<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 7, 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 24, 2000 at the
offices of Mercantile's counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th 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 July 11, 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").
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
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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 late November or
early December 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 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;
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(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 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 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,
/s/ Jerry V. Woodham
Jerry V. Woodham
Chairman of the Board and President
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FIRSTAR FUNDS
October 7, 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 24, 2000. If all necessary approvals are obtained, the proposed
reorganization will likely take place in late November or early December 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 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," and each, a "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.
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Under the proposed agreement and plan of reorganization (the "Reorganization
Agreement"), 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>
--------
* Will continue the investment objectives and policies of a Stellar Fund
that has investment objectives and policies 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.
At the same time that the Mercantile Funds are reorganized into the Firstar
Funds, it is expected that the investment portfolios of 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 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. Consummation of the Stellar and Select
reorganizations is subject to numerous conditions described in the relevant
reorganization agreement, including approval by shareholders of Stellar and
Select. If the Reorganization Agreement is approved by Mercantile shareholders
at the Special Meeting, it is expected that the Mercantile reorganization will
be completed whether or not the Stellar reorganization and Select
reorganization are completed.
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.
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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 or Firstar 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>
Firstar Fund and Share Class to be
Mercantile Fund and Share Class Received
------------------------------- ----------------------------------
<S> <C>
Mercantile Treasury Money Market Port-
folio 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
--------
* It is expected that prior to the reorganization certain shareholders for
whom Firstar Bank, N.A. or its affiliates have investment discretion will
have their Trust II Shares exchanged for shares of the Firstar
Institutional Money Market Fund; however, this exchange may occur after the
reorganization with respect to certain of these shareholders.
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:
<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>
Mercantile Fund shareholders who do not wish to be reorganized into the
Firstar Funds and have their Mercantile Fund shares exchanged for shares of a
corresponding Firstar Fund should redeem their shares prior to
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the consummation of the reorganization. If you redeem your shares, you will
recognize a taxable gain or loss based on the difference between your tax
basis in the shares and the amount you receive for them. In addition, if you
redeem your shares prior to the reorganization and your shares are subject to
a contingent deferred sales load, your redemption proceeds will be reduced by
any applicable sales load.
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 front-end 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" in the accompanying Proxy/Prospectus for additional
information.
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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 24, 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 24, 2000, at the
offices of Mercantile's counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and 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 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.
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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
/s/ Jerry V. Woodham
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.
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COMBINED PROXY STATEMENT/PROSPECTUS
October 7, 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 24, 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
July 11, 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").
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.
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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 7, 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 dated (i) March 1, 2000, as
supplemented, 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) September 18, 2000, as supplemented, with
respect to the Firstar U.S. Government Securities Fund, Firstar Aggregate Bond
Fund and Firstar National Municipal Bond Fund, and (iii) September 14, 2000,
as supplemented, with respect to Institutional Shares of the Firstar Money
Market Funds and 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 23, 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.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FEE TABLES................................................................ 1
Table I-A............................................................... 1
Table I-B............................................................... 3
Table I-C............................................................... 5
SUMMARY................................................................... 8
Proposed Reorganization................................................. 8
Overview of the Funds................................................... 9
Table II.............................................................. 12
Federal Income Tax Consequences......................................... 13
Mercantile and Firstar Board Consideration.............................. 13
Principal Risk Factors.................................................. 14
Voting Information...................................................... 19
THE REORGANIZATION........................................................ 20
Reasons for the Reorganization.......................................... 20
Description of the Reorganization Agreement............................. 20
Table III(A).......................................................... 21
Table III(B).......................................................... 23
Mercantile Board Consideration.......................................... 24
Capitalization.......................................................... 25
Table IV.............................................................. 26
Federal Income Tax Considerations....................................... 42
COMPARISON OF MERCANTILE FUNDS AND FIRSTAR FUNDS.......................... 43
Investment Objectives and Policies...................................... 43
Fund-By-Fund Analysis................................................... 44
Mercantile Treasury Money Market Portfolio/Firstar U.S. Treasury
Money Market Fund.................................................... 45
Mercantile Money Market Portfolio/Firstar Money Market Fund.......... 46
Mercantile Tax-Exempt Money Market Portfolio/Firstar Tax-Exempt Money
Market Fund.......................................................... 47
Mercantile Intermediate Corporate Bond Portfolio/Firstar Intermediate
Bond Market Fund..................................................... 48
Mercantile Bond Index Portfolio/Firstar Aggregate Bond Fund.......... 49
Mercantile Short-Intermediate Municipal Portfolio/Firstar Tax-Exempt
Intermediate Bond Fund............................................... 50
Mercantile Balanced Portfolio/Firstar Balanced Growth Fund........... 51
Mercantile Equity Index Portfolio/Firstar Equity Index Fund.......... 52
Mercantile Growth & Income Equity Portfolio/Firstar Growth & Income
Fund................................................................. 53
Mercantile Growth Equity Portfolio/Firstar Growth Fund............... 54
Mercantile Small Cap Equity Portfolio/Firstar Emerging Growth Fund... 55
Mercantile International Equity Portfolio/Firstar Core International
Equity Fund.......................................................... 56
Other Information Relating to the Stellar Treasury Fund................. 58
Investment Advisory Services............................................ 61
Table V............................................................... 62
Other Service Providers for the Mercantile Funds and Firstar Funds...... 63
Sales Loads, Distribution and Shareholder Servicing Arrangements for
Mercantile............................................................. 63
Sales Load, Distribution and Shareholder Servicing Arrangements for
Firstar................................................................ 65
Administration Agreements............................................... 67
Shareholder Transactions and Policies................................... 67
Shareholder Transactions and Services of the Firstar Funds and the
Corresponding Mercantile Funds......................................... 67
Fees and Expenses....................................................... 78
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Performance Comparisons of the Existing Firstar Funds and Corresponding
Mercantile Funds....................................................... 132
Management Discussion of Fund Performance............................... 138
Share Structure......................................................... 154
VOTING MATTERS............................................................ 155
General Information..................................................... 155
Shareholder and Board Approvals......................................... 158
Principal Shareholders.................................................. 158
Quorum.................................................................. 171
Annual Meetings and Shareholder Meetings................................ 171
ADDITIONAL INFORMATION ABOUT FIRSTAR...................................... 172
ADDITIONAL INFORMATION ABOUT MERCANTILE................................... 172
FINANCIAL STATEMENTS...................................................... 173
OTHER BUSINESS............................................................ 173
SHAREHOLDER INQUIRIES..................................................... 173
APPENDIX I--FORM OF AGREEMENT AND PLAN OF REORGANIZATION.................. I-1
</TABLE>
ii
<PAGE>
FEE TABLES
Table I-A
(After Fee Waivers and/or Expense Reimbursments)
The following table shows which of the Mercantile Funds and classes are
projected to experience higher, lower or the same annualized per share total
operating expense ratios than the designated class of the corresponding
Firstar Fund, after fee waivers and/or expense reimbursements following the
Reorganization. The total operating expense ratios are 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 for the period from the applicable effective time of the
Reorganization through 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.
<TABLE>
<CAPTION>
Higher Expenses Lower Expenses Same Expenses
after the after the after the
Fund and Class 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
-------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Higher Expenses Lower Expenses Same Expenses
after the after the after the
Fund and Class Reorganization Reorganization Reorganization
-------------- --------------- -------------- --------------
<S> <C> <C> <C>
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
------------------------------------------------------------------------------
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
------------------------------------------------------------------------------
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>
2
<PAGE>
Table I-B
(Before Fee Waivers and/or Expense Reimbursements)
The following table shows which of the Mercantile Funds and classes are
projected to experience higher, lower or the same annualized per share total
operating expense ratios than the designated class of the corresponding
Firstar Fund, before fee waivers and/or expense reimbursements following the
Reorganization. The total operating expense ratios are based upon the fee
arrangements and commitments that will be in place upon consummation of the
Reorganization.
<TABLE>
<CAPTION>
Higher Expenses Lower Expenses Same Expenses
after the after the after the
Fund and Class 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
-------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Higher Expenses Lower Expenses Same Expenses
after the after the after the
Fund and Class Reorganization Reorganization Reorganization
-------------- --------------- -------------- --------------
<S> <C> <C> <C>
Mercantile National Municipal
Bond Portfolio
Investor A Shares............... X
Investor B Shares............... X
Trust Shares.................... X
------------------------------------------------------------------------------
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
------------------------------------------------------------------------------
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-C
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.
FIRMCO has committed to waive fees and reimburse expenses as needed to
ensure that for the period from the applicable effective time of the
Reorganization through 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 this Table. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001.
Detailed pro forma expense information for each proposed reorganization is
provided below in "Comparison of Mercantile Funds and Firstar Funds--Fees and
Expenses."
