-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LMnhUfyJV+/tKVNspuqgGzYso85S7Y2mtn2hYd05gr7b3ToL4dsbghnpRxOsBsV5 NqMz9yK807NTALX1JkW/Zw== 0000912057-99-003290.txt : 19991104 0000912057-99-003290.hdr.sgml : 19991104 ACCESSION NUMBER: 0000912057-99-003290 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19991103 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: SEC FILE NUMBER: 333-88267 FILM NUMBER: 99740253 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 1 497 [Logo] STI ClASSIC FUNDS To STI Classic Funds Shareholders: Enclosed with this letter is a proxy ballot, an N-14 combined proxy/prospectus statement and related information concerning a special meeting of shareholders of the STI Classic Emerging Markets Equity Fund and the Sunbelt Equity Fund. The purpose of this proxy package is to announce that a Shareholder Meeting has been scheduled for December 10, 1999. The purpose of the meeting is to submit the Agreement and Plan of Reorganization between the Emerging Markets Equity Fund and the International Equity Fund, as well as the Sunbelt Equity Fund and the Small Cap Growth Stock Fund. The Board of Trustees of the STI Classic Funds unanimously approved the Reorganizations at meetings held on May 18, 1999 and August 17, 1999. In coming to this conclusion, the Board of Trustees considered a variety of factors including: - the compatibility of the funds' objectives and policies - the expense ratios of the combined funds - the potential economies of scale to be gained by the merger - the merger will be free from federal income taxes. The details of the proposed Agreement and Plan of Reorganization are set forth in the combined prospectus and proxy statement that accompanies this letter. We encourage you to read them thoroughly. In addition, we have included a list of commonly asked questions and answers on the next page. If you and the other shareholders of your fund approve the proposed reorganization of your fund and certain other conditions are satisfied, you will be able to continue your investment program through ownership in a different STI Classic Funds portfolio with similar objectives and policies. Most shareholders cast their votes by filling out and signing the enclosed proxy card. In order to conduct the Shareholder Meeting, a majority of shares must be represented. YOUR VOTE IS VERY IMPORTANT. PLEASE EITHER SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE, OR IN THE ALTERNATIVE, YOU MAY VOTE IN ANY ONE OF THE OTHER TWO MANNERS DESCRIBED ON THE PROXY CARD. We thank you for your continued confidence and support. Sincerely, /s/ Wilton Looney Wilton Looney CHAIRMAN OF THE BOARD IMPORTANT PROXY INFORMATION ENCLOSED -IMMEDIATE ACTION REQUIRED- QUESTIONS AND ANSWERS FOR THE STI CLASSIC FUNDS' SHAREHOLDER MEETING Q. WHY ARE THE BOARD OF TRUSTEES PROPOSING TO REORGANIZE THE STI CLASSIC EMERGING MARKETS EQUITY AND SUNBELT EQUITY FUNDS? A. Before approving the reorganization of these funds, the Board of Trustees evaluated several factors, including the compatibility of each fund's investment objective with the fund each will be reorganized into, and the potential for improved shareholder service. After careful consideration, they determined that the reorganizations are in the best interest of the shareholders. Through this proxy, they are submitting the proposals for reorganization to you for a vote. Q. HOW WILL THIS AFFECT ME AS A SHAREHOLDER? A. You will become a shareholder of another STI Classic Fund with similar investment objectives and policies as the fund you currently hold. There are NO SALES CHARGES on this transaction. Each shareholder will receive shares of an STI Classic Fund equal in value to the shares of the STI Classic Fund you currently hold. It is likely that the NAV per share price of your fund shares may change. However, the number of shares that you own will be adjusted so that there will be NO CHANGE in the market value of your account as a result of the merger. Q. WILL THE REORGANIZATION RESULT IN ANY TAXES? A. Neither of the STI Classic Funds nor their shareholders will incur any federal income tax as a result of the reorganizations. Q. WHAT FUND(S) WILL I HOLD FOLLOWING THE REORGANIZATIONS? A. The STI Classic Emerging Markets Equity Fund, Trust Class, shareholders will receive Trust Class shares of the STI Classic International Equity Fund. The STI Classic International Equity Fund has an investment objective similar to the STI Classic Emerging Markets Equity Fund, but seeks to achieve that objective by investing primarily in securities of issuers located in countries with developed markets rather than issuers located in countries with emerging markets. The STI Classic Sunbelt Equity Fund shareholders will receive shares of the Small Cap Growth Stock Fund. These Funds have similar investment objectives but the STI Classic Small Cap Growth Stock Fund does not concentrate its investments in any particular geographic location. Shareholders of the Sunbelt Equity Fund will receive the same class of shares in which they are currently invested. Q. HOW DO THE STI CLASSIC FUNDS' BOARD OF TRUSTEES RECOMMEND THAT I VOTE? A. After careful consideration, the Board of Trustees unanimously recommend that you vote "FOR" the proposed reorganizations. The Board of Trustees also wishes to remind you to vote ALL the proxy ballot cards you receive in any one of the three manners described on the cards. This means that if you receive multiple proxies and ballot cards because you are invested in both STI Classic Funds, please vote each and every ballot card you receive in one of the three manners of voting. Q. WHO SHOULD I CONTACT WITH QUESTIONS ABOUT THIS PROXY? A. If you have any questions regarding this proxy, please contact the following for further information: EMERGING MARKETS EQUITY FUND SHAREHOLDERS: - - Contact your account administrator SUNBELT EQUITY FUND SHAREHOLDERS: - - TRUST SHARES - Contact your account administrator - - INVESTOR AND/OR FLEX SHARES - Contact SunTrust Securities directly at 1-800-874-4770, or contact Additional Support Services at 1-877-474-5527. PLEASE VOTE THE ENCLOSED PROXY BALLOT CARD. YOUR VOTE IS IMPORTANT! STI CLASSIC FUNDS 2 Oliver Street Boston , MA 02109 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 10, 1999 Notice is hereby given that a Special Meeting of Shareholders of the STI Classic Funds (the "Trust"), with respect to its series the Sunbelt Equity Fund and Emerging Markets Equity Fund (each a "Transferring Fund" and collectively, the "Transferring Funds"), will be held at the offices of SEI Investments Company, One Freedom Valley Drive, Oaks, PA 19456, on December 10, 1999 at 3:00 p.m., Eastern Time, for the purposes of considering the proposals set forth below. The proposals, if approved, will result in the transfer of the assets and stated liabilities of the Transferring Funds to two corresponding series of the Trust, the Small Cap Growth Stock Fund and the International Equity Fund (each an "Acquiring Fund" and collectively, the "Acquiring Funds"), respectively, in return for shares of the corresponding Acquiring Funds (the "Reorganization"). Proposal 1: Approval of the Agreement and Plan of Reorganization (the "Reorganization Agreement") as it relates to (i) the transfer of all of the assets and certain stated liabilities of the Sunbelt Equity Fund to the Small Cap Growth Stock Fund in exchange for shares of the Acquiring Fund; and (ii) the distribution of the Acquiring Fund's shares so received to shareholders of the Transferring Fund. Proposal 2: Approval of the Reorganization Agreement as it relates to (i) the transfer of all of the assets and certain stated liabilities of the Emerging Markets Equity Fund to the International Equity Fund in exchange for shares of the Acquiring Fund; and (ii) the distribution of the Acquiring Fund's shares so received to shareholders of the Transferring Fund. Proposal 3: The transaction of such other business as may properly be brought before the meeting. Transferring Funds' shareholders of record as of the close of business on October 11, 1999 (the "Shareholders") are entitled to notice of, and to vote at, this meeting or any adjournment thereof. The Shareholders will vote on the proposals, and the proposed Reorganization will be effected only if the Shareholders approve the proposal. SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. YOU MAY EXECUTE THE PROXY CARD IN ONE OF THE THREE METHODS DESCRIBED IN THE PROXY CARD. RETURNING THE PROXY CARD IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON. Kevin P. Robins Assistant Secretary November 10, 1999 PROXY STATEMENT/PROSPECTUS STI CLASSIC FUNDS 2 OLIVER STREET BOSTON, MA 02109 1-800-874-4770 SUNBELT EQUITY FUND EMERGING MARKETS EQUITY FUND NOVEMBER 10, 1999 This Proxy Statement/Prospectus is furnished in connection with the solicitation of proxies by the Board of Trustees of STI Classic Funds (the "Trust") in connection with the Special Meeting of Shareholders (the "Meeting") of the Trust's Sunbelt Equity Fund and Emerging Markets Equity Fund (each a "Transferring Fund" and collectively, the "Transferring Funds"), to be held on December 10, 1999 at 3:00 p.m., Eastern Time, at the offices of SEI Investments Company, One Freedom Valley Drive, Oaks, PA 19456. At the Meeting, shareholders of the Transferring Funds ("Transferring Fund Shareholders") will be asked to consider and approve a proposed Agreement and Plan of Reorganization dated November 1, 1999 (the "Reorganization Agreement"), by and between the Transferring Funds and the Trust's Small Cap Growth Stock Fund and International Equity Fund (each an "Acquiring Fund" and collectively, the "Acquiring Funds"), respectively. The Transferring Funds and Acquiring Funds are referred to collectively as the "Funds." A copy of the Reorganization Agreement is attached as Exhibit A. Proposal 1: Approval of the Reorganization Agreement as it relates to (i) the transfer of all of the assets and certain stated liabilities of the Sunbelt Equity Fund to the Small Cap Growth Stock Fund in exchange for shares of the Acquiring Fund; and (ii) the distribution of the Acquiring Fund's shares so received to Transferring Fund Shareholders. Proposal 2: Approval of the Reorganization Agreement as it relates to (i) the transfer of all of the assets and certain stated liabilities of the Emerging Markets Equity Fund to the International Equity Fund in exchange for shares of the Acquiring Fund; and (ii) the distribution of the Acquiring Fund's shares so received to Transferring Fund Shareholders. Proposal 3: The transaction of such other business as may properly be brought before the meeting. The Reorganization Agreement provides that each Transferring Fund will transfer all of its assets and certain stated liabilities to its corresponding Acquiring Fund. In exchange for the transfers of these assets and liabilities, the Acquiring Fund will simultaneously issue shares to the Transferring Fund in an amount equal in value to the net asset value of such Transferring Fund's shares. This transfer is expected to occur on or about December 13, 1999. Immediately after the transfer of each Transferring Fund's assets and liabilities, the Transferring Fund will make a liquidating distribution to Transferring Fund Shareholders of the corresponding Acquiring Fund's shares received, so that a holder of shares in the Transferring Fund at the Effective Time of the Reorganization (as hereinafter defined) will receive a number of shares of its corresponding Acquiring Fund with the same aggregate value as the Transferring Fund Shareholder had in the Transferring Fund immediately before the Reorganization. At the Effective Time of the Reorganization, Transferring Fund Shareholders will become shareholders of the Acquiring Fund, and the Transferring Fund's legal existence will be terminated. The Transferring Funds and Acquiring Funds offer three classes of shares, Trust Shares, Investor Shares and Flex Shares, except for the Emerging Markets Equity Fund which only offers Trust Shares. Holders of Trust Shares of each Transferring Fund will receive an amount of Trust Shares of its corresponding Acquiring Fund equal in value to their Transferring Fund shares. Holders of Investor Shares and Flex Shares of the Sunbelt Equity Fund will receive an amount of Investor Shares and Flex Shares of the Small Cap Growth Stock Fund equal in value to their respective Sunbelt Equity Fund shares. The Trust is an open-end, management investment company registered under the Investment Company Act of 1940 (the "1940 Act"). Each Fund is a separate series of the Trust. Trusco Capital Management, Inc. ("Trusco") and STI Capital Management, N.A. ("STI Capital") are each direct wholly-owned subsidiaries of SunTrust Banks, Inc. ("SunTrust"), a Georgia corporation and a bank holding company. Trusco is the investment adviser to the Small Cap Growth Stock Fund and the Sunbelt Equity Fund. STI Capital is the investment adviser to the Emerging Markets Equity Fund and the International Equity Fund (Trusco and STI Capital are referred to collectively herein as the "Advisers"). Trusco is registered under the Investment Advisers Act of 1940 (the "Advisers Act"). STI Capital is a bank and is, therefore, not required to register as an investment adviser by virtue of Section 202(a)(11)(A) of the Advisers Act. This Proxy Statement/Prospectus sets forth concisely the information that a Shareholder should know before voting on the Reorganization, and should be retained for future reference. Certain additional relevant documents listed below, which have been filed with the Securities and Exchange Commission ("SEC"), are incorporated in whole or in part by reference. A Statement of Additional Information dated April 6, 1999, relating to this Proxy Statement/ Prospectus and the Reorganization, and including certain financial information about the Transferring Funds and the Acquiring Funds, has been filed with the SEC and is incorporated in its entirety into this Proxy Statement/Prospectus. A copy of such Statement of Additional Information is available upon request and without charge by writing to SEI Investments Distribution Co., One Freedom Valley Drive, Oaks, PA 19456 or by calling toll-free 1-800-874-4770. For a more detailed discussion of the investment objectives, policies, risks and restrictions of the Funds, see the registration statement or prospectuses contained in the registration statement for the Funds dated October 1, 1999 which have been filed with the SEC and are incorporated by reference into this Proxy Statement/Prospectus insofar as they relate to the Funds, and not to any other portfolio of the Trust described therein. Copies of the prospectuses for the Funds accompany this Proxy Statement/Prospectus. A Statement of Additional Information for the Funds dated October 1, 1999 has been filed with the SEC, and is incorporated by reference into this Proxy Statement/Prospectus. Copies are available upon request and without charge by calling 1-800-874-4770. This Proxy Statement/Prospectus constitutes the proxy statement of the Transferring Funds for the Meeting and is expected to be sent to Shareholders on or about November 10, 1999. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. TABLE OF CONTENTS
Page ---- Synopsis ................................................................................... 1 The Reorganization ................................................................ 1 The Funds ......................................................................... 2 Fees and Expenses ................................................................. 4 Investment Objectives, Policies and Restrictions .................................. 8 The Funds' Purchase, Exchange and Redemption Procedures ........................... 9 Risks ...................................................................................... 11 Information Relating to the Reorganization ................................................. 12 Description of the Reorganization ................................................. 12 Federal Income Taxes .............................................................. 13 Capitalization .................................................................... 14 Reasons for the Reorganization ............................................................. 15 Shareholder Rights ......................................................................... 16 Information About the Funds ................................................................ 18 Voting Matters ............................................................................. 19 Other Business ............................................................................. 22 Shareholder Inquiries ...................................................................... 22 Form of Agreement and Plan of Reorganization ..........................................Exhibit A Management's Discussion of Fund Performance ...........................................Exhibit B
SYNOPSIS This Synopsis is designed to allow you to compare the current fees, investment objectives, policies and restrictions, and distribution, purchase, exchange and redemption procedures of the Transferring Funds with those of the Acquiring Fund. It is a summary of certain information contained elsewhere in this Proxy Statement/Prospectus, or incorporated by reference into this Proxy Statement/Prospectus. Shareholders should read this entire Proxy Statement/Prospectus carefully. For more complete information, please read the prospectus for each Fund. THE REORGANIZATION BACKGROUND. Pursuant to the Reorganization Agreement between the participating series (attached hereto as Exhibit A), the Transferring Funds will transfer all of their assets and certain stated liabilities to the Acquiring Funds in exchange solely for shares of the Acquiring Funds. The Transferring Funds will distribute the Acquiring Funds' shares that they receive to their Shareholders in liquidation. The result of the Reorganization is that Shareholders will become shareholders of the corresponding Acquiring Funds. No front-end sales charges or contingent deferred sales charges will be imposed in connection with these transactions. Further, all expenses associated with the Reorganization will be borne by SunTrust and/or its subsidiaries, rather than the Funds and the shareholders thereof. The Board of Trustees of the Trust, including the Trustees who are not "interested persons" within the meaning of Section 2(a)(19) of the 1940 Act, has concluded that the Reorganization would be in the best interests of the Shareholders, and that the interests of the Shareholders would not be diluted as a result of the transactions contemplated by the Reorganization. The Board of Trustees recommends that you vote for approval of the Reorganization Agreement. TAX CONSEQUENCES. The Reorganization is intended to qualify for federal income tax purposes as a tax-free reorganization. If so, Shareholders will not recognize gain or loss in the transaction. SPECIAL CONSIDERATIONS AND RISK FACTORS. Although the investment objectives and policies of the Funds are generally similar, there are certain differences. Therefore, an investment in the Acquiring Funds may involve investment risks that are, in some respects, different from those of the Transferring Funds. For a more complete discussion of the risks associated with the respective Funds, see "RISKS," below. THE FUNDS BUSINESS OF THE FUNDS. The Trust is an open-end, management investment company, which offers redeemable shares in 36 separate investment portfolios. It was organized as a Massachusetts business trust on January 15, 1992. The Funds, with the exception of the Emerging Markets Equity Fund, offer three classes of shares, Trust Shares, Investor Shares, and Flex Shares. The classes differ with respect to minimum investment requirements, distribution and shareholder servicing costs, front-end sales charges and contingent deferred sales charges, as set forth in the Funds' prospectuses. The Emerging Markets Fund only offers a single class of shares, Trust Shares. FEES AND EXPENSES Under the Reorganization Agreement, each Transferring Fund will transfer all its assets and certain stated liabilities to its respective Acquiring Fund. The following comparative fee tables show the fees for the Funds. The pro forma tables show the fees you would pay, including the estimated ongoing operating expenses of each Fund, if the Reorganization is approved. Both sets of tables show fees and expenses without any waivers. The footnotes following the tables show what the actual fees and expenses will be after waivers, if any. If the Reorganization is approved, Total Expenses for shareholders that currently hold Trust Shares and Flex Shares of the Sunbelt Equity Fund will increase by .03% after waivers, while Total Expenses for shareholders that currently hold Investor Shares will decrease by .07%. Total Expenses for shareholders that currently hold Trust Shares of the Emerging Markets Funds will decrease by .09% after waivers. SUNBELT EQUITY FUND - SMALL CAP GROWTH STOCK FUND COMPARISON OF SHAREHOLDER TRANSACTION FEES
