modest increase in credit risk. We manage the Fund from a total return
perspective. That is, we make day to day investment decisions for the Fund with
a view towards maximizing returns. We analyze yields, market sectors and credit
risk in an effort to identify attractive investments with the best risk/reward
trade-off.
[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 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 PERFORMANCE OF THE FUND'S TRUST SHARES FROM
YEAR TO YEAR.*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
1994 -.07
1995 11.77
1996 3.90
1997 6.78
</TABLE>
<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
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 . . .
[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>
- --------------------------------------------------
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
$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
<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
STRATEGY 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 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.
- --------------------------------------------------
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
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>
INVESTMENT GOALS
PRIMARY Current income
SECONDARY Capital appreciation
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT Attempts to identify high dividend-paying,
STRATEGY undervalued stocks
INVESTOR PROFILE Investors who are looking for current income and
capital appreciation with less volatility than the
average stock fund
</TABLE>
<TABLE>
<S> <C>
TOP FIVE HOLDINGS
AS OF 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>
1990 -4.93%
1991 39.30%
1992 20.05%
1993 11.14%
1994 3.54%
1995 35.93%
1996 19.46%
1997 27.08%
</TABLE>
<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>
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/BARRA Value
Index is a widely recognized index of the stocks in the S&P 500 Index that
have lower price to book ratios.
[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 . . .
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.
<PAGE>
16 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>
CAPITAL GROWTH AND INVESTMENT GRADE PRIME QUALITY MONEY SHORT-TERM SMALL CAP GROWTH
APPRECIATION FUND INCOME FUND BOND FUND MARKET FUND BOND FUND STOCK FUND
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Asset-Backed
Securities X
- -------------------------------------------------------------------------------------------------------------------------------
Bank Obligations X
- -------------------------------------------------------------------------------------------------------------------------------
Commercial Paper X
- -------------------------------------------------------------------------------------------------------------------------------
Convertible
Securities X X X
- -------------------------------------------------------------------------------------------------------------------------------
Corporate Debt
Securities X X X
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Stocks X X X
- -------------------------------------------------------------------------------------------------------------------------------
Foreign
Securities (U.S.
Dollar
denominated) X
- -------------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed
Securities X X
- -------------------------------------------------------------------------------------------------------------------------------
U.S. Government
Securities X X X
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
VALUE INCOME
STOCK FUND
<S> <C>
- ----------------
Asset-Backed
Securities
- ----------------
Bank Obligations
- ----------------
Commercial Paper
- ----------------
Convertible
Securities X
- ----------------
Corporate Debt
Securities
- ----------------
U.S. Stocks X
- ----------------
Foreign
Securities (U.S.
Dollar
denominated)
- ----------------
Mortgage-Backed
Securities
- ----------------
U.S. Government
Securities
- ----------------
</TABLE>
Although the investments above are those that we believe are most likely to help
each Fund meet its investment goal, each Fund may invest in other securities,
use other strategies and engage in other investment practices, which are
described in detail in our Statement of Additional Information. Of course, we
cannot guarantee that any Fund will achieve its investment goal.
The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions. During
unusual economic or market conditions or for temporary defensive or liquidity
purposes, each Fund (except the Prime Quality Money Market Fund) may invest up
to 100% of its assets in cash, money market instruments, repurchase agreements
and short-term obligations. 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
The Investment Advisors make investment decisions for the Funds and continuously
review, supervise and administer their Funds' respective investment programs.
The Board of Trustees supervises the Advisors and establishes policies that the
Advisors must follow in their day to day management activities.
STI Capital Management, N.A. (STI), P.O. Box 3808, Orlando, Florida 32802,
serves as the Advisor to the Capital 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 Growth and Income and Small Cap Growth Stock Funds 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 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. David Yealy has served as a Vice President of Trusco since 1993. He has
managed the Short-Term Bond Fund since July 1996. He has more than 13 years of
investment experience.
Mr. L. Earl Denney, CFA, has served as Senior Vice President of STI since 1983.
He has managed the Investment Grade Bond Fund since it began operating in June
1992. He has more than 20 years of experience in fixed income investment
management. Prior to joining STI, he was fixed income portfolio manager with
American National Bank.
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.
The Growth and Income Fund is managed by teams of investment professionals from
Trusco.