Total Expense Information
<TABLE>
<CAPTION>
Pro Forma
Total Total Total
Operating Operating Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Mercantile 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:
Mercantile Treasury Firstar U.S. Treasury Firstar U.S. Treasury
Money 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%
-----------------------------------------------------------------------------------------------------------
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 Firstar Conning Firstar Conning
Money Market Portfolio Money Market Fund (shell) Money Market Fund (shell)
Shares 1.47%/0.99% Shares n/a Shares 1.37%/0.99%
-----------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Total Total Total
Operating Operating Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Mercantile 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>
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 & Corporate Firstar Aggregate Firstar Aggregate
Bond Portfolio Bond Fund Bond Fund
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-Intermediate Firstar Tax-Exempt Firstar Tax-Exempt
Municipal Portfolio Intermediate Bond Fund Intermediate Bond 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%
------------------------------------------------------------------------------------------------------
Mercantile Missouri Firstar Missouri Firstar Missouri
Tax-Exempt Bond Portfolio Tax-Exempt Bond Fund (shell) Tax-Exempt Bond Fund (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 Firstar National
Municipal Bond Portfolio Municipal Bond 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 Portfolio Income Fund (shell) Income 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%
------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Total Total Total
Operating Operating Operating
Expenses Corresponding Expenses Combined Fund/ Expenses
Mercantile 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>
Mercantile Equity Firstar Equity Firstar Equity
Index Portfolio Index Fund Index 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%
------------------------------------------------------------------------------------------------------
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 Fund International 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>
7
<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 and in the prospectuses and
statements of additional information of Firstar and Mercantile.
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 two weeks 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:
<TABLE>
<CAPTION>
Firstar Fund and Share Class to be
Mercantile Fund and Share Class 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>
--------
* It is expected that prior to the Reorganization certain shareholders for
whom Firstar Bank, N.A. or its affiliates have investment discretion will
have their Trust II Shares exchanged for shares of the Firstar Institutional
Money Market Fund; however, this exchange may occur after the Reorganization
with respect to certain of these shareholders.
8
<PAGE>
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 late November or early December
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 Reorganization--Description of the
Reorganization Agreement" below.
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 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 (i) each of the
Mercantile Funds, that is reorganizing into an existing Firstar Fund, and (ii)
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 a high level of current income exempt Seeks to provide a high level of current
from state income tax consistent with income exempt from state income taxes
liquidity and security of principal. consistent with 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 Firstar Tax-Exempt Money Market Fund:
Portfolio:
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
principal. of capital and a stable net asset value.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Mercantile Fund Corresponding Firstar Fund
--------------- --------------------------
<S> <C>
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.
Mercantile Intermediate Corporate Bond Portfolio: Firstar Intermediate Bond Market Fund:
Seeks as high a level of current income as Seeks to provide an annual rate of total
is consistent with preservation of capital. return, before Fund expenses, comparable to
the annual rate of total return of the
Lehman Brothers Intermediate
Government/Credit 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
of U.S. Government, mortgage-backed, asset- Lehman Brothers Aggregate Bond Index.
backed and corporate debt securities as
represented by the Lehman Brothers
Aggregate Bond Index.
Mercantile Government & Corporate Bond Portfolio: Firstar Aggregate Bond Fund:
Seeks the highest level of current income Seeks to provide an annual rate of total
consistent with conservation of capital. return, before Fund expenses, comparable to
the annual rate of total return of the
Lehman Brothers Aggregate Bond Index.
Mercantile Short-Intermediate Municipal Portfolio: Firstar Tax-Exempt Intermediate Bond Fund:
Seeks as high a level of current income, Seeks to provide current income that is
exempt from regular federal income tax, as substantially exempt from federal income
is consistent with preservation of capital. tax and emphasize total return with
relatively low volatility of principal.
Mercantile National Municipal Bond Firstar National Municipal Bond Fund:
Portfolio:
Seeks as high a level of current income Seeks as high a level of current income
exempt from regular federal income tax as exempt from regular federal income tax as
is consistent with conservation of capital. is 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 appreciation and current income with
current income consistent with the relatively low volatility of capital.
preservation of 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
approximate the price and yield performance performance of publicly traded common
of U.S. publicly traded common stocks with stocks in the aggregate, as represented by
large stock market capitalizations, as the S&P 500 Index.
represented by the Standard & Poor's 500
Index.
Mercantile Growth & Income Equity Firstar Growth & Income Fund:
Portfolio:
Seeks to provide long-term capital growth, Seeks both reasonable income and long-term
with income a secondary consideration. capital appreciation.
Mercantile Growth Equity Portfolio: Firstar Growth Fund:
Seeks capital appreciation. Seeks capital appreciation through
investment in securities of large-sized
companies.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Mercantile Fund Corresponding Firstar Fund
--------------- --------------------------
<S> <C>
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 each of the Firstar Shell Funds has 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
"Investment Objectives, Limitations and Certain Significant Investment
Policies of the Reorganizing Mercantile Funds and Corresponding Firstar Funds"
below.
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 and certain
non-fundamental 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 "Other Information Relating to the Stellar Treasury Fund" below.
FIRMCO currently serves as the investment 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, then the Fund's existing sub-
advisory arrangements with Glenmede Advisers, Inc. described in the enclosed
prospectuses of the Firstar Funds will remain in effect.
11
<PAGE>
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>
Differential between
Firstar and Mercantile
Fund 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 is 0.04% higher than
the contractual advisory fee 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."
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 and/or expense reimbursements) 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 and/or expense reimbursements) 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
12
<PAGE>
offer Trust Shares and all three of the Mercantile Funds that offer Trust II
Shares will have total operating expense ratios (after fee waivers and/or
expense reimbursements) which are higher after the Reorganization. For a more
detailed summary of fees and expenses, see "Fee and Expenses" below.
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 "Shareholder Transactions and Services of
the Firstar Funds and the Corresponding Mercantile Funds" below. 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.
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; (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, with
respect to the Firstar Funds, 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.
13
<PAGE>
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 the same as or similar to those of investing in its
corresponding Reorganizing Mercantile Fund. The reorganization of certain
Mercantile Funds into Existing Firstar Funds will expose the Shareholders of
the Reorganizing Mercantile Funds to the following additional principal risk
factors (capitalized terms are described in the table that follows this
discussion).
<TABLE>
<CAPTION>
The Corresponding Firstar Fund will carry
If a Shareholder invests in the the following additional principal risk
following Mercantile Fund: factor:
------------------------------- -------------------------------------------
<S> <C>
Mercantile Tax-Exempt Money Market Municipal Lease Obligation Risk
Portfolio
Mercantile Intermediate Corporate Bond Focus Risk
Portfolio
Fixed Income Management Risk
Mercantile Short-Intermediate Municipal Municipal Lease Obligation Risk
Portfolio
Mercantile Balanced Portfolio Convertible Securities Risk
Derivatives Risk
Mercantile Equity Index Portfolio Futures Risk
Derivatives Risk
Mercantile Growth & Income Equity Portfolio Interest Rate Risk
Convertible Securities Risk
Derivatives Risk
Mercantile Growth Equity Portfolio Interest Rate Risk
Convertible Securities Risk
</TABLE>
All of 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 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.
14
<PAGE>
"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.
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Management Risk--The investment adviser evaluates All Firstar Funds
the rewards and risks presented by all securities
purchased by a Fund and how they may advance the All Mercantile Funds
Fund's investment objective. It is possible,
however, that these evaluations will prove to be
inaccurate.
---------------------------------------------------------------------------------------
Uninsured Investment Risk--An investment in a Fund All Firstar Funds
is not a deposit of Firstar Bank, N.A. and is not
insured by the Federal Deposit Insurance Corporation All Mercantile Funds
or any other government agency.
---------------------------------------------------------------------------------------
Market Risk--The value of the securities in which a All Firstar Equity Funds
Fund invests may go up or down in response to the
prospects of individual companies and/or general All Mercantile Equity Funds
economic conditions.
---------------------------------------------------------------------------------------
Fixed Income Risk--The rate of income on Fund shares Firstar Money Market, Bond and
will vary from day to day so that dividends on your Tax-Exempt Bond Funds
investment will vary.
Mercantile Money Market, Bond and
Tax-Exempt Bond Funds
---------------------------------------------------------------------------------------
Volatility Risk--The value of your investment will Firstar Bond, Tax-Exempt Bond and
go up and down with the value of the investments Equity Funds
which the Fund holds. You may lose money if you
invest in the Fund. Mercantile Bond, Tax-Exempt Bond
and Equity Funds
---------------------------------------------------------------------------------------
Credit Risk--An issuer of fixed income securities Firstar Money Market, Bond,
may default on its obligation to pay interest and Taxable Bond, Balanced Growth,
repay principal, causing the value of your Growth & Income, Growth and
investment to decline. Lower-rated securities are Emerging Growth Funds
subject to greater credit risk than higher-rated
securities. Mercantile Money Market, Bond and
Tax-Exempt Bond Funds and
Mercantile Balanced Portfolio
---------------------------------------------------------------------------------------
Interest Rate Risk--In general, bond prices rise Firstar Money Market, Bond,
when interest rates fall and fall when interest Taxable Bond, Balanced Growth,
rates rise. Longer-term bonds, stripped securities Growth & Income, Growth and
and zero-coupon securities are more susceptible to Emerging Growth Funds
these fluctuations than short-term bonds. Changes in
interest rates will also effect a Fund's yield. A Mercantile Money Market, Bond and
decline in interest rates may lead to a decline in Tax-Exempt Bond Funds and
the Fund's yield. Lower-rated securities are subject Mercantile Balanced Portfolio
to greater interest rate risk than higher-rated
securities.