- -------------------------------------------------------------------------------------------------------------------- MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE IMPOSED ON PURCHASE (AS A (LOAD)(AS A PERCENTAGE OF NET FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE) - -------------------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND (Trust Shares) None None - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND None None (Trust Shares) - -------------------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND (Investor Shares) 3.75% None - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND 3.75% None (Investor Shares) - -------------------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND (Flex None 2.00% Shares) - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND None 2.00% (Flex Shares) - --------------------------------------------------------------------------------------------------------------------
COMPARISON OF ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- -------------------------------------------------------------------------------------------------------------------- DISTRIBUTION INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING FUND FEES FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND 1.15% None .15% 1.30% (Trust Class)* - --------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------- DISTRIBUTION INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING FUND FEES FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK 1.15% None .34% 1.49% FUND (Trust Shares)+ - -------------------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND 1.15% .43% .20% 1.78% (Investor Shares)* - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK 1.15% .50% .25% 1.90% FUND (Investor Shares)+ - -------------------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND 1.15% 1.00% .51% 2.66% (Flex Shares)* - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK 1.15% 1.00% 1.04% 3.19% FUND (Flex Shares)+ - --------------------------------------------------------------------------------------------------------------------
* The table shows the highest expenses that could be currently charged to the Sunbelt Equity Fund. Actual expenses are lower because the Advisers and the Distributor are voluntarily waiving a portion of their fees. Actual Investment Advisory Fees and Total Operating Expenses for Trust Shares are 1.02% and 1.17%, respectively. Actual Investment Advisory Fees, Distribution Fees and Total Operating Expenses for Investor Shares are 1.02%, .40% and 1.62%, respectively. Actual Investment Advisory Fees, Distribution Fees and Total Operating Expenses for Flex Shares are 1.02%, .69% and 2.22%, respectively. The Advisers and the Distributor could discontinue these voluntary waivers at any time. + The table shows the highest expenses that could be currently charged to the Small Cap Growth Stock Fund. Actual expenses are lower because the Advisers are voluntarily waiving a portion of their fees. Actual Investment Advisory Fees and Total Operating Expenses for Trust Shares are .86% and 1.20%, respectively. Investment Advisory Fees, Distribution Fees and Total Operating Expenses for Investor Shares will be .86%, .44% and 1.55%, respectively (Investor Shares of the Fund will not be available until after the Reorganization is approved). Actual Investment Advisory Fees, Distribution Fees and Total Operating Expenses f or Flex Shares are .86%, .35% and 2.25%, respectively. The Advisers and the Distributor could discontinue these voluntary waivers at any time. PRO FORMA SHAREHOLDER TRANSACTION FEES
- -------------------------------------------------------------------------------------------------------------------- MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE IMPOSED ON PURCHASE (AS A (LOAD) (AS A PERCENTAGE OF NET FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE) - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND (Trust None None Shares) - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND (Investor 3.75% None Shares) - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND (Flex None 2.00% Shares) - --------------------------------------------------------------------------------------------------------------------
PRO FORMA ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)+
- -------------------------------------------------------------------------------------------------------------------- INVESTMENT ADVISORY DISTRIBUTION OTHER TOTAL OPERATING FUND FEES (12b-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK 1.15% None .34% 1.49% FUND (Trust Shares) - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK 1.15% .50% .25% 1.90% FUND (Investor Shares) - -------------------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK 1.15% 1.00% 1.04% 3.19% FUND (Flex Shares) - --------------------------------------------------------------------------------------------------------------------
+ The table shows the highest expenses that could be currently charged to the Small Cap Growth Stock Fund following the Reorganization. Actual expenses will be lower because the Adviser is voluntarily waiving a portion of its fees. Investment Advisory Fees and Total Operating Expenses for Trust Shares will be .86% and 1.20%, respectively. Investment Advisory Fees, Distribution Fees and Total Operating Expenses for Investor Shares will be .86%, .44% and 1.55%, respectively. Investment Advisory Fees, Distribution Fees and Total Operating Expenses for Flex Shares will be .86%, .35% and 2.25%, respectively. The Adviser could discontinue these voluntary waivers at any time. EXAMPLES These examples are intended to help you compare the cost of investing in each Fund with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in each Fund for the time periods indicated, that your investment has a 5% return each year and that each Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions you would pay the following expenses if you redeem all of your shares at the end of the time periods indicated:
- ----------------------------------------------------------------------------------------------------------- FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND (Trust Class) $132 $412 $713 $1,568 - ----------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND (Trust $152 $471 $813 $1,779 Shares) - ----------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND (Investor Shares) $549 $914 $1,303 $2,391 - ----------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND $561 $950 $1,363 $2,514 (Investor Shares) - ----------------------------------------------------------------------------------------------------------- SUNBELT EQUITY FUND (Flex Shares) $469 $826 $1,410 $2,993 - ----------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND (Flex $522 $983 $1,669 $3,494 Shares) - -----------------------------------------------------------------------------------------------------------
-8- PRO FORMA EXAMPLE
- ----------------------------------------------------------------------------------------------------------- FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND (Trust $152 $471 $813 $1,779 Shares) - ----------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND $561 $950 $1,363 $2,514 (Investor Shares) - ----------------------------------------------------------------------------------------------------------- SMALL CAP GROWTH STOCK FUND (Flex $522 $983 $1,669 $3,494 Shares) - -----------------------------------------------------------------------------------------------------------
The Examples above should not be considered a representation of future expenses of the Funds. Actual expenses may be greater or less than those shown. EMERGING MARKETS EQUITY FUND - INTERNATIONAL EQUITY FUND COMPARISON OF SHAREHOLDER TRANSACTION FEES
- -------------------------------------------------------------------------------------------------------------------- MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE IMPOSED ON PURCHASE (AS A (LOAD) (AS A PERCENTAGE OF NET FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE) - -------------------------------------------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND (Trust None None Shares) - -------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND (Trust None None Shares) - --------------------------------------------------------------------------------------------------------------------
COMPARISON OF ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- -------------------------------------------------------------------------------------------------------------------- DISTRIBUTION INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING FUND FEES FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND 1.30% 0.00% .31% 1.61% (Trust Class)* - -------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND 1.25% 0.00% .28% 1.53% (Trust Shares)+ - --------------------------------------------------------------------------------------------------------------------
* The table shows the highest expenses that could be currently charged to the Emerging Markets Equity Fund. Actual expenses are lower because the Adviser and the Distributor are voluntarily waiving a portion of their fees. Actual Investment Advisory Fees, Distribution Fees, Other Expenses and Total Operating Expenses for Trust Shares are 1.26%, 0.00%, .31% and 1.57%, respectively. The Advisers and the Distributor could discontinue these voluntary waivers at any time. + The table shows the highest expenses that could be currently charged to the International Equity Fund. Actual expenses are lower because the Adviser is voluntarily waiving a portion of its fees. Actual Investment Advisory Fees and Total Operating Expenses for Trust Shares are 1.20% and 1.48%, respectively. The Adviser could discontinue these voluntary waivers at any time. PRO FORMA SHAREHOLDER FEES
- -------------------------------------------------------------------------------------------------------------------- MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE IMPOSED ON PURCHASE (AS A (LOAD) (AS A PERCENTAGE OF NET FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE) - -------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND (Trust None None Shares) - --------------------------------------------------------------------------------------------------------------------
PRO FORMA ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)+
- -------------------------------------------------------------------------------------------------------------------- INVESTMENT ADVISORY DISTRIBUTION OTHER TOTAL OPERATING FUND FEES (12b-1) FEES EXPENSES EXPENSES - -------------------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY 1.25% 0.00% .28% 1.53% FUND (Trust Shares) - --------------------------------------------------------------------------------------------------------------------
+ The table shows the highest expenses that could be currently charged to the International Equity Fund following the Reorganization. Actual expenses will be lower because the Adviser is voluntarily waiving a portion of its fees. Actual Investment Advisory Fees and Total Operating Expenses for Trust Shares will be 1.20% and 1.48%, respectively. The Adviser could discontinue these voluntary waivers at any time. EXAMPLES These examples are intended to help you compare the cost of investing in each Fund with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in each Fund for the time periods indicated, that your investment has a 5% return each year and that each Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions you would pay the following expenses if you redeem all of your shares at the end of the time periods indicated:
- ----------------------------------------------------------------------------------------------------------- FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND $164 $508 $876 $1,911 (Trust Class) - ----------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND (Trust $156 $483 $834 $1,824 Shares) - -----------------------------------------------------------------------------------------------------------
PRO FORMA EXAMPLE
- ----------------------------------------------------------------------------------------------------------- FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND (Trust Shares) $156 $483 $834 $1,824 - -----------------------------------------------------------------------------------------------------------
The Examples above should not be considered a representation of future expenses of the Funds. Actual expenses may be greater or less than those shown. INVESTMENT ADVISERS. Trusco and STI Capital are direct wholly-owned subsidiaries of SunTrust and are investment advisers to the Funds. Trusco is located at 50 Hurt Plaza, Suite 1400, Atlanta, GA 30303, and had approximately $30 billion of assets under management as of July 1, 1999. STI Capital is located at P.O. Box 3808, Orlando, FL 32802, and had approximately $14.5 billion of assets under management as of July 1, 1999. INVESTMENT ADVISORY FEES. The following table compares management fees paid to the Advisers for the Transferring Funds and the Acquiring Funds, respectively. The table shows advisory fees before any waivers ("Contractual") and advisory fees after any waivers ("Net Waivers"). The fees listed are as of the dates stated in the footnotes following the table.
TRANSFERRING FUNDS FEE ACQUIRING FUNDS FEE Sunbelt Equity Fund* Small Cap Growth Stock Fund* Contractual ...............................1.15% Contractual ................................1.15% Net Waivers ...............................1.02% Net Waivers ................................0.86% Emerging Markets Equity Fund* International Equity Fund* Contractual ...............................1.30% Contractual ................................1.25% Net Waivers ...............................1.26% Net Waivers ................................1.20%
* The Net Waiver fees for the Funds are based on the Advisers voluntarily agreeing to waive a portion of advisory fees for the fiscal year ending May 31, 1999. DISTRIBUTION FEES. The distributor for the Funds is SEI Investments Distribution Co. (the "Distributor"). The Distribution Fees payable to the Distributor for Investor Shares are lower for the Sunbelt Equity Fund than for the Small Cap Growth Stock Fund. The Distribution Fees payable to the Distributor for Flex Shares are the same for the Sunbelt Equity Fund and the Small Cap Growth Stock Fund. SALES LOADS AND CONTINGENT DEFERRED SALES CHARGES. The following chart compares front-end sales loads and contingent deferred sales charges ("CDSC") for the Sunbelt Equity Fund and the Small Cap Growth Stock Fund. The Trust Shares of the Funds are not subject to such charges.
TRANSFERRING FUNDS CHARGE ACQUIRING FUNDS CHARGE - ------------------ ------ --------------- ------ Sunbelt Equity Fund Small Cap Growth Stock Fund Investor Shares - Front-End Load ...........3.75% Investor Shares - Front-End Load .........3.75% Flex Shares - CDSC .........................2.00% Flex Shares - CDSC ......................2.00%
CONTINGENT DEFERRED SALES CHARGES. Flex Shares are subject to a 2.0% CDSC that decreases to 0% after the first year. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. THIS SECTION WILL HELP YOU COMPARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE TRANSFERRING FUNDS AND THE ACQUIRING FUNDS. PLEASE BE AWARE THAT THIS IS ONLY A BRIEF DISCUSSION. MORE COMPLETE INFORMATION MAY BE FOUND IN THE TRANSFERRING FUNDS' AND ACQUIRING FUNDS' PROSPECTUSES. SUNBELT EQUITY FUND The investment objective of the Sunbelt Equity Fund is to provide capital appreciation. It invests in common stocks and other equity securities of companies that are headquartered and/or conduct a substantial portion of their business in the southern region of the U.S., which includes Texas, Arkansas, Alabama, Mississippi, Tennessee, Kentucky, Florida, Virginia, Georgia, North Carolina, South Carolina and Louisiana. The Advisor's investment strategy is based on the belief that a portfolio of companies in this region with positive earnings trends will generate above-average returns over time. The Adviser focuses on companies with favorable earning characteristics. SMALL CAP GROWTH STOCK FUND The investment objective of the Small Cap Growth Stock Fund is to provide long-term capital appreciation. It invests primarily in small U.S. companies with market capitalizations between $50 million and $3 billion. The Adviser selects companies that demonstrate above-average earnings and sales growth potential. The selected companies tend to have an established operating history and a solid balance sheet. DIFFERENCES: The Sunbelt Equity Fund invests substantially all of its assets in common stocks and other equity securities of companies in the southern region of the U.S., while the Small Cap Growth Stock Fund may invest in companies located anywhere in the U.S. Also, the Small Cap Growth Stock Fund invests in companies with a market capitalization between $50 million and $3 billion, while the Sunbelt Equity Fund has no restriction based on market capitalization. EMERGING MARKETS EQUITY FUND The investment objective of the Emerging Markets Equity Fund is to provide long-term capital appreciation. The Fund primarily invests in undervalued common stocks and other equity securities of foreign issuers located in countries with emerging markets. The Adviser's "bottom- up"strategy focuses on individual stocks and companies. The Adviser attempts to identify investments that it believes are attractively priced relative to the current market. INTERNATIONAL EQUITY FUND The investment objective of the International Equity Fund is to provide long-term capital appreciation. The Fund invests primarily in common stocks and other equity securities of foreign companies the Adviser believes are trading at a discount. The Fund invests primarily in developed countries, but may invest in countries with emerging markets. The Adviser's "bottom-up" approach to stock selection focuses on individual stocks and fundamental characteristics of companies. The Adviser's goal is to find companies with top management, quality products and sound financial positions, that are trading at a discount. 