0001135428-01-500219.txt : 20011009
0001135428-01-500219.hdr.sgml : 20011009
ACCESSION NUMBER: 0001135428-01-500219
CONFORMED SUBMISSION TYPE: 497
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20011001
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: STI CLASSIC FUNDS
CENTRAL INDEX KEY: 0000883939
STANDARD INDUSTRIAL CLASSIFICATION: []
STATE OF INCORPORATION: MA
FISCAL YEAR END: 0531
FILING VALUES:
FORM TYPE: 497
SEC ACT: 1933 Act
SEC FILE NUMBER: 033-45671
FILM NUMBER: 1749987
BUSINESS ADDRESS:
STREET 1: 2 OLIVER STREET
CITY: BOSTON
STATE: MA
ZIP: 02109
BUSINESS PHONE: 6109896602
MAIL ADDRESS:
STREET 1: 530 E SWEDESFORD ROAD
CITY: WAYNE
STATE: PA
ZIP: 19087-1693
497
1
sti_497.txt
STI CLASSIC FUNDS
Flex Shares
MID CAP VALUE EQUITY FUND
STRATEGIC INCOME FUND
VANTAGE FUND
INVESTMENT ADVISER TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(THE "ADVISER")
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
----------------- PROSPECTUS
STI CLASSIC FUNDS NOVEMBER 30, 2001
-----------------
ABOUT THIS PROSPECTUS
The STI Classic Funds is a mutual fund family that offers shares in
separate investment portfolios (Funds). Each Fund has individual investment
goals and strategies. This prospectus gives you important information about the
Flex Shares of the Mid Cap Value Equity Fund, Strategic Income Fund and Vantage
Fund that you should know before investing. Please read this prospectus and keep
it for future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN
EASILY REVIEW THIS IMPORTANT INFORMATION. IN THE SECTION BELOW, THERE IS SOME
GENERAL INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH
OF THE FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
PAGE
----
MID CAP VALUE EQUITY FUND...................................... 1
STRATEGIC INCOME FUND.......................................... 4
VANTAGE FUND .................................................. 7
MORE INFORMATION ABOUT RISK.................................... 11
MORE INFORMATION ABOUT FUND INVESTMENTS........................ 12
INVESTMENT ADVISER............................................. 13
PORTFOLIO MANAGERS............................................. 13
PURCHASING, SELLING AND EXCHANGING FUND SHARES................. 13
DIVIDENDS AND DISTRIBUTIONS.................................... 17
TAXES.......................................................... 17
HOW TO OBTAIN MORE INFORMATION ABOUT
THE STI CLASSIC FUNDS...................................... Back Cover
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The
Adviser invests Fund assets in a way that it believes will help each Fund
achieve its goal. Still, investing in each Fund involves risk and there is no
guarantee that a Fund will achieve its goal. The Adviser's judgments about the
markets, the economy or companies may not anticipate actual market movements,
economic conditions or company performance, and these judgments may affect the
return on your investment. In fact, no matter how good a job the Adviser does,
you could lose money on your investment in a Fund, just as you could with other
investments. A FUND SHARE IS NOT A BANK DEPOSIT AND IT IS NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY GOVERNMENT AGENCY.
The value of your investment in a Fund is based on the market prices of the
securities a 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, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
MID CAP VALUE EQUITY FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Capital appreciation
SECONDARY Current income
INVESTMENT FOCUS U.S. mid-cap common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued mid-cap
stocks
INVESTOR PROFILE Investors who primarily want the value
of their investment to grow, but want to
receive some income from their investment
INVESTMENT STRATEGY
The Mid Cap Value Equity Fund invests primarily in common stocks of U.S.
companies. In selecting investments for the Fund, the Adviser chooses common
stocks of mid-sized companies (I.E., companies with market capitalizations
between approximately $1 billion and $12 billion) that it believes are
undervalued in the market. The Adviser may sell a security when it achieves a
designated price target, a company's growth prospects change, or the opportunity
for a better investment arises.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity market has moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that mid-cap equity securities may
underperform other segments of the equity market or the equity market as a
whole.
The mid-sized capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these smaller companies may have limited product
lines, markets and financial resources, and may depend upon a relatively small
management group. Therefore, mid-cap stocks may be more volatile than those of
larger companies. These securities may be traded over-the-counter or listed on
an exchange.
1
PERFORMANCE INFORMATION
The Mid Cap Value Equity Fund commenced operations on November 30, 2001, and
therefore does not have a performance history for a full calendar year.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
FLEX SHARES
-----------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of net asset value) 2.00%*
-----------------------------------------------------------------------------------------------------
* This charge is imposed if you sell your Flex shares within one year of your
purchase. See "How to Sell Fund Shares."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
FLEX SHARES
-----------------------------------------------------------------------------------------------------
Investment Advisory Fees 1.25%
Distribution and Service (12b-1) Fees 0.50%*
Other Expenses 0.25%**
-----
Total Annual Fund Operating Expenses 2.00%***
-----------------------------------------------------------------------------------------------------
* The Fund may charge a maximum 12b-1 fee of 1.00%, but expects to charge no
more than 0.50% for the current fiscal year.
** Other Expenses are estimated.
*** The Fund's total actual annual fund operating expenses for the most recent
fiscal year are expected to be less than the amount shown above because the
Adviser and the Distributor intend to waive a portion of the fees in order
to keep total operating expenses at a specified level. These fee waivers
remain in place as of the date of this prospectus, but the Adviser and the
Distributor may discontinue all or part of these waivers at any time. With
these fee waivers, the Fund's actual total operating expenses would be as
follows:
Mid Cap Value Equity Fund -- Flex Shares 1.90%
2
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 the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS
$453 $779
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS
$253 $779
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. In addition, the Fund may enter
into arrangements with broker-dealers who have agreed to pay certain Fund
expenses in return for executing Fund transactions through that broker-dealer.
For more information about these fees, see "Investment Adviser and "Distribution
of Fund Shares."