---------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Extension Risk--An issuer may exercise its right to Firstar U.S. Government
pay principal on an obligation held by a Fund (such Securities, Aggregate Bond,
as a mortgage-backed or asset-backed security) later National Municipal Bond and
than expected. This may happen when there is a rise Balanced Growth Funds
in interest rates. Under such circumstances, the
value of the obligation will decrease and the Fund Mercantile Bond and Tax-Exempt
will also suffer from the inability to invest in Bond Funds and Mercantile
higher yielding securities. Balanced Portfolio
---------------------------------------------------------------------------------------
Prepayment Risk--An issuer may exercise its right to Firstar U.S. Government
pay principal on an obligation held by a Fund (such Securities, Aggregate Bond,
as a mortgage-backed or asset-backed security) National Municipal Bond and
earlier than expected. This may happen when there is Balanced Growth Funds
a decline in interest rates. These events may make a
Fund unable to recoup its initial investment and may Mercantile Bond and Tax-Exempt
result in reduced yields. Bond Funds and Mercantile
Balanced Portfolio
---------------------------------------------------------------------------------------
Money Market Risk--Although a money market fund Firstar Money Market Funds
seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by Mercantile Money Market Funds
investing in a Fund.
---------------------------------------------------------------------------------------
Sector/Technology Risk--To the extent that a Fund Firstar Balanced Growth, Growth &
emphasizes particular companies or market sectors, Income, Growth and Emerging
such as technology, it will be especially Growth Funds
susceptible to the risks associated with investments
in those companies or market sectors. Stocks of Mercantile Balanced, Equity
technology companies may be subject to greater price Income, Equity Index, Growth &
volatility than stocks of companies in other Income Equity, Growth Equity,
sectors. Technology companies may produce or use Small Cap Equity and Small Cap
products or services that prove commercially Equity Index Portfolios
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 indexing Firstar Equity Index and Small
strategy to approximate the investment performance Cap Index Funds
of a benchmark index, before fund expenses. The Fund
may fail to match the investment results of its Mercantile Bond Index, Equity
benchmark index as a result of shareholder purchase Index and Small Cap Equity Index
and redemption activity, transaction costs, expenses Portfolios
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 securities Firstar Balanced Growth, Growth &
frequently have speculative characteristics and may Income, Growth and Emerging
be acquired without regard to minimum quality Growth Funds
ratings. Convertible securities are subject to
greater credit and interest rate risk than higher
rated securities.
---------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Concentration Risk--A Fund may invest more than 25% Firstar Tax-Exempt Money Market
of its total assets in municipal obligations issued and Tax-Exempt Bond Funds
by entities located in the same state and in
municipal obligations the interest on which is paid Mercantile Tax-Exempt Money
solely from revenues of similar projects. As a Market Portfolio and Mercantile
result, changes in economic, business or political Tax-Exempt Bond Funds
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 state or Firstar Tax-Exempt Money Market
local government issuer to make payments can be and Tax-Exempt Bond Funds
affected by many factors, including economic
conditions, the flow of tax revenues and changes in Mercantile Tax-Exempt Money
the level of federal, state or local aid. Some Market Portfolio and Mercantile
municipal securities are payable only from limited Tax-Exempt Bond Funds
revenue sources or by private entities.
---------------------------------------------------------------------------------------
Small Cap Stock Risk--Compared to larger- Firstar Emerging Growth and Small
capitalization stocks, small-capitalization stocks Cap Index Funds
tend to carry greater risk and exhibit greater price
volatility because their businesses may not be well Mercantile Small Cap Equity and
established. In addition, some smaller companies may Small Cap Equity Index Portfolios
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.
---------------------------------------------------------------------------------------
Foreign Investment Risk--The Fund's investments in Firstar Core International Equity
foreign securities are subject to foreign risks. Fund
Foreign stocks involve special risks not typically
associated with U.S. stocks. The stocks held by the Mercantile Intermediate Corporate
Fund may underperform other types of stocks, and Bond, Government & Corporate Bond
they may not increase or may decline in value. and International Equity
Foreign investments may be riskier than U.S. Portfolios
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 non- Firstar Missouri Tax-Exempt Bond
diversified, which means that it can invest a large Fund
percentage of its assets in a small number of
issues. As a result, a change in the value of any Mercantile Tax-Exempt Money
one investment held by the Fund may affect the Market and Missouri Tax-Exempt
overall value of the Fund more than it would affect Bond Portfolios
a diversified fund which holds more investments.
---------------------------------------------------------------------------------------
Derivatives Risk--Certain investments may be more Firstar Balanced Growth, Equity
sensitive to or otherwise not react in tandem with Index and Growth & Income Funds
interest rate changes or market movements and may be
leveraged.
---------------------------------------------------------------------------------------
Bank Risk--Municipal obligations that a Fund Firstar Tax-Exempt Money Market
purchases may be backed by letters of credit issued Fund
by banks and other financial institutions. Adverse
developments affecting banks could have a negative Mercantile Tax-Exempt Money
effect on the Fund's securities. Market Portfolio
---------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Municipal Lease Obligation Risk--A Fund may acquire Firstar Tax-Exempt Money Market
municipal lease obligations which are issued by a and Tax-Exempt Intermediate Bond
state or local government or authority to acquire Funds
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 Fund Firstar Missouri Tax-Exempt Bond
invests primarily in Missouri municipal securities, Fund
it also is likely to be especially susceptible to
economic, political and regulatory events that Mercantile Missouri Tax-Exempt
affect Missouri. Missouri's economy is largely Bond Portfolio
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 invest in Firstar U.S. Government
repurchase agreements, which carry the risk that the Securities Fund
other party may not fulfill its obligations under
the agreement. Mercantile U.S. Government
Securities Portfolio
---------------------------------------------------------------------------------------
Large Cap Indexing Risk--Your investment follows the Firstar Equity Index Fund
large-cap portion of the U.S. stock market, as
measured by the S&P 500 Index, during upturns as Mercantile Equity Index Portfolio
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 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).
---------------------------------------------------------------------------------------
Growth Risk--The growth stocks the Fund typically Firstar Growth Fund
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 typically Firstar Equity Income Fund
holds may not perform as well as other stocks, such
as growth stocks. Mercantile Equity Income
Portfolio
---------------------------------------------------------------------------------------
Emerging Market Risk--The risks associated with Firstar Core International Equity
foreign investments are heightened when investing in Fund
emerging markets. The governments and economies of
emerging market countries feature greater Mercantile International Equity
instability than those of more developed countries. Portfolio
Such investments tend to fluctuate in price more
widely and to be less liquid than other foreign
investments.
---------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Currency Risk--Currency risk is the potential for Firstar Core International Equity
price fluctuations in the dollar value of the Fund
foreign securities that the Fund holds because of
changing currency exchange rates. Mercantile International Equity
Portfolio
---------------------------------------------------------------------------------------
Focus Risk--Because of the smaller number of issues Firstar Intermediate Bond Market
held by the Fund than its benchmark index, material Fund
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 adviser Firstar Intermediate Bond Market
believes purchasing securities which are not in the Fund
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 impacted by Firstar Tax-Exempt Intermediate
changes in tax rates and policies than other funds. Bond Fund
---------------------------------------------------------------------------------------
Futures Risk--The Fund invests in futures contracts. Firstar Equity Index Fund
Such investments could cause the Fund to track the
S&P 500 Index less closely if they don't perform as
expected.
---------------------------------------------------------------------------------------
IPO Risk--The Fund's performance results may reflect Mercantile Small Cap Equity
periods of above-average performance attributable to Portfolio
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 Special 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."
19
<PAGE>
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.
Shareholders of different Mercantile Funds and different classes of each
such Fund will be affected differently by the Reorganization. Some Firstar
Funds have different operating expenses and investment policies than their
corresponding Mercantile Fund. For more information on these differences,
please see "Comparison of Mercantile Funds and Firstar Funds" and "Expense
Summaries of the Mercantile Funds and the Corresponding Firstar Funds" below.
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.
20
<PAGE>
Table III(A)
<TABLE>
<CAPTION>
Reorganizing Mercantile Fund and Share Class Existing Firstar Fund and Share Class
-------------------------------------------- -------------------------------------
<S> <C>
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
-----------------------------------------------------------------------------------------
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 Firstar Tax-Exempt Intermediate Bond
Portfolio 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>
--------
* It is expected that prior to the Reorganization certain shareholders for whom
Firstar Bank, N.A. or its affiliates have investment discretion will have
their Trust II Shares exchanged for shares of the Firstar Institutional Money
Market Fund; however, this exchange may occur after the Reorganization with
respect to certain shareholders.
21
<PAGE>
<TABLE>
<CAPTION>
Reorganizing Mercantile Fund and Share Class Existing Firstar Fund and Share Class
-------------------------------------------- -------------------------------------
<S> <C>
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
-------------------------------------------------------------------------------------
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>
22
<PAGE>
Table III(B)
<TABLE>
<CAPTION>
Continuing Mercantile Fund and Share Class Shell Firstar Fund and Share Class
------------------------------------------ ----------------------------------
<S> <C>
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 applicable 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 applicable
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 Mercantile Fund prior to the
applicable 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 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. An
application requesting relief with respect to Section 17(a) of the 1940 Act
has been filed with the SEC, and it is expected that the SEC will issue an
order granting such relief prior to the Reorganization.
23
<PAGE>
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.
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.
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; (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
24
<PAGE>
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" above and "Fees and
Expenses" below 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 for the period from the applicable effective
time of the Reorganization through 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 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.