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. DIFFERENCES: The Emerging Markets Equity Fund invests primarily in stocks of issuers located in emerging market countries, while the International Equity Fund invests primarily in developed countries, and less in emerging markets countries. THE FUNDS' PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES PURCHASE PROCEDURES. The Funds have the same procedures for purchasing shares. Shares of the Funds, other than Trust Shares, may be purchased directly from the Acquiring Funds by mail, telephone, wire, direct deposit, or Automated Clearing House. Trust Shares are sold to financial institutions or intermediaries, including subsidiaries of SunTrust on behalf of accounts for which they act as fiduciary, agent, investment advisor, or custodian. As a result, Trust Shares may be purchased through accounts maintained with financial institutions and potentially through a Preferred Portfolio Account (an asset allocation account available through SunTrust Securities, Inc.). The minimum purchase for Investor Shares is $2,000, and for Flex Shares is $5,000 ($2,000 for retirement plans). Additional Investor or Flex Shares may be purchased for a minimum of $1,000. The net asset value ("NAV") of the Funds is calculated once each day the New York Stock Exchange ("NYSE") is open for business (a "Business Day"), at the regularly scheduled close of normal trading on the NYSE (normally, 4:00 p.m. Eastern time). The NAV per share is calculated by dividing the total market value of each Fund's investments and other assets, less any liabilities, by the total outstanding shares of that Fund. The Funds may suspend a shareholder's right to sell shares if the NYSE restricts trading, the SEC declares an emergency or for other reasons. More information about this is in the Funds' Statement of Additional Information, incorporated herein by reference. EXCHANGE PRIVILEGES. The Funds have the same procedures for exchanging shares. For Investor Shares and Flex Shares, exchange requests must be for an amount of at least $1,000. For each shareholder, exchanges are allowed up to four times during a calendar year. This exchange privilege may be changed or canceled at any time upon 60 days' notice. Investor Shares of the Funds (including Funds not participating in the Reorganization) may be exchanged for Investor Shares of any other Fund. If shares are exchanged that were purchased without a sales charge or with a lower sales charge into a Fund with a sales charge or with a higher sales charge, the exchange is subject to an incremental sales charge (e.g., the difference between the lower and higher applicable sales charges). If shares are exchanged into a Fund with the same, lower or no sales charge there is no incremental sales charge for the exchange. Flex Shares of any Fund may be exchanged for Flex Shares of any other Fund. No contingent deferred sales charge is imposed on redemptions of Flex Shares acquired in an exchange, provided the shares are held for at least one year from the initial purchase. REDEMPTION PROCEDURES. The Funds have the same procedures for the redemption of shares. Shares may be redeemed on any Business Day by contacting the Funds directly by mail or telephone, or shareholders may contact their financial institution by mail or telephone (for Trust Shares, shareholders must contact their financial institution). To sell shares by telephone, the amount of the sale must be at least $1,000. For redemptions of $25,000 or more, the Funds must be notified in writing and a signature guarantee (a notarized signature is not sufficient) must be included. The sale price of each share will be the next NAV determined after a request is received less, in the case of Flex Shares, any applicable deferred sales charge. Shareholders with account balances of $10,000 or more may use the systematic withdrawal plan. Under the plan, shareholders may arrange monthly, quarterly, semi-annual or annual automatic withdrawals of at least $50 from any Fund. REDEMPTIONS IN KIND Each Fund generally pays sale (redemption) proceeds in cash. However, under unusual conditions that make the payment of cash unwise (and for the protection of a Fund's remaining shareholders) a Fund may pay all or part of a shareholder's redemption proceeds in liquid securities with a market value equal to the redemption price (redemption in kind). Although it is highly unlikely that shares would ever be redeemed in kind, shareholders would have to pay brokerage costs to sell the securities distributed to them, as well as taxes on any capital gains from the sale as with any redemption. DIVIDEND POLICIES. Both the Sunbelt Equity Fund and the Small Cap Growth Stock Fund declare and distribute income quarterly. The Emerging Markets Equity Fund and the International Equity Fund declare and distribute income annually. Capital gains, if any, are distributed at least annually. RISKS Since each Transferring and Acquiring fund purchases equity securities, each Fund is subject to the risk that stock prices will fall over short or extended periods of time. Historically, the equity markets have moved in cycles, and the value of the Fund's equity 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 each Fund. Other than this risk common to each Fund, the Funds are subject to certain additional risks. SUNBELT EQUITY FUND Because the Fund focuses its investments in southern companies, economic conditions in or government policies imposed by southern states may cause the Fund to be more volatile than an equity fund that invests in companies located across the U.S. SMALL CAP GROWTH STOCK FUND Because the Fund principally invests in small cap growth stocks, the Fund is subject to the risk that its market segment, small capitalization growth stocks, may under perform other equity market segments or the equity markets as a whole. The smaller capitalization companies the Fund invests in may be more vulnerable to adverse business or economic events than larger, more established companies. In particular, these small 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. RISK DIFFERENCES: Because the Sunbelt Equity Fund invests in southern companies, economic conditions in or government policies imposed by southern states may cause the Fund to be more volatile than the Small Cap Growth Stock Fund which invests in companies located across the U.S. However, the small cap stocks in the Small Cap Growth Stock Fund may be more volatile than the large cap stocks in the Sunbelt Equity Fund. EMERGING MARKETS EQUITY FUND The Fund invests primarily in common stocks and other equity securities of foreign issuers located in emerging market countries. Investments in foreign markets may be more volatile than investments in U.S. markets. Investments in emerging foreign markets may be more volatile than investments in developed foreign markets. Diplomatic, political or economic developments in a foreign country may cause investments in that country to lose money. These developments may occur more frequently in emerging market countries. Emerging market securities may be even more susceptible to political or economic developments than those in more developed countries. The value of the U.S. dollar may rise, causing reduced returns for U.S. persons investing abroad. A foreign country may not have the same accounting and financial reporting standards as the U.S. Some emerging market countries may have little to no accounting or financial reporting standards. Foreign stock markets, brokers and companies are generally subject to less supervision and regulation than their U.S. counterparts. There may be little to no supervision and regulation in some emerging market countries. INTERNATIONAL EQUITY FUND The International Equity Fund invests primarily in common stocks of foreign companies. Investments in foreign markets may be more volatile than investments in U.S. markets. Diplomatic, political or economic developments may cause foreign investments to lose money. The value of the U.S. dollar may rise, causing reduced returns for U.S. persons investing abroad. A foreign country may not have the same accounting and financial reporting standards as the U.S. stock markets, brokers and companies are generally subject to less supervision and regulation than their U.S. counterparts. Emerging markets securities may be even more susceptible to these risks. DIFFERENCES: Because the Emerging Markets Equity Fund invests primarily in emerging foreign markets, the Fund's investments may be more volatile than the International Equity Fund's investments in developed foreign markets. Diplomatic, political or economic developments in a foreign country may cause investments in that country to lose money. These developments may occur more frequently in emerging market countries. Emerging market securities may be even more susceptible to political or economic developments than those in more developed countries. INFORMATION RELATING TO THE REORGANIZATION DESCRIPTION OF THE REORGANIZATION. The following summary is qualified in its entirety by reference to the Reorganization Agreement found in Exhibit A. The Reorganization Agreement provides that all of the assets and stated liabilities of the Transferring Funds will be transferred to the Acquiring Funds at the Effective Time of the Reorganization. In exchange for the transfer of these assets, the Acquiring Funds will simultaneously issue at the Effective Time of the Reorganization a number of full and fractional shares of the Acquiring Funds to the Transferring Funds equal in value to the net asset value of the Transferring Funds immediately prior to the Effective Time of the Reorganization. Following the transfer of assets and liabilities in exchange for Acquiring Funds shares, the Transferring Funds will distribute, in complete liquidation, PRO RATA to their shareholders of record all the shares of the Acquiring Funds so received. Shareholders of the Transferring Funds owning shares at the Effective Time of the Reorganization will receive a number of shares of the applicable class of the corresponding Acquiring Funds with the same aggregate value as the shareholder had in the Transferring Funds immediately before the Reorganization. Such distribution will be accomplished by the establishment of accounts in the names of the Transferring Funds' shareholders on the share records of Acquiring Funds' transfer agent. Each account will represent the respective pro rata number of full and fractional shares of the Acquiring Funds due to the shareholders of the Transferring Funds. The Acquiring Funds do not issue share certificates to shareholders. Shares of the Acquiring Funds to be issued will have no preemptive or conversion rights. No front-end sales loads or contingent deferred sales charges will be imposed in connection with the receipt of such shares by the Transferring Funds' shareholders. The Transferring Funds' legal existence will then be terminated. The Reorganization Agreement provides for the Reorganization to occur on December 13, 1999 (the "Effective Time"). The Reorganization Agreement contains customary representations, warranties and conditions designed to ensure that the Reorganization is fair to each party. The Reorganization Agreement provides that the consummation of the Reorganization is contingent upon, among other things, (i) approval of the Reorganization Agreement by Transferring Fund Shareholders, (ii) the receipt by the Transferring Funds and the Acquiring Funds of a tax opinion to the effect that the Reorganization will be tax-free to the Transferring Funds and the Acquiring Funds and their shareholders, and (iii) receipt by the Transferring Fund and the Acquiring Fund of an order from the SEC permitting the Reorganization. The Reorganization Agreement may be terminated and abandoned with respect to the Acquiring Funds and/or the Transferring Funds, without penalty, by resolution of the Board of Trustees of the Trust or at the discretion of any duly authorized officer of the Trust, at any time prior to the Effective Time, if circumstances should develop that, in the opinion of such Board or officer, make proceeding with the Reorganization Agreement inadvisable. COSTS OF REORGANIZATION. Unless otherwise provided, the Reorganization expenses will be borne by SunTrust or its subsidiaries. Such expenses include, without limitation: (a) expenses associated with the preparation and filing of this Prospectus/Proxy Statement; (b) postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each of the Transferring and Acquiring Funds; and (f) solicitation costs of the transaction. FEDERAL INCOME TAXES. The combination of the Transferring Funds and the Acquiring Funds in the Reorganization is intended to qualify for federal income tax purposes as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended. If so, neither the Transferring Funds nor their shareholders will recognize gain or loss as a result of the Reorganization; the tax basis of the Acquiring Funds shares received will be the same as the basis of the Transferring Funds shares exchanged; and the holding period of the Acquiring Funds shares received will include the holding period of the Transferring Funds shares exchanged, provided that the shares exchanged were held as capital assets at the time of the Reorganization. As a condition to the closing of the Reorganization, the Trust will receive an opinion from counsel to the Transferring Funds to that effect. No tax ruling from the Internal Revenue Service regarding the Reorganization has been requested. The opinion of counsel is not binding on the Internal Revenue Service and does not preclude the Internal Revenue Service from adopting a contrary position. Shareholders should consult their own tax advisers concerning the potential tax consequences of the Reorganization to them, including foreign, state and local tax consequences. CAPITALIZATION. The following table sets forth as of May 31, 1999 (i) the capitalization of each Acquiring Fund; (ii) the capitalization of each Transferring Fund; and (iii) the pro forma combined capitalization of the Funds assuming the Reorganization has been approved.
- ------------------------------------------------------------------------------------------------------------------------ FUND NET ASSETS NET ASSET VALUE PER SHARE SHARES OUTSTANDING (000) (000) - ------------------------------------------------------------------------------------------------------------------------ Sunbelt Equity Fund Trust Shares $197,215 $11.09 17,784 Investor Shares $ 16,949 $10.76 1,575 Flex Shares $ 4,395 $10.65 416 Total $218,559 19,775 - ------------------------------------------------------------------------------------------------------------------------ Small Cap Growth Stock Fund Trust Shares $152,413 $14.57 10,464 Investor Shares N/A N/A N/A Flex Shares $ 4,841 $17.40 425 Total $157,254 10,889 - ------------------------------------------------------------------------------------------------------------------------ PRO FORMA Small Cap Growth Stock Fund Trust Shares $349,628 $14.57 24,018 Investor Shares $ 16,949 $10.00 1,695 Flex Shares $ 9,236 $17.40 730 Total $375,813 26,443 - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------ Emerging Markets Equity Fund Trust Shares $ 26,751 $ 8.12 3,294 Total $ 26,751 3,294 - ------------------------------------------------------------------------------------------------------------------------ International Equity Fund Trust Shares $573,255 $12.97 44,211 Total $573,255* $12.97 44,211+ - ------------------------------------------------------------------------------------------------------------------------ PRO FORMA International Equity Fund Trust Shares $600,006 $12.97 46,274 Total $600,006* $12.97 46,274+ - ------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------
* Totals do not include $14,145 for Investor Shares and $17,103 for Flex Shares, classes of the Fund which are not involved in the Reorganization. + Totals do not include $1,095 for Investor Shares and $1,357 for Flex Shares, classes of the Fund which are not involved in the Reorganization. REASONS FOR THE REORGANIZATION At meetings held on May 18, 1999 and August 17, 1999, the Board of Trustees of the Funds reviewed the proposed Reorganization. They received detailed information, including materials describing the Reorganization in terms of relative net assets, current and pro forma expenses, performance and comparative investment objectives, and policies and restrictions. After thorough consideration, the Board approved submission of the proposed Reorganization to Shareholders, concluding that participation in the Reorganization is in the best interests of the Transferring and Acquiring Funds and that the interests of existing Shareholders of the Transferring and Acquiring Funds will not be diluted as a result of the Reorganization. In particular, the Board reached the following conclusions: THE TERMS AND CONDITIONS OF THE REORGANIZATION. The Board approved the terms of the Reorganization Agreement, and in particular, requirements that the transfer of assets in exchange for shares of the Acquiring Funds will be at relative net asset value. In this regard, the Board concluded that the terms of the Reorganization do not involve overreaching on the part of any person concerned and that the conditions and policies of Rule 17a-8 under the 1940 Act will, to the extent possible, be followed. The Board also took note of the fact that no sales charges would be imposed in connection with the Reorganization. The Board also noted that the Reorganization would be submitted to the Transferring Funds' Shareholders. LACK OF DILUTION TO SHAREHOLDER INTEREST. The Board noted that neither the Transferring nor the Acquiring Funds would not bear any expenses in connection with the Reorganization. RELATIVE EXPENSE RATIOS. The Board carefully reviewed information regarding comparative expense ratios (respective current and pro forma expense ratios are set forth in the "Fees and Expenses" section, above). The Board concluded that expense ratios will generally be comparable. THE COMPARATIVE PERFORMANCE RECORDS. The Board reviewed detailed comparative performance information, taking into account performance over both the short-term and the longer term. The Board determined that the performance of the Small Cap Growth Stock Fund was superior to the performance of the Sunbelt Equity Fund. The Board also determined that the performance of the Emerging Markets Equity Fund and the International Equity Fund is generally comparable. COMPATIBILITY OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Board concluded that the investment objectives, policies and restrictions of the respective Funds are substantially identical. With respect to each Fund's policies, the Board determined that, although their were some substantial differences between the Transferring and Acquiring Funds, each Transferring Fund's investment policies was compatible with its respective Acquiring Fund. In particular, the Small Cap Growth Stock Fund can and does invest in securities of issuers located in the southern states, just as the Sunbelt Equity Fund can and does invest in securities of companies with capitalizations of under $3 billion. Similarly, even though the International Equity Fund primarily invests in companies located in developed countries, it can and does invest in emerging markets. THE EXPERIENCE AND EXPERTISE OF THE INVESTMENT ADVISERS. The Board noted that Trusco and STI Capital will remain as investment advisers to the Acquiring Funds. ASSUMPTION OF LIABILITIES. The Board took note of the fact that, under the Reorganization Agreement, the Acquiring Funds expect to acquire substantially all of the liabilities of the Transferring Funds, other than those for which specific reserves have been set aside. TAX CONSEQUENCES. The Board concluded that the Reorganization is expected to be free from federal income taxes. SHAREHOLDER LIABILITIES AND RIGHTS. The Board concluded that there would be no substantial change in potential shareholder liability or in shareholder rights. SHAREHOLDER RIGHTS THE FUNDS GENERAL. The Trust was established as a business trust under Massachusetts law by a Declaration of Trust dated January 15, 1992. The Trust is also governed by its By-laws and by applicable Massachusetts law. SHARES. The Trust is authorized to issue an unlimited number of shares of beneficial interest, without par value, from an unlimited number of series of shares. Currently, the Trust consists of 36 separate investment series, some of which offer up to three of five different classes of shares, Trust Shares, Investor Shares, Flex Shares, Corporate Trust Shares and Institutional Shares (the Funds participating in the Reorganization do not offer Corporate Trust Shares and Institutional Shares). The five classes differ with respect to minimum investment requirements, fund expenses, distribution and shareholder servicing costs, front-end sales loads and contingent deferred sales charges, as set forth in the Funds' prospectuses. The shares of each Fund have no preference as to conversion, exchange, dividends, retirement or other features, and have no preemptive rights. VOTING REQUIREMENTS. Shareholders are entitled to one vote for each full share held and fractional votes for fractional shares. On any matter submitted to a vote of shareholders, all shares of the Trust entitled to vote shall be voted on by individual series or class, except that (i) when so required by the 1940 Act, then shares shall be voted in the aggregate and not by individual series or class, and (ii) when the trustees of the Trust (the "Trustees") have determined that the matter only affects the interest of one or more series or class, then only shareholders of such series or class(es) shall be entitled to vote. The Trust's Declaration of Trust provides that any action may be taken or authorized upon the concurrence of a majority of the aggregate number of votes entitled to be cast thereon, subject to any applicable requirements of the 1940 Act. SHAREHOLDER MEETINGS. Annual meetings of shareholders will not be held, but special meetings of shareholders may be held under certain circumstances. A special meeting of the shareholders may be called at any time by the Trustees, by the president or, if the Trustees and the president shall fail to call any meeting of shareholders for a period of 30 days after written application