<PAGE>
As filed with the Securities and Exchange Commission on September 7, 2000
Registration No.:
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ [_] Post-Effective Amendment No. __
(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
FIRSTAR FUNDS, INC.
Area Code and Telephone Number:
(414) 287-3808
Address of Principal Executive Offices:
Firstar Funds Center
615 East Michigan Street
Milwaukee, Wisconsin 53201-3011
Name and Address of Agent for Service:
W. Bruce McConnel, III
Drinker Biddle & Reath LLP
One Logan Square
18/th/ and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
Copy to:
Suzanne E. Riley, Esq.
Firstar Mutual Fund Services, LLC
615 East Michigan Street, 2nd Floor
Milwaukee, WI 53201
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is required under the Securities Act of 1933 because an indefinite number of
shares in the Registrant have previously been registered on Form N-1A
(Registration Nos. 33-18255; 811-5380) pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended. The Registrant's Rule 24f-2 Notice
for the fiscal year ended October 31, 1999 was filed on January 27, 2000.
Pursuant to Rule 429 under the Securities Act of 1933, this Registration
Statement relates to the shares previously registered on the aforesaid
Registration Statement on Form N-1A.
It is proposed that this filing will become effective on October 7, 2000
pursuant to Rule 488 under the Securities Act of 1933.
<PAGE>
FIRSTAR FUNDS, INC.
FORM N-14
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item No. Heading
------- -------
<S> <C>
Part A - MERCANTILE AND FIRSTAR FUNDS
-------------------------------------
1. Beginning of Registration Statement
and Outside Front Cover Page.............................. Cover Page of Registration Statement; Cross-Reference Sheet; Front
Cover Page of Proxy Statement/Prospectus
2. Beginning and Outside
Back Cover Page........................................... Table of Contents
3. Fee Table, Synopsis Information
and Risk Factors.......................................... Summary -- Proposed Reorganization; Summary-- Overview of the Funds;
Summary -- Federal Income Tax Consequences; Summary -Mercantile and
Firstar Board Consideration; Summary -- Principal Risk Factors;
Summary -- Voting Information; Expenses. Appendix II- Expense
Summaries of Mercantile Funds and Corresponding Firstar Funds
4. Information About the Transaction......................... The Reorganization -- Reasons for the Reorganization; The
Reorganization --Description of the Reorganization Agreement; The
Reorganization -- Contemporaneous Stellar Reorganization; The
Reorganization-- Mercantile Board Consideration; The
Reorganization --Capitalization; The Reorganization -- Federal
Income Tax Considerations.
5. Information About the Registrant.......................... Comparison of Mercantile Funds and Firstar Funds; Additional
Information about Firstar
6. Information About the Company
Being Acquired............................................ Comparison of Mercantile Funds and Firstar Funds; Additional
Information about Firstar
7. Voting Information........................................ Voting Matters
8. Interest of Certain Persons
and Experts............................................... Not Applicable
9. Additional Information Required
for Reoffering by Persons Deemed
to be Underwriters........................................ Not Applicable
Part A - FIRSTAR STELLAR AND FIRSTAR FUNDS
------------------------------------------
1. Beginning of Registration Statement
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
and Outside Front Cover Page.............................. Cover Page of Registration Statement; Cross-Reference Sheet; Front
Cover Page of Proxy Statement/Prospectus
2. Beginning and Outside
Back Cover Page........................................... Table of Contents
3. Fee Table, Synopsis Information
and Risk Factors.......................................... Summary -- Proposed Reorganization; Summary-- Overview of the
Funds; Summary -- Federal Income Tax Consequences; Summary -
Mercantile and Firstar Board Consideration; Summary -- Principal
Risk Factors; Summary -- Voting Information; Summary --Fees and
Expenses. Appendix II - Expense Summaries of Firstar Stellar Funds
and Corresponding Firstar Funds
4. Information About the Transaction......................... The Reorganization -- Reasons for the Reorganization; The
Reorganization --Description of the Reorganization Agreement; The
Reorganization -- Firstar Stellar Board Consideration; The
Reorganization --Capitalization; The Reorganization --Federal
Income Tax Considerations.
5. Information About the Registrant.......................... Comparison of Firstar Stellar Funds and Firstar Funds; Additional
Information about Firstar
6. Information About the Company
Being Acquired............................................ Comparison of Firstar Stellar Funds and Firstar Funds; Additional
Information about Firstar
7. Voting Information........................................ Voting Matters
8. Interest of Certain Persons
and Experts............................................... Not Applicable
9. Additional Information Required
for Reoffering by Persons Deemed
to be Underwriters........................................ Not Applicable
Part B - MERCANTILE AND FIRSTAR FUNDS
-------------------------------------
10. Cover Page.............................................. Cover Page
11. Table of Contents....................................... Table of Contents
12. Additional Information
About the Registrant.................................... Incorporation of Documents by Reference in Statement of Additional
Information
13. Additional Information
About the Company Being
Acquired................................................ Not Applicable
14. Financial Statements.................................... Exhibits to Statement of Additional Information
</TABLE>
-3-
<PAGE>
<TABLE>
Part B - FIRSTAR STELLAR AND FIRSTAR FUNDS
-------------------------------------------
<S> <C>
10. Cover Page.............................................. Cover Page
11. Table of Contents....................................... Table of Contents
12. Additional Information
About the Registrant.................................... Incorporation of Documents by Reference in Statement of Additional
Information
13. Additional Information
About the Company Being
Acquired................................................ Not Applicable
14. Financial Statements.................................... Exhibits to Statement of Additional Information
Part C - MERCANTILE, FIRSTAR STELLAR AND FIRSTAR FUNDS
------------------------------------------------------
Items 15-17. Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C
of this Registration Statement.
</TABLE>
-4-
<PAGE>
Firstar Funds
Funds merger brochure
Revision 1
August 30, 2000
Bigger and brighter
Firstar Funds [logo]
<PAGE>
[gatefold]
Three fund families come together
This summer, the Boards of Directors of Firstar Funds, Inc. and Mercantile
Mutual Funds, Inc. and the Board of Trustees of Firstar Stellar Funds approved a
plan to combine the Three Fund families together to form Firstar Funds. For
shareholders, the proposed consolidation provides several benefit and Firstar
select funds:
. A larger group of funds with a wider spectrum of investment styles to choose
from
. Enhanced research capabilities thanks to pooled resources
. Investors will need to look to only one name when searching for information
on their investments - Firstar Funds
If approved by shareholders of the fund families involved, the reorganization is
scheduled to take place in late November. Under the proposed plan, some of the
funds with similar objectives would be combined with existing Firstar Funds,
while other funds would be reorganized into a Firstar fund specifically created
to continue the fund under the Firstar name.
While the names may change, rest assured that each fund will still be expertly
managed with the same disciplined approach you've come to rely on. The portfolio
managers are the investment professionals from Firstar Investment Research and
Management Company, LLC (FIRMCO), Firstar Bank, N.A.'s Capital Management
department and Mississippi Valley Advisors Inc., which have already been
combined and will become Firstar Capital Management, LLC.
The new Firstar Funds family will offer 36 portfolios with varying investment
objectives and styles. You'll find the entire suggested lineup of funds listed
in the charts featured in this brochure.
2
<PAGE>
[inside 3 panels]
[Please see the attached chart]
Invest in a bright future
For more information about the Firstar Funds family or your investment in a
Firstar Fund, contact your financial professional or call the Firstar Funds
Center at 1-800-677-FUND. You can also e-mail us at [email protected].
3
<PAGE>
Firstar Funds
Proposed fund combinations
The following chart lists all Mercantile, Firstar Stellar (Stellar) and Firstar
fund names, and the new corresponding name under the Firstar Funds family.
Names of funds that would retain their original name have also been included.
<TABLE>
<CAPTION>
. Equity
--------------------------------------------------------------------------------------------------------------------------------
combines with to create
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Growth Equity Firstar Growth Firstar Large Cap Core Equity
--------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth & Income Firstar Growth and Income Firstar Growth & Income
--------------------------------------------------------------------------------------------------------------------------------
Mercantile Equity Index Firstar Equity Index Firstar Equity Index
--------------------------------------------------------------------------------------------------------------------------------
Stellar Capital Appreciation Firstar MidCap Index Firstar Midcap Index
--------------------------------------------------------------------------------------------------------------------------------
Firstar Emerging Growth Mercantile Small Cap Equity Firstar Small Cap Core Equity
. Balanced
--------------------------------------------------------------------------------------------------------------------------------
combines with to create
--------------------------------------------------------------------------------------------------------------------------------
Stellar Fund Firstar Balanced Income Firstar Balanced Income
--------------------------------------------------------------------------------------------------------------------------------
Mercantile Balanced Firstar Balanced Growth Firstar Balanced Growth
. International
--------------------------------------------------------------------------------------------------------------------------------
combines with to create
--------------------------------------------------------------------------------------------------------------------------------
Firstar Core International Mercantile International Equity Firstar International Growth
. Taxable Bond
--------------------------------------------------------------------------------------------------------------------------------
combines with to create
--------------------------------------------------------------------------------------------------------------------------------
Mercantile Bond Index Mercantile Government & Corp. Bond Firstar Aggregate Bond
--------------------------------------------------------------------------------------------------------------------------------
Mercantile Interm. Corp. Bond Firstar Intermediate Bond Market Firstar Intermediate Bond
--------------------------------------------------------------------------------------------------------------------------------
Stellar U.S. Government Income Mercantile U.S. Government Securities Firstar U.S. Government Securities
. Tax-Exempt Bond
--------------------------------------------------------------------------------------------------------------------------------
combines with to create
--------------------------------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Mercantile National Muni. Bond Firstar National Municipal Bond
--------------------------------------------------------------------------------------------------------------------------------
Mercantile Short-Interm. Muni. Firstar Tax-Exempt Interm. Bond Firstar Tax-Exempt Intermediate Bond
. Money Market
--------------------------------------------------------------------------------------------------------------------------------
combine with to create
--------------------------------------------------------------------------------------------------------------------------------
Stellar Treasury and
Firstar U.S. Treasury Money Market Firstar U.S Treasury Money Market
Mercantile Treasury Money Market
--------------------------------------------------------------------------------------------------------------------------------
Stellar Tax-Free Money Market and
Firstar Tax-Exempt Money Market Firstar Tax-Exempt Money Market
Mercantile Tax-Exempt Money Market
--------------------------------------------------------------------------------------------------------------------------------
Mercantile Money Market Firstar Money Market Firstar Money Market
</TABLE>
Current name
------------
Other Funds that will not be combined
The funds listed below are either existing Firstar Funds that will not be
combined with any other portfolios, or Mercantile, Stellar and Firstar Select
Funds that will be reorganized into new Firstar funds that will continue the
funds' operations. Some of there funds may adopt a new Firstar name.
Stellar Relative Value
Stellar growth Equity
Stellar Science & Technology
Stellar International Equity
Stellar Strategic Income
Stellar Ohio Tax-Free Money Market
Mercantile Small Cap Equity Index
Mercantile Equity Income
Mercantile Missouri Tax-Exempt Bond
Firstar MicroCap
Firstar International Equity
Firstar Bond IMMDEX(TM)
Firstar Short-Term Bond Market
Firstar Special Growth
Firstar Institutional Money Market
Firstar U.S. Government Money Market
<PAGE>
Mercantile Mutual Funds, Inc.
Money Market Funds:
Mercantile Treasury Money Market Portfolio
Mercantile Money Market Portfolio
Mercantile Tax-Exempt Money Market Portfolio
Mercantile Conning Money Market Portfolio
Bond Funds:
Mercantile U.S. Government Securities Portfolio
Mercantile Intermediate Corporate Bond Portfolio
Mercantile Bond Index Portfolio
Mercantile Government & Corporate Bond Portfolio
Tax-Exempt Bond Funds:
Mercantile Short-Intermediate Municipal Portfolio
Mercantile Missouri Tax-Exempt Bond Portfolio
Mercantile National Municipal Bond Portfolio
Equity Funds:
Mercantile Balanced Portfolio
Mercantile Equity Income Portfolio
Mercantile Equity Index Portfolio
Mercantile Growth & Income Equity Portfolio
Mercantile Growth Equity Portfolio
Mercantile Small Cap Equity Portfolio
Mercantile Small Cap Equity Index Portfolio
Mercantile International Equity Portfolio
615 East Michigan Street
Milwaukee, WI 53201-3011
October __, 2000
Dear Shareholder:
On behalf of the Board of Directors of Mercantile Mutual Funds, Inc.
("Mercantile"), we are pleased to invite you to a special meeting of
shareholders of the Mercantile Portfolios named above (each a "Mercantile Fund")
to be held at 10:00 a.m. (Eastern time) on November 8, 2000 at the offices of
Mercantile's counsel, Drinker Biddle & Reath LLP, One Logan Square, 18/th/ and
Cherry Streets, Philadelphia, Pennsylvania (the "Special Meeting"). At the
Special Meeting, you will be asked to approve a proposed Agreement and Plan of
Reorganization, dated as of _________________ __, 2000 (the "Reorganization
Agreement"), by and between Mercantile and Firstar Funds, Inc. ("Firstar"),
which contemplates the reorganization of your Mercantile Fund into a
corresponding fund of Firstar (each a "Firstar Fund").
<PAGE>
Background. As you may recall, Mercantile Bancorporation Inc. merged with
Firstar Corporation on September 17, 1999. As a result of that merger,
Mississippi Valley Advisors Inc. ("MVA"), formerly the investment adviser to
Mercantile, became an indirect wholly-owned subsidiary of Firstar Corporation.
On March 1, 2000, Firstar Investment Research & Management Company, LLC
("FIRMCO"), also a wholly-owned subsidiary of Firstar Corporation and investment
adviser to Firstar, acquired all of the assets and liabilities of MVA. As a
result of this acquisition, FIRMCO became the investment adviser to Mercantile.
FIRMCO is also the investment adviser for the Firstar Stellar Funds
("Stellar"). Prior to April 1, 2000, the Capital Management Division of Firstar
Bank, N.A. served as investment adviser to Stellar. As part of an internal
restructuring of the investment advisory function within Firstar Corporation,
the investment management resources of the Capital Management Division of
Firstar Bank, N.A. have been consolidated with those of FIRMCO. In addition, an
affiliate of FIRMCO, Firstar Bank, N.A., serves as the investment adviser to the
Firstar Select Funds ("Select").
Because FIRMCO now manages Firstar, Mercantile and Stellar and its
affiliate manages Select, FIRMCO has decided to combine the assets of Firstar,
Mercantile, Stellar and Select into thirty-six separate Firstar investment
portfolios.
At the upcoming Special Meeting, you will be asked to approve the
reorganization of your Mercantile Fund into a corresponding Firstar Fund (the
"Reorganization"). If shareholder approval is obtained, your Mercantile Fund
will be reorganized into the corresponding Firstar Fund in mid to late November
2000, when your shares in the Mercantile Fund will be exchanged for shares of
equal value of a corresponding Firstar Fund.
MERCANTILE'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE
THE PROPOSED REORGANIZATION.
In considering these matters, you should note:
. The Same or Similar Objectives and Policies
Eleven of the Mercantile Funds (i.e. the Mercantile Treasury Money Market
Portfolio, Mercantile Money Market Portfolio, Mercantile Tax-Exempt Money Market
Portfolio, Mercantile Intermediate Corporate Bond Portfolio, Mercantile Short-
Intermediate Municipal Portfolio, Mercantile Balanced Portfolio, Mercantile
Equity Index Portfolio, Mercantile Growth & Income Equity Portfolio, Mercantile
Growth Equity Portfolio, Mercantile Small Cap Equity Portfolio and Mercantile
International Equity Portfolio) are proposed to be reorganized into existing
Firstar Funds that will have investment objectives and policies following the
Reorganization that are, in general, the same or similar to those of the
corresponding Mercantile Funds.
Four of the Mercantile Funds (i.e. the Mercantile U.S. Government
Securities Portfolio, Mercantile Bond Index Portfolio, Mercantile Government &
Corporate Bond Portfolio and Mercantile National Municipal Bond Portfolio) are
proposed to be reorganized, together with another Mercantile Fund or a Stellar
fund ("Stellar Fund"), into existing Firstar Funds that have
-2-
<PAGE>
not yet commenced operations. Each of these Firstar Funds will continue the
investment policies of one of the two Funds being reorganized into it. Each of
the Mercantile and/or Stellar Funds that are proposed to be reorganized into one
of these Firstar Funds have investment policies that are, in general, similar.
Four of the Mercantile Funds (i.e. the Mercantile Conning Money Market
Portfolio, Mercantile Missouri Tax-Exempt Bond Portfolio, Mercantile Equity
Income Portfolio and Mercantile Small Cap Equity Index Portfolio) are proposed
to be reorganized into newly organized shell Firstar Funds that have been
specifically created for the purpose of the Reorganization. Each of these newly
organized shell Firstar Funds will continue the investment policies of the
Mercantile Fund being reorganized into it.
. Same Value of Shares
The Firstar Fund shares you receive in the Reorganization will have the
same total dollar value as the total dollar value of the Mercantile Fund shares
that you held immediately prior to the Reorganization. The exchange of
Mercantile Fund shares for Firstar Fund shares will be tax-free under federal
tax laws, and no front-end or contingent deferred sales loads will be charged as
a result of the exchange.
. Reasons for the Reorganization
The proposed Reorganization is expected to benefit Mercantile Fund
shareholders by, among other things:
(i) offering a larger and more diverse group of mutual funds to all
shareholders;
(ii) actually or potentially reducing overall expenses by the achievement of
economics of scale associated with a larger asset base;
(iii) offering an opportunity for better investment performance due to an
expanded equity research staff that can focus on the core products available.
(iv) offering distribution channels that will have a better understanding of
the proprietary products offered by Firstar and will be better able to
communicate FIRMCO's investment style to existing and prospective shareholders,
thereby increasing assets in the complex; and
(v) allowing FIRMCO to effect portfolio transactions on more favorable terms.
To see how the Reorganization will affect your Mercantile Fund, please
carefully review the enclosed materials where you will find information on the
expenses, investment policies and services relating to the corresponding Firstar
Funds.
The formal Notice of Special Meeting, a Combined Proxy
Statement/Prospectus and a Proxy Ballot are enclosed. If you own shares in more
than one of the Mercantile Funds named
-3-
<PAGE>
above, more than one Proxy Ballot accompanies these materials. Please be sure to
vote and return each Proxy Ballot.
Whether or not you plan to attend the Special Meeting, you may vote by
proxy in any of the following ways:
1. Internet - Instructions for casting your vote via the Internet can be
--------
found in the enclosed proxy voting materials. The required control
number is printed on your enclosed Proxy Ballot. If this feature is
used, you are giving authorization for another person to execute your
proxy and there is no need to mail the Proxy Ballot.
2. Telephone - Instructions for casting your vote via telephone can be
---------
found in the enclosed proxy voting materials. The toll-free 800
number and required control number are printed on your enclosed Proxy
Ballot. If this feature is used, you are giving authorization for
another person to execute your proxy and there is no need to mail the
Proxy Ballot.
3. By mail - If you vote by mail, please indicate your voting
-------
instructions on the enclosed Proxy Ballot, date and sign the Ballot,
and return it in the envelope provided, which is addressed for your
convenience and needs no postage if mailed in the United States.
Please return your Proxy Ballot(s) or follow the instructions below to vote
on-line or by telephone so that your vote will be counted.
Your vote is important to us regardless of the number of shares that you
own. Please vote by returning your Proxy Ballot(s) today, in the enclosed
postage paid envelope. You also may vote your proxy by a toll-free phone call
or by voting on-line, as indicated in the enclosed materials.
The proposed Reorganization and the reasons for the Mercantile Board of
Directors' unanimous recommendation are discussed in detail in the enclosed
materials, which you should read carefully. If you have any questions about the
Reorganization, please do not hesitate to contact Mercantile toll-free at 1-800-
677-Fund.
We look forward to your attendance at the Special Meeting or receiving your
Proxy Ballot(s) or your on-line or telephone instructions so that your shares
may be voted at the Special Meeting.
Sincerely,
Jerry V. Woodham
Chairman of the Board and President
-4-
<PAGE>
FIRSTAR FUNDS
October __, 2000
Questions & Answers
For Shareholders of Mercantile Mutual Funds, Inc.:
The following questions and answers provide an overview of the proposal to
reorganize your portfolio of Mercantile Mutual Funds, Inc. ("Mercantile") into a
corresponding portfolio offered by Firstar Funds ("Firstar"). We also encourage
you to read the full text of the combined proxy statement/prospectus (the
"Proxy/Prospectus") that follows.
--------------------------------------------------------------------------------
Q: What are Mercantile shareholders being asked to vote upon?
A: Mercantile shareholders are being asked to consider and approve a proposal
to reorganize each of the portfolios offered by Mercantile (each, a "Mercantile
Fund") into a corresponding portfolio of Firstar (each, a "Firstar Fund").
Q. Why has the reorganization of the Mercantile Funds into corresponding
Firstar Funds been recommended?
A: The Board of Directors of Mercantile and the Board of Directors of Firstar
have each determined that the reorganization of each of the Mercantile Funds
into its respective corresponding Firstar Fund is in the best interests of the
respective shareholders of each such Fund. Among the benefits for Mercantile
Fund shareholders considered by the Mercantile Board of Directors were: access
to a larger and more diverse group of mutual funds; access to the expanded
equity research capabilities of Firstar Investment Research & Management
Company, LLC; the potential for individual Firstar Funds to achieve greater
portfolio diversification and engage in investment transactions on potentially
more advantageous terms; spreading relatively fixed costs, such as legal fees,
over a larger asset base; and the ability of Firstar to maintain existing
clients and attract new investors.
Q: What is the anticipated timing of the reorganization?
A: The meeting of shareholders to consider the proposal is scheduled to occur
on November 8, 2000. If all necessary approvals are obtained, the proposed
reorganization will likely take place in mid to late November 2000.
<PAGE>
Q: Who will receive the Proxy/Prospectus material?
A: The Proxy/Prospectus has been mailed to all persons and entities that held
shares of record in a Mercantile Fund on September 15, 2000. Please note that
in some cases record ownership of and/or voting authority over Mercantile Fund
shares may reside with a fiduciary or other agent. In these cases, the
fiduciary or other agent may receive the combined Proxy/Prospectus.
Q: How are the Mercantile Funds proposed to be reorganized?
A: As you may know, Mercantile consists of nineteen separate mutual funds. The
proposed agreement and plan of reorganization for these funds, approved by the
Mercantile Board of Directors, contemplates the reorganization of eleven of the
Mercantile Funds into eleven existing Firstar Funds having the same or similar
investment objectives and policies. Four of the Mercantile Funds will be
reorganized, together with another Mercantile Fund or a fund of the Firstar
Stellar Funds ("Stellar Fund"), into existing Firstar Funds that have not yet
commenced operations. Each of these Firstar Funds will continue the investment
policies of one of the two Funds that are being reorganized into it. Each of
the Mercantile and/or Stellar Funds that will reorganize into the same Firstar
Fund have investment policies that are, in general, similar. The remaining four
Mercantile Funds will be reorganized into four shell Firstar Funds that are
being created to continue the current operations of these Mercantile Funds.
Under the proposed agreement and plan of reorganization, each Mercantile
Fund will be reorganized into the Firstar Fund listed directly opposite such
Mercantile Fund in the table below. Those Mercantile Funds merging into Shell
Firstar Funds are printed in bold text.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Mercantile Fund Firstar Fund
-----------------------------------------------------------------------------------------------
<S> <C>
Treasury Money Market Portfolio U.S. Treasury Money Market Fund*
-----------------------------------------------------------------------------------------------
Money Market Portfolio Money Market Fund
-----------------------------------------------------------------------------------------------
Tax-Exempt Money Market Portfolio Tax-Exempt Money Market Fund
-----------------------------------------------------------------------------------------------
Conning Money Market Portfolio Conning Money Market Fund**
-----------------------------------------------------------------------------------------------
U.S. Government Securities Portfolio U.S. Government Securities Fund**
-----------------------------------------------------------------------------------------------
Intermediate Corporate Bond Portfolio Intermediate Bond Market Fund +
-----------------------------------------------------------------------------------------------
Bond Index Portfolio Aggregate Bond Fund***
-----------------------------------------------------------------------------------------------
Government & Corporate Bond Portfolio Aggregate Bond Fund**
-----------------------------------------------------------------------------------------------
Short-Intermediate Municipal Portfolio Tax-Exempt Intermediate Bond Fund
-----------------------------------------------------------------------------------------------
Missouri Tax-Exempt Bond Portfolio Missouri Tax-Exempt Bond Fund**
-----------------------------------------------------------------------------------------------
National Municipal Bond Portfolio National Municipal Bond Fund**
-----------------------------------------------------------------------------------------------
Balanced Portfolio Balanced Growth Fund
-----------------------------------------------------------------------------------------------
Equity Income Portfolio Equity Income Fund**
-----------------------------------------------------------------------------------------------
Equity Index Portfolio Equity Index Fund
-----------------------------------------------------------------------------------------------
Growth & Income Equity Portfolio Growth & Income Fund
-----------------------------------------------------------------------------------------------
Growth Equity Portfolio Growth Fund +
-----------------------------------------------------------------------------------------------
Small Cap Equity Portfolio Emerging Growth Fund** +
-----------------------------------------------------------------------------------------------
Small Cap Equity Index Portfolio Small Cap Index Fund**
-----------------------------------------------------------------------------------------------
International Equity Portfolio Core International Equity Fund** +
-----------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
* Will continue the investment objectives and policies of a Stellar Fund with
investment objectives and policies that are substantially similar to the
investment objectives and policies of the corresponding Mercantile Fund.
** Will continue the investment policies of the corresponding Mercantile Fund.
*** Will continue the investment policies of the Mercantile Government &
Corporate Bond Portfolio.
+ It is expected that at the time of the Reorganization, the Firstar
Intermediate Bond Market Fund will be renamed the Firstar Intermediate Bond
Fund, the Firstar Growth Fund will be renamed the Firstar Large Cap Core
Equity Fund, the Firstar Emerging Growth Fund will be renamed the Firstar
Small Cap Core Equity Fund and the Firstar Core International Equity Fund
will be renamed the Firstar International Growth Fund.
Please refer to Tables III(A) and III(B) of the accompanying
Proxy/Prospectus for information regarding the specific classes of shares of the
Mercantile Funds and Firstar Funds involved in the Reorganization.
Q: Which class of shares of the Firstar Funds will I receive in the
reorganization?
A: Each Mercantile Fund except the Mercantile Conning Money Market Portfolio
and each Firstar Fund except the Firstar Conning Money Market Portfolio offers
multiple classes of shares to investors. The various classes of Mercantile Fund
shares all represent interests in the same portfolio of securities owned by the
Mercantile Fund or Firstar Fund, but have different expenses and
characteristics, such as distribution and shareholder servicing arrangements,
that are intended to meet the needs of different types of investors. In
general, eligibility to purchase a particular class of Mercantile Fund shares or
Firstar Fund shares turns on whether the investor is characterized as an
"institutional investor" or a "retail investor."
As part of the reorganization, all shareholders of the Mercantile Conning
Money Market Portfolio will receive a single class of shares ("Shares") in the
corresponding Firstar Fund. All shareholders of each of the Mercantile Treasury
Money Market Portfolio, Mercantile Money Market Portfolio and Mercantile Tax-
Exempt Money Market Portfolio will receive the following share classes of its
corresponding Firstar Fund:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Fund and Share Class Firstar Share Class to be Received
-----------------------------------------------------------------------------------------------
<S> <C>
Mercantile Treasury Money Market Portfolio Firstar U.S. Treasury Money Market Fund
-----------------------------------------------------------------------------------------------
Investor A Institutional
-----------------------------------------------------------------------------------------------
Institutional Institutional
-----------------------------------------------------------------------------------------------
Trust Institutional
-----------------------------------------------------------------------------------------------
Trust II Institutional
-----------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE>
<TABLE>
<S> <C>
-----------------------------------------------------------------------------------------------
Mercantile Money Market Portfolio Firstar Money Market Fund
-----------------------------------------------------------------------------------------------
Investor A Retail A
-----------------------------------------------------------------------------------------------
Investor B Retail A
-----------------------------------------------------------------------------------------------
Institutional Retail A
-----------------------------------------------------------------------------------------------
Trust Retail A
-----------------------------------------------------------------------------------------------
Trust II Retail A
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Mercantile Tax-Exempt Money Market Portfolio Firstar Tax-Exempt Money Market Fund
-----------------------------------------------------------------------------------------------
Investor A Retail A
-----------------------------------------------------------------------------------------------
Trust Institutional
-----------------------------------------------------------------------------------------------
Trust II Institutional
-----------------------------------------------------------------------------------------------
</TABLE>
As part of the reorganization, all shareholders of each of the Mercantile
U.S. Government Securities Portfolio, Mercantile Intermediate Corporate Bond
Portfolio, Mercantile Bond Index Portfolio, Mercantile Government & Corporate
Bond Portfolio, Mercantile Short-Intermediate Municipal Portfolio, Mercantile
Missouri Tax-Exempt Bond Portfolio, Mercantile National Municipal Bond
Portfolio, Mercantile Balanced Portfolio, Mercantile Equity Income Portfolio,
Mercantile Equity Index Portfolio, Mercantile Growth & Income Equity Portfolio,
Mercantile Growth Equity Portfolio, Mercantile Small Cap Equity Portfolio,
Mercantile Small Cap Equity Index Portfolio and Mercantile International Equity
Portfolio will receive the following share classes of its corresponding Firstar
Fund:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Mercantile Share Class Firstar Share Class to be Received
-----------------------------------------------------------------------------------------------
<S> <C>
Investor A Retail A
-----------------------------------------------------------------------------------------------
Investor B Retail B
-----------------------------------------------------------------------------------------------
Institutional Class Y
-----------------------------------------------------------------------------------------------
Trust Institutional
-----------------------------------------------------------------------------------------------
</TABLE>
Q: What are the costs and federal tax implications to shareholders in
connection with the proposed reorganization?
A: In general, the costs of the reorganization will not be borne by Mercantile
Fund shareholders. No sales charge will be imposed on the shares of the Firstar
Funds issued to you in the reorganization, which means that the aggregate value
of the Firstar Fund shares issued to you will be equal to the aggregate value of
the Mercantile Fund shares that you own immediately prior to the reorganization.
In addition, the exchange of Mercantile Fund shares for Firstar Fund shares will
be tax-free under federal tax laws. However, the sale of securities by a
Mercantile Fund, prior to the reorganization, whether in the ordinary course of
business or in anticipation of the reorganization, could increase the amount of
the taxable capital gains distribution made prior to the reorganization. See
"The Reorganization - Federal Income Tax Considerations" for additional
information.
-4-
<PAGE>
Mercantile Mutual Funds, Inc.
Money Market Funds:
Mercantile Treasury Money Market Portfolio
Mercantile Money Market Portfolio
Mercantile Tax-Exempt Money Market Portfolio
Mercantile Conning Money Market Portfolio
Bond Funds:
Mercantile U.S. Government Securities Portfolio
Mercantile Intermediate Corporate Bond Portfolio
Mercantile Bond Index Portfolio
Mercantile Government & Corporate Bond Portfolio
Tax-Exempt Bond Funds:
Mercantile Short-Intermediate Municipal Portfolio
Mercantile Missouri Tax-Exempt Bond Portfolio
Mercantile National Municipal Bond Portfolio
Equity Funds:
Mercantile Balanced Portfolio
Mercantile Equity Income Portfolio
Mercantile Equity Index Portfolio
Mercantile Growth & Income Equity Portfolio
Mercantile Growth Equity Portfolio
Mercantile Small Cap Equity Portfolio
Mercantile Small Cap Equity Index Portfolio
Mercantile International Equity Portfolio
615 East Michigan Street
Milwaukee, WI 53201-3011
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On November 8, 2000
To Shareholders of Mercantile Mutual Funds, Inc.:
NOTICE IS GIVEN THAT a special meeting of the shareholders (the "Special
Meeting") of each of the Portfolios of Mercantile Mutual Funds, Inc. named above
(each a "Mercantile Fund" and together, the "Mercantile Funds"), each of which
is a separate series of Mercantile Mutual Funds, Inc. ("Mercantile"), will be
held at 10:00 a.m. (Eastern time), on November 8, 2000, at the offices of
Mercantile's counsel, Drinker Biddle & Reath LLP, One Logan Square, 18/th/ and
Cherry Streets, Philadelphia, Pennsylvania, for the purpose of considering and
voting upon:
<PAGE>
ITEM 1. A proposal to approve an Agreement and Plan of Reorganization by
and between Mercantile and Firstar Funds, Inc. ("Firstar"), which provides
for and contemplates: (a) the transfer of substantially all of the assets
and liabilities of each Mercantile Fund to a corresponding investment
portfolio of Firstar (each a "Firstar Fund") in exchange for shares of
designated classes of the corresponding Firstar Fund of equal value; (b)
the distribution of the shares of designated classes of the corresponding
Firstar Fund to the shareholders of each Mercantile Fund in liquidation of
each of the Mercantile Funds; (c) the transfer of substantially all of the
assets and liabilities of Mercantile; and (d) the dissolution of Mercantile
under state law and the deregistration of Mercantile under the Investment
Company Act of 1940, as amended.
ITEM 2. Such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
Item 1 is described in the attached Combined Proxy Statement/Prospectus.
Your Directors unanimously recommend that you vote in favor of the proposal.
Shareholders of record as of the close of business on September 15, 2000
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
You are requested to mark, date, sign and return promptly in the enclosed
envelope each accompanying Proxy Ballot that is being solicited by the
Mercantile Board of Directors. This is important to ensure a quorum at the
Special Meeting. You also may return proxies by: 1) touch-tone telephone
voting or 2) voting on-line. Proxies may be revoked at any time before they are
exercised by submitting to Mercantile a written notice of revocation or a
subsequently executed proxy or by attending the Special Meeting and voting in
person.
By Order of the Board of Directors
Jerry V. Woodham
Chairman of the Board and President
We need your proxy vote immediately. You may think that your vote is not
important, but it is vital. By law, the Special Meeting will have to be
adjourned without conducting any business if less than a majority of the shares
eligible to vote are represented. In that event, Mercantile would continue to
solicit votes in an attempt to achieve a quorum. Your vote could be critical in
allowing Mercantile to hold the Special Meeting as scheduled, so please return
your Proxy Ballot(s) immediately or vote on-line or by telephone.
-2-
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
October __, 2000
MERCANTILE MUTUAL FUNDS, INC.
615 East Michigan Street
Milwaukee, WI 53201-3011
1-800-551-3731
FIRSTAR FUNDS, INC.
615 East Michigan Street
Milwaukee, WI 53201-3011
1-800-228-1024
This combined proxy statement/prospectus ("Proxy/Prospectus") is being
sent to shareholders of the Mercantile Treasury Money Market Portfolio,
Mercantile Money Market Portfolio, Mercantile Tax-Exempt Money Market Portfolio,
Mercantile Conning Money Market Portfolio, Mercantile U.S. Government Securities
Portfolio, Mercantile Intermediate Corporate Bond Portfolio, Mercantile Bond
Index Portfolio, Mercantile Government & Corporate Bond Portfolio, Mercantile
Short-Intermediate Municipal Portfolio, Mercantile Missouri Tax-Exempt Bond
Portfolio, Mercantile National Municipal Bond Portfolio, Mercantile Balanced
Portfolio, Mercantile Equity Income Portfolio, Mercantile Equity Index
Portfolio, Mercantile Growth & Income Equity Portfolio, Mercantile Growth Equity
Portfolio, Mercantile Small Cap Equity Portfolio, Mercantile Small Cap Equity
Index Portfolio and Mercantile International Equity Portfolio (each a
"Mercantile Fund" and collectively the "Mercantile Funds"). The Board of
Directors of Mercantile Mutual Funds, Inc. ("Mercantile") has called a Special
Meeting of Shareholders (the "Special Meeting") to be held at the offices of
Mercantile's counsel, Drinker Biddle & Reath LLP, One Logan Square, 18th and
Cherry Streets, Philadelphia, Pennsylvania, on November 8, 2000 at 10:00 a.m.
Eastern time.
At the Special Meeting, shareholders will be asked:
. To approve a proposed Agreement and Plan of Reorganization dated as of
__________, 2000 (the "Reorganization Agreement"), by and between
Mercantile and Firstar Funds, Inc. ("Firstar"), which provides for and
contemplates (a) the transfer of substantially all of the assets and
liabilities of each Mercantile Fund to a corresponding investment portfolio
of Firstar (each a "Firstar Fund" and collectively, the "Firstar Funds") in
exchange for shares of designated classes of the corresponding Firstar Fund
of equal value; (b) the distribution of the shares of designated classes of
the corresponding Firstar Fund to shareholders of each Mercantile Fund in
liquidation of each of the Mercantile Funds; (c) the transfer of
substantially all of the assets and liabilities of Mercantile; and (d) the
dissolution of Mercantile under state law and the deregistration of
Mercantile under the Investment Company Act of 1940, as amended (the "1940
Act").
-1-
<PAGE>
The Reorganization Agreement, the form of which is attached as Appendix I
to this Proxy/Prospectus, provides for the transfer of substantially all of the
assets and liabilities of each Mercantile Fund to a corresponding Firstar Fund
in exchange for Retail A Shares, Retail B Shares, Institutional Shares, Class Y
Shares or Shares, as applicable, of the corresponding Firstar Fund of equal
value. Mercantile and Firstar are both registered open-end management investment
companies (mutual funds). As a result of the reorganization, shareholders of the
Mercantile Funds will become shareholders of the Firstar Funds (the Mercantile
Funds and Firstar Funds are sometimes referred to as the "Funds").
The transactions contemplated by the Reorganization Agreement are referred
to collectively as the "Reorganization."
If the Reorganization Agreement is approved and the transactions
contemplated thereby are consummated, Mercantile will transfer all of its assets
and liabilities, deregister as a registered investment company and dissolve
under Maryland law.
This Proxy/Prospectus sets forth concisely the information that a
Mercantile Fund shareholder should know before voting and investing, and should
be retained for future reference. It is both Mercantile's proxy statement for
the Special Meeting and a prospectus for the Firstar U.S. Treasury Money Market
Fund, Firstar Money Market Fund, Firstar Tax-Exempt Money Market Fund, Firstar
U.S. Government Securities Fund, Firstar Intermediate Bond Market Fund, Firstar
Aggregate Bond Fund, Firstar Tax-Exempt Intermediate Bond Fund, Firstar National
Municipal Bond Fund, Firstar Balanced Growth Fund, Firstar Equity Index Fund,
Firstar Growth & Income Fund, Firstar Growth Fund, Firstar Emerging Growth Fund
and Firstar Core International Equity Fund (the "Existing Firstar Funds"). It is
not a prospectus for the Firstar Conning Money Market Fund, Firstar Missouri
Tax-Exempt Bond Fund, Firstar Equity Income Fund and Firstar Small Cap Index
Fund (the "Shell Firstar Funds") because these funds were created to continue
the business of their corresponding Mercantile Funds. These four Shell Firstar
Funds will have substantially the same investment objectives, policies and
restrictions as its respective corresponding Mercantile Fund.
Additional information is set forth in the Statement of Additional
Information dated October __, 2000 relating to this Proxy/Prospectus and in the
prospectuses dated March 31, 2000, as supplemented, for the designated share
classes of the Mercantile Funds, which are incorporated herein by reference.
Each of these documents is on file with the Securities and Exchange Commission
(the "SEC"), and is available without charge by calling or writing Mercantile at
the telephone number or address stated above. The information contained in the
Existing Firstar Funds' current prospectuses (i) dated March 1, 2000 with
respect to Retail A Shares of the Firstar U.S. Treasury Money Market Fund,
Firstar Money Market Fund and Firstar Tax-Exempt Money Market Fund (the "Firstar
Money Market Funds") and Retail A, Retail B and Institutional Shares of the
Firstar Intermediate Bond Market Fund, Firstar Tax-Exempt Intermediate Bond
Fund, Firstar Balanced Growth Fund, Firstar Equity Index Fund, Firstar Growth &
Income Fund, Firstar Growth Fund, Firstar Emerging Growth Fund and Firstar Core
International Equity Fund (the "Firstar Non-Money Market Funds"), (ii)
_________, 2000 with respect to the Firstar U.S. Government Securities Fund,
Firstar Aggregate Bond Fund and Firstar National Municipal Bond Fund, (iii)
dated ________, 2000 with respect to Institutional Shares of
-2-
<PAGE>
the Firstar Money Market Funds and (iv) ________, 2000 with respect to Class Y
Shares of the Firstar Non-Money Market Funds also is incorporated by reference
into this Proxy/Prospectus. In addition, a current prospectus for the designated
share classes of the Existing Firstar Funds accompanies this Proxy/Prospectus.
The Annual Report for the year ended October 31, 1999 and the Semi-Annual Report
for the six-month period ended April 30, 2000 for the Existing Firstar Funds
(other than the Firstar U.S. Government Securities Fund, Firstar Aggregate Bond
Fund and Firstar National Municipal Bond Fund, which had not commenced
operations as of the date of this Proxy/Prospectus) are available without charge
by calling or writing Firstar at the telephone number or address stated above.
Each of these documents is also available on the SEC's website at www.sec.gov.
This Proxy/Prospectus is expected to be first sent to shareholders on or
about October 9, 2000.
The securities offered hereby have not been approved or disapproved by the
SEC or any state securities commission nor has the SEC or any state securities
commission passed upon the accuracy or adequacy of this Proxy/Prospectus. Any
representation to the contrary is a criminal offense.
Shares of Mercantile and Firstar are not deposits or obligations of, or
guaranteed or endorsed by, Firstar Corporation, Firstar Investment Research &
Management Company, LLC or any of their affiliates or any other bank. Such
shares are not insured by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency. Mutual
fund shares involve certain investment risks, including the possible loss of
principal. The distributor of Mercantile is BISYS Fund Services Limited
Partnership. The distributor of Firstar is Quasar Distributors, LLC.
Money market funds seek to maintain a net asset value of $1.00 per share.
An investment in a money market fund is neither insured nor guaranteed by the
U.S. Government. There can be no assurance that a money market fund will be able
to maintain a stable net asset value of $1.00 per share.
-3-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
FEE TABLES.......................................................................... 1
Table I-A................................................................. 1
Table I-B................................................................. 5
SUMMARY............................................................................. 9
Proposed Reorganization................................................... 9
Overview of the Funds..................................................... 11
Table II.................................................................. 14
Federal Income Tax Consequences........................................... 15
Mercantile and Firstar Board Consideration................................ 16
Principal Risk Factors.................................................... 16
Voting Information........................................................ 26
THE REORGANIZATION.................................................................. 26
Reasons for the Reorganization............................................ 26
Description of the Reorganization Agreement............................... 27
Table III(A).............................................................. 28
Table III(B).............................................................. 32
Mercantile Board Consideration............................................ 34
Capitalization............................................................ 35
Table IV.................................................................. 37
Federal Income Tax Consideration.......................................... 57
COMPARISON OF MERCANTILE FUNDS AND FIRSTAR FUNDS.................................... 58
Investment Objectives and Policies........................................ 58
Investment Advisory Services.............................................. 60
Table V................................................................... 61
Other Service Providers for the Mercantile Funds Firstar Funds............ 62
Sales Loads, Distribution and Shareholder Servicing Arrangements
for Mercantile.................................................... 62
Sales Load, Distribution and Shareholder Servicing Arrangements
for Firstar....................................................... 65
Administration Agreements................................................. 67
Shareholder Transactions and Policies..................................... 67
Fees and Expenses......................................................... 68
Performance............................................................... 68
Share Structure........................................................... 68
VOTING MATTERS...................................................................... 69
General Information....................................................... 69
Shareholder and Board Approvals........................................... 72
Principal Shareholders.................................................... 73
Table VI(A)............................................................... 73
Table VI(B)............................................................... 74
Table VI(C)............................................................... 74
Quorum.................................................................... 75
Annual Meetings and Shareholder Meetings.................................. 75
ADDITIONAL INFORMATION ABOUT FIRSTAR................................................ 76
ADDITIONAL INFORMATION ABOUT MERCANTILE............................................. 76
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
FINANCIAL STATEMENTS...................................................... 77
OTHER BUSINESS............................................................ 77
SHAREHOLDER INQUIRIES..................................................... 78
APPENDICES I FORM OF AGREEMENT AND PLAN OF REORGANIZATION I-1
II EXPENSE SUMMARIES OF THE MERCANTILE
FUNDS AND CORRESPONDING FIRSTAR FUNDS II-1
III INVESTMENT OBJECTIVES, LIMITATIONS AND
CERTAIN SIGNIFICANT INVESTMENT POLICIES
OF THE REORGANIZING MERCANTILE FUNDS
AND CORRESPONDING FIRSTAR FUNDS III-1
IV SHAREHOLDER TRANSACTIONS AND
SERVICES OF THE FIRSTAR FUNDS AND THE
CORRESPONDING MERCANTILE FUNDS IV-1
V PERFORMANCE COMPARISONS OF THE
OPERATING FIRSTAR FUNDS AND THEIR
CORRESPONDING MERCANTILE FUNDS V-1
VI MANAGEMENT DISCUSSION OF FIRSTAR
FUND PERFORMANCE VI-1
</TABLE>
-ii-
<PAGE>
FEE TABLES
Table I-A
The following tables show which of the Mercantile Funds and classes are
projected to experience higher, lower or the same annualized per share total
operating expense ratios, after fee waivers and/or reimbursements, following the
-----
Reorganization based upon the fee arrangements and commitments that will be in
place upon consummation of the Reorganization. Firstar Investment Research &
Management Company, LLC ("FIRMCO") has committed to waive fees and reimburse
expenses as needed to ensure that until October 31, 2001 the total operating
expense ratios for each class of shares of each Mercantile Fund will not exceed
the pro forma after waiver expense ratios in Table I-B. These fee waivers and
expense reimbursements may be terminated at any time on or after October 31,
2001.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Fund and Class Higher Expenses Lower Expenses Same Expenses
-------------- after the after the after the
Reorganization Reorganization Reorganization
-------------- -------------- ---------------
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Treasury Money Market
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
Trust II Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Money Market Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
Trust II Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Tax-Exempt Money Market
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
Trust II Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Conning Money Market
Portfolio
--------------------------------------------------------------------------------------------------
Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Fund and Class Higher Expenses Lower Expenses Same Expenses
-------------- after the after the after the
Reorganization Reorganization Reorganization
-------------- -------------- --------------
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile U.S. Government Securities
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Intermediate Corporate Bond
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Bond Index Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Government & Corporate Bond
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Short-Intermediate
Municipal Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Missouri Tax-Exempt Bond
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile National Municipal Bond
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Fund and Class Higher Expenses Lower Expenses Same Expenses
-------------- after the after the after the
Reorganization Reorganization Reorganization
-------------- -------------- --------------
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Balanced Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Equity Income Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Equity Index Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Growth & Income Equity
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Growth Equity Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Fund and Class Higher Expenses Lower Expenses Same Expenses
-------------- after the after the after the
Reorganization Reorganization Reorganization
-------------- -------------- --------------
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Small Cap Equity Index
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mercantile International Equity
Portfolio
--------------------------------------------------------------------------------------------------
Investor A Shares X
--------------------------------------------------------------------------------------------------
Investor B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
Trust Shares X
--------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
Table I-B
The following table shows (i) the current annualized total expense ratio as
of April 30, 2000 of each of the Mercantile Funds, before and after fee waivers
and/or expense reimbursements; (ii) the annualized total expense ratio of each
of the Existing Firstar Funds (other than the Firstar U.S. Government Securities
Fund, Firstar Aggregate Bond Fund and Firstar National Municipal Bond Fund,
Institutional Shares of the Firstar U.S. Treasury Money Market Fund and the
Firstar Tax-Exempt Money Market Fund and Class Y Shares of the Firstar
Intermediate Bond Market Fund, Firstar Balanced Growth Fund, Firstar Equity
Index Fund, Firstar Growth & Income Fund, Firstar Growth Fund, Firstar Emerging
Growth Fund and Firstar Core International Equity Fund, which had not commenced
operations as of the date of this Proxy/Prospectus), before and after fee
waivers, restated to reflect the expenses each Fund expects to incur during the
current fiscal year; and (iii) the pro forma annualized total expense ratio of
the Firstar U.S. Government Securities Fund, Firstar Aggregate Bond Fund,
Firstar National Municipal Bond Fund and each of the Shell Firstar Funds or the
combined portfolios consisting of a Mercantile Fund and its corresponding
Firstar Fund, as the case may be, before and after fee waivers, as of April 30,
2000, based upon the fee arrangements and commitments that will be in place upon
consummation of the reorganization of the Mercantile Funds into corresponding
Firstar Funds. Detailed pro forma expense information for each proposed
reorganization is included in Appendix II.
Total Expense Information
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Total Total Pro Forma
Operating Operating Total Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Mercantile Fund/ Before/After Firstar Fund/ Before/After Share Class Post- Before/After
Share Class Waivers Share Class Waivers Reorganization Waivers
----------- ------- ----------- ------- -------------- -------
-----------------------------------------------------------------------------------------------------------------------------------
Money Market Funds:
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Treasury Money Firstar U.S. Treasury Firstar U.S. Treasury
Market Portfolio Money Market Fund Money Market Fund
Investor A Shares 0.96%/0.81% Institutional Shares n/a Institutional Shares 0.83%/0.79%
Institutional Shares 0.96%/0.81% Institutional Shares n/a Institutional Shares 0.83%/0.79%
Trust Shares 0.96%/0.81% Institutional Shares n/a Institutional Shares 0.83%/0.79%
Trust II Shares 0.71%/0.56% Institutional Shares n/a Institutional Shares 0.83%/0.79%
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Firstar Firstar
Money Market Portfolio Money Market Fund Money Market Fund
Investor A Shares 0.95%/0.80% Retail A Shares 1.54%/0.75% Retail A Shares 1.26%/0.79%
Investor B Shares 1.70%/1.55% Retail A Shares 1.54%/0.75% Retail A Shares 1.26%/0.79%
Institutional Shares 0.95%/0.80% Retail A Shares 1.54%/0.75% Retail A Shares 1.26%/0.79%
Trust Shares 0.95%/0.80% Retail A Shares 1.54%/0.75% Retail A Shares 1.26%/0.79%
Trust II Shares 0.70%/0.55% Retail A Shares 1.54%/0.75% Retail A Shares 1.26%/0.79%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Total Total Pro Forma
Operating Operating Total Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Mercantile Fund/ Before/After Firstar Fund/ Before/After Share Class Post- Before/After
Share Class Waivers Share Class Waivers Reorganization Waivers
----------- ------- ----------- ------- -------------- -------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Tax-Exempt Firstar Tax-Exempt Firstar Tax-Exempt
Money Market Portfolio Money Market Fund Money Market Fund
Investor A Shares 0.84%/0.79% Retail A Shares 1.22%/0.72% Retail A Shares 1.18%/0.79%
Trust Shares 0.84%/0.79% Institutional Shares n/a Institutional Shares 0.93%/0.79%
Trust II Shares 0.59%/0.54% Institutional Shares n/a Institutional Shares 0.93%/0.79%
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Conning Money Firstar Conning Money Firstar Conning Money
Market Portfolio Market Fund Market Fund (shell)
(shell)
Shares 1.47%/0.99% Shares n/a Shares 1.37%/0.99%
------------------------------------------------------------------------------------------------------------------------------------
Bond Funds:
------------------------------------------------------------------------------------------------------------------------------------
Mercantile U. S. Government Firstar U. S. Government Firstar U. S. Government
Securities Portfolio Securities Fund Securities Fund
Investor A Shares 1.08%/0.98% Retail A Shares n/a Retail A Shares 1.08%/0.98%
Investor B Shares 1.78%/1.68% Retail B Shares n/a Retail B Shares 1.83%/1.73%
Institutional Shares 1.08%/0.98% Class Y Shares n/a Class Y Shares 1.08%/0.98%
Trust Shares 1.08%/0.68% Institutional Shares n/a Institutional Shares 0.83%/0.73%
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Intermediate Firstar Intermediate Firstar Intermediate
Corporate Bond Portfolio Bond Market Fund Bond Market Fund
Investor A Shares 1.19%/1.09% Retail A Shares 0.95%/0.82% Retail A Shares 0.95%/0.85%
Institutional Shares 1.19%/1.09% Class Y Shares n/a Class Y Shares 0.95%/0.85%
Trust Shares 1.19%/0.79% Institutional Shares 0.70%/0.57% Institutional Shares 0.70%/0.60%
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Bond Index Firstar Aggregate Firstar Aggregate
Portfolio Bond Fund Bond Fund
Investor A Shares 0.93%/0.83% Retail A Shares n/a Retail A Shares 0.99%/0.93%
Institutional Shares 0.93%/0.83% Class Y Shares n/a Class Y Shares 0.99%/0.93%
Trust Shares 0.93%/0.53% Institutional Shares n/a Institutional Shares 0.74%/0.68%
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Government Firstar Aggregate Firstar Aggregate
& Corporate Bond Bond Fund Bond Fund
Portfolio
Investor A Shares 1.07%/0.97% Retail A Shares n/a Retail A Shares 0.99%/0.93%
Investor B Shares 1.77%/1.67% Retail B Shares n/a Retail B Shares 1.74%/1.68%
Institutional Shares 1.07%/0.97% Class Y Shares n/a Class Y Shares 0.99%/0.93%
Trust Shares 1.07%/0.67% Institutional Shares n/a Institutional Shares 0.74%/0.68%
------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Bond Funds:
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Short- Firstar Tax-Exempt Firstar Tax-Exempt
Intermediate Municipal Intermediate Bond Intermediate Bond
Portfolio Fund Fund
Investor A Shares 1.17%/1.02% Retail A Shares 1.11%/0.92% Retail A Shares 1.11%/1.00%
Trust Shares 1.17%/0.77% Institutional Shares 0.86%/0.67% Institutional Shares 0.86%/0.75%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Fund/ Total Corresponding Total Combined Fund/ Pro Forma
Share Class Operating Firstar Fund/ Operating Share Class Post- Total Operating
-----------
Expenses Share Class Expenses Reorganization Expenses
----------- --------------
Before/After Before/After Before/After
Waivers Waivers Waivers
------- ------- -------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Missouri Firstar Missouri Firstar Missouri
Tax-Exempt Bond Tax-Exempt Bond Tax-Exempt Bond Fund
Portfolio Fund (shell) (shell)
Investor A Shares 1.06%/0.86% Retail A Shares n/a Retail A Shares 1.22%/0.97%
Investor B Shares 1.76%/1.66% Retail B Shares n/a Retail B Shares 1.72%/1.72%
Trust Shares 1.06%/0.66% Institutional Shares n/a Institutional Shares 0.72%/0.72%
----------------------------------------------------------------------------------------------------------------------------------
Mercantile National Firstar National
Municipal Bond Municipal Bond Firstar National
Portfolio Fund Municipal Bond Fund
Investor A Shares 1.16%/0.96% Retail A Shares n/a Retail A Shares 1.01%/1.01%
Investor B Shares 1.86%/1.76% Retail B Shares n/a Retail B Shares 1.76%/1.76%
Trust Shares 1.16%/0.76% Institutional Shares n/a Institutional Shares 0.76%/0.76%
----------------------------------------------------------------------------------------------------------------------------------
Stock Funds:
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Balanced Firstar Balanced Firstar Balanced
Portfolio Growth Fund Growth Fund
Investor A Shares 1.38%/1.28% Retail A Shares 1.27%/1.22% Retail A Shares 1.27%/1.22%
Investor B Shares 2.08%/1.98% Retail B Shares 2.02%/1.97% Retail B Shares 2.02%/1.97%
Institutional Shares 1.38%/1.28% Class Y Shares n/a Class Y Shares 1.27%/1.22%
Trust Shares 1.38%/0.98% Institutional Shares 1.02%/0.97% Institutional Shares 1.02%/0.97%
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Equity Firstar Equity Firstar Equity Income
Income Portfolio Income Fund (shell) Fund (shell)
Investor A Shares 1.38%/1.28% Retail A Shares n/a Retail A Shares 1.28%/1.25%
Investor B Shares 2.08%/1.98% Retail B Shares n/a Retail B Shares 2.03%/2.00%
Institutional Shares 1.38%/1.28% Class Y Shares n/a Class Y Shares 1.28%/1.25%
Trust Shares 1.38%/0.98% Institutional Shares n/a Institutional Shares 1.03%/1.00%
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Equity Index Firstar Equity Index Firstar Equity Index
Portfolio Fund Fund
Investor A Shares 0.95%/0.85% Retail A Shares 0.68%/0.62% Retail A Shares 0.67%/0.62%
Institutional Shares 0.95%/0.85% Class Y Shares n/a Class Y Shares 0.67%/0.62%
Trust Shares 0.95%/0.55% Institutional Shares 0.43%/0.37% Institutional Shares 0.42%/0.37%
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth & Firstar Growth & Firstar Growth &
Income Equity Portfolio Income Fund Income Fund
Investor A Shares 1.14%/1.04% Retail A Shares 1.19%/1.19% Retail A Shares 1.19%/1.19%
Investor B Shares 1.84%/1.74% Retail B Shares 1.94%/1.94% Retail B Shares 1.94%/1.94%
Institutional Shares 1.14%/1.04% Class Y Shares n/a Class Y Shares 1.19%/1.19%
Trust Shares 1.14%/0.74% Institutional Shares 0.94%/0.94% Institutional Shares 0.94%/0.94%
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth Firstar Growth Firstar Growth
Equity Portfolio Fund Fund
Investor A Shares 1.37%/1.27% Retail A Shares 1.20%/1.20% Retail A Shares 1.19%/1.19%
Investor B Shares 2.07%/1.97% Retail B Shares 1.95%/1.95% Retail B Shares 1.94%/1.94%
Institutional Shares 1.37%/1.27% Class Y Shares n/a Class Y Shares 1.19%/1.19%
Trust Shares 1.37%/0.97% Institutional Shares 0.95%/0.95% Institutional Shares 0.94%/0.94%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Fund/ Total Corresponding Total Combined Fund/ Pro Forma
Share Class Operating Firstar Fund/ Operating Share Class Post- Total Operating
-----------
Expenses Share Class Expenses Reorganization Expenses
----------- --------------
Before/After Before/After Before/After
Waivers Waivers Waivers
------- ------- -------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Small Cap Firstar Emerging Firstar Emerging
Equity Portfolio Growth Fund Growth Fund
Investor A Shares 1.36%/1.26% Retail A Shares 1.31%/1.31% Retail A Shares 1.23%/1.21%
Investor B Shares 2.06%/1.96% Retail B Shares 2.06%/2.06% Retail B Shares 1.98%/1.96%
Institutional Shares 1.36%/1.26% Class Y Shares n/a Class Y Shares 1.23%/1.21%
Trust Shares 1.36%/0.96% Institutional Shares 1.06%/1.06% Institutional Shares 0.98%/0.96%
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Firstar Small Cap Firstar Small Cap
Equity Index Portfolio Index Fund (shell) Index Fund (shell)
Investor A Shares 1.08%/0.98% Retail A Shares n/a Retail A Shares 0.99%/0.93%
Institutional Shares 1.08%/0.98% Class Y Shares n/a Class Y Shares 0.99%/0.93%
Trust Shares 1.08%/0.68% Institutional Shares n/a Institutional Shares 0.74%/0.68%
----------------------------------------------------------------------------------------------------------------------------------
Mercantile International Firstar Core Firstar Core
Equity Portfolio International Equity International
Fund Equity Fund
Investor A Shares 1.72%/1.56% Retail A Shares 2.37%/1.70% Retail A Shares 1.82%/1.51%
Investor B Shares 2.42%/2.26% Retail B Shares 2.87%/2.45% Retail B Shares 2.32%/2.26%
Institutional Shares 1.72%/1.56% Class Y Shares n/a Class Y Shares 1.57%/1.51%
Trust Shares 1.72%/1.26% Institutional Shares 1.87%/1.45% Institutional Shares 1.32%/1.26%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
SUMMARY
The following is a summary of certain information relating to the proposed
Reorganization between Firstar and Mercantile. More complete information is
contained elsewhere in this Proxy/Prospectus, the Prospectuses and Statements of
Additional Information of Firstar and Mercantile, and the Appendices attached
hereto.
Proposed Reorganization. The Reorganization Agreement provides for and
contemplates: (1) the transfer of substantially all of the assets and
liabilities of each Mercantile Fund to a corresponding investment portfolio
offered by Firstar (each, a "Corresponding Firstar Fund"), in exchange for
shares of the designated classes of such Corresponding Firstar Fund of equal
value (such shares of the designated classes of such Corresponding Firstar Fund,
the "Firstar Fund Shares"); (2) the distribution of the Firstar Fund Shares to
the shareholders of the Mercantile Funds in liquidation of each of the
Mercantile Funds; (3) the transfer of substantially all of the assets and
liabilities of Mercantile; and (4) the deregistration under the 1940 Act and the
dissolution under state law of Mercantile. It is anticipated that the
Reorganization will take place in two stages, with fifteen of the Mercantile
Funds first transferring their respective assets and liabilities to fourteen
corresponding Existing Firstar Funds with the same or similar investment
objectives and policies in exchange for the Firstar Fund Shares issued by such
corresponding Existing Firstar Funds, and a week later, the remaining four
Mercantile Funds transferring their respective assets and liabilities to four
Shell Firstar Funds organized for the purpose of acquiring the assets and
liabilities, and then continuing the business, of such Mercantile Fund, in
exchange for the Firstar Fund Shares issued by such corresponding Shell Firstar
Funds. The liquidation of each Mercantile Fund, and the distribution of the
Firstar Fund Shares to the respective shareholders of such Mercantile Fund,
shall occur immediately after the receipt by such Mercantile Fund of all of the
Firstar Fund Shares to be received by such Mercantile Fund in the
Reorganization. The Reorganization is subject to a number of conditions,
including approval by the shareholders of each Mercantile Fund.
As a result of the proposed Reorganization, each Mercantile Fund
shareholder will become a shareholder of its Corresponding Firstar Fund and will
hold, immediately after the Reorganization, Firstar Fund Shares in such
Corresponding Firstar Fund having a total dollar value equal to the total dollar
value of the shares such shareholder held in the Mercantile Fund immediately
prior to the effectiveness of the Reorganization. The exchange of shares in the
Reorganization will be tax-free under federal tax laws and shareholders of the
Firstar Funds and the Mercantile Funds will not pay any sales charge as a result
of the exchange of the shares in the Reorganization.
Shareholders of the Mercantile Conning Money Market Portfolio will receive
Shares of the Corresponding Firstar Fund. Shareholders of each of the
Mercantile Treasury Money Market Portfolio, Mercantile Money Market Portfolio
and Mercantile Tax-Exempt Money Market Portfolio will receive the following
share classes of its Corresponding Firstar Fund:
-9-
<PAGE>
<TABLE>
<CAPTION>
Fund and Share Class Firstar Share Class to be Received
-----------------------------------------------------------------------------------------------
<S> <C>
Mercantile Treasury
Money Market Portfolio Firstar U.S. Treasury Money Market Fund
-----------------------------------------------------------------------------------------------
Investor A Institutional
-----------------------------------------------------------------------------------------------
Institutional Institutional
-----------------------------------------------------------------------------------------------
Trust Institutional
-----------------------------------------------------------------------------------------------
Trust II Institutional
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Mercantile Money Market Portfolio Firstar Money Market Fund
-----------------------------------------------------------------------------------------------
Investor A Retail A
-----------------------------------------------------------------------------------------------
Investor B Retail A
-----------------------------------------------------------------------------------------------
Institutional Retail A
-----------------------------------------------------------------------------------------------
Trust Retail A
-----------------------------------------------------------------------------------------------
Trust II Retail A
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Mercantile Tax-Exempt Money Market Portfolio Firstar Tax-Exempt Money Market Fund
-----------------------------------------------------------------------------------------------
Investor A Retail A
-----------------------------------------------------------------------------------------------
Trust Institutional
-----------------------------------------------------------------------------------------------
Trust II Institutional
-----------------------------------------------------------------------------------------------
</TABLE>
Shareholders of each of the other Mercantile Funds will receive the following
share classes of its Corresponding Firstar Fund:
<TABLE>
<CAPTION>
Mercantile Share Class Firstar Share Class to be Received
-----------------------------------------------------------------------------------------------
<S> <C>
Investor A Retail A
-----------------------------------------------------------------------------------------------
Investor B Retail B
-----------------------------------------------------------------------------------------------
Institutional Class Y
-----------------------------------------------------------------------------------------------
Trust Institutional
-----------------------------------------------------------------------------------------------
</TABLE>
The Reorganization is expected to occur in mid to late November, 2000 or such
later date as may be determined pursuant to the Reorganization Agreement. For
more information about the Reorganization and the Reorganization Agreement, see
the Section below entitled "The Reorganization - Description of the
Reorganization Agreement."
At the same time that the Mercantile Funds are reorganized into the Firstar
Funds, it is expected that the investment portfolios of the Firstar Stellar
Funds ("Stellar") and the Firstar Select Funds ("Select") will be reorganized
into certain investment portfolios offered by Firstar, including, in the case of
the Stellar reorganization, certain of the Corresponding Firstar Funds. In
particular, it is expected that (1) the Stellar Treasury Fund, together with the
Mercantile Treasury Money Market Portfolio, will be reorganized into the Firstar
U.S. Treasury Money Market Fund, (2) the Stellar Tax-Free Money Market Fund,
together with the Mercantile Tax-Exempt Money Market Portfolio, will be
reorganized into the Firstar Tax-Exempt Money Market Fund, (3) the
-10-
<PAGE>
Stellar U.S. Government Income Fund, together with the Mercantile U.S.
Government Securities Portfolio, will be reorganized into the Firstar U.S.
Government Securities Fund, and (4) the Stellar Insured Tax-Free Bond Fund,
together with the Mercantile National Municipal Bond Portfolio, will be
reorganized into the Firstar National Municipal Bond Fund. If the Reorganization
Agreement is approved by Mercantile shareholders at the Special Meeting, it is
expected that the Reorganization will be completed whether or not the Stellar
reorganization and Select reorganization are completed.
Overview of the Funds
Comparison of Investment Objectives
The following chart summarizes the investment objective of each of the
Reorganizing Mercantile Funds and its Corresponding Firstar Fund.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Mercantile Fund Corresponding Firstar Fund
--------------- --------------------------
-----------------------------------------------------------------------------------------------
<S> <C>
Mercantile Treasury Money Market Portfolio: Firstar U.S. Treasury Money Market Fund: Seeks
Seeks a high level of current income exempt to provide a high level of current income
from state income tax consistent with exempt from state income taxes consistent with
liquidity and security of principal. liquidity, the preservation of capital and a
stable net asset value.
-----------------------------------------------------------------------------------------------
Mercantile Money Market Portfolio: Firstar Money Market Fund:
Seeks current income with liquidity and Seeks to provide a high level of taxable
stability of principal. current income consistent with liquidity, the
preservation of capital and a stable net asset
value.
-----------------------------------------------------------------------------------------------
Mercantile Tax-Exempt Money Market Portfolio: Firstar Tax-Exempt Money Market Fund:
Seeks as high a level of current interest Seeks to provide a high level of current
income exempt from federal income tax as is income exempt from federal income taxes
consistent with liquidity and stability of consistent with liquidity, the preservation of
principal. capital and a stable net asset value.
-----------------------------------------------------------------------------------------------
Mercantile U.S. Government Securities Firstar U.S. Government Securities Fund:
Portfolio: Seeks a high rate of current income that is
Seeks a high rate of current income that is consistent with relative stability of
consistent with relative stability of principal.
principal.
-----------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Mercantile Fund Corresponding Firstar Fund
--------------- --------------------------
-----------------------------------------------------------------------------------------------
<S> <C>
Mercantile Intermediate Corporate Bond Firstar Intermediate Bond Market Fund:
Portfolio: Seeks to provide an annual rate of total
Seeks as high a level of current income as is return, before Fund expenses, comparable to
consistent with preservation of capital. the annual rate of total return of the Lehman
Brothers Intermediate Government/Corporate
Bond Index.
-----------------------------------------------------------------------------------------------
Mercantile Bond Index Portfolio: Firstar Aggregate Bond Fund:
Seeks to provide investment results that, Seeks to provide an annual rate of total
before deduction of operating expenses, return, before Fund expenses, comparable to
approximate the price and yield performance the annual rate of total return of the Lehman
of U.S. Government, mortgage-backed, Brothers Aggregate Bond Index.
asset-backed and corporate debt securities
as represented by the Lehman Brothers
Aggregate Bond Index.
-----------------------------------------------------------------------------------------------
Mercantile Government & Corporate Bond Firstar Aggregate Bond Fund:
Portfolio: Seeks to provide an annual rate of total
Seeks the highest level of current income return, before Fund expenses, comparable to
consistent with conservation of capital. the annual rate of total return of the Lehman
Brothers Aggregate Bond Index.
-----------------------------------------------------------------------------------------------
Mercantile Short-Intermediate Municipal Firstar Tax-Exempt Intermediate Bond Fund:
Portfolio: Seeks to provide current income that is
Seeks as high a level of current income, substantially exempt from federal income tax
exempt from regular federal income tax, as and emphasize total return with relatively low
is consistent with preservation of capital. volatility of principal.
-----------------------------------------------------------------------------------------------
Mercantile National Municipal Bond Portfolio: Firstar National Municipal Bond Fund:
Seeks as high a level of current income Seeks as high a level of current income exempt
exempt from regular federal income tax as is from regular federal income tax as is
consistent with conservation of capital. consistent with conservation of capital.
-----------------------------------------------------------------------------------------------
Mercantile Balanced Portfolio: Firstar Balanced Growth Fund:
Seeks to maximize total return through a Seeks to achieve a balance of capital
combination of growth of capital and current appreciation and current income with
income consistent with the preservation of relatively low volatility of capital.
capital.
-----------------------------------------------------------------------------------------------
Mercantile Equity Index Portfolio: Firstar Equity Index Fund:
Seeks to provide investment results that, Seeks returns, before Fund expenses,
before the deduction of operating expenses, comparable to the price and yield performance
approximate the price and yield performance of publicly traded common stocks in the
of U.S. publicly traded common stocks with aggregate, as represented by the S&P 500 Index.
large stock market capitalizations, as
represented by the Standard & Poor's 500
Index.
-----------------------------------------------------------------------------------------------
Mercantile Growth & Income Equity Portfolio: Firstar Growth & Income Fund:
Seeks to provide long-term capital growth, Seeks both reasonable income and long-term
with income a secondary consideration. capital appreciation.
-----------------------------------------------------------------------------------------------
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Mercantile Fund Corresponding Firstar Fund
--------------- --------------------------
-----------------------------------------------------------------------------------------------
<S> <C>
Mercantile Growth Equity Portfolio: Firstar Growth Fund:
Seeks capital appreciation. Seeks capital appreciation through investment
in securities of large-sized companies.
-----------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Portfolio: Firstar Emerging Growth Fund:
Seeks capital appreciation. Seeks capital appreciation.
-----------------------------------------------------------------------------------------------
Mercantile International Equity Portfolio: Firstar Core International Equity Fund:
Seeks to provide capital growth consistent Seeks to provide maximum, long-term total
with reasonable investment risk. return consistent with reasonable risk to
principal.
-----------------------------------------------------------------------------------------------
</TABLE>
The investment objective, policies and restrictions of (i) the
Mercantile Conning Money Market Portfolio, (ii) the Mercantile Missouri Tax-
Exempt Bond Portfolio, (iii) the Mercantile Equity Income Portfolio and (iv) the
Mercantile Small Cap Equity Index Portfolio (collectively, the "Continuing
Mercantile Funds") are substantially the same as those of their Corresponding
Firstar Funds, because their Firstar Shell Funds have each been organized solely
in connection with this Reorganization to acquire the assets and liabilities,
and continue the business, of its corresponding Continuing Mercantile Fund.
The investment objectives, policies and restrictions of each of the other
Mercantile Funds (collectively, the "Reorganizing Mercantile Funds") are, in
general, substantially the same as or similar to those of its Corresponding
Firstar Fund. However, there are certain differences between the investment
policies and restrictions of certain of the Reorganizing Mercantile Funds and
their Corresponding Firstar Funds. For additional information, see "Comparison
of Mercantile Funds and Firstar Funds - Investment Objectives and Policies" and
Appendix III.
It is expected that at the time of the Reorganization, the Firstar U.S.
Treasury Money Market Fund, the Firstar Emerging Growth Fund and the Firstar
Core International Equity Fund will adopt investment objectives, policies and
restrictions that are substantially the same as the investment objectives,
policies and restrictions of the Stellar Treasury Fund, the Mercantile Small Cap
Equity Portfolio and the Mercantile International Equity Portfolio,
respectively. For a complete description of the investment objective, policies
and restrictions of the Stellar Treasury Fund, see Exhibit A to Appendix III of
this Proxy/Prospectus.
FIRMCO currently serves as adviser to each of the Mercantile Funds and
currently serves or will serve as the investment adviser to each of the Firstar
Funds. Conning Asset Management Company ("Conning") currently serves as sub-
adviser to the Mercantile Conning Money Market Portfolio and will serve as sub-
adviser to the Firstar Conning Money Market Fund. Clay Finlay, Inc. ("Clay
Finlay") currently serves as sub-adviser to the Mercantile International Equity
Portfolio. It is expected that at the time of the Reorganization, Clay Finlay
also will serve as sub-adviser to the Firstar Core International Equity Fund.
Firstar intends to call a special meeting of shareholders of the Firstar Core
International Equity Fund to approve Clay Finlay as sub-adviser. If this
engagement is not approved by shareholders of the Firstar Core International
Equity Fund,
-13-
<PAGE>
then the Fund's existing sub-advisory arrangements with The Glenmede Trust
Company described in the enclosed prospectuses of the Firstar Funds will remain
in effect.
Table II
The following table summarizes whether the contractual advisory fee rate
of a Firstar Fund (on a pro forma basis, after giving effect to the
Reorganization) is higher, lower or the same as its corresponding Mercantile
Fund by showing the differential between the Firstar Fund (on a pro forma basis,
after giving effect to the Reorganization) and Mercantile Fund contractual fee
rate.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Fund Differential between Firstar and Mercantile
contractual advisory fee rate+
----------------------------------------------------------------------------------------------
<S> <C>
Firstar U.S. Treasury Money Market Fund .04% higher +
----------------------------------------------------------------------------------------------
Firstar Money Market Fund .10% higher
----------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money Market Fund .10% higher
----------------------------------------------------------------------------------------------
Firstar Conning Money Market Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar U.S. Government Securities Fund .15% higher
----------------------------------------------------------------------------------------------
Firstar Intermediate Bond Market Fund .05% lower
----------------------------------------------------------------------------------------------
Firstar Aggregate Bond Fund .05%/.20% higher*
----------------------------------------------------------------------------------------------
Firstar Tax-Exempt Intermediate Bond Fund .05% lower
----------------------------------------------------------------------------------------------
Firstar Missouri Tax-Exempt Bond Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar National Municipal Bond Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar Balanced Growth Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar Equity Income Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar Equity Index Fund .05% lower
----------------------------------------------------------------------------------------------
Firstar Growth and Income Fund .20% higher
----------------------------------------------------------------------------------------------
Firstar Growth Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar Emerging Growth Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar Small Cap Index Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
Firstar Core International Equity Fund Same contractual fee rate
----------------------------------------------------------------------------------------------
</TABLE>
______________
+ The differentials listed in this column are determined in the same manner as
the example listed below:
The Firstar U.S. Treasury Money Market Fund's contractual advisory fee
rate is 0.44% and the Mercantile Treasury Money Market Portfolio's
contractual advisory fee rate is 0.40%. Therefore, the contractual
advisory fee rate for the Firstar U.S. Treasury Fund Portfolio is 0.04%
higher than the contractual advisory rate for the Mercantile Treasury
Money Market Portfolio.
* The contractual advisory fee rate will be .05% higher than the contractual
advisory fee rate of the Mercantile Government & Corporate Bond Portfolio and
.20% higher than the contractual advisory fee rate for the Mercantile Bond Index
Portfolio.
For more information on advisory fee rates, see "Comparison of Mercantile
Funds and Firstar Funds - Investment Advisory Services - Table V."
-14-
<PAGE>
Advisory fees, however, are only one type of fee and expense paid by mutual
funds. As noted previously in "Fee Tables - Tables I(A) and I(B)," (i) twelve of
the eighteen Mercantile Funds that offer Investor A Shares, three of the eleven
Mercantile Funds that offer Investor B Shares, eleven of the fourteen Mercantile
Funds that offer Institutional Shares, seven of the eighteen Mercantile Funds
that offer Trust Shares and none of the Mercantile Funds that offer Trust II
Shares will have total operating expense ratios (after fee waivers) which are
lower after the Reorganization; (ii) two of the eighteen Mercantile Funds that
offer Investor A Shares, three of the eleven Mercantile Funds that offer
Investor B Shares, one of the fourteen Mercantile Funds that offer Institutional
Shares, five of the eighteen Mercantile Funds that offer Trust Shares and none
of the Mercantile Funds that offer Trust II Shares will have the same total
operating expense ratios (after fee waivers) after the Reorganization; and (iii)
four of the eighteen Mercantile Funds that offer Investor A Shares, five of the
eleven Mercantile Funds that offer Investor B Shares, two of the fourteen
Mercantile Funds that offer Institutional Shares, six of the eighteen Mercantile
Funds that offer Trust Shares and all three of the Mercantile Funds that offer
Trust II Shares will have total operating expense ratios (after fee waivers)
which are higher after the Reorganization. For a more detailed summary of fees
and expenses, see Appendix II.
Firstar Mutual Fund Services, LLC ("FMFS") serves as administrator of the
Firstar Funds. FMFS also serves as co-administrator of the Mercantile Funds
along with BISYS Fund Services Ohio, Inc. FMFS serves as transfer agent to both
the Mercantile Funds and the Firstar Funds and Firstar Bank, N.A. serves as
custodian for both the Mercantile Funds and the Firstar Funds. The Mercantile
Funds and Firstar Funds have different distributors. For a detailed description
of the management of the Firstar Funds, including FIRMCO, Conning and Clay
Finlay and the other service providers to the Firstar Funds, see "Comparison of
Mercantile Funds and Firstar Funds - Investment Advisory Services," "Comparison
of Mercantile Funds and Firstar Funds - Other Service Provides for the
Mercantile Funds and the Firstar Funds" and the Firstar Fund prospectus which
accompanies this Proxy/Prospectus.
The purchase, redemption, exchange, dividend and other policies and
procedures of the Mercantile Funds and their Corresponding Firstar Funds are
generally similar. There are, however, some differences, such as with respect
to the categories of shareholders eligible for sales charge waivers. For more
information, see "Comparison of Mercantile Funds and Firstar Funds - Shareholder
Transactions and Policies," "Comparison of Mercantile Funds and Firstar Funds -
Share Structure" and Appendix IV to this Proxy/Prospectus. Please note that no
contingent deferred sales loads will be imposed on any Mercantile Fund shares as
a result of the Reorganization. In addition, no front-end sales load will be
imposed on any Firstar Fund Shares issued in the Reorganization.
Federal Income Tax Consequences. The exchange of shares in the
Reorganization is not expected to result in the recognition, for federal income
tax purposes, of gain or loss by the Mercantile Funds, the Firstar Funds or
their respective shareholders. The sale of securities by the Mercantile Funds
prior to the Reorganization, whether in the ordinary course of business or in
anticipation of the Reorganization, could increase the amount of the taxable
capital gains distributions made prior to the Reorganization. See "The
Reorganization - Federal Income Tax Considerations" for additional information.
-15-
<PAGE>
Mercantile and Firstar Board Consideration. During its deliberations,
Mercantile's Board of Directors (with the advice and assistance of its counsel)
reviewed, among other things: (1) the potential effect of the Reorganization on
the shareholders of the Mercantile Funds; (2) the capabilities, practices and
resources of FIRMCO and the Firstar Funds' other services providers; (3) the
investment advisory and other fees paid by the Firstar Funds, and the historical
and projected expense ratios of the Firstar Funds as compared with those of the
Mercantile Funds and industry peer groups; (4) the investment objectives,
policies and limitations of the Firstar Funds and their relative compatibility
with those of the Mercantile Funds; (5) the historical investment performance
records of the Mercantile Funds and the Firstar Funds, relative to each other
and to peer groups or indices; (6) the shareholder services offered by Firstar;
(7) the terms and conditions of the Reorganization Agreement; (8) the
anticipated tax consequences of the Reorganization for the respective Mercantile
Funds and their shareholders; and (9) the number of investment portfolio options
that would be available to shareholders after the Reorganization. The
Mercantile Board also considered FIRMCO's belief that the Reorganization would
eliminate certain duplicative shareholder costs and market overlap, facilitate
consolidation of FIRMCO's managerial resources and enhance generally operational
efficiencies and focus with respect to the mutual funds advised by FIRMCO. For
additional information, see "The Reorganization - Mercantile Board
Consideration."
Based upon their evaluation of the information presented to them, and in
light of their fiduciary duties under federal and state law, the Board of
Directors of Mercantile, including all of the non-interested members of the
Board, determined that participation in the Reorganization, as contemplated by
the Reorganization Agreement, was in the best interests of the shareholders of
each Mercantile Fund and that the interests of the existing shareholders of each
Mercantile Fund would not be diluted as a result of the Reorganization.
The Mercantile Board of Directors unanimously recommends that shareholders
of each Mercantile Fund approve the Reorganization Agreement.
After considering the relevant factors, the Firstar Board of Directors
similarly found that participation in the Reorganization was in the best
interests of the Firstar Funds and that the interests of the shareholders of the
Firstar Funds would not be diluted as a result of the Reorganization.
Principal Risk Factors. Because each of the Firstar Shell Funds is being
created to acquire substantially all of the assets and liabilities, and then
continue the business, of its corresponding Continuing Mercantile Fund, an
investment in a Firstar Shell Fund involves risks that are substantially the
same as those of investing in its corresponding Continuing Mercantile Fund. The
investment objectives, policies and restrictions of each Existing Firstar Fund
are, in general, the same as or similar to those of its corresponding Mercantile
Fund. Accordingly, an investment in an Existing Firstar Fund involves risks that
are similar to those of investing in its corresponding Reorganizing Mercantile
Fund. The principal risks applicable to the Mercantile Funds and the Firstar
Funds are described in the table below. Additional information regarding these
risks and other risks to which the Funds are subject are described in the
respective prospectuses and statements of additional information for the Funds.
The definitions of the terms
-16-
<PAGE>
used in the tables immediately follow the tables. The Mercantile Funds and
Firstar Funds are classified in the following groups:
"Mercantile Money Market Funds" means, collectively, the Mercantile
Treasury Money Market Portfolio, Mercantile Money Market Portfolio, Mercantile
Tax-Exempt Money Market Portfolio and Mercantile Conning Money Market Portfolio.
"Firstar Money Market Funds" means, collectively, the Corresponding Firstar
Funds of the Mercantile Money Market Funds.
"Mercantile Bond Funds" means, collectively the Mercantile U.S. Government
Securities Portfolio, Mercantile Intermediate Corporate Bond Portfolio,
Mercantile Bond Index Portfolio and Mercantile Government & Corporate Bond
Portfolio.
"Firstar Bond Funds" means, collectively, the Corresponding Firstar Funds
of the Mercantile Bond Funds.
"Mercantile Tax-Exempt Bond Funds" means, collectively the Mercantile
Short-Intermediate Municipal Portfolio, Mercantile Missouri Tax-Exempt Bond
Portfolio and Mercantile National Municipal Bond Portfolio.
"Firstar Tax-Exempt Bond Funds" means, collectively, the Corresponding
Firstar Funds of the Mercantile Tax-Exempt Bond Funds.
"Mercantile Equity Funds" means collectively, the Mercantile Balanced
Portfolio, Mercantile Equity Income Portfolio, Mercantile Equity Index
Portfolio, Mercantile Growth & Income Equity Portfolio, Mercantile Growth Equity
Portfolio, Mercantile Small Cap Equity Portfolio, Mercantile Small Cap Equity
Index Portfolio and Mercantile International Equity Portfolio.
"Firstar Equity Funds" means, collectively, the Corresponding Firstar Funds
of the Mercantile Equity Funds.
-17-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Management Risk - The investment adviser All Firstar Funds
evaluates the rewards and risks presented by
all securities purchased by a Fund and how
they may advance the Fund's investment All Mercantile Funds.
objective. It is possible, however, that
these evaluations will prove to be
inaccurate.
------------------------------------------------------------------------------------------------
Uninsured Investment Risk - An investment in All Firstar Funds
a Fund is not a deposit of Firstar Bank,
N.A. and is not insured by the Federal All Mercantile Funds
Deposit Insurance Corporation or any other
government agency.
------------------------------------------------------------------------------------------------
Market Risk - The value of the securities in All Firstar Equity Funds
which a Fund invests may go up or down in
response to the prospects of individual All Mercantile Equity Funds
companies and/or general economic conditions.
------------------------------------------------------------------------------------------------
Fixed Income Risk - The rate of income on Firstar Money Market, Bond and
Fund shares will vary from day to day so Tax-Exempt Bond Funds
that dividends on your investment will vary.
Mercantile Money Market, Bond and
Tax-Exempt Bond Funds
------------------------------------------------------------------------------------------------
Volatility Risk - The value of your Firstar Bond, Tax-Exempt Bond and
investment will go up and down with the Equity Funds
value of the investments which the Fund
holds. You may lose money if you invest in Mercantile Bond, Tax-Exempt Bond and
the Fund. Equity Funds
------------------------------------------------------------------------------------------------
Credit Risk - An issuer of fixed income Firstar Money Market, Bond, Taxable Bond,
securities may default on its obligation to Balanced Growth, Growth & Income, Growth
pay interest and repay principal, causing and Emerging Growth Funds
the value of your investment to decline.
Lower-rated securities are subject to Mercantile Money Market, Bond and
greater credit risk than higher-rated Tax-Exempt Bond Funds and Mercantile
securities. Balanced Portfolio
------------------------------------------------------------------------------------------------
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Interest Rate Risk - In general, bond prices Firstar Money Market, Bond, Taxable Bond,
rise when interest rates fall and fall when Balanced Growth, Growth & Income, Growth
interest rates rise. Longer-term bonds, and Emerging Growth Funds
stripped securities and zero-coupon
securities are more susceptible to these Mercantile Money Market, Bond and
fluctuations than short-term bonds. Changes Tax-Exempt Bond Funds and Mercantile
in interest rates will also effect a Fund's Balanced Portfolio
yield. A decline in interest rates may lead
to a decline in the Fund's yield.
Lower-rated securities are subject to
greater interest rate risk than higher-rated
securities.
------------------------------------------------------------------------------------------------
Extension Risk - An issuer may exercise its Firstar U.S. Government Securities,
right to pay principal on an obligation held Aggregate Bond, National Municipal Bond
by a Fund (such as a mortgage-backed or and Balanced Growth Funds
asset-backed security) later than expected.
This may happen when there is a rise in Mercantile Bond and Tax-Exempt Bond
interest rates. Under such circumstances, Funds and Mercantile Balanced Portfolio
the value of the obligation will decrease
and the Fund will also suffer from the
inability to invest in higher yielding
securities.
------------------------------------------------------------------------------------------------
Prepayment Risk - An issuer may exercise its Firstar U.S. Government Securities,
right to pay principal on an obligation held Aggregate Bond, National Municipal Bond
by a Fund (such as a mortgage-backed or and Balanced Growth Funds
asset-backed security) earlier than
expected. This may happen when there is a Mercantile Bond and Tax-Exempt Bond
decline in interest rates. These events may Funds and Mercantile Balanced Portfolio
make a Fund unable to recoup its initial
investment and may result in reduced yields.
------------------------------------------------------------------------------------------------
Money Market Risk - Although a money market Firstar Money Market Funds
fund seeks to preserve the value of your
investment at $1.00 per share, it is Mercantile Money Market Funds
possible to lose money by investing in a
Fund.
------------------------------------------------------------------------------------------------
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Sector/Technology Risk - To the extent that Firstar Balanced Growth, Growth & Income,
the Fund emphasizes particular companies or Growth and Emerging Growth Funds
market sectors, such as technology, it will
be especially susceptible to the risks Mercantile Balanced, Equity Income,
associated with investments in those Equity Index, Growth & Income Equity,
companies or market sectors. Stocks of Growth Equity, Small Cap Equity and
technology companies may be subject to Small Cap Equity Index Portfolios
greater price volatility than stocks of
companies in other sectors. Technology
companies may produce or use products or
services that prove commercially
unsuccessful, become obsolete or become
adversely impacted by government regulation.
Technology stocks may experience significant
price movements caused by disproportionate
investor optimism or pessimism.
------------------------------------------------------------------------------------------------
Indexing Risk in General - The Fund uses an Firstar Equity Index and Small Cap Index
indexing strategy to approximate the Funds
investment performance of a benchmark index,
before fund expenses. The Fund may fail to Mercantile Bond Index, Equity Index and
match the investment results of its Small Cap Equity Index Portfolios
benchmark index as a result of shareholder
purchase and redemption activity,
transaction costs, expenses and other
factors. The investment adviser may be
required to sell securities if the issuer or
the security is eliminated from the
benchmark index. Such sales may result in:
lower prices, or losses, that may not have
been incurred if the investment adviser did
not have to purchase or sell the securities.
------------------------------------------------------------------------------------------------
Convertible Securities Risk - Convertible Firstar Balanced Growth, Growth & Income,
securities frequently have speculative Growth and Emerging Growth Funds
characteristics and may be acquired without
regard to minimum quality ratings.
Convertible securities are subject to
greater credit and interest rate risk than
higher rated securities.
------------------------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Concentration Risk - A Fund may invest more Firstar Tax-Exempt Money Market and
than 25% of its total assets in municipal Tax-Exempt Bond Funds
obligations issued by entities located in
the same state and in municipal obligations Mercantile Tax-Exempt Money Market
the interest on which is paid solely from Portfolio and Mercantile Tax-Exempt
revenues of similar projects. As a result, Bond Funds
changes in economic, business or political
conditions relating to a particular state or
particular types of projects may have a
disproportionate impact on the Fund's share
price.
------------------------------------------------------------------------------------------------
Municipal Government Risk - The ability of a Firstar Tax-Exempt Money Market and
state or local government issuer to make Tax-Exempt Bond Funds
payments can be affected by many factors,
including economic conditions, the flow of Mercantile Tax-Exempt Money Market
tax revenues and changes in the level of Portfolio and Mercantile Tax-Exempt
federal, state or local aid. Some municipal Bond Funds
securities are payable only from limited
revenue sources or by private entities.
------------------------------------------------------------------------------------------------
Small Cap Stock Risk - Compared to Firstar Emerging Growth and Small Cap
larger-capitalization stocks, Index Funds
small-capitalization stocks tend to carry
greater risk and exhibit greater price Mercantile Small Cap Equity and Small
volatility because their businesses may not Cap Equity Index Portfolios
be well established. In addition, some
smaller companies may have specialized or
limited product lines, markets or financial
resources and may be dependent on one-person
management. All of these factors increase
risk and may result in more significant
losses than other equity funds.
------------------------------------------------------------------------------------------------
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Foreign Investment Risk - The Fund's Firstar Core International Equity Fund
investments in foreign securities are
subject to foreign risks. Foreign stocks Mercantile Intermediate Corporate Bond,
involve special risks not typically Government & Corporate Bond and
associated with U.S. stocks. The stocks International Equity Portfolios
held by the Fund may underperform other
types of stocks, and they may not increase
or may decline in value. Foreign
investments may be riskier than U.S.
investments because of factors such as
foreign government restrictions, changes in
currency exchange rates, incomplete
financial information about the issuers of
securities, and political or economic
instability. Foreign stocks may be more
volatile and less liquid than U.S. stocks.
------------------------------------------------------------------------------------------------
Non-Diversification Risk - The Fund is Firstar Missouri Tax-Exempt Bond Fund
non-diversified, which means that it can
invest a large percentage of its assets in a Mercantile Tax-Exempt Money Market and
small number of issues. As a result, a Missouri Tax-Exempt Bond Portfolios
change in the value of any one investment
held by the Fund may affect the overall
value of the Fund more than it would affect
a diversified fund which holds more
investments.
------------------------------------------------------------------------------------------------
Derivatives Risk - Certain investments may be Firstar Balanced Growth, Equity Index
more sensitive to or otherwise not react in and Growth & Income Funds
tandem with interest rate changes or market
movements and may be leveraged.
------------------------------------------------------------------------------------------------
Bank Risk - Municipal obligations that a Fund Firstar Tax-Exempt Money Market Fund
purchases may be backed by letters of credit
issued by banks and other financial Mercantile Tax-Exempt Money Market
institutions. Adverse developments Portfolio
affecting banks could have a negative effect
on the Fund's securities.
------------------------------------------------------------------------------------------------
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Municipal Lease Obligation Risk - A Fund may Firstar Tax-Exempt Money Market and
acquire municipal lease obligations which Tax-Exempt Intermediate Bond Funds
are issued by a state or local government or
authority to acquire land and a wide variety
of equipment and facilities. If funds are
not appropriated for the following year's
lease payments, the lease may terminate,
with the possibility of default on the lease
obligation and significant loss to the Fund.
------------------------------------------------------------------------------------------------
Investment in Missouri Risk - Because the Firstar Missouri Tax-Exempt Bond Fund
Fund invests primarily in Missouri municipal
securities, it also is likely to be Mercantile Missouri Tax-Exempt Bond
especially susceptible to economic, Portfolio
political and regulatory events that affect
Missouri. Missouri's economy is largely
comprised of services, manufacturing
(primarily defense, transportation and other
durable goods), wholesale and retail trade,
and state and local government. The
exposure to these industries leaves Missouri
vulnerable to an economic slowdown
associated with the business cycles of such
industries. Because defense-related
business plays an important role in
Missouri's economy, declining defense
appropriations and federal downsizing also
may continue to have an adverse impact on
the State. From time to time, Missouri and
its political subdivisions have encountered
financial difficulties.
------------------------------------------------------------------------------------------------
Repurchase Agreement Risk - The Fund may Firstar U.S. Government Securities Fund
invest in repurchase agreements, which carry
the risk that the other party may not Mercantile U.S. Government Securities
fulfill its obligations under the agreement. Portfolio
------------------------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Large Cap Indexing Risk - Your investment Firstar Equity Index Fund
follows the large-cap portion of the U.S.
stock market, as measured by the S&P 500 Mercantile Equity Index Portfolio
Index, during upturns as well as downturns.
Because of its indexing strategy, the Fund
cannot take steps to reduce market
volatility or to lessen the effects of a
declining market.
Whenever large-cap stocks perform less than
mid- or small-cap stocks, the Fund may
under-perform funds that have exposure to
those segments.
Further, the Fund will not necessarily
dispose of a security in response to adverse
events affecting the issuer of a security
(such as adverse credit factors or failure
to pay dividends).
------------------------------------------------------------------------------------------------
Growth Risk - The growth stocks the Fund Firstar Growth Fund
typically holds may not perform as well as
other types of stocks, such as value stocks. Mercantile Growth Equity Portfolio
------------------------------------------------------------------------------------------------
Value Risk - The value stocks the Fund Firstar Equity Income Fund
typically holds may not perform as well as
other stocks, such as growth stocks. Mercantile Equity Income Portfolio
------------------------------------------------------------------------------------------------
Emerging Market Risk - The risks associated Firstar Core International Equity Fund
with foreign investments are heightened when
investing in emerging markets. The Mercantile International Equity Portfolio
governments and economies of emerging market
countries feature greater instability than
those of more developed countries. Such
investments tend to fluctuate in price more
widely and to be less liquid than other
foreign investments.
------------------------------------------------------------------------------------------------
Currency Risk - Currency risk is the Firstar Core International Equity Fund
potential for price fluctuations in the
dollar value of the foreign securities that Mercantile International Equity Portfolio
the Fund holds because of changing currency
exchange rates.
------------------------------------------------------------------------------------------------
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
Focus Risk - Because of the smaller number of Firstar Intermediate Bond Market Fund
issues held by the Fund than its benchmark
index, material events affecting the Fund's
portfolio (for example, an issuer's decline
in credit quality) may influence the
performance of the Fund to a greater degree
than such events will influence its
benchmark index and may prevent the Fund
from attaining its investment objective for
particular periods.
------------------------------------------------------------------------------------------------
Fixed Income Management Risk - While the Firstar Intermediate Bond Market Fund
adviser believes purchasing securities which
are not in the Fund's benchmark index or not
consistent with the "mix" of the index
provides the opportunity to achieve an
enhanced gross return compared to the index,
the investment adviser may err in its
choices of securities or portfolio mixes.
Further, the Adviser calculates the Fund's
duration and average maturity based on
certain estimates relating to the duration
and maturity of the securities held by the
Fund. The estimates used may not always be
accurate, so the investment adviser's
calculations may be incorrect. Such errors
could result in a negative return and a loss
to you.
------------------------------------------------------------------------------------------------
Tax Risk - The Fund may be more adversely Firstar Tax-Exempt Intermediate Bond
impacted by changes in tax rates and Fund
policies than other funds.
------------------------------------------------------------------------------------------------
Futures Risk - The Fund invests in futures Firstar Equity Index Fund
contracts. Such investments could cause the
Fund to track the S&P 500 Index less closely
if they don't perform as expected.
------------------------------------------------------------------------------------------------
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Principal Risk Funds Subject to Risk
------------------------------------------------------------------------------------------------
<S> <C>
IPO Risk - The Fund's performance results may Mercantile Small Cap Equity Portfolio
reflect periods of above-average performance
attributable to its investing a portion of
its assets in the securities of companies
offering shares in initial public offerings.
It is possible that the above-average
performance of such companies may not be
repeated in the future.
------------------------------------------------------------------------------------------------
</TABLE>
Voting Information. Mercantile's Board of Directors is furnishing this
Proxy/Prospectus in connection with the solicitation of proxies. Only
shareholders of record at the close of business on September 15, 2000 will be
entitled to vote at the Meeting. Shares represented by a properly executed proxy
will be voted in accordance with the instructions thereon. If no instruction is
made, the named proxies will vote in favor of each proposal set forth in the
Notice of Meeting. Proxies may be revoked at any time before they are exercised
by submitting to Mercantile a written notice of revocation or a subsequently
executed proxy or by attending the Special Meeting and voting in person. For
additional information, see "Voting Matters."
THE REORGANIZATION
Reasons for the Reorganization. Significant features of the
Reorganization are summarized below. This summary is qualified in its entirety
by reference to the Reorganization Agreement, the form of which is attached as
Appendix I.
The proposed Reorganization is expected to benefit Mercantile Fund
shareholders by, among other things:
(i) Offering a larger and more diverse group of mutual funds to all
shareholders;
(ii) Actually or potentially reducing overall expenses by the achievement of
economies of scale associated with a larger asset base;
(iii) Offering an opportunity for better investment performance due to an
expanded equity research staff that can focus on the core products available;
(iv) Offering distribution channels that will have a better understanding of
the proprietary products offered by Firstar and will be better able to
communicate FIRMCO's investment style to existing and prospective shareholders,
thereby potentially increasing assets in the complex; and
(v) Allowing FIRMCO to effect portfolio transactions on more favorable terms.
-26-
<PAGE>
Description of the Reorganization Agreement. There are nineteen separate
Mercantile Funds. The Reorganization Agreement provides that substantially all
of the assets and liabilities of each of the fifteen Reorganizing Mercantile
Funds identified in column 1 on Table III(A) below will be transferred to, and
acquired by, one of the fourteen Existing Firstar Funds identified in column 2
on Table III(A) below, in exchange for full and fractional shares issued by such
Existing Firstar Fund. The Reorganization Agreement further provides that
substantially all of the assets and liabilities of each of the Continuing
Mercantile Funds identified in column 1 on Table III(B) below will be
transferred to, and acquired by, one of the newly-organized Shell Firstar Funds
identified in column 2 on Table III(B) below, in exchange for full and
fractional shares issued by such Shell Firstar Fund. In the tables, opposite the
name of each Mercantile Fund is the name of the Corresponding Firstar Fund to
which such Mercantile Fund will transfer substantially all of its assets and
liabilities and that will issue Firstar Fund Shares of designated classes to
such Mercantile Fund in consideration of such transfer. The Firstar Fund Shares
issued by each Firstar Fund to its corresponding Mercantile Fund will have the
same aggregate dollar value as the aggregate dollar value of the shares of such
Mercantile Fund immediately prior to the effective time of the Reorganization
with respect to such Fund.
-27-
<PAGE>
Table III(A)
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
REORGANIZING MERCANTILE FUND EXISTING FIRSTAR FUND
AND SHARE CLASS AND SHARE CLASS
Mercantile Treasury Money Market Portfolio Firstar U.S. Treasury Money Market Fund
Investor A Shares Institutional Shares
Institutional Shares Institutional Shares
Trust Shares Institutional Shares
Trust II Shares Institutional Shares
Mercantile Money Market Portfolio Firstar Money Market Fund
Investor A Shares Retail A Shares
Investor B Shares Retail A Shares
Institutional Shares Retail A Shares
Trust Shares Retail A Shares
Trust II Shares Retail A Shares
Mercantile Tax-Exempt Money Market Portfolio Firstar Tax-Exempt Money Market Fund
Investor A Shares Retail A Shares
Trust Shares Institutional Shares
Trust II Shares Institutional Shares
Mercantile U.S. Government Securities Portfolio Firstar U.S. Government Securities Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
REORGANIZING MERCANTILE FUND EXISTING FIRSTAR FUND
AND SHARE CLASS AND SHARE CLASS
Mercantile Intermediate Corporate Bond Portfolio Firstar Intermediate Bond Market Fund
Investor A Shares Retail A Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile Bond Index Portfolio Firstar Aggregate Bond Fund
Investor A Shares Retail A Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile Government & Corporate Bond Portfolio Firstar Aggregate Bond Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile Short-Intermediate Municipal Portfolio Firstar Tax-Exempt Intermediate Bond
Fund
Investor A Shares Retail A Shares
Trust Shares Institutional Shares
Mercantile National Municipal Bond Portfolio Firstar National Municipal Bond Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Trust Shares Institutional Shares
</TABLE>
-29-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
REORGANIZING MERCANTILE FUND EXISTING FIRSTAR FUND
AND SHARE CLASS AND SHARE CLASS
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile Equity Index Portfolio Firstar Equity Index Fund
Investor A Shares Retail A Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile Growth & Income Equity Portfolio Firstar Growth & Income Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile Growth Equity Portfolio Firstar Growth Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
</TABLE>
-30-
<PAGE>
<TABLE>
<CAPTION>
REORGANIZING MERCANTILE FUND EXISTING FIRSTAR FUND
AND SHARE CLASS AND SHARE CLASS
<S> <C>
Mercantile Small Cap Equity Portfolio Firstar Emerging Growth Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile International Equity Portfolio Firstar Core International Equity Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
</TABLE>
-31-
<PAGE>
Table III(B)
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
CONTINUING MERCANTILE FUND AND SHARE CLASS SHELL FIRSTAR FUND AND SHARE CLASS
Mercantile Conning Money Market Portfolio Firstar Conning Money Market Fund
Shares Shares
Mercantile Missouri Tax-Exempt Bond Portfolio Firstar Missouri Tax-Exempt Bond Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Trust Shares Institutional Shares
Mercantile Equity Income Portfolio Firstar Equity Income Fund
Investor A Shares Retail A Shares
Investor B Shares Retail B Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
Mercantile Small Cap Equity Index Portfolio Firstar Small Cap Index Fund
Investor A Shares Retail A Shares
Institutional Shares Class Y Shares
Trust Shares Institutional Shares
</TABLE>
Immediately after the effective time of the Reorganization, each Mercantile
Fund will distribute to its shareholders the Firstar Fund Shares received in the
Reorganization in liquidation of the Mercantile Fund. Each shareholder of
record of a particular Mercantile Fund at the effective time of the
Reorganization will receive shares of the designated class of its Corresponding
Firstar Fund with the same aggregate dollar value of the shares such shareholder
-32-
<PAGE>
held in such Mercantile Fund prior to the effective time of the Reorganization,
and will receive any unpaid dividends or distributions declared before the
effective time of the Reorganization with respect to a Mercantile Fund.
Firstar will establish an account for each former shareholder of the
Mercantile Funds that will reflect the number and class of Firstar Fund Shares
distributed to that shareholder. The Firstar Fund Shares issued in the
Reorganization will be in uncertificated form.
Please note that a vote for or against the Reorganization Agreement
includes a vote for or against the reorganization of Mercantile into Firstar. If
the Reorganization Agreement is approved and the transactions contemplated
thereby are consummated, Mercantile will transfer substantially all of its
assets and liabilities as of the effective time of the Reorganization, all
outstanding shares of the Mercantile Funds will be redeemed and cancelled in
exchange for Firstar Fund Shares of the Firstar Funds, and Mercantile will wind
up its affairs and apply to be deregistered as an investment company under the
1940 Act and thereafter dissolve under Maryland law.
The Reorganization is subject to a number of conditions, including approval
of the Reorganization Agreement and the related matters described in this
Proxy/Prospectus by a majority of the outstanding shares of each Mercantile
Fund; approval of the Reorganization by a majority of all of the shares of all
of the Mercantile Funds voting in the aggregate; the receipt of certain legal
opinions described in the Reorganization Agreement (which include an opinion of
Firstar's counsel addressed to Mercantile indicating that the Firstar Fund
Shares issued in the Reorganization will be validly issued, fully paid and non-
assessable); the receipt of certain certificates from the parties concerning the
continuing accuracy of the representations and warranties in the Reorganization
Agreement; the receipt of any necessary exemptive relief requested from the SEC
or its staff with respect to Section 17(a) of the 1940 Act; and the parties'
performance in all material respects of their respective covenants and
undertakings as described in the Reorganization Agreement.
It is possible that a majority of a Mercantile Fund's shareholders may
approve the Reorganization Agreement while a majority of all shareholders of all
Mercantile Funds does not approve the reorganization of Mercantile. In such a
case, the Mercantile Board of Directors will contemplate what further action is
appropriate.
The Reorganization Agreement also provides that FIRMCO or an affiliate has
agreed to pay all expenses associated with the Reorganization. The
Reorganization Agreement also provides, among other things, that the
Reorganization may be terminated at any time upon the mutual consent of both
Mercantile and Firstar, or by either Firstar or Mercantile under certain
conditions; and that officers of Firstar and of Mercantile may amend the
Reorganization Agreement as authorized by their respective Boards of Directors.
-33-
<PAGE>
As previously noted, the Stellar reorganization and the Select
reorganization are expected to occur at the same time as the Reorganization. In
connection with the Stellar reorganization, certain of the Stellar investment
portfolios will be reorganized into the same Firstar Fund as certain of the
Mercantile Funds. In particular, (1) the Stellar Treasury Fund, together with
the Mercantile Treasury Money Market Portfolio, will be reorganized into the
Firstar U.S. Treasury Money Market Fund, (2) the Stellar Tax-Free Money Market
Fund, together with the Mercantile Tax-Exempt Money Market Portfolio, will be
reorganized into the Firstar Tax-Exempt Money Market Fund, (3) the Stellar U.S.
Government Income Fund, together with the Mercantile U.S. Government Securities
Portfolio, will be reorganized into the Firstar U.S. Government Securities Fund,
and (4) the Stellar Insured Tax-Free Bond Fund, together with the Mercantile
National Municipal Bond Portfolio, will be reorganized into the Firstar National
Municipal Bond Fund. If the Reorganization Agreement is approved by Mercantile
shareholders at the Special Meeting, it is expected that the Reorganization will
be completed whether or not the Stellar reorganization and Select reorganization
are completed.
Mercantile Board Consideration. At a meeting held on April 18, 2000, the
Board of Directors of Mercantile was advised that FIRMCO was considering
recommending a consolidation of Mercantile with Firstar. The Mercantile Board
then met again on June 6, 2000 and July 11, 2000 to consider the Reorganization
proposal offered by management of Firstar, FIRMCO and its affiliates. In
preparation for the June 6, 2000 meeting, each of the Directors of Mercantile
was provided with detailed information about the Reorganization, Firstar and
FIRMCO. These materials summarized the principal terms and conditions of the
Reorganization, including the intention that the Reorganization be consummated
on a tax-free basis for each Mercantile Fund and its respective shareholders.
In addition, the Mercantile Directors received comparative information about the
Mercantile Funds and the Corresponding Firstar Funds, including information
concerning, but not limited to, the following matters: (1) investment
objectives and policies; (2) advisory, distribution and servicing arrangements;
(3) fund expenses (with and without giving effect to current expense
limitations), including pro forma expenses, relative to peer groups or
comparable indices; and (4) performance, including performance relative to peer
groups for the Firstar Funds. The Mercantile Board also was provided with
information about FIRMCO and its investment advisory organization, including the
individuals or teams of individuals with responsibility for managing each
Firstar Fund.
The Reorganization was unanimously approved by the Mercantile Board of
Directors on June 6, 2000 subject to the Board's receipt from FIRMCO of
additional information on certain aspects of the Reorganization. This
additional information was received and considered by the Mercantile Board and
on July 11, 2000, the Board of Directors of Mercantile unanimously ratified the
actions it had taken on June 6, 2000 approving the Reorganization.
-34-
<PAGE>
During its deliberations, Mercantile's Board of Directors (with the advice
and assistance of its counsel) reviewed, among other things: (1) the potential
effect of the Reorganization on the shareholders of the Mercantile Funds; (2)
the capabilities, practices and resources of FIRMCO and the Firstar Funds' other
service providers; (3) the investment advisory and other fees paid by the
Firstar Funds, and the historical and projected expense ratios of the Firstar
Funds as compared with those of the Mercantile Funds and industry peer groups or
comparable indices; (4) the investment objectives, policies and limitations of
the Firstar Funds and their relative compatibility with those of the Mercantile
Funds; (5) the historical investment performance records of the Mercantile Funds
and the Firstar Funds relative to each other and, with respect to the Firstar
Funds, to peer groups; (6) the shareholder services offered by Firstar; (7) the
terms and conditions of the Reorganization Agreement; (8) the anticipated tax
consequences of the Reorganization for the respective Mercantile Funds and their
shareholders; and (9) the number of investment portfolio options that would be
available to shareholders after the Reorganization. The Mercantile Board also
considered FIRMCO's belief that the Reorganization would eliminate certain
duplicative shareholder costs and market overlap, facilitate consolidation of
FIRMCO's managerial resources and enhance generally operational efficiencies and
focus with respect to the mutual funds advised by FIRMCO.
The Mercantile Directors also noted that the per share annualized total
operating expense ratios for certain of the classes of certain of the Firstar
Funds after the Reorganization, taking into account voluntary fee waivers, would
be higher than those of the corresponding Mercantile Funds before the
Reorganization. See "Table I-B - Total Expense Information" and Appendix II for
more information. The Mercantile Directors also noted that FIRMCO or an
affiliate would assume all customary expenses associated with the Reorganization
and that FIRMCO would commit to waive fees and reimburse expenses as needed to
ensure that until October 31, 2001 the Firstar Funds' total operating expense
ratios would not exceed the pro forma after waiver expenses shown in Table I-B.
After consideration of the foregoing and other factors, the Mercantile
Directors unanimously determined that the Reorganization was in the best
interest of the shareholders of each Mercantile Fund, and that the interests of
the existing shareholders of each Mercantile Fund would not be diluted as a
result of such Reorganization.
Capitalization. The following table sets forth, as of April 30, 2000 (the
end of Firstar's semi-annual period): (1) the capitalization of each of the
Mercantile Funds; (2) the capitalization of each of their Corresponding Firstar
Funds; and (3) the pro forma capitalization of each of the Corresponding Firstar
Funds as adjusted to give effect to the Reorganization. With respect to the
Mercantile Treasury Money Market Portfolio, Mercantile Tax-Exempt Money Market
Portfolio, Mercantile U.S. Government Securities Portfolio and Mercantile
National Municipal Bond Portfolio, the table also sets forth the capitalization
of the Stellar portfolio which will simultaneously be reorganized into the
Corresponding Firstar Fund of such Mercantile Fund and the pro forma
capitalization of such Corresponding Firstar Fund as adjusted to give effect to
both the Reorganization and the Stellar reorganization. With respect to the
Mercantile Bond Index Portfolio and the Mercantile Government & Corporate Bond
Portfolio, the table sets forth the capitalization of each such Mercantile Fund,
the pro forma capitalization of the Corresponding Firstar Fund as adjusted to
give effect to the reorganization of the Mercantile Bond Index
-35-
<PAGE>
Portfolio only, the pro forma capitalization of the Corresponding Firstar Fund
as adjusted to give effect to the reorganization of the Mercantile Government &
Corporate Bond Portfolio only, and the pro forma capitalization of the
Corresponding Firstar Fund as adjusted to give effect to the reorganization of
both the Mercantile Bond Index Portfolio and the Mercantile Government &
Corporate Bond Portfolio.
The capitalization of each Fund is likely to be different at the effective
time of the Reorganization as a result of daily share purchase and redemption
activity in the Funds as well as the effects of the other ongoing operations of
the respective Funds prior to the closing of the Reorganization.
The Firstar Conning Money Market Fund, Firstar Missouri Tax-Exempt Bond
Fund, Firstar Equity Income Fund and Firstar Small Cap Index Fund have not yet
commenced operations but will do so at the time the Reorganization occurs.
-36-
<PAGE>
Table IV
Capitalization
(as of April 30, 2000)
1. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Treasury Money Market
Portfolio and Stellar Treasury Fund with the Firstar U.S. Treasury Money Market
Fund. The table provides pro forma capitalization information for two different
scenarios: (a) the combination of the Mercantile Treasury Money Market Portfolio
with the Firstar U.S. Treasury Money Market Fund (Pro forma Combined Fund = Fund
A + Fund C) and (b) the combination of the Mercantile Treasury Money Market
Portfolio and the Stellar Treasury Fund with the Firstar Treasury Money Market
Fund (Pro forma Combined Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Treasury Money Market $76,187 76,187 $1.00
Portfolio (Investor A Shares) (Investor A Shares) (Investor A Shares)
(Fund A) $501,196 501,196 $1.00
(Institutional) (Institutional) (Institutional)
$189,391,54 4 189,391,544 $1.00
(Trust Shares) (Trust Shares) (Trust Shares)
$66,569,413 66,569,413 $1.00
(Trust II Shares) (Trust II Shares) (Trust II Shares)
-------------------------------------------------------------------------------------------------------
Stellar Treasury Fund $1,205,547,115 1,205,547,115 $1.00
(Fund B) (Class C Shares) (Class C Shares) (Class C Shares)
$2,177,195,841 2,177,195,841 $1.00
(Class Y Shares) (Class Y Shares) (Class Y Shares)
-------------------------------------------------------------------------------------------------------
Firstar U.S. Treasury Money $-- -- $--
Market Fund (Institutional (Institutional (Institutional
(Fund C)* Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $256,538,340 256,538,340 $1.00
(Fund A + Fund C) (Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $2,433,734,181 2,433,734,181 $1.00
(Fund A + Fund B + Fund C) (Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Institutional Shares of the Firstar U.S. Treasury Money Market Fund have
not been offered to investors as of the date of this Proxy/Prospectus.
-37-
<PAGE>
2. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Money Market
Portfolio with the Firstar Money Market Fund.
<TABLE>
<CAPTION>
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Money Market Portfolio $ 9,162,474 9,162,474 $1.00
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$ 49,888 49,888 $1.00
(Investor B Shares) (Investor B Shares) (Investor B Shares)
$ 30,532,748 30,532,748 $1.00
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$ 796,314,569 796,314,569 $1.00
(Trust Shares) (Trust Shares) (Trust Shares)
$ 552,536,361 552,536,361 $1.00
(Trust II Shares) (Trust II Shares) (Trust II Shares)
-------------------------------------------------------------------------------------------------------
Firstar Money Market Fund $ 181,997,172 181,997,172 $1.00
(Retail A Shares) (Retail A Shares) (Retail A Shares)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $1,570,593,212 1,570,593,212 $1.00
(Retail A Shares) (Retail A Shares) (Retail A Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-38-
<PAGE>
3. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Tax-Exempt Money
Market Portfolio and the Stellar Tax-Free Money Market Fund with the Firstar
Tax-Exempt Money Market Fund. The table provides pro forma capitalization
information for two different scenarios: (a) the combination of the Mercantile
Tax-Exempt Money Market Portfolio with the Firstar Tax-Exempt Money Market Fund
(Pro forma Combined Fund = Fund A + Fund C) and (b) the combination of the
Mercantile Tax-Exempt Money Market Portfolio and the Stellar Tax-Free Money
Market Fund with the Firstar Tax-Exempt Money Market Fund (Pro forma Combined
Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Tax-Exempt Money $ 234,683 234,683 $1.00
Market Portfolio (Investor A Shares) (Investor A Shares) (Investor A Shares)
(Fund A) $ 31,673,760 31,673,760 $1.00
(Trust Shares) (Trust Shares) (Trust Shares)
$111,864,620 111,864,620 $1.00
(Trust II Shares) (Trust II Shares) (Trust II Shares)
-------------------------------------------------------------------------------------------------------
Stellar Tax-Free Money Market $194,578,237 194,578,237 $1.00
Fund (Class C Shares) (Class C Shares) (Class C Shares)
(Fund B)
-------------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money Market $158,937,927 158,937,927 $1.00
Fund (Retail A Shares) (Retail A Shares) (Retail A Shares)
(Fund C)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $159,178,610 159,178,610 $1.00
(Fund A + Fund C) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$143,538,380 143,538,380 $1.00
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $173,571,847 173,571,847 $1.00
(Fund A + Fund B + Fund C) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$323,717,385 323,717,385 $1.00
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-39-
<PAGE>
4. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Conning Money Market
Portfolio with the Firstar Conning Money Market Fund.
<TABLE>
<CAPTION>
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Conning Money Market $190,185,773 190,185,773 $1.00
Portfolio (Shares) (Shares) (Shares)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $190,185,773 190,185,773 $1.00
(Shares) (Shares) (Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-40-
<PAGE>
5. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile U.S. Government
Securities Portfolio and the Stellar U.S. Government Income Fund with the
Firstar U. S. Government Securities Fund. The table provides pro forma
capitalization information for two different scenarios: (a) the combination of
the Mercantile U.S. Government Securities Portfolio with the Firstar U.S.
Government Securities Fund (Pro forma Combined Fund = Fund A + Fund C) and (b)
the combination of the Mercantile U.S. Government Securities Portfolio and the
Stellar U.S. Government Income Fund with the Firstar U.S. Government Securities
Fund (Pro forma Combined Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile U.S. Government $ 3,837,184 375,980 $10.21
Securities Portfolio (Investor A Shares) (Investor A Shares) (Investor A Shares)
(Fund A) $ 175,105 17,130 $10.22
(Investor B Shares) (Investor B Shares) (Investor B Shares)
$ 7,288,887 716,895 $10.17
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$ 51,713,926 5,066,947 $10.21
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
Stellar U.S. Government Income $162,758,243 17,411,531 $ 9.35
Fund (Class A Shares) (Class A Shares) (Class A Shares)
(Fund B) $ 1,296,016 138,708 $ 9.34
(Class B Shares) (Class B Shares) (Class B Shares)
-------------------------------------------------------------------------------------------------------
Firstar U.S. Government $ 0 0 $ 0
Securities Fund (Retail A Shares) (Retail A Shares) (Retail A Shares)
(Fund C)* $ 0 0 $ 0
(Retail B Shares) (Retail B Shares) (Retail B Shares)
$ 0 0 $ 0
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$ 0 0 $ 0
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-41-
<PAGE>
<TABLE>
<CAPTION>
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma Combined Fund $ 3,837,184 375,980 $10.21
(Fund A + Fund C) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 175,105 17,130 $10.22
(Retail B Shares) (Retail B Shares) (Retail B Shares)
$ 7,288,887 716,895 $10.17
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$ 51,713,926 5,066,947 $10.21
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $11,789,427 1,154,824 $10.21
(Fund A + Fund B + Fund C) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 1,458,121 143,670 $10.22
(Retail B Shares) (Retail B Shares) (Retail B Shares)
$ 7,288,887 716,895 $10.17
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$ 206,509,926 20,228,161 $10.21
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Firstar U.S. Government Securities Fund has not commenced operations as of
the date of this Proxy/Prospectus.
-42-
<PAGE>
6. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Intermediate
Corporate Bond Portfolio with the Firstar Intermediate Bond Market Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ ---------
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$423,591 45,524 $9.30
(Investor A Shares) (Investor A Shares) (Investor A Shares)
Mercantile Intermediate $957,439 102,890 $9.31
Corporate Bond Portfolio (Institutional Shares) (Institutional Shares) (Institutional Shares)
$37,508,592 4,046,294 $9.30
(Trust Shares) (Trust Shares) (Trust Shares)
-----------------------------------------------------------------------------------------------------------------------
$29,682,992 2,992,031 $9.92
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Firstar Intermediate Bond $-- -- $--
Market Fund* (Class Y Shares) (Class Y Shares) (Class Y Shares)
$368,098,405 37,102,918 $9.92
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------------------------------
$30,106,583 3,034,731 $9.92
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$957,439 96,516 $9.92
Pro forma Combined Fund (Class Y Shares) (Class Y Shares) (Class Y Shares)
$405,591,322 40,884,026 $9.92
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
*The Class Y Shares of the Firstar Intermediate Bond Market Fund have not been
offered to investors as of the date of this Proxy/Prospectus.
-43-
<PAGE>
7. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization information for the combination of the Mercantile Bond
Index Portfolio and the Mercantile Government & Corporate Bond Portfolio with
the Firstar Aggregate Bond Fund. The table provides pro forma capitalization
information for three different scenarios: (a) the combination of the Mercantile
Bond Index Portfolio with the Firstar Aggregate Bond Fund (Pro forma Combined
Fund = Fund A + Fund C), (b) the combination of the Mercantile Government &
Corporate Bond Portfolio with the Firstar Aggregate Bond Fund (Pro forma
Combined Fund = Fund B + Fund C) and (c) the combination of the Mercantile Bond
Index Portfolio and the Mercantile Government & Corporate Bond Portfolio with
the Firstar Aggregate Bond Fund (Pro forma Combined Fund = Fund A + Fund B +
Fund C).
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ ---------
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$976,547 101,155 $9.65
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$ 20,688,583 2,143,175 $9.65
Mercantile Bond Index Portfolio (Institutional Shares) (Institutional Shares) (Institutional Shares)
(Fund A) $148,912,471 15,439,389 $9.64
(Trust Shares) (Trust Shares) (Trust Shares)
---------------------------------------------------------------------------------------------------------------------
$3,195,302 328,030 $9.74
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$641,644 65,718 $9.76
Mercantile Government & Corporate (Investor B Shares) (Investor B Shares) (Investor B Shares)
Bond Portfolio $7,418,248 760,398 $9.76
(Fund B) (Institutional Shares) (Institutional (Institutional Shares)
$113,428,914 Shares) $9.76
(Trust Shares) 11,625,615 (Trust Shares)
(Trust Shares)
---------------------------------------------------------------------------------------------------------------------
$ --- --- $ ---
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ --- --- $ ---
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Firstar Aggregate Bond Fund $ --- --- $ ---
(Fund C)* (Class Y Shares) (Class Y Shares) (Class Y Shares)
$ --- --- $ ---
(Institutional Shares) (Institutional (Institutional Shares)
Shares)
---------------------------------------------------------------------------------------------------------------------
$976,547 101,155 $9.65
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$20,688,583 2,143,175 $9.65
Pro forma Combined Fund (Class Y Shares) (Class Y Shares) (Class Y Shares)
(Fund A + Fund C) $148,912,471 15,439,389 $9.64
(Institutional Shares) (Institutional (Institutional Shares)
Shares)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
-44-
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ ---------
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$3,195,302 328,030 $9.74
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$641,644 65,718 $9.76
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $7,418,248 760,398 $9.76
(Fund B + Fund C) (Class Y Shares) (Class Y Shares) (Class Y Shares)
$113,428,914 11,625,615 $9.76
(Institutional Shares) (Institutional (Institutional Shares)
Shares)
----------------------------------------------------------------------------------------------------------------
$4,171,849 428,291 $9.74
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$641,644 65,718 $9.76
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $28,104,831 2,879,925 $9.76
(Fund A + Fund B + Fund C) (Class Y Shares) (Class Y Shares) (Class Y Shares)
$262,326,139 26,881,478 $9.76
(Institutional Shares) (Institutional (Institutional Shares)
Shares)
----------------------------------------------------------------------------------------------------------------
</TABLE>
*The Firstar Aggregate Bond Fund has not commenced operations as of the date of
this Proxy/Prospectus.
-45-
<PAGE>
8. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Short-Intermediate
Municipal Portfolio with the Firstar Tax-Exempt Intermediate Bond Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------------- ------------------ ---------------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$44,256 4,488 $9.86
Mercantile Short-Intermediate (Investor A Shares) (Investor A Shares) (Investor A Shares)
Municipal Portfolio $27,942,789 2,842,578 $9.83
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$14,797,774 1,481,382 $9.94
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Firstar Tax-Exempt Intermediate $68,728,212 6,879,293 $9.99
Bond Fund (Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$14,842,030 1,485,412 $9.99
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Pro forma Combined Fund $96,664,001 9,675,668 $9.99
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-46-
<PAGE>
9. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Missouri Tax-Exempt
Bond Portfolio with the Firstar Missouri Tax-Exempt Bond Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------------- -------------------- ----------------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$20,234,876 1,797,674 $11.26
(Investor A Shares) (Investor A Shares) (Investor A Shares)
Mercantile Missouri Tax-Exempt $3,294,045 292,820 $11.25
Bond Portfolio (Investor B Shares) (Investor B Shares) (Investor B Shares)
$116,152,701 10,316,026 $11.26
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$ 20,234,896 1,797,674 $11.26
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$3,294,045 292,820 $11.25
Pro forma Combined Fund (Retail B Shares) (Retail B Shares) (Retail B Shares)
$116,152,701 10,316,026 $11.26
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-47-
<PAGE>
10. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile National Municipal
Bond Portfolio and the Stellar Insured Tax-Free Bond Fund with the Firstar
National Municipal Bond Fund. The table provides pro forma capitalization
information for two different scenarios: (a) the combination of the Mercantile
National Municipal Bond Portfolio with the Firstar National Municipal Bond Fund
(Pro forma Combined Fund = Fund A + Fund C) and (b) the combination of the
Mercantile National Municipal Bond Portfolio and the Stellar Insured Tax-Free
Bond Fund with the Firstar National Municipal Bond Fund (Pro forma Combined Fund
= Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------------- ------------------ ------------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1,460,740 155,456 $9.40
(Investor A Shares) (Investor A Shares) (Investor A Shares)
Mercantile National Municipal $638,533 68,048 $9.38
Bond Portfolio (Investor B Shares) (Investor B Shares) (Investor B Shares)
(Fund A) $265,768,912 28,342,537 $9.38
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$157,723,623 16,002,896 $9.86
Stellar Insured Tax-Free Bond (Class A Shares) (Class A Shares) (Class A Shares)
Fund $10 1 $9.86
(Fund B) (Class B Shares) (Class B Shares) (Class B Shares)
-------------------------------------------------------------------------------------------------------
$ -- -- $ --
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Firstar National Municipal Bond $ -- -- $ --
Fund (Retail B Shares) (Retail B Shares) (Retail B Shares)
(Fund C)* $ -- -- $ --
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$1,460,740 155,456 $9.40
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Pro forma Combined Fund $638,533 68,048 $9.38
(Fund A + Fund C) (Retail B Shares) (Retail B Shares) (Retail B Shares)
$265,768,912 28,342,537 $9.38
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$5,402,831 574,469 $9.40
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Pro forma Combined Fund $638,543 68,049 $9.38
(Fund A + Fund B + Fund C) (Retail B Shares) (Retail B Shares) (Retail B Shares)
$419,524,544 44,733,531 $9.38
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Firstar National Municipal Bond Fund has not commenced operations as of the
date of this Proxy/Prospectus.
-48-
<PAGE>
11. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Balanced Portfolio
with the Firstar Balanced Growth Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------------- ------------------ ---------------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Balanced Portfolio $10,075,967 933,839 $10.79
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$1,990,128 186,509 $10.67
(Investor B Shares) (Investor B Shares) (Investor B Shares)
$53,563,141 4,983,387 $10.75
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$22,581,605 2,091,371 $10.80
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
Firstar Balanced Growth Fund* $53,469,984 1,640,360 $32.60
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$1,264,043 38,673 $32.69
(Retail B Shares) (Retail B Shares) (Retail B Shares)
$ -- -- $ --
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$174,573,508 5,347,308 $32.65
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
Pro forma Combined Fund $63,543,951 1,949,377 $32.60
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$3,254,171 99,552 $32.69
(Retail B Shares) (Retail B Shares) (Retail B Shares)
$53,556,237 1,642,817 $32.60
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$197,152,513 6,038,855 $32.65
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Class Y Shares of the Firstar Balanced Growth Fund have not been offered to
investors as of the date of this Proxy/Prospectus.
-49-
<PAGE>
12. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Equity Income
Portfolio with the Firstar Equity Income Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$820,481 129,847 $6.32
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$640,153 101,560 $6.30
Mercantile Equity Income (Investor B Shares) (Investor B Shares) (Investor B Shares)
Portfolio $113,121 17,864 $6.33
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$54,894,443 8,679,498 $6.32
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$820,481 129,847 $6.32
(Retail A Shares) (Retail A Shares) (Retail A Shares)
640,153 101,560 $6.30
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $113,121 17,864 $6.33
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$54,894,443 8,679,498 $6.32
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-50-
<PAGE>
13. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Equity Index
Portfolio with the Firstar Equity Index Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 3,506,691 197,413 $17.76
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$ 37,724,640 2,123,671 $17.76
Mercantile Equity Index Portfolio (Institutional (Institutional (Institutional
Shares) Shares) Shares)
$ 70,164,791 3,946,257 $17.78
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$146,679,976 1,535,982 $95.48
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 9,131,982 95,787 $95.31
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Firstar Equity Index Fund* $ -- -- $ --
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$665,834,555 6,963,125 $95.63
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$150,186,667 1,572,709 $95.48
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 9,131,982 95,787 $95.31
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $ 37,717,346 395,032 $95.48
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$735,986,541 7,696,697 $95.63
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Class Y Shares of the Firstar Equity Index Fund have not been offered to
investors as of the date of this Proxy/Prospectus.
-51-
<PAGE>
14. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Growth & Income
Equity Portfolio with the Firstar Growth & Income Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 47,385,120 2,623,390 $18.06
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$ 9,714,550 549,822 $17.67
(Investor B Shares) (Investor B Shares) (Investor B Shares)
Mercantile Growth & Income $ 86,329,718 4,776,910 $18.07
Equity Portfolio (Institutional (Institutional (Institutional
Shares) Shares) Shares)
$246,714,630 13,586,012 $18.16
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$181,141,881 4,036,241 $44.90
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 2,460,928 54,987 $44.75
Firstar Growth & Income Fund* (Retail B Shares) (Retail B Shares) (Retail B Shares)
$ -- -- $ --
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$509,848,935 11,382,852 $44.97
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$228,524,001 5,091,522 $44.90
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 12,174,478 272,050 $44.75
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $ 86,323,718 1,923,690 $44.90
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$756,545,529 16,868,656 $44.97
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Class Y Shares of the Firstar Growth & Income Fund have not been offered to
investors as of the date of this Proxy/Prospectus.
-52-
<PAGE>
15. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Growth Equity
Portfolio with the Firstar Growth Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 9,296,079 421,411 $22.06
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$ 2,213,589 102,198 $21.66
(Investor B Shares) (Investor B Shares) (Investor B Shares)
Mercantile Growth Equity $ 2,607,143 118,307 $22.04
Portfolio (Institutional (Institutional (Institutional
Shares) Shares) Shares)
$111,340,820 5,011,539 $22.22
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$ 51,718,399 1,204,074 $42.94
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 1,144,141 26,876 $42.57
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Firstar Growth Fund* $ -- -- $ --
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$321,879,145 7,390,974 $43.55
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$ 61,013,478 1,420,541 $42.94
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 3,357,730 78,874 $42.57
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $ 2,607,143 60,716 $42.94
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$433,208,616 9,947,339 $43.55
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Class Y Shares of the Firstar Growth Fund have not been offered to
investors as of the date of this Proxy/Prospectus.
-53-
<PAGE>
16. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Small Cap Equity
Portfolio with the Firstar Emerging Growth Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 9,644,689 570,339 $16.91
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$ 1,259,999 77,354 $16.29
Mercantile Small Cap Equity (Investor B Shares) (Investor B Shares) (Investor B Shares)
Portfolio $ 4,316,832 256,056 $16.86
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$137,887,641 8,012,475 $17.21
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$ 11,154,683 876,833 $12.72
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 222,044 17,594 $12.92
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Firstar Emerging Growth Fund* $ -- -- $ --
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$184,496,463 14,433,579 $12.78
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$ 20,798,072 1,229,912 $16.91
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 1,482,043 90,985 $16.29
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $ 4,316,832 256,056 $16.86
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$322,358,404 18,731,310 $17.21
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Class Y Shares of the Firstar Emerging Growth Fund have not been offered to
investors as of the date of this Proxy/Prospectus.
-54-
<PAGE>
17. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile Small Cap Equity
Index Portfolio with the Firstar Small Cap Index Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 164,419 14,418 $11.40
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$15,514,528 1,364,327 $11.37
Mercantile Small Cap Equity (Institutional (Institutional (Institutional
Index Portfolio Shares) Shares) Shares)
$52,932,256 4,814,031 $11.41
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$ 164,419 14,418 $11.40
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$15,514,528 1,364,327 $11.37
Pro forma Combined Fund (Class Y Shares) (Class Y Shares) (Class Y Shares)
$52,932,256 4,814,031 $11.41
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
-55-
<PAGE>
18. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Mercantile International Equity
Portfolio with the Firstar Core International Equity Fund.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 4,164,470 241,746 $17.23
Investor A Shares) (Investor A Shares) (Investor A Shares)
$ 790,990 47,474 $16.66
Mercantile International (Investor B Shares) (Investor B Shares) (Investor B Shares)
Equity Portfolio $ 15,417,874 896,702 $17.19
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$109,908,750 6,296,258 $17.46
(Trust Shares) (Trust Shares) (Trust Shares)
-------------------------------------------------------------------------------------------------------
$ 30,142 3,034 $ 9.93
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 44,699 4,505 $ 9.92
Firstar Core International (Retail B Shares) (Retail B Shares) (Retail B Shares)
Equity Fund* $ -- -- $ --
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$ 39,613,123 3,981,644 $ 9.95
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
$ 4,194,612 243,495 $17.23
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$ 835,689 50,157 $16.66
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro forma Combined Fund $ 15,417,874 896,702 $17.19
(Class Y Shares) (Class Y Shares) (Class Y Shares)
$149,521,873 8,565,050 $17.46
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-------------------------------------------------------------------------------------------------------
</TABLE>
*The Class Y Shares of the Firstar Core International Equity Fund have not been
offered to investors as of the date of this Proxy/Prospectus.
-56-
<PAGE>
Federal Income Tax Considerations. Each Firstar Fund and each Mercantile
Fund intends to qualify as of the effective time of the Reorganization as a
separate "regulated investment company" under the Internal Revenue Code of 1986,
as amended (the "Code"). Accordingly, each Mercantile Fund and each
Corresponding Firstar Fund has been, and expects to continue to be, relieved of
federal income tax liability.
Consummation of the Reorganization with respect to each Mercantile Fund and
its Corresponding Firstar Fund is subject to the condition that Mercantile and
Firstar receive an opinion from Drinker Biddle & Reath LLP substantially to the
effect that, for federal income tax purposes: (i) the transfer of substantially
all of the assets and liabilities of a Mercantile Fund to its Corresponding
Firstar Fund in exchange for the Firstar Fund Shares issued by such
Corresponding Firstar Fund, and the distribution of those Firstar Fund Shares to
shareholders of the Mercantile Fund, will consist of nineteen "reorganizations"
within the meaning of Section 368(a) of the Code, and each Mercantile Fund and
its Corresponding Firstar Fund will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code in respect of the Reorganization; (ii)
no gain or loss will be recognized by any Mercantile Fund upon the transfer of
its assets and liabilities to its Corresponding Firstar Fund solely in exchange
for Firstar Fund Shares of the Corresponding Firstar Fund; (iii) no gain or loss
will be recognized by each Firstar Fund upon the receipt of the assets and
assumption of the liabilities of its Corresponding Mercantile Fund solely in
exchange for the Firstar Fund Shares; (iv) the basis of each Mercantile Fund's
assets received by the Corresponding Firstar Fund pursuant to the Reorganization
will be the same as the basis of those assets in the hands of such Mercantile
Fund immediately prior to the Reorganization; (v) the holding period of each
Mercantile Fund's assets in the hands of its Corresponding Firstar Fund will
include the period for which such assets have been held by such Mercantile Fund;
(vi) no gain or loss will be recognized by any Mercantile Fund on the
distribution to its shareholders of the Firstar Fund Shares of its Corresponding
Firstar Fund; (vii) no gain or loss will be recognized by the shareholders of
any Mercantile Fund upon their receipt of the Firstar Fund Shares in exchange
for such shareholders' shares of the Mercantile Fund; (viii) the basis of the
Firstar Fund Shares received by the shareholders of each Mercantile Fund will be
the same as the basis of the Mercantile Fund shares surrendered by such
shareholders pursuant to the Reorganization; (ix) the holding period for the
Firstar Fund Shares received by each Mercantile Fund shareholder will include
the period during which such shareholder held the Mercantile Fund shares
surrendered in exchange therefor, provided that such Mercantile Fund shares are
held as a capital asset in the hands of such Mercantile Fund shareholder on the
date of the exchange; and (x) each Firstar Fund will succeed to and take into
account the tax attributes described in Section 381(c) of the Code of the
Mercantile Fund as of the effective time of the Reorganization with respect to
the Mercantile Fund, subject to the conditions and limitations specified in the
Code. Shareholders of the Mercantile Funds should note, however, that the sale
of securities by the Mercantile Funds prior to the effective time of the
Reorganization, whether in the ordinary course of business or in anticipation of
the Reorganization, could increase the amount of the taxable capital gains
distributions made prior to the Reorganization.
Firstar and Mercantile have not sought, and will not seek, a private ruling
from the Internal Revenue Service ("IRS") with respect to the federal income tax
consequences of the Reorganization. The opinion of Drinker Biddle & Reath LLP
with respect to the federal income
-57-
<PAGE>
tax consequences of the Reorganization is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. Shareholders should consult
their own advisers concerning the potential tax consequences of the
Reorganization to them, including any applicable foreign, state or local income
tax consequences.
COMPARISON OF MERCANTILE FUNDS AND FIRSTAR FUNDS
Investment Objectives and Policies. The investment objectives, policies
and restrictions of each Mercantile Fund are, in general, similar to those of
its Corresponding Firstar Fund. They are summarized in Appendix III. Moreover,
(i) the investment objective, policies and restrictions of each of the
Mercantile U.S. Government Securities Portfolio and Mercantile National
Municipal Bond Portfolio are, in each case, substantially the same as those of
its respective Corresponding Existing Firstar Fund and the investment policies
and restrictions of the Mercantile Government & Corporate Bond Portfolio are
substantially the same as, and the Portfolio's investment objective is similar
to, those of its Corresponding Existing Firstar Fund, and (ii) the investment
objective, policies and restrictions of each of the Mercantile Conning Money
Market Portfolio, Mercantile Missouri Tax-Exempt Bond Portfolio, Mercantile
Equity Income Portfolio and Mercantile Small Cap Equity Index Portfolio are, in
each case, substantially the same as those of its respective Corresponding Shell
Firstar Fund. Each Shell Firstar Fund is being created to acquire the assets
and liabilities, and continue the business, of its respective corresponding
Continuing Mercantile Fund. With the exception of the Mercantile U.S.
Government Securities Portfolio, Mercantile Government & Corporate Bond
Portfolio and Mercantile National Municipal Bond Portfolio described above,
there are, however, certain differences in the types of securities in which each
of the Reorganizing Mercantile Funds may invest and the types of securities in
which its Corresponding Firstar Fund may invest, as well as differences in
certain investment policies of such Funds. A discussion of some of the more
significant differences between the Funds follows.
Reorganizing Money Market Funds. The Mercantile Money Market Funds and the
-------------------------------
Firstar Money Market Funds are all subject to the general restrictions and
limitations of Rule 2a-7 under the 1940 Act. However, there are differences
between the investment policies and restrictions of the Mercantile Money Market
Funds and their corresponding Firstar Funds. For example, the Mercantile
Treasury Money Market Portfolio invests in obligations issued by the U.S.
Treasury and certain U.S. Government agencies and instrumentalities that provide
income that is generally not subject to state income tax, while the Firstar U.S.
Treasury Money Market Fund invests in obligations issued or guaranteed as to
principal and interest by the U.S. Treasury. Similarly, the Firstar Treasury
Money Market Portfolio may enter into repurchase agreements whereas the
Mercantile Treasury Money Market Portfolio may only enter into repurchase
agreements in extraordinary circumstances. The Mercantile Money Market
Portfolio may invest in obligations issued or guaranteed by U.S. Government and
its agencies and instrumentalities while the Firstar Money Market Fund may
invest in obligations issued or guaranteed by both U.S. and foreign governments
and their agencies and instrumentalities. The Firstar Tax-Exempt Money Market
Fund is a diversified portfolio under the 1940 Act while the Mercantile Tax-
Exempt Money
-58-
<PAGE>
Market Portfolio is a non-diversified portfolio under the 1940 Act. It is
expected that at the time of the Reorganization the Firstar U.S. Treasury Money
Market Fund will adopt an investment objective and certain non-fundamental
investment policies and restrictions that are substantially the same as those of
the Stellar Treasury Fund. See Exhibit A to Appendix III of this
Proxy/Prospectus for a complete description of the investment objective,
policies and restrictions of the Stellar Treasury Fund.
Reorganizing Bond Funds. The Firstar Intermediate Bond Market Fund invests
-----------------------
in investment grade debt obligations, which are those rated in one of the top
four rating categories by one or more rating agencies, while the Mercantile
Intermediate Corporate Bond Portfolio, which also invests in investment grade
debt obligations, normally invests at least 65% of its total assets in debt
obligations rated in one of the three highest rating categories. The Mercantile
Bond Index Portfolio and the Firstar Aggregate Bond Fund invest in similar debt
securities but utilize entirely different strategies. The Mercantile Bond Index
Portfolio is not managed through the use of traditional methods of investment
management, but instead uses an "indexing" strategy through the use of computer
models to approximate the investment performance of the Lehman Aggregate Bond
Index. The Firstar Aggregate Bond Fund is managed through the use of
traditional methods of investment management, such as market, economic and
security analysis. Unlike the Mercantile Short-Intermediate Municipal
Portfolio, the Firstar Tax-Exempt Intermediate Bond Fund is required to invest
at least 65% of its total assets in bonds and debentures. The average weighted
maturity is generally between 2 and 5 years for the Mercantile Short-
Intermediate Municipal Portfolio, while the average weighted maturity of the
Firstar Tax-Exempt Intermediate Bond Fund is generally between 3 and 10 years.
It is expected that at the time of the Reorganization, the Firstar
Intermediate Bond Market Fund will be renamed the Firstar Intermediate Bond
Fund.
Reorganizing Equity Funds. Although actual percentages will vary from time
-------------------------
to time, the Mercantile Balanced Portfolio's policy is to invest at least 25% of
its total assets in fixed-income securities and no more than 75% of its total
assets in equity securities, while the Firstar Balanced Growth Fund's policy is
to invest at least 25% of its total assets in fixed income securities and at
least 50% and no more than 65% of its total assets in equity securities. The
Mercantile Balanced Portfolio's investments in equity securities are primarily
common stocks of companies with large market capitalizations, while the Firstar
Balanced Growth Fund's equity investments consist primarily of common stocks of
companies with market capitalizations between $100 million and $100 billion.
Both the Mercantile Equity Index Portfolio and the Firstar Equity Index Fund
include stocks in their respective portfolios based on such stocks' weightings
in the S&P 500 Index. The Mercantile Equity Index Portfolio, unlike the Firstar
Equity Index Fund, may invest in index-based depository receipts in lieu of
investments in the actual securities listed in the S&P 500 Index. Although many
of the stocks purchased by the Mercantile Growth & Income Equity Portfolio pay
dividends, income is not a major factor in the stock selection process for the
Portfolio. By contrast, the Firstar Growth & Income Fund will not purchase a
non-dividend paying security if immediately after giving effect to such purchase
less than 80% of the net assets of the Fund will be invested in dividend paying
securities. The Firstar Growth & Income Fund normally invests at least 50% of
its net assets in equity securities, and these securities are generally those of
companies with market capitalizations of over $1 billion, while the Mercantile
-59-
<PAGE>
Growth & Income Equity Portfolio invests primarily in common stocks with no
stated capitalization requirements. The Mercantile Growth Equity Portfolio
generally invests at least 65% of its total assets in stocks or other equity
securities of large- and medium-capitalization companies, while the Firstar
Growth Fund normally invests at least 50% of its total assets in equity
securities with market capitalizations over $3 billion. The Mercantile Small
Cap Equity Portfolio invests at least 65% of its total assets in small- to
medium-sized companies with market capitalizations from $100 million to $2
billion at the time of purchase, while the Firstar Emerging Growth Fund invests
at least 50% of its total assets in equity securities and these companies
generally have market capitalizations between $250 million and $2 billion. The
Firstar Core International Equity Fund normally invests at least 65% of its
total assets in securities of companies based in at least three different
countries other than the United States. The Mercantile International Equity Fund
normally invests at least 80% of its assets in the securities of issuers located
in at least three foreign countries with normally at least 50% of its total
assets invested in the securities of companies located in the developed
countries of Western Europe or Japan. The Firstar Core International Equity Fund
may not engage in options transactions whereas the Mercantile International
Equity Portfolio may engage in a wide range of options transactions. It is
expected that at the time of the Reorganization the Firstar Emerging Growth Fund
and the Firstar Core International Equity Fund will adopt investment objectives
and certain non-fundamental investment policies and restrictions that are
substantially the same as those of the Mercantile Small Cap Equity Portfolio and
Mercantile International Equity Portfolio, respectively.
It is expected that at the time of the Reorganization, the Firstar Growth
Fund will be renamed the Firstar Large Cap Core Equity Fund, the Firstar
Emerging Growth Fund will be renamed the Firstar Small Cap Core Equity Fund and
the Firstar Core International Equity Fund will be renamed the Firstar
International Growth Fund.
The investment objectives, policies and restrictions of the Mercantile
Funds and Firstar Funds are more fully discussed in Appendix III. Additional
information about the investment policies and restrictions of the Mercantile
Funds and Firstar Funds is included in their respective prospectuses and
statements of additional information, which have been incorporated herein by
reference.
Investment Advisory Services. FIRMCO serves as investment adviser to the
Firstar Funds and Mercantile Funds will continue to serve as investment adviser
to the Firstar Funds upon consummation of the Reorganization. Conning Asset
Management Company will serve as sub-adviser to the Firstar Conning Money Market
Fund upon consummation of the Reorganization. It is expected that Clay Finlay
Inc. will replace The Glenmede Trust Company as sub-adviser to the Firstar Core
International Equity Fund prior to the Reorganization and will continue to serve
as sub-adviser to the Portfolio upon consummation of the Reorganization.
The following table shows the contractual investment advisory and, where
applicable, sub-advisory fee ratios for each Mercantile Fund and its
Corresponding Firstar Fund. The table also shows the respective investment
advisory and sub-advisory fee rates paid to the investment adviser and sub-
adviser after taking into account voluntary fee waivers. The fees for the
Mercantile Funds are as of April 30, 2000. The fees for the Firstar Funds (both
before and after
-60-
<PAGE>
waivers) represent the pro forma annualized advisory fees based upon fee
arrangements that will be in place upon consummation of the Reorganization.
Table V
Investment Advisory and Sub-Advisory Fee Information
----------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Mercantile Fund Advisory Fees Corresponding Firstar Fund Advisory Fees
--------------- --------------------------
Before/After Waivers Before/After Waivers
--------------------
(Pro Forma After Giving
Effect to the Reorganization)
----------------------------
Reorganization
--------------
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Treasury Money Market Portfolio Firstar U.S. Treasury Money Market Fund
Advisory Fee 0.40% / 0.35% Advisory Fee 0.44% / 0.44%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Money Market Portfolio Firstar Money Market Fund
Advisory Fee 0.40% / 0.35% Advisory Fee 0.50% / 0.43%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Tax-Exempt Money Market Portfolio Firstar Tax-Exempt Money Market Fund
Advisory Fee 0.40% / 0.35% Advisory Fee 0.50% / 0.50%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Conning Money Market Portfolio Firstar Conning Money Market Fund (shell)
Advisory Fee 0.40% / 0.17% Advisory Fee 0.40% / 0.17%
Sub-Advisory Fee 0.30% / 0.12% Sub-Advisory Fee 0.30%/ 0.12%
(paid by Adviser) (paid by Adviser)
-------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Securities Portfolio Firstar U.S. Government Securities Fund
Advisory Fee 0.45% / 0.45% Advisory Fee 0.60% / 0.50%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Intermediate Corporate Bond Portfolio Firstar Intermediate Bond Market Fund
Advisory Fee 0.55% / 0.55% Advisory Fee 0.50% / 0.40%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Bond Index Portfolio Firstar Aggregate Bond Fund
Advisory Fee 0.30% / 0.30% Advisory Fee 0.50% / 0.44%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Government & Corporate Bond Portfolio Firstar Aggregate Bond Fund
Advisory Fee 0.45% / 0.45% Advisory Fee Aggregate 0.50% / 0.44%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Short-Intermediate Municipal Portfolio Firstar Tax-Exempt Intermediate Bond Fund
Advisory Fee 0.55% / 0.55% Advisory Fee 0.50% / 0.39%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Missouri Tax-Exempt Bond Portfolio Firstar Missouri Tax-Exempt Bond Fund (shell)
Advisory Fee 0.45% / 0.45% Advisory Fee 0.45% / 0.45%
-------------------------------------------------------------------------------------------------------------------------
Mercantile National Municipal Bond Portfolio Firstar National Municipal Bond Fund
Advisory Fee 0.55% / 0.55% Advisory Fee 0.55% / 0.55%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
Advisory Fee 0.75% / 0.75% Advisory Fee 0.75% / 0.71%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Equity Income Portfolio Firstar Equity Income Fund (shell)
Advisory Fee 0.75% / 0.75% Advisory Fee 0.75% / 0.72%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Equity Index Portfolio Firstar Equity Index Fund
Advisory Fee 0.30% / 0.30% Advisory Fee 0.25% / 0.20%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Growth & Income Equity Portfolio Firstar Growth & Income Fund
Advisory Fee 0.55% / 0.55% Advisory Fee 0.75% / 0.75%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Growth Equity Portfolio Firstar Growth Fund
Advisory Fee 0.75% / 0.75% Advisory Fee 0.75% / 0.75%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Portfolio Firstar Emerging Growth Fund
Advisory Fee 0.75% / 0.75% Advisory Fee 0.75% / 0.74%
-------------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Index Portfolio Firstar Small Cap Index Fund (shell)
Advisory Fee 0.40% / 0.40% Advisory Fee 0.40% / 0.34%
-------------------------------------------------------------------------------------------------------------------------
Mercantile International Equity Portfolio Firstar Core International Equity Fund
Advisory Fee 1.00% / 0.94% Advisory Fee 1.00% / 0.94%
Sub-Advisory Fee 0.75% / 0.75% Sub-Advisory Fee 0.75% / 0.75%
(paid by Adviser) (paid by Adviser)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
In addition to the compensation stated above, FIRMCO is entitled to
4/10/ths/ of the gross income earned by each Firstar Fund on each loan of its
portfolio securities, excluding capital gains or losses, if any. Pursuant to the
current policy of the SEC, FIRMCO does not intend to receive compensation for
such securities lending activity. FIRMCO may voluntarily waive advisory fees
otherwise payable by the Firstar Funds.
Other Service Providers for the Mercantile Funds and Firstar Funds
FMFS serves as co-administrator for the Mercantile Funds, administrator for
the Firstar Funds and as transfer agent for both the Mercantile Funds and the
Firstar Funds. Mercantile and Firstar have different distributors and
independent accountants. Upon completion of the Reorganization, Firstar will
continue to engage its existing service providers. In all cases, the types of
services provided to the Funds under these service arrangements are
substantially similar.
<TABLE>
<CAPTION>
Mercantile Firstar
---------- -------
<S> <C> <C>
Distributor BISYS Fund Services Limited Quasar Distributors, LLC
Partnership
Co-Administrators/ BISYS Fund Services Ohio, Inc. and Firstar Mutual Fund Services,
Administrator Firstar Mutual Fund Services, LLC LLC
Transfer Agent Firstar Mutual Fund Services, LLC Firstar Mutual Fund Services,
LLC
Custodian Firstar Bank N.A. Firstar Bank, N.A.
Independent Accountants KPMG LLP PricewaterhouseCoopers LLP
</TABLE>
Sales Loads, Distribution and Shareholder Servicing Arrangements for
Mercantile
Investor A Shares. Each Mercantile Fund, except the Mercantile Conning
-----------------
Money Market Portfolio, offers Investor A Shares. Investor A Shares of each
Mercantile Fund, except Investor A Shares of the Mercantile Treasury Money
Market Portfolio, Mercantile Money Market Portfolio and Mercantile Tax-Exempt
Money Market Portfolio (the "Mercantile Money Market Funds"), charge a front-end
sales load at the time of purchase. The maximum front-end sales load charged for
each Mercantile Fund's Investor A Shares is set forth in Appendix IV. Sales load
reduction and waiver categories, which differ in certain respects from those
applicable to Retail A Shares of the Corresponding Firstar Funds, are described
in Appendix IV.
Mercantile has adopted a Distribution and Services Plan for Investor A
Shares pursuant to which the Investor A Shares of each Mercantile Fund pay fees
to (i) Mercantile's distributor or other persons for distribution services and
related expenses and (ii) to broker-dealers and other financial organizations
("Service Organizations") for shareholder administrative services provided
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<PAGE>
to the holders of Investor A Shares. Distribution services and expenses include
compensating dealers and other sales personnel, direct advertising and marketing
expenses and expenses incurred in connection with preparing, printing, mailing
and distributing or publishing advertisements and sales literature and with
printing and mailing the Mercantile Funds' prospectuses and statements of
additional information (except those used for regulatory purposes or distributed
to existing shareholders). Shareholder administrative services include providing
information to customers showing their position in Investor A Shares, providing
sub-accounting with respect to Investor A Shares owned by customers, and
establishing and maintaining accounts and records. Under the Distribution and
Services Plan for Investor A Shares, payments by a Mercantile Fund for
distribution services and expenses may not exceed 0.10% (annualized) of the
average daily net asset value of such Mercantile Fund's Investor A Shares and
payments by a Mercantile Fund for shareholder administrative services may not
exceed 0.20% (0.15% for the Mercantile Money Market Funds) (annualized) of the
average daily net asset value of such Mercantile Fund's outstanding Investor A
Shares.
Investor B Shares. Each Mercantile Fund, except the Mercantile Treasury
-----------------
Money Market Portfolio, Mercantile Tax-Exempt Money Market Portfolio, Mercantile
Conning Money Market Portfolio, Mercantile Intermediate Corporate Bond
Portfolio, Mercantile Bond Index Portfolio, Mercantile Short-Intermediate
Municipal Portfolio, Mercantile Equity Index Portfolio and Mercantile Small Cap
Equity Index Portfolio, offers Investor B Shares. Investor B Shares are sold at
net asset value without imposition of a front-end sales load at the time of
purchase. However, there is a maximum 5% contingent deferred sales charge
("CDSC") assessed on Investor B Shares that are redeemed within one year of
purchase, declining to 1% in the sixth year and eliminated thereafter. Investor
B Shares of a Mercantile Fund automatically convert to Investor A Shares of the
same Fund six years after purchase. Retail B Shares of a Firstar Fund received
in exchange for Investor B Shares of a Mercantile Fund will be subject to the
same CDSC. In all cases, former holders of Investor B Shares of a Mercantile
Fund will be credited for the period from the original date of purchase of their
Investor B Shares for purposes of determining the amount of CDSC, if any.
Mercantile has adopted a Distribution and Services Plan for Investor B
Shares pursuant to which the Investor B Shares of each Mercantile Fund pay fees
to (i) Mercantile's distributor or other persons for distribution services and
related expenses and (ii) to Service Organizations for shareholder
administrative services provided to the holders of Investor B Shares.
Distribution services and expenses include compensating dealers and other sales
personnel, direct advertising and marketing expenses and expenses incurred in
connection with preparing, printing, mailing and distributing or publishing
advertisements and sales literature and with printing and mailing the Mercantile
Funds' prospectuses and statements of additional information (except those used
for regulatory purposes or distributed to existing shareholders). Shareholder
administrative services include providing information to customers showing their
position in Investor B Shares providing sub-accounting with respect to Investor
B Shares owned by customers, and establishing and maintaining accounts and
records. Under the Distribution and Services Plan for Investor B Shares,
payments by a Mercantile Fund for distribution services and expenses may not
exceed 0.75% (annualized) of the average daily net asset value of such
Mercantile Fund's Investor B Shares and payments by a Mercantile Fund for
shareholder administrative services may not exceed
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<PAGE>
0.25% (annualized) of the average daily net asset value of such Mercantile
Fund's outstanding Investor B Shares.
Institutional Shares. Each Mercantile Fund, except the Mercantile Tax-
--------------------
Exempt Money Market Portfolio, Mercantile Conning Money Market Portfolio,
Mercantile Short-Intermediate Municipal Portfolio, Mercantile Missouri Tax-
Exempt Bond Portfolio and Mercantile National Municipal Bond Portfolio, offers
Institutional Shares. Institutional Shares are sold at net asset value without
the imposition of a front-end sales load at the time of purchase or a CDSC at
the time of redemption.
Mercantile has adopted an Administrative Services Plan for Institutional
Shares pursuant to which the Institutional Shares of each Mercantile Fund pay
Service Organizations for shareholder administrative services provided to their
customers who own Institutional Shares. Shareholder administrative services
include providing information to customers showing their position in
Institutional Shares, providing sub-accounting with respect to Institutional
Shares owned by customers, and establishing and maintaining accounts and
records. Under the Administrative Services Plan for Institutional Shares,
payments by a Mercantile Fund for shareholder administrative services may not
exceed 0.30% (0.25% for the Mercantile Money Market Funds) (annualized) of the
average daily net asset value of such Mercantile Fund's outstanding
Institutional Shares owned by customers of Service Organizations.
Trust Shares. Each Mercantile Fund, except the Mercantile Conning Money
------------
Market Portfolio, offers Trust Shares. Trust Shares are sold at net asset value
without the imposition of a front-end sales load at the time of purchase or a
CDSC at the time of redemption.
Mercantile has adopted an Administrative Services Plan for Trust Shares
pursuant to which the Trust Shares of each Mercantile Fund pay Service
Organizations for shareholder administrative services provided to their
customers who own Trust Shares. Shareholder administrative services include
providing information to customers showing their position in Trust Shares,
providing sub-accounting with respect to Trust Shares owned by customers, and
establishing and maintaining accounts and records. Under the Administrative
Services Plan for Trust Shares, payments by a Mercantile Fund for shareholder
administrative services may not exceed 0.30% (0.25% for the Mercantile Money
Market Funds) (annualized) of the average daily net asset value of each
Mercantile Fund's outstanding Trust Shares owned by customers of Service
Organizations.
Trust II Shares. The Mercantile Treasury Money Market Portfolio, Mercantile
---------------
Money Market Portfolio and Mercantile Tax-Exempt Money Market Portfolio offer
Trust II Shares. Trust II Shares are sold at net asset value without the
imposition of a front-end sales load at the time of purchase or a CDSC at the
time of redemption. Trust II Shares are not subject to any distribution or
shareholder servicing fees.
Shares of the Mercantile Conning Money Market Portfolio. Shares of the
-------------------------------------------------------
Mercantile Conning Money Market Portfolio are sold at net asset value without
the imposition of a front-end sales charge at the time of purchase or a CDSC at
the time of redemption.
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<PAGE>
Mercantile has adopted a Shareholder Services Plan with respect to the
Mercantile Conning Money Market Portfolio pursuant to which the Portfolio pays
Service Organizations for shareholder liaison and/or administrative support
services provided to their customers who own shares of the Portfolio.
Shareholder liaison services means personnel services for shareholders and/or
the maintenance of shareholder accounts, such as responding to customer
inquiries and providing information on accounts. Administrative support
services include providing sub-accounting services, processing dividend payments
and forwarding shareholder communications. Under the Shareholder Services Plan,
payments by the Portfolio for shareholder liaison services and administrative
support services may not exceed 0.25% (annualized) and 0.50% (annualized),
respectively, of the Portfolio's average daily net assets.
Sales Load, Distribution and Shareholder Servicing Arrangements for Firstar
Retail A Shares. Each Firstar Fund, except the Firstar Conning Money Market
---------------
Fund, offers Retail A Shares. Retail A Shares of each Firstar Fund, except the
Firstar U.S. Treasury Money Market Fund, Firstar Money Market Fund and Firstar
Tax-Exempt Money Market Fund, charge a front-end sales load at the time of
purchase. The maximum front-end sales load charged for each Firstar Fund's
Retail A Shares is set forth in Appendix IV. Sales load reduction and waiver
categories, which differ in certain respects from those applicable to Investor A
Shares of the Corresponding Mercantile Funds, are described in Appendix IV.
Firstar has adopted a Distribution and Service Plan for Retail A Shares of
the Firstar Funds. Firstar also has adopted a Service Plan for Retail A Shares
of the Firstar Funds. Under each of these Plans, Service Organizations are
entitled to receive fees from a Firstar Fund at an annual rate of up to 0.25% of
the average daily net asset value of the Retail A Shares covered by their
respective agreements for distribution and/or shareholder support services, as
the case may be. Fees under both Plans with respect to a particular Fund will
not exceed, in the aggregate, the annual rate of 0.25% of the Fund's average
daily net assets for the Retail A Shares. The Firstar Funds do not intend to pay
distribution (12b-1) fees with respect to Retail A Shares during the current
fiscal year. Shareholder support services provided under the Plans may include
assisting investors in processing purchase, exchange and redemption requests;
processing dividend and distribution payments from a Firstar Fund; providing
information periodically to customers showing their positions in Retail A
Shares; providing sub-accounting services; and forwarding sales literature and
advertising.
Retail B Shares. Each Firstar Fund, except the Firstar Money Market Funds
---------------
offers Retail B Shares. Retail B Shares are sold at net asset value without the
imposition of a front-end sales load at the time of purchase. However, there is
a maximum 5% CDSC assessed on Retail B Shares that are redeemed within one year
of purchase, declining to 1% in the sixth year and eliminated thereafter.
Retail B Shares of a Firstar Fund automatically convert to Retail A Shares of
the same Fund six years after purchase. Retail B Shares of the Firstar Funds
received in exchange for Investor B Shares of the Mercantile Funds will be
subject to the CDSC. In all cases, former holders of Investor B Shares of the
Mercantile Funds will be credited for the period from the original date of
purchase of their Investor B Shares for the purpose of determining the amount of
CDSC, if any.
-65-
<PAGE>
Firstar has adopted a Distribution and Service Plan for Retail B Shares
pursuant to which (i) Firstar's distributor is entitled to receive fees from a
Firstar Fund at an annual rate of up to 0.75% of the average daily net asset
value of the Retail B Shares for distribution services with respect to the
Retail B Shares, and (ii) Service Organization are entitled to receive fees from
a Firstar Fund at an annual rate of up to 0.25% of the average daily net asset
value of the Retail B Shares covered by their agreements for shareholder liaison
services. Shareholder liaison services may include responding to customers'
inquiries and providing information on their investments, and other personal and
account maintenance services within NASD Rules.
Firstar has adopted a Service Plan for Retail B Shares pursuant to which
Service Organizations are entitled to receive fees from a Firstar Fund at an
annual rate of up to 0.25% of the average daily net asset value of the Retail B
Shares covered by their agreements, for shareholder support services.
Shareholder support services provided under the Plan may include assisting
investors in processing purchase, exchange and redemption requests; processing
dividend and distribution payments from a Firstar Fund; providing information
periodically to customers showing their positions in Retail B Shares; providing
sub-accounting services; and forwarding sales literature and advertising.
Institutional Shares. Each Firstar Fund, except the Firstar Money Market
--------------------
Fund and Firstar Conning Money Market Fund, offers Institutional Shares.
Institutional Shares are offered at net asset value without the imposition of a
front-end sales load at the time of purchase or a CDSC at the time of
redemption.
Firstar has adopted a Service Plan for Institutional Shares of the Firstar
U.S. Treasury Money Market Fund and Firstar Tax-Exempt Money Market Fund
pursuant to which Service Organizations are entitled to receive fees from a
Firstar Fund at an annual rate of up to 0.25% of the average daily net asset
value of the Institutional Shares covered by their agreements for shareholder
support services. Shareholder support services may include assisting investors
in processing purchase, exchange and redemption requests; processing dividend
and distribution payments from a Firstar Fund; providing information
periodically to customers showing their positions in Institutional Shares;
providing sub-accounting services; and forwarding sales literature and
advertising.
Class Y Shares. Each Firstar Fund, except the Firstar Money Market Funds,
--------------
offers Class Y Shares. Class Y Shares are offered at net asset value without
the imposition of a front-end sales load at the time of purchase or a CDSC at
the time of redemption.
Firstar has adopted a Service Plan for Class Y Shares pursuant to which
Service Organizations are entitled to receive fees from a Firstar Fund at an
annual rate of up to 0.25% of the average daily net asset value of the Class Y
Shares covered by their agreements for shareholder support services.
Shareholder support services may include assisting investors in processing
purchase, exchange and redemption requests; processing dividend and distribution
payments from a Firstar Fund; providing information periodically to customers
showing their positions in Class Y Shares; providing sub-accounting services;
and forwarding sales literature and advertising.
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<PAGE>
Shares of the Firstar Conning Money Market Fund. Shares of the Firstar
-----------------------------------------------
Conning Money Market Fund are sold at net asset value without the imposition of
a front-end sales charge at the time of purchase or a CDSC at the time of
redemption.
Firstar has adopted a Shareholder Services Plan with respect to the Firstar
Conning Money Market Fund pursuant to which the Fund pays Service Organizations
for shareholder liaison and/or administrative support services provided to their
customers who own shares of the Fund. Shareholder liaison services means
personal services for shareholders and/or the maintenance of shareholder
accounts, such as responding to customer inquiries and providing information on
accounts. Administrative support services include providing sub-accounting
services, processing dividend payments and forwarding shareholder
communications. Under the Shareholder Services Plan, payments by the Fund for
shareholder liaison and/or administrative support services may not exceed an
annual rate of 0.25% and 0.50%, respectively, of the Fund's average daily net
assets.
Administration Agreements
Mercantile has entered into a Co-Administration Agreement with FMFS and
BISYS Fund Services Ohio, Inc. ("BISYS"). Under the Co-Administration Agreement,
FMFS and BISYS have agreed to provide various administrative, accounting and
corporate secretarial services to the Mercantile Funds. For services provided,
FMFS and BISYS jointly receive a fee, computed daily and payable monthly, with
respect to each Mercantile Fund at the annual rate of 0.20% (0.10% for the
Mercantile Tax-Exempt Money Market Portfolio) of the average daily net assets of
each Fund.
Firstar has entered into an Administration Agreement (the "Administration
Agreement") with FMFS. Under the Administration Agreement, FMFS provides
various administrative, accounting and corporate secretarial services to the
Firstar Funds. FMFS is entitled to receive a fee for its administrative
services, computed daily and payable monthly, at the annual rate of 0.125% of
Firstar's first $2 billion of average aggregate daily net assets, plus 0.10% of
Firstar's average aggregate daily net assets in excess of $2 billion.
Shareholder Transactions and Policies.
The Mercantile Funds and the Corresponding Firstar Funds offer generally
similar shareholder transactions and policies. There are, however, some
differences. For example, the minimum account balance for the Mercantile Funds,
other than the Mercantile Conning Money Market Portfolio, is $500 while the
minimum account balance for the Firstar Funds is $1,000. Also, while there is no
minimum amount for share exchanges of the Mercantile Funds, there is a $1,000
minimum amount for share exchanges of the Firstar Funds. Additionally, holders
of Investor A Shares and Investor B Shares of the Mercantile Funds are able to
participate in a payroll deduction program whereas the Firstar Funds do not
offer a similar program. The Firstar Funds, unlike the Mercantile Funds, offer a
wide range of individual retirement accounts ("IRAs"), including Traditional
IRAs and Roth IRAs, as well as simplified tax-favored retirement plans for
employees of small employers and Simplified Employee Pension plans. There is
also a difference in the frequency of dividends for some of the Mercantile Funds
and the Corresponding
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<PAGE>
Firstar Funds. For a more detailed comparison of the shareholder transactions
and policies, see Appendix IV.
Fees and Expenses. Twelve of the eighteen Mercantile Funds that offer
Investor A Shares, three of the eleven Mercantile Funds that offer Investor B
Shares, eleven of the fourteen Mercantile Funds that offer Institutional Shares,
seven of the eighteen Mercantile Funds that offer Trust Shares and none of the
Mercantile Funds that offer Trust II Shares will have total operating expense
ratios (after fee waivers) which are lower after the Reorganization.
Two of the eighteen Mercantile Funds that offer Investor A Shares, three of
the eleven Mercantile Funds that offer Investor B Shares, one of the fourteen
Mercantile Funds that offer Institutional Shares, five of the eighteen
Mercantile Funds that offer Trust Shares and none of the Mercantile Funds that
offer Trust II Shares will have the same total operating expense ratios (after
fee waivers) after the Reorganization.
Four of the eighteen Mercantile Funds that offer Investor A Shares, five of
the eleven Mercantile Funds that offer Investor B Shares, two of the fourteen
Mercantile Funds that offer Institutional Shares, six of the eighteen Mercantile
Funds that offer Trust Shares and all three of the Mercantile Funds that offer
Trust II Shares will have total operating expense ratios (after fee waivers)
which are higher after the Reorganization. Fee waivers, however, are subject to
termination. For a more detailed summary of fees and expenses, see Appendix II.
Performance. The total returns of the Firstar Funds are competitive with
the Mercantile Funds. For a comparison of the total return performance of the
Reorganizing Mercantile Funds with the Existing Firstar Funds, see Appendix V.
See also Appendix VI for Management Discussion of Firstar Fund Performance.
Share Structure. Both Mercantile and Firstar are registered as open-end
management investment companies under the 1940 Act. Currently, Mercantile offers
nineteen funds. Firstar currently offers twenty-one funds and will offer thirty-
six funds immediately after the Reorganization (assuming that the Stellar
reorganization and the Select reorganization are also completed).
Mercantile was organized as a Maryland corporation on September 9, 1982. It
is subject to the provisions of its Charter and By-Laws. Firstar was organized
as a Wisconsin corporation on February 15, 1988 and is subject to the provision
of its Charter and By-Laws. Mercantile's Charter authorizes the Board of
Directors to issue full and fractional shares of capital stock ($0.001 par value
per share) and to classify and reclassify any authorized and unissued shares
into one or more classes of shares. Firstar's Charter authorizes the Board of
Directors to issue full and fractional shares of capital stock ($0.0001 par
value per share) and to classify and reclassify any particular class of shares
into one or more additional series of shares. In general, the charter documents
governing Mercantile are similar to those documents governing Firstar. Although
the rights of a shareholder of a Maryland corporation may vary in certain
respects from the rights of a shareholder of a Wisconsin corporation, the
attributes of a share of common stock of each corporation are comparable, and
shares of both are entitled to one vote per share held and
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<PAGE>
fractional votes for fractional shares held, and will vote in the aggregate and
not by portfolio or class except as otherwise required by law or when class
voting is permitted by its Board.
Additional information concerning the attributes of the shares issued by
Mercantile and Firstar is included in their respective prospectuses and
statements of additional information, which are incorporated herein by
reference. Information about the dividend and distribution policies of both the
Mercantile Funds and the Firstar Funds can be found in Appendix IV.
VOTING MATTERS
General Information. The Board of Directors of Mercantile is furnishing
this Proxy/Prospectus in connection with the solicitation of proxies for the
Special Meeting. It is expected that the solicitation of proxies will be
primarily by mail. Officers and service contractors of Mercantile and Firstar
may also solicit proxies by telephone or otherwise. In this connection,
Mercantile has retained ADP Proxy Services ("ADP") and D.F. King & Co., Inc.
("D.F. King") to assist in the solicitation of proxies for the Reorganization.
Shareholders may vote (1) by mail, by marking, signing, dating and returning the
enclosed Proxy Ballot(s) in the enclosed postage-paid envelope, (2) by touch-
tone voting, or (3) by on-line voting. Any shareholder giving a proxy may revoke
it at any time before it is exercised by submitting to Mercantile a written
notice of revocation or a subsequently executed proxy or by attending the
Special Meeting and voting in person. As the Special Meeting date approaches,
certain shareholders of each Mercantile Fund may receive a telephone call from a
representative of D.F. King if their votes have not yet been received.
Authorization to permit ADP or D.F. King to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of each
Fund. Proxies that are obtained telephonically will be recorded in accordance
with the procedures set forth below. The Directors believe that these procedures
are reasonably designed to ensure that the identity of the shareholder casting
the vote is accurately determined and that the voting instructions of the
shareholder are accurately determined.
In all cases where a telephonic proxy is solicited, the D.F. King
representative is required to ask for each shareholder's full name, address,
social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), and the number
of shares owned, and to confirm that the shareholder has received the proxy
materials in the mail. If the information solicited agrees with the information
provided to D.F. King, then the D.F. King representative has the responsibility
to explain the process, read the proposals on the proxy card, and ask for the
shareholder's instructions on the proposals. Although he or she is permitted to
answer questions about the process, the D.F. King representative is not
permitted to recommend to the shareholder how to vote, other than to read any
recommendation set forth on the proxy statement. D.F. King will record the
shareholder's instructions on the card. Within 72 hours, the shareholder will be
sent a letter or mailgram to confirm his or her vote and asking the shareholder
to call D.F. King immediately if his or her instructions are not correctly
reflected in the confirmation.
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<PAGE>
Any expenses incurred as a result of hiring ADP, D.F. King or any other
proxy solicitation agent will be borne by FIRMCO or its affiliates. It is
anticipated that the cost associated with using proxy solicitation agents will
be approximately $________.
Only shareholders of record at the close of business on September 15, 2000
will be entitled to vote at the Special Meeting. On that date, the following
Mercantile shares were outstanding and entitled to be voted:
Mercantile Fund Shares Outstanding
--------------- and Entitled to Vote
--------------------
Money Market Funds:
Treasury Money Market Portfolio
Investor A Shares ______
Institutional Shares ______
Trust Shares ______
Trust II Shares ______
Money Market Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Trust II Shares ______
Tax-Exempt Money Market Portfolio
Investor A Shares ______
Trust Shares ______
Trust II Shares ______
Conning Money Market Portfolio
Shares ______
Bond Funds:
U.S. Government Securities Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Intermediate Corporate Bond Portfolio
Investor A Shares ______
Institutional Shares ______
Trust Shares ______
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<PAGE>
Mercantile Fund Shares Outstanding
--------------- and Entitled to Vote
--------------------
Bond Index Portfolio
Investor A Shares ______
Institutional Shares ______
Trust Shares ______
Government & Corporate Bond Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Tax-Exempt Bond Funds:
Short-Intermediate Municipal Portfolio
Investor A Shares ______
Trust Shares ______
Missouri Tax-Exempt Bond Portfolio
Investor A Shares ______
Investor B Shares ______
Trust Shares ______
National Municipal Bond Portfolio
Investor A Shares ______
Investor B Shares ______
Trust Shares ______
Stock Funds:
Balanced Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Equity Income Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Equity Index Portfolio
Investor A Shares ______
Institutional Shares ______
Trust Shares ______
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<PAGE>
Mercantile Fund Shares Outstanding
--------------- and Entitled to Vote
--------------------
Growth & Income Equity Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Growth Equity Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Small Cap Equity Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Small Cap Equity Index Portfolio
Investor A Shares ______
Institutional Shares ______
Trust Shares ______
______
International Equity Portfolio
Investor A Shares ______
Investor B Shares ______
Institutional Shares ______
Trust Shares ______
Each whole and fractional share of a Mercantile Fund is entitled to a
whole or fractional vote as the case may be.