25
<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 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 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>
Mercantile Firstar Pro forma
Treasury Money Stellar U.S. Treasury Money Pro forma Combined Fund
Market Portfolio* Treasury Fund+ Market Fund** Combined Fund (Fund A + Fund B
(Fund A) (Fund B) (Fund C) (Fund A + Fund C) + Fund C)
------------------- ---------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Total Net Assets.. $76,187 $2,177,195,841 $0 $256,538,340 $2,433,734,181
(Investor A Shares) (Class Y Shares) (Institutional Shares) (Institutional Shares) (Institutional Shares)
$501,196 $1,205,547,115 $116,686,783 $1,322,233,898
(Institutional) (Class C Shares) (Retail A Shares) (Retail A Shares)
$189,391,544
(Trust Shares)
$66,569,413
(Trust II Shares)
Shares
Outstanding...... 76,187 2,177,195,841 0 256,538,340 $2,433,734,181
(Investor A Shares) (Class Y Shares) (Institutional Shares) (Institutional Shares) (Institutional Shares)
501,196 1,205,547,115 116,686,783 $1,322,233,898
(Institutional) (Class C Shares) (Retail A Shares) (Retail A Shares)
189,391,544
(Trust Shares)
66,569,413
(Trust II Shares)
Net Asset Value
Per Share........ $1.00 $1.00 $0 $1.00 $1.00
(Investor A Shares) (Class Y Shares) (Institutional Shares) (Institutional Shares) (Institutional Shares)
$1.00 $1.00 $1.00 $1.00
(Institutional) (Class C Shares) (Retail A Shares) (Retail A Shares)
$1.00
(Trust Shares)
$1.00
(Trust II Shares)
</TABLE>
--------
* All shareholders of the Mercantile Treasury Money Market Portfolio will
receive Institutional Shares of the Firstar U.S. Treasury Money Market Fund
in the Reorganization.
** Institutional Shares of the Firstar U.S. Treasury Money Market Fund have
not been offered to investors prior to the date of this Proxy/Prospectus.
+ The Stellar Treasury Fund will be the accounting survivor for financial
statement purposes.
26
<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>
Mercantile Firstar
Money Market Money Market Pro forma
Portfolio* Fund+ Combined Fund
---------------------- ----------------- -----------------
<S> <C> <C> <C>
Total Net Assets........ $9,162,474 $181,997,172 $1,570,593,212
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$49,888
(Investor B Shares)
$30,532,748
(Institutional Shares)
$796,314,569
(Trust Shares)
$552,536,361**
(Trust II Shares)
Shares Outstanding...... 9,162,474 181,997,172 1,570,593,212
(Investor A Shares) (Retail A Shares) (Retail A Shares)
49,888
(Investor B Shares)
30,532,748
(Institutional Shares)
796,314,569
(Trust Shares)
552,536,361**
(Trust II Shares)
Net Asset Value Per
Share.................. $1.00 $1.00 $1.00
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$1.00
(Investor B Shares)
$1.00
(Institutional Shares)
$1.00
(Trust Shares)
$1.00
(Trust II Shares)
</TABLE>
--------
* All shareholders of the Mercantile Money Market Portfolio will receive
Retail A Shares of the Firstar Money Market Fund in the Reorganization.
** Total Net Assets and Shares Outstanding do not reflect the anticipated
exchange prior to the Reorganization of the Trust II Shares held by certain
shareholders for whom Firstar Bank, N.A. or its affiliates have investment
discretion for shares of the Firstar Institutional Money Market Fund.
+ The Firstar Money Market Fund will be the accounting survivor for financial
statement purposes.
27
<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>
Mercantile Stellar Firstar Pro forma
Tax-Exempt Money Tax-Free Money Tax-Exempt Money Pro forma Combined Fund
Market Portfolio Market Fund Market Fund+ Combined Fund (Fund A + Fund B
(Fund A) (Fund B) (Fund C) (Fund A + Fund C) + Fund C)
------------------- ------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Total Net
Assets......... $234,683 $14,399,232 $158,937,927 $159,172,610 $173,571,842
(Investor A Shares) (Class C Shares)** (Retail A Shares) (Retail A Shares) (Retail A Shares)
$31,673,760 $180,179,005 $0 $143,538,380 $323,717,385
(Trust Shares) (Class C Shares)*** (Institutional Shares) (Institutional Shares) (Institutional Shares)
$111,864,620
(Trust II Shares)
Shares
Outstanding.... 234,683 14,399,232 158,937,927 159,172,610 173,571,842
(Investor A Shares) (Class C Shares)** (Retail A Shares) (Retail A Shares) (Retail A Shares)
31,673,760 180,179,005 $0 143,538,380 323,717,385
(Trust Shares) (Class C Shares)*** (Institutional Shares) (Institutional Shares) (Institutional Shares)
111,864,620
(Trust II Shares)
Net Asset Value
Per Share....... $1.00 $1.00 $1.00 $1.00 $1.00
(Investor A Shares) (Class C Shares)** (Retail A Shares) (Retail A Shares) (Retail A Shares)
$1.00 $1.00 $0 $1.00 $1.00
(Trust Shares) (Class C Shares)*** (Institutional Shares) (Institutional Shares) (Institutional Shares)
$1.00
(Trust II Shares)
</TABLE>
--------
+ The Firstar Tax-Exempt Money Market Fund will be the accounting survivor
for financial statement purposes.
* Holders of Investor A Shares of the Mercantile Tax-Exempt Money Market
Portfolio will receive Retail A Shares of the Firstar Tax-Exempt Money
Market Fund in the Reorganization and holders of Trust and Trust II Shares
of the Mercantile Tax-Exempt Money Market Portfolio will receive
Institutional Shares of the Firstar Tax-Exempt Money Market Fund in the
Reorganization.
** Not purchased through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A.
*** Purchased through an investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
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>
Mercantile
Conning
Money Market Pro forma
Portfolio+ Combined Fund
------------ -------------
<S> <C> <C>
Total Net Assets..................................... $190,185,773 $190,185,773
(Shares) (Shares)
Shares Outstanding................................... 190,185,773 190,185,773
(Shares) (Shares)
Net Asset Value Per Share............................ $1.00 $1.00
(Shares) (Shares)
</TABLE>
--------
+ The Mercantile Conning Money Market Portfolio will be the accounting
survivor for financial statement purposes.
28
<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>
Mercantile Stellar Firstar Pro forma
U.S. Government U.S. Government U.S. Government Pro forma Combined Fund
Securities Portfolio+ Income Fund Securities Fund* Combined Fund (Fund A + Fund B
(Fund A) (Fund B) (Fund C) (Fund A + Fund C) + Fund C)
---------------------- ------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Total Net
Assets......... $3,837,184 $7,949,243 $0 $3,837,184 $11,789,427
(Investor A Shares) (Class A Shares)** (Retail A Shares) (Retail A Shares) (Retail A Shares)
$175,105 $1,283,016 $0 $175,105 $1,458,121
(Investor B Shares) (Class B Shares)** (Retail B Shares) (Retail B Shares) (Retail B Shares)
$7,288,887 $154,809,000 $0 $7,288,887 $7,288,887
(Institutional Shares) (Class A Shares)*** (Class Y Shares) (Class Y Shares) (Class Y Shares)
$51,713,926 $13,000 $0 $51,713,926 $206,509,926
(Trust Shares) (Class B Shares)*** (Institutional Shares) (Institutional Shares) (Institutional Shares)
Shares
Outstanding.... 375,980 850,186 $0 375,980 1,154,824
(Investor A Shares) (Class A Shares)** (Retail A Shares) (Retail A Shares) (Retail A Shares)
17,130 137,868 $0 17,130 143,670
(Investor B Shares) (Class B Shares)** (Retail B Shares) (Retail B Shares) (Retail B Shares)
716,895 16,561,349 $0 716,895 716,895
(Institutional Shares) (Class A Shares)*** (Class Y Shares) (Class Y Shares) (Class Y Shares)
5,066,947 1,340 $0 5,066,947 20,228,161
(Trust Shares) (Class B Shares)*** (Institutional Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value
Per Share...... $10.21 $9.35 $0 $10.21 $10.21
(Investor A Shares) (Class A Shares) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$10.22 $9.34 $0 $10.22 $10.22
(Investor B Shares) (Class B Shares) (Retail B Shares) (Retail B Shares) (Retail B Shares)
$10.17 $0 $10.17 $10.17
(Institutional Shares) (Class Y Shares) (Class Y Shares) (Class Y Shares)
$10.21 $0 $10.21 $10.21
(Trust Shares) (Institutional Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* The Firstar U.S. Government Securities Fund has not commenced operations as
of the date of this Proxy/Prospectus.
** Not purchased through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A.
*** Purchased through an investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
+ The Mercantile U.S. Government Securities Portfolio will be the accounting
survivor for financial statement purposes.
29
<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>
Mercantile Firstar
Intermediate Corporate Intermediate Bond Pro forma
Bond Portfolio Market Fund+ Combined Fund
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $423,591 $29,682,992 $30,106,583
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$957,439 $0 $957,439
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$37,508,592 $368,098,405 $405,591,322
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 45,524 2,992,031 3,034,731
(Investor A Shares) (Retail A Shares) (Retail A Shares)
102,890 0 96,516
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
4,046,294 37,102,918 40,884,026
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $9.30 $9.92 $9.92
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$9.31 $0 $9.92
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$9.30 $9.92 $9.92
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Class Y Shares of the Firstar Intermediate Bond Market Fund have not been
offered to investors prior to the date of this Proxy/Prospectus.
+ The Firstar Intermediate Bond Market Fund will be the accounting survivor
for financial statement purposes.