of one or more shareholders who hold at least 10% of all shares issued and outstanding and entitled to vote at the meeting, then such shareholders may call the meeting. ELECTION AND TERM OF TRUSTEES. The Funds' affairs are supervised by the Trustees under the laws governing business trusts in the state of Massachusetts. Trustees of the Trust are elected by shareholders holding a majority of shares entitled to vote. Trustees hold office until their successors are duly elected and qualified or until their death, removal or resignation. Shareholders may remove a Trustee by vote of a majority of the votes entitled to vote, with or without cause. A Trustee elected thereby serves for the balance of the term of the removed Trustee. SHAREHOLDER LIABILITY. Pursuant to the Trust's Declaration of Trust, shareholders of the Funds generally are not personally liable for the acts, omissions or obligations of the Trustees or the Trust. LIABILITY OF TRUSTEES. The Trustees shall not be personally liable for any obligation of the Trust. The Trust will indemnify its Trustees and officers against all liabilities and expenses except for liabilities arising from such person's willful misfeasance, bad faith, gross negligence or reckless disregard of that person's duties. The foregoing is only a summary of certain rights of shareholders of the Funds under the Declaration of Trust and By-Laws, state law and the 1940 Act and is not a complete description of provisions contained in those sources. Shareholders should refer to the provisions of state law, the 1940 Act and rules thereunder directly for a more thorough description. INFORMATION ABOUT THE FUNDS Information concerning the operation and management of the Funds is incorporated herein by reference to the current prospectuses relating to the Funds dated October 1, 1999, which are incorporated by reference herein solely with respect to those participating Funds and copies of which accompany this Proxy Statement/Prospectus. Additional information about the Funds is included in the Statement of Additional Information for the Funds dated October 1, 1999, which is available upon request and without charge by calling 1-800-874-4770. The Statement of Additional Information has been filed with the SEC. The Funds are each subject to the informational requirements of the Securities Exchange Act of 1934 and the 1940 Act, and in accordance therewith file reports and other information, including proxy material and charter documents, with the SEC. These items may be inspected and copied at the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. INTEREST OF CERTAIN PERSONS IN THE TRANSACTIONS. SunTrust may be deemed to have an interest in the Reorganization because certain of its subsidiaries provide investment advisory services to the Funds pursuant to advisory agreements with the Funds. Future growth of the Acquiring Fund can be expected to increase the total amount of fees payable to these subsidiaries and to reduce the number of fees required to be waived to maintain total fees of the Funds at agreed upon levels. FINANCIAL STATEMENTS. The financial statements of the Funds contained in the Funds' annual report to shareholders for the fiscal year ended May 31, 1999 have been audited by Arthur Andersen, LLP, its independent accountants. These financial statements, as well as pro forma financial statements reflecting the Acquiring Funds after the Reorganization, are incorporated by reference into this Proxy Statement/Prospectus insofar as such financial statements relate to the Funds, and not to any other funds that are part of the Trust and described therein. The Funds will furnish, without charge, a copy of their most recent Semi-Annual Report succeeding their Annual Report, if any, on request. Requests should be directed to SEI Investments Distribution Co., Oaks, PA 19456 or by calling 1-800-874-4770. THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE REORGANIZATION AGREEMENT. VOTING MATTERS GENERAL INFORMATION. This Proxy Statement/Prospectus is being furnished in connection with the solicitation of proxies by the Board of Trustees of the Transferring Funds in connection with the Meeting. It is expected that the solicitation of proxies will be primarily by mail. Officers and service contractors of the Funds may also solicit proxies by telephone, facsimile, Internet or in person. The cost of solicitation will be borne directly or indirectly, by SunTrust. VOTING RIGHTS AND REQUIRED VOTE. Each share, or fraction thereof, of a Transferring Fund is entitled to one vote, or fraction thereof. Approval of the Reorganization Agreement requires the affirmative vote of a majority of the aggregate number of votes entitled to be cast. Any shareholder giving a proxy may revoke it at any time before it is exercised by submitting to the Trust a written notice of revocation or a subsequently executed proxy or by attending the Meeting and voting in person. The proposed Reorganization will be voted upon by the shareholders of the Transferring Funds. Shares represented by a properly executed proxy will be voted in accordance with the instructions thereon, or if no specification is made, the shares will be voted "FOR" the approval of the Reorganization Agreement. It is not anticipated that any matters other than the adoption of the Reorganization Agreement will be brought before the Meeting. Should other business properly be brought before the Meeting, it is intended that the accompanying proxies will be voted in accordance with the judgment of the persons named as such proxies. For the purposes of determining the presence of a quorum for transacting business at the Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owners or other persons entitled to vote shares on a particular matter with respect to which the brokers or nominees do not have discretionary power) will be treated as shares that are present but which have not been voted. For this reason, abstentions and broker non-votes will have the effect of a "NO" vote for purposes of obtaining the requisite approval of the Reorganization Agreement. If sufficient votes in favor of the proposals set forth in the Notice of the Special Meeting are not received by the time scheduled for the meeting, the persons named as proxies may propose one or more adjournments of the Meeting for a reasonable period of time to permit further solicitation of proxies with respect to the proposals. Any such adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the Meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment those proxies which they are entitled to vote in favor of the proposals. They will vote against any such adjournment those proxies required to be voted against the proposals. The costs of any additional solicitation and of any adjourned session will be borne by SunTrust. RECORD DATE AND OUTSTANDING SHARES. Only shareholders of record of the Transferring Funds at the close of business on October 11, 1999 (the "Record Date") are entitled to notice of and to vote at the Meeting and any postponement or adjournment thereof. At the close of business on the Record Date the following shares were outstanding and entitled to vote:
- ---------------------------------------------------------------------------------------- SUNBELT EQUITY FUND OUTSTANDING SHARES - ---------------------------------------------------------------------------------------- Trust Shares ................................... 10,230,944.240 - ---------------------------------------------------------------------------------------- Investor Shares ................................ 1,285,015.399 - ---------------------------------------------------------------------------------------- Flex Shares .................................... 319,373.450 - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- EMERGING MARKETS EQUITY FUND OUTSTANDING SHARES - ---------------------------------------------------------------------------------------- Trust Shares ................................... 2,639,149.276 - ----------------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. TRANSFERRING FUNDS. As of the Record Date, the officers and Trustees of the Transferring Funds, as a group, beneficially owned less than 1% of the outstanding Trust Shares, Investor Shares and Flex shares of the Transferring Funds. As of the Record Date, to the best of the knowledge of the Transferring Funds, the following persons owned of record or beneficially 5% or more of the outstanding shares of each of the three classes of the Transferring Funds:
- -------------------------------------------------------------------------------------------------------------------- PERCENTAGE TYPE OF NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP - -------------------------------------------------------------------------------------------------------------------- Crawford & Company Re Tr c/o Trustman Sunbelt Equity/Trust 12.607% * STI Trust & Investment Operations Inc P.O. Box 105504 Center 3145 Atlanta, GA 30348 - -------------------------------------------------------------------------------------------------------------------- Rex Miller TTEE Sunbelt Equity Fund/Flex 9.30% * Nale Inc. 401K P.O. Box 2410 Kennesaw, GA 30144-9106 - --------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------- PERCENTAGE TYPE OF NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP - -------------------------------------------------------------------------------------------------------------------- Arthur V Davis Foundation PF c/o Fabco Emerging Markets Equity Fund/Trust 14.537% * STI Trust & Investment Operations Inc P.O. Box 105504 Center 3145 Atlanta, GA 30348 - --------------------------------------------------------------------------------------------------------------------
* Record and Beneficial Ownership. ** Record Ownership Only. + Beneficial Owner Only. ACQUIRING FUNDS. As of the Record Date, the officers and Trustees of the Acquiring Funds, as a group, beneficially owned less than 1% of the outstanding Trust Shares, Investor Shares and Flex Shares of the Acquiring Funds. As of the Record Date, to the best of the knowledge of the Acquiring Funds, the following persons owned of record or beneficially 5% or more of the outstanding shares of each of the three classes of the Acquiring Funds:
- -------------------------------------------------------------------------------------------------------------------- PERCENTAGE TYPE OF NAME AND ADDRESS FUND/CLASS OWNERSHIP OWNERSHIP - -------------------------------------------------------------------------------------------------------------------- SunTrust Pension Small Cap Growth c/o Small Cap Growth Fund/Trust 15.426% * Trustman STI Trust & Investment Operations Inc P.O. Box 105504 Center 3145 Atlanta, GA 30348 - -------------------------------------------- -------------------------------------- --------------- ---------------- Crestar Retirement Small Cap Growth c/o Small Cap Growth Fund/Trust 7.358% * Trustman STI Trust & Investment Operations Inc P.O. Box 105504 Center 3145 Atlanta, GA 30348 - -------------------------------------------- -------------------------------------- --------------- ---------------- STI 401K-Small Cap Growth c/o Trustman 401K-Small Cap Growth/Trust 11.825% * STI Trust & Investment Operations Inc P.O. Box 105504 Center 3145 Atlanta, GA 30348 - -------------------------------------------- -------------------------------------- --------------- ----------------
* Record and Beneficial Ownership. ** Record Ownership Only. + Beneficial Owner Only. EXPENSES. In order to obtain the necessary quorum at the Meeting, additional solicitations may be made by mail, telephone, telegraph, facsimile or personal interview by representatives of the Trust or the Advisers at an estimated cost of approximately $5,400. All costs of solicitation (including the printing and mailing of this proxy statement, meeting notice and form of proxy, as well as any necessary supplementary solicitations) will be paid by SunTrust. Persons holding shares as nominees will, upon request, be reimbursed for their reasonable expenses in sending soliciting material to their principals. OTHER BUSINESS The Board of Trustees know of no other business to be brought before the Meeting. However, if any other matters come before the Meeting, it is the intention that proxies which do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy. SHAREHOLDER INQUIRIES Shareholder inquiries may be addressed to the Funds in writing at the address on the cover page of this Proxy Statement/Prospectus or by telephoning 1-800-874-4770. SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED TO VOTE BY MAIL, THE INTERNET, OR IN PERSON AT THE MEETING. INFORMATION ON THE VARIOUS MANNERS OF VOTING ARE SET FORTH IN THE ENCLOSED PROXY. FORM OF AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION is dated as of November 1, 1999 (the "Agreement"), by and between the STI Classic Funds (the "Trust") on behalf of its Sunbelt Equity Fund and Emerging Markets Equity Fund (the "Transferring Funds"), and the Trust on behalf of its Small Cap Growth Stock Fund and International Equity Fund (the "Acquiring Funds"), respectively. WHEREAS, the Trust was organized under Massachusetts law as a business trust under a Declaration of Trust dated January 15, 1992, as amended and restated; WHEREAS, the Trust is an open-end management investment company registered under the 1940 Act and the Reorganizing and Transferring Funds are duly organized and validly existing series of the Trust; NOW, THEREFORE, the parties hereto agree to effect (i) the transfer of all of the assets of each Transferring Fund solely in exchange for (a) the assumption by its corresponding Acquiring Fund of certain stated liabilities of such Transferring Fund and (b) beneficial shares of such Acquiring Fund followed by the distribution, at the Effective Time (as defined in Section 9 of this Agreement), of such beneficial shares of such Acquiring Fund to the holders of beneficial shares of the Transferring Fund on the terms and conditions hereinafter set forth in liquidation of such Transferring Fund (the "Reorganization"). The beneficial shares of each Acquiring Fund that are given in exchange for the assets of its corresponding Transferring Fund are referred to hereinafter as the "Acquiring Fund Shares," and the beneficial shares of each Transferring Fund that are held by the holders of such shares at the Effective Time are referred to hereinafter as the "Transferring Fund Shares." The parties hereto covenant and agree as follows: 1. PLAN OF REORGANIZATION. At the Effective Time, each Transferring Fund will assign, deliver and otherwise transfer all of its assets and good and marketable title thereto, free and clear of all liens, encumbrances and adverse claims except as provided in this Agreement, and assign certain stated liabilities as are set forth in a statement of assets and liabilities, to be prepared as of the Effective Time (the "Statement of Assets and Liabilities") to its corresponding Acquiring Fund and the Acquiring Fund shall acquire all such assets, and shall assume all such liabilities of the Transferring Fund, in exchange for delivery to the Transferring Fund by the Acquiring Fund of a number of its Acquiring Fund Shares (both full and fractional) equivalent in value to the Transferring Fund Shares of the Transferring Fund outstanding immediately prior to the Effective Time. The assets and stated liabilities of the Transferring Fund, as set forth in a statement of assets and liabilities shall be exclusively assigned to and assumed by the Acquiring Fund. All debts, liabilities, obligations and duties of the Transferring Fund, to the extent that they exist at or after the Effective Time and are stated in a statement of assets and liabilities, shall after the Effective Time attach to the Acquiring Fund and may be enforced against the Acquiring Fund to the same extent as if the same had been incurred by the Acquiring Fund. A-1 2. TRANSFER OF ASSETS. The assets of each Transferring Fund to be transferred to its corresponding Acquiring Fund shall include, without limitation, all cash, cash equivalents, securities, receivables (including interest and dividends receivable) as set forth in a statement of assets and liabilities, as well as any claims or rights of action or rights to register shares under applicable securities laws, any books or records of such Transferring Fund and other property owned by such Transferring Fund at the Effective Time. 3. REORGANIZATION OF THE TRANSFERRING FUND. At the Effective Time, each Transferring Fund will liquidate and the Acquiring Fund Shares (both full and fractional) received by the Transferring Fund will be distributed to the shareholders of record of the Transferring Fund as of the Effective Time in exchange for Transferring Fund Shares and in complete liquidation of the Transferring Fund. Each shareholder of the Transferring Fund will receive a number of Acquiring Fund Shares equal in value to the Transferring Fund Shares held by that shareholder. Such liquidation and distribution will be accompanied by the establishment of an open account on the share records of the Acquiring Fund in the name of each shareholder of record of the Transferring Fund and representing the respective number of Acquiring Fund Shares due such shareholder. As soon as practicable after the Effective Time, but not later than December 13, 1999, the Trust shall take all steps as shall be necessary and proper to effect a complete termination of the Transferring Fund. 4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUNDS. Each Acquiring Fund represents and warrants to its corresponding Transferring Fund as follows: (a) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Fund Shares to be issued in connection with the Reorganization have been duly authorized and upon consummation of the Reorganization will be validly issued, fully paid and nonassessable. (b) LIABILITIES. There are no liabilities of the Acquiring Fund, whether or not determined or determinable, other than liabilities disclosed or provided for in the Acquiring Fund's statement of assets and liabilities, if any, and liabilities incurred in the ordinary course of business prior to the Effective Time or otherwise previously disclosed to the Transferring Fund, none of which has been materially adverse to the business, assets or results of operations of the Acquiring Fund. (c) LITIGATION. Except as previously disclosed to the Transferring Fund, there are no claims, actions, suits or proceedings pending or, to the actual knowledge of the Acquiring Fund, threatened which would materially adversely affect any of the Acquiring Fund or its assets or business or which would prevent or hinder in any material respect consummation of the reorganization contemplated hereby. (d) TAXES. As of the Effective Time, all federal and other tax returns and reports of the Acquiring Fund required by law to have been filed shall have been filed, and all other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof, and to the best of the Acquiring Fund's knowledge, no such return is currently under audit and no assessment has been asserted with respect to any of such returns. A-2 5. REPRESENTATIONS AND WARRANTIES OF THE TRANSFERRING FUNDS. Each Transferring Fund represents and warrants to its corresponding Acquiring Fund as follows: (a) MARKETABLE TITLE TO ASSETS. The Transferring Fund will have, at the Effective Time, good and marketable title to, and full right, power and authority to sell, assign, transfer and deliver, the assets to be transferred to the Acquiring Fund. Upon delivery and payment for such assets, the Acquiring Fund will have good and marketable title to such assets without restriction on the transfer thereof free and clear of all liens, encumbrances and adverse claims. (b) LIABILITIES. There are no liabilities of the Transferring Fund, whether or not determined or determinable, other than liabilities disclosed or provided for in the Transferring Fund's Statement of Assets and Liabilities, and liabilities incurred in the ordinary course of business prior to the Effective Time or otherwise previously disclosed to the Acquiring Fund, none of which has been materially adverse to the business, assets or results of operations of the Transferring Fund. (c) LITIGATION. Except as previously disclosed to the Acquiring Fund, there are no claims, actions, suits or proceedings pending or, to the knowledge of the Transferring Fund, threatened which would materially adversely affect the Transferring Fund or its assets or business or which would prevent or hinder in any material respect consummation of the reorganization contemplated hereby. (d) TAXES. As of the Effective Time, all federal and other tax returns and reports of the Transferring Fund required by law to have been filed shall have been filed, and all other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof, and to the best of the Transferring Fund's knowledge, no such return is currently under audit and no assessment has been asserted with respect to any of such returns. 