If an accompanying proxy is executed and returned in time for the Special
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Special Meeting.
Shareholder and Board Approvals. The Reorganization Agreement is being
submitted for approval at the Meeting by Mercantile's shareholders pursuant to
Mercantile's Charter and By-Laws, and was unanimously approved by Mercantile's
Board of Directors at a meeting held on June 6, 2000, as ratified on July 11,
2000. The Reorganization Agreement must be approved by a majority of the
outstanding shares of each Mercantile Fund and the reorganization of Mercantile
must be approved by a majority of the outstanding shares of all the Mercantile
Funds. A vote for the Reorganization Agreement includes a vote for the
reorganization of Mercantile;
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<PAGE>
conversely, a vote against the Reorganization Agreement is a vote against the
reorganization of Mercantile.
The Reorganization Agreement provides that in the event the Reorganization
Agreement is approved with respect to less than all of the Mercantile Funds, the
failure of a Mercantile Fund to consummate the transactions contemplated by the
Reorganization Agreement shall not affect the consummation or validity of the
Reorganization with respect to any other Mercantile Fund. It is possible that a
majority of a Mercantile Fund's shares may approve the Reorganization Agreement
while a majority of all shares of all Mercantile Funds voting in the aggregate
do not approve the reorganization of Mercantile. In such a case, the Board of
Directors of Mercantile will consider what further action is appropriate.
With respect to the approval of the Reorganization Agreement, the term
"majority of the outstanding shares" of Mercantile or a Mercantile Fund means
more than 50% of the outstanding shares of Mercantile or the particular
Mercantile Fund. The vote of the shareholders of the Firstar Funds is not being
solicited, since their approval or consent is not necessary for the
Reorganization.
Principal Shareholders. As of September 15, 2000, the officers and
Directors of Mercantile as a group owned or controlled less than 1% of each
Mercantile Fund's outstanding shares. As of September 15, 2000, the officers and
Directors of Firstar as a group owned or controlled less than 1% of each Firstar
Fund's outstanding shares. Table VI(A) shows the name, address and share
ownership of each person known to Mercantile to have beneficial or record
ownership with respect to 5% or more of a class of a Mercantile Fund as of
September 15, 2000. Table VI(B) shows the name, address and share ownership of
each person known to Firstar to have beneficial or record ownership, as of
September 15, 2000, with respect to 5% or more of a class of a Stellar Fund that
is expected to reorganize into a Firstar Fund along with a Mercantile Fund.
Table VI(C) shows the name, address and share ownership of each person known to
Firstar to have beneficial or record ownership with respect to 5% or more of a
class of a Firstar Fund as of September 15, 2000.
Table VI(A)
<TABLE>
<CAPTION>
Class; Percentage Percentage Pro Forma
Name and Amount of of Class of Fund Percentage
Mercantile Fund Address Shares Owned Owned Post-Closing
Owned; Type
of Ownership
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Treasury Money Market Portfolio
------------------------------------------------------------------------------------------------------------
Money Market Portfolio
------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Portfolio
------------------------------------------------------------------------------------------------------------
Conning Money Market Portfolio
------------------------------------------------------------------------------------------------------------
U.S. Government Securities Portfolio
------------------------------------------------------------------------------------------------------------
Intermediate Corporate Bond
Portfolio
------------------------------------------------------------------------------------------------------------
Bond Index Portfolio
------------------------------------------------------------------------------------------------------------
Government & Corporate Bond
Portfolio
------------------------------------------------------------------------------------------------------------
</TABLE>
-73-
<PAGE>
<TABLE>
<CAPTION>
Class; Percentage Percentage Pro Forma
Name and Amount of of Class of Fund Percentage
Mercantile Fund Address Shares Owned Owned Post-Closing
Owned; Type
of Ownership
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Short-Intermediate Municipal
Portfolio
------------------------------------------------------------------------------------------------------------
Missouri Tax-Exempt Bond Portfolio
------------------------------------------------------------------------------------------------------------
National Municipal Bond Portfolio
------------------------------------------------------------------------------------------------------------
Balanced Portfolio
------------------------------------------------------------------------------------------------------------
Equity Income Portfolio
------------------------------------------------------------------------------------------------------------
Equity Index Portfolio
------------------------------------------------------------------------------------------------------------
Growth & Income Equity Portfolio
------------------------------------------------------------------------------------------------------------
Growth Equity Portfolio
------------------------------------------------------------------------------------------------------------
Small Cap Equity Portfolio
------------------------------------------------------------------------------------------------------------
Small Cap Equity Index Portfolio
------------------------------------------------------------------------------------------------------------
International Equity Portfolio
------------------------------------------------------------------------------------------------------------
</TABLE>
Table VI(B)
<TABLE>
<CAPTION>
Class; Percentage Pro Forma
Name and Amount of Percentage of Fund Percentage
Stellar Fund Address Shares Owned of Class Owned Post-Closing
------------ -------- ------------- ---------- ---------- ------------
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Treasury Fund
---------------------------------------------------------------------------------------------------
Tax-Free Money Market Fund
---------------------------------------------------------------------------------------------------
U.S. Government Income Fund
---------------------------------------------------------------------------------------------------
Insured Tax-Free Bond Fund
---------------------------------------------------------------------------------------------------
</TABLE>
Table VI(C)
<TABLE>
<CAPTION>
Class; Percentage Pro Forma
Name and Amount of Percentage of Fund Percentage
Firstar Fund Address Shares of Class Owned Post-Closing
Owned; Type
of Ownership
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market Fund
---------------------------------------------------------------------------------------------------
U.S. Treasury Money Market
Fund
---------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Fund
---------------------------------------------------------------------------------------------------
Intermediate Bond Market
Fund
---------------------------------------------------------------------------------------------------
Tax-Exempt Intermediate
Bond Fund
---------------------------------------------------------------------------------------------------
Balanced Growth Fund
---------------------------------------------------------------------------------------------------
Growth and Income Fund
---------------------------------------------------------------------------------------------------
Equity Index Fund
---------------------------------------------------------------------------------------------------
Growth Fund
---------------------------------------------------------------------------------------------------
Emerging Growth Fund
---------------------------------------------------------------------------------------------------
Core International Equity
Fund
---------------------------------------------------------------------------------------------------
</TABLE>
The Firstar U.S. Government Securities Fund, Firstar Aggregate Bond Fund,
Firstar National Municipal Bond Fund and the Shell Firstar Funds had not
commenced investment
-74-
<PAGE>
operations as of September 15, 2000 and, accordingly, no person owned 5% or more
of any such Firstar Fund.
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class.
Firstar and Mercantile have been advised by Firstar Bank, N.A., an
affiliate of FIRMCO, that with respect to the shares of each Mercantile Fund
over which Firstar Bank, N.A. has voting power, such shares may be voted by
Firstar Bank, N.A. itself in its capacity as fiduciary.
Quorum. In the event that a quorum is not present at the Special Meeting,
or in the event that a quorum is present at the Special Meeting but sufficient
votes to approve the Reorganization Agreement are not received by Mercantile or
by one or more of the Mercantile Funds, one or more adjournment(s) may be
proposed to permit further solicitation of proxies. Any adjourned session or
sessions may be held after the date set for the original Meeting without notice
except announcement at the Meeting, but under Maryland law, not more than 120
days after the record date. Any such adjournment(s) will require the affirmative
vote of a majority of those shares that are represented at the Meeting in person
or by proxy. If a quorum is present, the persons named as proxies will vote
those proxies which they are entitled to vote FOR the particular proposal for
which a quorum exists in favor of such adjournment(s), and will vote those
proxies required to be voted AGAINST such proposal against any adjournment(s).
A quorum is constituted by the presence in person or by proxy of the
holders of more than 50% of the shares of Mercantile or the Mercantile Fund
entitled to vote at the Special Meeting. For purposes of determining the
presence of a quorum for transacting business at the Special Meeting,
abstentions will be recorded as shares that are present at the Special Meeting
but which have not been voted. Abstentions will have the effect of a "no vote"
for purposes of obtaining the requisite approval of the Reorganization
Agreement. 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 the same as abstentions.
Annual Meetings and Shareholder Meetings. Neither Mercantile nor Firstar
presently intends to hold annual meetings of shareholders for the election of
Directors and other business unless otherwise required by the 1940 Act. Under
certain circumstances, however, holders of at least 10% of the outstanding
shares of either Mercantile or Firstar have the right to call a meeting of
shareholders.
-75-
<PAGE>
ADDITIONAL INFORMATION ABOUT FIRSTAR
Additional information about the Firstar Funds is included in their
prospectuses and statements of additional information dated (i) March 1, 2000
with respect to Retail A Shares of the Firstar Money Market Funds and Retail A,
Retail B and Institutional Shares of the Firstar Non-Money Market Funds, (ii)
_________, 2000 with respect to the Firstar U.S. Government Securities, Firstar
Aggregate Bond and Firstar National Municipal Bond Funds, ___________, 2000 with
respect to Institutional Shares of the Firstar Money Market Funds and _________,
2000 with respect to Class Y Shares of the Firstar Non-Money Market Funds, in
each case as supplemented or revised through the date hereof, copies of which,
to the extent not included herewith, may be obtained without charge by writing
or calling Firstar at the address and telephone number set forth on the first
page of this Proxy/Prospectus. Firstar is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and the 1940
Act, and in accordance therewith it files reports, proxy materials and other
information with the SEC. Reports and other information filed by Firstar can be
inspected and copied at the Public Reference Facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the offices of Firstar
listed above. In addition, these materials can be inspected and copied at the
SEC's Regional Offices at 7 World Trade Center, Suite 1300, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials also can be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
Information included in this Proxy/Prospectus concerning Firstar was
provided by Firstar.
ADDITIONAL INFORMATION ABOUT MERCANTILE
Additional information about Mercantile Funds is included in their
prospectuses and statements of additional information dated March 31, 2000, as
supplemented or revised through the date hereof, copies of which have been filed
with the SEC. Copies of these prospectuses and the related statements of
additional information may be obtained without charge by writing or calling
Mercantile at the address and telephone number set forth on the first page of
this Proxy/Prospectus. Mercantile is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended, and the 1940 Act, and in
accordance therewith it files reports, proxy materials and other information
with the SEC. Reports and other information filed by Mercantile can be inspected
and copied at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the offices of Mercantile listed
above. In addition, these materials can be inspected and copied at the SEC's
Regional Offices at 7 World Trade Center, Suite 1300, New York, New York 10048,
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also can be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
-76-
<PAGE>
Information included in this Proxy/Prospectus concerning Mercantile was
provided by Mercantile.
FINANCIAL STATEMENTS
The annual financial statements and financial highlights of the Firstar
Funds for the fiscal year ended October 31, 1999 have been audited by
PricewaterhouseCoopers LLP, independent accountants, to the extent indicated in
their reports thereon, and have been incorporated by reference into the
Statement of Additional Information to this Proxy/Prospectus in reliance upon
such reports given upon the authority of such firm as an expert in accounting
and auditing. The unaudited semi-annual financial statements and financial
highlights of the Firstar Funds for the 6-month period ended April 30, 2000 have
been incorporated by reference into the Statement of Additional Information to
this Proxy/Prospectus.
The annual financial statements and financial highlights of the Mercantile
Funds for the fiscal year ended November 30, 1999 have been audited by KPMG LLP,
independent auditors to the extent indicated in their reports thereon, and have
been incorporated by reference into the Statement of Additional Information to
this Proxy/Prospectus in reliance upon such reports given upon the authority of
such firm as an expert in accounting and auditing. The semi-annual financial
statements and financial highlights of the Mercantile Funds for the 6-month
period ended May 31, 2000 are unaudited and have been incorporated by reference
into the Statement of Additional Information to this Proxy/Prospectus.
OTHER BUSINESS
Mercantile's Board of Directors knows of no other business to be brought
before the Meeting. However, if any other matters properly come before the
Meeting, it is the intention of Mercantile that proxies that 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.
-77-
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Mercantile or to Firstar in
writing at the address(es), or by phone at the phone number(s), set forth on the
cover page of this Proxy/Prospectus.
* * *
Shareholders who do not expect to be present at the Special Meeting are
requested to mark, sign and date the enclosed proxy and return it in the
enclosed envelope. No postage is required if mailed in the United States.
Shareholders also may vote on-line or by telephone.
Mercantile will furnish, without charge, copies of its November 30, 1999
Annual Reports and May 31, 2000 Semi-Annual Reports to any shareholder upon
request addressed to: Mercantile Mutual Funds, Inc., c/o Firstar Mutual Fund
Services, LLC, 615 E. Michigan Street, P.O. Box 3011, Milwaukee, Wisconsin
53201-3011 or by telephone at 1-800-677-FUND.
-78-
<PAGE>
PROXY/PROSPECTUS A
MERCANTILE
APPENDIX I
AGREEMENT AND PLAN OF
REORGANIZATION
BY AND BETWEEN
FIRSTAR FUNDS, INC.
AND
MERCANTILE MUTUAL FUNDS, INC.
DATED AS OF __________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. CERTAIN DEFINITIONS.................................................................. 4
2. THE REORGANIZATION................................................................... 5
3. CALCULATIONS......................................................................... 9
4. VALUATION OF ASSETS.................................................................. 12
5. VALUATION TIMES...................................................................... 15
6. EFFECTIVE TIME OF THE REORGANIZATION................................................. 16
7. TERMINATION OF MERCANTILE............................................................ 17
8. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF MERCANTILE.......... 18
9. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF FIRSTAR............. 25
10. SHAREHOLDER ACTION ON BEHALF OF THE MERCANTILE FUNDS................................. 29
11. SHAREHOLDER ACTION ON BEHALF OF FIRSTAR.............................................. 30
12. N-14 REGISTRATION STATEMENT.......................................................... 31
13. FIRSTAR CONDITIONS................................................................... 31
14. MERCANTILE CONDITIONS................................................................ 35
15. TAX OPINION.......................................................................... 38
16. TAX DOCUMENTS........................................................................ 40
17. FURTHER ASSURANCES................................................................... 40
18. TERMINATION OF REPRESENTATIONS AND WARRANTIES........................................ 41
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
19. TERMINATION OF AGREEMENT............................................................. 41
20. AMENDMENT AND WAIVER................................................................. 42
21. GOVERNING LAW........................................................................ 42
22. SUCCESSORS AND ASSIGNS............................................................... 43
23. BENEFICIARIES........................................................................ 43
24. NOTICES.............................................................................. 43
25. EXPENSES............................................................................. 44
26. ENTIRE AGREEMENT..................................................................... 44
27. COUNTERPARTS......................................................................... 44
28. FAILURE OF ONE FUND TO CONSUMMATE THE TRANSACTIONS................................... 45
29. NO BROKERS OR FINDERS................................................................ 45
30. VALIDITY............................................................................. 45
31. EFFECT OF FACSIMILE SIGNATURE........................................................ 45
32. HEADINGS............................................................................. 45
33. FIRSTAR LIABILITY.................................................................... 46
34. MERCANTILE LIABILITY................................................................. 46
</TABLE>
-ii-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the _____ day of _____________, 2000, by Firstar Funds, Inc. ("Firstar"), a
Wisconsin corporation, and Mercantile Mutual Funds, Inc. ("Mercantile"), a
Maryland corporation.
BACKGROUND
----------
WHEREAS, each of the parties hereto is an open-end management investment
company registered with the Securities and Exchange Commission (the "SEC") under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Mercantile offers the following investment portfolios: (1)
Mercantile Treasury Money Market Portfolio, (2) Mercantile Money Market
Portfolio, (3) Mercantile Tax-Exempt Money Market Portfolio, (4) Mercantile U.S.
Government Securities Portfolio, (5) Mercantile Intermediate Corporate Bond
Portfolio, (6) Mercantile Government & Corporate Bond Portfolio, (7) Mercantile
Bond Index Portfolio, (8) Mercantile Short-Intermediate Municipal Portfolio, (9)
Mercantile National Municipal Bond Portfolio, (10) Mercantile Balanced
Portfolio, (11) Mercantile Equity Index Portfolio, (12) Mercantile Growth &
Income Equity Portfolio, (13) Mercantile Growth Equity Portfolio, (14)
Mercantile Small Cap Equity Portfolio, and (15) Mercantile International Equity
Portfolio (each a "Reorganizing Mercantile Fund" and collectively, the
"Reorganizing Mercantile Funds");
<PAGE>
WHEREAS, Mercantile also offers the following investment portfolios: (1)
Conning Money Market Fund, (2) Mercantile Missouri Tax-Exempt Bond Portfolio,
(3) Mercantile Equity Income Portfolio, and (4) Mercantile Small Cap Equity
Index Portfolio (each a "Continuing Mercantile Fund" and collectively, the
"Continuing Mercantile Funds" and, together with the Reorganizing Mercantile
Funds, each a "Mercantile Fund" and collectively, the "Mercantile Funds");
WHEREAS, Firstar currently offers, among others, the following investment
portfolios: (1) Firstar U.S. Treasury Money Market Fund, (2) Firstar Money
Market Fund, (3) Firstar Tax-Exempt Money Market Fund, (4) Firstar U.S.
Government Securities Fund, (5) Firstar Intermediate Bond Market Fund, (6)
Firstar Aggregate Bond Fund, (7) Firstar Tax-Exempt Intermediate Bond Fund, (8)
Firstar National Municipal Bond Fund, (9) Firstar Balanced Growth Fund, (10)
Firstar Equity Index Fund, (11) Firstar Growth and Income Fund, (12) Firstar
Growth Fund, (13) Firstar Emerging Growth Fund, and (14) Firstar Core
International Equity Fund (each an "Existing Firstar Fund" and collectively,
the "Existing Firstar Funds");
WHEREAS, Firstar has recently organized, or will soon organize, the
following additional investment portfolios: (1) Conning Money Market Fund, (2)
Firstar Missouri Tax-Exempt Bond Fund, (3) Firstar Equity Income Fund, and (4)
Firstar Small Cap Index Fund (each a "Shell Firstar Fund" and collectively, the
"Shell Firstar Funds," and, together with the Existing Firstar Funds, each a
"Firstar Fund" and collectively, the "Firstar Funds");
-2-
<PAGE>
WHEREAS, each of the parties hereto desires, upon the terms and subject to
the conditions set forth herein, to enter into and perform the reorganization
described herein (the "Reorganization"), pursuant to which, among other things,
at the respective times hereinafter set forth, (1) each Mercantile Fund shall
transfer substantially all of its respective Assets (as hereinafter defined),
subject, in each case, to substantially all of its respective Liabilities (as
hereinafter defined), to its Corresponding Firstar Fund (as hereinafter
defined), in exchange for Retail A, Retail B, Class Y or Institutional Shares
issued by such Corresponding Firstar Fund (the shares issued to a Mercantile
Fund by its Corresponding Firstar Fund in exchange for substantially all of the
Assets, subject to substantially all of the Liabilities, of such Mercantile Fund
in connection with the Reorganization, collectively, "Firstar Fund Shares"),
and (2) each Mercantile Fund shall then distribute to its shareholders of
record, the Firstar Fund Shares received by or on behalf of such Mercantile
Fund;
WHEREAS, each of the parties intends that the Shell Firstar Funds will have
nominal assets and liabilities before the Reorganization and will continue the
investment operations of the Continuing Mercantile Funds; and
WHEREAS, the parties intend that in connection with the Reorganization,
Mercantile shall be deregistered and dissolved as described in this Agreement.
-3-
<PAGE>
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Certain Definitions. As used herein,
--------------------
(a) The term "Corresponding Firstar Fund" shall mean with respect to
any Mercantile Fund, the particular Firstar Fund, the name of which is set forth
directly opposite the name of such Mercantile Fund on Schedule A hereto.
(b) The term "Corresponding Mercantile Fund" shall mean with respect
to any Firstar Fund, the particular Mercantile Fund, the name of which is set
forth directly opposite the name of such Firstar Fund on Schedule A hereto.
(c) The term "Assets" shall mean all property and assets of every
description and of any nature whatsoever including, without limitation, cash,
cash equivalents, securities, claims (whether absolute or contingent, known or
unknown, accrued or unaccrued), receivables (including dividend and interest
receivables), deferred or prepaid expenses, good will and other intangible
property, books and records, and all interests, rights, privileges and powers,
other than cash in an amount necessary to pay any unpaid dividends and
distributions as provided in Section 2(d) hereof.
(d) The term "Liabilities" shall mean all existing and future
liabilities and obligations of any nature, whether accrued, absolute, contingent
or otherwise, including, with
-4-
<PAGE>
respect to Mercantile and each Mercantile Fund, any obligation to indemnify
Mercantile's current Directors, acting in their capacities as such, to the
fullest extent permitted by law and Mercantile's Charter and Bylaws, in each
case as in effect as of the date of this Agreement.
2. The Reorganization.
------------------
(a) At the Applicable Effective Time of the Reorganization (as
hereinafter defined), (i) each Mercantile Fund shall transfer, assign and convey
to its Corresponding Firstar Fund substantially all of the Assets, subject to
substantially all of the Liabilities, of such Mercantile Fund, and (ii) each
such Corresponding Firstar Fund shall accept all such Assets and assume all such
Liabilities, such that at and after the Applicable Effective Time of the
Reorganization: (A) substantially all of the Assets of each particular
Mercantile Fund shall become and be Assets of its Corresponding Firstar Fund,
(B) substantially all of the Liabilities of each particular Mercantile Fund
shall become and be liabilities of, and shall attach to, its Corresponding
Firstar Fund, and (C) such Liabilities of each particular Mercantile Fund may
thenceforth be enforced only against its Corresponding Firstar Fund to the same
extent as if such Liabilities had been incurred by such Corresponding Firstar
Fund, subject to any defense and/or set off that Mercantile or such Mercantile
Fund was entitled to assert immediately prior to the Applicable Effective Time
of the Reorganization with respect to any such Liability, and subject to any
defense and/or set off that Firstar or such Corresponding Firstar Fund may from
time to time be entitled to assert against the creditor thereof.
(b) In exchange for the transfer of substantially all of the Assets
of each Mercantile Fund to its Corresponding Firstar Fund as provided in
paragraph (a) above, each
-5-
<PAGE>
Firstar Fund shall assume substantially all of the Liabilities of its
Corresponding Mercantile Fund as provided in paragraph (a) above and shall also
simultaneously issue, at the Applicable Effective Time of the Reorganization, to
its Corresponding Mercantile Fund, the number of full and fractional (to the
third decimal place) Firstar Fund Shares of each class of such Firstar Fund,
determined and adjusted as provided in Section 3 hereof.
(c) Immediately upon receipt of the Firstar Fund Shares of such
Firstar Fund in accordance with paragraph (b) above, each Mercantile Fund shall
distribute, in complete liquidation, pro rata to the shareholders of record of
such Mercantile Fund at the Applicable Effective Time of the Reorganization
(such shareholders of record of such Mercantile Fund as of such time,
collectively, the "Recordholders"), the respective Firstar Fund Shares that have
been so received as follows:
(1) With respect to the Mercantile Treasury Money Market
Portfolio, Recordholders of Investor A, Institutional, Trust and Trust II Shares
of such Mercantile Fund shall be credited with full and fractional Institutional
Shares of its Corresponding Firstar Fund with respect to such Investor A,
Institutional, Trust and Trust II Shares;
(2) With respect to the Mercantile Money Market Portfolio,
Recordholders of Investor A, Investor B, Institutional, Trust and Trust II
Shares of such Mercantile Fund shall be credited with full and fractional Retail
A Shares of its Corresponding Firstar Fund with respect to such Investor A,
Investor B, Institutional, Trust and Trust II Shares;
(3) With respect to the Mercantile Tax-Exempt Money Market
Portfolio, Recordholders of Investor A Shares of such Mercantile Fund shall be
credited with full
-6-
<PAGE>
and fractional Retail A Shares of its Corresponding Firstar Fund with respect to
such Investor A Shares, and Recordholders of Trust and Trust II Shares of such
Mercantile Fund shall be credited with full and fractional Institutional Shares
of its Corresponding Firstar Fund with respect to such Trust and Trust II
Shares;
(4) With respect to the Conning Money Market Portfolio,
Recordholders of Shares of such Mercantile Fund shall be credited with full and
fractional Shares of its Corresponding Firstar Fund with respect to such Shares
of the Conning Money Market Portfolio; and
(5) With respect to all other Mercantile Funds, Recordholders of
Investor A Shares of such Mercantile Fund will be credited with full and
fractional Retail A Shares of the Corresponding Firstar Fund with respect to
such Investor A Shares, Recordholders of Investor B Shares of such Mercantile
Fund will be credited with full and fractional Retail B Shares of the
Corresponding Firstar Fund with respect to such Investor B Shares, Recordholders
of Institutional Shares of such Mercantile Fund will be credited with full and
fractional Class Y Shares of the Corresponding Firstar Fund with respect to such
Institutional Shares, and Recordholders of Trust Shares of such Mercantile Fund
will be credited with full and fractional Institutional Shares of the
Corresponding Firstar Fund with respect to such Trust Shares.
(d) At the Applicable Effective Time of the Reorganization, each
shareholder of record of a Mercantile Fund as of the record date (the
"Distribution Record Date") with respect to any unpaid dividends and other
distributions that were declared before the Applicable Effective Time of the
Reorganization shall have the right to receive such unpaid dividends and
-7-
<PAGE>
distributions with respect to the shares of such Mercantile Fund that such
person held on the Distribution Record Date.
(e) Promptly upon receipt of instructions from Mercantile delivered
pursuant to this paragraph (e), Firstar shall, in accordance with such
instructions, record on its books the ownership, by the Recordholders, of the
number and type of Firstar Fund Shares distributed to such Recordholders.
(f) Mercantile shall promptly cancel on its books all of the shares
(including, without limitation, any treasury shares) of each Mercantile Fund
that has liquidated as provided in paragraph (c) above, and any such shares
issued and outstanding prior to such cancellation shall thereafter represent
only the right to receive the Firstar Fund Shares issued to such Mercantile Fund
in accordance with paragraph (b) above.
(g) Upon completion of the tasks required by paragraphs (a) through
(f) above with respect to each Mercantile Fund, the transfer books of Mercantile
with respect to such Mercantile Fund shall be permanently closed.
(h) Prior to the Applicable Effective Time of the Reorganization (as
hereinafter defined) with respect to each Mercantile Fund and its corresponding
Firstar Fund, Firstar and Mercantile shall file appropriate Articles of Transfer
pursuant to the laws of the State of Maryland, effective as of the Applicable
Effective Time of the Reorganization with respect to such Mercantile Fund and
its corresponding Firstar Fund.
-8-
<PAGE>
3. Calculations.
------------
(a) The number of each class of Firstar Fund Shares of each Existing
and Shell Firstar Fund issued to its Corresponding Mercantile Fund pursuant to
Section 2(b) hereof will be determined as follows:
(i) With respect to the Mercantile Treasury Money Market
Portfolio, the value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Mercantile Fund's Assets that are conveyed, less
the Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to either
Investor A, Institutional, Trust or Trust II Shares of such Mercantile Fund
shall be divided by the net asset value of one Institutional Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto.
(ii) With respect to the Mercantile Money Market Portfolio, the
value (determined as of the Applicable Valuation Time (as hereinafter defined))
of such Mercantile Fund's Assets that are conveyed, less the Liabilities that
are assumed, at the Applicable Effective Time of the Reorganization (as
hereinafter defined) and that are attributable to either Investor A, Investor B,
Institutional, Trust or Trust II Shares of such Mercantile Fund shall be divided
by the net asset value of one Retail A Share of its Corresponding Firstar Fund
that is to be delivered with respect thereto;
(iii) With respect to the Mercantile Tax-Exempt Money Market
Portfolio:
-9-
<PAGE>
(A) The value (determined as of the Applicable Valuation
Time (as hereinafter defined)) of such Mercantile Fund's Assets that are
conveyed, less the Liabilities that are assumed, at the Applicable
Effective Time of the Reorganization (as hereinafter defined) and that are
attributable to Investor A Shares of such Mercantile Fund shall be divided
by the net asset value of one Retail A Share of its Corresponding Firstar
Fund that is to be delivered with respect thereto; and
(B) The value (determined as of the Applicable Valuation
Time (as hereinafter defined)) of such Mercantile Fund's Assets that are
conveyed, less the Liabilities that are assumed, at the Applicable
Effective Time of the Reorganization (as hereinafter defined) and that are
attributable to either Trust or Trust II Shares of such Mercantile Fund
shall be divided by the net asset value of one Institutional Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto.
(iv) With respect to the Conning Money Market Portfolio, the
value (determined as of the Applicable Valuation Time (as hereinafter defined))
of such Mercantile Fund's Assets that are conveyed, less the Liabilities that
are assumed, at the Applicable Effective Time of the Reorganization (as
hereinafter defined) shall be divided by the net asset value of one Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto;
(v) With respect to all the other Mercantile Funds:
-10-
<PAGE>
(A) The value (determined as of the Applicable Valuation
Time (as hereinafter defined)) of such Mercantile Fund's Assets that are
conveyed, less the Liabilities that are assumed, at the Applicable
Effective Time of the Reorganization (as hereinafter defined) and that are
attributable to Investor A Shares of such Mercantile Fund shall be divided
by the net asset value of one Retail A Share of its Corresponding Firstar
Fund that is to be delivered with respect thereto;
(B) The value (determined as of the Applicable Valuation
Time (as hereinafter defined)) of such Mercantile Fund's Assets that are
conveyed, less the Liabilities that are assumed, at the Applicable
Effective Time of the Reorganization (as hereinafter defined) and that are
attributable to Investor B Shares of such Mercantile Fund shall be divided
by the net asset value of one Retail B Share of its Corresponding Firstar
Fund that is to be delivered with respect thereto;
(C) The value (determined as of the Applicable Valuation
Time (as hereinafter defined)) of such Mercantile Fund's Assets that are
conveyed, less the Liabilities that are assumed, at the Applicable
Effective Time of the Reorganization (as hereinafter defined) and that are
attributable to Institutional Shares of such Mercantile Fund shall be
divided by the net asset value of one Class Y Share of its Corresponding
Firstar Fund that is to be delivered with respect thereto; and
-11-
<PAGE>
(D) The value (determined as of the Applicable Valuation Time
(as hereinafter defined)) of such Mercantile Fund's Assets that are
conveyed, less the Liabilities that are assumed, at the Applicable
Effective Time of the Reorganization (as hereinafter defined) and that
are attributable to Trust Shares of such Mercantile Fund shall be
divided by the net asset value of one Institutional Share of its
Corresponding Firstar Fund that is to be delivered with respect
thereto.
(b) The net asset value of each class of Firstar Fund Shares shall be
computed at the Applicable Valuation Time (as hereinafter defined) in the manner
set forth in such Firstar Fund's then current prospectus under the Securities
Act of 1933, as amended (the "1933 Act"). The net asset value of shares of each
class of a Mercantile Fund shall be computed at the Applicable Valuation Time in
the manner set forth in such Mercantile Fund's then current prospectus under the
1933 Act.
4. Valuation of Assets.
-------------------
(a) With respect to each Mercantile Fund, the value of its Assets
shall be the value of such Assets computed as of the time at which its net asset
value is calculated at the Applicable Valuation Time (as hereinafter defined).
The net asset value of the Mercantile Fund Assets to be transferred to the
Firstar Funds shall be computed by Mercantile and shall be subject to adjustment
by the amount, if any, agreed to by Mercantile and the respective Mercantile
Funds and Firstar and the respective Firstar Funds. In determining the value of
the securities transferred by a Mercantile Fund to its Corresponding Firstar
Fund, each security shall be priced in
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<PAGE>
accordance with the pricing policies and procedures of such Mercantile Fund as
described in its then current prospectus(es) and statement of additional
information. For such purposes, price quotations and the security
characteristics relating to establishing such quotations shall be determined by
Mercantile, provided that such determination shall be subject to the approval of
Firstar. Firstar and Mercantile agree to use all commercially reasonable efforts
to resolve, prior to the Applicable Valuation Time, any material pricing
differences between the prices of portfolio securities determined in accordance
with the pricing policies and procedures of a Firstar Fund and those determined
in accordance with the pricing policies and procedures of its Corresponding
Mercantile Fund.
(b) It is understood and agreed that the net asset value of the Assets of
those Mercantile Funds that are money market funds shall be based on the
amortized cost valuation procedures that have been adopted by the Board of
Directors of Mercantile; provided that if the difference between the per share
net asset values of any such Mercantile Fund and its Corresponding Firstar Fund
equals or exceeds $0.0010 at the Applicable Valuation Time, as computed by using
market values in accordance with the policies and procedures established by
Mercantile, either party shall have the right to postpone the Applicable
Valuation Time and Applicable Effective Time of the Reorganization (as
hereinafter defined) with respect to such Funds until such time as the per share
difference is less than $0.0010.
(c) At least fifteen (15) business days prior to the Applicable Effective
Time of the Reorganization, each Mercantile Fund will provide its Corresponding
Firstar Fund with a schedule of its securities and other Assets and Liabilities
of which it is aware, and such Firstar
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<PAGE>
Fund will provide the Mercantile Fund with a copy of the current investment
objective and policies applicable to such Firstar Fund. Each Mercantile Fund
reserves the right to sell any of the securities or other Assets shown on the
list of the Fund's Assets prior to the Applicable Effective Time of the
Reorganization but will not, without the prior approval of Firstar, acquire any
additional securities other than securities which the Corresponding Firstar Fund
is permitted to purchase in accordance with its stated investment objective and
policies. At least ten (10) business days prior to the Applicable Effective Time
of the Reorganization, each Firstar Fund will advise its Corresponding
Mercantile Fund of any investments of such Mercantile Fund shown on such
schedule which the Firstar Fund would not be permitted to hold, pursuant to its
stated investment objective and policies or otherwise. In the event that the
Mercantile Fund holds any investments that its Corresponding Firstar Fund would
not be permitted to hold under its stated investment objective or policies, the
Mercantile Fund, if requested by the Firstar Fund and, to the extent permissible
and consistent with the Mercantile Fund's own investment objective and policies,
will dispose of such securities prior to the Applicable Effective Time of the
Reorganization. In addition, if it is determined that the portfolios of the
Mercantile Fund and the Firstar Fund, when aggregated, would contain investments
exceeding certain percentage limitations to which the Firstar Fund is or will be
subject with respect to such investments, the Mercantile Fund, if requested by
the Firstar Fund and to the extent permissible and consistent with the
Mercantile Fund's own investment objective and policies, will dispose of and/or
reinvest a sufficient amount of such investments as may be necessary to avoid
violating such limitations as of the Applicable Effective Time of the
Reorganization.
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<PAGE>
5. Valuation Times. Subject to Section 4(b) hereof, the valuation time
---------------
with respect to the Existing Firstar Funds and the Reorganizing Mercantile Funds
shall be 4:00 p.m., Eastern Time, on ________ __, 2000, or such earlier or later
date and time as may be mutually agreed in writing by an authorized officer of
each of the parties (the "First Valuation Time"). Subject to Section 4(b)
hereof, the valuation time with respect to the Shell Firstar Funds and the
Continuing Mercantile Funds shall be 4:00 p.m., Eastern Time, on _______ __,
2000, or such earlier or later date and time as may be mutually agreed in
writing by an authorized officer of each of the parties (the "Second Valuation
Time" and, together with the First Valuation Time, each an "Applicable Valuation
Time"), provided that the Second Valuation Time shall be no less than one week
following the First Valuation Time, unless otherwise agreed in writing by the
parties hereto. Notwithstanding anything herein to the contrary, in the event
that at an Applicable Valuation Time, (a) the New York Stock Exchange shall be
closed to trading or trading thereon shall be restricted or (b) trading or the
reporting of trading on such exchange or elsewhere shall be disrupted so that,
in the judgment of Firstar or Mercantile, accurate appraisal of the value of the
net assets of a Firstar Fund or a Mercantile Fund is impracticable, such
Valuation Time shall be postponed until the first business day after the day
when trading shall have been fully resumed without restriction or disruption,
reporting shall have been restored and accurate appraisal of the value of the
net assets of the Firstar Funds and the Mercantile Funds is practicable in the
judgment of Firstar and Mercantile.
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<PAGE>
6. Effective Time of the Reorganization.
------------------------------------
(a) Delivery by each Reorganizing Mercantile Fund of its respective
Assets to its Corresponding Firstar Fund, delivery by such Corresponding Firstar
Fund of its respective Firstar Fund Shares to such Reorganizing Mercantile Fund,
and liquidation of each such Reorganizing Mercantile Fund, in each case,
pursuant to Section 2 hereof, shall occur at the opening of business on the next
business day following the First Valuation Time (or on such other date following
the First Valuation Time as is agreed to in writing by an authorized officer of
each of the parties). The date and time at which the above-described actions are
taken shall be the "Applicable Effective Time of the Reorganization" with
respect to the Existing Firstar Funds and the Reorganizing Mercantile Funds. To
the extent any Assets of any Reorganizing Mercantile Fund are, for any reason,
not transferred to its Corresponding Firstar Fund at the Applicable Effective
Time of the Reorganization with respect to such Funds, Mercantile shall cause
such Assets to be transferred in accordance with this Agreement at the earliest
practicable date thereafter.
(b) Delivery by each Continuing Mercantile Fund of its respective Assets
to its Corresponding Firstar Fund, delivery by each such Corresponding Firstar
Fund of its respective Firstar Fund Shares to such Continuing Mercantile Fund,
and the liquidation of each such Continuing Mercantile Fund, in each case,
pursuant to Section 2 hereof, shall occur at the opening of business on the next
business day following the Second Valuation Time (or on such other date
following the Second Valuation Time as is agreed to in writing by an authorized
officer of each of the parties). The date and time at which the above-described
actions are taken
-16-
<PAGE>
shall be the "Applicable Effective Time of the Reorganization" with respect to
the Shell Firstar Funds and the Continuing Mercantile Funds. To the extent any
Assets of any Continuing Mercantile Fund are, for any reason, not transferred at
the Applicable Effective Time of the Reorganization with respect to such Funds,
Mercantile shall cause such Assets to be transferred in accordance with this
Agreement at the earliest practicable date thereafter.
(c) Prior to the Applicable Effective Time of the Reorganization with
respect to each Mercantile Fund and its Corresponding Firstar Fund, Firstar and
Mercantile shall execute and file Articles of Transfer, effective as of the
Applicable Effective Time of the Reorganization with respect to such Mercantile
Fund and its Corresponding Firstar Fund, with respect to the transactions
contemplated by this Agreement with the Department of Assessments and Taxation
of the State of Maryland (the "Department of Assessments").
7. Termination of Mercantile. Promptly following the Applicable Effective
-------------------------
Time of the Reorganization with respect to the Shell Firstar Funds and their
Corresponding Mercantile Funds, Mercantile shall file an application pursuant to
Section 8(f) of the 1940 Act for an order declaring that Mercantile has ceased
to be an investment company; provided that until such order is granted,
Mercantile shall continue to comply with all of its obligations as a registered
investment company under the 1940 Act and under any and all other applicable
state and federal securities laws (including, in the case of each of the
foregoing, the rules and regulations thereunder). Mercantile shall, promptly
after the Applicable Effective Time of the Reorganization with respect to the
Shell Firstar Funds and their Corresponding Mercantile Funds, file any final
regulatory reports, including, but not limited to, any Form N-SAR and Rule
-17-
<PAGE>
24f-2 Notice, with respect to such Mercantile Fund(s). All reporting and other
obligations of Mercantile shall remain the exclusive responsibility of
Mercantile up to and including the date on which such Mercantile Fund is
deregistered and dissolved. In addition, subject to the provisions of Section 28
hereof, promptly following the Applicable Effective Time of the Reorganization
with respect to the Shell Firstar Funds and their Corresponding Mercantile
Funds, Mercantile shall take all other steps necessary and proper to effect its
complete dissolution. Without limiting the generality of the foregoing, (a) the
affairs of Mercantile shall be immediately wound up, its contracts discharged
and its business liquidated; and (b) at an appropriate time as determined by
Mercantile, upon the advice of counsel, Mercantile shall file Articles of
Dissolution with the Department of Assessments and other documents required to
dissolve Mercantile under Maryland law.
8. Certain Representations, Warranties, Covenants and Agreements of
----------------------------------------------------------------
Mercantile. Mercantile, on behalf of itself and each of the Mercantile Funds,
----------
represents, warrants, covenants and agrees as follows:
(a) Mercantile is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Maryland.
(b) Mercantile is duly registered with the SEC as an open-end, management
investment company under the 1940 Act and such registration is in full force and
effect as of the date hereof.
(c) Mercantile has the power to own all of its Assets and, subject to the
approval of shareholders referred to in Section 10 hereof, to carry out and
consummate the
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<PAGE>
transactions contemplated herein. Mercantile has all necessary federal, state
and local authorizations, licenses and approvals necessary or desirable to carry
on its business as such business is now being conducted and, upon receipt by
Mercantile of an exemptive order under Section 17 of the 1940 Act and the filing
of Articles of Transfer with the Department of Assessments under Maryland law,
to consummate the transactions contemplated by this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Mercantile, and represents the legal, valid and binding obligation
of Mercantile, enforceable against Mercantile in accordance with the terms
hereof, subject as to enforcement to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer or conveyance, and
other similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles and provided that the provisions of this
Agreement intended to limit liability for particular matters to an investment
portfolio and its assets, including but not limited to Section 34 of this
Agreement, may not be enforceable. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated by this Agreement
will not, violate Mercantile's Charter or Bylaws or any other organizational
document of Mercantile or any material agreement, contract or other arrangement
to which Mercantile is a party or by which Mercantile or its properties or
Assets may be bound, subject or affected.
(e) Each Mercantile Fund has elected to qualify, and has qualified as of
and since its first taxable year, as a regulated investment company under Part I
of Subchapter M of
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<PAGE>
Subtitle A, Chapter 1, of the Internal Revenue Code of 1986, as amended (the
"Code"), and each Mercantile Fund currently qualifies, and shall continue to
qualify, as a regulated investment company under such Part for its taxable year
that includes the date on which the Applicable Effective Time of the
Reorganization occurs.
(f) All federal, state, local and foreign income, profits, franchise,
sales, withholding, customs, transfer and other taxes, including, without
limitation, interest, additions to tax, and penalties thereon (collectively,
"Taxes"), that relate to the Assets of Mercantile or of any Mercantile Fund, and
that are either due or properly shown to be due on any return filed by
Mercantile or by any Mercantile Fund have been (or as of the Applicable
Effective Time of the Reorganization shall have been) fully and timely paid or
provided for; and, to Mercantile's knowledge, there are no levies, liens, or
other encumbrances relating to Taxes existing, threatened or pending with
respect to the Assets of Mercantile (or with respect to any Assets of any
Mercantile Fund).
(g) All federal and other tax returns and reports of Mercantile and each
Mercantile Fund required by law to be filed on or before the Applicable
Effective Time of the Reorganization, have been or will be filed in a timely
manner, and all federal and other taxes owed by Mercantile on behalf of the
Mercantile Funds, have been or will be timely paid so far as due, and to the
best of Mercantile's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to any such return.
(h) The financial statements of each of the Mercantile Funds for its
respective fiscal year ended November 30, 1999, examined by KPMG LLP, and the
unaudited financial
-20-
<PAGE>
statements of each of the Mercantile Funds for its respective six-month period
ended May 31, 2000, copies of which have been previously furnished to Firstar,
present fairly and in conformity with generally accepted accounting principles
consistently applied (i) the financial condition of such Mercantile Fund as of
the dates indicated therein and (ii) the results of operations of such
Mercantile Fund for the periods indicated.
(i) Prior to or as of the First Valuation Time, each of the Reorganizing
Mercantile Funds shall have declared a dividend or dividends, with a record date
and ex-dividend date prior to or as of the First Valuation Time, which, together
with all previous dividends, shall have the effect of distributing to its
shareholders all of its net investment company income, if any, for the taxable
periods or years ended on or before November 30, 1999 and for the period from
said date to and including the Applicable Effective Time of the Reorganization
(computed without regard to any deduction for dividends paid), and all of its
net capital gain, if any, realized in taxable periods or years ended on or
before November 30, 1999 and in the period from said date to and including the
Applicable Effective Time of the Reorganization.
(j) At the Applicable Valuation Time and the Applicable Effective Time of
the Reorganization with respect to each Mercantile Fund, all Liabilities of such
Mercantile Fund which are required to be reflected in the net asset value per
share of shares of such Mercantile Fund in accordance with applicable law are
reflected in the net asset value per share of such Mercantile Fund.
(k) To Mercantile's knowledge, there are currently, and at the Applicable
Valuation Time and the Applicable Effective Time of the Reorganization with
respect to each
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<PAGE>
Mercantile Fund there shall be, no legal, administrative or other proceedings or
investigations pending or, to Mercantile's knowledge, threatened against or
otherwise involving Mercantile or any Mercantile Fund which could result in
liability on the part of Mercantile or any Mercantile Fund.
(l) Subject to the approval of shareholders referred to in Section 10
hereof and the filing of Articles of Transfer with the Department of Assessments
under Maryland law, at both the First Valuation Time and the Applicable
Effective Time of the Reorganization with respect to each Reorganizing
Mercantile Fund, Mercantile, on behalf of each Reorganizing Mercantile Fund,
shall have full right, power and authority to sell, assign, transfer and deliver
the Assets of such Reorganizing Mercantile Fund. Upon delivery and payment for
the Assets of the Reorganizing Mercantile Funds as contemplated in Section 2(b)
above and the filing of Articles of Transfer with the Department of Assessments
under Maryland law, each Corresponding Firstar Fund shall acquire good and
marketable title to the Assets of its Corresponding Mercantile Fund, in each
case, free and clear of all liens and encumbrances, and subject to no
restrictions on the ownership or transfer thereof (except as imposed by federal
or state securities laws).
(m) Subject to the approval of shareholders referred to in Section 10
hereof and the filing of Articles of Transfer with the Department of Assessments
under Maryland law, at both the Second Valuation Time and the Applicable
Effective Time of the Reorganization with respect to each Continuing Mercantile
Fund, Mercantile, on behalf of each Continuing Mercantile Fund, shall have full
right, power and authority to sell, assign, transfer and deliver the
-22-
<PAGE>
Assets of such Continuing Mercantile Fund. Upon delivery and payment for the
Assets of the Continuing Mercantile Fund, as contemplated in Section 2(b) above
and the filing of Articles of Transfer with the Department of Assessments under
Maryland law, each Shell Firstar Fund shall acquire good and marketable title to
the Assets of its Corresponding Mercantile Fund, in each case, free and clear of
all liens and encumbrances, and subject to no restrictions on the ownership or
transfer thereof (except as imposed by federal or state securities laws).
(n) No consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity, is required for the
consummation by Mercantile and by each Mercantile Fund of the transactions
contemplated by this Agreement, except (i) the filing of Articles of Transfer
with the Department of Assessments under Maryland law and (ii) as may be
required by the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the 1940 Act, or state securities laws (including, in the case of
each of the foregoing, the rules and regulations thereunder).
(o) On the effective date of the N-14 Registration Statement (as
hereinafter defined), at the time of the shareholders' meeting referred to in
Section 10 hereof and at each Applicable Effective Time of the Reorganization,
the registration statement filed by Firstar on Form N-14 relating to the shares
of each Firstar Fund that will be registered with the SEC pursuant to this
Agreement, together with any and all supplements and amendments thereto and the
documents contained or incorporated therein by reference, as supplemented and
amended, including, without limitation, the proxy statement of Mercantile and
the prospectuses of Mercantile and Firstar with respect to the transactions
contemplated by this Agreement (such
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<PAGE>
registration statement, together with such supplements and amendments and the
documents contained therein or incorporated therein by reference, as
supplemented and amended, the "N-14 Registration Statement") shall with respect
to Mercantile and each Mercantile Fund: (i) comply in all material respects with
the provisions of the 1933 Act, the 1934 Act, the 1940 Act, and applicable state
securities laws (including, in the case of each of the foregoing, the rules and
regulations thereunder), and (ii) not contain any untrue statement of a material
fact or omit to state a material fact that is required to be stated therein or
that is necessary to make the statements therein not misleading.
(p) All of the issued and outstanding shares of each of the Mercantile
Funds have been duly and validly issued, are fully paid and non-assessable, and
were offered for sale and sold in conformity with all applicable federal and
state securities laws (including, in the case of each of the foregoing, the
rules and regulations thereunder). All shares of any Mercantile Fund issued on
or after the date hereof shall be duly and validly issued, fully paid and non-
assessable and offered for sale and sold in conformity with all applicable
federal and state securities laws (including, in the case of each of the
foregoing, the rules and regulations thereunder). No shareholder of any of the
Mercantile Funds has, or will hereafter have, any statutory or contractual
preemptive right of subscription or purchase in respect of any shares of any
Mercantile Fund.
(q) Mercantile shall not sell or otherwise dispose of any Firstar Fund
Shares received in the transactions contemplated herein, except in distribution
to the Recordholders as contemplated herein.
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<PAGE>
9. Certain Representations, Warranties, Covenants and Agreements of Firstar.
------------------------------------------------------------------------
Firstar, on behalf of itself and each of the Firstar Funds, represents,
warrants, covenants and agrees as follows:
(a) Firstar is a corporation duly organized, validly existing and in good
standing under the laws of the State of Wisconsin.
(b) Firstar is duly registered with the SEC as an open-end, management
investment company under the 1940 Act and such registration is in full force and
effect as of the date hereof.
(c) Firstar has the power to own all of its Assets and, subject to the
approval of shareholders and the filing of the Articles of Amendment to the
Articles of Incorporation of Firstar referred to in Section 11 hereof, to carry
out and consummate the transactions contemplated herein. Firstar has all
necessary federal, state and local authorizations, licenses and approvals
necessary or desirable to carry on its business as such business is now being
conducted and, upon the filing of the Articles of Amendment to the Articles of
Incorporation of Firstar referred to in Section 11 hereof and receipt by Firstar
of an exemptive order under Section 17 of the 1940 Act, to consummate the
transactions contemplated by this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Firstar, and represents the legal, valid and binding obligation of
Firstar, enforceable against Firstar in accordance with the terms hereof,
subject as to enforcement to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer or conveyance, and
other similar laws of general applicability relating to or affecting creditors'
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<PAGE>
rights and to general equity principles and provided that the provisions of this
Agreement intended to limit liability for particular matters to an investment
portfolio and its assets, including but not limited to Section 33 of this
Agreement, may not be enforceable. Subject to the filing of the Articles of
Amendment to the Articles of Incorporation of Firstar referred to in Section 11
hereof, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement will not,
violate the Articles of Incorporation or Bylaws of Firstar or any other
organizational document of Firstar, or any agreement, contract or other
arrangement to which Firstar is a party or by which Firstar or its properties or
Assets may be bound, subject or affected.
(e) Each Firstar Fund has elected to qualify, and has qualified as of and
since its first taxable year, as a regulated investment company under Part I of
Subchapter M of Subtitle A, Chapter 1, of the Code, and each Firstar Fund has
been a regulated investment company under such Part at all times since the end
of its first taxable year when it so qualified. Each Firstar Fund currently
qualifies, and shall continue to qualify, as a regulated investment company
under the Code.
(f) All Taxes that relate to the Assets of Firstar or of any Firstar Fund,
and that are either due or properly shown to be due on any return filed by
Firstar or by any Firstar Fund, have been (or as of the Applicable Effective
Time of the Reorganization shall have been) fully and timely paid or provided
for; and, to Firstar's knowledge, there are no levies, liens or other
encumbrances relating to Taxes existing, threatened or pending with respect to
the Assets of Firstar (or with respect to any Assets of any Firstar Fund).
-26-
<PAGE>
(g) All federal and other tax returns and reports of Firstar and each
Firstar Fund required by law to be filed on or before the Applicable Effective
Time of the Reorganization have been or will be filed in a timely manner, and
all federal and other taxes owed by Firstar on behalf of the Firstar Funds have
been or will be timely paid so far as due, and to the best of Firstar's
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to any such return.
(h) The financial statements of each of the Firstar Funds for its
respective fiscal year ended October 31, 1999, examined by
PricewaterhouseCoopers LLP, and the unaudited financial statements of each of
the Firstar Funds for its respective six-month period ended April 30, 2000,
copies of which have been previously furnished to Mercantile, present fairly and
in conformity with generally accepted accounting principles consistently applied
(i) the financial condition of such Firstar Fund as of the dates indicated
therein and (ii) the results of operations of such Firstar Fund for the periods
indicated.
(i) At the Applicable Valuation Time and the Applicable Effective Time of
the Reorganization with respect to each Firstar Fund, all Liabilities of such
Firstar Fund which are required to be reflected in the net asset value per share
of the Firstar Fund Shares issued by such Firstar Fund pursuant to this
Agreement in accordance with applicable law are reflected in the net asset value
per share of such Firstar Fund.
(j) To Firstar's knowledge, there are currently, and at the Applicable
Valuation Time and the Applicable Effective Time of the Reorganization with
respect to each Firstar Fund there shall be, no legal, administrative or other
proceedings or investigations
-27-
<PAGE>
pending or, to Firstar's knowledge, threatened against or otherwise involving
Firstar or any Firstar Fund which could result in liability on the part of
Firstar or any Firstar Fund.
(k) No consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity is required for the
consummation by Firstar and by each Firstar Fund of the transactions
contemplated by this Agreement except (i) the filing of Articles of Amendment to
the Articles of Incorporation of Firstar referred to in Section 11 hereof and
(ii) as may be required by the 1933 Act, the 1934 Act, the 1940 Act or state
securities laws (including, in the case of each of the foregoing, the rules and
regulations thereunder).
(l) On the effective date of the N-14 Registration Statement, at the time
of the shareholders' meeting referred to in Section 10 hereof and at each
Applicable Effective Time of the Reorganization, the N-14 Registration Statement
shall with respect to Firstar and each of the Firstar Funds: (i) comply in all
material respects with the provisions of the 1933 Act, the 1934 Act, the 1940
Act, and applicable state securities laws (including, in the case of each of the
foregoing, the rules and regulations thereunder), and (ii) not contain any
untrue statement of a material fact or omit to state a material fact that is
required to be stated therein or that is necessary to make the statements
therein not misleading.
(m) The Firstar Fund Shares to be issued and delivered to each Mercantile
Fund pursuant to the terms hereof shall have been duly authorized as of the
Applicable Effective Time of the Reorganization and, when so issued and
delivered, shall be registered under the 1933 Act, duly and validly issued, and
fully paid and non-assessable, and no shareholder of any Firstar
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<PAGE>
Fund shall have any statutory or contractual preemptive right of subscription or
purchase in respect thereof.
(n) For the period beginning at the Applicable Effective Time of the
Reorganization with respect to the Shell Firstar Funds and the Continuing
Mercantile Funds and ending not less than three years thereafter, Firstar shall
provide or cause to be provided, liability coverage for the Directors and
officers of Mercantile which covers the actions of such Directors and officers
of Mercantile for the period they served as such and is at least comparable to
the liability coverage currently applicable to the Directors and officers of
Mercantile. Firstar agrees that all rights to indemnification existing in favor
of the Mercantile Directors, acting in their capacities as such, under
Mercantile's Charter as in effect as of the date of this Agreement shall survive
the Reorganization as obligations of Firstar, shall continue in full force and
effect without any amendment thereto, and shall constitute rights which may be
asserted against Firstar.
10. Shareholder Action on Behalf of the Mercantile Funds. As soon as
----------------------------------------------------
practicable after the effective date of the N-14 Registration Statement, but in
any event prior to the Applicable Effective Time of the Reorganization, and as a
condition to the consummation of the transactions contemplated hereby, the Board
of Directors of Mercantile shall call, and Mercantile shall hold, a meeting of
the shareholders of each of the Mercantile Funds for the purpose of considering
and voting upon:
(a) Approval of this Agreement and the transactions contemplated hereby,
including, without limitation, the transfer by such Mercantile Fund to its
Corresponding Firstar Fund, of substantially all of the Assets belonging to such
Mercantile Fund and the assumption by
-29-
<PAGE>
such Corresponding Firstar Fund of substantially all of the Liabilities of such
Mercantile Fund, in exchange for the Firstar Fund Shares issued by such
Corresponding Firstar Fund to such Mercantile Fund, in each case, in accordance
with, and at the respective times set forth in, Section 2 hereof.
(b) The liquidation of such Mercantile Fund through the distribution of
the Firstar Fund Shares received by such Mercantile Fund to the Recordholders of
the Mercantile Fund as described in this Agreement.
(c) Such other matters as may be determined by the Boards of Directors of
the parties.
11. Shareholder Action on Behalf of Firstar. Prior to the Effective Time of
---------------------------------------
the Reorganization with respect to the Existing Firstar Funds and as a condition
to the consummation of the transactions contemplated hereby, (i) the Board of
Directors of Firstar shall call, and Firstar shall hold, a meeting of the
shareholders of Firstar for the purpose of considering and voting upon (1) the
approval of Articles of Amendment to the Articles of Incorporation of Firstar to
enable Firstar to issue more than 30 classes of common stock (the "Articles of
Amendment"), (2) the approval of a sub-advisory agreement between Firstar
Investment Research & Management Company, LLC ("FIRMCO") and Clay Finlay Inc.
with respect to the Firstar Core International Equity Fund (the "Sub-Advisory
Agreement"), and (3) such other matters as may be determined by the Board of
Directors of Firstar, and (ii) provided that the approval required of Firstar's
shareholders is obtained, the Articles of Amendment shall be filed with the
office of the Department of Financial Institutions of the State of Wisconsin.
-30-
<PAGE>
12. N-14 Registration Statement. Firstar shall file the N-14 Registration
---------------------------
Statement. Firstar and Mercantile have cooperated and shall continue to
cooperate with each other and have furnished and shall continue to furnish each
other with the information relating to themselves that is required by the 1933
Act, the 1934 Act, the 1940 Act and applicable state securities laws (including,
in the case of each of the foregoing, the rules and regulations thereunder) to
be included in the N-14 Registration Statement and the information relating to
themselves that is necessary to ensure that the N-14 Registration Statement does
not contain any untrue statement of a material fact and to ensure that the N-14
Registration Statement does not omit to state a material fact that is required
to be stated therein or that is necessary to make the statements therein not
misleading.
13. Firstar Conditions. The obligations of Firstar (and of each respective
------------------
Firstar Fund) hereunder shall be subject to the following conditions precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the Board of Directors of Mercantile (including the
determinations required by Rule 17a-8(a) under the 1940 Act) and by the
shareholders of each of the Mercantile Funds, in each case, in the manner
required by law.
(b) The Articles of Amendment and Sub-Advisory Agreement shall have been
approved by the shareholders of Firstar and the Articles of Amendment shall have
been filed with the office of the Secretary of State of Wisconsin.
(c) Mercantile shall have duly executed and delivered to Firstar, on
behalf of each Mercantile Fund, such bills of sale, assignments, certificates
and other instruments of
-31-
<PAGE>
transfer, including, without limitation, Articles of Transfer for filing with
the Department of Assessments under Maryland law ("Transfer Documents"), as
Firstar may deem necessary or desirable to transfer to the Corresponding Firstar
Fund of such Mercantile Fund all of the right, title and interest of such
Mercantile Fund in and to substantially all of the respective Assets of such
Mercantile Fund. In each case, the Assets of each Mercantile Fund so transferred
shall be accompanied by all necessary state stock transfer stamps or cash for
the appropriate purchase price therefor.
(d) All representations and warranties of Mercantile made in this Agreement
shall be true and correct in all material respects on the date hereof, at the
Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, in each case, as if made at and as of such time. As of the
Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, there shall have been no material adverse change in the
financial position of any Mercantile Fund or of Mercantile since the date of the
most recent financial statements referred to in Section 8(h), other than those
changes (including, without limitation, changes due to net redemptions) incurred
in the ordinary course of business as an investment company since the date of
the most recent financial statements referred to in Section 8(h). At the
Applicable Effective Time of the Reorganization, Firstar shall have received a
certificate from the President or Vice President of Mercantile, dated as of such
date, certifying on behalf of Mercantile that as of such date each of the
conditions set forth in this clause (d) have been met.
(e) Firstar shall have received opinions of Drinker Biddle & Reath LLP,
counsel to Mercantile, addressed to Firstar, in form and substance reasonably
satisfactory to Firstar, and dated the Applicable Effective Time of the
Reorganization, to the effect that as of the
-32-
<PAGE>
date of such opinion, and subject to qualifications and conditions reasonably
acceptable to Firstar: (i) Mercantile is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland; (ii) this
Agreement has been duly and validly authorized, executed and delivered by
Mercantile and represents the legal, valid and binding obligation of Mercantile,
enforceable against Mercantile in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent transfer or conveyance and similar laws relating to or affecting
creditors' rights and remedies generally and court decisions with respect
thereto, and such counsel shall express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, as to the enforceability of any provision of the Agreement relating to
remedies after default, as to the availability of any specific or equitable
relief of any kind, or with respect to the provisions of this Agreement intended
to limit liability for particular matters to a particular Mercantile Fund and
its Assets, including but not limited to Section 34 of this Agreement; (iii) the
execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated by this Agreement will not, violate the Charter or
Bylaws of Mercantile or any material agreement known to counsel to which
Mercantile is a party or by which Mercantile may be bound; and (v) to such
counsel's knowledge, no consent, approval, authorization or order of any court,
governmental authority or agency is required for the consummation by Mercantile
of the transactions contemplated by this Agreement, except such (including the
filing of Articles of Transfer with the Department of Assessments) as have been
obtained under the 1933 Act, the 1934 Act, the 1940 Act, and Maryland corporate
and securities laws (including, in the case of each of the foregoing, the rules
and regulations thereunder). Such
-33-
<PAGE>
opinions may rely on opinions of Venable Baetjer and Howard, LLP to the extent
set forth in each such opinion.
(f) The N-14 Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of Firstar, contemplated by the SEC, and the
parties shall have received all permits, licenses and other authorizations
necessary under applicable state securities laws to consummate the transactions
contemplated by this Agreement and all such permits, licenses and other
authorizations shall be in full force and effect at such time.
(g) At the Applicable Effective Time of the Reorganization, Mercantile
shall have performed and complied in all material respects with each of its
agreements and covenants required by this Agreement to be performed or complied
with by Mercantile prior to or at the Applicable Valuation Time and the
Applicable Effective Time of the Reorganization and Firstar shall have received
a certificate from the President or Vice President of Mercantile, dated as of
such date, certifying on behalf of Mercantile that the conditions set forth in
this clause (g) have been, and continue to be, satisfied.
(h) Mercantile's agreements with each of its service contractors shall have
terminated at the Applicable Effective Time of the Reorganization and each party
shall have received reasonable assurance that no claim for damages (liquidated
or otherwise) will arise as a result of such termination.
(i) Firstar shall have received the tax opinions provided for in
Section 15 hereof.
-34-
<PAGE>
(j) Firstar shall have received any necessary exemptive relief from the
SEC with respect to Section 17(a) of the 1940 Act.
14. Mercantile Conditions. The obligations of Mercantile (and of each
---------------------
respective Mercantile Fund) hereunder shall be subject to the following
conditions precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the Board of Directors of Firstar (including the
determinations required by Rule 17a-8(a) under the 1940 Act) and by the
shareholders of each of the Mercantile Funds, in each case, in the manner
required by law.
(b) The Articles of Amendment and Sub-Advisory Agreement shall have been
approved by the shareholders of Firstar and the Articles of Amendment shall have
been filed with the office of the Secretary of State of Wisconsin.
(c) All representations and warranties of Firstar made in this Agreement
shall be true and correct in all material respects on the date hereof, at the
Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, in each case, as if made at and as of such time. As of the
Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, there shall have been no material adverse change in the
financial position of any Firstar Fund or of Firstar since the date of the most
recent financial statements referred to in Section 9(h) other than those changes
(including, without limitation, changes due to net redemptions) incurred in the
ordinary course of business as an investment company since the date of the most
recent financial statements referred to in Section 9(h). At the Applicable
Effective Time of the Reorganization, Mercantile shall have received a
certificate from the
-35-
<PAGE>
President or Vice President of Firstar, dated as of such date, certifying on
behalf of Firstar that as of such date each of the conditions set forth in this
clause (c) have been met.
(d) Mercantile shall have received opinions of Drinker Biddle & Reath LLP,
counsel to Firstar, addressed to Mercantile, in form and substance reasonably
satisfactory to Mercantile, and dated the Applicable Effective Time of the
Reorganization, to the effect that as of the date of such opinion, and subject
to qualifications and conditions reasonably acceptable to Mercantile: (i)
Firstar is a corporation duly organized, validly existing and in good standing
under the laws of the State of Wisconsin; (ii) the shares of each Existing or
Shell Firstar Fund, as appropriate, to be delivered to its Corresponding
Mercantile Fund are duly authorized and upon delivery will be validly issued,
fully paid and non-assessable by such Firstar Fund, and to such counsel's
knowledge, no shareholder of any Firstar Fund has any statutory preemptive right
to subscription or purchase in respect thereof; (iii) this Agreement has been
duly and validly authorized, executed and delivered by Firstar and represents
the legal, valid and binding obligation of Firstar, enforceable against Firstar
in accordance with the terms hereof, subject to the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent transfer or
conveyance and similar laws relating to or affecting creditors' rights and
remedies generally and court decisions with respect thereto, and such counsel
shall express no opinion with respect to the application of equitable principles
in any proceeding, whether at law or in equity, as to the enforceability of any
provision of the Agreement relating to remedies after default, as to the
availability of any specific or equitable relief of any kind, or with respect to
the provisions of this Agreement intended to limit liability for particular
matters to a particular Firstar Fund and its Assets, including but not limited
to Section 33 of this Agreement; (iv) the
-36-
<PAGE>
execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated by this Agreement will not, violate the Articles of
Incorporation or Bylaws of Firstar, or any material agreement known to such
counsel to which Firstar is a party or by which Firstar may be bound; and (v) to
such counsel's knowledge, no consent, approval, authorization or order of any
court, governmental authority or agency is required for the consummation by
Firstar of the transactions contemplated by this Agreement, except such
(including the filing of Articles of Amendment to the Articles of Incorporation
of Firstar with the Department of Financial Institutions of the State of
Wisconsin) as have been obtained under the 1933 Act, the 1934 Act, the 1940 Act,
and Wisconsin corporate and securities laws (including, in the case of each of
the foregoing, the rules and regulations thereunder). Such opinions may rely on
opinions of Foley & Lardner to the extent set forth in each such opinion.
(e) The N-14 Registration Statement shall have become effective under the
1933 Act and no stop order suspending such effectiveness shall have been
instituted, or, to the knowledge of Mercantile, contemplated by the SEC, and the
parties shall have received all permits, licenses and other authorizations
necessary under applicable state securities laws to consummate the transactions
contemplated by this Agreement, and all such permits and other authorizations
shall be in full force and effect at such time.
(f) At the Applicable Effective Time of the Reorganization, Firstar shall
have performed and complied in all material respects with each of its agreements
and covenants required by this Agreement to be performed or complied with by
Firstar prior to or at the Applicable Valuation Time and the Applicable
Effective Time of the Reorganization and
-37-
<PAGE>
Mercantile shall have received a certificate from the President or Vice
President of Firstar, dated as of such date, certifying on behalf of Firstar
that the conditions set forth in this clause (f) have been, and continue to be,
satisfied.
(g) Mercantile shall have received the tax opinions provided for in
Section 15 hereof.
(h) Mercantile shall have received any necessary exemptive relief from
the SEC with respect to Section 17(a) of the 1940 Act.
15. Tax Opinion. Firstar and Mercantile shall receive opinions of Drinker
-----------
Biddle & Reath LLP addressed to both Firstar and Mercantile in a form reasonably
satisfactory to them, and dated as of the Applicable Effective Time of the
Reorganization, substantially to the effect that on the basis of facts,
representations, and assumptions set forth in such opinions, and subject to
qualifications and exceptions reasonably acceptable to the parties:
(a) The Reorganization will consist of nineteen "reorganizations" within
the meaning of Section 368(a) of the Code, and each Mercantile Fund and the
Corresponding Firstar Fund will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code with respect to such Reorganization;
(b) In accordance with Section 361(a), 361(c)(1) and 357(a) of the Code,
no gain or loss will be recognized by any Mercantile Fund upon the transfer of
substantially all of its Assets and substantially all of its Liabilities to the
Corresponding Firstar Fund in exchange for the Firstar Fund Shares of the
Corresponding Firstar Fund;
-38-
<PAGE>
(c) In accordance with Section 1032(a) of the Code, no gain or loss will be
recognized by each Firstar Fund upon the receipt of substantially all of the
Assets and assumption of substantially all of the Liabilities of the
Corresponding Mercantile Fund in exchange for the Firstar Fund Shares;
(d) In accordance with Section 362(b) of the Code, the basis of each
Mercantile Fund's Assets received by the Corresponding Firstar Fund pursuant to
the Reorganization will be the same as the basis of those Assets in the hands of
the Mercantile Fund immediately prior to the Reorganization;
(e) In accordance with Section 1223(2) of the Code, the holding period of
each Mercantile Fund's Assets in the hands of the Corresponding Firstar Fund
will include the period for which such Assets have been held by the Mercantile
Fund;
(f) In accordance with Section 361(a), 361(c)(1) and 357(a) of the Code, no
gain or loss will be recognized by any Mercantile Fund on the distribution to
its shareholders of the Firstar Fund Shares to be received by the Mercantile
Fund in the Reorganization;
(g) In accordance with Section 354(a)(1) of the Code, no gain or loss will
be recognized by the shareholders of any Mercantile Fund upon their receipt of
the Corresponding Firstar Fund Shares in exchange for such shareholders' shares
of the Mercantile Fund;
(h) In accordance with Section 358(a)(1) of the Code, the basis of the
Firstar Fund Shares received by the shareholders of each Corresponding
Mercantile Fund will be the
-39-
<PAGE>
same as the basis of the Mercantile Fund shares surrendered by such shareholders
pursuant to the Reorganization;
(i) In accordance with Section 1223(1) of the Code, the holding period
for the Firstar Fund Shares received by each Mercantile Fund shareholder will
include the period during which such shareholder held the Mercantile Fund shares
surrendered therefor, provided that such Mercantile Fund shares are held as a
capital asset in the hands of such Mercantile Fund shareholder on the date of
the exchange; and
(j) Each Firstar Fund will succeed to and take into account the tax
attributes described in Section 381(c) of the Code of the Corresponding
Mercantile Fund as of the Applicable Effective Time of the Reorganization,
subject to the conditions and limitations specified in the Code.
In rendering such opinions described in this paragraph, Drinker Biddle &
Reath LLP may require and, to the extent it deems necessary and appropriate, may
rely upon representations made in certificates of Firstar Funds and Mercantile
Funds, their affiliates, and principal shareholders.
16. Tax Documents. Mercantile shall deliver to Firstar at the Applicable
-------------
Effective Time of the Reorganization, confirmations and/or other evidence
satisfactory to Firstar as to the adjusted tax basis of the Assets of each
Mercantile Fund delivered to a Firstar Fund in accordance with the terms of this
Agreement.
17. Further Assurances. Subject to the terms and conditions herein
------------------
provided, each of the parties hereto shall use its best efforts to execute and
deliver, or cause to be executed and
-40-
<PAGE>
delivered, such additional documents and instruments and to do, or cause to be
done, all things necessary, proper or advisable under the provisions of this
Agreement and under applicable law to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
delivering and/or causing to be delivered to the other party hereto each of the
items required under this Agreement as a condition to such other party's
obligations hereunder. In addition, Mercantile shall deliver or cause to be
delivered to Firstar, each account, book, record and other document of
Mercantile required to be maintained by Mercantile pursuant to Section 31(a) of
the 1940 Act and Rules 31a-1 to 31a-3 thereunder (regardless of whose possession
they are in).
18. Termination of Representations and Warranties. The representations and
---------------------------------------------
warranties of the parties set forth in this Agreement shall terminate upon the
consummation of the transactions contemplated herein; provided, however, that
nothing contained in this Section 18 shall be construed (a) to terminate the
obligations of each Firstar Fund to discharge the Liabilities of the
Corresponding Mercantile Fund assumed pursuant to Section 2(b) hereof, or (b) to
terminate the obligations of Firstar to provide liability coverage for the
Directors and officers of Mercantile and to indemnify the Directors of
Mercantile, in each case, pursuant to the covenants set forth in Section 9(n)
hereof.
19. Termination of Agreement. This Agreement may be terminated by a party
------------------------
at any time at or prior to the Applicable Effective Time of the Reorganization
by a vote of a majority of such party's Board of Directors as provided below:
-41-
<PAGE>
(a) By Firstar if the conditions set forth in Section 13 are not
satisfied as specified in said Section;
(b) By Mercantile if the conditions set forth in Section 14 are not
satisfied as specified in said Section; or
(c) By mutual consent of both parties.
If a party terminates this Agreement because one or more of its conditions have
not been fulfilled, or if this Agreement is terminated by mutual consent, this
Agreement will become null and void insofar as it is so terminated without any
liability of any party to the other parties except as otherwise provided herein.
20. Amendment and Waiver. At any time prior to or (to the fullest extent
--------------------
permitted by applicable law) after approval of this Agreement by the
shareholders of Mercantile in accordance with Section 10 hereof, (a) the parties
hereto may, by written agreement authorized by their respective Boards of
Directors and with or without the approval of their shareholders, amend, modify
or terminate any of the provisions of this Agreement, and (b) any party may
waive any breach by any other party or any failure by any other party to satisfy
any of the conditions to the obligations of the waiving party (such waiver to be
in writing and authorized by an authorized officer of the waiving party) with or
without the approval of such party's shareholders.
21. Governing Law. This Agreement and the transactions contemplated hereby
-------------
shall be governed, construed and enforced in accordance with the internal laws
of the State of Wisconsin, without giving effect to the conflicts of law
principles of such state.
-42-
<PAGE>
22. Successors and Assigns. This Agreement shall be binding upon the
----------------------
respective successors and permitted assigns of the parties hereto. This
Agreement and the rights, obligations and liabilities hereunder may not be
assigned by any party without the prior written consent of the other party.
23. Beneficiaries. Nothing contained in this Agreement shall be deemed to
-------------
create rights in persons not parties hereto (including, without limitation, any
shareholder of Firstar or Mercantile), other than (a) the Directors and officers
of Mercantile with respect to the covenants set forth in Section 9(n) hereof,
and (b) the successors and permitted assigns of the parties.
24. Notices. All notices required or permitted herein shall be in writing
-------
and shall be deemed to be properly given when delivered personally or by
telecopier to the party entitled to receive the notice or when sent by certified
or registered mail, postage prepaid, or delivered to a nationally recognized
overnight courier service, in each case, properly addressed to the party
entitled to receive such notice at the address or telecopier number stated below
or to such other address or telecopier number as may hereafter be furnished in
writing by notice similarly given by one party to the other party hereto:
If to Firstar:
Firstar Funds, Inc.
615 East Michigan Street
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
-43-
<PAGE>
With copies to:
W. Bruce McConnel, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18/th/ & Cherry Streets
Philadelphia, Pennsylvania 19103-6996
Telecopier Number: (215) 988-2757
If to Mercantile:
Mercantile Mutual Funds, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
With copies to:
Mary Jo Reilly, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18/th/ & Cherry Streets
Philadelphia, Pennsylvania 19103-6996
Telecopier Number: (215) 988-2757
25. Expenses. With regard to the expenses incurred by Mercantile and
--------
Firstar in connection with this Agreement and the transactions contemplated
hereby, FIRMCO shall bear such expenses or cause one of its affiliates to bear
such expenses.
26. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding of the parties hereto and supersedes any and all prior agreements,
arrangements and understandings relating to matters provided for herein.
27. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which, when executed and delivered shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
-44-
<PAGE>
28. Failure of One Fund to Consummate the Transactions. Subject to the
--------------------------------------------------
conditions set forth in this Agreement, and provided that the Reorganization
shall continue to qualify for tax-free treatment under the Code, the failure of
one Fund to consummate the transactions contemplated hereby shall not affect the
consummation or validity of the Reorganization with respect to any other Fund,
and the provisions of this Agreement shall be construed to effect this intent.
29. No Brokers or Finders. Each of the parties, on behalf of both itself
---------------------
and each of its Funds, hereby represents and warrants to the other party hereto
that that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
30. Validity. Whenever possible, each provision and term of this Agreement
--------
shall be interpreted in a manner to be effective and valid, but if any provision
or term of this Agreement is held to be prohibited by law or invalid, then such
provision or term shall be ineffective only in the jurisdiction or jurisdictions
so holding and only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
31. Effect of Facsimile Signature. A facsimile signature of an authorized
-----------------------------
officer of a party hereto on this Agreement and/or any Transfer Document shall
have the same effect as if executed in the original by such officer.
32. Headings. The headings contained herein are for reference purposes
--------
only and shall not affect in any way the meaning or interpretation of this
Agreement.
-45-
<PAGE>
33. Firstar Liability. Both parties specifically acknowledge and agree
-----------------
that any liability of Firstar under this Agreement with respect to a particular
Firstar Fund, or in connection with the transactions contemplated herein with
respect to a particular Firstar Fund, shall be discharged only out of the assets
of the particular Firstar Fund and that no other portfolio of Firstar shall be
liable with respect thereto.
34. Mercantile Liability. Both parties specifically acknowledge and agree
--------------------
that any liability of Mercantile under this Agreement with respect to a
Mercantile Fund, or in connection with the transactions contemplated herein with
respect to a particular Mercantile Fund, shall be discharged only out of the
assets of the particular Mercantile Fund and that no other portfolio of
Mercantile shall be liable with respect thereto.
-46-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers designated below as of the date first
written above.
FIRSTAR FUNDS, INC.
By: ___________________________
Name:
Title:
MERCANTILE MUTUAL FUNDS, INC.
By: ___________________________
Name:
Title:
Firstar Investment Research & Management
Company, LLC hereby joins in this Agreement
with respect to, and agrees to be bound by,
Section 25.
By: ___________________________
Name:
Title:
-47-
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
MERCANTILE FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Mercantile Treasury Money Market Portfolio Firstar U.S. Treasury Money Market Fund
Investor A Shares (Class B Shares) Institutional Shares
Institutional Shares (Class B - Special Institutional Shares
Series 2 Shares)
Trust Shares (Class B - Special Institutional Shares
Series 1 Shares)
Trust II Shares (Class B - Special Institutional Shares
Series 3 Shares)
Mercantile Money Market Portfolio Firstar Money Market Fund
Investor A Shares (Class A Shares) Retail A Shares
Investor B Shares (Class A - Special Retail A Shares
Series 3 Shares)
Institutional Shares (Class A - Special Retail A Shares
Series 2 Shares)
Trust Shares (Class A - Special Retail A Shares
Series 1 Shares)
Trust II Shares (Class A - Special Retail A Shares
Series 4 Shares)
Mercantile Tax-Exempt Money Market Portfolio Firstar Tax-Exempt Money Market Fund
Investor A Shares (Class J Shares) Retail A Shares
Trust Shares (Class J - Special Institutional Shares
Series 1 Shares)
Trust II Shares (Class J - Special Institutional Shares
Series 2 Shares)
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
MERCANTILE FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Conning Money Market Portfolio Conning Money Market Fund
Shares (Class T Shares) Shares
Mercantile U.S. Government Securities Portfolio Firstar U.S. Government Securities Fund
Investor A Shares (Class E Shares) Retail A Shares
Investor B Shares (Class E - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class E - Special Series 2 Shares)
Class Y Shares
Trust Shares (Class E - Special Series 1 Shares) Institutional Shares
Mercantile Intermediate Corporate Bond Firstar Intermediate Bond Market
Portfolio Fund
Investor A Shares (Class O Shares) Retail A Shares
Institutional Shares (Class O - Special Series 2 Shares) Class Y Shares
Trust Shares (Class O - Special Series 1 Shares) Institutional Shares
Mercantile Government & Corporate Bond Firstar Aggregate Bond Fund
Portfolio
Investor A Shares (Class D Shares) Retail A Shares
Investor B Shares (Class D - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class D - Special Series 2 Shares) Class Y Shares
Trust Shares (Class D - Special Series 1 Shares) Institutional Shares
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
MERCANTILE FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Mercantile Bond Index Portfolio Firstar Aggregate Bond Fund
Investor A Shares (Class Q Shares) Retail A Shares
Institutional Shares (Class Q - Special Series 2 Shares) Class Y Shares
Trust Shares (Class Q - Special Series 1 Shares) Institutional Shares
Mercantile Short-Intermediate Municipal Portfolio Firstar Tax-Exempt Intermediate Bond
Fund
Investor A Shares (Class I Shares) Retail A Shares
Trust Shares (Class I - Special Series 1 Shares) Institutional Shares
Mercantile Missouri Tax-Exempt Bond Portfolio Firstar Missouri Tax-Exempt Bond Fund
Investor A Shares (Class K Shares) Retail A Shares
Investor B Shares (Class K - Special Series 2 Shares) Retail B Shares
Trust Shares (Class K - Special Series 1 Shares) Institutional Shares
Mercantile National Municipal Bond Portfolio Firstar National Municipal Bond Fund
Investor A Shares (Class N Shares) Retail A Shares
Investor B Shares (Class N - Special Series 2 Shares) Retail B Shares
Trust Shares (Class N - Special Series 1 Shares) Institutional Shares
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
MERCANTILE FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
Investor A Shares (Class G Shares) Retail A Shares
Investor B Shares (Class G - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class G - Special Series 2 Shares)
Class Y Shares
Trust Shares (Class G - Special Series 1 Shares) Institutional Shares
Mercantile Equity Income Portfolio Firstar Equity Income Fund
Investor A Shares (Class M Shares) Retail A Shares
Investor B Shares (Class M - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class M - Special Series 2 Shares) Class Y Shares
Trust Shares (Class M - Special Series 1 Shares) Institutional Shares
Mercantile Equity Index Portfolio Firstar Equity Index Fund
Investor A Shares (Class P Shares) Retail A Shares
Institutional Shares (Class P - Special Series 2 Shares) Class Y Shares
Trust Shares (Class P - Special Series 1 Shares) Institutional Shares
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
MERCANTILE FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Mercantile Growth & Income Equity Portfolio Firstar Growth & Income Fund
Investor A Shares (Class C Shares) Retail A Shares
Investor B Shares (Class C - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class C - Special Series 2 Shares) Class Y Shares
Trust Shares (Class C - Special Series 1 Shares) Institutional Shares
Mercantile Growth Equity Portfolio Firstar Growth Fund
Investor A Shares (Class S Shares) Retail A Shares
Investor B Shares (Class S - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class S - Special Series 2 Shares) Class Y Shares
Trust Shares (Class S - Special Series 1 Shares) Institutional Shares
Mercantile Small Cap Equity Portfolio Firstar Emerging Growth Fund
Investor A Shares (Class F Shares) Retail A Shares
Investor B Shares (Class F - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class F - Special Series 2 Shares) Class Y Shares
Trust Shares (Class F - Special Series 1 Shares) Institutional Shares
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
MERCANTILE FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Mercantile Small Cap Equity Index Portfolio Firstar Small Cap Index Fund
Investor A Shares (Class R Shares) Retail A Shares
Institutional Shares (Class R - Special Series 2 Shares) Class Y Shares
Trust Shares (Class R - Special Series 1 Shares) Institutional Shares
Mercantile International Equity Portfolio Firstar Core International Equity Fund
Investor A Shares (Class H Shares) Retail A Shares
Investor B Shares (Class H - Special Series 3 Shares) Retail B Shares
Institutional Shares (Class H - Special Series 2 Shares) Class Y Shares
Trust Shares (Class H - Special Series 1 Shares) Institutional Shares
</TABLE>
A-6
<PAGE>
APPENDIX II
Expense Summaries of the Mercantile Funds
and Corresponding Firstar Funds
The following tables (a) compare the fees and expenses as of April 30,
2000, for the Mercantile Funds and their Corresponding Firstar Funds and (b)
show the estimated fees and expenses for the Corresponding Firstar Funds on a
pro forma basis after giving effect to the Reorganization. The purpose of these
tables is to assist shareholders in understanding the various costs and expenses
that investors in these portfolios will bear as shareholders. The tables do not
reflect any charges that may be imposed by institutions directly on their
customer accounts in connection with investments in the portfolios. The fund
operating expense levels shown in this Proxy/Prospectus assume current net asset
levels; pro forma expense levels shown should not be considered an actual
representation of future expenses or performance. Such pro forma expense levels
project anticipated levels but may be greater or less than those shown.
The Firstar Aggregate Bond Fund, Firstar U.S. Government Securities
Fund, Firstar National Municipal Bond Fund, Firstar Missouri Tax-Exempt Bond
Fund, Firstar Small Cap Index Fund, Firstar Equity Income Fund and Firstar
Conning Money Market Fund are new investment portfolios with nominal assets and
liabilities that will commence investment operations upon the completion of the
Reorganization.
FIRMCO has committed to waiving/reimbursing fees as needed to ensure
that total operating expense ratios will not exceed the pro forma after waiver
expense ratios until October 31, 2001.
II-1
<PAGE>
MERCANTILE TREASURY MONEY MARKET PORTFOLIO - TRUST SHARES, TRUST II SHARES AND
INSTITUTIONAL SHARES +
FIRSTAR STELLAR TREASURY FUND - CLASS Y SHARES +
FIRSTAR U.S. TREASURY MONEY MARKET FUND - INSTITUTIONAL SHARES/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Treasury Money Market Portfolio
------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust II Institutional Investor A
Trust Shares Shares Shares Shares
------------ ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of offering
(price)..................................... None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends....................... None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of the offering price or
sales price, whichever is less)............ None None None None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees............................. None None None None
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................ None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............ 0.40%/3/ 0.40%/3/ 0.40%/3/ 0.40%/3/
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b 1) Fees....... None None None 0.25%
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses/4/........................... 0.56% 0.31% 0.56% 0.31%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/....................................... 0.96% 0.71% 0.96% 0.96%
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Firstar
Firstar Stellar U.S. Treasury Money Combined Fund
Treasury Fund* Market Fund Pro Forma
-------------- ----------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional
Class Y Shares Institutional Shares Shares
-------------- -------------------- ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of offering
(price)..................................... None ++ None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends....................... None ++ None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of the offering price or
sales price, whichever is less)............ None ++ None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees............................. None ++ None/2/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................ None ++ None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............ 0.50% ++ 0.44%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees....... None ++ None
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses/4/........................... 0.43% ++ 0.39%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/....................................... 0.93% ++ 0.83%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-2
<PAGE>
+ In the Reorganization, holders of each class of shares of the Mercantile
Treasury Money Market Portfolio, and holders of Class Y Shares of the
Firstar Stellar Treasury Fund, will each receive Institutional Shares of
the Firstar U.S. Treasury Money Market Fund.
* The Firstar Stellar Treasury Fund is expected to reorganize into the
Firstar U.S. Treasury Money Market Fund in connection with the
Reorganization. The reorganization of the Firstar Stellar Treasury Fund
into the Firstar U.S. Treasury Money Market Fund and the Reorganization of
the Mercantile Treasury Money Market Portfolio into the Firstar U.S.
Treasury Money Market Fund will occur only if the shareholders of the
appropriate Funds approve each transaction.
++ Institutional Shares will not be issued until the Applicable Effective Time
of the Reorganization.
1. It is expected that the Firstar U.S. Treasury Money Market Fund will change
its investment policies upon consummation of the Reorganization and that it
will continue the operations of the Firstar Stellar Treasury Fund.
2. A fee of $15.00 is charged for each non-systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be:
Mercantile Treasury Money Market Portfolio...........0.35%
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Trust II Shares Institutional Investor A Shares Class Y Shares
------------ --------------- -------------- ----------------- --------------
Shares
------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Treasury Money Market Portfolio 0.46% 0.21% 0.46% 0.21% --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Stellar Treasury Fund -- -- -- -- 0.34%
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 0.35% -- --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep
the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Trust II Shares Institutional Investor A Shares Class Y Shares
------------ --------------- -------------- ----------------- --------------
Shares
------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Treasury Money Market Portfolio 0.81% 0.56% 0.81% 0.81% --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Stellar Treasury Fund -- -- -- -- 0.84%
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 0.79% -- --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-3
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Treasury Money Firstar Stellar Firstar U.S Treasury Combined Fund
Market Portfolio Treasury Fund Money Market Fund Pro Forma
---------------- ------------- ----------------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional Investor A Institutional Institutional
Trust Shares Trust II Shares Shares Shares Class Y Shares Shares Shares
------ ------ ------ ------ -------------- ------ ------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year............ $ 98 $ 73 $ 98 $ 98 $ 95 N/A $ 85
------------------------------------------------------------------------------------------------------------------------------------
3 years........... $ 306 $ 227 $ 306 $ 306 $ 296 N/A $ 265
------------------------------------------------------------------------------------------------------------------------------------
5 years........... $ 531 $ 395 $ 531 $ 531 $ 515 N/A $ 460
------------------------------------------------------------------------------------------------------------------------------------
10 years.......... $1,178 $ 883 $1,178 $1,178 $1,143 N/A $1,025
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-4
<PAGE>
MERCANTILE MONEY MARKET PORTFOLIO*
FIRSTAR MONEY MARKET FUND
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Money Market Portfolio
---------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust Trust II Institutional Investor A Investor B
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load
Imposed on Purchases (as a percentage of offering price)..... None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Reinvested Dividends........... None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a percentage of the
offering price or sales price, whichever is less)........... None None None None 5.00%/1/
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................................. None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................................. None None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)/3/.......................... 0.40% 0.40% 0.40% 0.40% 0.40%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........................ None None None 0.25% 1.00%
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses/5/............................................ 0.55% 0.30% 0.55% 0.30% 0.30%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/6/.......................................... 0.95% 0.70% 0.95% 0.95% 1.70%
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Combined
Firstar Money Fund
Market Fund Pro Forma
----------- ---------
------------------------------------------------------------------------------------------------------------------------------------
Retail A Retail A
Shares Shares
------ ------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses:
Maximum Sales Load
Imposed on Purchases (as a percentage of offering price)..... None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Reinvested Dividends........... None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a percentage of the
offering price or sales price, whichever is less)........... None None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................................. None/2/ None/2/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................................. None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)/3/.......................... 0.50% 0.50%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........................ 0.25%/4/ 0.25%/4/
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses/5/............................................ 0.79% 0.51%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/6/.......................................... 1.54% 1.26%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, shareholders of each class of shares of the
Mercantile Money Market Portfolio will receive Retail A Shares of the
Firstar Money Market Fund.
1. This amount applies if you sell your shares in the first year after
purchase and gradually declines until it is eliminated after six years.
After six years, Mercantile Investor B Shares automatically convert to
Investor A Shares.
2. A fee of $12.00 is charged for each wire redemption (Retail A Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for
which Firstar Bank, N.A. is a custodian
II-5
<PAGE>
3. Management Fees (after waivers) would be:
Mercantile Money Market Portfolio........... 0.35%
Firstar Money Market Fund................... 0.18%
Combined Fund Pro Forma..................... 0.43%
4. Distribution and Service (12b-1) Fees (after waivers) would be:
Firstar Money Market Fund................... 0.03%
Combined Fund Pro Forma..................... 0.01%
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Trust II Shares Institutional Shares Investor A Shares Investor B Shares Retail A Shares
------------ --------------- -------------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Money
Market Portfolio 0.45% 0.20% 0.45% 0.20% 0.20% --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Money
Market Fund -- -- -- -- -- 0.54%
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- -- -- 0.35%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep
the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Trust II Shares Institutional Shares Investor A Shares Investor B Shares Retail A Shares
------------ --------------- -------------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Money
Market Portfolio 0.80% 0.55% 0.80% 0.80% 1.55% --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Money
Market Fund -- -- -- -- -- 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- -- -- 0.79%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-6
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown on the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Combined
Firstar Money Fund
Mercantile Money Market Fund Market Fund Pro Forma
---------------------------- ----------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional Investor A Retail A Retail A
Trust Shares Trust II Shares Shares Shares Investor B Shares Shares Shares
------------ --------------- ------ ------ ----------------- ------ ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assuming Assuming No
Redemption Redemption
---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
1 year................ $ 97 $ 72 $ 97 $ 97 $ 673 $ 173 $ 157 $ 128
------------------------------------------------------------------------------------------------------------------------------------
3 years............... $ 303 $ 224 $ 303 $ 303 $ 836 $ 536 $ 486 $ 400
------------------------------------------------------------------------------------------------------------------------------------
5 years............... $ 525 $ 390 $ 525 $ 525 $1,123 $ 923 $ 839 $ 692
------------------------------------------------------------------------------------------------------------------------------------
10 years.............. $1,166 $ 871 $1,166 $1,166 $1,627 $1,627 $1,834 $1,523
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-7
<PAGE>
MERCANTILE TAX-EXEMPT MONEY MARKET PORTFOLIO +
FIRSTAR STELLAR TAX - FREE MONEY MARKET FUND +
FIRSTAR TAX - EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Firstar
Stellar
Tax-Free
Money
Mercantile Tax-Exempt Money Market Firstar Tax-Exempt Money Combined Fund
Market Portfolio Fund* Market Fund Pro Forma
---------------- ---- ----------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust Trust II Investor A Class C Institutional Retail A Institutional Retail A
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of the offering price
or sales Price, whichever is less)....... None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees........................... None None None None ++ None/1/ None/1/ None/1/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee.............................. None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers) 0.40%/2/ 0.40%/2/ 0.40%/2/ 0.55%/2/ ++ 0.50% 0.50% 0.50%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees None None 0.25% 0.25%/3/ ++ 0.25%/3/ None 0.25%/3/
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses 0.44% 0.19% 0.19% 0.50%/4/ ++ 0.47%/4/ 0.43%/4/ 0.43%/4/
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/
0.84% 0.59% 0.84% 1.30% ++ 1.22% 0.93% 1.18%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Trust Shares and Trust II Shares of the
Mercantile Tax-Exempt Money Market Portfolio will each receive Institutional
Shares of the Firstar Tax-Exempt Money Market Fund, and holders of Investor A
Shares of the Mercantile Tax-Exempt Money Market Portfolio and holders of
Class C Shares of the Firstar Stellar Tax-Free Money Market Fund will each
receive Retail A Shares of the Firstar Tax-Exempt Money Market Fund.
II-8
<PAGE>
* The Firstar Stellar Tax-Free Money Market Fund is expected to reorganize
into the Firstar Tax-Exempt Money Market Fund in connection with the
Reorganization. The reorganization of the Firstar Stellar Tax-Free Money
Market Fund into the Firstar Tax-Exempt Money Market Fund and the
Reorganization of the Mercantile Tax-Exempt Money Market Portfolio into the
Firstar Tax-Exempt Money Market Fund will occur only if the shareholders of
the appropriate Funds approve each transaction.
++ Institutional Shares will not be issued until the Applicable Effective Time
of the Reorganization.
1. A fee of $12.00 is charged for each wire redemption (Retail A Shares).
2. Management Fees (after waivers) would be:
Mercantile Tax Exempt Money Market Portfolio................. 0.35%
Firstar Stellar Tax Free Money Market Fund................... 0.84%
3. Distribution and Service (12b-1) Fees (after waivers) would be:
Firstar Stellar Tax-Free Money Market Fund............ 0.00%
Firstar Tax-Exempt Money Market Fund.................. 0.00%
Combined Fund Pro Forma............................... 0.00%
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Class C Shares Institutional Shares Retail A Shares
-------------- -------------------- ---------------
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
Firstar Stellar Tax-Free Money
Fund Market 0.41% -- --
------------------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money Market
Fund -- -- 0.22%
------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.29% 0.29%
------------------------------------------------------------------------------------------------------------
</TABLE>
II-9
<PAGE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown above.
These fee waivers and/or reimbursements are made in order to keep the annual
fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Trust II Shares Investor A Shares Class C Shares Institutional Shares Retail A Shares
------------ --------------- ----------------- -------------- -------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Tax-Exempt Money
Market Portfolio 0.79% 0.54% 0.79% -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Stellar Tax-Free Money
Market Fund -- -- -- 0.91% -- --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money
Market Fund -- -- -- -- -- 0.72%
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- -- 0.79% 0.79%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Firstar
Stellar
Tax-Free
Mercantile Tax-Exempt Money Market Money Market Firstar Tax-Exempt Money Market Combined Fund
Portfolio Fund Fund Pro Forma
--------- ---- ---- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust II Investor A Class C Institutional Institutional Retail A
Trust Shares Shares Shares Shares Shares Retail A Shares Shares Shares
------------ ------ ------ ------ ------ --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
1 year.......... $ 86 $ 60 $ 86 $ 132 N/A $ 124 $ 95 $ 120
------------------------------------------------------------------------------------------------------------------------------------
3 years......... $ 268 $ 189 $ 268 $ 412 N/A $ 387 $ 296 $ 375
------------------------------------------------------------------------------------------------------------------------------------
5 years......... $ 466 $ 329 $ 466 $ 713 N/A $ 670 $ 515 $ 649
------------------------------------------------------------------------------------------------------------------------------------
10 years........ $1,037 $ 738 $1,037 $1,568 N/A $1,477 $1,143 $1,432
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-10
<PAGE>
MERCANTILE CONNING MONEY MARKET PORTFOLIO
FIRSTAR CONNING MONEY MARKET FUND/1/
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Mercantile Combined Fund
Conning Money Market Portfolio Pro Forma
------------------------------ ---------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Shares Shares
------ ------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................ None None
---------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends............................... None None
---------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a percentage of the
offering price or sales price, whichever is less).. None None
---------------------------------------------------------------------------------------------------------------------------
Redemption Fees...................................... None None/2/
---------------------------------------------------------------------------------------------------------------------------
Exchange Fee......................................... None None
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)/3/.................. 0.40% 0.40%
---------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees................ None None
---------------------------------------------------------------------------------------------------------------------------
Other Expenses/4/.................................... 1.07% 0.97%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/5/................................. 1.47% 1.37%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. The Firstar Conning Money Market Fund has not yet commenced operations. The
Firstar Conning Market Fund will continue the operations of the Mercantile
Conning Money Market Portfolio upon consummation of the Reorganization
relating to that Fund.
2. A fee of $15.00 is charged for each non-systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be 0.17% for the Mercantile Conning
Money Market Portfolio and the Combined Fund Pro Forma.
II-11
<PAGE>
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
-----------------------------------------------------------------------
Shares
------
-----------------------------------------------------------------------
Mercantile Conning Money Market Portfolio 0.82%
-----------------------------------------------------------------------
Combined Fund Pro Forma 0.82%
-----------------------------------------------------------------------
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
-----------------------------------------------------------------------
Shares
------
-----------------------------------------------------------------------
Mercantile Conning Money Market Portfolio 0.99%
-----------------------------------------------------------------------
Combined Fund Pro Forma 0.99%
-----------------------------------------------------------------------
II-12
<PAGE>
Example: *
You would pay the following expenses on a $10,000 investment redeemed,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown on the above table:
--------------------------------------------------------------------------------
Mercantile Combined Fund
Conning Money Market Portfolio Pro Forma
------------------------------ ---------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Shares Shares
------ ------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 year........................ $ 150 $ 139
--------------------------------------------------------------------------------
3 years....................... $ 465 $ 434
--------------------------------------------------------------------------------
5 years....................... $ 803 $ 750
--------------------------------------------------------------------------------
10 years...................... $1,757 $1,646
--------------------------------------------------------------------------------
----------------
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-13
<PAGE>
<TABLE>
<CAPTION>
MERCANTILE U.S. GOVERNMENT SECURITIES PORTFOLIO - TRUST SHARES AND INSTITUTIONAL SHARES +
FIRSTAR STELLAR U.S. GOVERNMENT INCOME FUND - CLASS A SHARES AND CLASS B SHARES +
FIRSTAR U.S. GOVERNMENT SECURITIES FUND - INSTITUTIONAL SHARES AND CLASS Y SHARES/1/
---------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Securities Firstar Stellar U.S. Government
Portfolio Income Fund*
--------- ----------
---------------------------------------------------------------------------------------------------------------------
Institutional
Trust Shares Shares Class A Shares Class B Shares
------------ ------ -------------- --------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
<S>
Shareholder Transaction Expenses: <C> <C> <C> <C>
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price.......................... None None 4.00% None
--------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................. None None None None
--------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as
a percentage of the offering price or
sales price, whichever is less)......... None None None 5.00%/2/
--------------------------------------------------------------------------------------------------------------------
Redemption Fees......................... None None None None
--------------------------------------------------------------------------------------------------------------------
Exchange Fee............................ None None None None
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (before
waivers)................................ 0.45% 0.45% 0.60% 0.60%
--------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees... None None 0.25%/5/ 0.25%/5/
--------------------------------------------------------------------------------------------------------------------
Other Expenses.......................... 0.63%/6/ 0.63%/6/ 0.48%/6/ 0.48%/6/
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/ 1.08% 1.08% 1.33% 1.33%
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
----------------------------------------------------------------------------------------
Institutional
Shares Class Y Shares
------ --------------
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price.......................... None None
----------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................. None None
----------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as
a percentage of the offering price or
sales price, whichever is less)......... None None
----------------------------------------------------------------------------------------
Redemption Fees......................... None/3/ None/3/
----------------------------------------------------------------------------------------
Exchange Fee............................ None None
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (before
waivers)................................ 0.60%/4/ 0.60%/4/
----------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees... None None
----------------------------------------------------------------------------------------
Other Expenses.......................... 0.23% 0.48%
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/ 0.83% 1.08%
----------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Trust Shares of the Mercantile U.S.
Government Securities Portfolio, and holders of Class A Shares and Class B
Shares of the Firstar Stellar U.S. Government Income Fund who purchased
their shares through an investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A., will each receive Institutional
Shares of the Firstar U.S. Government Securities Fund. Holders of
Institutional Shares of the Mercantile U.S. Government Securities Portfolio
will receive Class Y Shares of the Firstar U.S. Government Securities Fund.
II-14
<PAGE>
* The Firstar Stellar U.S. Government Income Fund is expected to
reorganize into the Firstar U.S. Government Securities Fund in
connection with the Reorganization. The reorganization of the Firstar
Stellar U.S. Government Income Fund into the Firstar U.S. Government
Securities Fund and the Reorganization of the Mercantile U.S.
Government Securities Portfolio into the Firstar U.S. Government
Securities Fund will only occur if the shareholders of the appropriate
Funds approve each transaction.
1. The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganizations involving the
Mercantile U.S. Government Securities Portfolio and the Firstar
Stellar U.S. Government Securities Fund, the Firstar U.S. Government
Securities Fund will continue the operations of the Mercantile U.S.
Government Securities Portfolio.
2. This amount applies if you sell your shares in the first year after
purchase and gradually declines until it is eliminated after six
years. After six years, Firstar Stellar Class B Shares automatically
convert to Class A Shares.
3. A fee of $15.00 is charged for each non-systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.50% for the Combined Fund
Pro Forma.
5. The Firstar Stellar U.S. Government Income Fund is waiving the 12b-1
fees for Class A Shares and Class B Shares for the current fiscal
year.
6. "Other Expenses" for the Funds are expected to be less than the
amounts shown above because certain service providers are volu ntarily
waiving a portion of their fees and/or reimbursing the Funds for cert
ain "Other Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class A Shares Class B Shares
------------ -------------------- --------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.23% 0.53% -- --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Stellar U.S. Government -- -- 0.39% 0.39%
Income Fund
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7. As a result of the fee waivers and/or the expense reimbursements, the
Total Fund Operating Expenses are expected to be less than the amounts
shown above. These fee waivers and/or reimbursements are made in order
to keep the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class A Shares Class B Shares Class Y Shares
------------ -------------------- -------------- -------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.68% 0.98% -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Firstar Stellar U.S. Government
Income Fund -- -- 0.99% 0.99% --
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.73% -- -- 0.98%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-15
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government
Securities Portfolio Firstar Stellar U.S. Government Income Fund Combined Fund Pro Forma
-------------------- ------------------------------------------- -----------------------
------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional
Trust Shares Shares Class A Shares Class B Shares Shares Class Y Shares
------------ ------ -------------- -------------- ------ --------------
------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- -----------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year........ $ 110 $ 110 $ 530 $ 635 $ 135 $ 85 $ 110
------------------------------------------------------------------------------------------------------------------------------
3 years....... $ 343 $ 343 $ 805 $ 721 $ 421 $ 265 $ 343
------------------------------------------------------------------------------------------------------------------------------
5 years....... $ 595 $ 595 $1,100 $ 929 $ 729 $ 460 $ 595
------------------------------------------------------------------------------------------------------------------------------
10 years...... $1,317 $1,317 $1,937 $1,601 $1,601 $1,025 $1,317
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_____________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-16
<PAGE>
MERCANTILE U.S. GOVERNMENT SECURITIES PORTFOLIO -
INVESTOR A SHARES AND INVESTOR B SHARES +
FIRSTAR STELLAR U.S. GOVERNMENT INCOME FUND -
CLASS A SHARES AND CLASS B SHARES +
FIRSTAR U.S. GOVERNMENT SECURITIES FUND -
RETAIL A SHARES AND RETAIL B SHARES /1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Firstar Stellar U.S. Government
Securities Portfolio Income Fund*
-------------------- -----------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Investor A Investor B
Shares Shares Class A Shares Class B Shares
------ ------ -------------- --------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... 4.00% None 4.00% None
------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......................... None None None None
------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)............. None 5.00%/2/ None 5.00%/2/
------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.................................. None None None None
------------------------------------------------------------------------------------------------------------------------------
Exchange Fee..................................... None None None None
------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................. 0.45% 0.45% 0.60% 0.60%
------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees............ 0.30% 1.00% 0.25%/5/ 0.25%/5/
------------------------------------------------------------------------------------------------------------------------------
Other Expenses................................... 0.33%/7/ 0.33%/7/ 0.48%/7/ 0.48%/7/
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)/8/.... 1.08% 1.78% 1.33% 1.33%
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Retail A Shares Retail B Shares
--------------- ---------------
-------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... 4.00% None
-------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......................... None None
-------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)............. None 5.00%/2/
-------------------------------------------------------------------------------------------
Redemption Fees.................................. None/3/ None/3/
-------------------------------------------------------------------------------------------
Exchange Fee..................................... None None
-------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................. 0.60%/4/ 0.60%/4/
-------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees............ 0.00%/6/ 0.75%
-------------------------------------------------------------------------------------------
Other Expenses................................... 0.48% 0.48%
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)/8/.... 1.08% 1.83%
-------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Investor A Shares and Investor B Shares of
the Mercantile U.S. Government Securities Portfolio will receive Retail A
Shares and Retail B Shares, respectively, of the Firstar U.S. Government
Securities Fund. In addition, holders of Class A Shares and Class B Shares of
Firstar Stellar U.S. Government Income Fund who did not purchase their shares
through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A., will receive Retail A Shares and Retail
B Shares, respectively, of the Firstar U.S. Government Securities Fund.
* The Firstar Stellar U.S. Government Income Fund is expected to reorganize
into the Firstar U.S. Government Securities Fund in connection with the
Reorganization. The reorganization of the Firstar Stellar U.S. Government
Income Fund into the Firstar U.S. Government Securities Fund and the
Reorganization of the Mercantile U.S. Government Securities Portfolio into
the Firstar U.S. Government Securities Fund will only occur if the
shareholders of the appropriate Funds approve each transaction.
II-17
<PAGE>
1. The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganizations involving the
Mercantile U.S. Government Securities Portfolio and the Firstar Stellar U.S.
Government Income Fund, the Firstar U.S. Government Securities Fund will
continue the operations of the Mercantile U.S. Government Securities
Portfolio.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares, Firstar Stellar Class B Shares automatically convert to Class A
Shares, and the Combined Fund Pro Forma Retail B Shares automatically
convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A Shares and
Retail B Shares) and $15.00 for each non systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.50% for the Combined Fund Pro
Forma.
5. The Firstar Stellar U.S. Government Income Fund is waiving the 12b-1 fees
for Class A Shares and Class B Shares for the current fiscal year.
6. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b 1 fees
with respect to the Retail A Shares for the current fiscal year.
7. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A Shares Class B Shares
----------------- ----------------- -------------- --------------
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.23% 0.23% -- --
------------------------------------------------------------------------------------------------------------------
Firstar Stellar U.S. Government
Income Fund -- -- 0.39% 0.39%
------------------------------------------------------------------------------------------------------------------
</TABLE>
8. As a result of the fee waivers and/or expense reimbursements, the Total Fund
Operating Expenses are expected to be less than the amounts shown above.
These fee waivers and/or reimbursements are made in order to keep the annual
fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A Shares Class B Shares Retail A Shares
----------------- ----------------- -------------- -------------- ---------------
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.98% 1.68% -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Firstar Stellar U.S. Government
Income Fund -- -- 0.99% 0.99% --
-------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- -- 0.98%
-------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------
Retail B Shares
---------------
--------------------------------------------------------
<S> <C>
Mercantile U.S. Government
Securities Portfolio --
--------------------------------------------------------
Firstar Stellar U.S. Government
Income Fund --
--------------------------------------------------------
Combined Fund Pro Forma 1.73%
--------------------------------------------------------
</TABLE>
II-18
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Firstar Stellar U.S. Combined Fund
Securities Portfolio Government Income Fund Pro Forma
-------------------- ---------------------- ---------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Investor A Retail A
Shares Investor B Shares Class A Shares Class B Shares Shares Retail B Shares
------ ----------------- -------------- -------------- ------ ---------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption Redemption Redemption
---------- ---------- ---------- ---------- ---------- ----------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year...... $ 506 $ 681 $ 181 $ 530 $ 635 $ 135 $ 506 $ 686 $ 186
-----------------------------------------------------------------------------------------------------------------------------------
3 years..... $ 730 $ 860 $ 560 $1,335 $ 721 $ 421 $ 730 $ 876 $ 576
-----------------------------------------------------------------------------------------------------------------------------------
5 years..... $ 972 $1,164 $ 964 $2,156 $ 929 $ 729 $ 972 $1,190 $ 990
-----------------------------------------------------------------------------------------------------------------------------------
10 years.... $1,664 $1,741 $1,741 $4,283 $1,601 $1,601 $1,664 $1,771 $1,771
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-19
<PAGE>
MERCANTILE INTERMEDIATE CORPORATE BOND PORTFOLIO*
FIRSTAR INTERMEDIATE BOND MARKET FUND**
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Intermediate Corporate Bond Portfolio Firstar Intermediate Bond Market Fund
------------------------------------------------ -------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Institutional Investor A Institutional Retail A
Trust Shares Shares Shares Shares Class Y Shares Shares
----------- ------ ------ ------ -------------- ------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price).................. None None 4.00% None + 4.00%
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends............... None None None None + None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price
or sales price, whichever
is less)........................... None None None None + None
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees..................... None None None None/1/ + None/1/
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee........................ None None None None + None
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net
assets) Management Fees (before
waivers)............................ 0.55% 0.55% 0.55% 0.50%/2/ + 0.50%/2/
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1)
Fees................................ None None 0.30% None + 0.00%/3/
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses...................... 0.64%/4/ 0.64%/4/ 0.34%/4/ 0.20% + 0.45%
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/........................... 1.19% 1.19% 1.19% 0.70% + 0.95%
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------
Combined Fund Pro Forma
-----------------------
Institutional Class Y Retail A
Shares Shares Shares
------ ------ ------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price)..................... None None 4.00%
-------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................. None None None
-------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price
or sales price, whichever is less).... None None None
-------------------------------------------------------------------------------------------
Redemption Fees........................ None/1/ None/1/ None/1/
-------------------------------------------------------------------------------------------
Exchange Fee........................... None None None
-------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net
assets) Management Fees (before
waivers)............................... 0.50%/2/ 0.50%/2/ 0.50%/2/
-------------------------------------------------------------------------------------------
Distribution and Service (12b-1)
Fees................................... None None 0.00%/3/
-------------------------------------------------------------------------------------------
Other Expenses......................... 0.20% 0.45% 0.45%
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/.............................. 0.70% 0.95% 0.95%
-------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile
Intermediate Corporate Bond Portfolio will receive Institutional Shares of
the Firstar Intermediate Bond Market Fund, holders of Institutional Shares
of the Mercantile Intermediate Corporate Bond Portfolio will receive Class
Y Shares of the Firstar Intermediate Bond Market Fund, and holders of
Investor A Shares of the Mercantile Intermediate Corporate Bond Portfolio
will receive Retail A Shares of the Firstar Intermediate Bond Market Fund.
** It is expected that at the time of the Reorganization, the Firstar
Intermediate Bond Market Fund will be renamed the Firstar Intermediate Bond
Fund.
+ Class Y Shares will not be issued until the Reorganization is effective.
1. A fee of $12.00 is charged for each wire redemption (Retail A Shares) and
$15.00 for each non systematic withdrawal from a Retirement Account for
which Firstar Bank, N.A. is custodian.
II-20
<PAGE>
2. Management Fees (after waivers) would be:
Firstar Intermediate Bond Market Fund................... 0.37%
Combined Fund Pro Forma................................. 0.40%
3. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Investor A Shares
------------ -------------------- -----------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Intermediate Corporate Bond Portfolio 0.24% 0.54% 0.24%
-------------------------------------------------------------------------------------------------------------------
Firstar Intermediate Bond Market Fund -- 0.20% --
-------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.20% --
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Class Y Shares Retail A Shares
-------------- ---------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Intermediate Corporate Bond Portfolio -- --
-------------------------------------------------------------------------------------------------------------------
Firstar Intermediate Bond Market Fund N/A 0.45%
-------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma 0.45% 0.45%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Investor A Shares
------------ -------------------- -----------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Intermediate Corporate Bond Portfolio 0.79% 1.09% 1.09%
-------------------------------------------------------------------------------------------------------------------
Firstar Intermediate Bond Market Fund -- 0.57% --
-------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.60% --
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Class Y Shares Retail A Shares
-------------- ---------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Intermediate Corporate Bond Portfolio -- --
-------------------------------------------------------------------------------------------------------------------
Firstar Intermediate Bond Market Fund N/A 0.82%
-------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma 0.85% 0.85%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
II-21
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Mercantile Intermediate Corporate Bond Portfolio Firstar Intermediate Bond Market Fund
------------------------------------------------ -------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Institutional Investor A Institutional Class Y Retail A
Trust Shares Shares Shares Shares Shares Shares
------------ ------ ------ ------ ------ ------
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year................... $ 121 $ 121 $ 516 $ 72 N/A $ 493
----------------------------------------------------------------------------------------------------------------------------
3 years.................. $ 378 $ 378 $ 763 $224 N/A $ 691
----------------------------------------------------------------------------------------------------------------------------
5 years.................. $ 654 $ 654 $1,028 $390 N/A $ 904
----------------------------------------------------------------------------------------------------------------------------
10 years................. $1,443 $1,443 $1,785 $871 N/A $1,502
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------
Combined Fund Pro Forma
-----------------------
---------------------------------------------------------------------------
Institutional Class Y Retail A
Shares Shares Shares
------ ------ ------
---------------------------------------------------------------------------
<S> <C> <C> <C>
1 year................... $ 72 $ 97 $ 493
---------------------------------------------------------------------------
3 years.................. $224 $ 303 $1,302
---------------------------------------------------------------------------
5 years.................. $390 $ 525 $2,126
---------------------------------------------------------------------------
10 years................. $871 $1,166 $4,261
---------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-22
<PAGE>
MERCANTILE GOVERNMENT & CORPORATE BOND PORTFOLIO - TRUST SHARES AND
INSTITUTIONAL SHARES*
MERCANTILE BOND INDEX PORTFOLIO-TRUST SHARES AND INSTITUTIONAL SHARES*
FIRSTAR AGGREGATE BOND FUND-INSTITUTIONAL SHARES AND CLASS Y SHARES/1/
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Government & Corporate Bond Mercantile Bond Index Portfolio
Portfolio
---------
----------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional
Trust Shares Shares Trust Shares Shares
------------ ------ ------------ ------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... None None None None
----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......................... None None None None
----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)............. None None None None
----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees............................... None None None None
----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee.................................. None None None None
----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers).............. 0.45% 0.45% 0.30% 0.30%
----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees......... None None None None
----------------------------------------------------------------------------------------------------------------------------------
Other Expenses................................ 0.62%/4/ 0.62%/4/ 0.63%/4/ 0.63%/4/
----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/..................................... 1.07% 1.07% 0.93% 0.93%
----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma
-------------------------------------------------------------------------------------------------------
Institutional
Shares Class Y Shares
------ --------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... None None
-------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......................... None None
-------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)............. None None
-------------------------------------------------------------------------------------------------------
Redemption Fees............................... None/2/ None/2/
-------------------------------------------------------------------------------------------------------
Exchange Fee.................................. None None
-------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers).............. 0.50%/3/ 0.50%/3/
-------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees......... None None
-------------------------------------------------------------------------------------------------------
Other Expenses................................ 0.24% 0.49%
-------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/..................................... 0.74% 0.99%
-------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of each of the Funds will
receive Institutional Shares of the Firstar Aggregate Bond Fund, and holders
of Institutional Shares of each of the Funds will receive Class Y Shares of
the Firstar Aggregate Bond Fund.
1. The Firstar Aggregate Bond Fund has not yet commenced operations. In the
Reorganization, the Mercantile Government & Corporate Bond Portfolio and the
Mercantile Bond Index Portfolio will be combined into the Firstar Aggregate
Bond Fund. Upon consummation of the Reorganization, the Firstar Aggregate
Bond Fund will continue the operations of the Mercantile Government &
Corporate Bond Portfolio.
II-23
<PAGE>
2. A fee of $15.00 is charged for each non systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be 0.44% for the Combined Fund Pro
Forma.
4. "Other Expenses" for the Funds are expected to be less than the amounts shown
above because certain service providers are voluntarily waiving a portion of
their fees and/or reimbursing the Funds for certain "Other Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Trust Shares Institutional Shares
------------ --------------------
----------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Government & Corporate
Bond Portfolio 0.22% 0.52%
----------------------------------------------------------------------------------
Mercantile Bond Index Portfolio 0.23% 0.53%
----------------------------------------------------------------------------------
</TABLE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown above.
These fee waivers and/or reimbursements are made in order to keep the annual
fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class Y Shares
------------ -------------------- --------------
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Government & Corporate
Bond Portfolio 0.67% 0.97% --
------------------------------------------------------------------------------------------------------
Mercantile Bond Index Portfolio 0.53% 0.83% --
------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.68% 0.93%
------------------------------------------------------------------------------------------------------
</TABLE>
II-24
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Mercantile Government & Corporate Bond Portfolio Mercantile Bond Index Portfolio
------------------------------------------------ -------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Trust Shares Institutional Shares
------------ -------------------- ------------ --------------------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------
1 year................. $ 109 $ 109 $ 95 $ 95
-----------------------------------------------------------------------------------------------------------------------------
3 years................ $ 340 $ 340 $ 296 $ 296
-----------------------------------------------------------------------------------------------------------------------------
5 years................ $ 590 $ 590 $ 515 $ 515
-----------------------------------------------------------------------------------------------------------------------------
10 years............... $1,306 $1,306 $1,143 $1,143
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------
Combined Fund Pro Forma
-----------------------
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Institutional Shares Class Y Shares
--------------------- --------------
-----------------------------------------------------------------------------------------------
<S> <C> <C>
-----------------------------------------------------------------------------------------------
1 year................. $ 76 $ 101
-----------------------------------------------------------------------------------------------
3 years................ $237 $ 315
-----------------------------------------------------------------------------------------------
5 years................ $411 $ 547
-----------------------------------------------------------------------------------------------
10 years............... $918 $1,213
-----------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-25
<PAGE>
MERCANTILE GOVERNMENT & CORPORATE BOND PORTFOLIO - INVESTOR A SHARES AND
INVESTOR B SHARES*
MERCANTILE BOND INDEX PORTFOLIO - INVESTOR A SHARES*
FIRSTAR AGGREGATE BOND FUND - RETAIL A SHARES AND RETAIL B SHARES/1/
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Government & Corporate Mercantile Bond
Bond Index
Portfolio Portfolio Combined Fund Pro Forma
--------- --------- -----------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A Investor B Retail A Shares Retail B Shares
---------- ---------- --------------- ---------------
Shares Shares Investor A Shares
------ ------ -----------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..... 4.00% None 4.00% 4.00% None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................... None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)......... None 5.00%/2/ None None 5.00%/2/
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees........................... None None None None/3/ None/3/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee.............................. None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers).......... 0.45% 0.45% 0.30% 0.50%/4/ 0.50%/4/
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees..... 0.30% 1.00% 0.30% 0.00%/5/ 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses............................ 0.32%/6/ 0.32%/6/ 0.33%/6/ 0.49% 0.49%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/................................. 1.07% 1.77% 0.93% 0.99% 1.74%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Investor A Shares of each of the Funds
will receive Retail A Shares of the Firstar Aggregate Bond Fund, and holders
of Investor B Shares of the Mercantile Government & Corporate Bond Portfolio
will receive Retail B Shares of the Firstar Aggregate Bond Fund.
1. The Firstar Aggregate Bond Fund has not yet commenced operations. In the
Reorganization, the Mercantile Government & Corporate Bond Portfolio and the
Mercantile Bond Index Portfolio will be combined into the Firstar Aggregate
Bond Fund. Upon consummation of the Reorganization, the Firstar Aggregate
Bond Fund will continue the operations of the Mercantile Government &
Corporate Bond Portfolio.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
II-26
<PAGE>
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non-systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.44% for the Combined Fund Pro
Forma.
5. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
6. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Investor A Shares Investor B Shares
----------------- -----------------
----------------------------------------------------------------------------
<S> <C> <C>
Mercantile Government & Corporate
Bond Portfolio 0.22% 0.22%
----------------------------------------------------------------------------
Mercantile Bond Index Portfolio 0.23% --
----------------------------------------------------------------------------
</TABLE>
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Retail A Shares Retail B Shares
----------------- ----------------- --------------- ---------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile Government & Corporate
Bond Portfolio 0.97% 1.67% -- --
-------------------------------------------------------------------------------------------------------------------
Mercantile Bond Index Portfolio 0.83% -- -- --
-------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 0.93% 1.68%
-------------------------------------------------------------------------------------------------------------------
</TABLE>
II-27
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Government & Corporate Bond Mercantile Bond Combined Fund
Portfolio Index Portfolio Pro Forma
---------- --------------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Investor A Shares Retail A Shares Retail B Shares
----------------- ----------------- ----------------- --------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year................. $ 505 $ 680 $ 180 $ 491 $ 497 $ 677 $ 177
------------------------------------------------------------------------------------------------------------------------------------
3 years................ $ 727 $ 857 $ 557 $ 685 $1,305 $ 848 $ 548
------------------------------------------------------------------------------------------------------------------------------------
5 years................ $ 967 $1,159 $ 959 $ 894 $2,129 $1,144 $ 944
------------------------------------------------------------------------------------------------------------------------------------
10 years............... $1,653 $1,730 $1,730 $1,497 $4,263 $1,671 $1,671
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_____________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-28
<PAGE>
MERCANTILE SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO*
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Short Intermediate Firstar Tax-Exempt Intermediate
Municipal Portfolio Bond Fund
------------------- ---------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Institutional Retail A
Trust Shares Investor A Shares Shares Shares
------------ ----------------- ------ ------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............... None 4.00% None 4.00%
----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.............................. None None None None
----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less)......................... None None None None
----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees..................................... None None None/1/ None/1/
----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee........................................ None None None None
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers).................... 0.55% 0.55% 0.50%/2/ 0.50%/2/
----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees............... None 0.30%/3/ None 0.00%/4/
----------------------------------------------------------------------------------------------------------------------------------
Other Expenses...................................... 0.62%/5/ 0.32%/5/ 0.36% 0.61%
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)/6/...... 1.17% 1.17% 0.86% 1.11%
----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Institutional Retail A
Shares Shares
------ ------
--------------------------------------------------------------------------------------------------
<S> <C> <C>
--------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....................... None 4.00%
--------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends...................................... None None
--------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less)................................. None None
--------------------------------------------------------------------------------------------------
Redemption Fees............................................. None/1/ None/1/
--------------------------------------------------------------------------------------------------
Exchange Fee................................................ None None
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............................ 0.50%/2/ 0.50%/2/
--------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees....................... None 0.00%/4/
--------------------------------------------------------------------------------------------------
Other Expenses.............................................. 0.36% 0.61%
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)/6/.............. 0.86% 1.11%
--------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Short-
Intermediate Municipal Portfolio will receive Institutional Shares of the
Firstar Tax-Exempt Intermediate Bond Fund, and holders of Investor A Shares
of the Mercantile Short-Intermediate Municipal Portfolio will receive Retail
A Shares of the Firstar Tax-Exempt Intermediate Bond Fund.
1. A fee of $12.00 is charged for each wire redemption (Retail A Shares).
2. Management Fees (after waivers) would be:
<TABLE>
<S> <C>
Firstar Tax-Exempt Intermediate Bond Fund.................. 0.31%
Combined Fund Pro Forma.................................... 0.39%
</TABLE>
II-29
<PAGE>
3. Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<S> <C>
Mercantile Short-Intermediate Municipal Portfolio............ 0.25%
</TABLE>
4. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Trust Shares Retail A Shares
------------ ---------------
---------------------------------------------------------------------
<S> <C> <C>
Mercantile Short-Intermediate
Municipal Portfolio 0.22% 0.22%
---------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Trust Shares Investor A Shares Institutional Shares Retail A Shares
------------ ----------------- -------------------- ---------------
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile Short-Intermediate 1.02%
Municipal Portfolio 0.77% -- --
-----------------------------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Intermediate
Bond Fund -- -- 0.67% 0.92%
-----------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 0.75% 1.00%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
II-30
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Mercantile Short-Intermediate Firstar Tax-Exempt Intermediate
Municipal Portfolio Bond Fund Combined Fund Pro Forma
------------------- --------- -----------------------
----------------------------------------------------------------------------------------------------------------------------------
Institutional Retail A Institutional Retail A
Trust Shares Investor A Shares Shares Shares Shares Shares
------------ ----------------- ------ ------ ------ ------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year....................... $ 119 $ 514 $ 88 $ 509 $ 88 $ 509
----------------------------------------------------------------------------------------------------------------------------------
3 years...................... $ 372 $ 757 $ 274 $1,316 $ 274 $1,316
----------------------------------------------------------------------------------------------------------------------------------
5 years...................... $ 644 $1,018 $ 477 $2,139 $ 477 $2,139
----------------------------------------------------------------------------------------------------------------------------------
10 years..................... $1,420 $1,764 $1,061 $4,270 $1,061 $4,270
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return. Actual return may be greater or less than the
assumed amount. This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-31
<PAGE>
MERCANTILE MISSOURI TAX-EXEMPT BOND PORTFOLIO*
FIRSTAR MISSOURI TAX-EXEMPT BOND FUND/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Mercantile Missouri Tax-Exempt Bond Portfolio
---------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Investor A Investor B
Trust Shares Shares Shares
------------ ------ ------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........... None 4.00% None
------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.......................... None None None
------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)............... None None 5.00%/2/
------------------------------------------------------------------------------------------------------------------
Redemption Fees.................................. None None None
------------------------------------------------------------------------------------------------------------------
Exchange Fee..................................... None None None
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................. 0.45% 0.45% 0.45%
------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees............ None 0.30%/4/ 1.00%
------------------------------------------------------------------------------------------------------------------
Other Expenses................................... 0.61%/5/ 0.31%/5/ 0.31%/5/
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)...... 1.06%/6/ 1.06%/6/ 1.76%/6/
------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
------------------------------------------------------------------------------------------------------------------------------
Institutional Shares Retail A Shares Retail B Shares
-------------------- --------------- ---------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........... None 4.00% None
------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.......................... None None None
------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)............... None None 5.00%/2/
------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.................................. None/3/ None/3/ None/3/
------------------------------------------------------------------------------------------------------------------------------
Exchange Fee..................................... None None None
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................. 0.45% 0.45% 0.45%
------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees............ None 0.25%/4/ 0.75%
------------------------------------------------------------------------------------------------------------------------------
Other Expenses................................... 0.27% 0.52% 0.52%
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)...... 0.72% 1.22%/6/ 1.72%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Missouri
Tax-Exempt Bond Portfolio will receive Institutional Shares of the Firstar
Missouri Tax-Exempt Bond Fund, holders of Investor A Shares of the Mercantile
Missouri Tax-Exempt Bond Portfolio will receive Retail A Shares of the
Firstar Missouri Tax-Exempt Bond Fund, and holders of Investor B Shares of
the Mercantile Missouri Tax-Exempt Bond Portfolio will receive Retail B
Shares of the Firstar Missouri Tax Exempt-Bond Fund.
1. The Firstar Missouri Tax-Exempt Bond Fund has not yet commenced operations.
The Firstar Missouri Tax-Exempt Bond Fund will continue the operations of
the Mercantile Missouri Tax-Exempt Bond Portfolio upon consummation of the
Reorganization relating to that Fund.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
II-32
<PAGE>
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares).
4. Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Shares Retail A Shares
------------------ ---------------
<S> <C> <C>
Mercantile Missouri Tax-Exempt Bond Portfolio 0.20% --
Combined Fund Pro Forma -- 0.00%
</TABLE>
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Trust Shares Investor A Shares Investor B Shares
------------ ----------------- -----------------
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Missouri Tax-Exempt Bond
Portfolio 0.21% 0.21% 0.21%
-----------------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Trust Shares Investor A Shares Investor B Shares Retail A Shares
------------ ----------------- ----------------- ---------------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile Missouri Tax-Exempt Bond
Portfolio 0.66% 0.86% 1.66% --
------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- 0.97%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-33
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Mercantile Missouri Tax-Exempt Bond Portfolio
---------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Investor A
Trust Shares Shares Investor B Shares
------------ ------ -----------------
-----------------------------------------------------------------------------------------------------------------------------
Assuming
Assuming No
Redemption Redemption
---------- ----------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.............................. $ 108 $ 504 $ 679 $ 179
-----------------------------------------------------------------------------------------------------------------------------
3 years............................. $ 337 $ 724 $ 854 $ 554
-----------------------------------------------------------------------------------------------------------------------------
5 years............................. $ 585 $ 961 $1,154 $ 954
-----------------------------------------------------------------------------------------------------------------------------
10 years............................ $1,294 $1,642 $1,719 $1,719
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Institutional Retail A
Shares Shares Retail B Shares
------ ------ ---------------
--------------------------------------------------------------------------------------------------------
Assuming
Assuming No
Redemption Redemption
---------- ----------
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.............................. $ 74 $ 519 $ 675 $ 175
--------------------------------------------------------------------------------------------------------
3 years............................. $ 230 $ 772 $ 842 $ 542
--------------------------------------------------------------------------------------------------------
5 years............................. $ 401 $1,044 $1,133 $ 933
--------------------------------------------------------------------------------------------------------
10 years............................ $ 894 $1,818 $1,777 $1,777
--------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-34
<PAGE>
MERCANTILE NATIONAL MUNICIPAL BOND PORTFOLIO - TRUST SHARES +
FIRSTAR STELLAR INSURED TAX-FREE BOND FUND - CLASS A SHARES AND CLASS B SHARES +
FIRSTAR NATIONAL MUNICIPAL BOND FUND - INSTITUTIONAL SHARES/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile
National
Municipal Bond Firstar Stellar Insured Tax-Free Combined Fund
Portfolio Bond Fund* Pro Forma
--------- ---------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional
Trust Shares Class A Shares Class B Shares Shares
------------ -------------- -------------- ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)......... None 4.00% None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends........................ None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)............. None None 5.00%/2/ None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees............................... None None None None
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee.................................. None None None None
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers).............. 0.55% 0.75%/3/ 0.75%/3/ 0.55%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees......... None 0.25%/4/ 0.75%/4/ None
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses................................ 0.61%/5/ 0.47%/5/ 0.47%/5/ 0.21%
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/8/.............................. 1.16%/6/ 1.47%/6/ 1.97%/6/ 0.76%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Trust Shares of the Mercantile National
Municipal Bond Portfolio, and holders of Class A Shares and Class B Shares of
the Firstar Stellar Insured Tax-Free Bond Fund who purchased their shares
through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A., will each receive Institutional Shares
of the Firstar National Municipal Bond Fund.
II-35
<PAGE>
* The Firstar Stellar Insured Tax-Free Bond Fund is expected to reorganize into
the Firstar National Municipal Bond Fund in connection with the
Reorganization. The reorganization of the Firstar Stellar Insured Tax-Free
Bond Fund into the Firstar National Municipal Bond Fund and the
Reorganization of the Mercantile National Municipal Bond Portfolio into the
Firstar National Municipal Bond Fund will only occur if the shareholders of
the appropriate Funds approve each transaction.
1. The Firstar National Municipal Bond Fund has not yet commenced operations.
Upon consummation of the Reorganizations involving the Mercantile National
Municipal Bond Portfolio and the Firstar Stellar Insured Tax-Free Bond Fund,
the Firstar National Municipal Bond Fund will continue the operations of the
Mercantile National Municipal Bond Portfolio.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Firstar Stellar Class B Shares automatically convert to Class A
Shares.
3. Management Fees (after waivers) would be 0.55% for the Firstar Stellar
Insured Tax-Free Bond Fund.
4. The Firstar Stellar Insured Tax-Free Bond Fund does not intend to pay 12b-1
fees with respect to the Class A Shares and Class B Shares for the current
fiscal year.
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Trust Shares Class A Shares Class B Shares
------------ -------------- --------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile National Municipal Bond
Portfolio 0.21% -- --
-------------------------------------------------------------------------------------------------------
Firstar Stellar Insured Tax-Free Bond
Fund -- 0.38% 0.38%
-------------------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Trust Shares Class A Shares Class B Shares
------------ -------------- --------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile National Municipal Bond
Portfolio 0.76% -- --
-------------------------------------------------------------------------------------------------------
Firstar Stellar Insured Tax-Free Bond
Fund -- 0.93% 0.93%
-------------------------------------------------------------------------------------------------------
</TABLE>
II-36
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Mercantile National Combined Fund
Municipal Bond Portfolio Firstar Stellar Insured Tax-Free Bond Fund Pro Forma
------------------------ ------------------------------------------ ---------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Trust Shares Class A Shares Class B Shares Institutional Shares
------------ -------------- -------------- --------------------
--------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- -----------
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year............ $ 118 $ 543 $ 700 $ 200 $ 78
--------------------------------------------------------------------------------------------------------------------------
3 years........... $ 368 $1,347 $ 918 $ 618 $ 243
--------------------------------------------------------------------------------------------------------------------------
5 years........... $ 638 $2,167 $1,262 $1,062 $ 422
--------------------------------------------------------------------------------------------------------------------------
10 years.......... $1,409 $4,291 $2,049 $2,049 $ 942
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-37
<PAGE>
MERCANTILE NATIONAL MUNICIPAL BOND PORTFOLIO - INVESTOR A SHARES AND
INVESTOR B SHARES +
FIRSTAR STELLAR INSURED TAX-FREE BOND FUND - CLASS A SHARES AND
CLASS B SHARES +
FIRSTAR NATIONAL MUNICIPAL BOND FUND - RETAIL A SHARES AND RETAIL B SHARES/1/
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile National Municipal Firstar Stellar Insured Tax-Free
Bond Portfolio Bond Fund*
---- --------- ---------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Investor A Investor B Class A Shares Class B Shares
Shares Shares
------ ------ -------------- --------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... 4.00% None 4.00% None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less).......... None 5.00%/2/ None 5.00%/2/
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None None
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None None
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.55% 0.55% 0.75%/4/ 0.75%/4/
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.30%/5/ 1.00% 0.25%/5/ 0.75%/5/
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.31%/7/ 0.31%/7/ 0.47%/7/ 0.47%/7/
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)................................... 1.16%/8/ 1.86%/8/ 1.47%/8/ 1.97%/8/
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Retail A Shares Retail B Shares
--------------- ---------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... 4.00% None
----------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None
----------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)......... None 5.00%/2/
----------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None/3/ None/3/
----------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None
----------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.55% 0.55%
----------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.00%/6/ 0.75%
----------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.46% 0.46%
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)................................... 1.01% 1.76%
----------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Investor A Shares and Investor B Shares of
the Mercantile National Municipal Bond Portfolio will receive Retail A Shares
and Retail B Shares, respectively, of the Firstar National Municipal Bond
Fund. In addition, holders of Class A Shares and Class B Shares of Firstar
Stellar Insured Tax-Free Bond Fund who did not purchase their shares through
an investment management, trust, custody, or other agency relationship with
Firstar Bank, N.A., will receive Retail A Shares and Retail B Shares,
respectively, of the Firstar National Municipal Bond Fund.
* The Firstar Stellar Insured Tax-Free Bond Fund is expected to reorganize into
the Firstar National Municipal Bond Fund in connection with the
Reorganization. The reorganization of the Firstar Stellar Insured Tax-Free
Bond Fund into the Firstar National Municipal Bond Fund and the
Reorganization of the Mercantile National Municipal Bond Portfolio into the
Firstar National Municipal Bond Fund will only occur if the shareholders of
the appropriate Funds approve each transaction.
II-38
<PAGE>
1. The Firstar National Municipal Bond Fund has not yet commenced operations.
Upon consummation of the Reorganizations involving the Mercantile National
Municipal Bond Portfolio and the Firstar Stellar Insured Tax-Free Bond Fund,
the Firstar National Municipal Bond Fund will continue the operations of the
Mercantile National Municipal Bond Portfolio.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares, Firstar Stellar Class B Shares automatically convert to Class A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares).
4. Management Fees (after waivers) would be 0.55% for the Firstar Stellar
Insured Tax-Free Bond Fund.
5. Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Shares Class A Shares Class B Shares
----------------- -------------- --------------
<S> <C> <C> <C>
Mercantile National Municipal Bond Portfolio 0.20% -- --
Firstar Stellar Insured Tax Free Bond Fund -- 0.00% 0.00%
</TABLE>
6. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
7. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A Shares Class B Shares
----------------- ----------------- -------------- --------------
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile National Municipal Bond
Portfolio 0.21% 0.21% -- --
----------------------------------------------------------------------------------------------------------------------------
Firstar Stellar Insured Tax-Free Bond
Fund -- -- 0.38% 0.38%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-39
<PAGE>
8. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A Shares Class B Shares
----------------- ----------------- -------------- --------------
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile National Municipal Bond
Portfolio 0.96% 1.76% -- --
--------------------------------------------------------------------------------------------------------------------------
Firstar Stellar Insured Tax-Free Bond
Fund -- -- 0.93% 0.93%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-40
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile National Municipal Bond Firstar Stellar Insured Tax Free Bond Combined Fund
Portfolio Fund Pro Forma
--------- ---- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Retail
Investor A Class A A
Shares Investor B Shares Shares Class B Shares Shares Retail B Shares
------ ----------------- ------ -------------- ------ ---------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption Redemption Redemption
---------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year............ $ 513 $ 689 $ 189 $ 543 $ 700 $ 200 $ 499 $ 679 $ 179
------------------------------------------------------------------------------------------------------------------------------------
3 years........... $ 754 $ 885 $ 585 $1,347 $ 918 $ 618 $ 709 $ 854 $ 554
------------------------------------------------------------------------------------------------------------------------------------
5 years........... $1,013 $1,206 $1,006 $2,167 $1,262 $1,062 $ 936 $1,154 $ 954
------------------------------------------------------------------------------------------------------------------------------------
10 years.......... $1,753 $1,829 $1,829 $4,291 $2,049 $2,049 $1,587 $1,693 $1,693
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
---------------------
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in
understanding the various costs and expenses that an investor in the Funds will
bear directly or indirectly.
<PAGE>
MERCANTILE BALANCED PORTFOLIO - TRUST SHARES AND INSTITUTIONAL SHARES*
FIRSTAR BALANCED GROWTH FUND - INSTITUTIONAL SHARES AND CLASS Y SHARES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
----------------------------- ----------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional
Trust Shares Shares Shares Class Y Shares
------------ ------ ------ --------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............. None None None +
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None +
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)................ None None None +
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.................................. None None None/1/ +
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee..................................... None None None +
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................. 0.75% 0.75% 0.75%/2/ +
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees............ None None None +
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses................................... 0.63%/3/ 0.63%/3/ 0.27% +
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/4/......................................... 1.38% 1.38% 1.02% +
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Institutional
Shares Class Y Shares
------ --------------
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............... None None
------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.............................. None None
------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)................... None None
------------------------------------------------------------------------------------------
Redemption Fees.................................... None/1/ None/1/
------------------------------------------------------------------------------------------
Exchange Fee....................................... None None
------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................... 0.75%/2/ 0.75%/2/
------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.............. None None
------------------------------------------------------------------------------------------
Other Expenses..................................... 0.27% 0.52%
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)4............................................. 1.02% 1.27%
------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Balanced
Portfolio will receive Institutional Shares of the Firstar Balanced Growth
Fund, and holders of Institutional Shares of the Mercantile Balanced
Portfolio will receive Class Y Shares of the Firstar Balanced Growth Fund.
+ Class Y Shares will not be issued until the Applicable Effective Time of the
Reorganization.
1. A fee of $15.00 is charged for each non systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
2. Management Fees (after waivers) would be:
Firstar Balanced Growth Fund............................0.70%
Combined Fund Pro Forma.................................0.71%
II-42
<PAGE>
3. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
--------------------------------------------------------------------------------
Trust Shares Institutional Shares
------------ --------------------
--------------------------------------------------------------------------------
Mercantile Balanced Portfolio 0.23% 0.53%
--------------------------------------------------------------------------------
4. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class Y Shares
------------ -------------------- --------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Balanced Portfolio 0.98% 1.28% --
-------------------------------------------------------------------------------------------------------
Firstar Balanced Growth Fund -- 0.97% N/A
-------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.97% 1.22%
-------------------------------------------------------------------------------------------------------
</TABLE>
II-43
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund
Mercantile Balanced Portfolio Firstar Balanced Growth Fund Pro Forma
----------------------------- ---------------------------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Institutional Shares Class Y Shares Institutional Shares Class Y Shares
------------ -------------------- -------------------- -------------- -------------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year............ $ 140 $ 140 $ 104 N/A $ 104 $ 129
------------------------------------------------------------------------------------------------------------------------------------
3 years........... $ 437 $ 437 $ 325 N/A $ 325 $ 403
------------------------------------------------------------------------------------------------------------------------------------
5 years........... $ 755 $ 755 $ 563 N/A $ 563 $ 697
------------------------------------------------------------------------------------------------------------------------------------
10 years.......... $1,657 $1,657 $1,248 N/A $1,248 $1,534
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
__________________
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in
understanding the various costs and expenses that an investor in the Funds
will bear directly or indirectly.
II-44
<PAGE>
MERCANTILE BALANCED PORTFOLIO - INVESTOR A SHARES AND INVESTOR B SHARES*
FIRSTAR BALANCED GROWTH FUND - RETAIL A SHARES AND RETAIL B SHARES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Retail A Shares Retail B Shares
----------------- ----------------- --------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of offering
price)................................................ 5.50% None 5.50% None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................................. None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)....................... None 5.00%/1/ None 5.00%/1/
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees........................................ None None None/2/ None/2/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee........................................... None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)....................... 0.75% 0.75% 0.75%/3/ 0.75%/3/
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.................. 0.30% 1.00% 0.00%/4/ 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses......................................... 0.33%/5/ 0.33%/5/ 0.52% 0.52%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/6/............................................... 1.38% 2.08% 1.27% 2.02%
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Retail A Shares Retail B Shares
--------------- ---------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of offering
price)............................. 5.50% None
------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends............... None None
------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)......... None 5.00%/1/
------------------------------------------------------------------------------------------------
Redemption Fees........................ None/2/ None/2/
------------------------------------------------------------------------------------------------
Exchange Fee........................... None None
------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)....... 0.75%/3/ 0.75%/3/
------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.. 0.00%/4/ 0.75%
------------------------------------------------------------------------------------------------
Other Expenses......................... 0.52% 0.52%
------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/6/............................... 1.27% 2.02%
------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Investor A Shares and Investor B Shares of
the Mercantile Balanced Portfolio will receive Retail A Shares and Retail B
Shares, respectively, of the Firstar Balanced Growth Fund.
1. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
2. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
II-45
<PAGE>
3. Management Fees (after waivers) would be:
Firstar Balanced Growth Fund....................0.70%
Combined Fund Pro Forma.........................0.71%
4. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
---------------------------------------------------------------------
Investor A Shares Investor B Shares
----------------- -----------------
---------------------------------------------------------------------
Mercantile Balanced Portfolio 0.23% 0.23%
---------------------------------------------------------------------
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Retail A Shares Retail B Shares
----------------- ----------------- --------------- ---------------
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile Balanced Portfolio 1.28% 1.98% -- --
--------------------------------------------------------------------------------------------------------------
Firstar Balanced Growth Fund -- -- 1.22% 1.97%
--------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 1.22% 1.97%
--------------------------------------------------------------------------------------------------------------
</TABLE>
II-46
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Firstar Balanced Combined Fund
Balanced Portfolio Growth Fund Pro Forma
------------------ ----------- ---------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Retail A
Investor A Shares Investor B Shares Retail A Shares Retail B Shares Shares Retail B Shares
----------------- ----------------- --------------- --------------- ------ ----------------
-----------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming
Assuming Assuming No Assuming No Assuming No
Redemption Redemption Redemption Redemption Redemption Redemption
---------- ---------- ---------- ---------- ---------- ----------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year....... $ 679 $ 711 $ 211 $ 672 $ 705 $ 205 $ 672 $ 705 $ 205
-----------------------------------------------------------------------------------------------------------------------------------
3 years...... $1,753 $ 952 $ 652 $ 931 $ 934 $ 634 $ 931 $ 934 $ 634
-----------------------------------------------------------------------------------------------------------------------------------
5 years...... $2,816 $1,319 $1,119 $1,209 $1,288 $1,088 $1,209 $1,288 $1,088
-----------------------------------------------------------------------------------------------------------------------------------
10 years..... $5,428 $2,067 $2,067 $2,000 $1,978 $1,978 $2,000 $1,978 $1,978
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-47
<PAGE>
MERCANTILE EQUITY INCOME PORTFOLIO*
FIRSTAR EQUITY INCOME FUND /1/
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Mercantile Equity Income Portfolio
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Institutional Investor A Investor B
Trust Shares Shares Shares Shares
------------ ------ ------ ------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... None None 5.50% None
-------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......................... None None None None
-------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less).................... None None None 5.00%/2/
-------------------------------------------------------------------------------------------------------------------
Redemption Fees................................ None None None None
-------------------------------------------------------------------------------------------------------------------
Exchange Fee................................... None None None None
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............... 0.75% 0.75% 0.75% 0.75%
-------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.......... None None 0.30% 1.00%
-------------------------------------------------------------------------------------------------------------------
Other Expenses................................. 0.63%/6/ 0.63%/6/ 0.33%/6/ 0.33%/6/
-------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/...................................... 1.38% 1.38% 1.38% 2.08%
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Institutional Class Y Retail A Retail B
Shares Shares Shares Shares
------ ------ ------ ------
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... None None 5.50% None
------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......................... None None None None
------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less).................... None None None 5.00%/2/
------------------------------------------------------------------------------------------------------------
Redemption Fees................................ None/3/ None/3/ None/3/ None/3/
------------------------------------------------------------------------------------------------------------
Exchange Fee................................... None None None None
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............... 0.75%/4/ 0.75%/4/ 0.75%/4/ 0.75%/4/
------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.......... None None 0.00%/5/ 0.75%
------------------------------------------------------------------------------------------------------------
Other Expenses................................. 0.28% 0.53% 0.53% 0.53%
------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/...................................... 1.03% 1.28% 1.28% 2.03%
------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Equity
Income Portfolio will receive Institutional Shares of the Firstar Equity
Income Fund, holders of Institutional Shares of the Mercantile Equity Income
Portfolio will receive Class Y Shares of the Firstar Equity Income Fund,
holders of Investor A Shares of the Mercantile Equity Income Portfolio will
receive Retail A Shares of the Firstar Equity Income Fund, and holders of
Investor B Shares of the Mercantile Equity Income Portfolio will receive
Retail B Shares of the Firstar Equity Income Fund.
1. The Firstar Equity Income Fund has not yet commenced operations. The Firstar
Equity Income Fund will continue the operations of the Mercantile Equity
Income Portfolio upon consummation of the Reorganization relating to that
Fund.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
II-48
<PAGE>
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.72% for the Combined Fund Pro
Forma.
5. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
6. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Investor A Shares Investor B Shares
------------ -------------------- ----------------- -----------------
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile Equity Income Portfolio 0.23% 0.53% 0.23% 0.23%
----------------------------------------------------------------------------------------------------------------
</TABLE>
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Institutional Investor A Investor B Class Y Retail A Retail B
Trust Shares Shares Shares Shares Shares Shares Shares
------------ ------ ------ ------ ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Equity Income Portfolio 0.98% 1.28% 1.28% 1.98% -- -- --
------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 1.00% -- -- 1.25% 1.25% 2.00%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-49
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Equity Income Portfolio Combined Fund Pro Forma
---------------------------------- -----------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Trust Institutional Investor A Institutional Class Y Retail A
Shares Shares Shares Investor B Shares Shares Shares Shares Retail B Shares
------ ------ ------ ----------------- ------ ------ ------ ---------------
-----------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ---------- ---------- ----------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year..... $ 140 $ 140 $ 683 $ 711 $ 211 $ 105 $ 130 $ 673 $ 706 $ 206
-----------------------------------------------------------------------------------------------------------------------------------
3 years.... $ 437 $ 437 $ 963 $ 952 $ 652 $ 328 $ 406 $ 934 $ 937 $ 637
-----------------------------------------------------------------------------------------------------------------------------------
5 years.... $ 755 $ 755 $1,264 $1,319 $1,119 $ 569 $ 702 $1,214 $1,293 $1,093
-----------------------------------------------------------------------------------------------------------------------------------
10 years... $1,657 $1,657 $2,116 $2,067 $2,067 $1,259 $1,545 $2,010 $1,989 $1,989
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-50
<PAGE>
MERCANTILE EQUITY INDEX PORTFOLIO*
FIRSTAR EQUITY INDEX FUND
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Equity Index Portfolio Firstar Equity Index Fund Combined Fund Pro Forma
--------------------------------- ------------------------- -----------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Institu- Institu- Institu-
Trust tional Investor A tional Class Y Retail A tional Class Y Retail A
Shares Shares Shares Shares Shares Shares Shares Shares Shares
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses:
Maximum Sales Load
Imposed on Purchases (as
a percentage of offering
price)..................... None None 5.50% None + 5.50% None None 5.50%
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load
Imposed on Reinvested
Dividends.................. None None None None + None None None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load
(as a percentage of the
offering price or sales
price, whichever is less).. None None None None + None None None None
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............. None None None None/1/ + None/1/ None/1/ None/1/ None/1/
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................. None None None None + None None None None
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating
Expenses:
(as a percentage of average
net assets)
Management Fees (before
waivers)................... 0.30% 0.30% 0.30% 0.25%/2/ + 0.25%/2/ 0.25%/2/ 0.25%/2/ 0.25%/2/
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service
(12b-1) Fees............... None None 0.30% None + 0.00%/3/ None None 0.00%/3/
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses............. 0.65%/4/ 0.65%/4/ 0.35%/4/ 0.18% + 0.43% 0.17% 0.42% 0.42%
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating
Expenses (before waivers)/5/... 0.95% 0.95% 0.95% 0.43% + 0.68% 0.42% 0.67% 0.67%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Equity Index
Portfolio will receive Institutional Shares of the Firstar Equity Index Fund,
holders of Institutional Shares of the Mercantile Equity Index Portfolio will
receive Class Y Shares of the Firstar Equity Index Fund, and holders of
Investor A Shares of the Mercantile Equity Index Portfolio will receive
Retail A Shares of the Firstar Equity Index Fund.
II-51
<PAGE>
+ Class Y Shares will not be issued until the Applicable Effective Time of the
Reorganization.
1. A fee of $12.00 is charged for each wire redemption (Retail A Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, N.A. is custodian.
2. Management Fees (after waivers) would be:
Firstar Equity Index Fund........... 0.19%
Combined Fund Pro Forma............. 0.20%
3. The total of all 12b 1 fees and shareholder servicing fees may not exceed, in
the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b 1 fees
with respect to the Retail A Shares for the current fiscal year.
4. "Other Expenses" for the Funds are expected to be less than the amounts shown
above because certain service providers are voluntarily waiving a portion of
their fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Trust Shares Institutional Retail A Shares
------------ ------------- ---------------
Shares
------
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Equity Index Portfolio 0.25% 0.55% 0.25%
--------------------------------------------------------------------------------------
</TABLE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown above.
These fee waivers and/or reimbursements are made in order to keep the annual
fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Investor A Shares Class Y Shares Retail A Shares
------------ -------------------- ----------------- -------------- ---------------
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Equity Index Portfolio 0.55% 0.85% 0.85% -- --
-------------------------------------------------------------------------------------------------------------------------------
Firstar Equity Index Fund -- 0.37% -- N/A 0.62%
-------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.37% -- 0.62% 0.62%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-52
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1)
5% gross annual return and (2) the operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile Equity Index Portfolio Firstar Equity Index Fund Combined Fund Pro Forma
--------------------------------- ------------------------- -----------------------
-----------------------------------------------------------------------------------------------------------------------------------
Institu- Institu- Institu-
Trust tional Investor A tional Class Y Retail tional Class Y Retail A
Shares Shares Shares Shares Shares Shares Shares Shares Shares
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year....................... $ 97 $ 97 $ 642 $ 44 N/A $ 616 $ 43 $ 68 $ 615
-----------------------------------------------------------------------------------------------------------------------------------
3 years...................... $ 303 $ 303 $ 836 $ 138 N/A $ 756 $ 135 $ 214 $ 753
-----------------------------------------------------------------------------------------------------------------------------------
5 years...................... $ 525 $ 525 $1,047 $ 241 N/A $ 908 $ 235 $ 373 $ 903
-----------------------------------------------------------------------------------------------------------------------------------
10 years..................... $1,166 $1,166 $1,652 $ 542 N/A $1,350 $ 530 $ 835 $1,339
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-53
<PAGE>
MERCANTILE GROWTH & INCOME EQUITY PORTFOLIO - TRUST SHARES AND INSTITUTIONAL
SHARES*
FIRSTAR GROWTH AND INCOME FUND - INSTITUTIONAL SHARES AND CLASS Y SHARES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth & Income Equity
Portfolio Firstar Growth and Income Fund Combined Fund Pro Forma
--------- ------------------------------ -----------------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Institu- Institu- Institu-
tional tional tional
Trust Shares Shares Shares Class Y Shares Shares Class Y Shares
------------ ------ ------ -------------- ------ --------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of offering price). None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends................. None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less)............ None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.......................... None None None/1/ + None/1/ None/1/
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee............................. None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)......... 0.55% 0.55% 0.75% + 0.75% 0.75%
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.... None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses........................... 0.59%/2/ 0.59%/2/ 0.19% + 0.19% 0.44%
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers).. 1.14%/3/ 1.14%/3/ 0.94% + 0.94% 1.19%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Growth &
Income Equity Portfolio will receive Institutional Shares of the Firstar
Growth and Income Fund, and holders of Institutional Shares of the Mercantile
Growth & Income Equity Fund will receive Class Y Shares of the Firstar Growth
and Income Fund.
+ Class Y Shares will not be issued until the Applicable Effective Time of the
Reorganization.
1. A fee of $15.00 is charged for each non systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
II-54
<PAGE>
2. "Other Expenses" for the Funds are expected to be less than the amounts shown
above because certain service providers are voluntarily waiving a portion of
their fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Trust Shares Institutional Shares
------------ --------------------
------------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Growth & Income Equity Portfolio 0.19% 0.49%
------------------------------------------------------------------------------------------
</TABLE>
3. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Trust Shares Institutional Shares
------------ --------------------
------------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Growth & Income Equity Portfolio 0.74% 1.04%
------------------------------------------------------------------------------------------
</TABLE>
II-55
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth & Income Equity Combined Fund
Portfolio Firstar Growth and Income Fund Pro Forma
--------- ------------------------------ ---------
-----------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional Institutional
Trust Shares Shares Shares Class Y Shares Shares Class Y Shares
------------ ------ ------ -------------- ------ --------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year...................... $ 116 $ 116 $ 96 N/A $ 96 $ 121
-----------------------------------------------------------------------------------------------------------------------------------
3 years..................... $ 362 $ 362 $ 300 N/A $ 300 $ 378
-----------------------------------------------------------------------------------------------------------------------------------
5 years..................... $ 628 $ 628 $ 520 N/A $ 520 $ 654
-----------------------------------------------------------------------------------------------------------------------------------
10 years.................... $1,386 $1,386 $1,155 N/A $1,155 $1,443
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
____________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that
all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-56
<PAGE>
<TABLE>
<CAPTION>
MERCANTILE GROWTH & INCOME EQUITY PORTFOLIO - INVESTOR A SHARES & INVESTOR B SHARES*
FIRSTAR GROWTH AND INCOME FUND - RETAIL A SHARES & RETAIL B SHARES
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth & Income Equity
Portfolio Firstar Growth and Income Fund
--------- ------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Investor A Investor B
Shares Shares Retail A Shares Retail B Shares
------ ------ --------------- ---------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)......... 5.50% None 5.50% None
------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends....................... None None None None
------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less................... None 5.00%/1/ None 5.00%/1/
------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None/2/ None/2/
------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None None
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.55% 0.55% 0.75% 0.75%
------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.30% 1.00% 0.00%/3/ 0.75%
------------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.29%/4/ 0.29%/4/ 0.44% 0.44%
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers).. 1.14%/5/ 1.84%/5/ 1.19% 1.94%
------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------
Combined Fund Pro Forma
-----------------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Retail A Shares Retail B Shares
--------------- ---------------
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)......... 5.50% None
--------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends....................... None None
--------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less................... None 5.00/1/
--------------------------------------------------------------------------------------
Redemption Fees.............................. None/2/ None/2/
--------------------------------------------------------------------------------------
Exchange Fee................................. None None
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.75% 0.75%
--------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.00%/3/ 0.75%
--------------------------------------------------------------------------------------
Other Expenses............................... 0.44% 0.44%
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers).. 1.19% 1.94%
--------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Investor A Shares and Investor B Shares of
the Mercantile Growth & Income Equity Portfolio will receive Retail A Shares
and Retail B Shares, respectively, of the Firstar Growth and Income Fund.
1. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
2. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
II-57
<PAGE>
3. The total of all 12b-1 fees and shareholder servicing fees may not exceed, in
the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
4. "Other Expenses" for the Funds are expected to be less than the amounts shown
above because certain service providers are voluntarily waiving a portion of
their fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
----------------------------------------------------------------------
Investor A Shares Investor B Shares
----------------- -----------------
----------------------------------------------------------------------
Mercantile Growth & Income
Equity Portfolio 0.19% 0.19%
----------------------------------------------------------------------
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown above.
These fee waivers and/or reimbursements are made in order to keep the annual
fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
----------------------------------------------------------------------
Investor A Shares Investor B Shares
----------------- -----------------
----------------------------------------------------------------------
Mercantile Growth & Income
Equity Portfolio 1.04% 1.74%
----------------------------------------------------------------------
II-58
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth & Income Equity Portfolio Firstar Growth and Income Fund Combined Fund Pro Forma
------------------------------------------- ------------------------------ -----------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A Retail A Retail A
Shares Investor B Shares Shares Retail B Shares Shares Retail B Shares
------ ----------------- ------ --------------- ------ ---------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption Redemption Redemption
---------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year..... $ 660 $ 687 $ 187 $ 665 $ 697 $ 197 $ 665 $ 697 $ 197
------------------------------------------------------------------------------------------------------------------------------------
3 years.... $ 892 $ 879 $ 579 $ 907 $ 909 $ 609 $ 907 $ 909 $ 609
------------------------------------------------------------------------------------------------------------------------------------
5 years.... $1,143 $1,195 $ 995 $1,168 $1,247 $1,047 $1,168 $1,247 $1,047
------------------------------------------------------------------------------------------------------------------------------------
10 years... $1,860 $1,807 $1,807 $1,914 $1,891 $1,891 $1,914 $1,891 $1,891
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-59
<PAGE>
MERCANTILE GROWTH EQUITY PORTFOLIO - TRUST SHARES AND INSTITUTIONAL SHARES*
FIRSTAR GROWTH FUND INSTITUTIONAL SHARES AND CLASS Y SHARES**
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth
Equity Portfolio Firstar Growth Fund Combined Fund Pro Forma
----------------- ------------------- -----------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional Institutional
Trust Shares Shares Shares Class Y Shares Shares Class Y Shares
------------ ------ ------ -------------- ------ --------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholders Transaction Expense
Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).. None None None + None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends................. None None None + None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)...... None None None + None None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.......................... None None None/1/ + None/1/ None/1/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee............................. None None None + None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)......... 0.75% 0.75% 0.75% + 0.75% 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.... None None None + None None
------------------------------------------------------------------------------------------------------------------------------------
Other Express............................ 0.62%/2/ 0.62%/2/ 0.20% + 0.19% 0.44%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)..................................... 1.37%/3/ 1.37%/3/ 0.95% + 0.94% 1.19%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Growth
Equity Portfolio will receive Institutional Shares of the Firstar Growth
Fund, and holders of Institutional Shares of the Mercantile Growth Equity
Portfolio will receive Class Y Shares of the Firstar Growth Fund.
** It is expected that at the time of the Reorganization, the Firstar Growth
Fund will be renamed the Firstar Large Cap Core Equity Fund.
+ Class Y Shares will not be issued until the Applicable Effective Time of
the Reorganization.
1. A fee of $15.00 is charged for each non systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
II-60
<PAGE>
2. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
"Other Expenses" (after waivers) would be:
----------------------------------------------------------------------
Trust Shares Institutional
------------ -------------
Shares
------
---------------------------------------------------------------------
Mercantile Growth Equity Portfolio 0.22% 0.52%
---------------------------------------------------------------------
3. As a result of the fee waivers and/or the expense reimbursements, the
Total Fund Operating Expenses are expected to be less than the amounts
shown above. These fee waivers and/or reimbursements are made in order to
keep the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
------------------------------------------------------------------------
Trust Shares Institutional Shares
------------ ---------------------
------------------------------------------------------------------------
Mercantile Growth Equity Portfolio 0.97% 1.27%
------------------------------------------------------------------------
II-61
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth Equity Portfolio Firstar Large Growth Fund Combined Fund Pro Forma
---------------------------------- ------------------------- -----------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional Institutional
Trust Shares Shares Shares Class Y Shares Shares Class Y Share
------------ ------ ------ -------------- ------ -------------
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------------
1 year.............. $ 139 $ 139 $ 97 N/A $ 96 $ 121
---------------------------------------------------------------------------------------------------------------------------------
3 years............. $ 434 $ 434 $ 303 N/A $ 300 $ 378
---------------------------------------------------------------------------------------------------------------------------------
5 years............. $ 750 $ 750 $ 525 N/A $ 520 $ 654
---------------------------------------------------------------------------------------------------------------------------------
10 years............ $1,646 $1,646 $1,166 N/A $1,155 $1,443
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
____________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-62
<PAGE>
MERCANTILE GROWTH EQUITY PORTFOLIO - INVESTOR A SHARES & INVESTOR B SHARES*
FIRSTAR GROWTH FUND - RETAIL A SHARES & RETAIL B SHARES**
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Growth Equity Portfolio Firstar Large Growth Fund Combined Fund Pro Forma
---------------------------------- ------------------------- -----------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A
Shares Investor B Shares Retail A Shares Retail B Shares Retail A Shares Retail B Shares
------ ----------------- --------------- --------------- --------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases None None 5.50% None
(as a percentage of offering price).... 5.50% 5.50%
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends................... None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)........ None 5.00%/1/ None 5.00%/1/ None 5.00%/1/
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees......................... None None None/2/ None/2/ None/2/ None/2/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee............................ None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)....... 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.. 0.30% 1.00% 0.00%/3/ 0.75% 0.00%/3/ 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses..................... 0.32%/4/ 0.32%/4/ 0.45% 0.45% 0.44% 0.44%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)................................. 1.37%/5/ 2.07%/5/ 1.20% 1.95% 1.19% 1.94%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Investor A Shares and Investor B Shares of
the Mercantile Growth Equity Portfolio will receive Retail A Shares and Retail
B Shares, respectively, of the Firstar Growth Fund.
**It is expected that at the time of the Reorganization, the Firstar Growth Fund
will be renamed the Firstar Large Cap Core Equity Fund.
II-63
<PAGE>
1. This amount applies if you sell your shares in the first year after
purchase and gradually declines until it is eliminated after six years.
After six years, Mercantile Investor B Shares automatically convert to
Investor A Shares and Firstar Retail B Shares automatically convert to
Retail A Shares.
2. A fee of $12.00 is charged for each wire redemption (Retail A and
Retail B Shares) and $15.00 for each non systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
3. The total of all 12b-1 fees and shareholder servicing fees may not
exceed, in the aggregate, the annual rate of 0.25% of the Fund's
average daily net assets for the Retail A Shares. The Fund does not
expect to pay 12b-1 fees with respect to the Retail A Shares for the
current fiscal year.
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving
a portion of their fees and/or reimbursing the Funds for certain
"Other Expenses."
"Other Expenses" (after waivers) would be:
------------------------------------------------------------------------
Investor A Shares Investor B Shares
----------------- -----------------
------------------------------------------------------------------------
Mercantile Growth Equity
Portfolio 0.22% 0.22%
------------------------------------------------------------------------
5. As a result of the fee waivers and/or the expense reimbursements, the
Total Fund Operating Expenses are expected to be less than the amounts
shown above. These fee waivers and/or reimbursements are made in order
to keep the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
------------------------------------------------------------------------
Investor A Shares Investor B Shares
----------------- -----------------
------------------------------------------------------------------------
Mercantile Growth Equity
Portfolio 1.27% 1.97%
------------------------------------------------------------------------
II-64
<PAGE>
Example:*
YOU would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Mercantile Growth Equity Portfolio Firstar Growth Fund
---------------------------------- -------------------
----------------------------------------------------------------------------------------------------
Investor A Retail A
Shares Investor B Shares Shares Retail B Shares
------ -------------------- ------ ---------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- --------- ------------- -------------
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year..... $ 682 $ 710 $ 210 $ 666 $ 698 $ 198
----------------------------------------------------------------------------------------------------
3 years.... $ 960 $ 949 $ 649 $ 910 $ 912 $ 612
----------------------------------------------------------------------------------------------------
5 years.... $1,259 $1,314 $1,114 $1,173 $1,252 $1,052
----------------------------------------------------------------------------------------------------
10 years... $2,016 $2,057 $2,057 $1,925 $1,902 $1,902
----------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------
Combined Fund Pro Forma
-----------------------
-----------------------------------------------------------
Retail A
Shares Retail B Shares
------ ---------------
-----------------------------------------------------------
-----------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
------------------------------------------------------------
<S> <C> <C> <C>
1 year..... $ 665 $ 697 $ 197
------------------------------------------------------------
3 years.... $ 907 $ 909 $ 609
------------------------------------------------------------
5 years.... $1,168 $1,247 $1,047
------------------------------------------------------------
10 years... $1,914 $1,891 $1,891
------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-65
<PAGE>
MERCANTILE SMALL CAP EQUITY PORTFOLIO - TRUST SHARES AND INSTITUTIONAL SHARES*
FIRSTAR EMERGING GROWTH FUND INSTITUTIONAL SHARES AND CLASS Y SHARES/1/
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity
Portfolio Firstar Emerging Growth Fund
--------- ----------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Institutional Institutional
Trust Shares Shares Shares Class Y Shares
------------ ------ ------ --------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)....... None None None +
----------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends...................... None None None +
----------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)........... None None None +
----------------------------------------------------------------------------------------------------------------------
Redemption Fees............................ None None None/2/ +
----------------------------------------------------------------------------------------------------------------------
Exchange Fee............................... None None None +
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)........... 0.75% 0.75% 0.75% +
----------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees...... None None None +
----------------------------------------------------------------------------------------------------------------------
Other Expenses............................. 0.61%/4/ 0.61%/4/ 0.31% +
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers).............................. 1.36%/5/ 1.36%/5/ 1.06% +
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------
Combined Fund Pro Forma
-----------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Institutional
Shares Class Y Shares
------ --------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..... None None
--------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................... None None
--------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)......... None None
--------------------------------------------------------------------------------
Redemption Fees.......................... None/2/ None/2/
--------------------------------------------------------------------------------
Exchange Fee............................. None None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)......... 0.75%/3/ 0.75%/3/
--------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.... None None
--------------------------------------------------------------------------------
Other Expenses........................... 0.23% 0.48%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)............................ 0.98%/5/ 1.23%/5/
--------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Small Cap
Equity Portfolio will receive Institutional Shares of the Firstar Emerging
Growth Fund, and holders of Institutional Shares of the Mercantile Small Cap
Equity Portfolio will receive Class Y Shares of the Firstar Emerging Growth
Fund.
+ Class Y Shares will not be issued until the Applicable Effective Time of the
Reorganization.
II-66
<PAGE>
1. It is expected that the Firstar Emerging Growth Fund will change its
investment policies upon consummation of the Reorganization and that it will
continue the operations of the Mercantile Small Cap Equity Portfolio. In
addition, at the time of the Reorganization, it is expected that the Firstar
Emerging Growth Fund will be renamed the Firstar Small Cap Core Equity Fund.
2. A fee of $15.00 is charged for each non-systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be 0.74% for the Combined Fund Pro
Forma.
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses".
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Trust Shares Institutional Shares
------------ --------------------
---------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Small Cap Equity Portfolio 0.21% 0.51%
---------------------------------------------------------------------------------------
</TABLE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class Y Shares
------------ -------------------- --------------
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile Small Cap Equity Portfolio 0.96% 1.26% --
---------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.96% 1.21%
---------------------------------------------------------------------------------------------------------------
</TABLE>
II-67
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Firstar Emerging Growth Combined Fund
Portfolio Fund Pro Forma
--------- ---- ---------
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional Institutional
Trust Shares Shares Shares Class Y Shares Shares Class Y Shares
------------ ------ ------ -------------- ------ --------------
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year.......... $ 138 $ 138 $ 108 N/A $ 100 $ 125
-------------------------------------------------------------------------------------------------------------------------------
3 years......... $ 431 $ 431 $ 337 N/A $ 312 $ 390
-------------------------------------------------------------------------------------------------------------------------------
5 years......... $ 745 $ 745 $ 585 N/A $ 542 $ 676
-------------------------------------------------------------------------------------------------------------------------------
10 years........ $1,635 $1,635 $1,294 N/A $1,201 $1,489
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
___________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-68
<PAGE>
MERCANTILE SMALL CAP EQUITY PORTFOLIO - INVESTOR A SHARES AND INVESTOR B SHARES*
FIRSTAR EMERGING GROWTH FUND - RETAIL A SHARES AND RETAIL B SHARES/1/
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Firstar Emerging Growth
Portfolio Fund
--------- ----
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Retail A Shares Retail B Shares
----------------- ----------------- --------------- ---------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........... 5.50% None 5.50% None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.......................... None None None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)............ None 5.00%/2/ None 5.00%/2/
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees................................. None None None/3/ None/3/
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee.................................... None None None None
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................ 0.75% 0.75% 0.75% 0.75%
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........... 0.30% 1.00% 0.00%/5/ 0.75%
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses.................................. 0.31%/6/ 0.31%/6/ 0.56% 0.56%
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)..... 1.36%/7/ 2.06%/7/ 1.31% 2.06%
-----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------
Combined Fund Pro Forma
-----------------------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Retail A Shares Retail B Shares
--------------- ----------------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........... 5.50% None
--------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.......................... None None
--------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)............ None 5.00%/2/
--------------------------------------------------------------------------------------------
Redemption Fees................................. None/3/ None/3/
--------------------------------------------------------------------------------------------
Exchange Fee.................................... None None
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)................ 0.75%/4/ 0.75%/4/
--------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........... 0.00%/5/ 0.75%
--------------------------------------------------------------------------------------------
Other Expenses.................................. 0.48% 0.48%
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)..... 1.23%/7/ 1.98%/7/
--------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Investor A Shares and Investor B Shares of
the Mercantile Small Cap Equity Portfolio will receive Retail A Shares and
Retail B Shares, respectively, of the Firstar Emerging Growth Fund.
II-69
<PAGE>
1. It is expected that the Firstar Emerging Growth Fund will change its
investment policies upon consummation of the Reorganization and that it will
continue the operations of the Mercantile Small Cap Equity Portfolio. In
addition, it is expected that at the time of the Reorganization, the Firstar
Emerging Growth Fund will be renamed the Firstar Small Cap Core Equity Fund.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non-systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.74% for the Combined Fund Pro
Forma.
5. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
6. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses".
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Investor A Shares Investor B Shares
----------------- -----------------
-------------------------------------------------------------------------------------
<S> <C> <C>
Mercantile Small Cap Equity Portfolio 0.21% 0.21%
-------------------------------------------------------------------------------------
</TABLE>
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Retail A Shares Retail B Shares
----------------- ----------------- --------------- ---------------
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile Small Cap Equity Portfolio 1.26% 1.96% -- --
-------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 1.21% 1.96%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-70
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Portfolio Firstar Emerging Growth Fund Combined Fund Pro Forma
------------------------------------- ---------------------------- -----------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Retail A Shares Retail B Shares Retail A Shares Retail B Shares
----------------- ----------------- --------------- --------------- --------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption Redemption Redemption
---------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year..... $ 681 $ 709 $ 209 $ 676 $ 709 $ 209 $ 668 $ 701 $ 201
------------------------------------------------------------------------------------------------------------------------------------
3 years.... $ 957 $ 946 $ 646 $ 942 $ 946 $ 646 $ 919 $ 921 $ 621
------------------------------------------------------------------------------------------------------------------------------------
5 years.... $1,254 $1,308 $1,108 $1,229 $1,308 $1,108 $1,188 $1,268 $1,068
------------------------------------------------------------------------------------------------------------------------------------
10 years... $2,095 $2,046 $2,046 $2,042 $2,021 $2,021 $1,957 $1,935 $1,935
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
___________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-71
<PAGE>
MERCANTILE SMALL CAP EQUITY INDEX PORTFOLIO*
FIRSTAR SMALL CAP INDEX FUND/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile Small Cap Equity Index
Portfolio Combined Fund Pro Forma
--------- -----------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust Institutional Investor A Institutional Class Y Retail A
Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).......... None None 5.50% None None 5.50%
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......................... None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of the offering price or
sales price, whichever is less).............. None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees................................ None None None None/2/ None/2/ None/2/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................... None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............... 0.40% 0.40% 0.40% 0.40%/3/ 0.40%/3/ 0.40%/3/
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.......... None None 0.30% None None 0.00%/4/
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses................................. 0.68%/5/ 0.68%/5/ 0.38%/5/ 0.34% 0.59% 0.59%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/6/....................................... 1.08% 1.08% 1.08% 0.74% 0.99% 0.99%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile Small Cap
Equity Index Portfolio will receive Institutional Shares of the Firstar Small
Cap Index Fund, holders of Institutional Shares of the Mercantile Small Cap
Equity Index Portfolio will receive Class Y Shares of the Firstar Small Cap
Index Fund, and holders of Investor A Shares of the Mercantile Small Cap
Equity Index Portfolio will receive Retail A Shares of the Firstar Small Cap
Index Fund.
II-72
<PAGE>
1. The Firstar Small Cap Index Fund has not yet commenced operations. The
Firstar Small Cap Index Fund will continue the operations of the Mercantile
Small Cap Equity Index Portfolio upon consummation of the Reorganization
relating to that Fund.