3
STRATEGIC INCOME FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Current income
SECONDARY Preservation of capital
INVESTMENT FOCUS High yield corporate, government, and
other debt instruments of U.S. and non
U.S. issuers
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income while
reducing share price volatility through
diversification across these major
sectors of the fixed income market
INVESTOR PROFILE Investors who seek high current income
with reduced risk of share price
volatility
INVESTMENT STRATEGY
The Strategic Income Fund invests primarily in a diversified portfolio of high
yield corporate, U.S. government and international bonds. In selecting debt
securities for the Fund the Adviser seeks out companies with good fundamentals
and performing prospects that are currently out of favor with investors. The
primary basis for security selection is the potential income offered by the
security relative to the Adviser's assessment of the issuer's ability to
generate the cash flow required to meet its obligation. The Adviser employs a
"bottom-up" approach, identifying investment opportunities based on the
underlying financial and economic fundamentals of the specific issuer.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower-rated securities is even
greater than that of higher-rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
High yield securities involve greater risks of default or downgrade and are more
volatile than investment grade securities. Junk bonds involve greater risk of
default or price declines than investment grade securities due to actual or
perceived changes in an issuer's creditworthiness. In addition, issuers of junk
bonds may be more susceptible than other issuers to economic downturns. Junk
bonds are subject to the risk that the issuer may not be able to pay interest or
dividends and ultimately to repay principal upon maturity. Discontinuation of
these payments could substantially adversely affect the market value of the
security.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. These
various risks will be even greater for investments in emerging market countries
since political turmoil and rapid changes in economic conditions are more likely
to occur in these countries.
4
PERFORMANCE INFORMATION
The Strategic Income Fund commenced operations on November 30, 2001, and
therefore, does not have a performance history for a full calendar year.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
FLEX SHARES
---------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of net asset value) 2.00%*
---------------------------------------------------------------------------------------------------
* This charge is imposed if you sell your Flex shares within one year of your
purchase. See "How to Sell Fund Shares."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
FLEX SHARES
---------------------------------------------------------------------------------------------------
Investment Advisory Fees 0.85%
Distribution and Service (12b-1) Fees 0.50%*
Other Expenses 0.28%**
-----
Total Annual Fund Operating Expenses 1.63%***
---------------------------------------------------------------------------------------------------
* The Fund may charge a maximum 12b-1 fee of 1.00%, but expects to charge no
more than 0.50% for the current fiscal year.
** Other Expenses are estimated.
*** The Fund's total actual annual fund operating expenses for the most recent
fiscal year are expected to be less than the amount shown above because the
Adviser and the Distributor intend to waive a portion of the fees in order
to keep total operating expenses at a specified level. These fee waivers
remain in place as of the date of this prospectus, but the Adviser and the
Distributor may discontinue all or part of these waivers at any time. With
these fee waivers, the Fund's actual total operating expenses would be as
follows:
Strategic Income Fund -- Flex Shares 1.53%
5
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
operating 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:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS
$416 $667
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS
$216 $667
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. For more information about these
fees, see "Investment Adviser" and "Distribution of Fund Shares."
6
VANTAGE FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Long-term capital appreciation
SECONDARY Hedge against periodic declines in
equity markets
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued and
overvalued stocks
INVESTOR PROFILE Aggressive investors with long-term
investment goals who are willing to
accept significant volatility for the
possibility of higher returns.
INVESTMENT STRATEGY
The Vantage Fund establishes long and short positions primarily in common stocks
of U.S. companies. Using fundamental analysis, the Adviser buys stocks "long"
that it believes will perform better than their peers, and sells stocks "short"
that it believes will underperform their peers. A long position is established
when the Adviser purchases a stock outright, and a short position is established
when the Adviser sells a security that it has borrowed. Short positions may be
used to partially hedge long positions or to garner returns from declines in
securities prices. The Adviser may also seek to enhance returns by purchasing
securities with borrowed money. This investment technique, known as
"leveraging," increases investment risk, but also increases investment
opportunity. The Fund may borrow up to 33.33% of its assets (including the
amount borrowed). From time to time, the Adviser may take defensive positions in
cash or short-term debt securities in an attempt to moderate extreme volatility
caused by adverse market conditions.
The Adviser seeks to identify long and short opportunities by utilizing both
"bottom-up" and "top-down" fundamental analysis methodologies. "Bottom-up"
analysis is employed to evaluate the competitive advantages and market
sustainability of individual companies. "Top-down" analysis is used to assess
the relative attractiveness of investment opportunities within the context of
industry, macro-economic and financial market trends. Using top-down analysis,
the Adviser rotates the Fund's investments among various market sectors, making
periodic adjustments to the amount of assets allocated to long and short
positions of stocks within the same market sector. To execute its sector
rotation strategy efficiently, the Adviser may establish long or short positions
in securities that represent indexes or other groups of stocks, such as exchange
traded funds. For a complete list of investment techniques that may be employed
by the fund, please see the Statement of Additional Information.
The Fund invests primarily in companies with market capitalizations over $1
billion, but may invest a portion of its assets in smaller companies. Due to its
investment strategy, the Fund will buy and sell securities frequently. This may
result in higher transaction costs and additional capital gains tax liabilities.
7
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it establishes long and short positions in common stocks, the Fund is
subject to the risk that stock prices will rise and fall over short or extended
periods of time. Historically, the stock markets have moved in cycles, and the
value of the Fund's common stocks may fluctuate drastically from day-to-day.
Individual companies may report unexpected results or be affected considerably
by industry and/or economic trends and developments. The prices of stocks issued
by such companies may change substantially in response. These factors contribute
to price volatility, which is the principal risk of investing in the Fund. Since
the Fund engages in selling stocks short, the risk of price volatility may be
greater in this fund than in long-only equity mutual funds. While the potential
losses associated with long positions are typically limited to the original cost
of the securities, the potential for losses associated with short positions is
theoretically unlimited.
The Fund may engage in hedging transactions to reduce the risks of its
investments in equity securities. However, hedging will not necessarily protect
the Fund fully against anticipated risks. Moreover, hedging transactions involve
costs and risks of their own. As a result, hedging may not improve the Fund's
performance either on an absolute or risk-adjusted basis.
The practice of sector rotation will result in increased exposure to risks
inherent in particular industries or sectors. Different industries and sectors
may be more or less susceptible to changes in economic conditions, including,
for example, interest rates, inflation rates, industry conditions, competition,
technological developments, trade relationships, political and diplomatic events
and trends. Concentrations in sectors that produce unfavorable performance may
cause the Fund to perform more unfavorably than a broadly diversified fund that
has less exposure to those industries or sectors.
The small and medium capitalization companies in which the Fund invests may be
more vulnerable to unexpected business or economic events than larger, more
established companies. In particular, these small and medium companies may have
limited product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small and mid-cap stocks may be
more volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. These
various risks will be even greater for investments in emerging market countries
since political turmoil and rapid changes in economic conditions are more likely
to occur in these countries.
PERFORMANCE INFORMATION
The Vantage Fund commenced operations on November 30, 2001, and therefore does
not have a performance history for a full calendar year.