6. CONDITION PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS. All representations and warranties of the Transferring Funds contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the reorganization contemplated by this Agreement, as of the Effective Time, with the same force and effect as if made on and as of the Effective Time. 7. CONDITION PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUNDS. All representations and warranties of the Acquiring Funds contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the reorganization contemplated by this Agreement, as of the Effective Time, with the same force and effect as if made on and as of the Effective Time. 8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUNDS AND THE ACQUIRING FUNDS. The obligations of the Transferring Funds and the Acquiring Funds to effectuate this Agreement shall be subject to the satisfaction of each of the following conditions: A-3 (a) Such authority from the Securities and Exchange Commission (the "SEC") as may be necessary to permit the parties to carry out the reorganization contemplated by this Agreement shall have been received. (b) The Registration Statement on Form N-1A of the Acquiring Funds shall be effective under the Securities Act of 1933 (the "1933 Act"), and, to the best knowledge of the Acquiring Funds, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act. (c) The Acquiring Funds have filed all documents and paid all fees required to permit their shares to be offered to the public in all states of the United States, the Commonwealth of Puerto Rico and the District of Columbia (except where such qualifications are not required) so as to permit the transfer contemplated by this Agreement to be consummated. (d) Each Transferring Fund and Acquiring Fund shall have received on or before the Effective Time an opinion of counsel satisfactory to the Transferring Fund and the Acquiring Fund substantially to the effect that the Reorganization, as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code"), will have the following federal income tax consequences for Transferring Fund shareholders, each Transferring Fund, and its corresponding Acquiring Fund: 1. No gain or loss will be recognized by the Transferring Fund upon the transfer of its assets in exchange solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Transferring Fund's stated liabilities; 2. No gain or loss will be recognized by the Acquiring Fund on its receipt of the Transferring Fund's assets in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the Transferring Fund's liabilities; 3. The basis of the Transferring Fund's assets in the Acquiring Fund's hands will be the same as the basis of those assets in the Transferring Fund's hands immediately before the Reorganization; 4. The Acquiring Fund's holding period for the assets transferred to the Acquiring Fund by the Transferring Fund will include the holding period of those assets in the Transferring Fund's hands immediately before the Reorganization; 5. No gain or loss will be recognized by the Transferring Fund on the distribution of Acquiring Fund Shares to the Transferring Fund's shareholders in exchange for Transferring Fund Shares; 6. No gain or loss will be recognized by the Transferring Fund's shareholders as a result of the Transferring Fund's distribution of Acquiring Fund Shares A-4 to the Transferring Fund's shareholders in exchange for the Transferring Fund's shareholders' Transferring Fund Shares; 7. The basis of the Acquiring Fund Shares received by the Transferring Fund's shareholders will be the same as the adjusted basis of that Transferring Fund's shareholders' Transferring Fund Shares surrendered in exchange therefor; and 8. The holding period of the Acquiring Fund Shares received by the Transferring Fund's shareholders will include the Transferring Fund's shareholders' holding period for the Transferring Fund's shareholders' Transferring Fund Shares surrendered in exchange therefor, provided that said Transferring Fund Shares were held as capital assets on the date of the Reorganization. (e) A vote approving this Agreement and the Reorganization contemplated hereby shall have been adopted by at least a majority of the outstanding shares of the Transferring Funds entitled to vote at an annual or special meeting. (f) The Board of Trustees of the Trust, at a meeting duly called for such purpose, shall have authorized the issuance by each Acquiring Fund of Acquiring Fund Shares at the Effective Time in exchange for the assets of its corresponding Transferring Fund pursuant to the terms and provisions of this Agreement. 9. EFFECTIVE TIME OF THE REORGANIZATION. The exchange of the Transferring Funds' assets for corresponding Acquiring Fund Shares shall be effective as of the close of business on December 13, 1999, or at such other time and date as fixed by the mutual consent of the parties (the "Effective Time"). 10. TERMINATION. This Agreement and the reorganization contemplated hereby may be terminated and abandoned with respect to the Acquiring Fund and/or the Transferring Fund, without penalty, by resolution of the Board of Trustees of the Trust or at the discretion of any duly authorized officer of the Trust, at any time prior to the Effective Time, if circumstances should develop that, in the opinion of such Board or officer, make proceeding with the Agreement inadvisable. 11. AMENDMENT AND WAIVER. This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the parties; PROVIDED, THAT no such amendment may have the effect of changing the provisions for determining the number or value of Acquiring Fund Shares to be paid to the Transferring Funds' shareholders under this Agreement to the detriment of the Transferring Funds' shareholders without their further approval. Furthermore, either party may waive any breach by the other party or the failure to satisfy any of the conditions to its obligations (such waiver to be in writing and authorized by the President or any Vice President of the waiving party with or without the approval of such party's shareholders). A-5 12. GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts. 13. FEES AND EXPENSES. (a) Each Acquiring Fund and corresponding Transferring Fund represent and warrant to each other that there are no brokers or finders entitled to receive any payments in connection with the reorganization provided for herein. (b) Except as otherwise provided for herein, all expenses of the reorganization contemplated by this Agreement incurred by each Fund will be borne by SunTrust Banks, Inc. Such expenses include, without limitation, (i) expenses incurred in connection with the entering into and the carrying out of the provisions of this Agreement; (ii) expenses associated with the preparation and filing of the Prospectus/Proxy Statement on Form N-14 under the 1933 Act; (iii) registration or qualification fees and expenses of preparing and filing such forms as are necessary under applicable state securities laws to qualify the Acquiring Fund Shares to be issued in connection herewith in each state in which the Transferring Funds' shareholders are resident as of the date of the mailing of the Proxy Statement to such shareholders; (iv) postage; (v) printing; (vi) accounting fees; (vii) legal fees; and (viii) solicitation costs of the transaction. 14. HEADINGS, COUNTERPARTS, ASSIGNMENT. (a) The article and paragraph headings contained in this Agreement are for reference purposes only and shall not effect in any way the meaning or interpretation of this Agreement. (b) This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. (c) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation (other than the parties hereto and their respective successors and assigns) any rights or remedies under or by reason of this Agreement. 15. ENTIRE AGREEMENT. Each Acquiring Fund and Transferring Fund agree that neither party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties. The representations, warranties and covenants contained herein or in any document delivered pursuant hereto or in connection herewith shall survive the consummation of the reorganization contemplated hereunder. A-6 16. FURTHER ASSURANCES. Each Acquiring Fund and Transferring Fund shall take such further action as may be necessary or desirable and proper to consummate the reorganization contemplated hereby. 17. BINDING NATURE OF AGREEMENT. As provided in the Trust's Declaration of Trust, as amended and supplemented to date, this Agreement was executed by the undersigned officers of the Trust, on behalf of the Acquiring Funds and the Transferring Funds, as officers and not individually, and the obligations of this Agreement are not binding upon the undersigned officers individually, but are binding only upon the assets and property of the Trust. Moreover, no series of the Trust shall be liable for the obligations of any other series of the Trust. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. STI CLASSIC FUNDS, on behalf of its series, SUNBELT EQUITY FUND, and EMERGING MARKETS EQUITY FUND By /s/ Kevin P. Robins -------------------- Name: Kevin P. Robins Title: Vice President STI CLASSIC FUNDS, on behalf of its series, SMALL CAP GROWTH STOCK FUND, and INTERNATIONAL EQUITY FUND By /s/ Kevin P. Robins -------------------- Name: Kevin P. Robins Title: Vice President A-7 STATEMENT OF ADDITIONAL INFORMATION STI CLASSIC FUNDS 2 OLIVER STREET BOSTON, MA 02109 1-800-874-4770 This Statement of Additional Information is not a prospectus but should be read in conjunction with the Proxy Statement/Prospectus dated November 10, 1999 for the Special Meeting of Shareholders of the STI Classic Funds' (the "Trust") Sunbelt Equity Fund and Emerging Markets Equity Fund (the "Transferring Funds"), to be held on December 10, 1999. Copies of the Proxy Statement/Prospectus may be obtained at no charge by calling at 1-800-874-4770. Unless otherwise indicated, capitalized terms used herein and not otherwise defined have the same meanings as are given to them in the Proxy Statement/Prospectus. Further information about the Transferring Funds and the Trust's Small Cap Growth Stock Fund and International Equity Fund (the "Acquiring Funds" and, together with the Transferring Funds, the "Funds") is contained in and incorporated by reference to the Funds' Statement of Additional Information dated October 1, 1999, a copy of which is included herewith. The audited financial statements and related independent accountant's report for the Funds contained in the Annual Report dated May 31, 1999 is hereby incorporated herein by reference insofar as they relate to the Funds. No other parts of the Annual Report are incorporated by reference herein. The date of this Statement of Additional Information is November 10, 1999. EXHIBIT B MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE STI CLASSIC INTERNATIONAL EQUITY FUND The STI Classic International Equity Fund ("The Fund") invests in equity securities of foreign issuers and seeks to provide long term capital appreciation. We strive to obtain investment results that outperform the international markets and the average international mutual funds. The Fund focuses on sector and company fundamentals specifically looking for companies that exhibit top managements, quality products and sound financial positions. Our goal is to find companies that fit the above criteria but are still selling at a discount to their global peers. The Fund's performance for the year June 1998 to May 1999 was -7.43% (Trust Shares) vs. MSCI EAFE of 4.36%. Over the past year, many changes have occurred. Eleven western european countries combined currencies to create one common currency, the Euro, Asia has rallied off its bottom, and many markets have seen +50% returns. Brazil and Latin America experienced a collapse, only to quickly rebound after Brazil depegged its currency from the dollar. Japan has also rebounded off its lows due to economic stimulus packages and positive news flow, though earnings are still lagging. Recent concern over increasing growth has caused economic over-heating concerns across the European community where the Fund maintains its largest weighting. Many of the cyclical and commodity oriented companies have rallied on the back of the expectation of strong growth and inflation. While we do have exposure to these sectors, we do not believe this outperformance will continue. Financial companies have been the hardest hit as interest rate concerns have been a heavy burden on bond prices and fears of slower growth have tempered the performance of insurance companies and banks. This weakness has provided opportunities as we believe the markets have over-corrected for such fears. The Fund added some Brazilian and Mexican equities in February including Tele Norte, a fixed line telephone operator in Brazil and Telefonos de Mexico, Mexico's dominant phone company. These investments have experienced tremendous strength since their addition. We continue to monitor Latin America and Asia for value opportunities. Concerning the future outlook for international markets, we continue to see value across Europe and expect to remain overweighted here. Japan has rallied on hopes, not fundamentals, and we remain underweighted. We have added names in Japan such as Takefuji, a consumer finance company and FamilyMart, Japan's second largest convenient store operator. While we see some fundamentals turning in Japan, the changes are company specific. In our opinion, the macro picture remains mired in high unemployment, overvalued assets, and zero growth. /s/ Ned Dau Ned Dau Managing Director TRUST SHARES ------------------------------------------------------------- Annualized Annualized Cumulative One Year 3 Year Inception Inception Return Return to Date to Date ------------------------------------------------------------- -7.43% 11.62% 14.12% 58.55% -------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic International Equity Fund, MSCI EAFE Trust Shares Index, in U.S.$ 1/31/95 10,000 10,000 5/31/95 11,637 10,862 5/31/96 15,179 12,021 5/31/97 18,714 12,928 5/31/98 22,807 14,365 5/31/99 21,112 14,991
INVESTOR SHARES ------------------------------------------------------------- Annualized Annualized Cumulative One Year 3 Year Inception Inception Return Return to Date to Date ------------------------------------------------------------- -7.82% 11.19% 12.62% 49.85% Without load -11.27% 9.79% 11.36% 44.18% With load -------------------------------------------------------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic International Equity Fund, MSCI EAFE Investor Shares Index, in U.S.$ 1/31/95 9,625 10,000 5/31/95 11,201 10,862 5/31/96 14,585 12,021 5/31/97 17,918 12,928 5/31/98 21,750 14,365 5/31/99 20,049 14,991
FLEX SHARES ------------------------------------------------------------- Annualized Annualized Cumulative One Year 3 Year Inception Inception Return Return to Date to Date ------------------------------------------------------------- -8.48% 10.40% 11.89% 46.56% Without load ------------------------------------------------------------- -10.19% With load --------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic International Equity Fund, MSCI EAFE Flex Shares Index, in U.S.$ 1/31/95 10,000 10,000 5/31/95 11,637 10,862 5/31/96 15,139 12,021 5/31/97 18,467 12,928 5/31/98 22,260 14,365 5/31/99 20,372 14,991
Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. STI CLASSIC SMALL CAP GROWTH STOCK FUND The objective of the STI Classic Small Cap Growth Stock Fund (the "Fund") is to provide long-term capital appreciation by investing in smaller companies, domiciled primarily in the U.S., with market capitalizations ranging from $50 million to $3 billion. The philosophy of the Fund is that a portfolio of small capitalization companies with positive earnings characteristics and reasonable valuation will provide superior returns over time. The Fund invests in stocks of companies that are currently demonstrating strong earnings trends, characterized by solid historical earnings growth, high earnings and sales growth momentum, and positive earnings estimate revisions and earnings surprises. However, we try not to pay huge premiums for these companies. Consequently, we identify those companies that are reasonably valued relative to their earnings trends and relative to our universe of companies. In addition, we look for companies that have a history of generating high returns on invested capital and/or are demonstrating improving returns. The investment process of the Fund features a two-tiered strategy that includes a quantitative methodology to identify those companies with the best combination of the aforementioned characteristics and a qualitative overlay that involves basic fundamental analysis of each company. Our investment team looks at each company to understand the company's basic business model and competitive environment surrounding the company. In addition, we dig into the financials of each company, analyzing the income statement and balance sheet in order to identify any accounting irregularities, understand the capital structure of the company, how the company has grown in the past, and how it intends to fund its growth in the future. The Fund features a very disciplined approach for both the buying and selling of stocks. Furthermore, we exercise portfolio management techniques that are geared toward risk aversion, unlike most other aggressive small cap growth portfolios. The Fund equal-weights the portfolio among the top 15% to 20% of stocks in our investment universe (approximately 150-160 companies). Thus, we maintain a very diversified portfolio taking on very little company specific risk. In addition, we maintain controlled sector weightings to keep the portfolio from becoming over-concentrated in one particular economic sector. We are confident that our process will provide excellent risk-adjusted returns over time relative to the S&P Small Cap 600 Index and relative to other small cap mutual funds. We are very pleased with the Fund's results since inception on October 8, 1998 and feel very comfortable with how the portfolio is currently positioned. Since late March 1999, the broadening of the market has brought about a resurgence in small cap stock returns. Should this trend continue, this will be an excellent year for the STI Classic Small Cap Growth Stock Fund. /s/ Mark D. Garfinkel Mark D. Garfinkel, CFA Vice President and Portfolio Manager TRUST SHARES*
-------------- Cumulative Inception to Date -------------- 45.70% --------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic Small Cap Growth Stock Fund, S&P Small Cap Trust Shares 600 Index 10/31/98 10,000 10,000 5/31/99 12,070 11,168
FLEX SHARES*
-------------- Cumulative Inception to Date -------------- 44.78% Without load -------------- 42.78% With load --------------
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
STI Classic Small Cap Growth Stock Fund, S&P Small Cap Flex Shares 600 Index 10/31/98 10,000 10,000 5/31/99 11,764 11,168
*Commenced operations on October 8, 1998. Past performance is no indication of future performance. The Funds' comparative benchmarks do not include the annual operating expenses incurred by the Fund. Introduction to Pro Forma Combining Statements May 31, 1999 The accompanying unaudited Pro Forma Combining Statements of Assets and Liabilities, Pro Forma Combining Statements of Operations and Pro Forma Combining Schedules of Investments reflect the accounts of the Emerging Markets Equity Fund and Sunbelt Equity Fund (the "Transferring Funds") and the International Equity Fund and Small Cap Growth Stock Fund (the "Acquiring Funds"). These statements have been derived from the underlying accounting records of the Transferring Funds and Acquiring Funds that were used in calculating net assets for the twelve-month period ended May 31, 1999. The Pro Forma Combining Statements of Operations have been prepared based upon the fee and expense structure of the Transferring Funds. Under the proposed merger agreement and plan of reorganization, all outstanding shares of the Transferring Funds will be issued in exchange for shares of the Acquiring Funds.