30
<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>
Mercantile
Mercantile Government & Firstar Pro forma
Bond Index Corporate Bond Aggregate Pro forma Pro forma Combined Fund
Portfolio Portfolio+ Bond Fund* Combined Fund Combined Fund (Fund A + Fund
(Fund A) (Fund B) (Fund C) (Fund A + Fund C) (Fund B + Fund C) B + Fund C)
-------------- -------------- -------------- ----------------- ----------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Total Net
Assets....... $976,547 $3,195,302 $0 $976,547 $3,195,302 $4,171,849
(Investor A (Investor A (Retail A (Retail A (Retail A (Retail A
Shares) Shares) Shares) Shares) Shares) Shares)
$641,644 $0 $641,644 $641,644
$20,688,583 (Investor B (Retail B (Retail B (Retail B
(Institutional Shares) Shares) $20,688,583 Shares) Shares)
Shares) $7,418,248 $0 (Class Y $7,418,248 $28,104,831
$148,912,471 (Institutional (Class Y Shares) (Class Y (Class Y
(Trust Shares) Shares) Shares) $148,912,471 Shares) Shares)
$113,428,914 $0 (Institutional $113,428,914 $262,326,139
(Trust Shares) (Institutional Shares) (Institutional (Institutional
Shares) Shares) Shares)
Shares
Outstanding... 101,155 328,030 0 101,155 328,030 428,291
(Investor A (Investor A (Retail A (Retail A (Retail A (Retail A
Shares) Shares) Shares) Shares) Shares) Shares)
65,718 0 65,718 65,718
(Investor B (Retail B (Retail B (Retail B
2,143,175 Shares) Shares) 2,143,175 Shares) Shares)
(Institutional 760,398 0 (Class Y 760,398 2,879,925
Shares) (Institutional (Class Y Shares) (Class Y (Class Y
15,439,389 Shares) Shares) 15,439,389 Shares) Shares)
(Trust Shares) 11,625,615 0 (Institutional 11,625,615 26,881,478
(Trust Shares) (Institutional Shares) (Institutional (Institutional
Shares) Shares) Shares)
Net Asset
Value
Per Share..... $9.65 $9.74 $0 $9.65 $9.74 $9.74
(Investor A (Investor A (Retail A (Retail A (Retail A (Retail A
Shares) Shares) Shares) Shares) Shares) Shares)
$9.76 $0 $9.76 $9.76
(Investor B (Retail B (Retail B (Retail B
$9.65 Shares) Shares) $9.65 Shares) Shares)
(Institutional $9.76 $0 (Class Y $9.76 $9.76
Shares) (Institutional (Class Y Shares) (Class Y (Class Y
$9.64 Shares) Shares) $9.64 Shares) Shares)
(Trust Shares) $9.76 $0 (Institutional $9.76 $9.76
(Trust Shares) (Institutional Shares) (Institutional (Institutional
Shares) Shares) Shares)
</TABLE>
-------
* The Firstar Aggregate Bond Fund has not commenced operations as of the date
of this Proxy/Prospectus.
+ The Mercantile Government & Corporate Bond Portfolio will be the accounting
survivor for financial statement purposes.
31
<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>
Mercantile Firstar
Short-Intermediate Tax-Exempt Pro forma
Municipal Portfolio Intermediate Bond Fund+ Combined Fund
------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $44,256 $14,797,774 $14,842,030
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$27,942,789 $68,728,212 $96,664,001
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 4,488 1,481,382 1,485,412
(Investor A Shares) (Retail A Shares) (Retail A Shares)
2,842,578 6,879,293 9,675,668
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $9.86 $9.94 $9.99
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$9.83 $9.99 $9.99
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
+ The Firstar Tax-Exempt Intermediate Bond Fund will be the accounting
survivor for financial statement purposes.
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>
Mercantile
Missouri Tax-Exempt Pro forma
Bond Portfolio+ Combined Fund
----------------------- ----------------------
<S> <C> <C>
Total Net Assets............................ $20,234,876 $20,234,896
(Investor A Shares) (Retail A Shares)
$3,294,045 $3,294,045
(Investor B Shares) (Retail B Shares)
$116,152,701 $116,152,701
(Trust Shares) (Institutional Shares)
Shares Outstanding.......................... 1,797,674 1,797,674
(Investor A Shares) (Retail A Shares)
292,820 292,820
(Investor B Shares) (Retail B Shares)
10,316,026 10,316,026
(Trust Shares) (Institutional Shares)
Net Asset Value Per Share................... $11.26 $11.26
(Investor A Shares) (Retail A Shares)
$11.25 $11.25
(Investor B Shares) (Retail B Shares)
$11.26 $11.26
(Trust Shares) (Institutional Shares)
</TABLE>
--------
+ The Mercantile Missouri Tax-Exempt Bond Portfolio will be the accounting
survivor for financial statement purposes.
32
<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>
Mercantile Firstar Pro forma
National Municipal Stellar National Municipal Pro forma Combined Fund
Bond Portfolio+ Insured Tax-Free Bond Fund* Combined Fund (Fund A + Fund B +
(Fund A) Bond Fund (Fund B) (Fund C) (Fund A + Fund C) Fund C)
------------------- ------------------- --------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Total Net
Assets......... $1,460,740 $3,942,091 $0 $1,460,740 $5,402,831
(Investor A Shares) (Class A Shares)** (Retail A Shares) (Retail A Shares) (Retail A Shares)
$638,533 $10 $0 $638,533 $638,543
(Investor B Shares) (Class B Shares)** (Retail B Shares) (Retail B Shares) (Retail B Shares)
$265,768,912 $153,781,532 $0 $265,768,912 $419,524,544
(Trust Shares) (Class A Shares)*** (Institutional Shares) (Institutional Shares) (Institutional Shares)
$0
(Class B Shares)***
Shares
Outstanding.... 155,456 406,392 0 155,456 574,469
(Investor A Shares) (Class A Shares)** (Retail A Shares) (Retail A Shares) (Retail A Shares)
68,048 1 0 68,048 68,049
(Investor B Shares) (Class B Shares)** (Retail B Shares) (Retail B Shares) (Retail B Shares)
28,342,537 15,596,504 0 28,342,537 44,733,531
(Trust Shares) (Class A Shares)*** (Institutional Shares) (Institutional Shares) (Institutional Shares)
0
(Class B Shares)***
Net Asset Value
Per Share...... $9.40 $9.86 $0 $9.40 $9.40
(Investor A Shares) (Class A Shares) (Retail A Shares) (Retail A Shares) (Retail A Shares)
$9.38 $9.86 $0 $9.38 $9.38
(Investor B Shares) (Class B Shares) (Retail B Shares) (Retail B Shares) (Retail B Shares)
$9.38 $0 $9.38 $9.38
(Trust Shares) (Institutional Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* The Firstar National Municipal Bond Fund has not commenced operations as of
the date of this Proxy/Prospectus.
** Not purchased through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A.
*** Purchased through an investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
+ The Mercantile National Municipal Bond Portfolio will be the accounting
survivor for financial statement purposes.
33
<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>
Mercantile Firstar Pro forma
Balanced Portfolio Balanced Growth Fund+ Combined Fund
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $10,075,967 $53,469,984 $63,543,951
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$1,990,128 $1,264,043 $3,254,171
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$53,563,141 $0 $53,556,237
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$22,581,605 $174,573,508 $197,152,513
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 933,839 1,640,360 1,949,377
(Investor A Shares) (Retail A Shares) (Retail A Shares)
186,509 38,673 99,552
(Investor B Shares) (Retail B Shares) (Retail B Shares)
4,983,387 0 1,642,817
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
2,091,371 5,347,308 6,038,855
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $10.79 $32.60 $32.60
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$10.67 $32.69 $32.69
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$10.75 $0 $32.60
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$10.80 $32.65 $32.65
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Class Y Shares of the Firstar Balanced Growth Fund have not been offered to
investors prior to the date of this Proxy/Prospectus.
+ The Firstar Balanced Growth Fund will be the accounting survivor for
financial statement purposes.
34
<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>
Mercantile Pro forma
Equity Income Portfolio+ Combined Fund
------------------------ ---------------------
<S> <C> <C>
Total Net Assets............... $820,481 $820,481
(Investor A Shares) (Retail A Shares)
$640,153 $640,153
(Investor B Shares) (Retail B Shares)
$113,121 $113,121
(Institutional Shares) (Class Y Shares)
$54,894,443 $54,894,443
(Trust Shares) (Institutional Shares)
Shares Outstanding............. 129,847 129,847
(Investor A Shares) (Retail A Shares)
101,560 101,560
(Investor B Shares) (Retail B Shares)
17,864 17,864
(Institutional Shares) (Class Y Shares)
8,679,498 8,679,498
(Trust Shares) (Institutional Shares)
Net Asset Value Per Share...... $6.32 $6.32
(Investor A Shares) (Retail A Shares)
$6.30 $6.30
(Investor B Shares) (Retail B Shares)
$6.33 $6.33
(Institutional Shares) (Class Y Shares)
$6.32 $6.32
(Trust Shares) (Institutional Shares)
</TABLE>
--------
+ The Mercantile Equity Income Portfolio will be the accounting survivor for
financial statement purposes.
35
<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>
Mercantile Firstar Pro forma
Equity Index Portfolio Equity Index Fund+ Combined Fund
---------------------- --------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $3,506,691 $146,679,976 $150,186,667
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$9,131,982 $9,131,982
(Retail B Shares) (Retail B Shares)
$37,724,640 $0 $37,717,346
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$70,164,791 $665,834,555 $735,986,541
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 197,413 1,535,982 1,572,709
(Investor A Shares) (Retail A Shares) (Retail A Shares)
95,787 95,787
Retail B Shares) (Retail B Shares)
2,123,671 0 395,032
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
3,946,257 6,963,125 7,696,697
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $17.76 $95.48 $95.48
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$95.31 $95.31
(Retail B Shares) (Retail B Shares)
$17.76 $0 $95.48
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$17.78 $95.63 $95.63
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Class Y Shares of the Firstar Equity Index Fund have not been offered to
investors prior to the date of this Proxy/Prospectus.