8
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
FLEX SHARES
-------------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of
offering price) None
Maximum Deferred Sales Charge (Load) (as a percentage of net asset value) 2.00%*
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and
other Distributions (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) 1.00%*
Exchange Fee None
Maximum Account Fee None
-------------------------------------------------------------------------------------------------
* This charge is imposed if you sell your Flex shares within one year of your
purchase. See "How to Sell Fund Shares."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
FLEX SHARES
-------------------------------------------------------------------------------------------------
Investment Advisory Fees 1.60%
Distribution and Service (12b-1) Fees 0.50%*
Other Expenses 0.39%**
-----
Total Annual Fund Operating Expenses 2.49%***
-------------------------------------------------------------------------------------------------
* The Fund may charge a maximum 12b-1 fee of 1.00%, but expects to charge no
more than 0.50% for the current fiscal year.
** Other Expenses are estimated.
*** The Fund's total actual annual fund operating expenses for the most recent
fiscal year are expected to be less than the amount shown above because the
Adviser and the Distributor intend to waive a portion of the fees in order
to keep total operating expenses at a specified level. These fee waivers
remain in place as of the date of this prospectus, but the Adviser and the
Distributor may discontinue all or part of these waivers at any time. With
these fee waivers, the Fund's actual total operating expenses would be as
follows:
Vantage Fund -- Flex Shares 2.39%
9
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 the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
IF YOU SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS
$502 $924
IF YOU DO NOT SELL YOUR SHARES AT THE END OF THE PERIOD:
1 YEAR 3 YEARS
$302 $924
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. In addition, the Fund may enter
into arrangements with broker-dealers who have agreed to pay certain Fund
expenses in return for executing Fund transactions through that broker-dealer.
For more information about these fees, see "Investment Adviser and "Distribution
of Fund Shares."
10
MORE INFORMATION ABOUT RISK
EQUITY RISK
MID CAP VALUE EQUITY FUND
VANTAGE FUND
Equity securities include public and privately issued equity securities, common
and preferred stocks, warrants, rights to subscribe to common stock and
convertible securities, as well as instruments that attempt to track the price
movement of equity indices. Investments in equity securities and equity
derivatives in general are subject to market risks that may cause their prices
to fluctuate over time. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also affected by prevailing
interest rates, the credit quality of the issuer and any call provision.
Fluctuations in the value of equity securities in which a mutual fund invests
will cause a fund's net asset value to fluctuate. An investment in a portfolio
of equity securities may be more suitable for long-term investors who can bear
the risk of these share price fluctuations.
FOREIGN SECURITY RISKS
STRATEGIC INCOME FUND
Investments in securities of foreign companies or governments can be more
volatile than investments in U.S. companies or governments. Diplomatic,
political, or economic developments, including nationalization or appropriation,
could affect investments in foreign countries. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets. In
addition, the value of securities denominated in foreign currencies, and of
dividends from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign companies or
governments generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic U. S.
companies or governments. Transaction costs are generally higher than those in
the U. S. and expenses for custodial arrangements of foreign securities may be
somewhat greater than typical expenses for custodial arrangements of similar U.
S. securities. Some foreign governments levy withholding taxes against dividend
and interest income. Although in some countries a portion of these taxes are
recoverable the non-recovered portion will reduce the income received from the
securities comprising the portfolio.
HEDGING RISKS
VANTAGE FUND
Hedging is a strategy designed to offset investment risks. The Vantage Fund's
hedging activities include primarily short sales, but may also include among
other things, forwards, options and futures. There are risks associated with
hedging activities, including:
o 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 and currency exchange rates;
o There may be an imperfect or no correlation between the changes in
market value of the securities held by the Fund or the currencies in
which those securities are denominated and the prices of forward
contracts, futures and options on futures;
o There may not be a liquid secondary market for a futures contract or
option;
o Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in currencies, futures
contracts and options.
11
LEVERAGING RISK
VANTAGE FUND
Leveraging activities include, among other things, borrowing and the use of
short sales, options and futures. There are risks associated with leveraging
activities, including:
o A fund experiencing losses over certain ranges in the market that
exceed losses experienced by a non-leveraged Fund.
o There may be an imperfect or no correlation between the changes in
market value of the securities held by a fund and the prices of
futures and options on futures.
o Although the funds will only purchase exchange-traded futures and
options, due to market conditions there may not be a liquid secondary
market for a futures contract or option. As a result, the funds may be
unable to close out their futures or options contracts at a time which
is advantageous.
o Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
In addition, the following leveraged instruments are subject to certain specific
risks:
DERIVATIVES RISKS
VANTAGE FUND
The Funds may use derivatives to attempt to achieve their investment
objectives, while at the same time maintaining liquidity. To collateralize
(or cover) these derivatives transactions, the Funds hold cash or U.S.
government securities.
SHORT SALES
VANTAGE FUND
Short sales are transactions in which a Fund sells a security it does not
own. To complete a short sale, a Fund must borrow the security to deliver
to the buyer. The Fund is then obligated to replace the borrowed security
by purchasing the security at the market price at the time of replacement.
This price may be more or less than the price at which the security was
sold by the Fund. Potential losses associated with a short sale are
theoretically unlimited, since prices of the stocks being sold short have
unlimited appreciation potential.
MORE INFORMATION ABOUT FUND INVESTMENTS
This prospectus describes the Funds' primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in the
Statement of Additional Information (SAI).
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, the Fund may invest up to 100% of
its assets in cash, money market instruments, repurchase agreements and
short-term obligations. A Fund will do so only if the Adviser believes that the
risk of loss outweighs the opportunity for capital gains or higher income. Of
course, a Fund cannot guarantee that it will achieve its investment goal.
12
INVESTMENT ADVISER
The investment adviser (Adviser) makes investment decisions for the Funds and
continuously reviews, supervises and administers the Funds' investment program.
The Board of Trustees supervises the Adviser and establishes policies that the
Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco or the Adviser), 50 Hurt Plaza, Suite
1400, Atlanta, Georgia 30303, serves as the Adviser to the Funds. As of June 30,
2001, Trusco had in excess of $45 billion in assets under management.
The Adviser may use its affiliates as brokers for Fund transactions.
PORTFOLIO MANAGERS
The Mid Cap Value Equity Fund has been team managed since Novenber 2001 by Mr.
Mills Riddick, CFA, Mr. Dan Lewis, Mr. Brett Barner, CFA and Mr. Don Wordell,
MBA. Mr. Riddick has served as a Managing Director of Trusco since July 2000,
after serving as Managing Director of STI Capital Management, N.A. (STI), a
subsidiary of SunTrust Banks, Inc. since 1994. Mr. Riddick has more than 19
years of investment experience. Mr. Lewis has served as a Portfolio Manager of
Trusco since July 2000, after serving as a Portfolio Manager for STI since 1993.