qtag cusip desc shares market_val Q1 STI Classic Sunbelt Equity Fund 73 214,585,728 Q2 Schedule of Portfolio Investments Q3 May 31, 1999 (Unaudited) R3 --------------------------------------------------------------------- ------------ C3 Shares (000) Value (000) R3 --------------------------------------------------------------------- ------------ H1 Common Stocks--98.0% H2 Capital Goods--12.0% D1 043127109 Artesyn Technologies* 122,296 2,584 D1 095177101 Blount International 133,355 3,717 D1 488035106 Kellstrom Industries* 169,924 3,080 D1 577914104 Maverick Tube* 175,995 2,277 D1 600551105 Miller Industries* 435,896 2,098 D1 637657107 National Service Industries 41,874 1,541 D1 696639103 Palm Harbor Homes* 150,106 3,227 D1 817265101 Sensormatic Electronics* 104,358 1,396 D1 89674L101 Tristar Aerospace* 80,923 749 D1 90467L100 UNIFAB International* 331,835 3,422 D1 942622200 Watsco 106,090 2,049 R1 ------------ T2 Total Capital Goods 26,140 R1 ------------ H2 Communication Services--3.7% D1 020039103 Alltel 40,176 2,880 D1 55268B106 MCI WorldCom* 39,356 3,399 D1 868365107 Superior TeleCom* 58,516 1,734 R1 ------------ T2 Total Communication Services 8,013 R1 ------------ H2 Consumer Cyclicals--17.8% D1 001296102 AHL Services* 118,826 3,149 D1 154785109 Central Parking 40,931 1,330 D1 172737108 Circuit City 58,725 4,217 D1 256669102 Dollar General 75,488 2,005 D1 307000109 Family Dollar Stores 124,318 2,774 D1 548661107 Lowe's Companies 63,365 3,291 D1 607830106 Modis Professional Services* 189,582 2,796 D1 670823103 O'Charleys* 157,453 2,057 D1 720279108 Pier 1 Imports 156,478 1,731 D1 731108106 Policy Management Systems* 66,492 2,419 D1 74835F102 Quest Education* 211,639 2,381 D1 753820109 Rare Hospitality International* 77,431 1,781 D1 875382103 Tandy 64,310 5,306 D1 892356106 Tractor Supply* 44,927 1,337 D1 89531P105 Trex* 48,519 1,064 D1 918204108 V.F. 27,688 1,274 R1 ------------ T2 Total Consumer Cyclicals 38,912 R1 ------------ H2 Consumer Staples--6.1% D1 343496105 Flowers Industries 108,415 2,412 D1 689899102 Outback Steakhouse* 113,665 4,078 D1 835451105 Sonic* 247,259 6,807 R1 ------------ T2 Total Consumer Staples 13,297 R1 ------------ H2 Energy--18.4% D1 032511107 Anadarko Petroleum 117,354 4,401 D1 055482103 BJ Services* 179,297 4,942 D1 N22717107 Core Laboratories N.V.* 245,141 3,830 D1 25271C102 Diamond Offshore Drilling 128,263 3,495 D1 379336100 Global Industries* 662,783 7,373 D1 670509108 Nuevo Energy* 140,422 2,141 D1 675232102 Oceaneering International* 111,937 1,728 D1 861642106 Stone Energy* 185,441 6,989 D1 893817106 Transocean Offshore 124,176 3,058 D1 981475106 World Fuel Services 174,223 2,254 R1 ------------ T2 Total Energy 40,211 R1 ------------ H2 Financials--15.9% D1 14040H105 Capital One Financial 26,774 4,035 D1 124875105 CCB Financial 60,942 3,287 D1 229899109 Cullen/Frost Bankers 26,492 1,490 D1 304231301 Fairfield Communities* 565,607 8,979 D1 337162101 First Tennessee National 58,712 2,418 D1 669784100 Nova* 272,816 6,070 D1 743168106 Profit Recovery Group International* 146,974 5,410 D1 882673106 Texas Regional Bancshares, Cl A 42,200 1,145 D1 895925105 Triad Guaranty* 129,583 1,976 R1 ------------ T2 Total Financials 34,810 R1 ------------ H2 Health Care--3.1% D1 228903100 Cryolife* 274,510 3,397 D1 68750P103 Orthodontic Centers of America* 66,962 808 D1 761648104 Rexall Sundown* 145,521 2,483 R1 ------------ T2 Total Health Care 6,688 R1 ------------ H2 Technology--17.7% D1 005125109 Acxiom* 155,822 4,207 D1 08160H101 Benchmark Electronics* 214,785 6,444 D1 232522102 Cybex Computer Products* 127,104 2,884 D1 238124101 Datastream Systems* 188,213 2,282 D1 247025109 Dell Computer* 65,224 2,246 D1 635621105 National Data 48,242 2,270 D1 636518102 National Instruments* 29,351 1,117 D1 78388N107 SCB Computer Technology* 795,788 5,123 D1 808655104 Scientific-Atlanta 65,225 2,303 D1 859205106 Sterling Commerce* 33,867 1,317 D1 859547101 Sterling Software* 53,374 1,298 D1 871237103 Sykes Enterprises* 160,921 5,009 D1 882508104 Texas Instruments 20,939 2,290 R1 ------------ T2 Total Technology 38,790 R1 ------------ H2 Transportation--3.4% D1 22284P105 Covenant Transportation, Cl A* 114,180 1,370 D1 445658107 Hunt J B Transportation Services 93,873 1,584 D1 907818108 Union Pacific 48,129 2,746 D1 902925106 USA Truck* 186,915 1,706 R1 ------------ T2 Total Transportation 7,406 R1 ------------ T1 Total Common Stocks (Cost $166,276) 214,267 R1 ------------ R3 --------------------------------------------------------------------- ------------ C8 Face Amount (000) Value (000) R3 --------------------------------------------------------------------- ------------ H1 Repurchase Agreements--0.1% D2 4090REPOK Deutsche Bank 4.78%, dated 05/28/99, matures 06/01/99, 319 319 repurchase price $319,543 (collateralized by various U.S. Treasury obligations: total market value $326,219) R1 ------------ T1 Total Repurchase Agreements (Cost $319) 319 R1 ------------ G1 Total Investments--98.1% (Cost $166,595) 214,586 R1 ------------ O1 Other Assets and Liabilities, Net--1.9% 3,973 R1 ------------ N1 Total Net Assets--100.0% 218,559 R2 ------------ ------------ R4 --------------------------------------------------------------------- ------------
qtag cusip desc Coupon mat_date shares market_val Q1 STI Classic Small Cap Growth Stock Fund 3.000 206 162,651,449 Q2 Schedule of Portfolio Investments Q3 May 31, 1999 (Unaudited) R3 ------------------------------------------------------ ---------- ---------- ----------------- ------------- C3 Shares (000) Value (000) R3 ------------------------------------------------------ ---------- ---------- ----------------- ------------- H1 Common Stocks--99.5% H2 Basic Materials--6.9% D1 020753109 Alpha Industries* 23,001 801 D1 046224101 Astec Industries* 23,660 884 D1 077347201 Bel Fuse, Cl A* 25,800 851 D1 097383103 Boise Cascade 37,000 1,466 D1 15231R109 Centex Construction Products 23,020 826 D1 341140101 Florida Rock Industries 10,000 399 D1 387328107 Granite Construction 24,000 673 D1 469814107 Jacobs Engineering Group* 10,300 383 D1 501921100 LTV 45,000 276 D1 628852105 NCI Building Systems* 47,570 1,201 D1 834376105 Solutia 35,000 785 D1 86074Q102 Stillwater Mining* 36,500 1,166 D1 902974104 US Liquids* 20,900 376 D1 902948108 U.S. Plastic Lumber* 90,000 816 R1 ------------ T2 Total Basic Materials 10,903 R1 ------------ H2 Capital Goods--15.1% D1 000950105 AFC Cable Systems* 37,085 1,275 D1 030506109 American Woodmark 18,000 664 D1 032744104 Anaren Microwave* 38,400 823 D1 054350103 Avondale Industries* 20,000 730 D1 099724106 Borg-Warner Automotive 13,000 721 D1 109043109 Briggs & Stratton 11,800 737 D1 206186108 Concord Communications* 21,000 934 D1 220406102 Corsair Communications* 20,000 91 D1 224399105 Crane 15,000 451 D1 233233105 DM Management* 25,000 403 D1 267475101 Dycom Industry* 29,475 1,422 D1 284443108 Elcor 19,130 772 D1 371933102 Genesis Microchip* 58,100 1,053 D1 461142101 Intervoice* 93,000 1,035 D1 488035106 Kellstrom Industries* 14,000 254 D1 563571108 Manitowoc 20,723 705 D1 593261100 Miami Computer Supply* 39,550 744 D1 60740F105 Mobile Mini* 68,000 897 D1 61980K101 Motivepower Industries* 27,150 460 D1 637277104 National R.V. Holdings* 31,470 808 D1 63934E108 Navistar International* 30,000 1,481 D1 829073105 Simpson Manufacturing* 19,500 865 D1 784626103 Sps Technologies* 12,070 511 D1 87157J106 Syncor International* 32,000 1,088 D1 894065101 Transwitch* 27,500 1,272 D1 90467L100 UNIFAB International* 49,000 505 D1 913004107 United Stationers 33,000 619 D1 913456109 Universal Corp. 15,000 392 D1 903293405 USG 7,775 440 D1 92220P105 Varian Medical Associates* 15,000 282 D1 922248109 Varlen 39,176 1,479 R1 ------------ T2 Total Capital Goods 23,913 R1 ------------ H2 Communication Services--3.1% D1 111412102 Broadvision* 20,000 1,040 D1 338527104 Flashnet Communications * 11,000 217 D1 371931106 Genesys Telecom Labs* 52,000 1,202 D1 M50876107 Gilat Communications Limited* 54,500 804 D1 73172K104 Polycom* 61,695 1,581 R1 ------------ T2 Total Communication Services 4,844 R1 ------------ H2 Consumer Cyclicals--25.1% D1 02553E106 American Eagle Outfitters* 27,000 1,102 D1 032683302 Analytical Surveys* 25,500 625 D1 036115103 Ann Taylor Stores* 26,500 1,144 D1 043339100 Arvin Industries 23,000 903 D1 109641100 Brinker International* 22,985 645 D1 118440106 Buckle* 54,865 1,519 D1 125129106 CDW Computer Centers* 19,000 826 D1 152312104 Centex 18,000 667 D1 168615102 Chicos* 50,000 1,134 D1 179584107 Claire's Stores 35,000 1,024 D1 209341106 Consolidated Graphics* 16,310 752 D1 221485105 Cost Plus * 25,000 934 D1 22413E104 Craftmade International 46,640 624 D1 232217109 Cutter & Buck* 25,760 763 D1 23331A109 DR Horton 75,800 1,289 D1 246885107 Delia's* 19,000 252 D1 256747106 Dollar Tree Stores* 29,000 975 D1 291586105 Empi* 12,000 294 D1 337610109 First Years 24,010 384 D1 344839204 Foodmaker* 20,000 540 D1 349882100 Fossil* 32,530 1,364 D1 371901109 Gentex* 27,000 811 D1 47012E106 Jakks Pacific * 30,000 831 D1 482686102 K-Swiss, Cl A 46,740 2,682 D1 505336107 La-Z-Boy 26,800 533 D1 505401208 Labor Ready* 29,500 1,051 D1 531172104 Liberty Property Trust 25,270 610 D1 608190104 Mohawk Industries* 36,115 1,052 D1 60886R103 Monaco Coach* 37,510 1,125 D1 624580106 Movado Group 9,175 221 D1 688222207 Oshkosh B'gosh, Cl A 16,655 327 D1 688239201 Oshkosh Truck 6,000 238 D1 740065107 Pre Paid Legal Services* 10,000 266 D1 743205106 Programmer's Paradise * 8,000 86 D1 74838C106 Quiksilver* 34,000 969 D1 750069106 Racing Champions* 64,000 1,096 D1 753820109 Rare Hospitality International* 24,000 552 D1 795757103 Salton/Maxim Housewares* 21,500 919 D1 841297104 Southdown 24,900 1,578 D1 85375C101 Standard Pacific 54,145 711 D1 556269108 Steven Madden Ltd* 81,365 870 D1 868168105 Superior Industries International 27,000 673 D1 876289109 Tarrant Apparel Group* 33,330 1,010 D1 896818101 Triumph Group* 23,395 716 D1 903236107 Urs* 28,325 697 D1 961840105 Wet Seal, Cl A* 17,000 472 D1 974637100 Winnebago Industries 54,000 891 D1 988858106 Zale* 28,000 1,080 R1 ------------ T2 Total Consumer Cyclicals 39,827 R1 ------------ H2 Consumer Staples--4.8% D1 137219200 Canandaigua Wine, Cl A* 13,100 652 D1 270319106 Earthgrains 20,000 469 D1 343496105 Flowers Industries 44,600 992 D1 560321200 Mail-Well* 65,000 963 D1 698813102 Papa John's International* 38,900 1,537 D1 76009N100 Rent-A-Center * 35,000 903 D1 832248108 Smithfield Foods* 43,000 1,148 D1 865077101 Suiza Foods* 25,000 916 R1 ------------ T2 Total Consumer Staples 7,580 R1 ------------ H2 Energy--2.4% D1 269524104 Eagle Geophysical * 1,280 4 D1 675232102 Oceaneering International* 50,000 772 D1 80218K105 Santa Fe Snyder Corp* 80,000 680 D1 811904101 Seacor Holdings* 3,000 149 D1 816074306 Seitel* 40,000 632 D1 893817106 Transocean Offshore 61,800 1,522 R1 ------------ T2 Total Energy 3,759 R1 ------------ H2 Financials--7.6% D1 026522102 American Heritage 39,300 914 D1 03070X106 Amerin* 21,057 566 D1 G03910109 Annuity & Life Re Holdings 12,000 309 D1 061589107 Bank of Commerce/San Diego 16,000 312 D1 21988R102 Corporate Executive Board* 17,000 498 D1 229899109 Cullen/Frost Bankers 9,550 537 D1 253922108 Dime Community Bancorp 35,200 779 D1 25811P100 Doral Financial 42,000 709 D1 093210102 E.W. Blanch Holdings 16,900 1,082 D1 293310108 Enhance Financial Services Group 30,000 587 D1 31769P100 Financial Security Assurance Holdings 7,385 419 D1 357288109 Fremont General 55,000 1,165 D1 46145F105 Investment Technology Group* 16,881 748 D1 62944T105 NVR* 13,975 673 D1 69331W104 PFF Bancorp* 32,000 580 D1 72142R108 Pilgrim America Cap Corp* 19,600 390 D1 743674103 Protective Life 38,000 1,375 D1 783764103 Ryland Group 16,165 450 R1 ------------ T2 Total Financials 12,093 R1 ------------ H2 Health Care--8.2% D1 020813101 Alpharma, Cl A 24,000 640 D1 068306109 Barr Laboratories* 18,475 609 D1 09060P102 Biomatrix* 28,000 857 D1 140475104 Capital Senior Living* 70,000 761 D1 19652U104 Colorado Medtech* 65,340 923 D1 232861104 D&K Healthcare Resources* 24,400 576 D1 45868P100 Interim Services* 35,000 763 D1 465823102 Ivax* 40,000 537 D1 51807H100 Laser Vision Centers* 15,000 855 D1 536310105 Liposome* 78,000 1,116 D1 683829105 Optical Coating Laboratories 3,000 195 D1 688582105 Osteotech* 23,917 849 D1 759148109 Rehabcare Group* 33,000 710 D1 761152107 Resmed* 43,000 1,207 D1 770491108 Roberts Pharmaceutical* 63,000 1,197 D1 859152100 Steris* 25,000 414 D1 89618L100 Trigon Healthcare* 15,000 572 D1 922206107 Varian * 15,000 150 R1 ------------ T2 Total Health Care 12,931 R1 ------------ H2 Technology--19.0% D1 027352103 American Management Systems* 25,000 794 D1 12328X107 Business Objects ADR* 30,000 862 D1 M22465104 Checkpoint Software* 20,000 885 D1 17163B102 Ciber* 52,230 1,120 D1 203372107 Commscope* 50,000 1,313 D1 204925101 Computer Network Technology* 29,000 732 D1 218412104 Cordant Technologies 18,000 873 D1 232522102 Cybex Computer Products* 61,944 1,405 D1 285512109 Electronic Arts* 16,000 783 D1 303250104 Fair Isaac 5,000 164 D1 Y2573F102 Flextronics International* 7,000 350 D1 351042106 4front Technologies* 60,000 600 D1 426281101 Henry (Jack) & Associates 7,000 247 D1 427398102 Herley Industries * 52,000 673 D1 44914K306 Hyperion Telecommunications, Cl A* 60,000 1,013 D1 45765U103 Insight Enterprises* 38,557 978 D1 471896100 Javelin Systems * 60,000 776 D1 501052104 Kronos* 29,200 1,081 D1 51506S100 Landmark Systems* 24,000 231 D1 57632N105 Mastech* 62,900 1,207 D1 59133P100 Metamor Worldwide* 27,000 739 D1 594901100 Micros Systems* 40,000 1,250 D1 690213103 Overland Data * 65,000 423 D1 723481107 Pinnacle Systems* 19,000 984 D1 714265105 Perot Systems, Cl A* 14,800 401 D1 739323103 Powerhouse Technologies* 15,000 278 D1 743312100 Progress Software* 66,930 1,744 D1 747906105 Quantum* 20,000 396 D1 867654105 Sunquest* 44,000 578 D1 871130100 Sybase* 55,000 533 D1 871237103 Sykes Enterprises* 10,435 325 D1 872443403 T-HQ* 46,290 1,091 D1 874264104 Talk.com * 25,000 259 D1 M8743P105 Technomatrix Technologies* 51,000 854 D1 887134104 Timberline Software 54,000 918 D1 917327108 USWeb* 25,000 634 D1 922207105 Varian Semiconductor Equiptment* 15,000 187 D1 983922105 Xircom* 52,000 1,313 D1 989929104 Zomax* 41,000 1,081 R1 ------------ T2 Total Technology 30,075 R1 ------------ H2 Transportation--6.2% D1 007768104 Aeroflex* 61,000 888 D1 011659109 Alaska Airgroup* 10,000 415 D1 02629V108 American Freightways* 82,500 1,444 D1 03234G106 Amtran Inc* 14,525 341 D1 049164106 Atlas Air* 48,000 1,290 D1 270018104 Eagle USA Airfreight* 9,000 424 D1 349853101 Forward Air* 10,000 274 D1 359065109 Frontier Airlines* 62,000 961 D1 515098101 Landstar System* 10,000 376 D1 830879102 Skywest 38,680 899 D1 870756103 Swift Transportation* 45,000 823 D1 916906100 USFreightways 43,300 1,706 R1 ------------ T2 Total Transportation 9,841 R1 ------------ H2 Utilities--1.2% D1 283677854 El Paso Electric* 80,000 685 D1 494550106 Kinder Morgan Energy Partners 18,000 671 D1 744499104 Public Service of New Mexico 20,000 415 D1 744516105 Public Service of North Carolina 5,000 145 R1 ------------ T2 Total Utilities 1,916 R1 ------------ T1 Total Common Stocks (Cost $144,302) 157,682 R1 ------------ R3 ------------------------------------------------------ ---------- ---------- ----------------- ------------- C8 Face Amount (000) Value (000) R3 ------------------------------------------------------ ---------- ---------- ----------------- ------------- H1 Repurchase Agreements--2.9% D2 4245REPOM Morgan Stanley 4.80%, dated 05/28/99, matures 06/01/99, repurchase price $4,658,357 (collateralized by various FNMA obligations) 4,656 4,656 R1 ------------ T1 Total Repurchase Agreements (Cost $4,656) 4,656 R1 ------------ R3 ------------------------------------------------------ ---------- ---------- ----------------- ------------- C1 Shares Market Value R3 ------------------------------------------------------ ---------- ---------- ----------------- ------------- R1 ------------ G1 Total Investments--102.5% (Cost $148,958) 162,338 R1 ------------ O1 Other Assets and Liabilities, Net--2.5% (3,890) R1 ------------ N1 Total Net Assets--100.0% 158,448 R2 ------------ ------------ R4 ------------------------------------------------------ ---------- ---------- ----------------- -------------
STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999
--------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ Common Stocks--98.7% Basic Materials--2.9% Alpha Industries* 23,000 801 23,000 801 Astec Industries* 23,660 884 23,660 884 Bel Fuse, Cl A* 25,800 851 25,800 851 Boise Cascade 37,000 1,466 37,000 1,466 Centex Construction Products 23,020 826 23,020 826 Florida Rock Industries 10,000 399 10,000 399 Granite Construction 24,000 673 24,000 673 Jacobs Engineering Group* 10,300 383 10,300 383 LTV 45,000 276 45,000 276 NCI Building Systems* 47,570 1,201 47,570 1,201 Solutia 35,000 785 35,000 785 Stillwater Mining* 36,500 1,166 36,500 1,166 US Liquids* 20,900 376 20,900 376 U.S. Plastic Lumber* 90,000 816 90,000 816 Total Basic Materials 10,903 10,903 Capital Goods--13.3% AFC Cable Systems* 37,085 1,275 37,085 1,275 American Woodmark 18,000 664 18,000 664 Anaren Microwave* 38,400 823 38,400 823 Artesyn Technologies* 122,296 2,584 122,296 2,584 Avondale Industries* 20,000 730 20,000 730 Borg-Warner Automotive 13,000 721 13,000 721 Blount International 133,355 3,717 133,355 3,717 Briggs & Stratton 11,800 737 11,800 737 Concord Communications* 21,000 934 21,000 934 Corsair Communications* 20,000 91 20,000 91 Crane 15,000 451 15,000 451 DM Management* 25,000 403 25,000 403 Dycom Industry* 29,475 1,422 29,475 1,422 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ Elcor 19,130 772 19,130 772 Genesis Microchip* 58,100 1,053 58,100 1,053 Intervoice* 93,000 1,035 93,000 1,035 Kellstrom Industries* 14,000 254 169,924 3,080 183,924 3,334 Manitowoc 20,723 705 20,723 705 Maverick Tube* 175,995 2,277 175,995 2,277 Miami Computer Supply* 39,550 744 39,550 744 Miller Industries* 435,896 2,098 435,896 2,098 Mobile Mini* 68,000 897 68,000 897 Motivepower Industries* 27,150 460 27,150 460 National R.V. Holdings* 31,470 808 31,470 808 National Service Industries 41,874 1,541 41,874 1,541 Navistar International* 30,000 1,481 30,000 1,481 Palm Harbor Homes* 150,106 3,227 150,106 3,227 Sensormatic Electronics* 104,358 1,396 104,358 1,396 Simpson Manufacturing* 19,500 865 19,500 865 Sps Technologies* 12,070 511 12,070 511 Syncor International* 32,000 1,088 32,000 1,088 Transwitch* 27,500 1,272 27,500 1,272 Tristar Aerospace* 80,923 749 80,923 749 UNIFAB International* 49,000 505 331,835 3,422 380,835 3,927 United Stationers 33,000 619 33,000 619 Universal Corp. 15,000 392 15,000 392 USG 7,775 440 7,775 440 Varian Medical Associates* 15,000 282 15,000 282 Varlen 39,176 1,479 39,176 1,479 Watsco 106,090 2,049 106,090 2,049 Total Capital Goods 23,913 26,140 50,053 Communication Services--3.4% Alltel 40,176 2,880 40,176 2,880 Broadvision* 20,000 1,040 20,000 1,040 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ Flashnet Communications * 11,000 217 11,000 217 Genesys Telecom Labs* 52,000 1,202 52,000 1,202 Gilat Communications Limited* 54,500 804 54,500 804 MCI WorldCom* 39,356 3,399 39,356 3,399 Polycom* 61,695 1,581 61,695 1,581 Superior TeleCom* 58,516 1,734 58,516 1,734 Total Communication Services 4,844 8,013 12,857 Consumer Cyclicals--20.9% AHL Services* 118,826 3,149 118,826 3,149 American Eagle Outfitters* 27,000 1,102 27,000 1,102 Analytical Surveys* 25,500 625 25,500 625 Ann Taylor Stores* 26,500 1,144 26,500 1,144 Arvin Industries 23,000 903 23,000 903 Brinker International* 22,985 645 22,985 645 Buckle* 54,865 1,519 54,865 1,519 CDW Computer Centers* 19,000 826 19,000 826 Centex 18,000 667 18,000 667 Central Parking 40,931 1,330 40,931 1,330 Chicos* 50,000 1,134 50,000 1,134 Circuit City 58,725 4,217 58,725 4,217 Claire's Stores 35,000 1,024 35,000 1,024 Consolidated Graphics* 16,310 752 16,310 752 Cost Plus * 25,000 934 25,000 934 Craftmade International 46,640 624 46,640 624 Cutter & Buck* 25,760 763 25,760 763 DR Horton 75,800 1,289 75,800 1,289 Delia's* 19,000 252 19,000 252 Dollar General 75,488 2,005 75,488 2,005 Dollar Tree Stores* 29,000 975 29,000 975 Empi* 12,000 294 12,000 294 Family Dollar Stores 124,318 2,774 124,318 2,774 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ First Years 24,010 384 24,010 384 Foodmaker* 20,000 540 20,000 540 Fossil* 32,530 1,364 32,530 1,364 Gentex* 27,000 811 27,000 811 Jakks Pacific * 30,000 831 30,000 831 K-Swiss, Cl A 46,740 2,682 46,740 2,682 La-Z-Boy 26,800 533 26,800 533 Labor Ready* 29,500 1,051 29,500 1,051 Liberty Property Trust 25,270 610 25,270 610 Lowe's Companies 63,365 3,291 63,365 3,291 Modis Professional Services* 189,582 2,796 189,582 2,796 Mohawk Industries* 36,115 1,052 36,115 1,052 Monaco Coach* 37,510 1,125 37,510 1,125 Movado Group 9,175 221 9,175 221 O'Charleys* 157,453 2,057 157,453 2,057 Oshkosh B'gosh, Cl A 16,655 327 16,655 327 Oshkosh Truck 6,000 238 6,000 238 Pier 1 Imports 156,478 1,731 156,478 1,731 Policy Management Systems* 66,492 2,419 66,492 2,419 Pre Paid Legal Services* 10,000 266 10,000 266 Programmer's Paradise * 8,000 86 8,000 86 Quest Education* 211,639 2,381 211,639 2,381 Quiksilver* 34,000 969 34,000 969 Racing Champions* 64,000 1,096 64,000 1,096 Rare Hospitality International* 24,000 552 77,431 1,781 101,431 2,333 Salton/Maxim Housewares* 21,500 919 21,500 919 Southdown 24,900 1,578 24,900 1,578 Standard Pacific 54,145 711 54,145 711 Steven Madden Ltd* 81,365 870 81,365 870 Superior Industries International 27,000 673 27,000 673 Tandy 64,310 5,306 64,310 5,306 Tarrant Apparel Group* 33,330 1,010 33,330 1,010 Tractor Supply* 44,927 1,337 44,927 1,337 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ Trex* 48,519 1,064 48,519 1,064 Triumph Group* 23,395 716 23,395 716 Urs* 28,325 697 28,325 697 V.F. 27,688 1,274 27,688 1,274 Wet Seal, Cl A* 17,000 472 17,000 472 Winnebago Industries 54,000 891 54,000 891 Zale* 28,000 1,080 28,000 1,080 Total Consumer Cyclicals 39,827 38,912 78,739 Consumer Staples--5.5% Canandaigua Wine, Cl A* 13,100 652 13,100 652 Earthgrains 20,000 469 20,000 469 Flowers Industries 44,600 992 108,415 2,412 153,015 3,404 Mail-Well* 65,000 963 65,000 963 Outback Steakhouse* 113,665 4,078 113,665 4,078 Papa John's International* 38,900 1,537 38,900 1,537 Rent-A-Center * 35,000 903 35,000 903 Smithfield Foods* 43,000 1,148 43,000 1,148 Sonic* 247,259 6,807 247,259 6,807 Suiza Foods* 25,000 916 25,000 916 Total Consumer Staples 7,580 13,297 20,877 Energy--11.7% Anadarko Petroleum 117,354 4,401 117,354 4,401 BJ Services* 179,297 4,942 179,297 4,942 Core Laboratories N.V.* 245,141 3,830 245,141 3,830 Diamond Offshore Drilling 128,263 3,495 128,263 3,495 Eagle Geophysical * 1,280 4 1,280 4 Global Industries* 662,783 7,373 662,783 7,373 Nuevo Energy* 140,422 2,141 140,422 2,141 Oceaneering International* 50,000 772 111,937 1,728 161,937 2,500 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ Santa Fe Snyder Corp* 80,000 680 80,000 680 Seacor Holdings* 3,000 149 3,000 149 Seitel* 40,000 632 40,000 632 Stone Energy* 185,441 6,989 185,441 6,989 Transocean Offshore 61,800 1,522 124,176 3,058 185,976 4,580 World Fuel Services 174,223 2,254 174,223 2,254 Total Energy 3,759 40,211 43,970 Financials--12.4% American Heritage 39,300 914 39,300 914 Amerin* 21,057 566 21,057 566 Annuity & Life Re Holdings 12,000 309 12,000 309 Bank of Commerce/San Diego 16,000 312 16,000 312 Capital One Financial 26,774 4,035 26,774 4,035 CCB Financial 60,942 3,287 60,942 3,287 Corporate Executive Board* 17,000 498 17,000 498 Cullen/Frost Bankers 9,550 537 26,492 1,490 36,042 2,027 Dime Community Bancorp 35,200 779 35,200 779 Doral Financial 42,000 709 42,000 709 E.W. Blanch Holdings 16,900 1,082 16,900 1,082 Enhance Financial Services Group 30,000 587 30,000 587 Fairfield Communities* 565,607 8,979 565,607 8,979 Financial Security Assurance Holdings 7,385 419 7,385 419 First Tennessee National 58,712 2,418 58,712 2,418 Fremont General 55,000 1,165 55,000 1,165 Investment Technology Group* 16,881 748 16,881 748 Nova* 272,816 6,070 272,816 6,070 NVR* 13,975 673 13,975 673 PFF Bancorp* 32,000 580 32,000 580 Pilgrim America Cap Corp* 19,600 390 19,600 390 Profit Recovery Group International* 146,974 5,410 146,974 5,410 Protective Life 38,000 1,375 38,000 1,375 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ Ryland Group 16,165 450 16,165 450 Texas Regional Bancshares, Cl A 42,200 1,145 42,200 1,145 Triad Guaranty* 129,583 1,976 129,583 1,976 Total Financials 12,093 34,810 46,903 Health Care--5.2% Alpharma, Cl A 24,000 640 24,000 640 Barr Laboratories* 18,475 609 18,475 609 Biomatrix* 28,000 857 28,000 857 Capital Senior Living* 70,000 761 70,000 761 Colorado Medtech* 65,340 923 65,340 923 Cryolife* 274,510 3,397 274,510 3,397 D&K Healthcare Resources* 24,400 576 24,400 576 Interim Services* 35,000 763 35,000 763 Ivax* 40,000 537 40,000 537 Laser Vision Centers* 15,000 855 15,000 855 Liposome* 78,000 1,116 78,000 1,116 Optical Coating Laboratories 3,000 195 3,000 195 Orthodontic Centers of America* 66,962 808 66,962 808 Osteotech* 23,917 849 23,917 849 Rehabcare Group* 33,000 710 33,000 710 Resmed* 43,000 1,207 43,000 1,207 Rexall Sundown* 145,521 2,483 145,521 2,483 Roberts Pharmaceutical* 63,000 1,197 63,000 1,197 Steris* 25,000 414 25,000 414 Trigon Healthcare* 15,000 572 15,000 572 Varian * 15,000 150 15,000 150 Total Health Care 12,931 6,688 19,619 Technology--18.3% Acxiom* 155,822 4,207 155,822 4,207 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ American Management Systems* 25,000 794 25,000 794 Benchmark Electronics* 214,785 6,444 214,785 6,444 Business Objects ADR* 30,000 862 30,000 862 Checkpoint Software* 20,000 885 20,000 885 Ciber* 52,230 1,120 52,230 1,120 Commscope* 50,000 1,313 50,000 1,313 Computer Network Technology* 29,000 732 29,000 732 Cordant Technologies 18,000 873 18,000 873 Cybex Computer Products* 61,944 1,405 127,104 2,884 189,048 4,289 Datastream Systems* 188,213 2,282 188,213 2,282 Dell Computer* 65,224 2,246 65,224 2,246 Electronic Arts* 16,000 783 16,000 783 Fair Isaac 5,000 164 5,000 164 Flextronics International* 7,000 350 7,000 350 4front Technologies* 60,000 600 60,000 600 Henry (Jack) & Associates 7,000 247 7,000 247 Herley Industries * 52,000 673 52,000 673 Hyperion Telecommunications, Cl A* 60,000 1,013 60,000 1,013 Insight Enterprises* 38,557 978 38,557 978 Javelin Systems * 60,000 776 60,000 776 Kronos* 29,200 1,081 29,200 1,081 Landmark Systems* 24,000 231 24,000 231 Mastech* 62,900 1,207 62,900 1,207 Metamor Worldwide* 27,000 739 27,000 739 Micros Systems* 40,000 1,250 40,000 1,250 National Data 48,242 2,270 48,242 2,270 National Instruments* 29,351 1,117 29,351 1,117 Overland Data * 65,000 423 65,000 423 Pinnacle Systems* 19,000 984 19,000 984 Perot Systems, Cl A* 14,800 401 14,800 401 Powerhouse Technologies* 15,000 278 15,000 278 Progress Software* 66,930 1,744 66,930 1,744 Quantum* 20,000 396 20,000 396 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ SCB Computer Technology* 795,788 5,123 795,788 5,123 Scientific-Atlanta 65,225 2,303 65,225 2,303 Sterling Commerce* 33,867 1,317 33,867 1,317 Sterling Software* 53,374 1,298 53,374 1,298 Sunquest* 44,000 578 44,000 578 Sybase* 55,000 533 55,000 533 Sykes Enterprises* 10,435 325 160,921 5,009 171,356 5,334 T-HQ* 46,290 1,091 46,290 1,091 Talk.com * 25,000 259 25,000 259 Technomatrix Technologies* 51,000 854 51,000 854 Texas Instruments 20,939 2,290 20,939 2,290 Timberline Software 54,000 918 54,000 918 USWeb* 25,000 634 25,000 634 Varian Semiconductor Equiptment* 15,000 187 15,000 187 Xircom* 52,000 1,313 52,000 1,313 Zomax* 41,000 1,081 41,000 1,081 Total Technology 30,075 38,790 68,865 Transportation--4.6% Aeroflex* 61,000 888 61,000 888 Alaska Airgroup* 10,000 415 10,000 415 American Freightways* 82,500 1,444 82,500 1,444 Amtran Inc* 14,525 341 14,525 341 Atlas Air* 48,000 1,290 48,000 1,290 Covenant Transportation, Cl A* 114,180 1,370 114,180 1,370 Eagle USA Airfreight* 9,000 424 9,000 424 Forward Air* 10,000 274 10,000 274 Frontier Airlines* 62,000 961 62,000 961 Hunt J B Transportation Services 93,873 1,584 93,873 1,584 Landstar System* 10,000 376 10,000 376 Skywest 38,680 899 38,680 899 Swift Transportation* 45,000 823 45,000 823 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ Union Pacific 48,129 2,746 48,129 2,746 USA Truck* 186,915 1,706 186,915 1,706 USFreightways 43,300 1,706 43,300 1,706 Total Transportation 9,841 7,406 17,247 Utilities--0.5% El Paso Electric* 80,000 685 80,000 685 Kinder Morgan Energy Partners 18,000 671 18,000 671 Public Service of New Mexico 20,000 415 20,000 415 Public Service of North Carolina 5,000 145 5,000 145 Total Utilities 1,916 1,916 Total Common Stocks (Cost $310,578) 157,682 214,267 371,949 Repurchase Agreements--1.3% Morgan Stanley 4.80%, dated 05/28/99, matures 06/01/99, repurchase price $4,658,357 (collateralized by various FNMA obligations: total market value $4,767,582) 4,656 4,656 4,656 4,656 Deutsche Bank 4.78%, dated 05/28/99, matures 06/01/99, repurchase price $319,543 (collateralized by various U.S. Treasury obligations: total market value $326,219) 319 319 319 319 Total Repurchase Agreements (Cost $4,975) 4,656 319 4,975 Total Investments--100.0% (Cost $315,553) 162,338 214,586 376,924 Other Assets and Liabilities, Net---0.0% (3,890) 3,973 83 Total Net Assets--100.0% 158,448 218,559 377,007 STI CLASSIC FUNDS SMALL CAP GROWTH STOCK FUND SUNBELT EQUITY FUND PRO FORMA SCHEDULE OF INVESTMENTS (UNAUDITED) MAY 31, 1999 --------------------------- -------------------------- --------------------------- STI Small Cap STI Sunbelt Growth Stock Fund Equity Fund Pro Forma Combined - ------------------------------------------------------------------------------------------------------------------------------------ Shares / Face Shares / Face Shares / Face Security Amount (000) Value (000) Amount (000) Value (000) Amount (000) Value (000) - ------------------------------------------------------------------------------------------------------------------------------------ ADR American Depository Receipt Cl Class FNMA Federal National Mortgage Association * Non-income producing security
Pro Forma Combining Statement of Operations Period Ended May 31, 1999