+ The Firstar Equity Index Fund will be the accounting survivor for financial
statement purposes.
36
<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>
Mercantile
Growth & Income Equity Firstar Pro forma
Portfolio Growth & Income Fund+ Combined Fund
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $47,385,120 $181,141,881 $228,524,001
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$9,714,550 $2,460,928 $12,174,478
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$86,329,718 $0 $86,323,718
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$246,714,630 $509,848,935 $756,545,529
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 2,623,390 4,036,241 5,091,522
(Investor A Shares) (Retail A Shares) (Retail A Shares)
549,822 54,987 272,050
(Investor B Shares) (Retail B Shares) (Retail B Shares)
4,776,910 0 1,923,690
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
13,586,012 11,382,852 16,868,656
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $18.06 $44.90 $44.90
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$17.67 $44.75 $44.75
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$18.07 $0 $44.90
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$18.16 $44.97 $44.97
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Class Y Shares of the Firstar Growth & Income Fund have not been offered to
investors prior to the date of this Proxy/Prospectus.
+ The Firstar Growth & Income Fund will be the accounting survivor for
financial statement purposes.
37
<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>
Mercantile
Growth Equity Firstar Pro forma
Portfolio Growth Fund+ Combined Fund
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $9,296,079 $51,718,399 $61,013,478
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$2,213,589 $1,144,141 $3,357,730
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$2,607,143 $0 $2,607,143
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$111,340,820 $321,879,145 $433,208,616
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 421,411 1,204,074 1,420,541
(Investor A Shares) (Retail A Shares) (Retail A Shares)
102,198 26,876 78,874
(Investor B Shares) (Retail B Shares) (Retail B Shares)
118,307 0 60,716
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
5,011,539 7,390,974 9,947,339
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $22.06 $42.94 $42.94
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$21.66 $42.57 $42.57
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$22.04 $0 $42.94
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$22.22 $43.55 $43.55
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Class Y Shares of the Firstar Growth Fund have not been offered to investors
prior to the date of this Proxy/Prospectus.
+ The Firstar Growth Fund will be the accounting survivor for financial
statement purposes.
38
<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>
Mercantile
Small Cap Equity Firstar Pro forma
Portfolio+ Emerging Growth Fund Combined Fund
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $9,644,689 $11,154,683 $20,798,072
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$1,259,999 $222,044 $1,482,043
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$4,316,832 $0 $4,316,832
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$137,887,641 $184,496,463 $322,358,404
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 570,339 876,833 1,229,912
(Investor A Shares) (Retail A Shares) (Retail A Shares)
77,354 17,594 90,985
(Investor B Shares) (Retail B Shares) (Retail B Shares)
256,056 0 256,056
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
8,012,475 14,433,579 18,731,310
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $16.91 $12.72 $16.91
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$16.29 $12.92 $16.29
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$16.86 $0 $16.86
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$17.21 $12.78 $17.21
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Class Y Shares of the Firstar Emerging Growth Fund have not been offered to
investors prior to the date of this Proxy/Prospectus.
+ The Mercantile Small Cap Equity Portfolio will be the accounting survivor
for financial statement purposes.
39
<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>
Mercantile
Small Cap Equity Pro forma
Index Portfolio+ Combined Fund
---------------------- ---------------------
<S> <C> <C>
Total Net Assets.................. $164,419 $164,419
(Investor A Shares) (Retail A Shares)
$15,514,528 $15,514,528
(Institutional Shares) (Class Y Shares)
$52,932,256 $52,932,256
(Trust Shares) (Institutional Shares)
Shares Outstanding................ 14,418 14,418
(Investor A Shares) (Retail A Shares)
1,364,327 1,364,327
(Institutional Shares) (Class Y Shares)
4,814,031 4,814,031
(Trust Shares) (Institutional Shares)
Net Asset Value Per Share......... $11.40 $11.40
(Investor A Shares) (Retail A Shares)
$11.37 $11.37
(Institutional Shares) (Class Y Shares)
$11.41 $11.41
(Trust Shares) (Institutional Shares)
</TABLE>
--------
+ The Mercantile Small Cap Equity Index Portfolio will be the accounting
survivor for financial statement purposes.
40
<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>
Mercantile Firstar
International Equity Core International Pro forma
Portfolio+ Equity Fund Combined Fund
---------------------- --------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $4,164,470 $30,142 $4,194,612
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$790,990 $44,699 $835,689
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$15,417,874 $0 $15,417,874
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$109,908,750 $39,613,123 $149,521,873
(Trust Shares) (Institutional Shares) (Institutional Shares)
Shares Outstanding...... 241,746 3,034 243,495
(Investor A Shares) (Retail A Shares) (Retail A Shares)
47,474 4,505 50,157
(Investor B Shares) (Retail B Shares) (Retail B Shares)
896,702 0 896,702
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
6,296,258 3,981,644 8,565,050
(Trust Shares) (Institutional Shares) (Institutional Shares)
Net Asset Value Per
Share.................. $17.23 $9.93 $17.23
(Investor A Shares) (Retail A Shares) (Retail A Shares)
$16.66 $9.92 $16.66
(Investor B Shares) (Retail B Shares) (Retail B Shares)
$17.19 $0 $17.19
(Institutional Shares) (Class Y Shares)* (Class Y Shares)
$17.46 $9.95 $17.46
(Trust Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Class Y Shares of the Firstar Core International Equity Fund have not been
offered to investors prior to the date of this Proxy/Prospectus.
+ The Mercantile International Equity Portfolio will be the accounting
survivor for financial statement purposes.
41
<PAGE>
Federal Income Tax Considerations. Each Firstar Fund and each Mercantile
Fund intends to qualify as of the applicable 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 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.
42
<PAGE>
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 generally in this section and
are followed by a more detailed Fund-by-Fund analysis below. 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--Generally. 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 the 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 respective agencies and instrumentalities. The Firstar Tax-Exempt Money
Market Fund is a diversified portfolio under the 1940 Act while the Mercantile
Tax-Exempt Money 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 "Other Information
Relating to the Stellar Treasury Fund" below for a complete description of the
investment objective, policies and restrictions of the Stellar Treasury Fund.
Reorganizing Bond Funds--Generally. 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 Brothers 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.
43
<PAGE>
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--Generally. 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 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 65% 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 total 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.
Fund-by-Fund Analysis. This Fund-by-Fund analysis provides additional
information concerning 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 section. 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
44
<PAGE>
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 Section. 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: Seeks to provide a high level
of 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 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 "Other Information Relating to
the Stellar Treasury Fund" below.
Mercantile Treasury Money Market Portfolio/Firstar U.S. Treasury Money
Market Fund. Each of the Mercantile Treasury Money Market Portfolio and the
Firstar U.S. Treasury Money Market 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. 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
or sell securities on a forward commitment basis.
45
<PAGE>
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. Each of
the Mercantile Treasury Money Market Portfolio and the Stellar Treasury 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. 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. 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: Each of the Mercantile Money Market Portfolio and the Firstar Money
Market 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. 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 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.
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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 and other types of entities or by investment
companies, or they may be issued or guaranteed by the U.S. Government and its
agencies and instrumentalities or political subdivisions. 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.
Each of the Mercantile Tax-Exempt Money Market Portfolio and the Firstar
Tax-Exempt Money Market 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. 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 those 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.
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 debt 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,
which are exempt from federal income taxes and with remaining maturities of 13
months or less. For purposes of this fundamental policy, municipal securities
that are subject to the federal alternative minimum income tax are considered
taxable. 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, beneficial interests in trusts and partnership
interests.
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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.
(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/Credit 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 Portfolio 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 to
eligible rated securities at the time of purchase. 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., those rated
A or higher by S&P or Moody's) or unrated debt obligations determined to be of
comparable quality to eligible rated securities at the time of purchase. The
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/Credit 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., those rated 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
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of S&P or Moody's. The effective dollar-weighted average portfolio maturity of
the 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 total 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 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. Both Funds may enter into futures contracts and related options, but
only the Firstar Intermediate Bond Market Fund may buy and sell futures
contracts and related options on foreign exchanges or boards of trade.
5. Mercantile Bond Index Portfolio/Firstar Aggregate Bond Fund
Investment Objectives:
(a) Mercantile Bond Index Portfolio: Seeks to provide investment results
that, before the 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 a similar investment objective and
substantially the same investment 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 before expenses, 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.
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
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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 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., those rated
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, primarily bonds (at least 65% under normal market conditions). At
least 80% of its total assets will be invested in municipal securities 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 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 reverse
repurchase agreements and options, although the Fund
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does not intend to invest in options 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.
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/Credit Bond Index. Except for convertible securities, the
Fund will purchase only fixed-income securities rated investment grade or
unrated obligations determined to be of comparable quality.
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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 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 Fund 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
Portfolio 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. Both Funds may
enter into futures contracts and related options, but only the Firstar
Balanced Growth Fund may buy and sell futures contracts and related options on
foreign exchanges or boards of trade. 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.
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
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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 stock 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 in an 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 stock 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. In addition, the Firstar Equity Index Fund, unlike the
Mercantile Equity Index Portfolio, may buy and sell futures contracts and
related options on foreign exchanges or boards of trade.