He has more than 9 years of investment experience. Mr. Barner has served as Vice
president of Trusco since July 2000, after serving as a Managing Director of STI
since 1994. Mr. Barner has more than 17 years of investment experience. Mr.
Wordell has served as a Portfolio Manager since joining Trusco in 1996. He is a
member of the Association for Investment Management & Research (AIMR) and the
Orlando Society of Financial Analysts and has more than 5 years of investment
experience.
Mr. Neil J. Powers, CFA, joined Trusco in 1997 and serves as Managing Director.
He has managed the Strategic Income Fund since it began operating in November
2001. Prior to joining Trusco, Mr. Powers worked at Putnam Investments, from
1986 to 1997, where he managed multi-sector bond funds and separately managed
institutional accounts. He has more than 16 years of investment experience.
The Vantage Fund is managed by Mr. Alan S. Kelley. Mr. Kelly joined Trusco in
1999 and serves as Vice President. He has managed the Vantage Fund since it
began operating in November 2001. Prior to joining Trusco, Mr. Kelley served as
Portfolio Manager with SunTrust Bank, Atlanta from 1995 to 1999. He has more
than 8 years of investment experience.
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Flex Shares of the Funds.
HOW TO PURCHASE FUND SHARES
A SunTrust Securities Investment Consultant can assist you in opening a
brokerage account which will be used for all transactions regarding the purchase
of STI Classic Funds. Once your securities account is established, you may buy
shares of the Funds by:
o Mail
o Telephone (1-800-874-4770)
o Wire
o Automated Clearing House (ACH)
13
You may also buy shares through Investment Representatives of certain
correspondent banks of SunTrust Banks, Inc. (SunTrust) and other financial
institutions that are authorized to place transactions in Funds shares for their
customers. Please contact your financial institution directly and follow its
procedures for Fund share transactions. Your institution may charge a fee for
its services, in addition to the fees charged by a Fund. You will also generally
have to address your correspondence or questions regarding a Fund to your
institution. A Fund may reject any purchase order if it is determined that
accepting the order would not be in the best interests of STI Classic Funds or
its shareholders.
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 Funds receive your purchase order. Each Fund
calculates its 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 you to receive the current Business Day's NAV, generally a Fund
must receive your purchase order in proper form before 4:00 p.m., Eastern time.
A Fund will not accept orders that request a particular day or price for the
transaction or any other special conditions.
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 ADMINISTRATOR OR 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 INSTITUTIONS INTERNAL ORDER ENTRY CUT-OFF TIMES, PLEASE CONTACT YOUR
FINANCIAL INSTITUTION DIRECTLY.
HOW THE FUNDS CALCULATE NAV
In calculating NAV, each Fund generally values its investment portfolio at
market price. If market prices are unavailable or the Fund thinks that the
market price is unreliable, fair value prices may be determined in good faith
using methods approved by the Board of Trustees.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
MINIMUM PURCHASES
To purchase shares of the Vantage Fund for the first time, you must invest at
least $25,000 in the Fund. Your subsequent investments in the Vantage Fund must
be made in amounts of at least $1,000. To purchase shares for an individual
retirement account (IRA) or other tax qualified account only, you must invest at
least $2,000. The Vantage Fund may accept investments of smaller amounts at its
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
14
agreements. Once you have signed up to use FUNDLINK, simply call SunTrust at
1-800-874-4770 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 investment from $50 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.
CONTINGENT DEFERRED SALES CHARGES -- FLEX SHARES
You do not pay a sales charge when you purchase Flex Shares. The offering price
of Flex Shares is simply the next calculated NAV. 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% for either (1) the NAV of the shares at the time of
purchase, or (2) NAV of the shares next calculated after the Fund receives your
sale request, whichever is less. The sales charge does not apply to 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:
o to make certain withdrawals from a retirement plan (not including
IRAs);
o because of death or disability;
o for certain payments under the Systematic Withdrawal Plan (which is
discussed later); or
o for exchanges from Trust or Investor Shares to Flex Shares where the
total accumulated period from the original date of purchase is at
least one year.
OFFERING PRICE OF FUND SHARES
The offering price of Flex Shares is simply the next calculated NAV.
HOW TO SELL YOUR FUND SHARES
If you own your shares through a brokerage account with SunTrust Securities, you
may sell (sometimes called "redeem") your shares on any Business Day by
contacting SunTrust Securities directly by mail or telephone at 1-800-874-4770.
The minimum amount for telephone redemptions is $1,000.
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares. Your broker or
institution may charge a fee for its services, in addition to the fees charged
by the Fund.
If you would like to sell $25,000 or more of your shares, please notify the Fund
in writing and include a signature guarantee by a bank or other financial
institution (a notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request less, in the case of Flex Shares, any applicable deferred
sales charge.
15
REDEMPTION FEE
The Vantage Fund charges a redemption fee of 1.00% on redemptions of shares that
have been held for less than one year from the date of purchase. The fee will be
deducted from your sale proceeds and cannot be paid separately. The fee does not
apply to shares purchased with reinvested dividends or distributions. The
redemption fee is designed to discourage short-term trading and any proceeds of
the fee will be credited to the assets of the Vantage Fund.
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 a checking or
savings account with a SunTrust affiliates bank, electronically transferred to
your account.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after
the Funds receive your request. Your proceeds can be wired to your bank account
(subject to a $7.00 fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR
SHARES BY CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL
YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF
PURCHASE).
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 Funds' 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). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the required minimum you may be required to
sell your shares. The account balance minimum for Flex Shares is $5,000. But,
the Funds will always give you at least 60 days written notice to give you time
to add to your account and avoid the sale of your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the New York Stock Exchange
restricts trading, the SEC declares an emergency or for other reasons. More
information about this is in the SAI.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting SunTrust
Securities or your financial institution by mail or telephone. Exchange requests
must be for an amount of at least $1,000.
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with Fund management and may have an
adverse effect on all shareholders. In order to limit excessive exchange
activity and in other circumstances where it is in the best interests of a Fund,
all Funds reserve the right to revise or terminate the exchange privilege, limit
the amount or number of exchanges or reject any exchange. Currently, 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.
16
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
DAYS FROM YOUR DATE OF PURCHASE). This exchange privilege may be changed or
canceled at any time upon 60 days notice.