2. A fee of $12.00 is charged for each wire redemption (Retail A Shares) and
$15.00 for each non systematic withdrawal from a Retirement Account for
which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be 0.34% for the Combined Fund Pro
Forma.
4. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
-------------------------------------------------------------------------
Trust Shares Institutional Shares Investor A Shares
------------ -------------------- -----------------
-------------------------------------------------------------------------
Mercantile Small Cap
Equity Index Portfolio 0.28% 0.58% 0.28%
-------------------------------------------------------------------------
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Institutional
Trust Shares Shares Investor A Shares Class Y Shares Retail A Shares
------------ ------ ----------------- -------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Small Cap Equity Index Portfolio 0.68% 0.98% 0.98% -- --
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.68% -- 0.93% 0.93%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-73
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund
Mercantile Small Cap Equity Index Portfolio Pro Forma
------------------------------------------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional Investor A Institutional
Trust Shares Shares Shares Shares Class Y Shares Retail A Shares
------------ ------ ------ ------ -------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year.............................. $ 110 $ 110 $ 654 $ 76 $ 101 $ 645
------------------------------------------------------------------------------------------------------------------------------------
3 years............................. $ 343 $ 343 $ 875 $237 $ 315 $ 848
------------------------------------------------------------------------------------------------------------------------------------
5 years............................. $ 595 $ 595 $1,113 $411 $ 547 $1,067
------------------------------------------------------------------------------------------------------------------------------------
10 years............................ $1,317 $1,317 $1,795 $918 $1,213 $1,696
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
___________________
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear
II-74
<PAGE>
MERCANTILE INTERNATIONAL EQUITY PORTFOLIO - TRUST SHARES AND INSTITUTIONAL
SHARES*
FIRSTAR CORE INTERNATIONAL EQUITY FUND - INSTITUTIONAL SHARES AND CLASS Y
SHARES/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile International Firstar Core Internantional
Equity Portfolio Equity Fund Combined Fund Pro Forma
---------------- ----------- -----------------------
-----------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional Institutional
Trust Shares Shares Shares Class Y Shares Shares Class Y Shares
------------ ------ ------ -------------- ------ --------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).... None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends................... None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of the offering price or
sales price, whichever is less)........ None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.......................... None None None/2/ + None/2/ None/2/
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee............................. None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)/3/.... 1.00% 1.00% 1.25% + 1.00% 1.00%
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees None None None + None None
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses......................... 0.72%/4/ 0.72%/4/ 0.62% + 0.32% 0.57%
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/5/................................. 1.72% 1.72% 1.87% + 1.32% 1.57%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Trust Shares of the Mercantile
International Equity Portfolio will receive Institutional Shares of the
Firstar Core International Equity Fund, and holders of Institutional Shares
of the Mercantile International Equity Portfolio will receive Class Y Shares
of the Firstar Core International Equity Fund.
II-75
<PAGE>
+ Class Y Shares will not be issued until the Applicable Effective Time of the
Reorganization.
1. It is expected that the Firstar Core International Equity Fund will change
its investment policies upon consummation of the Reorganization and that it
will continue the operations of the Mercantile International Equity
Portfolio. In addition, it is expected that at the time of the
Reorganization, the Firstar Core International Equity Fund will be renamed
the Firstar International Growth Fund.
2. A fee of $15.00 is charged for each non-systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be:
Mercantile International Equity Portfolio..................0.94%
Firstar Core International Equity Fund.....................0.83%
Combined Fund Pro Forma....................................0.94%
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses".
"Other Expenses" (after waivers) would be:
------------------------------------------------------------------------
Trust Shares Institutional
------------ -------------
Shares
------
------------------------------------------------------------------------
Mercantile International Equity Portfolio 0.32% 0.62%
------------------------------------------------------------------------
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class Y Shares
------------ -------------------- --------------
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile International Equity
Portfolio 1.26% 1.56% --
----------------------------------------------------------------------------------------------------
Firstar Core International Equity Fund -- 1.45% N/A
----------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 1.26% 1.51%
----------------------------------------------------------------------------------------------------
</TABLE>
II-76
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Mercantile International Equity Firstar Core International Equity
Portfolio Fund Combined Fund Pro Forma
--------- ----- -----------------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Institutional Institutional Institutional
Trust Shares Shares Shares Class Y Shares Shares Class Y Shares
------------ ------ ------ -------------- ------ --------------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year.............................. $ 175 $ 175 $ 190 N/A $ 134 $ 160
----------------------------------------------------------------------------------------------------------------------------------
3 years............................. $ 542 $ 542 $ 588 N/A $ 418 $ 496
----------------------------------------------------------------------------------------------------------------------------------
5 years............................. $ 933 $ 933 $1,011 N/A $ 723 $ 855
----------------------------------------------------------------------------------------------------------------------------------
10 years............................ $2,030 $2,030 $2,190 N/A $1,590 $ 1,867
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-77
<PAGE>
MERCANTILE INTERNATIONAL EQUITY PORTFOLIO - INVESTOR A SHARES AND INVESTOR B
SHARES*
FIRSTAR CORE INTERNATIONAL EQUITY FUND - RETAIL A SHARES AND RETAIL B SHARES/1/
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Mercantile International Equity Firstar Core International Equity
Portfolio Fund Combined Fund Pro Forma
--------- ---- -----------------------
----------------------------------------------------------------------------------------------------------------------------------
Investor A Investor B Retail A Retail B Retail A Retail B
Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases
(as a percentage of offering price).... 5.50% None 5.50% None 5.50% None
----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends................... None None None None None None
----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of the offering price or
sales price, whichever is less)........ None 5.00%/2/ None 5.00%/2/ None 5.00%/2/
----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees......................... None None None/3/ None/3/ None/3/ None/3/
----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee............................ None None None None None None
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)/4/..... 1.00% 1.00% 1.25% 1.25% 1.00% 1.00%
----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees... 0.30% 1.00% 0.25%/5/ 0.75% 0.25%/5/ 0.75%
----------------------------------------------------------------------------------------------------------------------------------
Other Expenses.......................... 0.42%/6/ 0.42%/6/ 0.87% 0.87% 0.57% 0.57%
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/7/..................... 1.72% 2.42% 2.37% 2.87% 1.82% 2.32%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Investor A Shares and Investor B Shares of
None the Mercantile International Equity Portfolio will receive Retail A
Shares and Retail B Shares, respectively, of the Firstar Core International
Equity Fund.
II-78
<PAGE>
1. It is expected that the Firstar Core International Equity Fund will change
its investment policies upon consummation of the Reorganization and that it
will continue the operations of the Mercantile International Equity
Portfolio. In addition, it is expected that at the time of the
Reorganization, the Firstar Core International Equity Fund will be renamed
the Firstar International Growth Fund.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares and Firstar Retail B Shares automatically convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be:
Mercantile International Equity Portfolio......0.94%
Firstar Core International Equity Fund.........0.83%
Combined Fund Pro Forma....................... 0.94%
5. The Firstar Core International Equity Fund and Combined Fund Pro Forma do not
intend to pay 12b-1 fees with respect to the Retail A Shares.
6. "Other Expenses" for the Funds are expected to be less than the amounts shown
above because certain service providers are voluntarily waiving a portion of
their fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
-----------------------------------------------------------------------
Investor A Investor B
Shares Shares
------ ------
-----------------------------------------------------------------------
Mercantile International Equity Portfolio 0.32% 0.32%
-----------------------------------------------------------------------
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Retail A Shares Retail B Shares
----------------- ----------------- --------------- ---------------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile International Equity Portfolio 1.56% 2.26% -- --
----------------------------------------------------------------------------------------------------------------------------------
Firstar Core International Equity Fund -- -- 1.70% 2.45%
----------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 1.51% 2.26%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-79
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment,
assuming (1) 5% gross annual return and (2) the operating expenses remain the
same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile International Equity Portfolio Firstar Core International Equity Fund Combined Fund Pro Forma
----------------------------------------- -------------------------------------- -----------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A Retail A Retail A
Shares Investor B Shares Shares Retail B Shares shares Retail B Shares
------ ----------------- ------- --------------- ------ ---------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption Redemption Redemption
---------- ---------- ---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year..... $ 715 $ 745 $ 245 $ 777 $ 790 $ 290 $ 725 $ 735 $ 235
------------------------------------------------------------------------------------------------------------------------------------
3 years.... $1,062 $1,055 $ 755 $1,249 $1,189 $ 889 $1,091 $1,024 $ 724
------------------------------------------------------------------------------------------------------------------------------------
5 years.... $1,432 $1,491 $1,291 $1,746 $1,713 $1,513 $1,481 $1,440 $1,240
------------------------------------------------------------------------------------------------------------------------------------
10 years... $2,469 $2,425 $2,425 $3,107 $2,969 $2,969 $2,570 $2,418 $2,418
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-80
<PAGE>
APPENDIX III
Investment Objectives, Limitations and Certain
Significant Investment Policies of the Reorganizing
Mercantile Funds and Corresponding Firstar Funds
This Appendix highlights the investment objectives and certain significant
similarities and differences among the investment limitations and policies of
certain of the Reorganizing Mercantile Funds and their Corresponding Firstar
Funds. Because the Mercantile Conning Money Market Portfolio, Mercantile
Missouri Tax-Exempt Bond Portfolio, Mercantile Equity Income Portfolio and
Mercantile Small Cap Equity Index Portfolio will be reorganized into Shell
Firstar Funds that have substantially the same investment objectives, policies
and restrictions as their corresponding Continuing Mercantile Funds, they are
not discussed in this Appendix. Similarly, because (i) the Mercantile U.S.
Government Securities Portfolio, together with the Stellar U.S. Government
Income Fund, will reorganize into the Firstar U.S. Government Securities Fund,
which has substantially the same investment objective, policies and restrictions
as the Mercantile U.S. Government Securities Portfolio, (ii) the Mercantile
Government & Corporate Bond Portfolio, together with the Mercantile Bond Index
Portfolio, will reorganize into the Firstar Aggregate Bond Fund, which has
substantially the same investment objective, policies and restrictions as the
Mercantile Government & Corporate Bond Portfolio, and (iii) the Mercantile
National Municipal Bond Portfolio, together with the Stellar Insured Tax-Free
Bond Fund, will reorganize into the Firstar National Municipal Bond Fund, which
has substantially the same investment objective, policies and restrictions as
the Mercantile National Municipal Bond Portfolio, the Mercantile U.S. Government
Securities Portfolio, Mercantile Government & Corporate Bond Portfolio and
Mercantile National Municipal Bond Portfolio are not discussed in this Appendix.
The following is qualified in its entirety by the more detailed information
included in the prospectuses and statements of additional information for the
Mercantile Funds and the Corresponding Firstar Funds which are incorporated by
reference into this Proxy/Prospectus.
1. MERCANTILE TREASURY MONEY MARKET PORTFOLIO/FIRSTAR U.S. TREASURY MONEY
MARKET FUND
Investment Objectives:
(a) Mercantile Treasury Money Market Portfolio: Seeks a high level of
------------------------------------------
current income exempt from state income tax consistent with liquidity
and security of principal. This investment objective is fundamental
and may not be changed without the approval of the Portfolio's
shareholders.
(b) Stellar Treasury Fund: Seeks to achieve stability of principal and
---------------------
current income consistent with stability of principal. This investment
objective is fundamental and may not be changed without the approval
of the Fund's shareholders.
(c) Firstar U.S. Treasury Money Market Fund: Sees to provide a high level
---------------------------------------
of taxable current income exempt from state income taxes consistent
with liquidity,
<PAGE>
the preservation of capital and a stable net asset value. This
investment objective is not fundamental and may be changed by the
Firstar Board of Directors without shareholder approval.
Comment: Both the Mercantile Treasury Money Market Portfolio and the
Stellar Treasury Fund will reorganize into the Firstar U.S. Treasury Money
Market Fund. It is expected that at the time of the Reorganization the Firstar
U.S. Treasury Money Market Fund will adopt an investment objective and certain
non-fundamental investment policies and restrictions that are substantially the
same as those of the Stellar Treasury Fund. Accordingly, set forth below is a
description of the significant similarities and differences between the
investment objective, policies and restrictions of the Mercantile Treasury Money
Market Portfolio and (i) the existing investment objective, policies and
restrictions of the Firstar U.S. Treasury Money Market Fund and (ii) the
investment objective, policies and restrictions of the Stellar Treasury Fund
that are expected to be adopted by the Firstar U.S. Treasury Money Market Fund.
For a complete description of the investment objective, policies and
restrictions of the Stellar Treasury Fund, see Exhibit A to this Appendix.
Mercantile Treasury Money Market Portfolio/Firstar U.S. Treasury Money
Market Fund. The Mercantile Treasury Money Market Portfolio and the Firstar U.S.
Treasury Money Market Fund each is a money market fund and in accordance with
Rule 2a-7 under the 1940 Act will generally invest in instruments with remaining
maturities not exceeding 397 days. Each Fund's dollar-weighted average portfolio
maturity may not exceed 90 days. The Mercantile Treasury Money Market Portfolio
invests substantially all, but not less than 65%, of its total assets in money
market instruments issued by the U.S. Treasury and certain U.S. Government
agencies and instrumentalities that provide income that is generally not subject
to state income tax. During normal market conditions, the Firstar U.S. Treasury
Money Market Fund invests at least 65% of its total assets in short-term,
dollar-denominated debt obligations issued or guaranteed as to principal and
interest by the U.S. Treasury. The Firstar U.S. Treasury Money Market Fund also
may invest in repurchase agreements, reverse repurchase agreements and other
investment companies. The Mercantile Treasury Money Market Portfolio generally
does not invest in repurchase agreements, reverse repurchase agreements or other
investment companies, although it may enter into repurchase agreements and
invest in other investment companies in extraordinary circumstances. Unlike the
Firstar U.S. Treasury Money Market Fund, the Mercantile Treasury Money Market
Portfolio may purchase securities on a when-issued basis and purchase and sell
securities on a forward commitment basis.
The Firstar U.S. Treasury Money Market Fund may lend its portfolio
securities in an amount not to exceed 30% of the value of its total assets while
the Mercantile Treasury Money Market Portfolio may lend its portfolio securities
in an amount not to exceed 33-1/3% of the value of its total assets.
Mercantile Treasury Money Market Portfolio/Stellar Treasury Fund. The
Mercantile Treasury Money Market Portfolio and the Stellar Treasury Fund each is
a money market fund and in accordance with Rule 2a-7 under the 1940 Act will
generally invest in instruments with remaining maturities not exceeding 397
days. Each Fund's dollar-weighted average portfolio maturity may not exceed 90
days. The Mercantile Treasury Money Market Portfolio invests
-2-
<PAGE>
substantially all, but not less than 65%, of its total assets in money market
instruments issued by the U.S. Treasury and certain U.S. Government agencies and
instrumentalities that provide income that is generally not subject to state
income tax. The Stellar Treasury Fund invests exclusively in short-term U.S.
Treasury obligations. The Stellar Treasury Fund also may invest in repurchase
agreements collateralized by U.S. Treasury obligations, reverse repurchase
agreements and other investment companies. The Mercantile Treasury Money Market
Portfolio generally does not invest in repurchase agreements, reverse repurchase
agreements or other investment companies, although it may enter into repurchase
agreements and invest in other investment companies in extraordinary
circumstances.
The Mercantile Treasury Money Market Portfolio may lend its portfolio
securities in an amount not to exceed 33-1/3% of the value of its total assets,
while the Stellar Treasury Fund may not lend its portfolio securities. The
Mercantile Treasury Money Market Portfolio may borrow money from banks for
temporary purposes in an amount not exceeding 10% of the value of its total
assets at the time of the borrowing. The Stellar Treasury Fund may borrow money
as a temporary, extraordinary or emergency measure or to facilitate Fund
management in an amount not exceeding 33-1/3% of the value of its total assets.
2. MERCANTILE MONEY MARKET PORTFOLIO/ FIRSTAR MONEY MARKET FUND
Investment Objectives:
(a) Mercantile Money Market Portfolio: Seeks current income with
---------------------------------
liquidity and stability of principal. This investment objective is
fundamental and may not be changed without the approval of the
Portfolio's shareholders.
(b) Firstar Money Market Fund: Seeks to provide a high level of taxable
-------------------------
current income consistent with liquidity, the preservation of capital
and a stable net asset value. This investment objective is not
fundamental and may be changed by the Firstar Board of Directors
without shareholder approval.
Comment: The Mercantile Money Market Portfolio and the Firstar Money Market
Fund each is a money market fund and in accordance with Rule 2a-7 under the 1940
Act will generally invest in instruments with remaining maturities not exceeding
397 days. Each Fund's dollar-weighted average portfolio maturity may not exceed
90 days. Both the Mercantile Money Market Portfolio and the Firstar Money Market
Fund will purchase only those securities that are rated in the highest short-
term rating category (i.e., rated AAA by Standard & Poor's Ratings Group ("S&P")
or Aaa by Moody's Investors Service Inc. ("Moody's")) by at least two nationally
recognized rating agencies (or one such rating if only one agency has rated the
instrument) or that are determined to be of comparable quality.
The Mercantile Money Market Portfolio invests substantially all (but not
less than 80%) of its total assets in a broad range of U.S. dollar-denominated
money market instruments, including commercial paper, notes and bonds issued by
U.S. and foreign corporations, obligations issued by the U.S. Government and its
agencies and instrumentalities, and
-3-
<PAGE>
obligations issued by U.S. and foreign banks, such as certificates of deposit,
letters of credit, bankers' acceptances and time deposits. The Mercantile Money
Market Portfolio may also invest in repurchase agreements, reverse repurchase
agreements, stripped U.S. Government securities, certain variable and floating
rate securities and securities of other investment companies.
The Firstar Money Market Fund invests principally in short-term, high
quality, dollar-denominated money market debt obligations. These obligations may
be issued by entities including domestic and foreign corporations, banks and
other financial institutions, or they may be issued or guaranteed by the U.S.
Government and its agencies and instrumentalities. Unlike the Mercantile Money
Market Portfolio, the Firstar Money Market Fund may invest in obligations issued
by foreign governments and their agencies, instrumentalities and political
subdivisions and short-term funding agreements. The Firstar Money Market Fund
may lend its portfolio securities in an amount not to exceed 30% of the value of
its total assets while the Mercantile Money Market Portfolio may lend its
portfolio securities in an amount not to exceed 33-1/3% of the value of its
total assets.
3. MERCANTILE TAX-EXEMPT MONEY MARKET PORTFOLIO/FIRSTAR TAX-EXEMPT MONEY
MARKET FUND
Investment Objectives:
(a) Mercantile Tax-Exempt Money Market Portfolio: Seeks as high a level
--------------------------------------------
of current interest income exempt from federal income tax as is
consistent with liquidity and stability of principal. This investment
objective is fundamental and may not be changed without the approval
of the Portfolio's shareholders.
(b) Firstar Tax-Exempt Money Market Fund: Seeks to provide a high level
------------------------------------
of current income exempt from federal income taxes consistent with
liquidity, the preservation of capital and a stable net asset value.
This investment objective is not fundamental and may be changed by the
Firstar Board of Directors without shareholder approval.
Comment: Both the Mercantile Tax-Exempt Money Market Portfolio and the
Stellar Tax-Free Money Market Fund will reorganize into the Firstar Tax-Exempt
Money Market Fund.
The Mercantile Tax-Exempt Money Market Portfolio and the Firstar Tax-Exempt
Money Market Fund each is a money market fund and in accordance with Rule 2a-7
under the 1940 Act will generally invest in instruments with remaining
maturities not exceeding 397 days. Each Fund's dollar-weighted average portfolio
maturity may not exceed 90 days. Both the Mercantile Tax-Exempt Money Market
Portfolio and the Firstar Tax-Exempt Money Market Fund will purchase only
securities which are rated in the highest short-term rating category (i.e.,
rated AAA by S&P or Aaa by Moody's by at least two nationally recognized rating
agencies (or one such rating if only one agency has rated the instrument) or
that are determined to be of comparable quality.
-4-
<PAGE>
The Mercantile Tax-Exempt Money Market Portfolio normally invests (as a
matter of fundamental policy which cannot be changed without shareholder
approval) at least 80% of its total assets in short-term municipal securities
issued by or on behalf of states, territories and possessions of the United
States, the District of Columbia and their authorities, instrumentalities,
agencies and political subdivisions and that pay interest which is exempt from
federal income tax. Investments by the Mercantile Tax-Exempt Money Market
Portfolio in private activity bonds, the interest on which may be subject to the
federal alternative minimum tax, will not be treated as investments in municipal
securities for purposes of the 80% requirement stated above and, under normal
conditions, will not exceed 20% of the Portfolio's total assets when added with
any taxable investments.
The Firstar Tax-Exempt Money Market Fund invests (as a matter of
fundamental policy which cannot be changed without shareholder approval) at
least 80% of its net assets in municipal securities issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and their authorities, instrumentalities, agencies and political
subdivisions, which are exempt from federal income taxes and with remaining
maturities of 13 months or less. The municipal securities in which the Firstar
Tax-Exempt Money Market Fund may invest are generally the same as those eligible
for investment by the Mercantile Tax-Exempt Money Market Portfolio, except that
the Firstar Tax-Exempt Money Market Fund may not invest in tax-exempt derivative
securities, such as tender option bonds, participations, beneficial interests in
trusts and partnership interests.
The Firstar Tax-Exempt Money Market Fund, like the Mercantile Tax-Exempt
Money Market Portfolio, normally may invest no more than 20% of its total assets
in taxable obligations. Taxable obligations in which the Firstar Tax-Exempt
Money Market Fund may invest are generally the same as those eligible for
investment by the Mercantile Tax-Exempt Money Market Portfolio, except that the
Firstar Tax-Exempt Money Market Fund may not invest in bank obligations, such as
certificates of deposit and bankers' acceptances, stripped U.S. Government
securities and repurchase agreements. The Firstar Tax-Exempt Money Market Fund
may lend its portfolio securities in an amount not to exceed 30% of the value of
its total assets, whereas the Mercantile Tax-Exempt Money Market Portfolio may
not lend its portfolio securities.
The Firstar Tax-Exempt Money Market Fund is diversified, whereas the
Mercantile Tax-Exempt Money Market Portfolio is not-diversified, which means
that it may invest a relatively high percentage of its assets in the obligations
of a limited number of issuers.
4. MERCANTILE INTERMEDIATE CORPORATE BOND PORTFOLIO/FIRSTAR INTERMEDIATE BOND
MARKET FUND
Investment Objectives:
(a) Mercantile Intermediate Corporate Bond Portfolio: Seeks as high a
------------------------------------------------
level of current income as is consistent with preservation of capital.
This investment objective is fundamental and may not be changed
without the approval of the Portfolio's shareholders.
-5-
<PAGE>
(b) Firstar Intermediate Bond Market Fund: Seeks to provide an annual
-------------------------------------
rate of total return, before Fund expenses, comparable to the annual
rate of total return of the Lehman Brothers Intermediate
Government/Corporate Bond Index. This investment objective is not
fundamental and may be changed by Firstar's Board of Directors without
shareholder approval.
Comment: It is expected that at the time of the Reorganization, the
Firstar Intermediate Bond Market Fund will be renamed the Firstar Intermediate
Bond Fund.
The Mercantile Intermediate Corporate Bond Portfolio normally invests at
least 65% of its total assets in corporate debt obligations. These include
obligations that are issued by U.S. and foreign business corporations and
obligations issued by agencies, instrumentalities or authorities that are
organized as corporations by the U. S., by states or political subdivisions of
the U.S., or by foreign governments or political subdivisions. The Mercantile
Intermediate Corporate Bond Portfolio also may invest in obligations issued or
guaranteed by U.S. or foreign governments, their agencies and instrumentalities
and in mortgage-backed securities, including collateralized mortgage
obligations. The Fund may only purchase investment grade debt obligations
(i.e., those rated BBB or higher by S&P or Baa or higher by Moody's) or unrated
debt obligations determined to be of comparable quality. Under normal market
conditions, the Portfolio invests at least 65% of its total assets in debt
obligations rated in one of the top three rating categories (i.e., A or higher
by S&P or Moody's) or unrated debt obligations determined to be of comparable
quality. The Mercantile Intermediate Corporate Bond Portfolio's average
weighted maturity will generally be between 3 and 10 years.
The Firstar Intermediate Bond Market Fund attempts to make its duration and
return comparable to, and to maintain an overall interest rate sensitivity
equivalent to, that of the Lehman Brothers Intermediate Government/Corporate
Bond Index (the "Lehman Index"). To this end, the Fund invests at least 65% of
its total assets in debt securities, including securities issued or guaranteed
by the U.S. Government and its agencies, stripped U.S. Government securities,
corporate securities,, medium-term notes, collateralized mortgage obligations,
asset-backed and mortgage-backed obligations and Eurobonds. The Fund typically
holds less than 200 securities. The Fund is not an index fund, however, and may
---
invest more than 50% of its assets in securities not included in the Lehman
Index. Debt obligations purchased by the Fund will be rated investment grade
(i.e., BBB or higher by S&P or Baa or higher by Moody's) or unrated obligations
determined to be of comparable quality. The average quality for the Fund is
expected to be at least the second highest rating category of S&P or Moody's.
The effective dollar-weighted average portfolio maturity of the Firstar
Intermediate Bond Market Fund will be more than 3 years but less than 10 years
during normal market conditions.
Unlike the Mercantile Intermediate Corporate Bond Portfolio, the Firstar
Intermediate Bond Market Fund may invest in unlisted over-the-counter options,
preferred stocks and guaranteed investment contracts. The Mercantile
Intermediate Corporate Bond Portfolio, unlike the Firstar Intermediate Bond
Market Fund, may invest in convertible debt securities. The Firstar Intermediate
Bond Market Fund may invest no more than 50% of its net assets in collateralized
mortgage obligations, whereas there is no limit on the amount of the Mercantile
Intermediate Corporate Bond Portfolio's assets that may be invested in such
obligations. The
-6-
<PAGE>
Mercantile Intermediate Corporate Bond Portfolio may lend its portfolio
securities in an amount not to exceed 33-1/3% of the value of its total assets,
while the Firstar Intermediate Bond Market Fund may lend its portfolio
securities in an amount not to exceed 30% of the value of its total assets.
The Mercantile Intermediate Corporate Bond Portfolio may purchase put and
call options on particular securities or bond indices for hedging purposes in an
amount not to exceed 10% of its net assets. The Firstar Intermediate Bond
Market Fund may purchase put and call options on particular securities or
indices to manage exposure to certain markets, enhance income or for hedging
purposes in an amount not to exceed 5% of its net assets. The Mercantile
Intermediate Corporate Bond Portfolio may write covered call options in an
amount not to exceed 25% of its net assets, while covered call options written
by the Firstar Intermediate Bond Market Fund may not exceed 5% of its net
assets.
5. MERCANTILE BOND INDEX PORTFOLIO/FIRSTAR AGGREGATE BOND FUND
Investment Objectives:
(a) Mercantile Bond Index Portfolio: Seeks to provide investment results
-------------------------------
that, before deduction of operating expenses, approximate the price
and yield performance of U.S. Government, mortgage-backed, asset-
backed and corporate debt securities as represented by the Lehman
Brothers Aggregate Bond Index. This investment objective is not
fundamental and may be changed by Mercantile's Board of Directors
without shareholder approval.
(b) Firstar Aggregate Bond Fund: Seeks to provide an annual rate of total
---------------------------
return, before Fund expenses, comparable to the annual rate of total
return of the Lehman Brothers Aggregate Bond Index. This investment
objective is not fundamental and may be changed by Firstar's Board of
Directors without shareholder approval.
Comment: As previously noted, both the Mercantile Bond Index Portfolio and
the Mercantile Government & Corporate Bond Portfolio will reorganize into the
Firstar Aggregate Bond Fund, which has substantially the same investment
objective, policies and restrictions as the Mercantile Government & Corporate
Bond Portfolio.
The Mercantile Bond Index Portfolio is not managed through the use of
traditional methods of investment management, but instead uses an "indexing"
strategy through the use of computer models to approximate, within a 0.95
correlation coefficient, the investment performance of the Lehman Brothers
Aggregate Bond Index (the "Lehman Aggregate"). The Portfolio will invest
substantially all (but not less than 80%) of its total assets in securities
listed in the Lehman Aggregate. The Lehman Aggregate is comprised of U.S.
Government, mortgage-backed, asset-backed and non-convertible corporate debt
securities. The Portfolio's average weighted maturity is not expected to exceed
9 years.
-7-
<PAGE>
The securities in which the Firstar Aggregate Bond Fund invests are
substantially similar to those in which the Mercantile Bond Index Portfolio
invests. However, unlike the Mercantile Bond Index Portfolio, the Firstar
Aggregate Bond Fund is managed through the use of traditional methods of
investment management, such as market, economic and security analysis. The
Fund's average weighted maturity will vary from time to time depending on
current market and economic conditions and FIRMCO's assessment of probable
changes in interest rates.
While the Mercantile Bond Index Portfolio and the Firstar Aggregate
Bond Fund generally invest in a similar pool of investments, there are some
differences. Unlike the Mercantile Bond Index Portfolio, the Firstar Aggregate
Bond Fund may invest in collateralized mortgage obligations, convertible
securities and up to 10% of its total assets in U.S. dollar-denominated debt
obligations of foreign issuers, either directly or through American Depository
Receipts ("ADRs") and European Depository Receipts ("EDRs"). Unlike the Firstar
Aggregate Bond Fund, the Mercantile Bond Index Portfolio may invest in index-
based depository receipts. Both Funds may invest in options, futures and
options on futures.
Both the Mercantile Bond Index Portfolio and the Firstar Aggregate Bond
Fund will purchase only investment grade debt obligations (i.e., those rated Baa
or higher by Moody's or BBB or higher by S&P) or, in the case of the Firstar
Aggregate Bond Fund only, unrated debt obligations determined to be of
comparable quality. Unlike the Mercantile Bond Index Portfolio, the Firstar
Aggregate Bond Fund normally invests at least 65% of its total assets in debt
obligations rated in one of the top three rating categories (i.e., A or higher
by Moody's or S&P) or unrated debt obligations determined to be of comparable
quality.
6. MERCANTILE SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO/FIRSTAR TAX-EXEMPT
INTERMEDIATE BOND FUND
Investment Objectives:
(a) Mercantile Short-Intermediate Municipal Portfolio: Seeks as high a
-------------------------------------------------
level of current income, exempt from regular federal income tax, as is
consistent with preservation of capital. This investment objective is
fundamental and may not be changed without the approval of the
Portfolio's shareholders.
(b) Firstar Tax-Exempt Intermediate Bond Fund: Seeks to provide current
-----------------------------------------
income that is substantially exempt from federal income tax and
emphasize total return with relatively low volatility of principal.
This investment objective is not fundamental and may be changed by
Firstar's Board of Directors without shareholder approval.
Comment: The Mercantile Short-Intermediate Municipal Portfolio normally
invests (as a matter of fundamental policy which cannot be changed without
shareholder approval) at least 80% of its total assets in municipal securities
issued by state and local governments that pay interest which is exempt from
federal income tax. Investments by the Mercantile Short-Intermediate Municipal
Portfolio in private activity bonds, the interest on which may be subject to the
federal alternative minimum tax, will not be treated as investments in municipal
securities
-8-
<PAGE>
for purposes of the 80% requirement stated above and, under normal conditions,
will not exceed 20% of the Portfolio's total assets when added with any taxable
investments. The Portfolio's average weighted maturity will generally be between
2 and 5 years.
The Firstar Tax-Exempt Intermediate Bond Fund invests principally in
intermediate-term municipal obligations issued by state and local governments
exempt from federal income tax. The Fund will normally invest (as a matter of
fundamental policy which cannot be changed without shareholder approval) at
least 80% of its net assets in securities the interest on which is exempt from
regular federal income and alternative minimum taxes and will invest at least
65% of its total assets in bonds and debentures. The Fund intends to maintain
an average weighted maturity between 3 and 10 years.
The Mercantile Short-Intermediate Municipal Portfolio, but not the Firstar
Tax-Exempt Intermediate Bond Fund, may invest in tax-exempt derivatives, such as
tender option bonds, participations, beneficial interests in a trust or
partnership interests. The Firstar Tax-Exempt Intermediate Bond Fund, but not
the Mercantile Short-Intermediate Municipal Portfolio, may invest in municipal
leases, reverse repurchase agreements and options and futures, although the Fund
does not intend to invest in options or futures during the current fiscal year
other than put options on municipal securities. The Mercantile Short-
Intermediate Municipal Portfolio, like the Firstar Tax-Exempt Intermediate Bond
Fund, may invest in the securities of other investment companies, limited (i)
with respect to the Mercantile Short-Intermediate Municipal Portfolio to the
securities of "money market" funds which invest in the same types of securities
in which the Portfolio is permitted to invest, and (ii) with respect to the
Firstar Tax-Exempt intermediate Bond Fund to the securities of other investment
companies that invest in high quality short-term debt instruments. The
Mercantile Short-Intermediate Municipal Portfolio may lend its portfolio
securities in an amount not to exceed 33-1/3% of the value of its total assets.
The Firstar Tax-Exempt Intermediate Bond Fund may lend its portfolio securities
in an amount not to exceed 30% of the value of its total assets, although it
does not intend to engage in securities lending during the current fiscal year.
Both the Firstar Tax-Exempt Intermediate Bond Fund and the Mercantile
Short-Intermediate Municipal Portfolio only may purchase investment grade
municipal securities (i.e., those rated BBB or higher by S&P or Baa or higher by
Moody's) or unrated debt obligations determined to be of comparable quality.
Short-term municipal securities, such as municipal notes and tax-exempt
commercial paper, must have the highest rating assigned by a nationally
recognized rating agency for such instruments if purchased by the Firstar Tax-
Exempt Intermediate Bond Fund or one of the two highest ratings assigned by a
nationally recognized rating agency for such instruments if purchased by the
Mercantile Short-Intermediate Municipal Portfolio.
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<PAGE>
7. MERCANTILE BALANCED PORTFOLIO/FIRSTAR BALANCED GROWTH FUND
Investment Objectives:
(a) Mercantile Balanced Portfolio: Seeks to maximize total return through
-----------------------------
a combination of growth of capital and current income consistent with
the preservation of capital. This investment objective is fundamental
and may not be changed without the approval of the Portfolio's
shareholders.
(b) Firstar Balanced Growth Fund: Seeks to achieve a balance of capital
----------------------------
appreciation and current income with relatively low volatility of
capital. This investment objective is not fundamental and may be
changed by the Firstar Board of Directors without shareholder
approval.
Comment: The Mercantile Balanced Portfolio invests in a combination of
equity securities, fixed-income securities and money market instruments in
weightings that FIRMCO, through the use of its own dynamic computer models,
believes will offer attractive total returns over time. The Fund normally
invests at least 25% of its total assets in fixed-income securities and no more
than 75% of its total assets in equity securities, although the actual
percentages will vary from time to time based on FIRMCO's economic and market
outlooks. The Portfolio's equity securities consist mainly of common stocks of
companies with large market capitalizations and its fixed-income securities
consist mainly of investment grade bonds (i.e., those rated in one of the top
four rating categories by one or more nationally recognized rating agencies or
unrated bonds determined to be of comparable quality), including U.S. Government
securities.
The Firstar Balanced Growth Fund invests principally in a diversified
portfolio of fixed-income and equity securities. Although the actual percentages
will vary from time to time based on FIRMCO's economic and market outlooks, the
Fund's policy is to invest at least 25% of its total assets in fixed-income
senior securities and at least 50% and no more than 65% of its total assets in
equity securities at all times. The Fund's equity securities are selected on the
basis of their potential capital appreciation and consist mainly of common stock
of domestic and foreign companies. These equity securities generally have market
capitalizations between $100 million and $100 billion, although from time to
time a portion of the Fund's assets may be invested in securities with larger or
smaller market capitalizations. The fixed-income securities selected for the
Fund are those which FIRMCO believes will provide an annual rate of total return
similar to that of the Lehman Brothers Government/Corporate Bond Fund. Except
for convertible securities, the Fund will purchase only fixed-income securities
rated investment grade or unrated obligations determined to be of comparable
quality.
Both the Mercantile Balanced Portfolio and the Firstar Balanced Growth Fund
may invest in preferred stock, rights, warrants and securities convertible into
common stock. The Firstar Balanced Growth Fund may invest no more than 5% of its
net assets in rights and both the Firstar Balanced Growth Fund and Mercantile
Balanced Portfolio may invest no more than 5% of their net assets in warrants.
In addition, the Mercantile Balanced Portfolio may invest no more than
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<PAGE>
2% of its net assets in warrants that are not listed on the New York, American
or Canadian Stock Exchanges. The Firstar Balanced Growth Fund, unlike the
Mercantile Balanced Portfolio, may invest up to 5% of its net assets in
convertible securities rated below investment grade. The Mercantile Balanced
Portfolio may invest in foreign securities indirectly through ADRs and EDRs. The
Firstar Balanced Growth may invest in foreign securities directly and indirectly
through ADRs.
While both the Mercantile Balanced Portfolio and the Firstar Balanced
Growth Fund may invest in securities issued by other investment companies, the
Mercantile Balanced Portfolio limits such investments to those securities issued
by "money market" funds which invest in securities in which the Fund may invest.
The Firstar Balanced Growth Fund may invest in securities of other investment
companies that invest in high-quality, short-term debt instruments. The
Mercantile Balanced Portfolio, unlike the Firstar Balanced Growth Fund, may
invest in Standard & Poor's Depository Receipts, Standard & Poor's MidCap 400
Depository Receipts and the Dow Industrial DIAMONDS.
The Mercantile Balanced Portfolio may purchase put and call options on
particular securities or securities indices for hedging purposes in an amount
not to exceed 10% of its net assets. The Firstar Balanced Growth Fund may
purchase put and call options on particular securities or securities indices to
manage exposure to certain markets, enhance income or for hedging purposes in an
amount not to exceed 5% of its net assets. Further the Mercantile Balanced
Portfolio and the Firstar Balanced Growth Fund each may write covered call
options in an amount not to exceed 25% of its net assets. The Mercantile
Balanced Portfolio may lend its portfolio securities in an amount not to exceed
33-1/3% of the value of its total assets, while the Firstar Balanced Growth Fund
may lend its portfolio securities in an amount not to exceed 30% of the value of
its total assets.
8. MERCANTILE EQUITY INDEX PORTFOLIO/FIRSTAR EQUITY INDEX FUND
Investment Objectives:
(a) Mercantile Equity Index Portfolio: Seeks to provide investment
---------------------------------
results that, before the deduction of operating expenses, approximate
the price and yield performance of U.S. publicly traded common stocks
with large stock market capitalizations, as represented by the
Standard & Poor's 500 Index. This investment objective is not
fundamental and may be changed by the Mercantile Board of Directors
without shareholder approval.
(b) Firstar Equity Index Fund: Seeks returns, before Fund expenses,
comparable to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard &
Poor's 500 Index. This investment objective is not fundamental and may
be changed by the Firstar Board of Directors without shareholder
approval.
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<PAGE>
Comment: The Mercantile Equity Index Portfolio and the Firstar Equity
Index Fund are not managed through the use of traditional methods of investment
management, but instead use an "indexing" strategy through the use of computer
models to approximate the investment performance of the Standard & Poor's 500
Index (the S&P 500"). Both Funds invest substantially all of their assets (at
least 80%) in securities included in the S&P 500 and typically hold all 500
stocks represented in the S&P 500. It is expected that the quarterly
performance of the Firstar Equity Index Fund and the S&P 500 Index normally will
be within 0.3%. The quarterly performance of the Mercantile Equity Index
Portfolio, before expenses, normally tracks the performance of the S&P 500 Index
within a .95 correlation coefficient. Both the Mercantile Equity Index
Portfolio and the Firstar Equity Index Fund include stocks in their respective
portfolios based on such stocks' market capitalization weightings in the S&P 500
Index. Unlike the Firstar Equity Fund, the Mercantile Equity Index Portfolio
may invest in index-based depository receipts, such as Standard & Poor's
Depository Receipts, in lieu of investment in the actual securities listed in
the S&P 500, as well as in rights, warrants and convertible securities.
The Mercantile Equity Index Portfolio may purchase put and call options on
particular securities or securities indices for hedging purposes in an amount
not to exceed 10% of its net assets. The Firstar Equity Index Fund may purchase
put and call options on securities indices, but not on particular securities, to
manage exposure to certain markets, enhance income or for hedging purposes in an
amount not to exceed 5% of its net assets. The Mercantile Equity Index Portfolio
may write covered call options on particular securities and indices in the
amount not to exceed 25% of its net assets, while covered call options written
by the Firstar Equity Index Fund are limited to options on securities indices
and may not exceed 5% of the Fund's net assets. Both the Mercantile Equity Index
Portfolio and the Firstar Equity Index Fund may enter into futures contracts and
related options, although the Firstar Equity Index Fund will limit its
transactions in futures contracts and related options so that not more than 10%
of its net assets are at risk.
While both the Mercantile Equity Index Portfolio and the Firstar Equity
Index Fund may invest in securities issued by other investment companies, the
Mercantile Equity Index Portfolio limits such investments to those securities
issued by "money market" funds which invest in securities in which the Fund may
invest. The Firstar Equity Index Fund may invest in securities of other
investment companies that invest in high-quality, short-term debt instruments.
The Mercantile Equity Index Portfolio may lend its portfolio securities in an
amount not to exceed 33-1/3% of the value of its total assets, while the Firstar
Equity Index Fund may lend its portfolio securities in an amount not to exceed
30% of the value of its total assets.
9. MERCANTILE GROWTH & INCOME EQUITY PORTFOLIO/FIRSTAR GROWTH INCOME FUND
Investment Objectives:
(a) Mercantile Growth & Income Equity Portfolio: Seeks to provide long-
term capital growth, with income a secondary consideration. This
investment objective is fundamental and may not be changed without the
approval of the Portfolio's shareholders.
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<PAGE>
(b) Firstar Growth & Income Fund: Seeks both reasonable income and long-
----------------------------
term capital appreciation. This investment objective is not
fundamental and may be changed by the Firstar Board of Directors
without shareholder approval.
Comment: The Mercantile Growth & Income Equity Portfolio invests primarily
in common stocks. These stocks are generally listed on a national stock exchange
or are unlisted securities with an established over-the-counter market. Stocks
of companies which are believed to have superior revenue and earnings growth
prospects relative to their peers and to their price/earnings ratios are
favored. Income is not a major factor in the stock selection process. The
Portfolio may also invest in preferred stock, rights, warrants and convertible
securities. The Portfolio may invest up to 15% of its total assets in foreign
securities directly or indirectly through ADRs and EDRs.
The Firstar Growth & Income Fund selects common stocks primarily from a
universe of domestic companies that have established dividend-paying histories.
Normally, at least 50% of the Fund's net assets will be invested in equities.
The Fund will not purchase a non-dividend paying security if immediately after
giving effect to such purchase less than 80% of the net assets of the Fund will
be invested in dividend paying securities. The Fund generally invests in
medium-to-large sized companies with stock market capitalizations over $1
billion although, the Fund may also invest a portion of its assets in companies
with smaller market capitalizations. Although the Fund invests primarily in
common stocks, it may also invest in preferred stock, rights, warrants and
convertible securities, although the Fund will invest in preferred stocks only
if they present an opportunity for capital appreciation and in preferred stocks
convertible into common stocks only if they provide a current dividend payment.
The Fund also may invest in bonds, notes and debentures if these investments
provide a current interest payment and may purchase non-convertible debt
securities if they present an opportunity for capital appreciation. The Fund
may also invest in foreign securities directly or indirectly through ADRs.
The Mercantile Growth & Income Equity Portfolio may purchase put and call
options on particular securities or securities indices for hedging purposes in
an amount not to exceed 10% of its net assets. The Firstar Growth & Income Fund
may purchase put and call options on particular securities or securities indices
to manage exposure to certain markets, enhance income or for hedging purposes in
an amount not to exceed 5% of its net assets. The Mercantile Growth & Income
Equity Portfolio may write covered call options in an amount not to exceed 25%
of its net assets, while covered call options written by the Firstar Growth &
Income Fund may not exceed 5% of the Fund's net assets. Both the Mercantile
Growth & Income Equity Portfolio and the Firstar Growth & Income Fund may enter
into futures contracts and related options, although the Firstar Growth & Income
Fund intends to limit its investment in futures contracts and related options so
that not more than 5% of its net assets are at risk. The Firstar Growth and
Income Fund, unlike the Mercantile Growth Income Portfolio, may buy and sell
futures contracts and related options on foreign exchanges or boards of trade.
While both the Mercantile Growth & Income Equity Portfolio and the Firstar
Growth & Income Fund may invest in securities issued by other investment
companies, the Mercantile Growth & Income Equity Portfolio limits such
investments to those securities issued by "money market" funds which invest in
securities in which the Fund may invest. The Firstar Growth &
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<PAGE>
Income Fund may invest in securities of other investment companies that invest
in high-quality, short-term debt instruments. The Mercantile Growth & Income
Equity Portfolio, unlike the Firstar Growth & Income Fund, may invest in
Standard & Poor's Depository Receipts, Standard & Poor's MidCap 400 Depository
Receipts and The Dow Industrials DIAMONDS.
The Mercantile Growth & Income Equity Portfolio may lend its portfolio
securities in an amount not to exceed 33 1/3% of the value of its total assets,
while Firstar Growth & Income Fund may lend its portfolio securities in an
amount not to exceed 30% of the value of its total assets.
10. MERCANTILE GROWTH EQUITY PORTFOLIO/FIRSTAR GROWTH FUND
Investment Objectives:
(a) Mercantile Growth Equity Portfolio: Seeks capital appreciation. This
----------------------------------
investment objective is fundamental and may not be changed without the
approval of the Portfolio's shareholders.
(b) Firstar Growth Fund: Seeks capital appreciation through investment in
-------------------
securities of large-sized companies. This investment objective is not
fundamental and may be changed by the Firstar Board of Directors
without shareholder approval.
Comment: It is expected that at the time of the Reorganization, the Firstar
Growth Fund will be renamed the Firstar Large Cap Core Equity Fund.
The Mercantile Growth Equity Portfolio normally invests at least 65% of its
total assets in stocks or other equity securities of large- and medium-
capitalization companies that are listed on the New York Stock Exchange, the
American Stock Exchange or NASDAQ. The Portfolio invests primarily in the common
stocks of growth companies.
The Firstar Growth Fund normally invests at least 50% of its total assets
in equity securities. Most of these equity securities are publicly traded common
stocks of companies incorporated in the U.S. The Fund generally invests in
large-sized companies with stock market capitalizations over $3 billion that are
considered to be well-managed and to have attractive fundamental financial
characteristics (such as low debt, high returns on equity and consistent revenue
and earnings per share growth over the prior three to five years). The Fund may
also invest a portion of its assets in companies with market capitalizations
below $3 billion.
While both the Mercantile Growth Equity Portfolio and the Firstar Growth
Fund may invest in preferred stock, rights warrants and convertible securities,
the Firstar Growth Fund may invest in preferred stocks (including preferred
stocks convertible into common stock) only if they present an opportunity for
capital appreciation. The Mercantile Growth Equity Portfolio, like the Firstar
Growth Fund, may invest up to 5% of its net assets in warrants, although the
Mercantile Growth Equity Portfolio limits its investment in warrants which are
not listed on the New York or American Stock Exchanges to no more than 2% of its
net assets. Both the Mercantile Growth Equity Portfolio and the Firstar Growth
Fund may invest a portion of their assets in investment
-14-
<PAGE>
grade bonds, notes and debentures, although the Firstar Growth Fund will invest
in these securities if they present opportunities for capital appreciation.
While both the Mercantile Growth Equity Portfolio and the Firstar Growth
Fund may invest in foreign securities, the Mercantile Growth Equity Portfolio
may only do so indirectly by purchasing securities which are traded on U.S.
securities exchanges or in over-the-counter markets in the form of depository
receipts, such as ADRs, in an amount not to exceed 5% of its net assets.
The Mercantile Growth Equity Portfolio may purchase put options for hedging
purposes and may write covered call options, in each instance only with respect
to individual securities. Not more than 5% of the value of the Mercantile Growth
Equity Portfolio's total assets may be invested in premiums on open put option
positions and the aggregate value of the securities subject to covered call
options written by the Fund may not exceed 25% of the value of its net assets.
The Firstar Growth Fund may purchase put and call options on particular
securities or securities indices to manage exposure to certain markets, enhance
income or for hedging purposes in an amount not to exceed 5% of its net assets.
The Firstar Growth Fund also may write covered call options on particular
securities or securities indices. Both the Mercantile Growth Equity Portfolio
and the Firstar Growth Fund may invest in futures contracts and related options.
Unlike the Mercantile Growth Equity Portfolio, the Firstar Growth Fund may buy
and sell futures contracts and related options on foreign exchanges or boards of
trade.
Both the Mercantile Growth Equity Portfolio and the Firstar Growth Fund may
invest in securities issued by other investment companies, including in the case
of the Mercantile Growth Equity Portfolio, closed-end investment companies. The
Firstar Growth Fund limits its investments in other investment companies to
those that invest in high-quality, short-term debt instruments. The Mercantile
Growth Equity Portfolio, unlike the Firstar Growth Fund, may invest in Standard
& Poor's Depository Receipts, Standard & Poor's MidCap 400 Depository Receipts
and The Dow Industrials DIAMONDS.
The Mercantile Growth Equity Portfolio may borrow money directly or
indirectly through reverse repurchase agreements for temporary purposes in an
amount up to 33-1/3% of its total assets, although the Fund intends to limit
such borrowings during the current year to not more than 5% of its net assets.
The Firstar Growth Fund may borrow from banks and enter into reverse repurchase
agreements for temporary purposes in an amount not to exceed 10% of its total
assets. The Mercantile Growth Equity Portfolio may lend its portfolio securities
in an amount not to exceed 33-1/3% of the value of its total assets, while the
Firstar Growth Fund may lend its portfolio securities in an amount not to exceed
30% of the value of its total assets.
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<PAGE>
11. MERCANTILE SMALL CAP EQUITY PORTFOLIO/FIRSTAR EMERGING GROWTH FUND
Investment Objectives:
(a) Mercantile Small Cap Equity Portfolio: Seeks capital appreciation.
-------------------------------------
This investment objective is fundamental and may not be changed
without the approval of the Portfolio's shareholders.
(b) Firstar Emerging Growth Fund: Seeks capital appreciation. This
----------------------------
investment objective is not fundamental and may be changed by the
Firstar Board of Directors without shareholder approval.
Comment: It is expected that at the time of the Reorganization, the Firstar
Emerging Growth Fund will be renamed the Firstar Small Cap Core Equity Fund.
It is also expected that at the time of the Reorganization the Firstar
Emerging Growth Fund will adopt an investment objective and certain non-
fundamental investment policies and restrictions that are substantially the same
as those of the Mercantile Small Cap Equity Portfolio.
The Mercantile Small Cap Equity Portfolio normally invests at least 65% of
its total assets in the stocks of small- to medium-sized companies with market
capitalizations from $100 million to $2 billion at the time of purchase and
which are believed to have above-average prospects for capital appreciation.
These stocks may be listed on a national securities exchange or may be unlisted
securities with or without an established over-the-counter-market. The
Portfolio may also invest in larger companies that offer growth possibilities
and to a limited extent in initial public offerings. In addition to common
stock, the Portfolio may also invest in preferred stock, rights, warrants and
convertible securities. The Portfolio will not invest more than 5% of its net
assets in warrants and will limit its investments in warrants which are not
listed on the New York, American or Canadian Stock Exchange to not more than 2%
of net assets. The Portfolio may invest up to 25% of its total assets in
foreign securities indirectly through ADRs and EDRs. The Portfolio does not
intend to invest more than 5% of its total assets in the securities of
unseasoned companies (i.e. those which, with any predecessors, have less than 3
years of continuous operations).
The Firstar Emerging Growth Fund selects securities based on their
potential for price appreciation. Normally, the Fund invests at least 50% of its
total assets in equity securities. Most of these equity securities will be
publicly traded common stocks of small-sized companies incorporated in the U.S.
with market capitalizations between $250 million and $2 billion. The Fund may
also invest in investment grade non-convertible bonds, notes, debentures and
convertible preferred stock and may invest up to 5% of its net assets in rights
and warrants. The Fund may also invest in foreign securities directly or
indirectly through ADRs.
The Mercantile Small Cap Equity Portfolio may purchase put and call
options on particular securities or securities indices for hedging purposes in
an amount not to exceed 10% of its net assets. The Firstar Emerging Growth Fund
may purchase put and call options on
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<PAGE>
particular securities or securities indices to manage exposure to certain
markets, enhance income or for hedging purposes in an amount not to exceed 5% of
its net assets. The Mercantile Small Cap Equity Portfolio may write covered call
options in an amount not to exceed 25% of its net assets while covered call
options written by the Firstar Emerging Growth Fund will not exceed 5% of the
Fund's net assets.
While both the Mercantile Small Cap Equity Portfolio and the Firstar
Emerging Growth Fund may invest in securities issued by other investment
companies, the Mercantile Small Cap Equity Portfolio limits such investments to
those securities issued by "money market" funds which invest in securities in
which the Fund may invest. The Firstar Emerging Growth Fund may invest in
securities of other investment companies that invest in high-quality, short-term
debt instruments.
The Mercantile Small Cap Equity Portfolio may lend its portfolio securities
in an amount not to exceed 33-1/3% of the value of its total assets while the
Firstar Emerging Growth Fund may lend its portfolio securities in an amount not
to exceed 30% of the value of its total assets.
12. MERCANTILE INTERNATIONAL EQUITY PORTFOLIO/FIRSTAR CORE INTERNATIONAL EQUITY
FUND
Investment Objectives:
(a) Mercantile International Equity Portfolio: Seeks to provide capital
-----------------------------------------
growth consistent with reasonable investment risk. This investment
objective is fundamental and may not be changed without the approval
of the Portfolio's shareholders.
(b) Firstar Core International Equity Fund: Seeks to provide maximum,
--------------------------------------
long-term total return consistent with reasonable risk of principal.
This investment objective is not fundamental and may be changed by the
Firstar Board of Directors without shareholder approval.
Comment: It is expected that at the time of the Reorganization, the Firstar
Core International Equity Fund will be renamed the Firstar International Growth
Fund.
It is also expected that at the time of the Reorganization the Firstar Core
International Equity Fund will adopt an investment objective and certain non-
fundamental investment policies and restrictions that are substantially the same
as those of the Mercantile International Equity Portfolio.
The Mercantile International Equity Portfolio invests primarily in foreign
common stocks, most of which are denominated in foreign currencies. The
Portfolio normally invests at least 80% of its total assets in securities of
companies that derive more than 50% of their gross revenues outside the United
States or have more than 50% of their assets invested outside the United States.
The Portfolio normally invests in equity securities from at least three
different foreign countries. Generally, at least 50% of the Portfolio's total
assets will be invested in the
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<PAGE>
securities of companies located in the developed countries of Western Europe and
Japan, although the Fund may also invest in other developed countries in the Far
East and in countries with emerging markets or economies.
The Firstar Core International Equity Fund invests primarily in common
stocks and other equity securities of companies located outside the United
States. Normally, at least 65% of its total assets will be invested in
securities, such as equity securities, securities convertible into equity
securities and debt, of companies based in at least three different countries
other than the United States.
Both the Mercantile International Equity Portfolio and the Firstar Core
International Equity Fund may invest in preferred stock, but only the Mercantile
International Equity Portfolio may invest in rights, warrants and convertible
securities. The Mercantile International Equity Portfolio will not invest more
than 5% of its net assets in warrants and will limit its investments in warrants
not listed on the New York, American or Canadian Stock Exchange to not more than
2% of net assets. Unlike the Firstar Core International Equity Fund, the
Mercantile International Equity Portfolio may purchase index-based depository
receipts, including Standard & Poor's Depository Receipts, Standard & Poor's
MidCap 400 Depository Receipts and The Dow Industrial's DIAMONDS. Both the
Mercantile International Equity Portfolio and the Firstar Core International
Equity Fund may invest in foreign securities indirectly through ADRs and EDRs,
but only the Firstar Core International Equity Fund may invest in Global
Depository Receipts ("GDRs"). While both Funds are permitted to invest up to 15%
of their net assets in illiquid securities, the Mercantile International Equity
Portfolio limits its investment in restricted securities to 10% of net assets.
The Mercantile International Equity Portfolio, unlike the Firstar Core
International Equity Fund, does not invest in the securities of small or
unseasoned companies with less than three years of continuous operation.
Unlike the Firstar Core International Equity Fund which may not engage in
options transactions, the Mercantile International Equity Portfolio may purchase
put and call options on particular securities or securities indices for hedging
(or cross-hedging) purposes or for the purpose of earning additional income in
an amount not exceeding 10% of the Portfolio's net assets. The Mercantile
International Equity Portfolio also may write covered call options in an amount
not to exceed 25% of its net assets and may purchase foreign currency put and
call options, unlisted currency options and write foreign currency call options.
The Mercantile International Equity Portfolio may invest in interest rate
futures contracts, options on futures contracts and other types of financial
futures contracts, such as foreign currency contracts, as well as any index or
foreign market futures which are available in recognized exchanges or in other
established financial markets. The Firstar Core International Equity Fund's
investments in futures are limited to forward foreign currency contracts and
currency futures.
While both the Mercantile International Equity Portfolio and the Firstar
Core International Equity Fund may invest in securities issued by other
investment companies, the Mercantile International Equity Portfolio limits such
investments to those securities issued by "money market" funds which invest in
securities in which the Fund may invest. The Firstar Core International Equity
Fund may invest in securities of other investment companies that invest in high-
quality, short-term debt instruments.
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<PAGE>
The Mercantile International Equity Portfolio may lend its portfolio
securities in an amount not to exceed 33-1/3% of the value of its total assets
while the Firstar Core International Equity Fund may lend its portfolio
securities in an amount not to exceed 30% of the value of its total assets.
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EXHIBIT A
Firstar Stellar Treasury Fund
Investment Objective
--------------------
The Fund seeks to achieve stability of principal and current income consistent
with stability of principal. The investment objective is fundamental and cannot
be changed without the approval of shareholders.
Principal Investment Strategies
-------------------------------
The Fund intends to achieve its investment goal by investing exclusively in
short-term U.S. Treasury obligations that have a maturity of 397 days or less
from the date of purchase. The Fund may purchase repurchase agreements
collateralized by U.S. Treasury obligations. The Fund intends to invest in
agreements that provide for repurchase within 397 days from the date of
acquisition. The average maturity of these securities is 120 days or less. The
average maturity, however, of all the securities in the Fund's portfolio will be
90 days or less on a dollar-weighted basis. Securities subject to repurchase
agreements are marked to market on a daily basis. U.S. Treasury obligations are
issued by the U.S. government and are fully guaranteed as to principal and
interest by the United States government. The Fund may also retain assets in
cash and may purchase U.S. Treasury obligations on a when-issued or delayed
delivery basis.
Principal Risks of Investing in the Fund
----------------------------------------
The main risks of investing in the Fund are:
. Interest rate risk: The rate of income will vary from day to day depending
on short-term interest rates. It is possible that a major change in
interest rates could cause the value of your investment to decline.
. Credit risk: The Fund can also be affected by changes in the credit quality
rating of a security or changes in an issuer's financial condition. A
default on a security or a repurchase agreement held by the Fund could
cause the value of your investment to decline.
. Loss of principal: Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the Fund.
. Repurchase agreement risk: One of the risks of investing in repurchase
agreements is that the seller may not repurchase the securities held as
collateral for the repurchase agreement from the Fund. Another risk of
repurchase agreements is that the seller may default or file for
bankruptcy. That could mean that the Fund might have to wait through
lengthy court actions before selling the securities. See "Additional
Information About Investment Policies and Risks - Repurchase Agreements"
below.
A-1
<PAGE>
. When-issued and delayed delivery transaction risk: One of the risks of
investing in when-issued or delayed delivery transactions is that if the
seller chooses not to complete the transaction, the Fund could miss an
advantageous price or yield. Another risk is that because settlement dates
may be a month or more after entering into the transactions, the market
value of the securities may have dropped from the agreed upon purchase
price. However, the Fund may cancel a commitment to purchase securities
prior to settlement if the Fund's investment adviser believes it is
appropriate. The Fund may enter into transactions to sell its purchase
commitment to third parties at current market rates and simultaneously
acquire other commitments to purchase similar securities at later dates.
The Fund may realize short-term profits or losses on the sale of these
kinds of commitments. See "Additional Information About Investment Policies
and Risks - When-Issued and Delayed Delivery Transactions" below.
Additional Information About Investment Policies and Risks
----------------------------------------------------------
This section provides additional information regarding investments and
transactions the Fund is permitted to make. Unless otherwise indicated, the
investment policies of the Fund may be changed by the Trustees without approval
of shareholders. Shareholders will be notified before any material change in
these policies becomes effective.
The Fund may follow non-fundamental operational policies that are more
restrictive than the fundamental investment limitations set forth in this
Exhibit in order to comply with applicable laws and regulations, including the
provisions of and regulations under the Investment Company Act of 1940. In
particular, the Fund will comply with the various requirements of Rule 2a-7,
which regulates money market mutual funds. The Fund will also determine the
effective maturity of its investments, as well as its ability to consider a
security as having received the requisite short-term ratings by a nationally
recognized statistical rating organization according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of shareholders.
Repurchase Agreements
---------------------
The Fund may invest in repurchase agreements which are arrangements with banks,
broker/dealers, and other recognized financial institutions to sell securities
to the Fund and agree to repurchase them at a mutually agreed upon time and
price within one year from the date of acquisition. The Fund or its custodian
will take possession of the securities subject to repurchase agreements, and
these securities will be marked to market daily. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities. In the event that
such a defaulting seller filed for bankruptcy or became insolvent, disposition
of such securities by the Fund might be delayed pending court action. The Fund
believes that under the regular procedures normally in effect for custody of the
Fund's portfolio securities subject to repurchase agreements, a court of
competent jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial institutions, such as
broker/dealers, which are deemed by the Fund's adviser to be creditworthy
pursuant to guidelines established by the Board of Trustees.
A-2
<PAGE>
When-Issued and Delayed Delivery Transactions
---------------------------------------------
The Fund may purchase short-term obligations on a when-issued or delayed
delivery basis. These transactions are arrangements in which the Fund purchases
securities with payment and delivery scheduled for a future time. The seller's
failure to complete these transactions may cause the Fund to miss a price or
yield considered advantageous. Settlement dates may be a month or more after
entering into these transactions and the market values of the securities
purchased may vary from the purchase prices.
The Fund may dispose of a commitment prior to settlement if the investment
adviser deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current market
values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Fund may realize short-term profits or losses
upon the sale of such commitments.
These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Fund sufficient
to make payment for the securities to be purchased are segregated on the Fund's
records at the trade date. These assets are marked to market daily and are
maintained until the transaction is settled. The Fund does not intend to engage
in when-issued and delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its assets.
Restricted and Illiquid Securities
----------------------------------
The Fund may invest in a limited amount of restricted securities. Restricted
securities are securities that are thinly traded or whose resale is restricted
by federal securities laws. Restricted securities are any securities in which
the Fund may invest pursuant to its investment objective and policies but which
are subject to restrictions on resale under federal securities laws. The Fund's
Board of Trustees has established criteria that allows the adviser to consider
certain restricted securities as liquid.
The adviser may consider the following criteria in determining the liquidity of
certain restricted securities: (a) the frequency of trades and quotes for the
security; (b) the number of dealers willing to purchase or sell the security and
the number of other potential buyers; (c) dealer undertakings to make a market
in the security; and (d) the nature of the security and the nature of the
marketplace trades.
A-3
<PAGE>
Other Investment Companies
--------------------------
As an efficient means of carrying out its investment policies, the Fund may
invest in the securities of other investment companies. A disadvantage to
investing in other investment companies is that they also carry certain
expenses such as management fees. As a result, any investment by the Fund in
shares of other investment companies may duplicate shareholder expenses.
Reverse Repurchase Agreements
-----------------------------
The Fund may enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration, plus interest at an agreed upon rate.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled. During the period any
reverse repurchase agreements are outstanding, the Fund will restrict the
purchase of portfolio instruments to money market instruments maturing on or
before the expiration date of the reverse repurchase agreements, but only to the
extent necessary to assure completion of the reverse repurchase agreements. The
use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
The Fund's Investment Limitations
---------------------------------
The following is a list of the Fund's fundamental investment limitations, which
cannot be changed without the approval of a majority of the Fund's outstanding
voting securities. As used in this Exhibit, "a majority of the Fund's
outstanding voting securities" means the lesser of (a) 67% of the shares of
beneficial interest of the Fund represented at a meeting at which more than 50%
of the outstanding shares are present, or (b) more than 50% of the outstanding
shares of beneficial interest of the Fund.
1. The Fund will not sell any securities short.
2. The Fund will not purchase any securities on margin, but it may obtain such
short-term credits as may be necessary for clearance of purchases and sales
of portfolio securities.
3. The Fund will not issue senior securities, except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amount borrowed.
A-4
<PAGE>
4. The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage. However, the Fund may borrow money up to one-third
of the value of its total assets as a temporary, extraordinary, or
emergency measure or to facilitate management of the Fund by enabling the
Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. Interest paid
on borrowed funds will serve to reduce the Fund's income. The Fund will
not purchase any securities while borrowings and reverse repurchase
agreements in excess of 5% of its total assets are outstanding. During the
period any reverse repurchase agreements are outstanding, the Fund will
restrict the purchase of portfolio securities to money market instruments
maturing on or before the expiration date of the reverse repurchase
agreements, but only to the extent necessary to assure completion of the
reverse repurchase agreements.
5. The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, the Fund may mortgage, pledge,
or hypothecate assets having a market value not exceeding 10%.
6. The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
7. The Fund will not purchase or sell real estate, including limited
partnership interests. However, the Fund may invest in the securities of
companies whose business involves the purchase or sale of real estate or in
securities that are secured by real estate or interests in real estate.
8. The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
9. The Fund will not lend any of its assets, except that it may purchase or
hold U.S. Treasury obligations, including repurchase agreements.
The Trustees may change the following investment limitations without shareholder
approval. Shareholders will be notified before any material change in these
limitations becomes effective.
1. The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including certain restricted securities not determined
to be liquid under criteria established by the Trustees and repurchase
agreements providing for settlement in more than seven days after notice.
2. The Fund will limit its investment in other investment companies to: (a) no
more than 3% of the total outstanding voting stock of any investment
company; (b) no more than 5% of its total assets in any one investment
company; and (c) no more than 10% of its total assets in investment
companies in general. The Fund will limit its investments in the
securities of other investment companies to those of money market funds
having investment objectives and policies similar to its own. These
limitations are not applicable
A-5
<PAGE>
if the securities are acquired in a merger, consolidation, reorganization
or acquisition of assets.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
The Fund does not expect to borrow money or pledge securities in excess of 5% of
the value of its total assets in the coming fiscal year.
For purposes of its policies and limitations, the Fund considers certificates of
deposit and demand and time deposits issued by a U.S. branch of a domestic bank
or savings association having capital, surplus, and undivided profits in excess
of $100,000,000 at the time of investment to be "cash items."
A-6
<PAGE>
APPENDIX IV
Shareholder Transactions and Services of The Firstar Funds
and the Corresponding Mercantile Funds
This Appendix compares the shareholder transactions and services of the
Firstar Funds and their Corresponding Mercantile Funds. The following is
qualified in its entirety by the more detailed information included in the
prospectuses for the Mercantile Funds and the Firstar Funds which are
incorporated by reference into this Proxy/Prospectus. Unless otherwise
indicated, terms used herein and not otherwise defined have the same meanings as
are given to them in such prospectuses.
A. Sales Charges, Reduction of Sales Charges and Exemptions
--------------------------------------------------------
Trust, Trust II and Institutional Shares of the Mercantile Funds are sold
at their net asset value with no front-end or contingent deferred sales charge.
Shares of the Mercantile Conning Money Market Portfolio are also sold at their
net asset value with no front-end or contingent deferred sales charge.
Institutional Shares and Class Y Shares of the Firstar Funds and shares of
the Conning Money Market Fund are offered at their net asset value per share
with no front-end or contingent deferred sales charges.
Investor A Shares of the Mercantile non-money market funds and Retail A
Shares of the Firstar non-money market funds are sold at the portfolio's net
asset value per share, plus an applicable front-end sales charge. Investor A
Shares of Mercantile's Money Market Funds and Retail A Shares of Firstar's Money
Market Funds are sold at their net asset value without a sales charge. There is
a maximum sales charge of 5.50% of the offering price per share on Investor A
Shares of Mercantile's Equity Funds and Retail A Shares of Firstar's Equity
Funds. There is a maximum sales charge of 4.00% of the offering price per share
on Investor A Shares of Mercantile's Bond Funds and on Retail A Shares of
Firstar's Bond Funds. Sales charges on Mercantile's Equity and Bond Funds and
Firstar's Equity and Bond Funds are reduced as the amount invested increases,
provided that the amount invested reaches certain specified levels as follows:
<PAGE>
<TABLE>
<CAPTION>
Sales Charge as a Sales Charge as a Shareholder Organization
Amount of Transaction Percentage of Percentage of Reallowance as a Percentage of
at Offering Price Offering Price Net Asset Value Offering Price
----------------------------------------------------------------------------------------------------------------------------------
Equity Funds Bond Funds Equity Funds Bond Funds Equity Funds Bond Funds
<S> <C> <C> <C> <C> <C> <C>
Less than $50,000 5.50% 4.00% 5.82% 4.17% 5.00% 3.75%
$50,000 To $99,999 4.50% 3.50% 4.71% 3.63% 4.00% 3.25%
$100,000 to $249,999 3.50% 3.00% 3.63% 3.09% 3.00% 2.75%
$250,000 to $499,999 2.50% 2.50% 2.56% 2.56% 2.00% 2.25%
$500,000 to $999,999 2.00% 2.00% 2.04% 2.04% 1.50% 1.75%
$1,000,000 and above 0.50% 0.50% 0.50% 0.50% 0.40% 0.40%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The public offering price for Investor B Shares of Mercantile's Money Market
Portfolio, Equity and Bond Funds and Retail B Shares of Firstar's Equity and
Bond Funds is the net asset value of such shares purchased. Although investors
pay no front-end sales charge on purchases of Mercantile's Investor B Shares and
Firstar's Retail B Shares, such shares are subject to a contingent deferred
sales charge at the rates set forth below if they are redeemed within six years
of purchase. After six years, Mercantile's Investor B Shares and Firstar's
Retail B Shares will convert to Investor A Shares and Retail A Shares,
respectively.
<TABLE>
<CAPTION>
Number of Years Contingent Deferred Sales Charge
Elapsed Since Purchase (as % of dollar amount subject to the charge)
---------------------- ---------------------------------------------
<S> <C>
Less than one 5.00%
At least one but less than two 4.00%
At least two but less than three 3.00%
At least three but less than four 3.00%
At least four but less than five 2.00%
At least five but less than six 1.00%
At least six None
</TABLE>
-2-
<PAGE>
The sales charge on Mercantile Investor A Shares and Firstar Retail A Shares may
be reduced through:
1) Rights of Accumulation
----------------------
a. Mercantile Investor A Shares
----------------------------
In calculating the appropriate sales charge rate, this right allows
investors to add the value of the Investor A Shares of the non-money market
funds they already own, as well as the value of any existing Retail A or Class A
Shares of any other fund in the Firstar family of funds, to the amount they are
currently purchasing.
b. Firstar Retail A Shares
-----------------------
In calculating the appropriate sales charge rate, the right allows
investors to add the value of the Retail A Shares of the non-money market fund
they already own, as well as the value of any existing Investor A or Class A
Shares of any other fund in the Firstar family of funds, to the amount they are
currently purchasing.
2) Letter of Intent
----------------
a. Mercantile Investor A Shares
----------------------------
An investor can purchase Investor A Shares of any Mercantile Non-Money
Market Fund or Retail A or Class A Shares of any fund in the Firstar family of
funds that charges a sales load over a 13-month period and pay the same sales
charge the investor would have paid if all shares were purchased at once.
Mercantile's transfer agent will hold in escrow 5% of the investor's total
investment (for payment of a higher sales load in case you do not purchase the
full amount indicated on the application) until the full amount is received.
b. Firstar Retail A Shares
-----------------------
An investor can purchase Retail A Shares of any Firstar Non-Money
Market Fund or Investor A or Class A Shares of any fund in the Firstar family of
funds that charges a sales load over a 13-month period and pay the same sales
charge the investor would have paid if all shares were purchased at once. The
investor may obtain the reduced sales charge by means of a written Letter of
Intent which expresses a non-binding commitment to invest in the aggregate
$100,000 or more in Firstar Non-Money Market Fund Retail A Shares or Investor A
or Class A Shares of any Firstar family of funds. The transfer agent will hold
in escrow shares equal to 5% of the amount indicated in the Letter of Intent for
payment of a higher sales charge if an Investor does not purchase the full
amount indicated in the Letter of Intent.
-3-
<PAGE>
3) Quantity Discounts
------------------
a. Mercantile Investor A Shares
----------------------------
As the dollar amount of an investor's purchase increases, the sales
charge may decrease (see the table above). In addition, Mercantile will combine
purchases made on the same day by the investor and the investor's immediate
family members when calculating applicable sales charge.
b. Firstar Retail A Shares
-----------------------
As the dollar amount of an investor's purchase increases, their sales
charge may decrease (see the table above). For purposes of applying the Rights
of Accumulation and Letter of Intent privileges, the sales charge schedule
applies to the combined purchases made by any individual and/or spouse
purchasing securities for his, her or their own account, or the aggregate
investments of a trustee or other fiduciary or IRA for the benefits of the
persons listed below (See "Waivers - Mercantile Investor A Shares and Firstar
Retail A Shares").
4) Reinvestment Privilege
----------------------
a. Mercantile Investor A Shares
----------------------------
Mercantile investors can reinvest some or all of the money that they
receive when they sell Investor A Shares of a Mercantile Fund in Investor A
Shares of any other Mercantile Fund or in shares of any other fund in the
Firstar family of funds within 60 days without paying a sales charge. An
investor must notify Mercantile's transfer agent at the time of reinvestment
that the investor qualifies for this privilege.
b. Firstar Retail A Shares
-----------------------
If you sell shares of a Firstar Fund or of any Firstar family of
funds, you may reinvest some or all of the process in the Retail A Shares of any
Firstar Fund within 60 days without a sales charge, as long as the investor
notifies the transfer agent or shareholder organization at the time of the
investor's reinvestment.
-4-
<PAGE>
5) Waivers - Mercantile Investor A Shares and Firstar Retail A Shares
------------------------------------------------------------------
No sales charge will be assessed on purchases of Mercantile's Investor A
Shares and Firstar's Retail A Shares made by:
<TABLE>
<CAPTION>
Mercantile Firstar
<S> <C>
(1) an officer or director of Mercantile (or an (1) an employee, director, retiree or registered
immediate family member of any such individual); representative of Firstar Corporation or its
affiliates or of Firstar Funds, Inc. or a spouse,
parent, in-law, sibling or child of such an
individual;
(2) a broker, dealer or agent who has a sales (2) an investor that purchases through certain
agreement with Mercantile's distributor (or an broker-dealers who have agreed to provide certain
employee or immediate family member of any such services with respect to shares of the Firstar
individual); Funds, including Charles Schwab Mutual Fund
Marketplace(R);
(3) an investor who buys shares with the proceeds of (3) an investor that takes part in an
Trust Shares or Institutional Shares of a Mercantile employer-sponsored qualified retirement plan
Fund redeemed in connection with a rollover of administered by Firstar with assets of less than
benefits paid by a qualified retirement or employee $1 million at the time Firstar begins plan
benefit plan or a distribution on behalf of any other administration, provided such administration
qualified account administered by Firstar Bank, N.A. commenced on or after June 18, 1999;
or its affiliates or correspondents within 60 days of
receipt of such payment;
(4) an investor who buys shares by reinvesting (4) any purchases for an investor's medical
dividends and capital gains distributions; savings account for which Firstar Corporation or
an affiliate serves in a custodial capacity;
(5) a director, a current or retired employee or a (5) purchases through certain external
participant in an employee benefit or retirement plan organizations that have entered into a service
of Firstar Corporation or Mercantile's distributor or agreement with Firstar or its affiliates.
any of their affiliates (or an immediate family
member of any such individual);
(6) an investor who buys shares pursuant to a
wrap-free program offered by a broker-dealer or other
financial institution;
(7) an investor who buys shares through a payroll
deduction program;
(8) an employee of any sub-adviser to Mercantile;
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Firstar
<S> <C>
(9) an investor who holds a Southwestern Bell VISA
card formerly issued by Mercantile Bank of Southern
Illinois, N.A. and participated in Mercantile's
Automatic Investment Program;
(10) exchanging Trust Shares of a Mercantile Fund
received from the distribution of assets held in a
qualified trust, agency or custodian account with
Firstar Bank, N.A. or any of its affiliates or
correspondents; and
(11) another investment company distributed by
Mercantile's distributor or its affiliates.
</TABLE>
6) Waivers - Mercantile Investor B Shares and Firstar Retail B Shares
--------------------------------------------------------------------
When Mercantile Investor B Shares and Firstar Retail B Shares are redeemed,
shares that are not subject to a contingent deferred sales charge are redeemed
first, followed by the shares that have been held the longest. A contingent
deferred sales charge will not be assessed on either Investor B Shares or Retail
B Shares purchased through reinvestment of dividends or capital gains
distributions. Contingent deferred sales charges for Mercantile's Investor B
Shares and Firstar's Retail B Shares are also waived for the following reasons:
<TABLE>
<CAPTION>
Mercantile Firstar
<S> <C>
(1) the shares were purchased through an exchange of (1) certain exchanges of Firstar shares described
Investor B Shares of another Mercantile Fund; below;
(2) the redemption represents a distribution from a (2) the redemption is in connection with shares
qualified retirement plan under Section 403(b)(7) of sold for certain retirement distributions or
the Internal Revenue Code, due to death, disability because of disability or death;
or the attainment of a specified age;
(3) the account falls below the Mercantile Fund's (3) the redemption is effected pursuant to
minimum account size and Mercantile liquidates the Firstar's right to liquidate a shareholder's
account; account if the aggregate net asset value of Retail
B Shares held in the account is less than
Firstar's minimum account balance;
(4) the redemption results from a tax-free return of (4) the redemption results from certain tax-free
an excess contribution, pursuant to Section 408(d)(4) returns from IRAs of excess contributions;
or (5) of the Internal Revenue Code;
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Firstar
<S> <C>
(5) the investor participates in the Systematic (5) Redemptions made pursuant to the systematic
Withdrawal Plan and the annual withdrawals do not withdrawal plan (discussed below);
exceed 12% of the investor's account value; and
(6) the redemption is in connection with the
combination of a Firstar Fund with any other
investment company registered under the 1940 Act
by merger, acquisition of assets, or by any other
transaction; and
(6) the redemption is in connection with the death or (7) the redemption is in connection with required
disability of the shareholder. (or in some cases, discretionary) distributions to
participants or beneficiaries of an employee
pension, profit sharing or other trust or
qualified retirement or Keogh plan, individual
retirement account or custodial account maintained
pursuant to Section 403(b)(7) of the Internal
Revenue Code due to death, disability or the
attainment of a specified age.
</TABLE>
B. Purchase Policies
-----------------
The following chart compares the existing purchase policies of the
Mercantile Funds and the Firstar Funds.
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Institutional Shares Class Y Shares
-------------------- --------------
<S> <C> <C>
Minimum Initial Mercantile does not have any No minimum investment.
Investment minimum investment requirement but
the customer's financial
institution may do so.
</TABLE>
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Investor A and Investor B Retail A and Retail B Shares
------------------------- ----------------------------
Shares
------
<S> <C> <C>
Minimum Initial $1,000 for a regular account; no $1,000
Investment minimum investment if the
shareholder participates in a sweep
program or wrap fee program through
the shareholder's financial
institution or the Payroll
Deduction Program; $5,000 for the
ConvertiFund program; and $50 for
the Periodic Investment Plan.
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Funds: Trust and Firstar Funds:
Trust II Shares Institutional Shares
--------------- --------------------
<S> <C> <C>
Minimum Initial Mercantile does not have any No minimum investment.
Investment minimum investment requirement but
the customer's financial
institution may do so.
</TABLE>
<TABLE>
<CAPTION>
Mercantile Conning Money Market Firstar Conning
Market Portfolio Money Market Fund
---------------- -----------------
<S> <C> <C>
Minimum Initial Mercantile does not have any Firstar does not have any minimum
Investment minimum investment requirement but investment requirement but the
the customer's financial customer's financial institution
institution may do so. may do so.
</TABLE>
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Institutional Shares Class Y Shares
-------------------- --------------
<S> <C> <C>
Minimum Mercantile does not have any None.
Subsequent minimum subsequent investment
Investments requirement but the customer's
financial institution may do so.
</TABLE>
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Investor A and Investor B Retail A and Retail B Shares
------------------------- ----------------------------
Shares
------
<S> <C> <C>
Minimum $50 for a regular account; none if $50 for a regular account; $50 for
Subsequent investor participates in a sweep the Periodic Investment Plan.
Investments program or wrap fee program through
shareholder's financial
institution; $25 for the Payroll
Deduction Program; $1,000 minimum
account balance for the
ConvertiFund program; and $50 for
the Periodic Investment Plan.
</TABLE>
-8-
<PAGE>
Mercantile Funds: Trust and Firstar Funds:
Trust II Shares Institutional Shares
--------------- --------------------
Minimum Mercantile does not have any None.
Subsequent minimum subsequent investment
Investment requirement but the customer's
financial institution may do so.
Mercantile Conning Firstar Conning
Money Market Portfolio Money Market Fund
---------------------- -----------------
Minimum Mercantile does not have any Firstar does not have
Subsequent minimum subsequent investment any minimum subsequent
Investments requirement but the customer's investment requirement
financial institution may do so. but the customer's
financial instution may
do so.
Mercantile Funds: Firstar Funds:
Institutional Shares Class Y Shares
-------------------- --------------
Purchase Methods Follow established procedures of Purchases are effected
customer's financial institution. pursuant to a customer's
account at Firstar Bank,
N.A. Trust Department or
at another chosen
institution or broker-
dealer pursuant to
procedures established
in connection with the
requirements of the
account.
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Investor A and Investor B Shares Retail A and Retail B Shares
-------------------------------- ----------------------------
<S> <C> <C>
Purchase Methods Through a financial institution Through a shareholder organization;
that has a servicing agreement with by mail; automatically through the
the Fund; through a broker-dealer Periodic Investment Plan and
organization; automatically through ConvertiFund account; by telephone;
the Periodic Investment Plan, by wire; and by Internet (except
Payroll Deduction Program, and the for initial purchases).
ConvertiFund account; directly from
the Fund by mail; by telephone; and
by Internet (except for initial
purchases).
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Funds: Trust and Firstar Funds:
Trust II Shares Institutional Shares
--------------- --------------------
<S> <C> <C>
Purchase Methods Follow established procedures of Purchases are effected pursuant to
customer's financial institution. a customer's account at Firstar
Bank, N.A. Trust Department or at
another chosen institution or
broker-dealer pursuant to
procedures established in
connection with the requirements of
the account.
</TABLE>
<TABLE>
<CAPTION>
Mercantile Conning Firstar Conning
Money Market Portfolio Money Market Fund
---------------------- -----------------
<S> <C> <C>
Purchase Methods Follow established procedures of Follow established procedures of
customer's financial institution. customer's financial institution.
</TABLE>
C. Redemption Procedures
---------------------
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Institutional Shares Class Y Shares
-------------------- --------------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or shareholder
organization
By mail; telephone; wire; or Follow established procedures Follow established procedures
internet of customer's financial of customer's financial
institution. institution.
By systematic withdrawal plan No No
Checkwriting feature No No
</TABLE>
<TABLE>
<CAPTION>
Mercantile Funds:
Investor A Firstar Funds:
and Investor B Shares Retail A and Retail B Shares
--------------------- -------------------------------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or shareholder
organization
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Funds:
Investor A Firstar Funds:
and Investor B Shares Retail A and Retail B Shares
--------------------- ----------------------------
<S> <C> <C>
By mail Yes (a signature guarantee may Yes (a signature guarantee may
be required) be required)
By telephone Yes Yes (minimum $500)
By wire No No
By systematic withdrawal plan Yes ($10,000 account minimum Yes ($5,000 account minimum
and $50 minimum per and $50 minimum per
transaction monthly, transaction).
quarterly, semi-annually or
annually) and a signature
guarantee is required.
By Internet Yes (maximum redemption amount Yes (maximum redemption amount
for internet redemptions is for internet redemptions is
$25,000) $25,000)
Checkwriting feature Yes ($250 minimum and for the Yes for Retail A Shares
money market funds only) ($250 minimum and only for the
money market funds)
</TABLE>
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Trust and Trust II Shares Institutional Shares
------------------------- --------------------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or shareholder
organization
By mail; telephone; wire; or Follow established procedures Follow established procedures
internet of customer's financial of customer's financial
institution. (Trust Shares institution.
represented by certificate
must sold by mail).
By systematic withdrawal plan No No
Checkwriting feature No Yes ($250 minimum and only for
the money market funds)
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Conning Money Firstar Conning Money
Market Portfolio Market Fund
---------------- -----------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or shareholder
organization
By mail; telephone; wire; or Follow established procedures Follow established procedures
internet of customer's financial of customer's financial
institution. institution.
By systematic withdrawal plan No No
Checkwriting feature No No
</TABLE>
Each of the Mercantile Funds, other than the Mercantile Conning Money
Market Portfolio, may redeem Investor A, Investor B, Institutional, Trust and
Trust II Shares, as applicable, if a shareholder's account with Mercantile drops
below $500. If a shareholder's account falls below the minimum required
investment as a result of selling or exchanges shares, the shareholder will be
given 60 days to re-establish the minimum balance or the account will be closed.
Each of the Firstar Funds, other than the Firstar Conning Money Market
Fund, may redeem Retail A, Retail B, Institutional and Class Y Shares, as
applicable, if the balance in a shareholder's account falls below $1,000 as a
result of selling or exchanging shares. In such event, Firstar will provide
shareholders with 60 days' written notice of such fact and an opportunity to
raise the account balance prior to any redemption.
-12-
<PAGE>
D. Share Exchanges
---------------
<TABLE>
<CAPTION>
Mercantile Funds:
Investor A and Investor B Firstar Funds:
Shares Retail A and Retail B Shares
------ -------------------------------
<S> <C> <C>
Through a broker-dealer or Yes Yes
other financial organization
By mail Yes Yes
By telephone Yes (if elected this privilege Yes (privilege automatically
on account application) applies to all shareholders)
Through ConvertiFund Yes, minimum initial purchase Yes
of $5,000 and maintain a
minimum account balance of
$1,000.
Minimum None, except as described $1,000
above under ConvertiFund.
</TABLE>
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Institutional Shares Class Y Shares
-------------------- --------------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or shareholder
organization
By mail/By telephone Follow established procedures Follow established procedures
of customer's financial of customer's financial
institution. institution.
Minimum Follow established procedures $1,000
of customer's financial
institution.
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Trust and Trust II Shares Institutional Shares
------------------------- --------------------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or shareholder
organization
By mail/By telephone Follow established procedures Follow established procedures
of customer's financial of customer's financial
institution. institution.
Minimum Follow established procedures $1,000
of customer's financial
institution.
</TABLE>
<TABLE>
<CAPTION>
Mercantile Conning Money Firstar Conning Money
Market Portfolio Market Fund
---------------- -----------
<S> <C> <C>
Through a broker-dealer, None None
other financial
organization, or shareholder
organization
</TABLE>
More Information about Exchanging Shares
----------------------------------------
Firstar Funds
-------------
Generally, any share class of a Firstar Fund is exchangeable for the same
share class of another Firstar Fund, provided you are eligible to purchase that
share class or Fund. Listed below are permitted exchanges between different
share classes of the Funds:
. Retail B Shares of a non-money market fund may be exchanged for Retail
A Shares of a money market fund (except Retail B Shares are not
exchangeable for any shares of the Institutional Money Market Fund).
. Class Y Shares of a non-money market are exchangeable for
Institutional Shares of a money market fund.
Unless you qualify for a sales charge exemption, an initial sales charge
will be imposed on the exchange if the shares of the Fund being acquired have an
initial sales charge and the shares being redeemed were purchased without a
sales charge. Retail B Shares acquired in an exchange and Money Market Fund
Shares acquired in an exchange for Retail B Shares will be subject to a
contingent deferred sales charge upon redemption in accordance with this
Prospectus. For purposes of computing the contingent deferred sales charge, the
length of time of ownership will be measured from the date of the original
purchase of Retail B Shares.
-14-
<PAGE>
Mercantile Funds
----------------
Trust Shares of one Fund may be exchanged for Trust Shares of another Fund.
Trust II Shares of one money market fund may be exchanged for Trust II Shares of
another money market fund. An investor may be able to exchange Trust Shares of
one Fund for Investor A Shares of the same Fund if it involves the distribution
of assets from certain types of accounts held at Mercantile Trust Company
National Association or any of its affiliates. Trust and Trust II Shares may
also be exchanged for shares of corresponding classes of the Firstar Funds and
the Stellar Funds.
Institutional Shares of one Mercantile Fund may be exchanged for
Institutional Shares of another Mercantile Fund. Institutional Shares of a
Mercantile Fund may also be exchanged for Class Y Shares of the Firstar Funds
and the Stellar Funds.
Investor A Shares of one Mercantile Fund may be exchanged for Investor A
Shares of another Mercantile Fund or in certain limited circumstances, Trust or
Institutional Shares. When exchanging Investor A Shares of a Mercantile Fund
that has no sales charge or a lower sales charge for Investor A Shares of a
Mercantile Fund with a higher sales change, the shareholder will pay the
difference. Investor A Shares may also be exchanged for shares of corresponding
classes of the Firstar Funds and the Stellar Funds.
Investor B Shares of one Mercantile Fund may be exchanged for Investor B
Shares of another Mercantile Fund without a CDSC on the exchange. The holding
period of the shares originally held and redeemed will be added to the holding
period of the new shares acquired through the exchange. Investor B Shares may
also be exchanged for shares of corresponding classes of the Firstar Funds and
the Stellar Funds.
E. Pricing of Shares for each of the Mercantile Funds and Firstar Funds
--------------------------------------------------------------------
The price per share (the offering price) will be the net asset value per
share ("NAV") next determined after a Fund receives your purchase order plus, in
the case of Mercantile's Investor A Shares and Firstar Retail A Shares, the
applicable front-end sales charge.
For processing purchase and redemption orders, the NAVs per share of the
Mercantile Funds and the Firstar Funds are calculated each business day at the
following times:
-15-
<PAGE>
<TABLE>
<CAPTION>
Time of Calculation Mercantile Funds Firstar Funds
------------------- ---------------- -------------
<S> <C> <C>
11:00 a.m. CST Treasury Money Market
AND Portfolio (order must be
3:00 p.m. CST received by 11:00 a.m.)
Money Market Portfolio
(order must be received by
2:00 p.m.)
Tax-Exempt Money Market
Portfolio (order must be
received by 11:00 a.m.)
Conning Money Market
Portfolio (order must be
received by 1:00 p.m.)
11:30 a.m. CST Money Market Fund
U.S. Government Money Market
Fund
Tax-Exempt Money Market
Fund
Conning Money Market Fund
1:00 p.m. CST U.S. Treasury Money Market
Fund
3:00 p.m. CST Equity and Bond Funds Equity and Bond Funds
</TABLE>
NAV for Mercantile's Equity Funds and Firstar's Equity and Bond Funds is
determined on any day that the New York Stock Exchange (the "Exchange") is open
for business. NAV for Mercantile's Money Market and Bond Funds and Firstar's
Money Market Funds is determined on any day that both the Exchange and the
Federal Reserve Banks' Fedline System is open.
An investor's order for the purchase of shares is priced at the next NAV
calculated after the order is received. An investor's order for redemption of
shares is priced at the next NAV calculated after the shares are properly
tendered for redemption.
F. Dividends for each of the Mercantile Fund and Firstar Funds are declared
------------------------------------------------------------------------
and paid as follows:
--------------------
<TABLE>
<CAPTION>
Dividend Dividend
Mercantile Fund Declared/Paid Firstar Fund Declared/Paid
--------------- ------------- ------------ -------------
<S> <C> <C> <C>
Treasury Money Market Portfolio D/M U.S. Treasury Money Market Fund D/M
Money Market Portfolio D/M Money Market Fund D/M
Tax-Exempt Money Market Portfolio D/M Tax-Exempt Money Market Fund D/M
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Dividend Dividend
Mercantile Fund Declared/Paid Firstar Fund Declared/Paid
--------------- ------------- ------------ -------------
<S> <C> <C> <C>
Portfolio
Conning Money Market Portfolio D/M Conning Money Market Fund D/M
U.S. Government Securities D/M U.S. Government Income Fund M/M
Portfolio
Intermediate Corporate Bond D/M Intermediate Bond Market Fund M/M
Portfolio
Bond Index Portfolio D/M Aggregate Bond Fund M/M
Government & Corporate Bond D/M Aggregate Bond Fund M/M
Portfolio
Short-Intermediate Municipal D/M Tax-Exempt Intermediate Bond Fund M/M
Portfolio
Missouri Tax-Exempt Bond Portfolio D/M Missouri Tax-Exempt Bond Fund M/M
National Municipal Bond Portfolio D/M National Municipal Bond Fund M/M
Balanced Portfolio M/M Balanced Growth Fund Q/Q
Equity Income Portfolio M/M Equity Income Fund M/M
Equity Index Portfolio M/M Equity Index Fund Q/Q
Growth & Income Equity Portfolio M/M Growth and Income Fund Q/Q
Growth Equity Portfolio M/M Growth Fund A/A
Small Cap Equity Portfolio Q/Q Emerging Growth Fund A/A
Small Cap Equity Index Portfolio Q/Q Small Cap Index Fund Q/Q
International Equity Portfolio Q/Q Core International Equity Fund A/A
</TABLE>
D/M = Daily/Monthly
M/M = Monthly/Monthly
Q/Q = Quarterly/Quarterly
A/A = Annually/Annually
Each Mercantile Fund and each Firstar Fund distributes is net capital gains
to shareholders at least annually.
-17-
<PAGE>
APPENDIX V
Performance Comparisons of the Existing Firstar Funds
and their Corresponding Mercantile Funds
Total Return Performance
(As of 7/31/00)
The total returns of the Firstar Funds are competitive with those of the
Mercantile Funds as shown below. No Y Shares of the Firstar Non-Money Market
Funds or Institutional Shares of the Firstar Money Market Funds were outstanding
as of 7/31/00. In addition, comparisons of the total returns of the Investor A
Shares, Trust Shares and Institutional Shares of the Mercantile Bond Index
Portfolio and Mercantile Government & Corporate Bond Portfolio are set forth
below, since these portfolios are being reorganized into a Firstar Fund that has
not yet commenced operations but will continue the investment operations of the
Mercantile Government & Corporate Bond Portfolio. (Returns are not provided for
Investor B Shares of the Mercantile Government & Corporate Bond Portfolio, since
no class of shares offered by the Mercantile Bond Index Portfolio will
reorganize into the same class of the Corresponding Firstar Fund as Investor B
Shares of the Mercantile Government & Corporate Bond Portfolio.) However,
comparisons of the total returns of the Mercantile U.S. Government Securities
Portfolio and Stellar U.S. Government Income Fund, and the Mercantile National
Municipal Bond Portfolio and Stellar Insured Tax-Free Bond Fund, multiple Funds
that are being reorganized into existing Firstar Funds that have not commenced
operations but will continue the operations of the Mercantile U.S. Government
Securities Portfolio and Mercantile National Municipal Bond Portfolio,
respectively, are not listed below. Performance shown is based on historical
earnings and is not predictive of future performance. Performance reflects
reinvestment of dividends and other earnings. Performance reflects fee waivers
in effect. If fee waivers were not in place, a Fund's performance would be
reduced.
<TABLE>
<CAPTION>
Firstar Money
Mercantile Money Market Portfolio Market Fund
--------------------------------------------------------------------------------------------- ---------------
Investor B Shares
-----------------
(with applicable
----------------
contingent
----------
deferred sales
Trust II Institutional Investor A -------------- Retail A
Trust Shares Shares Shares Shares charge) Shares
------------ ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
1 Year 4.80% 5.04% 4.80% 4.69% -1.02% 4.57%
5 Years 4.99% N/A 4.88% 4.86% N/A 5.07%
10 Years N/A N/A N/A 4.59% N/A 4.91%
Since 4.55% 4.91% 4.70% 5.28% 4.02% 5.43%
Inception (12/1/90) (11/10/98) (1/3/94) (3/24/83) (1/26/96) (3/16/88)
Best Quarter 1.63%/Q1 `91 1.45%/Q2 `00 1.34%/Q2 `95 1.97%/Q2 `90 -3.94%/Q4 `97 2.33%/Q2 `89
Worst
Quarter 0.66%/Q2 `93 1.10%/Q2 `99 1.04%/Q2 `99 0.61%/Q2 `93 -4.15%/Q2 `99 0.64%/Q2 `93
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Mercantile Tax-Exempt Money Firstar Tax-Exempt Money
Market Portfolio Market Fund
---------------- -----------
Investor A Shares Retail A Shares
----------------- ---------------
<S> <C> <C>
1 Year 2.69% 2.81%
5 Years 2.76% 3.01%
10 Years 2.83% 3.13%
Since Inception 3.32% (7/10/86) 3.57% (6/27/88)
Best Quarter 1.38%/Q2 `90 1.58%/Q2 `89
Worst Quarter 0.39%/Q1 `94 0.50%/Q1 `94
</TABLE>
<TABLE>
<CAPTION>
Mercantile Intermediate Firstar Intermediate Bond
Corporate Bond Portfolio Market Fund
------------------------ -----------
Trust Shares Institutional Shares
------------ --------------------
<S> <C> <C>
1 Year -0.87% 1.88%
5 Years N/A 6.16%
10 Years N/A N/A
Since Inception 4.54% (2/10/97) 5.83% (1/5/93)
Best Quarter 5.33%/Q3 `98 5.02%/Q2 `95
Worst Quarter -1.41%/Q2 `99 -2.04%/Q1 `94
</TABLE>
<TABLE>
<CAPTION>
Mercantile Intermediate Firstar Intermediate Bond
Corporate Bond Portfolio Market Fund
------------------------- -----------
Investor A Shares Retail A Shares
----------------- ---------------
(with maximum 4.00% sales charge) (with maximum 4.00% sales charge)
--------------------------------- ---------------------------------
<S> <C> <C>
1 Year -5.11% -2.43%
5 Years N/A 5.05%
10 Years N/A N/A
Since Inception 2.94% (2/10/97) 5.05% (1/5/93)
Best Quarter 1.04%/Q3 `98 2.86%/Q2 `95
Worst Quarter -5.43%/Q2 `99 -5.97%/Q1 `94
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Bond Index Mercantile Government &
Portfolio Corporate Bond Portfolio
--------- ------------------------
Trust Shares Trust Shares
------------ ------------
<S> <C> <C>
1 Year 1.35% 5.38%
5 Years N/A 5.82%
Since Inception 5.48% (2/10/97) 6.83% (2/1/91)
Best Quarter 4.68%/Q3 `98 5.68%/Q2 `95
Worst Quarter -1.01%/Q2 `99 -2.71%/Q1 `96
</TABLE>
<TABLE>
<CAPTION>
Mercantile Bond Index Mercantile Government &
Portfolio Corporate Bond Portfolio
--------- ------------------------
Institutional Shares Institutional Shares
-------------------- --------------------
<S> <C> <C>
1 Year 1.06% 5.08%
5 Years N/A 5.51%
Since Inception 5.29% (2/10/97) 5.15% (1/3/94)
Best Quarter 4.60%/Q3 `98 5.60%/Q2 `95
Worst Quarter -1.08%/Q2 `99 -2.79%/Q1 `96
</TABLE>
<TABLE>
<CAPTION>
Mercantile Bond Index Mercantile Government &
Portfolio Corporate Bond Portfolio
--------- ------------------------
Investor A Shares Investor A Shares
(with maximum 4.00% sales charge) (with maximum 4.00% sales charge)
--------------------------------- ---------------------------------
<S> <C> <C>
1 Year -2.99% 0.86%
5 Years N/A 4.61%
10 Years N/A 6.27%
Since Inception 3.86% (2/10/97) 6.55% (6/15/88)
Best Quarter 0.41%/Q3 `98 1.40%/Q2 `95
Worst Quarter -5.04%/Q2 `99 -6.68%/Q1 `96
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Short-Intermediate Firstar Tax-Exempt Intermediate
Municipal Portfolio Bond Fund
------------------- ---------
Trust Shares Institutional Shares
------------ --------------------
<S> <C> <C>
1 Year -0.11% 0.08%
5 Years N/A 4.45%
10 Years N/A N/A
Since Inception 3.56% (7/10/95) 4.32% (2/8/93)
Best Quarter 2.31%/Q3 `98 3.93%/Q1 `95
Worst Quarter -1.15%/Q2 `99 -2.75%/Q1 `94
</TABLE>
<TABLE>
<CAPTION>
Mercantile Short-Intermediate Firstar Tax-Exempt Intermediate
Municipal Portfolio Bond Fund
------------------- ---------
Investor A Shares Retail A Shares
(with maximum 4.00% sales charge) (with maximum 4.00% sales charge)
--------------------------------- ---------------------------------
<S> <C> <C>
1 Year -4.12% -4.21%
5 Years N/A 3.35%
10 Years N/A N/A
Since Inception 2.16% (7/10/95) 3.54% (2/8/93)
Best Quarter -1.77%/Q3 `98 1.79%/Q1 `95
Worst Quarter -5.13%/Q2 `99 -6.64%/Q1 `94
</TABLE>
<TABLE>
<CAPTION>
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
----------------------------- ----------------------------
Trust Shares Institutional Shares
------------ --------------------
<S> <C> <C>
1 Year 2.94% 14.44%
5 Years 12.87% 14.81%
10 Years N/A N/A
Since Inception 10.79% (4/1/93) 11.85% (3/30/92)
Best Quarter 11.18%/Q4 `98 14.09%/Q4 `98
Worst Quarter -7.40%/Q3 `98 -7.98%/Q3 `98
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
----------------------------- ----------------------------
Investor A Shares Retail A Shares
(with maximum 5.50% sales charge) (with maximum 5.50% sales charge)
--------------------------------- ---------------------------------
<S> <C> <C>
1 Year -3.10% 7.90%
5 Years 11.28% 13.26%
10 Years N/A N/A
Since Inception 9.65% (4/1/93) 10.89% (3/30/92)
Best Quarter 4.90%/Q4 `98 8.88%/Q4 `98
Worst Quarter -12.49%/Q3 `98 -12.17%/Q3 `98
</TABLE>
<TABLE>
<CAPTION>
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
----------------------------- ----------------------------
Investor B Shares Retail B Shares
----------------- ---------------
<S> <C> <C>
1 Year -2.30% 8.30%
5 Years 11.51% N/A
10 Years N/A N/A
Since Inception 12.15% (4/1/93) 9.48% (3/1/99)
Best Quarter 5.95%/Q4 `98 7.16%/Q4 `99
Worst Quarter -12.28%/Q3 `98 -9.78%/Q3 `99
</TABLE>
<TABLE>
<CAPTION>
Mercantile Equity
Index Portfolio Firstar Equity Index Fund
--------------- -------------------------
Trust Shares Institutional Shares
------------ --------------------
<S> <C> <C>
1 Year 9.90% 9.55%
5 Years N/A 24.79%
10 Years N/A 18.27%
Since Inception 23.33% (5/1/97) 16.98% (12/29/89)
Best Quarter 21.19%/Q4 `98 21.52%/Q4 `98
Worst Quarter -9.96%/Q3 `98 -13.60%/Q3 `98
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Equity
Index Portfolio Firstar Equity Index Fund
--------------- -------------------------
Investor A Shares Retail A Shares
(with maximum 5.50% sales charge) (with maximum 5.50% sales charge)
--------------------------------- ---------------------------------
<S> <C> <C>
1 Year 3.53% 3.25%
5 Years N/A 23.11%
10 Years N/A 17.46%
Since Inception 20.66% (5/1/97) 16.19% (12/29/89)
Best Quarter 14.36%/Q4 `98 15.98%/Q4 `98
Worst Quarter -14.91%/Q3 `98 -18.34%/Q3 `90
</TABLE>
<TABLE>
<CAPTION>
Mercantile Growth & Income Firstar Growth &
Equity Portfolio Income Fund
---------------- -----------
Trust Shares Institutional Shares
------------ --------------------
<S> <C> <C>
1 Year 4.90% 4.74%
5 Years 18.37% 21.52%
10 Years N/A 15.60%
Since Inception 15.29% (4/1/91) 14.52% (12/29/89)
Best Quarter 18.59%/Q4 `98 17.77%/Q4 `98
Worst Quarter -14.34%/Q3 `98 -9.72%/Q3 `98
</TABLE>
<TABLE>
<CAPTION>
Mercantile Growth & Income Firstar Growth &
Equity Portfolio Income Fund
---------------- -----------
Investor A Shares Retail A Shares
(with maximum 5.50% sales charge) (with maximum 5.50% sales charge)
-------------------------------- ---------------------------------
<S> <C> <C>
1 Year -1.14% -1.27%
5 Years 16.63% 19.88%
10 Years 14.37% 14.81%
Since Inception 14.35% (6/2/88) 13.74% (12/29/89)
Best Quarter 12.00%/Q4 `98 12/41%/Q4 `98
Worst Quarter -19.12%/Q3 `98 -13.84%Q3 `98
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Growth & Income Firstar Growth &
Equity Portfolio Income Fund
---------------- -----------
Investor B Shares Retail B Shares
----------------- ---------------
<S> <C> <C>
1 Year -0.64% -1.35%
Z5 Years 16.98% N/A
10 Years N/A N/A
Since Inception 18.00% (3/1/95) 4.65% (3/1/99)
Best Quarter 9.02%/Q1 `98 3.39%/Q4 `99
Worst Quarter -15.83%/Q3 `98 -14.02%/Q3 `99
</TABLE>
<TABLE>
<CAPTION>
Mercantile Growth Equity
Portfolio Firstar Growth Fund
--------- -------------------
Trust Shares Institutional Shares
------------ --------------------
<S> <C> <C>
1 Year 24.13% 21.22%
5 Years N/A 22.11%
10 Years N/A N/A
Since Inception 18.85% (1/4/93) 16.76% (12/29/92)
Best Quarter 25.77%/Q4 `98 24.04%/Q4 `98
Worst Quarter -11.73%/Q3 `98 -11.12%/Q3 `98
</TABLE>
<TABLE>
<CAPTION>
Mercantile Growth Equity
Portfolio Firstar Growth Fund
--------- -------------------
Investor A Shares Retail A Shares
(with maximum 5.50% sales charge) (with maximum 5.50% sales charge)
--------------------------------- ---------------------------------
<S> <C> <C>
1 Year 17.00% 14.24%
5 Years 23.98% 20.46%
10 Years N/A N/A
Since Inception 17.83% (1/4/93) 15.68% (12/29/92)
Best Quarter 18.73%/Q4 `98 18.38%/Q4 `98
Worst Quarter -16.69%/Q3 `98 -15.17%/Q3 `98
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Growth Equity
Portfolio Firstar Growth Fund
--------- -------------------
Investor B Shares Retail B Shares
----------------- ---------------
<S> <C> <C>
1 Year 17.87% 14.97%
5 Years N/A N/A
10 Years N/A N/A
Since Inception 19.82% (2/23/98) 14.51% (3/1/99)
Best Quarter 20.40%/Q4 `98 13.21%/Q4 `99
Worst Quarter -16.38%/Q3 `98 -12.99%/Q3 `99
</TABLE>
<TABLE>
<CAPTION>
Mercantile Small Cap Equity
Portfolio Firstar Emerging Growth Fund
--------- ----------------------------
Trust Shares Institutional Shares
------------ --------------------
<S> <C> <C>
1 Year 40.15% 39.06%
5 Years 12.36% N/A
10 Years N/A N/A
Since Inception 14.24% (5/6/92) 9.85% (8/15/97)
Best Quarter 17.06%/Q2 `99 24.59%/Q4 `99
Worst Quarter -24.71%/Q3 `98 -19.59%/Q3 `98
</TABLE>
<TABLE>
<CAPTION>
Mercantile Small Cap Equity
Portfolio Firstar Emerging Growth Fund
--------- ----------------------------
Investor A Shares Retail A Shares
(with maximum 5.50% sales charge) (with maximum 5.50% sales charge)
--------------------------------- ---------------------------------
<S> <C> <C>
1 Year 32.08% 31.27%
5 Years 10.76% N/A
10 Years N/A N/A
Since Inception 13.20% (5/6/92) 7.36% (8/15/97)
Best Quarter 12.04%/Q4 `92 19.08%/Q4 `99
Worst Quarter -28.93%/Q3 `98 -23.25%/Q3 `98
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Mercantile Small Cap Equity
Portfolio Firstar Emerging Growth Fund
--------- ----------------------------
Investor B Shares Retail B Shares
----------------- ---------------
<S> <C> <C>
1 Year 33.90% 32.77%
5 Years 11.01% N/A
10 Years N/A N/A
Since Inception 11.83% (3/1/95) 23.39% (3/1/99)
Best Quarter 12.87%/Q1 `00 19.45%/Q4 `99
Worst Quarter -28.63%/Q3 `98 -14.34%/Q3 `99
</TABLE>
-9-
<PAGE>
APPENDIX VI - MANAGEMENT DISCUSSION OF FIRSTAR FUND PERFORMANCE
<PAGE>
(LOGO) FIRSTAR FUNDS
--------------------------------------------------------------------------------
INTERMEDIATE BOND MARKET FUND
--------------------------------------------------------------------------------
FIRSTAR INTERMEDIATE BOND MARKET FUND seeks to provide an annual rate of total
return comparable to that of the Lehman Brothers Intermediate
Government/Corporate Bond Index, before Fund expenses. In order to achieve its
objective, the Fund may invest in securities with long remaining maturities (10
years or longer) in addition to shorter bonds and notes.
This Fund's maturity mix gives the portfolio an overall AVERAGE MATURITY OF 5.5
YEARS and a DURATION OF 3.4 YEARS. Firstar Intermediate Bond Fund's duration is
just over three years and is between the durations of the other Firstar taxable
bond funds. If interest rates rise this Fund will display more downward price
movement than the Short-Term Bond Market Fund and less than the Bond IMMDEXTM
Fund. When interest rates fall, this Fund will exhibit more upward price
movement than Short-Term Bond Market Fund and less than the Bond IMMDEX/TM Fund.
During 1999, spreads on corporate bonds, asset-backed and mortgage-backed
securities tightened from historically wide levels in the fall of 1998. Since
that time, we selectively increased the Fund's exposure to these sectors. With
the spreads contracting, these sectors have contributed positively to the
performance of the Fund over the past year.
CORPORATE BONDS
The Fund's careful, research-intensive process of selecting investment-grade
corporate issues, asset-backed securities and mortgages gives the Fund a high-
quality focus. Currently the Fund's exposure to the corporate sector represents
56%. Sectors of the corporate market that we continue to favor include finance,
banking and brokerage.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
In general, we purchase only the highest rated (Aaa and Agency) collateralized
mortgage obligations (CMOs) and asset-backed securities (ABS). We utilize
shorter duration structures with more predictable "cash flow" characteristics.
This restrained use of mortgage and ABS instruments is a by-product of our
requirement to precisely measure the duration of the portfolio and ensure we
"match" the duration of the benchmark index at all times. The Firstar
Intermediate Bond Market Fund currently invests 22% in mortgage- and asset-
backed securities.
CONSISTENCY IS THE HALLMARK OF OUR APPROACH
Since Firstar Intermediate Bond Market Fund's inception on 1/5/93, we have
adhered to the same disciplined management approach. During the past 6+ years
the financial markets have become more volatile. THE HALLMARK OF OUR APPROACH
HAS BEEN THE FUND'S CONSISTENT PERFORMANCE IN ALL MARKET CLIMATES. Firstar
Intermediate's returns have been comparable to the benchmark in periods of
rising interest rates and falling interest rates. Our goal is to continue to
deliver this same consistent performance in the future.
We look forward to continuing to serve you as a Firstar Fund shareholder.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR INTERMEDIATE LEHMAN BROTHERS
BOND MARKET FUND - INTERMEDIATE
INSTITUTIONAL GOV'T./CORP. BOND <F4>
---------------------- ----------------------
1/5/93 10,000 10,000
10/93 10,858 10,844
10/94 10,670 10,635
10/95 11,978 11,968
10/96 12,669 12,663
10/97 13,602 13,612
10/98 14,665 14,853
10/99 14,946 15,000
This chart assumes an initial investment of $10,000 made on 1/5/93 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced. Performance is shown for Institutional shares, which
have lower expenses than Series A or Series B shares. If those fees and expenses
were reflected in the chart above, total return would have been reduced. Returns
shown include the reinvestment of all dividends and other distributions. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than their original cost.
--------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR YEARS ENDED OCTOBER 31, 1999
--------------------------------------------------------------------------------
1 3 5
Year Years Years Since Inception
--------------------------------------------------------------------------------
FIRSTAR INTERMEDIATE BOND
MARKET FUND - INSTITUTIONAL 1.9 5.7 7.0 6.1 (1/5/93)
FIRSTAR INTERMEDIATE BOND
MARKET FUND - A - NO LOAD 1.7 5.4 6.7 5.9 (1/5/93)
FIRSTAR INTERMEDIATE
BOND MARKET FUND - A - LOAD<F2> (2.2) 4.1 5.9 5.3 (1/5/93)
FIRSTAR INTERMEDIATE BOND
MARKET FUND - B - NO LOAD - - - 1.0 (3/1/99)<F1>
FIRSTAR INTERMEDIATE BOND
MARKET FUND - B - LOAD<F3> - - - (4.0) (3/1/99)<F1>
LEHMAN BROTHERS INTERMEDIATE
GOV'T./CORP. BOND INDEX<F4> 1.0 5.8 7.1 6.1 (1/5/93)
--------------------------------------------------------------------------------
A = Series A (retail class)
B = Series B (retail class)
<F1> Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
<F2> Reflects maximum sales charge of 3.75%.
<F3> Reflects maximum deferred sales charge of 5.00%.
<F4> The Lehman Brothers Intermediate Gov't./Corp. Bond Index is an unmanaged
market value weighted index measuring both principal price changes of, and
income provided by, the underlying universe of securities that comprise the
index. Securities included in the index must meet the following critieria:
fixed as opposed to variable rate; remaining maturity of one to ten years;
minimum outstanding par value of $100 million; and rated investment grade
or higher by Moody's, Standard & Poor's, or Fitch, in that order. An
investment cannot be made directly in an index.
The Lehman Brothers 1-3 Year Government/Corporate Bond Index, the Lehman
Brothers Intermediate Government/Corporate Bond Index and the Lehman Brothers
Government/Corporate Bond Index are trademarks of Lehman Brothers. The Fund, its
Adviser and the Co-Administrators are not affiliated in any way with Lehman
Brothers. Inclusion of a security in a bond index in no way implies an opinion
by Lehman Brothers as to its attractiveness or appropriateness as an investment.
Lehman Brothers' publication of the bond index is not made in connection with
any sale or offer for sale of securities or any solicitation of orders for the
purchase of securities.
Effective at the close of business January 9, 1995, Firstar Funds began to offer
Series A shares. Effective at the close of business on February 28, 1999,
Firstar Funds began to offer Series B shares. Series A shares have a 3.75%
maximum sales load and are subject to an annual 0.25% service organization fee.
The load performance for the Series A shares has been restated to reflect the
impact of the current sales charge. Series A performance prior to January 10,
1995, does not reflect the service organization fees. If service organization
fees had been reflected, performance would be reduced. Series B shares have a
5.00% maximum deferred sales charge and are subject to an annual 0.25% service
organization fee and an annual 0.75% 12b-1 fee. Performance for all share
classes reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
SECTOR DISTRIBUTION
10/31/99
-----------------------------------
U.S. TREASURY 18%
-----------------------------------
U.S. GOVERNMENT AGENCY 0%
-----------------------------------
MORTGAGE-BACKED<F1> 6%
-----------------------------------
FINANCE, BANKING, BROKERAGE 33%
-----------------------------------
INDUSTRIAL 9%
-----------------------------------
UTILITY 3%
-----------------------------------
INTERNATIONAL/YANKEE 11%
-----------------------------------
ASSET-BACKED 16%
-----------------------------------
CASH AND OTHER 4%
-----------------------------------
TOTAL 100%
-----------------------------------
PORTFOLIO COMPOSITION
10/31/99
-----------------------------------
AVERAGE MATURITY 5.5 YEARS
-----------------------------------
AVERAGE DURATION 3.4 YEARS
-----------------------------------
<F1> incl. U.S. Gov't. Agency-Backed
QUALITY DISTRIBUTION
10/31/99
-----------------------------------
U.S. TREASURY 18%
-----------------------------------
U.S. GOVERNMENT AGENCY 3%
-----------------------------------
Aaa 24%
-----------------------------------
Aa 8%
-----------------------------------
A 28%
-----------------------------------
Baa 19%
-----------------------------------
Ba 0%
-----------------------------------
TOTAL 100%
-----------------------------------
SEC 30-DAY YIELD
-----------------------------------
INSTITUTIONAL 6.37%
-----------------------------------
A - NO LOAD 6.11%
-----------------------------------
A - LOAD 5.88%
-----------------------------------
B - NO LOAD 5.36%
-----------------------------------
TOTAL FUND NET ASSETS
10/31/99
-----------------------------------
$318,031,682
-----------------------------------
<PAGE>
(LOGO) FIRSTAR FUNDS
--------------------------------------------------------------------------------
TAX-EXEMPT INTERMEDIATE BOND FUND
--------------------------------------------------------------------------------
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND FUND seeks to provide current income exempt
from federal taxes and emphasizes total return with relatively low volatility of
principal. In order to achieve its objective, the Fund may invest in securities
with long remaining maturities (10 years or longer) in addition to shorter bonds
and notes. Currently the Fund does not purchase any issues which are subject to
the alternative minimum tax.
This Fund's maturity mix gives it an overall AVERAGE PORTFOLIO MATURITY OF 5.0
YEARS and a DURATION OF 4.1 YEARS. Because Tax-Exempt Intermediate Bond Fund's
duration is approximately four years, its NAV will be less price sensitive to
changes in interest rates than the typical municipal debt fund which, according
to Lipper Analytical Services, has an average duration of 7.8 years. The
intermediate average maturity and duration of this Fund protected the Fund from
the rise in interest rates over the last twelve months. While the Fund's
duration is the single most significant determinant of its return, the Fund's
sector allocation is also important. The Fund continues to emphasize high
quality holdings, favoring prerefunded, noncallable issues with predictable cash
flows.
PREREFUNDED MUNICIPAL BONDS
Prerefunded municipal bonds are municipal bonds that hold U.S. Treasury issues
in an escrow account, assuring the timely repayment of interest and principal.
As of October 31, 1999, OVER 68% OF THE FUND'S HOLDINGS WERE INVESTED IN
PREREFUNDED MUNICIPAL BONDS, RESULTING IN AN AVERAGE CREDIT QUALITY RATING OF
AAA FOR THE FUND. With credit spreads in the municipal bond market remaining
tight, the Fund's focus on superior quality issues will help minimize the
effects of any widening of credit spreads and will protect the Fund from any
general deterioration of credit quality in the municipal bond market.
CONSISTENCY IS THE HALLMARK OF OUR APPROACH
Since Firstar Tax-Exempt Intermediate Bond Fund's inception on 2/8/93, we have
adhered to the same disciplined management approach. The past 6+ years have
brought us more volatility in the fixed-income markets than many would have
expected. THE HALLMARK OF OUR APPROACH HAS BEEN THE FUND'S CONSISTENT
PERFORMANCE IN ALL MARKET CLIMATES. Our goal is to continue to deliver this same
consistent performance in the future.
We look forward to continuing to serve you as a Firstar Fund shareholder.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR LEHMAN BROTHERS
TAX-EXEMPT 5-YEAR GENERAL
INTERMEDIATE OBLIGATION
BOND FUND BOND INDEX <F4>
---------------------- ----------------------
2/8/93 10,000 10,000
10/93 10,536 10,557
10/94 10,459 10,499
10/95 11,440 11,586
10/96 11,900 12,143
10/97 12,609 12,934
10/98 13,351 13,777
10/99 13,403 13,927
This chart assumes an initial investment of $10,000 made on 2/8/93 (inception).
Per formance reflects fee waivers in effect. In the absence of fee waivers,
total return would be reduced. Performance is shown for Institutional shares,
which have lower expenses than Series A or Series B shares. If those fees and
expenses were reflected in the chart above, total return would have been
reduced. Returns shown include the reinvestment of all dividends and other
distributions. Past performance is not predictive of future performance.
Investment return and principal value will fluctuate, so that your shares, when
redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR YEARS ENDED OCTOBER 31, 1999
--------------------------------------------------------------------------------
1 3 5
Year Years Years Since Inception
--------------------------------------------------------------------------------
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - INSTITUTIONAL 0.4 4.0 5.1 4.5 (2/8/93)
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - A - NO LOAD 0.1 3.8 4.8 4.3 (2/8/93)
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - A - LOAD<F2> (3.6) 2.4 4.0 3.6 (2/8/93)
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - B - NO LOAD - - - (1.6) (3/1/99)<F1>
FIRSTAR TAX-EXEMPT INTERMEDIATE
BOND FUND - B - LOAD<F3> - - - (6.4) (3/1/99)<F1>
LEHMAN BROTHERS 5 YEAR GENERAL
OBLIGATION BOND INDEX<F4> 1.1 4.7 5.8 5.1 (2/8/93)
--------------------------------------------------------------------------------
A = Series A (retail class)
B = Series B (retail class)
<F1> Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
<F2> Reflects maximum sales charge of 3.75%.
<F3> Reflects maximum deferred sales charge of 5.00%.
<F4> The Lehman Brothers 5 Year General Obligation Bond Index, an unmanaged
index, is a total return performance benchmark for the investment-grade
tax-exempt bond market. To be included in this index, a municipal bond must
be a state or local General Obligation bond; have a minimum credit rating
of at least Baa; have been issued as part of an offering of at least $50
million; have a maturity amount outstanding of at least $3 million; have
been issued within the last five years; and have a maturity of 4 to 6
years. An investment cannot be made directly in an index.
The Lehman Brothers 1-3 Year Government/Corporate Bond Index, the Lehman
Brothers Intermediate Government/Corporate Bond Index and the Lehman Brothers
Government/Corporate Bond Index are trademarks of Lehman Brothers. The Fund, its
Adviser and the Co-Administrators are not affiliated in any way with Lehman
Brothers. Inclusion of a security in a bond index in no way implies an opinion
by Lehman Brothers as to its attractiveness or appropriateness as an investment.
Lehman Brothers' publication of the bond index is not made in connection with
any sale or offer for sale of securities or any solicitation of orders for the
purchase of securities.
Effective at the close of business January 9, 1995, Firstar Funds began to offer
Series A shares. Effective at the close of business on February 28, 1999,
Firstar Funds began to offer Series B shares. Series A shares have a 3.75%
maximum sales load and are subject to an annual 0.25% service organization fee.
The load performance for the Series A shares has been restated to reflect the
impact of the current sales charge. Series A performance prior to January 10,
1995, does not reflect the service organization fees. If service organization
fees had been reflected, performance would be reduced. Series B shares have a
5.00% maximum deferred sales charge and are subject to an annual 0.25% service
organization fee and an annual 0.75% 12b-1 fee. Performance for all share
classes reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
SECTOR DISTRIBUTION
10/31/99
-----------------------------------
GENERAL OBLIGATIONS 8%
-----------------------------------
ESCROWED/PREREFUNDED 68%
-----------------------------------
INSURED 18%
-----------------------------------
REVENUE 3%
-----------------------------------
CASH AND OTHER 3%
-----------------------------------
TOTAL 100%
-----------------------------------
QUALITY DISTRIBUTION
10/31/99
-----------------------------------
Aaa 89%
-----------------------------------
Aa 11%
-----------------------------------
TOTAL 100%
-----------------------------------
PORTFOLIO COMPOSITION
10/31/99
-----------------------------------
AVERAGE MATURITY 5.0 YEARS
-----------------------------------
AVERAGE DURATION 4.1 YEARS
-----------------------------------
SEC 30-DAY YIELD
-----------------------------------
INSTITUTIONAL 4.19%
-----------------------------------
A - NO LOAD 3.94%
-----------------------------------
A - LOAD 3.79%
-----------------------------------
B - NO LOAD 3.19%
-----------------------------------
TOTAL FUND NET ASSETS
10/31/99
-----------------------------------
$85,123,822
-----------------------------------
<PAGE>
(LOGO) FIRSTAR FUNDS
-------------------------------------------------------------------------------
BALANCED GROWTH FUND
-------------------------------------------------------------------------------
Firstar Balanced Growth Fund seeks capital appreciation combined with reasonable
income by investing in stocks and bonds. Typically, the Fund will invest 60% of
assets in common stocks of large-, medium- and small-sized companies, with the
balance invested in high quality bonds and money markets. As of October 31,
1999, the Fund consisted of 62% in common stocks, 37% in bonds and 1% in money
markets. The weighted average market capitalization of the common stocks was
$52.5 billion, considerably less than the $116 billion average market
capitalization of the Standard & Poor's 500 Stock Index. Bond holdings within
the portfolio had a weighted average duration of 5.4 years, matching the
duration of the Lehman Brothers Intermediate Government/Corporate Bond Index.
For the 12 months ended October 31, 1999, Firstar Balanced Growth Fund returned
5.9% (Institutional shares), compared with the return of 12.6% for the Lipper
Balanced Fund Index.
The world witnessed a remarkable change in economic circumstances in 1999. You
may recall high economic stress in 1998 led to three interest rate reductions by
the Federal Reserve. The rebound in the world economy in 1999 saw the Fed
reverse itself with three rate increases. Stock prices began the fiscal year
with a dramatic increase, with the S&P 500 returning 22.3% during the first six
months. The change in investor perception from low inflation and low interest
rates to higher inflation and interest rate risk slowed the market advance, with
the S&P 500 up 2.7% during the last half of the fiscal year. Technology stocks
led all others during the year with a phenomenal 69.4% return for the S&P
technology sector. This return was responsible for nearly half of the total
return of the Index, making diversification a losing strategy for the full year.
Our sector bet in technology and consumer cyclicals had a positive impact on the
portfolio. Offsetting this, however, was an overweighted position in financials,
which performed poorly in the face of high interest rates. Our 30%
portfolio weight to small- and mid-cap stocks also detracted from results as
these sectors continued to underperform the large-cap dominated S&P 500.
The objective of the fixed-income component of Firstar Balanced Growth Fund is
to provide an annual rate of total return comparable to the return of the Lehman
Brothers Intermediate Government/Corporate Bond Index. Our careful, research-
intensive process of selecting investment-grade corporate issues, mortgage- and
asset-backed securities gives the Fund a high-quality focus. One-half (50%) of
the fixed-income portion of the Fund is invested in obligations rated Aaa/AAA or
higher. Among corporate bonds, we have a preference for finance, banking and
brokerage issues along with dollar-denominated international ("Yankee")
securities. We believe these sectors represent exceptional value in the current
environment. Since the Fund's inception in 1992, we have adhered to the same
disciplined management approach. While the past seven years have brought us more
volatility in the fixed-income markets than many would have expected, we have
applied our consistent, risk-controlled style in all market climates.
During fiscal 1999, the stock market rewarded only the largest companies with
good price performance; however, we believe this trend is nearing exhaustion.
History has proven great returns are earned by investing in reasonably valued
companies of little notoriety. Today, that area is the small and medium-sized
area of the stock market. Firstar Balanced Growth Fund is among the few balanced
funds with a large commitment in these companies. With good value in our stock
holdings, and bonds offering 4-5% real yield (after inflation), we are excited
about the prospects for the Fund in the coming year.
Thank you for your continued confidence in Firstar Balanced Growth Fund.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR BALANCED LIPPER
GROWTH FUND - BALANCED FUND S&P 500 STOCK
INSTITUTIONAL INDEX INDEX
---------------- ---------------- -----------------
3/30/92 10,000 10,000 10,000
10/92 10,372 10,481 10,548
10/93 11,771 12,167 12,124
10/94 11,662 12,093 12,593
10/95 13,969 14,220 15,923
10/96 15,724 16,281 19,760
10/97 18,615 19,553 26,106
10/98 20,260 21,657 31,846
10/99 21,449 24,377 40,021
This chart assumes an initial investment of $10,000 made on 3/30/92 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced. Performance is shown for Institutional shares, which
have lower expenses than Series A or Series B shares. If those fees and expenses
were reflected in the chart above, total return would have been reduced. Returns
shown include the reinvestment of all dividends and other distributions. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than their original cost.
-------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1999
-------------------------------------------------------------------------------
1 Year 3 Years 5 Years Since Inception
-------------------------------------------------------------------------------
FIRSTAR BALANCED
GROWTH FUND - INSTITUTIONAL 5.9 10.9 13.0 10.6 (3/30/92)
FIRSTAR BALANCED
GROWTH FUND - A - NO LOAD 5.6 10.6 12.7 10.4 (3/30/92)
FIRSTAR BALANCED
GROWTH FUND - A - LOAD<F2> 0.8 8.9 11.7 9.7 (3/30/92)
FIRSTAR BALANCED
GROWTH FUND - B - NO LOAD - - - 0.3 (3/1/99)<F1>
FIRSTAR BALANCED
GROWTH FUND - B - LOAD<F3> - - - (4.7) (3/1/99)<F1>
LIPPER BALANCED FUND INDEX<F4> 12.6 14.5 15.1 12.5 (3/30/92)
S&P 500 STOCK INDEX<F5> 25.7 26.5 26.0 20.0 (3/30/92)
-------------------------------------------------------------------------------
A = Series A (retail class)
B = Series B (retail class)
<F1> Series B performance for the period March 1, 1999 to
October 31, 1999 is not annualized.
<F2> Reflects maximum sales charge of 4.50%.
<F3> Reflects maximum deferred sales charge of 5.00%.
<F4> The Lipper Balanced Fund Index is composed of the 30 largest mutual
funds whose primary objective is to conserve principal by maintaining
a balanced portfolio of stocks and bonds.
<F5> The S&P500 Stock Index is an index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all
domestic common stocks.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A shares. Effective at the close of business on February 28, 1999,
Firstar Funds began to offer Series B shares. Series A shares have a 4.50%
maximum sales load and are subject to an annual 0.25% service organization fee.
The load performance for the Series A shares has been restated to reflect the
impact of the current sales charge. Series A performance prior to January 10,
1995, does not reflect the service organization fees. If service organization
fees had been reflected, performance would be reduced. Series B shares have a
5.00% maximum deferred sales charge and are subject to an annual 0.25% service
organization fee and an annual 0.75% 12b-1 fee. Performance for all share
classes reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
TOP 5 EQUITY HOLDINGS 10/31/99
---------------------------------------------
AMERICAN INTERNATIONAL GROUP 1.1%
---------------------------------------------
MICROSOFT CORPORATION 1.0%
---------------------------------------------
SUNGARD DATA SYSTEMS 1.0%
---------------------------------------------
STATE STREET CORPORATION 1.0%
---------------------------------------------
PROTECTIVE LIFE CORPORATION 1.0%
---------------------------------------------
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/99
---------------------------------------------
$235,174,312
---------------------------------------------
<PAGE>
(LOGO) FIRSTAR FUNDS
-------------------------------------------------------------------------------
EQUITY INDEX FUND
-------------------------------------------------------------------------------
Firstar Equity Index Fund seeks to provide investment returns, before Fund
expenses, comparable to the price and yield performance of publicly traded
stocks in the aggregate, as represented by the S&P 500 Index. The Fund does not
use traditional methods of financial and market analysis when making purchase
and sale decisions; rather, the Fund invests primarily in common stocks that
comprise the S&P 500 Index in proportion to their relative capitalization and
sector weightings.
Firstar Equity Index Fund's net asset value of $91.95 (Institutional shares) on
October 31 represents a total return of 2.6% for the last six months of the
fiscal year, which was comparable to the S&P's return of 2.7% over the same
period.
We believe by applying a capitalization weighting and sector balancing technique
that matches the structure of the S&P 500, as well as using S&P 500 futures
contracts to equitize the cash, the Fund should reasonably track the performance
of the index.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR EQUITY
INDEX FUND - S&P 500 STOCK
INSTITUTIONAL INDEX
--------------- ---------------
12/29/89 10,000 10,000
10/90 8,854 8,855
10/91 11,767 11,821
10/92 12,889 12,999
10/93 14,644 14,941
10/94 15,157 15,519
10/95 19,101 19,622
10/96 23,624 24,351
10/97 31,037 32,170
10/98 37,843 39,244
10/99 47,424 49,318
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Performance is shown for Institutional
shares, which have lower expenses than Series A or Series B shares. If those
fees and expenses were reflected in the chart above, total return would have
been reduced. Returns shown include the reinvestment of all dividends and other
distributions. Past performance is not predictive of future performance.
Investment return and principal value will fluctuate, so that your shares, when
redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1999
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 Year 3 Years 5 Years Since Inception
-------------------------------------------------------------------------------
FIRSTAR EQUITY INDEX
FUND - INSTITUTIONAL 25.3 26.2 25.6 17.1 (12/29/89)
FIRSTAR EQUITY INDEX
FUND - A - NO LOAD 25.0 25.9 25.3 17.0 (12/29/89)
FIRSTAR EQUITY INDEX
FUND - A - LOAD<F2> 19.4 23.9 24.2 16.4 (12/29/89)
FIRSTAR EQUITY INDEX
FUND - B - NO LOAD - - - 9.9 (3/1/99)<F1>
FIRSTAR EQUITY INDEX
FUND - B - LOAD<F3> - - - 4.9 (3/1/99)<F1>
S&P 500 STOCK INDEX<F4> 25.7 26.5 26.0 17.6 (12/29/89)
A = Series A (retail class)
B = Series B (retail class)
<F1> Series B performance for the period March 1, 1999 to
October 31, 1999 is not annualized.
<F2> Reflects maximum sales charge of 4.50%.
<F3> Reflects maximum deferred sales charge of 5.00%.
<F4> The S&P500 Stock Index is an index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all
domestic common stocks.
"Standard & Poor's/R," "S&P/R," "S&P 500/R," "Standard &Poor's 500," and "500"
are trademarks of the McGraw Hill Companies, Inc. and have been licensed for use
by Firstar Funds. The Equity Index Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in the Equity Index Fund.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A shares. Effective at the close of business on February 28, 1999,
Firstar Funds began to offer Series B shares. Series A shares have a 4.50%
maximum sales load and are subject to an annual 0.25% service organization fee.
The load performance for the Series A shares has been restated to reflect the
impact of the current sales charge. Series A performance prior to January 10,
1995, does not reflect the service organization fees. If service organization
fees had been reflected, performance would be reduced. Series B shares have a
5.00% maximum deferred sales charge and are subject to an annual 0.25% service
organization fee and an annual 0.75% 12b-1 fee. Performance for all share
classes reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
TOP 5 EQUITY HOLDINGS 10/31/99
----------------------------------------
MICROSOFT CORPORATION 4.0%
----------------------------------------
GENERAL ELECTRIC COMPANY 3.8%
----------------------------------------
INTEL CORPORATION 2.2%
----------------------------------------
WAL-MART STORES, INC. 2.2%
----------------------------------------
CISCO SYSTEMS, INC. 2.0%
----------------------------------------
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/99
----------------------------------------
$715,021,181
----------------------------------------
<PAGE>
(LOGO) FIRSTAR FUNDS
-------------------------------------------------------------------------------
GROWTH AND INCOME FUND
-------------------------------------------------------------------------------
For the fiscal year ended October 31, 1999, the Standard & Poor's 500 advanced
25.7%, propelled by a 69.4% gain for the technology sector. In fact, technology
stocks contributed over 40% of the return, with the "big five" - Microsoft,
Cisco, Lucent, Intel and America Online - responsible for one-quarter of the S&P
500's 12-month return. The Standard & Poor's 500 return without technology was
+15.1%. Strength was also seen in communication services stocks, with the
sector's +31% return driven by MCI WorldCom and Nextel. The consumer cyclicals
sector also beat the Index return, posting a +28% gain led by Wal-Mart and Home
Depot. What is notable regarding these top-performing companies is their high
relative price-to-earnings (P/E) ratios, averaging 64 times 1999 earnings, and
their low dividend yield, averaging .1%. Naturally this was a tough environment
for the Firstar Growth and Income Fund, which focuses on income-producing
securities at attractive multiples. Against the "headwinds," the Fund returned
+12.1% (Institutional shares) for the year.
In the Growth and Income Fund, we focus on the stocks of high quality companies
with predictable sales, earnings and cash flow growth, strong balance sheets and
innovative management. Standard & Poor's awards a stock rating of "A-" to "A+"
to companies with these characteristics. Companies with inconsistent or
negligible earnings histories and questionable balance sheets receive ratings of
"C" or "D." The Growth and Income portfolio has an average quality rating of "A-
." For the 12 months ended October of 1999, the lowest quality stocks were the
best performers, with "C" and "D"-rated companies up 48.4%. Companies with "A-"
ratings or greater were up a modest 5.8%.
The Growth and Income Fund focuses on companies that pay a dividend.
Historically this strategy has produced returns which are competitive in up
markets and outperform in down markets. The 22.4% annual return of the Growth
and Income Fund over the last five years is competitive with a +26.0% annual
gain for the Standard & Poor's 500 and a 20.1% return posted by the average
growth and income fund as measured by Morningstar. The Firstar Growth and Income
Fund is our most conservative equity fund, with a focus on providing competitive
risk-adjusted returns. The Fund, according to Morningstar, has experienced only
83% of the volatility of the S&P 500 and 88% of the volatility of the average
growth and income fund over the last five years. This combination of competitive
investment returns and low volatility gives the fund high marks for risk-
adjusted returns. We recognize, however, that this strategy does not work in all
market environments. The technology-driven market we have experienced over the
last 12 months is a case in point. Technology stocks generally do not pay
dividends and if they do, the payout is quite modest. The traditionally
defensive groups currently emphasized in the portfolio, including financials,
consumer staples and healthcare, posted 12-month returns of +19.5%, -.10% and
+10.4%, respectively. Simply stated, we own the sectors and the stocks that the
market is not favoring this year. This is a complete reversal from our 1998
experience when these groups, dominated by high quality companies, were in
favor.
The market's disdain for high quality companies over the last 12 months gave us
the opportunity to add a number of new companies to the portfolio at attractive
prices. Recent purchases for the Growth and Income Fund include Vulcan Materials
(we believe a major beneficiary of recent transportation legislation which will
increase highway construction spending by over 40% during the next several
years); Eli Lilly (a major pharmaceutical company with several promising new
drugs including Actos for Type II diabetes); Time Warner (the world's largest
media and entertainment company and, we believe, a beneficiary of the Internet
economy); and Walgreen's (one of America's largest drug retailers and an
indirect beneficiary of aging demographics and many successful new drug
launches).
As we approach the millennium, we believe the best opportunities in the market
are the 450 smaller companies within the S&P 500. Companies within this sector
with strong fundamentals should play catch-up to the lofty price-to-earnings
multiples of the "top 50." We are investing accordingly, with a $50 billion
average weighted market capitalization for the companies held in the Growth and
Income Fund versus a $116 billion average market capitalization for the Standard
& Poor's 500.
We thank you for your continued support.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR GROWTH AND
INCOME FUND - S&P 500 STOCK
INSTITUTIONAL INDEX<F4>
------------------ ------------------
12/29/89 10,000 10,000
10/90 9,304 8,855
10/91 11,698 11,821
10/92 12,368 12,999
10/93 13,596 14,941
10/94 13,846 15,519
10/95 17,307 19,622
10/96 21,963 24,351
10/97 28,734 32,170
10/98 34,008 39,244
10/99 38,103 49,318
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Performance reflects fee waivers in effect. In the absence
of fee waivers, total return would be reduced. Performance is shown for
Institutional shares, which have lower expenses than Series A or Series B
shares. If those fees and expenses were reflected in the chart above, total
return would have been reduced. Returns shown include the reinvestment of all
dividends and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
-------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1999
-------------------------------------------------------------------------------
1 Year 3 Years 5 Years Since Inception
-------------------------------------------------------------------------------
FIRSTAR GROWTH AND
INCOME FUND - INSTITUTIONAL 12.0 20.2 22.4 14.6 (12/29/89)
FIRSTAR GROWTH AND
INCOME FUND - A - NO LOAD 11.8 19.9 22.2 14.4 (12/29/89)
FIRSTAR GROWTH AND
INCOME FUND - A - LOAD<F2> 6.8 18.0 21.0 13.9 (12/29/89)
FIRSTAR GROWTH AND
INCOME FUND - B - NO LOAD - - - 3.2 (3/1/99)<F1>
FIRSTAR GROWTH AND
INCOME FUND - B - LOAD<F3> - - - (1.8) (3/1/99)<F1>
S&P 500 STOCK INDEX<F4> 25.7 26.5 26.0 17.6 (12/29/89)
-------------------------------------------------------------------------------
A = Series A (retail class)
B = Series B (retail class)
<F1> Series B performance for the period March 1, 1999 to
October 31, 1999 is not annualized.
<F2> Reflects maximum sales charge of 4.50%.
<F3> Reflects maximum deferred sales charge of 5.00%.
<F4> The S&P500 Stock Index is an index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all
domestic common stocks.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A shares. Effective at the close of business on February 28, 1999,
Firstar Funds began to offer Series B shares. Series A shares have a 4.50% maxi
mum sales load and are subject to an annual 0.25% service organization fee. The
load performance for the Series A shares has been restated to reflect the impact
of the current sales charge. Series A performance prior to January 10, 1995,
does not reflect the service organization fees. If service organization fees had
been reflected, performance would be reduced. Series B shares have a 5.00%
maximum deferred sales charge and are subject to an annual 0.25% service
organization fee and an annual 0.75% 12b-1 fee. Performance for all share
classes reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
TOP 5 EQUITY HOLDINGS 10/31/99
-----------------------------------------
ALLTELL CORPORATION 4.1%
-----------------------------------------
BRISTOL-MYERS SQUIBB COMPANY 2.8%
-----------------------------------------
TYCO INTERNATIONAL, LTD. 2.7%
-----------------------------------------
INTERPUBLIC GROUP OF COMPANIES,INC. 2.6%
-----------------------------------------
WELLS FARGO COMPANY, INC. 2.6%
-----------------------------------------
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/99
-----------------------------------------
$726,895,945
-----------------------------------------
<PAGE>
(LOGO) FIRSTAR FUNDS
-------------------------------------------------------------------------------
GROWTH FUND
-------------------------------------------------------------------------------
Firstar Growth Fund seeks long-term capital appreciation by investing in the
securities of large companies. As of October 31, 1999, the portfolio had a
weighted average market capitalization of $75.1 billion, up substantially from
the $48.9 billion on April 30, 1999. This compares with the Fund's primary
benchmark, the Standard & Poor's 500 (S&P 500), which had a weighted average
market capitalization of $116.1 billion on October 31. During the 12 months
ended October 31, the Growth Fund returned +18.2%, (Institutional shares)
trailing the S&P 500 +25.7%, and the Lipper Large Cap Core Fund average of
26.1%.
The last year has witnessed a remarkable change in economic circumstances for
the world economy and for the financial markets. High economic stress in 1998
led to three interest rate reductions by the Federal Reserve. The rebound in the
world economy in 1999 has seen the Fed reverse itself with three rate increases.
Stock prices began the fiscal year with a dramatic increase, with the S&P 500
returning 22.3% during the first six months. The change in investor perception
from low inflation and lower interest rates to higher inflation and interest
rate risk slowed the market advance, with the S&P 500 up 2.7% during the last
half of the fiscal year. Technology stocks led all others during the year with a
phenomenal 69.4% return for the S&P technology sector. This return was
responsible for nearly half of the total return of the index, making technology
stocks critical to Fund performance. No other sector contributed more than 11%
of the index return, making diversification a losing strategy for the full year.
Ironically, the year started in a higher-risk economic environment, and the best
returns were earned by those who took the greatest risk.
As we discussed in our mid-year report, the Fund started the year poorly in its
technology positions. Service company exposure was reduced in favor of those
companies which have more direct exposure to the construction of the Internet
and related communication services. New positions in Nortel and Sun Microsystems
appreciated over 50% during the last six months. Long-held positions in
Microsoft, Cisco Systems, Intel and First Data Systems were all up in excess of
50% for the full year, contributing 25% of the Fund's total return.
Additionally, advertising agency giants Omnicom and Interpublic Group were in
outstanding positions because of the surge in spending related to Internet
advertising. Large positions in Tyco, MCI WorldCom, Harley Davidson and American
International Group were also among the biggest contributors to return. A
significant reduction in our Tyco position was executed at the highest level of
prices during the year, making the stock's recent decline of less consequence.
The new year begins with the same themes driving the large company area of the
stock market. Technology stocks have roared to higher prices, taking their share
of the overall market to over 25%. This area has become the dominant sector in
the stock market, and we are determined to significantly improve our performance
in technology. New positions in JDS Uniphase, Qualcomm, Texas Instruments, Nokia
and EMC have already contributed to the portfolio performance. Our research
indicates that the lowest-risk way to invest in the explosive technology sector
is to own the leaders. Finance and health care companies represent good value
but are currently facing poor earnings growth (finance) or an election cycle
(health care) that are hindering their performance within the portfolio. We
believe better opportunities are ahead for these stocks. Finally, the consumer
continues to spend with a high degree of confidence. This gives us some
conviction that the next 12 months will be a good investment period for those
companies able to execute a profitable strategy in an increasingly competitive
world for consumer dollars.
We appreciate your continued support of Firstar Growth Fund.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR
GROWTH FUND - S&P 500 STOCK
INSTITUTIONAL INDEX
--------------- -----------------
12/29/92 10,000 10,000
10/93 10,753 10,981
10/94 10,813 11,406
10/95 12,927 14,422
10/96 15,360 17,898
10/97 18,671 23,645
10/98 22,199 28,844
10/99 26,236 36,248
This chart assumes an initial investment of $10,000 made on 12/29/92
(inception). Performance reflects fee waivers in effect. In the absence
of fee waivers, total return would be reduced. Performance is shown for
Institutional shares, which have lower expenses than Series A or Series B
shares. If those fees and expenses were reflected in the chart above, total
return would have been reduced. Returns shown include the reinvestment of all
dividends and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1999
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 Year 3 Years 5 Years Since Inception
-------------------------------------------------------------------------------
FIRSTAR GROWTH FUND -
INSTITUTIONAL 18.2 19.5 19.4 15.1 (12/29/92)
FIRSTAR GROWTH FUND -
A - NO LOAD 17.9 19.3 19.1 15.0 (12/29/92)
FIRSTAR GROWTH FUND -
A - LOAD<F2> 12.6 17.4 18.0 14.2 (12/29/92)
FIRSTAR GROWTH FUND -
B - NO LOAD - - - 2.3 (3/1/99)<F1>
FIRSTAR GROWTH FUND -
B - LOAD<F3> - - - (2.7) (3/1/99)<F1>
S&P 500 STOCK INDEX<F4> 25.7 26.5 26.0 20.7 (12/29/92)
A = Series A (retail class)
B = Series B (retail class)
<F1> Series B performance for the period March 1, 1999 to
October 31, 1999 is not annualized.
<F2> Reflects maximum sales charge of 4.50%.
<F3> Reflects maximum deferred sales charge of 5.00%
<F4> The S&P500 Stock Index is an index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The Index is
heavily weighted toward stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all
domestic common stocks.
An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Firstar Funds began to
offer Series A shares. Effective at the close of business on February 28, 1999,
Firstar Funds began to offer Series B shares. Series A shares have a 4.50%
maximum sales load and are subject to an annual 0.25% service organization fee.
The load performance for the Series A shares has been restated to reflect the
impact of the current sales charge. Series A performance prior to January 10,
1995, does not reflect the service organization fees. If service organization
fees had been reflected, performance would be reduced. Series B shares have
a 5.00% maximum deferred sales charge and are subject to an annual 0.25% service
organization fee and an annual 0.75% 12b-1 fee. Performance for all share
classes reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
TOP 5 EQUITY HOLDINGS 10/31/99
-----------------------------------------
AMERICAN INTERNATIONAL GROUP 2.9%
-----------------------------------------
MICROSOFT CORPORATION 2.8%
-----------------------------------------
STATE STREET CORPORATION 2.8%
-----------------------------------------
TYCO INTERNATIONAL, LTD. 2.8%
-----------------------------------------
MCI WORLDCOM, INC. 2.7%
-----------------------------------------
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/99
-----------------------------------------
$354,792,347
-----------------------------------------
<PAGE>
(LOGO) FIRSTAR FUNDS
-------------------------------------------------------------------------------
EMERGING GROWTH FUND
-------------------------------------------------------------------------------
Firstar Emerging Growth Fund seeks capital appreciation through investments in
small-sized companies with stock market capitalizations generally between $250
million and $2 billion. The Fund's weighted average market capitalization is
currently $1.2 billion, just slightly above the S&P SmallCap 600 Index weighted
average of $1.0 billion. For the fiscal year ended October 31, 1999, the Fund
performed poorly against the S&P SmallCap 600 Index and the average small
capitalization money manager, following a year of significant relative
outperformance in fiscal 1998. Investors favored high price-to-earnings stocks
(due to minimal or zero earnings in the denominator) against consistent growth
companies that fit our growth-at-a-reasonable-price (GARP) style. With this
market environment, the Fund returned -2.6% (Institutional shares) in fiscal
1999, trailing the S&P SmallCap 600 Index at +12.0% and the Russell 2000 Index
at +14.9%. Large stocks continued to dominate the top-returning categories as
the S&P 500 Index rose 25.7% during fiscal 1999.
Fiscal and calendar 1999 returns were driven primarily by technology stocks
across all market capitalizations. Basically, a heavy concentration in
technology stocks was the distinguishing characteristic between winning
portfolios and losing portfolios. In calendar 1999, the technology sector of the
S&P SmallCap 600 Index rose 25.0% and added 4.4% to the Index's total return.
The cumulative effort of all other sectors in the Index subtracted 3.3% from the
Index's total return. In fact, 13 of the S&P SmallCap's top 15 performing stocks
were technology companies, with some rising over 200%. Despite an overall
technology weight above the Index, the Fund did not benefit from the technology
frenzy due to bigger industry weights in data processing stocks which performed
poorly all year. In essence, the Fund's top technology performers in fiscal 1998
became the bottom performers of fiscal 1999. Specifically, Acxiom, National Data
and Mastech fell over 30% as their relative earnings momentum slowed within the
technology space. Today, the Fund is overweighted in technology stocks and
maintains positions in fundamentally improving industries that were not owned in
the Fund in fiscal 1998 or early in fiscal 1999. Examples of these industries
are semiconductors, e-commerce software, electrical components and
telecommunications equipment. Since mid-year, these positions have helped the
Fund gain moderate ground against the Index.
In addition to the technology sector, the Fund was overweighted in financial
stocks and consumer cyclical companies. Finance companies, with rising interest
rates this year, have lagged the returns of most sectors. Our finance positions
did outperform the Index (-5% against -8%); however, the overweight in a
declining sector hurt the Fund's overall positioning. The Fund is now
underweighted in finance companies based on our belief that consolidation of
small-sized banks will slow next year and the possibility of further interest
rate hikes. In consumer cyclicals, specifically retail stocks, the Fund fell -
14% against -12% for the Index. We continue to hold a larger retail position
than the Index.
The weighted average forward price-to-earnings ratio of the Fund is 21x, about
10% higher than that of the S&P SmallCap 600 Index; however, the expected
earnings growth of the 80 companies held within the Fund is 28%, more than
double the Index's estimated growth of 12%. We believe the continued focus on
consistent, quality companies with accelerating growth provides a solid platform
for outperformance in fiscal 2000.
Thank you for your support.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR EMERGING
GROWTH FUND - S&P WILSHIRE
INSTITUTIONAL SMALLCAP 600 NEXT 1750
--------------- -------------- ---------------
8/15/97 10,000 10,000 10,000
10/97 10,310 10,558 10,564
10/98 9,655 9,390 9,568
10/99 9,407 10,521 11,377
This chart assumes an initial investment of $10,000 made on 8/15/97 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced. Performance is shown for Institutional shares, which
have lower expenses than Series A or Series B shares. If those fees and expenses
were reflected in the chart above, total return would have been reduced. Returns
shown include the reinvestment of all dividends and other distributions. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be worth
more or less than their original cost.
-------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1999
-------------------------------------------------------------------------------
1 Year Since Inception
-------------------------------------------------------------------------------
FIRSTAR EMERGING GROWTH FUND - INSTITUTIONAL (2.6) (2.7) (8/15/97)
FIRSTAR EMERGING GROWTH FUND - A - NO LOAD (2.7) (2.9) (8/15/97)
FIRSTAR EMERGING GROWTH FUND - A - LOAD<F2> (7.1) (4.9) (8/15/97)
FIRSTAR EMERGING GROWTH FUND - B - NO LOAD - (3.3) (3/1/99)<F1>
FIRSTAR EMERGING GROWTH FUND - B - LOAD<F3> - (8.2) (3/1/99)<F1>
S&P SMALLCAP 600 INDEX<F4> 12.0 2.3 (8/15/97)
WILSHIRE NEXT 1750 INDEX<F5> 18.9 6.0 (8/15/97)
-------------------------------------------------------------------------------
A = Series A (retail class)
B = Series B (retail class)
<F1> Series B performance for the period March 1, 1999 to
October 31, 1999 is not annualized.
<F2> Reflects maximum sales charge of 4.50%.
<F3> Reflects maximum deferred sales charge of 5.00%.
<F4> The S&P SmallCap 600 Index is a capitalization weighted index that
measures the performance of selected U.S. stocks with small market
capitalizations.
<F5> The Wilshire Next 1750 Index is an unmanaged index which shows the
next largest 1,750 companies after the Top 750 of the Wilshire 5000
Stock Index.
An investment cannot be made directly in an index.
Series A shares have a 4.50% maximum sales load and are subject to an annual
0.25% service organization fee. Series B shares have a 5.00% maximum deferred
sales charge and are subject to an annual 0.25% service organization fee and a
0.75% 12b-1 fee. Performance reflects fee waivers in effect. In the absence of
fee waivers, total return would be reduced.
TOP 5 EQUITY HOLDINGS 10/31/99
--------------------------------------
SYKES ENTERPRISES,INC. 4.2%
--------------------------------------
THE BISYS GROUP, INC. 4.2%
--------------------------------------
RADIAN GROUP, INC. 3.3%
--------------------------------------
ACXIOM CORPORATION 3.3%
--------------------------------------
CDW COMPUTER CENTERS, INC. 3.0%
--------------------------------------
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/99
--------------------------------------
$149,315,954
--------------------------------------
<PAGE>
Firstar Stellar Funds
Money Market Funds:
Firstar Stellar Treasury Fund
Firstar Stellar Tax-Free Money Market Fund
Firstar Stellar Ohio Tax-Free Money Market Fund
Bond Funds:
Firstar Stellar Strategic Income Fund
Firstar Stellar U.S. Government Income Fund
Firstar Stellar Insured Tax-Free Bond Fund
Equity Funds:
Firstar Stellar Growth Equity Fund
Firstar Stellar Relative Value Fund
Firstar Stellar Science & Technology Fund
Firstar Stellar Fund
Firstar Stellar Capital Appreciation Fund
Firstar Stellar International Equity Fund
615 East Michigan Street
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
September __, 2000
Dear Shareholder:
On behalf of the Board of Trustees of Firstar Stellar Funds ("Stellar"), we
are pleased to invite you to a special meeting of shareholders of the Stellar
funds named above (each a "Stellar Fund") to be held at 10:00 a.m. (Eastern
time) on November 8, 2000 at the offices of Stellar's special counsel, Drinker
Biddle & Reath LLP, One Logan Square, 18/th/ and Cherry Streets, Philadelphia,
Pennsylvania (the "Special Meeting"). At the Special Meeting, you will be asked
to approve a proposed Agreement and Plan of Reorganization, dated as of
_________________ __, 2000 (the "Reorganization Agreement"), by and between
Stellar and Firstar Funds, Inc. ("Firstar"), which contemplates the
reorganization of your Stellar Fund into a corresponding fund of Firstar (each a
"Firstar Fund").
Background. Firstar Investment Research & Management Company, LLC
("FIRMCO"), a subsidiary of Firstar Corporation and investment adviser to
Firstar, is also the investment adviser for the Stellar Funds. Prior to April
1, 2000, the Stellar Funds were managed by the Capital Management Division of
Firstar Bank, N.A. As part of an internal restructuring of the investment
advisory function within the Firstar Corporation family, the investment
management resources of the Capital Management Division of Firstar Bank, N.A.
have been consolidated with those of FIRMCO.
<PAGE>
In addition, Mercantile Bancorporation Inc. merged with Firstar Corporation
on September 17, 1999. As a result of that merger, Mississippi Valley Advisors,
Inc. ("MVA"), formerly the investment adviser to Mercantile Mutual Funds, Inc.
("Mercantile"), became an indirect wholly-owned subsidiary of Firstar
Corporation. On March 1, 2000, FIRMCO acquired all of the assets and
liabilities of MVA. As a result of this acquisition, FIRMCO became investment
adviser to Mercantile.
Firstar Bank, N.A. serves as the investment adviser to the Firstar Select
Funds ("Select"). Because FIRMCO now manages Firstar, Stellar and Mercantile
and its affiliate manages Select, FIRMCO has decided to combine the assets of
Firstar, Stellar, Mercantile and Select into thirty-six separate Firstar
investment portfolios.
At the upcoming Special Meeting, you will be asked to approve the
reorganization of your Stellar Fund into a corresponding Firstar Fund (the
"Reorganization"). If shareholder approval is obtained, your Stellar Fund will
be reorganized into the corresponding Firstar Fund in mid to late November 2000,
when your shares in the Stellar Fund will be exchanged for shares of equal value
of a corresponding Firstar Fund.
STELLAR'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE
THE PROPOSED REORGANIZATION.
In considering these matters, you should note:
. The Same or Similar Objectives and Policies
Four of the Stellar Funds are proposed to be reorganized into existing
Firstar Funds that will have investment objectives and policies following the
Reorganization that are, in general, similar to those of the corresponding
Stellar Fund: (1) the Stellar Treasury Fund along with a separate portfolio
offered by Mercantile (the Mercantile Treasury Money Market Portfolio) will be
reorganized into the Firstar U.S. Treasury Money Market Fund, (2) the Stellar
Tax-Free Money Market Fund along with a separate portfolio offered by Mercantile
(the Mercantile Tax-Exempt Money Market Portfolio) will be reorganized into the
Firstar Tax-Exempt Money Market Fund, (3) the Stellar Fund will be reorganized
into the Firstar Balanced Income Fund, and (4) the Stellar Capital Appreciation
Fund will be reorganized into the Firstar MidCap Index Fund (the Firstar MidCap
Index Fund will have different investment objectives from the Stellar Capital
Appreciation Fund, but will hold many similar securities).
Six of the Stellar Funds (i.e., the Stellar Ohio Tax-Free Money Market
Fund, Stellar Strategic Income Fund, Stellar Growth Equity Fund, Stellar
Relative Value Fund, Stellar Science & Technology Fund and Stellar International
Equity Fund) are proposed to be reorganized into newly organized Firstar Funds
that have been specifically created for the purposes of the Reorganization and
will continue the investment objective and policies of the particular Stellar
Fund that is being reorganized into it.
Two of the Stellar Funds are proposed to be reorganized together with a
Mercantile Fund into existing Firstar Funds that have not yet commenced
operations. Each of these Firstar Funds
-2-
<PAGE>
will continue the investment objectives and policies of one of the two Funds
being reorganized into it: (1) the Stellar U.S. Government Income Fund and
Mercantile U.S. Government Securities Portfolio will reorganize into the Firstar
U.S. Government Securities Fund, which will continue the investment objective
and policies of the Mercantile U.S. Government Securities Portfolio, and (2) the
Stellar Insured Tax-Free Bond Fund and the Mercantile National Municipal Bond
Portfolio will reorganize into the Firstar National Municipal Bond Fund, which
will continue the investment objective and policies of the Mercantile National
Municipal Bond Portfolio. The Mercantile U.S. Government Securities Portfolio
and the Mercantile National Municipal Bond Portfolio have investment objectives
and policies that are substantially similar to the investment objectives and
policies of their respective corresponding Stellar Fund.
. Same Value of Shares
The Firstar Fund shares you receive in the Reorganization will have the
same total dollar value as the total dollar value of the Stellar Fund shares
that you held immediately prior to the Reorganization. The exchange of Stellar
Fund shares for Firstar Fund shares will be tax-free under federal tax laws, and
no front-end or contingent deferred sales loads will be charged as a result of
the exchange.
. Reasons for the Reorganization
The proposed Reorganization is expected to benefit Stellar Fund
shareholders by, among other things:
(i) offering a larger and more diverse group of mutual funds to all
shareholders;
(ii) actually or potentially reducing overall expenses by the achievement of
economies of scale associated with a larger asset base;
(iii) offering an opportunity for better investment performance due to an
expanded equity research staff that can focus on the core products available;
(iv) offering distribution channels that will have a better understanding of
the proprietary products offered by Firstar and will be better able to
communicate FIRMCO's investment style to existing and prospective shareholders,
thereby increasing assets in the complex; and
(v) allowing FIRMCO to effect portfolio transactions on more favorable terms.
To see how the Reorganization will affect your Stellar Fund, please
carefully review the enclosed materials where you will find information on the
expenses, investment policies and services relating to the corresponding Firstar
Funds.
The formal Notice of Special Meeting, a Combined Proxy
Statement/Prospectus and a Proxy Ballot are enclosed. If you own shares in more
than one of the Stellar Funds named above, more than one Proxy Ballot
accompanies these materials. Please be sure to vote and return each Proxy
Ballot.
-3-
<PAGE>
Whether or not you plan to attend the Special Meeting, you may vote by
proxy in any of the following ways:
1. Internet - Instructions for casting your vote via the Internet can
--------
be found in the enclosed proxy voting materials. The required control
number is printed on your enclosed Proxy Ballot. If this feature is
used, you are giving authorization for another person to execute your
proxy and there is no need to mail the Proxy Ballot.
2. Telephone - Instructions for casting your vote via telephone can
---------
be found in the enclosed proxy voting materials. The toll-free 800
number and required control number are printed on your enclosed Proxy
Ballot. If this feature is used, you are giving authorization for
another person to execute your proxy and there is no need to mail the
Proxy Ballot.
3. By mail - If you vote by mail, please indicate your voting
-------
instructions on the enclosed Proxy Ballot, date and sign the Ballot,
and return it in the envelope provided, which is addressed for your
convenience and needs no postage if mailed in the United States.
Please return your Proxy Ballot(s) or follow the instructions in the
enclosed proxy voting materials to vote on-line or by telephone so that your
vote will be counted.
Your vote is important to us regardless of the number of shares that you
own. Please vote by returning your Proxy Ballot(s) today, in the enclosed
postage-paid envelope. You also may vote your proxy by a toll-free phone call
or by voting on-line, as indicated in the enclosed materials.
The proposed Reorganization and the reasons for the Stellar Board of
Trustees' unanimous recommendation are discussed in detail in the enclosed
materials, which you should read carefully. If you have any questions about the
Reorganization, please do not hesitate to contact Stellar toll-free at 1-800-
677-FUND.
-4-
<PAGE>
We look forward to your attendance at the Special Meeting or receiving your
Proxy Ballot(s) or your on-line or telephone instructions so that your shares
may be voted at the Special Meeting.
Sincerely,
Bruce Laning
President
-5-
<PAGE>
FIRSTAR FUNDS, INC.
September __, 2000
Questions & Answers
-------------------
For Shareholders of Firstar Stellar Funds:
The following questions and answers provide an overview of the proposal to
reorganize your portfolio of Firstar Stellar Funds ("Stellar") into a
corresponding portfolio offered by Firstar Funds, Inc. ("Firstar"). We also
encourage you to read the full text of the combined proxy statement/prospectus
(the "Proxy/Prospectus") that follows.
--------------------------------------------------------------------------------
Q: What are Stellar shareholders being asked to vote upon?
A: Stellar shareholders are being asked to consider and approve a proposal to
reorganize each of the portfolios offered by Stellar (each, a "Stellar Fund")
into a corresponding portfolio of Firstar (each, a "Firstar Fund").
Q. Why has the reorganization of the Stellar Funds into corresponding Firstar
Funds been recommended?
A: The Board of Trustees of Stellar and the Board of Directors of Firstar have
each determined that the reorganization of each of the Stellar Funds into its
respective corresponding Firstar Fund is in the best interests of the respective
shareholders of each such Fund. Among the benefits for Stellar Fund
shareholders considered by the Stellar Board of Trustees were: access to a
larger and more diverse group of mutual funds; access to the expanded equity
research capabilities of Firstar Investment Research & Management Company, LLC;
the potential for individual Firstar Funds to achieve greater portfolio
diversification and engage in investment transactions on potentially more
advantageous terms; the ability to spread relatively fixed costs, such as legal
fees, over a larger asset base; and the ability of Firstar to maintain existing
clients and attract new investors.
Q: What is the anticipated timing of the reorganization?
A: The meeting of shareholders to consider the proposal is scheduled to occur
on November 8, 2000. If all necessary approvals are obtained, the proposed
reorganization will likely take place in mid to late November 2000.
Q: Who will receive the Proxy/Prospectus material?
A: The Proxy/Prospectus has been mailed to all persons and entities that held
shares of record in a Stellar Fund on September 15, 2000. Please note that in
some cases record ownership of and/or voting authority over Stellar Fund shares
may reside with a fiduciary or other agent. In these cases, the fiduciary or
other agent may receive the combined Proxy/Prospectus.
<PAGE>
Q: How are the Stellar Funds proposed to be reorganized?
A: As you may know, Stellar consists of twelve separate mutual funds. The
proposed agreement and plan of reorganization for these funds, approved by the
Stellar Board of Trustees, contemplates the reorganization of four of these
Stellar Funds into four Firstar Funds having similar investment objectives and
policies, except that the Stellar Capital Appreciation Fund will be merged into
the Firstar MidCap Index Fund which holds many similar securities but has
different investment objectives. In addition, six Stellar Funds will be
reorganized into six Firstar Funds (each a "Shell Firstar Fund") that are being
created to continue the current operations of these Stellar Funds. The
investment objectives and strategies of each of these six Shell Firstar Funds
will be identical to those of its corresponding Stellar Fund. Each of the two
remaining Stellar Funds will be reorganized together with a portfolio of
Mercantile Mutual Funds, Inc. (each a "Mercantile Fund") into a separate Firstar
Fund being created in connection with the reorganization that will continue the
investment objectives and policies of the Mercantile Fund. The investment
objectives and strategies of each of these two Mercantile Funds are
substantially similar to those of the relevant Stellar Fund.
Under the proposed agreement and plan of reorganization, each Stellar Fund
will be reorganized into the Firstar Fund listed directly opposite such Stellar
Fund in the table below. Those Stellar Funds reorganizing into Shell Firstar
Funds are printed in bold text:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Stellar Fund Firstar Fund
------------------------------------------------------------------------------------------------
<S> <C>
Treasury Fund U.S. Treasury Money Market Fund*
------------------------------------------------------------------------------------------------
Tax-Free Money Market Fund Tax-Exempt Money Market Fund
------------------------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund Ohio Tax-Exempt Money Market Fund*
------------------------------------------------------------------------------------------------
Strategic Income Fund Strategic Income Fund*
------------------------------------------------------------------------------------------------
U.S. Government Income Fund U.S. Government Securities Fund**
------------------------------------------------------------------------------------------------
Insured Tax-Free Bond Fund National Municipal Bond Fund**
------------------------------------------------------------------------------------------------
Growth Equity Fund Large Cap Growth Fund*
------------------------------------------------------------------------------------------------
Relative Value Fund Relative Value Fund*
------------------------------------------------------------------------------------------------
Science & Technology Fund Science & Technology Fund*
------------------------------------------------------------------------------------------------
Stellar Fund Balanced Income Fund
------------------------------------------------------------------------------------------------
Capital Appreciation Fund MidCap Index Fund
------------------------------------------------------------------------------------------------
International Equity Fund Global Equity Fund*
------------------------------------------------------------------------------------------------
</TABLE>
* The Stellar Fund's investment objectives and policies are expected to
continue following the proposed reorganization.
** The Mercantile Fund's investment objectives and policies are expected to
continue following the proposed reorganization.
-2-
<PAGE>
Q: Which class of shares of the Firstar Funds will I receive in the
reorganization?
A: Each Stellar Fund (except the Stellar Tax-Free Money Market Fund, Stellar
Ohio Tax-Free Money Market Fund and Stellar International Equity Fund) and each
Firstar Fund offer multiple classes of shares to investors. The various classes
of Stellar and Firstar Fund shares all represent interests in the same portfolio
of securities owned by the Stellar Fund or Firstar Fund, but have different
expenses and characteristics, such as distribution and shareholder servicing
arrangements, that are intended to meet the needs of different types of
investors. In general, eligibility to purchase a particular class of Stellar
Fund shares or Firstar Funds shares turns on whether the investor is
characterized as an "institutional investor" or a "retail investor."
To determine which class of shares of the relevant Firstar Fund that you
will receive in the reorganization, find the name of your Stellar Fund in column
1 of the table below, then find the name of the class of shares you currently
own in the Stellar Fund listed under the name of your Stellar Fund. The name of
the class of shares you will receive in the reorganization is listed in column 2
of the table below directly opposite the name of the class of shares you
currently own in the Stellar Fund.
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar Treasury Fund Firstar U.S. Treasury Money Market Fund
Class C Shares Retail A Shares
Class Y Shares Institutional Shares
Stellar Tax-Free Money Market Fund Firstar Tax-Exempt Money Market Fund
Class C Shares not purchased through an Retail A Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class C Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar Ohio Tax-Free Money Market Fund Firstar Ohio Tax-Exempt Money Market Fund
Class C Shares not purchased through an Retail A Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class C Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
Stellar Strategic Income Fund Firstar Strategic Income Fund
Class A Shares Retail A Shares
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar U.S. Government Income Fund Firstar U.S. Government Securities Fund
Class A Shares not purchased through an Retail A Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class A Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Bond Fund
Class A Shares not purchased through an Retail A Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class A Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar Growth Equity Fund Firstar Large Cap Growth Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Relative Value Fund Firstar Relative Value Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Science & Technology Fund Firstar Science & Technology Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Fund Firstar Balanced Income Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Capital Appreciation Fund Firstar MidCap Index Fund
Class A Shares Retail A Shares
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar International Equity Fund Firstar Global Equity Fund
Class A Shares Institutional Shares
</TABLE>
Q: What are the costs and federal tax implications to shareholders in
connection with the proposed reorganization?
A: In general, the costs of the reorganization will not be borne by Stellar
Fund shareholders. No sales charge will be imposed on the shares of the Firstar
Funds issued to you in the reorganization, which means that the aggregate value
of the Firstar Fund shares issued to you will be equal to the aggregate value of
the Stellar Fund shares that you own immediately prior to the reorganization. In
addition, the exchange of Stellar Fund shares for Firstar Fund shares will be
tax-free under federal tax laws. However, the sale of securities by a Stellar
Fund, prior to the reorganization, whether in the ordinary course of business or
in anticipation of the reorganization, could increase the amount of the taxable
capital gains distribution made prior to the reorganization. See "The
Reorganization -Federal Income Tax Considerations" for additional information.
-7-
<PAGE>
Firstar Stellar Funds
Money Market Funds:
Firstar Stellar Treasury Fund
Firstar Stellar Tax-Free Money Market Fund
Firstar Stellar Ohio Tax-Free Money Market Fund
Bond Funds:
Firstar Stellar Strategic Income Fund
Firstar Stellar U.S. Government Income Fund
Firstar Stellar Insured Tax-Free Bond Fund
Equity Funds:
Firstar Stellar Growth Equity Fund
Firstar Stellar Relative Value Fund
Firstar Stellar Science & Technology Fund
Firstar Stellar Fund
Firstar Stellar Capital Appreciation Fund
Firstar Stellar International Equity Fund
615 East Michigan Street
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On November 8, 2000
To Shareholders of Firstar Stellar Funds:
NOTICE IS GIVEN THAT a special meeting of the shareholders (the "Special
Meeting") of each fund of the Firstar Stellar Funds named above (each, a
"Stellar Fund" and together, the "Stellar Funds"), each of which is a separate
series of Firstar Stellar Funds ("Stellar"), will be held at 10:00 a.m. (Eastern
time), on November 8, 2000, at the offices of Stellar's special counsel, Drinker
Biddle & Reath LLP, One Logan Square, 18/th/ & Cherry Streets, Philadelphia,
Pennsylvania, for the purpose of considering and voting upon:
ITEM 1. A proposal to approve an Agreement and Plan of Reorganization by
and between Stellar and Firstar Funds, Inc. ("Firstar"), which provides for
and contemplates: (a) the transfer of substantially all of the assets and
liabilities of each Stellar Fund to a corresponding investment portfolio of
Firstar (each, a "Firstar Fund") in exchange for shares of designated
classes of the corresponding Firstar Fund of equal value; (b) the
distribution of the shares of the designated classes of each such Firstar
Fund to the shareholders of the corresponding Stellar Fund in liquidation
of each of the Stellar Funds;
<PAGE>
and (c) the deregistration under the Investment Company Act of 1940, as
amended, and the termination under state law of Stellar.
ITEM 2. Such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
Item 1 is described in the attached Combined Proxy Statement/Prospectus.
Your Trustees unanimously recommend that you vote in favor of the proposal.
Shareholders of record as of the close of business on September 15, 2000
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment(s) thereof.
You are requested to mark, date, sign and return promptly in the enclosed
envelope each accompanying Proxy Ballot that is being solicited by the Stellar
Board of Trustees. This is important to ensure a quorum at the Special Meeting.
You also may return proxies by: 1) touch-tone telephone voting or 2) voting on-
line. Proxies may be revoked at any time before they are exercised by submitting
to Stellar a written notice of revocation or a subsequently executed proxy or by
attending the Special Meeting and voting in person.
By Order of the Board of Trustees
Bruce Laning
President
We need your proxy vote immediately. You may think that your vote is not
important, but it is vital. By law, the Special Meeting will have to be
adjourned without conducting any business if less than a majority of the shares
eligible to vote are represented. In that event, Stellar would continue to
solicit votes in an attempt to achieve a quorum. Your vote could be critical in
allowing Stellar to hold the Special Meeting as scheduled, so please return your
Proxy Ballot(s) immediately or vote on-line or by telephone.
-2-
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
September __, 2000
FIRSTAR STELLAR FUNDS
615 East Michigan Street
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
1 800-677-FUND
FIRSTAR FUNDS, INC.
615 East Michigan Street
Milwaukee, WI 53201-3011
1-800-677-FUND
This combined proxy statement/prospectus ("Proxy/Prospectus") is being
sent to shareholders of the Firstar Stellar Treasury Fund, Firstar Stellar Tax-
Free Money Market Fund, Firstar Stellar Ohio Tax-Free Money Market Fund, Firstar
Stellar Strategic Income Fund, Firstar Stellar U.S. Government Income Fund,
Firstar Stellar Insured Tax-Free Bond Fund, Firstar Stellar Growth Equity Fund,
Firstar Stellar Relative Value Fund, Firstar Stellar Science & Technology Fund,
Firstar Stellar Fund, Firstar Stellar Capital Appreciation Fund and Firstar
Stellar International Equity Fund (each a "Stellar Fund" and collectively the
"Stellar Funds"). The Board of Trustees of Firstar Stellar Funds ("Stellar")
has called a Special Meeting of Shareholders (the "Special Meeting") at the
offices of Stellar's special counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ & Cherry Streets, Philadelphia, Pennsylvania, on November 8, 2000
at 10:00 a.m. Eastern time.