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
Portfolio 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.
(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 primary 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 will invest in preferred stocks convertible into common
stocks only if they provide a
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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 & Income Fund, unlike the Mercantile Growth &
Income Equity 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 Portfolio may invest. The Firstar Growth & 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 common 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 65% of its total assets in
equity securities of large-sized companies. 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.
54
<PAGE>
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 grade bonds, notes and debentures, although the Firstar
Growth Fund will invest in these securities only 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 Portfolio 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.
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.
55
<PAGE>
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 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. Both Funds
may enter into futures contracts and related options, but only the Firstar
Emerging Growth Fund may buy and sell futures contracts and related options on
foreign exchanges or boards of trade.
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 Portfolio 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
56
<PAGE>
(b) Firstar Core International Equity Fund: Seeks to provide maximum, long-
term total return consistent with reasonable risk to 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 securities of companies located in the
developed countries of Western Europe and Japan, although the Portfolio 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
57
<PAGE>
such investments to those securities issued by "money market" funds which
invest in securities in which the Portfolio 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.
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.
Other Information Relating to the Stellar Treasury Fund.
Investment Objective
The 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.
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.
. 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
58
<PAGE>
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. The investment policies and
limitations of the Fund may not be changed by the Board of Trustees of Stellar
without approval of shareholders.
The Fund may follow non-fundamental operational policies that are more
restrictive than the fundamental investment limitations set forth in this
section 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.
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.
59
<PAGE>
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.
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 section, "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.
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
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<PAGE>
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% of the value
of total assets at the time of the pledge.
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 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."
Investment Advisory Services. FIRMCO serves as investment adviser to the
Firstar Funds and Mercantile Funds and will continue to serve as investment
adviser to the Firstar Funds upon consummation of the Reorganization. Conning
Asset Management Company serves as sub-adviser to the Mercantile Conning Money
Market Portfolio and will serve as sub-adviser to the Firstar Conning Money
Market Fund upon consummation of the Reorganization. Clay Finlay Inc. serves
as sub-adviser to the Mercantile International Equity Portfolio. It is
expected that Clay Finlay Inc. will replace Glenmede Advisers, Inc. as sub-
adviser to the Firstar Core International Equity Fund prior to the
Reorganization and will continue to serve as sub-adviser to the Fund upon
consummation of the Reorganization.
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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 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>
Advisory Fees
Before/After
Waivers
(Pro Forma
Advisory Fees After Giving
Before/After Effect to the
Mercantile Fund Waivers Corresponding Firstar Fund Reorganization)
--------------- ------------- -------------------------- ---------------
<S> <C> <C> <C>
Mercantile Treasury Firstar U.S. Treasury Money Market Fund
Money Market Portfolio
Advisory Fee........... 0.40%/0.35% Advisory Fee................................ 0.44%/0.44%
-----------------------------------------------------------------------------------------------------
Mercantile Money Market Firstar Money Market Fund
Portfolio
Advisory Fee........... 0.40%/0.35% Advisory Fee................................ 0.50%/0.43%
-----------------------------------------------------------------------------------------------------
Mercantile Tax-Exempt Firstar Tax-Exempt Money Market Fund
Money Market Portfolio
Advisory Fee........... 0.40%/0.35% Advisory Fee................................ 0.50%/0.50%
-----------------------------------------------------------------------------------------------------
Mercantile Conning Money Firstar Conning Money Market Fund (shell)
Market Portfolio
Advisory Fee........... 0.40%/0.17% Advisory Fee................................ 0.40%/0.17%
Sub-Advisory Fee (paid
by Adviser)........... 0.30%/0.12% Sub-Advisory Fee (paid by Adviser).......... 0.30%/0.12%
-----------------------------------------------------------------------------------------------------
Mercantile U.S. Firstar U.S. Government Securities Fund
Government Securities
Portfolio
Advisory Fee........... 0.45%/0.45% Advisory Fee................................ 0.60%/0.50%
-----------------------------------------------------------------------------------------------------
Mercantile Intermediate Firstar Intermediate Bond Market Fund
Corporate Bond
Portfolio
Advisory Fee........... 0.55%/0.55% Advisory Fee................................ 0.50%/0.40%
-----------------------------------------------------------------------------------------------------
Mercantile Bond Index Firstar Aggregate Bond Fund
Portfolio
Advisory Fee........... 0.30%/0.30% Advisory Fee................................ 0.50%/0.44%
-----------------------------------------------------------------------------------------------------
Mercantile Government & Firstar Aggregate Bond Fund
Corporate Bond
Portfolio
Advisory Fee........... 0.45%/0.45% Advisory Fee Aggregate...................... 0.50%/0.44%
-----------------------------------------------------------------------------------------------------
Mercantile Short- Firstar Tax-Exempt Intermediate Bond Fund
Intermediate Municipal
Portfolio
Advisory Fee........... 0.55%/0.55% Advisory Fee................................ 0.50%/0.39%
-----------------------------------------------------------------------------------------------------
Mercantile Missouri Tax- Firstar Missouri Tax-Exempt Bond Fund (shell)
Exempt Bond Portfolio
Advisory Fee........... 0.45%/0.45% Advisory Fee................................ 0.45%/0.45%
-----------------------------------------------------------------------------------------------------
Mercantile National Firstar National Municipal Bond Fund
Municipal Bond
Portfolio
Advisory Fee........... 0.55%/0.55% Advisory Fee................................ 0.55%/0.55%
-----------------------------------------------------------------------------------------------------
Mercantile Balanced Firstar Balanced Growth Fund
Portfolio
Advisory Fee........... 0.75%/0.75% Advisory Fee................................ 0.75%/0.71%
-----------------------------------------------------------------------------------------------------
Mercantile Equity Income Firstar Equity Income Fund (shell)
Portfolio
Advisory Fee........... 0.75%/0.75% Advisory Fee................................ 0.75%/0.72%
-----------------------------------------------------------------------------------------------------
Mercantile Equity Index Firstar Equity Index Fund
Portfolio
Advisory Fee........... 0.30%/0.30% Advisory Fee................................ 0.25%/0.20%
-----------------------------------------------------------------------------------------------------
Mercantile Growth & Firstar Growth & Income Fund
Income Equity Portfolio
Advisory Fee........... 0.55%/0.55% Advisory Fee................................ 0.75%/0.75%
-----------------------------------------------------------------------------------------------------
Mercantile Growth Equity Firstar Growth Fund
Portfolio
Advisory Fee........... 0.75%/0.75% Advisory Fee................................ 0.75%/0.75%
-----------------------------------------------------------------------------------------------------
Mercantile Small Cap Firstar Emerging Growth Fund
Equity Portfolio
Advisory Fee........... 0.75%/0.75% Advisory Fee................................ 0.75%/0.74%
-----------------------------------------------------------------------------------------------------
Mercantile Small Cap Firstar Small Cap Index Fund (shell)
Equity Index Portfolio
Advisory Fee........... 0.40%/0.40% Advisory Fee................................ 0.40%/0.34%
-----------------------------------------------------------------------------------------------------
Mercantile International Firstar Core International Equity Fund
Equity Portfolio
Advisory Fee........... 1.00%/0.94% Advisory Fee................................ 1.00%/0.94%
Sub-Advisory Fee (paid
by Adviser)........... 0.75%/0.75% Sub-Advisory Fee (paid by Adviser).......... 0.75%/0.75%
-----------------------------------------------------------------------------------------------------
</TABLE>
62
<PAGE>
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 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
---------- -------
<C> <S> <C>
Distributor...................... BISYS Fund Services Quasar Distributors, LLC
Limited Partnership
Co-Administrators/Administrator.. BISYS Fund Services Firstar Mutual Fund Services, LLC
Ohio, Inc. and Firstar
Mutual Fund Services,
LLC
Transfer Agent................... Firstar Mutual Fund Firstar Mutual Fund Services, LLC
Services, LLC
Custodian........................ Firstar Bank, N.A. Firstar Bank, N.A.
Independent Accountants.......... KPMG LLP PricewaterhouseCoopers LLP
</TABLE>
It is expected that prior to the Reorganization KPMG LLP will resign as
Mercantile's independent accountants and that management will recommend that
the Board of Directors of Mercantile select PricewaterhouseCoopers LLP as
Mercantile's new independent accountants.
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 below in
"Shareholder Transactions and Services of the Firstar Funds and the
Corresponding Mercantile Funds." 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 below in "Shareholder
Transactions and Services of the Firstar Funds and the Corresponding
Mercantile Funds."
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 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.
63
<PAGE>
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 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
64
<PAGE>
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 such 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.
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 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 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 below in "Shareholder Transactions and Services
of the Firstar Funds and the Corresponding Mercantile Funds." 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 below in "Shareholder Transactions and Services of the Firstar Funds
and the Corresponding Mercantile Funds."
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 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, 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.
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.
66
<PAGE>
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 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 Firstar Funds. The following section contains a more
detailed comparison of shareholder transactions and policies.
Shareholder Transactions and Services of the Firstar Funds and the
Corresponding Mercantile Funds. This section 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 Firstar 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 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. 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 Fund'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 Investor A
Shares of Mercantile's Equity Funds and on 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
67
<PAGE>
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 Dealer
Amount of Percentage of Percentage of Reallowance as a Percentage
Transaction Offering Price Net Asset Value of Offering Price
at 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 and 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>
Contingent Deferred
Sales Charge
(as % of dollar amount
Number of Years Elapsed Since Purchase 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>
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
Funds 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
68
<PAGE>
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 fund in the 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)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 the 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
benefit 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 fund in the Firstar family
of funds, you may reinvest some or all of the proceeds in 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.