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 Fund receives your exchange requests. You may exchange
Flex Shares of any Fund for Flex Shares of any other Fund. Again, the CDSC will
be computed as of the original date of purchase.
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions the Fund reasonably believes to be genuine. If
you or your financial institution transact with the Fund over the telephone, you
will generally bear the risk of any loss.
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 Flex Shares the maximum distribution fee is 1.00% of the average daily net
assets of each Fund.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide cash or non-cash
compensation as recognition for past sales or encouragement for future sales
that may include the following: merchandise, travel expenses, prizes, meals,
lodging, and gifts that do not exceed $100 per year, per individual.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its net investment income quarterly.
Each Fund makes distributions of its net realized capital gains, if any, at
least annually. If you own Fund shares on a Fund's record date, you will be
entitled to receive the distribution. 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 Fund in writing
prior to the date of the distribution. Your election will be effective for
dividends and distributions paid after the Fund receives your written notice. To
cancel your election, simply send the Fund written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below the Funds 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 net investment income and its
net realized capital gains, if any, at least annually. The dividends and
distributions you receive may be subject to federal, state and
17
local taxation, depending upon your tax situation. Distributions you receive
from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OF FUND SHARES MAY BE A TAXABLE EVENT. FOR TAX PURPOSES, AN
EXCHANGE OF FUND SHARES FOR SHARES OF A DIFFERENT STI CLASSIC FUND IS TREATED
THE SAME AS A SALE.
If you have a tax-advantaged or other retirement account you will generally not
be subject to federal taxation on income and capital gain distributions until
you begin receiving your distributions from your retirement account. You should
consult your tax advisor regarding the rules governing your own retirement plan.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
18
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STI CLASSIC FUNDS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 30303
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available
without charge through the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated November 30, 2001, includes
detailed information about the STI Classic Funds.
The SAI is on file 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 SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and
contain information from the Fund's managers
about strategies and recent market conditions and
trends and their impact on Fund performance. The
reports also contain detailed financial information
about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL
REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Fund
c/o SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
FROM THE SEC:
You can also obtain the SAI or the Annual and
Semi-Annual reports, as well as other
information about the STI Classic Funds, from the
EDGAR Database on 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 on the
operation of the Public Reference Room, call
202-942-8090). 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 20549-0102. You may also obtain
this information, upon payment of a duplicating
fee, by e-mailing the SEC at the following
address: PUBLICINFO@SEC.GOV. The STI Classic
Funds' Investment Company Act registration
number is 811-06557.
STI-PS-010-0100
STI CLASSIC FUNDS
Trust Shares
MID CAP VALUE EQUITY FUND
STRATEGIC INCOME FUND
VANTAGE FUND
INVESTMENT ADVISER TO THE FUNDS:
TRUSCO CAPITAL MANAGEMENT, INC.
(THE "ADVISER")
The Securities and Exchange Commission has not approved or disapproved
these securities
or passed upon the adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
STI CLASSIC FUNDS NOVEMBER 30, 2001
ABOUT THIS PROSPECTUS
The STI Classic Funds is a mutual fund family that offers shares in
separate investment portfolios (Funds). Each Fund has individual investment
goals and strategies. This prospectus gives you important information about the
Trust Shares of the Mid Cap Value Equity Fund, Strategic Income Fund and Vantage
Fund that you should know before investing. Please read this prospectus and keep
it for future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN
EASILY REVIEW THIS IMPORTANT INFORMATION. IN THE SECTION BELOW, THERE IS SOME
GENERAL INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH
OF THE FUNDS. FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
PAGE
----
MID CAP VALUE EQUITY FUND................................... 1
STRATEGIC INCOME FUND....................................... 3
VANTAGE FUND ............................................... 5
MORE INFORMATION ABOUT RISK................................. 8
MORE INFORMATION ABOUT FUND INVESTMENTS..................... 9
INVESTMENT ADVISER.......................................... 10
PORTFOLIO MANAGERS.......................................... 10
PURCHASING AND SELLING FUND SHARES.......................... 10
DIVIDENDS AND DISTRIBUTIONS................................. 12
TAXES....................................................... 13
HOW TO OBTAIN MORE INFORMATION ABOUT
THE STI CLASSIC FUNDS................................... Back Cover
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that
goal. The Adviser invests Fund assets in a way that it believes will help a Fund
achieve its goal. Still, investing in each Fund involves risk and there is no
guarantee that a Fund will achieve its goal. The Adviser's judgments about the
markets, the economy or companies may not anticipate actual market movements,
economic conditions or company performance, and these judgments may affect the
return on your investment. In fact, no matter how good a job the Adviser does,
you could lose money on your investment in a Fund, just as you could with other
investments. A FUND SHARE IS NOT A BANK DEPOSIT AND IT IS NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY GOVERNMENT AGENCY.
The value of your investment in a Fund is based on the market prices of the
securities a 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, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
MID CAP VALUE EQUITY FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Capital appreciation
SECONDARY Current income
INVESTMENT FOCUS U.S. mid-cap common stocks
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued mid-cap stocks
INVESTOR PROFILE Investors who primarily want the value of
their investment to grow, but want to receive
some income from their investment
INVESTMENT STRATEGY
The Mid Cap Value Equity Fund invests primarily in common stocks of U.S.
companies. In selecting investments for the Fund, the Adviser chooses common
stocks of mid-sized companies (I.E., companies with market capitalizations
between approximately $1 billion and $12 billion) that it believes are
undervalued in the market. The Adviser may sell a security when it achieves a
designated target price, a company's growth prospects change, or the opportunity
for a better investment arises.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity market has moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that mid-cap equity securities may
underperform other segments of the equity market or the equity market as a
whole.
The mid-sized capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these smaller companies may have limited product
lines, markets and financial resources, and may depend upon a relatively small
management group. Therefore, mid-cap stocks may be more volatile than those of
larger companies. These securities may be traded over-the-counter or listed on
an exchange.
1
PERFORMANCE INFORMATION
The Mid Cap Value Equity Fund commenced operations on November 30, 2001, and
therefore does not have a performance history for a full calendar year.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
TRUST SHARES
-----------------------------------------------------------------------
Investment Advisory Fees 1.25%
Other Expenses 0.15%*
-----------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.40%**
* Other Expenses are estimated.
** The Fund's total actual annual fund operating expenses for the most recent
fiscal year are expected to be less than the amount shown above because the
Adviser intends to waive a portion of the fees in order to keep total
operating expenses at a specified level. These fee waivers remain in place
as of the date of this prospectus, but the Adviser may discontinue all or
part of these waivers at any time. With these fee waivers, the Fund's
actual total operating expenses would be as follows:
Mid Cap Value Equity Fund -- Trust Shares 1.30%
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 the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
$143 $443
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. In addition, the Fund may enter
into arrangements with broker-dealers who have agreed to pay certain Fund
expenses in return for executing Fund transactions through that broker-dealer.