<PAGE>
18 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. We may reject any
purchase order if we determine that accepting the order would not be in the best
interests of the STI Classic Funds or its shareholders.
SIMPLY SPEAKING . . .
WHEN CAN YOU PURCHASE SHARES?
You may purchase on any day that the New York Stock Exchange is open for
business (a Business Day). But you may not do so for shares of the Prime
Quality Money Market Fund on federal holidays.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. We calculate each
Fund's NAV once each Business Day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time). So,
to receive the current Business Day's NAV for all Funds (except the Prime
Quality Money Market Fund), generally we must receive your purchase order from
your financial institution before 4:00 p.m. Eastern time. For the Prime Quality
Money Market Fund, your purchase order will be effective on the Business Day we
receive it if:
- - we receive your order before 1:00 p.m. Eastern time; and
- - we receive federal funds (readily available) before we calculate NAV (normally
4:00 p.m., Eastern time).
Otherwise, your purchase order will be effective the following Business Day, as
long as we receive federal funds before we calculate NAV on that following day.
SIMPLY SPEAKING . . .
FOR CUSTOMERS OF OTHER FINANCIAL INSTITUTIONS
You may have to transmit your purchase and sale requests to your financial
institution at an earlier time for your transaction to become effective that
day. This allows the financial institution time to process your request and
transmit it to us. For more information about how to purchase or sell Fund
shares through your financial institution, you should contact your financial
institution directly.
HOW WE CALCULATE NAV
In calculating NAV for all Funds except for the Prime Quality Money Market Fund,
we generally value a Fund's portfolio at market price. In calculating NAV for
the Prime Quality Money Market Fund, we value the Fund's portfolio using the
amortized cost valuation method, which is described in detail in our Statement
of Additional Information. If market prices are unavailable, or we think that
the market price or amortized cost valuation method is unreliable, fair value
prices may be determined in good faith using methods approved by the Board of
Trustees. We expect the NAV of the Prime Quality Money Market Fund to remain
constant at $1.00 per share, although we cannot guarantee this.
<PAGE>
PROSPECTUS 19
PURCHASING, SELLING AND EXCHANGING FUND SHARES
SIMPLY SPEAKING . . .
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of all of the
assets in the Fund.
SELLING FUND SHARES
HOW TO SELL YOUR FUND SHARES
You may sell (sometimes called "redeem") your shares on any Business Day by
contacting your financial institution. Your financial institution will give you
information about how to sell your shares. The sale price of each share will be
the next NAV determined after we receive your request from your financial
institution. So, for all funds except the Prime Quality Money Market Fund, to
receive the current Business Day's NAV, generally we must receive your sale
order from your financial institution before 4:00 p.m. Eastern time. For the
Prime Quality Money Market Fund, your sale order will be effective that same
Business Day if we receive your order before 1:00 p.m. Eastern time.
SIMPLY SPEAKING . . .
TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. Although we have certain safeguards and procedures to
confirm the identity of callers and the authenticity of instructions, we are
not responsible for any losses or costs incurred by following telephone
instructions we reasonably believe to be genuine. If you or your financial
institution transact with us over the telephone, you will generally bear the
risk of any loss.
REDEMPTIONS IN KIND
We 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) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). Although it is highly unlikely that your shares would ever
be redeemed in kind, you would probably have to pay brokerage costs to sell the
securities distributed to you, as well as taxes on any capital gains from the
sale, as with any redemption.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
We may suspend your right to sell your shares if the NYSE restricts trading, the
SEC declares an emergency or for other reasons. More information about this is
in our Statement of Additional Information.
<PAGE>
20 PROSPECTUS
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 Growth and
Income and Small Cap Growth Stock Funds had not commenced operations.
This information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with each Fund's financial statements, appears
in the annual report that accompanies our Statement of Additional Information.
You can obtain the 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 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>
- ---------------------------
CAPITAL APPRECIATION FUND(1)
- ---------------------------
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
- ----------------------------
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 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>
- ---------------------------
CAPITAL APPRECIATION FUND(1)
- ---------------------------
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
- ----------------------------
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 FUN
- ------------------------------
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.
(1) Formerly Capital Growth Fund.
<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 distribute 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 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.
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>
NOTES
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NOTES
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