At the Special Meeting, shareholders will be asked:
. To approve a proposed Agreement and Plan of Reorganization dated as of
__________, 2000 (the "Reorganization Agreement"), by and between Stellar
and Firstar Funds, Inc. ("Firstar"), which provides for and contemplates
(a) the transfer of substantially all of the assets and liabilities of each
Stellar Fund to a corresponding investment portfolio of Firstar (each a
"Firstar Fund" and collectively, the "Firstar Funds") in exchange for
shares of equal value of designated classes of the corresponding Firstar
Fund; (b) the distribution of the shares of the designated classes of the
corresponding Firstar Fund to shareholders of each Stellar Fund in
liquidation of each of the Stellar Funds; and (c) the deregistration under
the Investment Company Act of 1940, as amended (the "1940 Act"), and
termination under state law, of Stellar.
The Reorganization Agreement, the form of which is attached as
Appendix I to this Proxy/Prospectus, provides for the transfer of substantially
all of the assets and liabilities of each Stellar Fund to a corresponding
Firstar Fund in exchange for Retail A Shares, Retail B Shares, or
-1-
<PAGE>
Institutional Shares, as applicable, of the corresponding Firstar Fund of equal
value. Stellar and Firstar are both registered open-end management investment
companies (mutual funds).
As a result of the reorganization, shareholders of the Stellar Funds will
become shareholders of the Firstar Funds (the Stellar Funds and Firstar Funds
are sometimes referred to as the "Funds").
The transactions contemplated by the Reorganization Agreement are referred
to collectively as the "Reorganization."
If the Reorganization Agreement is approved and the transactions
contemplated thereby are consummated, Stellar will transfer all of its assets
and liabilities, deregister as a registered investment company and terminate
under Massachusetts law.
This Proxy/Prospectus sets forth concisely the information that a Stellar
Fund shareholder should know before voting and investing, and should be retained
for future reference. It is both Stellar's proxy statement for the Special
Meeting and a prospectus for the Firstar U.S. Treasury Money Market Fund,
Firstar Tax-Exempt Money Market Fund, Firstar U.S. Government Securities Fund,
Firstar National Municipal Bond Fund, Firstar Balanced Income Fund and Firstar
MidCap Index Fund (the "Existing Firstar Funds"). It is not a prospectus for
the Firstar Ohio Tax-Exempt Money Market Fund, Firstar Strategic Income Fund,
Firstar Large Cap Growth Fund, Firstar Relative Value Fund, Firstar Science &
Technology Fund and Firstar Global Equity Fund (the "Shell Firstar Funds")
because these funds were created to continue the business of their corresponding
Stellar Funds. Each of these Shell Firstar Funds will have substantially the
same investment objectives, policies and restrictions as its respective
corresponding Stellar Fund.
Additional information is set forth in the Statement of Additional
Information relating to this Proxy/Prospectus and in the prospectuses dated
March 31, 2000 for the Stellar Funds, which are incorporated herein by
reference. Each of these documents is on file with the Securities and Exchange
Commission (the "SEC"), and is available without charge by calling or writing
Stellar at the telephone number or address stated above. The information
contained in the current prospectuses of the Existing Firstar Funds (other than
the Firstar U.S. Government Securities Fund and Firstar National Municipal Bond
Fund), dated March 1, 2000, for the designated share classes, and ____, 2000,
with respect to the Firstar U.S. Government Securities Fund and Firstar National
Municipal Bond Fund, also is incorporated by reference into this
Proxy/Prospectus. In addition, current prospectuses for the designated share
classes of the Existing Firstar Funds accompany this Proxy/Prospectus. The
Annual Report for the year ended October 31, 1999 and the Semi-Annual Report for
the period ended April 30, 2000 for the Existing Firstar Funds (other than the
Firstar U.S. Government Securities Fund and Firstar National Municipal Bond
Fund, which have not commenced operations as of the date of this
Proxy/Prospectus) are available without charge by calling or writing Firstar at
the telephone number or address stated above. Each of these documents is also
available on the SEC's website at www.sec.gov.
This Proxy/Prospectus is expected to be first sent to shareholders on or
about September ___, 2000.
-2-
<PAGE>
The securities offered hereby have not been approved or disapproved by the
Securities and Exchange Commission or any state securities commission nor has
the Securities and Exchange Commission or any state securities commission passed
upon the accuracy or adequacy of this Proxy/Prospectus. Any representation to
the contrary is a criminal offense.
Shares of Stellar and Firstar are not deposits or obligations of, or
guaranteed or endorsed by, Firstar Corporation, Firstar Investment Research &
Management Company, LLC or any of their affiliates or any other bank. Such
shares are not insured by the U.S. government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency. Mutual
fund shares involve certain investment risks, including the possible loss of
principal. The distributor of Stellar and Firstar is Quasar Distributors LLC.
Money market funds seek to maintain a net asset value of $1.00 per share.
An investment in a money market fund is neither insured nor guaranteed by the
U.S. government. There can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share.
-3-
<PAGE>
<TABLE>
<S> <C>
FEE TABLES.................................................................... 1
Table I-A.................................................................... 2
Table I-B.................................................................... 4
Table I-C.................................................................... 6
SUMMARY....................................................................... 9
Proposed Reorganization...................................................... 9
Overview of the Funds........................................................ 13
Table II................................................................... 15
Federal Income Tax Consequences.............................................. 17
Stellar and Firstar Board Consideration...................................... 17
Principal Risk Factors....................................................... 17
Voting Information........................................................... 29
THE REORGANIZATION............................................................ 30
Reasons for the Reorganization............................................... 30
Description of the Reorganization Agreement.................................. 30
Table III(A)............................................................... 31
Table III(B)............................................................... 35
Stellar Board Consideration.................................................. 37
Capitalization............................................................... 38
Table IV................................................................... 39
Federal Income Tax Considerations............................................ 53
COMPARISON OF STELLAR FUNDS AND FIRSTAR FUNDS................................. 54
Investment Objectives and Policies........................................... 54
Investment Advisory Services................................................. 56
Table V.................................................................... 56
Other Service Providers for the Stellar Funds and the Firstar Funds.......... 57
Sales Loads, Distribution Arrangements and Shareholder
Servicing Arrangements for Stellar......................................... 57
Sales Load, Distribution and Shareholder Servicing Arrangements for Firstar.. 60
Administration Agreements.................................................... 62
Shareholder Transactions and Policies........................................ 62
Fees and Expenses............................................................ 62
Performance.................................................................. 63
Share Structure.............................................................. 63
Comparison of Trust and Corporate Structure.................................. 64
VOTING MATTERS................................................................ 65
General Information.......................................................... 65
Shareholder and Board Approvals.............................................. 66
Principal Shareholders....................................................... 67
Table VI(A)................................................................ 67
Table VI(B)................................................................ 68
Table VI(C)................................................................ 68
Quorum....................................................................... 68
Annual Meetings and Shareholder Meetings..................................... 69
ADDITIONAL INFORMATION ABOUT FIRSTAR.......................................... 69
ADDITIONAL INFORMATION ABOUT STELLAR.......................................... 69
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
FINANCIAL STATEMENTS.......................................................... 70
OTHER BUSINESS................................................................ 70
SHAREHOLDER INQUIRIES......................................................... 71
</TABLE>
APPENDICES I FORM OF AGREEMENT AND
PLAN OF REORGANIZATION I-1
II EXPENSE SUMMARIES OF THE STELLAR
FUNDS AND CORRESPONDING FIRSTAR FUNDS II-1
III INVESTMENT OBJECTIVES, LIMITATIONS AND
CERTAIN SIGNIFICANT INVESTMENT POLICIES
OF THE REORGANIZING STELLAR FUNDS
AND CORRESPONDING FIRSTAR FUNDS III-1
IV SHAREHOLDER TRANSACTIONS AND
SERVICES OF THE FIRSTAR FUNDS AND THE
CORRESPONDING STELLAR FUNDS IV-1
V PERFORMANCE COMPARISONS OF THE
EXISTING FIRSTAR FUNDS AND THEIR
CORRESPONDING STELLAR FUNDS V-1
VI MANAGEMENT DISCUSSION OF FIRSTAR
FUND PERFORMANCE VI-1
-ii-
<PAGE>
FEE TABLES
The following tables show which classes of shares of the following Firstar
Funds are projected to experience higher, lower or the same annualized per share
total operating expense ratios as the corresponding class of shares of their
corresponding Stellar Fund, both before and after fee waivers, based upon the
fee arrangements and commitments that will be in place upon consummation of the
Reorganization.
Firstar Investment Research & Management Company, LLC ("FIRMCO") has
committed to waive fees and reimburse expenses as needed to ensure that until
October 31, 2001 the total operating expense ratios for each class of shares of
each Firstar Fund will not exceed the pro forma after waiver expense ratios in
Table I-C. These fee waivers and expense reimbursements may be terminated at any
time after October 31, 2001.
-1-
<PAGE>
Table I-A (After Fee Waivers)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Higher Expenses Lower Expenses Same Expenses
--------------- -------------- -------------
than the than the as the
-------- -------- ------
Corresponding Corresponding Corresponding
------------- ------------- -------------
Fund and Class Stellar Fund Stellar Fund Stellar Fund
-------------- ------------ ------------ ------------
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Firstar U.S. Treasury Money
Market Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money
Market Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar Ohio Tax-Exempt
Money Market Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar Strategic Income Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar U.S. Government
Securities Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar National Municipal
Bond Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar Large Cap Growth Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Higher Expenses Lower Expenses Same Expenses
--------------- -------------- -------------
than the than the as the
-------- -------- ------
Corresponding Corresponding Corresponding
------------- ------------- -------------
Fund and Class Stellar Fund Stellar Fund Stellar Fund
-------------- ------------ ------------ ------------
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Firstar Relative Value Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar Science & Technology
Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar Balanced Income Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar MidCap Index Fund
------------------------------------------------------------------------------------------------
Retail A Shares X
------------------------------------------------------------------------------------------------
Retail B Shares X
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Firstar Global Equity Fund
------------------------------------------------------------------------------------------------
Institutional Shares X
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE>
Table I-B (Before Fee Waivers)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Higher Expenses Lower Expenses
than the than the Same Expenses
Corresponding Corresponding as the Corresponding
Fund and Class Stellar Fund Stellar Fund Stellar Fund
-------------- ------------ ------------ ------------
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Firstar U.S. Treasury Money
Market Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money Market Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar Ohio Tax-Exempt
Money Market Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar Strategic Income Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar U.S. Government
Securities Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar National Municipal Bond Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Higher Expenses Lower Expenses
than the than the Same Expenses
Corresponding Corresponding as the Corresponding
Fund and Class Stellar Fund Stellar Fund Stellar Fund
-------------- ------------ ------------ ------------
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------
Firstar Large Cap Growth Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar Relative Value Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar Science & Technology Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar Balanced Income Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar MidCap Index Fund
--------------------------------------------------------------------------------------------------
Retail A Shares X
--------------------------------------------------------------------------------------------------
Retail B Shares X
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Firstar Global Equity Fund
--------------------------------------------------------------------------------------------------
Institutional Shares X
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE>
Table I-C (Before and After Fee Waivers)
The following table shows (i) the current annualized total expense
ratio as of April 30, 2000 of each of the Stellar Funds, before and after fee
waivers; (ii) the annualized total expense ratio of each of the Existing
Firstar Funds (other than the Firstar U.S. Government Securities Fund and
Firstar National Municipal Bond Fund, which had not commenced operations as of
the date of this Proxy/Prospectus and Institutional Shares of the Firstar U.S.
Treasury Money Market Fund and Firstar Tax-Exempt Money Market Fund, which were
not offered as of the date of this Proxy/Prospectus), before and after fee
waivers restated to reflect the expenses each Fund expects to incur during the
current fiscal year; and (iii) the pro forma annualized total expense ratio of
the Shell Firstar Funds or the combined portfolios consisting of a Stellar Fund
and its corresponding Firstar Fund, as the case may be, before and after fee
waivers, as of April 30, 2000, based upon the fee arrangements and commitments
that will be in place upon consummation of the Reorganization.
Total Expense Information
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Total Operating Total Operating Total Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Stellar Fund/ Before/After Firstar Fund/ Before/After Share Class Before/After
Share Class Waivers Share Class Waivers Post-Reorganization Waivers
----------- ------- ----------- ------- ------------------- -------
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Money Market Funds:
----------------------------------------------------------------------------------------------------------------------------------
Stellar Treasury Firstar U.S. Treasury Firstar U.S. Treasury
Fund Money Market Fund Money Market Fund
Class C Shares 1.18%/0.99% Retail A Shares 0.99%/0.73% Retail A Shares 1.08%/0.94%
Class Y Shares 0.93%/0.84% Institutional Shares n/a Institutional Shares 0.83%/0.79%
----------------------------------------------------------------------------------------------------------------------------------
Stellar Tax-Free Firstar Tax-Exempt Firstar Tax-Exempt
Money Market Fund Money Market Fund Money Market Fund
Class C Shares* 1.30%/0.91% Retail A Shares 1.22%/0.72% Retail A Shares 1.18%/0.79%
Class C Shares** 1.30%/0.91% Institutional Shares n/a Institutional Shares 0.93%/0.79%
----------------------------------------------------------------------------------------------------------------------------------
Stellar Ohio Tax-Free Firstar Ohio Tax-Exempt Firstar Ohio Tax-Exempt
Money Market Fund Money Market Fund (shell) Money Market Fund (shell)
Class C Shares* 1.35%/0.81% Retail A Shares n/a Retail A Shares 1.38%/0.79%
Class C Shares** 1.35%/0.81% Institutional Shares n/a Institutional Shares 1.13%/0.79%
----------------------------------------------------------------------------------------------------------------------------------
Bond Funds:
----------------------------------------------------------------------------------------------------------------------------------
Stellar Strategic Firstar Strategic Firstar Strategic
Income Fund Income Fund (shell) Income Fund (shell)
Class A Shares 1.70%/1.36% Retail A Shares n/a Retail A Shares 1.74%/1.45%
Class B Shares+ 2.20%/1.36% Retail B Shares n/a Retail B Shares 2.24%/1.70%
Class B Shares++ 2.20%/1.36% Institutional Shares n/a Institutional Shares 1.24%/1.20%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Total Operating Total Operating Total Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Stellar Fund/ Before/After Firstar Fund/ Before/After Share Class Before/After
Share Class Waivers Share Class Waivers Post-Reorganization Waivers
----------- ------- ----------- ------- ------------------- -------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
Stellar U. S. Firstar U. S. Firstar U. S.
Government Government Government
Income Fund Securities Fund Securities Fund
Class A Shares# Retail A Shares Retail A Shares
Class A Shares## 1.33%/0.99% Institutional Shares n/a Institutional Shares 1.08%/0.98%
Class B Shares+ 1.33%/0.99% Retail B Shares n/a Retail B Shares 0.83%/0.73%
Class B Shares++ 1.33%/0.99% Institutional Shares n/a Institutional Shares 1.83%/1.73%
1.33%/0.99% n/a 0.83%/0.73%
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Firstar National Firstar National
Bond Fund Municipal Bond Fund Municipal Bond Fund
Class A Shares# 1.47%/0.93% Retail A Shares n/a Retail A Shares 1.01%/1.01%
Class A Shares## 1.47%/0.93% Institutional Shares n/a Institutional Shares 0.76%/0.76%
Class B Shares+ 1.97%/0.93% Retail B Shares n/a Retail B Shares 1.76%/1.76%
Class B Shares++ 1.97%/0.93% Institutional Shares n/a Institutional Shares 0.76%/0.76%
-----------------------------------------------------------------------------------------------------------------------------------
Stock Funds:
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Growth Equity Firstar Large Cap Firstar Large Cap
Fund Growth Fund (shell) Growth Fund (shell)
Class A Shares 1.48%/1.39% Retail A Shares n/a Retail A Shares 1.43%/1.39%
Class B Shares 1.48%/1.39% Retail B Shares n/a Retail B Shares 2.18%/2.14%
Class Y Shares 1.23%/1.14% Institutional Shares n/a Institutional Shares 1.18%/1.14%
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Relative Value Firstar Relative Value Firstar Relative Value
Fund Fund (shell) Fund (shell)
Class A Shares 1.47%/1.38% Retail A Shares n/a Retail A Shares 1.22%/1.22%
Class B Shares 1.47%/1.38% Retail B Shares n/a Retail B Shares 1.97%/1.97%
Class Y Shares 1.22%/1.13% Institutional Shares n/a Institutional Shares 0.97%/0.97%
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Science Firstar Science & Firstar Science &
& Technology Technology Fund Technology Fund
Fund (shell) (shell)
Class A Shares 1.65%/1.56% Retail A Shares n/a Retail A Shares 1.56%/1.56%
Class B Shares 2.15%/2.06% Retail B Shares n/a Retail B Shares 2.31%/2.31%
Class Y Shares 1.40%/1.31% Institutional Shares n/a Institutional Shares 1.31%/1.31%
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Firstar Balanced Firstar Balanced
Fund Income Fund Income Fund
Class A Shares 1.72%/1.63% Retail A Shares 1.41%/1.22% Retail A Shares 1.33%/1.22%
Class B Shares 2.22%/2.13% Retail B Shares 2.16%/1.97% Retail B Shares 2.08%/1.97%
Class Y Shares 1.47%/1.38% Institutional Shares 1.16%/0.97% Institutional Shares 1.08%/0.97%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Pro Forma
Total Operating Total Operating Total Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Stellar Fund/ Before/After Firstar Fund/ Before/After Share Class Before/After
Share Class Waivers Share Class Waivers Post-Reorganization Waivers
----------- ------- ----------- ------- ------------------- -------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Capital Firstar MidCap Index Firstar MidCap Index
Appreciation Fund Fund Fund
Class A Shares 1.70%/1.36% Retail A Shares 0.90%/0.75% Retail A Shares 0.85%/0.75%
Class B Shares+ 2.20%/2.11% Retail B Shares 1.65%/1.50% Retail B Shares 1.60%/1.50%
Class B Shares++ 2.20%/2.11% Institutional Shares 0.65%/0.50% Institutional Shares 0.60%/0.50%
----------------------------------------------------------------------------------------------------------------------------------
Stellar International Firstar Global Equity Firstar Global Equity
Equity Fund Fund (shell) Fund (shell)
Class A Shares 1.52%/1.18% Institutional Shares n/a Institutional Shares 1.08%/1.02%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class C Shares of this Stellar Fund
not purchased through an investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A. will receive Retail A Shares of
the corresponding Firstar Fund with respect to such Class C Shares.
** In the Reorganization, holders of Class C Shares of this Stellar Fund
purchased through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A. will receive Institutional Shares of
# In the Reorganization, holders of Class A Shares of this Stellar Fund
not purchased through an investment management, trust, custody, or other
agency relationships with Firstar Bank, N.A. will receive Retail A Shares
of the corresponding Firstar Fund with respect to such Class A Shares.
## In the Reorganization, holders of Class A Shares of this Stellar Fund
purchased through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A. will receive Institutional Shares of
the corresponding Firstar Fund with respect to such Class A Shares.
+ In the Reorganization, holders of Class B Shares of this Stellar Fund
not purchased through an investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A. will receive Retail B Shares of
the corresponding Firstar Fund with respect to such Class B Shares
++ In the Reorganization, holders of Class B Shares of this Stellar Fund
purchased through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A. will receive Institutional Shares of
the corresponding Firstar Fund with respect to such Class B Shares.
Detailed pro forma expense information for each proposed reorganization is
included in Appendix II.
-8-
<PAGE>
SUMMARY
The following is a summary of certain information relating to the proposed
Reorganization between Firstar and Stellar. More complete information is
contained elsewhere in this Proxy/Prospectus, the Prospectuses and Statements of
Additional Information of Firstar and Stellar, and the Appendices attached
hereto.
Proposed Reorganization. The Reorganization Agreement provides for and
contemplates: (1) the transfer of substantially all of the assets and
liabilities of each Stellar Fund to a corresponding investment portfolio offered
by Firstar (each, a "Corresponding Firstar Fund"), in exchange for shares of the
designated classes of such Corresponding Firstar Fund of equal value (such
shares of the designated classes of such Corresponding Firstar Fund, the
"Firstar Fund Shares"); (2) the distribution of the Firstar Fund Shares to the
shareholders of the Stellar Funds in liquidation of each of the Stellar Funds;
and (3) the deregistration under the 1940 Act and the termination under state
law of Stellar. It is anticipated that the Reorganization will take place in
two stages, with six of the Stellar Funds first transferring their respective
assets and liabilities to six corresponding Existing Firstar Funds with the same
or similar investment objectives and policies in exchange for the Firstar Fund
Shares issued by such corresponding Existing Firstar Funds, and a week later the
remaining six Stellar Funds transferring their respective assets and liabilities
to six Shell Firstar Funds organized for the purpose of acquiring the assets and
liabilities, and then continuing the business, of such Stellar Fund, in exchange
for the Firstar Fund Shares issued by such corresponding Shell Firstar Funds.
The liquidation of each Stellar Fund, and the distribution of the Firstar Fund
Shares to the respective shareholders of such Stellar Fund, shall occur
immediately after the receipt by such Stellar Fund of all of the Firstar Fund
Shares to be received by such Stellar Fund in the Reorganization. The
Reorganization is subject to a number of conditions, including approval by the
shareholders of each Stellar Fund.
As a result of the proposed Reorganization, each Stellar Fund shareholder
will become a shareholder of its Corresponding Firstar Fund and will hold,
immediately after the Reorganization, Firstar Fund Shares in such Corresponding
Firstar Fund having a total dollar value equal to the total dollar value of the
shares such shareholder held in the Stellar Fund immediately prior to the
effectiveness of the Reorganization. The exchange of shares in the
Reorganization will be tax-free under federal tax laws and shareholders of the
Firstar Funds and the Stellar Funds will not pay any sales charge as a result of
the exchange of the shares in the Reorganization.
The following chart summarizes which share class of each Firstar Fund a
Stellar Fund shareholder will receive in the Reorganization:
-9-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar Treasury Fund Firstar U.S. Treasury Money Market Fund
Class C Shares Retail A Shares
Class Y Shares Institutional Shares
Stellar Tax-Free Money Market Fund Firstar Tax-Exempt Money Market Fund
Class C Shares not purchased through an Retail A Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class C Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Stellar Ohio Tax-Free Money Market Fund Firstar Ohio Tax-Exempt Money Market Fund
Class C Shares not purchased through an Retail A Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class C Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Stellar Strategic Income Fund Firstar Strategic Income Fund
Class A Shares Retail A Shares
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar U.S. Government Income Fund Firstar U.S. Government Securities Fund
Class A Shares not purchased through an Retail A Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class A Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Bond Fund
Class A Shares not purchased through an Retail A Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class A Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar Growth Equity Fund Firstar Large Cap Growth Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Relative Value Fund Firstar Relative Value Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Science & Technology Fund Firstar Science & Technology Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Fund Firstar Balanced Income Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Capital Appreciation Fund MidCap Index Fund
Class A Shares Retail A Shares
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares purchased through an Institutional Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar International Equity Fund Firstar Global Equity Fund
Class A Shares Institutional Shares
</TABLE>
The Reorganization is expected to occur in mid to late November 2000 or
such later date as may be determined pursuant to the Reorganization Agreement.
For more information about the Reorganization and the Reorganization Agreement,
see the Section below entitled "The Reorganization-Description of the
Reorganization Agreement."
At the same time that the Stellar Funds are reorganized into the Firstar
Funds, it is expected that the investment portfolios offered by Mercantile
Mutual Funds, Inc. ("Mercantile") and Firstar Select Funds ("Select") will be
reorganized into certain investment portfolios offered by Firstar, including in
the case of the Mercantile reorganization certain of the Corresponding Firstar
Funds. In particular it is expected that (1) the Stellar Treasury Fund together
with the Mercantile Treasury Money Market Portfolio will be reorganized into the
Firstar U.S. Treasury Money Market Fund, (2) the Stellar Tax-Free Money Market
Fund together with the Mercantile Tax-Exempt Money Market Portfolio will be
reorganized into the Firstar Tax-Exempt Money Market Fund, (3) the Stellar U.S.
Government Income Fund together with the Mercantile U.S. Government Securities
Portfolio will be reorganized into the Firstar U.S. Government Securities Fund,
and (4) the Stellar Insured Tax-Free Bond Fund together with the Mercantile
National Municipal Bond Portfolio will be reorganized into the Firstar National
Municipal Bond Fund.
If the Reorganization Agreement is approved by the Stellar shareholders at
the Special Meeting, it is expected that the Reorganization will be completed
whether or not the Mercantile reorganization or Select reorganization are
completed.
Overview of the Funds.
Comparison of Investment Objectives
-----------------------------------
The following chart summarizes the investment objective of each of the
Stellar Funds that is reorganizing into an Existing Firstar Fund (the
"Reorganizing Stellar Funds").
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
STELLAR FUND CORRESPONDING FIRSTAR FUND
------------ --------------------------
------------------------------------------------------------------------------------------
<S> <C>
Stellar Treasury Fund Firstar U.S. Treasury Money Market Fund*
Seeks to achieve stability of principal Seeks to provide a high level of current
and current income consistent with income exempt from state income taxes
stability of principal. consistent with liquidity, the preservation
of capital and a stable net asset value.
------------------------------------------------------------------------------------------
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
STELLAR FUND CORRESPONDING FIRSTAR FUND
------------ --------------------------
------------------------------------------------------------------------------------------
<S> <C>
Stellar Tax-Free Money Market Fund Firstar Tax-Exempt Money Market Fund
Seeks to provide current income exempt Seeks to provide a high level of current
from federal regular income tax income exempt from federal income taxes
consistent with stability of principal. consistent with liquidity, the preservation
of capital and a stable net asset value.
------------------------------------------------------------------------------------------
Stellar U.S. Government Income Fund Firstar U.S. Government Securities Fund
Seeks to provide current income. The Seeks a high rate of current income that is
fund's second objective is to achieve consistent with relative stability of
capital appreciation. principal.
------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Bond Fund
Seeks to provide current income exempt Seeks as high a level of current income
from federal income tax by primarily exempt from regular federal income tax as is
purchasing insured municipal bonds. consistent with conservation of capital.
------------------------------------------------------------------------------------------
Stellar Fund Firstar Balanced Income Fund
Seeks to maximize total return derived Seeks to provide current income and the
from a combination of dividend income and preservation of capital by investing in a
capital appreciation. balanced portfolio of dividend-paying equity
and fixed-income securities.
------------------------------------------------------------------------------------------
Stellar Capital Appreciation Fund Firstar MidCap Index Fund
Seeks to maximize capital appreciation. Seeks returns, before Fund expenses,
comparable to the price and yield
performance of publicly traded common stocks
in the aggregate, as represented by the S&P
MidCap 400 Index.
------------------------------------------------------------------------------------------
</TABLE>
* It is expected that upon consummation of the reorganization of the Stellar
Treasury Fund and Mercantile Treasury Money Market Portfolio into the Firstar
U.S. Treasury Money Market Fund, the Firstar U.S. Treasury Money Market Fund
will adopt investment objectives, policies and restrictions that are
substantially the same as the investment objectives, policies and restrictions
of the Stellar Treasury Fund. The Firstar U.S. Treasury Money Market Fund,
however, will retain its fundamental investment limitations, which are
similar, but not identical, to the Stellar Treasury Fund's fundamental
investment limitations.
The investment objective, policies and restrictions of the (1) Stellar Ohio
Tax-Free Money Market Fund, (2) Stellar Strategic Income Fund, (3) Stellar
Growth Equity Fund, (4) Stellar Relative Value Fund, (5) Stellar Science &
Technology Fund, and (6) Stellar International Equity Fund (collectively, the
"Continuing Stellar Funds") are substantially the same as those of their
corresponding Shell Firstar Funds, because the Shell Firstar Funds have each
been organized solely in connection with this Reorganization to acquire the
assets and continue the business of its corresponding Continuing Stellar Fund.
-14-
<PAGE>
The investment objectives, policies and restrictions of each of the other
Stellar Funds (collectively the "Reorganizing Stellar Funds") are, in general,
substantially the same and/or similar to those of its Corresponding Firstar Fund
(except that the Firstar MidCap Index Fund will have different investment
objectives from the Stellar Capital Appreciation Fund, but will hold many
similar securities). However, there are certain differences between the
investment policies and restrictions of these other Stellar Funds and their
Corresponding Firstar Funds. For additional information, see "Comparison of
Stellar Funds and Firstar Funds - Investment Objectives and Policies" and
Appendix III.
FIRMCO, a Wisconsin limited liability company and subsidiary of Firstar
Corporation, a bank holding company, serves as investment adviser to both the
Stellar Funds and the Firstar Funds. FIRMCO, with principal offices at Firstar
Center, 777 East Wisconsin Avenue, 8th Floor, Milwaukee, Wisconsin 53202, has
provided investment advisory services since 1986. FIRMCO currently has $50
billion in assets under management.
Prior to April 1, 2000, the Stellar Funds were managed by the Capital
Management Division of Firstar Bank, N.A., which is also a wholly owned
subsidiary of Firstar Corporation. As part of an internal restructuring of the
investment advisory function within Firstar Corporation, the investment
management resources of the Capital Management Division of Firstar Bank, N.A.
have been consolidated with those of FIRMCO. Management of the funds was not
affected by this consolidation.
Table II
The following table summarizes whether the contractual advisory fee rate of
a Firstar Fund (on a pro forma basis, after giving effect to the Reorganization)
is higher, lower or the same as its corresponding Stellar Fund by showing the
differential between the Firstar Fund (on a pro forma basis, after giving effect
to the Reorganization) and the Stellar Fund contractual fee rate.
Differential between Firstar and
Stellar contractual advisory
Fund fee rate*
---- -----------------------------------
Firstar U.S. Treasury Money Market Fund 0.06% lower
Firstar Tax-Exempt Money Market Fund 0.05% lower
Firstar Ohio Tax-Exempt Money Market Fund 0.05% lower
Firstar Strategic Income Fund same contractual fee rate
Firstar U.S. Government Securities Fund same contractual fee rate
Firstar National Municipal Bond Fund 0.20% lower rate
Firstar Large Cap Growth Fund 0.20% higher
Firstar Relative Value Fund same contractual fee rate
Firstar Science & Technology Fund 0.15% higher
Firstar Balanced Income Fund 0.20% lower
-15-
<PAGE>
Firstar MidCap Index Fund 0.70% lower
Firstar Global Equity Fund same contractual fee rate
* For example, the Firstar U.S. Treasury Money Market Fund has a contractual
advisory fee rate of 0.44% and its corresponding Stellar Fund has a contractual
advisory fee rate of 0.50%, thus the contractual advisory fee rate of the
Firstar U.S. Treasury Money Market Fund is 0.06% lower than the contractual
advisory fee rate of its corresponding Stellar Fund.
For more on advisory fee rates, see "Comparison of Stellar Funds and
Firstar Funds - Investment Advisory Services - Table V."
Advisory fees, however, are only one type of fee and expense paid by mutual
funds. As noted previously in "Fee Tables - Tables I(A), I(B) and I(C)," (i) all
Stellar Class A and Class B shareholders who will be receiving Institutional
Shares of the Corresponding Firstar Fund in the Reorganization will have total
operating expense ratios (after fee waivers) that are lower after the
Reorganization; (ii) Stellar Class A shareholders who will be receiving Retail A
Shares of the Corresponding Firstar Fund in the Reorganization will have total
operating expense ratios (after fee waivers) that are lower after the
Reorganization with respect to four out of eight Stellar Funds, higher with
respect to two out of eight Stellar Funds and the same with respect to two out
of eight Stellar Funds; (iii) Stellar Class B shareholders who will be receiving
Retail B Shares of the Corresponding Firstar Fund in the Reorganization will
have total operating expense ratios (after fee waivers) that are lower after the
Reorganization with respect to two out of eight Stellar Funds and higher with
respect to six out of eight Stellar Funds; (iv) all Stellar Class C shareholders
will have total operating expense ratios (after fee waivers) that are lower
after the Reorganization; and (v) Stellar Class Y shareholders will have total
operating expense ratios (after fee waivers) that are lower after the
Reorganization with respect to three out of five Stellar Funds and the same with
respect to two out of five Stellar Funds.
Firstar Mutual Fund Services, LLC ("FMFS") serves as administrator of the
Firstar Funds. FMFS also serves as administrator of the Stellar Funds. FMFS
serves as transfer agent to both the Stellar Funds and Firstar Funds. Firstar
Bank, N. A. serves as custodian to both the Stellar Funds and the Firstar Funds.
The distributor of Stellar and Firstar is Quasar Distributors LLC. For a
detailed description of the management of the Firstar Funds, including the
service providers to the Firstar Funds, see "Comparison of Stellar Funds and
Firstar Funds - Other Service Providers for the Stellar Funds and the Firstar
Funds" and the Firstar Funds prospectuses that accompany this Proxy/Prospectus.
The purchase, redemption, exchange, dividend and other policies and
procedures of the Stellar Funds and their Corresponding Firstar Funds are
generally similar. There are, however, some differences. For example,
shareholders of Firstar Funds are able to purchase (other than initial
purchases), exchange and redeem shares via the Internet. For more information,
see "Comparison of Stellar Funds and Firstar Funds - Shareholder Transactions
and Policies," "Comparison of Stellar Funds and Firstar Funds -Share Structure"
and Appendix IV to this Proxy/Prospectus.
-16-
<PAGE>
Federal Income Tax Consequences. The exchange of shares in the
Reorganization is not expected to result in the recognition, for federal income
tax purposes, of gain or loss by the Stellar Funds, the Firstar Funds or their
respective shareholders. The sale of securities by the Stellar Funds prior to
the Reorganization, whether in the ordinary course of business or in
anticipation of the Reorganization, could increase the amount of the taxable
capital gains distributions made prior to the Reorganization. See "The
Reorganization - Federal Income Tax Considerations" for additional information.
Stellar and Firstar Board Consideration. During its deliberations,
Stellar's Board of Trustees (with the advice and assistance of its counsel)
reviewed, among other things: (1) the potential effect of the Reorganization on
the shareholders of the Stellar Funds; (2) the capabilities, practices and
resources of FIRMCO; (3) the investment advisory and other fees paid by the
Firstar Funds, and the historical and projected expense ratios of the Firstar
Funds as compared with those of the Stellar Funds and industry peer groups; (4)
the investment objectives, policies and limitations of the Firstar Funds and
their relative compatibility with those of the Stellar Funds; (5) the historical
investment performance records of the Stellar Funds and the Firstar Funds,
relative to each other and to peer groups or indices; (6) the shareholder
services offered by Firstar; (7) the terms and conditions of the Reorganization
Agreement; (8) the anticipated tax consequences of the Reorganization for the
respective Stellar Funds and their shareholders; and (9) the number of
investment portfolio options that would be available to shareholders after the
Reorganization. The Stellar Board also considered FIRMCO's belief that the
Reorganization would eliminate certain duplicative shareholder costs and market
overlap, facilitate consideration of FIRMCO's managerial resources and enhance
generally operational efficiencies and focus with respect to the mutual funds
advised by FIRMCO. For additional information, see "The Reorganization -Stellar
Board Consideration."
Based upon their evaluation of the information presented to them, and in
light of their fiduciary duties under federal and state law, the Board of
Trustees of Stellar, including all of the non-interested members of the Board,
determined that participation in the Reorganization, as contemplated by the
Reorganization Agreement, was in the best interests of the shareholders of each
Stellar Fund and that the interests of the existing shareholders of each Stellar
Fund would not be diluted as a result of the Reorganization.
The Stellar Board of Trustees unanimously recommends that shareholders of
each Stellar Fund approve the Reorganization Agreement.
After considering the relevant factors, the Firstar Board of Directors
similarly found that participation in the Reorganization was in the best
interests of the Firstar Funds and that the interests of the shareholders of the
Firstar Funds would not be diluted as a result of the Reorganization.
Principal Risk Factors. Because each of the Shell Firstar Funds is being
created to acquire the assets and liabilities, and then continue the business,
of its corresponding Continuing Stellar Fund, an investment in a Shell Firstar
Fund involves risks that are substantially the same as those of investing in its
corresponding Continuing Stellar Fund. The investment objectives, policies and
restrictions of each other Firstar Fund are, in general, the same as or similar
to those
-17-
<PAGE>
of its corresponding Stellar Fund. Accordingly, an investment in an Existing
Firstar Fund involves risks that are similar to those of investing in its
corresponding Stellar Fund. The principal risks applicable to the Stellar Funds
and the Firstar Funds are described in the table below. Additional information
regarding these risks and other risks to which each of the Funds are subject are
described in the prospectuses and statements of additional information for the
Funds.
The Stellar Funds and Firstar Funds are classified in the following groups:
"Stellar Money Market Funds" means, collectively, the Stellar Treasury
Fund, Stellar Tax-Free Money Market Fund and Stellar Ohio Tax-Free Money Market
Fund.
"Firstar Money Market Funds" means, collectively, the Corresponding Firstar
Funds of the Stellar Money Market Funds.
"Stellar Bond Funds" means, collectively, the Stellar Strategic Income
Fund, Stellar U.S. Government Income Fund and Stellar Insured Tax-Free Bond
Fund.
"Firstar Bond Funds" means, collectively, the Corresponding Firstar Funds
of the Stellar Bond Funds.
"Stellar Equity Funds" means, collectively, the Stellar Growth Equity Fund,
Stellar Relative Value Fund, Stellar Science & Technology Fund, Stellar Fund,
Stellar Capital Appreciation Fund and Stellar International Equity Fund.
"Firstar Equity Funds" means, collectively, the Corresponding Firstar Funds
of the Stellar Equity Funds.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
-----------------------------------------------------------------------------------------
<S> <C>
Uninsured Investment Risk - An investment All Firstar Funds
in a Fund is not a deposit in a bank and
is not insured by the Federal Deposit All Stellar Funds
Insurance Corporation or any other
government agency.
-----------------------------------------------------------------------------------------
Credit Risk - An issuer of fixed income Firstar Money Market and Bond Funds, and
securities may default on its obligation Firstar Large Cap Growth, Relative Value,
to pay interest and repay principal, Science & Technology, Balanced Income and
causing the value of your investment to Global Equity Funds
decline. Changes in the credit rating of
a security or in the issuer's financial All Stellar Funds
condition could also affect the value of
your investment.
-----------------------------------------------------------------------------------------
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
-----------------------------------------------------------------------------------------
<S> <C>
Interest Rate Risk - In general, bond Firstar Money Market and Bond Funds, and
prices rise when interest rates fall and Firstar Large Cap Growth, Relative Value,
fall when interest rates rise. Long term Science & Technology, Balanced Income and
bonds, stripped securities and zero Global Equity Funds
coupon securities are more susceptible to
those fluctuations then short-term bonds. Stellar Money Market and Bond Funds, and
Changes in interest rates will also Stellar Growth Equity, Relative Value,
affect a Fund's yield. A decline in Science & Technology, Stellar and
interest rates may lead to a decline in a International Equity Funds
Fund's yield. Lower rated securities are
subject to greater interest rate risk
than higher rated securities.
-----------------------------------------------------------------------------------------
Fixed Income Risk - The rate of income on Firstar Money Market and Bond Funds
Fund shares will vary from day to day so
that the dividends on your investment Stellar Money Market and Bond Funds
will vary.
-----------------------------------------------------------------------------------------
Market Risk - The value of the securities Firstar Bond and Equity Funds
in which a Fund invests may go up or down
in response to the prospects of Stellar Bond and Equity Funds
individual companies and/or general
economic conditions.
-----------------------------------------------------------------------------------------
Volatility Risk - The value of your Firstar Bond and Equity Funds
investment will go up and down with the
value of the investments that a Fund Stellar Bond and Equity Funds
holds. You may lose money if you invest
in a Fund.
-----------------------------------------------------------------------------------------
Money Market Risk - Although a Fund seeks Firstar Money Market Funds
to preserve the value of your investment
at $1.00 per share, it is possible to Stellar Money Market Funds
lose money by investing in a Fund.
-----------------------------------------------------------------------------------------
Bond Selection Risk - Bonds selected by Firstar Bond Funds
the investment adviser may decline in
value or not increase in value when the Stellar Bond Funds
bond market in general is rising.
-----------------------------------------------------------------------------------------
Stock Selection Risk - The stocks Firstar Equity Funds
selected by the investment adviser may
decline in value or not increase in value Stellar Equity Funds
when the stock market in general is
rising.
-----------------------------------------------------------------------------------------
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
-----------------------------------------------------------------------------------------
<S> <C>
Liquidity Risk - Certain securities may be Firstar Strategic Income and U.S.
difficult or impossible to sell at the Government Securities Funds
time and price that the investment
adviser would like to sell. The Stellar Strategic Income and U.S.
investment adviser may have to lower the Government Income Funds and Stellar Equity
price, sell other securities instead or Funds
forgo an investment opportunity, any of
which could have a negative effect on
fund management or performance.
-----------------------------------------------------------------------------------------
Foreign Investment Risk - A Fund's Firstar Strategic Income, Large Cap Growth,
investments in foreign securities are Relative Value and Global Equity Funds
subject to foreign risks. Foreign stocks
involve special risks not typically Stellar Strategic Income, U.S. Government
associated with U.S. stocks. The stocks Income, Growth Equity, Relative Value,
held by a Fund may underperform other Stellar, Capital Appreciation and
types of stocks, and they may not International Equity Funds
increase or may decline in value.
Foreign investments may be riskier than
U.S. investments because of factors such
as foreign government restrictions,
changes in currency exchange rates,
incomplete financial information about
the issuers of securities, and political
or economic instability. Foreign stocks
may be more volatile and less liquid than
U.S. stocks.
-----------------------------------------------------------------------------------------
Futures and Options on Futures Risk - A Firstar National Municipal Bond, Large Cap
Fund may use futures and options on Growth, Science and Technology and Global
futures for hedging purposes only. The Equity Funds
hedging strategy may not be successful if
the portfolio manager is unable to Stellar U.S. Government Income, Insured
accurately predict movements in the Tax-Free Bond, Growth Equity, Science &
prices of individual securities held by a Technology, Capital Appreciation and
Fund or if the strategy does not International Equity Funds
correlate well with a Fund's investments.
The use of futures and options on futures
may produce a loss for a Fund, even when
used only for hedging purposes and you
could lose money because of a Fund's use
of options.
-----------------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
-----------------------------------------------------------------------------------------
<S> <C>
Small and Medium Size Companies Risk - A Firstar Large Cap Growth, Science &
Fund may invest in the stocks of small- Technology, MidCap Index and Global Equity
to medium-size companies. Small- and Funds
medium-size companies often have narrower
markets and more limited managerial and Stellar Growth Equity, Science &
financial resources than larger, more Technology, Stellar, Capital Appreciation
established companies. As a result, their and International Equity Funds
performance can be more volatile and they
face greater risk of business failure,
which could increase the volatility of a
Fund's portfolio.
-----------------------------------------------------------------------------------------
Prepayment Risk - An issuer may exercise Firstar Strategic Income, U.S. Government
its right to pay principal on an Securities, National Municipal Bond, Large
obligation held by a Fund (such as a Cap Growth and Balanced Income Funds
mortgage- or asset-backed security)
earlier than expected. This may happen Stellar Strategic Income, U.S. Government
when there is a decline in interest Income, Growth Equity and Stellar Funds
rates. These events may make a Fund
unable to recoup its initial investment
and may result in reduced yields.
-----------------------------------------------------------------------------------------
Extension Risk - An issuer may exercise Firstar Strategic Income, U.S. Government
its right to pay principal on an Securities, National Municipal Bond, Large
obligation held by a Fund (such as a Cap Growth and Balanced Income Funds
mortgage-backed or asset-backed security)
later than expected. This may happen Stellar Strategic Income, U.S. Government
when there is a rise in interest rates. Income, Growth Equity and Stellar Funds
Under such circumstances, the value of
the obligation will decrease and a Fund
will also suffer from the inability to
invest in higher yielding securities.
-----------------------------------------------------------------------------------------
Derivatives Risk - Certain investments may Firstar Large Cap Growth, Relative Value,
be more sensitive to or otherwise not Balanced Income and MidCap Index Funds
react in tandem with interest rate
changes or market movements and may be Stellar Growth Equity and Relative Value
leveraged. Funds
-----------------------------------------------------------------------------------------
Tax Risk - A Fund may be more adversely Firstar Tax-Exempt Money Market, Ohio
impacted by changes in tax rates and Tax-Exempt Money Market and National
policies than other funds. Municipal Bond Funds
Stellar Tax-Free Money Market, Ohio
Tax-Free Money Market and Insured Tax-Free
Bond Funds
-----------------------------------------------------------------------------------------
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
-----------------------------------------------------------------------------------------
<S> <C>
Real Estate Investment Trust (REIT) Risk - Firstar Strategic Income and Large Cap
Equity and mortgage REITs depend on Growth Funds
management skills and are not
diversified. As a result, REITs are Stellar Strategic Income, Growth Equity and
subject to the risk of financing either Stellar Funds
single projects or any number of
projects. REITs depend on heavy cash
flow and may be subject to defaults by
borrowers and self-liquidation.
Additionally, equity REITs may be
affected by any changes in the value of
the underlying property owned by the
trusts. Mortgage REITs may be affected by
the quality of any credit extended.
-----------------------------------------------------------------------------------------
Municipal Government Risk -The ability of Firstar Tax-Exempt Money Market, Ohio
a state or local government issuer to Tax-Exempt Money Market and National
make payments can be affected by many Municipal Bond Funds
factors, including economic conditions,
the flow of tax revenues and changes in Stellar Tax-Free Money Market, Ohio
the level of federal, state or local aid. Tax-Free Money Market and Insured Tax-Free
Some municipal securities are payable Bond Funds
only from limited revenue sources or by
private entities.
-----------------------------------------------------------------------------------------
Non-Diversification Risk - The Fund is Firstar Ohio Tax-Exempt Money Market and
non-diversified, which means that it can Science & Technology Funds
invest a large percentage of its assets
in a small number of issuers. As a Stellar Ohio Tax-Free Money Market and
result, a change in the value of any one Science & Technology Funds
investment held by the Fund may affect
the overall value of the Fund more than
it would affect a diversified fund, which
holds more investments.
-----------------------------------------------------------------------------------------
Municipal Lease Obligations Risk - A Fund Firstar Tax-Exempt Money Market and
may acquire municipal lease obligations National Municipal Bond Funds
that are issued by a state or local
government or authority to acquire land Stellar Tax-Free Money Market and Insured
and a wide variety of equipment and Tax-Free Bond Funds
facilities. If funds are not
appropriated for the following year's
lease payments, the lease may terminate,
with the possibility of default on the
lease obligation and significant loss to
the Fund.
-----------------------------------------------------------------------------------------
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
-----------------------------------------------------------------------------------------
<S> <C>
Portfolio Turnover Risk - The investment Firstar Strategic Income Fund
adviser may engage in active trading of
its portfolio securities to achieve its Stellar Strategic Income and Capital
investment goals. This practice could Appreciation Funds
result in a Fund experiencing a high
turnover rate (100% or more). High
portfolio turnover rates lead to
increased costs, could cause you to pay
higher taxes and could negatively affect
a Fund's performance.
-----------------------------------------------------------------------------------------
Concentration Risk - A Fund may invest Firstar Tax-Exempt Money Market and
more than 25% of its total assets in National Municipal Bond Fund
municipal obligations issued by entities
located in the same state and the
interest on which is paid solely from
revenues of similar projects. As a
result, changes in economic, business or
political conditions relating to a
particular state or types of projects may
have a disproportionate impact on the
Fund's share price.
-----------------------------------------------------------------------------------------
Repurchase Agreement Risk - A Fund may Firstar U.S. Government Securities Fund
enter into repurchase agreements in which
banks, broker dealers and other financial Stellar Treasury Fund
institutions sell securities to the Fund
and agree to repurchase them at a certain
time and price within one year. A seller
may not repurchase the securities from
the Fund, which may result in the Fund
selling the security for less than the
agreed upon price. Another risk of such
arrangements is that the seller may
default or file for bankruptcy. That
could mean the Fund might have to wait
through lengthy court actions before
selling the securities.
-----------------------------------------------------------------------------------------
Bank Risk - Municipal obligations that a Firstar Tax-Exempt Money Market Fund
Fund purchases may be backed by letters
of credit issued by banks and other Stellar Tax-Free Money Market Fund
financial institutions. Adverse
developments affecting banks could have a
negative effect on the Fund's portfolio
securities.
-----------------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
-----------------------------------------------------------------------------------------
<S> <C>
Investment in Ohio Risk - Ohio's economy Firstar Ohio Tax-Exempt Money Market Fund
is largely composed of manufacturing
which is concentrated in the automobile Stellar Ohio Tax-Free Money Market Fund
sector and other durable goods. The
exposure to these industries,
particularly the auto sector, leaves Ohio
vulnerable to an economic slowdown
associated with business cycles.
Furthermore, population growth, as in
many states around the Great Lakes, has
been stagnant.
A Fund's concentration in securities
issued by Ohio and its political
subdivisions provides a greater level of
risk than a fund whose assets are
diversified across numerous states and
municipal issuers. The ability of Ohio
or its municipalities to meet their
obligations will depend on: (1) the
availability of tax and other revenues;
(2) economic, political and demographic
conditions within the state; and (3) the
underlying fiscal condition of the state,
its counties and its municipalities.
-----------------------------------------------------------------------------------------
Credit Enhancement Risk - A Fund may Firstar Ohio Tax-Exempt Money Market Fund
invest more than 25% of its total assets
in securities credit-enhanced by banks. Stellar Ohio Tax-Free Money Market Fund
Any bankruptcy, receivership, default or
change in the credit quality of the party
providing the credit enhancement may
adversely affect the quality and
marketability of the underlying security
causing the Fund to lose money.
-----------------------------------------------------------------------------------------
</TABLE>
-24-
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
--------------------------------------------------------------------------------
Options Risk - A Fund may use options for Firstar Strategic Income Fund
hedging purposes only. The hedging Stellar Strategic Income and
strategy may not be successful if the Stellar Funds
portfolio manager is unable to accurately
predict movements in the prices of
individual securities held by the Fund or
if the strategy does not correlate well
with the Fund's investments. The use of
options may produce a loss for a Fund,
even when used only for hedging purposes
and you could lose money because of a
Fund's use of options.
--------------------------------------------------------------------------------
Value Style Investing Risk - Different Firstar Relative Value Fund
types of equity securities tend to shift Stellar Relative Value Fund
in and out of favor depending on market
and economic conditions, and the
performance resulting from a Fund's
"value" investment style may sometimes be
lower than that of other types of equity
funds, such as those focusing more
exclusively on growth in earnings.
--------------------------------------------------------------------------------
Industry Risk - A group of related stocks Firstar Science & Technology Fund
may decline in price due to industry Stellar Science & Technology Fund
specific developments. Companies in the
same or similar industries may share
common characteristics and are more
likely to react to industry specific
market or economic developments.
--------------------------------------------------------------------------------
-25-
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
--------------------------------------------------------------------------------
Science and Technology Concentration Risk Firstar Science & Technology Fund
- Science and technology related Stellar Science & Technology Fund
companies face special risks such as
competitive pressures and technological
obsolescence and may be subject to
greater governmental regulation than many
other industries. Technology and
technology related companies may be
subject to short product cycles and
aggressive pricing, which may increase
their volatility. For example, their
products or services may not prove
commercially successful or may become
obsolete quickly. The value of a Fund's
shares may be susceptible to factors
affecting the science and technology
areas and to greater risk and market
fluctuation than an investment in a fund
that invests in a broader range of
portfolio securities not concentrated in
any particular industry. Furthermore,
companies within the science and
technology industries face greater risks
of competition from new market entrances
and increased research and development
costs. Additionally, companies in these
areas are dependent upon consumer and
business acceptance as new technologies
evolve.
--------------------------------------------------------------------------------
IPO Risk - IPOs may have a magnified Firstar Science & Technology Fund
performance impact on a Fund with small Stellar Science & Technology Fund
asset base. The impact of IPOs on a
Fund's performance will decrease as a
Fund's asset size increases.
--------------------------------------------------------------------------------
-26-
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
--------------------------------------------------------------------------------
High Yield Bond Risk - High yield bonds Firstar Global Equity Fund
(generally referred to as junk bonds) are Stellar International Equity Fund
considered predominantly speculative by
traditional investment standards. The
market value of these low-rated
securities tends to be more sensitive to
individual corporate developments and
changes in interest rates and economic
conditions than higher-rated securities.
In addition, they generally present a
higher degree of credit risk. Issuers of
low-rated securities are often highly
leveraged, so their ability to repay
their debt during an economic downturn or
periods of rising interest rates may be
impaired.
--------------------------------------------------------------------------------
Underlying Funds Risk - A Fund's Firstar Global Equity Fund
performance directly relates to the Stellar International Equity Fund
performance of the funds in which it
invests. This investment strategy also
subjects a Fund to additional expenses
and certain tax consequences that would
not exist if you invested in those funds
directly. By investing in a Fund, you
bear not only the Fund's total operating
expenses, but the operating expenses of
the underlying funds as well.
--------------------------------------------------------------------------------
When-Issued and Delayed Delivery Stellar Treasury Fund
Transaction Risk - If the seller chooses
not to complete the transaction, the Fund
could miss an advantageous price or
yield. Another risk is that because
settlement dates may be a month or more
after entering into the transactions, the
market value of the securities may have
dropped from the agreed upon purchase
price.
--------------------------------------------------------------------------------
-27-
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
--------------------------------------------------------------------------------
Industrial Development Bond Concentration Stellar Insured Tax-Free Bond Fund
Risk - The Fund may invest more than 25%
of its assets in industrial development
bonds. The Fund does not invest that
amount in the same facility or project.
However, if the adviser chooses to
concentrate those investments in the same
industry or state, the shares of the Fund
are likely to fluctuate in value more
than those of a fund investing in a
broader range of securities.
--------------------------------------------------------------------------------
Convertible Securities Risk - Convertible Firstar Balanced Income Fund
securities frequently have speculative
characteristics and may be acquired
without regard to minimum quality
ratings. Convertible securities are
subject to greater credit and interest
rate risk than higher rated securities.
--------------------------------------------------------------------------------
-28-
<PAGE>
--------------------------------------------------------------------------------
PRINCIPAL RISK FUNDS SUBJECT TO RISK
--------------------------------------------------------------------------------
Mid-Cap Index Risk - The Fund's Firstar MidCap Index Fund
investments follow the mid-cap portion of
the U.S. stock market, as measured by
the S&P MidCap 400 Index, during upturns
as well as downturns. Because of its
indexing strategy, the Fund cannot take
steps to reduce market volatility or to
lessen the effects of a declining market.
Whenever mid-cap stocks underperform
large- or small-cap stocks, the Fund may
underperform funds that have exposure to
those segments. Further, the Fund will
not necessarily dispose of a security in
response to adverse events affecting the
issuer of a security (such as adverse
credit factors or failure to pay
dividends) if disposal would not be
consistent with the Fund's indexing
strategy.
The investment adviser may be required to
sell securities if the issuer of the
security is eliminated from the S&P
MidCap 400 Index. Such sales may result
in lower prices or losses that may not
have been incurred if the investment
adviser did not have to sell the
securities.
The Fund's ability to duplicate the
performance of the S&P MidCap 400 Index
will depend to some extent on the size
and timing of cash flows into and out of
the Fund as well as the Fund's expenses.
--------------------------------------------------------------------------------
Futures Risk - The Fund invests in futures Firstar MidCap Index Fund
contracts. Futures contracts could cause
the Fund to track the S&P MidCap 400
Index less closely if they don't perform
as expected.
--------------------------------------------------------------------------------
Voting Information. Stellar's Board of Trustees is furnishing this
Proxy/Prospectus in connection with the solicitation of proxies. Only
shareholders of record at the close of business on September 15, 2000 will be
entitled to vote at the Meeting. Shares represented by a properly executed
proxy will be voted in accordance with the instructions thereon. If no
instruction is made, the named proxies will vote in favor of each proposal set
forth in the Notice of Meeting.
-29-
<PAGE>
Proxies may be revoked at any time before they are exercised by submitting to
Stellar a written notice of revocation or a subsequently executed proxy or by
attending the Special Meeting and voting in person. For additional information,
see "Voting Matters."
THE REORGANIZATION
Reasons for the Reorganization. Significant features of the Reorganization
are summarized below. This summary is qualified in its entirety by reference to
the Reorganization Agreement, the form of which is attached as Appendix I.
The proposed Reorganization is expected to benefit Stellar Fund
shareholders by, among other things:
(i) offering a larger and more diverse group of mutual funds to all
shareholders;
(ii) actually or potentially reducing overall expenses by the achievement of
economies of scale associated with a larger asset base;
(iii) offering an opportunity for better investment performance due to an
expanded equity research staff that can focus on the core products available;
(iv) offering distribution channels that will have a better understanding of
the proprietary products offered by Firstar and will be better able to
communicate FIRMCO's investment style to existing and prospective shareholders,
thereby potentially increasing assets in the complex; and
(v) allowing FIRMCO to effect portfolio transactions on more favorable terms.
Description of the Reorganization Agreement. There are twelve separate
Stellar Funds. The Reorganization Agreement provides that substantially all of
the assets and liabilities of each of the six Stellar Funds identified in column
1 on Table III(A) below will be transferred to, and acquired by, one of the six
Existing Firstar Funds identified in column 2 on Table III(A) below, in exchange
for full and fractional shares issued by such Existing Firstar Fund. The
Reorganization Agreement further provides that substantially all of the assets
and liabilities of each of the Stellar Funds identified in column 1 on Table
III(B) below will be transferred to, and acquired by, one of the newly-organized
Shell Firstar Funds identified in column 2 on Table III(B) below, in exchange
for full and fractional shares issued by such Shell Firstar Funds. In the
tables, opposite the name of each Stellar Fund is the name of the Corresponding
Firstar Fund to which such Stellar Fund will transfer substantially all of its
assets and liabilities and that will issue shares to such Stellar Fund in
consideration of such transfer. The Firstar Fund Shares issued by each Firstar
Fund to its corresponding Stellar Fund will have the same aggregate dollar value
as the aggregate dollar value of the shares of such Stellar Fund immediately
prior to the effective time of the Reorganization with respect to such Fund.
-30-
<PAGE>
Table III(A)
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
REORGANIZING STELLAR FUND AND SHARE CLASS EXISTING FIRSTAR FUND AND SHARE CLASS
Stellar Treasury Fund Firstar U.S. Treasury Money Market Fund
Class C Shares Retail A Shares
Class Y Shares Institutional Shares
Stellar Tax-Free Money Market Fund Firstar Tax-Exempt Money Market Fund
Class C Shares not purchased through an Retail A Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class C Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
REORGANIZING STELLAR FUND AND SHARE CLASS EXISTING FIRSTAR FUND AND SHARE CLASS
Stellar U.S. Government Income Fund Firstar U.S. Government Securities Fund
Class A Shares not purchased through an Retail A Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class A Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
REORGANIZING STELLAR FUND AND SHARE CLASS EXISTING FIRSTAR FUND AND SHARE CLASS
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Bond Fund
Class A Shares not purchased through an Retail A Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class A Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
Stellar Capital Appreciation Fund Firstar MidCap Index Fund
Class A Shares Retail A Shares
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody, or
other agency relationship with Firstar Bank,
N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
REORGANIZING STELLAR FUND AND SHARE CLASS EXISTING FIRSTAR FUND AND SHARE CLASS
Stellar Fund Firstar Balanced Income Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
</TABLE>
-34-
<PAGE>
Table III(B)
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
CONTINUING STELLAR FUND AND SHARE CLASS SHELL FIRSTAR FUND AND SHARE CLASS
Stellar Ohio Tax-Free Money Market Fund Firstar Ohio Tax-Exempt Money Market Fund
Class C Shares not purchased through an Retail A Shares
investment management, trust, custody,
or other agency relationship with
Firstar Bank, N.A.
Class C Shares purchased through an Institutional Shares
investment management, trust, custody,
or other agency relationship with
Firstar Bank, N.A.
Stellar Strategic Income Fund Firstar Strategic Income Fund
Class A Shares Retail A Shares
Class B Shares not purchased through an Retail B Shares
investment management, trust, custody,
or other agency relationship with
Firstar Bank, N.A.
Class B Shares purchased through an Institutional Shares
investment management, trust, custody,
or other agency relationship with
Firstar Bank, N.A.
Stellar Growth Equity Fund Firstar Large Cap Growth Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
</TABLE>
-35-
<PAGE>
<TABLE>
<S> <C>
Stellar Relative Value Fund Firstar Relative Value Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Science & Technology Fund Firstar Science & Technology Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar International Equity Fund Firstar Global Equity Fund
Class A Shares Institutional Shares
</TABLE>
Immediately after the effective time of the Reorganization, each Stellar
Fund will distribute to its shareholders the Firstar Fund Shares received in the
Reorganization in liquidation of the Stellar Fund. Each shareholder of record
of a particular Stellar Fund at the effective time of the Reorganization will
receive shares of the designated class of its Corresponding Firstar Fund with
the same aggregate dollar value of the shares such shareholder held in such
Stellar Fund prior to the effective time of the Reorganization and will receive
any unpaid dividends or distributions declared before the effective time of the
Reorganization with respect to such Stellar Fund.
Firstar will establish an account for each former shareholder of the
Stellar Funds that will reflect the number and class of Firstar Fund Shares
distributed to that shareholder. The Firstar Fund Shares issued in the
Reorganization will be in uncertificated form.
Please note that a vote for or against the Reorganization Agreement
includes a vote for or against the reorganization of Stellar into Firstar. If
the Reorganization Agreement is approved and the transactions contemplated
thereby are consummated, Stellar will transfer substantially all of its assets
and liabilities as of the effective time of the Reorganization, all outstanding
shares of the Stellar Funds will be redeemed and cancelled in exchange for
Firstar Fund Shares of the Firstar Funds, and Stellar will wind up its affairs
and apply to be deregistered as an investment company under the 1940 Act and
thereafter terminate under Massachusetts law.
The Reorganization is subject to a number of conditions, including approval
of the Reorganization Agreement and the related matters described in this
Proxy/Prospectus by a majority of the outstanding shares of each Stellar Fund;
the receipt of certain legal opinions described in the Reorganization Agreement
(which include an opinion of Firstar's counsel addressed to Stellar indicating
that the Firstar Fund Shares issued in the Reorganization will be validly
issued, fully paid and non-assessable); the receipt of certain certificates from
the parties concerning the continuing accuracy of the representations and
warranties in the Reorganization
-36-
<PAGE>
Agreement; the receipt of any necessary exemptive relief requested from the SEC
or its staff with respect to Section 17(a) of the 1940 Act; and the parties'
performance in all material respects of their respective covenants and
undertakings as described in the Reorganization Agreement.
The Reorganization Agreement also provides that FIRMCO or an affiliate has
agreed to pay all expenses associated with the Reorganization. The
Reorganization Agreement also provides, among other things, that the
Reorganization may be terminated at any time upon the mutual consent of both
Stellar and Firstar, or by either Firstar or Stellar under certain conditions;
and that officers of Firstar and of Stellar may amend the Reorganization
Agreement as authorized by their respective Boards of Directors or Trustees, as
the case may be.
As previously noted, the Mercantile reorganization and the Select
reorganization are expected to occur at the same time as the Reorganization. In
connection with the Mercantile Reorganization, certain of the Mercantile
investment portfolios will be reorganized into the same Firstar Funds as certain
of the Stellar Funds. In particular, (1) the Mercantile Treasury Money Market
Portfolio together with the Stellar Treasury Fund will be reorganized into the
Firstar U.S. Treasury Money Market Fund; (2) the Mercantile Tax-Exempt Money
Market Portfolio together with the Stellar Tax-Free Money Market Fund will be
reorganized into the Firstar Tax-Exempt Money Market Fund; (3) the Mercantile
U.S. Government Securities Portfolio together with the Stellar U.S. Government
Income Fund will be reorganized into Firstar U.S. Government Securities Fund and
(4) the Mercantile National Municipal Bond Portfolio together with the Stellar
Insured Tax-Free Bond Fund will be reorganized into the Firstar National
Municipal Bond Fund. If the Reorganization Agreement is approved by Stellar
shareholders at the Special Meeting, it is expected that the Reorganization will
be completed whether or not the Mercantile reorganization and Select
reorganization are consummated.
Stellar Board Consideration. At a meeting held on April 20, 2000, the
Board of Trustees of Stellar was advised that FIRMCO was considering
recommending a consolidation of Stellar with Firstar. The Stellar Board then
met again on June 7, July 12, and July 20, 2000 to consider the Reorganization
proposal offered by management of Firstar, FIRMCO and its affiliates. In
preparation for the June 7, 2000 meeting, each of the Trustees of Stellar was
provided with detailed information about the Reorganization, Firstar and FIRMCO.
These materials summarized the principal terms and conditions of the
Reorganization, including the intention that the Reorganization be consummated
on a tax-free basis for each Stellar Fund and its shareholders. In addition,
the Stellar Trustees received comparative information about the Stellar Funds
and the Corresponding Firstar Funds, including information concerning, but not
limited to, the following matters: (1) investment objectives and policies; (2)
advisory, distribution and servicing arrangements; (3) fund expenses (with and
without giving effect to current expense limitations), including pro forma
expenses, relative to peer groups; and (4) performance, including performance
relative to peer groups or comparable indices for the Firstar Funds. The
Stellar Board also was provided with information about FIRMCO and its investment
advisory organization, including the individuals or teams of individuals with
responsibility for managing each Firstar Fund.
-37-
<PAGE>
The Reorganization was unanimously approved by the Stellar Board of
Trustees on June 7, 2000, subject to the Board's receipt from FIRMCO of
additional information on certain aspects of the Reorganization. This
additional information was received and considered by the Stellar Board on July
12 and on July 20, 2000, the Board of Trustees of Stellar unanimously ratified
the actions it had taken on June 7, 2000 approving the Reorganization.
During its deliberations, Stellar's Board of Trustees (with the advice and
assistance of its counsel) reviewed, among other things: (1) the potential
effect of the Reorganization on the shareholders of the Stellar Funds; (2) the
capabilities, practices and resources of FIRMCO; (3) the investment advisory and
other fees paid by the Firstar Funds, and the historical and projected expense
ratios of the Firstar Funds as compared with those of the Stellar Funds and
industry peer groups; (4) the investment objectives, policies and limitations of
the Firstar Funds and their relative compatibility with those of the Stellar
Funds; (5) the historical investment performance records of the Stellar Funds
and the Firstar Funds, relative to each other and to peer groups or comparable
indices; (6) the shareholder services offered by Firstar; (7) the terms and
conditions of the Reorganization Agreement; (8) the anticipated tax consequences
of the Reorganization for the respective Stellar Funds and their shareholders;
and (9) the number of investment portfolio options that would be available to
shareholders after the Reorganization. The Stellar Board also considered
FIRMCO's belief that the Reorganization would eliminate certain duplicative
shareholder costs and market overlap, facilitate consolidation of FIRMCO's
managerial resources and enhance generally operational efficiencies and focus
with respect to the mutual funds advised by FIRMCO.
The Stellar Trustees also noted that the per share annualized total
operating expense ratios for certain of the classes of certain of the Firstar
Funds after the Reorganization, taking into account voluntary fee waivers, would
be higher than those of the corresponding Stellar Funds before the
Reorganization. See "Fee Tables - Table I-C - Total Expense Information" and
Appendix II for more information. The Stellar Trustees also noted that FIRMCO
or an affiliate would assume all customary expenses associated with the
Reorganization and that FIRMCO would commit to waive fees and/or reimburse
expenses as needed to insure that until March 1, 2001 the Firstar Funds' total
operating expense ratios will not exceed the pro forma after-waiver expenses
shown in Table I-C.
After consideration of the foregoing and other factors, the Stellar
Trustees unanimously determined that the Reorganization was in the best interest
of the shareholders of each Stellar Fund, and that the interests of the existing
shareholders of each Stellar Fund would not be diluted as a result of such
Reorganization.
Capitalization. The following table sets forth, as of April 30, 2000 (the
end of Firstar's semi-annual period): (1) the capitalization of each of the
Stellar Funds; (2) the capitalization of each of their Corresponding Firstar
Funds; and (3) the pro forma capitalization of each of the Corresponding Firstar
Funds as adjusted to give effect to the Reorganization. With respect to the
Stellar Treasury Fund, Stellar Tax-Free Money Market Fund, Stellar U.S.
Government Income Fund and Stellar Insured Tax-Free Bond Fund, the table also
sets forth the capitalization of the Mercantile Fund which will, if the
conditions described in the reorganization agreement between Mercantile and
Firstar are timely met, simultaneously be reorganized into the Corresponding
-38-
<PAGE>
Firstar Fund of such Stellar Fund and the pro forma capitalization of such
Corresponding Firstar Fund as adjusted to give effect to both the Reorganization
and the Mercantile reorganization.
The capitalization of each Fund is likely to be different at the effective
time of the Reorganization as a result of daily share purchase and redemption
activity in the Funds as well as the effects of the other ongoing operations of
the respective Funds prior to the closing of the Reorganization.
The Firstar Ohio Tax-Free Money Market Fund, Firstar Strategic Income Fund,
Firstar Large Cap Growth Fund, Firstar Relative Value Fund, Firstar Science &
Technology Fund, and Firstar Global Equity Fund have not yet commenced
operations but will do so at the time the Reorganization occurs.
Table IV
Capitalization
(as of April 30, 2000)
1. The table below reflects the capitalization as of April 30, 2000, and pro
forma capitalization for the combination of the Stellar Treasury Fund with
the Firstar U.S. Treasury Money Market Fund. The table provides pro forma
capitalization information for two different scenarios: (a) the combination
of the Stellar Treasury Fund with the Firstar U.S. Treasury Money Market Fund
(Pro forma Combined Fund = Fund A + Fund C) and (b) the combination of the
Stellar Treasury Fund, the Mercantile Treasury Money Market Portfolio and the
Firstar U.S. Treasury Money Market Fund (Pro forma Combined Fund = Fund A +
Fund B + Fund C).
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ -------------------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$1,205,547,115 1,205,547,115 $1.00
Stellar Treasury Fund (Class C Shares) (Class C Shares) (Class C Shares)
(Fund A) $2,177,195,841 2,177,195,841 $1.00
(Class Y Shares) (Class Y Shares) (Class Y Shares)
-----------------------------------------------------------------------------------------------
Mercantile Treasury Money $76,187 76,187 $1.00
Market Portfolio (Investor A Shares) (Investor A Shares) (Investor A Shares)
(Fund B) $501,196 501,196 $1.00
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$189,391,544 189,391,544 $1.00
(Trust Shares) (Trust Shares) (Trust Shares)
$66,569,413 66,569,413 $1.00
(Trust II Shares) (Trust II Shares) (Trust II Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-39-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ -------------------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$116,686,783 116,686,783 $1.00
Firstar U.S. Treasury Money (Retail A Shares) (Retail A Shares) (Retail A Shares)
Market Fund $0 0 $0
(Fund C) (Institutional (Institutional (Institutional
Shares)* Shares)* Shares)*
-----------------------------------------------------------------------------------------------
$1,322,222,208 1,322,222,208 $1.00
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Pro Forma Combined Fund $2,177,195,841 2,177,195,841 $1.00
(Fund A + Fund C) (Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
$1,322,233,898 1,322,233,898 $1.00
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Pro Forma Combined Fund $2,433,734,181 2,433,734,181 $1.00
(Fund A +Fund B + Fund C) (Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
* Institutional Shares of the Firstar U.S. Treasury Money Market Fund have not
commenced operations as of the date of this Proxy/Prospectus.
-40-
<PAGE>
2. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Tax-Free Money
Market Fund and the Mercantile Tax-Exempt Money Market Portfolio with the
Firstar Tax-Exempt Money Market Fund. The table provides pro forma
capitalization information for two different scenarios: (a) the combination
of the Stellar Tax-Free Money Market Fund with the Firstar Tax-Exempt Money
Market Fund (Pro forma Combined Fund = Fund A + Fund C) and (b) the
combination of the Stellar Tax-Free Money Market Fund, the Mercantile Tax-
Exempt Money Market Portfolio and the Firstar Tax-Exempt Money Market Fund
(Pro forma Combined Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
-------------------- ------------------ ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Tax-Free Money Market $194,578,237 194,578,237 $1.00
Fund (Class C Shares) (Class C Shares) (Class C Shares)
(Fund A)
-----------------------------------------------------------------------------------------------
$234,683 234,683 $1.00
(Investor A Shares) (Investor A Shares) (Investor A Shares)
Mercantile Tax-Exempt Money $31,673,760 31,673,760 $1.00
Market Portfolio (Trust Shares) (Trust Shares) (Trust Shares)
(Fund B) $111,864,620 111,864,620 $1.00
(Trust II Shares) (Trust II Shares) (Trust II Shares)
-----------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money $158,937,927 158,937,927 $1.00
Market Fund (Retail A Shares) (Retail A Shares) (Retail A Shares)
(Fund C) $0 0 $0
(Institutional (Institutional (Institutional
Shares)* Shares)* Shares)*
-----------------------------------------------------------------------------------------------
$ 173,337,164 173,337,164 $1.00
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Pro Forma Combined Fund $ 180,179,005 180,179,005 $1.00
(Fund A + Fund C) (Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
Pro Forma Combined Fund $173,571,847 173,571,847 $1.00
(Fund A + Fund B + Fund C) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$323,717,385 323,717,385 $1.00
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
* Institutional Shares of the Firstar Tax-Exempt Money Market Fund have not
commenced operations as of the date of this Proxy/Prospectus.
-41-
<PAGE>
3. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Ohio Tax-Free Money
Market Fund with the Firstar Ohio Tax-Exempt Money Market Fund.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Ohio Tax-Free Money $61,757,532 61,757,532 $1.00
Market Fund (Class C Shares) (Class C Shares) (Class C Shares)
-----------------------------------------------------------------------------------------------
$308,788 308,788 $1.00
(Retail A Shares) (Retail A Shares) (Retail A Shares)
Pro Forma Combined Fund $61,448,744 61,448,744 $1.00
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-42-
<PAGE>
4. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Strategic Income
Fund with the Firstar Strategic Income Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$8 1 $8.38
(Class A Shares) (Class A Shares) (Class A Shares)
Stellar Strategic Income Fund $141,966,234 16,940,175 $8.38
(Class B Shares) (Class B Shares) (Class B Shares)
-----------------------------------------------------------------------------------------------
$8 1 $8.38
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$35,207,626 4,201,163 $8.38
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro Forma Combined Fund $106,758,607 12,739,012 $8.38
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-43-
<PAGE>
5. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar U.S. Government
Income Fund and Mercantile U.S. Government Securities Portfolio with the
Firstar U.S. Government Securities Fund. The table provides pro forma
capitalization information for two different scenarios: (a) the combination
of the Stellar U.S. Government Income Fund with the Firstar U.S. Government
Securities Fund (Pro forma Combined Fund = Fund A + Fund C) and (b) the
combination of the Stellar U.S. Government Income Fund, the Mercantile U.S.
Government Securities Portfolio and the Firstar U.S. Government Securities
Fund (Pro forma Combined Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Net Asset Value
Total Net Assets Shares Outstanding Per Share
---------------- ------------------ --------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar U.S. Government $162,758,243 17,411,531 $9.35
Income Fund (Class A Shares) (Class A Shares) (Class A Shares)
(Fund A) $1,296,016 138,708 $9.34
(Class B Shares) (Class B Shares) (Class B Shares)
-----------------------------------------------------------------------------------------------
Mercantile U.S. Government $3,837,184 375,980 $10.22
Securities Portfolio (Investor A Shares) (Investor A Shares) (Investor A Shares)
(Fund B) $175,105 17,130 $10.22
(Investor B Shares) (Investor B Shares) (Investor B Shares)
$7,288,887 716,895 $10.17
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
$51,713,926 5,066,947 $10.21
(Trust Shares) (Trust Shares) (Trust Shares)
-----------------------------------------------------------------------------------------------
Firstar U.S. Government $0 0 $0
Securities Fund (Retail A Shares) (Retail A Shares) (Retail A Shares)
(Fund C)* $0 0 $0
(Retail B Shares) (Retail B Shares) (Retail B Shares)
$0 0 $0
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
Pro Forma Combined Fund $162,758,243 17,411,531 $9.35
(Fund A + Fund C) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$1,296,016 138,708 $9.34
(Retail B Shares) (Retail B Shares) (Retail B Shares)
$-- -- $--
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-44-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$11,789,427 1,154,824 $10.21
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$1,458,121 142,670 $10.22
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro Forma Combined Fund $7,288,887 716,895 $10.17
(Fund A + Fund B + Fund C) (Class Y Shares) (Class Y Shares) (Class Y Shares)
$206,509,626 20,228,161 $10.21
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
* The Firstar U.S. Government Securities Fund has not commenced operations as of
the date of this Proxy/Prospectus.
-45-
<PAGE>
6. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Insured Tax-Free
Bond Fund and Mercantile National Municipal Bond Portfolio with the Firstar
National Municipal Bond Fund. The table provides pro forma capitalization
information for two different scenarios: (a) the combination of the Stellar
Insured Tax-Free Bond Fund with the Firstar National Municipal Bond Fund
(Pro forma Combined Fund = Fund A + Fund C) and (b) the combination of the
Stellar Insured Tax-Free Bond Fund, the Mercantile National Municipal Bond
Portfolio and the Firstar National Municipal Bond Fund (Pro forma Combined
Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$157,723,623 16,002,896 $9.86
Stellar Insured Tax-Free Bond (Class A Shares) (Class A Shares) (Class A Shares)
Fund $10 1 $9.86
Fund A) (Class B Shares) (Class B Shares) (Class B Shares)
-----------------------------------------------------------------------------------------------
$1,460,740 155,456 $9.40
(Investor A Shares) (Investor A Shares) (Investor A Shares)
Mercantile National Municipal $638,533 68,048 $9.38
Bond Portfolio (Investor B Shares) (Investor B Shares) (Investor B Shares)
(Fund B) $265,768,912 28,342,537 $9.38
(Trust Shares) (Trust Shares) (Trust Shares)
-----------------------------------------------------------------------------------------------
$0 0 $0
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$0 0 $0
Firstar National Municipal (Retail B Shares) (Retail B Shares) (Retail B Shares)
Bond Fund $0 0 $0
(Fund C)* (Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
$3,942,091 406,392 $9.86
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$10 1 $9.86
Pro Forma Combined Fund (Retail B Shares) (Retail B Shares) (Retail B Shares)
(Fund A + Fund C) $153,781,532 $15,596,504 $9.86
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$5,402,831 574,469 $9.40
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$638,543 68,049 $9.38
Pro Forma Combined Fund (Retail B Shares) (Retail B Shares) (Retail B Shares)
(Fund A + Fund B + Fund C) $419,524,544 44,733,531 $9.38
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
* The Firstar National Municipal Bond Fund has not commenced operations as of
the date of this Proxy/Prospectus.
-47-
<PAGE>
7. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Growth Equity Fund
and the Firstar Large Cap Growth Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$49,957 1,873 $26.67
(Class A Shares) (Class A Shares) (Class A Shares)
$105,755,728 3,729,807 $26.68
Stellar Growth Equity Fund (Class B Shares) (Class B Shares) (Class B Shares)
$229,824,690 8,594,146 $26.74
(Class Y Shares) (Class Y Shares) (Class Y Shares)
-----------------------------------------------------------------------------------------------
$49,957 1,873 $26.67
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$105,755,728 3,729,807 $26.68
Pro Forma Combined Fund (Retail B Shares) (Retail B Shares) (Retail B Shares)
$229,824,690 8,594,146 $26.74
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-48-
<PAGE>
8. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Relative Value Fund
with the Firstar Relative Value Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$49,829,001 1,732,644 $28.76
(Class A Shares) (Class A Shares) (Class A Shares)
$16,032,485 559,231 $28.67
Stellar Relative Value Fund (Class B Shares) (Class B Shares) (Class B Shares)
$480,124,570 16,669,077 $28.80
(Class Y Shares) (Class Y Shares) (Class Y Shares)
-----------------------------------------------------------------------------------------------
$49,829,001 1,732,644 $28.76
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$16,032,485 559,231 $28.67
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro Forma Combined Fund $480,124,570 16,669,077 $28.80
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-49-
<PAGE>
9. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Science &
Technology Fund with the Firstar Science & Technology Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$211,248 10,727 $19.69
(Class A Shares) (Class A Shares) (Class A Shares)
$11,506,274 584,798 $19.68
Stellar Science & Technology (Class B Shares) (Class B Shares) (Class B Shares)
Fund $96,276,755 4,864,570 $19.79
(Class Y Shares) (Class Y Shares) (Class Y Shares)
-----------------------------------------------------------------------------------------------
$211,248 10,727 $19.69
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$11,506,274 584,798 $19.68
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro Forma Combined Fund $96,276,755 4,864,570 $19.79
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-50-
<PAGE>
10. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Fund with the
Firstar Balanced Income Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$39,721,166 2,897,018 $13.71
(Class A Shares) (Class A Shares) (Class A Shares)
$13,591 991 $13.71
Stellar Fund (Class B Shares) (Class B Shares) (Class B Shares)
$44,343,011 3,234,974 $13.71
(Class Y Shares) (Class Y Shares) (Class Y Shares)
-----------------------------------------------------------------------------------------------
$11,413,492 1,040,347 $10.96
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$3,581,529 310,980 $10.98
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Firstar Balanced Income Fund $76,997,876 7,056,887 $10.98
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
$51,119,658 4,664,441 $10.96
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$3,595,120 312,218 $10.98
(Retail B Shares) (Retail B Shares) (Retail B Shares)
Pro Forma Combined Fund $121,324,887 11,093,955 $10.98
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-51-
<PAGE>
11. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar Capital
Appreciation Fund with the Firstar MidCap Index Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$87,896,862 6,220,364 $14.13
Stellar Capital Appreciation (Class A Shares) (Class A Shares) (Class A Shares)
Fund $14 1 $14.13
(Class B Shares) (Class B Shares) (Class B Shares)
-----------------------------------------------------------------------------------------------
$1,390,713 119,386 $11.65
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$294,776 25,354 $11.63
Firstar MidCap Index Fund (Retail B Shares) (Retail B Shares) (Retail B Shares)
$102,814,800 8,828,042 $11.65
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
$89,248,575 7,660,833 $11.65
(Retail A Shares) (Retail A Shares) (Retail A Shares)
$294,790 25,355 $11.63
Pro Forma Combined Fund (Retail B Shares) (Retail B Shares) (Retail B Shares)
$102,814,800 8,828,042 $11.65
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
-52-
<PAGE>
12. The table below reflects the capitalization as of April 30, 2000 and pro
forma capitalization for the combination of the Stellar International
Equity Fund with the Firstar Global Equity Fund.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Shares Net Asset Value
Total Net Assets Outstanding Per Share
---------------- ----------- ---------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar International Equity $72,975,632 5,351,316 $13.64
Fund (Retail A Shares) (Retail A Shares) (Retail A Shares)
-----------------------------------------------------------------------------------------------
Pro Forma Combined Fund $72,975,632 5,351,316 $13.64
(Institutional (Institutional (Institutional
Shares) Shares) Shares)
-----------------------------------------------------------------------------------------------
</TABLE>
Federal Income Tax Considerations. Each Firstar Fund and each Stellar Fund
intends to qualify as of the effective time of the Reorganization as a separate
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, each Stellar Fund and each Corresponding
Firstar Fund has been, and expects to continue to be, relieved of federal income
tax liability.
Consummation of the Reorganization with respect to each Stellar Fund and
its Corresponding Firstar Fund is subject to the condition that Stellar and
Firstar receive an opinion from Drinker Biddle & Reath LLP substantially to the
effect that, for federal income tax purposes: (i) the transfer of substantially
all of the assets and liabilities of a Stellar Fund to its Corresponding Firstar
Fund in exchange for the Firstar Fund Shares issued by such Corresponding
Firstar Fund, and the distribution of those Firstar Fund Shares to shareholders
of the Stellar Fund, will consist of twelve "reorganizations" within the meaning
of Section 368(a) of the Code, and each Stellar Fund and its Corresponding
Firstar Fund will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code in respect of the Reorganization; (ii) no gain or
loss will be recognized by any Stellar Fund upon the transfer of its assets and
liabilities to its Corresponding Firstar Fund solely in exchange for Firstar
Fund Shares of the Corresponding Firstar Fund; (iii) no gain or loss will be
recognized by each Firstar Fund upon the receipt of the assets and assumption of
liabilities of its Corresponding Stellar Fund solely in exchange for the Firstar
Fund Shares; (iv) the basis of each Stellar Fund's assets received by the
Corresponding Firstar Fund pursuant to the Reorganization will be the same as
the basis of those assets in the hands of such Stellar Fund immediately prior to
the Reorganization; (v) the holding period of each Stellar Fund's assets in the
hands of its Corresponding Firstar Fund will include the period for which such
assets have been held by such Stellar Fund; (vi) no gain or loss will be
recognized by any Stellar Fund on the distribution to its shareholders of the
Firstar Fund Shares of its Corresponding Firstar Fund; (vii) no gain or loss
will be recognized by the shareholders of any Stellar Fund upon their receipt of
the Firstar Fund Shares in exchange for such shareholders' shares of the Stellar
Fund; (viii) the basis of the Firstar Fund Shares received by the shareholders
of each Stellar Fund will be the same as the basis of the Stellar Fund Shares
surrendered by such shareholders pursuant to the Reorganization; (ix) the
holding period for the Firstar Fund Shares received by each Stellar Fund
shareholder will include
-53-
<PAGE>
the period during which such shareholder held the Stellar Fund Shares
surrendered in exchange therefor, provided that such Stellar Fund shares are
held as a capital asset in the hands of such Stellar Fund shareholder on the
date of the exchange; and (x) each Firstar Fund will succeed to and take into
account the tax attributes described in Section 381 (c) of the Code of the
Stellar Fund as of the effective time of the Reorganization with respect to the
Stellar Funds, subject to the conditions and limitations specified in the Code.
Shareholders of the Stellar Funds should note, however, that the sale of
securities by the Stellar Funds prior to the effective time of the
Reorganization, whether in the ordinary course of business or in anticipation of
the Reorganization, could increase the amount of the taxable capital gains
distribution made prior to the Reorganization.
Firstar and Stellar have not sought, and will not seek, a private ruling
from the Internal Revenue Service ("IRS") with respect to the federal income tax
consequences of the Reorganization. The opinion of Drinker Biddle & Reath LLP
with respect to the federal income tax consequences of the Reorganization is not
binding on the IRS and does not preclude the IRS from adopting a contrary
position. Shareholders should consult their own advisers concerning the
potential tax consequences of the Reorganization to them, including any
applicable foreign, state or local income tax consequences.
COMPARISON OF STELLAR FUNDS AND FIRSTAR FUNDS
Investment Objectives and Policies. The investment objectives, policies and
restrictions of each of the Stellar Ohio Tax-Free Money Market, Strategic
Income, Growth Equity, Relative Value, Science & Technology and International
Equity Funds are, in each case, substantially the same as those of its
respective corresponding Shell Firstar Fund. Each of these Shell Firstar Funds
is being created to acquire the assets and liabilities and continue the business
of its respective corresponding Continuing Stellar Fund. The investment
objectives, policies and restrictions of each of the Stellar Tax-Free Money
Market, U.S. Government Income, Insured Tax-Free Bond, Stellar and Capital
Appreciation Funds, are, in general, similar to those of its respective
corresponding Existing Firstar Fund. They are summarized in Appendix III. In
addition, it is expected that upon consummation of the reorganization of the
Stellar Treasury Fund and Mercantile Treasury Money Market Portfolio into the
Firstar U.S. Treasury Money Market Fund, the Firstar U.S. Treasury Money Market
Fund will adopt the investment objective and non-fundamental investment policies
and restrictions of the Stellar Treasury Fund, but the Firstar U.S. Treasury
Money Market Fund will retain its current fundamental investment limitations
which are similar, but not identical, to the Stellar Treasury Fund's fundamental
investment limitations.
There are, however, certain differences in the types of securities in which
each of the Reorganizing Stellar Funds may invest and the types of securities in
which its Corresponding Firstar Fund may invest, as well as differences in
certain investment policies of the Funds. A discussion of some of the more
significant differences between some of the Funds follows.
Reorganizing Money Market Funds. The Stellar Money Market Funds and the
-------------------------------
Firstar Money Market Funds are all subject to the general restrictions and
limitations of Rule 2a-7 under the 1940 Act. However, there are differences
between the investment policies and restrictions of the Stellar Money Market
Funds and their Corresponding Firstar Funds. Although it is expected that the
Firstar U.S. Treasury Money Market Fund will adopt the investment objectives and
non-fundamental investment policies and restrictions of
-54-
<PAGE>
the Stellar Treasury Fund, the Firstar U.S. Treasury Money Market Fund will
retain its fundamental investment limitations. Accordingly, there are some
differences between the Funds. For example, the Stellar Treasury Fund differs
from the Firstar U.S. Treasury Money Market Fund in that the Firstar U.S.
Treasury Money Market Fund has fundamental policies permitting the Fund to
borrow up to 10% of the value of its net assets and lend up to 30% of its net
assets, while the Stellar Treasury Fund has fundamental policies permitting it
to borrow up to 33-1/3% of its net assets and prohibiting it from engaging in
securities lending. The Stellar Tax-Free Money Market Fund differs from its
Corresponding Firstar Fund in that the Stellar Tax-Free Money Market Fund may
invest more than 25% of its total assets (i.e., concentrate) in securities
credit-enhanced by banks while the Firstar Tax-Exempt Money Market Fund may
invest more than 25% of its assets in municipal obligations covered by insurance
policies. In addition, the Stellar Tax-Free Money Market Fund, but not the
Firstar Tax-Exempt Money Market Fund, may invest in municipal leases and
repurchase agreements. The Firstar Tax-Exempt Money Market Fund, unlike the
Stellar Tax-Free Money Market Fund, may invest more than 25% of its total assets
in municipal obligations, the issuers of which are located in the same state or
the interest on which is paid solely from revenues of similar projects if such
investment is deemed necessary or appropriate by the adviser.
Reorganizing Bond Funds. The Stellar U.S. Government Income Fund and its
-----------------------
Corresponding Firstar Fund, the Firstar U.S. Government Securities Fund, have
similar investment programs, except that the Stellar U.S. Government Income Fund
may invest in investment grade debt securities of foreign issuers, while its
Corresponding Firstar Fund may not. The Stellar Insured Tax-Free Bond Fund and
its Corresponding Firstar Fund, the Firstar National Municipal Bond Fund, both
invest at least 80% of their total assets in municipal securities that pay
interest that is exempt from federal income tax. At least 65% of the value of
the Stellar Insured Tax-Free Bond Fund's assets are invested in intermediate- to
long-term, investment grade municipal securities that are insured as to timely
payment while the Firstar National Municipal Bond Fund is not subject to this
requirement. In addition, while the Stellar Insured Tax-Free Bond Fund has no
target average weighted maturity, the Firstar National Municipal Bond fund will
have an average weighted maturity longer than 10 years.
Reorganizing Equity Funds. The Stellar Fund invests no more than 50% of
-------------------------
its net assets in each of the following: domestic equity securities, domestic
fixed-income securities, international securities, real estate securities and
short-term securities. Its Corresponding Firstar Fund, the Firstar Balanced
Income Fund, typically invests 50% (but no less than 20% and no more than 60%)
of its assets in equity securities and 50% (but no less than 40%) of its assets
in fixed income securities. In addition, the equity securities the Firstar
Balanced Income Fund invests in have market capitalizations of over $750
million, while the Stellar Fund may invest in equity securities of small, medium
or large companies. The Stellar Capital Appreciation Fund and its Corresponding
Firstar Fund, the Firstar MidCap Index Fund, are similar in that both seek to
achieve their investment objectives by investing a substantial portion of their
net assets in the equity securities of U.S. companies with mid-level market
capitalizations. However, the Stellar Capital Appreciation Fund invests at
least 50% of its total assets in companies whose market
-55-
<PAGE>
capitalizations range from $200 million to $10 billion and whose shares are
traded on NASDAQ or on the New York or American Stock Exchanges, and in
selecting these securities, the investment advisor employs automated
quantitative measurement techniques. The Firstar MidCap Index Fund attempts to
replicate the performance of the S&P MidCap 400 Index by investing at least 80%
of its net assets in domestic companies included in the index with market
capitalization between $148 million and $13 billion.
The investment objectives, strategies and policies of the Stellar Funds and
Firstar Funds are more fully discussed in Appendix III. Additional information
about the investment policies and restrictions of the Stellar Funds and Firstar
Funds is included in their respective prospectuses and statements of additional
information, which have been incorporated herein by reference.
Investment Advisory Services. FIRMCO serves as investment adviser to the
Firstar Funds and Stellar Funds and will continue to serve as investment adviser
to the Firstar Funds upon consummation of the Reorganization.
The following table shows the contractual investment advisory fees for each
Stellar Fund and its Corresponding Firstar Fund. For the Stellar Funds, the
table also shows the respective investment advisory fee rates paid to the
investment advisor and sub-advisor after taking into account voluntary fee
waivers. For the Firstar Funds, pro forma advisory fees are calculated based
upon contractual advisory fees then reduced by expected waivers to achieve the
desired expense ratio. The fees for the Stellar Funds are as of April 30, 2000.
The fees for the Firstar Funds (both before and after waivers) represent the pro
forma annualized advisory fees based upon fee arrangements that will be in place
upon consummation of the Reorganization.
Table V
Investment Advisory Fee Information
-----------------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Stellar Fund Advisory Fees Corresponding Firstar Fund Advisory Fees
------------ --------------------------
Before/After Waivers Before/After Waivers
-------------------- (Pro Forma After Giving
Effect to the Reorganization)
-----------------------------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Stellar Treasury Fund Firstar U.S. Treasury Money Market Fund
Advisory Fee 0.50% / 0.50% Advisory Fee 0.44% / 0.44%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Tax-Free Money Market Fund Firstar Tax-Exempt Money Market Fund
Advisory Fee 0.55% / 0.50% Advisory Fee 0.50% / 0.50%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Ohio Tax-Free Money Market Fund Firstar Ohio Tax-Exempt Money Market Fund (shell)
Advisory Fee 0.55% / 0.35% Advisory Fee 0.50% / 0.34%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Strategic Income Fund Firstar Strategic Income Fund (shell)
Advisory Fee 0.95% / 0.95% Advisory Fee 0.95% / 0.91%
-----------------------------------------------------------------------------------------------------------------------------
Stellar U.S. Government Income Fund Firstar U.S. Government Securities Fund (shell)
Advisory Fee 0.60% / 0.60% Advisory Fee 0.60% / 0.50%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Fund (shell)
Advisory Fee 0.75% / 0.55% Advisory Fee 0.55% / 0.55%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Growth Equity Fund Firstar Large Cap Growth Fund (shell)
Advisory Fee 0.75% / 0.75% Advisory Fee 0.95% / 0.91%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Relative Value Fund Firstar Relative Value Fund (shell)
Advisory Fee 0.75% / 0.75% Advisory Fee 0.75% / 0.75%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Science & Technology Fund Firstar Science & Technology Fund (shell)
Advisory Fee 0.90% / 0.90% Advisory Fee 1.05% / 1.05%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Stellar Fund Advisory Fees Corresponding Firstar Fund Advisory Fees
------------ --------------------------
Before/After Waivers Before/After Waivers
-------------------- (Pro Forma After Giving
Effect to the Reorganization)
-----------------------------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Stellar Fund Firstar Balanced Income Fund
Advisory Fee 0.95% / 0.95% Advisory Fee 0.75% / 0.64%
-----------------------------------------------------------------------------------------------------------------------------
Stellar Capital Appreciation Fund Firstar MidCap Index Fund
Advisory Fee 0.95% / 0.95% Advisory Fee 0.25% / 0.15%
-----------------------------------------------------------------------------------------------------------------------------
Stellar International Equity Fund Firstar Global Equity Fund (shell)
Advisory Fee 0.75% / 0.75% Advisory Fee 0.75% / 0.70%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
In addition to the compensation stated above, FIRMCO is entitled to
4/10ths of the gross income earned by each Firstar Fund on each loan of its
portfolio securities, excluding capital gains or losses, if any. Pursuant
to the current policy of the SEC, FIRMCO does not intend to receive
compensation for such securities lending activity. FIRMCO may voluntarily
waive advisory fees otherwise payable by the Firstar Funds.
Other Service Providers for the Stellar Funds and the Firstar Funds
Listed below are the service providers used by Stellar and Firstar.
Upon completion of the Reorganization, Firstar will continue to engage its
existing service providers. In all cases, the types of services provided to
the Funds under these service arrangements are substantially similar.
<TABLE>
<CAPTION>
Stellar Firstar
------- -------
<S> <C> <C>
Distributor Quasar Distributors LLC Quasar Distributors LLC
Administrator Firstar Mutual Fund Services LLC Firstar Mutual Fund Services LLC
Transfer Agent Firstar Mutual Fund Services LLC Firstar Mutual Fund Services LLC
Custodian Firstar Bank, N.A. Firstar Bank, N.A.
Independent Accountants Arthur Andersen LLP PricewaterhouseCoopers LLP
</TABLE>
Sales Loads, Distribution Arrangements and Shareholder Servicing
Arrangements for Stellar
Class A Shares. Each Stellar Fund, other than the Stellar Treasury
--------------
Fund, Stellar Tax-Free Money Market Fund and Stellar Ohio Tax-Free Money
Market Fund, offers Class A Shares. Class A Shares of each Stellar Fund,
other than the Stellar Treasury Fund, Stellar Tax-Free
-57-
<PAGE>
Money Market Fund and Stellar Ohio Tax-Free Money Market Fund, charge a front-
end sales load at the time of purchase. The maximum front-end sales load charged
for Class A Shares is 4.00% for bond funds, 5.50% for equity funds other than
the International Equity Fund and 1.50% for the International Equity Fund. A
chart showing the breakpoints for sales charges for Class A Shares is set forth
in Appendix IV. Sales load reduction and waiver categories, which differ in
certain respects from those applicable to Retail A Shares of the Corresponding
Firstar Funds, are described in Appendix IV.
Stellar has adopted a Distribution Plan for Class A Shares of the Stellar
Funds. Stellar has also adopted a Shareholder Servicing Plan for Class A Shares
of the Stellar Funds. Under these plans, Class A Shares pay distribution fees of
up to an annual rate of 0.25% of the average daily net asset value of the shares
to the Distributor and shareholder servicing fees of up to 0.25% of the average
daily net asset value of the shares, to shareholder servicing organizations.
Currently, Stellar limits the shareholder servicing fee to an annual rate of
0.16% of average daily net assets, but this waiver can be modified or terminated
at any time. Payments to the Distributor are used to finance activities that
promote the sale of the Funds' shares, such as advertising, printing and mailing
prospectuses to persons other than current shareholders, printing and mailing
sales literature, and compensating underwriters, dealers and sales personnel.
The Shareholder Servicing Plan permits the payment of fees to Firstar Bank, N.A.
and, indirectly, to financial institutions to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances. These services may include, among other things,
assisting customers in processing purchase, exchange and redemption requests,
establishing and maintaining shareholder accounts and records, answering routine
client inquiries and assisting clients in changing account designations.
Class B Shares. Each Stellar Fund, other than the Stellar Treasury Fund,
--------------
Stellar Tax-Free Money Market Fund, Stellar Ohio Tax-Free Money Market Fund and
Stellar International Equity Fund, offers Class B Shares. Class B Shares are
sold at net asset value without imposition of a front-end sales load at the time
of purchase. However, there is a maximum 5% contingent deferred sales charge
(CDSC) assessed on Class B Shares that are redeemed within one year of purchase,
declining to 1% in the sixth year and eliminated thereafter. Retail B Shares of
the Firstar Funds received in exchange for Class B Shares of the Stellar Funds
will be subject to the CDSC. In all cases, former holders of Class B Shares of
the Stellar Funds will be credited for the period from the original date of
purchase of the Class B Shares for the purpose of determining the amount of
CDSC, if any.
Stellar has adopted a Distribution Plan pursuant to which Stellar's
distributor is entitled to receive fees from (1) the Stellar Science &
Technology Fund, Stellar Fund, Stellar Capital Appreciation Fund and Stellar
Insured Tax-Free Bond Fund at the annual rate of up to 0.75% of the average
aggregate net asset value of shares of the Funds held during the month, and (2)
the Class B Shares of the other Funds at the annual rate of up to 0.25% of the
average aggregate net asset value of shares of the Funds held during the month.
Payments to the Distributor are used to finance activities that promote the sale
of the Funds' shares, such as advertising, printing and mailing prospectuses to
persons other than current shareholders, printing and mailing sales literature,
and compensating underwriters, dealers and sales personnel.
-58-
<PAGE>
Stellar has adopted a Shareholder Servicing Plan for Class B Shares
pursuant to which service organizations are entitled to receive fees from a
Stellar Fund at an annual rate of up to 0.25% of the average daily net asset
value of the Class B Shares. Currently, Stellar limits the shareholder
servicing fee to an annual rate of 0.16% of the average daily net assets of a
fund, but this waiver can be modified or terminated at any time. The
Shareholder Servicing Plan permits the payment of fees to Firstar Bank, N.A.
and, indirectly, to financial institutions to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances. These services may include, among other things,
assisting customers in processing purchase, exchange and redemption requests,
establishing and monitoring shareholder accounts and records, answering routine
client inquiries and assisting clients in changing account designations.
Class C Shares. The Stellar Treasury Fund, Stellar Tax-Free Money Market
--------------
Fund and Stellar Ohio Tax-Free Money Market Fund offer Class C Shares. Class C
Shares are offered at net asset value without the imposition of a front-end
sales load at the time of purchase or a CDSC at the time of redemption. Class C
Shares are regular retail shares and may be purchased by individuals or
individual retirement accounts. With Class C Shares, no sales charge is paid
when you invest.
Stellar has adopted a Distribution Plan for Class C Shares pursuant to
which Stellar's distributor is entitled to receive fees at the annual rate of up
to 0.25% of the average aggregate net asset value of Class C Shares of the Fund
held during the month. Currently, only the Stellar Treasury Fund pays
distribution fees. Payments to the Distributor are used to finance activities
that promote the sale of the Fund's shares, such as advertising, printing and
mailing prospectuses to persons other than current shareholders, printing and
mailing sales literature, and compensating underwriters, dealers and sales
personnel.
Stellar has adopted a Shareholder Servicing Plan for Class C Shares
pursuant to which service organizations are entitled to receive fees at an
annual rate of up to 0.25% of the average daily net asset value of the Class C
Shares. Currently, Stellar limits the shareholder servicing fee to an annual
rate of 0.16% of the average daily net assets of a Fund, but this waiver can be
modified or terminated at any time. The Shareholder Servicing Plan permits the
payment of fees to Firstar Bank, N.A., and indirectly, to financial institutions
to cause services to be provided to shareholders by a representative who has
knowledge of the shareholder's particular circumstances. These services may
include, among other things, assisting customers in processing purchase,
exchange and redemption requests, establishing and monitoring shareholder
accounts and records, answering routine client inquiries and assisting clients
in changing account designations.
Class Y Shares. The Stellar Treasury Fund, Stellar Growth Equity Fund,
--------------
Stellar Relative Value Fund, Stellar Science & Technology Fund and Stellar Fund
offer Class Y Shares. Class Y Shares are offered at net asset value without the
imposition of a front-end sales load at the time of purchase or a CDSC at the
time of redemption.
Stellar has adopted a Shareholder Servicing Plan pursuant to which service
organizations are entitled to receive fees from a Stellar Fund at an annual rate
of up to 0.25% of the average
-59-
<PAGE>
daily net asset value of the shares. Currently, Stellar limits the shareholder
servicing fee to an annual rate of 0.16% of the average daily net assets of a
Fund, but this waiver can be modified or terminated at any time. The Shareholder
Servicing Plan permits the payment of fees to Firstar Bank, N.A. and indirectly,
to financial institutions to cause services to be provided to shareholders by a
representative who has knowledge of the shareholder's particular circumstances.
These services may include, among other things, assisting customers in
processing purchase, exchange and redemption requests, establishing and
monitoring shareholder accounts and records, answering routine client inquiries
and assisting clients in changing account designations.
Sales Load, Distribution and Shareholder Servicing Arrangements for Firstar
Retail A Shares. Each Firstar Fund offers Retail A Shares. Retail A
---------------
Shares of each Firstar Fund, except the Firstar Money Market Funds, charge a
front-end sales load at the time of purchase. The maximum front-end sales load
charged for each Firstar Fund's Retail A Shares is 5.50% for each balanced and
stock fund and 4.00% for each bond fund. A chart showing the break points for
sales charges for Retail A Shares is set forth in Appendix IV. Sales load
reduction and waiver categories, which differ in certain respects from those
applicable to Class A Shares of the corresponding Stellar Funds, are described
in Appendix IV.
Firstar has adopted a Distribution and Service Plan for Retail A Shares of
the Firstar Funds. Firstar also has adopted a Service Plan for Retail A Shares
of the Firstar Funds. Under each of these Plans, service organizations are
entitled to receive fees from a Firstar Fund at an annual rate of up to 0.25% of
the average daily net asset value of the Retail A Shares covered by their
respective agreements for distribution and/or shareholder support services, as
the case may be. Fees under both Plans with respect to a particular Fund will
not exceed, in the aggregate, the annual rate of 0.25% of the Fund's average
daily net assets for the Retail A Shares. The Firstar Funds do not intend to
pay distribution (12b-1) fees with respect to Retail A Shares during the current
fiscal year. Shareholder support services provided under the Plans may include
assisting investors in processing purchase, exchange and redemption requests;
processing dividend and distribution payments from a Firstar Fund; providing
information periodically to customers showing their positions in Retail A
Shares; providing sub-accounting services; and forwarding sales literature and
advertising.
Retail B Shares. Each Firstar Fund, except the Firstar Money Market Funds,
---------------
offers Retail B Shares. Retail B Shares are sold at net asset value without the
imposition of a front-end sales load at the time of purchase. However, there is
a maximum 5% CDSC assessed on Retail B Shares that are redeemed within one year
of purchase, declining to 1% in the sixth year and eliminated thereafter.
Retail B Shares of a Firstar Fund automatically convert to Retail A Shares of
the same Fund six years after purchase. Retail B Shares of the Firstar Funds
received in exchange for Class B Shares of the Stellar Funds will be subject to
the CDSC. In all cases, former holders of Class B Shares of the Stellar Funds
will be credited for the period from the original date of purchase of their
Class B Shares for the purpose of determining the amount of the CDSC, if any.
-60-
<PAGE>
Firstar has adopted a Distribution and Service Plan for Retail B Shares
pursuant to which (i) Firstar's distributor is entitled to receive fees from a
Firstar Fund at an annual rate of up to 0.75% of the average daily net asset
value of the Retail B Shares for distribution services with respect to the
Retail B Shares, and (ii) service organizations are entitled to receive fees
from a Firstar Fund at an annual rate of up to 0.25% of the average daily net
asset value of the Retail B Shares covered by their agreements for shareholder
liaison services. Shareholder liaison services may include responding to
customers' inquiries and providing information on their investments, and other
personal and account maintenance services within NASD Rules.
Firstar has adopted a Service Plan for Retail B Shares pursuant to which
service organizations are entitled to receive fees from a Firstar Fund at an
annual rate of up to 0.25% of the average daily net asset value of the Retail B
Shares covered by their agreements, for shareholder support services.
Shareholder support services provided under the Plan may include assisting
investors in processing purchase, exchange and redemption requests; processing
dividend and distribution payments from a Firstar Fund; providing information
periodically to customers showing their positions in Retail B Shares; providing
sub-accounting services; and forwarding sales literature and advertising.
Institutional Shares. Each Firstar Fund offers Institutional Shares.
--------------------
Institutional Shares are offered at net asset value without the imposition of a
front-end sales load at the time of purchase or a CDSC at the time of
redemption.
Firstar has adopted a Service Plan for Institutional Shares of the Firstar
U.S. Treasury Money Market Fund, Firstar Tax-Exempt Money Market Fund and
Firstar Ohio Tax-Exempt Money Market Fund pursuant to which service
organizations are entitled to receive fees from a Firstar Fund at an annual rate
of up to 0.25% of the average daily net asset value of the Institutional Shares
covered by their agreements for shareholder support services. Shareholder
support services may include assisting investors in processing purchase,
exchange and redemption requests; processing dividend and distribution payments
from a Firstar Fund; providing information periodically to customers showing
their positions in Institutional Shares; providing sub-accounting services; and
forwarding sales literature and advertising.
Class Y Shares. Each Firstar Fund, except the Firstar Money Market Funds,
--------------
offers Class Y Shares. Class Y Shares are offered at net asset value without
the imposition of a front-end sales load at the time of purchase or a CDSC at
the time of redemption.
Firstar has adopted a Service Plan for Class Y Shares pursuant to which
service organizations are entitled to receive fees from a Firstar Fund at an
annual rate of up to 0.25% of the average daily net asset value of the Class Y
Shares covered by their agreements for shareholder support services.
Shareholder support services may include assisting investors in processing
purchase, exchange and redemption requests; processing dividend and distribution
payments from a Firstar Fund; providing information periodically to customers
showing their positions in Class Y Shares; providing sub-accounting services;
and forwarding sales literature and advertising.
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<PAGE>
Administration Agreements
Stellar has entered into an administration agreement (the "Stellar
Administration Agreement") with FMFS, a subsidiary of Firstar Bank, N.A. Under
the Stellar Administration Agreement, FMFS provides administrative personnel and
services to the Funds. FMFS also provides services such as legal compliance and
accounting services. FMFS is paid at an annual rate of 0.11% of the average
daily net assets of each Fund.
Firstar has entered into an Administration Agreement (the "Administration
Agreement") with FMFS. Under the Administration Agreement, FMFS provides
various administrative, accounting and corporate secretarial services to the
Firstar Funds. FMFS is entitled to receive a fee for its administrative
services, computed daily and payable monthly, at the annual rate of 0.125% of
Firstar's first $2 billion of average aggregate daily net assets, plus 0.10% of
Firstar's average aggregate daily net assets in excess of $2 billion.
Shareholder Transactions and Policies
The Stellar Funds and the Corresponding Firstar Funds offer generally
similar shareholder services and transactions. There are, however, some
differences in the shareholder services and transactions of the Stellar Funds
and the Corresponding Firstar Funds. For example, Firstar Funds offer a program
called ConvertiFund which lets investors automatically exchange shares of one
account for shares of another account on a regular basis, as long as the shares
are Retail A or Retail B Shares. Shareholders of Firstar Funds are also able to
purchase (other than initial purchases), exchange and redeem shares via the
Internet. For a more detailed comparison of shareholder transactions and
policies, see Appendix IV.
Fees and Expenses
With respect to two out of the eight Stellar Funds in which holders of
Class A Shares of such Stellar Fund will receive Retail A Shares of the
Corresponding Firstar Fund and with respect to six out of the eight Stellar
Funds in which holders of Class B Shares of such Stellar Fund will receive
Retail B Shares of the Corresponding Firstar Fund, the Corresponding Firstar
Fund will have total operating expense ratios with respect to such class (after
fee waivers) that are higher than that of the corresponding class of the
corresponding Stellar Fund. However, all Stellar Class A and Class B
shareholders who will be receiving Institutional Shares of the Corresponding
Firstar Fund in the Reorganization will have total operating expense ratios
(after fee waivers) that are lower after the Reorganization. In addition, with
respect to four out of the eight Stellar Funds in which Stellar Class A
shareholders will be receiving Retail A Shares of the Corresponding Firstar Fund
and with respect to two out of the eight Stellar Funds in which Stellar Class B
shareholders will be receiving Retail B Shares of the Corresponding Firstar
Fund, the Corresponding Firstar Fund will have total operating expense ratios
with respect to such class (after fee waivers) that are lower than that of the
corresponding class of the corresponding Stellar Fund. Stellar Class A
shareholders will have total operating expense ratios (after fee waivers) that
are the same after the Reorganization with respect to two out of the eight
Stellar Funds in which Class A shareholders of such Stellar Fund will receive
Retail A Shares of the Corresponding Firstar Fund.
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<PAGE>
Specifically, Class A shareholders of the Stellar Strategic Income Fund and
Insured Tax-Free Bond Fund who will receive Retail A Shares in the
Reorganization, and Class B shareholders of the Stellar Strategic Income Fund,
U.S. Government Income Fund, Insured Tax-Free Bond Fund, Growth Equity Fund,
Relative Value Fund and Science & Technology Fund who will receive Retail B
Shares in the Reorganization, will have total operating expense ratios (after
fee waivers) that are higher after the Reorganization than what they had while
invested in the relevant Stellar Fund prior to the Reorganization. Conversely,
Class A shareholders of the Stellar U.S. Government Income Fund, Relative Value
Fund, Stellar Fund and Capital Appreciation Fund who will receive Retail A
Shares in the Reorganization, Class A shareholders of the Stellar U.S.
Government Income Fund, Insured Tax-Free Bond Fund and International Equity Fund
who will receive Institutional Shares in the Reorganization, Class B
shareholders of the Stellar Capital Appreciation Fund and Stellar Fund who will
receive Retail B Shares in the Reorganization, and Class B shareholders of the
Stellar Strategic Income Fund, U.S. Government Income Fund, Insured Tax-Free
Bond Fund and Capital Appreciation Fund who will receive Institutional Shares in
the Reorganization, will each have total operating expense ratios (after fee
waivers) that are lower after the Reorganization than what they had while
invested in the relevant Stellar Fund prior to the Reorganization. Class A
shareholders of the Stellar Growth Equity Fund and Stellar Science & Technology
Fund who will receive Retail A Shares in the Reorganization, will have total
operating expense ratios (after fee waivers) that are the same after the
Reorganization as what they had while invested in the relevant Stellar Fund
prior to the Reorganization.
All Stellar Class C shareholders will have total operating expense ratios
(after fee waivers) that are lower after the Reorganization. Stellar Class Y
shareholders will have total operating expense ratios (after fee waivers) that
are lower after the Reorganization with respect to three out of five Stellar
Funds and the same with respect to the remaining two Stellar Funds.
Specifically, Class Y shareholders of the Stellar Treasury Fund, Relative Value
Fund and Stellar Fund will have lower total operating expense ratios (after fee
waivers) after the Reorganization than what they had while invested in the
relevant Stellar Fund prior to the Reorganization, and Class Y shareholders of
the Stellar Growth Equity Fund and Stellar Science & Technology Fund will have
the same total operating expense ratios (after fee waivers) after the
Reorganization as what they had while invested in the relevant Stellar Fund
prior to the Reorganization.
Fee waivers are subject to termination. For a more detailed summary of
fees and expenses, see "Fee Tables" and Appendix II.
Performance. The total returns of the Firstar Funds are competitive with
the Stellar Funds. For a comparison of the total return performance of the
Reorganizing Stellar Funds with the Existing Firstar Fund, see Appendix V. See
also Appendix VI for Management Discussion of Firstar Fund Performance.
Share Structure. Both Stellar and Firstar are registered as open-end
management investment companies under the 1940 Act. Currently, Stellar offers
twelve funds. Firstar currently offers twenty-one funds and will offer thirty-
six funds immediately after the Reorganization (assuming the Mercantile and
Select reorganizations are also consummated).
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<PAGE>
Stellar is a Massachusetts business trust established under a Declaration
of Trust dated January 23, 1989. Stellar was organized under the name "Value
Plus Funds," but its name was changed on March 29, 1989 to "Losantiville Funds."
On May 1, 1993, the name of Stellar was changed again to "Star Funds." On
November 20, 1998, Star Banc Corporation, the parent company of Star Bank, N.A.,
Stellar's former investment advisor, merged with Firstar Corporation. After the
merger, Star Bank, N.A. changed its name to Firstar Bank, N.A. Effective March
1, 1999, the Board of Trustees of Stellar approved changing Stellar's name to
"Firstar Stellar Funds."
Stellar's Declaration of Trust authorizes the Board of Trustees to divide
the beneficial interest in Stellar into an unlimited number of shares (with no
par value) and to divide the shares into one or more classes. Shares of Stellar
may be issued in series and shares of any series will constitute units of
beneficial interest in Stellar specifically allocated to such series. Each
share of Stellar represents an equal proportionate interest in the related
investment portfolio with other shares of the same class, none having priority
or preference over another. Shares of Stellar are entitled to one vote for each
full share held and fractional votes for fractional shares held. All shares of
all classes of each Stellar Fund have equal voting rights. However, matters
affecting only one particular Fund or class can be voted on only by shareholders
in that fund or class. There is no cumulative voting in the election of
Trustees for the Stellar Funds.
Firstar was organized as a Wisconsin Corporation on February 15, 1988. The
company, formerly known as Portico Funds, Inc., changed its name to Firstar
Funds effective February 1, 1998. Firstar's Articles of Incorporation authorize
the Board of Directors to issue full and fractional shares of capital stock
($0.0001 par value per share) and to classify and reclassify any particular
class of shares into one or more additional series of shares. Shares of the
Firstar Funds are entitled to one vote for each full share held and fractional
votes for fractional shares held.
Shareholders of Firstar Funds will vote together in the aggregate and not
separately on a fund-by-fund basis, except as otherwise required by law or when
the Board of Directors determines that the matter to be voted upon affects only
the interests of the shareholders of a particular class or a particular series
within a class. On any matter submitted to the vote of shareholders which only
pertains to agreements, liabilities or expenses applicable to one series of a
Fund (such as a Distribution and Service Plan applicable to Retail A or B
Shares) but not the other series of the same Fund, only the affected series will
be entitled to vote. There is no cumulative voting with respect to Firstar
Funds shares.
Additional information concerning the attributes of the shares issued by
Stellar and Firstar is included in their respective prospectuses, which are
incorporated herein by reference. Information about the dividend and
distribution policies of both the Stellar Funds and the Firstar Funds can be
found in Appendix IV.
Comparison of Trust and Corporate Structure. Stellar is organized as a
Massachusetts business trust. Firstar is organized as a Wisconsin corporation.
Although the rights of a holder of a share of beneficial interest of a
Massachusetts business trust vary in certain respects from the rights of a
shareholder of a Wisconsin corporation, the attributes of a share of beneficial
interest
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<PAGE>
are comparable to those of a share of common stock, i.e., shares of
both are entitled to one vote per share held and fractional votes for fractional
shares held, and will vote in the aggregate and not by portfolio or class except
as otherwise required by law or when class voting is permitted by its Board.
It should be noted that under Wisconsin law, Firstar shareholders have no
personal liability for Firstar's acts or obligations. By contrast, under
certain circumstances, Stellar shareholders may be held personally liable under
Massachusetts law for acts or obligations of the Trust. To protect
shareholders, Stellar has provisions in its Declaration of Trust that endeavor
to protect shareholders from such liability. Thus, the risk of an interest
holder incurring a financial loss on account of interest holder liability is
limited to circumstances in which the Trust itself is unable to meet its
obligations.
VOTING MATTERS
General Information. The Board of Trustees of Stellar is furnishing this
Proxy/Prospectus in connection with the solicitation of proxies for the Special
Meeting. It is expected that the solicitation of proxies will be primarily by
mail. Officers and service contractors of Stellar and Firstar may also solicit
proxies by telephone or otherwise. In this connection, Stellar has retained ADP
Proxy Services ("ADP") and D.F. King & Co., Inc. ("D.F. King") to assist in the
solicitation of proxies for the Reorganization. Shareholders may vote (1) by
mail, by marking, signing, dating and returning the enclosed Proxy Ballot(s) in
the enclosed postage-paid envelope, (2) by touch-tone telephone voting, or (3)
by on-line voting. Any shareholder giving a proxy may revoke it at any time
before it is exercised by submitting to Stellar a written notice of revocation
or a subsequently executed proxy or by attending the Special Meeting and voting
in person. As the Special Meeting date approaches, certain shareholders of each
Fund may receive a telephone call from a representative of D.F. King if their
votes have not yet been received. Authorization to permit ADP or D.F. King to
execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of each Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. The Trustees believe that these procedures are reasonably designed to
ensure that the identity of the shareholder casting the vote is accurately
determined and that the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the D.F. King
representative is required to ask for each shareholder's full name, address,
social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), and the number
of shares owned, and to confirm that the shareholder has received the proxy
materials in the mail. If the information solicited agrees with the information
provided to D.F. King, then the D.F. King representative has the responsibility
to explain the process, read the Proposals on the proxy card, and ask for the
shareholder's instructions on the Proposals. The D.F. King representative,
although he or she is permitted to answer questions about the process, is not
permitted to recommend to the shareholder how to vote, other than to read any
recommendation set forth on the proxy statement. D.F. King will record the
shareholder's instructions on the card. Within 72 hours, the shareholder will
be sent a letter or mailgram to
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<PAGE>
confirm his or her vote and asking the shareholder to call D.F. King immediately
if his or her instructions are not correctly reflected in the confirmation.
Any expenses incurred as a result of hiring ADP, D.F. King or any
other proxy solicitation agent will be borne by FIRMCO or its affiliates. It is
anticipated that the cost associated with using proxy solicitation agents will
be approximately $________.
Only shareholders of record at the close of business on September 15,
2000 will be entitled to vote at the Special Meeting. On that date, the
following Stellar Shares were outstanding and entitled to be voted:
<TABLE>
<CAPTION>
Stellar Funds Shares Outstanding
------------- ------------------
and Entitled to Vote
--------------------
<S> <C>
Treasury Fund _________
Tax-Free Money Market Fund _________
Ohio Tax-Free Money Market Fund _________
Strategic Income Fund _________
U. S. Government Income Fund _________
Insured Tax-Free Bond Fund _________
Growth Equity Fund _________
Relative Value Fund _________
Science & Technology Fund _________
Stellar Fund _________
Capital Appreciation Fund _________
International Equity Fund _________
</TABLE>
Each whole and fractional share of a Stellar Fund is entitled to a
whole or fractional vote, as the case may be.
If an accompanying proxy is executed and returned in time for the
Special Meeting, the shares covered thereby will be voted in accordance with the
proxy on all matters that may properly come before the Special Meeting.
Shareholder and Board Approvals. The Reorganization Agreement is being
submitted for approval at the Special Meeting by Stellar's shareholders pursuant
to Stellar's Amended and Restated Declaration of Trust and By-Laws, and was
unanimously approved by Stellar's Board of Trustees at a meeting held on July
20, 2000. The Reorganization Agreement must be approved by the holders of a
majority of the outstanding shares of each Stellar Fund. A vote for the
Reorganization Agreement includes a vote for the reorganization of Stellar;
conversely, a vote against the Reorganization Agreement is a vote against the
reorganization of Stellar.
The Reorganization Agreement provides that in the event the
Reorganization Agreement is approved with respect to less than all of the
Stellar Funds, the failure of a Stellar
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Fund to consummate the transactions contemplated by the Reorganization Agreement
shall not affect the consummation or validity of the Reorganization with respect
to any other Stellar Fund.
With respect to the approval of the Reorganization Agreement, the term
"majority of the outstanding shares" means more than 50% of the outstanding
shares of each particular Stellar Fund. The vote of the shareholders of the
Firstar Funds is not being solicited, since their approval or consent is not
necessary for the Reorganization.
Principal Shareholders. As of September 15, 2000, the officers and
Trustees of Stellar as a group owned or controlled less than 1% of each Stellar
Fund's outstanding shares. As of September 15, 2000, the officers and directors
of Firstar as a group owned or controlled less than 1% of each Firstar Fund's
outstanding shares. Table VI(A) shows the name, address and share ownership of
each person known to Stellar to have ownership with respect to 5% or more of a
Stellar Fund as of August September 15, 2000. Table VI(B) shows the name,
address and share ownership of each person known to Firstar to have ownership,
as of September 15, 2000, with respect to 5% or more of a class of a Mercantile
Fund that is expected to reorganize into a Firstar Fund along with a Stellar
Fund. Table VI(C) shows the name, address and share ownership of each person
known to Firstar to have ownership with respect to 5% or more of a class of a
Firstar Fund as of September 15, 2000. The type of ownership of each entry
listed on Tables VI(A), VI(B) and VI(C) is record ownership.
Table VI(A)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Pro Forma
Class; Percentage Percentage Percentage
Name and Amount of of Class of Fund of Class
Stellar Fund Address Shares Owned Owned Owned Post-Closing
------------ ------- ------------ ----- ----- ------------
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Treasury Fund
------------------------------------------------------------------------------------------------------------
Tax-Free Money Market Fund
------------------------------------------------------------------------------------------------------------
Ohio Tax-Free Money Market Fund
------------------------------------------------------------------------------------------------------------
Strategic Income Fund
------------------------------------------------------------------------------------------------------------
U.S. Government Income Fund
------------------------------------------------------------------------------------------------------------
Insured Tax-Free Bond Fund
------------------------------------------------------------------------------------------------------------
Growth Equity Fund
------------------------------------------------------------------------------------------------------------
Relative Value Fund
------------------------------------------------------------------------------------------------------------
Science & Technology Fund
------------------------------------------------------------------------------------------------------------
Stellar Fund
------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund
------------------------------------------------------------------------------------------------------------
International Equity Fund
------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
Table VI(B)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Class; Percentage Pro Forma
Name and Amount of Percentage of Fund Percentage
Mercantile Fund Address Shares Owned of Class Owned Post-Closing
--------------- ------- ------------ -------- ----- ------------
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Treasury Money Market
Portfolio
---------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Portfolio
---------------------------------------------------------------------------------------------------
U.S. Government Securities
Portfolio
---------------------------------------------------------------------------------------------------
National Municipal Bond
Portfolio
---------------------------------------------------------------------------------------------------
</TABLE>
Table VI(C)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Class; Percentage Pro Forma
Name and Amount of Percentage of Fund Percentage
Firstar Fund Address Shares Owned of Class Owned Post-Closing
------------ ------- ------------ -------- ----- ------------
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. Treasury Money Market
Fund
---------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Fund
---------------------------------------------------------------------------------------------------
MidCap Index Fund
---------------------------------------------------------------------------------------------------
Balanced Income Fund
---------------------------------------------------------------------------------------------------
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through
one or more controlled companies more than 25% of the voting securities of a
company is presumed to "control" such company. Accordingly, to the extent that
a shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, such
shareholder may be presumed to control such class.
Firstar and Stellar have been advised by Firstar Bank, N.A., an
affiliate of FIRMCO, that, with respect to the shares of each Stellar Fund over
which Firstar Bank, N.A. has voting power, such shares may be voted by Firstar
Bank, N.A. itself in its capacity as fiduciary.
Quorum. In the event that a quorum is not present at the Special Meeting,
or in the event that a quorum is present at the Special Meeting but sufficient
votes to approve the Reorganization Agreement are not received by Stellar or by
one or more of the Stellar Funds, one or more adjournment(s) may be proposed to
permit further solicitation of proxies. Any adjourned session or sessions may
be held after the date set for the original Special Meeting without notice
except announcement at the Special Meeting. Any such adjournment(s) will
require the affirmative vote of a plurality of those shares affected by the
adjournment(s) that are represented at the Special Meeting in person or by
proxy. If a quorum is present, the persons named as proxies will vote those
proxies that they are entitled to vote FOR the particular proposal for which a
quorum exists in favor of such adjournment(s), and will vote those proxies
required to be voted AGAINST such proposal against any adjournment(s). A
shareholder vote may be taken with respect to one or more Stellar Funds (but not
the other Stellar Funds) on some or all matters before any such adjournment(s)
if a quorum is present and sufficient votes have been received for approval with
respect to such Funds.
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<PAGE>
A quorum is constituted with respect to each of the share classes of
each of the Stellar Funds by the presence in person or by proxy of the holders
of more than 50% of the outstanding shares thereof entitled to vote at the
Special Meeting. For purposes of determining the presence of a quorum for
transacting business at the Special Meeting, abstentions will be treated as
shares that are present at the Special Meeting but which have not been voted.
Abstentions will have the effect of a "no" vote for purposes of obtaining the
requisite approvals of the Reorganization Agreement. Broker "non-votes" (that
is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner 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 abstentions.
Annual Meetings and Shareholder Meetings. Neither Stellar nor Firstar
presently intends to hold annual meetings of shareholders for the election of
Trustees and other business unless otherwise required by the 1940 Act. Under
certain circumstances, however, holders of at least 10% of the outstanding
shares of Stellar or Firstar have the right to call a meeting of shareholders.
ADDITIONAL INFORMATION ABOUT FIRSTAR
Additional information about the (1) Retail A Shares and Retail B Shares of
the Firstar non-money market funds is included in their prospectus and statement
of additional information dated March 1, 2000; (2) Institutional Shares of the
Firstar Money Market Funds is included in their prospectus and statement of
additional information dated September __, 2000; (3) Y Shares of the Firstar
non-money market funds is included in their prospectus and statement of
additional information dated September __, 2000 and (4) Retail A, Retail B,
Class Y and Institutional Shares of the Firstar U.S. Government Securities Fund
and Firstar National Municipal Bond Fund is included in their prospectus and
statement of additional information dated _______ __, 2000, copies of which, to
the extent not included herewith, may be obtained without charge by writing or
calling Firstar at the address and telephone number set forth on the first page
of this Proxy/Prospectus. Firstar is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended, and the 1940 Act, and in
accordance therewith it files reports, proxy materials and other information
with the SEC. Reports and other information filed by Firstar can be inspected
and copied at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the offices of Firstar listed above.
In addition, these materials can be inspected and copied at the SEC's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also can be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
Information included in this Proxy/Prospectus concerning Firstar was
provided by Firstar.
ADDITIONAL INFORMATION ABOUT STELLAR
Additional information about Stellar is included in their prospectuses and
statement of additional information, dated March 31, 2000, copies of which have
been filed with the SEC.
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<PAGE>
Copies of these prospectuses and the related statement of additional information
may be obtained without charge by writing or calling Stellar at the address and
telephone number set forth on the first page of this Proxy/Prospectus. Reports
and other information filed by Stellar can be inspected and copied at the Public
Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the offices of Stellar listed above. In addition,
these materials can be inspected and copied at the SEC's Regional Offices at 7
World Trade Center, Suite 1300, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also can be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
Information included in this Proxy/Prospectus concerning Stellar was
provided by Stellar.
FINANCIAL STATEMENTS
The annual financial statements and financial highlights of the Firstar
Funds for the fiscal year ended October 31, 1999 have been audited by
PricewaterhouseCoopers LLP, independent accountants, to the extent indicated in
their reports thereon, and have been incorporated by reference in the Statement
of Additional Information to this Proxy/Prospectus, in reliance upon such
reports given upon the authority of such firm as an expert in accounting and
auditing. The unaudited semi-annual financial statements and financial
highlights of the Firstar Funds for the fiscal period ended April 30, 2000 have
also been incorporated by reference in the Statement of Additional Information
to the Proxy/Prospectus.
The annual financial statements and financial highlights of the Stellar
Funds for the fiscal year ended November 30, 1999 incorporated by reference in
the Statement of Additional Information to this Proxy/Prospectus and elsewhere
in this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report. The unaudited semi-
annual financial statements and financial highlights of the Stellar Funds for
the fiscal period ended May 31, 2000 have also been incorporated by reference in
the Statement of Additional Information to the Proxy/Prospectus.
OTHER BUSINESS
Stellar's Board of Trustees knows of no other business to be brought before
the Meeting. However, if any other matters properly come before the Meeting, it
is the intention of Stellar that proxies that 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.
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<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Stellar or to Firstar in writing
at the address(es), or by phone at the phone number(s), on the cover page of
this Proxy/Prospectuses.
* * *
Shareholders who do not expect to be present at the meeting are requested
to mark, sign and date the enclosed proxy and return it in the enclosed
envelope. No postage is required if mailed in the United States. Shareholders
also may vote on-line or by telephone.
Stellar will furnish, without charge, copies of its November 30, 1999
Annual Reports to any shareholder upon request addressed to: Firstar Stellar
Funds c/o Firstar Mutual Fund Services, LLC, at P.O. Box 701, Milwaukee,
Wisconsin 53201-0701 or by telephone at 1-800-677-FUND.
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<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF
REORGANIZATION
BY AND BETWEEN
FIRSTAR FUNDS, INC.
AND
FIRSTAR STELLAR FUNDS
DATED AS OF __________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. CERTAIN DEFINITIONS..................................................... 4
2. THE REORGANIZATION...................................................... 5
3. CALCULATIONS............................................................ 11
4. VALUATION OF ASSETS..................................................... 19
5. VALUATION TIMES......................................................... 21
6. EFFECTIVE TIME OF THE REORGANIZATION.................................... 22
7. TERMINATION OF STELLAR.................................................. 23
8. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
STELLAR................................................................. 24
9. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
FIRSTAR................................................................. 30
10. SHAREHOLDER ACTION ON BEHALF OF THE STELLAR FUNDS....................... 35
11. SHAREHOLDER ACTION ON BEHALF OF FIRSTAR................................. 36
12. N-14 REGISTRATION STATEMENT............................................. 36
13. FIRSTAR CONDITIONS...................................................... 37
14. STELLAR CONDITIONS...................................................... 40
15. TAX OPINION............................................................. 44
16. TAX DOCUMENTS........................................................... 46
17. FURTHER ASSURANCES...................................................... 46
18. TERMINATION OF REPRESENTATIONS AND WARRANTIES........................... 47
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
19. TERMINATION OF AGREEMENT............................................... 47
20. AMENDMENT AND WAIVER................................................... 48
21. GOVERNING LAW.......................................................... 48
22. SUCCESSORS AND ASSIGNS................................................. 48
23. BENEFICIARIES.......................................................... 48
24. NOTICES................................................................ 49
25. EXPENSES............................................................... 50
26. ENTIRE AGREEMENT....................................................... 50
27. COUNTERPARTS........................................................... 50
28. FAILURE OF ONE FUND TO CONSUMMATE THE TRANSACTIONS..................... 50
29. NO BROKERS OR FINDERS.................................................. 51
30. VALIDITY............................................................... 51
31. EFFECT OF FACSIMILE SIGNATURE.......................................... 51
32. HEADINGS............................................................... 51
33. FIRSTAR LIABILITY...................................................... 51
34. STELLAR LIABILITY...................................................... 52
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the _____ day of _____________, 2000, by Firstar Funds, Inc. ("Firstar"), a
Wisconsin corporation, and Firstar Stellar Funds ("Stellar"), a Massachusetts
business trust.
BACKGROUND
----------
WHEREAS, each of the parties hereto is an open-end management investment
company registered with the Securities and Exchange Commission (the "SEC") under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Stellar offers the following investment portfolios: (1) Stellar
Treasury Fund, (2) Stellar Tax-Free Money Market Fund, (3) Stellar U.S.
Government Income Fund, (4) Stellar Insured Tax-Free Bond Fund, (5) Stellar
Capital Appreciation Fund, and (6) Stellar Fund (each a "Reorganizing Stellar
Fund" and collectively, the "Reorganizing Stellar Funds");
WHEREAS, Stellar also offers the following investment portfolios: (1)
Stellar Ohio Tax-Free Money Market Fund, (2) Stellar Strategic Income Fund, (3)
Stellar Growth Equity Fund, (4) Stellar Relative Value Fund, (5) Stellar Science
and Technology Fund, and (6) Stellar International Equity Fund (each a
"Continuing Stellar Fund" and collectively, the "Continuing
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<PAGE>
Stellar Funds" and, together with the Reorganizing Stellar Funds, each a
"Stellar Fund" and collectively, the "Stellar Funds");
WHEREAS, Firstar currently offers, among others, the following investment
portfolios: (1) Firstar U.S. Treasury Money Market Fund, (2) Firstar Tax-Exempt
Money Market Fund, (3) Firstar U.S. Government Securities Fund, (4) Firstar
National Municipal Bond Fund, (5) Firstar MidCap Index Fund, and (6) Firstar
Balanced Income Fund (each an "Existing Firstar Fund" and collectively, the
"Existing Firstar Funds");
WHEREAS, Firstar has recently organized, or will soon organize, the
following additional investment portfolios: (1) Firstar Ohio Tax-Free Money
Market Fund, (2) Firstar Strategic Income Fund, (3) Firstar Large Cap Growth
Fund, (4) Firstar Relative Value Fund, (5) Firstar Science & Technology Fund,
and (6) Firstar Global Equity Fund (each a "Shell Firstar Fund" and
collectively, the "Shell Firstar Funds," and, together with the Existing Firstar
Funds, each a "Firstar Fund" and collectively, the "Firstar Funds");
WHEREAS, each of the parties hereto desires, upon the terms and subject to
the conditions set forth herein, to enter into and perform the reorganization
described herein (the "Reorganization"), pursuant to which, among other things,
at the respective times hereinafter set forth, (1) each Stellar Fund shall
transfer substantially all of its respective Assets (as hereinafter defined),
subject, in each case, to substantially all of its respective Liabilities (as
hereinafter defined), to its Corresponding Firstar Fund (as hereinafter
defined), in exchange for Retail A,
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<PAGE>
Retail B or Institutional Shares issued by such Corresponding Firstar Fund (the
shares issued to a Stellar Fund by its Corresponding Firstar Fund in exchange
for substantially all of the Assets, subject to substantially all of the
Liabilities, of such Stellar Fund in connection with the Reorganization,
collectively, "Firstar Fund Shares"), and (2) each Stellar Fund shall then
distribute to its shareholders of record, the Firstar Fund Shares received by or
on behalf of such Stellar Fund;
WHEREAS, each of the parties intends that the Shell Firstar Funds will have
nominal assets and liabilities before the Reorganization and will continue the
investment operations of the Continuing Stellar Funds; and
WHEREAS, the parties intend that in connection with the Reorganization,
Stellar shall be deregistered and terminated as described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
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<PAGE>
1. Certain Definitions. As used herein,
-------------------
(a) The term "Corresponding Firstar Fund" shall mean with respect to
any Stellar Fund, the particular Firstar Fund, the name of which is set forth
directly opposite the name of such Stellar Fund on Schedule A hereto.
(b) The term "Corresponding Stellar Fund" shall mean with respect to
any Firstar Fund, the particular Stellar Fund, the name of which is set forth
directly opposite the name of such Firstar Fund on Schedule A hereto.
(c) The term "Assets" shall mean all property and assets of every
description and of any nature whatsoever including, without limitation, cash,
cash equivalents, securities, claims (whether absolute or contingent, known or
unknown, accrued or unaccrued), receivables (including dividend and interest
receivables), deferred or prepaid expenses, good will and other intangible
property, books and records, and all interests, rights, privileges and powers,
other than cash in an amount necessary to pay any unpaid dividends and
distributions as provided in Section 2(d) hereof.
(d) The term "Liabilities" shall mean all existing and future
liabilities and obligations of any nature, whether accrued, absolute, contingent
or otherwise, including, with respect to Stellar and each Stellar Fund, any
obligation to indemnify Stellar's current Trustees, acting in their capacities
as such, to the fullest extent permitted by law and Stellar's Amended and
Restated Declaration of Trust ("Declaration of Trust") and By-laws, in each case
as in effect as of the date of this Agreement.
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<PAGE>
2. The Reorganization.
------------------
(a) At the Applicable Effective Time of the Reorganization (as
hereinafter defined), (i) each Stellar Fund shall transfer, assign and convey to
its Corresponding Firstar Fund substantially all of the Assets, subject to
substantially all of the Liabilities, of such Stellar Fund, and (ii) each such
Corresponding Firstar Fund shall accept all such Assets and assume all such
Liabilities, such that at and after the Applicable Effective Time of the
Reorganization: (1) substantially all of the Assets of each particular Stellar
Fund shall become and be Assets of its Corresponding Firstar Fund, (2)
substantially all of the Liabilities of each particular Stellar Fund shall
become and be liabilities of, and shall attach to, its Corresponding Firstar
Fund, and (3) such Liabilities of each particular Stellar Fund may thenceforth
be enforced only against its Corresponding Firstar Fund to the same extent as if
such Liabilities had been incurred by such Corresponding Firstar Fund, subject
to any defense and/or set off that Stellar or such Stellar Fund was entitled to
assert immediately prior to the Applicable Effective Time of the Reorganization
with respect to any such Liability, and subject to any defense and/or set off
that Firstar or such Corresponding Firstar Fund may from time to time be
entitled to assert against the creditor thereof.
(b) In exchange for the transfer of substantially all of the Assets of
each Stellar Fund to its Corresponding Firstar Fund as provided in paragraph (a)
above, each Firstar Fund shall assume substantially all of the Liabilities of
its Corresponding Stellar Fund as provided in paragraph (a) above and shall also
simultaneously issue, at the Applicable Effective Time of the Reorganization, to
its Corresponding Stellar Fund, the number of full and fractional
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<PAGE>
(to the third decimal place) Firstar Fund Shares of each class of such Firstar
Fund, determined and adjusted as provided in Section 3 hereof.
(c) Immediately upon receipt of the Firstar Fund Shares of such
Firstar Fund in accordance with paragraph (b) above, each Stellar Fund shall
distribute, in complete liquidation, pro rata to the shareholders of record of
such Stellar Fund at the Applicable Effective Time of the Reorganization (such
shareholders of record of such Stellar Fund as of such time, collectively, the
"Recordholders"), the respective Firstar Fund Shares that have been so received
as follows:
(i) With respect to the Stellar Treasury Fund, Recordholders of
Class C Shares of such Stellar Fund will be credited with full and fractional
Retail A Shares of the Corresponding Firstar Fund with respect to such Class C
Shares and Recordholders of Class Y Shares of such Stellar Fund will be credited
with full and fractional Institutional Shares of the Corresponding Firstar Fund
with respect to such Class Y Shares;
(ii) With respect to the Stellar Tax-Free Money Market Fund,
Recordholders of Class C Shares of such Stellar Fund purchased other than
through an investment management, trust, custody or other agency relationship
with Firstar Bank, N.A. will be credited with full and fractional Retail A
Shares of the Corresponding Firstar Fund with respect to such Class C Shares and
Recordholders of Class C Shares of such Stellar Fund purchased through an
investment management, trust, custody or other agency relationship with Firstar
Bank, N.A. will be credited with full and fractional Institutional Shares of the
Corresponding Firstar Fund with respect to such Class C Shares;
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<PAGE>
(iii) With respect to the Stellar Ohio Tax-Free Money Market Fund,
Recordholders of Class C Shares of such Stellar Fund purchased other than
through an investment management, trust, custody or other agency relationship
with Firstar Bank, N.A. will be credited with full and fractional Retail A
Shares of the Corresponding Firstar Fund with respect to such Class C Shares and
Recordholders of Class C Shares of such Stellar Fund purchased through an
investment management, trust, custody or other agency relationship with Firstar
Bank, N.A. will be credited with full and fractional Institutional Shares of the
Corresponding Firstar Fund with respect to such Class C Shares;
(iv) With respect to the Stellar Strategic Income Fund, Recordholders
of Class A Shares of such Stellar Fund will be credited with full and fractional
Retail A Shares of the Corresponding Firstar Fund with respect to such Class A
Share, Recordholders of Class B Shares of such Stellar Fund purchased other than
through an investment management, trust, custody or other agency relationship
with Firstar Bank, N.A. will be credited with full and fractional Retail B
Shares of the Corresponding Firstar Fund with respect to such Class B Shares and
Recordholders of Class B Shares of such Stellar Fund purchased through an
investment management, trust, custody or other agency relationship with Firstar
Bank, N.A. will be credited with full and fractional Institutional Shares of the
Corresponding Firstar Fund with respect to such Class B Shares;
(v) With respect to the Stellar U.S. Government Income Fund,
Recordholders of Class A Shares of such Stellar Fund purchased other than
through an investment management, trust, custody or other agency relationship
with Firstar Bank, N.A. will
-7-
<PAGE>
be credited with full and fractional Retail A Shares of the Corresponding
Firstar Fund with respect to such Class A Shares, Recordholders of Class A
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. will be credited
with full and fractional Institutional Shares of the Corresponding Firstar Fund
with respect to such Class A Shares, Recordholders of Class B Shares of such
Stellar Fund purchased other than through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. will be credited
with full and fractional Retail B Shares of the Corresponding Firstar Fund with
respect to such Class B Shares and Recordholders of Class B Shares of such
Stellar Fund purchased through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A. will be credited with full and
fractional Institutional Shares of the Corresponding Firstar Fund with respect
to such Class B Shares;
(vi) With respect to the Stellar Insured Tax-Free Bond Fund,
Recordholders of Class A Shares of such Stellar Fund purchased other than
through an investment management, trust, custody or other agency relationship
with Firstar Bank, N.A. will be credited with full and fractional Retail A
Shares of the Corresponding Firstar Fund with respect to such Class A Shares,
Recordholders of Class A Shares of such Stellar Fund purchased through an
investment management, trust, custody or other agency relationship with Firstar
Bank, N.A. will be credited with full and fractional Institutional Shares of the
Corresponding Firstar Fund with respect to such Class A Shares, Recordholders of
Class B Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
will be credited with full and fractional Retail B
-8-
<PAGE>
Shares of the Corresponding Firstar Fund with respect to such Class B Shares and
Recordholders of Class B Shares of such Stellar Fund purchased through an
investment management, trust, custody or other agency relationship with Firstar
Bank, N.A. will be credited with full and fractional Institutional Shares of the
Corresponding Firstar Fund with respect to such Class B Shares;
(vii) With respect to the Stellar International Equity Fund,
Recordholders of Class A Shares of such Stellar Fund will be credited with full
and fractional Institutional Shares of the Corresponding Firstar Fund with
respect to such Class A Shares;
(viii) With respect to the Stellar Capital Appreciation Fund,
Recordholders of Class A Shares of such Stellar Fund will be credited with full
and fractional Retail A Shares of the Corresponding Firstar Fund with respect to
such Class A Shares, Recordholders of Class B Shares of such Stellar Fund
purchased other than through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A. will be credited with full and
fractional Retail B Shares of the Corresponding Firstar Fund with respect to
such Class B Shares and Recordholders of Class B Shares of such Stellar Fund
purchased through an investment management, trust, custody or other agency
relationship with Firstar Bank, N.A. will be credited with full and fractional
Institutional Shares of the Corresponding Firstar Fund with respect to such
Class B Shares; and
(ix) With respect to all other Stellar Funds, Recordholders of Class
A Shares of such Stellar Fund will be credited with full and fractional Retail A
Shares of the Corresponding Firstar Fund with respect to such Class A Shares,
Recordholders of Class B
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<PAGE>
Shares of such Stellar Fund will be credited with full and fractional Retail B
Shares of the Corresponding Firstar Fund with respect to such Class B Shares,
and Recordholders of Class Y Shares of such Stellar Fund will be credited with
full and fractional Institutional Shares of the Corresponding Firstar Fund with
respect to such Class Y Shares.
(d) At the Applicable Effective Time of the Reorganization, each
shareholder of record of a Stellar Fund as of the record date (the "Distribution
Record Date") with respect to any unpaid dividends and other distributions that
were declared before the Applicable Effective Time of the Reorganization shall
have the right to receive such unpaid dividends and distributions with respect
to the shares of such Stellar Fund that such person held on the Distribution
Record Date.
(e) Promptly upon receipt of instructions from Stellar delivered
pursuant to this paragraph (e), Firstar shall, in accordance with such
instructions, record on its books the ownership, by the Recordholders, of the
number and type of Firstar Fund Shares distributed to such Recordholders.
(f) Stellar shall promptly cancel on its books all of the shares
(including, without limitation, any treasury shares) of each Stellar Fund that
has liquidated as provided in paragraph (c) above, and any such shares issued
and outstanding prior to such cancellation shall thereafter represent only the
right to receive the Firstar Fund Shares issued to such Stellar Fund in
accordance with paragraph (b) above.
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<PAGE>
(g) Upon completion of the tasks required by paragraphs (a) through (f)
above with respect to each Stellar Fund, the transfer books of Stellar with
respect to such Stellar Fund shall be permanently closed.
3. Calculations.
------------
(a) The number of each class of Firstar Fund Shares of each Existing and
Shell Firstar Fund issued to its Corresponding Stellar Fund pursuant to Section
2(b) hereof will be determined as follows:
(i) With respect to the Stellar Treasury Fund:
(A) The value (determined as of the Applicable Valuation Time
(as hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less
the Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class C
Shares of such Stellar Fund shall be divided by the net asset value of one
Retail A Share of its Corresponding Firstar Fund that is to be delivered with
respect thereto; and
(B) The value (determined as of the Applicable Valuation Time
(as hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less
the Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class Y
Shares of such Stellar Fund shall be divided by the net asset value of one
Institutional Share of its Corresponding Firstar Fund that is to be delivered
with respect thereto.
(ii) With respect to the Stellar Tax-Free Money Market Fund:
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<PAGE>
(A) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class C
Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall be divided by the net asset value of one Retail A Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto; and
(B) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class C
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. shall be divided by
the net asset value of one Institutional Share of its Corresponding Firstar Fund
that is to be delivered with respect thereto.
(iii) With respect to the Stellar Ohio Tax-Free Money Market Fund:
(A) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class C
Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall be divided by the net asset value of one Retail A Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto; and
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<PAGE>
(B) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class C
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. shall be divided by
the net asset value of one Institutional Share of its Corresponding Firstar Fund
that is to be delivered with respect thereto.
(iv) With respect to the Stellar Strategic Income Fund:
(A) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class A
Shares of such Stellar Fund shall be divided by the net asset value of one
Retail A Share of its Corresponding Firstar Fund that is to be delivered with
respect thereto;
(B) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall be divided by the net asset value of one Retail B Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto; and
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<PAGE>
(C) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. shall be divided by
the net asset value of one Institutional Share of its Corresponding Firstar Fund
that is to be delivered with respect thereto.
(v) With respect to the Stellar U.S. Government Income Fund:
(A) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class A
Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall be divided by the net asset value of one Retail A Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto;
(B) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class A
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. shall be divided
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<PAGE>
by the net asset value of one Institutional Share of its Corresponding Firstar
Fund that is to be divided with respect thereto;
(C) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall be divided by the net asset value of one Retail B Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto; and
(D) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. shall be divided by
the net asset value of one Institutional Share of its Corresponding Firstar Fund
that is to be delivered with respect thereto.
(vi) With respect to the Stellar Insured Tax-Free Bond Fund:
(A) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class A
Shares of such Stellar Fund purchased other than through an
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<PAGE>
investment management, trust, custody or other agency relationship with Firstar
Bank, N.A. shall be divided by the net asset value of one Retail A Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto;
(B) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class A
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. shall be divided by
the net asset value of one Institutional Share of its Corresponding Firstar Fund
that is to be divided with respect thereto;
(C) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall be divided by the net asset value of one Retail B Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto; and
(D) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased through an investment
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<PAGE>
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall be divided by the net asset value of one Institutional Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto.
(vii) With respect to the Stellar International Equity Fund, the
value (determined as of the Applicable Valuation Time (as hereinafter defined))
of such Stellar Fund's Assets that are conveyed, less the Liabilities that are
assumed, at the Applicable Effective Time of the Reorganization (as hereinafter
defined) and that are attributable to Class A Shares of such Stellar Fund shall
be divided by the net asset value of one Institutional Share of its
Corresponding Firstar Fund that is to be delivered with respect thereto.
(viii) With respect to the Stellar Capital Appreciation Fund:
(A) The value (determined as of the Applicable Valuation Time
(as hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less
the Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class A
Shares of such Stellar Fund shall be divided by the net asset value of one
Retail A Share of its corresponding Firstar Fund that is to be delivered with
respect thereto;
(B) The value (determined as of the Applicable Valuation Time
(as hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less
the Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased other than through an investment
management, trust, custody or other agency relationship with Firstar Bank, N.A.
shall
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<PAGE>
be divided by the net asset value of one Retail B Share of its corresponding
Firstar Fund that is to be delivered with respect thereto; and
(C) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund purchased through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. shall be divided by
the net asset value of one Institutional Share of its Corresponding Firstar Fund
that is to be delivered with respect thereto.
(ix) With respect to all other Stellar Funds:
(A) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class A
Shares of such Stellar Fund shall be divided by the net asset value of one
Retail A Share of its Corresponding Firstar Fund that is to be delivered with
respect thereto;
(B) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class B
Shares of such Stellar Fund shall be divided by the net asset value of one
Retail B Share of its Corresponding Firstar Fund that is to be delivered with
respect thereto; and
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<PAGE>
(C) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of such Stellar Fund's Assets that are conveyed, less the
Liabilities that are assumed, at the Applicable Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to Class Y
Shares of such Stellar Fund shall be divided by the net asset value of one
Institutional Share of its Corresponding Firstar Fund that is to be delivered
with respect thereto.
(b) The net asset value of each class of Firstar Fund Shares shall be
computed at the Applicable Valuation Time (as hereinafter defined) in the manner
set forth in such Firstar Fund's then current prospectus under the Securities
Act of 1933 (the "1933 Act"). The net asset value of shares of each class of a
Stellar Fund shall be computed at the Applicable Valuation Time in the manner
set forth in such Stellar Fund's then current prospectus under the 1933 Act.
4. Valuation of Assets.
-------------------
(a) With respect to each Stellar Fund, the value of its Assets shall
be the value of such Assets computed as of the time at which its net asset value
is calculated at the Applicable Valuation Time (as hereinafter defined). The net
asset value of the Stellar Fund Assets to be transferred to the Firstar Funds
shall be computed by Stellar and shall be subject to adjustment by the amount,
if any, agreed to by Stellar and the respective Stellar Funds and Firstar and
the respective Firstar Funds. In determining the value of the securities
transferred by a Stellar Fund to its Corresponding Firstar Fund, each security
shall be priced in accordance with the pricing policies and procedures of such
Stellar Fund as described in its then current prospectus(es) and statement of
additional information. For such purposes, price quotations and the security
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<PAGE>
characteristics relating to establishing such quotations shall be determined by
Stellar, provided that such determination shall be subject to the approval of
Firstar. Firstar and Stellar agree to use all commercially reasonable efforts
to resolve, prior to the Applicable Valuation Time, any material pricing
differences between the prices of portfolio securities determined in accordance
with the pricing policies and procedures of a Firstar Fund and those determined
in accordance with the pricing policies and procedures of its Corresponding
Stellar Fund.
(b) It is understood and agreed that the net asset value of the Assets of
those Stellar Funds that are money market funds shall be based on the amortized
cost valuation procedures that have been adopted by the Board of Trustees of
Stellar; provided that if the difference between the per share net asset values
of any such Stellar Fund and its Corresponding Firstar Fund equals or exceeds
$0.0010 at the Applicable Valuation Time, as computed by using market values in
accordance with the policies and procedures established by Stellar, either party
shall have the right to postpone the Applicable Valuation Time and Applicable
Effective Time of the Reorganization (as hereinafter defined) with respect to
such Funds until such time as the per share difference is less than $0.0010.
(c) At least fifteen (15) business days prior to the Applicable Effective
Time of the Reorganization, each Stellar Fund will provide its Corresponding
Firstar Fund with a schedule of its securities and other Assets and Liabilities
of which it is aware, and such Firstar Fund will provide the Stellar Fund with a
copy of the current investment objective and policies applicable to such Firstar
Fund. Each Stellar Fund reserves the right to sell any of the securities or
other Assets shown on the list of the Fund's Assets prior to the Applicable
Effective Time of
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<PAGE>
the Reorganization but will not, without the prior approval of Firstar, acquire
any additional securities other than securities which the Corresponding Firstar
Fund is permitted to purchase in accordance with its stated investment objective
and policies. At least ten (10) business days prior to the Applicable Effective
Time of the Reorganization, each Firstar Fund will advise its Corresponding
Stellar Fund of any investments of such Stellar Fund shown on such schedule
which the Firstar Fund would not be permitted to hold, pursuant to its stated
investment objective and policies or otherwise. In the event that the Stellar
Fund holds any investments that its Corresponding Firstar Fund would not be
permitted to hold under its stated investment objective or policies, the Stellar
Fund, if requested by the Firstar Fund and to the extent permissible and
consistent with the Stellar Fund's own investment objective and policies, will
dispose of such securities prior to the Applicable Effective Time of the
Reorganization. In addition, if it is determined that the portfolios of the
Stellar Fund and the Firstar Fund, when aggregated, would contain investments
exceeding certain percentage limitations to which the Firstar Fund is or will be
subject with respect to such investments, the Stellar Fund, if requested by the
Firstar Fund and, to the extent permissible and consistent with the Stellar
Fund's own investment objective and policies, will dispose of and/or reinvest a
sufficient amount of such investments as may be necessary to avoid violating
such limitations as of the Applicable Effective Time of the Reorganization.
5. Valuation Times. Subject to Section 4(b) hereof, the valuation time with
---------------
respect to the Existing Firstar Funds and the Reorganizing Stellar Funds shall
be 4:00 p.m., Eastern Time, on ________ __, 2000, or such earlier or later date
and time as may be mutually agreed in writing by an authorized officer of each
of the parties (the "First Valuation Time"). Subject to
-21-
<PAGE>
Section 4(b) hereof, the valuation time with respect to the Shell Firstar Funds
and the Continuing Stellar Funds shall be 4:00 p.m., Eastern Time, on _______
__, 2000, or such earlier or later date and time as may be mutually agreed in
writing by an authorized officer of each of the parties (the "Second Valuation
Time" and, together with the First Valuation Time, each an "Applicable Valuation
Time"), provided that the Second Valuation Time shall be no less than one week
following the First Valuation Time, unless otherwise agreed in writing by the
parties hereto. Notwithstanding anything herein to the contrary, in the event
that at an Applicable Valuation Time, (a) the New York Stock Exchange shall be
closed to trading or trading thereon shall be restricted or (b) trading or the
reporting of trading on such exchange or elsewhere shall be disrupted so that,
in the judgment of Firstar or Stellar, accurate appraisal of the value of the
net assets of a Firstar Fund or a Stellar Fund is impracticable, such Valuation
Time shall be postponed until the first business day after the day when trading
shall have been fully resumed without restriction or disruption, reporting shall
have been restored and accurate appraisal of the value of the net assets of the
Firstar Funds and the Stellar Funds is practicable in the judgment of Firstar
and Stellar.
6. Effective Time of the Reorganization.
------------------------------------
(a) Delivery by each Reorganizing Stellar Fund of its respective Assets to
its Corresponding Firstar Fund, delivery by such Corresponding Firstar Fund of
its respective Firstar Fund Shares to such Reorganizing Stellar Fund, and
liquidation of each such Reorganizing Stellar Fund, in each case, pursuant to
Section 2 hereof, shall occur at the opening of business on the next business
day following the First Valuation Time (or on such other date following the
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<PAGE>
First Valuation Time as is agreed to in writing by an authorized officer of each
of the parties). The date and time at which the above-described actions are
taken shall be the "Applicable Effective Time of the Reorganization" with
respect to the Existing Firstar Funds and the Reorganizing Stellar Funds. To the
extent any Assets of any Reorganizing Stellar Fund are, for any reason, not
transferred to its Corresponding Firstar Fund at the Applicable Effective Time
of the Reorganization with respect to such Funds, Stellar shall cause such
Assets to be transferred in accordance with this Agreement at the earliest
practicable date thereafter.
(b) Delivery by each Continuing Stellar Fund of its respective Assets
to its Corresponding Firstar Fund, delivery by each such Corresponding Firstar
Fund of its respective Firstar Fund Shares to such Continuing Stellar Fund, and
the liquidation of each such Continuing Stellar Fund, in each case, pursuant to
Section 2 hereof, shall occur at the opening of business on the next business
day following the Second Valuation Time (or on such other date following the
Second Valuation Time as is agreed to in writing by an authorized officer of
each of the parties). The date and time at which the above-described actions are
taken shall be the "Applicable Effective Time of the Reorganization" with
respect to the Shell Firstar Funds and the Continuing Stellar Funds. To the
extent any Assets of any Continuing Stellar Fund are, for any reason, not
transferred at the Applicable Effective Time of the Reorganization with respect
to such Funds, Stellar shall cause such Assets to be transferred in accordance
with this Agreement at the earliest practicable date thereafter.
7. Termination of Stellar. Promptly following the Applicable Effective
----------------------
Time of the Reorganization with respect to the Shell Firstar Funds and their
Corresponding Stellar Funds,
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<PAGE>
Stellar shall file an application pursuant to Section 8(f) of the 1940 Act for
an order declaring that Stellar has ceased to be an investment company; provided
that until such order is granted, Stellar shall continue to comply with all of
its obligations as a registered investment company under the 1940 Act and under
any and all other applicable state and federal securities laws (including, in
the case of each of the foregoing, the rules and regulations thereunder).
Stellar shall, promptly after the Applicable Effective Time of the
Reorganization with respect to the Shell Firstar Funds and their Corresponding
Stellar Funds, file any final regulatory reports, including, but not limited to,
any Form N-SAR and Rule 24f-2 Notice, with respect to such Stellar Fund(s). All
reporting and other obligations of Stellar shall remain the exclusive
responsibility of Stellar up to and including the date on which such Stellar
Fund is deregistered and terminated. In addition, promptly following the
Applicable Effective Time of the Reorganization with respect to the Shell
Firstar Funds and their Corresponding Stellar Funds, Stellar shall be terminated
pursuant to its Declaration of Trust and shall take all other steps necessary
and proper to effect its complete termination. Without limiting the generality
of the foregoing, (a) the affairs of Stellar shall be immediately wound up, its
contracts discharged and its business liquidated; and (b) the Trustees of
Stellar shall execute and lodge among the records of Stellar an instrument in
writing setting forth the fact of such termination.
8. Certain Representations, Warranties, Covenants and Agreements of
----------------------------------------------------------------
Stellar. Stellar, on behalf of itself and each of the Stellar Funds, represents,
-------
warrants, covenants and agrees as follows:
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<PAGE>
(a) Stellar is validly existing under the laws of the Commonwealth of
Massachusetts as a trust with transferable shares of the type customarily
referred to as a Massachusetts business trust.
(b) Stellar is duly registered with the SEC as an open-end, management
investment company under the 1940 Act and such registration is in full force and
effect as of the date hereof.
(c) Stellar has the power to own all of its Assets and, subject to the
approval of shareholders referred to in Section 10 hereof, to carry out and
consummate the transactions contemplated herein. Stellar has all necessary
federal, state and local authorizations, licenses and approvals necessary or
desirable to carry on its business as such business is now being conducted and,
upon receipt by Stellar of an exemptive order under Section 17 of the 1940 Act,
to consummate the transactions contemplated by this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Stellar, and represents the legal, valid and binding obligation of
Stellar, enforceable against Stellar in accordance with the terms hereof,
subject as to enforcement to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer or conveyance, and
other similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles and provided that the provisions of this
Agreement intended to limit liability for particular matters to an investment
portfolio and its assets, including but not limited to Section 34 of this
Agreement, may not be enforceable. The execution and delivery of this Agreement
do not, and the consummation of the transactions
-25-
<PAGE>
contemplated by this Agreement will not, violate Stellar's Declaration of Trust
or By-laws or any other organizational document of Stellar or any material
agreement, contract or other arrangement to which Stellar is a party or by which
Stellar or its properties or Assets may be bound, subject or affected.
(e) Each Stellar Fund has elected to qualify, and has qualified as of
and since its first taxable year, as a regulated investment company under Part I
of Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of 1986,
as amended (the "Code"), and each Stellar Fund currently qualifies, and shall
continue to qualify, as a regulated investment company under such Part for its
taxable year that includes the date on which the Applicable Effective Time of
the Reorganization occurs.
(f) All federal, state, local and foreign income, profits, franchise,
sales, withholding, customs, transfer and other taxes, including, without
limitation, interest, additions to tax, and penalties thereon (collectively,
"Taxes"), that relate to the Assets of Stellar or of any Stellar Fund, and that
are either due or properly shown to be due on any return filed by Stellar or by
any Stellar Fund have been (or as of the Applicable Effective Time of the
Reorganization shall have been) fully and timely paid or provided for; and, to
Stellar's knowledge, there are no levies, liens, or other encumbrances relating
to Taxes existing, threatened or pending with respect to the Assets of Stellar
(or with respect to any Assets of any Stellar Fund).
(g) All federal and other tax returns and reports of Stellar and each
Stellar Fund required by law to be filed on or before the Applicable Effective
Time of the Reorganization, have been or will be filed in a timely manner, and
all federal and other taxes
-26-
<PAGE>
owed by Stellar on behalf of the Stellar Funds, have been or will be timely paid
so far as due, and to the best of Stellar's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to any
such return.
(h) The financial statements of each of the Stellar Funds for its
respective fiscal year ended November 30, 1999, examined by Arthur Andersen LLP,
and the unaudited financial statements of each of the Stellar Funds for its
respective six-month period ended May 31, 2000, copies of which have been
previously furnished to Firstar, present fairly and in conformity with generally
accepted accounting principles consistently applied (i) the financial condition
of such Stellar Fund as of the dates indicated therein and (ii) the results of
operations of such Stellar Fund for the periods indicated.
(i) Prior to or as of the First Valuation Time, each of the
Reorganizing Stellar Funds shall have declared a dividend or dividends, with a
record date and ex-dividend date prior to or as of the First Valuation Time,
which, together with all previous dividends, shall have the effect of
distributing to its shareholders all of its net investment company income, if
any, for the taxable periods or years ended on or before November 30, 1999 and
for the period from said date to and including the Applicable Effective Time of
the Reorganization (computed without regard to any deduction for dividends
paid), and all of its net capital gain, if any, realized in taxable periods or
years ended on or before November 30, 1999 and in the period from said date to
and including the Applicable Effective Time of the Reorganization.
(j) At the Applicable Valuation Time and the Applicable Effective Time
of the Reorganization with respect to each Stellar Fund, all Liabilities of such
Stellar Fund which
-27-
<PAGE>
are required to be reflected in the net asset value per share of shares of such
Stellar Fund in accordance with applicable law are reflected in the net asset
value per share of such Stellar Fund.
(k) To Stellar's knowledge, there are currently, and at the Applicable
Valuation Time and the Applicable Effective Time of the Reorganization with
respect to each Stellar Fund there shall be, no legal, administrative or other
proceedings or investigations pending or, to Stellar's knowledge, threatened
against or otherwise involving Stellar or any Stellar Fund which could result in
liability on the part of Stellar or any Stellar Fund.
(l) Subject to the approval of shareholders referred to in Section 10
hereof, at both the First Valuation Time and the Applicable Effective Time of
the Reorganization with respect to each Reorganizing Stellar Fund, Stellar, on
behalf of each Reorganizing Stellar Fund, shall have full right, power and
authority to sell, assign, transfer and deliver the Assets of such Reorganizing
Stellar Fund. Upon delivery and payment for the Assets of the Reorganizing
Stellar Funds as contemplated in Section 2(b) above, each Corresponding Firstar
Fund shall acquire good and marketable title to the Assets of its Corresponding
Stellar Fund, in each case, free and clear of all liens and encumbrances, and
subject to no restrictions on the ownership or transfer thereof (except as
imposed by federal or state securities laws).
(m) Subject to the approval of shareholders referred to in Section 10
hereof, at both the Second Valuation Time and the Applicable Effective Time of
the Reorganization with respect to each Continuing Stellar Fund, Stellar, on
behalf of each Continuing Stellar Fund, shall have full right, power and
authority to sell, assign, transfer and deliver the Assets of such Continuing
Stellar Fund. Upon delivery and payment for the Assets of the Continuing
Stellar
-28-
<PAGE>
Fund, as contemplated in Section 2(b) above, each Shell Firstar Fund shall
acquire good and marketable title to the Assets of its Corresponding Stellar
Fund, in each case, free and clear of all liens and encumbrances, and subject to
no restrictions on the ownership or transfer thereof (except as imposed by
federal or state securities laws).
(n) No consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity, is required for the
consummation by Stellar and by each Stellar Fund of the transactions
contemplated by this Agreement, except as may be required by the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, or
state securities laws (including, in the case of each of the foregoing, the
rules and regulations thereunder).
(o) On the effective date of the N-14 Registration Statement (as
hereinafter defined), at the time of the shareholders' meeting referred to in
Section 10 hereof and at each Applicable Effective Time of the Reorganization,
the registration statement filed by Firstar on Form N-14 relating to the shares
of each Firstar Fund that will be registered with the SEC pursuant to this
Agreement, together with any and all supplements and amendments thereto and the
documents contained or incorporated therein by reference, as supplemented and
amended, including, without limitation, the proxy statement of Stellar and the
prospectuses of Stellar and Firstar with respect to the transactions
contemplated by this Agreement (such registration statement, together with such
supplements and amendments and the documents contained therein or incorporated
therein by reference, as supplemented and amended, the "N-14 Registration
Statement") shall with respect to Stellar and each Stellar Fund: (i) comply in
all material respects
-29-
<PAGE>
with the provisions of the 1933 Act, the 1934 Act, the 1940 Act, and applicable
state securities laws (including, in the case of each of the foregoing, the
rules and regulations thereunder), and (ii) not contain any untrue statement of
a material fact or omit to state a material fact that is required to be stated
therein or that is necessary to make the statements therein not misleading.
(p) All of the issued and outstanding shares of each of the Stellar
Funds have been duly and validly issued, are fully paid and non-assessable, and
were offered for sale and sold in conformity with all applicable federal and
state securities laws (including, in the case of each of the foregoing, the
rules and regulations thereunder). All shares of any Stellar Fund issued on or
after the date hereof shall be duly and validly issued, fully paid and non-
assessable and offered for sale and sold in conformity with all applicable
federal and state securities laws (including, in the case of each of the
foregoing, the rules and regulations thereunder). No shareholder of any of the
Stellar Funds has, or will hereafter have, any statutory or contractual
preemptive right of subscription or purchase in respect of any shares of any
Stellar Fund.
(q) Stellar shall not sell or otherwise dispose of any Firstar Fund
Shares received in the transactions contemplated herein, except in distribution
to the Recordholders as contemplated herein.
9. Certain Representations, Warranties, Covenants and Agreements of
----------------------------------------------------------------
Firstar. Firstar, on behalf of itself and each of the Firstar Funds, represents,
-------
warrants, covenants and agrees as follows:
(a) Firstar is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin.
-30-
<PAGE>
(b) Firstar is duly registered with the SEC as an open-end, management
investment company under the 1940 Act and such registration is in full force and
effect as of the date hereof.
(c) Firstar has the power to own all of its Assets and, subject to the
approval of shareholders and the filing of the Articles of Amendment to the
Articles of Incorporation of Firstar referred to in Section 11 hereof, to carry
out and consummate the transactions contemplated herein. Firstar has all
necessary federal, state and local authorizations, licenses and approvals
necessary or desirable to carry on its business as such business is now being
conducted and, upon the filing of the Articles of Amendment to the Articles of
Incorporation of Firstar referred to in Section 11 hereof and receipt by Firstar
of an exemptive order under Section 17 of the 1940 Act, to consummate the
transactions contemplated by this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Firstar, and represents the legal, valid and binding obligation of
Firstar, enforceable against Firstar in accordance with the terms hereof,
subject as to enforcement to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer or conveyance, and
other similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles and provided that the provisions of this
Agreement intended to limit liability for particular matters to an investment
portfolio and its assets, including but not limited to Section 33 of this
Agreement, may not be enforceable. Subject to the filing of the Articles of
Amendment to the Articles of Incorporation of Firstar referred to in Section 11
hereof, the execution and delivery of this Agreement does not, and the
consummation
-31-
<PAGE>
of the transactions contemplated by this Agreement will not, violate the
Articles of Incorporation or Bylaws of Firstar or any other organizational
document of Firstar, or any material agreement, contract or other arrangement to
which Firstar is a party or by which Firstar or its properties or Assets may be
bound, subject or affected.
(e) Each Firstar Fund has elected to qualify, and has qualified as of
and since its first taxable year, as a regulated investment company under Part I
of Subchapter M of Subtitle A, Chapter 1, of the Code, and each Firstar Fund has
been a regulated investment company under such Part at all times since the end
of its first taxable year when it so qualified. Each Firstar Fund currently
qualifies, and shall continue to qualify, as a regulated investment company
under the Code.
(f) All Taxes that relate to the Assets of Firstar or of any Firstar
Fund, and that are either due or properly shown to be due on any return filed by
Firstar or any Firstar Fund, have been (or as of the Applicable Effective Time
of the Reorganization shall have been) fully and timely paid or provided for;
and, to Firstar's knowledge, there are no levies, liens or other encumbrances
relating to Taxes existing, threatened or pending with respect to the Assets of
Firstar (or with respect to any Assets of any Firstar Fund).
(g) All federal and other tax returns and reports of Firstar and each
Firstar Fund required by law to be filed on or before the Applicable Effective
Time of the Reorganization have been or will be filed in a timely manner, and
all federal and other taxes owed by Firstar on behalf of the Firstar Funds have
been or will be timely paid so far as due, and
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<PAGE>
to the best of Firstar's knowledge, no such return is currently under audit and
no assessment has been asserted with respect to any such return.
(h) The financial statements of each of the Firstar Funds for its
respective fiscal year ended October 31, 1999, examined by
PricewaterhouseCoopers LLP, and the unaudited financial statements of each of
the Firstar Funds for its respective six-month period ended April 30, 2000,
copies of which have been previously furnished to Stellar, present fairly and in
conformity with generally accepted accounting principles consistently applied
(i) the financial condition of such Firstar Fund as of the dates indicated
therein and (ii) the results of operations of such Firstar Fund for the periods
indicated.
(i) At the Applicable Valuation Time and the Applicable Effective Time
of the Reorganization with respect to each Firstar Fund, all Liabilities of such
Firstar Fund which are required to be reflected in the net asset value per share
of the Firstar Fund Shares issued by such Firstar Fund pursuant to this
Agreement in accordance with applicable law are reflected in the net asset value
per share of such Firstar Fund.
(j) To Firstar's knowledge, there are currently, and at the Applicable
Valuation Time and the Applicable Effective Time of the Reorganization with
respect to each Firstar Fund there shall be, no legal, administrative or other
proceedings or investigations pending or, to Firstar's knowledge, threatened
against or otherwise involving Firstar or any Firstar Fund which could result in
liability on the part of Firstar or any Firstar Fund.
(k) No consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity is required for the
consummation by Firstar and by
-33-
<PAGE>
each Firstar Fund of the transactions contemplated by this Agreement except (i)
the filing of Articles of Amendment to the Articles of Incorporation of Firstar
referred to in Section 11 hereof or (ii) as may be required by the 1933 Act, the
1934 Act, the 1940 Act or state securities laws (including, in the case of each
of the foregoing, the rules and regulations thereunder).
(l) On the effective date of the N-14 Registration Statement, at the
time of the shareholders' meeting referred to in Section 10, and at each
Applicable Effective Time of the Reorganization, the N-14 Registration Statement
shall with respect to Firstar and each of the Firstar Funds: (i) comply in all
material respects with the provisions of the 1933 Act, the 1934 Act, the 1940
Act, and applicable state securities laws (including, in the case of each of the
foregoing, the rules and regulations thereunder), and (ii) not contain any
untrue statement of a material fact or omit to state a material fact that is
required to be stated therein or that is necessary to make the statements
therein not misleading.
(m) The Firstar Fund Shares to be issued and delivered to each Stellar
Fund pursuant to the terms hereof shall have been duly authorized as of the
Applicable Effective Time of the Reorganization and, when so issued and
delivered, shall be registered under the 1933 Act, duly and validly issued, and
fully paid and non-assessable, and no shareholder of any Firstar Fund shall have
any statutory or contractual preemptive right of subscription or purchase in
respect thereof.
(n) For the period beginning at the Applicable Effective Time of the
Reorganization with respect to the Shell Firstar Funds and the Continuing
Stellar Funds and ending not less than three years thereafter, Firstar shall
provide or cause to be provided, liability
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<PAGE>
coverage for the Trustees and officers of Stellar which covers the actions of
such Trustees and officers of Stellar for the period they served as such and is
at least comparable to the liability coverage currently applicable to the
Trustees and officers of Stellar. Firstar agrees that all rights to
indemnification existing in favor of the Stellar Trustees, acting in their
capacities as such, under Stellar's Declaration of Trust as in effect as of the
date of this Agreement shall survive the Reorganization as obligations of
Firstar, shall continue in full force and effect without any amendment thereto,
and shall constitute rights which may be asserted against Firstar.