For more information about these fees, see "Investment Adviser."
2
STRATEGIC INCOME FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Current income
SECONDARY Preservation of capital
INVESTMENT FOCUS High yield corporate, government, and other
debt instruments of U.S. and non U.S. issuers
SHARE PRICE VOLATILITY Moderate
PRINCIPAL INVESTMENT STRATEGY Attempts to increase income while reducing
share price volatility through diversification
across three major sectors of the fixed income
market
INVESTOR PROFILE Investors who seek high current income with
reduced risk of share price volatility
INVESTMENT STRATEGY
The Strategic Income Fund invests primarily in a diversified portfolio of high
yield corporate, U.S. government and international bonds. In selecting debt
securities for the Fund the Adviser seeks out companies with good fundamentals
and performing prospects that are currently out of favor with investors. The
primary basis for security selection is the potential income offered by the
security relative to the Adviser's assessment of the issuer's ability to
generate the cash flow required to meet its obligation. The Adviser employs a
"bottom-up" approach, identifying investment opportunities based on the
underlying financial and economic fundamentals of the specific issuer.
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower-rated securities is even
greater than that of higher-rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
High yield securities involve greater risks of default or downgrade and are more
volatile than investment grade securities. Junk bonds involve greater risk of
default or price declines than investment grade securities due to actual or
perceived changes in an issuer's creditworthiness. In addition, issuers of junk
bonds may be more susceptible than other issuers to economic downturns. Junk
bonds are subject to the risk that the issuer may not be able to pay interest or
dividends and ultimately to repay principal upon maturity. Discontinuation of
these payments could substantially adversely affect the market value of the
security.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. These
various risks will be even greater for investments in emerging market countries
since political turmoil and rapid changes in economic conditions are more likely
to occur in these countries.
3
PERFORMANCE INFORMATION
The Strategic Income Fund commenced operations on November 30, 2001, and
therefore, does not have a performance history for a full calendar year.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
TRUST SHARES
------------------------------------------------------------------------
Investment Advisory Fees 0.85%
Other Expenses 0.20%*
------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.05%**
* Other Expenses are estimated.
** The Fund's total actual annual fund operating expenses for the most recent
fiscal year are expected to be less than the amount shown above because the
Adviser intends to waive a portion of the fees in order to keep total
operating expenses at a specified level. These fee waivers remain in place
as of the date of this prospectus, but the Adviser may discontinue all or
part of these waivers at any time. With these fee waivers, the Fund's
actual total operating expenses would be as follows:
Strategic Income Fund-- Trust Shares 0.95%
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
operating 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:
1 YEAR 3 YEARS
$107 $334
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. For more information about these
fees, see "Investment Adviser."
4
VANTAGE FUND
FUND SUMMARY
INVESTMENT GOALS
PRIMARY Long-term capital appreciation
SECONDARY Hedge against periodic declines in equity
markets
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Attempts to identify undervalued and overvalued
stocks
INVESTOR PROFILE Aggressive investors with long-term investment
goals who are willing to accept significant
volatility for the possibility of higher
returns.
INVESTMENT STRATEGY
The Vantage Fund establishes long and short positions primarily in common stocks
of U.S. companies. Using fundamental analysis, the Adviser buys stocks "long"
that it believes will perform better than their peers, and sells stocks "short"
that it believes will underperform their peers. A long position is established
when the Adviser purchases a stock outright, and a short position is established
when the Adviser sells a security that it has borrowed. Short positions may be
used to partially hedge long positions or to garner returns from declines in
securities prices. The Adviser may also seek to enhance returns by purchasing
securities with borrowed money. This investment technique, known as
"leveraging," increases investment risk, but also increases investment
opportunity. The Fund may borrow up to 33.33% of its assets (including the
amount borrowed). From time to time, the Adviser may take defensive positions in
cash or short-term debt securities in an attempt to moderate extreme volatility
caused by adverse market conditions.
The Adviser seeks to identify long and short opportunities by utilizing both
"bottom-up" and "top-down" fundamental analysis methodologies. "Bottom-up"
analysis is employed to evaluate the competitive advantages and market
sustainability of individual companies. "Top-down" analysis is used to assess
the relative attractiveness of investment opportunities within the context of
industry, macro-economic and financial market trends. Using top-down analysis,
the Adviser rotates the Fund's investments among various market sectors, making
periodic adjustments to the amount of assets allocated to long and short
positions of stocks within the same market sector. To execute its sector
rotation strategy efficiently, the Adviser may establish long or short positions
in securities that represent indexes or other groups of stocks, such as exchange
traded funds. For a complete list of investment techniques that may be employed
by the fund, please see the Statement of Additional Information.
The Fund invests primarily in companies with market capitalizations over $1
billion, but may invest a portion of its assets in smaller companies. Due to its
investment strategy, the Fund will buy and sell securities frequently. This may
result in higher transaction costs and additional capital gains tax liabilities.
5
WHAT ARE THE RISKS OF INVESTING IN THIS FUND?
Since it establishes long and short positions in common stocks, the Fund is
subject to the risk that stock prices will rise and fall over short or extended
periods of time. Historically, the stock markets have moved in cycles, and the
value of the Fund's common stocks may fluctuate drastically from day-to-day.
Individual companies may report unexpected results or be affected considerably
by industry and/or economic trends and developments. The prices of stocks issued
by such companies may change substantially in response. These factors contribute
to price volatility, which is the principal risk of investing in the Fund. Since
the Fund engages in selling stocks short, the risk of price volatility may be
greater in this fund than in long-only equity mutual funds. While the potential
losses associated with long positions are typically limited to the original cost
of the securities, the potential for losses associated with short positions is
theoretically unlimited.
The Fund may engage in hedging transactions to reduce the risks of its
investments in equity securities. However, hedging will not necessarily protect
the Fund fully against anticipated risks. Moreover, hedging transactions involve
costs and risks of their own. As a result, hedging may not improve the Fund's
performance either on an absolute or risk-adjusted basis.
The practice of sector rotation will result in increased exposure to risks
inherent in particular industries or sectors. Different industries and sectors
may be more or less susceptible to changes in economic conditions, including,
for example, interest rates, inflation rates, industry conditions, competition,
technological developments, trade relationships, political and diplomatic events
and trends. Concentrations in sectors that produce unfavorable performance may
cause the Fund to perform more unfavorably than a broadly diversified fund that
has less exposure to those industries or sectors.