Pro Forma Combined STI Small Cap STI Sunbelt STI Small Cap Growth Stock Fund Equity Fund Combined Adjustments Growth Stock Fund - ------------------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Interest Income $ 119 $ 187 $ 306 $ 306 Dividend income 77 1,415 1,492 1,492 - --------------------------------------------------------------------------------------------------------------------------------- Total investment income 196 1,602 1,798 1,798 - --------------------------------------------------------------------------------------------------------------------------------- EXPENSES: Investment advisory fees 314 3,788 4,102 4,102 Trustees' fees - 12 12 12 Administrative personnel and services fees 21 258 279 279 Custodian and recordkeeping fees and expenses 7 19 26 26 Transfer Agent Fees-Trust Shares 11 12 23 -7 16 Transfer Agent Fees-Investor Shares 12 12 12 Transfer Agent Fees-Flex Shares 9 23 32 -3 29 Transfer Agent Out of Pocket Fees 15 61 76 76 Fund share registration costs 16 14 30 30 Auditing fees 4 12 16 16 Legal fees 4 25 29 29 Printing and postage 10 61 71 71 Insurance premiums - - - - Distribution services fees-Investor Shares - 97 97 2 99 Distribution services fees-Flex Shares 12 63 75 75 Amortization of deferred organizational costs - - - - Miscellaneous 1 - 1 1 - --------------------------------------------------------------------------------------------------------------------------------- Total expenses 424 4,457 4,881 (8) 4,873 - --------------------------------------------------------------------------------------------------------------------------------- Deduct- 0 Waiver of investment advisory fees (79) (417) (496) 105 (391) Waiver of distribution services fees-Investor Shares - (7) (7) (38) (45) Waiver of distribution services fees-Flex Shares (8) (20) (28) 3 (25) - --------------------------------------------------------------------------------------------------------------------------------- NET EXPENSES 337 4,013 4,350 4,412 - --------------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (141) (2,411) (2,552) (2,614) - --------------------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments: 0 Net realized gain (loss) on investments (identified cost basis) 2,335 (16,055) (13,720) (13,720) Net change in unrealized appreciation (depreciation) on investments 4,550 (79,885) (75,335) (75,335) - --------------------------------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 6,885 (95,940) (89,055) (89,055) - --------------------------------------------------------------------------------------------------------------------------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,744 $ (98,351) (91,607) (91,669) - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
Pro Forma Statement of Assets and Liabilities (Unaudited) STI Classic Funds Small Cap Growth Stock Fund May 31, 1999 (000)
Pro Forma Combined STI Classic Funds STI Classic Funds STI Classic Funds Small Cap Small Cap Growth Sunbelt Equity Pro Forma Growth Stock Stock Fund Fund Adjustments Fund ASSETS Total Investments at Market Value (Cost $148,958, $162,338 $214,586 $376,924 $166,595 and $315,553) Cash (333) 1,969 1,636 Accrued Income 28 42 70 Receivables for Investment Securities Sold 3,919 4,909 8,828 Receivables for Capital Shares Sold 27 18 45 Other Receivables 22 0 22 Other Assets 13 0 13 ----------------- ----------------- ------------- Total Assets 166,014 221,524 387,538 ----------------- ----------------- ------------- LIABILITIES Accrued Expenses (198) (392) (590) Payable for Investment Securities Purchased (7,317) (2,520) (9,837) Payable for Capital Shares Redeemed (51) (53) (104) ----------------- ----------------- ------------- Total Liabilities (7,566) (2,965) (10,531) ----------------- ----------------- ------------- 158,448 218,559 377,007 NET ASSETS Portfolio shares of the Trust Class (unlimited authorization - no par value) based on (10,464,063, 17,784,188, 24,018,386) outstanding shares of beneficial interest 137,985 166,929 304,914 Portfolio shares of the Investor Class (unlimited authorization - no par value) based on (0, 1,574,615, 1,694,895) outstanding shares of beneficial interest 0 14,344 14,344 Portfolio shares of the Flex Class (unlimited authorization - no par value) based on (425,752, 416,394, 729,679) outstanding shares of beneficial interest 6,037 5,998 12,035 Undistributed net investment income 0 0 0 Accumulated net realized gain (loss) on investments 1,046 (16,703) (15,657) Net unrealized appreciation on investments 13,380 47,991 61,371 ----------------- ----------------- ------------- Total Net Assets $158,448 $218,559 $377,007 ----------------- ----------------- ----------- ------------- ----------------- ----------------- ----------- ------------- Net Asset Value, Offering and Redemption Price Per Share - Trust Shares $14.55 $11.09 $14.55 ----------------- ----------------- ------------- ----------------- ----------------- ------------- Net Asset Value and Redemption Price Per Share - Investor Shares $10.00 $10.76 ----------------- ------------- ----------------- ------------- Net Asset Value, Offering and Redemption Price Per Share - Investor Shares $11.18 $11.18 ----------------- ------------- ----------------- ------------- Net Asset Value, Offering and Redemption Price Per Share - Flex $14.46 $10.55 $14.46 Shares ----------------- ----------------- ------------- ----------------- ----------------- ------------- $158,448 $218,559 $377,007 ----------------- ----------------- ------------- ----------------- ----------------- -------------
Page 19 Adjustments ADJUSTMENTS TO FINANCIALS FUNSHARE - --------
Sunbelt NA Small Cap NAV Adjusted Shares Trust 197,215,399.72 14.55 13,554,323.00 Investor 16,948,952.38 10.00 1,694,895.24 Flex 4,394,780.00 14.46 303,926.69
ADVISORY FEE - ------------
Sunbelt's Avg Net Assets Sunbelt's BPS Small Cap BPS Sunbelts Fee Small Cap Fee Difference ----------------------------------------------------------------------------------------------------------------------- Trust 300,526,205.94 1.15% 1.15% 3,456,051.37 3,456,051.37 0.00 0.00 Investor* 22,560,923.89 1.15% 1.15% 259,450.62 259,450.62 0.00 Flex 6,345,012.79 1.15% 1.15% 72,967.65 72,967.65 0.00 ----------------- 0.00 ----------------- -----------------
DISTRIBUTION - ------------
Sunbelt's Avg Net Assets Sunbelt's BPS Small Cap BPS Sunbelts Fee Small Cap Fee Difference ----------------------------------------------------------------------------------------------------------------------- Investor* 22,560,923.89 0.43% 0.44% 97,011.97 99,268.07 -2,256.09 Flex 6,345,012.79 1.00% 1.00% 63,450.13 63,450.13 0.00 ----------------- -2,256.09 ----------------- -----------------
T/A FEES - -------- The T/A fee was only patrially reduced due to Small Cap fiscal year was 7.5 months. ADMINISTRATION - -------------- There will be no adjustment to the fund since the fees are calculated by total avg net assets under management and allocated pro-rata amongst the funds. ADVISORY & 12B-1 WAIVERS - ------------------------
Advisory 12b-1 Investor 12b-1 Flex -------------- ---------- Total Expenses 4,883,000 Adj Total Exp Bps 1.305% 1.305% Less Class Specific -231,000 T/A Fee 12000 29000 Fund Expenses 4,652,000 T/A Bps 0.053% 0.383% Avg Net Assets 356,503,692 12b-1 Fee Bps 0.500% 1.000% Fund Expenses BPS 1.305% Advisory Waiver 0.110% 0.110% Trust Class T/A Fee BPS 0.005% Net Exp Before W 1.748% 2.578% Adj Total Expenses BPS 1.310% Base Cap 1.550% 2.250% Less Base Cap -1.200% 12b-1 Waiver Bps 0.198% 0.328% Advisory Waiver BPS 0.110% 12b-1 Waiver 44,781.02 24,853.36 Advisory Waiver 390,711 Avg Net Assets Total Trust Investor Flex ----- ----- -------- ---- Trust Sunbelt 300,526,206 300,526,206 Investor Sunbelt 22,560,924 22,560,924 Flex Sunbelt 6,345,013 6,345,013 Trust Small Cap 25,835,862 25,835,862 Flex Small Cap 1,235,687 1,235,687 ------------------- ---------------------------------------------------------------- 356,503,692 326,362,068 22,560,924 7,580,700 ------------------- ---------------------------------------------------------------- ------------------- ----------------------------------------------------------------
Page 20 Exp Proj
Fee Table Year Fund: 1 132 A= Sales Load 2 B= Total fund operating expenses 3 412 C= Redemption fee 4 D= Years CDSC is applicable 5 713 Actuals 6 A= 0.00% 7 B= 1.30% 8 C= 0.00% 9 D= - 10 1568
5% Total less Amounts Amount Sales Beginning Expense Ending Average Expense Annual Aggregate Redemption for Fee Year Invested - Load = Value + Ratio = Value Value x Ratio = Expenses Expenses + Fee = Table 1 10000 0 10000 370.00 10370.00 10185 1.30% 132.41 132.41 0.00 132.41 2 10370 383.69 10753.69 10561.85 1.30% 137.30 137.30 0.00 269.71 3 10753.69 397.89 11151.58 10952.63 1.30% 142.38 142.38 0.00 412.09 4 11151.58 412.61 11564.18 11357.88 1.30% 147.65 147.65 0.00 559.75 5 11564.18 427.87 11992.06 11778.12 1.30% 153.12 153.12 0.00 712.86 6 11992.06 443.71 12435.77 12213.91 1.30% 158.78 158.78 0.00 871.64 7 12435.77 460.12 12895.89 12665.83 1.30% 164.66 164.66 0.00 1036.30 8 12895.89 477.15 13373.04 13134.46 1.30% 170.75 170.75 0.00 1207.05 9 13373.04 494.80 13867.84 13620.44 1.30% 177.07 177.07 0.00 1384.11 10 13867.84 513.11 14380.95 14124.39 1.30% 183.62 183.62 0.00 1567.73
Page 21 Cap Table STI FUNDS
Fund Net Assets (000's) NAV Shares (000's) ---- ------------------ --- -------------- - -------------------------------------------------------------------------------- STI Sunbelt Equity Trust Shares 197,215 11.09 17,784 11.089462 Investor Shares 16,949 10.76 1,575 10.761270 Flex Shares 4,395 10.55 416 10.564904 Total 218,559 19,775 - --------------------------------------------------------------------------------- STI Small Cap Growth Equity Trust Class 152,413 14.57 10,464 14.565463 Investor Shares - - - #DIV/0! Flex Shares 4,841 17.40 425 11.390588 Total 157,254 10,889 - --------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- Combined Funds Trust Shares 349,628 14.57 24,018.00 14.556916 Investor Shares 16,949 10.00 1,695 9.999410 Flex Shares 9,236 17.40 730 12.652055 Total 375,813 26,443 - ---------------------------------------------------------------------------------
Page 22 STI CLASSIC FUNDS Notes to Pro Forma Financial Statements December 10, 1999 1. BASIS OF COMBINATION The unaudited Pro Forma Combining Schedule of Investments, Pro Forma Combining Statements of Assets and Liabilities and Pro Forma Combining Statements of Operations give effect to the proposed merger of the Sunbelt Equity Fund into the Small Cap Growth Stock Fund. The proposed merger will be accounted for by the method of accounting for tax free mergers of investment companies (sometimes referred to as the pooling without restatement method). The Merger will be accomplished by an exchange of all outstanding shares of the Trust, Investor and Flex Classes of the Sunbelt Equity Fund in exchange for shares of the Trust, Investor, and Flex shares of the Small Cap Growth Equity Fund. The pro forma combining statements should be read in conjunction with the historical financial statements of the constituent funds and the notes thereto incorporated by reference in the Statement of Additional Information. The STI Classic Funds is an open-end management investment company registered under the Investment Company Act of 1940, as amended. PRO FORMA ADJUSTMENTS: a) The Pro Forma combining statements of assets and liabilities assume the issuance of additional shares of the respective STI Classic Fund as if the reorganization had taken place on May 31, 1999 and are based on the net asset value of the acquiring fund. In addition, the Small Cap Equity Growth Stock Fund is the surviving fund for accounting purposes and legal entity surviving. The performance history of the Small Cap Equity Stock Fund will be carried forward. b) The Pro forma adjustments reflect the impact of applying the contractual fees in place for the legally surviving Small Cap Equity Growth Fund for Advisor, Administration and Distribution as well as the expected savings in other expenses due to the combination of the funds. STI CLASSIC FUNDS SUNBELT EQUITY FUND SPECIAL MEETING OF THE SHAREHOLDERS PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR THE SPECIAL MEETING OF SHAREHOLDERS, DECEMBER 10, 1999 The undersigned, revoking previous proxies with respect to the Shares (defined below), hereby appoints Kevin Robins and Todd Cipperman as proxies and each of them, each with full power of substitution, to vote at the Special Meeting of Shareholders of the Sunbelt Equity Fund, a series of the STI Classic Funds (the "Trust"), to be held in the offices of SEI Investments, One Freedom Valley Drive, Oaks, Pennsylvania 19456, on Friday, December 10, 1999, at 3:00 p.m. (Eastern Time), and any adjournments or postponements thereof (the "Meeting") all shares of beneficial interest of said Trust that the undersigned would be entitled to vote if personally present at the Meeting ("Shares") on the proposal set forth below with respect to the proposed Agreement and Plan of Reorganization (the "Reorganization Agreement") between the Sunbelt Equity Fund and the Small Cap Growth Stock Fund, a corresponding series of the Trust, and on any other matters properly brought before the Meeting. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO: ( X PLEASE MARK YOUR CHOICES LIKE THIS ON THE PROPOSAL) --- Proposal: Approve the Reorganization Agreement as it relates to the Sunbelt Equity Fund and the Small Cap Growth Stock Fund: ____For ____Against ____Abstain THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE SIGNING SHAREHOLDER(S). IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. The undersigned acknowledges receipt with this Proxy of a copy of the Notice of Special Meeting and the Proxy Statement of the Board of Trustees. Your signature(s) on this Proxy should be exactly as your name(s) appear on this Proxy. If the shares are held jointly, each holder should sign this Proxy. Attorneys-in-fact, executors, administrators, trustees or guardians should indicate the full title and capacity in which they are signing. Dated:________________________, 1999 -------------------------------- Signature of Shareholder -------------------------------- Signature (Joint owners) YOU CAN VOTE BY MAIL, INTERNET, OR IN PERSON. - - TO VOTE BY MAIL, PLEASE DATE, SIGN AND RETURN THIS CARD USING THE ENCLOSED, POSTAGE-PAID ENVELOPE. - - YOU MAY ALSO SUBMIT YOUR VOTE OVER THE INTERNET AT WWW.PROXYVOTE.COM. - - FINALLY, YOU MAY VOTE IN PERSON BY ATTENDING THE MEETING ON DECEMBER 10, 1999. STI CLASSIC FUNDS EMERGING MARKETS EQUITY FUND SPECIAL MEETING OF THE SHAREHOLDERS PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR THE SPECIAL MEETING OF SHAREHOLDERS, DECEMBER 10, 1999 The undersigned, revoking previous proxies with respect to the Shares (defined below), hereby appoints Kevin Robins and Todd Cipperman as proxies and each of them, each with full power of substitution, to vote at the Special Meeting of Shareholders of the Emerging Markets Equity Fund, a series of the STI Classic Funds (the "Trust"), to be held in the offices of SEI Investments, One Freedom Valley Drive, Oaks, Pennsylvania 19456, on Friday, December 10, 1999, at 3:00 p.m. (Eastern Time), and any adjournments or postponements thereof (the "Meeting") all shares of beneficial interest of said Trust that the undersigned would be entitled to vote if personally present at the Meeting ("Shares") on the proposal set forth below with repect to the proposed Agreement and Plan of Reorganization (the "Reorganization Agreement") between the Emerging Markets Equity Fund and the International Equity Fund, a corresponding series of the Trust, and on any other matters properly brought before the Meeting. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO: ( X PLEASE MARK YOUR CHOICE LIKE THIS ON THE PROPOSAL ) --- Proposal: Approve the Reorganization Agreement as it relates to the Emerging Markets Equity Fund and the International Equity Fund: ____For ____Against ____Abstain THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE SIGNING SHAREHOLDER(S). IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. The undersigned acknowledges receipt with this Proxy of a copy of the Notice of Special Meeting and the Proxy Statement of the Board of Trustees. Your signature(s) on this Proxy should be exactly as your name(s) appear on this Proxy. If the shares are held jointly, each holder should sign this Proxy. Attorneys-in-fact, executors, administrators, trustees or guardians should indicate the full title and capacity in which they are signing. Dated:________________________, 1999 -------------------------------- Signature of Shareholder -------------------------------- Signature (Joint owners) YOU CAN VOTE BY MAIL, INTERNET, OR IN PERSON. - - TO VOTE BY MAIL, PLEASE DATE, SIGN AND RETURN THIS CARD USING THE ENCLOSED, POSTAGE-PAID ENVELOPE. - - YOU MAY ALSO SUBMIT YOUR VOTE OVER THE INTERNET AT WWW.PROXYVOTE.COM. - - FINALLY, YOU MAY VOTE IN PERSON BY ATTENDING THE MEETING ON DECEMBER 10, 1999. -----END PRIVACY-ENHANCED MESSAGE-----