10. Shareholder Action on Behalf of the Stellar Funds. As soon as
-------------------------------------------------
practicable after the effective date of the N-14 Registration Statement, but in
any event prior to the Applicable Effective Time of the Reorganization, and as a
condition to the consummation of the transactions contemplated hereby, the Board
of Trustees of Stellar shall call, and Stellar shall hold, a meeting of the
shareholders of each of the Stellar Funds for the purpose of considering and
voting upon:
(a) Approval of this Agreement and the transactions contemplated
hereby, including, without limitation, the transfer by such Stellar Fund to its
Corresponding Firstar Fund, of substantially all of the Assets belonging to such
Stellar Fund and the assumption by such Corresponding Firstar Fund of
substantially all of the Liabilities of such Stellar Fund, in exchange for the
Firstar Fund Shares issued by such Corresponding Firstar Fund to such Stellar
Fund, in each case, in accordance with, and at the respective times set forth
in, Section 2 hereof.
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<PAGE>
(b) The liquidation of such Stellar Fund through the
distribution of the Firstar Fund Shares received by such Stellar Fund to the
Recordholders of the Stellar Fund as described in this Agreement.
(c) Such other matters as may be determined by the Board of
Trustees of Stellar.
11. Shareholder Action on Behalf of Firstar. Prior to the Effective
---------------------------------------
Time of the Reorganization with respect to the Existing Firstar Funds and as a
condition to the consummation of the transactions contemplated hereby, (i) the
Board of Directors of Firstar shall call, and Firstar shall hold, a meeting of
the shareholders of Firstar for the purpose of considering and voting upon the
approval of Articles of Amendment to the Articles of Incorporation of Firstar to
enable Firstar to issue more than 30 classes of common stock (the "Articles of
Amendment"), and such other matters as may be determined by the Board of
Directors of Firstar, and (ii) provided that the approval required of Firstar's
shareholders is obtained, the Articles of Amendment shall be filed with the
office of the Department of Financial Institutions of the State of Wisconsin.
12. N-14 Registration Statement. Firstar shall file the N-14
---------------------------
Registration Statement. Firstar and Stellar have cooperated and shall continue
to cooperate with each other and have furnished and shall continue to furnish
each other with the information relating to themselves that is required by the
1933 Act, the 1934 Act, the 1940 Act and applicable state securities laws
(including, in the case of each of the foregoing, the rules and regulations
thereunder) to be included in the N-14 Registration Statement and the
information relating to themselves that is
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<PAGE>
necessary to ensure that the N-14 Registration Statement does not contain any
untrue statement of a material fact and to ensure that the N-14 Registration
Statement does not omit to state a material fact that is required to be stated
therein or that is necessary to make the statements therein not misleading.
13. Firstar Conditions. The obligations of Firstar (and of each
------------------
respective Firstar Fund) hereunder shall be subject to the following conditions
precedent:
(a) This Agreement and the transactions contemplated by this
Agreement shall have been approved by the Board of Trustees of Stellar
(including the determinations required by Rule 17a-8(a) under the 1940 Act) and
by the shareholders of each of the Stellar Funds, in each case, in the manner
required by law.
(b) The Articles of Amendment shall have been approved by the
shareholders of Firstar and filed with the office of the Department of Financial
Institutions of the State of Wisconsin.
(c) Stellar shall have duly executed and delivered to Firstar, on
behalf of each Stellar Fund, such bills of sale, assignments, certificates and
other instruments of transfer ("Transfer Documents") as Firstar may deem
necessary or desirable to transfer to the Corresponding Firstar Fund of such
Stellar Fund, all of the right, title and interest of such Stellar Fund in and
to substantially all of the respective Assets of such Stellar Fund. In each
case, the Assets of each Stellar Fund so transferred shall be accompanied by all
necessary state stock transfer stamps or cash for the appropriate purchase price
therefor.
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<PAGE>
(d) All representations and warranties of Stellar made in this
Agreement shall be true and correct in all material respects on the date hereof,
at the Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, in each case, as if made at and as of such time. As of the
Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, there shall have been no material adverse change in the
financial position of any Stellar Fund or of Stellar since the date of the most
recent financial statements referred to in Section 8(h), other than those
changes (including, without limitation, changes due to net redemptions) incurred
in the ordinary course of business as an investment company since the date of
the most recent financial statements referred to in Section 8(h). At the
Applicable Effective Time of the Reorganization, Firstar shall have received a
certificate from the President or Vice President of Stellar, dated as of such
date, certifying on behalf of Stellar that as of such date each of the
conditions set forth in this clause (d) have been met.
(e) Firstar shall have received opinions of Drinker Biddle &
Reath, LLP, counsel to Stellar, addressed to Firstar, in form and substance
reasonably satisfactory to Firstar, and dated the Applicable Effective Time of
the Reorganization, to the effect that as of the date of such opinion, and
subject to qualifications and conditions reasonably acceptable to Firstar: (i)
Stellar has been duly organized and is validly existing under the laws of the
Commonwealth of Massachusetts as a trust with transferable shares of the type
customarily referred to as a Massachusetts business trust; (ii) this Agreement
has been duly and validly authorized, executed and delivered by Stellar and
represent the legal, valid and binding obligation of Stellar, enforceable
against Stellar in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent
-38-
<PAGE>
transfer or conveyance and similar laws relating to or affecting creditors'
rights and remedies generally and court decisions with respect thereto, and such
counsel shall express no opinion with respect to the application of equitable
principles in any proceeding, whether at law or in equity, as to the
enforceability of any provision of the Agreement relating to remedies after
default, as to the availability of any specific or equitable relief of any kind,
or with respect to the provisions of this Agreement intended to limit liability
for particular matters to a particular Stellar Fund and its Assets, including
but not limited to Section 34 of this Agreement; (iii) the execution and
delivery of this Agreement did not, and the consummation of the transactions
contemplated by this Agreement will not, violate the Declaration of Trust or By-
laws of Stellar or any material agreement known to counsel to which Stellar is a
party or by which Stellar may be bound; and (iv) to such counsel's knowledge, no
consent, approval, authorization or order of any court, governmental authority
or agency is required for the consummation by Stellar of the transactions
contemplated by this Agreement, except such as have been obtained under the 1933
Act, the 1934 Act, the 1940 Act, and Massachusetts securities laws (including,
in the case of each of the foregoing, the rules and regulations thereunder).
Such opinions may rely on opinions of Sullivan & Worcester LLP to the extent set
forth in each such opinion.
(f) The N-14 Registration Statement shall have become effective
under the 1933 Act, and no stop order suspending such effectiveness shall have
been instituted or, to the knowledge of Firstar, contemplated by the SEC, and
the parties shall have received all permits, licenses and other authorizations
necessary under applicable state securities laws to consummate the transactions
contemplated by this Agreement and all such permits, licenses and other
authorizations shall be in full force and effect at such time.
-39-
<PAGE>
(g) At the Applicable Effective Time of the Reorganization,
Stellar shall have performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to be performed or
complied with by Stellar prior to or at the Applicable Valuation Time and the
Applicable Effective Time of the Reorganization and Firstar shall have received
a certificate from the President or Vice President of Stellar, dated as of such
date, certifying on behalf of Stellar that the conditions set forth in this
clause (g) have been, and continue to be, satisfied.
(h) Stellar's agreements with each of its service contractors
shall have terminated at the Applicable Effective Time of the Reorganization and
each party shall have received reasonable assurance that no claim for damages
(liquidated or otherwise) will arise as a result of such termination.
(i) Firstar shall have received the tax opinions provided for in
Section 15 hereof.
(j) Firstar shall have received any necessary exemptive relief
from the SEC with respect to Section 17(a) of the 1940 Act.
14. Stellar Conditions. The obligations of Stellar (and of each
------------------
respective Stellar Fund) hereunder shall be subject to the following conditions
precedent:
(a) This Agreement and the transactions contemplated by this
Agreement shall have been approved by the Board of Directors of Firstar
(including the determinations
-40-
<PAGE>
required by Rule 17a-8(a) under the 1940 Act) and by the shareholders of each of
the Stellar Funds, in each case, in the manner required by law.
(b) The Articles of Amendment shall have been approved by the
shareholders of Firstar and filed with the office of the Department of Financial
Institutions of the State of Wisconsin.
(c) All representations and warranties of Firstar made in this
Agreement shall be true and correct in all material respects on the date hereof,
at the Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, in each case, as if made at and as of such time. As of the
Applicable Valuation Time and at the Applicable Effective Time of the
Reorganization, there shall have been no material adverse change in the
financial position of any Firstar Fund or of Firstar since the date of the most
recent financial statements referred to in Section 9(h) other than those changes
(including, without limitation, changes due to net redemptions) incurred in the
ordinary course of business as an investment company since the date of the most
recent financial statements referred to in Section 9(h). At the Applicable
Effective Time of the Reorganization, Stellar shall have received a certificate
from the President or Vice President of Firstar, dated as of such date,
certifying on behalf of Firstar that as of such date each of the conditions set
forth in this clause (c) have been met.
(d) Stellar shall have received opinions of Drinker Biddle &
Reath LLP, counsel to Firstar, addressed to Stellar in form and substance
reasonably satisfactory to Stellar and dated the Applicable Effective Time of
the Reorganization, to the effect that as of the date of such opinion, and
subject to qualifications and conditions reasonably acceptable to Stellar:
-41-
<PAGE>
(i) Firstar is a corporation duly organized, validly existing and in good
standing under the laws of the State of Wisconsin; (ii) the shares of each
Existing or Shell Firstar Fund, as appropriate, to be delivered to its
Corresponding Stellar Fund are duly authorized and upon delivery will be validly
issued, fully paid and non-assessable by such Firstar Fund, and to such
counsel's knowledge, no shareholder of any Firstar Fund has any statutory
preemptive right to subscription or purchase in respect thereof; (iii) this
Agreement has been duly and validly authorized, executed and delivered by
Firstar and represents the legal, valid and binding obligation of Firstar,
enforceable against Firstar in accordance with the terms hereof, subject to the
effect of bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent transfer or conveyance and similar laws relating to or affecting
creditors' rights and remedies generally and court decisions with respect
thereto, and such counsel shall express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, as to the enforceability of any provision of the Agreement relating to
remedies after default, as to the availability of any specific or equitable
relief of any kind, or with respect to the provisions of this Agreement intended
to limit liability for particular matters to a particular Firstar Fund and its
Assets, including but not limited to Section 33 of this Agreement; (iv) the
execution and delivery of this Agreement did not, and the consummation of the
transactions contemplated by this Agreement will not, violate the Articles of
Incorporation or Bylaws of Firstar, or any material agreement known to such
counsel to which Firstar is a party or by which Firstar may be bound; and (v) to
such counsel's knowledge, no consent, approval, authorization or order of any
court, governmental authority or agency is required for the consummation by
Firstar of the transactions contemplated by this Agreement, except such as have
been obtained under the 1933 Act, the 1934 Act, the 1940 Act,
-42-
<PAGE>
and Wisconsin corporate and securities laws (including, in the case of each of
the foregoing, the rules and regulations thereunder). Such opinions may rely on
opinions of Foley & Lardner to the extent set forth in each such opinion.
(e) The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending such effectiveness shall have
been instituted, or, to the knowledge of Stellar, contemplated by the SEC, and
the parties shall have received all permits, licenses and other authorizations
necessary under applicable state securities laws to consummate the transactions
contemplated by this Agreement, and all such permits and other authorizations
shall be in full force and effect at such time.
(f) At the Applicable Effective Time of the Reorganization,
Firstar shall have performed and complied in all material respects with each of
its agreements and covenants required by this Agreement to be performed or
complied with by Firstar prior to or at the Applicable Valuation Time and the
Applicable Effective Time of the Reorganization and Stellar shall have received
a certificate from the President or Vice President of Firstar, dated as of such
date, certifying on behalf of Firstar that the conditions set forth in this
clause (f) have been, and continue to be, satisfied.
(g) Stellar shall have received the tax opinions provided for in
Section 15 hereof.
(h) Stellar shall have received any necessary exemptive relief
from the SEC with respect to Section 17(a) of the 1940 Act.
-43-
<PAGE>
15. Tax Opinion. Firstar and Stellar shall receive opinions of
-----------
Drinker Biddle & Reath LLP addressed to both Firstar and Stellar in a form
reasonably satisfactory to them, and dated as of the Applicable Effective Time
of the Reorganization, substantially to the effect that on the basis of facts,
representations, and assumptions set forth in such opinions, and subject to
qualifications and exceptions reasonably acceptable to the parties:
(a) The Reorganization will consist of twelve "reorganizations"
within the meaning of Section 368(a) of the Code, and each Stellar Fund and the
Corresponding Firstar Fund will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code with respect to such Reorganization;
(b) In accordance with Section 361(a), 361(c)(1) and 357(a) of
the Code, no gain or loss will be recognized by any Stellar Fund upon the
transfer of substantially all of its Assets and substantially all of its
Liabilities to the Corresponding Firstar Fund in exchange for the Firstar Fund
Shares of the Corresponding Firstar Fund;
(c) In accordance with Section 1032(a) of the Code, no gain or
loss will be recognized by each Firstar Fund upon the receipt of substantially
all of the Assets and assumption of substantially all of the Liabilities of the
Corresponding Stellar Fund in exchange for the Firstar Fund Shares;
(d) In accordance with Section 362(b) of the Code, the basis of
each Stellar Fund's Assets received by the Corresponding Firstar Fund pursuant
to the Reorganization will be the same as the basis of those Assets in the hands
of the Stellar Fund immediately prior to the Reorganization;
-44-
<PAGE>
(e) In accordance with Section 1223(2) of the Code, the holding
period of each Stellar Fund's Assets in the hands of the Corresponding Firstar
Fund will include the period for which such Assets have been held by the Stellar
Fund;
(f) In accordance with Section 361(a), 361(c)(1) and 357(a) of
the Code, no gain or loss will be recognized by any Stellar Fund on the
distribution to its shareholders of the Firstar Fund Shares to be received by
the Stellar Fund in the Reorganization;
(g) In accordance with Section 354(a)(1) of the Code, no gain or
loss will be recognized by the shareholders of any Stellar Fund upon their
receipt of the Corresponding Firstar Fund Shares in exchange for such
shareholders' shares of the Stellar Fund;
(h) In accordance with Section 358(a)(1) of the Code, the basis
of the Firstar Fund Shares received by the shareholders of each Corresponding
Stellar Fund will be the same as the basis of the Stellar Fund shares
surrendered by such shareholders pursuant to the Reorganization;
(i) In accordance with Section 1223(1) of the Code, the holding
period for the Firstar Fund Shares received by each Stellar Fund shareholder
will include the period during which such shareholder held the Stellar Fund
shares surrendered therefor, provided that such Stellar Fund shares are held as
a capital asset in the hands of such Stellar Fund shareholder on the date of the
exchange; and
(j) Each Firstar Fund will succeed to and take into account the
tax attributes described in Section 381(c) of the Code of the Corresponding
Stellar Fund as of the Applicable
-45-
<PAGE>
Effective Time of the Reorganization, subject to the conditions and limitations
specified in the Code.
In rendering such opinions described in this paragraph, Drinker Biddle
& Reath LLP may require and, to the extent it deems necessary and appropriate,
may rely upon representations made in certificates of Firstar Funds and Stellar
Funds, their affiliates, and principal shareholders.
16. Tax Documents. Stellar shall deliver to Firstar at the Applicable
-------------
Effective Time of the Reorganization, confirmations and/or other evidence
satisfactory to Firstar as to the adjusted tax basis of the Assets of each
Stellar Fund delivered to a Firstar Fund in accordance with the terms of this
Agreement.
17. Further Assurances. Subject to the terms and conditions herein
------------------
provided, each of the parties hereto shall use its best efforts to execute and
deliver, or cause to be executed and delivered, such additional documents and
instruments and to do, or cause to be done, all things necessary, proper or
advisable under the provisions of this Agreement and under applicable law to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, delivering and/or causing to be delivered to the
other party hereto each of the items required under this Agreement as a
condition to such other party's obligations hereunder. In addition, Stellar
shall deliver or cause to be delivered to Firstar, each account, book, record
and other document of Stellar required to be maintained by Stellar pursuant to
Section 31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder (regardless of
whose possession they are in).
-46-
<PAGE>
18. Termination of Representations and Warranties. The
---------------------------------------------
representations and warranties of the parties set forth in this Agreement shall
terminate upon the consummation of the transactions contemplated herein;
provided, however, that nothing contained in this Section 18 shall be construed
(a) to terminate the obligations of each Firstar Fund to discharge the
Liabilities of the Corresponding Stellar Fund assumed pursuant to Section 2(b)
hereof, or (b) to terminate the obligations of Firstar to provide liability
coverage for the Trustees and officers of Stellar and to indemnify the Trustees
of Stellar, in each case, pursuant to the covenants set forth in Section 9(n)
hereof.
19. Termination of Agreement. This Agreement may be terminated by a
------------------------
party at any time at or prior to the Applicable Effective Time of the
Reorganization by a vote of a majority of such party's Board of Directors or
Trustees, as applicable, as provided below:
(a) By Firstar if the conditions set forth in Section 13 are not
satisfied as specified in said Section;
(b) By Stellar if the conditions set forth in Section 14 are not
satisfied as specified in said Section; or
(c) By mutual consent of both parties.
If a party terminates this Agreement because one or more of its conditions have
not been fulfilled, or if this Agreement is terminated by mutual consent, this
Agreement will become null and void insofar as it is so terminated without any
liability of any party to the other parties except as otherwise provided herein.
-47-
<PAGE>
20. Amendment and Waiver. At any time prior to or (to the fullest extent
--------------------
permitted by applicable law) after approval of this Agreement by the
shareholders of Stellar in accordance with Section 10 hereof, (a) the parties
hereto may, by written agreement authorized by their respective Boards of
Directors or Trustees, as the case may be, and with or without the approval of
their shareholders, amend, modify or terminate any of the provisions of this
Agreement, and (b) any party may waive any breach by any other party or any
failure by any other party to satisfy any of the conditions to the obligations
of the waiving party (such waiver to be in writing and authorized by an
authorized officer of the waiving party) with or without the approval of such
party's shareholders.
21. Governing Law. This Agreement and the transactions contemplated hereby
-------------
shall be governed, construed and enforced in accordance with the internal laws
of the State of Wisconsin, without giving effect to the conflicts of law
principles of such state.
22. Successors and Assigns. This Agreement shall be binding upon the
----------------------
respective successors and permitted assigns of the parties hereto. This
Agreement and the rights, obligations and liabilities hereunder may not be
assigned by any party without the prior written consent of the other party.
23. Beneficiaries. Nothing contained in this Agreement shall be deemed to
-------------
create rights in persons not parties hereto (including, without limitation, any
shareholder of Firstar or Stellar), other than (a) the Trustees and officers of
Stellar with respect to the covenants set forth in Section 9(n) hereof and (b)
the successors and permitted assigns of the parties.
-48-
<PAGE>
24. Notices. All notices required or permitted herein shall be in writing
-------
and shall be deemed to be properly given when delivered personally or by
telecopier to the party entitled to receive the notice or when sent by certified
or registered mail, postage prepaid, or delivered to a nationally recognized
overnight courier service, in each case, properly addressed to the party
entitled to receive such notice at the address or telecopier number stated below
or to such other address or telecopier number as may hereafter be furnished in
writing by notice similarly given by one party to the other party hereto:
If to Firstar:
Firstar Funds, Inc.
615 East Michigan Street
P.O. Box 3011
Milwaukee, Wisconsin 53201-301
With copies to:
W. Bruce McConnel, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18/th/ & Cherry Streets
Philadelphia, Pennsylvania 19103-6996
Telecopier Number: (215) 988-2757
If to Stellar:
Stellar Mutual Funds, Inc.
615 E. Michigan Street
Milwaukee, WI 53202
-49-
<PAGE>
With copies to:
Kenneth L. Greenberg, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18/th/ & Cherry Streets
Philadelphia, PA 19103-6996
Telecopier Number: (215) 988-2757
25. Expenses. With regard to the expenses incurred by Stellar and Firstar
--------
in connection with this Agreement and the transactions contemplated hereby,
Firstar Investment Research & Management Company, LLC, shall bear such expenses
or cause one of its affiliates to bear such expenses.
26. Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding of the parties hereto and supersedes any and all prior agreements,
arrangements and understandings relating to matters provided for herein.
27. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which, when executed and delivered shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
28. Failure of One Fund to Consummate the Transactions. Subject to the
--------------------------------------------------
conditions set forth in this Agreement, and provided that the Reorganization
shall continue to qualify for tax-free treatment under the Code, the failure of
one Fund to consummate the transactions contemplated hereby shall not affect the
consummation or validity of the Reorganization with respect to any other Fund,
and the provisions of this Agreement shall be construed to effect this intent.
-50-
<PAGE>
29. No Brokers or Finders. Each of the parties, on behalf of both itself
---------------------
and each of its Funds, hereby represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
30. Validity. Whenever possible, each provision and term of this Agreement
--------
shall be interpreted in a manner to be effective and valid, but if any provision
or term of this Agreement is held to be prohibited by law or invalid, then such
provision or term shall be ineffective only in the jurisdiction or jurisdictions
so holding and only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
31. Effect of Facsimile Signature. A facsimile signature of an authorized
-----------------------------
officer of a party hereto on this Agreement and/or any Transfer Document shall
have the same effect as if executed in the original by such officer.
32. Headings. The headings contained herein are for reference purposes
--------
only and shall not affect in any way the meaning or interpretation of this
Agreement.
33. Firstar Liability. Both parties specifically acknowledge and agree
-----------------
that any liability of Firstar under this Agreement with respect to a particular
Firstar Fund, or in connection with the transactions contemplated herein with
respect to a particular Firstar Fund, shall be discharged only out of the assets
of the particular Firstar Fund and that no other portfolio of Firstar shall be
liable with respect thereto.
-51-
<PAGE>
34. Stellar Liability. The names "Firstar Stellar Funds" and "Trustees of
-----------------
Firstar Stellar Funds" refer respectively to the trust created and the trustees,
as trustees but not individually or personally, acting from time to time under a
Declaration of Trust, dated January 23, 1989, as amended and restated on May 13,
1999, which is hereby referred to and a copy of which is on file at the office
of the Secretary of State of the Commonwealth of Massachusetts and at the
principal office of Stellar. The obligations of Stellar entered into in the
name or on behalf thereof by any of the trustees, representatives or agents are
made not individually, but in such capacities, and are not binding upon any of
the trustees, shareholders or representatives of Stellar personally, but bind
only the trust property, and all persons dealing with any series of shares of
Stellar must look solely to the trust property belonging to such series for the
enforcement of any claims against Stellar.
Both parties specifically acknowledge and agree that any liability of
Stellar under this Agreement with respect to a Stellar Fund, or in connection
with the transactions contemplated herein with respect to a particular Stellar
Fund, shall be discharged only out of the assets of the particular Stellar Fund
and that no other portfolio of Stellar shall be liable with respect thereto.
-52-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers designated below as of the date first
written above.
FIRSTAR FUNDS, INC.
By: ___________________________
Name:
Title:
FIRSTAR STELLAR FUNDS
By: ___________________________
Name:
Title:
Firstar Investment Research & Management
Company, LLC, hereby joins in this Agreement
with respect to, and agrees to be bound by,
Section 25.
By: ___________________________
Name:
Title:
-53-
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar Treasury Fund Firstar U.S. Treasury Money Market Fund
Class C Shares Retail A Shares
Class Y Shares Institutional Shares
Stellar Tax-Free Money Market Fund Firstar Tax-Exempt Money Market Fund
Class C Shares purchased other than through an Retail A Shares
investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
Class C Shares purchased through an investment Institutional Shares
management, trust, custody or other agency
relationship with Firstar Bank, N.A.
Stellar Ohio Tax-Free Money Market Fund Firstar Ohio Tax-Free Money Market Fund
Class C Shares purchased other than through an Retail A Shares
investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
Class C Shares purchased through an investment Institutional Shares
management, trust, custody or other agency
relationship with Firstar Bank, N.A.
Stellar Strategic Income Fund Firstar Strategic Income Fund
Class A Shares Retail A Shares
Class B Shares purchased other than through an Retail B Shares
investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody or other agency
relationship with Firstar Bank, N.A.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar U.S. Government Income Fund Firstar U.S. Government Securities Fund
Class A Shares purchased other than through an investment Retail A Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
Class A Shares purchased through an investment Institutional Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
Class B Shares purchased other than through an investment Retail B Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Bond Fund
Class A Shares purchased other than through an investment Retail A Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
Class A Shares purchased through an investment Institutional Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
Class B Shares purchased other than through an investment Retail B Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody or other agency relationship
with Firstar Bank, N.A.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar Growth Equity Fund Firstar Large Cap Growth Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Relative Value Fund Firstar Relative Value Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Science and Technology Fund Firstar Science and Technology Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Fund Firstar Balanced Income Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
Stellar Capital Appreciation Fund MidCap Index Fund
Class A Shares Retail A Shares
Class B Shares purchased other than through an Retail B Shares
investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
Class B Shares purchased through an investment Institutional Shares
management, trust, custody or other agency
relationship with Firstar Bank, N.A.
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
<S> <C>
STELLAR FUND AND SHARE CLASS FIRSTAR FUND AND SHARE CLASS
Stellar International Equity Fund Firstar Global Equity Fund
Class A Shares Institutional Shares
</TABLE>
A-4
<PAGE>
APPENDIX II
Expense Summaries of the Stellar Funds and Corresponding Firstar Funds
The following tables (a) compare the fees and expenses as of April 30,
2000, for the Stellar Funds and their Corresponding Firstar Funds and (b) show
the estimated fees and expenses for the Corresponding Firstar Funds on a pro
forma basis after giving effect to the Reorganization. The purpose of these
tables is to assist shareholders in understanding the various costs and expenses
that investors in these portfolios will bear as shareholders. The tables do not
reflect any charges that may be imposed by institutions directly on their
customer accounts in connection with investments in the portfolios. The fund
operating expense levels shown in this Proxy/Prospectus assume current net asset
levels; pro forma expense levels shown should not be considered an actual
representation of future expenses or performance. Such pro forma expense levels
project anticipated levels but may be greater or less than those shown.
The Firstar Ohio Tax-Free Money Market Fund, Firstar U.S. Government
Securities Fund, Firstar National Municipal Bond Fund, Firstar Strategic Income
Fund, Firstar Large Cap Growth Fund, Firstar Relative Value Fund, Firstar
Science & Technology Fund and Firstar Global Equity Fund are new investment
portfolios with nominal assets and liabilities that will commence operations
upon completion of the Reorganization.
FIRMCO has committed to waiving/reimbursing fees as needed to ensure
that total operating expense ratios will not exceed the pro forma after waiver
expense ratios until October 31, 2001.
II-1
<PAGE>
MERCANTILE TREASURY MONEY MARKET PORTFOLIO - TRUST SHARES, TRUST II SHARES AND
INSTITUTIONAL SHARES +
STELLAR TREASURY FUND - CLASS Y SHARES +
FIRSTAR U.S. TREASURY MONEY MARKET FUND - INSTITUTIONAL SHARES/1/
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Firstar U.S.
Mercantile Treasury Treasury Treasury Money Combined Fund
Money Market Portfolio* Fund Market Fund Pro Forma
----------------------- ---- ----------- ---------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Investor A Trust Trust II Institutional Class Y Institutional Institutional
Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of offering
(price)................................. None None None None None ++ None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends................ None None None None None ++ None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less).... None None None None None ++ None
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees........................ None None None None None ++ None/2/
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee........................... None None None None None ++ None
-----------------------------------------------------------------------------------------------------------------------------------
++
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)....... 0.40%/3/ .40%/3/ 0.40%/3/ 0.40%/3/ 0.50% ++ 0.44%
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.. 0.25% None None None None ++ None
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses/4/...................... 0.31%/5/ .56% 0.31% 0.56% 0.43% ++ 0.39%
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/5/........................ 0.96% .96% 0.71% 0.96% 0.93% ++ 0.83%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of each class of shares of the Mercantile
Treasury Money Market Portfolio, and holders of Class Y Shares of the
Stellar Treasury Fund, will each receive Institutional Shares of the Firstar
U.S. Treasury Money Market Fund.
* The Mercantile Treasury Money Market Portfolio is expected to reorganize
into the Firstar U.S. Treasury Money Market Fund in connection with the
Reorganization. The reorganization of the Stellar Treasury Fund into the
Firstar U.S. Treasury Money Market Fund and the reorganization of the
Mercantile Treasury Money Market Portfolio into the Firstar U.S. Treasury
Money Market Fund will occur only if the shareholders of the appropriate
Funds approve each transaction.
++ Institutional Shares will not be issued until the Reorganization is
effective.
II-2
<PAGE>
1. It is expected that the Firstar U.S. Treasury Money Market Fund will change
its investment policies upon consummation of the Reorganization and that it
will continue the operations of the Stellar Treasury Fund.
2. A fee of $15.00 is charged for each non-systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be:
Mercantile Treasury Money Market Portfolio...........0.35%
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Trust Shares Trust II Shares Institutional Shares Class Y Shares
----------------- ------------ --------------- -------------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Treasury Money Market Portfolio 0.21% 0.46% 0.21% 0.46% --
------------------------------------------------------------------------------------------------------------------------------------
Stellar Treasury Fund -- -- -- -- 0.34%
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- 0.35% --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Trust Shares Trust II Shares Institutional Shares Class Y Shares
----------------- ------------ --------------- -------------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile Treasury Money Market Portfolio 0.81% 0.81% 0.56% 0.81% --
------------------------------------------------------------------------------------------------------------------------------------
Stellar Treasury Fund -- -- -- -- 0.84%
------------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- 0.79% --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-3
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Firstar U.S.
Mercantile Treasury Treasury Treasury Money Combined Fund
Money Market Portfolio* Fund Market Fund Pro Forma
----------------------- ---- ----------- ---------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Investor A Trust Trust II Institutional Class Y Institutional Institutional
Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year..................... $ 98 $ 98 $ 73 $ 98 $ 95 N/A $ 85
-----------------------------------------------------------------------------------------------------------------------------------
3 years.................... $ 306 $ 306 $ 227 $ 306 $ 296 N/A $ 265
-----------------------------------------------------------------------------------------------------------------------------------
5 years.................... $ 531 $ 531 $ 395 $ 531 $ 515 N/A $ 460
-----------------------------------------------------------------------------------------------------------------------------------
10 years................... $1,178 $1,178 $ 883 $1,178 $1,143 N/A $1,025
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-4
<PAGE>
STELLAR TREASURY FUND - CLASS C SHARES +
FIRSTAR U.S. TREASURY MONEY MARKET FUND - RETAIL A SHARES/1/
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Firstar U.S. Treasury Combined Fund
Treasury Fund Money Market Fund Pro Forma
------------- ----------------- ---------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class C Shares Retail A Shares Retail A Shares
-------------- --------------- ---------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or sales
price, whichever is less).............. None None None
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None/2/ None/2/
-----------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.50% 0.50%/3/ 0.44%
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.25%/4/ 0.25%/4/ 0.25%/4/
-----------------------------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.43%/5/ 0.24% 0.39%/5/
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/6/................................ 1.18% 0.99% 1.08%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Class C Shares of the Stellar Treasury
Fund, will receive Retail A Shares of the Firstar U.S. Treasury Money Market
Fund.
* The Mercantile Treasury Money Market Portfolio is expected to reorganize
into the Firstar U.S. Treasury Money Market Fund in connection with the
Reorganization (see previous chart). The Reorganization of the Stellar
Treasury Fund into the Firstar U.S. Treasury Money Market Fund and the
reorganization of the Mercantile Treasury Money Market Portfolio into the
Firstar U.S. Treasury Money Market Fund will occur only if the shareholders
of the appropriate Funds approve each transaction.
II-5
<PAGE>
1. It is expected that the Firstar U.S. Treasury Money Market Fund will change
its investment policies upon consummation of the Reorganization and that it
will continue the operations of the Stellar Treasury Fund.
2. A fee of $12.00 is charged for each wire redemption (Retail A Shares) and
$15.00 for each non-systematic withdrawal from a Retirement Account for which
Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be:
Firstar U.S. Treasury Money Market Fund................0.49%
4. Distribution and Service (12b-1) Fees (after waivers) would be:
Stellar Treasury Fund...........................................0.15%
Firstar U.S. Treasury Money Market Fund.........................0.00%
Combined Fund Pro Forma.........................................0.15%
5. "Other Expenses" for the Funds are expected to be less than the amounts shown
above because certain service providers are voluntarily waiving a portion of
their fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Class C Shares Retail A Shares
-------------- ---------------
----------------------------------------------------------------------------------
<S> <C> <C>
Stellar Treasury Fund 0.34% --
----------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.35%
----------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Class C Shares Retail A Shares
-------------- ---------------
----------------------------------------------------------------------------------
<S> <C> <C>
Stellar Treasury Fund 0.99% --
----------------------------------------------------------------------------------
Firstar U.S. Treasury Money Market Fund -- 0.73
----------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.94%
----------------------------------------------------------------------------------
</TABLE>
II-6
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Stellar Firstar U.S. Treasury Combined Fund
Treasury Fund Money Market Fund Pro Forma
------------- ----------------- ---------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Class C Shares Retail A Shares Retail A Shares
-------------- --------------- ---------------
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 year...................................... $ 120 $ 101 $ 110
-----------------------------------------------------------------------------------------------------------------------------------
3 years..................................... $ 375 $ 315 $ 343
-----------------------------------------------------------------------------------------------------------------------------------
5 years..................................... $ 649 $ 547 $ 595
-----------------------------------------------------------------------------------------------------------------------------------
10 years.................................... $1,432 $1,213 $1,317
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of
future expenses which may be more or less than those shown.
The assumed 5% annual return is hypothetical and should not be
considered a representation of past or future annual return.
Actual return may be greater or less than the assumed amount.
This example assumes that all dividends and other
distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-7
<PAGE>
MERCANTILE TAX-EXEMPT MONEY MARKET PORTFOLIO +
STELLAR TAX-FREE MONEY MARKET FUND +
FIRSTAR TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Stellar
Tax-Free
Money
Mercantile Tax-Exempt Money Market Firstar Tax-Exempt Money Combined Fund
Market Portfolio* Fund Market Fund Pro Forma
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust Trust II Investor A Class C Institutional Retail A Institutional Retail A
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price).................... None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends........... None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of the offering price
or sales Price, whichever
is less)....................... None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.................... None None None None ++ None/1/ None/1/ None/1/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee....................... None None None None ++ None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (before waivers)... 0.40%/2/ 0.40%/2/ 0.40%/2/ 0.55%/2/ ++ 0.50% 0.50% 0.50%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1)
Fees None None 0.25% 0.25%/3/ ++ 0.25%/3/ None 0.25%/3/
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses/4/ 0.44% 0.19% 0.19% 0.50%/4/ ++ 0.47%/4/ 0.43%/4/ 0.43%/4/
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)/5/ 0.84% 0.59% 0.84% 1.30% ++ 1.22% 0.93% 1.18%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Trust Shares and Trust II Shares of the
Mercantile Tax-Exempt Money Market Portfolio will each receive Institutional
Shares of the Firstar Tax-Exempt Money Market Fund; and holders of Investor
A Shares of the Mercantile Tax-Exempt Money Market Portfolio, and holders of
Class C Shares of the Stellar Tax-Free Money Market Fund, will each receive
Retail A Shares of the Firstar Tax-Exempt Money Market Fund.
* The Mercantile Tax-Exempt Money Market Portfolio is expected to reorganize
into the Firstar Tax-Exempt Money Market Fund in connection with the
Reorganization. The Reorganization of the Stellar Tax-Free Money Market Fund
into the Firstar Tax-Exempt Money Market Fund and the reorganization of the
Mercantile Tax-Exempt Money Market Portfolio into the Firstar Tax-Exempt
Money Market Fund will occur only if the shareholders of the appropriate
Funds approve each transaction.
++ Institutional Shares will not be issued until the Reorganization is
effective.
II-8
<PAGE>
1. A fee of $12.00 is charged for each wire redemption (Retail A Shares).
2. Management Fees (after waivers) would be:
Mercantile Tax-Exempt Money Market Portfolio............... 0.35%
Stellar Tax-Free Money Market Fund......................... 0.50%
3. Distribution and Service (12b-1) Fees (after waivers) would be:
Stellar Tax-Free Money Market Fund......................... 0.00%
Firstar Tax-Exempt Money Market Fund....................... 0.00%
Combined Fund Pro Forma.................................... 0.00%
4. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Institutional Shares Class C Shares Retail A Shares
-------------------- -------------- ---------------
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Tax-Free Money Market Fund -- 0.41% --
----------------------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money Market Fund -- -- 0.22%
----------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma 0.29% -- 0.29%
----------------------------------------------------------------------------------------------------------------
</TABLE>
II-9
<PAGE>
5. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Trust Shares Trust II Shares Investor A Shares Class C Shares Institutional Retail A Share
------------ --------------- ----------------- -------------- -------------- --------------
Shares
------
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mercantile Tax-Exempt Money
Market Portfolio 0.79% 0.54% 0.79% -- -- --
--------------------------------------------------------------------------------------------------------------------------------
Stellar Tax-Free Money Market
Fund -- -- -- 0.91% -- --
--------------------------------------------------------------------------------------------------------------------------------
Firstar Tax-Exempt Money Market
Fund -- -- -- -- -- 0.72%
--------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- -- -- 0.79% 0.79%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-10
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1)
5% gross annual return and (2) the operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Stellar Tax
Mercantile Tax-Exempt Money Market - Free Money Firstar Tax-Exempt Money Market Combined Fund
Portfolio Market Fund Fund Pro Forma
--------- ----------- ---- ---------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Trust II Investor A Class C Institutional Institutional Retail A
Trust Shares Shares Shares Shares Shares Retail A Shares Shares Shares
------------ ------ ------ ------ ------ --------------- ------ ---------
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year.......... $ 86 $ 60 $ 86 $ 132 N/A $ 124 $ 95 $ 120
---------------------------------------------------------------------------------------------------------------------------------
3 years......... $268 $ 189 $ 268 $ 412 N/A $ 387 $ 296 $ 375
---------------------------------------------------------------------------------------------------------------------------------
5 years......... $466 $ 329 $ 466 $ 713 N/A $ 670 $ 515 $ 649
---------------------------------------------------------------------------------------------------------------------------------
10 years....... $1,037 $ 738 $1,037 $1,568 N/A $1,477 $1,143 $1,432
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return
may be greater or less than the assumed amount. This example
assumes that all dividends and other distributions are
reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-11
<PAGE>
STELLAR OHIO TAX-FREE MONEY MARKET FUND*
FIRSTAR OHIO TAX-EXEMPT MONEY MARKET FUND/1/
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Stellar Ohio Tax-Free Combined Fund
Money Market Fund Pro Forma
--------------------- --------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Class C Shares Institutional Shares Retail A Shares
-------------- -------------------- ---------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None None None
---------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None
---------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)...... None None None
---------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None/2/
---------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)/3/ 0.55% 0.50% 0.50%
---------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.25%/4/ None 0.25%/4/
---------------------------------------------------------------------------------------------------------------------------------
Other Expenses/5/ 0.55% 0.63% 0.63%
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)/6/ 1.35% 1.13% 1.38%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class C Shares of the Stellar Ohio Tax-
Free Money Market Fund who purchased their shares through an investment
management, trust, custody, or other agency relationship with Firstar Bank,
NA., will receive Institutional Shares of the Firstar Ohio Tax-Exempt Money
Market Fund. All other holders of Class C Shares of the Stellar Ohio Tax-
Free Money Market Fund will receive Retail A Shares of the Firstar Ohio Tax-
Exempt Money Market Fund.
1. The Firstar Ohio Tax-Exempt Money Market Fund has not yet commenced
operations. The Firstar Ohio Tax-Exempt Money Market Fund will continue the
operations of the Stellar Ohio Tax-Free Money Market Fund upon consummation
of the Reorganization relating to that Fund.
2. A fee of $12.00 is charged for each wire redemption (Retail A Shares).
3. Management Fees (after waivers) would be:
Stellar Ohio Tax-Free Money Market Fund............................0.35%
Combined Fund Pro Forma............................................0.34%
II-12
<PAGE>
4. Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Class C Shares Retail A Shares
-------------- ---------------
-----------------------------------------------------------------------------------------
<S> <C> <C>
Stellar Ohio Tax-Free Money Market Fund 0.00% --
-----------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.00%
-----------------------------------------------------------------------------------------
</TABLE>
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Class C Shares Institutional Shares Retail A Shares
-------------- -------------------- ---------------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Ohio Tax-Free Money Market Fund 0.46% -- --
-----------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.45% 0.45%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Class C Shares Institutional Shares Retail A Shares
-------------- -------------------- ---------------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Ohio Tax-Free Money Market Fund 0.81% -- --
-----------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.79% 0.79%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-13
<PAGE>
Example:/*/
You would pay the following expenses on a $10,000 investment redeemed
at the end of each period shown, assuming (1) 5% gross annual return and (2) the
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Stellar Ohio Tax-Free Combined Fund
Money Market Fund Pro Forma
----------------- ---------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Class C Shares Institutional Shares Retail A Shares
-------------- -------------------- ---------------
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 year.............................. $137 $ 115 $ 140
--------------------------------------------------------------------------------------------------------------------------------
3 years............................. $428 $ 359 $ 437
--------------------------------------------------------------------------------------------------------------------------------
5 years............................. $739 $ 622 $ 755
--------------------------------------------------------------------------------------------------------------------------------
10 years............................ $1,624 $1,375 $1,657
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-14
<PAGE>
STELLAR STRATEGIC INCOME FUND/*/
FIRSTAR STRATEGIC INCOME FUND/1/
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Stellar Strategic Combined Fund
Income Fund Pro Forma
----------- ---------
---------------------------------------------------------------------------------------------------------------------------------
Institutional
Class A Shares Class B Shares Shares Retail A Shares Retail B Shares
-------------- -------------- ------ --------------- ---------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... 4.00% None None 4.00% None
---------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None None None
---------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)...... None 5.00%/2/ None None 5.00%/2/
---------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None/3/ None/3/ None/3/
---------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None None None
---------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.95% 0.95% 0.95% 0.95%/4/ 0.95%/4/
---------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees/5/..... 0.25% 0.75% None 0.25% 0.75%
---------------------------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.50%/6/ 0.50%/6/ 0.29% 0.54% 0.54%
---------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers)/7/.. 1.70% 2.20% 1.24% 1.74% 2.24%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class A Shares of the Stellar Strategic
Income Fund will receive Retail A Shares of the Firstar Strategic Income
Fund. In addition, holders of Class B Shares of the Stellar Strategic
Income Fund who purchased their shares through an investment management,
trust, custody, or other agency relationship with Firstar Bank, N.A., will
receive Institutional Shares of the Firstar Strategic Income Fund. All
other holders of Class B Shares of the Stellar Strategic Income Fund will
receive Retail B Shares of the Firstar Strategic Income Fund.
1. The Firstar Strategic Income Fund has not yet commenced operations. The
Firstar Strategic Income Fund will continue the operations of the Stellar
Strategic Income Fund upon consummation of the Reorganization relating to
that Fund.
2. This amount applies if you sell your shares in the first year after
purchase and gradually declines until it is eliminated after six years.
After six years, Stellar Class B Shares automatically convert to Class A
Shares and Firstar Retail B Shares automatically convert to Retail A
Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
II-15
<PAGE>
4. Management Fees (after waivers) would be 0.91% for the Combined Fund Pro
Forma.
5. Distribution and Service (12b-1) Fees (after waivers) are expected to be:
--------------------------------------------------------------------------
Class A/Retail A Class B/Retail B
Shares Shares
------ ------
--------------------------------------------------------------------------
Stellar Strategic Income Fund 0.00% 0.00%
--------------------------------------------------------------------------
Combined Fund Pro Forma 0.00% 0.25%
--------------------------------------------------------------------------
6. "Other Expenses" are expected to be less than the amounts shown above
because certain service providers are voluntarily waiving a portion of
their fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
--------------------------------------------------------------------------
Class A Shares Class B Shares
-------------- --------------
--------------------------------------------------------------------------
Stellar Strategic Income Fund 0.41% 0.41%
--------------------------------------------------------------------------
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep
the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Class A/Retail A Class B/Retail B Institutional Shares
--------------------
Shares Shares
------ ------
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Strategic Income Fund 1.36% 1.36% --
---------------------------------------------------------------------------------------------
Combined Fund Pro Forma 1.45% 1.70% 1.20%
---------------------------------------------------------------------------------------------
</TABLE>
II-16
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed
at the end of the period shown, assuming (1) 5% gross annual return and (2) the
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Stellar Strategic Combined Fund
Income Fund Pro Forma
----------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Institutional Retail A
--------
Class A Shares Class B Shares Shares Shares Retail B Shares
-------------- -------------- ------ ------ ---------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year.............. $ 566 $ 723 $ 223 $ 126 $ 570 $ 727 $ 227
------------------------------------------------------------------------------------------------------------------------------------
3 years............. $ 914 $ 988 $ 688 $ 393 $ 926 $1,000 $ 700
------------------------------------------------------------------------------------------------------------------------------------
5 years............. $1,286 $1,380 $1,180 $ 681 $1,306 $1,400 $1,200
------------------------------------------------------------------------------------------------------------------------------------
10 years............ $2,328 $2,293 $2,293 $1,500 $2,370 $2,335 $2,335
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-17
<PAGE>
MERCANTILE U.S. GOVERNMENT SECURITIES PORTFOLIO - TRUST SHARES AND INSTITUTIONAL
SHARES +
STELLAR U.S. GOVERNMENT INCOME FUND - CLASS A SHARES AND CLASS B SHARES +
FIRSTAR U.S. GOVERNMENT SECURITIES FUND - INSTITUTIONAL SHARES AND CLASS Y
SHARES/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Stellar U.S. Government Combined Fund
Securities Portfolio* Income Fund Pro Forma
-------------------- ----------- ---------
Institutional Institutional
Trust Shares Shares Class A Shares Class B Shares Shares Class Y Shares
------------ ------ -------------- -------------- ------ --------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ShareholdTransaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of
offering price................. None None 4.00% None None None
-----------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends......... None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load
(as a percentage of the offering
price or sales price, whichever is
less)............................... None None None 5.00%/2/ None None
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Fees................ None None None None None/3/ None/3/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................... None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net
assets)
Management Fees (before
waivers)....................... 0.45% 0.45% 0.60% 0.60% 0.60%/4/ 0.60%/4/
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service
(12b-1) Fees................... None None 0.25%/5/ 0.25%/5/ None None
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses................. 0.63%/6/ 0.63%/6/ 0.48%/6/ 0.48%/6/ 0.23% 0.48%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/ 1.08% 1.08% 1.33% 1.33% 0.83% 1.08%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Trust Shares of the Mercantile U.S.
Government Securities Portfolio, and holders of Class A Shares and Class B
Shares of the Stellar U.S. Government Income Fund who purchased their
shares through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A., will each receive Institutional
Shares of the Firstar U.S. Government Securities Fund. All other holders of
Class A Shares of the Stellar U.S. Government Income Fund will receive
Retail A Shares of the Firstar U.S. Government Securities Fund, and all
other holders of Class B Shares of the Stellar U.S. Government Income Fund
will receive Retail B Shares of the Firstar U.S. Government Securities
Fund. Holders of Institutional Shares of the Mercantile U.S. Government
Securities Portfolio will receive Class Y Shares of the Firstar U.S.
Government Securities Fund.
II-18
<PAGE>
* The Mercantile U.S. Government Securities Portfolio is expected to
reorganize into the Firstar U.S. Government Securities Fund in connection
with the Reorganization. The Reorganization of the Stellar U.S. Government
Income Fund into the Firstar U.S. Government Securities Fund and the
reorganization of the Mercantile U.S. Government Securities Portfolio into
the Firstar U.S. Government Securities Fund will only occur if the
shareholders of the appropriate Funds approve each transaction.
1. The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganizations involving the
Mercantile U.S. Government Securities Portfolio and the Stellar U.S.
Government Income Fund, the Firstar U.S. Government Securities Fund will
continue the operations of the Mercantile U.S. Government Securities
Portfolio.
2. This amount applies if you sell your shares in the first year after
purchase and gradually declines until it is eliminated after six years.
After six years, Stellar Class B Shares automatically convert to Class A
Shares.
3. A fee of $15.00 is charged for each non systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.50% for the Combined Fund Pro
Forma.
5. The Stellar U.S. Government Income Fund is waiving the 12b-1 fees for Class
A Shares and Class B Shares for the current fiscal year.
6. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class A Shares Class B Shares
------------ -------------------- -------------- --------------
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.23% 0.53% -- --
---------------------------------------------------------------------------------------------------
Stellar U.S. Government
Income Fund -- -- 0.39% 0.39%
---------------------------------------------------------------------------------------------------
</TABLE>
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep
the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Trust Shares Institutional Shares Class A Shares Class B Shares Class Y Shares
------------ -------------------- -------------- -------------- --------------
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.68% 0.98% -- -- --
-------------------------------------------------------------------------------------------------------------------------
Stellar U.S. Government
Income Fund -- -- 0.99% 0.99% --
------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 0.73% -- -- 0.98%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
II-19
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Combined Fund
Securities Portfolio Stellar U.S. Government Income Fund Pro Forma
-------------------- ----------------------------------- ---------
------------------------------------------------------------------------------------------------------------------------------------
Institutional Class A Institutional Class Y
Trust Shares Shares Shares Class B Shares Shares Shares
------------ ------ ------ -------------- ------ ------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year.......... $ 110 $ 110 $ 530 $ 635 $ 135 $ 85 $ 110
------------------------------------------------------------------------------------------------------------------------------------
3 years......... $ 343 $ 343 $ 805 $ 721 $ 421 $ 265 $ 343
------------------------------------------------------------------------------------------------------------------------------------
5 years......... $ 595 $ 595 $1,110 $ 929 $ 729 $ 460 $ 595
------------------------------------------------------------------------------------------------------------------------------------
10 years........ $1,317 $1,317 $1,937 $1,601 $1,601 $1,025 $1,317
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-20
<PAGE>
MERCANTILE U.S. GOVERNMENT SECURITIES PORTFOLIO - INVESTOR A SHARES AND INVESTOR
B SHARES +
STELLAR U.S. GOVERNMENT INCOME FUND - CLASS A SHARES AND CLASS B SHARES +
FIRSTAR U.S. GOVERNMENT SECURITIES FUND - RETAIL A SHARES AND RETAIL B SHARES/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Stellar U.S. Government Combined Fund
Securities Portfolio* Income Fund Pro Forma
-------------------- ----------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A Investor B Class A
Shares Shares Shares Class B Shares Retail A Shares Retail B Shares
------ ------ ------ -------------- --------------- ---------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).. 4.00% None 4.00% None 4.00% None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends................. None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)...... None 5.00%/2/ None 5.00%/2/ None 5.00%/2/
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees......................... None None None None None/3/ None/3/
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee............................ None None None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)........ 0.45% 0.45% 0.60% 0.60% 0.60%/4/ 0.60%/4/
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees... 0.30% 1.00% 0.25%/5/ 0.25%/5/ 0.00%/6/ 0.75%
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses.......................... 0.33%/7/ 0.33%/7/ 0.48%/7/ 0.48%/7/ 0.48% 0.48%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/8/.................................. 1.08% 1.78% 1.33% 1.33% 1.08% 1.83%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Investor A Shares and Investor B Shares
of the Mercantile U.S. Government Securities Portfolio will receive Retail
A Shares and Retail B Shares, respectively, of the Firstar U.S. Government
Securities Fund. In addition, holders of Class A Shares and Class B Shares
of Stellar U.S. Government Income Fund who did not purchase their shares
through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A., will receive Retail A Shares and
Retail B Shares, respectively, of the Firstar U.S. Government Securities
Fund.
* The Mercantile U.S. Government Securities Portfolio is expected to
reorganize into the Firstar U.S. Government Securities Fund in connection
with the Reorganization. The Reorganization of the Stellar U.S. Government
Income Fund into the Firstar U.S. Government Securities Fund and the
reorganization of the Mercantile U.S. Government Securities Portfolio into
the Firstar U.S. Government Securities Fund will only occur if the
shareholders of the appropriate Funds approve each transaction.
/1./ The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganizations involving the
Mercantile U.S. Government Securities Portfolio and the Stellar U.S.
Government Income Fund, the Firstar U.S. Government Securities Fund will
continue the operations of the Mercantile U.S. Government Securities
Portfolio.
II-21
<PAGE>
2. This amount applies if you sell your shares in the first year after
purchase and gradually declines until it is eliminated after six years.
After six years, Mercantile Investor B Shares automatically convert to
Investor A Shares, Stellar Class B Shares automatically convert to Class A
Shares, and the Combined Fund Pro Forma Retail B Shares automatically
convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A Shares and
Retail B Shares) and $15.00 for each non-systematic withdrawal from a
Retirement Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.50% for the Combined Fund Pro
Forma.
5. The Stellar U.S. Government Income Fund is waiving the 12b-1 fees for Class
A Shares and Class B Shares for the current fiscal year.
6. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
7. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A Shares Class B Shares
----------------- ----------------- -------------- --------------
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.23% 0.23% -- --
-------------------------------------------------------------------------------------------------------
Stellar U.S. Government
Income Fund -- -- 0.39% 0.39%
-------------------------------------------------------------------------------------------------------
</TABLE>
8. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep
the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A/Retail Class B/Retail B Shares
----------------- ----------------- -----------------------
A Shares
--------
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile U.S. Government
Securities Portfolio 0.98% 1.68% -- --
----------------------------------------------------------------------------------------------------------------------
Stellar U.S. Government
Income Fund -- -- 0.99% 0.99%
----------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- -- 0.98% 1.73%
----------------------------------------------------------------------------------------------------------------------
</TABLE>
II-22
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile U.S. Government Securities Portfolio Stellar U.S. Government Income Fund
----------------------------------------------- -----------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A
Shares Investor B Shares Class A Shares Class B Shares
------ ----------------- -------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ----------- ---------- -----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year....... $ 506 $ 681 $ 181 $ 530 $ 635 $ 135
------------------------------------------------------------------------------------------------------------------------------------
3 years...... $ 730 $ 860 $ 560 $ 805 $ 721 $ 421
------------------------------------------------------------------------------------------------------------------------------------
5 years...... $ 972 $1,164 $ 964 $1,100 $ 929 $ 729
------------------------------------------------------------------------------------------------------------------------------------
10 years..... $1,664 $1,741 $1,741 $1,937 $1,601 $1,601
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retail A
Shares Retail B Shares
------ ---------------
-------------------------------------------------------------------------
Assuming
Assuming No
Redemption Redemption
---------- ----------
-------------------------------------------------------------------------
<S> <C> <C> <C>
1 year....... $ 506 $ 686 $ 186
-------------------------------------------------------------------------
3 years...... $ 730 $ 876 $ 576
-------------------------------------------------------------------------
5 years...... $ 972 $1,190 $ 990
-------------------------------------------------------------------------
10 years..... $1,664 $1,771 $1,771
-------------------------------------------------------------------------
</TABLE>
_________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly
II-23
<PAGE>
MERCANTILE NATIONAL MUNICIPAL BOND PORTFOLIO - TRUST SHARES +
STELLAR INSURED TAX-FREE BOND FUND - CLASS A SHARES AND CLASS B SHARES +
FIRSTAR NATIONAL MUNICIPAL BOND FUND - INSTITUTIONAL SHARES/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile
National
Municipal Bond Combined Fund
Portfolio* Stellar Insured Tax-Free Bond Fund Pro Forma
---------- ---------------------------------- ---------
------------------------------------------------------------------------------------------------------------------------------------
Institutional
Trust Shares Class A Shares Class B Shares Shares
------------ -------------- -------------- ------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None 4.00% None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)......... None None 5.00%/2/ None
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None None
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.55% 0.75%/3/ 0.75%/3/ 0.55%
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ None 0.25%/4/ 0.75%/4/ None
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.61%/5/ 0.47%/5/ 0.47%/5/ 0.21%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers) 1.16%/6/ 1.47%/6/ 1.97%/6/ 0.76%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Trust Shares of the Mercantile National
Municipal Bond Portfolio, and holders of Class A Shares and Class B Shares of
the Stellar Insured Tax-Free Bond Fund who purchased their shares through an
investment management, trust, custody, or other agency relationship with
Firstar Bank, N.A., will each receive Institutional Shares of the Firstar
National Municipal Bond Fund. All other holders of Class A Shares of the
Stellar Insured Tax-Free Bond Fund will receive Retail A Shares of the
Firstar National Municipal Bond Fund, and all other holders of Class B Shares
of the Stellar Insured Tax-Free Bond Fund will receive Retail B Shares of the
Firstar National Municipal Bond Fund.
II-24
<PAGE>
* The Mercantile National Municipal Bond Portfolio is expected to reorganize
into the Firstar National Municipal Bond Fund in connection with the
Reorganization. The Reorganization of the Stellar Insured Tax-Free Bond Fund
into the Firstar National Municipal Bond Fund and the reorganization of the
Mercantile National Municipal Bond Portfolio into the Firstar National
Municipal Bond Fund will only occur if the shareholders of the appropriate
Funds approve each transaction.
1. The Firstar National Municipal Bond Fund has not yet commenced operations.
Upon consummation of the Reorganizations involving the Mercantile National
Municipal Bond Portfolio and the Stellar Insured Tax-Free Bond Fund, the
Firstar National Municipal Bond Fund will continue the operations of the
Mercantile National Municipal Bond Portfolio.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Stellar Class B Shares automatically convert to Class A Shares.
3. Management Fees (after waivers) would be 0.55% for the Stellar Insured Tax-
Free Bond Fund.
4. The Stellar Insured Tax-Free Bond Fund does not intend to pay 12b-1 fees
with respect to the Class A Shares and Class B Shares for the current fiscal
year.
5. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Trust Shares Class A Shares Class B Shares
------------ -------------- --------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile National Municipal
Bond Portfolio 0.21% -- --
---------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Fund -- 0.38% 0.38%
---------------------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Trust Shares Class A Shares Class B Shares
------------ ------------- --------------
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Mercantile National Municipal
Bond Portfolio 0.76% -- --
---------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Fund -- 0.93% 0.93%
---------------------------------------------------------------------------------------------------------
</TABLE>
II-25
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile National Municipal Bond Combined Fund
Portfolio Stellar Insured Tax-Free Bond Fund Pro Forma
--------- ---------------------------------- ---------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Trust Shares Class A Shares Class B Shares Institutional Shares
------------ -------------- -------------- --------------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 year............ $ 118 $ 544 $ 700 $ 200 $ 78
------------------------------------------------------------------------------------------------------------------------------------
3 years........... $ 368 $ 846 $ 918 $ 618 $243
------------------------------------------------------------------------------------------------------------------------------------
5 years........... $ 638 $1,171 $1,262 $1,062 $422
------------------------------------------------------------------------------------------------------------------------------------
10 years.......... $1,409 $2,087 $2,049 $2,049 $942
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_____________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-26
<PAGE>
MERCANTILE NATIONAL MUNICIPAL BOND PORTFOLIO -
INVESTOR A SHARES AND INVESTOR B SHARES +
STELLAR INSURED TAX-FREE BOND FUND - CLASS A SHARES AND CLASS B SHARES +
FIRSTAR NATIONAL MUNICIPAL BOND FUND-RETAIL A SHARES AND RETAIL B SHARES /1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile National Municipal
Bond Portfolio* Stellar Insured Tax-Free Bond Fund
--------------- ----------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A Investor B
Shares Shares Class A Shares Class B Shares
------ ------ -------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... 4.00% None 4.00% None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None None
------------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)......... None 5.00%/2/ None 5.00%/2/
------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None None
------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None None
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.55% 0.55% 0.75%/4/ 0.75%/4/
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.30%/5/ 1.00% 0.25%/5/ 0.75%/5/
------------------------------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.31%/7/ 0.31%/7/ 0.47%/7/ 0.47%/7/
------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)................................... 1.16%/8/ 1.86%/8/ 1.47%/8/ 1.97%/8/
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Retail A Shares Retail B Shares
--------------- ---------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... 4.00% None
----------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None
----------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
percentage of the offering price or
sales price, whichever is less)......... None 5.00%/2/
----------------------------------------------------------------------------------------------------
Redemption Fees.............................. None/3/ None/3/
----------------------------------------------------------------------------------------------------
Exchange Fee................................. None None
----------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.55% 0.55%
----------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ 0.00%/6/ 0.75%
----------------------------------------------------------------------------------------------------
Other Expenses............................... 0.46% 0.46%
----------------------------------------------------------------------------------------------------
Total Fund Operating Expenses
(before waivers)................................... 1.01% 1.76%
----------------------------------------------------------------------------------------------------
</TABLE>
+ In the Reorganization, holders of Investor A Shares and Investor B Shares of
the Mercantile National Municipal Bond Portfolio will receive Retail A
Shares and Retail B Shares, respectively, of the Firstar National Municipal
Bond Fund. In addition, holders of Class A Shares and Class B Shares of
Stellar Insured Tax-Free Bond Fund who did not purchase their shares through
an investment management, trust, custody, or other agency relationship with
Firstar Bank, N.A., will receive Retail A Shares and Retail B Shares,
respectively, of the Firstar National Municipal Bond Fund.
II-27
<PAGE>
* The Mercantile National Municipal Bond Portfolio is expected to reorganize
into the Firstar National Municipal Bond Fund in connection with the
Reorganization. The Reorganization of the Stellar Insured Tax-Free Bond Fund
into the Firstar National Municipal Bond Fund and the reorganization of the
Mercantile National Municipal Bond Portfolio into the Firstar National
Municipal Bond Fund will only occur if the shareholders of the appropriate
Funds approve each transaction.
1. The Firstar National Municipal Bond Fund has not yet commenced operations.
Upon consummation of the Reorganizations involving the Mercantile National
Municipal Bond Portfolio and the Stellar Insured Tax-Free Bond Fund, the
Firstar National Municipal Bond Fund will continue the operations of the
Mercantile National Municipal Bond Portfolio.
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Mercantile Investor B Shares automatically convert to Investor A
Shares, Stellar Class B Shares automatically convert to Class A Shares and
Firstar Retail B Shares automatically convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares).
4. Management Fees (after waivers) would be 0.55% for the Stellar Insured Tax-
Free Bond Fund.
5. Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Investor A Shares Class A Shares Class B Shares
----------------- -------------- --------------
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mercantile National Municipal
Bond Portfolio 0.20% -- --
------------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Fund -- 0.00% 0.00%
------------------------------------------------------------------------------------------------------------
</TABLE>
6. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
7. "Other Expenses" for the Funds are expected to be less than the amounts
shown above because certain service providers are voluntarily waiving a
portion of their fees and/or reimbursing the Funds for certain "Other
Expenses."
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A Shares Class B Shares
----------------- ----------------- -------------- --------------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile National Municipal
Bond Portfolio 0.21% 0.21% -- --
------------------------------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Fund -- -- 0.38% 0.38%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-28
<PAGE>
8. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Investor A Shares Investor B Shares Class A Shares Class B Shares
----------------- ----------------- -------------- --------------
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercantile National Municipal
Bond Portfolio 0.96% 1.76% -- --
---------------------------------------------------------------------------------------------------------------------------
Stellar Insured Tax-Free Bond Fund -- -- 0.93% 0.93%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming
(1) 5% gross annual return and (2) the operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Mercantile National Municipal Bond Portfolio Stellar Insured Tax-Free Bond Fund
-------------------------------------------- ----------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Investor A
Shares Investor B Shares Class A Shares Class B Shares
------ ----------------- -------------- --------------
------------------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ---------- ---------- ----------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 year............ $ 513 $ 689 $ 189 $ 544 $ 700 $ 200
------------------------------------------------------------------------------------------------------------------------------------
3 years........... $ 754 $ 885 $ 585 $ 846 $ 918 $ 618
------------------------------------------------------------------------------------------------------------------------------------
5 years........... $1,013 $1,206 $1,006 $1,171 $1,262 $1,062
------------------------------------------------------------------------------------------------------------------------------------
10 years.......... $1,753 $1,829 $1,829 $2,087 $2,049 $2,049
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------
Combined Fund
Pro Forma
---------
----------------------------------------------------------------------
----------------------------------------------------------------------
Retail
A
Shares Retail B Shares
------ ---------------
----------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
----------------------------------------------------------------------
<S> <C> <C> <C>
1 year............ $ 499 $ 679 $ 179
----------------------------------------------------------------------
3 years........... $ 709 $ 854 $ 554
----------------------------------------------------------------------
5 years........... $ 936 $1,154 $ 954
----------------------------------------------------------------------
10 years.......... $1,587 $1,693 $1,693
----------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-30
<PAGE>
STELLAR GROWTH EQUITY FUND*
FIRSTAR LARGE CAP GROWTH FUND/1/
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Stellar Growth Equity Fund
--------------------------
-----------------------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None 5.50% None
-----------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None
-----------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)...... None None 5.00%/2/
-----------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None
-----------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.75% 0.75% 0.75%
-----------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ None 0.25% 0.25%
-----------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.48%/6/ 0.48%/6/ 0.48%/6/
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/........................................ 1.23% 1.48% 1.48%
-----------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
-----------------------------------------------------------------------------------------------------------------
Institutional
Shares Retail A Shares Retail B Shares
------ --------------- ---------------
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None 5.50% None
-----------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None
-----------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a None
Percentage of redemption proceeds)...... None 5.00%/2/
-----------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None/3/ None/3/ None/3/
-----------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.95%/4/ 0.95%/4/ 0.95%/4/
-----------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ None 0.00%5 0.75%
-----------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.23% 0.48% 0.48%
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/........................................ 1.18% 1.43% 2.18%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class Y Shares of the Stellar Growth
Equity Fund will receive Institutional Shares of the Firstar Large Cap
Growth Fund, holders of Class A Shares of the Stellar Growth Equity Fund
will receive Retail A Shares of the Firstar Large Cap Growth Fund, and
holders of Class B Shares of the Stellar Growth Equity Fund will receive
Retail B Shares of the Firstar Large Cap Growth Fund.
1. The Firstar Large Cap Growth Fund has not yet commenced operations. The
Firstar Large Cap Growth Fund will continue the operations of the Stellar
Growth Equity Fund upon consummation of the Reorganization relating to that
Fund.
II-31
<PAGE>
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Stellar Class B Shares automatically convert to Class A Shares and
Firstar Retail B Shares automatically convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
4. Management Fees (after waivers) would be 0.91% for the Combined Fund Pro
Forma.
5. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
6. "Other Expenses" are expected to be less than the amounts shown above
because certain service providers are voluntarily waiving a portion of their
fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Growth Equity Fund 0.39% 0.39% 0.39%
---------------------------------------------------------------------------------------------------
</TABLE>
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Class Y Shares Class A/Retail A Class B/Retail B Institutional Shares
-------------- ---------------- ---------------- --------------------
Shares Shares
------ ------
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stellar Growth Equity Fund 1.14% 1.39% 1.39% --
--------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 1.39% 2.14% 1.14%
--------------------------------------------------------------------------------------------------------------------
</TABLE>
II-32
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed
at the end of each period shown, assuming (1) 5% gross annual return and (2) the
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Stellar Growth Equity Fund
--------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
-------------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
----------- ----------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.............................. $ 125 $ 692 $ 651 $ 151
-------------------------------------------------------------------------------------------------------------------
3 years............................. $ 390 $ 992 $ 768 $ 468
-------------------------------------------------------------------------------------------------------------------
5 years............................. $ 676 $1,313 $1,008 $ 808
-------------------------------------------------------------------------------------------------------------------
10 years............................ $1,489 $2,221 $1,768 $1,768
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
--------------------------------------------------------------------------------------------------
Institutional Retail A
--------
Shares Shares Retail B Shares
------ ------ ---------------
--------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.............................. $ 120 $ 688 $ 721 $ 221
--------------------------------------------------------------------------------------------------
3 years............................. $ 375 $ 978 $ 982 $ 682
--------------------------------------------------------------------------------------------------
5 years............................. $ 649 $1,289 $1,369 $1,169
--------------------------------------------------------------------------------------------------
10 years............................ $1,432 $2,169 $2,149 $2,149
--------------------------------------------------------------------------------------------------
</TABLE>
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-33
<PAGE>
STELLAR RELATIVE VALUE FUND*
FIRSTAR RELATIVE VALUE FUND/1/
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Stellar Relative Value Fund
---------------------------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None 5.50% None
--------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None
--------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)...... None None 5.00%/2/
--------------------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None None None
--------------------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.75% 0.75% 0.75%
--------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ None 0.25% 0.25%
--------------------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.47%/5/ 0.47%/5/ 0.47%/5/
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)........................................... 1.22%/6/ 1.47%/6/ 1.47%/6/
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
-----------------------------------------------------------------------------------------------------------
Institutional
Shares Retail A Shares Retail B Shares
------ --------------- ---------------
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None 5.50% None
-----------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None
-----------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)...... None None 5.00%/2/
-----------------------------------------------------------------------------------------------------------
Redemption Fees.............................. None/3/ None/3/ None/3/
-----------------------------------------------------------------------------------------------------------
Exchange Fee................................. None None None
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............. 0.75% 0.75% 0.75%
-----------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees........ None 0.00%/4/ 0.75%
-----------------------------------------------------------------------------------------------------------
Other Expenses............................... 0.22% 0.47% 0.47%
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)........................................... 0.97% 1.22% 1.97%
-----------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class Y Shares of the Stellar Relative
Value Fund will receive Institutional Shares of the Firstar Relative Value
Fund, holders of Class A Shares of the Stellar Relative Value Fund will
receive Retail A Shares of the Firstar Relative Value Fund, and holders of
Class B Shares of the Stellar Relative Value Fund will receive Retail B
Shares of the Firstar Relative Valve Fund.
1. The Firstar Relative Value Fund has not yet commenced operations. The
Firstar Relative Value Fund will continue the operations of the Stellar
Relative Value Fund upon consummation of the Reorganization relating to that
Fund.
II-34
<PAGE>
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Stellar Class B Shares automatically convert to Class A Shares and
Firstar Retail B Shares automatically convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
4. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
5. "Other Expenses" are expected to be less than the amounts shown above
because certain service providers are voluntarily waiving a portion of their
fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Relative Value Fund 0.38% 0.38% 0.38%
------------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Relative Value Fund 1.13% 1.38% 1.38%
-----------------------------------------------------------------------------------------------
</TABLE>
II-35
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed
at the end of each period shown, assuming (1) 5% gross annual return and (2) the
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Stellar Relative Value Fund
---------------------------
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
--------------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.............................. $ 124 $ 691 $ 650 $ 150
--------------------------------------------------------------------------------------------------------------------
3 years............................. $ 387 $ 989 $ 765 $ 465
--------------------------------------------------------------------------------------------------------------------
5 years............................. $ 670 $1,309 $1,003 $ 803
--------------------------------------------------------------------------------------------------------------------
10 years............................ $1,477 $2,211 $1,757 $1,757
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
----------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Institutional Retail A
--------
Shares Shares Retail B Shares
------ ------ ---------------
----------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.............................. $ 99 $ 667 $ 700 $ 200
----------------------------------------------------------------------------------------------------
3 years............................. $ 309 $ 916 $ 918 $ 618
----------------------------------------------------------------------------------------------------
5 years............................. $ 536 $1,183 $1,262 $1,062
----------------------------------------------------------------------------------------------------
10 years............................ $1,190 $1,946 $1,924 $1,924
----------------------------------------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-36
<PAGE>
STELLAR SCIENCE & TECHNOLOGY FUND*
FIRSTAR SCIENCE & TECHNOLOGY FUND/1/
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Stellar Science & Technology Fund
---------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........ None 5.50% None
---------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends....................... None None None
---------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)........ None None 5.00%/2/
---------------------------------------------------------------------------------------------------------------------------
Redemption Fees................................ None None None
---------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................... None None None
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............... 0.90% 0.90% 0.90%
---------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.......... None 0.25% 0.75%
---------------------------------------------------------------------------------------------------------------------------
Other Expenses................................. 0.50%/5/ 0.50%/5/ 0.50%/5/
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers).... 1.40%/6/ 1.65%/6/ 2.15%/6/
---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Institutional
Shares Retail A Shares Retail B Shares
------ --------------- ---------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........ None 5.50% None
---------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends....................... None None None
---------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)........ None None 5.00%/2/
---------------------------------------------------------------------------------------------------------------------------
Redemption Fees................................ None/3/ None/3/ None/3/
---------------------------------------------------------------------------------------------------------------------------
Exchange Fee................................... None None None
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)............... 1.05% 1.05% 1.05%
---------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.......... None 0.00%/4/ 0.75%
---------------------------------------------------------------------------------------------------------------------------
Other Expenses................................. 0.26% 0.51% 0.51%
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before waivers).... 1.31% 1.56% 2.31%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class Y Shares of the Stellar Science &
Technology Fund will receive Institutional Shares of the Firstar Science &
Technology Fund, holders of Class A Shares of the Stellar Science &
Technology Fund will receive Retail A Shares of the Firstar Science &
Technology Fund, and holders of Class B Shares of the Stellar Science &
Technology Fund will receive Retail B Shares of the Firstar Science &
Technology Fund.
1. The Firstar Science & Technology Fund has not yet commenced operations. The
Firstar Science & Technology Fund will continue the operations of the
Stellar Science & Technology Fund upon consummation of the Reorganization
relating to that Fund.
II-37
<PAGE>
2. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Stellar Class B Shares automatically convert to Class A Shares and
Firstar Retail B Shares automatically convert to Retail A Shares.
3. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non-systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
4. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
5. "Other Expenses" are expected to be less than the amounts shown above
because certain service providers are voluntarily waiving a portion of their
fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Science & Technology Fund 0.41% 0.41% 0.41%
------------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Science & Technology Fund 1.31% 1.56% 2.06%
------------------------------------------------------------------------------------------------
</TABLE>
II-38
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at
the end of each period shown, assuming (1) 5% gross annual return and (2) the
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Stellar Science & Technology Fund
---------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
----------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.................. $ 143 $ 709 $ 718 $ 218
----------------------------------------------------------------------------------------------------------------
3 years................. $ 443 $1,042 $ 973 $ 673
----------------------------------------------------------------------------------------------------------------
5 years................. $ 766 $1,398 $1,354 $1,154
----------------------------------------------------------------------------------------------------------------
10 years................ $1,680 $2,397 $2,240 $2,240
----------------------------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Institutional
Shares Retail A Shares Retail B Shares
------ --------------- ---------------
---------------------------------------------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year.................. $ 133 $ 700 $ 734 $ 234
---------------------------------------------------------------------------------------------------------------
3 years................. $ 415 $1,016 $1,021 $ 721
---------------------------------------------------------------------------------------------------------------
5 years................. $ 718 $1,353 $1,435 $1,235
---------------------------------------------------------------------------------------------------------------
10 years................ $1,579 $2,304 $2,286 $2,286
---------------------------------------------------------------------------------------------------------------
</TABLE>
----------
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-39
<PAGE>
STELLAR FUND*
FIRSTAR BALANCED INCOME FUND
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Stellar Fund Firstar Balanced Income Fund
------------ ----------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Class Y Class A Class B Institutional Retail A Retail B
Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None 5.50% None None 5.50% None
--------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None None None None
--------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)....... None None 5.00%/1/ None None 5.00%/1/
--------------------------------------------------------------------------------------------------------------------------
Redemption Fees........................... None None None None/2/ None/2/ None/2/
--------------------------------------------------------------------------------------------------------------------------
Exchange Fee.............................. None None None None None None
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers).......... 0.95% 0.95% 0.95% 0.75%/3/ 0.75%/3/ 0.75%
--------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees..... None 0.25% 0.75% None 0.00%/4/ 0.75%
--------------------------------------------------------------------------------------------------------------------------
Other Expenses............................ 0.52%/5/ 0.52%/5/ 0.52%/5/ 0.41% 0.66% 0.66%
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/6/ 1.47% 1.72% 2.22% 1.16% 1.41% 2.16%
--------------------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Institutional Retail A Retail B
Shares Shares Shares
------ ------ ------
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...... None 5.50% None
--------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends..................... None None None
--------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)....... None None 5.00%/1/
--------------------------------------------------------------------------------------------
Redemption Fees........................... None/2/ None/2/ None/2/
--------------------------------------------------------------------------------------------
Exchange Fee.............................. None None None
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers).......... 0.75%/3/ 0.75%/3/ 0.75%/3/
--------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees..... None 0.00%/4/ 0.75%
--------------------------------------------------------------------------------------------
Other Expenses............................ 0.33% 0.58% 0.58%
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/6/ 1.08% 1.33% 2.08%
--------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class Y Shares of the Stellar Fund will
receive Institutional Shares of the Firstar Balanced Income Fund, holders of
Class A Shares of the Stellar Fund will receive Retail A Shares of the
Firstar Balanced Income Fund, and holders of Class B Shares of the Stellar
Fund will receive Retail B Shares of the Firstar Balanced Income Fund.
1. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Stellar Class B Shares automatically convert to Class A Shares and
Firstar Retail B Shares automatically convert to Retail A Shares.
2. A fee of $12.00 is charged for each wire redemption (Retail A and B Shares)
and $15.00 for each non systematic withdrawal from a Retirement Account for
which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be:
II-40
<PAGE>
----------------------------------------------------------------------
Firstar Balanced Income Fund..................... 0.56%
----------------------------------------------------------------------
Combined Fund Pro Forma.......................... 0.64%
----------------------------------------------------------------------
4. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
5. "Other Expenses" are expected to be less than the amounts shown above
because certain service providers are voluntarily waiving a portion of their
fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Class Y Shares Class A Shares Class B Shares
-------------- -------------- --------------
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Fund 0.43% 0.43% 0.43%
-----------------------------------------------------------------------------------------------
</TABLE>
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep
the annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Class Y Shares Class A/Retail A Class B/Retail B Institutional Shares
-------------- ---------------- ---------------- --------------------
Shares Shares
------ ------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stellar Fund 1.38% 1.63% 2.13% --
------------------------------------------------------------------------------------------------------------------------------
Firstar Balanced Income Fund -- 1.22% 1.97% 0.97%
------------------------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma -- 1.22% 1.97% 0.97%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
II-41
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed
at the end of each period shown, assuming (1) 5% gross annual return and (2) the
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
Stellar Fund Firstar Balanced Income Fund
------------ ----------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Class Y Class A Institutional Retail A
Shares Shares Class B Shares Shares Shares Retail B Shares
------ ------ -------------- ------ ------ ---------------
-----------------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ---------- ---------- ----------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year...... $ 150 $ 715 $ 725 $ 225 $ 118 $ 686 $ 719 $ 219
-----------------------------------------------------------------------------------------------------------------------------
3 years..... $ 465 $1,062 $ 994 $ 694 $ 368 $ 972 $ 976 $ 676
-----------------------------------------------------------------------------------------------------------------------------
5 years..... $ 803 $1,432 $ 1,390 $ 1,190 $ 638 $1,279 $ 1,359 $ 1,159
-----------------------------------------------------------------------------------------------------------------------------
10 years.... $1,757 $2,469 $ 2,314 $ 2,314 $1,409 $2,148 $ 2,128 $ 2,128
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Institutional Retail A
Shares Shares Retail B Shares
------ ------ ---------------
----------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year...... $ 110 $ 678 $ 711 $ 211
----------------------------------------------------------------------------
3 years..... $ 343 $ 948 $ 952 $ 652
----------------------------------------------------------------------------
5 years..... $ 595 $1,239 $ 1,319 $ 1,119
----------------------------------------------------------------------------
10 years.... $1,317 $2,063 $ 2,043 $ 2,043
----------------------------------------------------------------------------
</TABLE>
_________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-42
<PAGE>
STELLAR CAPITAL APPRECIATION FUND*
FIRSTAR MIDCAP INDEX FUND
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Stellar Capital
Appreciation Fund Firstar MidCap Index Fund
----------------- -------------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Class A Class B Institutional Retail A Retail B
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..... 5.50% None None 5.50% None
------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................... None None None None None
------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)...... None 5.00%/1/ None None 5.00%/1/
------------------------------------------------------------------------------------------------------------------------------
Redemption Fees.......................... None None None/2/ None/2/ None/2/
------------------------------------------------------------------------------------------------------------------------------
Exchange Fee............................. None None None None None
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)......... 0.95% 0.95% 0.25%/3/ 0.25%/3/ 0.25%/3/
------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.... 0.25%/4/ 0.75% None 0.00%/5/ 0.75%
------------------------------------------------------------------------------------------------------------------------------
Other Expenses............................ 0.50%/6/ 0.50%/6/ 0.40% 0.65% 0.65%
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/................................ 1.70% 2.20% 0.65% 0.90% 1.65%
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Institutional Retail A Retail B
Shares Shares Shares
------ ------ ------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)..... None 5.50% None
-------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends.................... None None None
-------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)...... None None 5.00%/1/
-------------------------------------------------------------------------------------------
Redemption Fees.......................... None/2/ None/2/ None/2/
-------------------------------------------------------------------------------------------
Exchange Fee............................. None None None
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)......... 0.25%/3/ 0.25%/3/ 0.25%/3/
-------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees.... None 0.00%/5/ 0.75%
-------------------------------------------------------------------------------------------
Other Expenses............................ 0.35% 0.60% 0.60%
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/7/................................ 0.60% 0.85% 1.60%
-------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, holders of Class A Shares of the Stellar Capital
Appreciation Fund will receive Retail A Shares of the Firstar MidCap Index
Fund. In addition, holders of Class B Shares of the Stellar Capital
Appreciation Fund who purchased their shares through an investment
management, trust, custody, or other agency relationship with Firstar Bank,
N.A., will receive Institutional Shares of the Firstar MidCap Index Fund.
All other holders of Class B Shares of the Stellar Capital Appreciation Fund
will receive Retail B Shares of the Firstar MidCap Index Fund.
1. This amount applies if you sell your shares in the first year after purchase
and gradually declines until it is eliminated after six years. After six
years, Stellar Class B Shares automatically convert to Class A Shares and
Firstar Retail B Shares automatically convert to Retail A Shares.
2. A fee of $12.00 is charged for each wire redemption (Retail A and Retail B
Shares) and $15.00 for each non systematic withdrawal from a Retirement
Account for which Firstar Bank, N.A. is custodian.
II-43
<PAGE>
3. Management Fees (after waivers) would be:
---------------------------------------------------------------------------
Firstar MidCap Index Fund............................ 0.10%
---------------------------------------------------------------------------
Combined Fund Pro Forma.............................. 0.15%
---------------------------------------------------------------------------
4. The Stellar Capital Appreciation Fund does not intend to pay 12b-1 fees with
respect to the Class A Shares for the current fiscal year.
5. The total of all 12b-1 fees and shareholder servicing fees may not exceed,
in the aggregate, the annual rate of 0.25% of the Fund's average daily net
assets for the Retail A Shares. The Fund does not expect to pay 12b-1 fees
with respect to the Retail A Shares for the current fiscal year.
6. "Other Expenses" are expected to be less than the amounts shown above
because certain service providers are voluntarily waiving a portion of their
fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Class A Shares Class B Shares
-------------- --------------
---------------------------------------------------------------------------------------
<S> <C> <C>
Stellar Capital Appreciation Fund 0.41% 0.41%
---------------------------------------------------------------------------------------
</TABLE>
7. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Class A/Retail A Class B/Retail B Institutional Shares
---------------- ---------------- --------------------
Shares Shares
------ ------
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Stellar Capital Appreciation Fund 1.36% 2.11% --
----------------------------------------------------------------------------------------------------------------
Firstar MidCap Index Fund 0.75% 1.50% 0.50%
----------------------------------------------------------------------------------------------------------------
Combined Fund Pro Forma 0.75% 1.50% 0.50%
----------------------------------------------------------------------------------------------------------------
</TABLE>
II-44
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed
at the end of each period shown, assuming (1) 5% gross annual return and (2) the
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Stellar Capital Appreciation Fund Firstar MidCap Index Fund
--------------------------------- -------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Class A Class B Institutional Retail A Retail B
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
-------------------------------------------------------------------------------------------------------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ---------- ---------- ------------
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year...... $ 713 $ 723 $ 223 $ 66 $ 637 $ 668 $ 168
-------------------------------------------------------------------------------------------------------------------
3 years..... $1,056 $ 988 $ 688 $ 208 $ 821 $ 820 $ 520
-------------------------------------------------------------------------------------------------------------------
5 years..... $1,422 $1,380 $1,180 $ 362 $1,021 $1,097 $ 897
-------------------------------------------------------------------------------------------------------------------
10 years.... $2,488 $2,293 $2,293 $ 810 $1,597 $1,571 $1,571
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------
Combined Fund
Pro Forma
---------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Institutional Retail A Retail B
Shares Shares Shares
------ ------ ------
-----------------------------------------------------------------------------
Assuming Assuming No
Redemption Redemption
---------- ----------
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year...... $ 61 $ 632 $ 663 $ 163
-----------------------------------------------------------------------------
3 years..... $192 $ 806 $ 805 $ 505
-----------------------------------------------------------------------------
5 years..... $335 $ 995 $1,071 $ 871
-----------------------------------------------------------------------------
10 years.... $750 $1,541 $1,514 $1,514
-----------------------------------------------------------------------------
</TABLE>
________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. This example assumes that all
dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-45
<PAGE>
STELLAR INTERNATIONAL EQUITY FUND*
FIRSTAR GLOBAL EQUITY FUND/1/
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Stellar International Combined Fund
Equity Fund Pro Forma
----------- ---------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Class A Shares Institutional Shares
-------------- --------------------
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................ 1.50% None
------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on
Reinvested Dividends............................... None None
------------------------------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a
Percentage of redemption proceeds)................. None None
------------------------------------------------------------------------------------------------------------------------------
Redemption Fees...................................... None None/2/
------------------------------------------------------------------------------------------------------------------------------
Exchange Fee......................................... None None
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Management Fees (before waivers)..................... 0.75% 0.75%/3/
------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees................ 0.25%/4/ None
------------------------------------------------------------------------------------------------------------------------------
Other Expenses....................................... 0.52%/5/ 0.33%
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (before
waivers)/6/............................................. 1.52% 1.08%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* In the Reorganization, the holders of Class A Shares of the Stellar
International Equity Fund will receive Institutional Shares of the Firstar
Global Equity Fund.
1. The Firstar Global Equity Fund has not yet commenced operations. The Firstar
Global Equity Fund will continue the operations of the Stellar International
Equity Fund upon consummation of the Reorganization relating to that Fund.
2. A fee of $12.00 is charged for each wire redemption (Retail A Shares) and
$15.00 for each non systematic withdrawal from a Retirement Account for
which Firstar Bank, N.A. is custodian.
3. Management Fees (after waivers) would be 0.70% for the Combined Fund Pro
Forma.
II-46
<PAGE>
4. The Stellar International Equity Fund does not intend to pay 12b-1 fees with
respect to Class A Shares for the current fiscal year.
5. "Other Expenses" are expected to be less than the amounts shown above
because certain service providers are voluntarily waiving a portion of their
fees and/or reimbursing the Funds for certain "Other Expenses."
"Other Expenses" (after waivers) would be:
-----------------------------------------------------------------------
Class A Shares
--------------
-----------------------------------------------------------------------
Stellar International Equity Fund 0.43%
-----------------------------------------------------------------------
6. As a result of the fee waivers and/or the expense reimbursements, the Total
Fund Operating Expenses are expected to be less than the amounts shown
above. These fee waivers and/or reimbursements are made in order to keep the
annual fees and expenses of the Funds at a certain level.
Total Fund Operating Expenses (after waivers) would be:
----------------------------------------------------------------------------
Class A Shares Institutional Shares
-------------- ---------------------
----------------------------------------------------------------------------
Stellar International Equity Fund 1.18% --
----------------------------------------------------------------------------
Combined Fund Pro Forma -- 1.02%
----------------------------------------------------------------------------
II-47
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment
redeemed at the end of each period shown, assuming (1) 5% gross annual return
and (2) the operating expenses remain the same as those shown in the above
table:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Stellar International Combined Fund
Equity Fund Pro Forma
----------- ---------
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Class A Shares Institutional Shares
-------------- --------------------
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 year.............................. $ 302 $ 110
-----------------------------------------------------------------------------------------------------------------
3 years............................. $ 623 $ 343
-----------------------------------------------------------------------------------------------------------------
5 years............................. $ 967 $ 595
-----------------------------------------------------------------------------------------------------------------
10 years............................ $1,935 $1,317
-----------------------------------------------------------------------------------------------------------------
</TABLE>
____________________
* This example should not be considered a representation of future
expenses which may be more or less than those shown. The assumed
5% annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may
be greater or less than the assumed amount. This example assumes
that all dividends and other distributions are reinvested.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
II-48
<PAGE>
APPENDIX III
Investment Objectives, Limitations and Certain
Significant Investment Policies of the Reorganizing
Stellar Funds and Corresponding Firstar Funds
This Appendix highlights the investment objectives and certain significant
similarities and differences among the investment limitations and policies of
certain of the Reorganizing Stellar Funds and their Corresponding Firstar Funds.
Because the Stellar Ohio Tax-Free Money Market Fund, Stellar Strategic Income
Fund, Stellar Growth Equity Fund, Stellar Relative Value Fund, Stellar Science &
Technology Fund, and Stellar International Equity Fund will be reorganized into
Shell Firstar Funds that have substantially the same investment objectives,
policies and restrictions as their corresponding Continuing Stellar Funds, they
are not discussed in this Appendix. The following is qualified in its entirety
by the more detailed information included in the prospectuses and statements of
additional information for the Stellar Funds and the Corresponding Firstar Funds
which are incorporated by reference into this Proxy/Prospectus.
1. Stellar Treasury Fund and Firstar U.S. Treasury Money Market Fund
Investment Objectives:
(a) Stellar Treasury Fund: Seeks to achieve stability of principal and
---------------------
current income consistent with stability of principal. This
investment objective is fundamental and may not be changed without the
approval of the Fund's shareholders.
(b) Firstar U.S. Treasury Money Market Fund: Seeks to provide a high
---------------------------------------
level of taxable current income exempt from state income taxes
consistent with liquidity, the preservation of capital and a stable
net asset value. This investment objective is not fundamental and may
be changed by the Firstar Board of Directors without shareholder
approval.
Comment: Both the Stellar Treasury Fund and the Mercantile Treasury Money
Market Portfolio will reorganize into the Firstar U.S. Treasury Money Market
Fund. It is expected that at the time of the Reorganization the Firstar U.S.
Treasury Money Market Fund will adopt an investment objective and certain non-
fundamental policies and restrictions that are substantially the same as those
of the Stellar Treasury Fund. The Firstar U.S. Treasury Money Market Fund,
however, will retain its own fundamental investment limitations. Accordingly,
set forth below is a description of the significant differences between the
fundamental investment limitations of the Stellar Treasury Fund and the Firstar
U.S. Treasury Money Market Fund.
The Stellar Treasury Fund has a fundamental policy that it may borrow up to
33-1/3% of the value of its net assets, while the Firstar U.S. Treasury Money
Market Fund has a fundamental policy that it may only borrow up to 10% of the
value of its net assets. In addition, the Firstar U.S. Treasury Money Market
Fund has a fundamental policy that it may lend up to 30% of its total net
assets, while the Stellar Treasury Fund has a fundamental policy that it may not
engage in securities lending.
III-1
<PAGE>
2. Stellar Tax-Free Money Market Fund and Firstar Tax-Exempt Money Market Fund.
Investment Objectives:
Stellar Tax-Free Money Market Fund: Seeks to provide current income exempt
----------------------------------
from federal regular income tax consistent with stability of principal. This
investment objective is fundamental and may not be changed without the approval
of the Fund's shareholders.
Firstar Tax-Exempt Money Market Fund: Seeks to provide a high level of
------------------------------------
current income exempt from federal income taxes consistent with liquidity, the
preservation of capital and a stable net asset value. This investment objective
is not fundamental and may be changed by the Firstar Board of Directors without
shareholder approval.
Comment: Both the Stellar Tax-Free Money Market Fund and Mercantile Tax-
Exempt Money Market Portfolio will reorganize into the Firstar Tax-Exempt Money
Market Fund. Each Fund is a money market fund and in accordance with Rule 2a-7
under the 1940 Act, will generally invest in instruments with remaining
maturities not exceeding 397 days, and each Fund's dollar weighted average
portfolio maturity may not exceed 90 days. Both the Stellar Tax-Free Money
Market Fund and the Firstar Tax-Exempt Money Market Fund will purchase only
securities that are rated in the highest short-term rating category (i.e., rated
AAA by S&P or Aaa by Moody's) by at least two nationally recognized rating
agencies (or one such rating if only one agency has rated the instrument) or
that are determined to be of comparable quality. However, the Stellar Tax-Free
Money Market Fund may purchase bonds which have no short-term ratings but which
have long-term ratings by nationally recognized statistical rating organizations
("NRSROs") in the two highest ratings categories. This Fund has the ability but
no present intention of investing in municipal securities that are rated MIG-2
or VMIG-2 by Moody's Investors Service, Inc. ("Moody's"), F2 by Fitch IBCA, Inc.
("Fitch"), or A-2 or SP-2 by Standard and Poor's Rating Services ("S&P") and in
tax-exempt commercial paper that is rated P-2 by Moody's, A-2 by S&P, or F2 by
Fitch.
The Stellar Tax-Free Money Market Fund invests its assets so that at least
80% of its annual interest income is exempt from federal regular income tax and
not subject to the alternative minimum tax. The Fund's portfolio primarily
consists of debt obligations issued by or on behalf of states, territories and
possessions of the United States, and any political subdivision or financing
authority of any of these, the income from which is exempt from federal regular
income tax.
Similarly, the Firstar Tax-Exempt Money Market Fund invests at least 80% of
its net assets in a diversified portfolio of dollar-denominated debt obligations
("municipal obligations") issued by or on behalf of states, territories and
possessions of the United States, the District of Columbia and their
authorities, instrumentalities, agencies and political subdivisions, that are
exempt from federal income taxes and with remaining maturities of 13 months or
less.
While the Stellar Tax-Free Money Market Fund and the Firstar Tax-Exempt
Money Market Fund invest in a similar pool of investments, there are certain
differences. Particularly,
III-2
<PAGE>
the Funds have similar, but slightly different, policies with respect to
concentration of their assets. The Stellar Tax-Free Money Market Fund may invest
more than 25% of its total assets in securities credit-enhanced by banks while
the Firstar Tax-Exempt Money Market Fund may invest more than 25% of its assets
in municipal obligations covered by insurance policies. Additionally, while the
Stellar Tax-Free Money Market Fund does not intend to purchase securities that
would increase the percentage of its assets invested in the securities of
governmental subdivisions located in any one state, territory or U.S. possession
to more than 25%, the Fund may invest more than 25% of the value of its assets
in tax-exempt project notes guaranteed by the U.S. government, regardless of the
issuing municipality. While the Firstar Tax-Exempt Money Market Fund does not
presently intend to do so on a regular basis, it may invest more than 25% of its
total assets in municipal obligations, the issuers of which are located in the
same state or the interest on which is paid solely from the revenue of similar
projects.
The Stellar Tax-Free Money Market Fund, but not the Firstar Tax-Exempt
Money Market Fund, may invest in municipal leases and repurchase agreements.
Further, the Stellar Tax-Free Money Market Fund may borrow money directly up to
one-third of the value of its total assets as a temporary or emergency measure
to meet redemption requests and not for investment leverage. The Firstar Tax-
Exempt Money Market Fund may borrow to meet shareholder redemptions up to 10% of
its total assets from banks or through reverse repurchase agreements. The
Stellar Tax-Free Money Market Fund, but not the Firstar Tax-Exempt Money Market
Fund, may purchase securities on a delayed delivery basis. The Firstar Tax-
Exempt Money Market Fund, but not the Stellar Tax-Free Money Market Fund, may
purchase securities on a forward commitment basis. The Stellar Tax-Free Money
Market Fund and the Firstar Tax-Exempt Money Market Fund may purchase securities
on a when-issued basis up to 20% and 25%, respectively, of the value of their
respective assets.
Although the Stellar Tax-Free Money Market Fund is permitted to make
taxable, temporary investments, the adviser currently has no intention to
generate income subject to federal regular income tax. The Firstar Tax-Exempt
Money Market Fund may invest in short-term taxable money market obligations
(taxable obligations will not normally exceed 20% of the Fund's total assets)
for temporary defensive purposes.
3. Stellar U.S. Government Income Fund and Firstar U.S. Government Securities
Fund.
Investment Objectives:
Stellar U.S. Government Income Fund: Seeks to provide current income. The
------------------------------------
Fund's second objective is to achieve capital appreciation. This investment
objective is fundamental and may not be changed without the approval of the
Fund's shareholders.
Firstar U.S. Government Securities Fund: Seeks a high rate of current
----------------------------------------
income that is consistent with relative stability of principal. This investment
objective is not fundamental and may be changed by Firstar's Board of Directors
without shareholder approval.
Comment: Both the Stellar U.S. Government Income Fund and the Mercantile
U.S. Government Securities Portfolio will be reorganized into the Firstar U.S.
Government Securities
III-3
<PAGE>
Fund. The Firstar U.S. Government Securities Fund is a newly established Fund
created for the purposes of the Reorganization that has investment objectives,
policies and restrictions that are substantially similar to the Mercantile U.S.
Government Securities Portfolio. The Stellar U.S. Government Income Fund invests
at least 65% of its total assets in securities issued or guaranteed as to
payment of principal and interest by the U.S. government, its agencies or
instrumentalities which produce income. The Fund tries to achieve capital
appreciation and improve total return by increasing or decreasing its average
maturity depending on forecasted interest rates. Up to 35% of the Fund's assets
may be invested in time and savings deposits, mortgage-backed securities,
investment grade corporate debt obligations, asset-backed securities, commercial
paper and debt securities of foreign issuers.
The Firstar U.S. Government Securities Fund will invest at least 65% of its
total assets in debt obligations issued or guaranteed by the U.S. Government and
its agencies, including U.S. Treasury bonds, notes and bills, as well as
repurchase agreements backed by such obligations. The Fund may also invest in
mortgage-backed securities issued by U.S. government sponsored entities,
collateralized mortgage obligations and certificates issued by government-backed
trusts. The Fund's securities maturity will vary from one to 30 years, but the
average weighted maturity generally will not exceed 10 years.
While the Stellar U.S. Government Income Fund and the Firstar U.S.
Government Securities Fund invest in a similar pool of investments, there are
several differences between the Funds. Although both Funds may invest in
"stripped" government securities, the Firstar U.S. Government Securities Fund
may not invest in certain types of these securities known as Treasury Income
Growth Receipts ("TIGRs") or Certificates of Accrual on Treasury Securities
("CATS") which are not as liquid as other types of "stripped" U.S. government
securities and are not considered U.S. government securities for purposes of the
1940 Act. The Stellar U.S. Government Income Fund can invest up to 5% of its
total assets in investment grade debt securities of foreign issuers, while the
Firstar U.S. Government Securities Fund may not invest in foreign securities.
The Funds also have different restrictions for investments in options. For
example, the Stellar U.S. Government Income Fund can write covered call and put
options, but the Firstar U.S. Government Securities Fund may only write covered
call options. The Stellar U.S. Government Income Fund may purchase options in
an amount up to 5% of its total assets, while the Firstar U.S. Government
Securities Fund may purchase options in an amount up to 10% of its net assets.
Further, the aggregate value of securities subject to covered call options may
not exceed 25% of the value of the Firstar U.S. Government Securities Fund's net
assets, while no such restriction is imposed on the Stellar U.S. Government
Income Fund.
III-4
<PAGE>
4. Stellar Insured Tax-Free Bond Fund and Firstar National Municipal Bond Fund.
Investment Objectives:
Stellar Insured Tax-Free Bond Fund: Seeks to provide current income exempt
----------------------------------
from federal income tax by primarily purchasing insured municipal bonds. This
investment objective is fundamental and may not be changed without the approval
of the Fund's shareholders.
Firstar National Municipal Bond Fund: Seeks as high a level of current
------------------------------------
income exempt from regular federal income tax as is consistent with conservation
of capital. This investment objective is not fundamental and may be changed by
the Firstar Board of Directors without shareholder approval.
Comment: Both the Stellar Insured Tax-Free Bond Fund and the Mercantile
National Municipal Bond Portfolio will reorganize into the Firstar National
Municipal Bond Fund. The Firstar National Municipal Bond Fund is a newly
established fund created for the purposes of the Reorganization that has
investment objectives, policies and restrictions that are substantially similar
to those of the Mercantile National Municipal Bond Portfolio. The Stellar
Insured Tax-Free Bond Fund invests its assets so that at least 80% of its annual
interest income is exempt from federal income tax and not subject to the
alternative minimum tax. Usually, at least 65% of the value of the fund's
assets is invested in intermediate- to long-term investment grade municipal
securities that are insured as to timely payment. These insured municipal
securities, that meet the adviser's investment requirements, are either: (1)
covered by an insurance policy applicable to a particular security, or (2)
insured under master insurance policies issued by municipal bond insurers, which
may be purchased by the fund. When investing in municipal securities, the
Stellar Insured Tax-Free Bond Fund's investment adviser looks for the following
qualities in an investment: (i) rated investment grade (i.e., within the top
four rating categories by an NRSRO); (ii) insured by a municipal bond insurance
company which is rated in the top rating category by an NRSRO; (iii) guaranteed
at the time of purchase by the U.S. government as to the payment of principal
and interest; (iv) fully collateralized by an escrow of U.S. government
securities; or (v) determined to be of comparable quality to an investment grade
or better by the investment adviser if the security is unrated.
The Firstar National Municipal Bond Fund will invest at least 80% of its
total assets in municipal securities that pay interest that is exempt from
federal income tax, including general obligation securities, revenue securities
and private activity bonds. Under normal conditions, the Fund's investments in
private activity bonds, together with any investments in securities subject to
the alternative minimum tax and taxable obligations, will not exceed 20% of its
total assets. The Fund's average weighted maturity will generally be 10 years
or less. No specific percentage of the Fund's assets is invested in municipal
securities that are insured as to timely payment. The Fund may only invest in
investment grade municipal securities. The Fund may invest 25% or more of its
net assets in (i) municipal securities whose issuers are in the same state; (ii)
municipal securities the interest on which is paid solely from revenue of
similar projects and (iii) private activity bonds, though it does not presently
intend to do so. On a temporary defensive basis, the Fund may hold without any
limitation uninvested cash reserves and invest in taxable obligations.
III-5
<PAGE>
The Stellar Insured Tax-Free Bond Fund may invest in repurchase agreements,
but the Firstar National Municipal Bond Fund may not. The Stellar Insured Tax-
Free Bond Fund may invest up to 5% of its total net assets in options and
futures contracts, while the Firstar National Municipal Bond Fund may not invest
in options or futures contracts. The Firstar National Municipal Bond Fund may
invest in tax-exempt derivatives including term option bonds, participations,
beneficial interests in trusts and partnership interests, but expects to invest
less than 5% of its total assets in such securities. Finally, while the Stellar
Insured Tax-Free Bond Fund may invest up to 20% of its net assets in when-issued
securities, forward commitments and delayed settlement transactions, the Firstar
National Municipal Bond Fund expects that its commitments to purchase when-
issued securities will not exceed 5% of its total net assets and expects that
forward commitments and delayed settlement transactions will not exceed 25% of
its net assets.
5. Stellar Fund and Firstar Balanced Income Fund.
Investment Objectives:
Stellar Fund: Seeks to maximize total return derived from a combination of
------------
dividend income and capital appreciation. This investment objective is
fundamental and may not be changed without the approval of the Fund's
shareholders.
Firstar Balanced Income Fund: Seeks to provide current income and the
----------------------------
preservation of capital by investing in a balanced portfolio of dividend-paying
equity and fixed-income securities. This investment objective is not
fundamental and may be changed by the Firstar Board of Directors without
shareholder approval.
Comment: The Stellar Fund invests no more than 50% of its net assets in
each of the following categories: domestic equity securities, domestic fixed-
income securities (including mortgage and asset-backed securities),
international securities (equity and fixed income), real estate securities
(REITs) and short-term securities. For the Fund's domestic equity securities,
the adviser chooses stocks that it believes to be undervalued compared to stocks
contained in the S & P 500 Composite Stock Price Index. The companies in which
the Fund invests may be small, medium or large in size. The Fund's fixed-income
investments include short to long-term, investment grade domestic corporate debt
obligations, obligations of the U.S. government, and notes, bonds, and discount
notes of U.S. government agencies or instrumentalities. The Stellar Fund will
only invest in bonds rated Baa or higher by Moody's Investors Service, Inc. or
rated BBB or higher by S&P or Fitch IBCA, Inc.
The Firstar Balanced Income Fund typically invests 50% of its assets in
equity securities and 50% in fixed-income securities, although the actual
percentage of assets invested in each will vary from time to time. It may
invest no less than 20% and no more than 60% of its assets in equity securities,
and it may invest no less than 40% of its assets in fixed-income securities.
The Fund may also acquire bonds, notes, debentures and preferred stocks if they
provide a current interest stream, and may invest up to 5% of its net assets in
other types of domestic securities having common stock characteristics, such as
rights and warrants to purchase equity
III-6
<PAGE>
securities. The Portfolio's equity securities consist mainly of common stock of
domestic and foreign companies that the Adviser considers to be well managed and
to have attractive fundamental financial characteristics, with market
capitalizations of over $750 million. Except for convertible securities, the
Fund will purchase only fixed-income securities rated investment grade by at
least one rating agency or unrated obligations deemed by the Adviser to be
comparable in quality.
The Firstar Balanced Income Fund may lend its portfolio securities to
unaffiliated domestic broker/dealers and other institutional investors. The
Stellar Fund may not lend its securities.
Both Funds may invest in short-term obligations on a when-issued or delayed
delivery basis. The Firstar Balanced Income Fund does not expect such
investments to exceed 25% of the value of its total assets, while the Stellar
Fund does not intend to engage in such transactions to an extent that would
cause more than 20% of its assets to be so committed. The Firstar Balanced
Income Fund may purchase or sell futures contracts, or options thereon, while
the Stellar Fund is not permitted to engage in futures transactions.
Finally, while the Firstar Balanced Income Fund may borrow from banks and
enter into reverse repurchase agreements in amounts up to 10% of its total
assets, the Stellar Fund may invest up to 33 1/3% of its total assets in reverse
repurchase agreements, but may not borrow from banks.
6. Stellar Capital Appreciation Fund and Firstar MidCap Index Fund.
Investment Objectives:
Stellar Capital Appreciation Fund: Seeks to maximize capital appreciation.
---------------------------------
This investment objective is fundamental and may not be changed without approval
of the Fund's shareholders.
Firstar MidCap Index Fund: Seeks returns, before Fund expenses, comparable
-------------------------
to the price and yield performance of publicly traded common stocks in the
aggregate, as represented by the S&P MidCap 400 Index. This investment
objective is not fundamental and may be changed by the Firstar Board of
Directors without shareholder approval.
Comment: The Stellar Capital Appreciation Fund invests at least 50% of the
value of its total assets in equity securities of U.S. companies that have
market capitalizations ranging from $200 million to $10 billion and whose
shares are traded on the New York or American Stock Exchanges or traded on
NASDAQ or over-the-counter. In selecting securities, the fund's investment
adviser employs automated quantitative measurement techniques, and considers,
among other things, a security's historical performance, price/earnings ratio,
market capitalization and credit ranking based on the standards of NRSROs. To a
lesser extent, the Fund may also invest a portion of its net assets in domestic
debt securities, U.S. government securities, international securities, options
and futures and money market instruments.
III-7
<PAGE>
The Firstar MidCap Index Fund attempts to replicate the performance of the
S&P MidCap 400 Index ("400 Index") before Fund expenses. Under normal market
conditions, the Fund will invest substantially all of its total assets in
securities included in the 400 index. At least 80% of the Fund's net assets
will be invested in the common stocks of such companies at all times. The 400
Index consists of medium-size domestic companies with market capitalizations
between $148 million and $13 billion. While index funds are traditionally less
managed than equity or bond portfolios, the Firstar MidCap Index Fund's
investment adviser uses capitalization weighting and sector managing techniques
in an effort to keep the Fund's quarterly performance within 0.03% of the 400
Index under normal market conditions. In addition to the aforementioned
policies, the Fund may also invest a portion of its net assets in futures
contracts and options on futures contracts for hedging purposes, to have fuller
exposure to price movements in stock or bond indices to increase total return or
to maintain liquidity to meet potential shareholder redemptions, invest cash
balances or dividends or minimize trading costs. In addition, the Fund may also
purchase and sell futures and related options to maintain cash reserves while
simulating full investment in the stocks underlying the 400 Index and to reduce
transaction costs.
There are several noteworthy differences in the investment policies of the
two Funds. The Firstar MidCap Index Fund may invest up to 10% of its total
assets in borrowings and reverse repurchase agreements. The Stellar Capital
Appreciation may invest up to 33 1/3% of its total assets in reverse repurchase
agreements. Unlike the Firstar MidCap Index Fund, the Stellar Capital
Appreciation Fund may invest up to 10% of its total assets in the securities of
foreign issuers. While both Funds may participate in securities lending, the
Firstar MidCap Index Fund limits its portfolio lending to 30% of its assets,
while the Stellar Capital Appreciation Fund may lend up to 33 1/3% of its total
assets. Also, only the Stellar Capital Appreciation Fund may hold convertible
securities and invest a percentage of its assets in warrants. Unlike the
Firstar MidCap Index Fund, the Stellar Capital Appreciation Fund may invest up
to 20% of its net assets in short-term obligations on a when-issued or delayed
delivery basis.
While both the Stellar Capital Appreciation Fund and Firstar MidCap Index
Fund may invest up to 5% of their net assets in put and call options, the
Firstar MidCap Index Fund's investments must be based solely on the investment
strategies of the S&P MidCap 400 Index. The Stellar Capital Appreciation Fund
is not limited in this manner. In a similar fashion, both Funds may purchase
and sell futures contracts to act as hedge against changes in the value of
portfolio securities due to changes in interest rates and market conditions, but
the Firstar MidCap Index Fund may also purchase and sell futures contracts to
have more exposure to maintain cash reserves while simulating full investment in
the stocks underlying the S&P MidCap 400 Index, to keep its assets substantially
exposed to the market (as represented by the S&P MidCap 400 Index), and to
reduce transaction costs. As with its investment in put and call options, the
Firstar MidCap Index Fund must base its purchase of futures contracts and
related options on the S&P MidCap 400 Index.
III-8
<PAGE>
APPENDIX IV
Shareholder Transactions and Services of the Firstar Funds
and the Corresponding Stellar Funds
This Appendix compares the shareholder transactions and services of the
Firstar Funds and their corresponding Stellar Funds. The following is qualified
in its entirety by the more detailed information included in the prospectuses
for the Stellar Funds and the Firstar Funds which are incorporated by reference
in this Proxy/Prospectus. Unless otherwise indicated, terms used herein and not
otherwise defined have the same meanings as are given to them in such
prospectuses.
A. Sales Charges and Exemptions
----------------------------
Class C and Class Y Shares of the Stellar Funds and Institutional and Class
Y Shares of the Firstar Funds are offered at their net asset value per share
with no front-end or contingent deferred sales charges.
Class A Shares of the Stellar Funds and Retail A Shares of the Firstar non-
money market funds are sold at the portfolio's net asset value per share, plus
an applicable front-end sales charge. There is a maximum sales charge of 5.50%
of the offering price per share on Class A Shares of the Stellar Equity Funds
(except for the Stellar International Equity Fund which has a maximum sales
charge of 1.50% of the offering price of Class A Shares) and Retail A Shares of
the Firstar Equity Funds. There is a maximum sales charge of 4.00% of the
offering price per share on Class A Shares of the Stellar Bond Funds and Retail
A Shares of the Firstar Bond Funds. Sales charges on Stellar's Equity and Bond
Funds and Firstar's Equity and Bond Funds are reduced as the amount invested
increases, provided that the amount invested reaches certain specified levels as
follows:
<TABLE>
<CAPTION>
Sales Charge as a Sales Charge as a Shareholder Organization
Amount of Transaction Percentage of Percentage of Reallowance as a Percentage of
at Offering Price Offering Price Net Asset Value Offering Price
------------------ ------------------- -------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Funds Bond Funds Equity Funds Bond Funds Equity Funds Bond Funds
Less than $50,000 5.50% 4.00% 5.82% 4.17% 5.00% 3.75%
$50,000 To $99,999 4.50% 3.50% 4.71% 3.63% 4.00% 3.25%
$100,000 to $249,999 3.50% 3.00% 3.63% 3.09% 3.00% 2.75%
$250,000 to $499,999 2.50% 2.50% 2.56% 2.56% 2.00% 2.25%
$500,000 to $999,999 2.00% 2.00% 2.04% 2.04% 1.50% 1.75%
$1,000,000 and above 0.50% 0.50% 0.50% 0.50% 0.40% 0.40%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
IV-1
<PAGE>
For the Stellar International Equity Fund:
<TABLE>
<CAPTION>
Shareholder
Organization
Sales Charge as a Sales Charge as a Reallowance as a
Amount of Transaction Percentage of Offering Percentage of Net Percentage of
at Offering Price Price Asset Value Offering Price
---------------------------------------------------------------------------------------------------
Stellar International Stellar International Stellar International
Equity Fund Equity Fund Equity Fund
<S> <C> <C> <C>
Less than $100,000 1.50% 1.52% 1.34%
$100,000 to $249,999 1.00% 1.01% 0.89%
$250,000 to $499,999 0.75% 0.76% 0.67%
$500,000 and above 0.50% 0.50% 0.45%
---------------------------------------------------------------------------------------------------
</TABLE>
The public offering price for Class B Shares of Stellar's Equity (the
Stellar International Equity Fund does not offer Class B Shares) and Bond Funds
and Retail B Shares of Firstar's Equity and Bond Funds is the net asset value of
such shares purchased. Although investors pay no front-end sales charge on
purchases of Stellar's and Firstar's Retail B Shares, such shares are subject to
a contingent deferred sales charge at the rates set forth below if they are
redeemed within six years of purchase. After six years, Stellar's Class B and
Firstar's Retail B Shares will convert to Stellar Class A and Firstar Retail A
Shares, respectively.
<TABLE>
<CAPTION>
Number of Years Contingent Deferred Sales Charge
Elapsed Since Purchase (as % of dollar amount subject to the charge)
----------------------- ---------------------------------------------
<S> <C>
Less than one 5.00%
At least one but less than two 4.00%
At least two but less than three 3.00%
At least three but less than four 3.00%
At least four but less than five 2.00%
At least five but less than six 1.00%
At least six None
</TABLE>
1. Sales Charge Reduction - Stellar Class A and Firstar Retail A Shares
--------------------------------------------------------------------
The sales charge on purchases of Stellar Class A and Firstar Retail A
Shares may be reduced through:
(a) Rights of Accumulation
----------------------
Stellar Class A Shares and Firstar Retail A Shares. In calculating
--------------------------------------------------
the appropriate sales charge rate, the right allows investors to add the
value of the Class A/Retail A Shares of the non-money market fund they
already own, as well as the value of any existing Class A/Retail A Shares
of any other Fund in the Firstar family of funds, to the amount they are
currently purchasing.
IV-2
<PAGE>
(b) Letter of Intent
----------------
(i) Stellar Class A Shares
----------------------
If an investor intends to purchase at least $50,000 of Class
A Shares over 13 months, the investor may sign a letter of intent to reduce
the sales charge. A letter of intent includes a provision allowing Stellar
to adjust the sales charge depending on the amount the investor actually
purchases within the 13-month period. It also allows the custodian to hold
the maximum sales charge in shares in escrow until the purchases are
completed.
(ii) Firstar Retail A Shares
-----------------------
An investor can purchase Retail A Shares of any Firstar non-
money market fund or Retail A Shares of any fund in the Firstar family of
funds that charges a sales load over a 13-month period and pay the same
sales charge the investor would have paid if all shares were purchased at
once. The investor may obtain the reduced sales charge by means of a
written letter of intent which expresses a non-binding commitment to invest
in the aggregate $100,000 or more in Firstar non-money market Fund Retail A
Shares or Retail A Shares of any Firstar family of funds. The transfer
agent will hold in escrow shares equal to 5% of the amount indicated in the
letter of intent for payment of a higher sales charge if an Investor does
not purchase the full amount indicated in the letter of intent.
(c) Quantity Discounts
------------------
(i) Stellar Class A Shares
----------------------
As the dollar amount of an investor's purchase increases,
sales charge may decrease (see the table above).
(ii) Firstar Retail A Shares
-----------------------
As the dollar amount of an investor's purchase increases,
their sales charge may decrease (see the table above). For purposes of
applying the Rights of Accumulation and Letter of Intent privileges, the
sales charge schedule applies to the combined purchases made by any
individual and/or spouse purchasing securities for his, her or their own
account, or the aggregate investments of a trustee or other fiduciary or
IRA for the benefits of the persons listed below (See "Waivers - Stellar
Class A Shares and Firstar Retail A Shares").
IV-3
<PAGE>
(d) Reinvestment Privilege
----------------------
(i) Stellar Class A Shares
----------------------
If Class A Shares of any of the Stellar Funds have been
redeemed, the investor has a one-time right, within 30 days, to reinvest
the redemption proceeds at the next-determine net asset value without any
sales charge so long as investor notifies the transfer agent or shareholder
organization at the time of the request. Investors should inform Stellar,
in writing, that they are reinvesting so that they will not be overcharged.
(ii) Firstar Retail A Shares
-----------------------
If you sell shares of a Firstar Fund or of any Firstar
family of funds, you may reinvest some or all of the process in the Retail
A Shares of any Firstar Fund within 60 days without a sales charge, as long
as the investor notifies the transfer agent or shareholder organization at
the time of the investor's reinvestment.
2. Waivers - Stellar Class A and Firstar Retail A Shares.
-----------------------------------------------------
No sales charge may be assessed on purchases of Stellar Class A and Firstar
Retail A Shares made by:
<TABLE>
<CAPTION>
Stellar Firstar
<S> <C>
(1) employees and retired employees of Firstar Bank or (1) an employee, director, retiree or registered
its affiliates and members of the families (including representative of Firstar Corporation or its
parents, grandparents, siblings, spouses, children, affiliates or of Firstar Funds, Inc. or a spouse,
and in-laws) of such employees or retired employees; parent, in-law, sibling or child of such an
individual;
(2) Firstar trust customers of Firstar Corporation and (2) any purchases for an investor's medical
subsidiaries; and savings account for which Firstar Corporation or
an affiliate serves in a custodial capacity;
(3) non-trust customers of financial advisers (3) purchases through certain external
organizations that have entered into a service
agreement with Firstar or its affiliates;
(4) an investor that takes part in an
employer-sponsored qualified retirement plan
administered by Firstar with assets of less than
$1 million at the time Firstar begins plan
administration, provided such administration
commenced on or after June 18, 1999;
</TABLE>
IV-4
<PAGE>
<TABLE>
<S> <C>
(5) an investor that purchases through certain
broker-dealers who have agreed to provide certain
services with respect to shares of the Firstar
Funds, including Charles Schwab Mutual Fund
Marketplace(R). The investor should check with a
broker-dealer to see if the investor qualifies for
this exemption.
</TABLE>
3. Waivers - Stellar Class B and Firstar Retail B Shares
-----------------------------------------------------
When Stellar Class B Shares and Firstar Retail B Shares are redeemed,
shares that are not subject to a contingent deferred sales charge are redeemed
first, followed by the shares that have been held the longest. A contingent
deferred sales charge will not be assessed on either Stellar Class B Shares or
Firstar Retail B Shares purchased through reinvestment of dividends or capital
gains distributions. Contingent deferred sales charges for Stellar Class B
Shares and Firstar Retail B Shares are also waived for the following reasons:
<TABLE>
<CAPTION>
Stellar Firstar
<S> <C>
(1) employees or retired employees of Firstar Bank or (1) certain exchanges of Firstar shares described
its affiliates and members of the families (including below;
parents, grandparents, siblings, spouses, children,
and in-laws) of such employees or retired employees;
(2) Firstar trust customers of Firstar Corporation (2) the redemption is in connection with shares
and its subsidiaries; sold for certain retirement distributions or
because of disability or death;
(3) non-trust customers of financial advisers; (3) the redemption is effected pursuant to
Firstar's right to liquidate a shareholder's
(4) redemptions made following death or disability account if the aggregate net asset value of Retail
(as defined by the IRS); B Shares held in the account is less than
Firstar's minimum account balance;
(5) redemptions made as minimum required (4) the redemption is in connection with the
distributions under an IRA or other retirement plan combination of a Firstar Fund with any other
to a shareholder who is 70 1/2 years old or older; and investment company registered under the 1940 Act
by merger, acquisition of assets, or by any other
transaction;
(6) involuntary redemptions made in shareholder
account that do not have the required minimum balance. (5) the redemption results from certain tax-free
returns from IRAs of excess contributions;
(6) Redemptions made pursuant to the systematic
withdrawal plan (discussed below); and
</TABLE>
IV-5
<PAGE>
Stellar Firstar
(7) the redemption is in connection
with required (or in some cases,
discretionary) distributions to
participants or beneficiaries of an
employee pension, profit sharing or
other trust or qualified retirement or
Keogh plan, individual retirement
account or custodial account
maintained pursuant to Section
403(b)(7) of the Internal Revenue
Code due to death, disability or the
attainment of a specified age.
B. Purchase Policies
-----------------
The following chart compares the existing purchase policies of the Stellar
Funds and the Firstar Funds.
<TABLE>
<CAPTION>
Retail A and
------------
Class A, B and C Shares of the Retail B Shares of the Firstar Funds
------------------------------- ------------------------------------
Minimum Initial Investment Stellar Funds
-------------
<S> <C> <C>
$1,000 for individuals; $500 for $1,000
Education IRA customers; $25 for
Firstar Bank employees and members
of their immediate family, and
persons contributing to Simple
IRAs; and, for Class A and B
shares, $1,000 for trust or
institutional customers of Firstar
Bank ($1,000 may be determined by
combining the amount in all mutual
fund accounts maintained with
Firstar Bank)
Class Y Shares of the Stellar Funds Institutional Shares of the Firstar
----------------------------------- -----------------------------------
Funds
-----
$1,000 for trust or institutional NO
customers of Firstar Bank ($1,000
may be determined by combining the
amount in all mutual fund accounts
the investor maintains with Firstar
Bank)
</TABLE>
IV-6
<PAGE>
<TABLE>
<CAPTION>
Minimum Subsequent Class A, B and C Shares of the Retail A and Retail B Shares of
------------------------------- -------------------------------
Investments Stellar Funds the Firstar Funds
------------- -----------------
<S> <C> <C>
None except $25 if investor $50 for a regular account; $50 for
participates in Automatic Investment the Periodic Investment Plan
Plan
Class Y Shares of the Stellar Funds Institutional Shares of the
----------------------------------- ---------------------------
Firstar Funds
-------------
None except $25 if investor None
participates in Automatic Investment
Plan
Purchase Methods Class A, B and C Shares of the Retail A and Retail B Shares of
------------------------------- -------------------------------
Stellar Funds the Firstar Funds
------------- -----------------
By telephone; by mail; by wire; Through a Shareholder
through the Automatic Investment Organization; by mail;
Plan; through shareholder service by wire; automatically through
organizations; by exchange the Periodic Investment Plan or
ConvertiFund; by telephone; by
wire; and by Internet (except for
initial purchases).
Class Y Shares of the Stellar Institutional Shares of the
----------------------------- ---------------------------
Funds Firstar Funds
----- -------------
By telephone; by mail; by wire; Purchases are effected pursuant
automatic investment; through to a customer's account at Firstar
shareholder service organizations; Bank, N.A., or another chosen
by exchange institution or broker-dealer
pursuant to procedures
established in connection with
the requirements of the account.
</TABLE>
IV-7
<PAGE>
C. Redemption Procedures
---------------------
<TABLE>
<CAPTION>
Class A, B and C Shares of the Retail A and Retail B Shares of
------------------------------ -------------------------------
Stellar Funds the Firstar Funds
------------- -----------------
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent, or through a
shareholder organization
By mail Yes Yes (a signature guarantee may be
required)
By telephone Yes Yes (minimum $500);
By wire Yes No
By systematic withdrawal plan Yes (minimum of $25 per pay period) Yes ($5,000 account minimum and
$50 minimum per transaction)
By Internet No Yes (maximum redemption amount
for internet redemptions is
$25,000).
Checkwriting feature No Yes ($250 minimum and only for
the money market funds)
</TABLE>
<TABLE>
<CAPTION>
Class Y Shares of the Stellar Funds Institutional Shares of the
----------------------------------- ---------------------------
Firstar Funds
-------------
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent, or through a
shareholder organization
By mail; telephone; wire; or by Yes Follow established procedures of
Internet customer's financial institution.
By systematic withdrawal plan No No
Checkwriting feature No Yes ($250 minimum and only for
money market funds)
</TABLE>
Each of the Stellar Funds may redeem Class A, B, Y and C Shares in a
shareholder's account if the balance in such shareholder's account with the Fund
drops below $1,000. If a shareholder's account falls below the minimum required
investment as a result of selling or exchanging shares, the shareholder will be
given 30 days to re-establish the minimum balance or the account will be closed.
IV-8
<PAGE>
Firstar may redeem Retail A, Retail B, and Institutional Shares if the
balance in a shareholder's account (other than a retirement plan account) falls
below $1,000 as a result of selling or exchanging shares. In such event, Firstar
will provide shareholders with 60 days' written notice of such fact. If such
shareholder does not re-establish the required minimum balance within such
period the account will be closed.
D. Share Exchanges
---------------
<TABLE>
<CAPTION>
Class A, B and C Shares of the Retail A and Retail B Shares of the
------------------------------ -----------------------------------
Stellar Funds Firstar Funds
------------- -------------
<S> <C> <C>
Through an Authorized Selling or No Yes
Servicing Agent
By mail Yes Yes
By telephone Yes Yes (privilege automatically applies
to all shareholders)
Through ConvertiFund No Yes (no minimum initial purchase or
minimum account balance)
Minimum $1,000 $1,000
</TABLE>
<TABLE>
<CAPTION>
Class Y Shares of the Stellar Institutional Shares of the Firstar
----------------------------- -----------------------------------
Funds Funds
----- -----
<S> <C> <C>
Through an Authorized Selling or No Yes
Servicing Agent
By mail/By telephone Yes Follow established procedures of
customer's financial institution
Minimum $1,000 $1,000
</TABLE>
More Information about Exchanging Shares
----------------------------------------
Firstar Funds
-------------
Generally, any share class of a Firstar Fund is exchangeable for the same
share class of another Firstar Fund, provided you are eligible to purchase that
share class or Fund. Listed below are permitted exchanges between different
share classes of the Fund.
. Retail B Shares of a non-money market fund may be exchanged for Retail
Shares of a money market fund (except Retail B Shares are not
exchangeable for any shares of the Institutional Money Market Fund).
. Class Y Shares of a non-money market fund are exchangeable for
Institutional Shares of a money market fund.
Unless you qualify for a sales charge exemption, an initial sales charge
will be imposed on the exchange if the shares of the Fund being acquired have an
initial sales charge and the shares being redeemed were purchased without a
sales charge. Retail B Shares acquired in an exchange and Money Market Fund
Shares acquired in an exchange for Retail B Shares will be subject to a
contingent deferred sales charge upon redemption in accordance with this
Prospectus. For purposes of computing the contingent deferred sales charge, the
length of time of ownership will be measured from the date of the original
purchase of Retail B Shares.
IV-9
<PAGE>
Stellar Funds
-------------
Shareholders can exchange shares between Stellar Funds within the same
class. Shareholders also may exchange Class C Shares for Class A or Class B
Shares. Exchanges from Class B to Class C and then to Class A are not permitted.
E. Pricing of Shares for each of the Stellar Funds and Firstar Funds
-----------------------------------------------------------------
The price per share (the offering price) will be the net asset value per
share ("NAV") next determined after a Fund receives your purchase order plus, in
the case of Firstar Retail A and Stellar Class A Shares, the applicable front-
end sales charge.
For processing purchase and redemption orders, the NAVs per share of the Stellar
Funds and the Firstar Funds are calculated each business day at the following
times:
Time of Calculation Stellar Funds Firstar Funds
------------- -------------
9:00 a.m., CST Tax-Free Money Market Fund Ohio Tax-Exempt Money
Ohio Tax-Free Money Market Market Fund
Fund
11:30a.m., CST Tax-Exempt Money
Market Fund
IV-10
<PAGE>
Time of Calculation Stellar Funds Firstar Funds
------------- -------------
1:00 p.m., CST Treasury Fund U.S. Treasury Money
Market Fund
3:00 p.m. CST Equity and Bond Funds Equity and Bond Funds
NAV for Stellar's Equity and Bond Funds and Firstar's Equity and Bond Funds
is determined on any day that the New York Stock Exchange (the "Exchange") is
open for business. NAV for Stellar Money Market Funds and Firstar's Money Market
Funds is determined on any day that both the Exchange and the Federal Reserve
Banks' Fedline System is open.
An Investor's order for the purchase of shares is priced at the next NAV
calculated after the order is received. An investor's order for redemption of
shares is priced at the next NAV calculated after the shares are properly
tendered for redemption.
G. Dividends for each of the Stellar Funds and Firstar Funds are declared and
--------------------------------------------------------------------------
paid as follows:
----------------
<TABLE>
<CAPTION>
Dividend Dividend
-------- --------
Stellar Fund Declared/Paid Firstar Fund Declared/Paid
------------ ------------- ------------ -------------
<S> <C> <C> <C>
Treasury Fund D/M U.S. Treasury Money Market D/M
Fund
Tax-Free Money Market D/M Tax-Exempt Money Market Fund D/M
Fund
Ohio Tax-Free Money D/M Ohio Tax-Free Money Market D/M
Market Fund Fund
U.S. Government Income D/M U.S. Government Securities M/M
Fund Fund
Insured Tax-Free Bond M/M National Municipal Bond Fund M/M
Fund
Strategic Income Fund D/M Strategic Income Fund M/M
Relative Value Fund Q/Q Relative Value Fund A/A
Stellar Fund Q/Q Balanced Income Fund Q/Q
Growth Equity Fund A/A Large Cap Growth Fund A/A
</TABLE>
IV-11
<PAGE>
<TABLE>
<CAPTION>
Dividend Dividend
-------- --------
Stellar Fund Declared/Paid Firstar Fund Declared/Paid
------------ ------------- ------------ -------------
<S> <C> <C> <C>
Science & Technology A/A Science & Technology Fund A/A
Fund
Capital Appreciation Fund A/A Mid Cap Index Fund A/A
International Equity Fund A/A Global Equity Fund A/A
</TABLE>
D/M = Daily/Monthly
M/M = Monthly/Monthly
Q/Q = Quarterly/Quarterly
A/A = Annually/Annually
Each Stellar Fund and each Firstar Fund distributes its net capital gains
to shareholders at least annually.
IV-12
<PAGE>
APPENDIX V
Performance Comparisons of the Existing
Firstar Funds and their Corresponding
Stellar Funds
Total Return Performance
(As of 7/31/00)
The total returns of the Firstar Funds are competitive with those of the
Stellar Funds as shown below. No Class Y Shares of Firstar's equity funds or
Institutional Shares of Firstar's money market funds were outstanding as of
7/31/00. No Class B Shares of Stellar's Insured Tax-Free Bond Fund were
outstanding as of 7/31/00. Performance comparisons between the (1) Stellar
Insured Tax-Free Bond Fund and the Mercantile National Municipal Bond Portfolio
and (2) Stellar U.S. Government Income Fund and Mercantile U.S. Government
Securities Portfolio have been included. The Stellar Insured Tax-Free Bond Fund
and the Mercantile National Municipal Bond Portfolio will be reorganized into
the Firstar National Municipal Bond Fund, and the Stellar U.S. Government Income
Fund and the Mercantile U.S. Government Securities Portfolio will be reorganized
into the Firstar U.S. Government Securities Fund. However, each of the Firstar
Funds will be adopting the investment objectives and policies of its
corresponding Mercantile Fund. The Firstar National Municipal Bond Fund and
Firstar U.S. Government Securities Fund are newly organized Funds that have been
specifically created for this Reorganization and do not have any performance
history. In addition, it is anticipated that upon the reorganization of the
Stellar Treasury Fund and Mercantile Treasury Money Market Fund into the Firstar
U.S. Treasury Money Market Fund, the Firstar U.S. Treasury Money Market Fund
will adopt the investment objectives and policies of the Stellar Treasury Fund.
There is no performance information for the Firstar MidCap Index Fund because
the Fund commenced operations on November 4, 1999. Performance shown is based on
historical earnings and is not predictive of future performance. Performance
reflects reinvestment of dividends and other earnings. Performance reflects fee
waivers in effect. If fee waivers were not in place, a Fund's performance would
be reduced.
V-1
<PAGE>
<TABLE>
<CAPTION>
Stellar Treasury Fund Firstar U.S. Treasury Money
---------------------
Market Fund
-----------
Class C Shares Retail A Shares
-------------- ---------------
<S> <C> <C>
1 Year 4.35% 4.38%
5 Years N/A 4.66%
Since Inception 4.85% (3/25/97) 4.20% (4/29/91)
Best Quarter 1.89% / Q3 '90 1.34% / Q2 '95
Worst Quarter 0.62% / Q4 '93 0.62% / Q2 '93
<CAPTION>
Stellar Tax-Free Money Firstar Tax-Exempt Money
Fund Market Fund
---- -----------
Class C Shares Retail A Shares
-------------- ---------------
<S> <C> <C>
1 Year 2.75% 2.81%
5 Years 2.88% 3.01%
10 Years N/A 3.13%
Since Inception 2.77% (3/15/91)
Best Quarter 1.01% / Q3 '91 1.58% / Q2 '89
Worst Quarter 0.43% / Q1 '94 0.50% / Q1 '94
<CAPTION>
Stellar U.S. Government Mercantile
Income Fund U. S. Government
-----------
Securities Portfolio
--------------------
Class A Shares Investor A Shares
-------------- -----------------
(with 4.00% sales charge) (with 4.00% sales charge)
<S> <C> <C>
1 Year -3.67% -2.61%
5 Years 4.56% 4.46%
10 Years N/A 6.27%
Since Inception 4.48% (1/5/93)
Best Quarter 0.63% / Q2 '95 1.20% / Q3 '91
Worst Quarter -6.73% / Q1 '96 -6.49% / Q1 '94
</TABLE>
V-2
<PAGE>
<TABLE>
<CAPTION>
Mercantile
Stellar U.S. Government U.S. Government
Income Fund Securities Portfolio
----------- --------------------
Class B. Shares Investor B Shares
--------------- -----------------
(With applicable contingent (With applicable contingent
deferred sales charge) deferred sales charge)
<S> <C> <C>
1 Year -4.41% -3.97%
5 Years N/A N/A
Since Inception 2.94% (4/27/98) 3.89% (5/11/95)
Best Quarter -0.31% / Q3 '98 -2.04% / Q3 '98
Worst Quarter -6.31% / Q2 '99 -6.05% / Q1 '96
<CAPTION>
Mercantile
Stellar U.S. Government U.S. Government
Income Fund Securities Portfolio
----------- --------------------
Class B. Shares Trust Shares
--------------- ------------
(With applicable contingent
deferred sales charge)
<S> <C> <C>
1 Year -4.41% 1.76%
5 Years N/A 5.63%
Since Inception 2.94% (4/27/98) 6.28% (2/1/91)
Best Quarter -0.31% / Q3 '98 5.46% / Q2 '95
Worst Quarter -6.31% / Q2 '99 -2.53% / Q1 '94
</TABLE>
V-3
<PAGE>
<TABLE>
<CAPTION>
Stellar Insured Tax-Free Mercantile National
Bond Fund Municipal Bond Portfolio
--------- ------------------------
Class A Shares Investor A Shares
-------------- -----------------
(with 4.00% sales charge) (with 4.00% sales charge)
<S> <C> <C>
1 Year -5.04% -6.19%
Since Inception 2.93% (12/30/96) 10.35% (11/18/96)
Best Quarter -0.78% / Q3 '98 -0.43% / Q3 '97
Worst Quarter -5.88% / Q2 '99 -6.65% / Q2 '99
<CAPTION>
Firstar Balanced
Stellar Fund Income Fund*
------------ ------------
Class A Shares Retail A Shares
-------------- ---------------
(with 4.00% sales charge) (with 5.50% sales charge)
<S> <C> <C>
1 Year 5.43% -3.38%
5 Years 10.68% 13.78%
10 Years N/A 12.83%
Since Inception 9.19% (10/18/91)
Best Quarter 3.81% / Q4 '99 10.40% / Q2 '97
Worst Quarter -12.36% / Q3 '98 -5.43% / Q3 '90
Firstar Balanced
Income Fund**
-------------
Retail B Shares
---------------
(With applicable contingent
deferred sales charge)
<S> <C>
1 Year -3.34%
Since Inception 0.81% (3/1/99)
Best Quarter -0.82% / Q4 '99
Worst Quarter -9.37% / Q3 '99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Firstar Balanced
Stellar Fund Income Fund*
------------ ------------
Class Y Shares Institutional Shares
-------------- --------------------
<S> <C> <C>
1 Year 11.91% 2.49%
5 Years 12.23% 15.27%
10 Years N/A 13.65%
Since Inception 10.79% (4/11/94) 9.26%
Best Quarter 10.03% / Q4 '99 10.40% / Q2 '97
Worst Quarter -7.16% / Q3 '98 -5.43% / Q3 '90
</TABLE>
* The Firstar Balanced Income Fund commenced operations on December 1, 1997. The
performance of the Firstar Balanced Income Fund for the period prior to December
1, 1997 is the performance of a common trust fund managed by FIRMCO which
operated during the periods prior to commencement of operations of the Firstar
Balanced Income Fund using materially equivalent investment objectives,
policies, guidelines and restrictions as the Firstar Balanced Income Fund. The
common trust fund transferred its assets to the Balanced Income Fund at the
commencement of operations. At the time of the transfer, FIRMCO did not manage
any other collective investment or common trust funds using materially
equivalent investment objectives, policies, guidelines and restrictions to those
of the Firstar Balanced Income Fund. The common trust fund was not registered
under the 1940 Act, and was not subject to certain restrictions that are imposed
by the 1940 Act and the Code. If the common trust fund had been registered under
the 1940 Act, performance may have been adversely affected. The performance of
the common trust fund has been restated to reflect the Firstar Balanced Income
Fund's expenses for its first year of operations. Prior to January 10, 1995, the
Firstar Balanced Income Fund offered to investors one series of shares with
neither a sales charge nor a service fee. For the Retail A Shares, the average
annual total return calculation reflects a maximum initial sales charge of 5.50%
but for periods prior to January 10, 1995, performance does not reflect service
organization fees. If service organization fees had been reflected, performance
would be reduced.
** Class B Shares of the Stellar Fund commenced operations on March 31, 2000, so
performance information has not been provided for this class of shares.
V-5
<PAGE>
APPENDIX VI - MANAGEMENT DISCUSSION OF FIRSTAR FUND PERFORMANCE
<PAGE>
(LOGO) FIRSTAR FUNDS
--------------------------------------------------------------------------------
BALANCED INCOME FUND
--------------------------------------------------------------------------------
Firstar Balanced Income Fund seeks to provide current income and preserve
capital by investing in stocks and bonds. Typically, the Fund will invest 50% of
assets in common stocks of large, dividend-paying equity securities, with the
balance invested in intermediate-term high quality bonds and money markets. As
of October 31, 1999, the Fund consisted of 47% in common and preferred stocks,
43% in bonds, and 10% in money markets. The weighted average market
capitalization of the common stocks was $50 billion, considerably less than the
$116 billion average market capitalization of the Standard & Poor's 500 Stock
Index. Bond holdings within the portfolio had a weighted average duration of 3.5
years, matching the duration of the Lehman Brothers Intermediate
Government/Corporate Bond Index. For the 12 months ended October 31, 1999,
Firstar Balanced Income Fund returned +6.3% (Institutional shares), compared
with the return of 12.6% for the Lipper Balanced Fund Index.
For the fiscal year ended October 31, 1999, the Standard & Poor's 500 advanced
25.7%, propelled by a 69.4% gain for the technology sector. In fact, technology
stocks contributed over 40% of the return, with Microsoft, Cisco, Lucent, Intel
and America Online responsible for one-quarter of the S&P 500's 12-month return.
The Standard & Poor's 500 return without technology was +15.1%. Strength was
also seen in communication services stocks, with the sector's +31% return driven
by MCI Worldcom and Nextel. The consumer cyclicals sector also beat the Index
return, posting a +28% gain led by Wal-Mart and Home Depot. What is notable
regarding these top-performing companies is their high relative price-to-
earnings (P/E) ratios, averaging 64 times 1999 earnings, and their low dividend
yield, averaging .1%. This was a challenging environment given the Balanced
Income Fund's focus on income-producing securities at attractive multiples.
The equity portion of the Balanced Income Portfolio focuses on companies that
pay a dividend. Our strategy in managing the equity portion of the portfolio is
to own companies that demonstrate predictable sales and earnings growth, strong
balance sheets, and innovative management. (Standard & Poor's awards a stock
rating of "A" to "A+" to companies with these characteristics, while companies
with inconsistent or negligible earnings histories and questionable balance
sheets receive ratings of "C" or "D.") We believe over a long period of time
this strategy results in competitive, risk-adjusted returns for our
shareholders. This was not, however, a winning strategy for the fiscal year
ended October 31, which witnessed higher quality (A-rated) companies up 5.8%
versus lower quality companies (C&D-rated) up 48.4%.
The goal of the fixed-income component of Firstar Balanced Income Fund is to
provide an annual rate of total return comparable to the return of the Lehman
Brothers Intermediate Government/Corporate Bond Index. After the dramatic
widening of yield spreads in non-Treasury sectors last year, we selectively
added to our holdings in the corporate, asset-backed and mortgage-backed
sectors. The subsequent tightening of yield spreads in these sectors in 1999 has
contributed to the performance of the Fund over the last 12 months. Our careful,
research-intense process of selecting investment-grade issues in these sectors
gives the Fund a high-quality focus. Over 70% of the fixed-income portion of the
Fund is invested in obligations rated Aaa/AAA or higher. Among corporate bonds,
we have a preference for finance, banking and brokerage issues along with
dollar-denominated international ("Yankee") securities. We think these
sectors represent exceptional value moving forward. The hallmark of our fixed-
income approach is our consistent, risk-controlled style in all market climates.
The Balanced Income Fund is designed to reduce risk by investing in conservative
stocks and conservative bonds. The Fund's stocks have not been rewarded in the
current environment, but we believe that predictable earnings growth from
undervalued companies will be rewarded in this fast-changing market.
Thank you for your support of Firstar Balanced Income Fund.
<PAGE>
(LOGO) FIRSTAR FUNDS
FIRSTAR BALANCED LIPPER
INCOME FUND - BALANCED FUND
INSTITUTIONAL INDEX S&P 500
---------------- -------------- --------------
12/1/97 10,000 10,000 10,000
10/98 11,270 10,854 11,659
10/99 11,984 12,217 14,652
This chart assumes an initial investment of $10,000 made on 12/1/97 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced. Performance is shown for Institutional shares, which
have lower expenses than Series A or Series B shares. If those fees and expenses
were reflected in the chart above, total return would have been reduced. Returns
shown include the reinvestment of all dividends and other distributions. Past
perform ance is not predictive of future performance. Investment return and
principal value will fluc tuate, so that your shares, when redeemed, may be
worth more or less than their original cost.
-------------------------------------------------------------------------------
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED OCTOBER 31, 1999
-------------------------------------------------------------------------------
1 Year Since Inception
-------------------------------------------------------------------------------
FIRSTAR BALANCED INCOME
FUND - INSTITUTIONAL 6.3 9.9 (12/1/97)
FIRSTAR BALANCED INCOME FUND -
A - NO LOAD 6.0 9.6 (12/1/97)
FIRSTAR BALANCED INCOME FUND -
A - LOAD<F2> 1.2 7.0 (12/1/97)
FIRSTAR BALANCED INCOME FUND -
B - NO LOAD - 2.0 (3/1/99)<F1>
FIRSTAR BALANCED INCOME FUND -
B - LOAD<F3> - (3.0)(3/1/99)<F1>
LIPPER BALANCED FUND INDEX<F4> 12.6 11.0 (12/1/97)
S&P 500 STOCK INDEX<F5> 25.7 22.1 (12/1/97)
-------------------------------------------------------------------------------
A= Series A (Retail shares)
B= Series B (Retail shares)
<F1> Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
<F2> Reflects maximum sales charge of 4.50%.
<F3> Reflects maximum deferred sales charge of 5.00%.
<F4> The Lipper Balanced Fund Index is composed of the 30 largest mutual funds
whose primary objective is to conserve principal by maintaining a balanced
portfolio of stocks and bonds.
<F5> The S&P 500 Stock Index is an index of an unmanaged group of 500 selected
common stocks, most of which are listed on the New York Stock Exchange. The
Index is heavily weighted toward stocks with large market capitalizations
and represents approximately two-thirds of the total market value of all
domestic common stocks.
An investment cannot be made directly in an index.
Series A shares have a 4.50% maximum sales load and are subject to an annual
0.25% service organization fee. Series B shares have a 5.00% maximum deferred
sales charge and are subject to an annual 0.25% service organization fee and a
0.75% 12b-1 fee. Performance reflects fee waivers in effect. In the absence of
fee waivers, total return would be reduced.
TOP 5 EQUITY HOLDINGS 10/31/99
---------------------------------------------
ALLTELL CORPORATION 2.1%
---------------------------------------------
BRISTOL-MYERS SQUIBB COMPANY 1.4%
---------------------------------------------
TYCO INTERNATIONAL, LTD. 1.4%
---------------------------------------------
INTERPUBLIC GROUP OF COMPANIES, INC. 1.3%
---------------------------------------------
WELLS FARGO COMPANY, INC. 1.3%
---------------------------------------------
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
TOTAL FUND NET ASSETS 10/31/99
---------------------------------------------
$64,386,218
---------------------------------------------
<PAGE>
MERCANTILE MUTUAL FUNDS, INC.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
1-(800)-452-2724
FIRSTAR FUNDS
615 East Michigan Street
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
1-(800)-677-3863
STATEMENT OF ADDITIONAL INFORMATION
(November 8, 2000 Special Meeting of Shareholders of Mercantile Mutual
Funds, Inc.)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Combined Proxy Statement/Prospectus dated October
__, 2000 ("Combined Proxy Statement/Prospectus") for the Special Meeting of
Shareholders of the Mercantile Mutual Funds, Inc. ("Mercantile") to be held on
November 8, 2000. Copies of the Combined Proxy Statement/Prospectus may be
obtained at no charge by writing or calling Mercantile or Firstar Funds
("Firstar") at the addresses or telephone numbers set forth above.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Combined Proxy
Statement/Prospectus.
Incorporation of Documents by Reference in Statement of Additional
Information:
Further information about the Class A, Class B and Institutional Shares of
the Firstar Intermediate Bond Fund (formerly the Intermediate Bond Market Fund),
Tax-Exempt Intermediate Bond Fund, Balanced Growth Fund, Growth and Income Fund,
Equity Index Fund, Large Cap Core Equity Fund (formerly the Growth Fund), Small
Cap Core Equity Fund (formerly the Emerging Growth Fund), and International
Growth Fund (formerly the Core International Equity Fund) is contained in and
incorporated herein by reference to the Statement of Additional Information
dated March 1, 2000 (as revised March 17, 2000).
Further information about the Class Y Shares of the Firstar Intermediate
Bond Fund (formerly the Intermediate Bond Market Fund), Tax-Exempt Intermediate
Bond Fund, Balanced Growth Fund, Growth and Income Fund, Equity Index Fund,
Large Cap Core Equity Fund (formerly the Growth Fund), Small Cap Core Equity
Fund (formerly the Emerging Growth Fund), and International Growth Fund
(formerly the Core International Equity Fund) is contained in and incorporated
herein by reference to the Statement of Additional Information dated _________,
2000.
Further information about the Class A Shares, Class B Shares, Class Y
Shares and Institutional Shares of the Firstar U.S. Government Income Fund,
Aggregate Bond Fund, and
<PAGE>
National Municipal Bond Fund is contained in and incorporated herein by
reference to the Statement of Additional Information dated __________, 2000.
Further information about the Class A Shares of the Firstar Money Market
Fund, U.S. Treasury Money Market Fund and Tax-Exempt Money Market Fund is
contained in and incorporated herein by reference to the Statement of Additional
Information dated March 1, 2000.
Further information about the Institutional Shares of the Firstar U.S.
Treasury Money Market Fund and Tax-Exempt Money Market Fund is contained in and
incorporated herein by reference to the Statement of Additional Information
dated _________, 2000.
Further information about the Trust Shares, Trust II Shares, Institutional
Shares, Investor A Shares and Investor B Shares of the Mercantile Treasury Money
Market Portfolio, Money Market Portfolio, Tax-Exempt Money Market Portfolio,
U.S. Government Securities Portfolio, Intermediate Corporate Bond Portfolio,
Bond Index Portfolio, Government & Corporate Bond Portfolio, Short-Intermediate
Municipal Portfolio, National Municipal Bond Portfolio, Balanced Portfolio,
Equity Index Portfolio, Growth & Income Equity Portfolio, Growth Equity
Portfolio, Small Cap Equity Portfolio and International Equity Portfolio is
contained in and incorporated herein by reference to the Statement of Additional
Information dated March 31, 2000 (as revised April 24, 2000).
The audited financial statements and related Report of Independent Auditors
for the year ended October 31, 1999 (with respect to all Firstar Funds listed
below except the International Growth Fund (formerly the Core International
Equity Fund)) and the unaudited financial statements for the semi-annual period
ended April 30, 2000 for the Class A, Class B and Institutional Shares of the
Firstar Money Market Fund, U.S. Treasury Money Market Fund, Tax-Exempt Money
Market Fund, Intermediate Bond Fund (formerly the Intermediate Bond Market
Fund), Tax-Exempt Intermediate Bond Fund, Balanced Growth Fund, Growth and
Income Fund, Equity Index Fund, Large Cap Core Equity Fund (formerly the Growth
Fund), Small Cap Core Equity Fund (formerly the Emerging Growth Fund) and
International Growth Fund (formerly the Core International Equity Fund) are
incorporated herein by reference. No other parts of the annual and semi-annual
reports are incorporated herein by reference.
The audited financial statements and related Report of Independent
Accountants for the year ended November 30, 1999 and the unaudited financial
statements for the semi-annual period ended May 31, 2000 for the Trust Shares,
Trust II Shares, Institutional Shares, Investor A Shares and Investor B Shares
of the Mercantile Treasury Money Market Portfolio, Money Market Portfolio, Tax-
Exempt Money Market Portfolio, U.S. Government Securities Portfolio,
Intermediate Corporate Bond Portfolio, Bond Index Portfolio, Government &
Corporate Bond Portfolio, Short-Intermediate Municipal Portfolio, National
Municipal Bond Portfolio, Balanced Portfolio, Equity Index Portfolio, Growth &
Income Equity Portfolio, Growth Equity Portfolio, Small Cap Equity Portfolio and
International Equity Portfolio are incorporated herein by reference. No other
parts of the annual and semi-annual reports are incorporated herein by
reference.
The date of this Statement of Additional Information is October __, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
GENERAL INFORMATION................................... 1
Introductory Note to Pro Forma Financial Information.. 1
Pro Forma Financial Statements........................ 1
</TABLE>
-i-
<PAGE>
GENERAL INFORMATION
The Reorganization contemplates the transfer of substantially all of the
assets and liabilities of each Mercantile Fund to a Corresponding Firstar Fund
in exchange for shares of designated classes of the Corresponding Firstar Fund.
The Shares issued by a Firstar Fund will have an aggregate value equal
to the aggregate value of the shares of the respective corresponding Mercantile
Funds that were outstanding immediately before the effective time of the
Reorganization.
After the transfer of substantially all of their assets and liabilities in
exchange for the Firstar Fund shares, the Mercantile Funds will distribute the
shares to their shareholders in liquidation of such Mercantile Fund. Each
shareholder owning shares of a particular Mercantile Fund at the effective time
of the Reorganization will receive shares from its Corresponding Firstar Fund of
equal value, and will receive any unpaid dividends or distributions that were
declared before the effective time of the Reorganization on shares of the
Mercantile Funds. The Corresponding Firstar Fund will establish an account for
each former shareholder of the Mercantile Funds reflecting the appropriate
number of shares distributed to the shareholder. These accounts will be
substantially identical to the accounts maintained by Mercantile Funds for each
shareholder. Upon completion of the Reorganization with respect to all
Mercantile Funds, all outstanding shares of the Mercantile Funds will have been
redeemed and cancelled in exchange for shares distributed by its Corresponding
Firstar Fund, and Mercantile will wind up its affairs and be deregistered as
investment company under the 1940 Act and dissolved under Maryland law.
For further information about the transaction, see the Combined Proxy
Statement/Prospectus.
Introductory Note to Pro Forma Financial Information
The following unaudited pro forma information gives effect to the proposed
transfer of the assets and liabilities of the Mercantile Funds and Firstar
Stellar Funds, as applicable, to the Corresponding Firstar Funds, accounted for
as if each transfer had occurred as of April 30, 2000. In addition, each pro-
forma combined statement has been prepared based upon the proposed fee and
expense structure of the applicable Corresponding Firstar Fund. There are
multiple pro forma financial statements for the combination of the Mercantile
Treasury Money Market Portfolio, Firstar Stellar Treasury Fund and Firstar U.S.
Treasury Money Market Fund and the combination of the Mercantile Tax-Exempt
Money Market Portfolio, Firstar Stellar Tax-Free Money Market Fund and Firstar
Tax-Exempt Money Market Fund because it is possible that only the Mercantile
Portfolio shareholders or Firstar Stellar Fund shareholders will approve the
reorganization of their portfolio or fund with the corresponding Firstar Fund.
Therefore, the pro forma financial statements for the combined and individual
combinations are shown.
The pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto of the Mercantile Funds (and
Firstar Stellar Funds, as applicable) and Firstar Funds incorporated herein by
reference in this Statement of Additional Information. Each combination of the
above Mercantile Funds and Firstar Funds will be accounted for as a tax-free
reorganization.
Pro Forma Financial Statements
<PAGE>
FIRSTAR STELLAR FUNDS
615 East Michigan Street
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
1-(800)-677-3863
FIRSTAR FUNDS
615 East Michigan Street
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
1-(800)-677-3863
STATEMENT OF ADDITIONAL INFORMATION
(November 8, 2000 Special Meeting of Shareholders of Firstar Stellar Funds)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Combined Proxy Statement/Prospectus dated September
__, 2000 ("Combined Proxy Statement/Prospectus") for the Special Meeting of
Shareholders of the Firstar Stellar Funds ("Stellar") to be held on November 8,
2000. Copies of the Combined Proxy Statement/Prospectus may be obtained at no
charge by writing or calling Stellar or Firstar Funds, Inc. ("Firstar") at the
addresses or telephone numbers set forth above.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Combined Proxy
Statement/Prospectus.
Incorporation of Documents by Reference in Statement of Additional
Information:
Further information about the Retail A, Retail B and Institutional Shares
of the Firstar Balanced Income Fund and MidCap Index Fund and Retail A Shares of
the Firstar U.S. Treasury Money Market Fund and Tax-Exempt Money Market Fund is
contained in and incorporated herein by reference to the Statement of Additional
Information dated March 1, 2000 (as revised March 17, 2000).
Further information about the Retail A Shares, Retail B Shares and
Institutional Shares of the Firstar U.S. Government Securities Fund and National
Municipal Bond Fund is contained in and incorporated herein by reference to the
Statement of Additional Information dated __________, 2000.
Further information about the Institutional Shares of the Firstar U.S.
Treasury Money Market Fund and Tax-Exempt Money Market Fund is contained in and
incorporated herein by reference to the Statement of Additional Information
dated _______, 2000.
-1-
<PAGE>
Further information about the Class A, Class B, Class C and Class Y Shares
of the Stellar Treasury Fund, Tax-Free Money Market Fund, U.S. Government Income
Fund, Insured Tax-Free Bond Fund, Stellar Fund and Capital Appreciation Fund is
contained in and incorporated herein by reference to the Statement of Additional
Information dated March 31, 2000.
The audited financial statements and related Report of Independent
Accountants for the year ended October 31, 1999 and the unaudited financial
statements for the semi-annual period ended April 30, 2000 for the Retail A,
Retail B and Institutional Shares of the Firstar U.S. Treasury Money Market
Fund, Tax-Exempt Money Market Fund, Balanced Income Fund and MidCap Index Fund
are incorporated herein by reference. No other parts of the annual and semi-
annual reports are incorporated herein by reference.
The audited financial statements and related Report of Independent Auditors
for the year ended November 30, 1999 and the unaudited financial statements for
the semi-annual period ended May 31, 2000 for the Class A, Class B, Class C and
Class Y Shares of the Stellar Treasury Fund and Tax-Free Money Market Fund are
incorporated herein by reference. No other parts of the annual and semi-annual
reports are incorporated herein by reference.
The audited financial statements and related Report of Independent Auditors
for the year ended November 30, 1999 and the unaudited financial statements for
the semi-annual period ended May 31, 2000 for the Stellar Insured Tax-Free Bond
Fund and U.S. Government Income Fund are incorporated herein by reference. No
other parts of the annual and semi-annual reports are incorporated herein by
reference.
The audited financial statements and related Report of Independent Auditors
for the year ended November 30, 1999 and the unaudited financial statements for
the semi-annual period ended May 31, 2000 for the Stellar Fund and Stellar
Capital Appreciation Fund are incorporated herein by reference. No other parts
of the annual and semi-annual reports are incorporated herein by reference.
The date of this Statement of Additional Information is October __, 2000.
-2-
<PAGE>
TABLE OF CONTENTS
Page
GENERAL INFORMATION............................................................1
Introductory Note to Pro Forma Financial Information...........................1
Pro Forma Financial Statements.................................................1
<PAGE>
GENERAL INFORMATION
The Reorganization contemplates the transfer of substantially all of the
assets and liabilities of each Stellar Fund to a Corresponding Firstar Fund in
exchange for shares of designated classes of the Corresponding Firstar Fund.
The Shares issued by a Firstar Fund will have an aggregate value equal to
the aggregate value of the shares of the respective corresponding Stellar Funds
that were outstanding immediately before the effective time of the
Reorganization.
After the transfer of substantially all of their assets and liabilities in
exchange for the Firstar Fund shares, the Stellar Funds will distribute the
shares to their shareholders in liquidation of such Stellar Fund. Each
shareholder owning shares of a particular Stellar Fund at the effective time of
the Reorganization will receive shares from its Corresponding Firstar Fund of
equal value, and will receive any unpaid dividends or distributions that were
declared before the effective time of the Reorganization on shares of the
Stellar Funds. The Corresponding Firstar Fund will establish an account for
each former shareholder of the Stellar Funds reflecting the appropriate number
of shares distributed to the shareholder. These accounts will be substantially
identical to the accounts maintained by Stellar Funds for each shareholder.
Upon completion of the Reorganization with respect to all Stellar Funds, all
outstanding shares of the Stellar Funds will have been redeemed and cancelled in
exchange for shares distributed by its Corresponding Firstar Fund, and Stellar
will wind up its affairs and be deregistered as investment company under the
1940 Act and dissolved under Massachusetts law.
For further information about the transaction, see the Combined Proxy
Statement/Prospectus.
Introductory Note to Pro Forma Financial Information
The following unaudited pro forma information gives effect to the proposed
transfer of the assets and liabilities of the Stellar Funds and Mercantile
Mutual Funds, Inc., as applicable, to the Corresponding Firstar Funds, accounted
for as if each transfer had occurred as of April 30, 2000. In addition, each
pro-forma combined statement has been prepared based upon the proposed fee and
expense structure of the applicable Corresponding Firstar Fund. There are
multiple pro forma financial statements for the combination of the Mercantile
Treasury Money Market Portfolio, Firstar Stellar Treasury Fund and Firstar U.S.
Treasury Money Market Fund and the combination of The Mercantile Tax-Exempt
Money Market Portfolio, Firstar Stellar Tax-Free Money Market Fund and Firstar
Tax-Exempt Money Market Fund because it is possible that only the Mercantile
Portfolio shareholders or Firstar Stellar Fund shareholders will approve the
reorganization of their portfolio or fund with the corresponding Firstar Fund.
Therefore, the pro forma financial statements for the individual combinations
are shown.
The pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto of the Stellar Funds (and
Mercantile Mutual Funds, Inc., as applicable) and Firstar Funds incorporated
herein by reference in this Statement of Additional Information. Each
combination of the above Stellar Funds and Firstar Funds will be accounted for
as a tax-free reorganization.
Pro Forma Financial Statements
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Money Market Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Money Mercantile Money Pro Forma
Market Fund Market Portfolio Adjustments Combined
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at amortized cost $178,128 $1,392,551 - $1,570,679
Interest receivable 188 2,977 - 3,165
Receivable for Fund shares sold 16,151 - - 16,151
Other assets 22 77 - 99
---------------------------------------------------------------------------------------------------------
Total assets 194,489 1,395,605 - 1,590,094
=========================================================================================================
Liabilities:
Dividends payable 695 5,782 - 6,477
Payable for Fund shares redeemed 11,556 - - 11,556
Payable to affiliates 182 649 - 831
Accrued expenses and other liabilities 59 578 - 637
---------------------------------------------------------------------------------------------------------
Total liabilities 12,492 7,009 - 19,501
=========================================================================================================
Net Assets $181,997 $1,388,596 - $1,570,593
=========================================================================================================
Net Assets:
A Shares $181,997 $ 9,162 $ 1,379,434 $1,570,593
B Shares - 50 (50) -
Y Shares (1) - 1,348,851 (1,348,851) -
Institutional Shares (2) - 30,533 30,533 -
---------------------------------------------------------------------------------------------------------
Total net assets $181,997 $1,388,596 - $1,570,593
=========================================================================================================
Shares Outstanding:
A Shares 181,997 9,162 1,379,434 1,570,593
B Shares - 50 (50) -
Y Shares (1) - 30,533 (30,533) -
Institutional Shares (2) - 1,348,851 (1,348,851) -
---------------------------------------------------------------------------------------------------------
Total shares outstanding 181,997 1,388,596 - 1,570,593
=========================================================================================================
Net Asset Value Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
B Shares $ 1.00
Y Shares (1) $ 1.00
Institutional Shares (2) $ 1.00
---------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
B Shares $ 1.00
Y Shares (1) $ 1.00
Institutional Shares (2) $ 1.00
---------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
B Shares (3) $ 1.00
Y Shares (1) $ 1.00
Institutional Shares (2) $ 1.00
---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Institutional class
(2) Represents Mercantile Trust & Trust II classes
(3) Does not include the deduction of any applicable contingent deferred sales
charge
(See Notes to Pro Forma Financial Statements)
1
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar U.S. Treasury Money Market Fund
(unaudited)
Firstar U.S.
Treasury Money Firstar Stellar Pro Forma
Market Fund Treasury Fund Adjustments Combined
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at amortized cost $116,666 $3,366,722 - $3,483,388
Interest receivable 605 31,164 - 31,769
Other assets 12 326 - 338
----------------------------------------------------------------------------------------------------------------------
Total assets 117,283 3,398,212 - 3,515,495
======================================================================================================================
Liabilities:
Dividends payable 466 12,776 - 13,242
Payable to affiliates 117 2,512 - 2,629
Accrued expenses and other liabilities 13 181 - 194
----------------------------------------------------------------------------------------------------------------------
Total liabilities 596 15,469 - 16,065
======================================================================================================================
Net Assets $116,687 $3,382,743 - $3,499,430
======================================================================================================================
Net Assets:
A Shares (1) $116,687 $1,205,547 - $1,322,234
Institutional Shares (2) - 2,177,196 - 2,177,196
----------------------------------------------------------------------------------------------------------------------
Total net assets $116,687 $3,382,743 - $3,499,430
======================================================================================================================
Shares Outstanding:
A Shares (1) 116,687 1,205,547 - 1,322,234
Institutional Shares (2) - 2,177,196 - 2,177,196
----------------------------------------------------------------------------------------------------------------------
Total shares outstanding 116,687 3,382,743 - 3,499,430
======================================================================================================================
Net Asset Value Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00
Institutional Shares (2) - $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00
Institutional Shares (2) - $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00
Institutional Shares (2) - $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Stellar C Class
(2) Represents Stellar Y Class
(See Notes to Pro Forma Financial Statements)
2
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar U.S. Treasury Money Market Fund
(unaudited)
Firstar U.S. Mercantile
Treasury Money Treasury Money Pro Forma
Market Fund Market Portfolio Adjustments Combined
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at amortized cost $116,666 $260,455 - $377,121
Interest receivable 605 639 - 1,244
Other assets 12 23 - 35
----------------------------------------------------------------------------------------------------------------------
Total assets 117,283 261,117 - 378,400
======================================================================================================================
Liabilities:
Dividends payable 466 960 - 1,426
Payable to affiliates 117 126 - 243
Accrued expenses and other liabilities 13 3,493 - 3,506
----------------------------------------------------------------------------------------------------------------------
Total liabilities 596 4,579 - 5,175
======================================================================================================================
Net Assets $116,687 $256,538 - $373,225
======================================================================================================================
Net Assets:
A Shares $116,687 $ 76 ($76) $116,687
Y Shares (1) - 501 (501) -
Institutional Shares (2) - 255,961 577 256,538
----------------------------------------------------------------------------------------------------------------------
Total net assets $116,687 $256,538 $ 0 $373,225
======================================================================================================================
Shares Outstanding:
A Shares 116,687 76 (76) 116,687
Y Shares (1) - 501 (501) -
Institutional Shares (2) - 255,961 577 256,538
----------------------------------------------------------------------------------------------------------------------
Total shares outstanding 116,687 256,538 - 373,225
======================================================================================================================
Net Asset Value Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
Y Shares (1) - $ 1.00 -
Institutional Shares (2) - $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
Y Shares (1) - $ 1.00 -
Institutional Shares (2) - $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
Y Shares (1) - $ 1.00 -
Institutional Shares (2) - $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust & Trust II classes
(See Notes to Pro Forma Financial Statements)
3
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar U.S. Treasury Money Market Fund
(unaudited)
Firstar U.S. Mercantile
Treasury Money Firstar Stellar Treasury Money Pro Forma
Market Fund Treasury Fund Market Portfolio Adjustments Combined
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at amortized cost $116,666 $3,366,722 $260,455 - $3,743,843
Interest receivable 605 31,164 639 - 32,408
Other assets 12 326 23 - 361
-------------------------------------------------------------------------------------------------------------------------
Total assets 117,283 3,398,212 261,117 - 3,776,612
=========================================================================================================================
Liabilities:
Dividends payable 466 12,776 960 - 14,202
Payable to affiliates 117 2,512 126 - 2,755
Accrued expenses and other liabilities 13 181 3,493 - 3,687
-------------------------------------------------------------------------------------------------------------------------
Total liabilities 596 15,469 4,579 - 20,644
=========================================================================================================================
Net Assets $116,687 $3,382,743 $256,538 - $3,755,968
=========================================================================================================================
Net Assets:
A Shares (1) $116,687 $1,205,547 $ 76 ($76) $1,322,234
Y Shares (2) - - 501 (501) -
Institutional Shares (3) - 2,177,196 255,961 577 2,433,734
-------------------------------------------------------------------------------------------------------------------------
Total net assets $116,687 $3,382,743 $256,538 $ 0 $3,755,968
=========================================================================================================================
Shares Outstanding:
A Shares (1) 116,687 1,205,547 76 (76) 1,322,234
Y Shares (2) - - 501 (501) -
Institutional Shares (3) - 2,177,196 255,961 577 2,433,734
-------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 116,687 3,382,743 256,538 - 3,755,968
=========================================================================================================================
Net Asset Value Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00 $ 1.00
Y Shares (2) - - $ 1.00 -
Institutional Shares (3) - $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00 $ 1.00
Y Shares (2) - - $ 1.00 -
Institutional Shares (3) - $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00 $ 1.00
Y Shares (2) - - $ 1.00 -
Institutional Shares (3) - $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Stellar C Class
(2) Represents Mercantile Intitutional class
(3) Represents Mercantile Trust & Trust II classes
(See Notes to Pro Forma Financial Statements)
4
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Tax-Exempt Money Market Fund
(unaudited)
Firstar Tax- Firstar Stellar Tax-
Exempt Money Free Money Pro Forma
Market Fund Market Fund Adjustments Combined
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at amortized cost $155,896 $193,020 - $348,916
Receivable for securities matured 2,000 - - 2,000
Interest receivable 1,601 2,192 - 3,793
Other assets 10 25 - 35
-------------------------------------------------------------------------------------------------------------------------
Total assets 159,507 195,237 - 354,744
=========================================================================================================================
Liabilities:
Dividends payable 401 493 - 894
Payable to affiliates 154 162 - 316
Accrued expenses and other liabilities 14 4 - 18
-------------------------------------------------------------------------------------------------------------------------
Total liabilities 569 659 - 1,228
=========================================================================================================================
Net Assets $158,938 $194,578 - $353,516
=========================================================================================================================
Net Assets:
A Shares (1) $158,938 $194,578 $(180,179) $173,337
Institutional Shares 180,179 180,179
-------------------------------------------------------------------------------------------------------------------------
Total net assets $158,938 $194,578 - $353,516
=========================================================================================================================
Shares Outstanding:
A Shares (1) 158,938 194,578 (180,179) 173,337
Institutional Shares 180,179 180,179
-------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 158,938 194,578 - 353,516
=========================================================================================================================
Net Asset Value Per Share:
A Shares (1) $ 1.00 $ 1.00 - $ 1.00
Institutional Shares - - - $ 1.00
-------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares (1) $ 1.00 $ 1.00 - $ 1.00
Institutional Shares - - - $ 1.00
-------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares (1) $ 1.00 $ 1.00 - $ 1.00
Institutional Shares - - - $ 1.00
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Stellar C class
(See Notes to Pro Forma Financial Statements)
5
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Tax-Exempt Money Market Fund
(unaudited)
Firstar Tax- Mercantile Tax-
Exempt Money Exempt Money Pro Forma
Market Fund Market Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments, at amortized cost $155,896 $145,279 - $301,175
Receivable for securities matured 2,000 - - 2,000
Interest receivable 1,601 711 - 2,312
Other assets 10 13 - 23
------------------------------------------------------------------------------------------------------------------
Total assets 159,507 146,003 - 305,510
==================================================================================================================
Liabilities:
Dividends payable 401 380 - 781
Payable to affiliates 154 81 - 235
Accrued expenses and other liabilities 14 1,769 - 1,783
------------------------------------------------------------------------------------------------------------------
Total liabilities 569 2,230 - 2,799
==================================================================================================================
Net Assets $158,938 $143,773 - $302,711
==================================================================================================================
Net Assets:
A Shares $158,938 $ 235 - $159,173
Y Shares (1) - 31,674 ($31,674) -
Institutional Shares (2) - 111,864 31,674 143,538
------------------------------------------------------------------------------------------------------------------
Total net assets $158,938 $143,773 - $302,711
==================================================================================================================
Shares Outstanding:
A Shares 158,938 235 - 159,173
Y Shares (1) - 31,674 (31,674) -
Institutional Shares (2) - 111,864 31,674 143,538
------------------------------------------------------------------------------------------------------------------
Total shares outstanding 158,938 143,773 - 302,711
==================================================================================================================
Net Asset Value Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
Y Shares (1) - $ 1.00 -
Institutional Shares (2) - $ 1.00 $ 1.00
------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
Y Shares (1) - $ 1.00 -
Institutional Shares (2) - $ 1.00 $ 1.00
------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 1.00 $ 1.00 $ 1.00
Y Shares (1) - $ 1.00 -
Institutional Shares (2) - $ 1.00 $ 1.00
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust & Trust II classeses
(See Notes to Pro Forma Financial Statements)
6
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Tax-Exempt Money Market Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Tax- Firstar Stellar Tax- Mercantile Tax-
Exempt Money Free Money Exempt Money Pro Forma
Market Fund Market Fund Market Portfolio Adjustments Combined
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at amortized cost $155,896 $193,020 $145,279 - $494,195
Receivable for securities matured 2,000 - - - 2,000
Interest receivable 1,601 2,192 711 - 4,504
Other assets 10 25 13 - 48
-----------------------------------------------------------------------------------------------------------------------------
Total assets 159,507 195,237 146,003 - 500,747
=============================================================================================================================
Liabilities:
Dividends payable 401 493 380 - 1,274
Payable to affiliates 154 162 81 - 397
Accrued expenses and other liabilities 14 4 1,769 - 1,787
-----------------------------------------------------------------------------------------------------------------------------
Total liabilities 569 659 2,230 - 3,458
=============================================================================================================================
Net Assets $158,938 $194,578 $143,773 - $497,289
=============================================================================================================================
Net Assets:
A Shares (1) $158,938 $194,578 $ 235 $(180,179) $173,572
Y Shares (2) - - 31,674 (31,674) -
Institutional Shares (3) - - 111,864 211,853 323,717
-----------------------------------------------------------------------------------------------------------------------------
Total net assets $158,938 $194,578 $143,773 - $497,289
=============================================================================================================================
Shares Outstanding:
A Shares (1) 158,938 194,578 235 (180,179) 173,572
Y Shares (2) - - 31,674 (31,674) -
Institutional Shares (3) - - 111,864 211,853 323,717
-----------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 158,938 194,578 143,773 - 497,289
=============================================================================================================================
Net Asset Value Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00 $ 1.00
Y Shares (2) - - $ 1.00 -
Institutional Shares (3) - - $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00 $ 1.00
Y Shares (2) - - $ 1.00 -
Institutional Shares (3) - - $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares (1) $ 1.00 $ 1.00 $ 1.00 $ 1.00
Y Shares (2) - - $ 1.00 -
Institutional Shares (3) - - $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents a portion of Stellar C class
(2) Represents Mercantile Intitutional class
(3) Represents Mercantile Trust & Trust II classes
(See Notes to Pro Forma Financial Statements)
7
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Intermediate Bond Market Fund*
(unaudited)
<TABLE>
<CAPTION>
Firstar Mercantile
Intermediate Intermediate
Bond Market Corporate Bond Pro Forma
Fund Portfolio Adjustments Combined
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $393,377 and
$40,547 respectively) $384,122 $38,552 - $422,674
Cash 58 - - 58
Income receivable 5,455 738 - 6,193
Receivable for Fund shares sold 8,860 - - 8,860
Other assets 28 17 ($16) 29
-----------------------------------------------------------------------------------------------------------------------------------
Total assets 398,523 39,307 (16) 437,814
===================================================================================================================================
Liabilities:
Payable for Fund shares redeemed 111 141 - 252
Distributions payable - 203 203
Payable to affiliates 324 26 - 350
Accrued expenses and other liabilities 40 47 - 87
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 475 417 - 892
===================================================================================================================================
Net Assets $398,048 $38,890 ($16) $436,922
===================================================================================================================================
Net Assets Consist of:
Paid in capital $406,988 $41,822 ($16) $448,794
Accumulated undistributed net investment income 336 18 - 354
Accumulated undistributed net realized gain (loss) (21) (955) - (976)
Net unrealized appreciation (depreciation) on investments (9,255) (1,995) - (11,250)
-----------------------------------------------------------------------------------------------------------------------------------
Total net assets $398,048 $38,890 ($16) $436,922
===================================================================================================================================
Net Assets:
A Shares $ 29,683 $ 424 - 30,107
B Shares 267 - - 267
Y Shares (1) - 957 - 957
Institutional Shares (2) 368,098 37,509 ($16) 405,591
-----------------------------------------------------------------------------------------------------------------------------------
Total net assets $398,048 $38,890 ($16) $436,922
===================================================================================================================================
Shares Outstanding:
A Shares 2,992 46 (3) 3,035
B Shares 27 - - 27
Y Shares (1) - 103 (7) 96
Institutional Shares (2) 37,103 4,046 (265) 40,884
-----------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 40,122 4,195 (275) 44,042
===================================================================================================================================
Net Asset Value Per Share:
A Shares $ 9.92 $ 9.30 - $ 9.92
B Shares $ 9.92 - - $ 9.92
Y Shares (1) - $ 9.31 - $ 9.92
Institutional Shares (2) $ 9.92 $ 9.30 - $ 9.92
-----------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 10.33 $ 9.74 - $ 10.33
B Shares $ 9.92 - - $ 9.92
Y Shares (1) - $ 9.31 - $ 9.92
Institutional Shares (2) $ 9.92 $ 9.30 - $ 9.92
-----------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 9.92 $ 9.30 - $ 9.92
B Shares (3) $ 9.92 - - $ 9.92
Y Shares (1) - $ 9.31 - $ 9.92
Institutional Shares (2) $ 9.92 $ 9.30 - $ 9.92
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
* Expected to change its name to Firstar Intermediate Bond Fund upon
consumation of the Reorganization
(See Notes to Pro Forma Financial Statements)
8
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Tax-Exempt Intermediate Bond Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Tax- Mercantile Short
Exempt Intermediate
Intermediate Municipal Pro Forma
Bond Fund Portfolio Adjustments Combined
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $82,178 $27,648 - $109,826
$84,137 and $28,309 respectively)
Cash 83 - - 83
Income receivable 1,455 442 - 1,897
Receivable for Fund shares sold 10 - - 10
Other assets 30 7 ($7) 30
----------------------------------------------------------------------------------------------------------------------------------
Total assets 83,756 28,097 (7) 111,846
==================================================================================================================================
Liabilities:
Payable for investments purchased - - - -
Payable for Fund shares redeemed 39 - - 39
Distributions payable - 84 84
Payable to affiliates 98 20 - 118
Accrued expenses and other liabilities 18 6 - 24
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 155 110 - 265
==================================================================================================================================
Net Assets $83,601 $27,987 ($7) $111,581
==================================================================================================================================
Net Assets Consist of:
Paid in capital $85,695 $28,801 ($7) $114,489
Accumulated undistributed net investment income 46 (3) - 43
Accumulated undistributed net realized gain (loss) (181) (150) - (331)
Net unrealized appreciation (depreciation) on investments (1,959) (661) - (2,620)
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $83,601 $27,987 ($7) $111,581
==================================================================================================================================
Net Assets:
A Shares $14,798 $ 44 - 14,842
B Shares 75 - - 75
Y Shares (1) - - - -
Institutional Shares (2) 68,728 27,943 ($7) 96,664
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $83,601 $27,987 ($7) $111,581
==================================================================================================================================
Shares Outstanding:
A Shares 1,481 4 - 1,485
B Shares 8 - - 8
Y Shares (1) - - - -
Institutional Shares (2) 6,879 2,843 (46) 9,676
----------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 8,368 2,847 (46) 11,169
==================================================================================================================================
Net Asset Value Per Share:
A Shares $ 9.99 $ 9.86 - $ 9.99
B Shares $ 9.99 - - $ 9.99
Y Shares (1) - - - $ 9.99
Institutional Shares (2) $ 9.99 $ 9.83 - $ 9.99
----------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 10.41 $ 10.11 - $ 10.41
B Shares $ 9.99 - - $ 9.99
Y Shares (1) - - - $ 9.99
Institutional Shares (2) $ 9.99 $ 9.83 - $ 9.99
----------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 9.99 $ 9.86 - $ 9.99
B Shares (3) $ 9.99 - - $ 9.99
Y Shares (1) - - - $ 9.99
Institutional Shares (2) $ 9.99 $ 9.83 - $ 9.99
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
9
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar National Municipal Bond Fund
(unaudited)
<TABLE>
<CAPTION>
Mercantile
National Firstar Stellar
Municipal Bond Insured Tax- Pro Forma
Portfolio Free Bond Fund Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $264,679 $149,756 - $414,435
$272,466 and $150,551 respectively)
Income receivable 4,356 2,976 - 7,332
Receivable for investments sold - 5,123 - 5,123
Receivable for Fund shares sold 14 - - 14
Other assets 33 26 ($26) 33
------------------------------------------------------------------------------------------------------------------------------
Total assets 269,082 157,881 (26) 426,937
==============================================================================================================================
Liabilities:
Distributions payable 962 - 962
Payable to affiliates 162 149 - 311
Accrued expenses and other liabilities 90 8 - 98
------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,214 157 - 1,371
==============================================================================================================================
Net Assets $267,868 $157,724 ($26) $425,566
==============================================================================================================================
Net Assets Consist of:
Paid in capital $277,419 $158,277 ($26) $435,670
Accumulated undistributed net investment income (439) (10) - (449)
Accumulated undistributed net realized gain (loss) (1,325) 252 - (1,073)
Net unrealized appreciation (depreciation) on investments (7,787) (795) - (8,582)
------------------------------------------------------------------------------------------------------------------------------
Total net assets $267,868 $157,724 ($26) $425,566
==============================================================================================================================
Net Assets:
A Shares $ 1,461 $157,724 ($153,782) 5,403
B Shares 638 - - 638
Y Shares - - - -
Institutional Shares (1) 265,769 - 153,756 419,525
------------------------------------------------------------------------------------------------------------------------------
Total net assets $267,868 $157,724 ($26) $425,566
==============================================================================================================================
Shares Outstanding:
A Shares 155 16,003 (15,584) 574
B Shares 68 - - 68
Y Shares - - - -
Institutional Shares (1) 28,343 - 16,391 44,734
------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 28,566 16,003 807 45,376
==============================================================================================================================
Net Asset Value Per Share:
A Shares $ 9.40 $ 9.86 - $ 9.40
B Shares $ 9.38 $ 9.86 - $ 9.38
Y Shares - - - -
Institutional Shares (1) $ 9.38 - - $ 9.38
------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 9.87 $ 10.27 - $ 9.87
B Shares $ 9.38 $ 9.86 - $ 9.38
Y Shares - - - $ 9.40
Institutional Shares (1) $ 9.38 - - $ 9.38
------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 9.40 $ 9.86 - $ 9.40
B Shares (2) $ 9.38 $ 9.86 - $ 9.38
Y Shares - - - $ 9.40
Institutional Shares (1) $ 9.38 - - $ 9.38
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Trust class
(2) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Aggregate Bond Fund
(unaudited)
Mercantile
Government &
Mercantile Bond Corporate Bond Pro Forma
Index Portfolio Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $170,083 $123,882 - $293,965
$128,029 and $175,484 respectively)
Cash 1 2 - 3
Income receivable 2,310 1,615 - 3,925
Receivable for Fund shares sold - 40 - 40
Other assets 24 27 ($17) 34
------------------------------------------------------------------------------------------------------------------------------
Total assets 172,418 125,566 (17) 297,967
==============================================================================================================================
Liabilities:
Payable for investments purchased - - - -
Payable for Fund shares redeemed 909 203 - 1,112
Distributions payable 824 584 1,408
Payable to affiliates 71 69 - 140
Accrued expenses and other liabilities 36 26 - 62
------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,840 882 - 2,722
==============================================================================================================================
Net Assets $170,578 $124,684 ($17) $295,245
==============================================================================================================================
Net Assets Consist of:
Paid in capital $177,015 $130,590 ($17) $307,588
Accumulated undistributed net investment income 51 274 - 325
Accumulated undistributed net realized gain (loss) (1,087) (2,033) - (3,120)
Net unrealized appreciation (depreciation) on investments (5,401) (4,147) - (9,548)
------------------------------------------------------------------------------------------------------------------------------
Total net assets $170,578 $124,684 ($17) $295,245
==============================================================================================================================
Net Assets:
A Shares $ 977 $ 3,195 - $ 4,172
B Shares - 642 - 642
Y Shares (1) 20,689 7,418 ($2) 28,105
Institutional Shares (2) 148,912 113,429 (15) 262,326
------------------------------------------------------------------------------------------------------------------------------
Total net assets $170,578 $124,684 ($17) $295,245
==============================================================================================================================
Shares Outstanding:
A Shares 101 328 (1) 428
B Shares - 66 - 66
Y Shares (1) 2,143 760 (23) 2,880
Institutional Shares (2) 15,439 11,626 (184) 26,881
------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 17,683 12,780 (208) 30,255
==============================================================================================================================
Net Asset Value Per Share:
A Shares $ 9.65 $ 9.74 - $ 9.74
B Shares - $ 9.76 - $ 9.76
Y Shares (1) $ 9.65 $ 9.76 - $ 9.76
Institutional Shares (2) $ 9.64 $ 9.76 - $ 9.76
------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 10.05 $ 10.15 - $ 10.15
B Shares - $ 9.76 - $ 9.76
Y Shares (1) $ 9.65 $ 9.76 - $ 9.76
Institutional Shares (2) $ 9.64 $ 9.76 - $ 9.76
------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 9.65 $ 9.74 - $ 9.74
B Shares (3) - $ 9.76 - $ 9.76
Y Shares (1) $ 9.65 $ 9.76 - $ 9.76
Institutional Shares (2) $ 9.64 $ 9.76 - $ 9.76
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
11
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar U.S. Government Securities Fund
(unaudited)
Firstar Stellar Mercantile U.S.