The small and medium capitalization companies in which the Fund invests may be
more vulnerable to unexpected business or economic events than larger, more
established companies. In particular, these small and medium companies may have
limited product lines, markets and financial resources, and may depend upon a
relatively small management group. Therefore, small cap stocks may be more
volatile than those of larger companies. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
Investing in foreign countries poses additional risks since political and
economic events unique to a country or region will affect those markets and
their issuers. These events will not necessarily affect the U.S. economy or
similar issuers located in the United States. In addition, investments in
foreign countries are generally denominated in a foreign currency. As a result,
changes in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from and in response to events that do not
otherwise affect the value of the security in the issuer's home country. These
various risks will be even greater for investments in emerging market countries
since political turmoil and rapid changes in economic conditions are more likely
to occur in these countries.
PERFORMANCE INFORMATION
The Vantage Fund commenced operations on November 30, 2001, and therefore does
not have a performance history for a full calendar year.
6
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FUND'S FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD FUND SHARES.
TRUST SHARES
--------------------------------------------------------------------------------
Redemption Fee (as a percentage of amount redeemed, if applicable) 1.00%*
--------------------------------------------------------------------------------
* This charge is imposed if you sell your Trust shares within one year of
your purchase. See "How to Sell Your Fund Shares."
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
TRUST SHARES
--------------------------------------------------------------------------------
Investment Advisory Fees 1.60%
Other Expenses 0.35%*
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.95%**
* Other Expenses are estimated.
** The Fund's total actual annual fund operating expenses for the most recent
fiscal year are expected to be less than the amount shown above because the
Adviser intends to waive a portion of the fees in order to keep total
operating expenses at a specified level. These fee waivers remain in place
as of the date of this prospectus, but the Adviser may discontinue all or
part of these fee waivers at any time. With these fee waivers, the Fund's
actual total operating expenses would be as follows:
Vantage Fund-- Trust Shares 1.85%
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 the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
1 YEAR 3 YEARS
$198 $612
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. In addition, the Fund may enter
into arrangements with broker-dealers who have agreed to pay certain Fund
expenses in return for executing Fund transactions through that broker-dealer.
For more information about these fees, see "Investment Adviser."
7
MORE INFORMATION ABOUT RISK
EQUITY RISK
MID CAP VALUE EQUITY FUND
VANTAGE FUND
Equity securities include public and privately issued equity securities, common
and preferred stocks, warrants, rights to subscribe to common stock and
convertible securities, as well as instruments that attempt to track the price
movement of equity indices. Investments in equity securities and equity
derivatives in general are subject to market risks that may cause their prices
to fluctuate over time. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also affected by prevailing
interest rates, the credit quality of the issuer and any call provision.
Fluctuations in the value of equity securities in which a mutual fund invests
will cause a fund's net asset value to fluctuate. An investment in a portfolio
of equity securities may be more suitable for long-term investors who can bear
the risk of these share price fluctuations.
FOREIGN SECURITY RISKS
STRATEGIC INCOME FUND
Investments in securities of foreign companies or governments can be more
volatile than investments in U.S. companies or governments. Diplomatic,
political, or economic developments, including nationalization or appropriation,
could affect investments in foreign countries. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets. In
addition, the value of securities denominated in foreign currencies, and of
dividends from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign companies or
governments generally are not subject to uniform accounting, auditing, and
financial reporting standards comparable to those applicable to domestic U. S.
companies or governments. Transaction costs are generally higher than those in
the U. S. and expenses for custodial arrangements of foreign securities may be
somewhat greater than typical expenses for custodial arrangements of similar U.
S. securities. Some foreign governments levy withholding taxes against dividend
and interest income. Although in some countries a portion of these taxes are
recoverable the non-recovered portion will reduce the income received from the
securities comprising the portfolio.
HEDGING RISKS
VANTAGE FUND
Hedging is a strategy designed to offset investment risks. The Vantage Fund's
hedging activities include primarily short sales, but may also include among
other things, forwards, options and futures. There are risks associated with
hedging activities, including:
o 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 and currency exchange rates;
o There may be an imperfect or no correlation between the changes in
market value of the securities held by the Fund or the currencies in
which those securities are denominated and the prices of forward
contracts, futures and options on futures;
o There may not be a liquid secondary market for a futures contract or
option;
o Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in currencies, futures
contracts and options.
8
LEVERAGING RISK
VANTAGE FUND
Leveraging activities include, among other things, borrowing and the use of
short sales, options and futures. There are risks associated with leveraging
activities, including:
o A fund experiencing losses over certain ranges in the market that
exceed losses experienced by a non-leveraged Fund.
o There may be an imperfect or no correlation between the changes in
market value of the securities held by a fund and the prices of
futures and options on futures.
o Although the funds will only purchase exchange-traded futures and
options, due to market conditions there may not be a liquid secondary
market for a futures contract or option. As a result, the funds may be
unable to close out their futures or options contracts at a time which
is advantageous.
o Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.
In addition, the following leveraged instruments are subject to certain specific
risks:
DERIVATIVES RISKS
VANTAGE FUND
The Funds may use derivatives to attempt to achieve their investment
objectives, while at the same time maintaining liquidity. To collateralize
(or cover) these derivatives transactions, the Funds hold cash or U.S.
government securities.
SHORT SALES
VANTAGE FUND
Short sales are transactions in which a Fund sells a security it does not
own. To complete a short sale, a Fund must borrow the security to deliver
to the buyer. The Fund is then obligated to replace the borrowed security
by purchasing the security at the market price at the time of replacement.
This price may be more or less than the price at which the security was
sold by the Fund. Potential losses associated with a short sale are
theoretically unlimited, since prices of the stocks being sold short have
unlimited appreciation potential.
MORE INFORMATION ABOUT FUND INVESTMENTS
This prospectus describes the Funds' primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in the
Statement of Additional Information (SAI).
The investments and strategies described in this prospectus are those that the
Funds 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. A Fund will do so only if the Adviser believes that the
risk of loss outweighs the opportunity for capital gains or higher income. Of
course, a Fund cannot guarantee that it will achieve its investment goal.
9
INVESTMENT ADVISER
The investment adviser (Adviser) makes investment decisions for the Fund and
continuously reviews, supervises and administers each Fund's investment program.
The Board of Trustees supervises the Adviser and establishes policies that the
Adviser must follow in its management activities.
Trusco Capital Management, Inc. (Trusco or the Adviser), 50 Hurt Plaza, Suite
1400, Atlanta, Georgia 30303, serves as the Adviser to the Fund. As of June 30,
2001, Trusco had in excess of $45 billion in assets under management.
The Adviser may use its affiliates as brokers for Fund transactions.
PORTFOLIO MANAGERS
The Mid Cap Value Equity Fund has been team managed since November 2001 by Mr.
Mills Riddick, CFA, Mr. Dan Lewis, Mr. Brett Barner, CFA and Mr. Don Wordell,
MBA. Mr. Riddick has served as a Managing Director of Trusco since July 2000,
after serving as Managing Director of STI Capital Management, N.A. (STI), a
subsidiary of SunTrust Banks, Inc. since 1994. Mr. Riddick has more than 19
years of investment experience. Mr. Lewis has served as a Portfolio Manager of
Trusco since July 2000, after serving as a Portfolio Manager for STI since 1993.
He has more than 9 years of investment experience. Mr. Barner has served as Vice
president of Trusco since July 2000, after serving as a Managing Director of STI
since 1994. Mr. Barner has more than 17 years of investment experience. Mr.
Wordell has served as a Portfolio Manager since joining Trusco in 1996. He is a
member of the Association for Investment Management & Research (AIMR) and the
Orlando Society of Financial Analysts and has more than 5 years of investment
experience.
Mr. Neil J. Powers, CFA, joined Trusco in 1997 and serves as Managing Director.
He has managed the Strategic Income Fund since it began operating in November
2001. Prior to joining Trusco, Mr. Powers worked at Putnam Investments, from
1986 to 1997, where he managed multi-sector bond funds and separately managed
institutional accounts. He has more than 16 years of investment experience.
The Vantage Fund is managed by Mr. Alan S. Kelley. Mr. Kelley joined Trusco in
1999 and serves as Vice President. He has managed the Vantage Fund since it
began operating in November 2001. Prior to joining Trusco, Mr. Kelley served as
Portfolio Manager with SunTrust Bank, Atlanta from 1995 to 1999. He has more
than 8 years of investment experience.
PURCHASING AND SELLING FUND SHARES
This section tells you how to purchase and sell (sometimes called "redeem")
Trust Shares of the Funds.
HOW TO PURCHASE FUND SHARES
The Funds offer Trust Shares only to financial institutions or intermediaries,
including subsidiaries of SunTrust Banks, Inc. (SunTrust), for their own or
their customers' accounts for which they act as fiduciary, agent, investment
adviser, or custodian. As a result, you, as a customer of a financial
institution may purchase Trust Shares through accounts made with financial
institutions and potentially through the Investor's Advantage 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 it is
determined that accepting the order would not be in the best interests of the
STI Classic Funds or their shareholders.
10
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 Funds receive your purchase order. Each Fund
calculates its 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 you to receive the current Business Day's NAV, generally a Fund
must receive your purchase order in proper form before 4:00 p.m., Eastern time.
A Fund will not accept orders that request a particular day or price for the
transaction or any other special conditions.
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 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 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 THE FUNDS CALCULATE NAV
In calculating NAV, each Fund generally values its investment portfolio at
market price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
NET ASSET VALUE
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
MINIMUM PURCHASES
To purchase shares of the Vantage Fund for the first time, you must invest at
least $25,000 in the Fund. Your subsequent investments in the Vantage Fund must
be made in amounts of at least $1,000. To purchase shares for an individual
retirement account (IRA) or other tax qualified account only, you must invest at
least $2,000. The Vantage Fund may accept investments of smaller amounts at its
discretion.
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.
Holders of Trust Shares may sell shares by following the procedures established
when they opened their account or accounts with the Funds or with their
financial institution or intermediary. The sale price of each share will be the
next NAV determined after the Funds receive your request.
11
REDEMPTION FEE
The Vantage Fund charges a redemption fee of 1.00% on redemptions of shares that
have been held for less than one year from the date of purchase. The fee will be
deducted from your sale proceeds and cannot be paid separately. The fee does not
apply to shares purchased with reinvested dividends or distributions. The
redemption fee is designed to discourage short-term trading and any proceeds of
the fee will be credited to the assets of the Vantage Fund.
RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within five Business Days after
the Fund receives your request, but it may take up to seven days.
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 Funds' 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). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction 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 New York Stock
Exchange restricts trading, the SEC declares an emergency or for other reasons.
More information about this is in the SAI.
TELEPHONE TRANSACTIONS
Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. Although the Fund has certain safeguards and procedures to
confirm the identity of callers and the authenticity of instructions, the Fund
is not responsible for any losses or costs incurred by following telephone
instructions the Fund reasonably believes to be genuine. If you or your
financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its net investment income quarterly.
Each Fund makes distributions of its net realized capital gains, if any, at
least annually. If you own Fund shares on a Fund's record date, you will be
entitled to receive the distribution.
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.
12
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below the Funds 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 net investment income and its
net realized capital gains, if any, at least annually. The dividends and
distributions you receive may be subject to federal, state and local taxation,
depending upon your tax situation. Distributions you receive from a Fund may be
taxable whether or not you reinvest them. Income distributions are generally
taxable at ordinary income tax rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. EACH SALE OF FUND
SHARES MAY BE A TAXABLE EVENT. FOR TAX PURPOSES, AN EXCHANGE OF FUND SHARES FOR
SHARES OF A DIFFERENT STI CLASSIC FUND IS TREATED THE SAME AS A SALE.
If you have a tax-advantaged or other retirement account you will generally not
be subject to federal taxation on income and capital gain distributions until
you begin receiving your distributions from your retirement account. You should
consult your tax advisor regarding the rules governing your own retirement plan.
MORE INFORMATION ABOUT TAXES IS IN THE SAI.
13
STI CLASSIC FUNDS
HOW TO OBTAIN MORE INFORMATION ABOUT THE STI CLASSIC FUNDS
INVESTMENT ADVISER
Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 30303
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated November 30, 2001, includes detailed information about the STI
Classic Funds. The SAI is on file 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 SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-428-6970
BY MAIL: Write to the Fund
c/o SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
FROM THE SEC:
You can also obtain the SAI or the Annual and Semi-Annual reports, as well as
other information about the STI Classic Funds, from the EDGAR Database on 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 on the operation of
the Public Reference Room, call 202-942-8090). 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 20549-0102. You
may also obtain this information, upon payment of a duplicating fee, by
e-mailing the SEC at the following address: PUBLICINFO@SEC.GOV. The STI Classic
Funds' Investment Company Act registration number is 811-06557.