U.S. Government
Government Securities Pro Forma
Securities Fund Portfolio Adjustments Combined
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $161,368 $63,363 - $224,731
$65,450 and $167,477 respectively)
Cash - 1 - 1
Income receivable 2,970 398 - 3,368
Receivable for investments sold - 1 - 1
Receivable for Fund shares sold - 161 - 161
Other assets 23 12 ($23) 12
-------------------------------------------------------------------------------------------------------------------------------
Total assets 164,361 63,936 (23) 228,274
===============================================================================================================================
Liabilities:
Payable for Fund shares redeemed - 584 - 584
Distributions payable 127 280 407
Payable to affiliates 158 36 - 194
Accrued expenses and other liabilities 22 21 - 43
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities 307 921 - 1,228
===============================================================================================================================
Net Assets $164,054 $63,015 ($23) $227,046
===============================================================================================================================
Net Assets Consist of:
Paid in capital $171,989 $66,520 ($23) $238,486
Accumulated undistributed net investment income 0 332 - 332
Accumulated undistributed net realized gain (loss) (1,826) (1,750) - (3,576)
Net unrealized appreciation (depreciation) on investments (6,109) (2,087) - (8,196)
-------------------------------------------------------------------------------------------------------------------------------
Total net assets $164,054 $63,015 ($23) $227,046
===============================================================================================================================
Net Assets:
A Shares $162,758 $ 3,837 ($154,806) 11,789
B Shares 1,296 175 (13) 1,458
Y Shares (1) - 7,289 - 7,289
Institutional Shares (2) - 51,714 154,796 206,510
-------------------------------------------------------------------------------------------------------------------------------
Total net assets $164,054 $63,015 ($23) $227,046
===============================================================================================================================
Shares Outstanding:
A Shares 17,412 376 (16,633) 1,155
B Shares 139 17 (12) 144
Y Shares (1) - 717 - 717
Institutional Shares (2) - 5,067 15,161 20,228
-------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 17,551 6,177 (1,484) 22,244
===============================================================================================================================
Net Asset Value Per Share:
A Shares $ 9.35 $ 10.21 - $ 10.21
B Shares $ 9.34 $ 10.22 - $ 10.22
Y Shares (1) - $ 10.17 - $ 10.17
Institutional Shares (2) - $ 10.21 - $ 10.21
-------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 9.74 $ 10.47 - $ 10.47
B Shares $ 9.34 $ 10.22 - $ 10.22
Y Shares (1) - $ 10.17 - $ 10.17
Institutional Shares (2) - $ 10.21 - $ 10.21
-------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 9.35 $ 10.21 - $ 10.21
B Shares (3) $ 9.34 $ 10.22 - $ 10.22
Y Shares (1) - $ 10.17 - $ 10.17
Institutional Shares (2) - $ 10.21 - $ 10.21
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
12
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Balanced Income Fund
(Unaudited)
Firstar Balanced Firstar Stellar Pro Forma
Income Fund Fund Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $91,096 $82,370 - $173,466
$83,790 and $60,019 respectively)
Cash - 6 - 6
Income receivable 778 373 - 1,151
Receivable for investments sold 704 1,611 - 2,315
Receivable for Fund shares sold 290 - - 290
Other assets 65 36 ($31) 70
------------------------------------------------------------------------------------------------------------------------------
Total assets 92,933 84,396 (31) 177,298
==============================================================================================================================
Liabilities:
Payable for investments purchased 529 153 - 682
Payable for Fund shares redeemed 136 - - 136
Payable to affiliate 98 133 - 231
Accrued expenses and other liabilities 177 32 - 209
------------------------------------------------------------------------------------------------------------------------------
Total liabilities 940 318 - 1,258
==============================================================================================================================
Net Assets $91,993 $84,078 ($31) $176,040
==============================================================================================================================
Net Assets Consist of:
Paid in capital $84,937 $59,110 ($31) $144,016
Accumulated undistributed net investment income 251 184 - 435
Accumulated undistributed net realized gain (loss) (501) 2,433 - 1,932
Net unrealized appreciation (depreciation) on investments 7,306 22,351 - 29,657
------------------------------------------------------------------------------------------------------------------------------
Total net assets $91,993 $84,078 ($31) $176,040
==============================================================================================================================
Net Assets:
A Shares $11,413 $39,722 ($15) 51,120
B Shares 3,582 13 - 3,595
Institutional Shares (1) 76,998 44,343 (16) 121,325
------------------------------------------------------------------------------------------------------------------------------
Total net assets $91,993 $84,078 ($31) $176,040
==============================================================================================================================
Shares Outstanding:
A Shares 1,040 2,897 727 4,664
B Shares 311 1 - 312
Institutional Shares (1) 7,057 3,235 802 11,094
------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 8,408 6,133 1,529 16,070
==============================================================================================================================
Net Asset Value Per Share:
A Shares $ 10.96 $ 13.71 - $ 10.96
B Shares $ 10.98 $ 13.71 - $ 10.98
Institutional Shares (1) $ 10.98 $ 13.71 - $ 10.98
------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 11.60 $ 14.51 - $ 11.60
B Shares $ 10.98 $ 13.71 - $ 10.98
Institutional Shares (1) $ 10.98 $ 13.71 - $ 10.98
------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 10.96 $ 13.71 - $ 10.96
B Shares (2) $ 10.98 $ 13.71 - $ 10.98
Institutional Shares (1) $ 10.98 $ 13.71 - $ 10.98
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Stellar Y class
(2) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
13
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Balanced Growth Fund
(unaudited)
<TABLE>
<CAPTION>
Mercantile
Firstar Balanced Balanced Pro Forma
Growth Fund Portfolio Adjustments Combined
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost
$182,505 and $81,852 respectively) $230,786 $88,016 - $318,802
Cash 16 33 - 49
Income receivable 1,556 416 - 1,972
Receivable for investments sold 1,147 - - 1,147
Receivable for Fund shares sold 941 2 - 943
Other assets 38 14 ($12) 40
-----------------------------------------------------------------------------------------------------------------
Total assets 234,484 88,481 (12) 322,953
=================================================================================================================
Liabilities:
Payable for investments purchased 2,563 27 - 2,590
Payable for Fund shares redeemed 2,275 129 - 2,404
Payable to affiliates 290 68 - 358
Accrued expenses and other liabilities 48 46 - 94
-----------------------------------------------------------------------------------------------------------------
Total liabilities 5,176 270 - 5,446
-----------------------------------------------------------------------------------------------------------------
Net Assets $229,308 $88,211 ($12) $317,507
=================================================================================================================
Net Assets Consist of:
Paid in capital $160,744 $76,843 ($12) $237,575
Accumulated undistributed net investment income 346 9 - 355
Accumulated undistributed net realized gain (loss) 19,937 5,195 - 25,132
Net unrealized appreciation (depreciation) on
investments 48,281 6,164 - 54,445
-----------------------------------------------------------------------------------------------------------------
Total net assets $229,308 $88,211 ($12) $317,507
=================================================================================================================
Net Assets:
A Shares $ 53,470 $10,076 ($2) 63,544
B Shares 1,264 1,990 - 3,254
Y Shares (1) - 53,563 (7) 53,556
Institutional Shares (2) 174,574 22,582 (3) 197,153
-----------------------------------------------------------------------------------------------------------------
Total net assets $229,308 $88,211 ($12) $317,507
=================================================================================================================
Shares Outstanding:
A Shares 1,640 934 (625) 1,949
B Shares 39 187 (126) 100
Y Shares (1) - 4,983 (3,342) 1,643
Institutional Shares (2) 5,347 2,091 (1,399) 6,039
-----------------------------------------------------------------------------------------------------------------
Total shares outstanding 7,026 8,195 (5,490) 9,731
=================================================================================================================
Net Asset Value Per Share:
A Shares $ 32.60 $ 10.79 - $ 32.60
B Shares $ 32.69 $ 10.67 - $ 32.69
Y Shares (1) - $ 10.75 - $ 32.60
Institutional Shares (2) $ 32.65 $ 10.80 - $ 32.65
-----------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 34.50 $ 11.42 - $ 34.50
B Shares $ 32.69 $ 10.67 - $ 32.69
Y Shares (1) - $ 10.75 - $ 32.60
Institutional Shares (2) $ 32.65 $ 10.80 - $ 32.65
-----------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 32.60 $ 10.79 - $ 32.60
B Shares (3) $ 32.69 $ 10.67 - $ 32.69
Y Shares (1) - $ 10.75 - $ 32.60
Institutional Shares (2) $ 32.65 $ 10.80 - $ 32.65
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
14
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Growth and Income Fund
(unaudited)
<TABLE>
<CAPTION>
Mercantile
Firstar Growth Growth &
and Income Income Equity Pro Forma
Fund Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost
$522,238 and $280,854 respectively) $695,053 $393,776 - $1,088,829
Income receivable 776 265 - 1,041
Receivable for investments sold 7,428 - - 7,428
Receivable for Fund shares sold 256 1,404 - 1,660
Other assets 36 32 ($28) 40
------------------------------------------------------------------------------------------------------------------
Total assets 703,549 395,477 (28) 1,098,998
==================================================================================================================
Liabilities:
Payable for investments purchased 7,819 313 - 8,132
Payable for Fund shares redeemed 1,378 4,543 - 5,921
Payable to affiliates 778 339 - 1,117
Accrued expenses and other liabilities 122 138 - 260
------------------------------------------------------------------------------------------------------------------
Total liabilities 10,097 5,333 - 15,430
------------------------------------------------------------------------------------------------------------------
Net Assets $693,452 $390,144 ($28) $1,083,568
==================================================================================================================
Net Assets Consist of:
Paid in capital $447,537 $219,874 ($28) $ 667,383
Accumulated undistributed net investment income 1,115 (7) - 1,108
Accumulated undistributed net realized gain (loss) 71,985 57,355 - 129,340
Net unrealized appreciation (depreciation) on
investments 172,815 112,922 - 285,737
------------------------------------------------------------------------------------------------------------------
Total net assets $693,452 $390,144 ($28) $1,083,568
==================================================================================================================
Net Assets:
A Shares $181,142 $ 47,385 ($3) 228,524
B Shares 2,461 9,714 (1) 12,174
Y Shares (1) - 86,330 (6) 86,324
Institutional Shares (2) 509,849 246,715 (18) 756,546
------------------------------------------------------------------------------------------------------------------
Total net assets $693,452 $390,144 ($28) $1,083,568
==================================================================================================================
Shares Outstanding:
A Shares 4,036 2,623 (1,567) 5,092
B Shares 55 550 (333) 272
Y Shares (1) - 4,777 (2,853) 1,924
Institutional Shares (2) 11,383 13,586 (8,100) 16,869
------------------------------------------------------------------------------------------------------------------
Total shares outstanding 15,474 21,536 (13,853) 24,157
==================================================================================================================
Net Asset Value Per Share:
A Shares $ 44.90 $ 18.06 - $ 44.90
B Shares $ 44.75 $ 17.67 - $ 44.75
Y Shares (1) - $ 18.07 - $ 44.90
Institutional Shares (2) $ 44.97 $ 18.16 - $ 44.97
------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 47.51 $ 19.11 - $ 47.51
B Shares $ 44.75 $ 17.67 - $ 44.75
Y Shares (1) - $ 18.07 - $ 44.90
Institutional Shares (2) $ 44.97 $ 18.16 - $ 44.97
------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 44.90 $ 18.06 - $ 44.90
B Shares (3) $ 44.75 $ 17.67 - $ 44.75
Y Shares (1) - $ 18.07 - $ 44.90
Institutional Shares (2) $ 44.97 $ 18.16 - $ 44.97
------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
15
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Equity Index Fund
(unaudited)
<TABLE>
<CAPTION>
Mercantile
Firstar Equity Equity Index Pro Forma
Index Fund Portfolio Adjustments Combined
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost
$434,879 and $79,368 respectively) $823,360 $111,371 - $934,731
Cash 204 - - 204
Income receivable 814 87 - 901
Receivable for investments sold - - - -
Receivable for Fund shares sold 810 23 - 833
Other assets 111 21 ($20) 112
-------------------------------------------------------------------------------------------------------------------------
Total assets 825,299 111,502 (20) 936,781
=========================================================================================================================
Liabilities:
Payable for Fund shares redeemed 2,780 9 - 2,789
Payable to affiliates 549 50 - 599
Accrued expenses and other liabilities 323 47 - 370
-------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,652 106 - 3,758
=========================================================================================================================
Net Assets $821,647 $111,396 ($20) $933,023
=========================================================================================================================
Net Assets Consist of:
Paid in capital $433,198 $ 79,912 ($20) $513,090
Accumulated undistributed net investment income 643 (274) - 369
Accumulated undistributed net realized gain (loss) (2,790) (245) - (3,035)
Net unrealized appreciation (depreciation) on
investments 388,481 32,003 - 420,484
Net unrealized appreciation (depreciation) on
Futures contracts 2,115 - - 2,115
-------------------------------------------------------------------------------------------------------------------------
Total net assets $821,647 $111,396 ($20) $933,023
=========================================================================================================================
Net Assets:
A Shares $146,680 $ 3,507 - 150,187
B Shares 9,132 - - 9,132
Y Shares (1) - 37,724 ($7) 37,717
Institutional Shares (2) 665,835 70,165 (13) 735,987
-------------------------------------------------------------------------------------------------------------------------
Total net assets $821,647 $111,396 ($20) $933,023
=========================================================================================================================
Shares Outstanding:
A Shares 1,536 197 (160) 1,573
B Shares 96 - - 96
Y Shares (1) - 2,124 (1,729) 395
Institutional Shares (2) 6,963 3,946 (3,212) 7,697
-------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 8,595 6,267 (5,101) 9,761
=========================================================================================================================
Net Asset Value Per Share:
A Shares $ 95.48 $ 17.76 - $ 95.48
B Shares $ 95.31 - - $ 95.31
Y Shares (1) - $ 17.76 - $ 95.48
Institutional Shares (2) $ 95.63 $ 17.78 - $ 95.63
-------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 101.04 $ 18.79 - $ 101.04
B Shares $ 95.31 - - $ 95.31
Y Shares (1) - $ 17.76 - $ 95.48
Institutional Shares (2) $ 95.63 $ 17.78 - $ 95.63
-------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 95.48 $ 17.76 - $ 95.48
B Shares (3) $ 95.31 - - $ 95.31
Y Shares (1) - $ 17.76 - $ 95.48
Institutional Shares (2) $ 95.63 $ 17.78 - $ 95.63
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
(See Notes to Pro Forma Financial Statements)
16
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Growth Fund*
(unaudited)
<TABLE>
<CAPTION>
Mercantile
Firstar Growth Growth Equity Pro Forma
Fund Portfolio Adjustments Combined
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost
$250,068 and $65,159 respectively) $380,492 $124,929 - $505,421
Income receivable 132 53 - 185
Receivable for investments sold 1,751 - - 1,751
Receivable for Fund shares sold 320 1,400 - 1,720
Other assets 40 14 ($12) 42
-------------------------------------------------------------------------------------------------------------------
Total assets 382,735 126,396 (12) 509,119
===================================================================================================================
Liabilities:
Payable for investments purchased 2,484 815 - 3,299
Payable for Fund shares redeemed 5,058 9 - 5,067
Payable to affiliates 403 96 - 499
Accrued expenses and other liabilities 49 18 - 67
-------------------------------------------------------------------------------------------------------------------
Total liabilities 7,994 938 - 8,932
===================================================================================================================
Net Assets $374,741 $125,458 ($12) $500,187
===================================================================================================================
Net Assets Consist of:
Paid in capital $216,039 $ 46,934 ($12) $262,961
Accumulated undistributed net investment income (184) (120) - (304)
Accumulated undistributed net realized gain (loss) 28,462 18,874 - 47,336
Net unrealized appreciation (depreciation) on
investments 130,424 59,770 - 190,194
-------------------------------------------------------------------------------------------------------------------
Total net assets $374,741 $125,458 ($12) $500,187
===================================================================================================================
Net Assets:
A Shares $ 51,718 $ 9,296 ($1) 61,013
B Shares 1,144 2,214 - 3,358
Y Shares (1) - 2,607 - 2,607
Institutional Shares (2) 321,879 111,341 (11) 433,209
-------------------------------------------------------------------------------------------------------------------
Total net assets $374,741 $125,458 ($12) $500,187
===================================================================================================================
Shares Outstanding:
A Shares 1,204 421 (205) 1,421
B Shares 27 102 (50) 79
Y Shares (1) - 118 (57) 61
Institutional Shares (2) 7,391 5,012 (2,456) 9,947
-------------------------------------------------------------------------------------------------------------------
Total shares outstanding 8,622 5,653 (2,767) 11,508
===================================================================================================================
Net Asset Value Per Share:
A Shares $ 42.94 $ 22.06 - $ 42.94
B Shares $ 42.57 $ 21.66 - $ 42.57
Y Shares (1) - $ 22.04 - $ 42.94
Institutional Shares (2) $ 43.55 $ 22.22 - $ 43.55
-------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $ 45.46 $ 23.34 - $ 45.46
B Shares $ 42.57 $ 21.66 - $ 42.57
Y Shares (1) - $ 22.04 - $ 42.94
Institutional Shares (2) $ 43.55 $ 22.22 - $ 43.55
-------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $ 42.94 $ 22.06 - $ 42.94
B Shares (3) $ 42.57 $ 21.66 - $ 42.57
Y Shares (1) - $ 22.04 - $ 42.94
Institutional Shares (2) $ 43.55 $ 22.22 - $ 43.55
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred
sales charge
* Expected to change its name to Firstar Large Cap Core Equity Fund upon
consummation of the Reorganization
(See Notes to Pro Forma Financial Statements)
17
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar MidCap Index Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Stellar
Capital
Firstar MidCap Appreciation Pro Forma
Index Fund Fund Adjustments Combined
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $96,468 and
$63,470 respectively) $104,407 $87,911 - $192,318
Income receivable 98 66 - 164
Receivable for investments sold 91 - - 91
Receivable for Fund shares sold 93 - - 93
Other assets 34 39 $ (39) 34
----------------------------------------------------------------------------------------------------------------------------------
Total assets 104,723 88,016 (39) 192,700
==================================================================================================================================
Liabilities:
Payable for Fund shares redeemed 29 - - 29
Payable to affiliates 61 113 - 174
Accrued expenses and other liabilities 132 6 - 138
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 222 119 - 341
==================================================================================================================================
Net Assets $104,501 $87,897 $ (39) $192,359
==================================================================================================================================
Net Assets Consist of:
Paid in capital $92,708 $65,203 $ (39) $157,872
Accumulated undistributed net investment income 78 (444) - (366)
Accumulated undistributed net realized gain (loss) 3,675 (1,303) - 2,372
Net unrealized appreciation (depreciation) on investments 7,939 24,441 - 32,380
Net unrealized appreciation (depreciation) on Futures contracts 101 - - 101
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $104,501 $87,897 $ (39) $192,359
==================================================================================================================================
Net Assets:
A Shares $1,391 $87,897 $ (39) 89,249
B Shares 295 - - 295
Institutional Shares 102,815 - - 102,815
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $104,501 $87,897 $ (39) $192,359
==================================================================================================================================
Shares Outstanding:
A Shares 119 6,220 1,322 7,661
B Shares 25 0 - 25
Institutional Shares 8,828 - - 8,828
----------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 8,972 6,220 1,322 16,514
==================================================================================================================================
Net Asset Value Per Share:
A Shares $11.65 $14.13 - $11.65
B Shares $11.63 $14.13 - $11.63
Institutional Shares $11.65 - - $11.65
----------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $12.33 $14.95 - $12.33
B Shares $11.63 $14.13 - $11.63
Institutional Shares $11.65 - - $11.65
----------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $11.65 $14.13 - $11.65
B Shares (1) $11.63 $14.13 - $11.63
Institutional Shares $11.65 - - $11.65
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not include the deduction of any applicable contingent deferred sales
charge
(See Notes to Pro Forma Financial Statements)
18
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Emerging Growth Fund*
(unaudited)
<TABLE>
<CAPTION>
Mercantile Small
Firstar Emerging Cap Equity Pro Forma
Growth Fund Portfolio Adjustments Combined
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $124,737 and
$165,864 respectively) $200,657 $154,571 - $355,228
Cash 378 0 - 378
Income receivable 73 35 - 108
Receivable for investments sold 1,610 166 - 1,776
Receivable for Fund shares sold 85 1 - 86
Other assets 31 33 $ (27) 37
----------------------------------------------------------------------------------------------------------------------------------
Total assets 202,834 154,806 (27) 357,613
==================================================================================================================================
Liabilities:
Payable for investments purchased 6,503 1,510 - 8,013
Payable for Fund shares redeemed 162 38 - 200
Payable to affiliates 241 124 - 365
Accrued expenses and other liabilities 55 25 - 80
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,961 1,697 - 8,658
==================================================================================================================================
Net Assets $195,873 $153,109 $ (27) $348,955
==================================================================================================================================
Net Assets Consist of:
Paid in capital $150,449 $106,135 $ (27) $256,557
Accumulated undistributed net investment income (391) (268) - (659)
Accumulated undistributed net realized gain (loss) 11,022 17,408 - 28,430
Net unrealized appreciation (depreciation) on investments 34,793 29,834 - 64,627
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $195,873 $153,109 $ (27) $348,955
==================================================================================================================================
Net Assets:
A Shares $11,155 $9,645 $ (2) 20,798
B Shares 222 1,260 - 1,482
Y Shares (1) - 4,317 - 4,317
Institutional Shares (2) 184,496 137,887 (25) 322,358
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $195,873 $153,109 $ (27) $348,955
==================================================================================================================================
Shares Outstanding:
A Shares 877 570 (217) 1,230
B Shares 18 77 (4) 91
Y Shares (1) - 256 - 256
Institutional Shares (2) 14,434 8,012 (3,715) 18,731
----------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 15,329 8,915 (3,936) 20,308
==================================================================================================================================
Net Asset Value Per Share:
A Shares $12.72 $16.91 - $16.91
B Shares $12.62 $16.29 - $16.29
Y Shares (1) - $16.86 - $16.86
Institutional Shares (2) $12.78 $17.21 - $17.21
----------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $13.46 $17.89 - $17.89
B Shares $12.62 $16.29 - $16.29
Y Shares (1) - $16.86 - $16.86
Institutional Shares (2) $12.78 $17.21 - $17.21
----------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $12.72 $16.91 - $16.91
B Shares (3) $12.62 $16.29 - $16.29
Y Shares (1) - $16.86 - $16.86
Institutional Shares (2) $12.78 $17.21 - $17.21
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred sales
charge
* Expected to change its name to Firstar Small Cap Core Equity Fund upon
consummation of the Reorganization
(See Notes to Pro Forma Financial Statements)
19
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
(Amounts in thousands, except per share data)
April 30, 2000 Firstar Core International Equity Fund*
(unaudited)
<TABLE>
<CAPTION>
Firstar Core Mercantile
International International Pro Forma
Equity Fund Equity Portfolio Adjustments Combined
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Total investments in securities, at value (cost $104,403 and
$38,481 respectively ) $38,229 $127,506 - $165,735
Foreign Currency (cost $307 and $102 respectively) 99 307 - 406
Cash 583 - - 583
Income receivable 149 330 - 479
Receivable for investments sold 1,139 2,952 - 4,091
Receivable for Fund shares sold 145 12 - 157
Other assets 3 21 - 24
----------------------------------------------------------------------------------------------------------------------------------
Total assets 40,347 131,128 - 171,475
==================================================================================================================================
Liabilities:
Payable for investments purchased - 477 - 477
Payable for Fund shares redeemed 5 167 - 172
Payable to affiliates 63 116 - 179
Accrued expenses and other liabilities 591 86 - 677
----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 659 846 - 1,505
==================================================================================================================================
Net Assets $39,688 $130,282 - $169,970
==================================================================================================================================
Net Assets Consist of:
Paid in capital $39,795 $91,296 - $131,091
Accumulated undistributed net investment income 87 (1,094) - (1,007)
Accumulated undistributed net realized gain (loss) 61 16,977 - 17,038
Net unrealized appreciation (depreciation) on investments (252) 23,103 - 22,851
Net unrealized appreciation (depreciation) on foreign currency (3) - - (3)
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $39,688 $130,282 - $169,970
==================================================================================================================================
Net Assets:
A Shares $30 $4,164 - 4,194
B Shares 45 791 - 836
Y Shares (1) - 15,418 - 15,418
Institutional Shares (2) 39,613 109,909 - 149,522
----------------------------------------------------------------------------------------------------------------------------------
Total net assets $39,688 $130,282 - $169,970
==================================================================================================================================
Shares Outstanding:
A Shares 3 242 (2) 243
B Shares 5 47 (2) 50
Y Shares (1) - 897 - 897
Institutional Shares (2) 3,982 6,296 (1,713) 8,565
----------------------------------------------------------------------------------------------------------------------------------
Total shares outstanding 3,990 7,482 (1,717) 9,755
==================================================================================================================================
Net Asset Value Per Share:
A Shares $9.93 $17.23 - $17.23
B Shares $9.92 $16.66 - $16.66
Y Shares (1) - $17.19 - $17.19
Institutional Shares (2) $9.95 $17.46 - $17.46
----------------------------------------------------------------------------------------------------------------------------------
Offering Price Per Share:
A Shares $10.51 $18.23 - $18.23
B Shares $9.92 $16.66 - $16.66
Y Shares (1) - $17.19 - $17.19
Institutional Shares (2) $9.95 $17.46 - $17.46
----------------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
A Shares $9.93 $17.23 - $17.23
B Shares (3) $9.92 $16.66 - $16.66
Y Shares (1) - $17.19 - $17.19
Institutional Shares (2) $9.95 $17.46 - $17.46
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Mercantile Intitutional class
(2) Represents Mercantile Trust class
(3) Does not include the deduction of any applicable contingent deferred sales
charge
* Expected to change its name to Firstar International Growth Fund upon
consummation of the Reorganization
(See Notes to Pro Forma Financial Statements)
20
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Money Market Fund
(unaudited)
Firstar Money Mercantile Money Pro Forma
Market Fund Market Portfolio Adjustments Combined
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 13,541 $ 85,168 $ - $ 98,709
Dividend income - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total income 13,541 85,168 - 98,709
Expenses:
Investment advisory fees 1,233 6,177 1,544 8,954
Administration fees 265 3,110 (1,530) 1,845
Shareholder servicing fees 106 1,940 (434) 1,612
Distribution and service fees - 503 1,288 1,791
Transfer and dividend disbursing agent fees and expenses 283 566 (151) 698
Portfolio accounting fees 49 1 165 215
Custodian fees 36 311 (168) 179
Other expenses 275 748 678 1,701
----------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,247 13,356 1,392 16,995
Waivers (396) (2,144) 1,304 (1,236)
----------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,851 11,212 2,696 15,759
----------------------------------------------------------------------------------------------------------------------------------
Net investment income 11,690 73,956 (2,696) 82,950
----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments - - - -
Net change in unrealized appreciation (depreciation) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain - - - -
----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 11,690 $ 73,956 $ (2,696) $ 82,950
==================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
1
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
For the twelve months ended April 30, 2000 Firstar U.S. Treasury Money Market Fund
(unaudited)
Firstar U.S.
Treasury Money Firstar Stellar Pro Forma
Market Fund Treasury Fund Adjustments Combined
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 5,588 $ 142,775 $ - $ 148,363
Dividend income - - - -
----------------------------------------------------------------------------------------------------------------------------------
Total income 5,588 142,775 - 148,363
Expenses:
Investment advisory fees 554 13,460 (1,782) 12,232
Administration fees 119 2,961 (193) 2,887
Shareholder servicing fees - - 5,886 5,886
Distribution and service fees - 1,355 2,849 4,204
Transfer and dividend disbursing agent fees and expenses 33 483 (236) 280
Portfolio accounting fees 32 181 (17) 196
Custodian fees 17 673 (466) 224
Other expenses 72 3,737 (3,473) 336
----------------------------------------------------------------------------------------------------------------------------------
Total expenses 827 22,850 2,568 26,245
Waivers (6) - 6 -
----------------------------------------------------------------------------------------------------------------------------------
Net expenses 821 22,850 2,574 26,245
----------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,767 119,925 (2,574) 122,118
----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments - - - -
Net change in unrealized appreciation (depreciation) - - - -
----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain - - - -
----------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 4,767 $ 119,925 $ (2,574) $ 122,118
==================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
2
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
For the twelve months ended April 30, 2000 Firstar U.S. Treasury Money Market Fund
(unaudited)
Mercantile
Firstar U.S. Treasury
Treasury Money Money Market Pro Forma
Market Fund Portfolio Adjustments Combined
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 5,588 $ 14,574 $ - $ 20,162
Dividend income - - - -
--------------------------------------------------------------------------------------------------------------------------------
Total income 5,588 14,574 - 20,162
Expenses:
Investment advisory fees 554 1,177 51 1,782
Administration fees 119 588 (290) 417
Shareholder servicing fees - 476 233 709
Distribution and service fees - 38 166 204
Transfer and dividend disbursing agent fees and expenses 33 104 (96) 41
Portfolio accounting fees 32 2 (6) 28
Custodian fees 17 59 (44) 32
Other expenses 72 175 (198) 49
--------------------------------------------------------------------------------------------------------------------------------
Total expenses 827 2,619 (184) 3,262
Waivers (6) (414) 420 -
--------------------------------------------------------------------------------------------------------------------------------
Net expenses 821 2,205 236 3,262
--------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,767 12,369 (236) 16,900
--------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments - - - -
Net change in unrealized appreciation (depreciation) - - - -
--------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain - - - -
--------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 4,767 $ 12,369 $ (236) $ 16,900
================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
3
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
For the twelve months ended April 30, 2000 Firstar U.S. Treasury Money Market Fund
(unaudited)
Mercantile
Firstar U.S. Treasury
Treasury Money Firstar Stellar Money Market Pro Forma
Market Fund Treasury Fund Portfolio Adjustments Combined
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income $ 5,588 $ 142,775 $ 14,574 $ - $ 162,937
Dividend income - - - - -
--------------------------------------------------------------------------------------------------------------------------------
Total income 5,588 142,775 14,574 - 162,937
Expenses:
Investment advisory fees 554 13,460 1,177 (1,564) 13,627
Administration fees 119 2,961 588 (478) 3,190
Shareholder servicing fees - - 476 149 625
Distribution and service fees - 1,355 38 (15) 1,378
Transfer and dividend disbursing agent
fees and expenses 33 483 104 (310) 310
Portfolio accounting fees 32 181 2 2 217
Custodian fees 17 673 59 (501) 248
Other expenses 72 3,737 175 (113) 3,871
--------------------------------------------------------------------------------------------------------------------------------
Total expenses 827 22,850 2,619 (2,830) 23,466
Waivers (6) - (414) 420 -
--------------------------------------------------------------------------------------------------------------------------------
Net expenses 821 22,850 2,205 (2,410) 23,466
--------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,767 119,925 12,369 2,410 139,471
--------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments - - - - -
Net change in unrealized appreciation (depreciation) - - - - -
--------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain - - - - -
--------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 4,767 $ 119,925 $ 12,369 $ 2,410 $ 139,471
================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
4
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Tax-Exempt Money Market Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Tax- Firstar Stellar Tax
Exempt Money Free Money Pro Forma
Market Fund Market Fund Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 5,370 $ 5,756 $ - $ 11,126
Dividend income - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total income 5,370 5,756 - 11,126
Expenses:
Investment advisory fees 760 905 (82) 1,583
Administration fees 163 181 (18) 326
Shareholder servicing fees - 194 106 300
Distribution and service fees - - - -
Transfer and dividend disbursing agent fees and expenses 34 38 (28) 44
Portfolio accounting fees 36 43 (3) 76
Custodian fees 26 41 (35) 32
Other expenses 85 37 (30) 92
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,104 1,439 (90) 2,453
Waivers - (139) 139 -
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,104 1,300 49 2,453
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,266 4,456 (49) 8,673
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments - - - -
Net change in unrealized appreciation (depreciation) - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain - - - -
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 4,266 $ 4,456 $ (49) $ 8,673
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
5
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Tax-Exempt Money Market Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Tax- Mercantile Tax-
Exempt Money Exempt Money Pro Forma
Market Fund Market Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 5,370 $ 5,843 $ - $ 11,213
Dividend income - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total income 5,370 5,843 - 11,213
Expenses:
Investment advisory fees 760 679 170 1,609
Administration fees 163 170 (2) 331
Shareholder servicing fees - 91 263 354
Distribution and service fees - 23 (23) -
Transfer and dividend disbursing agent fees and expenses 34 62 (51) 45
Portfolio accounting fees 36 2 39 77
Custodian fees 26 34 (28) 32
Other expenses 85 93 (85) 93
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,104 1,154 283 2,541
Waivers - (85) 85 -
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,104 1,069 368 2,541
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,266 4,774 (368) 8,672
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments - - - -
Net change in unrealized appreciation (depreciation) - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain - - - -
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 4,266 $ 4,774 $ (368) $ 8,672
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
6
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Tax-Exempt Money Market Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Tax-Exempt Firstar Stellar Tax Mercantile Tax-
Money Market Free Money Exempt Money Pro Forma
Fund Market Fund Market Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income $ 5,370 $ 5,756 $ 5,843 $ - $ 16,969
Dividend income - - - - -
--------------------------------------------------------------------------------------------------------------------- --------------
Total income 5,370 5,756 5,843 - 16,969
Expenses:
Investment advisory fees 760 905 679 87 2,431
Administration fees 163 181 170 (13) 501
Shareholder servicing fees - 194 91 (60) 225
Distribution and service fees - - 23 - 23
Transfer and dividend disbursing agent
fees and expenses 34 38 62 (66) 68
Portfolio accounting fees 36 43 2 36 117
Custodian fees 26 41 34 (52) 49
Other expenses 85 37 93 (74) 141
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,104 1,439 1,154 (142) 3,555
------------------------------------------------------------------------------------------------------------------------------------
Waivers - (139) (85) 224 -
Net expenses 1,104 1,300 1,069 82 3,555
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,266 4,456 4,774 (82) 13,414
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments - - - - -
Net change in unrealized appreciation
(depreciation) - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain - - - - -
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 4,266 $ 4,456 $ 4,774 $ (82) $ 13,414
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
7
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Intermediate Bond Market Fund
(unaudited)
<TABLE>
<CAPTION>
Mercantile
Firstar Intermediate
Intermediate Bond Corporate Bond Pro Forma
Market Fund Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 22,729 $ 3,917 $ - $ 26,646
Dividend income - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total income 22,729 3,917 - 26,646
Expenses:
Investment advisory fees 1,706 305 (28) 1,983
Administration fees 366 111 (68) 409
Shareholder servicing fees 85 3 (1) 87
Distribution and service fees 2 1 - 3
Transfer and dividend disbursing agent fees and expenses 53 18 4 75
Portfolio accounting fees 111 10 46 167
Custodian fees 46 28 (30) 44
Other expenses 105 33 (39) 99
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,474 509 (116) 2,867
Waivers (445) (55) 103 (397)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,029 454 (13) 2,470
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 20,700 3,463 13 24,176
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options (2,814) (964) - (3,778)
Net change in unrealized appreciation (depreciation)
on investments and options (11,333) (2,987) - (14,320)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (14,147) (3,951) - (18,098)
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 6,553 $ (488) $ 13 $ 6,078
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Tax-Exempt Intermediate Bond Fund
(unaudited)
Mercantile Short-
Firstar Tax-Exempt Intermediate
Intermediate Bond Municipal Pro Forma
Fund Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income:
Interest income $ 4,420 $ 1,657 $ - $ 6,077
Dividend income - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total income 4,420 1,657 - 6,077
Expenses:
Investment advisory fees 447 201 (18) 630
Administration fees 96 73 (39) 130
Shareholder servicing fees 55 - - 55
Distribution and service fees 1 - - 1
Transfer and dividend disbursing agent fees and expenses 42 11 2 55
Portfolio accounting fees 62 9 22 93
Custodian fees 20 18 (19) 19
Other expenses 94 12 50 156
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 817 324 (2) 1,139
Waivers (162) (36) 59 (139)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 655 288 57 1,000
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 3,765 1,369 (57) 5,077
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options (162) (150) - (312)
Net change in unrealized appreciation (depreciation)
on investments and options (3,739) (1,381) - (5,120)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (3,901) (1,531) - (5,432)
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ (136) $ (162) $ (57) $ (355)
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
9
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
National Municipal Insured Tax-Free Pro Forma
Bond Portfolio Bond Fund Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 22,304 $ 8,259 $ - $ 30,563
Dividend income - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total income 22,304 8,259 - 30,563
Expenses:
Investment advisory fees 1,802 1,201 (320) 2,683
Administration fees 655 176 (329) 502
Shareholder servicing fees - 183 103 286
Distribution and service fees 12 - - 12
Transfer and dividend disbursing agent fees and expenses 90 37 (34) 93
Portfolio accounting fees 7 56 132 195
Custodian fees 131 40 (122) 49
Other expensee 157 50 (22) 185
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,854 1,743 (592) 4,005
Waivers (328) (320) 648 -
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,526 1,423 56 4,005
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 19,778 6,836 (56) 26,558
-----------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options (1,397) 395 - (1,002)
Net change in unrealized appreciation (depreciation)
on investments and options (24,562) 9,008 - (15,554)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (25,959) 9,403 - (16,556)
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ (6,181) $ 16,239 $ (56) $ 10,002
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Aggregate Bond
(unaudited)
Mercantile
Government &
Corporate Bond Mercantile Bond Pro Forma
Portfolio Index Portfolio Adjustments Combined
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Income:
Interest income $ 10,066 $ 12,908 $ - $ 22,974
Dividend income - - - -
---------------------------------------------------------------------------------------------------------------------------------
Total income 10,066 12,908 - 22,974
Expenses:
Investment advisory fees 680 585 466 1,731
Administration fees 303 389 (336) 356
Shareholder servicing fees 15 64 - 79
Distribution and service fees 19 3 - 22
Transfer and dividend disbursing agent fees and expenses 49 62 (31) 80
Portfolio accounting fees 20 22 135 177
Custodian fees 60 97 (119) 38
Other expenses 68 90 36 194
---------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,214 1,312 151 2,677
Waivers (151) (194) 123 (222)
---------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,063 1,118 274 2,455
---------------------------------------------------------------------------------------------------------------------------------
Net investment income 9,003 11,790 (274) 20,519
---------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options (2,787) (1,280) - (4,067)
Net change in unrealized appreciation (depreciation)
on investments and options (5,680) (8,381) - (14,061)
---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (8,467) (9,661) - (18,128)
---------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 536 $ 2,129 $ (274) $ 2,391
=================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
11
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar U.S. Government Securities Fund
(unaudited)
Mercantile U.S.
Firstar Stellar Government
U.S. Government Securities Pro Forma
Securities Fund Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 10,665 $ 5,617 $ - $ 16,282
Dividend income - - - -
------------------------------------------------------------------------------------------------------------------------------------
Total income 10,665 5,617 - 16,282
Expenses:
Investment advisory fees 986 406 135 1,527
Administration fees 180 181 (99) 262
Shareholder servicing fees 189 21 106 316
Distribution and service fees - 16 32 48
Transfer and dividend disbursing agent fees and expenses 42 29 2 73
Portfolio accounting fees 66 17 60 143
Custodian fees 41 36 (44) 33
Other expenses 57 51 (32) 76
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,561 757 160 2,478
Waivers - (90) (165) (255)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,561 667 (5) 2,223
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 9,104 4,950 5 14,059
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options (2,212) (1,062) - (3,274)
Net change in unrealized appreciation (depreciation)
on investments and options (6,235) (2,793) - (9,028)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (8,447) (3,855) - (12,302)
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 657 $ 1,095 $ 5 $ 1,757
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
12
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Balanced Income Fund
(unaudited)
Firstar Balance Firstar Stellar Pro Forma
Income Fund Fund Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 2,096 $ 1,996 $ - $ 4,092
Dividend income 492 1,733 - 2,225
-----------------------------------------------------------------------------------------------------------------------------------
Total income 2,588 3,729 - 6,317
Expenses:
Investment advisory fees 514 865 (182) 1,197
Administration fees 73 100 (9) 164
Shareholder servicing fees 33 104 59 196
Distribution and service fees 16 103 - 119
Transfer and dividend disbursing agent fees and expenses 31 59 (17) 73
Portfolio accounting fees 41 64 (25) 80
Custodian fees 18 23 2 43
Other expenses 118 61 (13) 166
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 844 1,379 (185) 2,038
Waivers (130) - (46) (176)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 714 1,379 (231) 1,862
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 1,874 2,350 231 4,455
------------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 567 2,222 - 2,789
Net change in unrealized appreciation (depreciation)
on investments and options 538 13,503 - 14,041
-----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1,105 15,725 - 16,830
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 2,979 $ 18,075 $ 231 $ 21,285
====================================================================================================================================
</TABLE>
(See Notes too Pro Forma Financial Statements)
13
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Balanced Growth Fund
(unaudited)
Mercantile
Firstar Balanced Balanced Pro Forma
Growth Fund Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Interest income $ 6,186 $ 4,181 $ - $ 10,367
Dividend income 769 720 - 1,489
------------------------------------------------------------------------------------------------------------------------------------
Total income 6,955 4,901 - 11,856
Expenses:
Investment advisory fees 1,845 806 - 2,651
Administration fees 264 215 (115) 364
Shareholder servicing fees 141 173 (29) 285
Distribution and service fees 5 56 (9) 52
Transfer and dividend disbursing agent fees and expenses 75 35 (18) 92
Portfolio accounting fees 93 13 39 145
Custodian fees 93 54 (37) 110
Other expenses 132 52 42 226
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 2,648 1,404 (127) 3,925
Waivers (115) (107) 63 (159)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,533 1,297 (64) 3,766
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,422 3,604 64 8,090
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 23,892 14,052 - 37,944
Net change in unrealized appreciation (depreciation)
on investments and options 2,704 (13,943) - (11,239)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 26,596 109 - 26,705
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 31,018 $ 3,713 $ $ 64 $ 34,795
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
14
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Growth and Income Fund
(unaudited)
<TABLE>
<CAPTION>
Mercantile
Firstar Growth and Growth & Income Pro Forma
Income Funds Equity Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 1,766 $ 625 $ - $ 2,391
Dividend income 10,547 5,461 - 16,008
------------------------------------------------------------------------------------------------------------------------------------
Total income 12,313 6,086 - 18,399
Expenses:
Investment advisory fees 5,459 2,494 907 8,860
Administration fees 781 906 (470) 1,217
Shareholder servicing fees 489 286 73 848
Distribution and service fees 13 255 (48) 220
Transfer and dividend disbursing agent fees and expenses 183 130 30 343
Portfolio accounting fees 93 3 128 224
Custodian fees 104 136 (122) 118
Other expenses 238 196 (91) 343
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 7,360 4,406 407 12,173
Waivers (20) (448) 468 -
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 7,340 3,958 875 12,173
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 4,973 2,128 (875) 6,226
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 112,853 72,979 - 185,832
Net change in unrealized appreciation (depreciation)
on investments and options (88,556) (51,641) - (140,197)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 24,297 21,338 - 45,635
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 29,270 $ 23,466 $ (875) $ 51,861
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
15
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Equity Index Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Equity Mercantile Equity Pro Forma
Index Funds Equity Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 2,685 $ 41 $ - $ 2,726
Dividend income 8,635 1,316 - 9,951
------------------------------------------------------------------------------------------------------------------------------------
Total income 11,320 1,357 - 12,677
Expenses:
Investment advisory fees 1,864 314 (52) 2,126
Administration fees 800 208 (132) 876
Shareholder servicing fees 366 95 (29) 432
Distribution and service fees 40 9 8 57
Transfer and dividend disbursing agent fees and expenses 125 31 14 170
Portfolio accounting fees 101 23 63 187
Custodian fees 105 53 (81) 77
Other expenses 209 27 (74) 162
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 3,610 760 (283) 4,087
Waivers (445) (104) 98 (451)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 3,165 656 (185) 3,636
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 8,155 701 185 9,041
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 491 339 - 830
Net change in unrealized appreciation (depreciation)
on investments and options 56,715 8,953 - 65,668
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 57,206 9,292 - 66,498
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 65,361 $ 9,993 $ 185 $ 75,539
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
16
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Growth Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Growth Mercantile Growth Pro Forma
Fund Equity Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 1,203 $ 160 $ - $ 1,363
Dividend income 1,755 923 - 2,678
------------------------------------------------------------------------------------------------------------------------------------
Total income 2,958 1,083 - 4,041
Expenses:
Investment advisory fees 2,666 845 - 3,511
Administration fees 381 225 (124) 482
Shareholder servicing fees 124 2 27 153
Distribution and service fees 6 44 (22) 28
Transfer and dividend disbursing agent fees and expenses 63 31 4 98
Portfolio accounting fees 67 2 48 117
Custodian fees 63 56 (53) 66
Other expenses 154 56 (84) 126
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 3,524 1,261 (204) 4,581
Waivers (22) (113) 135 -
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 3,502 1,148 (69) 4,581
------------------------------------------------------------------------------------------------------------------------------------
Net investment income(loss) (544) (65) 69 (540)
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 43,774 24,607 - 68,381
Net change in unrealized appreciation (depreciation)
on investments and options 28,760 819 - 29,579
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 72,534 25,426 - 97,960
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 71,990 $ 25,361 $ 69 $ 97,420
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
17
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the period November 1, 1999 through
April 30, 2000 Firstar MidCap Index Fund
(unaudited)
<TABLE>
<CAPTION>
Firstar Stellar
Capital
Firstar MidCap Appreciation Pro Forma
Index Funds Funds Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 219 $ 13 $ - $ 232
Dividend income 402 375 - 777
------------------------------------------------------------------------------------------------------------------------------------
Total income 621 388 - 1,009
Expenses:
Investment advisory fees 98 414 (303) 209
Administration fees 42 48 (4) 86
Shareholder servicing fees 1 57 39 97
Transfer and dividend disbursing agent fees and expenses 17 12 9 38
Portfolio accounting fees 19 23 11 53
Custodian fees 23 11 27 61
Other expenses 71 17 (34) 54
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 271 582 (255) 598
Waivers (74) - (9) (83)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 197 582 (264) 515
------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 424 (194) 264 494
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 3,675 1,337 - 5,012
Net change in unrealized appreciation (depreciation)
on investments and options 8,040 5,945 - 13,985
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 11,715 7,282 - 18,997
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 12,139 $ 7,088 $ 264 $ 19,491
====================================================================================================================================
</TABLE>
* Statement of Operations for the Firstar MidCap Index Fund is shown
since its inception on 11/4/99.
(See Notes to Pro Forma Financial Statements)
18
<PAGE>
STATEMENTS OF OPERATIONS
(Amounts in thousands)
For the twelve months ended April 30, 2000 Firstar Emerging Growth Fund
(unaudited)
<TABLE>
<CAPTION>
Mercantile Small
Firstar Emerging Cap Equity Pro Forma
Growth Fund Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 802 $ 291 $ - $ 1,093
Dividend income 490 923 - 1,413
------------------------------------------------------------------------------------------------------------------------------------
Total income 1,292 1,214 - 2,506
Expenses:
Investment advisory fees 1,261 940 - 2,201
Administration fees 180 251 (129) 302
Shareholder servicing fees 27 12 11 50
Distribution and service fees 2 39 (1) 40
Transfer and dividend disbursing agent fees and expenses 53 39 (27) 65
Portfolio accounting fees 45 3 43 91
Custodian fees 58 51 (50) 59
Other expenses 175 58 (89) 144
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 1,801 1,393 (242) 2,952
Waivers - (125) 81 (44)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 1,801 1,268 (161) 2,908
------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (509) (54) 161 (402)
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 20,086 24,336 - 44,422
Net change in unrealized appreciation (depreciation)
on investments and options 36,667 20,812 - 57,479
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 56,753 45,148 - 101,901
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 56,244 $ 45,094 $ 161 $ 101,499
====================================================================================================================================
</TABLE>
(See Notes to Pro Forma Financial Statements)
19
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Amount in thousands)
For the twelve months ended April 30, 2000 Firstar Core International Equity Fund
(unaudited)
Firstar Core Mercantile
International International Pro Forma
Equity Fund * Equity Portfolio Adjustments Combined
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $ 50 $ 107 $ - $ 157
Dividend income 340 1,065 - 1,405
------------------------------------------------------------------------------------------------------------------------------------
Total income 390 1,172 - 1,562
Expenses:
Investment advisory fees 215 1,007 (43) 1,179
Administration fees 18 201 (98) 121
Shareholder servicing fees - - - -
Distribution and service fees - 53 (4) 49
Transfer and dividend disbursing agent fees and expenses 16 27 3 46
Portfolio accounting fees 16 1 56 73
Custodian fees 13 122 (64) 71
Other expenses 66 142 (136) 72
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 344 1,553 (286) 1,611
Waivers (95) (275) 299 (71)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 249 1,278 13 1,540
------------------------------------------------------------------------------------------------------------------------------------
Net investment income 141 (106) (13) 22
------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments and options 54 506 - 560
Net change in unrealized appreciation (depreciation)
on investments and options (261) (13,164) - (13,425)
------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (207) (12,658) - (12,865)
------------------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ (66) $ (12,764) $ (13) $ (12,843)
====================================================================================================================================
</TABLE>
* Statement of Operations for the Firstar Core International Equity Fund is
shown since its inception on 11/4/99.
(See Notes to Pro Forma Financial Statements)
20
<PAGE>
FIRSTAR MONEY MARKET FUND
FIRSTAR MONEY MARKET FUND / MERCANTILE MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS April 30, 2000
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Firstar Mercantile Pro Forma Firstar Mercantile Combined
Principal Principal Combined Amortized Amortized Amortized
Amount Amount Principal Amount Cost Cost Cost
------------ ---------- ---------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL PAPER 92.5%
Asset Backed Security 1.5%
Ciesco L.P.,
$ 4,000 4,000 6.00%, 6/19/00 3,967 $ 3,967
Corporate Asset Funding Co., Inc.:
4,000 4,000 5.92%, 5/04/00 3,998 3,998
4,000 4,000 6.13%, 7/17/00 3,948 3,948
CXC, Inc.,
4,000 4,000 6.07%, 5/12/00 3,993 3,993
Edison Asset Securitization, L.L.C.:
4,000 4,000 5.84%, 5/03/00 3,999 3,999
4,000 4,000 6.11%, 6/28/00 3,961 3,961
--------- ---------- ----------
23,866 - 23,866
--------- ---------- ----------
Autos & Trucks 0.5%
Ford Motor Credit Company,
4,000 4,000 6.04%, 5/31/00 3,980 3,980
General Motors Acceptance Corporation,
4,000 4,000 6.16%, 7/10/00 3,952 3,952
--------- ---------- ----------
7,932 - 7,932
--------- ---------- ----------
Banking - Foreign 7.4%
Deutsche Bank Finance, Inc.:
4,000 4,000 6.08%, 6/07/00 3,975 3,975
4,000 4,000 6.08%, 6/30/00 3,960 3,960
50,000 50,000 6.07%, 6/30/00 $ 49,494 49,494
Dresdner US Finance, Inc.,
4,000 4,000 6.11%, 6/27/00 3,961 3,961
UBS Finance (Delaware), Inc.:
50,000 50,000 6.04%, 5/1/00 50,000 50,000
4,500 4,500 5.84%, 5/10/00 4,493 4,493
--------- ---------- ----------
16,389 99,494 115,883
--------- ---------- ----------
Communications 3.7%
AT&T Corp.,
50,000 50,000 6.00%, 5/4/00 49,975 49,975
British Telecommunications PLC:
4,000 4,000 5.90%, 5/08/00 3,995 3,995
4,000 4,000 6.08%, 7/05/00 3,956 3,956
--------- ---------- ----------
7,951 49,975 57,926
--------- ---------- ----------
Finance - Miscellaneous 19.3%
ABN Amro
30,000 30,000 5.94%, 6/26/00 30,000 30,000
AIG Funding
25,000 25,000 6.10%, 5/26/00 24,894 24,894
Associates First Cap
50,000 50,000 6.01%, 5/12/00 49,908 49,908
Bell Atlantic Financial Services, Inc.,
4,000 4,000 6.04%, 5/01/00 4,000 4,000
CIT Group Holdings, Inc.,
4,000 4,000 5.94%, 6/01/00 3,980 3,980
National Rural Utilities CFC:
50,000 50,000 0.00%, 5/18/00 49,857 49,857
4,000 4,000 6.12%, 7/20/00 3,946 3,946
</TABLE>
See notes to the Pro Forma Financial Statements
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
4,000 4,000 6.20%, 10/13/00 3,886 3,886
New Center Asset,
50,000 50,000 0.00%, 5/10/00 49,924 49,924
Pitney Bowes,
29,524 29,524 6.07%, 5/19/00 29,435 29,435
Sheffield Receivables Corp.,
4,000 4,000 6.06%, 5/26/00 3,983 3,983
Transamerica Financial,
50,000 50,000 6.02%, 5/17/00 49,866 49,866
--------- ---------- ----------
19,795 283,884 303,679
--------- ---------- ----------
Finance - Services 28.2%
American Express,
50,000 50,000 6.01%, 5/18/00 49,858 49,858
American General Finance,
50,000 50,000 6.03%, 5/11/00 49,916 49,916
Countrywide Home,
50,000 50,000 6.07%, 5/1/00 50,000 50,000
FCE Bank,
50,000 50,000 6.02%, 5/12/00 49,908 49,908
GTE Funding,
22,068 22,068 6.14%, 5/31/00 21,955 21,955
G.E. Capital Services,
45,000 45,000 0.00%, 5/12/00 44,917 44,917
Goldman Sachs Group, L.P.:
4,000 4,000 6.06%, 5/11/00 3,993 3,993
4,000 4,000 5.93%, 5/22/00 3,986 3,986
50,000 50,000 0.00%, 8/4/00 49,202 49,202
Household Finance Corporation:
4,000 4,000 6.06%, 6/14/00 3,970 3,970
4,000 4,000 6.07%, 6/22/00 3,965 3,965
Merrill Lynch and Co., Inc.:
4,000 4,000 5.88%, 5/01/00 4,000 4,000
4,000 4,000 6.14%, 7/28/00 3,940 3,940
Morgan Stanley, Dean Witter, Discover & Co.,
4,000 4,000 5.93%, 5/25/00 3,984 3,984
50,000 50,000 6.07%, 5/26/00 49,789 49,789
Wells Fargo,
50,000 50,000 6.02%, 5/31/00 49,749 49,749
--------- ---------- ----------
27,838 415,294 443,132
--------- ---------- ----------
Insurance 6.4%
American Family Financial Services, Inc.:
4,000 4,000 5.85%, 5/18/00 3,989 3,989
4,000 4,000 6.06%, 9/18/00 3,906 3,906
Metlife Funding,
35,415 35,415 6.12%, 5/30/00 35,241 35,241
Prudential Funding Corporation:
50,000 50,000 6.03%, 5/17/00 49,866 49,866
4,000 4,000 5.86%, 5/19/00 3,988 3,988
4,000 4,000 6.21%, 8/28/00 3,918 3,918
--------- ---------- ----------
15,801 85,107 100,908
--------- ---------- ----------
Machinery - Agriculture and Construction 2.9%
John Deere Capital Corporation,
40,000 40,000 0.00%, 5/15/00 39,906 39,906
6,000 6,000 6.25%, 6/12/00 6,003 6,003
--------- ---------- ----------
6,003 39,906 45,909
--------- ---------- ----------
Miscellaneous 14.3%
Anheuser-Busch,
39,825 39,825 0.00%, 5/22/00 39,685 39,685
Bestfoods, Inc.,
4,000 4,000 5.95%, 6/06/00 3,976 3,976
Honeywell International
50,000 50,000 6.03%, 05/22/00 49,824 49,824
Invensys PLC,
4,000 4,000 6.05%, 5/17/00 3,989 3,989
Motorola,
</TABLE>
See notes to the Pro Forma Financial Statements
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
25,000 25,000 0.00%, 7/17/00 24,673 24,673
Philip Morris,
50,000 50,000 6.05%, 5/8/00 49,942 49,942
Procter & Gamble,
49,000 49,000 6.09%, 5/24/00 48,809 48,809
SBC Corporation,
4,000 4,000 6.14%, 8/09/00 3,931 3,931
--------- ---------- ----------
11,896 212,933 224,829
--------- ---------- ----------
Printing & Publishing 1.7%
McGraw Hill,
5,000 5,000 6.07%, 6/20/00 4,958 4,958
22,000 22,000 6.06%, 6/30/00 21,778 21,778
--------- ---------- ----------
4,958 21,778 26,736
--------- ---------- ----------
Sovereign 0.8%
Hydro-Quebec Corporation,
4,000 4,000 5.90%, 5/24/00 3,985 3,985
Quebec (Province of) Canada,
4,371 4,371 6.18%, 9/01/00 4,279 4,279
Venantius Corporation,
4,000 4,000 6.16%, 7/19/00 3,946 3,946
--------- ---------- ----------
12,210 - 12,210
--------- ---------- ----------
Utilities 5.8%
Ameren Corp.,
40,900 40,900 6.11%, 7/6/00 40,442 40,442
Virginia Electric & Power,
50,000 50,000 6.03%, 5/16/00 49,874 49,874
--------- ---------- ----------
- 90,316 90,316
--------- ---------- ----------
Total Commercial Paper 154,639 1,298,687 1,453,326
--------- ---------- ----------
CERTIFICATES OF DEPOSIT 3.5%
Union Bank of Switzerland,
30,000 30,000 5.51%, 6/5/00 30,000 30,000
Westdeutsche Landebank, -
25,000 25,000 6.02%, 5/31/00 25,000 25,000
--------- ---------- ----------
- 55,000 55,000
--------- ---------- ----------
Total Certificates of Deposit - 55,000 55,000
--------- ---------- ----------
FUNDING AGREEMENTS 0.5%
Travelers Insurance Corporation,
7,000 7,000 6.31%, 6/30/00 * 7,000 7,000
--------- ---------- ----------
Total Funding Agreements 7,000 - 7,000
--------- ---------- ----------
VARIABLE RATE DEMAND NOTES 0.5% -
8,000 8,000 Sara Lee Corporation 8,000 8,000
--------- ---------- ----------
-
Total Variable Rate Demand Notes 8,000 - 8,000
--------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Number Number Number
of shares of shares of shares
------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPANIES 3.0%
2,786 38,864 41,650 Financial Square Prime Obligation Fund 2,786 38,864 41,650
5,703 5,703 Short-Term Investments Co. -
Liquid Assets Portfolio 5,703 - 5,703
--------- ---------- ----------
Total Investment Companies 8,489 38,864 47,353
--------- ---------- ----------
Total Investments 100.0% $ 178,128 $1,392,551 $1,570,679
========= ========== ==========
</TABLE>
See notes to the Pro Forma Financial Statements
3
<PAGE>
FIRSTAR U.S. TREASURY MONEY MARKET FUND
FIRSTAR U.S. TREASURY MONEY MARKET FUND / FIRSTAR STELLAR TREASURY FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Stellar Combined Firstar Stellar Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Cost Cost Cost
---------- ----------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURIES 48.1%
U.S.Treasury Notes 44.6%
50,000 50,000 6.75%, 4/30/00 50,000 50,000
165,000 165,000 6.375%, 5/15/00 165,050 165,050
5,000 230,000 235,000 6.25%, 5/31/00 5,002 230,103 235,105
50,000 50,000 5.375%, 6/30/00 49,969 49,969
50,000 50,000 5.375%, 7/31/00 49,941 49,941
5,000 170,000 175,000 6.125%, 7/31/00 5,004 170,169 175,173
10,000 150,000 160,000 6.00%, 8/15/00 9,999 150,011 160,010
75,000 75,000 5.125%, 8/31/00 74,786 74,786
5,000 125,000 130,000 6.25%, 8/31/00 5,001 125,096 130,097
5,000 100,000 105,000 4.50%, 9/30/00 4,967 99,337 104,304
8,000 155,000 163,000 4.00%, 10/31/00 7,915 153,344 161,259
50,000 50,000 5.75%, 10/31/00 49,948 49,948
150,000 150,000 5.75%, 11/15/00 149,686 149,686
------------ ------------- -------------
37,888 1,517,440 1,555,328
------------ ------------- -------------
U.S. Treasury Bills 3.5%
5,000 5,000 5.76%, 5/04/00 4,998 4,998
7,000 7,000 5.75%, 5/11/00 6,989 6,989
10,000 10,000 5.52%, 5/25/00 9,963 9,963
8,000 8,000 5.67%, 6/08/00 7,952 7,952
15,000 15,000 5.63%, 6/15/00 14,894 14,894
16,000 16,000 5.41%, 6/22/00 15,875 15,875
50,000 50,000 5.72%, 6/29/00 49,532 49,532
4,000 4,000 5.66%, 7/06/00 3,958 3,958
5,000 5,000 5.63%, 7/20/00 4,937 4,937
2,000 2,000 5.73%, 8/10/00 1,968 1,968
------------ ------------- -------------
71,534 49,532 121,066
------------ ------------- -------------
Total U.S. Treasuries 109,422 1,566,972 1,676,394
------------ ------------- -------------
REPURCHASE AGREEMENTS 45.8%
715,000 715,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.71%, dated 4/28/00,
due 5/1/00, repurchase price
$715,340,221 (Collateralized by U.S.
Government Securities) 715,000 715,000
165,000 165,000 Lehman Brothers Inc., 5.70%, dated
4/28/00, due 5/1/00, repurchase price
$165,078,375 (Collateralized by U.S.
Government Securities) 165,000 165,000
715,000 715,000 Warburg Dillon Read, LLC, 5.72%, dated
4/28/00, due 5/1/00, repurchase price
$715,340,817 (Collateralized by U.S.
Government Securities) 715,000 715,000
------------ ------------- -------------
Total Repurchase Agreements - 1,595,000 1,595,000
------------ ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
Number Number Number
of Shares of Shares of Shares
---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPANIES 6.1%
Financial Square
5,687 44,631 50,318 Treasury Obligation Portfolio 5,687 44,631 50,318
Short-Term Investments Co.
1,557 160,119 161,676 Treasury Tax Advantage Portfolio 1,557 160,119 161,676
------------ ------------- -------------
Total Investment Companies 7,244 204,750 211,994
------------ ------------- -------------
Total Investments 100.0% $116,666 $ 3,366,722 $3,483,388
============ ============= =============
</TABLE>
See notes to the Pro Forma Financial Statements
4
<PAGE>
FIRSTAR U.S. TREASURY MONEY MARKET FUND
FIRSTAR U.S. TREASURY MONEY MARKET FUND / MERCANTILE TREASURY MONEY MARKET
PORTFOLIO PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Mercantile Combined Firstar Mercantile Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Cost Cost Cost
--------- ------------ ----------- ---------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURIES 98.1%
U.S.Treasury Notes 22.7%
5,000 $ 5,000 6.25%, 5/31/00 5,002 $ 5,002
$ 47,580 47,580 5.375%, 7/31/00 $ 47,519 47,519
5,000 5,000 6.125%, 7/31/00 5,004 5,004
10,000 10,000 6.00%, 8/15/00 9,999 9,999
5,000 5,000 6.25%, 8/31/00 5,001 5,001
5,000 5,000 4.50%, 9/30/00 4,967 4,967
8,000 8,000 4.00%, 10/31/00 7,915 7,915
----------- ------------- ---------------
37,888 47,519 85,407
----------- ------------- ---------------
U.S. Treasury Bills 75.4%
28,468 28,468 0.00%, 5/04/00 28,455 28,455
5,000 5,000 5.76%, 5/04/00 4,998 4,998
10,534 10,534 0.00%, 5/11/00 10,518 10,518
7,000 7,000 5.75%, 5/11/00 6,989 6,989
8,957 8,957 5.59%, 5/18/00 8,933 8,933
31,436 31,436 0.00%, 5/25/00 31,318 31,318
10,000 10,000 5.52%, 5/25/00 9,963 9,963
33,193 33,193 5.50%, 6/01/00 33,032 33,032
46,185 46,185 0.00%, 6/08/00 45,911 45,911
8,000 8,000 5.67%, 6/08/00 7,952 7,952
15,000 15,000 5.63%, 6/15/00 14,894 14,894
16,000 16,000 5.41%, 6/22/00 15,875 15,875
55,274 55,274 5.72%, 6/29/00 54,769 54,769
4,000 4,000 5.66%, 7/06/00 3,958 3,958
5,000 5,000 5.63%, 7/20/00 4,937 4,937
2,000 2,000 5.73%, 8/10/00 1,968 1,968
----------- ------------- ---------------
71,534 212,936 284,470
----------- ------------- ---------------
Total U.S. Treasuries 109,422 260,455 369,877
----------- ------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Number Number Number
of Shares of Shares of Shares
------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPANIES 1.9%
Financial Square
5,687 5,687 Treasury Obligation Portfolio 5,687 5,687
Short-Term Investments Co.
1,557 1,557 Treasury Tax Advantage Portfolio 1,557 1,557
----------- ------------- ---------------
Total Investment Companies 7,244 - 7,244
----------- ------------- ---------------
Total Investments 100.0% $116,666 $260,455 $ 377,121
=========== ============= ===============
</TABLE>
See notes to the Pro Forma Financial Statements
5
<PAGE>
FIRSTAR U.S. TREASURY MONEY MARKET FUND
FIRSTAR U.S. TREASURY MONEY MARKET FUND / FIRSTAR STELLAR TREASURY
FUND / MERCANTILE TREASURY MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Stellar Mercantile Combined Firstar Stellar Mercantile Combined
Principal Principal Principal Principal Amortized Amortized Amortized Amortized
Amount Amount Amount Amount Cost Cost Cost Cost
---------- ----------- ------------ --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. TREASURIES 51.7%
U.S. Treasury Notes 42.8%
50,000 50,000 6.75%, 4/30/00 50,000 50,000
165,000 165,000 6.375%, 5/15/00 165,050 165,050
5,000 230,000 235,000 6.25%, 5/31/00 5,002 230,103 235,105
50,000 50,000 5.375%, 6/30/00 49,969 49,969
50,000 47,580 97,580 5.375%, 7/31/00 49,941 47,519 97,460
5,000 170,000 175,000 6.125%, 7/31/00 5,004 170,169 175,173
10,000 150,000 160,000 6.00%, 8/15/00 9,999 150,011 160,010
75,000 75,000 5.125%, 8/31/00 74,786 74,786
5,000 125,000 130,000 6.25%, 8/31/00 5,001 125,096 130,097
5,000 100,000 105,000 4.50%, 9/30/00 4,967 99,337 104,304
8,000 155,000 163,000 4.00%, 10/31/00 7,915 153,344 161,259
50,000 50,000 5.75%, 10/31/00 49,948 49,948
150,000 150,000 5.75%, 11/15/00 149,686 149,686
-------- ----------- ---------- ------------
37,888 1,517,440 47,519 1,602,847
-------- ----------- ---------- ------------
U.S. Treasury Bills 8.9%
28,468 28,468 0.00%, 5/4/00 28,455 28,455
5,000 5,000 5.76%, 5/04/00 4,998 4,998
10,534 10,534 0.00%, 5/11/00 10,518 10,518
7,000 7,000 5.75%, 5/11/00 6,989 6,989
8,957 8,957 5.59%, 5/18/00 8,933 8,933
31,436 31,436 0.00%, 5/25/00 31,318 31,318
10,000 10,000 5.52%, 5/25/00 9,963 9,963
33,193 33,193 5.50%, 6/01/00 33,032 33,032
46,185 46,185 0.00%, 6/08/00 45,911 45,911
8,000 8,000 5.67%, 6/08/00 7,952 7,952
15,000 15,000 5.63%, 6/15/00 14,894 14,894
16,000 16,000 5.41%, 6/22/00 15,875 15,875
50,000 55,274 105,274 5.72%, 6/29/00 49,532 54,769 104,301
4,000 4,000 5.66%, 7/06/00 3,958 3,958
5,000 5,000 5.63%, 7/20/00 4,937 4,937
2,000 2,000 5.73%, 8/10/00 1,968 1,968
-------- ----------- ---------- -----------
71,534 49,532 212,936 334,002
-------- ----------- ---------- -----------
Total U.S. Treasuries 109,422 1,566,972 260,455 1,936,849
-------- ----------- ---------- -----------
REPURCHASE AGREEMENTS 42.6%
715,000 715,000 Donaldson, Lufkin and Jenrette
Securities Corp., 5.71%, dated 4/28/00,
due 5/1/00, repurchase price
$715,340,221 (Collateralized by U.S.
Government Securities) 715,000 715,000
165,000 165,000 Lehman Brothers Inc., 5.70%, dated
4/28/00, due 5/1/00, repurchase price
$165,078,375 (Collateralized by U.S.
Government Securities) 165,000 165,000
715,000 715,000 Warburg Dillon Read, LLC, 5.72%, dated
4/28/00, due 5/1/00, repurchase price
$715,340,817 (Collateralized by U.S.
Government Securities) 715,000 715,000
-------- ----------- ---------- -----------
Total Repurchase Agreements - 1,595,000 - 1,595,000
-------- ----------- ---------- -----------
Number Number Number Number
of Shares of Shares of Shares of Shares
--------- ----------- ----------- ----------
INVESTMENT COMPANIES 5.7%
Financial Square
5,687 44,631 50,318 Treasury Obligation Portfolio 5,687 44,631 50,318
Short-Term Investments Co.
1,557 160,119 161,676 Treasury Tax Advantage Portfolio 1,557 160,119 161,676
-------- ----------- ---------- -----------
Total Investment Companies 7,244 204,750 - 211,994
-------- ----------- ---------- -----------
Total Investments 100.0% $116,666 $ 3,366,722 $ 260,455 $ 3,743,843
======== =========== ========== ===========
</TABLE>
See notes to the Pro forma financial Statements
6
<PAGE>
FIRSTAR TAX-EXEMPT MONEY MARKET FUND
FIRSTAR TAX-EXEMPT MONEY MARKET FUND / FIRSTAR STELLAR TAX-FREE MONEY MARKET
FUND PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Stellar Combined Firstar Stellar Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Cost Cost Cost
------------ --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
GENERAL OBLIGATION 4.4%
District of Columbia Series A,
$3,000 $ 3,000 7.25%, 6/1/05 $3,070 3,070
Milwaukee, WI Sewer District Series A,
4,000 4,000 6.70%, 10/1/00 4,047 4,047
Northwestern Mutual Life,
$ 100 100 4.50%, 2/15/09* # $ 100 100
Laredo, Texas,
1,630 1,630 6.75%, 8/01/00 1,642 1,642
Richmond County, Georgia,
2,575 2,575 4.50%, 3/01/01 2,581 2,581
Wyandotte County, Kansas,
1,755 2,000 3,755 4.50%, 9/01/00 1,758 2,004 3,762
---------- --------- ----------
Total General Obligation 6,081 9,121 15,202
---------- --------- ----------
PREREFUNDED AND ESCROWED
TO MATURITY 16.7%
Austin, Texas, Utility System Revenue,
4,000 6,000 10,000 10.75%, 5/15/10, Prerefunded 5/15/00 4,010 6,015 10,025
Boston, Massachusetts, Hospital Revenue,
4,000 4,000 7.63%, 2/15/21, Prerefunded 8/15/00 4,108 4,108
Cattaraugus County, New York, St. Bonaventure University
3,000 3,000 8.30%, 12/01/10, Prerefunded 12/01/00 3,129 3,129
Central Arizona, Water Conservation District,
5,175 5,000 10,175 7.13%, 11/01/11, Prerefunded 11/01/00 5,360 5,179 10,539
Dover, DE, Electric Revenue,
1,210 1,210 7.00%, 7/1/15, Prerefunded 7/1/00 1,240 1,240
Henrico County, Virginia, Hospital Revenue,
1,290 1,290 7.50%, 9/01/07, Prerefunded 8/01/00 1,327 1,327
Hoffman Estates, Illinois, Economic Development,
3,910 3,910 7.63%, 11/15/09, Prerefunded 11/15/00 4,056 4,056
Illinois State,
2,000 2,000 6.50%, 6/01/01, Prerefunded 6/01/00 2,044 2,044
Martinsville Memorial Hospital, Virginia,
1,250 1,250 7.00%, 1/01/06, Prerefunded 1/01/01 1,271 1,271
Massachusetts State, University Hospital,
4,000 4,000 7.25%, 7/01/19, Prerefunded 7/01/00 4,101 4,101
Metropolitan Transit Authority, New York,
2,530 2,530 7.50%, 7/01/26, Prerefunded 7/01/00 2,595 2,595
Montgomery County, Pennsylvania,
1,580 1,580 8.63%, 7/01/07, Prerefunded 7/01/00 1,621 1,621
Northeast Independent School District, Texas,
1,900 1,900 6.00%, 6/15/00, Escrowed to Maturity 1,906 1,906
Rhode Island, Hospital Revenue,
1,000 1,000 7.75%, 7/01/16, Prerefunded 7/01/00 1,026 1,026
Sarasota County, FL School Board Funding Corp. Lease,
2,180 2,180 7.25%, 7/1/10, Prerefunded 7/1/00 2,215 2,215
Scranton-Lackwana, Pennsylvania, Hospital Revenue,
1,520 1,520 7.25%, 6/15/05, Prerefunded 6/15/00 1,557 1,557
Seattle, WA, Municipal Water,
2,500 2,500 7.25%, 5/1/17, Prerefunded 5/1/00 2,550 2,550
Tuscon, Arizona, Street and Highway User Revenue,
1,000 1,000 6.88%, 7/01/08, Prerefunded 7/01/00 1,015 1,015
Walled Lake, Michigan, School District,
2,000 2,000 7.10%, 5/01/05, Prerefunded 5/01/00 2,040 2,040
---------- --------- ----------
Total Prerefunded and Escrowed to Maturity 41,166 17,199 58,365
---------- --------- ----------
REVENUE BONDS 75.4%
Electric Revenue 4.6%
Chelan County, Washington, Public Utility,
5,000 2,370 7,370 5.09%, 6/01/15*# 5,000 2,370 7,370
County of Mason, Kentucky, Series 1984B,
1,950 1,950 4.99%, 10/15/14*# 1,950 1,950
Putnam County, Florida Development Authority -
5,485 1,210 6,695 Seminole Electric, 4.99%, 3/15/14*# 5,485 1,210 6,695
---------- --------- ----------
12,435 3,580 16,015
---------- --------- ----------
Hospital Revenue 23.6%
</TABLE>
See notes to the Pro Forma Financial Statements
7
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Bexar County, TX Health Facilities Development Authority, Army
Retirement Resources Foundation, 5.09%, 7/1/2011 3,165 3,165
3,165 3,165 Bexar County, TX Health Facilities Development Authority, Army
2,030 2,030 Retirement Resources Foundation, 3.45%, 7/1/2011 2,030 2,030
2,225 2,225 Boston, MA, Boston City Hospital, 7.65%, 8/15/00 2,283 2,283
Cuyahoga County, OH, Cleveland Clinic,
3,000 3,000 5.09%, 1/1/24 3,000 3,000
Cuyahoga County, OH, Cleveland Clinic,
7,445 7,445 5.09%, 1/1/25 7,445 7,445
Hamilton County, OH Hospital Facilities Authority Series A,
5,500 5,500 Health Alliance of Greater Cincinnati, 4.94%, 1/1/18 5,500 5,500
Hamilton County, OH Hospital Facilities Authority Series B,
5,050 5,050 Health Alliance of Greater Cincinnati, 4.94%, 1/1/18 5,050 5,050
Hawii Department Budget & Finance, Kuakini Medical Center
2,225 2,225 Project, 5.09%, 7/1/05 2,225 2,225
Illinois Health Facilities Authority,
2,900 2,900 Gottlieb Health Resources, Inc., 4.99%, 11/15/25 2,900 2,900
Illinois Health Facilities Authority,
2,500 2,500 Southern Illinois Healthcare Enterprises, 5.09%,
3/01/21*# 2,500 2,500
Illinois Health Facilities Authority,
4,100 4,100 Recreational Facilities, 5.04%, 12/01/25*# 4,100 4,100
Indiana Health Facilities Funding Authority, Capital Access,
8,000 8,000 5.04%, 1/1/12 8,000 8,000
Indiana Health Facilities Finance Authority -
4,600 4,600 Henry County Memorial Hospital, 5.04%, 4/01/13*# 4,600 4,600
Indiana Hospital Equipment Finance Authority,
2,250 5,050 7,300 Nursing Home Improvements, 5.04%, 12/01/15*# 2,250 5,050 7,300
New Jersey Health Care Facilities Financing Authority,
Barnert
5,585 5,585 Hospital, 6.80%, 8/1/19 5,782 5,782
Warren County, OH, Health Care Facilities Series B,
4,500 4,500 5.24%, 7/1/23 4,500 4,500
Wisconsin State Health & Educational Facilities -
5,000 3,000 8,000 Marshfield Clinic, 5.09%, 6/01/10*# 5,000 3,000 8,000
Wisconsin State Health & Educational Facilities -
1,900 1,900 Blood Center, 5.14%, 6/01/19*# 1,900 1,900
Wisconsin State Health & Educational Facilities - -
2,109 2,109 Sinai Samaritan, 5.14%, 9/01/19*# 2,109 2,109
--------- ----------- ----------
22,459 59,930 82,389
--------- ----------- ----------
Housing Revenue 5.6%
Cook County, IL, Catholic Charities,
2,700 2,700 5.09%, 1/1/28 2,700 2,700
Florida Housing Finance Agency -
3,000 3,000 Carlton Multifamily, 5.14%, 12/01/08*# 3,000 3,000
Illinois Development Finance Authority -
3,215 1,515 4,730 St. Paul's House, 5.09%, 2/01/25*# 3,215 1,515 4,730
Orland Hills, Illinois, Multi-Family,
2,470 2,470 5.09%, 12/01/04*# 2,470 2,470
Washington State Housing Finance - Community
3,830 2,740 6,570 Multifamily Mortgage, 5.09%, 10/01/20*# 3,830 2,740 6,570
--------- ----------- -----------
12,515 6,955 19,470
--------- ----------- -----------
Industrial Development/Pollution
Control Revenue 10.2%
Berks County, PA Industrial Development Authority,
9,000 9,000 4.29%, 7/1/2016 9,000 9,000
Cattaraugus County, NY Industrial Development Agency Civic
4,655 4,655 Facility, St. Bonadventure University, 8.30%, 12/1/10 4,855 4,855
Indiana State Development Finance Authority, Indiana
2,400 2,400 Historical Society, 5.04%, 8/1/31 2,400 2,400
Mason County, Kentucky, Pollution Control,
2,850 3,700 6,550 4.99%, 10/15/14*# 2,850 3,700 6,550
Oakbrook Terrace, Illinois, Industrial Development, -
4,100 4,100 3.89%, 12/01/25*# 4,100 4,100
Oklahoma County, Oklahoma Finance Authority,
2,000 2,000 Hutto-Carbon Office, 4.29%, 12/01/14 2,000 2,000
Oklahoma County, Oklahoma Finance Authority -
2,600 1,000 3,600 Perrine Office Project, 4.29%, 12/01/14*# 2,600 1,000 3,600
Rutherford County, TN, Square D Co.,
3,100 3,100 4.99%, 4/01/17 3,100 3,100
--------- ----------- ----------
9,550 26,055 35,605
--------- ----------- ----------
Miscellaneous 21.0%
1,000 1,000 Chicago, IL Motor Fuel Tax, 7.05%, 1/1/07 1,037 1,037
Cleveland, OH Income Tax Revenue,
5,300 5,300 4.94%, 5/15/24 5,300 5,300
Cook County, Illinois:
3,790 3,790 5.09%, 5/01/20*# 3,790 3,790
2,000 2,000 5.09%, 1/01/28*# 2,000 2,000
6,000 6,000 Eau Claire, WI Area School District Series A, 4.00%,
11/15/00 5,998 5,998
</TABLE>
See notes to the Pro Forma Financial Statements
8
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Illinois Development Finance Authority,
5,095 5,095 Council for the Jewish Elderly, 5.09%, 3/1/15 5,095 5,095
Illinois Development Finance Authority,
3,700 3,700 Aurora Central Catholic High School, 5.09%, 4/1/24 3,700 3,700
Illinois Development Finance Authority,
4,800 4,800 Rest Haven, 5.09%, 1/01/27*# 4,800 4,800
Illinois Development Finance Authority,
4,500 4,500 Chicago Symphony Orchestra Project, 4.99%, 6/01/31 4,500 4,500
Illinois Development Finance Authority,
3,000 3,000 Presbyterian Home Lake-A, 5.09%, 9/01/31*# 3,000 3,000
Illinois Education Facilities Authority, Chicago Zoological
2,000 2,000 Society, 5.09%, 12/15/25*# 2,000 2,000
Illinois Education Facilities Authority, Newberry Library
2,500 2,500 Project, 4.99%, 3/01/28 2,500 2,500
Indiana State Development Finance Authority,
4,130 4,130 Educational Facilities Project - Lutheran, 5.19%,
10/1/17 4,130 4,130
Indiana Health Facilities Finance Authority,
6,100 6,100 Capital Access Designated Pool, 5.04%, 1/12/20 6,100 6,100
Indiana Health Facilities Finance Authority,
2,100 2,100 5.04%, 1/12/20*# 2,100 2,100
New York State Dormitory Authority Series B,
3,350 3,350 State University Educational Facilities, 7.00%, 5/15/16 3,421 3,421
Ohio State University General Receipts Series B,
2,500 2,500 4.94%, 12/1/14 2,500 2,500
Philadelphia, PA Hospital & Higher Education Facilities
4,025 4,025 Authorit, Children's Seashore House, 7.75%, 8/15/17 4,041 4,041
Massachusetts State Health & Educational Facilities
1,585 1,585 Authority, Series A, Fairview Extended Care, 10.125%,
1/1/11 1,687 1,687
Smith Creek Metropolitan District of Colorado,
4,600 4,600 5.09%, 10/01/35 4,600 4,600
Warren County, OH Health Care Facilities Series A,
975 975 Otterbein Homes, 4.94%, 7/1/21 975 975
--------- ---------- ----------
17,690 55,584 73,274
--------- ---------- ----------
University Revenue 10.4%
Illinois Development Finance Authority -
6,000 6,000 St. Ignatius College Prep, 5.09%, 6/01/24*# 6,000 6,000
Illinois Development Finance Authority,
1,055 1,055 Lake Forest Academy, 5.09%, 12/01/24 1,055 1,055
Illinois Development Finance Authority,
3,000 3,000 Loyola Academy, 4.99%, 10/01/27 3,000 3,000
Illinois Development Finance Authority,
2,105 2,105 Loyola Academy, 5.09%, 10/01/12 2,105 2,105
Maricopa County, AZ Community College District
2,000 2,000 Project 1994 Series C, 5.25%, 7/1/00
Series C, 5.25%, 7/1/00 2,004 2,004
Minnesota State Higher Educational Authority,
4,745 4,745 Bethel College, 5.09%, 4/01/28*# 4,745 4,745
Texas Higher Education Authority,
2,190 2,190 5.09%, 12/01/25*# 2,190 2,190
University of Illinois, Series 1990A,
720 720 Certificates of Participation, 7.25%, 8/15/00 727 727
University of Minnesota, Series A,
4,000 2,500 6,500 5.09%, 1/01/34*# 4,000 2,500 6,500
University of North Carolina, Chapel Hill Foundation
5,200 2,950 8,150 Certificates of Participation, 5.09%, 10/01/09*# 5,200 2,950 8,150
--------- ---------- ----------
22,862 13,614 36,476
--------- ---------- ----------
Total Revenue Bonds 97,511 165,718 263,229
--------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Number Number Number
of Shares of shares of shares
---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPANIES 3.5%
7,321 7,321 Financial Square Tax-Exempt Money Market Fund 7,321 7,321
982 982 SEI Tax Exempt Money Market Fund 982 982
3,817 3,817 Tax Free Cash Reserves 3,817 3,817
--------- ---------- ----------
Total Investment Companies 11,138 982 12,120
--------- ---------- ----------
Total Investments 100.0% $155,896 $193,020 $ 348,916
========= ========== ==========
* Variable rate security
# Stated maturity with option to put
</TABLE>
See notes to th e Pro Forma Financial Statements
9
<PAGE>
FIRSTAR TAX-EXEMPT MONEY MARKET FUND
FIRSTAR TAX-EXEMPT MONEY MARKET FUND / MERCANTILE TAX-EXEMPT MONEY MARKET
PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS April 30, 2000
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Mercantile Combined Firstar Mercantile Combined
Principal Principal Principal Amortized Amortized Amortized
Amount Amount Amount Cost Cost Cost
------------ ------------ ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
GENERAL OBLIGATION 8.5%
Albuquerque, Public Improvements,
$ 3,000 $ 3,000 4.50%, 7/01/00 $ 3,004 $ 3,004
Idaho State, Tax Anticipation Notes,
5,000 5,000 4.25%, 6/30/00 5,007 5,007
Iowa State, School Cash Anticipation Program, Series A,
2,000 2,000 4.00%, 6/23/00 2,002 2,002
Memphis, Tennessee, Series A,
5,000 5,000 4.49%, 8/01/04* 5,000 5,000
Northwestern Mutual Life,
$ 100 100 4.50%, 2/15/09* # $ 100 100
Oregon State, Series 73 G,
4,500 4,500 4.44%, 12/01/18* 4,500 4,500
Laredo, Texas,
1,630 1,630 6.75%, 8/01/00 1,642 1,642
Richmond County, Georgia,
2,575 2,575 4.50%, 3/01/01 2,581 2,581
Wyandotte County, Kansas,
1,755 1,755 4.50%, 9/01/00 1,758 1,758
--------- ---------- ---------
Total General Obligation 6,081 19,513 25,594
--------- ---------- ---------
PREREFUNDED AND ESCROWED
TO MATURITY 13.7%
Austin, Texas, Utility System Revenue,
4,000 4,000 10.75%, 5/15/10, Prerefunded 5/15/00 4,010 4,010
Boston, Massachusetts, Hospital Revenue,
4,000 4,000 7.63%, 2/15/21, Prerefunded 8/15/00 4,108 4,108
Cattaraugus County, New York, St. Bonaventure University
3,000 3,000 8.30%, 12/01/10, Prerefunded 12/01/00 3,129 3,129
Central Arizona, Water Conservation District,
5,175 5,175 7.13%, 11/01/11, Prerefunded 11/01/00 5,360 5,360
Henrico County, Virginia, Hospital Revenue,
1,290 1,290 7.50%, 9/01/07, Prerefunded 8/01/00 1,327 1,327
Hoffman Estates, Illinois, Economic Development,
3,910 3,910 7.63%, 11/15/09, Prerefunded 11/15/00 4,056 4,056
Illinois State,
2,000 2,000 6.50%, 6/01/01, Prerefunded 6/01/00 2,044 2,044
Martinsville Memorial Hospital, Virginia,
1,250 1,250 7.00%, 1/01/06, Prerefunded 1/01/01 1,271 1,271
Massachusetts State, University Hospital,
4,000 4,000 7.25%, 7/01/19, Prerefunded 7/01/00 4,101 4,101
Metropolitan Transit Authority, New York,
2,530 2,530 7.50%, 7/01/26, Prerefunded 7/01/00 2,595 2,595
Montgomery County, Pennsylvania,
1,580 1,580 8.63%, 7/01/07, Prerefunded 7/01/00 1,621 1,621
Northeast Independent School District, Texas,
1,900 1,900 6.00%, 6/15/00, Escrowed to Maturity 1,906 1,906
Rhode Island, Hospital Revenue,
1,000 1,000 7.75%, 7/01/16, Prerefunded 7/01/00 1,026 1,026
Scranton-Lackwana, Pennsylvania, Hospital Revenue,
1,520 1,520 7.25%, 6/15/05, Prerefunded 6/15/00 1,557 1,557
Tuscon, Arizona, Street and Highway User Revenue,
1,000 1,000 6.88%, 7/01/08, Prerefunded 7/01/00 1,015 1,015
Walled Lake, Michigan, School District,
2,000 2,000 7.10%, 5/01/05, Prerefunded 5/01/00 2,040 2,040
--------- ---------- ---------
Total Prerefunded and Escrowed to Maturity 41,166 - 41,166
--------- ---------- ---------
REVENUE BONDS 72.6%
Airport/Marina Revenue 7.9%
Chicago, O'Hare International Airport, American
Airlines, Inc.,
14,500 14,500 5.78%, 12/01/17* 14,500 14,500
Lexington-Fayette Urban County Airport, Series A,
7,200 7,200 5.93%, 7/01/28* 7,200 7,200
Port Corpus Christi, Port, Reynolds Metals Co.,
2,200 2,200 4.19%, 9/01/14* 2,200 2,200
--------- ---------- ---------
- 23,900 23,900
--------- ---------- ---------
</TABLE>
See notes to the Pro Forma Financial Statements
10
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Electric Revenue 4.1%
Chelan County, Washington, Public Utility,
5,000 5,000 5.09%, 6/01/15*# 5,000 5,000
County of Mason, Kentucky, Series 1984B,
1,950 1,950 4.99%, 10/15/14*# 1,950 1,950
Putnam County, Florida Development Authority -
5,485 5,485 Seminole Electric, 4.99%, 3/15/14*# 5,485 5,485
-------- -------- --------
12,435 - 12,435
-------- -------- --------
Hospital Revenue 20.1%
7,000 7,000 Methodist Hospital, 5.78%, 12/01/25* 7,000 7,000
Illinois Health Facilities Authority,
2,500 2,500 Southern Illinois Healthcare Enterprises, 5.09%,3/01/21*# 2,500 2,500
Illinois Health Facilities Authority,
4,100 4,100 Recreational Facilities, 5.04%, 12/01/25*# 4,100 4,100
Illinois Health Facilities Authority,
8,000 8,000 University of Chicago Hospital, 5.78%, 8/01/26* 8,000 8,000
Indiana Health Facilities Finance Authority -
4,600 4,600 Henry County Memorial Hospital, 5.04%, 4/01/13*# 4,600 4,600
Indiana Hospital Equipment Finance Authority,
2,250 2,250 Nursing Home Improvements, 5.04%, 12/01/15*# 2,250 2,250
Missouri State Health & Educational Facilities Authority,
4,600 4,600 Washington University Project, Series A, 4.44%, 9/01/10* 4,600 4,600
Missouri State Health & Educational Facilities Authority,
1,000 1,000 Washington University Project, Series B, 4.44%, 9/01/10* 1,000 1,000
Missouri State Health & Educational Facilities Authority,
6,800 6,800 Barnes Hospital Project, 4.44%, 12/01/15* 6,800 6,800
Missouri State Health & Educational Facilities Authority,
2,900 2,900 St. Anthony Medical Center, Series B, 4.44%, 12/01/19* 2,900 2,900
New Hampshire Higher Educational & Health Facilities Authority,
4,000 4,000 New England, Inc. Series G, 4.49%, 12/01/25* 4,000 4,000
North Central Texas Health Facilities Development Corp.,
3,700 3,700 Methodist Hospitals of Dallas, Series B, 6.08%, 10/01/15* 3,700 3,700
Wisconsin State Health & Educational Facilities -
5,000 5,000 Marshfield Clinic, 5.09%, 6/01/10*# 5,000 5,000
Wisconsin State Health & Educational Facilities -
1,900 1,900 Blood Center, 5.14%, 6/01/19*# 1,900 1,900
Wisconsin State Health & Educational Facilities -
2,109 2,109 Sinai Samaritan, 5.14%, 9/01/19*# 2,109 2,109
-------- -------- --------
22,459 38,000 60,459
-------- -------- --------
Housing Revenue 4.2%
Florida Housing Finance Agency -
3,000 3,000 Carlton Multifamily, 5.14%, 12/01/08*# 3,000 3,000
Illinois Development Finance Authority -
3,215 3,215 St. Paul's House, 5.09%, 2/01/25*# 3,215 3,215
Orland Hills, Illinois, Multi-Family,
2,470 2,470 5.09%, 12/01/04*# 2,470 2,470
Washington State Housing Finance - Community
3,830 3,830 Multifamily Mortgage, 5.09%, 10/01/20*# 3,830 3,830
-------- -------- --------
12,515 - 12,515
-------- -------- --------
Industrial Development/Pollution
Control Revenue 17.5%
Brazos River Authority, Texas Pollution Control,
7,300 7,300 5.88%, 2/01/32* 7,300 7,300
Harris County, Health Facilities Development Corp.,
5,100 5,100 Exxon Corp., 5.78%, 3/01/24* 5,100 5,100
Mason County, Kentucky, Pollution Control,
2,850 2,850 4.99%, 10/15/14*# 2,850 2,850
Minneapolis Community Development Agency,
4,850 4,850 Northern States Power Co., Series A, 4.49%, 3/01/11 4,850 4,850
Missouri State Environmental Improvement and Energy Resource
1,000 1,000 Authority, Monsanto Co. Project, 4.49%, 6/01/23* 1,000 1,000
Oakbrook Terrace, Illinois, Industrial Development,
4,100 4,100 3.89%, 12/01/25*# 4,100 4,100
Oklahoma County, Oklahoma Finance Authority -
2,600 2,600 Perrine Office Project, 4.29%, 12/01/14*# 2,600 2,600
Putnam County, GA Development Authority Pollution Control,
8,000 8,000 Georgia Power Co., Plant PJ, 5.78%, 9/01/29* 8,000 8,000
Salt Lake County, Pollution Control, SVC Station Holdings Project,
5,000 5,000 British Petroleum Co., Series B, 5.78%, 10/01/25 5,000 5,000
St. Charles Parish Pollution Control,
7,000 7,000 Shell Oil Co. Project, 5.78%, 10/01/25 7,000 7,000
Tulsa Industrial Authority Revenue, University of Tulsa,
5,000 5,000 Series B, 4.49%, 10/01/26* 5,000 5,000
-------- -------- --------
9,550 43,250 52,800
-------- -------- --------
Miscellaneous 11.2%
Cook County, Illinois:
</TABLE>
See notes to the Pro Forma Financial Statements
11
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
3,790 3,790 5.09%, 5/01/20*# 3,790 3,790
2,000 2,000 5.09%, 1/01/28*# 2,000 2,000
Delaware State Economic Development Authority,
Solid Waste Disposal & Sewage Facilities, Series A,
8,000 8,000 Ciba Specialty Chemicals, 5.88%, 7/01/28* 8,000 8,000
Illinois Development Finance Authority,
4,800 4,800 Rest Haven, 5.09%, 1/01/27*# 4,800 4,800
Illinois Development Finance Authority,
3,000 3,000 Presbyterian Home Lake-A, 5.09%, 9/01/31*# 3,000 3,000
Illinois Education Facilities Authority, Chicago Zoological
2,000 2,000 Society, 5.09%, 12/15/25*# 2,000 2,000
Indiana Health Facilities Finance Authority,
2,100 2,100 5.04%, 1/12/20*# 2,100 2,100
Texas State, Multi-Modal-Water Development Board,
8,000 8,000 Series A, 5.78%, 3/01/15* 8,000 8,000
--------- -------- --------
17,690 16,000 33,690
--------- -------- --------
University Revenue 7.6%
Illinois Development Finance Authority -
6,000 6,000 St. Ignatius College Prep, 5.09%, 6/01/24*# 6,000 6,000
Minnesota State Higher Educational Authority,
4,745 4,745 Bethel College, 5.09%, 4/01/28*# 4,745 4,745
Texas Higher Education Authority,
2,190 2,190 5.09%, 12/01/25*# 2,190 2,190
University of Illinois, Series 1990A,
720 720 Certificates of Participation, 7.25%, 8/15/00 727 727
University of Minnesota, Series A,
4,000 4,000 5.09%, 1/01/34*# 4,000 4,000
University of North Carolina, Chapel Hill Foundation
5,200 5,200 Certificates of Participation, 5.09%, 10/01/09* 5,200 5,200
--------- --------- --------
22,862 - 22,862
--------- --------- --------
Total Revenue Bonds 97,511 121,150 218,661
--------- --------- --------
</TABLE>
<TABLE>
<CAPTION>
Number Number Number
of Shares of shares of shares
------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPANIES 5.2%
4,615 4,615 Federated Tax-Free Fund 4,615 4,615
7,321 7,321 Financial Square Tax-Exempt Money Market Fund 7,321 7,321
1 1 Nuveen Tax Exempt Fund 1 1
3,817 3,817 Tax Free Cash Reserves 3,817 3,817
--------- --------- --------
Total Investment Companies 11,138 4,616 15,754
--------- --------- --------
Total Investments 100.0% $ 155,896 $ 145,279 $301,175
========= ========= ========
* Variable rate security
# Stated maturity with option to put
</TABLE>
See notes to the Pro Forma Financial Statements
12
<PAGE>
FIRSTAR TAX-EXEMPT MONEY MARKET FUND
FIRSTAR TAX-EXEMPT MONEY MARKET FUND / FIRSTAR STELLAR TAX-FREE MONEY MARKET
FUND / MERCANTILE TAX-EXEMPT MONEY MARKET PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS April 30, 2000
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Stellar Mercantile Combined Firstar Stellar Mercantile Combined
Principal Principal Principal Principal Amortized Amortized Amortized Amortized
Amount Amount Amount Amount Cost Cost Cost Cost
---------- --------- ---------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GENERAL OBLIGATION 7.0%
Albuquerque, Public Improvements,
$ 3,000 $ 3,000 4.50%, 7/01/00 $ 3,004 $ 3,004
District of Columbia Series A,
$ 3,000 3,000 7.25%, 6/1/05 $ 3,070 3,070
Idaho State, Tax Anticipation Notes,
5,000 5,000 4.25%, 6/30/00 5,007 5,007
Iowa State, School Cash Anticipation Program,
Series A,
2,000 2,000 4.00%, 6/23/00 2,002 2,002
Memphis, Tennessee, Series A,
5,000 5,000 4.49%, 8/01/04* 5,000 5,000
Milwaukee, WI Sewer District Series A,
4,000 4,000 6.70%, 10/1/00 4,047 4,047
Northwestern Mutual Life,
$ 100 100 4.50%, 2/15/09* # $ 100 100
Oregon State, Series 73 G,
4,500 4,500 4.44%, 12/01/18* 4,500 4,500
Laredo, Texas,
1,630 1,630 6.75%, 8/01/00 1,642 1,642
Richmond County, Georgia,
2,575 2,575 4.50%, 3/01/01 2,581 2,581
Wyandotte County, Kansas,
1,755 2,000 3,755 4.50%, 9/01/00 1,758 2,004 3,762
--------- --------- ---------- ---------
Total General Obligation 6,081 9,121 19,513 34,715
--------- --------- ---------- ---------
PREREFUNDED AND ESCROWED
TO MATURITY 11.8%
Austin, Texas, Utility System Revenue,
4,000 6,000 10,000 10.75%, 5/15/10, Prerefunded 5/15/00 4,010 6,015 10,025
Boston, Massachusetts, Hospital Revenue,
4,000 4,000 7.63%, 2/15/21, Prerefunded 8/15/00 4,108 4,108
Cattaraugus County, New York, St. Bonaventure
University
3,000 3,000 8.30%, 12/01/10, Prerefunded 12/01/00 3,129 3,129
Central Arizona, Water Conservation District,
5,175 5,000 10,175 7.13%, 11/01/11, Prerefunded 11/01/00 5,360 5,179 10,539
Dover, DE, Electric Revenue,
1,210 1,210 7.00%, 7/1/15, Prerefunded 7/1/00 1,240 1,240
Henrico County, Virginia, Hospital Revenue,
1,290 1,290 7.50%, 9/01/07, Prerefunded 8/01/00 1,327 1,327
Hoffman Estates, Illinois, Economic
Development,
3,910 3,910 7.63%, 11/15/09, Prerefunded 11/15/00 4,056 4,056
Illinois State,
2,000 2,000 6.50%, 6/01/01, Prerefunded 6/01/00 2,044 2,044
Martinsville Memorial Hospital, Virginia,
1,250 1,250 7.00%, 1/01/06, Prerefunded 1/01/01 1,271 1,271
Massachusetts State, University Hospital,
4,000 4,000 7.25%, 7/01/19, Prerefunded 7/01/00 4,101 4,101
Metropolitan Transit Authority, New York,
2,530 2,530 7.50%, 7/01/26, Prerefunded 7/01/00 2,595 2,595
Montgomery County, Pennsylvania,
1,580 1,580 8.63%, 7/01/07, Prerefunded 7/01/00 1,621 1,621
Northeast Independent School District, Texas,
1,900 1,900 6.00%, 6/15/00, Escrowed to Maturity 1,906 1,906
Rhode Island, Hospital Revenue,
1,000 1,000 7.75%, 7/01/16, Prerefunded 7/01/00 1,026 1,026
Sarasota County, FL School Board Funding Corp.
Lease
2,180 2,180 7.25%, 7/1/10, Prerefunded 7/1/00 2,215 2,215
Scranton-Lackwana, Pennsylvania, Hospital
Revenue,
1,520 1,520 7.25%, 6/15/05, Prerefunded 6/15/00 1,557 1,557
Seattle, WA, Municipal Water,
2,500 2,500 7.25%, 5/1/17, Prerefunded 5/1/00 2,550 2,550
Tuscon, Arizona, Street and Highway User
Revenue,
1,000 1,000 6.88%, 7/01/08, Prerefunded 7/01/00 1,015 1,015
Walled Lake, Michigan, School District,
2,000 2,000 7.10%, 5/01/05, Prerefunded 5/01/00 2,040 2,040
--------- --------- ---------- ---------
Total Prerefunded and Escrowed to Maturity 41,166 17,199 - 58,365
--------- --------- ---------- ---------
REVENUE BONDS 77.8%
</TABLE>
See notes to the Pro Forma Financial Statements
13
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Airport/Marina Revenue 4.8%
Chicago, O'Hare International Airport, American
Airlines, Inc.,
14,500 14,500 5.78%, 12/01/17* 14,500 14,500
Lexington-Fayette Urban County Airport,
Series A,
7,200 7,200 5.93%, 7/01/28* 7,200 7,200
Port Corpus Christi, Port, Reynolds Metals
Co.,
2,200 2,200 4.19%, 9/01/14* 2,200 2,200
--------- --------- ---------- ---------
23,900 23,904
--------- --------- ---------- ---------
Electric Revenue 3.2%
Chelan County, Washington, Public Utility,
5,000 2,370 7,370 5.09%, 6/01/15*# 5,000 2,370 7,370
County of Mason, Kentucky, Series 1984B,
1,950 1,950 4.99%, 10/15/14*# 1,950 1,950
Putnam County, Florida Development Authority -
5,485 1,210 6,695 Seminole Electric, 4.99%, 3/15/14*# 5,485 1,210 6,695
--------- --------- ---------- ---------
12,435 3,580 - 16,015
--------- --------- ---------- ---------
Hospital Revenue 24.4%
Bexar County, TX Health Facilities Development Authority,
Army
3,165 3,165 Retirement Resources Foundation, 5.09%, 7/1/2011 3,165 3,165
Bexar County, TX Health Facilities Development Authority,
Army
2,030 2,030 Retirement Resources Foundation, 3.45%, 7/1/2011 2,030 2,030
2,225 2,225 Boston, MA, Boston City Hospital, 7.65%, 8/15/00 2,283 2,283
Cuyahoga County, OH, Cleveland Clinic,
3,000 3,000 5.09%, 1/1/24 3,000 3,000
Cuyahoga County, OH, Cleveland Clinic,
7,445 7,445 5.09%, 1/1/25 7,445 7,445
Hamilton County, OH Hospital Facilities Authority Series A,
5,500 5,500 Health Alliance of Greater Cincinnati, 4.94%, 1/1/18 5,500 5,500
Hamilton County, OH Hospital Facilities Authority Series B,
5,050 5,050 Health Alliance of Greater Cincinnati, 4.94%, 1/1/18 5,050 5,050
Harris County, Health Facilities Development Corp.,
7,000 7,000 Methodist Hospital, 5.78%, 12/01/25* 7,000 7,000
Hawii Department Budget & Finance, Kuakini Medical Center
2,225 2,225 Project, 5.09%, 7/1/05 2,225 2,225
Illinois Health Facilities Authority,
2,900 2,900 Gottlieb Health Resources, Inc., 4.99%, 11/15/25 2,900 2,900
Illinois Health Facilities Authority,
2,500 2,500 Southern Illinois Healthcare Enterprises, 5.09%,3/01/21*# 2,500 2,500
Illinois Health Facilities Authority,
4,100 4,100 Recreational Facilities, 5.04%, 12/01/25*# 4,100 4,100
Illinois Health Facilities Authority,
8,000 8,000 University of Chicago Hospital, 5.78%, 8/01/26* 8,000 8,000
Indiana Health Facilities Funding Authority, Capital Access,
8,000 8,000 5.04%, 1/1/12 8,000 8,000
Indiana Health Facilities Finance Authority -
4,600 4,600 Henry County Memorial Hospital, 5.04%, 4/01/13*#4,600 4,600
Indiana Hospital Equipment Finance Authority,
2,250 5,050 7,300 Nursing Home Improvements, 5.04%, 12/01/15*# 2,250 5,050 7,300
Missouri State Health & Educational Facilities Authority,
4,600 4,600 Washington University Project, Series A, 4.44%, 9/01/10* 4,600 4,600
Missouri State Health & Educational Facilities Authority,
1,000 1,000 Washington University Project, Series B, 4.44%, 9/01/10* 1,000 1,000
Missouri State Health & Educational Facilities Authority,
6,800 6,800 Barnes Hospital Project, 4.44%, 12/01/15* 6,800 6,800
Missouri State Health & Educational Facilities Authority,
2,900 2,900 St. Anthony Medical Center, Series B, 4.44%, 12/01/19* 2,900 2,900
New Hampshire Higher Educational & Health Facilities
Authority,
4,000 4,000 New England, Inc. Series G, 4.49%, 12/01/25* 4,000 4,000
New Jersey Health Care Facilities Financing Authority,
Barnert
5,585 5,585 Hospital, 6.80%, 8/1/19 5,782 5,782
North Central Texas Health Facilities Development Corp.,
3,700 3,700 Methodist Hospitals of Dallas, Series B, 6.08%, 10/01/15* 3,700 3,700
Warren County, OH, Health Care Facilities Series B,
4,500 4,500 5.24%, 7/1/23 4,500 4,500
Wisconsin State Health & Educational Facilities -
5,000 3,000 8,000 Marshfield Clinic, 5.09%, 6/01/10*# 5,000 3,000 8,000
Wisconsin State Health & Educational Facilities -
1,900 1,900 Blood Center, 5.14%, 6/01/19*# 1,900 1,900
Wisconsin State Health & Educational Facilities - -
2,109 2,109 Sinai Samaritan, 5.14%, 9/01/19*# 2,109 2,109
--------- --------- ---------- ---------
22,459 59,930 38,000 120,389
--------- --------- ---------- ---------
Housing Revenue 3.9%
Cook County, IL, Catholic Charities,
2,700 2,700 5.09%, 1/1/28 2,700 2,700
Florida Housing Finance Agency -
3,000 3,000 Carlton Multifamily, 5.14%, 12/01/08*# 3,000 3,000
</TABLE>
See notes to the Pro Forma Financial Statements
14
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Illinois Development Finance Authority -
3,215 1,515 4,730 St. Paul's House, 5.09%, 2/01/25*# 3,215 1,515 4,730
Orland Hills, Illinois, Multi-Family,
2,470 2,470 5.09%, 12/01/04*# 2,470 2,470
Washington State Housing Finance - Community
3,830 2,740 6,570 Multifamily Mortgage, 5.09%, 10/01/20*# 3,830 2,740 6,570
--------- --------- ---------- ---------
12,515 6,955 - 19,470
--------- --------- ---------- ---------
Industrial Development/Pollution
Control Revenue 16.0%
Berks County, PA Industrial Development Authority,
9,000 9,000 4.29%, 7/1/2016 9,000 9,000
Brazos River Authority, Texas Pollution Control,
7,300 7,300 5.88%, 2/01/32* 7,300 7,300
Cattaraugus County, NY Industrial Development Agency Civic
4,655 4,655 Facility, St. Bonadventure University, 8.30%, 12/1/10 4,855 4,855
Harris County, Health Facilities Development Corp.,
5,100 5,100 Exxon Corp., 5.78%, 3/01/24* 5,100 5,100
Indiana State Development Finance Authority, Indiana
2,400 2,400 Historical Society, 5.04%, 8/1/31 2,400 2,400
Mason County, Kentucky, Pollution Control,
2,850 3,700 6,550 4.99%, 10/15/14*# 2,850 3,700 6,550
Minneapolis Community Development Agency,
4,850 4,850 Northern States Power Co., Series A, 4.49%, 3/01/11 4,850 4,850
Missouri State Environmental Improvement and Energy Resource
1,000 1,000 Authority, Monsanto Co. Project, 4.49%, 6/01/23* 1,000 1,000
Oakbrook Terrace, Illinois, Industrial Development, -
4,100 4,100 3.89%, 12/01/25*# 4,100 4,100
Oklahoma County, Oklahoma Finance Authority,
2,000 2,000 Hutto-Carbon Office, 4.29%, 12/01/14 2,000 2,000
Oklahoma County, Oklahoma Finance Authority -
2,600 1,000 3,600 Perrine Office Project, 4.29%, 12/01/14*# 2,600 1,000 3,600
Putnam County, GA Development Authority Pollution Control,
8,000 8,000 Georgia Power Co., Plant PJ, 5.78%, 9/01/29* 8,000 8,000
Rutherford County, TN, Square D Co.,
3,100 3,100 4.99%, 4/01/17 3,100 3,100
Salt Lake County, Pollution Control, SVC Station Holdings
Project,
5,000 5,000 British Petroleum Co., Series B, 5.78%, 10/01/25 5,000 5,000
St. Charles Parish Pollution Control,
7,000 7,000 Shell Oil Co. Project, 5.78%, 10/01/25 7,000 7,000
Tulsa Industrial Authority Revenue, University of Tulsa,
5,000 5,000 Series B, 4.49%, 10/01/26* 5,000 5,000
--------- --------- ---------- ---------
9,550 26,055 43,250 78,855
--------- --------- ---------- ---------
Miscellaneous 18.1%
1,000 1,000 Chicago, IL Motor Fuel Tax, 7.05%, 1/1/07 1,037 1,037
Cleveland, OH Income Tax Revenue,
5,300 5,300 4.94%, 5/15/24 5,300 5,300
Cook County, Illinois:
3,790 3,790 5.09%, 5/01/20*# 3,790 3,790
2,000 2,000 5.09%, 1/01/28*# 2,000 2,000
Delaware State Economic Development Authority,
Solid Waste Disposal & Sewage Facilities, Series A,
8,000 8,000 Ciba Specialty Chemicals, 5.88%, 7/01/28* 8,000 8,000
6,000 6,000 Eau Claire, WI Area School District Series A, 4.00%,
11/15/00 5,998 5,998
Illinois Development Finance Authority,
5,095 5,095 Council for the Jewish Elderly, 5.09%, 3/1/15 5,095 5,095
Illinois Development Finance Authority,
3,700 3,700 Aurora Central Catholic High School, 5.09%, 4/1/24 3,700 3,700
Illinois Development Finance Authority,
4,800 4,800 Rest Haven, 5.09%, 1/01/27*# 4,800 4,800
Illinois Development Finance Authority,
4,500 4,500 Chicago Symphony Orchestra Project, 4.99%, 6/01/31 4,500 4,500
Illinois Development Finance Authority,
3,000 3,000 Presbyterian Home Lake-A, 5.09%, 9/01/31*# 3,000 3,000
Illinois Education Facilities Authority, Chicago Zoological
2,000 2,000 Society, 5.09%, 12/15/25*# 2,000 2,000
Illinois Education Facilities Authority, Newberry Library
Project,
2,500 2,500 4.99%, 3/01/28 2,500 2,500
Indiana State Development Finance Authority,
4,130 4,130 Educational Facilities Project - Lutheran, 5.19%, 10/1/17 4,130 4,130
Indiana Health Facilities Finance Authority,
6,100 6,100 Capital Access Designated Pool, 5.04%, 1/12/20 6,100 6,100
Indiana Health Facilities Finance Authority,
2,100 2,100 5.04%, 1/12/20*# 2,100 2,100
New York State Dormitory Authority Series B,
3,350 3,350 State University Educational Facilities, 7.00%, 5/15/16 3,421 3,421
Ohio State University General Receipts Series B,
2,500 2,500 4.94%, 12/1/14 2,500 2,500
Philadelphia, PA Hospital & Higher Education Facilities
Authority,
</TABLE>
See notes to the Pro Forma Financial Statements
15
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
4,025 4,025 Children's Seashore House, 7.75%, 8/15/17 4,041 4,041
Massachusetts State Health & Educational
Facilities Authority,
1,585 1,585 Series A, Fairview Extended Care, 10.125%,
1/1/11 1,687 1,687
Smith Creek Metropolitan District of Colorado,
4,600 4,600 5.09%, 10/01/35 4,600 4,600
Texas State, Multi-Modal-Water Development
Board,
8,000 8,000 Series A, 5.78%, 3/01/15* 8,000 8,000
Warren County, OH Health Care Facilities
Series A,
975 975 Otterbein Homes, 4.94%, 7/1/21 975 975
--------- --------- ---------- ---------
17,690 55,584 16,000 89,274
--------- --------- ---------- ---------
University Revenue 7.4%
Illinois Development Finance Authority -
6,000 6,000 St. Ignatius College Prep, 5.09%,
6/01/24*# 6,000 6,000
Illinois Development Finance Authority,
1,055 1,055 Lake Forest Academy, 5.09%, 12/01/24 1,055 1,055
Illinois Development Finance Authority,
3,000 3,000 Loyola Academy, 4.99%, 10/01/27 3,000 3,000
Illinois Development Finance Authority,
2,105 2,105 Loyola Academy, 5.09%, 10/01/12 2,105 2,105
Maricopa County, AZ Community College
District Project 1994
2,000 2,000 Series C, 5.25%, 7/1/00 2,004 2,004
Minnesota State Higher Educational
Authority,
4,745 4,745 Bethel College, 5.09%, 4/01/28*# 4,745 4,745
Texas Higher Education Authority,
2,190 2,190 5.09%, 12/01/25*# 2,190 2,190
University of Illinois, Series 1990A,
720 720 Certificates of Participation, 7.25%,
8/15/00 727 727
University of Minnesota, Series A,
4,000 2,500 6,500 5.09%, 1/01/34*# 4,000 2,500 6,500
University of North Carolina, Chapel
Hill Foundation
5,200 2,950 8,150 Certificates of Participation, 5.09%,
10/01/09* 5,200 2,950 8,150
--------- --------- ---------- ---------
22,862 13,614 - 36,476
--------- --------- ---------- ---------
Total Revenue Bonds 97,511 165,718 121,150 384,379
--------- --------- ---------- ---------
</TABLE>
<TABLE>
<CAPTION>
Number Number Number Number
of shares of shares of shares of shares
--------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT COMPANIES 3.4%
4,615 4,615 Federated Tax-Free Fund 4,615 4,615
7,321 7,321 Financial Square Tax-Exempt Money Market
Fund 7,321 7,321
1 1 Nuveen Tax Exempt Fund 1 1
982 982 SEI Tax Exempt Money Market Fund 982 982
3,817 3,817 Tax Free Cash Reserves 3,817 3,817
--------- --------- ---------- ---------
Total Investment Companies 11,138 982 4,616 16,736
--------- --------- ---------- ---------
Total Investments 100.0% $ 155,896 $193,020 $ 145,279 $ 494,195
========= ======== ========= =========
* Variable rate security
# Stated maturity with option to put
</TABLE>
See notes to the Pro Forma Financial Statements
16
<PAGE>
FIRSTAR INTERMEDIATE BOND MARKET FUND
FIRSTAR INTERMEDIATE BOND MARKET FUND / MERCANTILE INTERMEDIATE CORPORATE
BOND PORTFOLIO PRO FORMA COMBINED SCHEDULE OF INVESTMENTS April 30, 2000
(Amounts and Shares in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Mercantile Combined Firstar Mercantile Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Value Value Value
--------- ---------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM INVESTMENTS 94.7%
Asset-Backed Securities 11.0%
Auto Loan Receivables 0.7%
Honda Auto Lease Trust,
$ 3,000 $ 3,000 Series 1999-A, Class A5, 6.65%, 7/15/05 $ 2,969 - $ 2,969
------- -------- -------
Credit Card Receivables 4.1%
American Express Master Trust,
2,000 2,000 Series 1994-2, Class A, 7.60%, 8/15/02 2,008 2,008
Chemical Master Credit Card Trust,
633 633 Series 1995-3, Class A, 6.23%, 8/15/02 619 619
Citibank Credit Card Master Trust, Principal Only:
11,900 11,900 Series 1996-1, Class A, 0.00%, 2/07/01 11,276 11,276
1,875 1,875 Series 1997-6, Class A, 0.00%, 8/15/06 1,360 1,360
Household Affinity Credit Card Master Trust I,
1,925 1,925 Series 1993-2, Class A, 5.60%, 11/15/00 1,920 1,920
Speigel Credit Card Master Trust,
158 158 Series 1994-B, Class A, 8.15%, 6/15/04 158 158
------- --------- --------
17,341 - 17,341
------- --------- --------
Home Equity Loan Receivables 6.2%
Advanta Home Equity Loan Trust:
559 559 Series 1993-1, Class A1, 5.95%, 3/25/09 536 536
786 786 Series 1993-1, Class A2, 5.95%, 5/25/09 757 757
AFC Home Equity Loan Trust:
1,658 1,658 Series 1993-4, Class 1A, 5.80%, 2/26/24 1,588 1,588
2,246 2,246 Series 1996-4, Class 1A7, 6.86%, 3/25/27 2,171 2,171
Contimortage Home Equity Loan Trust:
5,000 5,000 Series 1997-4, Class A4, 6.30%, 7/15/12 4,961 4,961
2,950 2,950 Series 1997-5, Class A5, 6.63%, 12/15/20 2,845 2,845
1,000 1,000 Series 1997-2, Class A9, 7.09%, 4/15/28 976 976
3,075 3,075 Series 1997-3, Class A9, 7.12%, 8/15/28 2,949 2,949
Corestates Home Equity Trust,
725 725 Series 1996-1, Class A3, 7.00%, 12/15/09 724 724
Delta Funding Home Equity Loan Trust,
2,000 2,000 Series 1997-4, Class A5F, 6.67%, 1/25/28 1,911 1,911
EQCC Home Equity Loan Trust:
277 277 Series 1994-4, Class A3, 8.68%, 10/15/08 278 278
726 726 Series 1993-4, Class A, 5.725%, 12/15/08 706 706
955 955 Series 1994-1, Class A, 5.80%, 3/15/09 927 927
2,000 2,000 Series 1996-1, Class A4, 6.56%, 3/15/23 1,919 1,919
2,000 2,000 Series 1997-1, Class A7, 7.12%, 5/15/28. 1,974 1,974
UCFC Home Equity Loan,
889 889 Series 1995-C2, Class A6, 6.825%, 10/10/26 871 871
------- --------- --------
26,093 - 26,093
------- --------- --------
Corporate Bonds 42.6%
ABN AMRO Bank Guarantee,
1,600 1,600 7.25%, 5/31/05 1,569 1,569
Aetna Services, Inc. Company Guarantee,
3,000 3,000 6.75%, 8/15/01 2,964 2,964
Aetna Services, Inc. Debentures,
1,375 1,375 6.75%, 9/15/13 1,155 1,155
</TABLE>
See notes to the Pro Forma Financial Statements
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Air 2 US,
1,000 1,000 10.127%, 10/01/20 1,015 1,015
American West Airlines, Pass-Thru Certificates,
2,087 2,087 8.54%, 1/02/06 (Acquired 9/14/99, Cost $2,087)* 2,051 2,051
Amsouth Bancorp Subordinated Notes,
1,500 1,500 7.75%, 5/15/04 1,484 1,484
Applied Material Inc.,
$ 1,000 1,000 7.00%, 9/06/05 $ 969 969
Armstrong World,
1,950 1,950 6.35%, 8/15/03 1,758 1,758
Associates Corp N.A.:
50 50 6.875%, 2/01/03 49 49
1,000 1,000 7.23%, 5/17/06 979 979
Associated P&C Holdings Senior Notes,
1,500 1,500 6.75%, 7/15/03 (Acquired 9/03/99; Cost $1,431)* 1,432 1,432
AT&T Capital Corporation Company Guarantee:
2,000 2,000 6.25%, 5/15/01 1,979 1,979
50 50 7.125%, 1/15/02 50 50
1,075 1,075 6.75%, 2/04/02 1,061 1,061
1,150 1,150 6.75%, 4/01/04 1,118 1,118
100 100 7.00%, 5/15/05 97 97
BankAmerica Corporation Subordinated Notes:
200 200 8.125%, 2/01/02 202 202
2,000 2,000 10.00%, 2/01/03 2,112 2,112
BankBoston Notes,
1,450 1,450 6.375%, 4/15/08 1,330 1,330
Bankers Trust - NY, Subordinated Debentures:
6,000 6,000 8.125%, 5/15/02 6,037 6,037
500 500 7.25%, 1/15/03 492 492
Bank of Oklahoma, Subordinated Notes,
1,300 1,300 7.125%, 8/15/07 1,204 1,204
Bank One N.A.,
50 50 6.625%, 4/15/03 49 49
Bear Stearns Company Senior Notes:
2,000 2,000 9.375%, 6/01/01 2,035 2,035
500 500 8.25%, 2/01/02 503 503
150 150 6.25%, 7/15/05 139 139
Boatmens,
400 400 8.625%, 11/15/03 411 411
Brown-Forman Corp.,
1,000 1,000 7.38%, 5/10/05 992 992
Campbell Soup Co.,
1,000 1,000 6.90%, 10/15/06 971 971
Caterpillar, Inc. Sinking Fund Debentures,
2,112 2,112 9.75%, 6/01/19 2,206 2,206
Cendant Corp.,
880 880 7.75%, 12/01/03 868 868
Chase Manhattan Corp. Subordinated Notes,
2,300 2,300 9.375%, 7/01/01 2,351 2,351
500 500 7.125%, 3/01/05 489 489
Clorox,
100 100 8.80%, 7/15/01 102 102
Computer Associates International,
275 275 6.25%, 4/15/03 262 262
Conectiv, Inc. Medium Term Notes,
3,000 3,000 6.73%, 6/01/06 2,899 2,899
Continental Airlines Inc. Pass-Thru Certificates,
1,470 1,470 6.80%, 7/02/07 1,388 1,388
Continental Bank N.A. Subordinated Notes,
2,875 2,875 12.50%, 4/01/01 3,005 3,005
Continental Cablevision, Inc. Debentures,
4,525 4,525 9.50%, 8/01/13 4,848 4,848
Dana Corp.,
1,700 1,700 6.25%, 3/01/04 1,590 1,590
Dell Computer Corp.,
1,000 1,000 6.55%, 4/15/08 936 936
</TABLE>
See notes to the Pro Forma Financial Statements
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Dillard Investment Debentures,
1,895 1,895 9.25%, 2/01/01 1,919 1,919
Dillards Inc.,
450 450 5.79%, 11/15/01 425 425
Walt Disney Co.,
1,000 1,000 6.75%, 3/30/06 971 971
Donaldson, Lufkin Jenrette, Inc. Senior Notes,
3,000 3,000 5.875%, 4/01/02 2,902 2,902
Dupont,
200 200 8.50%, 2/15/03 202 202
1,000 1,000 8.125%, 3/15/04 1,025 1,025
Dynegy, Inc. Senior Notes,
2,100 2,100 6.875%, 7/15/02 2,045 2,045
Exxon Capital Corp.,
100 100 6.625%, 8/15/02 99 99
Federal Express Corporation Notes,
1,500 1,500 9.65%, 6/15/12 1,618 1,618
Federal Express Sinking Fund Pass-Thru Certificates,
793 793 7.89%, 9/23/08 770 770
First Interstate Bancorp Subordinated Notes,
2,350 2,350 10.875%, 4/15/01 2,424 2,424
500 500 9.90%, 11/15/01 516 516
First National Bank Omaha Subordinated Notes,
1,600 1,600 7.32%, 12/01/10 1,476 1,476
First USA Bank Senior Notes,
1,000 1,000 5.85%, 2/22/01 989 989
Ford Motor Credit Co. Notes:
2,575 2,575 8.20%, 2/15/02 2,601 2,601
800 800 7.50%, 1/15/03 797 797
1,000 1,000 9.03%, 12/30/09 1,036 1,036
FPL Group Capital, Inc. Guaranteed Notes,
1,500 1,500 7.625%, 9/15/06 1,479 1,479
General Electric Capital Corp.,
1,000 1,000 7.66%, 8/02/04 1,011 1,011
General Mills Inc.,
1,000 1,000 8.90%, 3/15/06 1,059 1,059
General Motors Acceptance Corp. Notes:
1,000 1,000 9.625%, 12/15/01 1,032 1,032
500 500 8.50%, 2/04/02 508 508
500 500 6.75%, 2/07/02 494 494
1,000 1,000 5.75%, 11/10/03 941 941
Georgia Pacific Corp. Debentures:
1,150 1,150 9.50%, 12/01/11 1,219 1,219
775 775 9.50%, 5/15/22 779 779
Goldman Sachs Group Notes,
5,000 5,000 6.25%, 2/01/03 (Acquired 2/01/96; Cost $4,988)* 4,802 4,802
GTE California Inc.,
1,000 1,000 6.70%, 9/01/09 922 922
Homeside, Inc. Senior Notes,
1,000 1,000 11.25%, 5/15/03 1,089 1,089
International Paper Co.,
1,000 1,000 7.00%, 6/01/01 988 988
Lehman Brothers Holdings, Inc. Notes:
1,500 1,500 6.65%, 11/08/00 1,496 1,496
1,212 1,212 8.875%, 3/01/02 1,232 1,232
800 800 8.75%, 5/15/02 812 812
2,700 2,700 7.50%, 9/01/06 2,618 2,618
Lehman Brothers, Inc. Debentures:
1,000 1,000 6.125%, 2/01/01 989 989
2,450 2,450 11.625%, 5/15/05 2,774 2,774
Lubrizol Corp.,
1,000 1,000 5.875%, 12/01/08 893 893
Marlin Water Trust Senior Notes,
2,492 2,492 7.09%, 12/15/01 (acquired 12/08/98; Cost $2,492 )* 2,448 2,448
The May Department Stores Debentures,
2,000 2,000 9.875%, 6/15/21 2,127 2,127
</TABLE>
See notes to the Pro Forma Financial Statements
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch & Company Notes:
7,000 7,000 5.75%, 11/04/02 6,703 6,703
500 500 8.00%, 6/01/07 502 502
Motorola Inc.,
1,000 1,000 7.60%, 1/01/07 1,006 1,006
National Rural Utilities,
100 100 6.65%, 10/01/05 96 96
National Westminster Bank Debentures,
1,700 1,700 9.375%, 11/15/03 1,779 1,779
National Westminster Bank Subordinated Notes,
700 145 845 9.45%, 5/01/01 714 148 862
Nationsbank Corp.:
500 500 7.75%, 8/15/04 501 501
600 600 6.875%, 2/15/05 578 578
NCNB Corp. Subordinated Notes,
2,380 2,380 10.20%, 7/15/15 2,834 2,834
Newcourt Credit Group Notes:
1,785 1,785 7.125%, 12/17/03 (Acquired 9/14/99, Cost $1,772)* 1,745 1,745
1,800 1,800 6.875%, 2/16/05 (Acquired 3/16/99, Cost $1,032)* 1,722 1,722
News America Holdings Debentures,
750 750 10.125%, 10/15/12 768 768
Northwest Airlines Pass-Thru Certificates:
831 831 8.13%, 2/01/14 774 774
834 834 7.248%, 7/02/14 752 752
Norwest Financial Inc.
50 50 6.125%, 8/01/03 48 48
Oneok, Inc. Notes,
1,100 1,100 7.75%, 8/15/06 1,081 1,081
Osprey Trust Secured Notes,
2,300 2,300 8.31%, 1/15/03 (Acquired 9/16/99, Cost $2,300)* 2,290 2,290
Pacific Bell,
1,065 1,065 7.25%, 7/01/02 1,061 1,061
Pacific Gas & Electric,
50 50 6.25%, 8/01/03 48 48
Paine Webber Group, Inc. Notes:
3,000 3,000 7.115%, 1/27/04 2,908 2,908
500 500 8.875%, 3/15/05 511 511
Praxair Inc.,
1,000 1,000 6.90%, 11/01/06 943 943
Principal Financial Group Senior Notes,
4,500 4,500 8.20%, 8/15/09 (Acquired 8/18/99, Cost $4,486)* 4,490 4,490
Proctor & Gamble,
50 50 8.00%, 11/15/03 51 51
PSI Energy, Inc. Debentures,
1,600 1,600 7.85%, 10/15/07 1,544 1,544
J.C. Penney Company, Inc. Debentures:
1,000 1,000 7.60%, 4/01/07 798 798
1,950 1,950 9.75%, 6/15/21 1,714 1,714
875 875 8.25%, 8/15/22 710 710
Quaker Oats:
150 150 9.00%, 12/07/01 153 153
125 125 9.00%, 12/10/01 127 127
Raytheon Co.,
1,000 1,000 6.15%, 11/02/08 864 864
Rochester Telephone Corporation Debentures,
1,100 1,100 9.00%, 8/15/21 936 936
St. Paul Co.:
25 25 7.49%, 11/06/02 25 25
50 50 7.50%, 12/20/02 50 50
Salomon, Inc. Senior Notes,
1,100 1,100 6.75%, 2/15/03 1,074 1,074
Sears Roebuck Acceptance Corporation Notes,
1,300 1,300 6.25%, 5/01/09 1,143 1,143
Security Capital Group, Inc. Medium Term Notes,
1,700 1,700 7.75%, 11/15/03 1,630 1,630
Security Pacific Corp. Subordinated Notes,
</TABLE>
See notes to the Pro Form Financial Statements
20
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1,158 1,158 11.00%, 3/01/01 1,193 1,193
Southwestern Bell Telephone Co.,
1,000 1,000 6.56%, 11/15/05 955 955
Standard Federal Bancorp Medium Term Notes,
2,155 2,155 7.75%, 7/17/06 2,109 2,109
Texaco Capital,
1,000 1,000 7.09%, 2/01/07 975 975
Toll Road Investors Debentures,
4,800 4,800 0.00%, 2/15/04 (Acquired 4/23/99, Cost $3,591) * 3,570 3,570
Transamerica Finance Corporation Senior Notes,
3,225 3,225 6.125%, 11/01/01 3,154 3,154
Union Pacific Co.,
200 200 7.875%, 2/15/02 200 200
Union Texas Petroleum,
1,000 1,000 8.50%, 4/15/07 1,047 1,047
United Airlines Pass-Thru Certificates,
3,055 3,055 7.27%, 1/30/13 2,858 2,858
United HealthCare Corporation Notes,
5,000 5,000 6.60%, 12/01/03 (Acquired 11/19/98, Cost $4,989) * 4,778 4,778
Wall-Mart Stores:
100 100 6.50%, 6/01/03 98 98
600 600 7.50%, 5/15/04 605 605
Wells Fargo,
300 300 8.375%, 5/15/02 305 305
Westdeutsche Landesbank Subordinated Notes,
3,000 3,000 6.75%, 6/15/05 2,862 2,862
------- --------- --------
145,802 34,406 180,208
------- --------- --------
Mortgage-Backed Securities 4.4%
Advanta Mortgage Loan Trust,
1,054 1,054 Series 1997-1, Class A5, 7.35%, 5/25/27 1,034 1,034
AmResco Residential Securities Mortgage Loan,
3,000 3,000 6.96%, 3/25/27 2,912 2,912
Green Tree Financial Corporation Pass-Thru Certificates:
1,072 1,072 Series 1994-4, Class A4, 7.95%, 7/15/19 1,077 1,077
5,927 5,927 Series 1997-E, Class HEA6, 6.62%, 1/15/29 5,774 5,774
MDC Asset Investors Trust,
Real Estate Mortgage Investment Conduit (REMIC),
452 452 Series VIII, Class 8, 7.75%, 9/25/17 457 457
Merrill Lynch Mortgage Investors,
1,658 1,658 Series 1998-C1, Class A1, 6.31%, 11/15/26 1,589 1,589
Prudential Securities Financial Asset Funding Corp.,
1,292 1,292 Series 1993-8, Class A, 5.775%, 11/15/14 1,249 1,249
Prudential Securities Secured Financing Corp.:
949 949 Series 1993-1, Class A, 6.44%, 2/16/21 927 927
1,473 1,473 Series 1994-5, Class A1, 5.66%, 5/25/25 1,390 1,390
Residential Asset Securities Corporation,
1,000 1,000 Series 1998-KS1, Class AI9, 6.445%, 3/25/28 934 934
Salomon Brothers Mortgage Securities VI,
800 800 Series 1986-1, Class A, 6.00%, 12/25/11 770 770
Westam Mortgage Financial Corporation,
557 557 Series 11, Class A, 6.36%, 8/26/20 533 533
------- --------- --------
18,646 - 18,646
------- --------- --------
International/Yankee (U.S. $ Denominated) 8.1%
AT & T Canada, Inc. Senior Notes:
2,000 2,000 9.95%, 6/15/08 1,574 1,574
2,000 2,000 10.625%, 11/01/08 2,218 2,218
Banco Santander-Chile Notes,
3,450 3,450 6.50%, 11/01/05 3,286 3,286
British Sky Broadcasting Subordinated Debentures,
1,130 1,130 6.875%, 2/23/09 988 988
Corp Andina De Fomento Notes,
750 750 7.75%, 3/01/04 737 737
Dresdner Bank Subordinated Debentures,
650 650 7.25%, 9/15/15 593 593
</TABLE>
See notes to the Pro Form Financial Statements
21
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ford Capital BV Debentures:
175 175 9.875%, 5/15/02 182 182
600 600 9.50%, 6/01/10 649 649
Hydro-Quebec Corporation Debentures,
2,250 2,250 11.75%, 2/01/12 2,931 2,931
Korea Development Bank Bonds:
1,300 1,300 6.25%, 5/01/00 1,300 1,300
1,075 1,075 7.125%, 9/17/01 1,063 1,063
Korea Electric Power Debentures:
3,000 3,000 8.00%, 7/01/02 2,959 2,959
820 820 7.75%, 4/01/13 746 746
750 750 6.75%, 8/01/27 698 698
Midland Bank PLC Subordinated Notes,
4,225 4,225 6.95%, 3/15/11 3,891 3,891
National Bank of Hungary Debentures,
1,350 1,350 8.875%, 11/01/13 1,393 1,393
Norsk Hydro A/S Debentures,
1,350 1,350 9.00%, 4/15/12 1,445 1,445
Pohang Iron & Steel Notes,
875 875 7.125%, 7/15/04 827 827
Sumitomo Bank International Notes,
1,600 1,600 9.55%, 7/15/00 1,598 1,598
Sanwa Bank Ltd. Subordinated Notes,
2,000 2,000 8.35%, 7/15/09 1,976 1,976
Union Camp Corp. Debentures,
659 659 10.00%, 5/01/19 682 682
Wharf Capital International Ltd. Notes:
800 800 8.875%, 11/01/04 804 804
1,725 1,725 7.625%, 3/13/07 1,602 1,602
----------- ------------- ------------
34,142 - 34,142
----------- ------------- ------------
U.S. Government Agency-Backed
Mortgage Issues 0.7%
Federal Farm Credit Bank,
500 500 8.95%, 6/01/06 540 540
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
299 299 Series 1551, Class E, 6.50%, 9/15/07 297 297
364 364 Series 1167, Class E, 7.50%, 11/15/21 359 359
1,099 1,099 Series 1286, Class A, 6.00%, 5/15/22 1,034 1,034
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
522 522 Series 1992-103, Class L, 7.50%, 11/25/02 523 523
223 223 Series 1990-89, Class K, 6.50%, 7/25/20 213 213
----------- ------------- ------------
2,426 540 2,966
----------- ------------- ------------
U.S. Treasury Obligations 27.9%
U.S. Treasury Bonds:
10,000 10,000 13.75%, 8/15/04 12,600 12,600
23,600 23,600 10.75%, 8/15/05 27,929 27,929
U.S. Treasury Notes:
2,300 2,300 5.875%, 6/30/00 2,299 2,299
180 180 5.875%, 11/15/04 175 175
U.S. Treasury Strips, Principal Only:
60,900 60,900 0.00%, 11/15/04 45,216 45,216
42,000 42,000 0.00%, 8/15/05 29,696 29,696
----------- ------------- ------------
115,441 2,474 117,915
----------- ------------- ------------
Total Long-Term Investments (Cost $411,530) 362,860 37,420 400,280
----------- ------------- ------------
Pro Forma
Firstar Mercantile Combined
Number Number Number
of Shares of Shares of Shares
-------------- ----------- -----------
SHORT-TERM INVESTMENTS 5.1%
</TABLE>
See notes to the Pro Forma Financial Statements
22
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Investment Companies 5.3%
1,132 1,132 Federated Money Market Trust 1,132 1,132
6,205 6,205 Financial Square Prime Obligation Fund 6,205 6,205
15,057 15,057 Short-Term Investments Co. Liquid Assets Portfolio 15,057 15,057
------------ ------------- ----------
Total Short-Term Investments (Cost $22,394) 21,262 1,132 22,394
------------ ------------- ----------
Total Investments (Cost $433,924) 100.0% $ 384,122 $ 38,552 $ 422,674
============ ============= ==========
* Unregistered Security
</TABLE>
See notes to the Pro Forma Financial Statements
23
<PAGE>
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND FUND
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND FUND / MERCANTILE SHORT-INTERMEDIATE
MUNICIPAL PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Mercantile Combined Firstar Mercantile Combined
Prinicipal Prinicipal Prinicipal Market Market Market
Amount Amount Amount Value Value Value
------------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
GENERAL OBLIGATION 13.2%
Brown County,
Wisconsin, Series A, G.O.,
$ 325 $ 325 4.80%, 11/01/01 $ 325 $ 325
Duluth, Minnesota, Series A, G.O.,
365 365 4.65%, 2/01/02 365 365
Elgin Illinois,
$ 2,990 2,990 7.25%, 1/01/04 $ 3,204 3,204
Kentucky County, Michigan, Building Authority,
800 800 4.50%, 12/01/01 799 799
Lake County, Illinois, School District 112,
1,415 1,415 9.00%, 12/01/05 1,674 1,674
Loudoun County, Virginia, Series A, G.O.,
1,000 1,000 5.00%, 12/01/02 1,006 1,006
Massachusetts State Port Authority Revenue, Servies A,
1,000 1,000 5.75%, 7/01/12 1,035 1,035
New York State, Environmental Facilities Revenue,
1,000 1,000 5.05%, 1/15/13 956 956
Ohio State Building Authority,
1,000 1,000 4.75%, 10/01/17 884 884
Rhode Island State, Series A, G.O.,
900 900 4.60%, 11/01/03 891 891
South Dakota State Building Authority Building
Revenue, Series A,
640 640 5.00%, 9/01/02 642 642
Sparks, Nevada, G.O.,
900 900 4.80%, 3/01/04 894 894
Vermont Municipal Bond Bank, Series 2,
270 270 4.50%, 12/01/01 270 270
Washington State,
1,500 1,500 6.30%, 9/01/02 1,542 1,542
------- -------- ------------
Total General Obligation (Cost $14,495) 6,420 8,067 14,487
------- -------- ------------
REVENUE BONDS 10.7%
Education 2.7%
Eaton Rapids, Michigan, Public Schools,
1,000 1,000 5.375%, 5/01/07 1,022 1,022
Jefferson County, Colorado, School District
No. R-001, Series A,
1,000 1,000 5.25%, 12/15/11 990 990
Plano Independent School District,
1,000 1,000 4.70%, 2/15/13 911 911
------- -------- ------------
Total Education - 2,923 2,923
------- -------- ------------
Hospital 1.7%
North Carolina Medical Care Community,
Pitt County Memorial
Hospital, Hospital & Nursing Home Revenue,
Series A,
1,000 1,000 4.00%, 12/01/01 981 981
St. Joseph County, Indiana, Hospital Authority,
Memorial Hlth Syst,
1,000 1,000 4.75%, 8/15/12 903 903
------- -------- ------------
Total Hospital - 1,884 1,884
------- -------- ------------
Transportaition 3.1%
Hawaii State Highway Revenue,
600 600 4.80%, 7/01/03 598 598
Illinois State Toll Highway Authority, Series A,
750 750 4.75%, 1/01/02 748 748
Kansas State Department of Transportation,
Highway Revenue
1,000 1,000 5.50%, 9/01/10 1,027 1,027
Oklahoma State Capital Improvement Authority,
1,000 1,000 4.00%, 12/01/01 983 983
</TABLE>
See notes to the Pro Forma Financial Statements
24
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
------- ------ ---------
Total Transportation - 3,356 3,356
------- ------ ---------
Utilities 3.2%
Dallas, Texas, Water Works & Sewer System Revenue,
450 450 4.60%, 4/01/01 451 451
Grant County, Washington Public Utilities District
No. 001, Electric Revenue, Series F,
500 500 4.80%, 1/01/04 498 498
North Davis County, Utah, Sewer District,
560 560 5.70%, 3/01/02 569 569
Scottsdale Arizona Water and Sewer,
1,290 1,290 7.00%, 7/01/06 1,423 1,423
Seattle, Washington Municipal Light & Power Revenue,
600 600 4.80%, 5/01/02 599 599
------- ------ ---------
Total Utilities 1,423 2,117 3,540
------- ------ ---------
Total Revenue Bonds (Cost $12,204) 1,423 10,280 11,703
------- ------ ---------
PREREFUNDED AND ESCROWED
TO MATURITY 51.0%
Alaska State Housing Finance Corporation,
1,465 1,465 6.375%, 12/01/12, Prerefunded 12/01/02 1,536 1,536
Anniston, Alabama Regional Medical Center Board
Project,
1,400 1,400 8.00%, 7/01/11, Escrowed to Maturity 1,679 1,679
Arizona State Municipal Funding Program,
1,500 1,500 8.75%, 8/01/07, Escrowed to Maturity 1,826 1,826
Arizona Health Facilities Hospital Revenue,
1,870 1,870 7.25%, 11/01/14, Prerefunded 11/01/03 2,023 2,023
Cherokee County, Oklahoma,
1,340 1,340 0.00%, 11/01/11, Escrowed to Maturity 710 710
Cleveland, Ohio Parking Facilities Revenue,
1,125 1,125 8.10%, 9/15/22, Prerefunded 9/15/02 1,223 1,223
Delaware State Economic Development Authority,
First Mortgage; Gilpin Hall Project
2,800 2,800 7.625%, 7/01/25, Prerefunded 7/01/05 3,162 3,162
Delaware State Health Facilities Authority Revenue,
1,265 1,265 7.00%, 10/01/15, Prerefunded to Various Dates 1,357 1,357
Detroit, Michigan Water Supply System,
1,000 1,000 6.25%, 7/01/12, Prerefunded 7/01/02 1,041 1,041
Emporia, Kansas Sewer System,
1,165 1,165 6.25%, 11/15/07, Escrowed to Maturity 1,266 1,266
Farmington, New Mexico Power Revenue Bonds,
2,645 2,645 9.875%, 1/01/13, Prerefunded 7/01/05 3,157 3,157
Fruita, Colorado, Escrowed to Maturity,
490 490 9.25%, 4/01/03 537 537
Fulco, Georgia Hospital Authority
Anticipation Certificates,
1,090 1,090 6.25%, 9/01/13, Prerefunded 9/01/02 1,140 1,140
Granite, Illinois Single Family Mortgage Revenue,
965 965 7.75%, 10/01/11, Escrowed to Maturity 1,098 1,098
Hazleton, Pennslyvania, Health Services Authority,
1,000 1,000 8.38%, 7/01/12, Prerefunded to 1/01/03 1,098 1,098
Hodgkins, Illinois,
1,200 1,200 9.50%, 12/01/09, Prerefunded 12/01/01 1,318 1,318
Houston, Texas Airport Systems Revenue,
950 950 8.20%, 7/01/05, Escrowed to Maturity 1,042 1,042
Illinois Health Facilities Authority Revenue,
Memorial Hospital,
1,000 1,000 7.25%, 5/01/22, Prerefunded 5/01/02 1,063 1,063
Illinois Health Facilities Authority Revenue,
Evangelical -A,
1,320 1,320 6.75%, 4/15/12, Escrowed to Maturity 1,443 1,443
Kentucky State Turnpike Authority Revenue,
1,400 1,400 7.20%, 7/01/09, Escrowed to Maturity 1,522 1,522
Louisiana Public Facilities Authority Hospital Revenue,
1,915 1,915 7.25%, 10/01/22, Prerefunded 10/01/02 2,048 2,048
Louisville, Kentucky Water & Sewer Revenue,
1,250 1,250 6.00%, 11/15/07, Escrowed to Maturity 1,318 1,318
Loveland, Colorado, Water Utility Improvements,
1,365 1,365 8.875%, 11/01/05, Escrowed to Maturity 1,561 1,561
Metropolitan Government Nashville & Davidson
County, Tennessee Water & Sewer,
5,000 5,000 0.00%, 12/01/13, Prerefunded 12/01/02 1,396 1,396
</TABLE>
See notes to the Pro Forma Financial Statements
25
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Minneapolis, Minnesota Hospital and Rehabiltation
St. Marys Hospital,
1,255 1,255 10.00%, 6/01/13, Escrowed to Maturity 1,634 1,634
New Jersey State Turnpike Authority Revenue,
820 820 6.75%, 1/01/09, Escrowed to Maturity 885 885
Peninsula Ports Authority Virginia Health Care
Facilities - Mary Immaculate Project,
2,000 2,000 7.00%, 8/01/17, Prerefunded to 8/01/04 & 8/01/06 2,091 2,091
Philadelphia Hospitals Authority Revenue,
1,150 1,150 9.875%, 7/01/10, Prerefunded to 7/01/05 1,394 1,394
Phoenix, Arizona Street & Highway Users,
Partially Prerefunded 7/01/02, Remainder Escrowed
to Maturity:
1,000 1,000 6.50%, 7/01/09 1,049 1,049
4,700 4,700 6.25%, 7/01/11 4,834 4,834
Regional Transportation Authority, Illinois Series B,
1,000 1,000 6.00%, 6/01/07, Prerefunded 6/01/04 1,053 1,053
San Marcos, California Certificates of Participation,
1,085 1,085 0.00%, 2/15/06, Escrowed to Maturity 808 808
St. Paul, Minnesota, Port Authority Hotel,
2,335 2,335 8.05%, 8/01/21, Prerefunded 8/01/08 2,757 2,757
Tulsa County, Oklahoma Home Finance Authority Single
Family Mortgage Revenue,
1,710 1,710 6.90%, 8/01/10, Escrowed to Maturity 1,908 1,908
University of Illinois,
1,005 1,005 6.10%, 10/01/03, Escrowed to Maturity 1,042 1,042
Wausau, Wisconsin School District,
1,000 1,000 6.50%, 4/01/10, Prerefunded 4/01/02 1,029 1,029
-------- --------- ------------
Total Prerefunded and Escrowed to Maturity
(Cost $57,552) 56,048 - 51.033%
-------- --------- ------------
INSURED BONDS 19.7%
Education 5.6%
Box Elder County, Utah School District, G.O.,
675 675 4.80%, 6/15/01 677 677
Chelsea, Michigan School District, G.O.,
400 400 5.25%, 5/01/01 404 404
Cook County, Illinois Niles Twp. School District,
1,560 1,560 0.00%, 12/01/07 1,038 1,038
Cook County, Illinois Cicero School District,
1,000 1,000 8.50%, 12/01/04 1,136 1,136
King County, Washington School District No 414, G.O.,
1,000 1,000 5.00%, 12/01/08 986 986
Muncie, Indiana School Building Corp.,
500 500 4.95%, 1/15/02 501 501
Ottumwa, Iowa Community School District, G.O.,
425 425 5.10%, 6/01/01 428 428
Universit of Texas Permanent University Fund,
1,000 1,000 5.00%, 7/01/14 933 933
-------- --------- ------------
2,174 3,929 6,103
-------- --------- ------------
Electric 1.9%
Springfield, Illinois Electric Revenue:
1,000 1,000 6.00%, 3/01/04 1,033 1,033
1,050 1,050 6.00%, 3/01/06 1,097 1,097
-------- --------- ------------
2,130 - 2,130
-------- --------- ------------
General Obligation 10.2%
Amarillo, Texas Independent School District,
1,035 1,035 7.00%, 2/01/06 1,131 1,131
Bolingbrook, Illinois,
1,080 1,080 0.00%, 1/01/05 845 845
Chicago, Illinois,
675 675 11.60%, 1/01/01 706 706
1,000 1,000 5.50%, 1/01/13 1,004 1,004
Du Page County, Illinois, Forest Preservation District
, G.O.,
500 500 5.90%, 11/01/01 509 509
Hawaii State, Series CI, G.O.,
1,000 1,000 4.10%, 11/01/01 984 984
Houston, Texas, Series C, G.O.,
800 800 5.50%, 4/01/01 808 808
Illinois Sate, G.O.,
400 400 5.25%, 4/01/01 403 403
Maine Municipal Bond Bank, Series A,
800 800 4.90%, 11/01/02 802 802
</TABLE>
See notes to the Pro Forma Financial Statements
26
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Maricopa County, Arizona Elementary School District,
No. 068, Alhambra,
2,500 2,500 5.625%, 7/01/13, Partially Prerefunded 2,547 2,547
Washington State, Series R-92C, G.O.,
250 250 5.75%, 9/01/02 255 255
Will County, Illinois Community School District #365,
1,685 1,685 0.00%, 11/01/05 1,253 1,253
---------- --------- ------------
6,482 4,765 11,247
---------- --------- ------------
Public Facilities & Improvements 2.0%
Illinois State Certificates of Participation,
1,000 1,000 6.00%, 7/01/06 1,045 1,045
Texas State Turnpike Authority, Dallas,
1,000 1,000 6.50%, 1/01/08 1,079 1,079
---------- --------- ------------
2,124 - 2,124
---------- --------- ------------
Total Insured Municipal Bonds (Cost $22,211) 12,910 8,694 21,604
---------- --------- ------------
Pro Forma
Firstar Mercantile Combined
Number of Number of Number of
Shares Shares Shares INVESTMENT COMPANIES 5.4%
------------- ------------ ----------
607 607 Federated Tax-Fee Fund 607 607
1,584 1,584 Financial Square Tax-Exempt 1,584 1,584
3,793 3,793 Tax Free Investment Trust 3,793 3,793
---------- --------- ------------
Total Investment Companies (Cost $5,984) 5,377 607 5,984
---------- --------- ------------
Total Investments (Cost $112,446) 100.0% $ 82,178 $ 27,648 $ 109,826
========== ========= ============
</TABLE>
See notes to the Pro Forma Financial Statements
27
<PAGE>
FIRSTAR NATIONAL MUNICIPAL BOND FUND
MERCANTILE NATIONAL MUNICIPAL BOND PORTFOLIO / FIRSTAR STELLAR INSURED TAX FREE
BOND FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Mercantile Stellar Combined Mercantile Stellar Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Value Value Value
---------------- ----------- ------------ ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Municipal Bonds 99.7%
Alabama 1.5%
Alabama Water PCA, Revenue Bonds,
$ 1,750 $1,750 (AMBAC INS), 6.70%, 8/15/06 $ 1,793 $1,793
Alabama Water PCA, Revenue Bonds,
1,855 1,855 (AMBAC INS),5.50%, 8/15/12 1,863 1,863
Bessemer, AL Water Revenue, Revenue
2,500 2,500 Bonds, (AMBAC INS), 5.75%, 7/1/16 2,514 2,514
---------- ------- ---------
- 6,170 6,170
---------- ------- ---------
Alaska 1.5%
Alaska Energy Auth. Power, Rev. Bonds,
1,000 1,000 Bradley Lake, (FSA INS), 6.0%, 7/1/10 1,047 1,047
Alaska Energy Auth. Power, Rev. Bonds,
4,040 4,040 Bradley Lake, (FSA INS), 6.0%, 7/1/11 4,232 4,232
Alaska State, Housing Finance Corp.,
Series A, 5.70%, 12/1/11, Callable on
$1,000 1,000 12/1/05 @102 (MBIA Insured) $1,008 1,008
---------- ------- ---------
1,008 5,279 6,287
---------- ------- ---------
California 2.7%
San Francisco Bay Area Rapid Transit Tax
Revenue, 5.25%, 7/1/17, Callable on
5,000 5,000 7/1/08 @ 101 4,749 4,749
Southern California Public Power Authority,
Electric Power & Light Revenue, Palo
Verde, Series A, 5.00%, 7/1/15, Callable
7,000 7,000 on 7/1/03 @ 102 ( AMBAC-TCRS Insured) 6,567 6,567
---------- ------- ---------
11,316 - 11,316
---------- ------- ---------
Colorado 3.3%
Adams County School District No. 012,
G.O., 5.40%, 12/15/13, Callable on
6,655 6,655 12/15/07 @ 101 (FGIC Insured) 6,585 6,585
Colorado Post-Secondary Education
Facilities, Rev. Bonds, Auraria
1,250 1,250 Foundation Project, (FSA INS), 5.75%,
9/1/10 1,277 1,277
Colorado Springs, Utilities Revenue, System
Improvement, Series A, 5.25%, 11/15/22,
6,160 6,160 Callable on 11/15/07 @ 100 5,588 5,588
---------- ------- ---------
12,173 1,277 13,450
---------- ------- ---------
Connecticut 3.1%
Connecticut State, Clean Water Foundation
Revenue, 5.25%, 3/1/20, Callable on
4,360 4,360 3/1/08 @ 101 4,119 4,119
Connecticut State, Series A, G.O., 5.25%,
8,785 8,785 3/1/13, Callable on 3/1/07 @ 101 8,640 8,640
---------- ------- ---------
12,759 - 12,759
---------- ------- ---------
District of Columbia 1.2%
District of Columbia Water & Sewer
Authority Revenue, 5.50%, 10/1/18,
5,000 5,000 Callable on 4/1/09 @ 160 (FSA Insured) 4,810 - 4,810
---------- ------- ---------
Flordia 5.0%
Flordia State Department of Environmental
Preservation 2000, General Services
Revenue, Series A, 5.50%, 7/1/13,
5,000 5,000 Callable on 7/1/06 @ 101 (MBIA Insured) 5,026 5,026
Flordia State Department of Transportation,
1,280 1,280 Rev. Bonds, (FGIC INS), 5.13%, 7/1/13 1,241 1,241
Flordia State Department of Transportation,
G.O., 5.25%, 7/1/17, Callable on 7/1/06
5,525 5,525 @ 101 5,260 5,260
Orlando & Orange County Expressway Auth.,
FL,
</TABLE>
See notes to the Pro Forma Financial Statements
28
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1,500 1,500 Revenue Bonds, (AMBAC INS), 5.38%, 7/1/08 1,517 1,517
Palm Beach County, Park & Recreational
Facilities Revenue, 5.25%, 11/1/16,
5,000 5,000 Callable on 11/1/06 @ 102 (FSA Insured) 4,792 4,792
Palm Beach County, Solid Waste Authority
Revenue, Series B, 5.38%, 10/1/11,
Callable on 10/1/06 @ 101 (AMBAC
3,000 3,000 Insured) 3,012 3,012
------ ------ ------
18,090 2,758 20,848
------ ------ ------
Hawaii 3.0%
Hawaii State, Series CN, G.O., 5.50%,
3/1/14, Callable on 3/1/07 @ 102
8,000 8,000 (FGIC Insured) 7,893 7,893
Hawaii State, Series CR, G.O., 5.00%,
4/1/16, Callable on 4/1/08 @ 101
5,000 5,000 (MBIA Insured) 4,565 4,565
------ ------ ------
12,458 - 12,458
------ ------ ------
Illinois 16.1%
Bolingbrook, IL, Residential Mortgage, Rev.
1,080 1,080 Bonds, (FGIC INS), 7.50%, 8/1/10 1,225 1,225
Chicagoo, IL, GO UT, (MBIA INS),
1,100 1,100 5.38%, 1/1/13 1,090 1,090
Chicago Metropolitian Water Reclamation
District, G.O., 5.25%, 12/1/14, Callable on
5,000 5,000 12/1/08 @102 4,846 4,846
Chicago, IL Park District, GO UT, (MBIA INS),
2,000 2,000 5.60%, 1/1/14 2,005 2,005
Cook County, IL School District No. 123, GO
1,000 1,000 LT, (FSA INS), 6.20%, 12/1/08 1,068 1,068
Cook County, IL School District No. 97, GO
2,235 2,235 UT, (FGIC INS), 9.00%, 12/1/11 2,913 2,913
Cook County, G.O., 5.13%
6,000 6,000 11/15/12 (MBIA Insured) 5,570 5,570
Cook County, Series A, G.O., 6.25%
9,090 9,090 11/15/12 (MBIA Insured) 9,752 9,752
Illinois Health Facility Authority, Rev.
Bonds, Advocate Health Care Network,
2,500 2,500 (MBIA INS) 5.80%, 8/15/16 2,485 2,485
Illinois Health Facility Authority, 5.38%,
7/1/17, Callable on 7/1/07 @ 101
5,395 5,395 (MBIA Insured) 5,125 5,125
Ilinois State, G.O., 5.25%, 2/1/13, Callable
8,400 8,400 on 2/1/07 @ 101 (FGIC Insured) 8,209 8,209
Illinois State, G.O. UT, (MBIA INS),
2,225 2,225 6.10%, 2/1/17 2,277 2,277
Illinois State, G.O. UT, (MBIA INS),
1,410 1,410 5.75%, 5/1/21 1,391 1,391
McHenry County, IL Community Unit School
District No. 200, Series A, GO UT, (FSA INS),
5.85%,
2,400 2,400 1/1/16, Prerefunded 1/1/08 2,429 2,429
Northern Illinois University, Revenue Bonds,
1,000 1,000 (FGIC INS), 5.70%, 4/1/16 1,001 1,001
Regional Transportation Authority Series A,
Revenue
2,500 2,500 Bonds, (AMBAC INS), 6.00%, 6/1/09 2,634 2,634
St. Clair County, IL, GO UT, (FGIC INS), 6.00%,
2,020 2,020 10/1/11 2,134 2,134
Will County, IL Community Unit School ditstrict
3,045 3,045 No. 365, GO UT, (FSA INS), 0.00%, 11/1/10,
principal only 1,702 1,702
Will County, IL Forest Preservation District,
2,500 2,500 GO UT, (AMBAC INS), 6.00%, 12/1/06 2,562 2,562
Will County, IL Forest Preservation District,
5,805 5,805 GO UT, (FGIC INS), 6.00%, 12/1/10 6,138 6,138
------ ------ ------
33,502 33,054 66,556
------ ------ ------
Indiana 2.1%
Crown Point, IN Multi-School Building Corp.,
2,630 2,630 (MBIA INS), 7.88, 1/15/06 2,958 2,958
Indiana Transportation Finance Authority,
Series A, Airport Lease, Rev. Bonds,
2,000 2,000 (AMBAC Insured), 5.0%, 11/1/07 1,972 1,972
Indiana Transportation Finance Authority,
Highway Revenue, Series A, 5.75%,
3,500 3,500 6/1/12 (AMBAC Insured) 3,579 3,579
------ ------ ------
3,579 4,930 8,509
------ ------ ------
Iowa 0.3%
Muscatine, IA, Electric, Revenue Bonds,
1,000 1,000 6.70%, 1/1/13 - 1,079 1,079
------ ------ ------
</TABLE>
See notes to the Pro Forma Financial Statements
29
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Kentucky 0.6%
Jefferson County, KY HFDA, Rev. Bonds, University
2,500 2,500 Medical Center, Inc., (MBIA INS), 5.50%, 7/1/17 - 2,444 2,444
------ ----- ------
Louisiana 1.8%
Baton Rouge, LA Sales & Use Tax Public Improvements
2,030 2,030 Series A, (FGIC INS), 5.25%, 8/1/15 1,943 1,943
Jefferson Parish, LA, Revenue Bonds,
1,000 1,000 (AMBAC INS), 5.00%, 11/1/11 971 971
Jefferson Parish, LA, Home Mortgage Auth., Revenue
1,000 1,000 Bonds, (FGIC INS), 7.10%, 8/1/11 1,141 1,141
Lafayette, LA Sales Tax Public Improvements,
1,000 1,000 Sereis B, (FGIC INS), 7.00%, 3/1/08 1,111 1,111
Louisana PFA, Rev. Bonds, Tulane University,
1,500 1,500 (MBIA INS), 5.10%, 11/15/14 1,418 1,418
Terrebonne Parish, LA Hospital Service District No.
1, Revenue Bonds, Terrebonne General Medical
1,000 1,000 Center, (AMBAC INS), 5.25%, 4/1/14 939 939
------ ----- ------
- 7,523 7,523
------ ----- ------
Maine 0.9%
Maine Municipal Board Series D,
4,000 4,000 (AMBAC INS), 5.35%, 11/1/17 - 3,843 3,843
------ ----- ------
Massachusetts 5.3%
Martha's Vineyard, MA Series A, Rev. Bonds,
1,000 1,000 (FSA INS), 5.13%, 5/1/18 920 920
Massachusetts Bay Transportation Authority,
Series A, 5.00%, 3/1/12, Callable on
5,795 5,795 3/1/07 @ 101 (FGIC Insured) 5,599 5,599
Massachusetts Bay Transportation Authority,
Series A, 5.13%, 3/1/17, Callable on
6,165 6,165 3/1/07 @ 101 (FGIC Insured) 5,746 5,746
Massachusetts State Water Pollution
Abatement Trust, Series 3, 5.63%, 2/1/15,
7,115 7,115 Callable on 2/1/07 @ 101 7,180 7,180
Massachusetts Water Resources Authority, Rev.
2,500 2,500 Bonds, (FGIC INS), 5.40%, 11/1/11 2,568 2,568
------ ----- ------
18,525 3,488 22,013
------ ----- ------
Michigan 1.9%
Dearborn, MI Economic Development Corp., Rev.
Bonds, Oakwood Obligated Group, (FGIC INS),
2,450 2,450 5.75%, 11/15/15 2,446 2,446
Haslett, MI Public School District, GO UT,
1,200 1,200 (MBIA INS), 5.70%, 5/1/16 1,242 1,242
Lanse Creuse, MI Public School District,
1,000 1,000 (AMBAC INS), 5.25%, 5/1/16 957 957
Richmond, MI Community School District, GO UT,
School Improvements, (AMBAC INS), 5.60%,
1,065 1,065 5/1/18, Prerefunded 5/1/06 1,095 1,095
Ypsilanti, MI School District, GO UT,
2,000 2,000 (FGIC INS), 5.60%, 5/1/12, Prerefunded 5/1/07 2,059 2,059
------ ----- ------
- 7,799 7,799
------ ----- ------
Minnesota 3.7%
Minnesota State, G.O., 4.90%, 8/1/14,
5,000 5,000 Callable on 8/1/07 @ 100 4,669 4,669
Monticello Independent School District No.
882, G.O., 5.40%, 2/1/15, Callable on
6,000 6,000 2/1/06 @ 100 6,014 6,014
Rochester Health Care Facilities, Mayo
Foundation, Series A, 5.38%, 11/15/18,
5,000 5,000 Callable on 5/15/08 @ 101 4,683 4,683
------ ----- ------
15,366 - 15,366
------ ----- ------
Mississippi 1.6%
Mississippi State, Series A, G.O., 5.13%,
6,835 6,835 7/1/14, Callable on 7/1/07 @ 100 6,546 - 6,546
------ ----- ------
Montana 0.6%
Montana State Health Facilities Auth., Revenue
Bonds, Sisters of Charity, Leavenworth,
2,550 2,550 (MBIA INS), 5.13%, 12/1/18 - 2,336 2,336
------ ----- ------
Nebraska 0.3%
Omaha, NE Public Power District Series B, Electric
Revenue Bonds, 6.00%, 2/1/07, Escrowed to
1,000 1,000 maturity - 1,048 1,048
------ ----- ------
Nevada 5.8%
Clark County Flood Control, Series F, G.O.,
</TABLE>
See notes to the Pro Forma Financial Statements
30
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
5.00%, 11/1/12, Cllable on 11/1/08 @ 101
6,460 6,460 (FGIC Insured) 6,147 6,147
Clark County, NV School District, GO UT,
2,500 2,500 (FGIC INS), 5.75%, 6/15/10 2,608 2,608
Clark County, NV School District, GO UT,
5,000 5,000 (FGIC INS), 5.50%, 6/15/11 5,042 5,042
Clark County, NV School District, GO UT,
2,500 2,500 (FGIC INS), 5.80%, 6/15/11 2,606 2,606
Nevada State, 5.00%, 5/15/15, Callable on
6,745 6,745 5/15/08 @ 100 6,167 6,167
Washoe County, NV School District, GO UT,
1,500 1,500 (MBIA INS), 5.75%, 6/1/11 1,530 1,530
------ ----- ------
17,356 6,744 24,100
------ ----- ------
New Jersey 2.9%
Camden County, Municipal Utilities Authority
Sewer Revenue, Series C, G.O., 5.10%,
5,000 5,000 7/15/12, Callable on 7/15/08 @ 101 4,883 4,883
New Jersey State Transportation System,
Series A, 5.00%, 6/15/14, Callable on
7,500 7,500 6/15/08 @ 100 7,055 7,055
------ ----- ------
11,938 - 11,938
------ ----- ------
New York 1.2%
New York State Thruway Authority, Series A,
5.25%, 4/1/14, Callable on 4/1/07 @ 102
5,000 5,000 (AMBAC Insured) 4,842 - 4,842
------ ----- ------
North Dakota 1.2%
Fargo Water Revenue, 5.13%, 1/1/17,
5,250 5,250 Callable on 1/1/08 @ 100 (MBIA Insured) 4,843 - 4,843
------ ----- ------
Ohio 6.9%
Clermont County, OH, GO UT, (AMBAC INS),
2,555 2,555 6.00%, 5/15/07 2,633 2,633
Cleveland, OH Waterworks, Series H, Improvement
Rev. Bonds, (MBIA INS), 5.75%, 1/1/16,
2,460 2,460 Prerefunded 1/1/06 2,575 2,575
Cleveland, OH Waterworks, Series H, Improvement
Rev. Bonds, (MBIA INS), 5.75%, 1/1/16,
40 40 Unrefunded balance 40 40
Columbus, OH Sewer System, Rev. Bonds,
1,000 1,000 6.25%, 6/1/08 1,039 1,039
Greater Cleveland Regional Transportation Auth., OH,
GO UT, (FGIC INS), 5.65%, 12/1/16,
3,500 3,500 Prerefunded 12/1/06 3,643 3,643
Hamilton County, OH Hospital Facilities Auth., Rev.
Bonds, Children's Hospital Medical Center, Cincinnati,
1,000 1,000 (FGIC INS), 5.20%, 5/15/09 995 995
Montgomery County, OH, Water Revenue Bonds,
Greater Moraine-Beaver Creek, (FGIC INS),
2,000 2,000 6.25%, 11/15/12 2,080 2,080
Ohio State Building Auth., Adult Correctional
Facilities Revenue Bonds, (MBIA INS),
1,000 1,000 5.70%, 10/1/06 1,034 1,034
Ohio State Building Auth., Revenue Bonds, State
Facilities - Administration Building,
1,000 1,000 (MBIA INS),6.00%, 10/1/08 1,046 1,046
Ohio State Building Auth., Revenue Bonds, State
Facilities - Administration Building,
1,225 1,225 (MBIA INS), 6.00%, 10/1/09 1,272 1,272
Ohio State Building Authority, 4.75%,
8,000 8,000 10/1/17, Callable on 10/1/08 @ 101 7,069 7,069
Ohio State Turnpike Commission Series A,
1,000 1,000 (MBIA INS), 5.70%, 2/15/13 1,018 1,018
Ohio State Water Development Auth., Pollution
2,000 2,000 Control Revenue Bonds, (MBIA INS), 5.25%, 12/1/09 2,008 2,008
Ohio State Water Development Auth., Revenue
Bonds, (AMBAC INS), 5.80%, 12/1/11, Escrowed
1,000 1,000 to maturity 1,048 1,048
Sylvania, OH City School District, GO UT,
1,000 1,000 (FGIC INS), 5.80%, 12/1/15 1,015 1,015
------ ------ ------
7,069 21,446 28,515
------ ------ ------
Oregon 1.5%
Washington County, Unified Sewer Agency,
Sewer Revenue, Series 1, 5.75%, 10/1/10
6,110 6,110 (FGIC Insured) 6,323 - 6,323
------ ------ ------
</TABLE>
See notes to the Pro Forma Financial Statements
31
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Pennsylvania 2.1%
Bucks County, PA Water & Sewer Auth., Rev Bonds,
1,000 1,000 (FGIC INS), 5.55%, 12/1/17 984 984
Chester Upland School Auth., PA, Series A, Rev Bonds,
2,000 2,000 (FSA INS), 5.25%, 9/1/17 1,888 1,888
Pennsylvania State, G.O., 5.13%, 9/15/11,
Callable on 3/15/07 @ 101.5 (AMBAC
5,000 5,000 Insured) 4,930 4,930
Pennsylvania State Higher Education Facilities Auth.,
Series A, Revenue Bonds, University of Pennsylvania-
1,000 1,000 Health Services, (MBIA INS), 5.25%, 1/1/12 981 981
------ ------ ------
4,930 3,853 8,783
------ ------ ------
Rhode Island 1.2%
Rhode Island State, Series A, G.O., 5.13%,
8/1/12, Callable on 8/1/07 @ 101 (MBIA
5,055 5,055 Insured) 4,918 - 4,918
------ ------ ------
Tennessee 0.7%
Jackson, TN Water & Sewer, Rev. Bonds,
2,900 2,900 6.30%, 7/1/11, Escrowed to maturity - 3,005 3,005
------ ------ ------
Texas 9.1%
Harris County Health Facilities Development
Revenue, Memorial Hospital Systems
Project, Series A, 5.50%, 6/1/17, Callable
8,000 8,000 on 6/1/07 @ 102 (MBIA Insured) 7,674 7,674
Harris County, TX HFDC, Rev. Bonds, Memorial
2,500 2,500 Hospital System, (MBIA INS), 5.75%, 6/1/19 2,436 2,436
San Antonio Independent School District,
G.O., 5.13%, 8/15/14, Callable on 8/15/08
6,000 6,000 @ 100 (PSF Guaranteed) 5,739 5,739
Houston, TX Water Conveyance System Contract,
Certificate Participation Series J, (AMBAC INS),
1,000 1,000 6,13%, 12/15/09 1,056 1,056
Laredo, TX Independent School District, GO UT,
2,290 2,290 6.75%, 5/1/05 2,540 2,540
Port Houston Authority, TX Harris County, Revenue
2,500 2,500 Bonds, (MBIA INS), 6.50%, 5/1/05 2,564 2,564
Texas State, G.O., 5.40%, 8/1/21, Callable
6,750 6,750 on 8/1/06 @ 100 6,390 6,390
Texas Water Development Board, Revenue Bonds,
2,500 2,500 5.50%, 7/15/10 2,532 2,532
University of Texas Permanent University
Fund, College & University Revenue, 5.00%,
7/1/14, Callable on 7/1/08 @100 (PUFG
7,060 7,060 Guaranteed) 6,590 6,590
------ ------ ------
26,393 11,128 37,521
------ ------ ------
Utah 0.6%
Davis County, UT School District, GO UT,
2,500 2,500 (MBIA INS), 5.70%, 6/1/07 - 2,574 2,574
------ ------ ------
Virginia 1.4%
Chesapeake Bay Bridge & Tunnel District, VA,
1,000 1,000 Rev. Bonds, (FGIC INS), 5.60%, 7/1/07 1,031 1,031
Virginia State Transportation Board,
Transportation Contract Revenue, U.S.
Route 58 Corridor, Series B, 5.13%,
4,920 4,920 5/15/12, Callable on 5/15/06 @ 101 4,810 4,810
------ ------ ------
4,810 1,031 5,841
------ ------ ------
Washington 6.4%
King County School District No. 415, G.O.,
5.35%, 12/1/16, Callable on 12/1/07 @
4,050 4,050 100 (MBIA Insured) 3,907 3,907
King County, Series F, G.O., 5.13%, 12/1/14,
5,000 5,000 Callable on 12/1/07 @ 100 4,706 4,706
Seattle, WA Municipal Lighting & Power, Revenue Bonds,
2,500 2,500 6.10%, 7/1/05, Prerefunded 7/1/04 2,640 2,640
Snohomish County, WA Public Electric Utility District No.
1,000 1,000 001, Revenue Bonds, 6.75%, 1/1/12 1,099 1,099
Tacoma, WA Electric System, Revenue Bonds,
330 330 (AMBAC INS), 6.15%, 1/1/08 343 343
Tacoma , WA Electric System, Revenue Bonds,
2,170 2,170 (AMBAC INS), 6.15%, 1/1/08, Prerefunded 2,238 2,238
</TABLE>
See notes to the Pro Forma Financial Statements
32
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Washington State Motor Vehicle Fuel Tax,
Series D, G.O., 5.38%, 1/1/22, Callable on
8,000 8,000 1/1/07 @ 100 (FGIC Insured) 7,425 7,425
Washington State, Series C, G.O., 5.50%,
4,190 4,190 1/1/17, Callable on 1/1/07 @ 100 4,096 4,096
--------- --------- ---------
20,134 6,320 26,454
--------- --------- ---------
Washington, D.C. 0.3%
District of Columbia, Rev. Bonds, Association of
American Medical Colleges, (AMBAC INS),
1,350 1,350 5.38%, 2/15/17 - 1,285 1,285
--------- --------- ---------
West Virginia 0.6%
Kanawha Putnam County, Charleston WV Single
6,370 6,370 Family Mortgage, 0.00%, 12/1/16 principal only - 2,408 2,408
--------- --------- ---------
Wisconsin 1.6%
Wisconsin Health and Educational Facilities Auth.,
Revenue Bonds, Aurora Medical Group, (FSA INS),
2,460 2,460 5.60%, 11/16/16 2,395 2,395
Wisxonsin Health and Educatinal Facilities Auth.,
Revenue Bonds, Meriter Hospital, Inc., (MBIA INS),
2,000 2,000 6.00%, 12/1/17 2,006 2,006
Wisconsin State, GO UT,
2,095 2,095 (FGIC INS), 5.50, 5/1/10 2,124 2,124
--------- --------- ---------
- 6,525 6,525
--------- --------- ---------
--------- --------- ---------
Total Municipal Bonds (Cost $421,618) 263,688 149,347 413,035
--------- --------- ---------
<CAPTION>
Pro Forma
Mercantile Stellar Combined
Number of Number of Number of
Shares Shares Shares INVESTMENT COMPANIES 0.3%
--------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
991 991 Federated Tax-Free Fund 991 991
330 330 SEI Tax Exempt Money Market Fund 330 330
78 78 Tax Free Inv CO STIF Money Market Fund 78 78
--------- --------- ---------
Total Investment Companies (Cost $1,399) 991 408 1,399
--------- --------- ---------
Total Investments (Cost $423,017) 100.0% $ 264,679 $ 149,756 $ 414,434
========= ========= =========
</TABLE>
See notes to the Pro Forma Financial Statements
33
<PAGE>
FIRSTAR AGGREGATE BOND FUND
MERCANTILE GOVERNMENT & CORPORATE BOND PORTFOLIO / MERCANTILE BOND INDEX
PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Mercantile Mercantile
Mercantile Govt/Corp Mercantile Govt/Corp
Bond Index Bond Pro Forma Bond Index Bond Pro Forma
Portfolio Portfolio Combined Portfolio Portfolio Combined
Principal Principal Principal Principal Principal Principal
Amount Amount Amount Value Value Value
------------ ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Corporate Bonds 30.1%
Aerospace/Defense 0.9%
$2,595 $ 2,595 Raytheon Co., 6.45%, 8/15/02 $2,516 - $2,516
--------- ------ -------
Automotive 3.3%:
Ford Motor Credit Corp., Global Bond, 7.00%,
2,000 $ 750 2,750 9/25/01 1,989 746 2,735
1,850 1,850 Ford Motor Credit Corp., 6.80%, 4/23/01 1,842 1,842
3,194 3,194 Ford Motor Credit Corp., 6.50%, 2/28/02 3,140 3,140
2,000 2,000 General Motors Corp., 8.88%, 5/15/03 2,065 2,065
--------- ------ -------
4,054 5,728 9,782
--------- ------ -------
Automotive Parts 0.6%
2,000 2,000 Dana Corp., 6.25%, 3/1/04 1,871 - 1,871
--------- ------ -------
Banking 0.2%
500 500 BankAmerica Corp., 7.50%, 10/15/02 - 499 499
--------- ------ -------
Commercial Services 1.1%
2,000 1,300 3,300 Cendant Corp., 7.75%, 12/1/03 1,972 1,282 3,254
--------- ------ -------
Computers 0.5%
1,400 1,400 IBM Corp., 6.45%, 8/1/07 - 1,323 1,323
--------- ------ -------
Computer Software 1.5%
1,000 1,500 2,500 Computer Associates, 6.25%, 4/15/03 953 1,430 2,383
1,000 1,200 2,200 Dell Computer Corp., 6.55%, 4/15/08 936 1,097 2,033
--------- ------ -------
1,889 2,527 4,416
--------- ------ -------
Construction 0.6%
2,000 2,000 Armstrong World, 6.35%, 8/15/03 1,803 - 1,803
--------- ------ -------
Consumer Goods & Services 2.2%
3,000 3,000 Motorola, Inc., 7.60%, 1/1/07 3,019 3,019
1,000 1,000 Motorola, Inc., 6.50%, 11/15/28 859 859
2,500 2,500 Procter & Gamble Co., 6.60%, 12/15/04 2,434 2,434
--------- ------ -------
3,878 2,434 6,312
--------- ------ -------
Financial Services 7.6%
2,000 2,000 Associates Corp., 5.80%, 4/20/04 1,870 1,870
2,000 2,000 Citigroup, Inc., 6.63%, 1/15/28 1,715 1,715
1,700 1,700 GE Global Insurance Holdings, 6.45%, 3/1/19 1,481 1,481
1,000 1,000 GE Capital Corp., 8.75%, 3/14/03 1,037 1,037
1,000 1,000 GMAC., 6.85%, 4/17/01 997 997
1,400 1,400 GMAC., 6.70%, 4/30/01 1,394 1,394
1,000 3,000 4,000 Household Finance Corp., 8.38%, 11/15/01 1,012 3,038 4,050
1,000 1,000 Household Finance Corp., 6.88%, 3/1/07 941 941
3,000 3,000 Merrill Lynch & Co., 6.38%, 10/1/01 2,962 2,962
1,000 1,000 Merrill Lynch & Co., 8.00%, 2/1/02 1,012 1,012
2,000 2,000 Traveler's Group, Inc., 7.30%, 5/15/02 1,993 1,993
3,000 3,000 Traveler's Group, Inc., 7.50%, 2/01/03 2,988 2,988
--------- ------ -------
2,965 19,475 22,440
--------- ------ -------
Food Products 0.3%
1,000 1,000 Campbell Soup Co., 6.90%, 10/15/06 971 - 971
--------- ------ -------
</TABLE>
See notes to the Pro Forma Financial Statements
34
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Industrial Goods & Services(1.4%
E.I. duPont de Nemours & Co., 6.88%,
1,000 1,300 2,300 10/15/09 959 1,247 2,206
1,500 1,500 Laclede Gas Co., 7.50%, 11/01/07 1,481 1,481
500 500 Rockwell International Corp., 6.75%, 9/15/02 491 491
------ ------ ------
959 3,219 4,178
------ ------ ------
Insurance 0.5%
St. Paul Companies, Inc., Inc., 6.38%, 12/15/08,
1,550 1,550 MTN - 1,401 1,401
------ ------ ------
Oil & Exploration, Production & Services 3.4%
2,000 2,000 Texaco Capital, Inc., 6.95%, 10/15/01 1,985 1,985
1,500 1,500 Texaco Capital, Inc., 7.09%, 2/1/07 1,462 1,462
Union Texas Petroleum Holdings, Inc., 8.50%,
6,275 6,275 4/15/07 6,568 6,568
------ ------ ------
8,030 1,985 10,015
------ ------ ------
Paper & Related 0.7%
2,000 2,000 International Paper Co., 7.00%, 6/1/01 1,976 - 1,976
------ ------ ------
Retail Stores 1.3%
3,000 3,000 Dillards, Inc., 5.79%, 11/15/01 2,836 2,836
1,500 1,500 Dillards, Inc., 7.13%, 8/1/18 1,116 1,116
------ ------ ------
2,836 1,116 3,952
------ ------ ------
Telecommunications 4.0%
1,000 1,000 AT & T Corp., 5.63%, 3/15/04 938 938
Bell Telephone Co. of Pennsylvania, 8.75%,
1,000 1,000 8/15/31 1,081 1,081
3,000 3,000 Lucent Technologies, Inc., 6.90%, 7/15/01 2,991 2,991
1,265 1,265 Lucent Technologies, Inc., 6.45%, 3/15/29 1,088 1,088
1,000 1,000 Northern Telecom Ltd., 6.88%, 10/1/02 985 985
1,000 1,000 Pacific Bell, 7.25%, 7/1/02 996 996
3,250 3,250 SBC Communications, Inc., 6.50%, 2/15/02 3,204 3,204
500 500 United Telephone - Florida 490 490
------ ------ ------
6,053 5,720 11,773
------ ------ ------
TOTAL CORPORATE BONDS 41,773 46,709 88,482
------ ------ ------
International/Yankee (U.S. $ Denominated) 0.1%
500 500 Ontario Global Bond, 7.38%, 1/27/03 - 501 501
------ ------ ------
U.S. Government Agencies 39.1%
Federal Home Loan Bank 3.7%
1,500 1,500 5.52%, 4/9/01, Series 3101 1,485 1,485
1,000 1,000 5.75%, 4/30/01, Series 4901 991 991
2,000 2,000 6.39%, 6/22/04, Series K504 1,939 1,939
1,000 1,000 6.67, 1/8/07, Series I-07 966 966
3,000 3,000 5.67%, 9/11/08, Series KS08 2,691 2,691
3,100 3,100 5.79%, 4/27/09, Series EV09 2,790 2,790
------ ------ ------
8,072 2,790 10,862
------ ------ ------
Federal Home Loan Mortgage Corp. 14.1%
9 9 8.50%, 5/1/01, Pool #200034 9 9
11 11 8.50%, 10/1/01, Pool #200055 11 11
24 24 8.50%, 11/1/01, Pool #200058 24 24
19 19 8.00%, 3/1/02, Pool #215507 19 19
30 30 8.50%, 4/1/02, Pool #200070 30 30
9 9 8.00%, 5/1/02, Pool #216910 9 9
20 20 8.00%, 6/1/02, Pool #218582 21 21
74 74 8.00%, 6/1/02, Pool #218101 74 74
47 47 8.00%, 7/1/02, Pool #501214 47 47
14 14 8.00%, 7/1/02, Pool #217891 15 15
57 57 9.00%, 3/1/03, Pool #380019 57 57
20 20 9.00%, 5/1/03, Pool #380021 20 20
</TABLE>
See notes to the Pro Forma Financial Statements
35
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Federal Home Loan Mortgage Corp. 14.0% (cont.)
31 31 8.50%, 3/1/05, Pool #380084 32 32
4 4 8.50%, 4/1/05, Pool #380085 4 4
13 13 8.50%, 4/1/06, Pool #E00025 13 13
10 10 8.50%, 9/1/05, Pool #503592 10 10
2,718 2,718 6.00%, 12/1/25, Pool #G00427 2,479 2,479
189 189 6.00%, 4/1/29, Pool #C24786 171 171
377 377 6.00%, 4/1/29, Pool #C25708 342 342
4,212 4,212 6.00%, 5/1/29, Pool #C25918 3,819 3,819
302 302 6.00%, 5/1/29, Pool #C25930 273 273
112 112 6.00%, 5/1/29, Pool #C26993 102 102
238 238 6.00%, 7/1/29, Pool #C29068 215 215
1,151 1,151 7.50%, 11/1/09, Gold Pool #M30082 1,141 1,141
183 183 7.00%, 11/1/10, Gold Pool #E20202 179 179
196 196 7.00%, 11/1/10, Gold Pool #E62010 192 192
295 344 639 6.00%, 2/1/11, Gold Pool #E62600 278 324 602
650 650 6.00%, 3/1/11, Gold Pool #E63503 613 613
602 602 6.00%, 4/1/11, Gold Pool #E63515 568 568
650 650 6.00%, 6/1/11, Gold Pool #E00439 613 613
599 599 7.00%, 7/1/11, Pool #31335K 586 586
974 974 6.00%, 3/1/12, Gold Pool #E66538 916 916
1,227 1,227 7.50%, 9/1/12, Gold Pool #G10735 1,223 1,223
833 833 6.00%, 3/1/13, Gold Pool #E69338 782 782
761 761 6.00%, 3/1/13, Pool #E69425 715 715
770 770 6.00%, 4/1/13, Gold Pool #E70028 724 724
1,634 1,634 6.00%, 4/1/13, Pool #E00543 1,534 1,534
1,667 1,667 6.50%, 10/1/13, Gold Pool #E00574 1,599 1,599
878 878 5.50%, 11/1/13, Gold Pool #E73355 807 807
2,258 2,258 5.50%, 11/1/13, Gold Pool #E73249 2,075 2,075
937 937 5.50%, 11/1/13, Gold Pool #E72928 861 861
879 879 5.50%, 12/1/13, Gold Pool #E73342 808 808
1,821 1,821 5.50%, 12/1/13, Gold Pool #E00598 1,673 1,673
1,893 1,893 6.00%, 6/1/14, Gold Pool #E00677 1,776 1,776
933 933 8.00%, 1/1/23, Gold Pool #C00225 937 937
145 145 8.00%, 1/1/23, Gold Pool #D29451 146 146
180 180 6.00%, 2/1/26, Gold Pool #D68286 164 164
1,812 1,812 6.00%, 3/1/26, Gold Pool #C80393 1,648 1,648
337 337 6.00%, 4/1/26, Gold Pool #D70772 307 307
272 272 6.00%, 4/1/26, Gold Pool #D70405 248 248
92 92 6.00%, 4/1/26, Gold Pool #C80395 84 84
147 147 8.00%, 11/1/26, Gold Pool #D76134 147 147
21 21 6.00%, 12/1/26, Gold Pool #D76870 19 19
750 750 6.00%, 12/1/26, Gold Pool #C80465 682 682
291 291 8.00%, 12/1/26, Gold Pool #D76530 292 292
207 207 8.00%, 12/1/26, Gold Pool #D76906 207 207
551 551 7.00%, 1/1/27, Gold Pool #D77743 529 529
1,302 1,302 7.00%, 1/1/27, Gold Pool #D77720 1,249 1,249
332 332 8.00%, 1/1/27, Gold Pool #C00490 333 333
2,689 2,689 6.00%, 9/1/27, Gold Pool #C00565 2,439 2,439
2,821 2,821 6.00%, 1/1/29, Gold Pool #C00702 2,558 2,558
1,916 1,916 6.00%, 3/1/29, Gold Pool #C00730 1,738 1,738
------ ------ ------
29,956 11,554 41,510
------ ------ ------
Federal National Mortgage Assoc. 13.1%
225 450 675 6.00%, 11/1/00 223 447 670
4,970 4,970 7.50%, 2/11/02 5,003 5,003
3,000 3,000 6.63%, 9/15/09 2,863 2,863
622 622 6.00%, 5/1/11, Pool #337194 587 587
1,757 1,757 6.00%, 12/1/11, Pool #367838 1,692 1,692
721 721 6.00%, 2/1/12, Pool #250917 678 678
649 649 6.00%, 3/1/12, Pool #374638 611 611
724 724 6.00%, 3/1/12, Pool #373131 682 682
759 759 6.00%, 3/1/12, Pool #359504 714 714
1,211 1,211 7.50%, 3/1/12, Pool #250858 1,208 1,208
395 395 6.50%, 7/1/12, Pool #370716 379 379
732 732 6.50%, 7/1/12, Pool #393667 706 706
652 652 6.50%, 8/1/12, Pool #251165 626 626
3,119 3,119 6.00%, 1/1/13, Pool #251501 2,936 2,936
736 736 6.00%, 4/1/13, Pool #414671 691 691
928 928 5.50%, 11/1/13, Pool #449032 852 852
847 847 6.00%, 11/1/03, Pool #323379 795 795
1,814 1,814 5.50%, 1/1/14, Pool #482515 1,665 1,665
2,281 2,281 6.00%, 2/1/26, Pool #336918 2,078 2,078
1,191 1,191 2,382 6.00%, 10/1/26, Pool #368935 1,085 1,085 2,170
</TABLE>
See notes to the Pro Forma Financial Statements
36
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Federal National Mortgage Assoc. 13.0% (cont.)
73 73 9.00%, 10/1/26, Pool #353671 75 75
67 67 9.00%, 10/1/26, Pool #358137 69 69
110 110 9.00%, 10/1/26, Pool #361800 113 113
149 149 9.00%, 11/1/26, Pool #364453 154 154
60 60 9.00%, 11/1/26, Pool #358703 61 61
47 47 9.00%, 12/1/26, Pool #368686 49 49
1,623 1,623 6.50%, 8/1/27, Pool #395219 1,516 1,516
1,530 1,530 6.50%, 8/1/27, Pool #397372 1,430 1,430
776 776 6.00%, 1/1/28, Pool #398195 704 704
809 809 6.00%, 1/1/28, Pool #402874 734 734
1,882 1,882 6.00%, 12/1/28, Pool #455087 1,707 1,707
1,880 1,880 6.00%, 1/1/29, Pool #481539 1,705 1,705
2,700 2,700 6.00%, 7/1/29, Pool #323812 2,447 2,447
------ ------ ------
22,612 15,758 38,370
------ ------ ------
Government National Mortgage Assoc. 8.2%
1 1 9.50%, 2/15/01, Pool #149206 1 1
23 23 8.00%, 1/15/02, Pool #188653 23 23
3 3 8.00%, 3/15/02, Pool #199167 3 3
22 22 8.00%, 4/15/02, Pool #180980 23 23
40 40 7.50%, 4/15/02, Pool #210173 40 40
7 7 7.50%, 7/15/02, Pool #216193 7 7
44 44 8.00%, 7/15/02, Pool #209779 44 44
17 17 9.50%, 10/15/02, Pool #232514 18 18
108 108 6.50%, 9/15/03, Pool #002549 106 106
16 16 9.50%, 9/15/05, Pool #290435 17 17
30 30 9.50%, 1/15/06, Pool #298829 32 32
54 54 8.00%, 5/15/06, Pool #303851 54 54
55 55 9.50%, 7/15/07, Pool #331878 57 57
201 201 8.00%, 11/15/07, Pool #339329 205 205
114 114 8.00%, 12/15/07, Pool #338551 116 116
216 216 7.50%, 7/15/08, Pool #349404 217 217
333 333 9.50%, 8/15/09, Pool #400219 347 347
122 122 9.50%, 9/15/09, Pool #377317 127 127
242 242 9.50%, 2/15/10, Pool #392932 252 252
22 22 8.00%, 5/15/10, Pool #398424 22 22
135 135 6.50%, 8/15/10, Pool #387094 131 131
75 75 7.50%, 8/15/10, Pool #413412 76 76
65 65 7.50%, 9/15/10, Pool #413117 66 66
180 180 7.50%, 11/15/10, Pool #415775 181 181
124 124 8.00%, 11/15/10, Pool #405524 126 126
652 652 8.00%, 11/15/10, Pool #410294 664 664
158 158 8.00%, 11/15/10, Pool #414827 161 161
37 37 6.00%, 3/15/11, Pool #425964 35 35
64 64 6.50%, 3/15/11, Pool #408253 62 62
18 18 6.50%, 3/15/11, Pool #419123 17 17
339 339 6.00%, 4/15/11, Pool #393849 322 322
43 43 6.00%, 4/15/11, Pool #421800 41 41
409 409 6.00%, 4/15/11, Pool #429397 388 388
239 239 6.50%, 4/15/11, Pool #402546 232 232
60 60 6.50%, 4/15/11, Pool #418274 58 58
294 294 6.50%, 4/15/11, Pool #421831 285 285
510 510 6.00%, 5/15/11, Pool #421871 483 483
393 393 6.00%, 5/15/11, Pool #432659 373 373
38 38 6.00%, 5/15/11, Pool #345647 36 36
367 367 6.50%, 5/15/11, Pool #408304 356 356
390 390 6.50%, 5/15/11, Pool #412598 379 379
264 264 6.50%, 5/15/11, Pool #432640 256 256
50 50 6.50%, 5/15/11, Pool #430822 48 48
197 197 6.00%, 6/15/11, Pool #406582 187 187
203 203 6.00%, 6/15/11, Pool #423828 192 192
74 74 6.50%, 6/15/11, Pool #421731 72 72
246 246 6.50%, 6/15/11, Pool #423833 239 239
474 474 6.50%, 6/15/11, Pool #345631 460 460
361 361 6.50%, 6/15/11, Pool #426173 350 350
532 532 6.50%, 6/15/11, Pool #430820 517 517
251 251 6.50%, 8/15/11, Pool #421746 243 243
311 311 6.50%, 2/15/12, Pool #393334 302 302
304 304 6.50%, 3/15/12, Pool #399161 295 295
585 585 7.50%, 7/15/12, Pool #447382 587 587
936 936 8.50%, 4/15/17, Pool #212112 959 959
109 109 8.50%, 11/15/21, Pool #297863 111 111
464 464 9.00%, 3/15/25, Pool #404067 481 481
</TABLE>
See notes to the Pro Forma Financial Statements
37
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Government National Mortgage Assoc. 8.2% (cont.)
736 736 8.00%, 4/15/22, Pool #320818 742 742
567 567 7.50%, 4/15/23, Pool #343195 560 560
192 192 8.00%, 5/15/23, Pool #350495 193 193
89 89 9.00%, 5/15/25, Pool #401372 92 92
218 218 9.00%, 5/15/25, Pool #386743 226 226
21 21 9.50%, 8/15/25, Pool #414557 22 22
263 263 7.50%, 10/15/25, Pool #366152 259 259
321 321 7.50%, 10/15/25, Pool #366154 316 316
59 59 6.50%, 3/15/26, Pool #419578 55 55
797 797 6.50%, 4/15/26, Pool #415721 749 749
761 761 6.50%, 4/15/26, Pool #422323 715 715
766 766 6.50%, 4/15/26, Pool #422656 720 720
742 742 6.50%, 5/15/26, Pool #417388 698 698
74 74 6.50%, 5/15/26, Pool #428852 70 70
652 3,875 4,527 6.50%, 6/15/26, Pool #423801 613 3,642 4,255
378 378 7.00%, 8/20/26, Pool #002266 362 362
128 128 9.50%, 9/15/26, Pool #438724 134 134
132 132 9.50%, 10/15/26, Pool #438728 138 138
54 54 9.50%, 11/15/26, Pool #436994 57 57
51 51 9.50%, 11/15/26, Pool #438731 53 53
434 348 782 7.00%, 9/15/27, Pool #455304 418 335 753
664 664 6.50%, 10/15/28, Pool #434031 623 623
877 877 7.00%, 8/15/28, Pool #482697 844 844
--------- --------- ---------
9,756 14,362 24,118
--------- --------- ---------
TOTAL U.S. GOVERNMENT AGENCIES 70,396 44,464 114,860
--------- --------- ---------
U.S. Treasury Bonds 14.7%
2,055 2,055 12.00%, 8/15/13, Callable on 8/15/08 @ 100 2,749 2,749
1,250 1,250 7.50%, 11/15/16 1,400 1,400
1,500 1,500 8.75%, 5/15/17 1,875 1,875
2,865 2,865 8.88%, 8/15/17 3,622 3,622
3,150 3,150 8.88%, 2/15/19 4,027 4,027
6,000 6,000 8.13%, 8/15/19 7,207 7,207
2,000 2,183 4,183 8.75%, 8/15/20 2,556 2,789 5,345
3,100 3,100 8.00%, 11/15/21 3,727 3,727
4,600 4,600 7.63%, 11/15/22 5,346 5,346
3,000 3,000 6.25%, 8/15/23 3,002 3,002
5,000 5,000 6.00%, 2/15/26 4,864 4,864
--------- --------- ---------
TOTAL U.S. TREASURY BONDS 28,999 14,165 43,164
--------- --------- ---------
U.S. Treasury Notes 14.7%
3,100 3,100 6.38%, 9/30/01 3,087 3,087
3,000 3,000 5.88%, 11/30/01 2,964 2,964
4,000 4,000 6.00%, 7/31/02 3,946 3,946
2,695 2,695 6.25%, 8/31/02 2,669 2,669
2,100 2,100 5.88%, 9/30/02 2,064 2,064
2,800 2,800 5.25%, 8/15/03 2,691 2,691
2,930 2,930 5.75%, 8/15/03 2,857 2,857
500 500 5.25%, 5/15/04 477 477
1,470 1,470 7.25%, 5/15/04 1,504 1,504
1,600 1,600 5.88%, 11/15/04 1,559 1,559
2,750 2,750 6.63%, 5/15/07 2,770 2,770
4,500 4,500 6.13%, 8/15/07 4,408 4,408
2,500 4,905 7,405 5.63%, 5/15/08 2,377 4,663 7,040
5,400 5,400 5.50%, 5/15/09 5,086 5,086
--------- --------- ---------
TOTAL U.S. TREASURY NOTES 27,536 15,586 43,122
--------- --------- ---------
Total Long Term Investments (Cost $299,677) 168,704 121,425 290,129
--------- --------- ---------
<CAPTION>
Mercantile
Mercantile Govt/Corp
Bond Index Bond Pro Forma
Portfolio Portfolio Combined
Number of Number of Number of SHORT-TERM INVESTMENTS 1.3%
Shares Shares Shares Investment Companies 1.3%
--------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1,379 2,457 3,836 Federated Money Market Trust 1,379 2,457 3,836
--------- --------- ---------
Total Short-Term Investments (Cost $3,836) 1,379 2,457 3,836
--------- --------- ---------
Total Investments (Cost $303,513) 100.0% $ 170,083 $ 123,882 $ 293,965
========= ========= =========
</TABLE>
See notes to the Pro Forma Financial Statements
38
<PAGE>
FIRSTAR U.S. GOVERNMENT SECURITIES FUND
FIRSTAR STELLAR U.S. GOVERNMENT INCOME FUND/MERCANTILE U.S. GOVERNMENT
SECURITIES PORTFOLIO PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts and Shares in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Stellar Mercantile Combined Stellar Mercantile Combined
Principal Principal Principal Market Market Market
Amount Amount Amount Value Value Value
-------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Corporate Bonds 22.7%
Automobile 0.8%
$2,250 $2,250 Ford Motor Co., 6.375%, 2/1/29 $1,854 - $1,854
----------------------------------
Banking 2.0%
3,000 3,000 Citigroup Inc., 9.50%, 3/1/02 3,105 3,105
1,400 1,400 Huntington National Bank, 6.75%, 6/15/03 1,354 1,354
----------------------------------
4,459 - 4,459
----------------------------------
Building & Construction Products 0.9%
2,000 2,000 Masco Corp., 6.125%, 9/15/03 1,924 - 1,924
----------------------------------
Chemicals 0.3%
735 735 Dow Chemical Co., 7.60%, 1/2/02 738 - 738
----------------------------------
Defense 0.9%
2,000 2,000 Martin Marietta Corp., 6.50%, 4/15/03 1,905 - 1,905
----------------------------------
Electronics 0.3%
750 750 Motorola, Inc., 6.50%, 11/15/28 644 - 644
----------------------------------
Finance 6.1%
1,750 1,750 Associates Corp. of North America, 5.50%, 2/15/04 1,623 1,623
1,750 1,750 Bear Stearns Companies Inc. (The), 6.45%, 8/1/02 1,701 1,701
850 850 Chevron Capital USA, Inc., 7.45%, 8/15/04 839 839
500 500 Ford Motor Credit Corp., 6.11%, 12/28/01 489 489
1,500 1,500 General Electric Global Insurance Holding Corp., 7.00%,
2/15/26 1,367 1,367
1,000 1,000 Goldman Sachs Group, 6.65%, 5/15/09 914 914
250 250 International Lease Finance Corp., 8.375%, 12/15/04 255 255
2,000 2,000 Merrill Lynch & Co., Inc., 6.00%, 2/17/09 1,763 1,763
1,500 1,500 Morgan Stanley Dean Witter & Co., 5.625%, 1/20/04 1,404 1,404
2,000 2,000 Salomon Smith Barney, 6.25%, 1/15/05 1,886 1,886
1,500 1,500 Sears Roebuck Acceptance Corp., 7.00%, 6/15/07 1,408 1,408
----------------------------------
13,649 - 13,649
----------------------------------
Household Products 0.4%
1,000 1,000 Procter & Gamble Co., 7.375%, 3/1/23 945 - 945
----------------------------------
Industrial 0.9%
2,200 2,200 Fort James Corp., 6.625%, 9/15/04 2,106 - 2,106
----------------------------------
International 1.2%
100 100 Koninklijke Philips Electronics NV, 8.375%, 9/15/06 103 103
2,000 2,000 TransCanada PipeLines Ltd., 9.125%, 4/20/06 2,126 2,126
430 430 TransCanada PipeLines Ltd., 8.625%, 5/15/12 449 449
----------------------------------
2,678 - 2,678
----------------------------------
Oil 2.6%
1,000 1,000 Ashland Inc., 7.90%, 8/5/06 983 983
1,750 1,750 Enron Corp., 7.625%, 9/10/04 1,732 1,732
3,000 3,000 Occidental Petroleum Corp., 8.50%, 11/9/01 3,017 3,017
----------------------------------
5,732 - 5,732
----------------------------------
Real Estate 1.2%
1,000 1,000 Highwoods Forsyth LP, 7.19%, 6/15/04 931 931
1,000 1,000 Irvine Apartment Communities, Inc., 7.00%, 10/1/07 873 873
1,000 1,000 Post Apartment Homes LP, 7.30%, 4/1/04 976 976
</TABLE>
See notes to the Pro Forma Financial Statements
39
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
----------------------------------
2,780 - 2,780
----------------------------------
Retail 1.6%
2,000 2,000 May Department Stores Company (The), 6.70%, 9/15/28 1,706 1,706
1,000 1,000 Safeway, Inc., 5.875%, 11/15/01 972 972
1,000 1,000 Safeway, Inc., 7.50%, 9/15/09 961 961
----------------------------------
3,639 - 3,639
----------------------------------
Telecommunications 1.4%
2,000 2,000 GTE California, Inc., 5.50%, 1/15/09 1,711 1,711
1,500 1,500 GTE Corp., 7.83%, 5/1/23 1,409 1,409
----------------------------------
3,120 - 3,120
----------------------------------
Utilities - Electric 2.1%
500 500 Northern Illinois Gas Co., 7.26%, 10/15/25 451 451
4,500 4,500 ENSEARCH Corp., 6.25%, 1/1/03 4,329 4,329
----------------------------------
4,780 - 4,780
----------------------------------
Total Corporate Bonds (Cost $53,817) 50,953 - 50,953
----------------------------------
Government Agencies 54.1%
Fannie Mae 25.8%
$ 225 225 6.00%, 11/01/00, Pool #190070 $ 224 224
5,000 5,000 5.36%, 2/16/01 4,944 4,944
3,000 3,000 5.41%, 12/15/03 2,825 2,825
12,318 12,318 5.125%, 2/13/04 11,460 11,460
1,000 1,000 6.50%, 4/29/09 926 926
5,500 5,500 6.625%, 9/15/09 5,249 5,249
5,000 5,000 6.00%, 2/25/11, REMIC, Series 1996-21-PK 4,558 4,558
651 651 6.00%, 3/01/11, Pool#340503 618 618
690 690 6.50%, 5/01/11, Pool #335713 665 665
426 426 6.50%, 5/01/11, Pool #346276 410 410
473 473 6.50%, 7/01/11, Pool #351761 455 455
1,170 1,170 6.50%, 7/01/11, Pool #250613 1,127 1,127
192 192 7.00%, 11/01/11, Pool #250738 188 188
149 149 7.00%, 11/01/11, Pool #351122 146 146
203 203 7.00%, 11/01/11, Pool #349630 199 199
711 711 6.50%, 12/01/11, Pool #368127 684 684
1,135 1,135 6.50%, 12/01/11, Pool #250781 1,094 1,094
630 630 6.50%, 12/01/11, Pool #367868 607 607
1,545 1,545 5.50%, 3/01/13, Pool #420158 1,419 1,419
802 802 6.00%, 4/01/13, Pool #251656 752 752
2,604 2,604 6.00%, 4/01/13, Pool #425550 2,442 2,442
259 259 6.00%, 8/1/13 240 240
2,056 2,056 6.50%, 8/01/13, Pool #251901 1,971 1,971
847 847 6.00%, 11/01/13, Pool #323379 794 794
907 907 5.50%, 1/01/14, Pool #482515 832 832
926 926 6.50%, 4/01/14, Pool #492264 887 887
1,875 1,875 6.00%, 6/01/14, Pool #500971 1,757 1,757
2,728 2,728 7.00%, 7/01/14, Pool #252637 2,666 2,666
1,916 1,916 7.00%, 10/01/14, Pool #252799 1,873 1,873
4,250 4,250 6.50%, 4/25/23, REMIC, Series 1993-210-PL 3,981 3,981
548 548 8.00%, 7/01/24, Pool #190264 549 549
696 696 6.50%, 10/01/27, Pool #400141 650 650
1,000 1,000 6.25%, 5/15/29 885 885
----------------------------------
30,124 27,953 58,077
----------------------------------
Federal Home Loan Bank 8.8%
5,000 5,000 5.875%, 8/15/01 4,937 4,937
5,500 5,500 6.00%, 8/15/02 5,366 5,366
1,500 1,500 5.40%, 1/15/03 1,434 1,434
2,500 2,500 7.125%, 2/15/05 2,488 2,488
1,000 1,000 5.038%, 10/14/08 857 857
2,000 2,000 5.705%, 3/2/09 1,790 1,790
3,000 3,000 6.30%, 6/3/09 2,799 2,799
----------------------------------
19,671 - 19,671
----------------------------------
Federal Home Loan Mortgage Corp. 12.4%
3,000 3,000 5.00%, 2/15/01 2,966 2,966
</TABLE>
See notes to the Pro Forma Financial Statements
40
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
5 5 9.50%, 9/01/04, Pool #380053 5 5
149 149 7.50%, 4/01/08, Pool #E45929 149 149
106 106 8.50%, 3/01/06, Gold Pool #E00022 108 108
295 295 6.00%, 2/01/11, Gold Pool #E62600 278 278
478 478 6.50%, 2/01/11, Gold Pool #E00419 460 460
436 436 7.00, 7/1/11, Gold Pool #E31335K 427 427
294 294 7.00, 11/01/11, Gold Pool #E65619 287 287
627 627 6.50%, 1/01/12, Gold Pool #E00465 604 604
995 995 6.00%, 2/01/12, Gold Pool #E66284 936 936
371 371 6.50%, 2/01/12, Gold Pool #E66172 356 356
624 624 6.50%, 2/01/12, Gold Pool #E66272 601 601
805 805 6.00%, 3/01/12, Gold Pool #E66474 757 757
2,193 2,193 7.50%, 9/01/12, Gold Pool #G10735 2,185 2,185
3,567 3,567 5.50%, 12/01/12, Gold Pool #E68353 3,304 3,304
833 833 6.00%, 3/01/13, Gold Pool #E69338 782 782
770 770 6.00%, 4/01/13, Gold Pool #E70028 724 724
1,634 1,634 6.00%, 4/01/13, Gold Pool #E00543 1,534 1,534
1,690 1,690 5.50%, 5/01/13, Gold Pool #G10814 1,553 1,553
4,183 4,183 6.00%, 5/01/13, Gold Pool #E00549 3,927 3,927
834 834 6.50%, 10/01/13, Gold Pool #E00574 800 800
1,384 1,384 5.50%, 3/01/14, Gold Pool #E00633 1,272 1,272
959 959 6.50%, 7/01/14, Gold Pool #E77812 919 919
2,876 2,876 7.00%, 9/01/14, Gold Pool #E00746 2,810 2,810
----------------------------------
- 27,744 27,744
----------------------------------
Freddie Mac 4.3%
2,075 2,075 6.22%, 3/24/03 2,022 2,022
1,000 1,000 6.875%, 1/15/05 985 985
2,000 2,000 7.585%, 9/19/06 1,970 1,970
2,000 2,000 6.50%, 3/15/26 1,872 1,872
2,972 2,972 7.50%, 1/1/30 2,914 2,914
----------------------------------
9,763 - 9,763
----------------------------------
Ginnie Mae 2.8%
51 51 8.00%, 2/15/07, Pool #315126 52 52
35 35 6.50%, 5/15/08, Pool #340791 34 34
136 136 9.00%, 7/15/09, Pool #390782 141 141
176 176 9.00%, 11/15/09, Pool #359559 182 182
253 253 8.00%, 10/15/10, Pool #414750 258 258
76 76 6.50%, 11/15/10, Pool #414786 74 74
194 194 6.50%, 2/15/11, Pool #373569 188 188
31 31 6.50%, 3/15/11, Pool #416179 30 30
243 243 6.50%, 3/15/11, Pool #406466 236 236
409 409 6.50%, 3/15/11, Pool #410935 397 397
206 206 6.50%, 3/15/11, Pool #344973 199 199
236 236 6.50%, 3/15/11, Pool #408253 229 229
458 458 6.50%, 4/15/11, Pool #416060 445 445
302 302 6.50%, 4/15/11, Pool #422652 293 293
103 103 6.50%, 5/15/11, Pool #433036 100 100
213 213 6.50%, 5/15/11, Pool #408304 207 207
44 44 6.50%, 5/15/11, Pool #422814 43 43
175 175 6.50%, 6/15/11, Pool #421731 170 170
84 84 6.50%, 6/15/11, Pool #432993 81 81
219 219 6.50%, 7/15/11, Pool #424521 213 213
568 568 6.50%, 7/15/11, Pool #433088 551 551
72 72 8.50%, 5/15/17, Pool #219152 74 74
106 106 8.50%, 6/15/21, Pool #307921 109 109
894 894 7.50%, 12/15/22, Pool #347332 883 883
227 227 8.00%, 5/15/23, Pool #352469 228 228
18 18 9.50%, 1/15/25, Pool #384421 19 19
18 18 9.50%, 2/15/25, Pool #401796 19 19
2 2 9.50%, 2/15/25, Pool #392967 2 2
315 315 9.50%, 2/15/25, Pool #365292 331 331
82 82 9.50%, 3/15/25, Pool #407257 86 86
78 78 9.50%, 4/15/25, Pool #386741 81 81
261 261 7.00%, 9/15/27, Pool #455304 251 251
----------------------------------
- 6,206 6,206
----------------------------------
</TABLE>
See notes to the Pro Forma Financial Statements
41
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Total Government Agencies (cost $125,500) 59,558 61,903 121,461
----------------------------------
U.S. Treasuries 22.2%
U.S. Treasury Bonds 13.6%
175 175 6.375%, 1/31/02 174 174
5,400 5,400 9.875%, 11/15/15 7,265 7,265
1,500 1,500 9.00%, 11/15/18 1,936 1,936
3,500 3,500 8.125%, 8/15/19 4,204 4,204
4,250 4,250 8.75%, 5/15/20 5,421 5,421
5,250 5,250 6.75%, 8/15/26 5,614 5,614
6,000 6,000 6.125%, 11/15/27 5,944 5,944
----------------------------------
30,384 174 30,558
----------------------------------
U.S. Treasury Notes 8.2%
450 450 5.625%, 2/28/01 448 448
8,000 8,000 5.875%, 10/31/01 7,910 7,910
3,000 3,000 6.625%, 3/31/02 2,995 2,995
7,000 7,000 7.50%, 5/15/02 7,107 7,107
----------------------------------
18,012 448 18,460
----------------------------------
U.S. Treasury Strips 0.4%
5,000 5,000 0.00%, 11/15/27 * 987 - 987
----------------------------------
Total U.S. Treasuries (cost $51,299) 49,383 622 50,005
----------------------------------
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Stellar Mercantile Combined
Principal Principal Principal
Amount Amount Amount
Shares/ Shares/ Shares/ Options Purchased 0.0%
Contracts Contracts Contracts Put Options 0.0%
---------------------------------
<S> <C> <C> <C> <C> <C> <C>
100 100 Chicago Board Options Exchange 30-Year Treasury Bond
Index, expires 7/22/00, exercise price $60 16 16
----------------------------------
Total Options Purchased (cost $14) 16 - 16
----------------------------------
Short - Term Investments 1.0%
Mutual Fund 0.4%
838 838 Federated Trust for U.S. Treasury Obligations 838 838
Repurchase Agreement 0.6%
1,458 1,458 Donaldson, Lufkin and Jenrette Securities Corp.,
5.73%, dated 4/28/2000, due 5/1/2000, repurchase price
$1,458,696 (Collateralized by U.S. Government
Securities) 1,458 1,458
----------------------------------
Total Short-Term Investment (cost $2,296) 1,458 838 2,296
----------------------------------
Total Investments (cost $232,927) 100.0% $ 161,368 $ 63,363 $ 224,731
==================================
* Non-income producing
</TABLE>
See notes to the Pro Forma Financial Statements
42
<PAGE>
FIRSTAR BALANCED INCOME FUND
FIRSTAR BALANCED INCOME FUND / FIRSTAR STELLAR FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Stellar Combined Firstar Stellar Combined
Shares Shares Shares Market Value Market Value Market Value
--------- --------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS 54.8%
Advertising 0.2%
4,000 4,000 WPP Group PLC - $ 309 $ 309
------------ ------------ ------------
Auto and Truck Parts 0.1%
6,800 6,800 Delphi Automotive Systems Corporation $ 130 - 130
------------ ------------ ------------
Banking 2.1%
19,700 19,700 Bank of New York Company, Inc. 809 809
10,400 10,400 Chase Manhattan Corporation 749 749
3,000 3,000 Commerzbank AG 114 114
16,800 16,800 Mellon Bank Corporation 540 540
15,400 15,400 Northern Trust Corporation 988 988
9,300 9,300 Wells Fargo Company, Inc. 382 382
------------ ------------ ------------
3,468 114 3,582
------------ ------------ ------------
Building Materials 0.3%
13,000 13,000 Vulcan Materials Company 570 - 570
------------ ------------ ------------
Business Machines & Software 3.4%
4,000 4,000 BMC Software, Inc.* 187 187
7,000 7,000 Honeywell International, Inc. 392 392
3,300 3,300 International Business Machines Corporation 368 368
7,675 7,675 Microsoft Corporation* 535 535
24,000 24,000 Oracle Systems Corporation* 1,918 1,918
8,000 8,000 SAP AG 393 393
3,300 19,800 23,100 Sun Microsystems, Inc.* 303 1,820 2,123
------------ ------------ ------------
1,206 4,710 5,916
------------ ------------ ------------
Business Services 1.5%
12,100 12,100 Automatic Data Processing, Inc. 651 651
3,900 3,900 Electronic Data Systems Corporation 268 268
11,400 11,400 First Data Corporation 555 555
20,100 20,100 Manpower, Inc. 710 710
17,300 17,300 Viad Corp. 439 439
------------ ------------ ------------
2,623 - 2,623
------------ ------------ ------------
Chemicals 1.2%
1,000 1,000 Dow Chemical Company 113 113
22,100 22,100 Ecolab, Inc. 863 863
14,500 14,500 Millipore Corporation 1,039 1,039
------------ ------------ ------------
1,902 113 2,015
------------ ------------ ------------
Communications & Media 2.7%
4,000 4,000 British Sky Broadcasting ADR 591 591
9,800 9,800 CBS Corporation * 576 576
2,600 2,600 General Motors Corporation - Class H 250 250
7,300 7,300 Infinity Broadcasting Corporation* 248 248
15,700 15,700 Interpublic Group of Companies, Inc. 644 644
13,075 13,075 New York Times Company - Class A 539 539
11,900 11,900 The News Corporation Ltd. 612 612
4,000 4,000 Reuters Group PLC 417 417
7,900 7,900 Time Warner Inc. 711 711
------------ ------------ ------------
2,968 1,620 4,588
------------ ------------ ------------
Computers 0.6%
5,100 5,100 Compaq Computer Corporation 149 149
6,800 6,800 Dell Computer Corporation* 341 341
3,700 3,700 EMC Corporation* 514 514
------------ ------------ ------------
1,004 - 1,004
------------ ------------ ------------
Consumer Products 0.2%
6,250 6,250 Avery Dennison Corporation 410 410
1 1 Energizer Holdings, Inc* - 0
------------ ------------ ------------
410 - 410
------------ ------------ ------------
Cosmetics & Soap 0.5%
5,400 5,400 Avon Products, Inc. 224 224
5,800 5,800 Estee Lauder Companies - Class A 256 256
5,000 5,000 Proctor & Gamble Company 298 298
------------ ------------ ------------
480 298 778
------------ ------------ ------------
Drugs\Medical Supplies 3.9%
</TABLE>
See notes to the Pro Forma Financial Statements
43
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
12,300 12,300 American Home Products Corporation 691 691
12,100 8,000 20,100 Bristol-Myers Squibb Company 634 420 1,054
10,100 10,100 Eli Lilly & Company 781 781
1,100 1,100 Genentech, Inc.* 129 129
9,200 9,200 Johnson & Johnson 759 759
10,300 7,762 18,062 Medtronic, Inc. 535 403 938
4,000 4,000 Merck & Co., Inc. 278 278
4,500 4,500 Novo Nordisk A/S ADR 306 306
2,000 2,000 Roch Holding AG ADR 209 209
4,000 4,000 SmithKline Beecham PLC ADR 275 275
11,000 11,000 Warner-Lambert Company 1,252 1,252
------------ ------------ ------------
5,059 1,613 6,672
------------ ------------ ------------
Electrical Equipment 0.9%
5,400 5,400 Emerson Electric Company 296 296
4,900 2,700 7,600 General Electric Company 771 425 1,196
------------ ------------ ------------
771 721 1,492
------------ ------------ ------------
Electronics 1.3%
7,300 7,300 Cannon Inc. ADR 339 339
4,000 4,000 Lexmark International Group, Inc.* 472 472
8,575 8,575 Molex, Inc. - Class A 343 343
8,880 8,880 Philips Electronics NV 396 396
5,200 5,200 Solectron Corporation* 243 243
1,800 1,800 Sony Corporation ADR 406 406
------------ ------------ ------------
586 1,613 2,199
------------ ------------ ------------
Electric Utilities 0.2%
2,100 2,100 Duke Power Company 121 121
5,300 5,300 The Montana Power Company 233 233
------------ ------------ ------------
354 - 354
------------ ------------ ------------
Entertainment & Leisure 0.1%
4,600 4,600 The Walt Disney Company 199 - 199
------------ ------------ ------------
Financial Services 3.6%
12,200 12,200 Alliance Capital Management L.P. 547 547
3,800 3,800 American Express Company 570 570
16,200 9,967 26,167 Citigroup Inc. 963 592 1,555
7,200 7,200 Federal National Mortgage Association 434 434
11,600 11,600 Franklin Resources, Inc. 374 374
10,100 10,100 H & R Block, Inc. 422 422
8,000 8,000 Marsh & McLennan Companies, Inc. 789 789
7,100 12,000 19,100 Morgan Stanley Dean Witter & Company 545 921 1,466
------------ ------------ ------------
4,210 1,947 6,157
------------ ------------ ------------
Food, Beverages & Tobacco 1.3%
8,200 8,200 Anheuser-Busch Companies, Inc. 579 579
4,000 4,000 Heineken NV 222 222
14,900 14,900 PepsiCo, Inc. 547 547
7,800 18,000 25,800 Sysco Corporation 293 677 970
------------ ------------ ------------
1,419 899 2,318
------------ ------------ ------------
Health Care Services & Supplies 0.2%
10,400 10,400 Columbia / HCA Healthcare Corporation 296 - 296
------------ ------------ ------------
Insurance 0.8%
4,500 7,500 12,000 American International Group, Inc. 494 823 1,317
------------ ------------ ------------
Machinery - Industrial 0.3%
2,000 2,000 Mannesmann AG - 530 530
------------ ------------ ------------
Medical Instruments 0.4%
13,000 13,000 Guidant Corporation - 746 746
------------ ------------ ------------
Metals & Minerals 0.2%
2,800 2,600 5,400 Alcoa Inc. 182 169 351
------------ ------------ ------------
Multi-Industry 0.9%
9,800 9,800 Pentair, Inc. 375 375
2,500 2,500 Siemens AG ADR 370 370
19,400 19,400 Tyco International, Ltd. 891 891
------------ ------------ ------------
1,266 370 1,636
------------ ------------ ------------
Mutual Fund 0.3%
2,800 2,600 25,645 Gateway Cincinnati Fund - 498 498
------------ ------------ ------------
Natural Gas 0.8%
8,500 8,500 Coastal Corporation 427 427
5,800 5,800 El Paso Energy Corporation 246 246
11,200 11,200 Enron Corporation 781 781
------------ ------------ ------------
1,027 427 1,454
------------ ------------ ------------
Networking Products 0.4%
</TABLE>
See notes to the Pro Forma Financial Statements
44
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
9,400 9,400 Cisco Systems, Inc.* 652 - 652
----- ------ ------
Oil - Domestic 0.6%
10,200 10,200 Phillips Petroleum Company 484 484
20,000 20,000 USX Corporation - Marathon Group, Inc. 466 466
----- ------ ------
950 - 950
----- ------ ------
Oil - International 0.9%
9,000 9,000 BP Amoco PLC - ADR 459 459
7,088 6,600 13,688 Exxon Mobil Corporation 551 513 1,064
2,500 2,500 Royal Dutch Petroleum - ADR 143 143
----- ------ ------
551 1,115 1,523
----- ------ ------
Oil - Services & Equipment 0.9%
1,900 1,900 Elf Aquitaine SA 170 170
9,600 9,600 Nabors Industries, Inc.* 379 379
6,600 6,600 Repsol TPF, SA 136 136
9,350 4,000 13,350 Schlumberger Limited 716 306 1,022
1,600 1,600 Transocean Sedco Forex Inc. 75 75
----- ------ ------
1,170 612 1,612
----- ------ ------
Paper & Forest Products 0.3%
7,100 7,100 Kimberly-Clark Corporation 412 412
5,100 5,100 The Mead Corporation 177 177
----- ------ ------
589 - 589
----- ------ ------
Printing & Publishing 0.7%
9,550 9,550 Harcourt General, Inc. 357 357
2,700 2,700 Houghton Mifflin Company 112 112
14,000 14,000 McGraw-Hill, Inc. 735 735
----- ------ ------
1,204 - 1,204
----- ------ ------
Real Estate Investment Trusts (REIT's) 10.1%
13,075 13,075 AMB Property Corporation 288 288
13,000 13,000 Apartment Investment and Management Company 517 517
26,071 26,071 Archstone Communities Trust 564 564
23,756 23,756 Avalaonbay Communities, Inc. 929 929
30,000 30,000 BRE Properties, Inc., Class A 838 838
18,000 18,000 Bedford Property Investors 317 317
12,000 12,000 Boston Properties, Inc. 418 418
10,000 10,000 Brandywine Realty Trust 174 174
15,000 15,000 CBL & Associates Properties, Inc. 352 352
13,000 13,000 Camden Property Trust 369 369
39,000 39,000 Catellus Development Corporation* 507 507
15,000 15,000 Chelsea GCA Realty, Inc. 489 489
20,000 20,000 Developers Diversified Realty Corporation 304 304
34,000 34,000 Duke-Weeks Realty Corporation 737 737
25,000 25,000 EastGroup Properties, Inc. 520 520
29,875 29,875 Equity Office Properties Trust 812 812
9,000 9,000 Equity Residential Properties Trust 409 409
8,000 8,000 Franchise Finance Corporation of America 190 190
10,000 10,000 Healthcare Realty Trust, Inc. 180 180
38,000 38,000 Host Marriot Corporation 406 406
22,250 22,250 Kimco Realty Corporation 886 886
12,000 12,000 Koger Equity, Inc. 210 210
35,000 35,000 LaSalle Hotel Properties 529 529
13,000 13,000 Liberties Property Trust 322 322
7,000 7,000 The Macerich Company 162 162
25,000 25,000 Mack-Cali Realty Corporation 644 644
21,000 21,000 MeriStar Hospitality Corporation 415 415
19,000 19,000 The Mills Corporation 342 342
32,000 32,000 Pacific Gulf Properties, Inc. 688 688
12,000 12,000 Public Storage, Inc. 268 268
8,000 8,000 Realty Income Corporation 174 174
10,000 10,000 Reckson Associates Realty Corporation 201 201
18,080 18,080 Simon Property Group, Inc. 459 459
14,000 14,000 Spieker Properties, Inc. 620 620
16,500 16,500 Starwood Hotels & Resorts, Inc. 469 469
7,000 7,000 Storage USA, Inc. 205 205
16,800 16,800 Summit Properties, Inc. 335 335
5,000 5,000 Sun Communities, Inc. 166 166
25,000 25,000 Sun Hung Kai Properties Ltd. 539 539
14,000 14,000 Vornado Realty Trust 483 483
----- ------ ------
288 17,149 17,437
----- ------ ------
Retail 2.4%
4,300 4,300 Costco Wholesale Corporation* 232 232
12,635 18,000 30,635 Gap, Inc. 464 661 1,125
1,200 1,200 Kohl's Corporation* 58 58
5,500 5,500 Lowe's Cormpanies, Inc. 272 272
20,000 20,000 Luxottica Group SPA 477 477
9,000 9,000 Safeway, Inc* 397 397
3,500 3,500 Target Corporation 233 233
19,100 19,100 Walgreen Company 537 537
15,000 15,000 Wal-Mart Stores, Inc. 831 831
----- ------ ------
1,796 2,366 4,162
----- ------ ------
</TABLE>
See notes to the Pro Forma Financial Statements
45
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Semiconductors 2.2%
5,900 14,000 19,900 Intel Corporation 748 1,775 2,523
7,500 7,500 Texas Instruments, Inc. 1,222 1,222
------ ------ ------
1,970 1,775 3,745
------ ------ ------
Telecommunications 4.3%
11,500 11,500 AT&T Corporation 537 537
7,400 7,400 ALLTEL Corporation 493 493
13,900 13,900 Bell Atlantic Corporation 823 823
9,900 9,900 Broadwing Inc.* 280 280
13,800 13,800 Cable & Wireless PLC 681 681
2,500 2,500 COLT Telecom Group PLC* 427 427
5,600 5,600 GTE Corporation 379 379
14,800 14,800 Lucent Technologies, Inc. 920 920
12,000 12,000 MCI Worldcom, Inc. 545 545
14,500 14,500 Sprint Corporation 892 892
8,044 8,044 SBC Communications, Inc. 352 352
3,100 3,100 Telecom Italia SPA* 443 443
4,600 4,600 Telefoneos de Mexico ADR 271 271
5,692 5,692 Telefonica SA 377 377
12,000 12,000 Vodafone AirTouch PLC 564 564
------ ------ ------
3,025 4,959 7,420
------ ------ ------
Telecommunications Equipment 3.5%
10,000 10,000 Alcatel 454 454
1,600 1,600 Corning Incorporated 316 316
2,800 10,500 13,300 Ericsson AB ADR 248 929 1,177
1,675 1,675 Motorola, Inc. 199 199
11,200 24,000 35,200 Nokia Corp. - ADR 637 1,365 2,002
7,300 9,400 16,700 Nortel Networks Corporation 827 1,065 1,892
------ ------ ------
2,227 3,813 6,040
------ ------ ------
Transportation 0.5%
5,600 5,600 Expeditors International of Washington, Inc. 239 239
8,400 8,400 United Parcel Service, Inc. 559 559
------ ------ ------
798 - 798
------ ------ ------
------ ------ ------
Total Common Stocks (Cost $67,480) 45,844 49,309 95,153
------ ------ ------
PREFERRED STOCKS 1.1%
Chemicals 0.1%
5,000 5,000 Monsanto Corporation, (convertible into Pharmacia
Corporation common stock)
6.50%, 11/30/03 226 226
Communications & Media 0.5%
1,600 1,600 Cox Communications Inc.,
7.75%, 11/15/29 (convertible to Sprint PCS
common stock) 163 163
1,000 1,000 Global Crossing Inc.,
6.75%, 4/15/12 (convertible to Global Crossing
Inc. common stock) 252 252
6,700 6,700 The News Corporation Ltd. 295 295
------ ------ ------
415 295 936
------ ------ ------
Food, Beverages & Tobacco 0.2%
6,300 6,300 Seagram Company Ltd.,
7.50%, 6/21/02 (convertible to Seagram Company
Ltd. common stock) 321 321
Natural Gas 0.3%
27,300 27,300 Enron Corporation,
7.00%, 7/31/02 (convertible to EOG Resources,
common stock) 642 642
------ ------ ------
Total Preferred Stocks (Cost $1,611) 1,604 295 1,899
------ ------ ------
CLOSED-END INVESTMENT COMPANIES 0.8%
8,000 8,000 Italy Fund, Ince (The) 145 145
13,500 13,500 Mexico Fund (The) 204 204
53,300 53,300 Morgan Stanley Asia-Pacific Fund 566 566
45,100 45,100 Templeton Dragon Fund, Inc. 358 358
6,500 6,500 WEBS Italy Index Fund, Inc. 152 152
------ ------ ------
Total Closed-End Investment Companies (Cost $1,124) - 1,425 1,425
------ ------ ------
<CAPTION>
Pro Forma
Firstar Stellar Pro Forma Firstar Stellar Combined
Principal Amount Principal Amout Principal Amount Market Value Market Value Market Value
---------------- --------------- ---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
LONG-TERM INVESTMENTS 34.7%
Asset-Backed Securities 2.1%
Auto Loan Receivables 0.5%
</TABLE>
See notes to the Pro Forma Financial Statements
46
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Banc One Auto Grantor Trust,
$ 57 $ 57 Series 1997-A, Class A, 6.27%, 11/20/03 57 57
Chase Manhattan Auto Owner Trust,
300 300 Series 1997-B, Class A5, 6.60%, 3/15/02 299 299
Honda Auto Lease Trust,
500 500 Series 1999-A, Class A5, 6.65%, 7/15/05 495 495
----- ----- -----
851 - 851
----- ----- -----
Credit Card Receivables 1.0%
Chemical Master Credit Card Trust I,
250 250 Series 1995-2, Class A, 6.23%, 6/15/03 249 249
Citibank Credit Card Master Trust I, Principal Only:
300 300 Series 1996-1, Class A, 0.00%, 2/07/01 284 284
800 800 Series 1997-6, Class A, 0.00%, 8/15/06 580 580
Discover Card Master Trust I,
500 500 Series 1995-2, Class A, 6.55%, 8/15/00 500 500
Sears Credit Account Master Trust,
150 150 Series 1995-2, Class A, 8.10%, 6/15/04 151 151
----- ----- -----
1,764 - 1,764
----- ----- -----
Home Equity Loan Receivables 0.6%
Contimortgage Home Equity Loan Trust,
502 502 Series 1997-3, Class A9, 7.12%, 8/15/28 482 482
GE Capital Mortgage Services, Inc.,
200 200 Series 1996-HE1, Class A4, 7.30%, 2/25/25 198 198
Green Tree Home Equity Loan Trust,
300 300 Series 1997-B, Class A6, 7.12%, 4/15/27 297 297
----- ----- -----
977 - 977
----- ----- -----
Corporate Bonds 8.4%
ABN Amro Bank Guarantee,
250 250 7.25%, 5/31/05 245 245
Air 2 US,
100 100 10.127%, 10/01/20 101 101
American West Airlines Pass-Thru Certificates,
125 125 8.54%, 1/02/06 (Acquired 9/14/99, Cost $125)* 123 123
AT&T Capital Corp. Company Guarantee,
200 200 6.25%, 5/15/01 198 198
Ashland, Inc. Medium Term Notes,
$ 250 250 7.90%, 8/05/06 246 246
Associates Corporation of North America Senior Notes,
150 150 7.50%, 4/15/02 150 150
Bank One Corporation Notes,
250 250 6.875%, 8/01/06 237 237
BankAmerica Corporation Subordinated Notes,
185 185 9.20%, 5/15/03 192 192
BankBoston Corporation Subordinated Notes,
200 200 6.625%, 2/01/04 192 192
Bankers Trust Corporation Subordinated Notes,
200 200 7.50%, 11/15/15 189 189
Bank of New York Subordinated Notes,
150 150 7.875%, 11/15/02 150 150
Bank of Oklahoma Subordinated Notes,
300 300 7.125%, 8/15/07 278 278
Barclays North American Capital Corp. Debentures,
300 300 9.75%, 5/15/21 319 319
Bear Stearns Co., Inc. Senior Notes
243 243 6.45%, 8/01/02 250 250
CE Generations LLC,
400 400 7.416%, 12/15/18 362 362
Chevron Capital USA Inc. Guaranteed Notes,
250 7.45%, 8/15/04 247 247
Citicorp Subordinated Notes,
100 100 9.50%, 2/01/02 103 103
Citgroup, Inc. Senior Notes
1,000 1,000 9.50%, 3/01/02 1,035 1,035
Conectiv, Inc. Medium Term Notes,
225 225 6.73%, 6/01/06 217 217
Continental Airlines Inc. Pass-Thru Certificates,
173 173 6.80%, 7/02/07 163 163
Continental Cablevision, Inc. Debentures,
100 100 9.50%, 8/01/13 107 107
Donaldson, Lufkin & Jenrette Senior Notes,
200 200 5.875%, 4/01/02 193 193
Dow Chemical Pass Thru Certificates,
105 7.60%, 1/02/02 105 105
Duty Free International, Inc. Notes,
250 250 7.00%, 1/15/04 245 245
Dynegy, Inc. Senior Notes,
200 200 7.45%, 7/15/06 191 191
Enron Corporation Notes,
50 50 7.625% 9/10/04 49 49
Enserch Corporation,
500 6.25% 1/01/03 481 481
Federal Express Corporation Notes,
180 180 9.65%, 6/15/12 194 194
FPL Group Capital, Inc. Guaranteed Notes,
150 150 7.625%, 9/15/06 148 148
Ford Motor Credit Corporation Notes:
200 200 6.11%, 12/28/01 196 196
</TABLE>
See notes to the Pro Forma Financial Statements
47
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
250 250 6.375%, 2/01/29 206 206
Goldman Sachs Group Notes,
400 400 6.25%, 2/01/03 (Acquired 6/30/99, Cost $393)** 384 384
International Lease Finance Corporation Notes,
250 250 8.375%, 12/15/04 255 255
Lehman Brothers, Inc. Senior Notes,
150 150 8.75%, 5/15/02 152 152
Lehman Brothers, Inc. Notes,
1,000 1,000 6.50%, 10/01/02 971 971
Lehman Brothers, Inc. Medium Term Notes,
375 375 7.50%, 9/01/06 364 364
Marlin Water Trust Senior Notes,
97 97 7.09%, 12/15/01 (Acquired 12/9/98, Cost $97)** 95 95
Merrill Lynch & Co. Notes:
225 225 8.30%, 11/01/02 230 230
200 200 6.25%, 10/15/08 180 180
Midlantic Corporation Subordinated Notes,
240 240 9.20%, 8/01/01 245 245
Morgan Stanley Group Debentures,
300 300 8.875%, 10/15/01 306 306
Morgan Stanley Senior Notes,
500 500 5.625%, 1/20/04 468 468
National Westminster Bank Debentures,
300 300 9.375%, 11/15/03 314 314
Oneok, Inc. Notes,
125 125 7.75%, 8/15/06 123 123
Paine Webber Group, Inc. Subordinated Notes,
200 200 7.75%, 9/01/02 199 199
Principal Financial Group Senior Notes,
400 400 8.20%, 8/15/09 (Acquired 8/18/99, Cost $399)** 399 399
PSI Energy Debentures,
150 150 7.85%, 10/15/07 145 145
J.C. Penny Company, Inc. Debentures,
150 150 8.25%, 8/15/22 122 122
Salomon, Inc. Notes:
409 409 7.50%, 2/01/03 407 407
277 277 7.00%, 6/15/03 272 272
Sears Roebuck Acceptance Corporation Notes,
500 500 7.00%, 6/15/07 469 469
Standard Federal Bancorp Medium Term Notes,
250 250 7.75%, 7/17/06 245 245
Zurich Capital Trust Company Guarantee,
365 365 8.376%, 6/01/37 345 345
Washington Mutual, Inc. Notes,
250 250 7.50%, 8/15/06 242 242
Westdeutsche Landesbank Subordinated Notes:
200 200 6.05%, 1/15/09 175 175
400 400 6.75%, 6/15/05 382 382
----- ----- ------
9,098 5,503 14,601
----- ----- ------
International/Yankee (U.S. $ Denominated) 1.4%
Ford Capital BV Debentures:
200 200 9.375%, 5/15/01 204 204
150 150 9.50%, 6/01/10 162 162
Household Netherlands BV Company Guarantee,
125 125 6.20%, 12/01/03 119 119
Korea Development Bank Bonds,
230 230 7.125%, 9/17/01 227 227
Metronet Communicationas Corp. Senior Notes,
300 300 9.95%, 6/15/08 236 236
Norsk Hydro A/S Debentures,
50 50 9.00%, 4/15/12 54 54
Stagecoach Holdings PLC Notes,
200 200 8.625%, 11/15/09 163 163
Trans-Canada Pipelines Subordinated Debentures,
1,000 1,000 9.125%, 4/20/06 1,063 1,063
Trans-Canada Pipelines Debentures,
200 200 9.875%, 1/01/21 235 235
Wharf Capital International Ltd. Notes,
50 50 7.625%, 3/13/07 46 46
----- ----- ------
1,211 1,298 2,509
----- ----- ------
U.S. Government Agency-Backed Mortgage Issues 4.5%
Federal Home Loan Bank (FHLB)
2,000 2,000 6.00%, 8/15/02 1,951 1,951
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC),
51 51 Series 1201, Class E, 7.40%, 12/15/21 51 51
Federal National Mortgage Association (FNMA)
1,000 1,000 5.125%, 2/13/04 930 930
500 500 5.25%, 1/15/09 434 434
250 250 6.625%, 9/15/09 239 239
250 250 6.93%, 9/17/12 235 235
250 250 6.25%, 5/15/29 221 221
Real Estate Mortgage Investment Conduit (REMIC):
333 333 Series 1996-21, Class PK, 6.00%, 2/25/11 303 303
39 39 Series 1989-2, Class D, 8.80%, 1/25/19 40 40
255 255 Series 1990-63, Class H, 9.50%, 6/25/20 264 264
48 48 Series 1990-89, Class K, 6.50%, 7/25/20 46 46
</TABLE>
See notes to the Pro Forma Financial Statements
48
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
23 23 Series 1991-147, Class K, 7.00%, 1/25/21 23 23
750 750 Series 1993-210, Class PL, 6.50%, 4/25/23 703 703
Government National Mortgage Association (GNMA)
276 276 7.50%, 6/15/27, Pool #447728 272 272
Real Estate Mortgage Investment Conduit (REMIC),
67 67 Series 3, Class F, 6.50%, 6/17/20 64 64
SALLIE MAE Floating Rate Notes:
1,000 1,000 6.152%, 7/20/00 1,000 1,000
1,000 1,000 6.042%, 3/07/01 999 999
-------- -------- ---------
224 7,551 7,775
-------- -------- ---------
U.S. Treasury Obligations 18.3%
U.S. Treasury Bonds,
8,250 8,250 11.625%, 11/15/02 9,186 9,186
685 685 9.875%, 11/15/15 921 921
250 250 9.00%, 11/15/18 323 323
1,500 1,500 6.75%, 8/15/26 1,604 1,604
U.S. Treasury Notes,
1,000 1,000 5.875%, 10/31/01 989 989
1,850 1,850 6.375%, 8/15/02 1,839 1,839
U.S. Treasury Strips, Principal Only,
22,280 22,280 0.00%, 11/15/04 16,542 16,542
1,000 1,000 0.00%, 11/15/27 197 197
-------- -------- ---------
27,567 4,034 31,601
-------- -------- ---------
Total Long-Term Investments (Cost $58,679) 41,692 18,386 60,078
-------- -------- ---------
SHORT-TERM INVESTMENTS 8.6%
Commercial Paper 0.4%
Dupont Ei De Nemours Corporation
400 400 0.00%, 5/22/00 398 398
General Electric Capital Corporation
250 250 0.00%, 5/03/00 250 250
-------- -------- ---------
- 648 648
-------- -------- ---------
Repurchase Agreements 4.5%
Donaldson, Lufkin and Jenrette Securities Corp., 5.73%
due 5/01/00 (Collateralized by U.S. Government
7,749 7,749 Securities) - 7,749 7,749
-------- -------- ---------
U.S. Government Agencies 0.3%
Federal Farm Credit Bank (FFCB),
560 560 0.00%, 5/19/00 - 558 558
-------- -------- ---------
<CAPTION>
Number Number Number
of Shares of Shares of Shares
-------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment Companies 3.4%
5 5 Financial Square Prime Obligation Fund 5 5
500 500 Flex Funds 500 500
1,000 1,000 Government Money Market 1,000 1,000
2,500 2,500 RNC Money Market Fund 2,500 2,500
1,951 1,951 Short-Term Investments Co. Liquid Assets Portfolio 1,951 1,951
-------- -------- ---------
Total Investment Companies (Cost $1,956) 1,956 4,000 5,956
-------- -------- ---------
Total Short-Term Investments (Cost $14,915) 1,956 12,955 14,911
-------- -------- ---------
Total Investments (Cost $143,809) 100.0% $ 91,096 $ 82,370 $ 173,466
======== ======== =========
* Non-income producing
** Unregistered Security
</TABLE>
See notes to the Pro Forma Financial Statements
49
<PAGE>
FIRSTAR BALANCED GROWTH FUND
FIRSTAR BALANCED GROWTH FUND / MERCANTILE BALANCED PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Mercantile Combined Firstar Mercantile Combined
Shares Shares Shares Market Value Market Value Market Value
------------- ------------ ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS 63.8%
Aerospace & Defense 0.4%
19,700 19,700 General Dynamics Corporation $ 1,152 $ 1,152
7,000 7,000 Orbital Sciences Corporation* 88 88
--------- ---------- ---------
1,240 - 1,240
--------- ---------- ---------
Air Transportation 0.2%
30,800 30,800 Southwest Airlines 668 - 668
--------- ---------- ---------
Banking 2.4%
7,300 7,300 Bank United Corporation - Class A 242 242
3,900 3,900 CCB Financial Corporation 154 154
5,750 5,750 Charter One Financial, Inc. 117 117
14,100 12,735 26,835 Chase Manhattan Corporation 1,016 $ 918 1,934
4,400 4,400 Commerce Bancorp, Inc. 175 175
1,500 1,500 Cullen/Frost Bankers, Inc. 37 37
16,500 16,500 Fifth Third Bancorp 1,042 1,042
2,300 2,300 First Tennessee National Corporation 44 44
34,694 34,694 First Union Corporation 1,106 1,106
3,700 3,700 Marshall & Ilsley Corporation 172 172
3,500 3,500 North Fork Bancorporation, Inc. 57 57
7,000 7,000 Sovereign Bancorp, Inc. 48 48
24,400 24,400 State Street Corporation 2,364 2,364
2,200 2,200 TCF Financial Corporation 51 51
2,000 2,000 Zions Bancorporation 83 83
--------- ---------- ---------
5,602 2,024 7,626
--------- ---------- ---------
Batteries 0.1%
13,233 13,233 Energizer Holdings, Inc.* 226 226
5,100 5,100 Rayovac Corporation* 106 106
--------- ---------- ---------
106 226 332
--------- ---------- ---------
Building & Construction 0.7%
9,300 9,300 Astec Industries, Inc.* 234 234
5,100 5,100 Granite Construction, Inc. 121 121
2,800 2,800 Martin Marietta Materials, Inc. 148 148
60,950 60,950 Masco Corporation 1,368 1,368
800 800 Southdown, Inc. 46 46
10,700 10,700 Texas Industries, Inc. 349 349
5,400 5,400 U.S. Aggregates, Inc.* 92 92
--------- ---------- ---------
990 1,368 2,358
--------- ---------- ---------
Business Services 3.3%
9,300 9,300 Affiliated Computer Services, Inc.* 308 308
10,500 10,500 The BISYS Group, Inc.* 657 657
4,900 4,900 Ceridian Corporation* 106 106
1,300 1,300 CheckFree Holdings Corporation* 66 66
3,850 3,850 Cintas Corporation 153 153
22,300 22,300 Cisco Systems, Inc.* 1,546 1,546
12,900 12,900 Computer Sciences Corporation* 1,052 1,052
3,500 3,500 Diebold, Inc. 101 101
7,100 7,100 Electronic Data Systems Corporation 488 488
47,400 20,877 68,277 First Data Corporation 2,308 1,016 3,324
8,555 8,555 FIserv, Inc. * 393 393
12,900 12,900 F.Y.I. Inc. * 346 346
3,400 3,400 Manpower Inc. 120 120
3,500 3,500 NCO Group, Inc.* 120 120
6,300 6,300 Robert Half International Inc. 385 385
21,900 21,900 Sabre Group Holdings, Inc. * 765 765
11,200 11,200 The Source Information Management
Company* 165 165
6,600 6,600 Steiner Leisure Ltd. 133 133
3,450 3,450 Symbol Technologies, Inc. 192 192
2,400 2,400 Viad Corp. 61 61
--------- ---------- ---------
7,431 3,050 10,481
--------- ---------- ---------
Chemicals 0.4%
14,800 14,800 M.A. Hanna Company 170 170
8,900 8,900 Minerals Technologies Inc. 412 412
44,681 44,681 Solutia, Inc. 609 609
--------- ---------- ---------
582 609 1,191
--------- ---------- ---------
</TABLE>
See notes to the Pro Forma Financial Statements
50
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Communications & Media 2.1%
47,200 47,200 Charter Communications, Inc.* 693 693
2,300 2,300 Citadel Communications Corporation* 90 90
27,000 27,000 The Walt Disney Company 1,169 1,169
1,200 1,200 Hispanic Broadcasting Corporation* 121 121
27,300 27,300 Infinity Broadcasting* 926 926
33,800 33,800 Interpublic Group of Companies, Inc. 1,386 1,386
16,900 16,900 Omnicom Group, Inc. 1,539 1,539
6,182 6,182 Time Warner Inc. 556 556
1,200 1,200 Univision Communications Inc.* 131 131
--------- ---------- ---------
6,055 556 6,611
--------- ---------- ---------
Computers 1.6%
13,200 13,200 ASM Lithography Holding N.V.* 528 528
20,100 20,100 Compaq Computer Corporation 588 588
14,600 14,600 EMC Corporation* 2,028 2,028
19,100 19,100 Sun Microsystems, Inc.* 1,756 1,756
4,800 4,800 Zebra Technologies Corporation* 274 274
--------- ---------- ---------
4,586 588 5,174
--------- ---------- ---------
Containers 0.2%
31,027 31,027 Crown Cork & Seal Company, Inc. - 504 504
--------- ---------- ---------
Cosmetics & Soap 0.4%
11,253 11,253 Estee Laudee Companies Inc. 497 497
14,290 14,290 Gillette Company 529 529
5,800 5,800 Procter & Gamble Company 346 346
--------- ---------- ---------
- 1,372 1,372
--------- ---------- ---------
Data Processing 0.7%
27,200 27,200 Acxiom Corporation* 734 734
3,200 3,200 ChoicePoint, Inc.* 122 122
1,300 1,300 CSG Systems International, Inc.* 60 60
4,200 4,200 National Computer Systems, Inc. 216 216
1,900 1,900 Shared Medical Systems Corporation 79 79
29,700 29,700 SunGard Data Systems, Inc. 1,026 1,026
--------- ---------- ---------
2,237 - 2,237
--------- ---------- ---------
Distribution 0.2%
5,700 5,700 CDW Computer Centers, Inc.* 593 593
1,200 1,200 Fastenal Company 70 70
--------- ---------- ---------
663 - 663
--------- ---------- ---------
Drugs 4.1%
3,800 3,800 Alphama Inc. -Class A 147 147
3,800 3,800 ALZA Corporation - Class A* 167 167
18,000 17,184 35,184 Bristol-Myers Squibb Company 944 901 1,845
29,100 16,910 46,010 Eli Lilly & Company 2,250 1,307 3,557
2,100 2,100 Forest Laboratories, Inc.* 177 177
1,400 1,400 MedImmune, Inc.* 224 224
16,500 15,264 31,764 Merck & Co., Inc. 1,147 1,061 2,208
24,288 24,288 Schering-Plough Corporation 979 979
900 900 Sepracor Inc.* 83 83
7,300 7,300 Shire Pharmaceuticals Group PLC - ADR* 294 294
24,400 24,400 Warner-Lambert Company 2,777 2,777
14,900 14,900 Watson Pharmaceuticals, Inc.* 670 670
--------- ---------- ---------
8,880 4,248 13,128
--------- ---------- ---------
Electric 0.6%
7,100 7,100 AES Corporation* 639 639
21,723 21,723 Cinergy Corporation 581 581
10,306 10,306 Duke Energy Corporation 593 593
--------- ---------- ---------
- 1,813 1,813
--------- ---------- ---------
Electrical Equipment 0.4%
7,796 7,796 General Electric Company - 1,226 1,226
--------- ---------- ---------
Electronics 0.4%
8,427 8,427 Hewlett-Packard Company - 1,138 1,138
--------- ---------- ---------
Electronic Components &
Semiconductors 8.1%
1,000 1,000 Aeroflex Inc.* 37 37
6,940 6,940 Altera Corporation* 710 710
14,200 14,200 Analog Devices, Inc. * 1,091 1,091
19,600 9,016 28,616 Applied Materials, Inc.* 1,996 918 2,914
500 500 Applied Micro Circuits Corporation* 64 64
4,400 4,400 Atmel Corporation* 215 215
5,600 5,600 ATMI, Inc.* 216 216
500 500 AVX Corporation 49 49
8,000 8,000 Benchmark Electronics, Inc.* 321 321
4,200 4,200 Broadcom Corporation* 724 724
2,200 2,200 Burr-Brown Corporation* 150 150
</TABLE>
See notes to the Pro Forma Financial Statements
51
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Electronic Components &
Semiconductors 8.1% (cont.)
12,600 12,600 Conexant Systems, Inc.* 754 754
1,900 1,900 Credence Systems Corporation* 271 271
3,400 3,400 CTS Corporation 214 214
2,000 2,000 Exar Corporation* 160 160
15,900 15,900 Flextronics International Ltd.* 1,117 1,117
16,100 16,100 Infineon Technologies ADR* 1,093 1,093
11,000 11,000 Integrated Device Technology, Inc.* 529 529
19,100 8,000 27,100 Intel Corporation 2,422 1,015 3,437
500 500 Intersil Holding Corporation* 17 17
11,272 11,272 KLA-Tencor Corporation* 844 844
3,200 3,200 Kulicke & Soffa Industries, Inc. * 251 251
3,000 3,000 Lam Research Corporation* 138 138
1,800 1,800 LSI Logic Corporation* 112 112
6,700 8,800 15,500 Maxim Integrated Products, Inc. * 434 570 1,004
2,000 2,000 Micrel, Inc.* 173 173
23,312 23,312 Molex, Inc. - Class A 932 932
7,400 7,400 Novellus Systems, Inc.* 493 493
5,600 5,600 PMC - Sierra, Inc.* 1,075 1,075
3,500 3,500 Phototronics, Inc.* 117 117
3,200 3,200 Sanmina Corporation * 192 192
2,000 2,000 Semtech Corporation* 136 136
5,300 5,300 STMicroelectronics N.V. 1,005 1,005
6,000 6,000 Teradyne, Inc.* 660 660
22,000 22,000 Texas Instruments, Inc. 3,583 3,583
2,200 2,200 TriQuint Semiconductor, Inc. * 226 226
3,200 3,200 SCI Systems, Inc.* 170 170
2,500 2,500 Veeco Instruments Inc.* 155 155
3,800 3,800 Vitesse Semiconductor* 259 259
2,100 2,100 Xilinx, Inc.* 154 154
--------- ---------- ---------
21,705 4,057 25,762
--------- ---------- ---------
Entertainment & Leisure 0.6%
3,600 3,600 Anchor Gaming* 145 145
38,100 25,100 63,200 Carnival Corporation 948 624 1,572
8,400 8,400 Cinar Films Inc. - Class B * 59 59
--------- ---------- ---------
1,152 624 1,776
--------- ---------- ---------
Financial Services 3.0%
27,050 27,050 Concord EFS, Inc. * 605 605
6,900 6,900 E*Trade Group, Inc.* 148 148
14,600 14,600 Federal Home Loan Mortgage Corporation 671 671
7,900 7,900 Federal National Mortgage Association 476 476
4,200 4,200 Federated Investors, Inc. 119 119
24,900 24,900 Franklin Resources, Inc. 803 803
25,793 25,793 Heller Financial, Inc. 501 501
63,700 49,042 12,742 MBNA Corporation 1,692 1,303 2,995
20,600 7,900 28,500 Morgan Stanley Dean Witter & Company 1,581 606 2,187
31,511 31,511 SLM Holding Corporation 987 987
--------- ---------- ---------
6,095 3,397 9,492
--------- ---------- ---------
Food & Beverage 1.6%
2,800 2,800 Canandaigua Brands, Inc.* 141 141
30,000 30,000 Heinz (H.J.) Company 1,020 1,020
16,500 30,464 46,964 PepsiCo, Inc. 605 1,118 1,723
37,800 37,800 Ralston-Ralston Purina Group 669 669
6,500 6,500 SUPERVALU, Inc. 134 134
31,927 31,927 SYSCO Corporation 1,201 1,201
15,400 15,400 Universal Foods Corporation 253 253
--------- ---------- ---------
1,133 4,008 5,141
--------- ---------- ---------
Health Care Services & Supplies 0.8%
20,625 20,625 Cardinal Health, Inc. 1,136 1,136
24,353 24,353 Health Management Associates, Inc. -
Class A 388 388
46,200 46,200 IMS Health Inc. 788 788
9,700 9,700 Lincare Holdings, Inc. * 296 296
600 600 Omnicare, Inc. 9 9
--------- ---------- ---------
2,617 - 2,617
--------- ---------- ---------
Insurance 2.1%
19,400 19,400 AFLAC, Inc. 947 947
1,900 1,900 Allmerica Financial Corporation 103 103
3,400 3,400 Ambac Financial Group, Inc. 163 163
19,755 19,755 American International Group 2,167 2,167
9,900 9,900 Aon Corporation 268 268
13,200 13,200 Arthur J. Gallagher & Company 492 492
6,800 6,800 Enhance Financial Services Group Inc. 69 69
3,900 3,900 Financial Security Assurance
Holdings Ltd. 288 288
7,200 7,200 Hooper Holmes, Inc. 125 125
600 600 Jefferson - Pilot Corporation 40 40
17,400 17,400 MetLife, Inc.* 288 288
26,100 26,100 MGIC Investment Corporation 1,248 1,248
1,900 1,900 Nationwide Financial Services, Inc. 53 53
1,350 1,350 The PMI Group, Inc. 65 65
</TABLE>
See notes to the Pro Forma Financial Statements
52
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
8,500 8,500 Protective Life Corporation 202 202
1,900 1,900 ReliaStar Financial Corporation 82 82
1,800 1,800 Torchmark Corporation 44 44
3,000 3,000 XL Capital Ltd. 143 143
--------- ---------- ---------
6,787 - 6,787
--------- ---------- ---------
Internet Products & Services 0.2%
4,400 4,400 Ariba, Inc.* 326 326
6,900 6,900 EDGAR Online, Inc.* 45 45
700 700 PurchasePro.com, Inc.* 21 21
2,500 2,500 Verio Inc.* 94 94
--------- ---------- ---------
486 - 486
--------- ---------- ---------
Medical 1.4%
2,300 2,300 Aclara Biosciences Inc.* 88 88
8,308 8,308 Allergan, Inc. 489 489
500 12,800 13,300 C.R. Bard, Inc. 22 558 580
17,450 17,450 Baxter International, Inc. 1,136 1,136
2,000 2,000 Chiron Corporation* 90 90
3,700 3,700 Genentech, Inc.* 433 433
14,300 14,300 Johnson & Johnson 1,180 1,180
1,400 1,400 Millennium Pharmaceuticals, Inc.* 111 111
3,200 3,200 Mylan Laboratories Inc. 91 91
25,500 25,500 QuadraMed Corporation* 100 100
6,100 6,100 Texas Biotechnology Corporation* 75 75
--------- ---------- ---------
2,190 2,183 4,373
--------- ---------- ---------
Medical Instruments 1.1%
5,000 5,000 Biomet, Inc. 178 178
2,200 2,200 Coherent, Inc.* 127 127
10,475 10,475 DENTSPLY International Inc. 304 304
9,300 9,300 Edwards Lifesciences Corporation* 139 139
9,300 9,300 Guidant Corporation 534 534
25,000 25,000 Medtronic, Inc. 1,298 1,298
500 500 MiniMed Inc.* 61 61
3,800 3,800 Patterson Dental Company* 183 183
18,800 18,800 Renal Care Group, Inc.* 419 419
1,900 1,900 Stryker Corporation 137 137
7,400 7,400 Sybron International Corporation* 230 230
--------- ---------- ---------
3,610 - 3,610
--------- ---------- ---------
Metals & Minerals 0.3%
44,130 44,130 USX Corporation-Marathon Group, Inc. - 1,029 1,029
--------- ---------- ---------
Miscellaneous 0.6%
24,347 24,347 Millipore Corporation - 1,745 1,745
--------- ---------- ---------
Multi-Industry 0.9%
7,500 7,500 GSI Lumonics Inc.* 141 141
6,200 6,200 Kaydon Corporation 145 145
4,500 4,500 Mettler-Toledo International Inc.* 157 157
6,000 6,000 Pentair, Inc. 230 230
49,000 49,000 Tyco International, Ltd. 2,251 2,251
--------- ---------- ---------
2,924 - 2,924
--------- ---------- ---------
Natural Gas 0.6%
26,800 26,800 Enron Corporation 1,868 - 1,868
--------- ---------- ---------
Networking Products 1.9%
21,994 21,994 Adaptec, Inc.* 594 594
50,000 50,000 Cisco Systems, Inc. * 3,466 3,466
3,700 3,700 Black Box Corporation * 285 285
1,800 1,800 Juniper Networks, Inc.* 383 383
15,600 15,600 Network Appliance, Inc.* 1,153 1,153
1,700 1,700 QLogic Corporation * 171 171
3,000 3,000 Xircom, Inc.* 118 118
--------- ---------- ---------
5,576 594 6,170
--------- ---------- ---------
Office Equipment & Supplies 0.3%
16,280 16,280 Avery Dennison Corporation 1,068 1,068
--------- ---------- ---------
Oil & Gas - Domestic 1.4%
6,900 6,900 Barret Resources Corporation* 219 219
1,900 1,900 Devon Energy Corporation 92 92
61,000 61,000 EOG Resources, Inc. 1,517 1,517
4,000 4,000 Newfield Exploration Company* 163 163
13,500 13,500 Phillips Petroleum Company 640 640
2,900 2,900 St. Mary Land & Exploration Company 98 98
16,000 16,000 Texaco Inc. 792 792
19,363 19,363 Unocal Corporation 626 626
7,600 7,600 Valero Energy Corporation 220 220
6,300 6,300 Veritas DGC Inc.* 151 151
--------- ---------- ---------
3,892 626 4,518
--------- ---------- ---------
</TABLE>
See notes to the Pro Forma Financial Statements
53
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Oil & Gas Services 2.3%
3,500 3,500 ENSCO International Incorporated 116 116
2,600 2,600 Grant Prideco, Inc.* 50 50
3,300 3,300 Noble Drilling Corporation* 132 132
1,000 1,000 Santa Fe International Corporation 34 34
4,600 4,600 Global Marine Inc.* 110 110
12,600 12,600 Ocean Energy Inc.* 163 163
9,100 9,100 Precision Drilling Corporation* 291 291
3,800 3,800 Talisman Energy Inc.* 114 114
20,200 20,200 Halliburton Company 893 893
4,100 4,100 National-Oilwell, Inc.* 98 98
3,400 3,400 Dynegy Inc. 222 222
4,600 4,600 Kinder Morgan, Inc. 139 139
2,000 2,000 BJ Services Company* 141 141
9,500 13,552 23,052 El Paso Energy Corporation 404 576 980
Oil & Gas Services 2.3% (cont.)
1,000 1,000 Hanover Compressor Company* 58 58
9,820 9,820 Murphy Oil Corporation 579 579
5,100 5,100 Nabors Industries, Inc. * 201 201
58,220 58,220 Ocean Energy, Inc.* 753 753
5,600 5,600 Petroleum Geo-Services ASA - ADR * 90 90
20,700 20,700 Schlumberger Limited* 1,585 1,585
1,000 1,000 Smith International, Inc.* 76 76
2,600 2,600 Weatherford International, Inc.* 106 106
9,700 9,700 Transocean Sedco Forex Inc. 456 456
--------- ---------- ---------
5,023 2,364 7,387
--------- ---------- ---------
Paper & Related Products 0.5%
8,800 8,800 Champion International Corporation 579 579
1,800 1,800 Consolidated Papers, Inc. 68 68
30,551 30,551 Mead Corporation 1,064 1,064
--------- ---------- ---------
647 1,064 1,711
--------- ---------- ---------
Printing & Publishing 0.0%
2,100 2,100 Scholastic Corporation* 98 - 98
--------- ---------- ---------
Production 0.2%
9,241 9,241 Illinois Tool Works, Inc. 592 592
--------- ---------- ---------
Rental Equipment 0.1%
10,600 10,600 Avis Group Holdings, Inc.* 215 215
6,000 6,000 Rent-A-Center, Inc.* 122 122
--------- ---------- ---------
337 - 337
--------- ---------- ---------
Restaurants 0.3%
3,600 3,600 Brinker International, Inc. * 115 115
2,900 2,900 Starbucks Corporation* 88 88
19,174 19,174 Tricon Global Restraunts, Inc.* 654 654
--------- ---------- ---------
203 654 857
--------- ---------- ---------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Retail 6.0%
8,600 8,600 Ames Department Stores, Inc.* 154 154
4,000 4,000 BJ's Wholesale Club* 142 142
18,800 18,800 Circuit City Stores Inc. 1,106 1,106
67,156 67,156 Consolidated Stores Corporation* 835 835
20,800 20,800 Costco Companies, Inc. * 1,125 1,125
31,965 31,965 Dollar General Corporation 731 731
34,100 34,100 Family Dollar Stores 650 650
45,100 45,100 Goody's Family Clothing, Inc. * 293 293
18,750 18,750 Home Depot, Inc. 1,051 1,051
10,150 10,150 InterTAN, Inc.* 140 140
29,400 29,400 Kohl's Corporation* 1,411 1,411
5,200 5,200 Linens 'n Things, Inc.* 161 161
39,420 21,000 60,420 Lowe's Companies, Inc. 1,951 1,040 2,991
12,200 12,200 The Men's Wearhouse, Inc. * 262 262
74,707 74,707 Office Depot, Inc.* 789 789
4,100 4,100 Ross Stores, Inc. 85 85
43,600 43,600 Safeway, Inc. * 1,924 1,924
16,300 16,300 Target Corporation 1,085 1,085
1,500 1,500 Tiffany & Company 109 109
30,000 18,241 48,241 Wal-Mart Stores, Inc. 1,661 1,010 2,671
42,700 42,700 Walgreen Company* 1,201 1,201
7,500 7,500 Whitehall Jewelers, Inc.* 129 129
4,200 4,200 Williams-Sonoma, Inc.* 145 145
--------- ---------- ---------
15,516 3,674 19,190
--------- ---------- ---------
Software 2.7%
8,400 8,400 Aspen Technology, Inc* 297 297
23,800 23,800 BMC Software, Inc.* 1,114 1,114
7,100 7,100 Citrix Systems, Inc.* 434 434
600 600 Electronic Arts, Inc.* 36 36
11,200 11,200 General Magic, Inc.* 62 62
</TABLE>
See notes to the Pro Forma Financial Statements
54
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
2,500 2,500 Intuit Inc.* 90 90
1,400 1,400 Mercury Interactive Corporation* 126 126
37,900 14,930 52,830 Microsoft Corporation* 2,644 1,041 3,685
1,200 1,200 NVIDIA Corporation* 107 107
14,400 14,400 Oracle Corporation* 1,151 1,151
4,100 4,100 Rational Software Corporation* 349 349
1,100 1,100 SAGA SYSTEMS, Inc.* 20 20
1,500 1,500 Symantec Corporation* 94 94
5,325 5,325 VERITAS Software Corporation* 571 571
8,100 8,100 Verity, Inc.* 263 263
------- ------ -------
6,244 2,155 8,399
------- ------ -------
Metals & Minerals 0.4%
16,100 16,100 Alcoa, Inc. 1,044 1,044
5,900 5,900 Prudential Steel Ltd. 60 60
------- ------ -------
60 1,044 1,104
------- ------ -------
Telecommunications 2.4%
5,900 5,900 AT & T Wireless Group* 188 188
8,500 8,500 ALLTEL Corporation 566 566
26,100 26,100 Broadwing Inc.* 759 759
15,549 15,549 GTE Corporation 1,053 1,053
2,400 2,400 McLeodUSA, Incorporated * 60 60
27,786 21,200 48,986 MCI WorldCom, Inc.* 1,263 963 2,226
9,600 9,600 Nextel Communications, Inc.* 1,051 1,051
25,100 25,100 SBC Communications, Inc. 1,100 1,100
4,600 4,600 Telesystem International Wireless Inc.* 152 152
5,100 5,100 Voicestream Wireless Corporation* 505 505
------- ------ -------
4,544 3,116 7,660
------- ------ -------
Telecommunications Equipment 4.7%
4,300 4,300 ADTRAN, Inc.* 291 291
4,400 4,400 Alpha Industries, Inc. 229 229
8,700 8,700 CIENA Corporation* 1,076 1,076
6,000 6,000 Comverse Technology, Inc.* 535 535
2,600 2,600 Corning Incorporated 513 513
1,500 1,500 Crown Castle International Corporation* 58 58
1,700 1,700 Ditech Communications Corporation * 146 146
6,200 6,200 Ericsson AB 548 548
700 700 Harmonic Inc.* 52 52
3,800 3,800 Harris Corporation 123 123
14,600 14,600 JDS Uniphase Corporation* 1,514 1,514
4,600 4,600 Motorola, Inc. 548 548
34,400 7,200 41,600 Nokia Corp. - ADR 1,957 411 2,368
25,400 8,200 33,600 Nortel Networks Corporation 2,877 929 3,806
1,400 1,400 Polycom, Inc.* 111 111
1,400 1,400 Powerwave Technologies, Inc.* 291 291
9,200 9,200 QUALCOMM Incorporated* 998 998
11,900 11,900 Scientific-Atlanta, Inc. 774 774
7,900 7,900 Siebel Systems, Inc.* 971 971
------- ------ -------
13,612 1,340 14,952
------- ------ -------
Telecommunications Services 0.3%
2,200 2,200 Adelphia Business Solutions, Inc.* 77 77
1,050 1,050 Allegiance Telecom, Inc.* 74 74
12,600 12,600 Global Crossing Ltd.* 397 397
4,900 4,900 MGC Communications, Inc.* 240 240
1,600 1,600 Powertel, Inc.* 108 108
3,900 3,900 Viatel, Inc.* 149 149
------- ------ -------
1,045 - 1,045
------- ------ -------
Textiles & Apparel 0.0%
2,900 2,900 Jones Apparel Group, Inc.* 86 - 86
------- ------ -------
Transportation 0.5%
6,500 6,500 Circle International Group, Inc. 173 173
7,100 7,100 EGL, Inc.* 163 163
1,500 1,500 GATX Corporation 54 54
32,800 32,800 Harley-Davidson, Inc. 1,306 1,306
------- ------ -------
1,696 - 1,696
------- ------ -------
Utilities 0.3%
2,200 2,200 Calpine Corporation* 201 201
4,900 4,900 Constellation Energy Group 162 162
4,400 4,400 Edison International 84 84
9,800 9,800 Kansas City Power & Light Company 252 252
1,900 1,900 Montana Power Company 84 84
3,700 3,700 PECO Energy Company 154 154
1,500 1,500 Wisconsin Energy Corporation 32 32
------- ------ -------
969 - 969
------- ------ -------
Total Common Stocks (Cost $148,215) 149,155 54,056 203,211
------- ------ -------
</TABLE>
See notes to the Pro Forma Financial Statements
55
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Firstar Mercantile Combined
Principal Principal Principal
Amount Amount Amount
------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
LONG-TERM INVESTMENTS 34.8%
Asset Backed Securities 2.1%
Credit Card Receivables 1.2%
Chase Credit Card Master Trust,
$ 500 $ 500 Series 1996-1, 5.55%, 1/15/01 495 495
Chemical Master Credit Card Trust,
2,300 2,300 Series 1995-2, 6.23%, 6/15/03 2,295 2,295
Citibank Credit Card Master Trust, Principal Only,
200 200 Series 1997-6, 0.00%, 8/15/06 145 145
Household Affinity Credit Card Master Trust I,
292 292 Series 1993-2, Class A, 5.60%, 11/15/00 291 291
Sears Credit Account Master Trust:
450 450 Series 1994-1, Class A, 7.00%, 8/15/00 450 450
263 263 Series 1995-2, Class A, 8.10%, 1/15/01 264 264
----- ----- -----
3,940 - 3,940
----- ----- -----
Home Equity Loan Receivables 0.9%
Contimortgage Home Equity Loan Trust,
700 700 Series 1997-5, Class A5, 6.63%, 12/15/20 675 675
Merrill Lynch Mortgage Investors, Inc.,
1,244 1,244 Series 1998-C1, Class A1, 6.31%, 11/15/26 1,192 1,192
Saxon Asset Securities Trust,
900 900 Series 1997-1, Class AF5, 7.325%, 1/25/12 887 887
----- ----- -----
2,754 - 2,754
----- ----- -----
Corporate Bonds 12.8%
ABN AMRO Bank Guarantee,
1,000 1,000 7.25%, 5/31/05 981 981
Air 2 US,
400 400 10.127%, 10/01/20 406 406
America West Airlines Pass-Thru Certificates:
376 376 8.54%, 1/02/06 (Acquired 9/14/99, Cost $376)** 369 369
653 653 7.93%, 1/02/19 (Acquired 9/14/99, Cost $653)** 650 650
Associates Corporation Debentures,
$ 1,500 1,500 7.95%, 2/15/10 1,487 1,487
Atlantic Richfield Co. Debentures,
300 300 8.50%, 4/01/12 319 319
BankAmerica Corporation Subordinated Notes,
350 350 7.75%, 7/15/02 351 351
BankBoston Corporation Subordinated Notes,
1,225 1,225 6.625%, 2/01/04 1,176 1,176
Bank One Corporation Notes,
300 300 6.875%, 8/01/06 285 285
Bankers Trust Corporation Subordinated Debentures,
1,775 1,775 8.125%, 5/15/02 1,786 1,786
Barclays American Corp. Debentures,
250 250 9.75%, 5/15/21 266 266
CE Generations LLC,
600 600 7.416%, 12/15/18 543 543
CIT Group, Inc. Senior Notes,
950 950 5.57%, 12/08/03 883 883
Commonwealth Edison Debentures,
900 900 9.875%, 6/15/20 972 972
Compass Bancshares, Inc. Subordinated Notes,
400 400 8.375%, 9/15/04 406 406
Continental Bank Subordinated Notes,
300 300 12.50%, 4/01/01 314 314
Continental Cablevision, Inc. Debentures:
350 350 8.875%, 9/15/05 366 366
900 900 9.50%, 8/01/13 964 964
Walt Disney Company Notes,
1,000 1,000 5.25%, 11/10/03 935 935
Donaldson, Lufkin & Jenrette Senior Notes:
1,000 1,000 6.00%, 12/01/01 976 976
800 800 6.875%, 11/01/05 761 761
Dresdner Bank New York Subordinated Debentures,
800 800 7.25%, 9/15/15 730 730
Duty Free International, Inc. Notes,
975 975 7.00%, 1/15/04 955 955
Dynegy, Inc. Senior Notes,
1,000 1,000 7.45%, 7/15/06 956 956
Federal Express Corporation Notes,
500 500 9.65%, 6/15/12 539 539
First Bank System Subordinated Notes,
975 975 6.625%, 5/15/03 947 947
First Union National Bank Subordinated Notes,
1,000 1,000 7.88%, 2/15/10 989 989
Ford Motor Credit Corporation,
</TABLE>
See notes to the Pro Forma Financial Statements
56
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1,000 1,000 6.70%, 7/16/04 963 963
General Motors Acceptance Corp. Medium Term Notes:
890 890 6.85%, 4/17/01 887 887
1,000 1,000 6.70%, 4/30/01 995 995
1,000 1,000 6.60%, 1/17/01 997 997
Georgia Pacific Corporation Debentures:
300 300 9.50%, 12/01/11 318 318
300 300 9.875%, 11/01/21 306 306
100 100 9.50%, 5/15/22 100 100
Goldman Sachs Group Notes,
1,500 1,500 6.25%, 2/01/03 (Acquired 2/01/96; Cost $1,496)** 1,441 1,441
Keycorp Subordinated Notes,
730 730 8.00%, 7/01/04 733 733
Lehman Brothers Holdings, Inc. Notes:
350 350 6.65%, 11/08/99 349 349
200 200 8.75%, 5/15/02 203 203
500 500 7.8%, 7/07/05 488 488
500 500 8.5%, 8/01/15 499 499
Marlin Water Trust Senior Notes,
677 677 7.09%, 12/15/01 (Acquired 12/9/98, Cost $680)* 665 665
The May Department Stores Company Debentures,
300 300 9.875%, 6/15/21 319 319
Merrill Lynch & Co. Notes:
1,100 1,100 7.15%, 7/30/12 1,019 1,019
925 925 6.875%, 11/15/18 823 823
NCNB Corporation Subordinated Notes,
750 750 10.20%, 7/15/15 893 893
News America Holdings, Inc., Debentures,
300 300 10.125%, 10/15/12 307 307
Norwest Financial, Inc. Senior Notes,
1,200 1,200 6.63%, 7/15/04 1,155 1,155
PSI Energy, Inc. Debentures,
600 600 7.85%, 10/15/07 579 579
Paine Webber Group, Inc. Notes:
500 500 7.875%, 2/15/03 497 497
500 500 8.875%, 3/15/05 511 511
J.C. Penney Company, Inc. Debentures:
625 625 9.75%, 6/15/21 549 549
500 500 8.25%, 8/15/22 405 405
Rochester Telephone Debentures,
400 400 9.00%, 8/15/21 374 374
Salomon, Inc. Senior Notes,
575 575 6.75%, 2/15/03 562 562
Salomon Smith Barney Holdings, Inc. Notes,
700 700 6.875%, 6/15/05 673 673
Stagecoach Holdings PLC Notes,
300 300 8.625%, 11/15/09 245 245
Tenneco, Inc. Debentures,
425 425 7.45%, 12/15/25 392 392
USF&G Corporation Senior Notes:
1,000 1,000 8.375%, 6/15/01 1,009 1,009
350 350 7.125%, 6/01/05 333 333
U.S. West Communications Group Debentures,
575 575 8.875%, 6/01/31 581 581
Utilicorp United Inc. Senior Notes,
350 350 7.00%, 7/15/04 338 338
------ ----- ------
32,388 8,432 40,820
------ ----- ------
International/Yankee (U.S. $ Denominated) 2.3%
Banco Santander-Chile Notes,
475 475 6.560%, 11/01/05 452 452
Ford Capital BV Debentures,
325 325 9.875%, 5/15/02 337 337
Hydro-Quebec Corporation Debentures:
350 350 11.75%, 2/01/12 456 456
500 500 9.75%, 1/15/18 522 522
Korea Development Bank Bonds,
585 585 7.125%, 9/17/01 578 578
Korea Electric Power Debentures:
290 290 7.75%, 4/01/13 264 264
200 200 6.75%, 8/01/27 186 186
Midland Bank PLC Subordinated Notes,
950 950 6.95%, 3/15/11 875 875
National Bank of Hungary Debentures,
250 250 8.875%, 11/01/13 258 258
Norsk Hydro A/S Debentures,
350 350 9.00%, 4/15/12 375 375
Pohang Iron & Steel Notes,
200 200 7.125%, 7/15/04 189 189
Principal Financial Group (Australia) Senior Notes,
1,400 1,400 8.20%, 8/15/09 (Acquired 8/18/99, Cost $1,396)** 1,397 1,397
Sweden (Kingdom of) Debentures,
150 150 11.125%, 6/01/15 194 194
WestDeutsche Landesbank NY Subordinated Notes,
</TABLE>
See notes to the Pro Forma Financial Statements
57
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
700 700 6.05%, 1/15/09 614 614
Wharf Capital International Ltd. Notes:
325 325 8.875%, 11/01/04 327 327
225 225 7.625%, 3/13/07 209 209
------ ------ -------
7,233 - 7,233
------ ------ -------
U.S. Government Agency-Backed Mortgage Issues 7.3%
Federal Home Loan Bank Discount Notes (FHLB),
2,958 2,958 5.80%, 5/01/00 2,958 2,958
Federal Home Loan Bank Medium Term Notes (FHLB),
2,000 2,000 5.35%, 2/07/01 1,978 1,978
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
259 259 Series 85, Class C, 8.60%, 1/15/21 263 263
27 27 Series 1169, Class D, 7.00%, 5/15/21 27 27
339 339 Series 1136, Class H, 6.00%, 9/15/21 317 317
237 237 Series 1201, Class E, 7.40%, 12/15/21 236 236
Federal Home Loan Mortgage Corporation Notes (FHLMC):
31 31 7.00%, 4/01/08 31 31
159 159 7.00%, 4/01/08 156 156
256 256 6.50%, 4/01/08 249 249
407 407 6.50%, 1/01/09 394 394
2,950 2,950 6.625%, 9/15/09 2,810 2,810
2,341 2,341 6.50%, 1/01/18 2,214 2,214
3,086 3,086 6.00%, 4/01/18 2,841 2,841
Federal National Mortgage Association (FNMA)
467 467 6.00%, 3/01/13 438 438
336 336 6.00%, 5/01/13 315 315
206 206 6.00%, 6/01/13 193 193
170 170 7.00%, 2/01/16 165 165
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
260 260 Series 1989-37, Class XX, 8.00%, 7/25/19 261 261
230 230 Series 1990-30, Class E, 6.50%, 3/25/20 218 218
235 235 Series 1990-105, Class J, 6.50%, 9/25/20 224 224
Government National Mortgage Association (GNMA)
146 146 7.00%, 7/15/09, Pool #364246 145 145
301 301 6.50%, 10/20/10, Pool #002108 291 291
1,388 1,388 6.50%, 7/15/11, Pool #436630 1,347 1,347
7 7 8.50%, 6/15/17, Pool #217380 7 7
198 198 8.00%, 7/15/22, Pool #328848 199 199
145 145 7.00%, 11/15/22, Pool #337961 140 140
237 237 7.00%, 11/15/22, Pool #341287 229 229
336 336 7.50%, 3/15/23, Pool #331533 331 331
6 6 8.50%, 3/15/23, Pool #350083 6 6
189 189 7.50%, 4/15/23, Pool #343195 187 187
282 282 8.50%, 8/15/24, Pool #365113 288 288
45 45 8.50%, 9/15/24, Pool #375056 46 46
198 198 8.50%, 9/15/24, Pool #353354 203 203
71 71 8.50%, 1/15/25, Pool #400165 72 72
20 20 8.50%, 2/15/25, Pool #406286 20 20
166 166 8.50%, 3/15/25, Pool #384593 170 170
29 29 8.50%, 4/15/25, Pool #346295 30 30
206 206 8.00%, 8/15/25, Pool #389312 208 208
11 11 7.50%, 9/15/25, Pool #384783 11 11
15 15 7.50%, 9/15/25, Pool #394485 15 15
13 13 7.50%, 10/15/25, Pool #416975 13 13
18 18 7.50%, 10/15/25, Pool #400096 18 18
634 634 7.50%, 10/15/25, Pool #246633 625 625
688 688 7.50%, 10/15/25, Pool #409725 678 678
121 121 6.50%, 1/15/26, Pool #385123 114 114
647 647 6.50%, 1/15/26, Pool #417525 608 608
18 18 6.50%, 3/15/26, Pool #417294 17 17
313 313 6.50%, 4/15/26, Pool #408279 294 294
357 357 6.50%, 4/15/26, Pool #422323 335 335
379 379 6.50%, 4/15/26, Pool #421399 356 356
144 144 6.50%, 5/15/26, Pool #430798 135 135
------ ------ -------
4,356 19,070 23,426
------ ------ -------
U.S. Treasury Obligations 10.3%
U.S. Treasury Bonds:
300 300 10.75%, 8/15/05 355 355
2,750 2,750 12.00%, 8/15/13 3,678 3,678
175 175 9.875%, 11/15/15 235 235
15,885 15,885 9.25%, 2/15/16 20,456 20,456
1,000 1,000 8.125%, 5/15/21 1,212 1,212
1,000 1,000 8.125%, 8/15/21 1,213 1,213
U.S. Treasury Notes:
5,700 5,700 6.625%, 5/15/07 5,738 5,738
------ ------ -------
26,429 6,458 32,887
------ ------ -------
Total Long-Term Investments (Cost $111,611) 77,100 33,960 111,060
------ ------ -------
</TABLE>
See notes to the Pro Forma Financial Statements
58
<PAGE>
<TABLE>
Pro Forma
Firstar Mercantile Combined
Shares Shares Shares SHORT-TERM INVESTMENTS 1.4%
------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment Companies 1.4%
- - Financial Square Prime Obligation Fund - -
4,531 4,531 Short-Term Investments Co. Liquid Assets Portfolio 4,531 - 4,531
--------- -------- ---------
Total Short-Term Investments (Cost $4,531) 4,531 - 4,531
--------- -------- ---------
Total Investments (Cost $264,357) 100.0% $ 230,786 $ 88,016 $ 318,802
========= ======== =========
* Non-income producing
** Unregistered Security
</TABLE>
See notes to the Pro Forma Financial Statements
59
<PAGE>
FIRSTAR GROWTH AND INCOME FUND
FIRSTAR GROWTH AND INCOME FUND / MERCANTILE GROWTH & INCOME EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Mercantile Combined Firstar Mercantile Combined
Shares Shares Shares Market Value Market Value Market Value
--------------- ------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS 95.4%
Auto & Truck Parts 0.2%
96,200 96,200 Delphi Automotive Systems Corporation $ 1,840 - $ 1,840
------- ------- -------
Banking 5.1%
274,300 274,300 Bank of New York 11,263 11,263
144,500 95,000 239,500 Chase Manhattan Corporation 10,413 $ 6,846 17,259
233,700 233,700 Mellon Bank Corporation 7,508 7,508
214,300 214,300 Northern Trust Corporation 13,742 13,742
131,200 131,200 Wells Fargo Company, Inc. 5,387 5,387
------- ------- -------
48,313 6,846 55,159
------- ------- -------
Batteries 0.1%
92,733 92,733 Energizer Holdings, Inc.* - 1,582 1,582
------- ------ -------
Building Materials 1.5%
355,500 355,500 Masco Corporation 7,977 7,977
181,900 181,900 Vulcan Materials Company 7,969 7,969
------- ------ -------
7,969 7,977 15,946
------- ------ -------
Business Machines & Software 4.2%
152,000 152,000 BMC Software, Inc.* 7,115 7,115
35,200 60,300 95,500 Hewlett-Packard Company 4,752 8,140 12,892
46,500 46,500 International Business Machines Corporation 5,191 5,191
110,400 129,300 239,700 Microsoft Corporation* 7,700 9,019 16,719
45,675 45,675 Sun Microsystems, Inc.* 4,199 4,199
------- ------ -------
21,842 24,274 46,116
------- ------ -------
Business Services 5.0%
175,000 175,000 Adaptec, Inc.* 4,725 4,725
169,000 169,000 Automatic Data Processing, Inc. 9,094 9,094
55,200 54,500 109,700 Electronic Data Systems Corporation 3,795 3,747 7,542
164,200 186,000 350,200 First Data Corporation 7,994 9,056 17,050
281,000 281,000 Manpower, Inc. 9,923 9,923
242,600 242,600 Viad Corporation 6,156 6,156
------- ------ -------
36,962 17,528 54,490
------- ------ -------
Chemicals 3.8%
309,600 309,600 Ecolab, Inc. 12,094 12,094
203,600 111,300 314,900 Millipore Corporation 14,596 7,979 22,575
477,000 477,000 Solutia, Inc. 6,499 6,499
------- ------ -------
26,690 14,478 41,168
------- ------ -------
Communications & Media 4.8%
136,600 136,600 CBS Corporation * 8,025 8,025
64,400 64,400 The Walt Disney Company 2,789 2,789
37,200 37,200 General Motors Corporation - Class H 3,583 3,583
102,300 102,300 Infinity Broadcasting Corporation* 3,472 3,472
219,400 219,400 Interpublic Group of Companies, Inc. 8,995 8,995
188,500 188,500 New York Times Company - Class A 7,764 7,764
111,100 81,000 192,100 Time Warner, Inc. 9,992 7,285 17,277
------- ------ -------
44,620 7,285 51,905
------- ------ -------
Computers 2.2%
73,400 168,100 241,500 Compaq Computer Corporation 2,147 4,917 7,064
</TABLE>
See notes to the Pro Forma Financial Statements
60
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
98,600 104,800 203,400 Dell Computer Corporation* 4,942 5,253 10,195
51,600 51,600 EMC Corporation* 7,169 7,169
------ ------ -------
14,258 10,170 24,428
------ ------ -------
Consumer Products 1.0%
86,900 75,004 161,904 Avery Dennison Corporation 5,703 4,922 10,625
------ ------ -------
Cosmetics & Soap 1.4%
77,200 77,200 Avon Products, Inc. 3,204 3,204
83,700 81,800 165,500 Estee Lauder Companies, Inc. 3,693 3,609 7,302
65,000 65,000 Gillette Company 2,405 2,405
41,400 41,400 Proctor & Gamble Company 2,468 2,468
------ ------ -------
6,897 8,482 15,379
------ ------ -------
Containers 0.8%
262,150 262,150 Estee Lauder Companies, Inc. - 4,260 4,260
------ ------ -------
Drugs & Medical Supply 10.8%
129,100 129,100 Allergan, Inc. 7,601 7,601
171,800 171,800 American Home Products Corporation 9,653 9,653
138,000 138,000 Baxter International, Inc. 8,987 8,987
169,400 148,632 318,032 Bristol-Myers Squibb Company 8,883 7,794 16,677
141,300 115,000 256,300 Eli Lilly & Company 10,924 8,891 19,815
128,300 128,300 Johnson & Johnson 10,585 10,585
143,800 143,800 Medtronic, Inc. 7,469 7,469
55,100 116,000 171,100 Merck & Company, Inc. 3,829 8,062 11,891
191,000 191,000 Schering Plough Corporation 7,700 7,700
153,400 153,400 Warner-Lambert Company 17,459 17,459
------ ------ -------
68,802 49,035 117,837
------ ------ -------
Electric 1.4%
52,200 52,200 AES Corporation 4,695 4,695
28,400 101,600 130,000 Duke Power Company 1,633 5,842 7,475
76,600 76,600 Montana Power Company 3,372 3,372
------ ------ -------
5,005 10,537 15,542
------ ------ -------
Electrical Equipment 2.5%
69,200 78,800 148,000 General Electric Company 10,882 12,391 23,273
91,104 91,104 Grainger (W.W.), Inc. 3,952 3,952
------ ------ -------
10,882 16,343 27,225
------ ------ -------
Electronics & Scientific Equipment 6.6%
54,655 54,655 Altera Corporation 5,588 5,588
87,000 87,000 Applied Materials, Inc.* 8,858 8,858
85,900 66,000 151,900 Intel Corporation 10,893 8,370 19,263
107,000 107,000 KLA - Tencor Corporation 8,012 8,012
77,347 77,347 Maxim Integrated Products, Inc.* 5,013 5,013
120,500 120,500 Molex, Inc. - Class A 4,820 4,820
71,700 71,700 Solectron Corporation* 3,356 3,356
104,500 104,500 Texas Instruments, Inc. 17,020 17,020
------ ------ -------
36,089 35,841 71,930
------ ------ -------
Energy - Raw Materials 0.2%
59,000 59,000 Halliburton Company - 2,607 2,607
------ ------ -------
Financial Services 8.5%
338,100 338,100 Alliance Capital Management L.P. 15,151 15,151
52,900 52,900 American Express Company 7,938 7,938
227,300 227,300 Citigroup Inc. 13,510 13,510
201,800 201,800 Franklin Resources, Inc. 6,508 6,508
144,200 144,200 H & R Block, Inc. 6,027 6,027
196,250 196,250 Heller Financial, Inc. 3,815 3,815
310,000 310,000 MBNA Corporation 8,234 8,234
111,700 111,700 Marsh & McLennan Companies, Inc. 11,009 11,009
99,900 93,000 192,900 Morgan Stanley Dean Witter & Company 7,667 7,138 14,805
178,728 178,728 SLM Holding Corporation 5,596 5,596
------ ------ -------
67,810 24,783 92,593
------ ------ -------
</TABLE>
See notes to the Pro Forma Financial Statements
61
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Food, Beverages & Tobacco 4.1%
115,000 115,000 Anheuser-Busch Companies, Inc. 8,115 8,115
108,000 108,000 Heinz (H.J.) Company 3,672 3,672
209,000 222,400 431,400 PepsiCo, Inc. 7,668 8,159 15,827
278,200 278,200 Ralston-Ralston Purina Group 4,921 4,921
108,600 209,670 318,270 Sysco Corporation 4,086 7,889 11,975
------ ------ ------
19,869 24,641 44,510
------ ------ ------
Healthcare Services & Supplies 0.6%
119,600 119,600 C.R.Bard, Inc. 5,210 5,210
145,300 145,300 Columbia / HCA Healthcare Corporation 4,132 4,132
15,500 15,500 Genetech, Inc.* 1,814 1,814
------ ------ ------
5,946 5,210 5,946
------ ------ ------
Insurance 0.6%
63,100 63,100 American International Group, Inc. 6,921 - 6,921
------ ------ ------
Metals & Minerals 0.7%
39,100 75,000 114,100 ALCOA Inc. 2,537 4,866 7,403
------ ------ ------
Multi-Industry 1.6%
137,700 137,700 Pentair, Inc. 5,267 5,267
271,400 271,400 Tyco International, Ltd. 12,467 12,467
------ ------ ------
17,734 - 17,734
------ ------ ------
Natural Gas 1.3%
78,175 78,175 El Paso Energy Corporation 3,322 3,322
157,200 157,200 Enron Corporation 10,955 10,955
------ ------ ------
14,277 - 14,277
------ ------ ------
Oil - Domestic 2.2%
143,200 143,200 Phillips Petroleum Company 6,793 6,793
279,300 282,500 561,800 USX Corporation - Marathon Group, Inc. 6,511 6,586 13,097
138,984 138,984 Unocal Corporation 4,491 4,491
------ ------ ------
13,304 11,077 24,381
------ ------ ------
Oil - International 0.7%
98,519 98,519 Exxon Mobil Corporation 7,654 - 7,654
------ ------ ------
Oil - Services 2.9%
99,800 99,800 Murphy Oil Corporation 5,888 5,888
133,900 133,900 Schlumberger, Ltd. 10,252 10,252
137,700 137,700 Nabors Industries* 5,431 5,431
700,000 700,000 Ocean Energy, Inc. 9,056 9,056
23,100 7,000 30,100 Transocean Sedco Forex Inc. 1,086 329 1,415
------ ------ ------
16,769 15,273 32,042
------ ------ ------
Paper & Forest Products 1.5%
100 100 Consolidated Papers, Inc. 4 4
99,600 99,600 Kimberly-Clark Corporation 5,783 5,783
70,800 225,800 296,600 Mead Corporation 2,465 7,861 10,326
------ ------ ------
8,252 7,861 16,113
------ ------ ------
Printing & Publishing 1.6%
137,800 137,800 Harcourt General, Inc. 5,147 5,147
39,200 39,200 Houghton Mifflin Company 1,632 1,632
195,300 195,300 McGraw-Hill, Inc. 10,253 10,253
------ ------ ------
17,032 - 17,032
------ ------ ------
Production 0.4%
65,000 65,000 Illinois Tool Works, Inc. - 4,164 4,164
------ ------ ------
Real Estate Investment Trusts (REIT's) 0.4%
183,400 183,400 AMB Property Corporation 4,046 - 4,046
------ ------ ------
Restraunts 0.5%
144,820 144,820 Tricon Global Restraunts, Inc.* - 4,942 4,942
------ ------ ------
</TABLE>
See notes to the Pro Forma Financial Statements
62
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Retail 4.0%
289,000 289,000 Consolidated Stores Corporation* 3,594 3,594
60,200 60,200 Costco Wholesale Corporation* 3,255 3,255
177,400 177,400 Gap, Inc. 6,519 6,519
16,800 16,800 Kohl's Corporation* 806 806
76,700 144,300 221,000 Lowe's Companies, Inc. 3,797 7,143 10,940
49,200 49,200 Target Corporation 3,275 3,275
267,000 267,000 Walgreen Company 7,509 7,509
135,000 135,000 Wal-Mart Stores Inc. 7,476 7,476
------- ------- --------
25,161 18,213 43,374
------- ------- --------
Telecommunications 5.4%
160,600 160,600 AT & T Corporation 7,498 7,498
104,500 104,500 ALLTEL Corporation 6,962 6,962
200,600 200,600 Bell Atlantic Corporation 11,886 11,886
138,000 138,000 Broadwing Inc.* 3,907 3,907
105,000 105,000 GTE Corporation 7,114 7,114
20,000 20,000 MCI WorldCom, Inc.* 909 909
173,000 173,000 SBC Communications, Inc. 7,580 7,580
209,200 209,200 Sprint Corporation 12,866 12,866
------- ------- --------
43,119 15,603 58,722
------- ------- --------
Telecommunications Equipment 5.5%
135,600 114,000 249,600 Cisco Systems, Inc.* 9,401 7,903 17,304
23,200 23,200 Corning Incorporated 4,582 4,582
39,000 39,000 Ericsson AB - ADR 3,449 3,449
23,500 23,500 Motorola, Inc. 2,798 2,798
156,400 67,500 223,900 Nokia Corporation 8,895 3,839 12,734
102,700 62,900 165,600 Nortel Networks Corporation 11,631 7,123 18,754
------- ------- --------
40,756 18,865 59,621
------- ------- --------
Transportation 1.0%
78,400 78,400 Expeditors International of Washintgon, Inc. 3,352 3,352
117,950 117,950 United Parcel Service, Inc. 7,844 7,844
------- ------- --------
11,196 - 11,196
------- ------- --------
Travel & Recreation 0.3%
109,000 109,000 Carnival Corporation - 2,711 2,711
------- ------- --------
Total Common Stock (Cost $753,887) 658,256 380,376 1038,632
------- ------- --------
PREFERRED STOCKS 2.1%
Communications 0.5%
23,100 23,100 Cox Communications Inc., (convertible to Sprint PCS
Inc., common stock)
7.75%, 11/15/29 2,346 2,346
13,400 13,400 Global Crossing Inc., (convertible to Global Crossing
Inc., common stock)
6.75%. 4/15/12 3,378 3,378
Drug 0.3%
71,800 71,800 Monsanto Corporation, (convertible into Pharmacia
Corporation common stock)
6.50%, 11/30/03 3,249 3,249
Food, Beverages & Tobbaco 0.4%
88,100 88,100 Seagram Company Ltd.,
7.00%, 7/31/02 (convertible to Seagram Company Ltd.,
common stock) 4,482 4,482
Natural Gas 0.9%
383,300 383,300 Enron Corporation,
7.00%. 7/31/02 (convertible to EOG Resources,
common stock) 9,007 9,007
-------
</TABLE>
See notes to the Pro Forma Financial Statements
63
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
--------- --------- ---------
Total Preferred Stock (Cost $21,470) 22,462 - 22,462
--------- --------- ---------
Pro Forma
Firstar Mercantile Combined
Principal Principal Principal
Amount Amount Amount
-------------- ------------- -------------
SHORT-TERM INVESTMENTS 2.5%
U.S. Government Agency-Backed Mortgage Issues 0.9%
Federal Home Loan Bank (FHLB),
10,000 10,000 0.00%, 05/01/00 - 10,000 10,000
--------- --------- ---------
Commercial Paper 0.3%
3,411 3,411 Pitney-Bowes Credit - 3,400 3,400
--------- --------- ---------
<CAPTION>
Pro Forma
Firstar Mercantile Combined
Shares Shares Shares
-------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment Companies 1.3%
1 1 Financial Square Prime Obligation Fund 1 1
14,334 14,334 Short-Term Investments Co. Liquid Assets Portfolio 14,334 14,334
--------- --------- ---------
14,335 - 14,335
--------- --------- ---------
Total Short-Term Investments (Cost $27,735) 14,335 13,400 27,735
--------- --------- ---------
Total Investments (Cost $803,092) 100.0% $ 695,053 $ 393,776 $1,088,829
========= ========= ==========
* Non-income producing
</TABLE>
See notes to the Pro Forma Financial Statements
64
<PAGE>
FIRSTAR EQUITY INDEX FUND
FIRSTAR EQUITY INDEX FUND / MERCANTILE EQUITY INDEX PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Firstar Mercantile Combined Pro Forma
Number of Number of Number of Firstar Mercantile Combined
Shares Shares Shares Market Value Market Value Market Value
-------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS 95.2%
Aerospace & Aircraft 0.9%
60,326 7,676 68,002 Boeing Company $ 2,394 $ 305 $ 2,699
12,100 1,791 13,891 General Dynamics Corporation 708 105 813
24,468 3,599 28,067 Lockheed Martin Corporation 609 90 699
3,800 636 4,436 Northrop Grumman Corporation 269 45 314
20,800 3,089 23,889 Raytheon Company 462 69 531
11,800 1,694 13,494 Rockwell International Corporation 465 67 532
1,737 1,737 Teledyne Technologies Inc.* 30 30
9,300 1,351 10,651 Textron, Inc. 576 84 660
29,900 4,363 34,263 United Technologies Corporation 1,859 271 2,130
------ ------ -------
7,372 1,036 8,408
------ ------ -------
Air Transportation 0.3%
10,700 1,344 12,044 AMR Corporation * 364 46 410
8,400 1,273 9,673 Delta Air Lines, Inc. 443 67 510
17,700 2,663 20,363 FDX Corporation * 667 100 767
29,925 4,562 34,487 Southwest Airlines Company 649 99 748
4,700 662 5,362 US Airways Group, Inc. * 131 18 149
------ ------ -------
2,254 330 2,584
------ ------ -------
Appliances 0.1%
2,200 344 2,544 Armstrong World Industries, Inc. 43 7 50
5,300 760 6,060 Black & Decker Corporation 223 32 255
5,300 759 6,059 Maytag Corporation 183 26 209
3,900 549 4,449 Snap-On Tools, Inc. 103 15 118
4,600 679 5,279 Whirlpool Corporation 300 44 344
------ ------ -------
852 124 976
------ ------ -------
Autos & Trucks 1.3%
8,300 1,364 9,664 Autozone, Inc.* 190 31 221
10,038 1,472 11,510 Dana Corporation 305 45 350
33,638 5,174 38,812 Delphi Automotive Systems 643 99 742
4,500 665 5,165 Eaton Corporation 378 56 434
75,000 10,717 85,717 Ford Motor Company 4,102 586 4,688
40,200 5,687 45,887 General Motors Corporation 3,764 532 4,296
11,237 1,613 12,850 Genuine Parts Company 295 42 337
5,600 758 6,358 ITT Industries, Inc. 177 24 201
3,900 600 4,500 Navistar International Corporation 137 21 158
4,240 718 4,958 PACCAR, Inc. 202 34 236
7,200 1,069 8,269 TRW, Inc. 421 63 484
------ ------ -------
10,614 1,533 12,147
------ ------ -------
Banking 6.0%
24,400 3,550 27,950 AMSouth Bancorp 355 52 407
73,194 10,216 83,410 Banc One Corporation 2,232 312 2,544
47,200 6,679 53,879 Bank of New York Company, Inc. 1,938 274 2,212
110,207 14,773 124,980 BankAmerica Corporation 5,400 724 6,124
20,700 2,899 23,599 BB&T Corporation 551 77 628
54,220 7,109 61,329 Chase Manhattan Corporation 3,907 512 4,419
217,602 30,088 247,690 Citigroup, Inc. 12,934 1,788 14,722
9,100 1,396 10,496 Comerica, Inc. 386 59 445
18,650 2,697 21,347 Fifth Third Bancorp 1,177 170 1,347
61,728 8,658 70,386 First Union Corporation 1,968 276 2,244
59,737 8,927 68,664 Firstar 1,486 222 1,708
56,305 8,405 64,710 Fleet Financial Group, Inc. 1,995 298 2,293
15,590 2,080 17,670 Huntington Bancshares Incorporated 285 38 323
11,000 1,606 12,606 J.P. Morgan & Co., Inc. 1,412 206 1,618
32,300 4,716 37,016 Mellon Bank Corporation 1,038 152 1,190
13,700 2,036 15,736 Northern Trust Corporation 879 131 1,010
7,000 1,059 8,059 Old Kent Financial Corporation 211 32 243
18,800 2,795 21,595 PNC Bank Corporation 820 122 942
13,300 2,000 15,300 Regions Financial Corporation 272 41 313
10,000 1,566 11,566 SouthTrust Corporation 239 37 276
</TABLE>
See notes to the Pro Forma Financial Statements
65
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
10,000 1,508 11,508 State Street Corporation 969 146 1,115
10,200 1,561 11,761 Summit Bancorp. 259 40 299
19,900 2,961 22,861 Sun Trust Banks, Inc. 1,010 150 1,160
16,100 2,423 18,523 Synovus Financial Corp. 299 45 344
45,055 6,667 51,722 US Bancorp 915 135 1,050
8,500 1,305 9,805 Union Planters Corp. 241 37 278
12,100 1,825 13,925 Wachovia Corporation 759 114 873
36,837 5,310 42,147 Washington Mutual, Inc. 942 136 1,078
102,330 14,654 116,984 Wells Fargo & Company 4,202 602 4,804
------ ------ ------
49,081 6,928 56,009
------ ------ ------
Bio-Technology 0.4%
63,400 9,070 72,470 Amgen, Inc. * 3,550 508 4,058
------ ------ ------
Building & Housing 0.1%
3,700 511 4,211 Centex Corporation 89 12 101
4,600 693 5,293 Fluor Corporation 154 23 177
3,000 434 3,434 Kaufman and Broad Home Corporation 58 8 66
27,100 4,035 31,135 Masco Corporation 608 91 699
2,700 390 3,090 Pulte Corporation 58 8 66
6,100 813 6,913 The Stanley Works 180 24 204
------ ------ ------
1,147 166 1,313
------ ------ ------
Building Materials 0.1%
4,800 790 5,590 Johnson Controls, Inc. 304 50 354
2,900 488 3,388 Owens-Corning Corporation 53 9 62
5,900 877 6,777 Vulcan Materials Company 258 38 296
------ ------ ------
615 97 712
------ ------ ------
Business Machines & Software 5.5%
10,000 1,434 11,434 Apple Computer, Inc. * 1,241 178 1,419
105,309 15,060 120,369 COMPAQ Computer Corporation 3,080 441 3,521
48,825 7,106 55,931 Honeywell, Inc. 2,734 398 3,132
113,800 16,006 129,806 International Business Machines Corporation 12,703 1,787 14,490
180,236 25,012 205,248 Oracle Systems Corporation * 14,408 1,999 16,407
16,600 2,412 19,012 Pitney-Bowes, Inc. 679 99 778
100,700 14,062 114,762 Sun Microsystems, Inc. * 9,258 1,293 10,551
41,000 6,027 47,027 Xerox Corporation 1,084 159 1,243
------ ------ ------
45,187 6,354 51,541
------ ------ ------
Business Services 5.1%
3,300 545 3,845 Autodesk, Inc. 127 21 148
38,300 5,611 43,911 Automatic Data Processing, Inc. 2,061 302 2,363
5,700 900 6,600 H & R Block, Inc. 238 38 276
15,100 2,190 17,290 BMC Software* 707 103 810
8,800 1,314 10,114 Ceridian Corporation * 191 28 219
433,800 60,762 494,562 Cisco Systems, Inc. * 30,075 4,213 34,288
33,187 4,849 38,036 Computer Associates International, Inc. 1,852 271 2,123
10,400 1,449 11,849 Computer Sciences Corporation * 848 118 966
4,700 661 5,361 Deluxe Corporation 118 17 135
9,721 1,495 11,216 Dun & Bradstreet Corporation 293 45 338
30,500 4,163 34,663 Electronic Data Systems 2,097 286 2,383
9,000 1,313 10,313 Equifax Inc. 220 32 252
26,800 3,853 30,653 First Data Corporation 1,305 188 1,493
2,600 335 2,935 National Service Industries 56 7 63
14,600 2,275 16,875 Paychex, Inc.* 768 120 888
7,200 1,020 8,220 Quintiles Transnational Corporation* 103 15 118
15,100 2,513 17,613 Service Corporation International 77 13 90
19,400 2,739 22,139 Unisys Corporation* 450 64 514
4,200 700 4,900 Young & Rubicam Inc. 234 39 273
------ ------ ------
41,820 5,920 47,740
------ ------ ------
Chemicals 1.1%
13,700 2,062 15,762 Air Products and Chemicals, Inc. 426 64 490
13,600 1,967 15,567 Dow Chemical Company 1,537 222 1,759
65,199 9,450 74,649 Dupont (E.I.) De Nemours & Company 3,093 448 3,541
4,637 717 5,354 Eastman Chemical Company 243 38 281
7,900 1,128 9,028 Ecolab, Inc. 309 44 353
4,500 600 5,100 W.R. Grace & Co.* 59 8 67
3,100 521 3,621 Great Lakes Chemical Corporation 84 14 98
6,000 918 6,918 Hercules, Inc. 93 14 107
2,600 427 3,027 Millipore Corporation 186 31 217
10,300 1,574 11,874 PPG Industries, Inc. 560 86 646
9,400 1,489 10,889 Praxair, Inc. 418 66 484
12,644 1,978 14,622 Rohm & Haas Company 450 70 520
10,100 1,526 11,626 Sherwin-Williams Company 251 38 289
6,300 883 7,183 Sigma-Aldrich Corporation 185 26 211
8,350 1,170 9,520 Union Carbide Corporation 493 69 562
</TABLE>
See notes to the Pro Forma Financial Statements
66
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
26,800 3,932 30,732 The Williams Companies, Inc. 1,000 147 1,147
------ ------ -------
9,387 1,385 10,772
------ ------ -------
Communications & Media 2.7%
4,350 796 5,146 Andrew Corporation * 128 23 151
47,600 6,928 54,528 CBS Corporation* 2,797 407 3,204
20,600 3,030 23,630 Clear Channel Communications, Inc. * 1,483 218 1,701
59,700 6,816 66,516 Comcast Corporation - Class A 2,392 273 2,665
5,100 820 5,920 Dow Jones & Company, Inc. 331 53 384
17,300 2,577 19,877 Gannett Company, Inc. 1,105 165 1,270
4,300 615 4,915 Harcourt General, Inc. 161 23 184
17,500 2,517 20,017 Interpublic Group of Companies, Inc. 718 103 821
5,000 733 5,733 Knight-Ridder, Inc. 245 36 281
38,253 5,501 43,754 Mediaone Group, Inc. * 2,893 416 3,309
10,800 1,590 12,390 New York Times Company - Class A 445 65 510
10,600 1,616 12,216 Omnicom Group, Inc. 965 147 1,112
82,800 11,444 94,244 Time Warner, Inc. 7,447 1,029 8,476
4,323 507 4,830 Times Mirror Company - Class A 422 49 471
14,000 2,181 16,181 Tribune Company 544 85 629
------ ------ -------
22,076 3,092 25,168
------ ------ -------
Computers 2.8%
164,100 22,765 186,865 Dell Computer Corporation * 8,226 1,141 9,367
65,600 8,985 74,585 EMC Corporation * 9,114 1,248 10,362
18,600 2,821 21,421 Gateway 2000, Inc.* 1,028 156 1,184
6,000 805 6,805 NCR Corporation* 232 31 263
18,600 1,376 19,976 Network Appliance, Inc.* 1,375 102 1,477
13,900 2,010 15,910 Seagate Technology, Inc. * 706 102 808
11,200 1,695 12,895 Silicon Graphics, Inc. * 81 12 93
22,400 2,500 24,900 Veritas Software Corporation* 2,403 268 2,671
------ ------ -------
23,165 3,060 26,225
------ ------ -------
Consumer Durables 0.1%
19,950 2,886 22,836 Eastman Kodak Company 1,116 161 1,277
2,128 361 2,489 Polaroid Corporation 43 7 50
------ ------ -------
1,159 168 1,327
------ ------ -------
Consumer Products 0.2%
7,200 1,076 8,276 Avery Dennison Corporation 473 71 544
6,467 6,467 Energizer Holdings, Inc.* 110 110
2,100 333 2,433 Jostens, Inc. 52 8 60
17,500 2,604 20,104 Newell Rubbermaid, Inc. 441 66 507
18,800 2,978 21,778 Nabisco Group Holdings 242 38 280
3,200 529 3,729 Tupperware Corporation 60 10 70
608 608 Water Pik Technologies, Inc* 4 4
------ ------ -------
1,382 193 1,575
------ ------ -------
Containers 0.1%
1,900 275 2,175 Ball Corporation 60 9 69
2,800 489 3,289 Bemis Company, Inc. 103 18 121
6,900 1,074 7,974 Crown Cork & Seal Company, Inc. 112 17 129
8,900 1,410 10,310 Owens-Illinois, Inc. * 120 19 139
9,624 1,547 11,171 Pactiv Corporation* 79 13 92
4,904 724 5,628 Sealed Air Corporation* 273 40 313
------ ------ -------
747 116 863
------ ------ -------
Cosmetics & Soap 1.3%
3,500 503 4,003 Alberto-Culver Company 83 12 95
16,200 2,336 18,536 Avon Products, Inc. 672 96 768
14,000 2,169 16,169 Clorox Company 514 80 594
36,200 5,275 41,475 Colgate-Palmolive Company 2,068 301 2,369
68,688 9,482 78,170 Gillette Company 2,541 351 2,892
6,600 926 7,526 International Flavors & Fragrances, Inc. 227 32 259
82,300 11,700 94,000 Procter & Gamble Company 4,907 698 5,605
------ ------ -------
11,012 1,570 12,582
------ ------ -------
Distribution 0.0%
9,358 1,350 10,708 Ikon Office Solutions, Inc. 55 8 63
------ ------ -------
Diversified 0.3%
8,100 1,295 9,395 Danaher Corporation 463 74 537
35,410 5,222 40,632 Unilever N.V. 1,613 238 1,851
------ ------ -------
2,076 312 2,388
------ ------ -------
Drugs 7.9%
96,000 13,821 109,821 Abbott Laboratories 3,690 531 4,221
8,000 1,234 9,234 Allergan, Inc. 471 73 544
6,000 895 6,895 Alza Corporation * 264 39 303
84,300 11,566 95,866 American Home Products Corporation 4,737 650 5,387
</TABLE>
See notes to the Pro Forma Financial Statements
67
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
3,100 433 3,533 Bard (C.R.), Inc. 135 19 154
18,100 2,665 20,765 Baxter International, Inc. 1,179 174 1,353
14,400 2,304 16,704 Becton, Dickinson & Company 369 59 428
9,300 1,300 10,600 Biogen, Inc.* 547 76 623
128,340 17,582 145,922 Bristol-Meyers Squibb Company 6,730 922 7,652
16,850 2,437 19,287 Cardinal Health, Inc. 928 134 1,062
9,500 1,489 10,989 Humana, Inc. * 73 11 84
89,500 12,189 101,689 Johnson & Johnson 7,384 1,006 8,390
68,100 9,633 77,733 Eli Lilly & Company 5,265 745 6,010
74,700 10,670 85,370 Medtronic, Inc. 3,880 554 4,434
150,700 20,746 171,446 Merck & Company, Inc. 10,474 1,442 11,916
249,900 34,373 284,273 Pfizer, Inc. 10,527 1,448 11,975
76,412 11,226 87,638 Pharmacia & Upjohn, Inc. 3,816 561 4,377
91,800 13,036 104,836 Schering-Plough 3,701 526 4,227
5,400 756 6,156 St. Jude Medical, Inc. * 168 24 192
18,800 2,780 21,580 Tenet Healthcare Corporation * 479 71 550
5,800 846 6,646 Watson Pharmaceuticals, Inc.* 261 38 299
------ ------ -------
65,078 9,103 74,181
------ ------ -------
Electric 0.7%
12,900 1,890 14,790 AES Corp 1,160 170 1,330
7,700 1,242 8,942 Ameren Corporation 282 46 328
9,632 1,494 11,126 CINenergy Corporation 258 40 298
6,900 1,052 7,952 CMS Energy Corporation 131 20 151
13,700 2,010 15,710 Consolidated Edison Company of New York, Inc. 482 71 553
8,950 1,403 10,353 Constellation Energy Group 296 46 342
22,528 3,367 25,895 Duke Power Company 1,295 194 1,489
20,700 3,119 23,819 Edison International 395 59 454
6,700 876 7,576 Florida Progress Corporation 328 43 371
7,600 1,117 8,717 General Public Utilities Corporation 213 31 244
5,300 800 6,100 Pinnacle West Capital Corporation 186 28 214
16,600 2,480 19,080 Texas Utilities Company 559 84 643
------ ------ -------
5,585 832 6,417
------ ------ -------
Electrical Equipment 4.5%
27,000 3,976 30,976 Emerson Electric Company 1,482 218 1,700
211,900 29,148 241,048 General Electric Company 33,321 4,584 37,905
5,600 834 6,434 Grainger (W.W.), Inc. 243 36 279
41,600 2,740 44,340 Solectron Corporation* 1,947 128 2,075
------ ------ -------
36,993 4,966 41,959
------ ------ -------
Electronics 6.6%
23,200 3,178 26,378 Analog Devices* 1,782 244 2,026
63,300 8,967 72,267 Hewlett-Packard Company 8,545 1,211 9,756
215,600 29,629 245,229 Intel Corporation 27,341 3,757 31,098
8,100 1,145 9,245 Lexmark International Group, Inc.* 956 135 1,091
12,250 1,648 13,898 Molex Incorporated 673 91 764
45,752 6,378 52,130 Motorola, Inc. 5,447 759 6,206
10,000 1,495 11,495 National Semiconductor Corporation * 607 91 698
3,450 452 3,902 Tektronix, Inc. 200 26 226
51,500 7,162 58,662 Texas Instruments, Inc. 8,388 1,167 9,555
3,400 492 3,892 Thomas & Betts Corporation 105 15 120
------ ------ -------
54,044 7,496 61,540
------ ------ -------
Energy 1.1%
10,900 1,740 12,640 American Electric Power Company 399 64 463
9,000 1,418 10,418 Carolina Power & Light Company 329 52 381
12,700 1,961 14,661 Central & South West Corporation 275 43 318
12,650 1,910 14,560 Coastal Corporation 635 96 731
18,422 2,160 20,582 Dominion Resources, Inc. 829 97 926
8,900 1,318 10,218 DTE Energy Company 290 43 333
14,300 2,086 16,386 El Paso Energy Corporation 608 89 697
14,900 2,268 17,168 Entergy Corporation 379 58 437
14,100 2,100 16,200 FirstEnergy Corp. 359 53 412
11,700 1,622 13,322 FPL Group, Inc. 529 73 602
6,800 1,014 7,814 New Century Energies, Inc. 222 33 255
11,600 1,690 13,290 Niagara Mohawk Power Corporation * 161 23 184
3,300 453 3,753 NICOR, Inc. 112 15 127
9,000 1,364 10,364 Northern States Power Company 196 30 226
23,800 3,484 27,284 Pacific Gas & Electric Company 617 90 707
13,100 1,734 14,834 Peco Energy Company 546 72 618
13,100 1,974 15,074 Public Service Enterprises Group, Inc. 470 71 541
17,672 2,727 20,399 Reliant Energy, Inc. 471 73 544
14,017 2,222 16,239 Sempra Energy 260 41 301
43,200 6,201 49,401 Southern Company 1,077 155 1,232
13,200 1,956 15,156 Unicom Corporation 525 78 603
------ ------ -------
9,289 1,349 10,638
------ ------ -------
</TABLE>
See notes to the Pro Forma Financial Statements
68
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Energy - Raw Materials 0.3%
19,990 3,037 23,027 Baker Hughes, Inc. 636 97 733
27,300 4,015 31,315 Halliburton Company 1,206 177 1,383
20,700 3,168 23,868 Occidental Petroleum Corporation 444 68 512
------ ------ -------
2,286 342 2,628
------ ------ -------
Entertainment & Leisure 0.9%
7,700 852 8,552 Brunswick Corporation 148 16 164
38,000 5,535 43,535 Carnival Corporation 945 138 1,083
12,187 1,729 13,916 Hasbro, Inc. 194 28 222
24,387 3,830 28,217 Mattel, Inc. 299 47 346
84,100 12,025 96,125 McDonald's Corporation 3,206 458 3,664
11,800 1,778 13,578 Mirage Resorts, Incorporated * 240 36 276
42,770 6,365 49,135 Viacom, Inc. - Class B * 2,326 346 2,672
8,050 1,128 9,178 Wendy's International, Inc. 180 25 205
------ ------ -------
7,538 1,094 8,632
------ ------ -------
Environmental Services 0.0%
22,100 22,100 Laidlaw, Inc. - Class B 19 - 19
------ ------ -------
Finance 1.2%
28,000 3,935 31,935 American Express Company 4,202 590 4,792
7,717 1,122 8,839 Bear Stearns Companies, Inc. 331 48 379
29,706 4,395 34,101 Household International, Inc. 1,240 183 1,423
7,200 1,050 8,250 Lehman Brothers Holdings, Inc. 591 86 677
22,800 3,371 26,171 Merrill Lynch & Company, Inc. 2,324 344 2,668
38,200 5,624 43,824 National City Corporation 649 96 745
------ ------ -------
9,337 1,347 10,684
------ ------ -------
Financial Services 2.1%
45,090 6,573 51,663 Associates First Capital Corporation - Class A 1,000 146 1,146
12,200 1,786 13,986 Capital One Financial Corp. 534 78 612
18,815 3,010 21,825 Conseco, Inc. 102 16 118
6,600 980 7,580 Countrywide Credit Industries, Inc. 182 27 209
63,500 9,135 72,635 Federal National Mortgage Association 3,830 551 4,381
15,000 2,259 17,259 Franklin Resources, Inc. 484 73 557
6,500 995 7,495 Kansas City Southern Industries 467 72 539
6,000 954 6,954 MBIA, Inc. 297 47 344
49,662 7,320 56,982 MBNA Corporation 1,319 194 1,513
70,732 10,080 80,812 Morgan Stanley Group, Inc. 5,429 774 6,203
8,700 1,337 10,037 Paine Webber 382 59 441
50,600 7,463 58,063 The Charles Schwab Corporation 2,252 332 2,584
9,700 1,437 11,137 SLM Holding Corporation 304 45 349
7,300 1,067 8,367 T. Rowe Price Associates, Inc. 278 41 319
------ ------ -------
16,860 2,455 19,315
------ ------ -------
Food, Beverages & Tobacco 3.0%
36,758 5,583 42,341 Archer-Daniels-Midland Company 365 55 420
16,800 2,499 19,299 Bestfoods 844 126 970
27,000 3,908 30,908 Campbell Soup Company 702 102 804
159,600 21,962 181,562 Coca-Cola Company 7,511 1,034 8,545
26,300 3,857 30,157 Coca-Cola Enterprises 561 82 643
30,250 4,437 34,687 ConAgra, Inc. 571 84 655
9,800 1,203 11,003 Dardeen Restaurants, Inc. 181 22 203
10,000 1,470 11,470 Fortune Brands, Inc. 250 37 287
18,000 2,720 20,720 General Mills, Inc. 655 99 754
2,400 331 2,731 Great Atlantic & Pacific Tea Company, Inc. 44 6 50
22,300 3,304 25,604 Heinz (H.J.) Company 758 112 870
8,300 1,277 9,577 Hershey Foods Corporation 377 58 435
25,100 3,672 28,772 Kellogg Company 613 90 703
23,900 3,439 27,339 Lowe's Companies, Inc 1,183 170 1,353
91,500 12,945 104,445 PepsiCo, Inc. 3,357 475 3,832
149,400 21,003 170,403 Philip Morris Companies, Inc. 3,268 459 3,727
8,000 1,180 9,180 Quaker Oats Company 522 77 599
19,400 2,927 22,327 Ralston-Ralston Purina Group 343 52 395
56,000 8,255 64,255 Sara Lee Corporation 840 124 964
20,600 2,967 23,567 Sysco Corporation 775 112 887
9,120 1,354 10,474 Tricon Global Restaurants, Inc. * 311 46 357
10,900 1,560 12,460 UST, Inc. 163 23 186
6,800 1,025 7,825 Wrigley (Wm) Jr. Company 492 74 566
------ ------ -------
24,686 3,519 28,205
------ ------ -------
Gold & Precious Metals 0.1%
23,200 3,584 26,784 Barrick Gold Corporation 390 60 450
9,600 1,489 11,089 Freeport McMoRan Copper & Gold, Inc. 92 14 106
15,500 2,349 17,849 Homestake Mining Company 93 14 107
</TABLE>
See notes to the Pro Forma Financial Statements
69
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
19,361 2,978 22,339 Placer Dome, Inc. 157 24 181
------------- ------------- ------------
732 112 844
------------- ------------- ------------
Health Care Services & Supplies 1.2%
3,400 502 3,902 Bausch & Lomb, Inc. 205 30 235
24,500 3,759 28,259 Boston Scientific Corporation * 649 100 749
33,828 5,092 38,920 Columbia/HCA Healthcare Corporation 962 145 1,107
3,620 533 4,153 Edwards Lifesciences Corporation* 54 8 62
25,700 3,761 29,461 HEALTHSOUTH Corporation * 207 30 237
18,842 2,840 21,682 IMS Health, Inc. 321 48 369
6,300 967 7,267 Manor Care, Inc.* 75 12 87
16,494 2,599 19,093 McKesson HBOC, Inc. 278 44 322
1,700 221 1,921 Shared Medical Systems Corporation 70 9 79
10,900 1,552 12,452 United Healthcare Corporation 727 103 830
53,600 7,674 61,274 Warner-Lambert Company 6,100 873 6,973
4,300 607 4,907 Wellpoint Health Networks* 317 45 362
------------- ------------- ------------
9,965 1,447 11,412
------------- ------------- ------------
Home Furnishings 0.0%
11,700 1,808 13,508 Leggett & Platt, Inc. 250 39 289
------------- ------------- ------------
Hospital Supplies & Services 0.0%
6,500 1,017 7,517 Biomet, Inc. 232 36 268
------------- ------------- ------------
Household Products 0.1%
12,300 1,849 14,149 Federated Department Stores * 418 63 481
------------- ------------- ------------
Insurance 2.8%
9,394 1,241 10,635 Aetna Life and Casualty Company 544 72 616
15,900 2,377 18,277 AFLAC Corporation 776 116 892
49,946 7,282 57,228 Allstate Corporation 1,180 172 1,352
15,500 2,310 17,810 American General Corporation 868 129 997
100,202 13,770 113,972 American International Group, Inc. 10,991 1,510 12,501
15,000 2,294 17,294 Aon Corporation 406 62 468
11,000 1,561 12,561 Chubb Corporation 700 99 799
12,600 1,496 14,096 CIGNA Corporation 1,005 119 1,124
10,200 1,482 11,682 Cincinnati Financial Corporation 411 60 471
13,700 2,085 15,785 The Hartford Financial Services Group, Inc. 715 109 824
6,225 921 7,146 Jefferson-Pilot Corporation 414 61 475
26,704 4,117 30,821 KeyCorp 494 76 570
11,800 1,802 13,602 Lincoln National Corporation 411 63 474
16,260 2,377 18,637 Marsh & McLennan Companies, Inc. 1,603 234 1,837
6,400 957 7,357 MGIC Investment Corporation 306 46 352
4,300 684 4,984 Progressive Corporation 281 45 326
8,800 1,287 10,087 Providian Corporation 775 113 888
8,100 1,215 9,315 SAFECO Corporation 179 27 206
14,332 2,025 16,357 St Paul Companies, Inc. 511 72 583
7,900 1,199 9,099 Torchmark Corporation 198 30 228
14,259 2,140 16,399 UNUM Provident Corporation 242 36 278
------------- ------------- ------------
23,010 3,251 26,261
------------- ------------- ------------
Internet Services 1.6%
144,000 20,262 164,262 American Online, Inc.* 8,613 1,212 9,825
34,300 4,672 38,972 Yahoo! Inc.* 4,468 609 5,077
------------- ------------- ------------
13,081 1,821 14,902
------------- ------------- ------------
Liquor 0.5%
29,500 4,239 33,739 Anheuser-Busch Companies, Inc. 2,082 299 2,381
4,200 607 4,807 Brown-Foreman Corporation - Class B 229 33 262
2,300 330 2,630 Adolph Coors Company 117 17 134
26,500 3,939 30,439 Seagram Company Ltd. 1,431 213 1,644
------------- ------------- ------------
3,859 562 4,421
------------- ------------- ------------
Machinery - Industrial 0.0%
338 338 Milacron, Inc. 6 6
108 108 NACCO Industries, Inc. 5 5
9,500 1,435 10,935 Thermo Electron Corporation * 184 28 212
------------- ------------- ------------
184 39 223
------------- ------------- ------------
Medical Instruments 0.2%
18,700 2,712 21,412 Guidant Corporation 1,073 156 1,229
12,800 1,762 14,562 PE Corp-PE Biosystems Group 768 106 874
2,900 368 3,268 PerkinElmer, Inc. 159 20 179
------------- ------------- ------------
2,000 282 2,282
------------- ------------- ------------
Metals & Minerals 0.1%
</TABLE>
See notes to the Pro Forma Financial Statements
70
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
6,080 856 6,936 Allegheny Teledyne, Inc. 147 21 168
1,132 166 1,298 Arch Coal, Inc. 6 1 7
5,200 808 6,008 Nucor Corporation 224 35 259
18,366 2,774 21,140 USX Corporation-Marathon Group, Inc. 428 65 493
4,793 796 5,589 USX Corporation-US Steel Group, Inc. 120 20 140
5,600 819 6,419 Worthington Industries, Inc. 69 10 79
------------- ------------- ------------
994 152 1,146
------------- ------------- ------------
Miscellaneous 1.0%
49,200 6,856 56,056 Applied Materials, Inc. * 5,009 698 5,707
4,100 627 4,727 Mallinckrodt Group, Inc. 110 17 127
9,400 1,413 10,813 PP&L Resources, Inc. 224 34 258
21,000 3,244 24,244 3 Com Corporation * 828 128 956
24,900 3,657 28,557 3M Corporation 2,154 316 2,470
------------- ------------- ------------
8,325 1,193 9,518
------------- ------------- ------------
Motorcycle 0.1%
18,800 18,800 Harley Davidson, Inc. 749 - 749
------------- ------------- ------------
Multi-Industry 1.2%
46,141 6,600 52,741 Cendant Corporation* 712 102 814
17,900 2,184 20,084 Corning, Inc. 3,535 431 3,966
6,500 945 7,445 Loews Corporation 358 52 410
1,924 1,924 Tenneco, Inc. 17 17
108,896 15,190 124,086 Tyco International, Ltd. 5,002 698 5,700
------------- ------------- ------------
9,624 1,283 10,907
------------- ------------- ------------
Natural Gas 0.4%
46,300 6,478 52,778 Enron Corporation 3,227 451 3,678
------------- ------------- ------------
Networking 0.0%
6,500 972 7,472 Adaptec, Inc.* 175 26 201
------------- ------------- ------------
Non-Ferrous Metals 0.4%
13,250 2,049 15,299 Alcan Aluminum Ltd. 434 67 501
22,900 3,366 26,266 Alcoa, Inc. 1,486 218 1,704
8,800 1,187 9,987 Englehard Corporation 154 21 175
11,400 1,737 13,137 Inco, Ltd. 178 27 205
9,436 1,511 10,947 Newmont Mining Corporation 221 35 256
5,100 805 5,905 Phelps Dodge Corporation 236 37 273
3,500 597 4,097 Reynolds Metals Company 233 40 273
------------- ------------- ------------
2,942 445 3,387
------------- ------------- ------------
Office Equipment 0.0%
21,500 3,013 24,513 Novell, Inc. * 422 59 481
------------- ------------- ------------
Oil - Domestic 0.5%
5,600 830 6,430 Amerada Hess Corporation 356 53 409
7,300 1,161 8,461 Anadarko Petroleum Corporation 317 50 367
4,600 678 5,278 Ashland, Inc. 157 23 180
13,592 1,598 15,190 Burlington Resources, Inc. 534 63 597
19,850 750 20,600 Columbia Gas System, Inc. 1,246 47 1,293
5,208 773 5,981 Kerr-McGee Corporation 270 40 310
14,900 2,350 17,250 Phillips Petroleum Company 707 111 818
5,200 774 5,974 Rowan Companies, Inc.* 145 22 167
5,700 873 6,573 Sun Company, Inc. 173 27 200
14,200 2,248 16,448 Unocal Corporation 459 73 532
------------- ------------- ------------
4,364 509 4,873
------------- ------------- ------------
Oil - International 4.2%
7,400 1,017 8,417 Apache Corporation 358 49 407
32,636 4,864 37,500 BP Amoco PLC 1,664 248 1,912
42,500 5,815 48,315 Chevron Corporation 3,618 495 4,113
38,400 5,688 44,088 Conoco, Inc. 955 141 1,096
222,927 30,630 253,557 Exxon Mobil Corporation 17,319 2,380 19,699
138,000 19,006 157,006 Royal Dutch Petroleum Company 7,918 1,091 9,009
34,500 5,060 39,560 Texaco, Inc. 1,708 250 1,958
19,663 1,634 21,297 Transocean Sedco Forex Inc. 924 77 1,001
------------- ------------- ------------
34,464 4,731 39,195
------------- ------------- ------------
Oil & Gas Services 0.4%
1,700 233 1,933 Eastern Enterprises 103 14 117
3,700 549 4,249 McDermott International, Inc. 30 4 34
287 287 ONEOK, Inc. 7 7
2,200 318 2,518 Peoples Energy Corporation 68 10 78
33,900 4,937 38,837 Schlumberger, Ltd. 2,595 378 2,973
9,000 1,407 10,407 Tosco Corporation 289 45 334
15,338 2,320 17,658 Union Pacific Resources Group 294 45 339
</TABLE>
See notes to the Pro Forma Financial Statements
71
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
------------- ------------- ------------
3,379 503 3,882
------------- ------------- ------------
Paper & Forest Products 0.7%
3,400 498 3,898 Boise Cascade Corporation 111 16 127
5,500 865 6,365 Champion International Corporation 361 57 418
13,400 1,977 15,377 Fort James Corporation 321 47 368
10,200 1,596 11,796 Georgia-Pacific Corporation 375 59 434
25,415 3,781 29,196 International Paper Company 934 139 1,073
34,012 4,858 38,870 Kimberly-Clark Corporation 1,975 282 2,257
6,372 994 7,366 Louisiana Pacific Corporation 85 13 98
6,200 901 7,101 Mead Corporation 216 31 247
1,800 243 2,043 Potlatch Corporation 71 10 81
3,250 501 3,751 Temple-Inland, Inc. 163 25 188
6,825 891 7,716 Westvaco Corporation 211 28 239
14,650 1,810 16,460 Weyerhaeuser Company 783 97 880
6,600 1,002 7,602 Willamette Industries 252 38 290
------------- ------------- ------------
5,858 842 6,700
------------- ------------- ------------
Printing & Publishing 0.1%
11,500 1,762 13,262 McGraw-Hill, Inc. 604 93 697
3,200 494 3,694 Meredith Corporation 89 14 103
7,300 1,191 8,491 R.R. Donnelley & Sons Company 155 25 180
------------- ------------- ------------
848 132 980
------------- ------------- ------------
Production 0.6%
1,400 218 1,618 Briggs & Stratton Corporation 54 8 62
22,000 3,189 25,189 Caterpillar, Inc. 868 126 994
5,600 866 6,466 Cooper Industries, Inc. 192 30 222
4,100 594 4,694 Crane Co. 110 16 126
14,000 2,095 16,095 Deere & Company 565 85 650
13,600 1,918 15,518 Dover Corporation 691 97 788
1,900 277 2,177 FMC Corporation * 111 16 127
18,800 2,262 21,062 Illinois Tool Works, Inc. 1,204 145 1,349
10,300 1,495 11,795 Ingersoll-Rand Company 483 70 553
6,366 1,114 7,480 Pall Corporation 142 25 167
6,525 1,031 7,556 Parker-Hannifin Corporation 303 48 351
4,900 531 5,431 Timken Company 91 10 101
------------- ------------- ------------
4,814 676 5,490
------------- ------------- ------------
Railroads 0.2%
27,943 4,250 32,193 Burlington Northern Santa Fe 674 103 777
12,720 1,936 14,656 CSX Corporation 266 41 307
22,200 3,458 25,658 Norfolk Southern Corporation 391 61 452
15,300 2,275 17,575 Union Pacific Corporation 645 96 741
------------- ------------- ------------
1,976 301 2,277
------------- ------------- ------------
Retail 5.3%
26,043 3,812 29,855 Albertson's, Inc. 848 124 972
4,400 581 4,981 American Greetings Corporation 80 11 91
7,400 1,251 8,651 Bed Bath & Beyond, Inc.* 271 46 317
12,700 1,901 14,601 Best Buy* 1,025 154 1,179
12,000 1,875 13,875 Circuit City Stores, Inc. 706 110 816
6,000 983 6,983 Consolidated Stores Corporation* 75 12 87
27,242 3,964 31,206 Costco Companies, Inc.* 1,473 214 1,687
6,600 939 7,539 Dillard Department Stores, Inc. - Class A 92 13 105
16,581 2,088 18,669 Dollar General Corporation 379 48 427
53,275 7,790 61,065 Gap, Inc. 1,958 286 2,244
148,200 20,265 168,465 Home Depot, Inc. 8,308 1,136 9,444
28,500 4,503 33,003 Kmart Corporation * 231 37 268
19,400 2,916 22,316 Kohls Department Stores * 931 140 1,071
51,200 7,535 58,735 Kroger Corporation * 950 140 1,090
13,311 1,932 15,243 The Limited, Inc. 601 87 688
2,500 334 2,834 Longs Drug Stores Corporation 58 8 66
20,514 3,050 23,564 The May Department Stores Company * 564 84 648
8,400 1,281 9,681 Nordstrom, Inc. 234 36 270
23,400 3,388 26,788 Office Depot* 247 36 283
15,700 2,359 18,059 J.C. Penney Company, Inc. 217 33 250
3,300 447 3,747 Pep Boys-Manny, Moe & Jack 21 3 24
15,400 2,327 17,727 Rite Aid Corporation 77 12 89
30,800 4,656 35,456 Safeway, Inc.* 1,359 206 1,565
23,600 3,474 27,074 Sears Roebuck and Company 864 127 991
28,750 4,222 32,972 Staples, Inc. * 548 81 629
7,000 1,271 8,271 Supervalu, Inc. 145 26 171
11,400 1,802 13,202 Tandy Corporation 650 103 753
27,400 4,022 31,422 Target Corporation 1,824 268 2,092
19,000 2,893 21,893 TJX Companies, Inc. 365 56 421
17,025 2,286 19,311 Toys "R" Us, Inc. * 260 35 295
</TABLE>
See notes to the Pro Forma Financial Statements
72
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
62,000 9,095 71,095 Walgreen Company 1,744 256 2,000
287,200 39,561 326,761 Wal-Mart Stores, Inc. 15,904 2,191 18,095
8,800 1,338 10,138 Winn-Dixie Stores, Inc. 146 22 168
------------- ------------- ------------
43,155 6,141 49,296
------------- ------------- ------------
Savings & Loan 0.3%
43,100 6,321 49,421 Federal Home Loan Mortgage Corporation 1,980 290 2,270
10,200 1,527 11,727 Golden West Financial Corporation 348 52 400
------------- ------------- ------------
2,328 342 2,670
------------- ------------- ------------
Semiconductors 1.0%
7,500 1,308 8,808 Advanced Micro Devices, Inc. * 658 115 773
12,200 1,700 13,900 Conexant Systems, Inc.* 730 102 832
10,400 1,638 12,038 KLA-Tencor Corporation * 779 123 902
18,600 2,598 21,198 LSI Logic Corp * 1,163 162 1,325
16,900 2,256 19,156 Micron Technology Incorporated 2,353 314 2,667
10,100 1,436 11,536 Teradyne, Inc.* 1,111 158 1,269
20,000 2,812 22,812 Xilinx, Inc.* 1,465 206 1,671
------------- ------------- ------------
8,259 1,180 9,439
------------- ------------- ------------
Software 3.1%
7,200 1,050 8,250 Adobe Systems Incorporated 871 127 998
10,800 1,702 12,502 Citrix Systems, Inc.* 659 104 763
22,800 3,211 26,011 Compuware Corporation* 286 40 326
328,900 46,206 375,106 Microsoft Corporation * 22,941 3,223 26,164
16,200 2,417 18,617 Parametric Technology Company * 132 20 152
16,800 2,169 18,969 Peoplesoft, Inc. * 234 30 264
------------- ------------- ------------
25,123 3,544 28,667
------------- ------------- ------------
Steel 0.0%
8,200 1,181 9,381 Bethlehem Steel Corporation* 44 - 44
------------- ------------- ------------
Telecommunications 8.8%
18,600 2,664 21,264 ADC Telecommunications, Inc.* 1,130 162 1,292
19,600 2,740 22,340 Alltell Corporation 1,306 183 1,489
206,342 28,414 234,756 AT & T Corporation 9,634 1,327 10,961
100,508 13,811 114,319 Bell Atlantic Corporation 5,955 818 6,773
121,600 16,671 138,271 BellSouth Corp. 5,920 812 6,732
10,300 1,561 11,861 Cabletron Systems * 236 36 272
8,300 1,234 9,534 CenturyTel, Inc. 203 30 233
47,420 7,016 54,436 Global Crossing Ltd.* 1,494 221 1,715
62,700 8,678 71,378 GTE Corporation 4,248 588 4,836
201,779 28,284 230,063 Lucent Technologies, Inc. 12,548 1,759 14,307
183,170 25,188 208,358 MCI Worldcom, Inc. 8,323 1,144 9,467
22,700 3,050 25,750 Nextel Communications, Inc.* 2,484 334 2,818
220,007 30,294 250,301 SBC Communications, Inc. 9,639 1,327 10,966
9,000 1,382 10,382 Scientific-Atlanta, Inc. 585 90 675
54,400 7,841 62,241 Sprint Corporation 3,346 482 3,828
54,500 7,608 62,108 Sprint PCS Group 2,998 418 3,416
31,145 4,552 35,697 US West, Inc. 2,217 324 2,541
------------- ------------- ------------
72,266 10,055 82,321
------------- ------------- ------------
Telecommunications Equipment 2.1%
10,400 1,302 11,702 Comverse Technology, Inc.* 928 116 1,044
91,160 12,816 103,976 Nortel Networks Corporation 10,324 1,451 11,775
45,500 6,560 52,060 Qualcom, Inc.* 4,934 711 5,645
25,100 3,564 28,664 Tellabs, Inc. * 1,376 195 1,571
------------- ------------- ------------
17,562 2,473 20,035
------------- ------------- ------------
Textiles & Apparel 0.3%
24,200 3,564 27,764 CVS Corporation 1,053 155 1,208
3,600 592 4,192 Liz Claiborne, Inc. 167 27 194
17,400 2,603 20,003 Nike, Inc. - Class B 756 113 869
502 502 Reebok International Ltd.* 9 9
306 306 Russell Corporation 6 6
1,100 132 1,232 Springs Industries, Inc. 45 5 50
7,454 1,095 8,549 VF Corporation 210 31 241
------------- ------------- ------------
2,231 346 2,577
------------- ------------- ------------
Tire & Rubber 0.1%
4,800 661 5,461 Cooper Tire & Rubber Company 65 9 74
6,800 994 7,794 Goodrich (B.F.) Company 217 32 249
9,262 1,385 10,647 Goodyear Tire & Rubber Company 256 38 294
------------- ------------- ------------
538 79 617
------------- ------------- ------------
Transportation Equipment 0.0%
2,500 411 2,911 Cummins Engine Company, Inc. 89 15 104
------------- ------------- ------------
</TABLE>
See notes to the Pro Forma Financial Statements
73
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Travel & Recreation 0.9%
132,800 18,421 151,221 The Walt Disney Company 5,752 798 6,550
7,150 1,145 8,295 Harrahs Entertainment, Inc. * 147 24 171
23,000 2,284 25,284 Hilton Hotels Corporation 195 19 214
14,900 2,300 17,200 Marriott International, Inc. - Class A 477 74 551
15,532 1,171 16,703 Sabre Holding Corporation* 543 41 584
----------- ------------- ------------
7,114 956 8,070
----------- ------------- ------------
Trucking 0.0%
3,550 610 4,160 Ryder System, Inc. 79 14 93
----------- ------------- ------------
Waste Management 0.0%
11,800 1,682 13,482 Allied Waste Industries, Inc.* 72 10 82
37,740 5,632 43,372 Waste Management, Inc. 599 89 688
----------- ------------- ------------
671 99 770
----------- ------------- ------------
----------- ------------- ------------
Total Common Stock (Cost $470,649) 780,617 109,602 890,219
----------- ------------- ------------
INVESTMENT COMPANIES 0.1%
6,300 6,300 S&P Depository Receipt - 914 914
----------- ------------- ------------
Total Investment Companies (Cost $850) - 914 914
----------- ------------- ------------
Pro Forma
Firstar Mercantile Combined
Principal Principal Principal
Amount Amount Amount SHORT-TERM INVESTMENTS 4.7%
--------------- ------------- ------------
U.S. Governement Agencies 0.1%
855 855 FHLB Discount Note, 5.79%, 5/1/00 - 855 855
----------- ------------- ------------
U.S. Treasuries 0.4%
3,600 3,600 U.S. Treasury Bill, 0.00%, 5/25/00 3,587 - 3,587
----------- ------------- ------------
Variable Rate Demand Notes 4.2%
16,453 16,453 American Family Financial Services, Inc. 16,453 - 16,453
22,703 22,703 Warner Lambert Company 22,703 - 22,703
----------- ------------- ------------
Total Variable Rate Demand Notes 39,156 - 39,156
----------- ------------- ------------
Total Short-Term Investments (Cost $43,598) 42,743 855 43,598
----------- ------------- ------------
Total Investments (Cost $514,247) 100.0% $ 823,360 $ 111,371 $ 934,731
=========== ============= ============
* Non-income producing
Actual Actual Actual
Number Number Number
of contracts of contracts of contracts
--------------- ------------- ------------
Futures
121 121 S&P 500 Financial Futures Contracts (Cost $44,165) $ 46,280 - $ 46,280
=========== ============= ============
</TABLE>
See notes to the Pro Forma Financial Statements
74
<PAGE>
FIRSTAR GROWTH FUND
FIRSTAR GROWTH FUND / MERCANTILE GROWTH EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Firstar Mercantile Combined Pro Forma
Number of Number of Number of Firstar Mercantile Combined
Shares Shares Shares Market Value Market Value Market Value
----------- ---------- --------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS 96.2%
Aerospace & Aircraft 0.4%
38,500 38,500 General Dynamics Corporation $ 2,252 - $ 2,252
------------- ------------- -----------
Air Transportation 0.4%
100,700 100,700 Southwest Airlines 2,184 - 2,184
------------- ------------- ------------
Banking 4.4%
23,853 23,853 BankAmerica Corporation $ 1,169 1,169
45,600 45,600 Chase Manhattan Corporation 3,286 3,286
54,262 54,262 Citigroup, Inc. 3,225 3,225
54,000 54,000 Fifth Third Bancorp 3,409 3,409
79,300 13,000 92,300 State Street Corporation 7,682 1,259 8,941
49,000 49,000 Wells Fargo & Company 2,012 2,012
------------- ------------ ------------
14,377 7,665 22,042
------------- ------------ ------------
Biotechnology 0.6%
50,800 50,800 Amgen, Inc.* - 2,845 2,845
------------- ------------ ------------
Business Services 3.4%
41,900 41,900 Computer Sciences Corporation* 3,417 3,417
54,900 14,200 169,100 First Data Corporation 7,542 691 8,233
71,400 71,400 Sabre Group Holdings, Inc. * 2,495 2,495
85,800 85,800 SunGard Data Systems, Inc. * 2,965 2,965
------------- ------------- -----------
16,419 691 17,110
------------- ------------- -----------
Communications & Media 4.5%
125,500 125,500 Charter Communications, Inc.* 1,843 1,843
88,200 88,200 Walt Disney Company 3,820 3,820
89,200 38,000 127,200 Infinity Broadcasting 3,027 1,290 4,317
110,300 110,300 Interpublic Group of Companies, Inc. 4,522 4,522
57,400 57,400 Omnicom Group, Inc. 5,227 5,227
21,000 21,000 Time Warner, Inc. 1,889 1,889
36,000 36,000 Tribune Company 1,399 1,399
------------- ------------- ------------
18,439 4,578 23,017
------------- ------------- ------------
Computers 4.3%
41,700 41,700 ASM Lithography Holding N.V.* 1,668 1,668
49,000 49,000 COMPAQ Computer Corporation 1,433 1,433
47,600 28,800 76,400 EMC Corporation* 6,613 4,001 10,614
61,400 6,600 68,000 Sun Microsystems, Inc. 5,645 607 6,252
16,800 16,800 VERITAS Software Corporation* 1,802 1,802
--------- ------------ ------------
15,728 6,041 21,769
--------- ------------ ------------
Consumer Products 0.2%
16,000 16,000 Avery Dennison Corporation - 1,050 1,050
--------- ------------ ------------
Cosmetics & Soap 0.3
36,400 36,400 Estee Lauder Companies - 1,606 1,606
--------- ------------ ------------
Drugs 10.1%
34,400 34,400 Abbott Laboratories 1,322 1,322
61,000 42,000 103,000 Bristol-Meyers Squibb Company 3,199 2,202 5,401
95,000 23,000 118,000 Eli Lilly and Company 7,345 1,778 9,123
</TABLE>
See notes to the Pro Froma Financial Statements
75
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12,100 3,900 16,000 Genentech, Inc.* 1,416 456 1,872
46,500 26,000 72,500 Johnson & Johnson 3,836 2,145 5,981
53,700 48,900 102,600 Merck & Co., Inc. 3,732 3,399 7,131
84,000 84,000 Pfizer, Inc. 3,539 3,539
49,200 49,200 Schering Plough Corporation 1,983 1,983
83,100 26,400 109,500 Warner-Lambert Company 9,458 3,005 12,463
50,900 50,900 Watson Pharmaceuticals, Inc.* 2,287 2,287
--------- ------- -------
31,273 19,829 51,102
--------- ------- -------
Electrical Equipment 1.0%
31,900 31,900 General Electric Company - 5,016 5,016
--------- ------- -------
Electronic Components & Semiconductors 13.9%
30,100 30,100 Altera Corporation * 3,078 3,078
36,400 11,400 47,800 Analog Devices, Inc.* 2,796 876 3,672
62,700 22,000 84,700 Applied Materials, Inc.* 6,384 2,240 8,624
14,000 14,000 Broadcom Corporation* 2,413 2,413
35,300 11,800 47,100 Conexant Systems, Inc.* 2,114 707 2,821
33,800 33,800 Flextronics International Ltd.* 2,374 2,374
52,700 52,700 Infineon Technologies AG* 3,577 3,577
65,100 21,500 86,600 Intel Corporation 8,255 2,727 10,982
29,700 29,700 KLA-Tencor Corporation* 2,224 2,224
28,800 28,800 Maxim Integrated Products * 1,867 1,867
76,237 76,237 Molex, Inc. - Class A 3,049 3,049
17,900 17,900 PMC - Sierra, Inc.* 3,435 3,435
17,800 17,800 STMicroelectronics N.V. 3,376 3,376
20,400 6,800 27,200 Teradyne, Inc.* 2,244 748 2,992
72,200 24,100 96,300 Texas Instruments Incorporated 11,760 3,925 15,685
--------- ------- -------
51,777 18,392 70,169
--------- ------- -------
Electronics 0.6%
21,200 21,200 Hewlett-Packard Company - 2,862 2,862
--------- ------- -------
Financial Services 4.9%
47,700 39,000 86,700 Federal Home Loan Mortgage Corporation 2,191 1,792 3,983
25,000 26,000 51,000 Federal National Mortgage Association 1,508 1,568 3,076
81,400 81,400 Franklin Resources, Inc. 2,625 2,625
207,825 93,450 301,275 MBNA Corporation 5,520 2,482 8,002
71,700 22,000 93,700 Morgan Stanley Dean Witter & Company 5,503 1,689 7,192
--------- ------- -------
17,347 7,531 24,878
--------- ------- -------
Food, Beverages, & Tobacco 1.0%
27,000 27,000 Coca-Cola Company 1,271 1,271
56,000 47,500 103,500 PepsiCo, Inc. 2,055 1,743 3,798
50,500 50,500 Sysco Corporation 1,900 1,900
--------- ------- -------
2,055 4,914 5,069
--------- ------- -------
Health Care Services & Supplies 1.3%
67,150 67,150 Cardinal Health, Inc. 3,697 3,697
157,700 157,700 IMS Health Incorporated 2,691 2,691
--------- ------- -------
6,388 - 6,388
--------- ------- -------
Insurance 3.4%
63,250 63,250 AFLAC, Inc. 3,087 3,087
64,282 18,015 82,297 American International Group 7,051 1,976 9,027
32,300 32,300 Aon Corporation 874 874
85,200 85,200 MGIC Investment Corporation 4,074 4,074
--------- ------- -------
15,086 1,976 17,062
--------- ------- -------
Internet Products & Services 0.2%
15,400 15,400 Ariba, Inc.* 1,142 - 1,142
--------- ------- -------
Medical Instruments 1.8%
31,600 31,600 Guidant Corporation 1,813 1,813
84,800 57,000 141,800 Medtronic, Inc. 4,404 2,960 7,364
--------- ------- -------
6,217 2,960 9,177
--------- ------- -------
</TABLE>
See notes to the Proma Froma Financial Statements
76
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Multi-Industry 1.6%
167,300 12,900 180,200 Tyco International, Ltd. 7,685 593 8,278
-------- --------- ----------
Networking Products 3.9%
168,700 37,700 206,400 Cisco Systems, Inc. * 11,696 2,614 14,310
6,300 6,300 Juniper Networks, Inc.* 1,340 1,340
54,400 54,400 Network Appliance, Inc.* 4,022 4,022
-------- --------- ----------
17,058 2,614 19,672
-------- --------- ----------
Oil & Gas - Domestic 2.0%
158,500 158,500 EOG Resources, Inc. 3,943 3,943
45,300 14,500 59,800 Phillips Petroleum Company 2,149 688 2,837
54,100 17,200 71,300 Texaco, Inc. 2,678 851 3,529
-------- --------- ----------
8,770 1,539 10,309
-------- --------- ----------
Oil & Gas Services 2.9%
87,300 87,300 Enron Corporation* 6,084 6,084
65,900 65,900 Halliburton Company 2,912 2,912
70,400 70,400 Schlumberger Limited 5,390 5,390
-------- --------- ----------
14,386 - 14,386
-------- --------- ----------
Paper & Forest Products 0.4%
30,200 30,200 Champion International Corporation 1,986 - 1,986
-------- --------- ----------
Production 0.3%
21,000 21,000 Illinois Tool Works, Inc. - 1,345 1,345
-------- --------- ----------
Retail 9.9%
63,200 63,200 Circuit City Stores, Inc. 3,717 3,717
68,000 68,000 Costco Companies, Inc. * 3,676 3,676
88,200 88,200 Dollar General Corporation 2,018 2,018
61,300 50,000 111,300 Home Depot, Inc. 3,437 2,803 6,240
96,200 96,200 Kohl's Corporation* 4,618 4,618
32,000 32,000 Kroeger Company * 594 594
128,500 128,500 Lowe's Companies, Inc. 6,361 6,361
142,200 29,000 171,200 Safeway, Inc. * 6,275 1,280 7,555
53,100 53,100 Target Corporation 3,534 3,534
134,400 134,400 Walgreen Company 3,780 3,780
101,200 32,400 133,600 Wal-Mart Stores, Inc. 5,604 1,794 7,398
-------- --------- ----------
43,020 6,471 49,491
-------- --------- ----------
Software 3.5%
20,300 4,000 24,300 Citrix Systems, Inc.* 1,240 244 1,484
123,800 51,000 174,800 Microsoft Corporation * 8,635 3,557 12,192
47,100 47,100 Oracle Corporation* 3,765 3,765
-------- --------- ----------
13,640 3,801 17,441
-------- --------- ----------
Telecommunications 5.7%
4950 4,950 Allegiance Telecommunications, Inc. 350 350
27,800 27,800 ALLTEL Corporation 1,852 1,852
20,200 6,700 26,900 AT & T Wireless Group* 643 213 856
69,100 69,100 Broadwing, Inc.* 2,024 2,024
44,300 14,200 58,500 Global Crossing Ltd.* 1,395 447 1,842
51,100 5,300 56,400 JDS Uniphase Corporation* 5,298 550 5,848
22,400 22,400 Lucent Technologies, Inc. 1,393 1,393
93,472 30,000 123,472 MCI WorldCom, Inc.* 4,247 1,363 5,610
15,900 15,900 Mcleod, Inc. * 397 397
31,300 4,900 36,200 Nextel Communications, Inc.* 3,425 536 3,961
4,100 4,100 Nextlink Communications, Inc. * 346 346
27,792 27,792 SBC Communications, Inc. 1,218 1,218
15,000 15,000 Vodafone Airtouch Public Ltd * 705 705
16,600 5,500 22,100 VoiceStream Wireless Corporation* 1,643 544 2,187
-------- --------- ----------
20,527 8,062 28,589
-------- --------- ----------
Telecommunications Equipment 7.6%
27,400 9,100 36,500 CIENA Corporation* 3,387 1,125 4,512
20,600 6,400 27,000 Comverse Technology, Inc.* 1,837 571 2,408
</TABLE>
See notes to the Pro Froma Financial Statements
77
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
9,100 9,100 Corning Incorporated 1,797 1,797
21,400 7,000 28,400 Ericsson AB 1,893 619 2,512
14,600 14,600 Motorola, Inc. 1,738 1,738
112,200 11,600 123,800 Nokia Corporation - ADR 6,381 660 7,041
83,000 15,500 98,500 Nortel Networks Corporation 9,400 1,755 11,155
40,400 13,400 53,800 Scientific-Atlanta, Inc. 2,632 871 3,503
30,200 30,200 Qualcom, Inc. 3,275 3,275
----------- ----------- -----------
32,340 5,601 37,941
----------- ----------- -----------
Transportation 0.9%
110,400 110,400 Harley-Davidson, Inc. 4,395 - 4,395
----------- ----------- -----------
Travel & Recreation 0.8%
125,800 26,000 151,800 Carnival Corporation - Class A 3,129 647 3,776
----------- ----------- -----------
1,941,922 Total Common Stock (Cost $296,055) 367,620 118,629 486,249
----------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Firstar Mercantile Combined
Principal Principal Principal
Amount Amount Amount
--------- ---------- ---------
<S> <C> <C>
SHORT-TERM INVESTMENTS 3.8%
U.S. Government Agency-Backed Mortgage Issues 0.8%
Federal Home Loan Bank (FHLB),
$ 4,000 $ 4,000 0.00%, 05/01/00 - 4,000 4,000
----------- ------------- -------------
Commercial Paper 0.4%
2,307 2,307 Pitney-Bowes Credit - 2,300 2,300
----------- ------------- --------------
<CAPTION>
Pro Forma
Firstar Mercantile Combined
Number of Number of Number of
Shares Shares Shares
----------- ------------ ------------
<S> <C> <C>
Investment Companies 2.6%
67 67 Financial Square Prime Obligation Fund 67 67
12,805 12,805 Short-Term Investments Co. Liquid Assets Portfolio 12,805 12,805
----------- ------------- -------------
Total Investment Companies 12,872 - 12,872
----------- ------------- -------------
Total Short-Term Investments (Cost $19,172) 12,872 2,300 19,172
----------- ------------- -------------
Total Investments (Cost $315,227) 100.0% $ 380,492 $ 124,929 $ 505,421
=========== ============= ==============
</TABLE>
* Non-income producing
See notes to the Pro Froma Financial Statements
78
<PAGE>
FIRSTAR MIDCAP INDEX FUND
FIRSTAR MIDCAP INDEX FUND / FIRSTAR STELLAR CAPITAL APPRECIATION FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts in thousands) April 30, 2000
Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Firstar Stellar Combined Pro Forma
Number of Number of Number of Firstar Stellar Combined
Shares Shares Shares Market Value Market Value Market Value
----------- ---------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS 94.8%
Aerospace & Aircraft 0.8%
3,800 3,800 Cordant Technologies, Inc. $ 215 $ 215
17,300 17,300 General Dynamics Corp. $ 1,012 1,012
4,700 4,700 Litton Industries, Inc.* 204 204
1,000 1,000 Sequa Corporation 49 49
------------ ------------ ------------
468 1,012 1,480
------------ ------------ ------------
Appliances 0.3%
16,000 16,000 Maytag Corp. 551 551
------------ ------------ ------------
Autos & Trucks 0.5%
2,300 2,000 4,300 Arvin Industries, Inc. 50 44 94
2,600 2,600 Borg-Warner Automotive, Inc. 109 109
7,600 7,600 Federal-Mogul Corporation 103 103
6,900 7,500 14,400 Lear Corporation* 206 224 430
6,400 8,000 14,400 Meritor Automotive, Inc. 96 120 216
2,800 2,800 Superior Industries International, Inc. 90 90
------------ ------------ ------------
654 388 1,042
------------ ------------ ------------
Banking 3.9%
6,600 6,600 Associated Banc-Corp 169 169
4,100 4,100 CCB Financial Corporation 162 162
4,900 25,000 29,900 City National Corporation 180 921 1,101
11,700 11,700 Compass Bancshares, Inc. 216 216
20,200 20,200 First Security Corporation 285 285
13,400 26,000 39,400 First Tennessee National Corporation 255 494 749
5,100 5,100 First Virginia Banks, Inc. 186 186
9,300 9,300 FirstMerit Corporation 152 152
16,500 40,000 56,500 Hibernia Corporation 175 425 600
5,000 5,000 Keystone Financial, Inc. 75 75
10,900 11,000 21,900 Marshall & Ilsley Corporation 506 511 1,017
7,100 7,100 Mercantile Bankshares Corporation 202 202
11,100 11,100 National Commerce Bancorporation 182 182
18,100 17,000 35,100 North Fork Bancorporation, Inc. 293 275 568
8,200 8,200 Pacific Centruy Financial Corporation 169 169
5,000 5,000 Provident Financial Group 147 147
8,500 8,500 TCF Financial Corporation 199 199
3,900 3,900 Westamerica Bancorporation 98 98
3,400 3,400 Wilmington Trust Corporation 157 157
8,800 17,000 25,800 Zions Bancorporation 365 706 1,071
------------ ------------ ------------
4,173 3,332 7,505
------------ ------------ ------------
Biotechnology 1.0%
18,700 20,000 38,700 Chiron Corporation* 846 905 1,751
2,900 2,900 Incyte Pharmaceuticals, Inc.* 223 223
------------ ------------ ------------
1,069 905 1,974
------------ ------------ ------------
Building & Construction 0.6%
14,400 14,400 Astec Industries, Inc. * 362 362
14,400 12,000 26,400 Clayton Homes, Inc. 137 114 251
2,800 16,000 18,800 Granite Construction, Inc. 66 380 446
------------ ------------ ------------
203 856 1,059
------------ ------------ ------------
Building Materials 1.3%
7,300 7,300 American Standard Companies, Inc.* 299 299
4,800 18,000 22,800 Martin Marietta Materials, Inc. 254 954 1,208
3,700 6,000 9,700 Southdown, Inc. 215 349 564
5,000 6,500 11,500 USG Corporation 209 271 480
------------ ------------ ------------
977 1,574 2,551
------------ ------------ ------------
Business Services 3.9%
6,000 6,000 ACNielson Corporation* 138 138
4,500 4,500 Avnet, Inc. 354 354
17,200 19,500 36,700 Cintas Corporation 681 773 1,454
15,800 30,000 45,800 Comdisco, Inc. 491 932 1,423
21,200 21,200 Concord EFS, Inc.* 474 474
15,800 15,800 Convergys Corporation* 695 695
</TABLE>
See notes to the Pro Forma Financial statements
79
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
9,100 9,100 Gartner Group, Inc.* 98 98
7,100 7,100 Harte-Hanks, Inc. 176 176
2,700 19,000 21,700 Jacobs Engineering Group, Inc.* 85 595 680
7,400 10,000 17,400 Keane, Inc.* 214 289 503
3,700 5,000 8,700 Kelly Services, Inc. - Class A 87 118 205
7,800 7,800 Manpower, Inc. 275 275
9,900 9,900 Modis Professional Services, Inc.* 75 75
4,600 4,600 Navigant Consulting, Inc.* 46 46
2,300 2,300 NCO Group, Inc.* 79 79
9,300 9,300 Robert Half International, Inc. 568 568
9,800 9,800 Viad Corporation 249 249
------------ ------------ ------------
4,785 2,707 7,492
------------ ------------ ------------
Chemicals 1.5%
6,300 6,300 Airgas, Inc.* 37 37
4,500 20,000 24,500 Albemarle Corporation 94 419 513
12,300 12,300 CK Witco Corporation 144 144
6,900 6,900 Cabot Corporation 186 186
4,300 4,300 Cytec Industries, Inc.* 130 130
7,800 7,800 Ethyl Corporation 24 24
3,200 3,200 Ferro Corporation 73 73
1,200 3,000 4,200 H.B. Fuller Company 46 115 161
3,200 3,200 Georgia Gulf Corporation 77 77
5,700 3,000 8,700 The Lubrizol Corporation 146 77 223
12,100 12,100 Lyondell Chemical Company 222 222
5,700 5,700 M.A. Hannna Company 66 66
2,200 2,200 Minerals Technologies, Inc. 102 102
4,400 4,400 Olin Corporation 78 78
3,800 3,800 A. Schulman, Inc 49 49
11,300 11,300 Solutia, Inc. 154 154
6,400 6,400 Waters Corporation* 606 606
3,800 3,800 Wellman, Inc. 81 81
------------ ------------ ------------
2,315 611 2,926
------------ ------------ ------------
Communications & Media 1.9%
12,100 20,000 32,100 A.H. Belo Corporation 202 334 536
3,699 3,699 Chris-Craft Industries, Inc.* 227 227
5,600 5,600 Hispanic Broadcasting Corporation* 566 566
2,800 2,800 Media General, Inc. 138 138
10,500 6,000 16,500 Univision Communications, Inc.* 1,147 656 1,803
11,400 11,400 Westwood One, Inc.* 403 403
------------ ------------ ------------
2,683 990 3,673
------------ ------------ ------------
Computers 1.6%
24,000 24,000 Lexmark International Group, Inc., Class A * 2,832 2,832
16,600 16,600 Quantum Corporation* 195 195
10,300 10,300 Storage Technology Corporation* 134 134
------------ ------------ ------------
329 2,832 3,161
------------ ------------ ------------
Computer Services 1.2%
5,000 5,000 Affiliated Computer Services, Inc.* 166 166
25,000 25,000 Cadence Design Systems, Inc.* 420 420
5,600 5,600 Cambridge Technology Partners, Inc.* 62 62
5,700 5,700 CheckFree Holdings Corporation* 290 290
6,500 6,500 DST Systems, Inc.* 482 482
13,200 13,200 SunGard Data Systems Inc.* 456 456
4,300 4,300 Sykes Enterprises, Inc.* 86 86
7,100 7,100 Synopsys, Inc.* 298 298
------------ ------------ ------------
2,260 - 2,260
------------ ------------ ------------
Consumer Products 0.4%
4,900 4,900 Blyth Industries, Inc. 145 145
4,600 4,600 Carter-Wallace, Inc. 102 102
10,800 10,800 The Dial Corporation 150 150
10,400 10,400 Energizer Holdings, Inc.* 177 177
8,000 8,000 Pennzoil-Quaker State Company 88 88
10,100 10,100 RPM, Inc. 102 102
------------ ------------ ------------
764 - 764
------------ ------------ ------------
Cosmetics & Soap 0.1%
4,000 5,000 9,000 Church & Dwight Companies, Inc. 72 89 161
------------ ------------ ------------
Data Processing 1.3%
9,000 9,000 Acxiom Corporation* 243 243
5,400 5,400 CSG Systems International, Inc.* 249 249
12,700 15,000 27,700 Fiserv, Inc.* 583 689 1,272
27,700 30,000 57,700 Informix Corporation* 305 330 635
7,800 7,800 The Reynolds & Reynolds Company - Class A 185 185
------------ ------------ ------------
1,565 1,019 2,584
------------ ------------ ------------
Distribution 0.5%
9,900 9,900 Arrow Electronics, Inc. 434 434
3,900 3,900 Fastenal Company 228 228
</TABLE>
See notes to the Pro Forma Financial Statements
80
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
5,400 5,400 Tech Data Corporation* 226 226
------------ ------------ ------------
888 - 888
------------ ------------ ------------
Drugs 4.5%
13,800 13,800 Bergen Brunswig Corporation 69 69
13,000 13,000 Biogen, Inc. * 765 765
8,600 11,000 19,600 Forest Laboratories, Inc.* 723 925 1,648
4,500 4,500 Gilead Sciences, Inc.* 244 244
8,000 8,000 ICN Pharmaceuticals, Inc. 202 202
16,350 27,000 43,350 IVAX Corporation 448 739 1,187
6,900 6,900 MedImmune, Inc.* 1,104 1,104
9,200 9,200 Millennium Pharmaceuticals, Inc.* 730 730
13,300 20,000 33,300 Myland Laboratories, Inc. 377 568 945
6,600 6,600 Perrigo Company* 38 38
6,800 6,800 Sepracor, Inc.* 626 626
26,000 26,000 Watson Parmaceuticals, Inc. * 1,168 1,168
------------ ------------ ------------
4,561 4,165 8,726
------------ ------------ ------------
Electric 6.8%
11,300 8,000 19,300 Allegheny Energy, Inc. 343 243 586
8,100 8,100 Alliant Energy Corporation 243 243
1,900 1,900 Black Hills Corporation 44 44
6,500 6,500 Calpine Corporation* 595 595
2,400 2,400 Cleco Corporation 83 83
3,000 28,000 31,000 CMP Group, Inc. 87 810 897
29,100 29,100 Coastal Corp. 1,461 1,461
9,600 9,600 Conectiv, Inc. 170 170
14,800 14,800 DPL, Inc. 344 344
7,700 7,700 DQE, Inc. 295 295
11,000 11,000 El Paso Energy Corp. 468 468
12,800 44,200 57,000 Energy East Corporation 267 923 1,190
3,000 3,000 Hawaiian Electric Industries, Inc. 111 111
3,900 3,900 IDACORP, Inc. 144 144
8,900 8,900 IPALCO Enterprises, Inc. 182 182
6,400 6,400 Kansas City Power & Light Company 164 164
13,400 13,400 LG&E Energy Corporation 312 312
7,500 7,500 Minnesota Power, Inc. 138 138
11,300 28,000 39,300 The Montana Power Company 498 1,234 1,732
12,900 12,900 NiSource, Inc. 239 239
14,700 41,000 55,700 Northeast Utilities 316 881 1,197
6,200 6,200 NSTAR 273 273
8,000 8,000 16,000 OGE Energy Corporation 159 158 317
12,300 12,300 Potomac Electric Power Company 288 288
3,700 3,700 Public Service Company of New Mexico 67 67
8,800 8,800 Puget Sound Energy, Inc. 209 209
10,669 10,669 SCANA Corporation 276 276
7,300 7,300 Sierra Pacific Resources 110 110
13,300 13,300 TECO Energy, Inc. 291 291
9,600 8,000 17,600 Utilicorp United Inc. 185 154 339
5,700 5,700 Vectren Corporation 115 115
12,100 12,100 Wisconsin Energy Corporation 259 259
------------ ------------ ------------
6,807 6,332 13,139
------------ ------------ ------------
Electronics 4.9%
19,900 19,900 American Power Conversion Corporation* 703 703
3,700 3,700 AMETEK, Inc. 76 76
7,100 7,100 Diebold, Inc. 205 205
6,700 6,700 Hubbell, Inc. 175 175
3,200 3,200 L-3 Communications Holdings, Inc.* 170 170
18,000 18,000 Linear Technology Corp. 1,028 1,028
1,900 1,900 MagneTek, Inc.* 16 16
7,900 10,500 18,400 Microchip Technology Inc.* 490 652 1,142
12,500 12,500 Molex Inc. 687 687
14,900 14,900 SCI Systems, Inc.* 793 793
13,100 8,000 21,100 Sanmina Corporation* 787 481 1,268
4,300 4,300 Sawtek, Inc.* 206 206
7,900 7,900 Sensormatic Electronics Corporation* 132 132
13,800 13,800 Symbol Technologies, Inc. 769 769
4,600 4,600 UCAR International, Inc.* 61 61
8,800 15,750 24,550 Vishay Intertechnology, Inc.* 738 1,321 2,059
------------ ------------ ------------
5,321 4,169 9,490
------------ ------------ ------------
Entertainment & Leisure 0.8%
7,800 7,800 Callaway Golf Company 130 130
4,400 4,400 GTECH Holdings Corporation* 91 91
7,500 7,500 International Game Technology* 183 183
5,500 5,500 International Speedway Corporation 237 237
9,400 5,000 14,400 Mandalay Resort Group* 177 94 271
31,400 31,400 Park Place Entertainment Corporation* 402 402
8,000 8,000 Premier Parks, Inc. 173 173
------------
</TABLE>
See notes to the Pro Forma Financial statements
81
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
------------ ------------ ------------
1,393 94 1,487
------------ ------------ ------------
Financial Services 2.6%
9,200 17,000 26,200 A.G. Edwards, Inc. 346 640 986
29,800 29,800 E*TRADE Group, Inc.* 641 641
5,900 24,000 29,900 The FINOVA Group, Inc. 76 307 383
3,200 11,000 14,200 Investment Technology Group, Inc. 120 412 532
11,000 11,000 Jefferies Group, Inc. 243 243
6,000 6,000 Legg Mason, Inc. 227 227
7,600 7,600 NOVA Corporation* 240 240
24,450 24,450 Old Kent Financial Corp. 737 737
30,000 30,000 Pinnacle West Capital Corp. 1,054 1,054
------------ ------------ ------------
1,650 3,393 5,043
------------ ------------ ------------
Food, Beverages & Tobacco 1.9%
3,500 3,500 Dean Foods Company 86 86
5,800 5,800 Dole Food Company, Inc. 102 102
2,600 2,600 Dreyer's Grand Ice Cream, Inc. 62 62
10,300 10,300 Flowers Industries, Inc. 157 157
4,300 4,300 Hannaford Brothers Company 311 311
14,700 16,000 30,700 Hormel Foods Corporation 224 244 468
11,000 12,500 23,500 IBP, Inc. 182 207 389
1,200 1,200 International Multifoods Corporation 15 15
7,000 7,000 Interstate Bakeries Corporation 89 89
2,800 2,800 Lance, Inc. 30 30
7,300 7,300 McCormick & Company, Inc. 228 228
11,300 11,300 R.J. Reynolds Tobacco Holding, Inc. 234 234
3,900 3,900 Ruddick Corporation 45 45
2,600 2,600 The J.M. Smucker Company 42 42
3,200 3,200 Suiza Foods Corporation* 125 125
23,300 25,000 48,300 Tyson Foods, Inc. - Class A 243 261 504
2,800 4,000 6,800 Universal Corporation 53 75 128
4,700 26,000 30,700 Universal Foods Corpoartion 77 427 504
2,800 2,800 Vlasic Foods International, Inc.* 5 5
14,500 14,500 Whitman Corporation 166 166
------------ ------------ ------------
2,476 1,214 3,690
------------ ------------ ------------
Health Care Services & Supplies 2.3%
5,400 5,400 Apria Healthcare Group, Inc.* 75 75
9,600 9,600 Beverly Enterprises, Inc.* 32 32
5,200 5,200 Covance Inc.* 48 48
4,000 4,000 Express Scripts, Inc.* 143 143
5,000 5,000 First Health Group Corporation* 152 152
11,400 11,400 Foundation Health Systems, Inc.* 115 115
8,600 17,500 26,100 Genzyme Corporation* 420 854 1,274
24,800 24,800 Health Management Associates, Inc. - Class A* 395 395
6,300 6,300 Hillenbrand Industries, Inc. 190 190
5,600 4,000 9,600 Lincare Holdings, Inc.* 171 122 293
9,400 9,400 Omnicare, Inc. 143 143
12,004 12,004 Priority Healthcare Corp. * 664 664
6,300 6,300 Quorum Health Group, Inc.* 67 67
7,600 7,600 Total Renal Care Holdings, Inc.* 22 22
4,000 16,200 20,200 Trigon Healthcare, Inc.* 144 582 726
------------ ------------ ------------
2,117 2,222 4,339
------------ ------------ ------------
Home Furnishings 0.5%
5,000 5,000 Furniture Brands International, Inc.* 93 93
23,000 23,000 Leggett & Platt, Inc. 491 491
6,300 7,000 13,300 Mohawk Industries, Inc.* 156 173 329
------------ ------------ ------------
249 664 913
------------ ------------ ------------
Insurance 2.6%
5,600 6,000 11,600 Allmerica Financial Corporation 303 324 627
7,200 7,200 Ambac Financial Group, Inc. 346 346
6,000 12,000 18,000 American Financial Group, Inc. 153 305 458
4,800 6,000 10,800 Everest Re Group, Ltd. 140 176 316
2,800 2,800 HSB Group, Inc. 81 81
3,700 3,700 Horace Mann Educators Corporation 54 54
18,000 18,000 Lincoln National Corp. 627 627
6,200 6,200 Ohio Casualty Corporation 103 103
13,000 13,000 Old Republic International Corporation 185 185
8,400 8,400 Oxford Health Plans, Inc.* 160 160
4,500 4,500 PacifiCare Health Systems, Inc.* 231 231
4,600 17,500 22,100 The PMI Group, Inc. 223 848 1,071
6,600 6,600 Protective Life Corporation 157 157
9,200 9,200 ReliaStar financial Corporation 396 396
7,300 7,300 Unitrin, Inc. 246 246
------------ ------------ ------------
2,778 2,280 5,058
------------ ------------ ------------
Machinery - Agriculture & Automotive 0.0%
</TABLE>
See notes to the Pro Forma Financial statements
82
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
6,550 6,550 AGCO Corporation 78 - 78
------------ ------------ ------------
Machinery - Industrial 0.8%
2,836 2,836 Albany International Corporation 43 43
10,000 10,000 Black & Decker Corp. (The) 421 421
3,300 3,300 Flowserve Corporation 47 47
3,400 4,000 7,400 Imation Corporation* 95 112 207
2,900 2,900 Kennametal, Inc. 83 83
1,500 1,500 Nordson Corporation 67 67
3,200 2,500 5,700 SPX Corporation 352 275 627
2,600 2,600 Stewart & Stevenson Services, Inc. 31 31
------------ ------------ ------------
718 808 1,526
------------ ------------ ------------
Manufacturing 1.2%
3,100 10,000 13,100 Carlisle Companies Inc. 128 412 540
5,100 5,100 Federal Signal Corporation 104 104
4,100 4,100 Harsco Corporation 122 122
3,200 3,200 Kaydon Corporation 75 75
4,100 4,100 Lancaster Colony Corporation 108 108
4,100 5,000 9,100 Mark IV Industries, Inc. 87 106 193
2,600 2,600 Modine Manufacturing Company 57 57
500 500 NCH Corporation 22 22
4,900 5,000 9,900 Pentair, Inc. 187 191 378
2,600 2,600 Precision Castparts Corporation 109 109
2,000 2,500 4,500 Tecumseh Products Company - Class A 93 116 209
3,900 3,900 Teleflex, Inc. 135 135
3,700 6,000 9,700 Trinity Industries, Inc. 82 134 216
------------ ------------ ------------
1,309 959 2,268
------------ ------------ ------------
Medical Instruments 1.7%
2,500 2,500 Acuson Corporation* 31 31
3,000 3,000 Beckman Coulter, Inc. 194 194
20,600 20,600 CONMED Corp. * 538 538
5,500 5,000 10,500 DENTSPLY International, Inc. 160 145 305
6,000 6,000 Edwards Lifesciences Corporation* 90 90
3,200 3,200 MiniMed, Inc.* 393 393
5,900 5,900 PSS World Medical, Inc.* 51 51
6,000 6,000 STERIS Corporation* 54 54
10,000 5,000 15,000 Stryker Corporation 719 359 1,078
10,700 10,700 Sybron International Corporation* 333 333
6,600 6,600 VISX, Inc.* 104 104
------------ ------------ ------------
2,129 1,042 3,171
------------ ------------ ------------
Metals & Minerals 0.2%
11,400 8,000 19,400 AK Steel Holding Corporation 126 89 215
2,000 2,000 Carpenter Technology Corporation 40 40
1,000 1,000 Cleveland-Cliffs, Inc. 25 25
500 500 MAXXAM, Inc.* 14 14
1,600 1,600 Oregon Steel Mills, Inc. 5 5
2,300 2,300 Ryerson Tull, Inc. 28 28
------------ ------------ ------------
238 89 327
------------ ------------ ------------
Miscellelaneous 0.4%
4,700 4,700 Donaldson Company, Inc. 109 109
11,700 11,700 IMC Global, Inc. 181 181
2,800 2,800 Rollins, Inc. 40 40
6,100 6,100 Sotheby's Holdings, Inc. 101 101
9,700 9,700 Stewart Enterprises, Inc. 47 47
5,300 5,300 Titan Corporation* 228 228
4,100 4,100 York International Corporation 99 99
------------ ------------ ------------
805 - 805
------------ ------------ ------------
Multi-Industry 0.2%
4,000 4,000 Alexander & Baldwin, Inc. 84 84
2,400 2,400 The Dexter Corporation 132 132
4,400 4,000 8,400 Ogden Corporation 43 39 82
4,600 4,600 Pittston Brink's Group 75 75
------------ ------------ ------------
334 39 373
------------ ------------ ------------
Office Equipment & Supplies 0.2%
8,100 8,100 Herman Miller, Inc. 222 222
6,200 6,200 HON INDUSTRIES, Inc. 155 155
2,600 2,600 The Standard Register Company 34 34
3,800 3,800 Wallace Computer Services, Inc. 42 42
------------ ------------ ------------
453 - 453
------------ ------------ ------------
Oil - Domestic 0.1%
5,100 5,100 Helmerich & Payne, Inc. 160 - 160
------------ ------------ ------------
Oil - International 2.3%
10,000 10,000 Amerada Hess Corp. 636 636
</TABLE>
See notes to the Pro Forma Financial statements
83
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
8,900 8,900 Devon Energy Corporation 429 429
4,600 4,000 8,600 Murphy Oil Corporation 271 236 507
14,300 10,000 24,300 Nabors Industries, Inc.* 564 394 958
5,900 7,000 12,900 Noble Affiliates, Inc. 213 252 465
13,500 10,000 23,500 Noble Drilling Corporation* 539 399 938
17,200 17,200 Ocean Energy Inc.* 223 223
9,600 9,600 Pioneer Natural Resources Company 99 99
18,900 18,900 Santa Fe Snyder Corporation* 174 174
------------ ------------ ------------
2,512 1,917 4,429
------------ ------------ ------------
Oil & Gas Services 5.3%
5,300 5,300 AGL Resources, Inc. 93 93
7,800 7,800 BJ Services Company* 548 548
5,000 5,000 Conoco Inc. - Class A 119 119
14,400 14,400 Dynegy, Inc. 942 942
14,100 8,000 22,100 ENSCO International, Inc. 468 266 734
17,900 25,000 42,900 Global Marine, Inc.* 430 600 1,030
22,250 8,000 30,250 Grant Prideco, Inc.* 428 154 582
3,000 3,000 Hanover Compressor Company* 175 175
13,800 13,800 KeySpan Corporation 405 405
11,600 11,600 Kinder Morgan, Inc. 352 352
8,900 8,900 MCN Energy Group, Inc. 222 222
4,000 4,000 National Fuel Gas Company 190 190
8,400 8,400 Questar Corporation 158 158
5,000 5,000 Smith International, Inc.* 380 380
5,800 6,000 11,800 Tidewater, Inc. 173 179 352
30,000 30,000 Tosco Corp. 962 962
20,000 20,000 Transocean Sedco Forex Inc. 940 940
9,000 9,000 Ultramar Diamond Shamrock Corporation 223 223
5,800 20,000 25,800 Valero Energy Corporation 168 580 748
6,700 6,700 Varco International, Inc. 84 84
4,700 6,000 10,700 Washington Gas Light Company 120 154 274
11,100 8,000 19,100 Weatherford International, Inc.* 451 325 776
------------ ------------ ------------
6,010 4,279 10,289
------------ ------------ ------------
Paper & Forest Products 1.2%
5,400 6,000 11,400 Bowater, Inc. 297 330 627
1,900 1,900 Chesapeake Corporation 59 59
9,400 9,400 Consolidated Papers, Inc. 356 356
8,500 8,500 Georgia-Pacific Corporation 197 197
5,400 5,400 Longview Fibre Company 69 69
2,800 5,000 7,800 Rayonier, Inc. 131 234 365
3,800 9,000 12,800 P.H. Glatfelter Company 41 97 138
10,500 12,000 22,500 Sonoco Products Company 219 251 470
4,600 4,600 Wausau-Mosinee Paper Corporation 56 56
------------ ------------ ------------
1,425 912 2,337
------------ ------------ ------------
Plastics 0.6%
34,000 34,000 Spartech Corp. - 1,181 1,181
------------ ------------ ------------
Printing & Publishing 0.9%
2,400 2,400 Banta Corporation 47 47
3,200 3,200 Houghton Mifflin Company 133 133
4,500 4,500 Lee Enterprises, Inc. 102 102
11,000 13,000 24,000 Reader's Digest Association, Inc. 352 416 768
1,600 1,600 Scholastic Corporation* 75 75
5,800 5,800 Valassis Communications, Inc.* 198 198
900 900 The Washington Post Company - Class B 439 439
------------ ------------ ------------
1,346 416 1,762
------------ ------------ ------------
Restaraunts 1.1%
3,500 3,500 Bob Evans Farms, Inc. 46 46
6,700 6,700 Brinker International, Inc.* 214 214
3,200 3,200 Buffets, Inc.* 31 31
5,300 5,300 CBRL Group, Inc. 74 74
3,100 3,100 Lone Star Steakhouse & Saloon, Inc. 37 37
7,700 4,000 11,700 Outback Steakhouse, Inc.* 252 131 383
3,100 3,100 Papa John's International, Inc.* 85 85
22,050 22,050 Sonic Corp. * 613 613
18,900 18,900 Starbucks Corporation* 571 571
------------ ------------ ------------
1,310 744 2,054
------------ ------------ ------------
Retail 3.3%
9,900 7,000 16,900 Abercrombie & Fitch Company* 109 77 186
4,800 4,800 American Eagle Outfitters, Inc.* 82 82
7,600 8,000 15,600 BJ's Wholesale Club, Inc.* 269 284 553
7,100 7,100 Barnes & Noble, Inc.* 131 131
5,000 5,000 Bed Bath & Beyond Inc.* 184 184
15,000 15,000 Best Buy Co., Inc. * 1,211 1,211
7,900 7,900 Borders Group, Inc.* 125 125
4,400 4,400 CDW Computer Centers, Inc.* 458 458
</TABLE>
See notes to the Pro Forma Financial statements
84
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
4,900 5,500 10,400 Claire's Stores, Inc. 90 101 191
6,400 6,400 Dollar Tree Stores, Inc.* 370 370
17,800 17,800 Family Dollar Stores, Inc. 339 339
4,800 4,800 Helig-Meyers Company 15 15
3,100 3,100 Lands' End, Inc.* 131 131
10,000 10,000 Lowe's Cos., Inc. 495 495
5,000 5,000 Neiman Marcus Group, Inc. 129 129
11,700 11,700 OfficeMax, Inc.* 66 66
2,900 2,900 Payless ShoeSource, Inc.* 160 160
9,200 9,200 Ross Stores, Inc. 191 191
14,800 14,800 Saks, Inc.* 169 169
19,100 19,100 Shopko Stores, Inc. 341 341
7,400 7,400 Tiffany & Company 538 538
10,000 10,000 Warnaco Group, Inc. (The) 106 106
5,800 5,800 Williams-Sonoma, Inc.* 201 201
------------ ------------ ------------
3,573 2,799 6,372
------------ ------------ ------------
Savings & Loan 1.2%
5,600 13,000 18,600 Astoria Financial Corporation 154 358 512
21,800 13,650 35,450 Charter One Financial, Inc. 443 277 720
11,400 13,000 24,400 Dime Bancorp, Inc. 214 244 458
11,100 11,100 GreenPoint Financial Corporation 207 207
22,500 20,000 42,500 Sovereign Bancorp, Inc. 155 137 292
4,200 4,200 Webster Financial Corporation 90 90
------------ ------------ ------------
1,263 1,016 2,279
------------ ------------ ------------
Schools 0.2%
7,800 7,800 Apollo Group, Inc.* 226 226
7,200 7,200 DeVry, Inc.* 171 171
5,300 5,300 Sylvan Learning Systems, Inc.* 80 80
------------ ------------ ------------
477 - 477
------------ ------------ ------------
Semiconductors 8.0%
10,500 10,500 Altera Corporation* 1,074 1,074
12,000 12,000 Applied Micro Circuits Corp. * 1,546 1,546
22,600 22,600 Atmel Corporation* 1,106 1,106
6,800 6,800 Cirrus Logic, Inc.* 111 111
11,200 15,000 26,200 Cypress Semiconductor Corporation* 582 779 1,361
9,700 15,000 24,700 Integrated Device Technology, Inc.* 466 721 1,187
17,800 17,800 Jabil Circuit, Inc.* 729 729
28,550 28,550 Maxim Integrated Products, Inc.* 1,850 1,850
4,200 4,200 Micrel, Inc.* 363 363
12,000 12,000 Novellus Systems, Inc.* 800 800
7,500 8,000 15,500 Qlogic Corporation* 752 803 1,555
4,000 4,000 TranSwitch Corporation* 352 352
3,900 3,900 TriQuint Semiconductor, Inc.* 401 401
16,200 10,000 26,200 Vitesse Semiconductor Corporation* 1,103 681 1,784
15,000 15,000 Xilinx, Inc. * 1,099 1,099
------------ ------------ ------------
9,689 5,629 15,318
------------ ------------ ------------
Shipbuilding 0.1%
3,400 3,400 Newport News Shipbuilding, Inc. 113 - 113
------------ ------------ ------------
Software 9.1%
20,000 20,000 Citrix Systems, Inc. * 1,221 1,221
18,029 18,029 Computer Associates International, Inc. 1,006 1,006
6,600 10,000 16,600 Electronic Arts, Inc.* 399 605 1,004
58,000 58,000 InterVoice-Brite, Inc. * 925 925
20,100 32,500 52,600 Intuit, Inc.* 722 1,168 1,890
8,800 8,800 Legato Systems, Inc.* 114 114
5,000 5,000 Macromedia, Inc.* 435 435
6,600 6,600 Mentor Graphics Corporation* 87 87
14,300 6,000 20,300 Network Associates, Inc.* 364 153 517
3,200 3,200 NVIDIA Corporation* 285 285
3,000 3,000 Policy Management Systems Corporation* 40 40
9,200 7,000 16,200 Rational Software Corporation* 783 595 1,378
19,900 20,000 39,900 Siebel Systems, Inc.* 2,445 2,457 4,902
3,300 3,300 Structural Dynamics Research Corporation* 44 44
8,400 8,400 Sybase, Inc.* 170 170
6,100 10,000 16,100 Symantec Corporatation* 381 624 1,005
3,400 3,400 Transaction Systems Architects, Inc.* 55 55
23,250 23,250 VERITAS Software Corp. * 2,494 2,494
------------ ------------ ------------
6,324 11,248 17,572
------------ ------------ ------------
Telecommunications 2.0%
22,200 15,000 37,200 Broadwing, Inc.* 629 425 1,054
5,500 25,000 30,500 COMSAT Corporation 134 611 745
25,500 25,500 Dycom Industries, Inc. * 1,326 1,326
6,400 6,400 Telephone and Data Systems, Inc. 653 653
------------ ------------ ------------
1,416 2,362 3,778
------------ ------------ ------------
</TABLE>
See notes to the Pro Forma Financial statements
85
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Telecommunications Equipment 2.7%
4,000 4,000 ADTRAN, Inc.* 270 270
3,900 3,900 ANTEC Corporation* 210 210
17,000 17,000 CenturyTel, Inc. 417 417
20,000 20,000 Comverse Technology, Inc. * 1,783 1,783
7,100 7,100 Harris Corporation 229 229
3,400 3,400 Polycom, Inc.* 269 269
2,100 2,100 Powerwave Technologies, Inc.* 437 437
15,000 15,000 QUALCOMM Inc. * 1,626 1,626
------------ ------------ ------------
1,415 3,826 5,241
------------ ------------ ------------
Textiles & Apparel 0.4%
4,200 4,200 Burlington Industries, Inc.* 18 18
12,600 12,600 Jones Apparel Group, Inc.* 374 374
8,000 8,000 Shaw Industries, Inc. * 127 127
5,300 5,300 Unifi, Inc.* 54 54
5,000 5,000 Warnaco Group, Inc. 53 53
5,500 5,500 Westpoint Stevens, Inc. 103 103
------------ ------------ ------------
602 127 729
------------ ------------ ------------
Tire & Rubber 0.1%
2,000 3,000 5,000 Bandag, Inc. 48 72 120
------------ ------------ ------------
Transportation 1.2%
5,000 5,000 Airborne Freight Corporation 107 107
2,700 12,000 14,700 Alaska Air Group, Inc.* 78 345 423
2,300 2,300 Arnold Industries, Inc. 27 27
4,200 4,200 C.H. Robinson Worldwide, Inc. 210 210
4,900 4,900 CNF Transportation, Inc. 137 137
5,000 5,000 GATX Corporation 179 179
24,000 24,000 Harley-Davidson 955 955
3,300 3,300 J.B. Hunt Transport Services, Inc.* 54 54
3,100 3,100 Overseas Shipholding Group, Inc. 81 81
6,600 6,600 Swift Transportation Company, Inc.* 132 132
4,600 4,600 Wisconsin Central Transportation 67 67
Corporation* ------------ ------------ ------------
1,072 1,300 2,372
------------ ------------ ------------
Unit Investment Trust 2.1%
45,000 45,000 Standard & Poor's Mid-Cap 400 Depository 3,977 3,977
Receipts- ------------ ------------ ------------
Utilities 0.2%
10,000 7,000 17,000 American Water Works, Inc. 227 159 386
------------ ------------ ------------
Total Common Stock (Cost $149,393) 95,603 86,300 181,903
------------ ------------ ------------
Mutual Fund 0.3%
61,110 61,110 Dean Small Cap Value Fund - 531 531
------------ ------------ ------------
Total Mutual Fund (identified cost $661) 531 531
------------ ------------ ------------
<CAPTION>
Pro Forma
Firstar Stellar Combined
Principal Principal Principal
Amount Amount Amount
------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS 5.2%
Repurchase Agreement 0.6%
1,080 1,080 Donaldson, Lufkin and Jenrette Securities
Corp., 5.73%
dated 4/28/2000, due 5/1/2000, repurchase
price $1,080,516
(Collateralized by U.S. Government
Securities) - 1,080 1,080
------------ ------------ ------------
U.S. Treasuries 0.3%
600 600 U.S. Treasury Bill, 5.67%, 7/06/00 594 - 594
------------ ------------ ------------
Total U.S. Treasuries (Cost $594) 594 - 594
------------ ------------ ------------
Variable Rate Demand Notes 4.3%
3,282 3,282 Sara Lee Corporation 3,282 3,282
2,321 2,321 Warner-Lambert Company 2,321 2,321
2,607 2,607 American Family Financial Services, Inc. 2,607 2,607
------------ ------------ ------------
Total Variable Rate Demand Notes (Cost $8,210) 8,210 - 8,210
------------ ------------ ------------
Total Short-Term Investments (Cost $9,884) 8,804 1,080 9,884
------------ ----------- -----------
Total Investments (Cost $159,938) 100.0% $ 104,407 $ 87,911 $ 192,318
============ ============ ============
* Non-income producing
Actual Actual Actual
</TABLE>
See notes to the Pro Forma Financial statements
86
<PAGE>
<TABLE>
<CAPTION>
Number Number Number
of contracts of contracts of contracts
------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Futures
33 33 MidCap 400 Financial Futures Contracts (Cost $7,965) $ 8,066 - $ 8,066
============ ============ ============
</TABLE>
See notes to the Pro Forma Financial statements
87
<PAGE>
FIRSTAR EMERGING GROWTH FUND
FIRSTAR EMERGING GROWTH FUND / MERCANTILE SMALL CAP EQUITY PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Amounts in thousands) April 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Firstar Mercantile Combined Pro Forma
Number of Number of Number of Firstar Mercantile Combined
Shares Shares Shares Market Value Market Value Market Value
------------ ---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
COMMON STOCKS 92.7%
Aluminum 0.3%
75,602 75,602 Century Aluminum Company - $ 1,059 $ 1,059 0.30%
------------ ------------ -----------
Apparel 0.3%
63,200 63,200 Kellwood Co. - 1,082 1,082 0.30%
------------ ------------ -----------
Auto - Rentals 1.4%
123,100 120,587 243,687 Avis Rent A Car, Inc.* $ 2,493 2,442 4,935 1.39%
------------ ------------ -----------
Banking 4.9%
35,700 35,700 Associated Banc-Corp. 913 913
79,400 66,337 145,737 Bank United Corporation Class A 2,635 2,202 4,837
42,000 39,500 81,500 CCB Financial Corporation 1,661 1,563 3,224
45,800 41,750 87,550 Commerce Bancorp, Inc. 1,818 1,657 3,475
15,700 73,022 88,722 Cullen/Frost Bankers, Inc. 388 1,803 2,191
112,700 122,562 235,262 Sovereign Bancorp, Inc. 775 843 1,618
59,600 59,600 Webster Financial Corp. 1,274 1,274
------------ ------------ -----------
7,277 10,255 17,532 4.94%
------------ ------------ -----------
Batteries 0.8%
74,400 57,500 131,900 Rayovac Corporation* 1,553 1,200 2,753 0.77%
------------ ------------ -----------
Biotechnology 1.0%
26,900 21,300 48,200 Aclara Biosciences, Inc.* 1,026 812 1,838
74,000 58,600 132,600 Texas Biotechnology Corporation* 906 718 1,624
------------ ------------ -----------
1,932 1,530 3,462 0.97%
------------ ------------ -----------
Building & Construction 4.1%
113,800 90,213 204,013 Astec Industries, Inc.* 2,858 2,267 5,125
54,800 54,800 Granite Construction, Inc.* 1,301 1,301
121,400 95,200 216,600 Texas Industries, Inc. 3,961 3,106 7,067
58,400 58,400 U.S. Aggregates, Inc.* 993 993
------------ ------------ -----------
9,113 5,373 14,486 4.08%
------------ ------------ -----------
Business Machines & Software 0.9%
100,330 100,330 Affiliated Computer Services, Inc.* 3,323 - 3,323 0.94%
------------ ------------ -----------
Business Services 5.3%
139,935 139,935 F.Y.I. Incorporated * 3,752 3,752
54,642 54,642 Iron Mountain, Inc. * 1,913 1,913
37,400 37,400 NCO Group, Inc.* 1,286 1,286
175,800 211,600 387,400 The Source Information Management Company* 2,593 3,121 5,714
84,935 84,935 Steiner Leisure Ltd* 1,709 1,709
131,800 131,800 SunGard Data Systems, Inc. * 4,555 4,555
------------ ------------ -----------
9,340 9,589 18,929 5.33%
------------ ------------ -----------
Chemicals 3.2%
188,600 85,000 273,600 M.A. Hanna Company 2,169 978 3,147
75,500 43,436 118,936 Minerals Technologies, Inc. 3,492 2,009 5,501
57,600 57,600 OM Group, Inc. 2,650 2,650
------------ ------------ -----------
5,661 5,637 11,298 3.18%
------------ ------------ -----------
Communications & Media 0.3%
24,400 24,400 Citadel Communications Corporation * 953 - 953 0.27%
</TABLE>
See notes to the Pro Forma Financial Statements
88
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
-------------
Computers 1.6%
54,800 42,988 97,788 Zebra Technologies Corporation Class A* 3,123 2,450 5,573 1.57%
-------------- ------------- -------------
Data Processing 5.6%
230,491 90,000 320,491 Acxiom Corporation * 6,223 2,430 8,653
112,015 112,015 The BISYS Group, Inc.* 7,008 7,008
84,400 84,400 Deltek Systems, Inc. * 1,029 1,029
65,100 65,100 National Computer Systems, Inc. 3,349 3,349
-------------- ------------- -------------
16,580 3,459 20,039 5.64%
-------------- ------------- -------------
Drugs 1.9%
43,600 34,568 78,168 Alpharma, Inc. Class A 1,684 1,335 3,019
48,700 41,555 90,255 Shire Pharmaceuticals Group PLC - ADR* 1,960 1,673 3,633
-------------- ------------- -------------
3,644 3,008 6,652 1.87%
-------------- ------------- -------------
Electrical Components & Semiconductors 12.
24,500 24,500 Amkor Technologies, Inc. * 1,499 1,499
60,900 60,900 ATMI, Inc.* 2,345 2,345
86,700 86,200 172,900 Benchmark Electronics, Inc.* 3,484 3,464 6,948
26,200 25,583 51,783 Burr-Brown Corporation* 1,786 1,743 3,529
102,495 102,495 CFM Technologies, Inc. * 922 922
14,100 14,100 Credence Systems Corporation* 2,013 2,013
46,600 46,600 CTS Corporation 2,939 2,939
90,900 67,300 158,200 Integraded Device Technology, Inc.* 4,369 3,235 7,604
5,700 5,700 Intersil Holding Corporation* 192 192
36,600 28,974 65,574 Kulicke and Soffa Industries, Inc. * 2,866 2,269 5,135
13,100 13,100 Micrel, Inc.* 1,133 1,133
47,900 47,900 Novellus Systems, Inc.* 3,194 3,194
54,900 68,660 123,560 Photronics, Inc.* 1,829 2,287 4,116
20,412 20,412 PRI Automation, Inc. * 1,630 1,630
16,800 16,800 TriQuint Semiconductor, Inc. * 1,727 1,727
-------------- ------------- -------------
27,877 17,049 44,926 12.65%
-------------- ------------- -------------
Entertainment & Leisure 1.4%
48,200 34,500 82,700 Anchor Gaming* 1,940 1,389 3,329
138,430 89,800 228,230 Cinar Corporation * 969 629 1,598
-------------- ------------- -------------
2,909 2,018 4,927 1.39%
-------------- ------------- -------------
Financial Services 0.4%
45,800 45,800 Federated Investors, Inc. 1,294 - 1,294 0.36%
-------------- ------------- -------------
Food & Beverage 1.5%
46,000 Celestial Seasonings, Inc. * 1,547 1,547
59,254 59,254 Performance Food Group Co. * 1,563 1,563
74,000 68,800 142,800 Universal Foods Corporation 1,216 1,131 2,347
-------------- ------------- -------------
1,216 4,241 5,457 1.54%
-------------- ------------- -------------
Insurance 5.6%
111,000 64,500 175,500 Enhance Financial Services Group Inc. 1,124 653 1,777
42,545 33,200 75,745 Financial Security Assurance Holdings Ltd. 3,140 2,451 5,591
142,060 45,600 187,660 Arthur J. Gallagher & Co. 5,292 1,699 6,991
82,400 141,280 223,680 Hooper Holmes, Inc. 1,432 2,455 3,887
40,000 25,000 65,000 Protective Life Corporation 952 595 1,547
-------------- ------------- -------------
11,940 7,853 19,793 5.57%
-------------- ------------- -------------
Internet Products & Services 0.4%
131,600 64,700 196,300 EDGAR Online, Inc.* 861 424 1,285 0.36%
-------------- ------------- -------------
Liquor 0.9%
33,900 26,667 60,567 Canandaigua Brands, Inc.* 1,708 1,343 3,051 0.86%
-------------- ------------- -------------
Manufacturing - Consumer Goods 0.8%
57,926 57,926 Aptargroup, Inc. 1,651 1,651
44,400 44,400 Blyth Industries, Inc. * 1,318 1,318
-------------- ------------- -------------
- 2,969 2,969 0.84%
-------------- ------------- -------------
Medical Instruments & Products 4.5%
74,800 92,300 167,100 DENTSPLY International, Inc.* 2,174 2,682 4,856
129,200 77,200 206,400 Edwards Lifesciences Corporation* 1,929 1,158 3,087
</TABLE>
See notes to the Pro Forma Financial Statements
89
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
44,300 35,350 79,650 Patterson Dental Company* 2,132 1,701 3,833
73,800 52,000 125,800 Renal Care Group, Inc.* 1,647 1,160 2,807
179,000 179,000 Serologicals Corp. * 649 649
14,893 14,893 Varian Medical Systems, Inc. * 596 596
-------------- ------------- -------------
7,882 7,946 15,828 4.46%
-------------- ------------- -------------
Multi-Industry 4.4%
155,100 155,100 DT Industries, Inc. 1,919 1,919
88,400 275,355 363,755 GSI Lumonics, Inc.* 1,663 5,180 6,843
96,600 62,800 159,400 Kaydon Corporation 2,258 1,468 3,726
53,700 34,552 88,252 Mettler-Toledo International, Inc.* 1,867 1,192 3,059
-------------- ------------- -------------
5,788 9,759 15,547 4.38%
-------------- ------------- -------------
Oil & Gas - Domestic 4.4%
80,100 63,000 143,100 Barrett Resources Corporation* 2,543 2,000 4,543
43,200 43,200 Newfield Exploration Company* 1,755 1,755
209,033 209,033 Ocean Energy, Inc. * 2,704 2,704
104,100 104,100 Pride International, Inc. * 2,355 2,355
31,200 31,200 St. Mary Land & Exploration Company 1,053 1,053
72,400 57,400 129,800 Veritas DGC, Inc.* 1,738 1,378 3,116
-------------- ------------- -------------
7,089 8,437 15,526 4.37%
-------------- ------------- -------------
Oil & Gas Services 0.6%
48,700 38,900 87,600 National-Oilwell, Inc.* 1,166 931 2,097 0.59%
-------------- ------------- -------------
Real Estate Investment Trusts 0.3%
38,000 38,000 Plum Creek Timber, Inc. - 926 926 0.26%
-------------- ------------- -------------
Restaurants 0.7%
42,000 33,600 75,600 Brinker International, Inc.* 1,339 1,071 2,410 0.68%
-------------- ------------- -------------
Retail 8.7%
124,100 83,800 207,900 Ames Department Stores* 2,226 1,503 3,729
49,220 38,600 87,820 CDW Computer Centers, Inc. * 5,119 4,014 9,133
394,427 250,000 644,427 Goody's Family Clothing, Inc. * 2,564 1,625 4,189
109,750 109,750 InterTAN, Inc.* 1,516 1,516
131,840 106,000 237,840 The Men's Wearhouse, Inc. * 2,826 2,272 5,098
128,440 128,440 Pier 1 Imports* 1,461 1,461
97,200 75,400 172,600 Rent-A-Center, Inc.* 1,980 1,536 3,516
87,200 51,950 139,150 Whitehall Jewellers, Inc.* 1,499 893 2,392
-------------- ------------- -------------
19,191 11,843 31,034 8.74%
-------------- ------------- -------------
Software 5.6%
93,200 66,866 160,066 Aspen Technology, Inc. * 3,297 2,365 5,662
80,800 80,800 AVT Corp. * 894 894
66,089 66,089 Computer Network Technology Corp. * 1,066 1,066
138,500 110,700 249,200 General Magic, Inc.* 762 609 1,371
16,600 16,600 Mercury Interactive Corporation * 1,494 1,494
311,800 276,276 588,076 QuadraMed Corporation* 1,218 1,079 2,297
46,400 46,400 SPSS, Inc. * 1,322 1,322
95,300 76,344 171,644 Verity, Inc.* 3,091 2,476 5,567
-------------- ------------- -------------
9,862 9,811 19,673 5.54%
-------------- ------------- -------------
Telecommunications Equipment 3.1%
61,600 61,600 ADTRAN, Inc.* 4,162 4,162
47,400 47,400 Alpha Industries, Inc.* 2,465 2,465
39,800 27,000 66,800 Black Box Corporation* 3,062 2,077 5,139
-------------- ------------- -------------
9,689 2,077 11,766 3.31%
-------------- ------------- -------------
Telecommunications Services 1.2%
56,700 56,700 MGC Communications, Inc.* 2,778 2,778
34,400 34,400 Tekelec * 1,204
42,100 42,100 Viatel, Inc.* 1,610 1,610
-------------- ------------- -------------
4,388 1,204 4,388 1.24%
-------------- ------------- -------------
Transportation 2.3%
74,900 61,000 135,900 Circle International Group, Inc. 1,989 1,620 3,609
77,000 67,708 144,708 EGL, Inc.* 1,766 1,553 3,319
</TABLE>
See notes to the Pro Forma Financial Statements
90
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
29,893 29,893 U.S. Freightways Corp. 1,394 1,394
-------------- ------------- -------------
3,755 4,567 8,322 2.34%
-------------- ------------- -------------
Utility 0.9%
53,900 63,000 116,900 Kansas City Power & Light Company 1,385 1,618 3,003 0.85%
-------------- ------------- -------------
Wholesale Distribution 0.5%
128,398 128,398 Watsco, Inc. - 1,653 1,653 0.47%
-------------- ------------- -------------
Total Common Stock (Cost $264,528) 184,331 144,824 329,155 92.66%
-------------- ------------- -------------
Proforma
Firstar Mercantile Combined
Principal Principal Principal
Amount Amount Amount
----------- ---------- ----------
LONG-TERM INVESTMENTS 1.7%
U.S. Government Agency-Backed Mortgage
Issues 1.7%
6,000 6,000 FHLB Discount Note, 0.00%, 5/1/00 6,000 6,000
-------------- ------------- -------------
Total Long-Term Investments (Cost $6,000) - 6,000 6,000 1.69%
-------------- ------------- -------------
Pro Forma
Firstar Mercantile Combined
Number of Number of Number of
Shares Shares Shares
----------- ---------- ----------
SHORT-TERM INVESTMENTS 5.6%
Investment Companies 2.9%
1,240 1,240 Financial Square Prime Obligation Fund 1,240 1,240
9,086 9,086 Short-Term Investments Co. Liquid Assets Polio 9,086 9,086
-------------- ------------- -------------
Total Investment Companies (Cost $10,326) 10,326 - 10,326 2.91%
-------------- ------------- -------------
Principal Principal Principal
Amount Amount Amount
----------- ---------- ----------
Variable Rate Demand Notes 2.7%
3,747 3,747 Pitney Bowes Credit Corp. 3,747 3,747
6,000 6,000 Sara Lee Corporation 6,000 6,000
-------------- ------------- -------------
Total Variable Rate Demand Notes
(Cost $9,747) 6,000 3,747 9,747
-------------- ------------- -------------
Total Short-Term Investments
(Cost $20,073) 16,326 3,747 20,073 5.65%
-------------- ------------- -------------
Total Investments (Cost $290,601) 100.0% $ 200,657 $ 154,571 $ 355,228 100.00%
============== ============= =============
</TABLE>
* Non-income producing
See notes to the Pro Forma Financial Statements
91
<PAGE>
FIRSTAR CORE INTERNATIONAL EQUITY FUND
FIRSTAR CORE INTERNATIONAL EQUITY FUND / MERCANTILE INTERNATIONAL EQUITY
PORTFOLIO
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
(Unaudited) April 30, 2000
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Firstar Mercantile Combined Firstar Mercantile Combined
Number of Number of Number of Market Market Market
Shares Shares Shares Industry Value Value Value
---------- ----------- ---------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON AND PREFERRED STOCKS 95.5%
Australia 2.7%
52,600 52,600 Australian Gas Light Company Ltd. Gas Utility $ 273,159 $ 273,159
31,000 31,000 Commonwealth Bank of Australia Banks 471,747 471,747
191,400 191,400 ERG Ltd. Telecommunications $ 910,205 910,205
201,000 201,000 Foster's Brewing Group Ltd. Brewery 507,367 507,367
76,300 76,300 Macquarie Bank Ltd. Banks 1,050,694 1,050,694
229,000 229,000 Telstra Corporation Ltd. Telecommunications 980,780 980,780
48,200 48,200 Westpac Banking Corporation Banks 307,402 307,402
---------- ---------- ----------
1,559,675 2,941,679 4,501,354
---------- ---------- ----------
Austria 0.2%
9,000 9,000 Bank Austria AG Banks 400,255 - 400,255
---------- ---------- ----------
Belgium 1.5%
900 900 Electrabel SA Electric Utility 218,090 218,090
21,500 69,000 90,500 Fortis (B) Financial Services 544,113 1,739,306 2,283,419
---------- ---------- ----------
762,203 1,739,306 2,501,509
---------- ---------- ----------
Canada 0.1%
1,000 1,000 Magna Entertainment Corporation -
Class A* Entertainment & Leisure 4,125 4,125
5,000 5,000 Magna International, Inc. - Class A Automobiles 233,750 233,750
---------- ---------- ----------
237,875 - 237,875
---------- ---------- ----------
Denmark 0.5%
4,500 4,500 Tele Danmark AS 330,013 330,013
67,331 67,331 Nortic Baltic Holding AB* Financial Services 419,714 419,714
---------- ---------- ----------
749,727 - 749,727
---------- ---------- ----------
Finland 1.9%
15,600 40,000 55,600 Nokia Oyj Telecommunications 897,075 2,300,191 3,197,266
---------- ---------- ----------
France 9.2%
48,200 48,200 Accor SA Hotels & Lodging 1,794,377 1,794,377
3,100 3,100 Alcatel Telecommunications 720,405 720,405
5,000 5,000 Aventis SA Drugs 275,677 275,677
12,425 12,425 Axq UAP Insurance 1,846,822 1,846,822
17,500 17,500 BNP Paribas Banks 1,417,798 1,417,798
2,000 2,000 Bouygues SA Building & Construction 1,279,504 1,279,504
3,600 3,600 Cap Gemini SA Computer Software 708,649 708,649
8,290 8,290 Castorama Dubois Investissement SA Retail 1,813,178 1,813,178
3,000 3,000 Compagnie de Saint-Gobain Building & Construction 410,371 410,371
1,800 1,800 Groupe Danone Food & Beverages 394,514 394,514
6,800 6,800 Lafarge SA Building & Construction 564,549 564,549
4,700 4,700 Lagardere S.C.A. Multi-Industry 319,101 319,101
6,700 6,700 Scor Assistance Insurance 292,350 292,350
8,303 8,303 Scheider Electric SA Machinery 544,806 544,806
4,522 13,000 17,522 Total Final Elf Oil & Gas Exploration 687,799 1,977,308 2,665,107
3,900 3,900 Valeo SA Automobile Parts 216,805 216,805
---------- ---------- ----------
4,426,377 10,837,636 15,264,013
---------- ---------- ----------
Germany 5.8%
6,826 6,826 Aventis SA Drugs 377,598 377,598
41,000 41,000 BASF AG Chemicals 1,776,679 1,776,679
15,500 15,500 Bayer AG Chemicals 643,420 643,420
13,200 13,200 Continental AG Rubber-Tires 240,590 240,590
3,100 3,100 DaimlerChrysler AG Automobiles 180,807 180,807
13,450 13,450 Fresenius Medical Care AG Health Care 992,846 992,846
3,370 3,370 Marschollek, Lautenschlaeger und
Partner AG Financial Services 1,787,424 1,787,424
3,500 3,500 Schering AG Drugs 495,990 495,990
5,600 13,900 19,500 Siemens AG Multi-Industry 828,288 2,055,928 2,884,216
4,900 4,900 Veba AG Multi-Industry 242,700 242,700
---------- ---------- ----------
3,009,393 6,612,877 9,622,270
---------- ---------- ----------
</TABLE>
See notes to the Pro Forma Financial Statements
92
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Great Britain 17.6%
14,000 14,000 BOC Group PLC Chemicals 231,580 231,580
34,000 75,500 109,500 SmithKline Beecham PLC Drugs 467,433 1,037,977 1,505,410
33,000 33,000 British Telecommunications Telecommunications 594,413 594,413
57,000 57,000 Bass PLC Beverages 669,906 669,906
217,300 217,300 BP Amoco PLC Oil & Gas 1,885,647 1,885,647
87,000 87,000 British Aerospace PLC Aerospace 536,432 536,432
51,950 51,950 CGU PLC Insurance 746,730 746,730
71,000 71,000 Cable & Wireless PLC Telecommunications 1,181,111 1,181,111
152,300 152,300 Carlton Communications PLC Telecommunications 1,844,761 1,844,761
123,230 123,230 Compass Group PLC Food Products 1,756,847 1,756,847
93,700 93,700 Electra Investment Trust PLC Financial Services 1,568,998 1,568,998
159,640 159,640 Electrocomponents PLC Electronics 1,611,390 1,611,390
112,100 112,100 GKN PLC Automotive Parts &
Equipment 1,557,822 1,557,822
35,200 35,200 Gallaher Group PLC Tobacco 174,898 174,898
36,200 36,200 Johnson Matthey PLC Electronics 467,088 467,088
150,000 150,000 Lloyds TSB Group PLC Banks 1,474,178 1,474,178
121,500 121,500 Misys PLC Computer Services 1,393,732 1,393,732
52,100 52,100 Cadbury Schweppes PLC Food Products 357,933 357,933
66,000 66,000 Royal & Sun Alliance Insurance Group PLC Insurance 370,282 370,282
21,800 21,800 Associated British Foods PLC Food Products 129,640 129,640
45,000 45,000 ScottishPower PLC Electric Utility 362,148 362,148
160,700 160,700 Scottish & Southern Energy PLC Electric Utility 1,361,800 1,361,800
74,100 74,100 Reuters Group PLC Multimedia 1,332,408 1,332,408
30,000 30,000 Rio Tinto PLC Mining 467,136 467,136
83,000 83,000 Allied Domecq PLC Beverages 408,830 408,830
100,000 385,200 485,200 Invensys PLC Manufacturing 481,221 1,853,662 2,334,883
253,000 253,000 Corus Group PLC Manufacturing 340,501 340,501
158,800 158,800 Tomkins PLC Manufacturing 490,192 490,192
23,173 23,173 Trinity Mirror PLC Publishing 180,775 180,775
381,795 381,795 Vodafone AirTouch PLC Telecommunications 1,759,603 1,759,603
--------- ---------- ----------
6,730,408 22,366,666 29,097,074
--------- ---------- ----------
Hong Kong 2.1%
122,000 122,000 China Mobile LTD Telecommunications 881,028 881,028
128,000 128,000 Citric Pacific LTD Diversified Operations 586,658 586,658
52,000 52,000 Hutchison Whampoa LTD Diversified Operations 754,378 754,378
208,000 208,000 Li & Fung LTD Distribution 803,780 803,780
65,000 65,000 Sun Hung Kai Properties LTD Real Estate 511,124 511,124
--------- ---------- ----------
- 3,536,968 3,536,968
--------- ---------- ----------
Ireland 0.2%
28,000 28,000 Allied Irish Banks PLC Banks 280,051 - 280,051
--------- ---------- ----------
Italy 4.6%
156,420 156,420 Benetton Group SPA Textiles & Apparel 288,664 288,664
16,900 16,900 Bipop-Carire SPA Banks 1,540,144 1,540,144
161,000 161,000 Bulgari SPA Retail 1,760,685 1,760,685
137,000 120,000 257,000 ENI SPA Oil & Gas Exploration 682,940 598,196 1,281,136
73,100 73,100 Mediaset SPA Media 1,189,132 1,189,132
347,300 347,300 Seat Pagine Gialle SPA Publishing 1,528,715 1,528,715
--------- ---------- ----------
971,604 6,616,872 7,588,476
--------- ---------- ----------
Japan 24.9%
14,500 14,500 Asia Pacific System Research Co. Ltd. Computer Services 511,173 511,173
8,910 8,910 AUCNET, Inc. Retail 404,794 404,794
3,625 3,625 AVEX, Inc. Entertainment & Leisure 499,769 499,769
16,000 16,000 Canon, Inc. Photo Equipment 731,345 731,345
40,000 40,000 Chugai Pharmaceutical Company, Ltd. Drugs 769,836 769,836
4,200 4,200 Citizen Electronics Co. Electronics 528,522 528,522
102 102 DDI Corporation Telecommunications 1,170,299 1,170,299
17,000 17,000 Dai Nippon Printing Company, Ltd. Printing 288,328 288,328
69,000 69,000 Daiwa Securities Group, Inc. Financial Services 1,053,436 1,053,436
30 30 East Japan Railway Company Transportation 177,655 177,655
6,000 6,000 Eisai Company, Ltd. Drugs 174,879 174,879
6,600 6,600 FamilyMart Company, Ltd. Retail 241,832 241,832
2,990 2,990 FANCL Corporation Cosmetics & Toiletries 435,186 435,186
2,600 2,600 FAST RETAILING Co., Ltd. Retail 1,145,132 1,145,132
62,000 186,000 248,000 Fuji Heavy Industries, Ltd. Automobiles 473,283 1,419,849 1,893,132
15,000 15,000 Fuji Photo Film Company, Ltd. Photo Equipment 600,972 600,972
40,000 40,000 FUJITSU Ltd. Computer Software 1,132,548 1,132,548
7,000 7,000 HOGY MEDICAL Co., Ltd Health Care 479,297 479,297
37,500 37,500 Homac Corporation Retail 929,911 929,911
121,000 121,000 HUNET, Inc. Building & Construction 626,973 626,973
31,600 31,600 Japan Digital Laboratiory Co., Ltd. Computers 470,748 470,748
150,000 150,000 Japan Radio Co., Ltd. Media 1,261,625 1,261,625
12,000 12,000 Jusco Company, Ltd. Retail 222,068 222,068
6,500 6,500 JUSTSYSTEM Corporation* Computer Software 357,854 357,854
16,000 72,000 88,000 Kao Corporation Household Products 487,070 2,091,883 2,578,953
106,000 106,000 Kubota Corporation Machinery 345,242 345,242
7,000 7,000 KYOCERA Corporation Electronics 1,170,392 1,170,392
</TABLE>
See notes to the Pro Forma Financial Statements
93
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
200,000 200,000 Mitsui Mining & Smelting Co., Ltd. Metals & Mining 1,152,904 1,152,904
31,000 31,000 NEC Corporation Electronics 843,304 843,304
75,000 75,000 NGK SPARK PLUG Co., Ltd. Automotive Parts &
Equipment 793,894 793,894
23 23 NTT Mobile Communications Network, Inc. Telecommunications 768,263 768,263
45,000 45,000 Nihon Unisys, Ltd. Computer Software 1,045,109 1,045,109
3,300 3,300 Nintendo Company, Ltd. Entertainment & Leisure 549,619 549,619
37 67 104 Nippon Telegraph and Telephone Corporation Telecommunications 458,756 830,720 1,289,476
31,000 31,000 Nomura Securities Co., Ltd. Financial Services 780,200 780,200
92,000 92,000 Oki Electric Industry Co., Ltd. Telecommunications 646,959 646,959
4,800 4,800 ORIX Corporation Financial Services 684,858 684,858
1,200 3,300 4,500 Rohm Company, Ltd. Electronics 401,943 1,105,345 1,507,288
5,500 5,500 RYOHIN KEIKAKU Co., Ltd. Retail 1,020,357 1,020,357
140,000 140,000 Sakura Bank Ltd. Banks 981,912 981,912
24,000 24,000 Shiseido Company, Ltd. Household Products 303,345 303,345
13,200 13,200 Shobunsha Publications, Inc. Publishing 622,901 622,901
1,500 1,500 SOFTBANK Corporation Networking 369,188 369,188
1,700 3,700 5,400 Sony Corporation* Electronics 196,623 424,863 621,486
1,700 3,700 5,400 Sony Corporation Electronics 195,207 427,944 623,151
16,500 16,500 Sumida Corporation Telecommunications 778,627 778,627
7,000 7,000 TDK Corporation Computers 937,221 937,221
12,360 12,360 TAIYO INK MFG. Co., Ltd. Chemicals 892,048 892,048
12,000 12,000 TOYODA GOSEI Co., Ltd. Automotive Parts &
Equipment 693,963 693,963
13,000 13,000 Toyota Motor Corporation Automobiles 645,941 645,941
1,500 1,500 Toys "R" Us - Japan, Ltd. Retail 227,620 227,620
20,000 20,000 Wacoal Corporation Textiles & Apparel 168,772 168,772
4,950 4,950 WORLD Co., Ltd.* Textiles & Apparel 334,810 334,810
9,900 9,900 WORLD Co., Ltd. Textiles & Apparel 743,817 743,817
13,000 13,000 YAMADA DENKI Co., Ltd. Retail 1,082,583 1,082,583
--------- ---------- ----------
7,432,716 33,878,801 41,311,517
--------- ---------- ----------
Netherlands 7.3%
28,600 28,600 ABN AMRO Holding NV Banks 590,349 590,349
11,500 32,200 43,700 Akzo Nobel NV Chemicals 471,927 1,321,394 1,793,321
103,200 103,200 CRH PLC Building & Construction 1,654,322 1,654,322
14,400 14,400 Equant NV* Computers 1,117,434 1,117,434
22,100 22,100 Getronics NV Computer Services 1,321,207 1,321,207
12,500 12,500 Hagemeyer NV Consumer Products 246,349 246,349
25,000 43,540 68,540 Koninklijke Ahold NV Electronics 584,389 1,947,059 2,531,448
5,200 5,200 KPN NV Telecommunications 525,308 525,308
6,100 6,100 Royal Dutch Petroleum Company Oil & Gas Exploration 352,447 352,447
11,200 11,200 TNT Post Group NV Transportation 244,965 244,965
33,250 33,250 VNU NV Publishing 1,783,252 1,783,252
--------- ---------- ----------
3,015,734 9,144,668 12,160,402
--------- ---------- ----------
New Zealand 0.3%
129,100 129,100 Telecom Corporation Telecommunications 546,103 - 546,103
--------- ---------- ----------
Norway 0.2%
67,700 67,700 Christiania Bank Og Kreditkasse Banks 313,265 - 313,265
--------- ---------- ----------
Singapore 0.9%
49,000 49,000 DBS Group Holdings Ltd. Banks 674,378 674,378
192,000 192,000 Parkway Holdings Ltd. Health Care 550,981 550,981
20,000 20,000 Singapore Airlines Ltd. Transportation 207,321 207,321
--------- ---------- ----------
207,321 1,225,359 1,432,680
--------- ---------- ----------
Spain 6.3%
30,800 30,800 Banco Popular Espanol SA Banks 449,303 449,303
158,100 158,100 Banco Santander Central Hispano SA Banks 1,652,608 1,652,608
30,800 30,800 Endesa SA Electric Utility 669,724 669,724
30,100 30,100 Grupo Dragados SA Building & Construction 230,420 230,420
89,000 89,000 Indra Sistemas Telecommunications 2,095,024 2,095,024
106,100 106,100 NH Hoteles SA Financial Services 1,194,145 1,194,145
31,000 31,000 Repsol - YPF SA Oil & Gas Exploration 635,651 635,651
33,900 64,994 98,894 Telefonica SA Telecommunications 756,285 1,449,971 2,206,256
33,800 33,800 Telefonica Publicidad e Informacion, SA Advertising 1,339,925 1,339,925
--------- ---------- ----------
2,741,383 7,731,673 10,473,056
--------- ---------- ----------
</TABLE>
See notes to the Pro Forma Financial Statements
94
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Sweden 0.8%
6,600 6,600 AstraZeneca Group PLC Drugs 276,075 276,075
23,300 23,300 Electrolux AB Appliances 394,276 394,276
17,800 17,800 SKF AB - Class B Manufacturing 381,727 381,727
10,600 10,600 Volvo AB Automobiles 257,511 257,511
--------- ----------- -----------
1,309,589 - 1,309,589
--------- ----------- -----------
Switzerland 4.2%
16,530 16,530 ABB Ltd. Engineering 1,859,085 1,859,085
2,210 2,210 Adecco SA Human Resources 1,817,582 1,817,582
300 300 Nestle SA Food Products 530,078 530,078
1,135 1,135 PubliGroupe SA Advertising 877,390 877,390
111 111 Roche Holding AG Drugs 1,161,936 1,161,936
1,800 1,800 Swisscom AG Telecommunications 636,094 636,094
--------- ----------- -----------
1,166,172 5,715,993 6,882,165
--------- ----------- -----------
United States 4.2%
20,000 20,000 Amdocs Ltd., Sponsored ADR Telecommunications 1,353,750 1,353,750
58,000 58,000 Datacraft Asia Ltd., Sponsored ADR Telecommunications 435,000 435,000
23,700 23,700 Ericsson LM, Sponsored ADR Telecommunications 2,095,969 2,095,969
12,700 12,700 Gucci Group NV, Sponsored ADR Textile & Apparel 1,112,838 1,112,838
16,300 16,300 ICICI Ltd., Sponsored ADR Financial Services 413,612 413,612
14,000 14,000 Internet Initiative Japan Inc., Sponsored ADR* Computer Software 840,000 840,000
26,800 26,800 Wal-Mart de Mexico SA de CV, Sponsored ADR* Retail 620,659 620,659
--------- ----------- -----------
- 6,871,828 6,871,828
--------- ----------- -----------
Total Common and Preferred Stocks
(Cost $135,426,129) 36,756,926 121,520,517 158,277,44
--------- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Firstar Mercantile Combined
Principal Principal Principal
Amount Amount Amount
---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS 4.5%
U.S. Government Agencies 3.5%
Federal Home Loan Bank,
$ 5,986,000 $ 5,986,000 0.00%, 5/1/00 - 5,986,000 5,986,000
------------ ------------ ------------
TOAL U.S. GOVERNMENT AGENCIES - 5,986,000 5,986,000
------------ ------------ ------------
Variable Rate Demand Notes 0.9%
1,471,975 1,471,975 Chase U.S. 1,471,975 1,471,975
------------ ------------ ------------
Total Variable Rate Demand Notes 1,471,975 - 1,471,975
------------ ------------ ------------
Total Short-Term Investments (Cost $7,457,975) 1,471,975 5,986,000 7,457,975
------------ ------------ ------------
Total Investments (Cost $142,884,104) 100.0% $ 38,228,901 $127,506,517 $165,735,41
============ ============ ===========
</TABLE>
* Non-Income producing
See notes to the Pro Forma Financial Statements
95
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
1. Basis of Combination
--------------------
The unaudited Pro Forma Combined Statements of Assets and Liabilities,
Statements of Operations, and Schedules of Portfolio Investments reflect
the accounts of sixteen investment portfolios offered by Firstar Funds,
Inc. ("the Firstar Funds"), fifteen investment portfolios offered by
Mercantile Mutual Funds, Inc. ("the Mercantile Funds") and six investment
portfolios offered by Firstar Stellar Funds ("the Stellar Funds") as if
the proposed reorganization occurred as of and for the year ended April 30,
2000. These statements have been derived from books and records utilized in
calculating daily net asset value at April 30, 2000. Below are the fund
names for the Firstar Funds (F), the Mercantile Funds (M) and the Stellar
Funds (S) and the Surviving Funds. All of the Surviving Funds will be
portfolios of the Firstar Funds. The designation (F), (S) or (M) in the
Surviving Funds column indicates which Fund will be the accounting survivor
of the reorganization.
<TABLE>
<CAPTION>
Firstar Funds Stellar Funds Mercantile Funds Surviving Funds
------------- ------------- ---------------- ---------------
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
Money Market Fund Money Market Portfolio Money Market Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money Market Treasury Money Market Treasury Money Market
Fund Treasury Fund Portfolio Fund (S)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Tax-Free Money Market Tax-Exempt Money Market Tax-Exempt Money Market
Fund Fund Portfolio Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Intermediate Bond Market Intermediate Corporate Intermediate Bond Market
Fund Bond Portfolio Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Intermediate Bond Short-Intermediate Tax-Exempt Intermediate
Fund Municipal Portfolio Bond Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
National Municipal Bond Insured Tax-Free Bond National Municipal Bond National Municipal Bond
Fund Fund Portfolio Fund (M)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Aggregate Bond Fund Government & Corporate Aggregate Bond Fund (M)*
Bond Portfolio and
Bond Index Portfolio
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities U.S. Government Income U.S. Government Securities U.S. Government Securities
Fund Fund Portfolio Fund (M)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Balanced Income Fund Stellar Fund Balanced Income Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Balanced Growth Fund Balanced Portfolio Balanced Growth Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Growth & Income Equity Growth and Income Fund (F)
Growth and Income Fund Portfolio
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Equity Index Fund Equity Index Portfolio Equity Index Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Growth Fund Growth Equity Portfolio Growth (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
MidCap Index Fund Capital Appreciation Fund MidCap Index Fund (F)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Emerging Growth Fund Small Cap Equity Portfolio Emerging Growth Equity (M)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Core International Equity Core International Equity
Fund International Equity Portfolio Fund (M)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Mercantile Government & Corporate Bond Portfolio will be the
accounting survivor.
1
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
The Plan of Reorganization provides that at the time the reorganization becomes
effective (the "Effective Time of the Reorganization"), substantially all of the
assets and liabilities of the acquired funds will be transferred such that at
and after the Effective Time of Reorganization, substantially all of the assets
and liabilities of the acquired funds will become assets and liabilities of the
acquiring funds. In exchange for the transfer of assets and liabilities, the
acquiring funds will issue to the acquired funds full and fractional shares of
the designated classes of the acquiring funds, and the acquired funds will make
a liquidating distribution of such shares to its shareholders. The number of
shares of the acquiring funds so issued will be in equal value to the full and
fractional shares of the acquired funds that are outstanding immediately prior
to the Effective Time of Reorganization. At and after the Effective Time of
Reorganization, all debts, liabilities and obligations of the acquired funds
will attach to the acquiring funds and may thereafter be enforced against the
acquiring funds to the same extent as if they had been incurred by them. The pro
forma statements give effect to the proposed transfer described above.
Under the purchase method of accounting for business combinations under
generally accepted accounting principles, the basis on the part of the acquiring
funds of the assets of the acquired funds will be the fair market value of such
on the closing date of the transaction. The acquiring funds will recognize no
gain or loss for federal tax purposes on its issuance of shares in the
reorganization, and the basis to the acquiring funds of the assets of the
acquired funds received pursuant to the reorganization will equal the fair
market value of the consideration furnished, and costs incurred, by the
acquiring funds in the reorganization -- i.e., the sum of the liabilities
assumed, the fair market value of the acquiring funds shares issued, and such
costs. For accounting purposes, the Surviving Funds are the survivor of this
reorganization. The pro forma statements reflect the combined results of
operations of the acquired and acquiring funds. However, should such
reorganization be effected, the statements of operations of the acquiring funds
will not be restated for precombination period results of the corresponding
acquired funds.
The Pro Forma Combined Statements of Assets and Liabilities, Statements of
Operations, and Schedules of Portfolio Investments should be read in conjunction
with the historical financial statements of the Firstar Funds, Mercantile Funds
and Firstar Stellar Funds incorporated by reference in the Statement of
Additional Information.
The Firstar Funds, Mercantile Funds and Firstar Stellar Funds are each separate
portfolios of the Firstar Funds, Inc., Mercantile Mutual Funds, Inc. and the
Firstar Stellar Funds, which are registered as open-end management investment
companies under the Investment Company Act of 1940 (the "1940 Act").
2
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
2. Service Providers
-----------------
Firstar Investment Research & Management Company, LLC (the "Advisor"), will
serve as the combined Fund's investment advisor. Clay Finlay, Inc. will
serve as the sub-advisor to the Firstar International Growth Fund. Firstar
Mutual Fund Services, LLC (the "Administrator") will serve as the
administrator, transfer agent and fund accountant to the Funds. Firstar
Bank, N.A. will serve as the custodian to the Funds. Quasar Distributors,
Inc. will serve as the distributor to the Funds.
3. Organizational Expenses
-----------------------
Organizational costs of the funds that are not Surviving Funds cannot be
carried over when being merged with another fund. Therefore, in the
Statements of Assets and Liabilities, the organizational costs were
reclassified against capital for the Non-Surviving Funds rather than being
carried forward.
4. Classes and Fees
----------------
Mercantile Funds
----------------
The Mercantile Funds have several classes of shares which have identical
rights and privileges except with respect to fees paid under shareholder
servicing and/or distribution plans, expenses allocable exclusively to each
class of shares, voting rights on matters affecting a single class of
shares, and the exchange privilege of each class of shares. Investor A
shares are subject to a front-end sales charge. Investor B shares are
subject to a contingent deferred sales charge (CDSC).
<TABLE>
<CAPTION>
Mercantile Funds Classes of Shares
---------------- -----------------
<S> <C>
Money Market Portfolio Investor A, Investor B, Institutional, Trust & Trust II
Treasury Money Market Portfolio Investor A, Institutional, Trust & Trust II
Tax-Exempt Money Market Portfolio Investor A, Trust & Trust II
Intermediate Corporate Bond Portfolio Investor A, Institutional & Trust
Short-Intermediate Municipal Portfolio Investor A & Trust
Balanced Portfolio Investor A, Investor B, Institutional & Trust
Growth & Income Equity Portfolio Investor A, Investor B, Institutional & Trust
Growth Equity Portfolio Investor A, Investor B, Institutional & Trust
Small Cap Equity Portfolio Investor A, Investor B, Institutional & Trust
Equity Index Portfolio Investor A, Institutional & Trust
International Equity Portfolio Investor A, Investor B, Institutional & Trust
Government & Corporate Bond Portfolio Investor A, Investor B, Institutional & Trust
Bond Index Portfolio Investor A, Institutional & Trust
National Municipal Bond Portfolio Investor A, Investor B & Trust
U.S. Government Securities Portfolio Investor A, Investor B, Institutional & Trust
</TABLE>
5
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
Under the terms of the investment advisory agreement, the Advisor is entitled to
receive fees computed at an annual rate of the average daily net assets. Such
fees are accrued daily and paid monthly.
<TABLE>
<CAPTION>
Mercantile Funds Advisory Fees Annual Rate
---------------- -------------------------
<S> <C>
Money Market Portfolio 0.40%
Treasury Money Market Portfolio 0.40%
Tax-Exempt Money Market Portfolio 0.40%
Intermediate Corporate Bond Portfolio 0.55%
Short-Intermediate Municipal Portfolio 0.55%
Balanced Portfolio 0.75%
Growth & Income Equity Portfolio 0.55%
Growth Equity Portfolio 0.75%
Small Cap Equity Portfolio 0.75%
Equity Index Portfolio 0.30%
International Equity Portfolio 1.00%
Government & Corporate Bond Portfolio 0.45%
Bond Index Portfolio 0.30%
National Municipal Bond Portfolio 0.55%
U.S. Government Securities Portfolio 0.45%
</TABLE>
Under the terms of the administration agreement, the Administrator and BISYS
Fund Services Ohio, Inc. as co-administrator are entitled to receive joint
administration fees computed at an annual rate of the average daily net assets.
Such fees are accrued daily and paid monthly.
<TABLE>
<CAPTION>
Mercantile Funds Administration Fees Annual Rate
---------------- -------------------------------
<S> <C>
Money Market Portfolio 0.20%
Treasury Money Market Portfolio 0.20%
Tax-Exempt Money Market Portfolio 0.10%
Intermediate Corporate Bond Portfolio 0.20%
Short-Intermediate Municipal Portfolio 0.20%
Balanced Portfolio 0.20%
Growth & Income Equity Portfolio 0.20%
Growth Equity Portfolio 0.20%
Small Cap Equity Portfolio 0.20%
</TABLE>
6
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
Equity Index Portfolio 0.20%
International Equity Portfolio 0.20%
Government & Corporate Bond Portfolio 0.20%
Bond Index Portfolio 0.20%
National Municipal Bond Portfolio 0.20%
U.S. Government Securities Portfolio 0.20%
Firstar Stellar Funds
---------------------
The Firstar Stellar Funds have several classes of shares which have identical
rights and privileges except with respect to fees paid under shareholder
servicing or distribution plans, expenses allocable exclusively to each class of
shares, voting rights on matters affecting a single class of shares, and the
exchange privilege of each class of shares. Class A shares are subject to a
front-end sales charge. Class B shares are subject to a contingent deferred
sales charge (CDSC).
Firstar Stellar Funds Classes of Shares
--------------------- -----------------
Treasury Fund Class A & Institutional
Tax-Free Money Market Fund Class C
Stellar Fund Class A, B & Y
Capital Appreciation Fund Class A & B
Insured Tax-Free Bond Fund Class A & B
U.S. Government Income Fund Class A & B
Under the terms of the investment advisory agreement, the Advisor is entitled to
receive fees computed at an annual rate of the average daily net assets. Such
fees are accrued daily and paid monthly.
Firstar Stellar Funds Advisory Fees Annual Rate
--------------------- -------------------------
Treasury Fund 0.50%
Tax-Free Money Market Fund 0.55%
Stellar Fund 0.95%
Capital Appreciation Fund 0.95%
Insured Tax-Free Bond Fund 0.75%
U.S. Government Income Fund 0.60%
Under the terms of the administration agreement, the Administrator is entitled
to receive fees at an annual rate of the average daily net assets. Such fees are
accrued daily and paid monthly.
7
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
Firstar Stellar Funds Administration Fees Annual Rate
--------------------- -------------------------------
Treasury Fund 0.11%
Tax-Free Money Market Fund 0.11%
Stellar Fund 0.11%
Capital Appreciation Fund 0.11%
Insured Tax-Free Bond Fund 0.11%
U.S. Government Income Fund 0.11%
Firstar Funds
-------------
The Firstar Funds have several classes of shares which have identical rights and
privileges except with respect to fees paid under shareholder servicing and/or
distribution plans, expenses allocable exclusively to each class of shares,
voting rights on matters affecting a single class of shares, and the exchange
privilege of each class of shares. Class A shares are subject to a front-end
sales charge. Class B shares are subject to a contingent deferred sales charge
(CDSC).
Firstar Funds Classes of Shares
------------- -----------------
Money Market Fund Class A & Institutional
U.S. Treasury Money Market Fund Class A & Institutional
Tax-Exempt Money Market Fund Class A & Institutional
Intermediate Bond Market Fund Class A, B, Y & Institutional
Tax-Exempt Intermediate Bond Fund Class A, B, Y & Institutional
Balanced Income Fund Class A, B, Y & Institutional
Balanced Growth Fund Class A, B, Y & Institutional
Growth and Income Fund Class A, B, Y & Institutional
Equity Index Fund Class A, B, Y & Institutional
MidCap Index Fund Class A, B, Y & Institutional
Growth Fund Class A, B, Y & Institutional
Emerging Growth Fund Class A, B, Y & Institutional
Core International Equity Fund Class A, B, Y & Institutional
Under the terms of the investment advisory agreement, the Advisor is entitled to
receive fees computed at an annual rate of the average daily net assets. Such
fees are accrued daily and paid monthly.
Firstar Funds Advisory Fees Annual Rate
------------- -------------------------
Money Market Fund 0.50%
U.S. Treasury Money Market Fund 0.50%
8
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
Tax-Exempt Money Market Fund 0.50%
Intermediate Bond Market Fund 0.50%
Tax-Exempt Intermediate Bond Fund 0.50%
Balanced Income Fund 0.75%
Balanced Growth Fund 0.75%
Growth and Income Fund 0.75%
Equity Index Fund 0.25%
Growth Fund 0.75%
MidCap Index Fund 0.25%
Emerging Growth Fund 0.75%
Core International Equity Fund 1.25% on first $50 million
1.05% on excess
Under the terms of the administration agreement, the Administrator is entitled
to receive fees at an annual rate of the average daily net assets. Such fees are
accrued daily and paid monthly.
Firstar Funds Administration Fees Annual Rate
------------- -------------------------------
Money Market Fund Tiered
U.S. Treasury Money Market Fund Tiered
Tax-Exempt Money Market Fund Tiered
Intermediate Bond Market Fund Tiered
Tax-Exempt Intermediate Bond Fund Tiered
Balanced Income Fund Tiered
Balanced Growth Fund Tiered
Growth and Income Fund Tiered
Equity Index Fund Tiered
Growth Fund Tiered
MidCap Index Fund Tiered
Emerging Growth Fund Tiered
Core International Equity Fund Tiered
Tiered: 0.0125% on first $2 billion of Fund complex net assets
0.010% on assets in excess of $2 billion
9
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
5. Pro Forma Adjustments and Pro Forma Combined Columns
----------------------------------------------------
The pro forma adjustments and pro forma combined columns of the statements
of operations reflect the adjustments necessary to show expenses and
waivers at the rates which would have been in effect if the Firstar Funds,
Mercantile Funds and Firstar Stellar Funds, as appropriate, were included
in the Surviving Funds for the year ended April 30, 2000. These rates are
included in the N-14 Registration statement.
The pro forma statements of assets and liabilities and schedules of
investments give effect to the proposed combination of such assets as if
the reorganization had occurred at April 30, 2000. The Surviving Funds will
offer the following classes:
Surviving Funds Classes of Shares
--------------- -----------------
Money Market Fund Class A
U.S. Treasury Money Market Fund Class A & Institutional
Tax-Exempt Money Market Fund Class A & Institutional
Intermediate Bond Market Fund Class A, B, Y & Institutional
Tax-Exempt Intermediate Bond Fund Class A, B, Y & Institutional
National Municipal Bond Fund Class A, B, Y & Institutional
Aggregate Bond Fund Class A, B, Y & Institutional
U.S. Government Securities Fund Class A, B, Y & Institutional
Balanced Income Fund Class A, B, Y & Institutional
Balanced Growth Fund Class A, B, Y & Institutional
Growth and Income Fund Class A, B, Y & Institutional
Equity Index Fund Class A, B, Y & Institutional
Growth Fund Class A, B, Y & Institutional
Midcap Index Fund Class A, B, Y & Institutional
Emerging Growth Fund Class A, B, Y & Institutional
Core International Equity Fund Class A, B, Y & Institutional
More information on the classes of shares offered can be found in the N-14
Proxy statement.
6. Portfolio Valuation, Securities Transactions and Related Income
---------------------------------------------------------------
Securities of the Money Market Funds are valued utilizing the amortized
cost method permitted in accordance with Rule 2a-7 under the 1940 Act.
Under the amortized cost method, discount or premium is amortized on a
constant basis to the maturity of the security. In addition, the Money
Market Funds may not (a) purchase any instrument with a remaining maturity
greater than thirteen months unless such instrument is subject to a demand
feature, or (b) maintain a dollar-weighted average maturity which exceeds
90 days.
Securities of the Non-Money Market Funds are valued at market value. Short-
term investments maturing in 60 days or less are valued at amortized cost,
which approximates market value.
10
<PAGE>
Security transactions are accounted for on a trade date basis. Net realized
gains or losses from sales of securities are determined by comparing the
net sale proceeds to an identified cost basis. Interest income and expenses
are recognized on the accrual basis. Dividends are recorded on the ex-
dividend or as soon as information is available to the Funds. Discounts and
premiums on securities are amortized over the life of the respective
security. Discounts and premiums on securities with put provisions are
amortized to the earlier of the put date or maturity.
7. Capital Shares
--------------
The pro forma net asset values per share assume the issuance of shares of
the Firstar Funds, after any necessary stock splits, which would have
occurred at April 30, 2000 in connection with the proposed reorganization.
The pro forma number of shares outstanding consists of the following:
<TABLE>
<CAPTION>
Additional Shares Pro Forma
Shares outstanding at issued in the Shares at April
April 30, 2000 Reorganization 30, 2000
(000) (000) (000)
--------------------- ------------------- ---------------
<S> <C> <C> <C>
Money Market Fund (F) 181,997 1,388,596 1,570,593
U.S. Treasury Money Market Fund (S) 3,382,743 373,226 3,755,968
Tax-Exempt Money Market Fund (F) 158,938 338,351 497,289
Intermediate Bond Market Fund (F) 40,122 3,920 44,042
Tax-Exempt Intermediate Bond Fund (F) 8,368 2,801 11,169
National Municipal Bond Fund (M) 28,566 16,779 45,345
Aggregate Bond Fund (M) 12,780 17,477 30,257
U.S. Government Securities Fund (M) 6,218 16,066 22,284
Balanced Income Fund (F) 8,408 7,662 16,070
Balanced Growth Fund (F) 7,026 2,705 9,731
Growth and Income Fund (F) 15,474 8,681 24,155
Equity Index Fund (F) 8,595 1,166 9,761
Growth Fund (F) 8,622 2,886 11,508
MidCap Index Fund (F) 8,972 7,542 16,514
Emerging Growth Fund (M) 8,915 11,394 20,309
Core International Equity Fund (M) 7,492 2,273 9,765
</TABLE>
The (F), (M) or (S) notation refers to whether the accounting surviving fund is
a Firstar Fund (F), Mercantile Fund (M) or a Firstar Stellar Fund (S).
11
<PAGE>
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS (Unaudited)
7. Merger Costs
------------
All costs associated with the Reorganization will be paid by Firstar Investment
Research and Management Company.
12
<PAGE>
FIRSTAR FUNDS
FORM N-14
---------
PART C. OTHER INFORMATION
Item 15. Indemnification
---------------
Article IX of Registrant's Articles of Incorporation, incorporated by
reference as Exhibit (1)(a) hereto, provides for the indemnification of
Registrant's directors and officers to the full extent permitted by the
Wisconsin Business Corporation Law and the Investment Company Act of 1940.
Article VII of the By-laws of the Registrant, incorporated by reference
as Exhibit (2)(a) hereto, provides that officers and directors of the Registrant
shall be indemnified by the Registrant against judgments, penalties, fines,
excise taxes, settlements and reasonable expenses (including attorney's fees)
incurred in connection with a legal action, suit or proceeding to the full
extent permissible under the Wisconsin Business Corporation Law, the Securities
Act of 1933 and the Investment Company Act of 1940.
Registrant has obtained from a major insurance carrier a directors' and
officers' liability policy covering certain types of errors and omissions. In no
event will Registrant indemnify any of its directors or officers against any
liability to which such person would otherwise be subject by reason of his
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office. Registrant will comply with
Rule 484 under the Securities Act of 1933 and Release No. 11330 under the
Investment Company Act of 1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Indemnification of the Registrant, its affiliates, their respective
assigns and their respective officers, directors, employees, agents and servants
against certain losses is provided for in Section 7.2 of the Internet Access
Agreement with Firstar Trust Company incorporated herein by reference as Exhibit
(13)(ff).
<PAGE>
Indemnification of the Registrant, its transfer agent, its
administrator, and their respective affiliates, directors, trustees, officers,
employees and agents, and each person who controls them within the meaning of
the Securities Act of 1933, against certain losses is provided for in Section
12(a) of the Order Processing Agreement with M&I Trust Company incorporated
herein by reference as Exhibit (13)(gg) and Section 9(a) of the Order Processing
Agreement with Northern Trust Retirement Consulting, L.L.C. incorporated herein
by reference to Exhibit (13)(jj).
Indemnification of the Registrant, its investment adviser and their
affiliates, directors, managers, employees and shareholders against certain
losses is provided for in Section 9 of the Service Agreement with Jack White &
Company incorporated herein by reference to Exhibit (13)(hh).
Indemnification of the Registrant, its investment adviser and their
directors, managers, officers, employees and agents against certain losses is
provided for in Section 6(a) of the Service Agreement with National Investors
Services Corp. incorporated herein by reference as Exhibit (13)(ii).
Indemnification of the Registrant and its directors, officers,
employees and agents against certain losses is provided for in Section 13 of the
Retirement Plan Order Processing Amendment to the Operating Agreement with
Charles Schwab & Co., Inc., The Charles Schwab Trust Company and Firstar
Investment Research and Management Company, LLC incorporated herein by reference
to Exhibit (13)(pp).
Indemnification of the Registrant, its investment adviser and their
directors, officers, employees and agents against certain losses is provided for
in Section 4(a) of the Services Agreement with Charles Schwab and Co., Inc. and
Firstar Investment Research and Management Company, LLC incorporated herein by
reference as Exhibit (13)(qq).
Indemnification of Registrant's principal underwriter, custodians and
transfer agents against certain losses is provided for, respectively, in Section
6(a) of the Distribution Agreement, incorporated by reference as Exhibit (7)(a)
hereto, Section 11 of the Custodian Agreement, incorporated by reference as
Exhibit (9)(a) hereto, and Section 6(c) of the Shareholder Servicing Agent
Agreement incorporated by reference as Exhibit (13)(n) hereto.
Item 16. Exhibits
(1) (a) Articles of Incorporation filed February 19,
1988 is incorporated by reference to Exhibit
(1)(a) to Post-Effective Amendment No. 28 to
the Registration Statement, filed February 15,
1996 ("Post-Effective Amendment No. 28").
(b) Amendment No. 1 to the Articles of
Incorporation filed June 30, 1989 is
incorporated by reference to Exhibit (1)(b) to
Post-Effective Amendment No. 28.
C-2
<PAGE>
(c) Amendment No. 2 to the Articles of
Incorporation filed June 30, 1989 is
incorporated by reference to Exhibit (1)(c) to
Post-Effective Amendment No. 28.
(d) Amendment No. 3 to the Articles of
Incorporation filed November 12, 1991 is
incorporated by reference to Exhibit (1)(d) to
Post-Effective Amendment No. 28.
(e) Amendment No. 4 to the Articles of
Incorporation filed August 18, 1992 is
incorporated by reference to Exhibit (1)(e) to
Post-Effective Amendment No. 28.
(f) Amendment No. 5 to the Articles of
Incorporation filed October 23, 1992 is
incorporated by reference to Exhibit (1)(f) to
Post-Effective Amendment No. 28.
(g) Amendment No. 6 to the Articles of
Incorporation filed January 26, 1993 is
incorporated by reference to Exhibit (1)(g) to
Post-Effective Amendment No. 28.
(h) Amendment No. 7 to the Articles of
Incorporation filed February 10, 1994 is
incorporated by reference to Exhibit (1)(h) to
Post-Effective Amendment No. 28.
(i) Amendment No. 8 to the Articles of
Incorporation filed December 29, 1994 is
incorporated by reference to Exhibit (1)(i) to
Post-Effective Amendment No. 28.
(j) Amendment No. 9 to the Articles of
Incorporation filed July 20, 1995 is
incorporated by reference to Exhibit (1)(j) to
Post-Effective Amendment No. 28.
(k) Amendment No. 10 to the Articles of
Incorporation filed November 10, 1995 is
incorporated by reference to Exhibit (1)(k) to
Post-Effective Amendment No. 28.
(l) Amendment No. 11 to Articles of Incorporation
filed July 21, 1997 with respect to the
Emerging Growth Fund is incorporated by
reference to Exhibit (1)(l) to Post-Effective
Amendment No. 32.
(m) Amendment No. 12 to Articles of Incorporation
filed January 12, 1998 with respect to change
of name to Firstar Funds, Inc. is incorporated
by reference to Exhibit (1)(m) to Post-
Effective Amendment No. 34.
C-3
<PAGE>
(n) Amendment No. 13 to Articles of Incorporation
filed February 17, 1999 with respect to Retail
B Shares is incorporated by reference to
Exhibit (a)(14) to Post-Effective Amendment No.
36.
(o) Amendment No. 14 to Articles of Incorporation
dated October 15, 1999 with respect to Core
International Equity Fund is incorporated by
reference to Exhibit (a)(15) to Post-Effective
Amendment No. 38.
(p) Amendment No. 15 to Articles of Incorporation
dated October 15,1999 with respect to MidCap
Index Fund is incorporated by reference to
Exhibit (a)(16) to Post-Effective Amendment No.
38.
(q) Amendment No. 16 to Articles of Incorporation
filed July 12, 2000 with respect to the Small
Cap Aggressive Growth Fund is incorporated by
reference to Exhibit (a)(17) to Post-Effective
Amendment No. 42.
(r) Amendment No. 17 to Articles of Incorporation
filed August 14, 2000 with respect to the
Aggregate Bond Fund, National Municipal Bond
Fund and U.S. Government Securities Fund is
incorporated by reference to Exhibit (a)(18) to
Post-Effective Amendment No. 42.
(s) Amendment No. 18 to Articles of Incorporation
filed August 14, 2000 with respect to Y Shares
is incorporated by reference to Exhibit (a)(19)
to Post-Effective Amendment No. 42.
(2) (a) Registrant's By-laws dated September 9, 1988
are incorporated by reference to Exhibit (2)(a)
to Post-Effective Amendment No. 28.
(b) Amendment to By-Laws as approved by the
Registrant's Board of Directors on February 23,
1990 is incorporated by reference to Exhibit
(2)(b) to Post-Effective Amendment No. 28.
(c) Amendment to By-Laws as approved by the
Registrant's Board of Directors on February 15,
1991 is incorporated by reference to Exhibit
(2)(c) to Post-Effective Amendment No. 28.
(d) Amendment to By-Laws as approved by the
Registrant's Board of Directors on June 21,
1991 is incorporated by reference to Exhibit
(2)(d) to Post-Effective Amendment No. 28.
(3) Not Applicable.
C-4
<PAGE>
(4) (a) Form of Agreement and Plan of Reorganization
for Firstar Funds, Inc. and Mercantile Mutual
Funds, Inc., filed as Appendix I to the
Combined Proxy Statement and Prospectus
relating to the reorganization of the
portfolios of Mercantile Mutual Funds, Inc.
into certain portfolios of Firstar Funds, Inc.
(b) Form of Agreement and Plan of Reorganization,
for Firstar Stellar Funds and Firstar Funds,
Inc. filed as Appendix I to the Combined Proxy
Statement and Prospectus relating to the
reorganization of the portfolios of Firstar
Stellar Funds into certain portfolios of
Firstar Funds, Inc.
(5) See Articles V and VII of the Articles of
Incorporation which are included as Exhibit
(a)(14) and incorporated by reference to
Exhibits (1)(a) and (1)(i) to Post-Effective
Amendment No. 28 and Article II, Sections 1, 9
and 10 of Article III, Sections 1, 2 and 3 of
Article V and Section II of Article VII of the
By-laws which are incorporated by reference to
Exhibits 2(a)-2(d) of Post-Effective Amendment
No. 28.
(6) (a) Investment Advisory Agreement between
Registrant and First Wisconsin Trust Company
dated August 29, 1991 with respect to the Money
Market Fund, U.S. Government Money Market Fund,
Tax-Exempt Money Market Fund, Income and Growth
Fund, Short-Intermediate Fixed Income Fund,
Special Growth Fund, Bond IMMDEX(TM) Fund,
Equity Index Fund, Institutional Money Market
Fund and U.S. Federal Money Market Fund is
incorporated by reference to Exhibit (5)(a) to
Post-Effective Amendment No. 28.
(b) Assumption and Guarantee Agreement between
First Wisconsin Trust Company and First
Wisconsin Asset Management dated February 3,
1992 is incorporated by reference to Exhibit
(5)(b) to Post-Effective Amendment No. 28.
(c) Investment Advisory Agreement between
Registrant and First Wisconsin Asset Management
dated March 27, 1992 with respect to the
Balanced Fund is incorporated by reference to
Exhibit (5)(c) to Post-Effective Amendment No.
28.
(d) Addendum No. 1 dated December 27, 1992 to
Investment Advisory Agreement between
Registrant and Firstar Investment Research and
Management Company dated March 27, 1992 with
respect to the Growth Fund (formerly the
MidCore Growth Fund) and Intermediate Bond
Market Fund is incorporated by reference to
Exhibit (5)(d) to Post-Effective Amendment No.
28.
C-5
<PAGE>
(e) Addendum No. 2 dated February 5, 1993, to
Investment Advisory Agreement between the
Registrant and Firstar Investment Research and
Management Company dated March 27, 1992 with
respect to the Tax-Exempt Intermediate Bond
Fund is incorporated by reference to Exhibit
(5)(e) to Post-Effective Amendment No. 28.
(f) Assumption and Guarantee Agreement between
Firstar Trust Company and Firstar Investment
Research and Management Company dated June 17,
1993 with respect to the Income and Growth Fund
is incorporated by reference to Exhibit (5)(f)
to Post-Effective Amendment No. 28.
(g) Addendum No. 3 dated September 2, 1997, to
Investment Advisory Agreement between the
Registrant and Firstar Investment Research and
Management Company dated March 27, 1992 with
respect to the International Equity Fund is
incorporated by reference to Exhibit (5)(g) to
Post-Effective Amendment No. 32.
(h) Amended and Restated Sub-Advisory Agreement
among Firstar Investment Research and
Management Company, the Registrant and
Hansberger Global Investors, Inc. dated June
15, 1997 with respect to the International
Equity Fund is incorporated by reference to
Exhibit (5)(h) to Post-Effective Amendment No.
32.
(i) Addendum No. 4 to the Investment Advisory
Agreement between Registrant and Firstar
Investment Research and Management Company
dated March 27, 1992 with respect to the
MicroCap Fund is incorporated by reference to
Exhibit (5)(i) to Post-Effective Amendment No.
28.
(j) Addendum No. 6 to the Investment Advisory
Agreement between Registrant and Firstar
Investment Research & Management Company dated
December 1, 1997 with respect to the Balanced
Income Fund is incorporated by reference to
Exhibit (5)(j) to Post-Effective Amendment No.
34.
(k) Addendum No. 5 to the Investment Advisory
Agreement between Registrant and Firstar
Investment Research & Management Company dated
as of August 15, 1997 with respect to the
Emerging Growth Fund is incorporated by
reference to Exhibit (5)(k) to Post-Effective
Amendment No. 32.
(l) Investment Sub-Advisory Agreement among the
Registrant, Firstar Investment Research &
Management Company, LLC and The
C-6
<PAGE>
Glenmede Trust Company dated November 1, 1999
with respect to the Core International Equity
Fund is incorporated by reference to Exhibit
(d)(12) to Post-Effective Amendment No. 38.
(m) Addendum No. 7 to the Investment Advisory
Agreement between Registrant and Firstar
Investment Research and Management Company, LLC
dated November 1, 1999 with respect to the Core
International Equity Fund is incorporated by
reference to Exhibit (d)(13) to Post-Effective
Amendment No. 38.
(n) Addendum No. 8 to the Investment Advisory
Agreement between Registrant and Firstar
Investment Research & Management Company, LLC
dated November 1, 1999 with respect to the
MidCap Index Fund is incorporated by reference
to Exhibit (d)(14) to Post-Effective Amendment
No. 38.
(o) Form of Addendum No. 9 to the Investment
Advisory Agreement between Registrant and
Firstar Investment Research and Management
Company, LLC, with respect to the Small Cap
Aggressive Growth Fund is incorporated by
reference to Exhibit (d)(15) to Post-Effective
Amendment No. 39.
(p) Form of Addendum No. 11 to the Investment
Advisory Agreement between Registrant and
Firstar Investment Research and Management
Company, LLC, with respect to the Aggregate
Bond Fund, National Municipal Bond Fund and
U.S. Government Securities Fund is incorporated
by reference to Exhibit (d)(16) to Post-
Effective Amendment No. 40.
(7) (a) Distribution Agreement between Registrant,
Firstar Investment Research & Management
Company, LLC, and Quasar Distributors, LLC with
respect to the Institutional Money Market Fund,
Money Market Fund, U.S. Treasury Money Market
Fund, U.S. Government Money Market Fund, Tax-
Exempt Money Market Fund, Short-Term Bond
Market Fund, Intermediate Bond Market Fund,
Bond IMMDEX(TM)Fund, Tax-Exempt Intermediate
Bond Fund, Balanced Income Fund, Balanced
Growth Fund, Growth and Income Fund, Equity
Index Fund, Growth Fund, MidCap Index Fund,
Special Growth Fund, Emerging Growth Fund,
MicroCap Fund, Small Cap Aggressive Growth
Fund, Core International Equity Fund and
International Equity Fund is incorporated by
reference to Exhibit (e)(1) to Post-Effective
Amendment No. 42.
(8) Deferred Compensation Plan dated September 16,
1994 and Deferred Compensation Agreement
between Registrant and its
C-7
<PAGE>
Directors is incorporated by reference to
Exhibit (7) to Post-Effective Amendment No. 28.
(9) (a) Custodian Agreement between Registrant and
First Wisconsin Trust Company dated July 29,
1988 is incorporated by reference to Exhibit
(8)(a) to Post-Effective Amendment No. 28.
(b) Letter dated December 28, 1989 with respect to
the Custodian Agreement with respect to the
Equity Index Fund is incorporated by reference
to Exhibit (8)(b) to Post-Effective Amendment
No. 28.
(c) Revised Mutual Fund Custodial Agent Service
Annual Fee Schedule dated March 1, 1997 to the
Custodian Agreement with respect to the Money
Market Fund, U.S. Government Money Market Fund,
Intermediate Bond Market Fund, Bond IMMDEX(TM)
Fund, Growth and Income Fund, MidCore Growth
Fund, MicroCap Fund, Tax-Exempt Money Market
Fund, U.S. Treasury Money Market Fund, Short-
Term Bond Market Fund, Tax-Exempt Intermediate
Bond Fund, Balanced Fund, Equity Index Fund,
Special Growth Fund and International Equity
Fund is incorporated by reference to Exhibit
(8)(c) to Post-Effective Amendment No. 34.
(d) Amendment dated May 1, 1990 to the Custodian
Agreement between Registrant and First
Wisconsin Trust Company is incorporated by
reference to Exhibit (8)(d) to Post-Effective
Amendment No. 28.
(e) Letter dated April 19, 1991 with respect to the
Custodian Agreement with respect to the
Institutional Money Market Fund and U.S.
Federal Money Market Fund is incorporated by
reference to Exhibit (8)(e) to Post-Effective
Amendment No. 28.
(f) Letter dated March 27, 1992 with respect to the
Custodian Agreement with respect to the
Balanced Fund is incorporated by reference to
Exhibit (8)(f) to Post-Effective Amendment No.
28.
(g) Letter dated December 27, 1992 with respect to
the Custodian Agreement with respect to the
Intermediate Bond Market Fund and Growth Fund
(formerly the MidCore Growth Fund) is
incorporated by reference to Exhibit (8)(g) to
Post-Effective Amendment No. 28.
(h) Letter dated February 5,1993 with respect to
the Custodian Agreement with respect to the
Tax-Exempt Intermediate Bond
C-8
<PAGE>
Fund is incorporated by reference to Exhibit
(8)(h) to Post-Effective Amendment No. 28.
(i) Letter Agreement with respect to the Custodian
Agreement dated as of September 2, 1997 with
respect to the International Equity Fund is
incorporated by reference to Exhibit No. (8)(i)
to Post-Effective Amendment No. 32.
(j) Letter Agreement dated August 1, 1995 with
respect to the Custodian Agreement with respect
to the MicroCap Fund is incorporated by
reference to Exhibit No. (8)(j) to Post-
Effective Amendment No. 28.
(k) Letter Agreement with respect to the Custodian
Agreement with respect to the Balanced Income
Fund dated December 1, 1997 is incorporated by
reference to Exhibit (8)(k) to Post-Effective
Amendment No. 34.
(l) Letter Agreement with respect to the Custodian
Agreement with respect to the Emerging Growth
Fund dated as of March 1, 1997 is incorporated
by reference to Exhibit (8)(l) to Post-
Effective Amendment No. 34.
(m) Foreign Custodian Monitoring Agreement between
Registrant and Firstar Investment Research and
Management Company, LLC, dated June 13, 1997
with respect to the International Equity Fund
is incorporated by reference to Exhibit 8(m) to
Post-Effective Amendment No. 32.
(n) Assignment dated October 1, 1998 of Custodian
Agreement between Registrant and Firstar Trust
Company, dated as of July 29, 1988 to Firstar
Bank Milwaukee, N.A. is incorporated by
reference to Exhibit (g)(14) to Post-Effective
Amendment No. 36.
(o) Letter Agreement dated November 1, 1999 with
respect to the Custodian Agreement between the
Registrant and Firstar Bank Milwaukee, N. A.
with respect to the Core International Equity
Fund is incorporated by reference to Exhibit
(g)(15) to Post-Effective Amendment No. 38.
(p) Letter Agreement dated November 1, 1999 with
respect to the Custodian Agreement between the
Registrant and Firstar Bank Milwaukee, N.A.
with respect to the MidCap Index Fund is
incorporated by reference to Exhibit (g)(16) to
Post-Effective Amendment No. 38.
C-9
<PAGE>
(q) Global Custody Agreement dated November 3,
1999 between Registrant and Chase Manhattan
Bank with respect to the Small Cap
Aggressive Growth Fund is incorporated by
reference to Exhibit (g)(17) to Post-
Effective Amendment No. 39.
(r) Form of Letter Agreement with respect to the
Custodian Agreement between the Registrant
and Firstar Bank, N.A., (formerly Firstar
Bank Milwaukee, N. A.), with respect to the
Small Cap Aggressive Growth Fund is
incorporated by reference to Exhibit (g)(18)
to Post-Effective Amendment No. 39.
(s) Form of Letter Agreement with respect to the
Custodian Agreement between Registrant and
Firstar Bank, N.A. (formerly Firstar Bank
Milwaukee, N.A.) with respect to the Conning
Money Market Fund, Ohio Tax-Exempt Money
Market Fund, Aggregate Bond Fund, National
Municipal Bond Fund, Missouri Tax-Exempt
Bond Fund, U.S. Government Securities Fund,
Strategic Income Fund, Equity Income Fund,
Relative Value Fund, Large Cap Growth Fund,
Science & Technology Fund, REIT Fund, Small-
Cap Index Fund and Global Equity Fund is
incorporated by reference to Exhibit (g)(19)
to Post-Effective Amendment No. 40.
(10) (a) Amended and Restated Distribution and
Service Plan and Form of Distribution and
Servicing Agreement is incorporated by
reference to Exhibit (14)(a) to Post-
Effective Amendment No. 30.
(b) Distribution and Services Plan for the
Retail B Shares is incorporated by reference
to Exhibit (m)(2) to Post-Effective
Amendment No. 36.
(c) Services Plan for the Retail B Shares is
incorporated by reference to Exhibit (m)(3)
to Post-Effective Amendment No. 36.
(d) Form of Amended and Restated 12b-1
Distribution and Service Plan with respect
to the Retail B Shares is incorporated by
reference to Exhibit (m)(4) to Post-
Effective Amendment No. 40.
(e) Form of Amended and Restated Non-12b-1
Service Plan with respectf to the Retail B
Shares is incorporated by reference to
Exhibit (m)(5) to Post-Effective Amendment
No. 40.
(f) Form of Services Plan with respect to the Y
Shares is incorporated by reference to
Exhibit (m)(6) to Post-Effective Amendment
No. 40.
C-10
<PAGE>
(g) Amended and Restated Plan Pursuant to Rule
18f-3 for Operation of a Multi-Series System
is incorporated by reference to Exhibit
(n)(2) to Post-Effective Amendment No. 38.
(h) Form of Amended and Restated Plan Pursuant
to Rule 18f-3 for Operation of a Multi-
Series System is incorporated by reference
to Exhibit (n)(3) to Post-Effective
Amendment No. 39.
(i) Form of Amended and Restated 18f-3 Plan
Pursuant to Rule 18f-3 for operation of a
Multi-Series System is incorporated by
reference to Exhibit (n)(4) to Post-
Effective Amendment No. 40.
(11) Opinion of Drinker Biddle & Reath LLP
(including consent of firm).
(12) Opinion of Drinker Biddle & Reath LLP as to
tax consequences (including consent of
firm).
(13) (a) Fund Administration Servicing Agreement
between Registrant and Firstar Mutual Fund
Services, LLC, with respect to the
Institutional Money Market Fund, Money
Market Fund, U.S. Treasury Money Market
Fund, U.S. Government Money Market Fund,
Tax-Exempt Money Market Fund, Short-Term
Bond Market Fund, Intermediate Bond Market
Fund, Bond IMMDEX(TM)Fund, Tax-Exempt
Intermediate Bond Fund, Balanced Income
Fund, Balanced Growth Fund, Growth and
Income Fund, Equity Index Fund, Growth Fund,
MidCap Index Fund, Special Growth Fund,
Emerging Growth Fund, MicroCap Fund, Small
Cap Aggressive Growth Fund, Core
International Equity Fund and International
Equity Fund is incorporated by reference to
Exhibit (h)(1) to Post-Effective Amendment
No. 42.
(b) Fund Accounting Servicing Agreement dated
March 23, 1988 between Registrant and First
Wisconsin Trust Company is incorporated by
reference to Exhibit (9)(d) to Post-
Effective Amendment No. 28.
(c) Letter dated July 29, 1988 with respect to
the Fund Accounting Servicing Agreement is
incorporated by reference to Exhibit (9)(e)
to Post-Effective Amendment No. 28.
(d) Letter dated December 28, 1989 with respect
to the Fund Accounting Servicing Agreement
with respect to the Equity Index Fund is
incorporated by reference to Exhibit (9)(f)
to Post-Effective Amendment No. 28.
C-11
<PAGE>
(e) Letter dated April 19, 1991 with respect to
the Fund Accounting Servicing Agreement with
respect to the Institutional Money Market
Fund and U.S. Federal Money Market Fund is
incorporated by reference to Exhibit (9)(g)
to Post-Effective Amendment No. 28.
(f) Letter dated March 27, 1992 with respect to
the Fund Accounting Servicing Agreement with
respect to the Balanced Fund is incorporated
by reference to Exhibit (9)(h) to Post-
Effective Amendment No. 28.
(g) Letter dated December 27, 1992 with respect
to the Fund Accounting Servicing Agreement
with respect to the Intermediate Bond Market
Fund and Growth Fund (formerly the MidCore
Growth Fund) is incorporated by reference to
Exhibit (9)(i) to Post-Effective Amendment
No. 28.
(h) Letter dated February 5, 1993 with respect
to the Fund Accounting Servicing Agreement
with respect to the Tax-Exempt Intermediate
Bond Fund is incorporated by reference to
Exhibit (9)(j) to Post-Effective Amendment
No. 29.
(i) Revised Fund Valuation and Accounting Fee
Schedule dated January 1, 2000 to the Fund
Accounting Servicing Agreement with respect
to the Money Market Fund, Institutional
Money Market Fund, U.S. Treasury Money
Market Fund, U.S. Government Money Market
Fund, Tax-Exempt Money Market Fund, Short-
Term Bond Market Fund, Intermediate Bond
Market Fund, Bond IMMDEXTM Fund, Tax-Exempt
Intermediate Bond Fund, Balanced Income
Fund, Balanced Growth Fund, Growth & Income
Fund, Equity Index Fund, Growth Fund, MidCap
Index Fund, Special Growth Fund, Emerging
Growth Fund, MicroCap Fund, Core
International Equity Fund and International
Equity Fund is incorporated by reference to
Exhibit (h)(11) to Post-Effective Amendment
No. 38.
(j) Intentionally left blank.
(k) Intentionally left blank.
(l) Letter Agreement dated August 1, 1995 with
respect to the Fund Accounting Servicing
Agreement with respect to the MicroCap Fund
is incorporated by reference to Exhibit
(9)(n) to Post-Effective Amendment No. 28.
(m) Letter Agreement with respect to the Fund
Accounting Servicing Agreement with respect
to the Balanced Income Fund dated
C-12
<PAGE>
December 1, 1990 is incorporated by
reference to Exhibit (9)(o) to Post-
Effective Amendment No. 34.
(n) Shareholder Servicing Agent Agreement dated
March 23, 1988 between Registrant and First
Wisconsin Trust Company is incorporated by
reference to Exhibit (9)(p) to Post-
Effective Amendment No. 28.
(o) Letter dated July 29, 1988 with respect to
Shareholder Servicing Agent Agreement is
incorporated by reference to Exhibit (9)(q)
to Post-Effective Amendment No. 28.
(p) Letter dated December 28, 1989 with respect
to the Shareholder Servicing Agent Agreement
with respect to the Equity Index Fund is
incorporated by reference to Exhibit (9)(r)
to Post-Effective Amendment No. 28.
(q) Letter dated April 23, 1991 with respect to
the Shareholder Servicing Agent Agreement
with respect to the Institutional Money
Market Fund and U.S. Federal Money Market
Fund is incorporated by reference to Exhibit
(9)(s) to Post-Effective Amendment No. 28.
(r) Letter dated March 27, 1992 with respect to
the Shareholder Servicing Agent Agreement
with respect to the Balanced Fund is
incorporated by reference to Exhibit (9)(t)
to Post-Effective Amendment No. 28.
(s) Letter dated December 27, 1992 with respect
to the Shareholder Servicing Agent Agreement
with respect to the Intermediate Bond Market
Fund and Growth Fund (formerly the MidCore
Growth Fund) is incorporated by reference to
Exhibit (9)(u) to Post-Effective Amendment
No. 28.
(t) Letter dated February 5, 1993 with respect
to the Shareholder Servicing Agent Agreement
with respect to the Tax-Exempt Intermediate
Bond Fund is incorporated by reference to
Exhibit (9)(v) to Post-Effective Amendment
No. 29.
(u) Letter dated April 26, 1994 with respect to
the Shareholder Servicing Agent Agreement
with respect to the International Equity
Fund is incorporated by reference to Exhibit
(9)(w) to Post-Effective Amendment No. 28.
(v) Amendment dated May 1, 1990 to the
Shareholder Servicing Agent Agreement
between Registrant and First Wisconsin Trust
C-13
<PAGE>
Company is incorporated by reference to
Exhibit (9)(x) to Post-Effective Amendment
No. 28.
(w) Letter Agreement dated August 1, 1995 with
respect to the Shareholder Servicing Agent
Agreement with respect to the MicroCap Fund
is incorporated by reference to Exhibit
(9)(y) to Post-Effective Amendment No. 28.
(x) Letter with respect to Shareholder Servicing
Agent Agreement with respect to the Balanced
Income Fund dated December 1, 1997 is
incorporated by reference to Exhibit (9)(z)
to Post-Effective Amendment No. 34.
(y) Plan of Reorganization is incorporated by
reference to Exhibit (9)(aa) to Post-
Effective Amendment No. 28.
(z) Purchase and Assumption Agreement dated
February 22, 1988 is incorporated by
reference to Exhibit (9)(ab) to Post-
Effective Amendment No. 28.
(aa) Letter Agreement with respect to the Fund
Accounting Servicing Agreement with respect
to the Emerging Growth Fund is incorporated
by reference to Exhibit (9)(ad) to Post-
Effective Amendment No. 32.
(bb) Letter Agreement with respect to Shareholder
Servicing Agent Agreement with respect to
the Emerging Growth Fund dated August 15,
1997 is incorporated by reference to Exhibit
(9)(ae) to Post-Effective Amendment No. 34.
(cc) Intentionally left blank.
(dd) License Agreement between Registrant and
Firstar Corporation for use of Firstar name
is incorporated by reference to Exhibit
(9)(ag) to Post-Effective Amendment No. 34.
(ee) Revised Shareholder Servicing Agent
Agreement Fee Schedule dated January 1, 2000
to the Fund Accounting Servicing Agreement
with respect to the Money Market Fund,
Institutional Money Market Fund, U.S.
Treasury Money Market Fund, U.S. Government
Money Market Fund, Tax-Exempt Money Market
Fund, Short-Term Bond Market Fund,
Intermediate Bond Market Fund, Bond IMMDEXTM
Fund, Tax-Exempt Intermediate Bond Fund,
Balanced Income Fund, Balanced Growth Fund,
Growth & Income Fund, Equity Index Fund,
Growth Fund, MidCap Index Fund, Special
Growth Fund, Emerging Growth Fund, MicroCap
C-14
<PAGE>
Fund, Core International Equity Fund and
International Equity Fund is incorporated by
reference to Exhibit (h)(34) to Post-
Effective Amendment No. 38.
(ff) Internet Access Agreement with Firstar Trust
Company, dated April 1998 is incorporated by
reference to Exhibit (h)(35) to Post-
Effective Amendment No. 35.
(gg) Order Processing Agreement with M&I Trust
Company, dated April 1, 1998 is incorporated
by reference to Exhibit (h)(36) to Post-
Effective Amendment No. 35.
.
(hh) Service Agreement with Jack White and
Company, dated May 12, 1998 is incorporated
by reference to Exhibit (h)(37) to Post-
Effective Amendment No. 35.
.
(ii) Service Agreement with National Investors
Services Corp. dated June 1998 is
incorporated by reference to Exhibit (h)(38)
to Post-Effective Amendment No. 35.
(jj) Order Processing Agreement with Northern
Trust Retirement Consulting, L.L.C., dated
February 1, 1998 is incorporated by
reference to Exhibit (h)(39) to Post-
Effective Amendment No. 36.
(kk) 403(b) Comprehensive Agreement with
Universal Pensions, Inc., dated May 4, 1998
is incorporated by reference to Exhibit (h)
(40) to Post-Effective Amendment No. 36.
(ll) Assignment dated October 1, 1998 of Fund
Accounting Servicing Agreement between
Registrant and Fifrstar Trust Company, dated
March 23, 1988, to Firstar Mutual Fund
Services, LLC. is incorporated by reference
to Exhibit (h)(41) to Post-Effective
Amendment No. 36.
(mm) Assignment dated October 1, 1998 of the
Shareholder Servicing Agent Agreement
between Registrant and Firstar Trust
Company, dated March 23, 1988, to Firstar
Mutual Fund Services, LLC. is incorporated
by reference to Exhibit (h)(43) to Post-
Effective Amendment No. 36.
(nn) Confidentiality Agreement dated June 17,
1999 between Charles Schwab & Co., Inc. and
Firstar Investment Research and Management
Company, LLC is incorporated by reference to
Exhibit (h)(44) to Post-Effective Amendment
No. 37.
C-15
<PAGE>
(oo) Operating Agreement dated June 17, 1999
among Registrant, Charles Schwab & Co., Inc.
and Firstar Investment Research and
Management Company LLC is incorporated by
reference to Exhibit (h)(45) to Post-
Effective Amendment No. 37.
(pp) Retirement Plan Order Processing Amendment
to the Operating Agreement dated June 17,
1999 among Registrant, Charles Schwab & Co.,
Inc., The Charles Schwab Trust Company and
Firstar Investment Research and Management
Company, LLC is incorporated by reference to
Exhibit (h)(46) to Post-Effective Amendment
No. 37.
(qq) Services Agreement dated June 17, 1999 among
Registrant, Charles Schwab & Co., Inc. and
Firstar Investment Research and Management
Company, LLC is incorporated by reference to
Exhibit (h)(47) to Post-Effective Amendment
No. 37.
(rr) Letter Agreement dated November 1, 1999
regarding Fund Accounting Servicing
Agreement between Registrant and Firstar
Mutual Fund Services, LLC, with respect to
the Core International Equity Fund is
incorporated by reference to Exhibit (h)(50)
to Post-Effective Amendment No. 38.
(ss) Letter Agreement dated November 1, 1999
regarding Fund Accounting Servicing
Agreement between Registrant and Firstar
Mutual Fund Services, LLC, with respect to
the MidCap Index Fund is incorporated by
reference to Exhibit (h)(51) to Post-
Effective Amendment No. 38.
(tt) Letter Agreement dated November 1, 1999 to
the Shareholder Servicing Agent Agreement
between the Registrant and Firstar Mutual
Fund Services, LLC, with respect to the Core
International Equity Fund is incorporated by
reference to Exhibit (h)(52) to Post-
Effective Amendment No. 38.
(uu) Letter Agreement dated November 1, 1999 to
the Shareholder Servicing Agent Agreement
between the Registrant and Firstar Mutual
Fund Services, LLC, with respect to the
MidCap Index Fund is incorporated by
reference to Exhibit (h)(53) to Post-
Effective Amendment No. 38.
(vv) Credit Agreement dated December 29, 1999 for
Firstar Funds, Inc. and Mercantile Mutual
Funds, Inc. with Chase Manhattan Bank is
incorporated by reference to Exhibit (h)(54)
to Post-Effective Amendment No. 38.
C-16
<PAGE>
(ww) Exchange Agreement dated November 2, 1999
between Registrant and Firstar Corporation
Pension Trust with respect to the Small Cap
Aggressive Growth Fund is incorporated by
reference to Exhibit (h)(55) to Post-
Effective Amendment No. 39.
(xx) Form of Letter Agreement to the Fund
Accounting Servicing Agreement between
Registrant and Firstar Mutual Fund Services,
LLC, with respect to the Small Cap
Aggressive Growth Fund is incorporated by
reference to Exhibit (h)(57) to Post-
Effective Amendment No. 39.
(yy) Form of Letter Agreement to the Shareholder
Servicing Agent Agreement between the
Registrant and Firstar Mutual Fund Services,
LLC, with respect to the Small Cap
Aggressive Growth Fund is incorporated by
reference to Exhibit (h)(58) to Post-
Effective Amendment No. 39.
(zz) Form of Amendment to Shareholder Servicing
Agent Agreement dated March 23, 1988 and
assigned as of October 1, 1998 with respect
to the Small Cap Aggressive Growth Fund is
incorporated by reference to Exhibit (h)(59)
to Post-Effective Amendment No. 39.
(aaa) Form of Letter Agreement with respect to the
Fund Accounting Servicing Agreement between
Registrant and Firstar Mutual Fund Services,
LLC with respect to the Conning Money Market
Fund, Ohio Tax-Exempt Money Market Fund,
Aggregate Bond Fund, National Municipal Bond
Fund, Missouri Tax-Exempt Bond Fund, U.S.
Government Securities Fund, Strategic Income
Fund, Equity Income Fund, Relative Value
Fund, Large Cap Growth Fund, Science &
Technology Fund, REIT Fund, Small Cap Index
Fund and Global Equity Fund is incorporated
by reference to Exhibit (h)(60) to Post-
Effective Amendment No. 40.
(bbb) Form of Letter Agreement with respect to the
Shareholder Servicing Agent Agreement
between Registrant and Firstar Mutual Fund
Services, LLC with respect to the Conning
Money Market Fund, Ohio Tax-Exempt Money
Market Fund, Aggregate Bond Fund, National
Municipal Bond Fund, Missouri Tax-Exempt
Bond Fund, U.S. Government Securities Fund,
Strategic Income Fund, Equity Income Fund,
Relative Value Fund, Large Cap Growth Fund,
Science & Technology Fund, REIT Fund, Small
Cap Index Fund and Global Equity Fund is
incorporated by reference to Exhibit (h)(61)
to Post-Effective Amendment No. 40.
C-17
<PAGE>
(ccc) Purchase Agreement between Registrant and
ALPS Securities, Inc. is incorporated by
reference to Exhibit (13)(a) to Post-
Effective Amendment No. 29.
(ddd) Purchase Agreement between ALPS Securities,
Inc. and Sunstone Financial Group, Inc. is
incorporated by reference to Exhibit (13)(b)
to Post-Effective Amendment No. 29.
(eee) Purchase Agreement between Firstar Trust
(Wisconsin) and the Registrant relating to
startup of Balanced Income Fund is
incorporated by reference to Exhibit (13)(c)
to Post-Effective Amendment No. 34.
(fff) Purchase Agreement dated February 26, 1999
between Registrant and B.C. Ziegler &
Company with respect to the Series B Shares
is incorporated by reference to Exhibit
(l)(4) to Post-Effective Amendment No. 38.
(ggg) Purchase Agreement dated November 3, 1999
between Registrant and B.C. Ziegler &
Company with respect to the Core
International Equity Fund is incorporated by
reference to Exhibit (l)(5) to Post-
Effective Amendment No. 38.
(hhh) Purchase Agreement dated November 3, 1999
between Registrant and B.C. Ziegler &
Company with respect to the MidCap Index
Fund is incorporated by reference to Exhibit
(l)(6) to Post-Effective Amendment No. 38.
(iii) Form of Purchase Agreement between
Registrant and B.C. Ziegler & Company with
respect to the Small Cap Aggressive Growth
Fund is incorporated by reference to Exhibit
(l)(7) to Post-Effective Amendment No. 39.
(jjj) Form of Purchase Agreement between
Registrant and B.C. Ziegler & Company with
respect to the Conning Money Market Fund,
Ohio Tax-Exempt Money Market Fund, Aggregate
Bond Fund, National Municipal Bond Fund,
Missouri Tax-Exempt Bond Fund, U.S.
Government Securities Fund, Strategic Income
Fund, Equity Income Fund, Relative Value
Fund, Large Cap Growth Fund, Science &
Technology Fund, REIT Fund, Small Cap Index
Fund and Global Equity Fund is incorporated
by reference to Exhibit (l)(8) to Post-
Effective Amendment No. 40.
(kkk) Form of Purchase Agreement with respect to Y
Shares of the Aggregate Bond Fund, National
Municipal Bond Fund and U.S.
C-18
<PAGE>
Government Securities Fund is incorporated
by reference to Exhibit (l)(9) to Post-
Effective Amendment No. 40.
(14) (a) Consent of Drinker Biddle & Reath LLP.
(b) Consent of PricewaterhouseCoopers LLP.
(c) Consent of Arthur Anderson LLP.
(d) Consent of KPMG LLP.
(15) None.
(16) Powers of Attorney.
(17) (a) Forms of Proxy Ballot.
(b)(i) Prospectus for Retail A Shares of the
Firstar Money Market, Firstar U.S.
Treasury Money Market, Firstar U.S.
Government Money Market and Firstar Tax-
Exempt Money Market Funds; Institutional
Shares of the Firstar Institutional Money
Market Fund and Retail A Shares, Retail B
Shares and Institutional Shares of the
Firstar Short-Term Bond Market, Firstar
Intermediate Bond Market, Firstar Bond
IMMDEX(TM), Firstar Tax-Exempt
Intermediate Bond, Firstar Balanced
Income, Firstar Balanced Growth, Firstar
Growth and Income, Firstar Equity Index,
Firstar Growth, Firstar Special Growth,
Firstar MidCap Index, Firstar Emerging
Growth, Firstar MicroCap, Firstar Core
International Equity and Firstar
International Equity Funds dated March 1,
2000.
(b)(ii) Prospectus for Retail A, Retail B, Y and
Institutional Shares of the Firstar U.S.
Government Securities, Firstar Aggregate
Bond and Firstar National Municipal Bond
Funds dated __________, 2000.
(b)(iii) Prospectus for Institutional Shares of
the Firstar U.S. Treasury Money Market,
Firstar U.S. Government Money Market and
Firstar Tax-Exempt Money Market Funds and
Y Shares of the Firstar Short-Term Bond
Market, Firstar Intermediate Bond Market,
Firstar Bond IMMDEXTM, Firstar Tax-Exempt
Intermediate Bond, Firstar Balanced
Income, Firstar Balanced Growth, Firstar
Growth and Income, Firstar Equity Index,
Firstar Growth, Firstar MidCap Index,
Firstar Special Growth, Firstar Emerging
Growth, Firstar MicroCap, Firstar Core
International Equity and Firstar
International Equity Funds dated
___________, 2000.
C-19
<PAGE>
(b)(iv) Statement of Additional Information for
Retail A Shares, Retail B Shares and
Institutional Shares of the Firstar
Short-Term Bond Market, Firstar
Intermediate Bond Market, Firstar Bond
IMMDEX(TM), Firstar Tax-Exempt
Intermediate Bond, Firstar Balanced
Income, Firstar Balanced Growth, Firstar
Growth and Income, Firstar Equity Index,
Firstar Growth, Firstar Special Growth,
Firstar MidCap Index, Firstar Emerging
Growth, Firstar MicroCap, Firstar Core
International Equity and Firstar
International Equity Funds dated March
1, 2000, as revised March 17, 2000.
(b)(v) Statement of Additional Information for
Retail A, Retail B, Y and Institutional
Shares of the Firstar U.S. Government
Securities, Firstar Aggregate Bond and
Firstar National Municipal Bond Funds
dated __________, 2000.
(b)(vi) Statement of Additional Information for
Institutional Shares of the Firstar U.S.
Treasury Money Market, Firstar U.S.
Government Money Market and Firstar Tax-
Exempt Money Market Funds and Y Shares
of the Firstar Short-Term Bond Market,
Firstar Intermediate Bond Market,
Firstar Bond IMMDEX(TM), Firstar Tax-
Exempt Intermediate Bond, Firstar
Balanced Income, Firstar Balanced
Growth, Firstar Growth and Income,
Firstar Equity Index, Firstar Growth,
Firstar MidCap Index, Firstar Special
Growth, Firstar Emerging Growth, Firstar
MicroCap, Firstar Core International
Equity and Firstar International Equity
Funds dated ___________, 2000.
(b)(vii) Statement of Additional Information for
Retail A Shares and Institutional Shares
of the Firstar Money Market, Firstar
Institutional Money Market, Firstar U.S.
Treasury Money Market, Firstar U.S.
Government Money Market and Firstar Tax-
Exempt Money Market Funds dated March 1,
2000.
(b)(viii) Prospectus for Class A, Class B and
Class Y Shares of the Firstar Stellar
Growth Equity, Firstar Stellar Relative
Value, Firstar Stellar Science &
Technology and Firstar Stellar Funds;
Class A and Class B Shares of the
Firstar Stellar Capital Appreciation
Fund and Class A Shares of the Firstar
Stellar International Equity Fund dated
March 31, 2000.
(b)(ix) Prospectus for Class A and Class B
Shares of the Firstar Stellar Strategic
Income, Firstar Stellar U.S. Government
Income and Firstar Stellar Insured Tax-
Free Bond Funds dated March 31, 2000.
(b)(x) Prospectus for Class C Shares of the
Firstar Stellar Tax-Free Money Market
and Firstar Stellar Ohio Tax-Free Money
C-20
<PAGE>
Market Funds and Class C and Class Y
Shares of the Firstar Stellar Treasury
Fund dated March 31, 2000.
(b)(xi) Statement of Additional Information for
Class A, Class B and Class Y Shares of
the Firstar Stellar Growth Equity,
Firstar Stellar Relative Value, Firstar
Stellar Science & Technology and Firstar
Stellar Funds; Class A and Class B
Shares of the Firstar Stellar Strategic
Income, Firstar Stellar U.S. Government
Income, Firstar Stellar Capital
Appreciation and Firstar Stellar Insured
Tax-Free Bond Funds; Class C Shares of
the Firstar Stellar Tax-Free Money
Market and Firstar Stellar Ohio Tax-Free
Money Market Funds, Class C and Class Y
Shares of the Firstar Stellar Treasury
Fund and Class A Shares of the Firstar
Stellar International Equity Fund dated
March 31, 2000.
(b)(xii) Prospectus for Institutional Shares of
the Mercantile Treasury Money Market,
Mercantile Money Market, Mercantile U.
S. Government Securities, Mercantile
Intermediate Corporate Bond, Mercantile
Bond Index, Mercantile Government &
Corporate Bond, Mercantile Balanced,
Mercantile Equity Income, Mercantile
Equity Index, Mercantile Growth & Income
Equity, Mercantile Growth Equity,
Mercantile Small Cap Equity, Mercantile
Small Cap Equity Index and Mercantile
International Equity Portfolios dated
March 31, 2000.
(b)(xiii) Prospectus for Investor A and Investor B
Shares of the Mercantile Balanced,
Mercantile Equity Income, Mercantile
Growth & Income Equity, Mercantile
Growth Equity, Mercantile Small Cap
Equity, and Mercantile International
Equity Portfolios and Class A Shares of
the Mercantile Equity Index and
Mercantile Small Cap Equity Index
Portfolios dated March 31, 2000.
(b)(xiv) Prospectus for Investor A Shares of the
Mercantile Treasury Money Market and
Mercantile Tax-Exempt Money Market
Portfolios and Investor A and Investor B
Shares of the Mercantile Money Market
Portfolio dated March 31, 2000.
(b)(xv) Prospectus for Investor A and Investor B
Shares of the Mercantile U.S. Government
Securities and Mercantile Government &
Corporate Bond Portfolios and Investor A
Shares of the Mercantile Intermediate
Corporate Bond and Mercantile Bond Index
Portfolios dated March 31, 2000.
(b)(xvi) Prospectus for Investor A and Investor B
Shares of the Mercantile Missouri Tax-
Exempt Bond and Mercantile National
Municipal Bond Portfolios and Investor A
Shares of
C-21
<PAGE>
the Mercantile Short-Intermediate
Municipal Portfolio dated March 31,
2000.
(b)(xvii) Prospectus for Trust and Trust II Shares
of the Mercantile Treasury Money Market,
Mercantile Money Market and Mercantile
Tax-Exempt Money Market, Portfolios and
Trust Shares of the Mercantile U.S.
Government Securities, Mercantile
Intermediate Corporate Bond, Mercantile
Bond Index, Mercantile Government &
Corporate Bond, Mercantile Short-
Intermediate Municipal, Mercantile
Missouri Tax-Exempt Bond, Mercantile
National Municipal Bond, Mercantile
Balanced, Mercantile Equity Income,
Mercantile Equity Index, Mercantile
Growth & Income Equity, Mercantile
Growth Equity, Mercantile Small Cap
Equity, Mercantile Small Cap Equity
Index and Mercantile International
Equity Portfolios dated March 31, 2000.
(b)(xviii) Prospectus for Trust Shares of the
Mercantile Treasury Money Market,
Mercantile Money Market and Mercantile
Tax-Exempt Money Market Portfolios dated
March 31, 2000.
(b)(xix) Prospectus for Shares of the Mercantile
Conning Money Market Portfolio dated
March 31, 2000.
(b)(xx) Statement of Additional Information for
Institutional, Investor A, Investor B
and Trust Shares of the Mercantile U.S.
Government Securities, Mercantile
Government & Corporate Bond, Mercantile
Balanced, Mercantile Equity Income,
Mercantile Growth & Income Equity,
Mercantile Growth Equity, Mercantile
Small Cap Equity and Mercantile
International Equity Portfolios;
Institutional, Investor A, Trust and
Trust II Shares of the Mercantile
Treasury Money Market Portfolio;
Investor A, Trust and Trust II Shares of
the Mercantile Tax-Exempt Money Market
Portfolio; Institutional, Investor A,
Investor B, Trust and Trust II Shares of
the Mercantile Money Market Portfolio;
Institutional, Investor A and Trust
Shares of the Mercantile Intermediate
Corporate Bond, Mercantile Bond Index,
Mercantile Equity Index and Mercantile
Small Cap Equity Index Portfolios;
Investor A, Investor B and Trust Shares
of the Mercantile National Municipal
Bond and Mercantile Missouri Tax-Exempt
Bond Portfolios; and Investor A and
Trust Shares of the Mercantile Short-
Intermediate Municipal Portfolio dated
March 31, 2000, as revised April 24,
2000.
(b)(xxi) Statement of Additional Information for
Shares of the Mercantile Conning Money
Market Portfolio dated March 31, 2000.
C-22
<PAGE>
(b)(xxii) Annual Report for the fiscal year ended
October 31, 1999 for the Firstar Money
Market, Firstar Institutional Money
Market, Firstar U.S. Government Money
Market, Firstar U.S. Treasury Money
Market, Firstar Tax-Exempt Money Market,
Firstar Short-Term Bond Market, Firstar
Intermediate Bond Market, Firstar Tax-
Exempt Intermediate Bond, Firstar Bond
IMMDEX(TM), Firstar Balanced Income,
Firstar Balanced Growth, Firstar Growth
and Income, Firstar Equity Index,
Firstar Growth, Firstar Special Growth,
Firstar Emerging Growth, Firstar
MicroCap and Firstar International
Equity Funds.
(b)(xxiii) Annual Reports for the fiscal year ended
October 31, 1999 for the Firstar Money
Market, Firstar Tax-Exempt Money Market,
Firstar U.S. Government Money Market and
Firstar U.S. Treasury Money Market
Funds.
(b)(xxiv) Semi-Annual Reports for the semi-annual
period ended April 30, 2000 for the
Firstar Money Market, Firstar
Institutional Money Market, Firstar U.S.
Government Money Market, Firstar U.S.
Treasury Money Market, Firstar Tax-
Exempt Money Market, Firstar Short-Term
Bond Market, Firstar Intermediate Bond
Market, Firstar Tax-Exempt Intermediate
Bond, Firstar Bond IMMDEX(TM), Firstar
Balanced Income, Firstar Balanced
Growth, Firstar Growth and Income,
Firstar Equity Index, Firstar Growth,
Firstar MidCap Index, Firstar Special
Growth, Firstar Emerging Growth, Firstar
MicroCap, Firstar Core International
Equity and Firstar International Equity
Funds.
(b)(xxv) Semi-Annual Reports for the semi-annual
period ended April 30, 2000 for the
Firstar Money Market, Firstar
Institutional Money Market, Firstar Tax-
Exempt Money Market, Firstar U.S.
Government Money Market and Firstar U.S.
Treasury Money Market Funds.
(b)(xxvi) Annual Report for the fiscal year ended
November 30, 1999 for the Firstar
Stellar Growth Equity, Firstar Stellar
Relative Value, Firstar Stellar Science
& Technology, Firstar Stellar, Firstar
Stellar Capital Appreciation and Firstar
Stellar International Equity Funds.
(b)(xxvii) Annual Report for the fiscal year ended
November 30, 1999 for the Firstar
Stellar Insured Tax-Free Bond, Firstar
Stellar U.S. Government Income and
Firstar Stellar Strategic Income Funds.
(b)(xxviii) Annual Report for the fiscal year ended
November 30, 1999 for the Firstar
Stellar Treasury, Firstar Stellar Tax-
Free Money
C-23
<PAGE>
Market and Firstar Stellar Ohio Tax-Free
Money Market Funds.
(b)(xxix) Semi-Annual Report for the semi-annual
period ended May 31, 2000 for the
Firstar Stellar Growth Equity, Firstar
Stellar Relative Value, Firstar Stellar
Science & Technology, Firstar Stellar,
Firstar Stellar Capital Appreciation and
Firstar Stellar International Equity
Funds.
(b)(xxx) Semi-Annual Report for the semi-annual
period ended May 31, 2000 for the
Firstar Stellar Insured Tax-Free Bond,
Firstar Stellar U.S. Government Income
and Firstar Stellar Strategic Income
Funds.
(b)(xxxi) Semi-Annual Report for the semi-annual
period ended May 31, 2000 for the
Firstar Stellar Treasury, Firstar
Stellar Tax-Free Money Market and
Firstar Stellar Ohio Tax-Free Money
Market Funds.
(b)(xxxii) Annual Report for the fiscal year ended
November 30, 1999 for the Mercantile
Treasury Money Market, Mercantile Money
Market, Mercantile Tax-Exempt Money
Market, Mercantile U.S. Government
Securities, Mercantile Intermediate
Corporate Bond, Mercantile Bond Index,
Mercantile Government & Corporate Bond,
Mercantile Short-Intermediate Municipal,
Mercantile Missouri Tax-Exempt Bond,
Mercantile National Municipal Bond,
Mercantile Balanced, Mercantile Equity
Income, Mercantile Equity Index,
Mercantile Growth & Income Equity,
Mercantile Growth Equity, Mercantile
Small Cap Equity, Mercantile Small Cap
Equity Index and Mercantile
International Equity Portfolios.
(b)(xxxiii) Semi-Annual Report for the semi-annual
period ended May 31, 2000 for the
Mercantile Treasury Money Market,
Mercantile Money Market, Mercantile Tax-
Exempt Money Market, Mercantile U.S.
Government Securities, Mercantile
Intermediate Corporate Bond, Mercantile
Bond Index, Mercantile Government &
Corporate Bond, Mercantile Short-
Intermediate Municipal, Mercantile
Missouri Tax-Exempt Bond, Mercantile
National Municipal Bond, Mercantile
Balanced, Mercantile Equity Income,
Mercantile Equity Index, Mercantile
Growth & Income Equity, Mercantile
Growth Equity, Mercantile Small Cap
Equity, Mercantile Small Cap Equity
Index and Mercantile International
Equity Portfolios.
(b)(xxxiv) Annual Report for the fiscal year ended
November 30, 1999 for the Mercantile
Conning Money Market Portfolio.
C-24
<PAGE>
(b)(xxxv) Semi Annual Report for the semi-annual
period ended May 31, 2000 for the
Mercantile Conning Money Market
Portfolio.
Item 17. Undertakings
(1) The undersigned Registrant agrees that prior to any
public reoffering of the securities registered
through the use of a prospectus which is a part of
this registration statement by any person or party
who is deemed to be an underwriter within the meaning
of Rule 145(c) of the Securities Act of 1933, as
amended (the "1933 Act"), the reoffering prospectus
will contain the information called for by the
applicable registration form for reofferings by
persons who may be deemed underwriters, in addition
to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every
prospectus that is filed under paragraph (1) above
will be filed as a part of an amendment to the
registration statement and will not be used until the
amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration
statement for the securities offered therein, and the
offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
C-25
<PAGE>
SIGNATURES
----------
As required by the Securities Act of 1933, this registration statement
has been signed on behalf of the registrant in the City of Milwaukee and State
of Wisconsin, on the 7th day of September 2000.
FIRSTAR FUNDS, INC.
Registrant
By: /s/ Bruce R. Laning
------------------------------------
Bruce R. Laning
Director, President & Treasurer
As required by the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
*James M. Wade Chairman and September 7, 2000
------------------------------------
(James M. Wade) Director
/s/ Bruce R. Laning Director, President September 7, 2000
-----------------------------------
Bruce R. Laning and Treasurer
*Richard Riederer Director September 7, 2000
------------------------------------
(Richard Riederer)
*Jerry Remmel Director September 7, 2000
------------------------------------
(Jerry Remmel)
*Glen R. Bomberger Director September 7, 2000
------------------------------------
(Glen R. Bomberger)
*Charles R. Roy Director September 7, 2000
-----------------------------------
(Charles R. Roy)
*Bronson J. Haase Director September 7, 2000
-----------------------------------
(Bronson J. Haase)
*By: /s/ Bruce R. Laning September 7, 2000
----------------------------------
Bruce R. Laning
Attorney-in-fact
</TABLE>
<PAGE>
Exhibit Index
-------------
Exhibit No. Description
----------- -----------
(4) (a) Form of Agreement and Plan of Reorganization for Firstar
Funds, Inc. and Mercantile Mutual Funds, Inc., filed as
Appendix I to the Combined Proxy Statement and Prospectus
relating to the reorganization of the portfolios of
Mercantile Mutual Funds, Inc. into certain portfolios of
Firstar Funds, Inc.
(b) Form of Agreement and Plan of Reorganization, for Firstar
Stellar Funds and Firstar Funds, Inc. filed as Appendix I to
the Combined Proxy Statement and Prospectus relating to the
reorganization of the portfolios of Firstar Stellar Funds
into certain portfolios of Firstar Funds, Inc.
(11) Opinion of Drinker Biddle & Reath LLP (including consent of
firm).
(12) Opinion of Drinker Biddle & Reath LLP as to tax consequences
(including consent of firm).
(14) (a) Consent of Drinker Biddle & Reath LLP.
(b) Consent of PricewaterhouseCoopers LLP.
(c) Consent of Arthur Anderson LLP.
(d) Consent of KPMG LLP.
(16) Powers of Attorney.
(17) (a) Forms of Proxy Ballot.
(b)(i) Prospectus for Retail A Shares of the Firstar Money Market,
Firstar U.S. Treasury Money Market, Firstar U.S. Government
Money Market and Firstar Tax-Exempt Money Market Funds;
Institutional Shares of the Firstar Institutional Money
Market Fund and Retail A Shares, Retail B Shares and
Institutional Shares of the Firstar Short-Term Bond Market,
Firstar Intermediate Bond Market, Firstar Bond IMMDEX(TM),
Firstar Tax-Exempt Intermediate Bond, Firstar Balanced
Income, Firstar Balanced Growth, Firstar Growth and Income,
Firstar Equity Index, Firstar Growth, Firstar Special
Growth, Firstar MidCap Index, Firstar Emerging Growth,
Firstar MicroCap, Firstar Core International Equity and
Firstar International Equity Funds dated March 1, 2000.
(b)(ii) Prospectus for Retail A, Retail B, Y and Institutional
Shares of the Firstar U.S. Government Securities, Firstar
Aggregate Bond and Firstar National Municipal Bond Funds
dated __________, 2000.
(b)(iii) Prospectus for Institutional Shares of the Firstar U.S.
Treasury Money Market, Firstar U.S. Government Money Market
and Firstar Tax-Exempt Money Market Funds and Y Shares of
the Firstar Short-Term Bond Market, Firstar Intermediate
Bond Market, Firstar Bond IMMDEX(TM), Firstar Tax-Exempt
Intermediate Bond, Firstar Balanced Income, Firstar Balanced
Growth, Firstar Growth and Income, Firstar Equity Index,
Firstar Growth, Firstar MidCap Index, Firstar Special
Growth, Firstar
<PAGE>
Emerging Growth, Firstar MicroCap, Firstar Core
International Equity and Firstar International Equity Funds
dated ___________, 2000.
(b)(iv) Statement of Additional Information for Retail A Shares,
Retail B Shares and Institutional Shares of the Firstar
Short-Term Bond Market, Firstar Intermediate Bond Market,
Firstar Bond IMMDEX(TM), Firstar Tax-Exempt Intermediate
Bond, Firstar Balanced Income, Firstar Balanced Growth,
Firstar Growth and Income, Firstar Equity Index, Firstar
Growth, Firstar Special Growth, Firstar MidCap Index,
Firstar Emerging Growth, Firstar MicroCap, Firstar Core
International Equity and Firstar International Equity Funds
dated March 1, 2000, as revised March 17, 2000.
(b)(v) Statement of Additional Information for Retail A, Retail B,
Y and Institutional Shares of the Firstar U.S. Government
Securities, Firstar Aggregate Bond and Firstar National
Municipal Bond Funds dated __________, 2000.
(b)(vi) Statement of Additional Information for Institutional Shares
of the Firstar U.S. Treasury Money Market, Firstar U.S.
Government Money Market and Firstar Tax-Exempt Money Market
Funds and Y Shares of the Firstar Short-Term Bond Market,
Firstar Intermediate Bond Market, Firstar Bond IMMDEX(TM),
Firstar Tax-Exempt Intermediate Bond, Firstar Balanced
Income, Firstar Balanced Growth, Firstar Growth and Income,
Firstar Equity Index, Firstar Growth, Firstar MidCap Index,
Firstar Special Growth, Firstar Emerging Growth, Firstar
MicroCap, Firstar Core International Equity and Firstar
International Equity Funds dated ___________, 2000.
(b)(vii) Statement of Additional Information for Retail A Shares and
Institutional Shares of the Firstar Money Market, Firstar
Institutional Money Market, Firstar U.S. Treasury Money
Market, Firstar U.S. Government Money Market and Firstar
Tax-Exempt Money Market Funds dated March 1, 2000.
(b)(viii) Prospectus for Class A, Class B and Class Y Shares of the
Firstar Stellar Growth Equity, Firstar Stellar Relative
Value, Firstar Stellar Science & Technology and Firstar
Stellar Funds; Class A and Class B Shares of the Firstar
Stellar Capital Appreciation Fund and Class A Shares of the
Firstar Stellar International Equity Fund dated March 31,
2000.
(b)(ix) Prospectus for Class A and Class B Shares of the Firstar
Stellar Strategic Income, Firstar Stellar U.S. Government
Income and Firstar Stellar Insured Tax-Free Bond Funds dated
March 31, 2000.
(b)(x) Prospectus for Class C Shares of the Firstar Stellar Tax-
Free Money Market and Firstar Stellar Ohio Tax-Free Money
Market Funds and Class C and Class Y Shares of the Firstar
Stellar Treasury Fund dated March 31, 2000.
(b)(xi) Statement of Additional Information for Class A, Class B and
Class Y Shares of the Firstar Stellar Growth Equity, Firstar
Stellar Relative Value,
-2-
<PAGE>
Firstar Stellar Science & Technology and Firstar Stellar
Funds; Class A and Class B Shares of the Firstar Stellar
Strategic Income, Firstar Stellar U.S. Government Income,
Firstar Stellar Capital Appreciation and Firstar Stellar
Insured Tax-Free Bond Funds; Class C Shares of the Firstar
Stellar Tax-Free Money Market and Firstar Stellar Ohio Tax-
Free Money Market Funds, Class C and Class Y Shares of the
Firstar Stellar Treasury Fund and Class A Shares of the
Firstar Stellar International Equity Fund dated March 31,
2000.
(b)(xii) Prospectus for Institutional Shares of the Mercantile
Treasury Money Market, Mercantile Money Market, Mercantile
U. S. Government Securities, Mercantile Intermediate
Corporate Bond, Mercantile Bond Index, Mercantile Government
& Corporate Bond, Mercantile Balanced, Mercantile Equity
Income, Mercantile Equity Index, Mercantile Growth & Income
Equity, Mercantile Growth Equity, Mercantile Small Cap
Equity, Mercantile Small Cap Equity Index and Mercantile
International Equity Portfolios dated March 31, 2000.
(b)(xiii) Prospectus for Investor A and Investor B Shares of the
Mercantile Balanced, Mercantile Equity Income, Mercantile
Growth & Income Equity, Mercantile Growth Equity, Mercantile
Small Cap Equity, and Mercantile International Equity
Portfolios and Class A Shares of the Mercantile Equity Index
and Mercantile Small Cap Equity Index Portfolios dated March
31, 2000.
(b)(xiv) Prospectus for Investor A Shares of the Mercantile Treasury
Money Market and Mercantile Tax-Exempt Money Market
Portfolios and Investor A and Investor B Shares of the
Mercantile Money Market Portfolio dated March 31, 2000.
(b)(xv) Prospectus for Investor A and Investor B Shares of the
Mercantile U.S. Government Securities and Mercantile
Government & Corporate Bond Portfolios and Investor A Shares
of the Mercantile Intermediate Corporate Bond and Mercantile
Bond Index Portfolios dated March 31, 2000.
(b)(xvi) Prospectus for Investor A and Investor B Shares of the
Mercantile Missouri Tax-Exempt Bond and Mercantile National
Municipal Bond Portfolios and Investor A Shares of the
Mercantile Short-Intermediate Municipal Portfolio dated
March 31, 2000.
(b)(xvii) Prospectus for Trust and Trust II Shares of the Mercantile
Treasury Money Market, Mercantile Money Market and
Mercantile Tax-Exempt Money Market, Portfolios and Trust
Shares of the Mercantile U.S. Government Securities,
Mercantile Intermediate Corporate Bond, Mercantile Bond
Index, Mercantile Government & Corporate Bond, Mercantile
Short-Intermediate Municipal, Mercantile Missouri Tax-Exempt
Bond, Mercantile National Municipal Bond, Mercantile
Balanced, Mercantile Equity Income, Mercantile Equity Index,
Mercantile Growth & Income Equity, Mercantile Growth Equity,
Mercantile Small Cap Equity, Mercantile Small Cap Equity
Index and Mercantile International Equity Portfolios dated
March 31, 2000.
-3-
<PAGE>
(b)(xviii) Prospectus for Trust Shares of the Mercantile Treasury Money
Market, Mercantile Money Market and Mercantile Tax-Exempt
Money Market Portfolios dated March 31, 2000.
(b)(xix) Prospectus for Shares of the Mercantile Conning Money Market
Portfolio dated March 31, 2000.
(b)(xx) Statement of Additional Information for Institutional,
Investor A, Investor B and Trust Shares of the Mercantile
U.S. Government Securities, Mercantile Government &
Corporate Bond, Mercantile Balanced, Mercantile Equity
Income, Mercantile Growth & Income Equity, Mercantile Growth
Equity, Mercantile Small Cap Equity and Mercantile
International Equity Portfolios; Institutional, Investor A,
Trust and Trust II Shares of the Mercantile Treasury Money
Market Portfolio; Investor A, Trust and Trust II Shares of
the Mercantile Tax-Exempt Money Market Portfolio;
Institutional, Investor A, Investor B, Trust and Trust II
Shares of the Mercantile Money Market Portfolio;
Institutional, Investor A and Trust Shares of the Mercantile
Intermediate Corporate Bond, Mercantile Bond Index,
Mercantile Equity Index and Mercantile Small Cap Equity
Index Portfolios; Investor A, Investor B and Trust Shares of
the Mercantile National Municipal Bond and Mercantile
Missouri Tax-Exempt Bond Portfolios; and Investor A and
Trust Shares of the Mercantile Short-Intermediate Municipal
Portfolio dated March 31, 2000, as revised April 24, 2000.
(b)(xxi) Statement of Additional Information for Shares of the
Mercantile Conning Money Market Portfolio dated March 31,
2000.
(b)(xxii) Annual Report for the fiscal year ended October 31, 1999 for
the Firstar Money Market, Firstar Institutional Money
Market, Firstar U.S. Government Money Market, Firstar U.S.
Treasury Money Market, Firstar Tax-Exempt Money Market,
Firstar Short-Term Bond Market, Firstar Intermediate Bond
Market, Firstar Tax-Exempt Intermediate Bond, Firstar Bond
IMMDEX(TM), Firstar Balanced Income, Firstar Balanced
Growth, Firstar Growth and Income, Firstar Equity Index,
Firstar Growth, Firstar Special Growth, Firstar Emerging
Growth, Firstar MicroCap and Firstar International Equity
Funds.
(b)(xxiii) Annual Reports for the fiscal year ended October 31, 1999
for the Firstar Money Market, Firstar Tax-Exempt Money
Market, Firstar U.S. Government Money Market and Firstar
U.S. Treasury Money Market Funds.
(b)(xxiv) Semi-Annual Reports for the semi-annual period ended April
30, 2000 for the Firstar Money Market, Firstar Institutional
Money Market, Firstar U.S. Government Money Market, Firstar
U.S. Treasury Money Market, Firstar Tax-Exempt Money Market,
Firstar Short-Term Bond Market, Firstar Intermediate Bond
Market, Firstar Tax-Exempt Intermediate Bond, Firstar Bond
IMMDEX(TM), Firstar Balanced Income, Firstar Balanced
Growth, Firstar Growth and Income, Firstar Equity Index,
Firstar Growth, Firstar
-4-
<PAGE>
MidCap Index, Firstar Special Growth, Firstar Emerging
Growth, Firstar MicroCap, Firstar Core International Equity
and Firstar International Equity Funds.
(b)(xxv) Semi-Annual Reports for the semi-annual period ended April
30, 2000 for the Firstar Money Market, Firstar Institutional
Money Market, Firstar Tax-Exempt Money Market, Firstar U.S.
Government Money Market and Firstar U.S. Treasury Money
Market Funds.
(b)(xxvi) Annual Report for the fiscal year ended November 30, 1999
for the Firstar Stellar Growth Equity, Firstar Stellar
Relative Value, Firstar Stellar Science & Technology,
Firstar Stellar, Firstar Stellar Capital Appreciation and
Firstar Stellar International Equity Funds.
(b)(xxvii) Annual Report for the fiscal year ended November 30, 1999
for the Firstar Stellar Insured Tax-Free Bond, Firstar
Stellar U.S. Government Income and Firstar Stellar Strategic
Income Funds.
(b)(xxviii) Annual Report for the fiscal year ended November 30, 1999
for the Firstar Stellar Treasury, Firstar Stellar Tax-Free
Money Market and Firstar Stellar Ohio Tax-Free Money Market
Funds.
(b)(xxix) Semi-Annual Report for the semi-annual period ended May 31,
2000 for the Firstar Stellar Growth Equity, Firstar Stellar
Relative Value, Firstar Stellar Science & Technology,
Firstar Stellar, Firstar Stellar Capital Appreciation and
Firstar Stellar International Equity Funds.
(b)(xxx) Semi-Annual Report for the semi-annual period ended May 31,
2000 for the Firstar Stellar Insured Tax-Free Bond, Firstar
Stellar U.S. Government Income and Firstar Stellar Strategic
Income Funds.
(b)(xxxi) Semi-Annual Report for the semi-annual period ended May 31,
2000 for the Firstar Stellar Treasury, Firstar Stellar Tax-
Free Money Market and Firstar Stellar Ohio Tax-Free Money
Market Funds.
(b)(xxxii) Annual Report for the fiscal year ended November 30, 1999
for the Mercantile Treasury Money Market, Mercantile Money
Market, Mercantile Tax-Exempt Money Market, Mercantile U.S.
Government Securities, Mercantile Intermediate Corporate
Bond, Mercantile Bond Index, Mercantile Government &
Corporate Bond, Mercantile Short-Intermediate Municipal,
Mercantile Missouri Tax-Exempt Bond, Mercantile National
Municipal Bond, Mercantile Balanced, Mercantile Equity
Income, Mercantile Equity Index, Mercantile Growth & Income
Equity, Mercantile Growth Equity, Mercantile Small Cap
Equity, Mercantile Small Cap Equity Index and Mercantile
International Equity Portfolios.
(b)(xxxiii) Semi-Annual Report for the semi-annual period ended May 31,
2000 for the Mercantile Treasury Money Market, Mercantile
Money Market, Mercantile Tax-Exempt Money Market, Mercantile
U.S. Government Securities, Mercantile Intermediate
Corporate Bond, Mercantile Bond
-5-
<PAGE>
Index, Mercantile Government & Corporate Bond, Mercantile
Short-Intermediate Municipal, Mercantile Missouri Tax-Exempt
Bond, Mercantile National Municipal Bond, Mercantile
Balanced, Mercantile Equity Income, Mercantile Equity Index,
Mercantile Growth & Income Equity, Mercantile Growth Equity,
Mercantile Small Cap Equity, Mercantile Small Cap Equity
Index and Mercantile International Equity Portfolios.
(b)(xxxiv) Annual Report for the fiscal year ended November 30, 1999
for the Mercantile Conning Money Market Portfolio.
(b)(xxxv) Semi Annual Report for the semi-annual period ended May 31,
2000 for the Mercantile Conning Money Market Portfolio.
-6-