5)Waivers--Mercantile Investor A Shares and Firstar Retail A Shares
No sales charge will be assessed on purchases of Mercantile Investor A
Shares and Firstar Retail A Shares made by:
<TABLE>
<CAPTION>
Mercantile Firstar
---------- -------
<S> <C>
(1) an officer or director of (1) an employee, director, retiree or
Mercantile (or an immediate family registered representative of
member of any such individual); Firstar Corporation or its
affiliates or of Firstar Funds,
Inc. or a spouse, parent, in-law,
sibling or child of such an
individual;
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
Mercantile Firstar
---------- -------
<S> <C>
(2) a broker, dealer or agent who has a (2) an investor that purchases through
sales agreement with Mercantile's certain broker-dealers who have
distributor (or an employee or agreed to provide certain services
immediate family member of any such with respect to shares of the
individual); Firstar Funds, including Charles
Schwab Mutual Fund Marketplace(R);
(3) an investor who buys shares with (3) an investor that takes part in an
the proceeds of Trust Shares or employer-sponsored qualified
Institutional Shares of a retirement plan administered by
Mercantile Fund redeemed in Firstar with assets of less than $1
connection with a rollover of million at the time Firstar begins
benefits paid by a qualified plan administration, provided such
retirement or employee benefit plan administration commenced on or
or a distribution on behalf of any after June 18, 1999;
other qualified account
administered by Firstar Bank, N.A.
or its affiliates or correspondents
within 60 days of receipt of such
payment;
(4) an investor who buys shares by (4) an investor making purchases for
reinvesting dividends and capital his or her medical savings account
gains distributions; for which Firstar Corporation or an
affiliate serves in a custodial
capacity;
(5) a director, a current or retired (5) an investor making purchases
employee or a participant in an through certain external
employee benefit or retirement plan organizations that have entered
of Firstar Corporation or into a service agreement with
Mercantile's distributor or any of Firstar or its affiliates.
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;
(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) an investor who exchanges 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>
70
<PAGE>
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 (1) certain exchanges of Firstar shares
an exchange of Investor B Shares of described below;
another Mercantile Fund;
(2) the redemption represents a (2) the redemption is in connection
distribution from a qualified with shares sold for certain
retirement plan under Section retirement distributions or because
403(b)(7) of the Internal Revenue of disability or death;
Code, due to death, disability or
the attainment of a specified age;
(3) the account falls below the (3) the redemption is effected pursuant
Mercantile Fund's minimum account to Firstar's right to liquidate a
size and Mercantile liquidates the shareholder's account if the
account; 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- (4) the redemption results from certain
free return of an excess tax-free returns from IRAs of
contribution, pursuant to Section excess contributions;
408(d)(4) or (5) of the Internal
Revenue Code;
(5) the investor participates in the (5) the redemption is made pursuant to
Systematic Withdrawal Plan and the Systematic Withdrawal Plan
annual withdrawals do not exceed (discussed below);
12% of the investor's account
value; and
(6) the redemption is in connection (6) the redemption is in connection
with the death or disability of the with the combination of a Firstar
shareholder. Fund with any other investment
company registered under the 1940
Act by merger, acquisition of
assets, or by any other
transaction; and
(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.
</TABLE>
71
<PAGE>
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.
<CAPTION>
Mercantile Funds:
Investor A and Investor B Firstar Funds:
Shares Retail A and Retail B Shares
------------------------- ----------------------------
<S> <C> <C>
Minimum Initial $1,000 for a regular account; $1,000 (waived if you
Investment no minimum investment if the participate in the Periodic
shareholder participates in a Investment Plan)
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.
<CAPTION>
Mercantile Funds: Firstar Funds:
Trust and 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.
<CAPTION>
Mercantile Conning Firstar Conning
Money Market Portfolio Money Market Fund
---------------------- -----------------
<S> <C> <C>
Minimum Initial Mercantile does not have any Firstar does not have any
Investment minimum investment requirement minimum investment requirement
but the customer's financial but the customer's financial
institution may do so. institution may do so.
<CAPTION>
Mercantile Funds: Firstar Funds:
Institutional Shares Class Y Shares
-------------------- --------------
<S> <C> <C>
Minimum Subsequent Mercantile does not have any None.
Investments minimum subsequent investment
requirement but the customer's
financial institution may do
so.
<CAPTION>
Mercantile Funds:
Investor A and Investor B Firstar Funds:
Shares Retail A and Retail B Shares
------------------------- ----------------------------
<S> <C> <C>
Minimum Subsequent $50 for a regular account; none $50
Investments if investor participates in a
sweep 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>
72
<PAGE>
<TABLE>
<CAPTION>
Mercantile Funds: Firstar Funds:
Trust and Trust II Shares Institutional Shares
------------------------- --------------------
<S> <C> <C>
Minimum Subsequent Mercantile does not have any None.
Investment minimum subsequent investment
requirement but the customer's
financial institution may do so.
<CAPTION>
Mercantile Conning Firstar Conning
Money Market Portfolio Money Market Fund
---------------------- -----------------
<S> <C> <C>
Minimum Subsequent Mercantile does not have any Firstar does not have any
Investments minimum subsequent investment minimum subsequent investment
requirement but the customer's requirement but the customer's
financial institution may do so. financial institution may do so.
<CAPTION>
Mercantile Funds: Firstar Funds:
Institutional Shares Class Y Shares
-------------------- --------------
<S> <C> <C>
Purchase Methods Follow established procedures of Purchases are effected pursuant
customer's financial to a customer's account at
institution. 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.
Institutions and broker-dealers
purchasing shares on behalf of
their Customers may do so by
mail or by wire.
<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
that has a servicing agreement organization; by mail;
with the Fund; through a broker- automatically through the
dealer organization; Periodic Investment Plan and
automatically through the ConvertiFund account; by wire;
Periodic Investment Plan, and by Internet (except for
Payroll Deduction Program, and initial purchases).
the ConvertiFund account;
directly from the Fund by mail;
by telephone; and by Internet
(except for initial purchases).
<CAPTION>
Mercantile Funds: Firstar Funds:
Trust and Trust II Shares Institutional Shares
------------------------- --------------------
<S> <C> <C>
Purchase Methods Follow established procedures of Purchases are effected pursuant
customer's financial to a customer's account at
institution. 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.
Institutions and broker-dealers
purchasing shares on behalf of
their customers may do so by
mail or wire.
<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 customer's financial
institution. institution.
</TABLE>
73
<PAGE>
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; Follow established procedures Follow established procedures
wire; or Internet of customer's financial of customer's financial
institution. institution.
By Systematic Withdrawal No No
Plan
Checkwriting feature No No
<CAPTION>
Mercantile Funds:
Investor A and Investor B Firstar Funds:
Shares Retail A and Retail B Shares
------------------------- ----------------------------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or
shareholder
organization
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 Yes ($10,000 account minimum Yes ($5,000 account minimum and
Plan and $50 minimum per transaction $50 minimum per transaction).
monthly, 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)
<CAPTION>
Mercantile Funds:
Investor A and Investor B Firstar Funds:
Shares Retail A and Retail B Shares
------------------------- ----------------------------
<S> <C> <C>
Checkwriting feature Yes ($250 minimum and available Yes for Retail A Shares ($250
for the Money Market Funds only) minimum and available for the
Money Market Funds only)
<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; Follow established procedures Follow established procedures
wire; or Internet of customer's financial of customer's financial
institution. institution.
By Systematic Withdrawal No No
Plan
Checkwriting feature No Yes ($250 minimum and available
for the Money Market Funds
only)
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
Mercantile Conning Firstar Conning
Money Market Portfolio Money Market Fund
---------------------- -----------------
<S> <C> <C>
Through a broker-dealer, Yes Yes
other financial
organization, or
shareholder
organization
By mail; telephone; Follow established procedures Follow established procedures
wire; or Internet of customer's financial of customer's financial
institution. institution.
By Systematic Withdrawal No No
Plan
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 as a result of selling or exchanging shares. In such event, 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.
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 Yes Yes
or other financial
organization
By mail Yes Yes
By telephone Yes (if this privilege was Yes (privilege automatically
elected 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 above $1,000
under ConvertiFund.
<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>
75
<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 Follow established
procedures of customer's procedures of customer's
financial institution. financial institution.
Minimum Follow established $1,000
procedures of customer's
financial institution.
<CAPTION>
Mercantile Conning Firstar Conning
Money Market Portfolio Money Market Fund
---------------------- -----------------
<S> <C> <C>
Through a broker-dealer, No exchange privilege No exchange privilege
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 at the time of the exchange. 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 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 Retail A Shares of a
Money Market Fund acquired in an exchange of Retail B Shares will be subject
to a contingent deferred sales charge upon redemption. 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.
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 Firstar Bank,
N.A. 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
76
<PAGE>
with a higher sales charge, 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 Investor A Shares and Firstar Retail A Shares, the
applicable front-end sales charge.
For processing purchase and redemption orders, the NAV per share of each of
the Mercantile Funds and Firstar Funds is calculated each business day at the
following times:
<TABLE>
<CAPTION>
Time of
Calculation Mercantile Funds Firstar Funds
----------- ---------------- -------------
<S> <C> <C>
11:00 a.m. CST Treasury Money Market Portfolio
and (order must be received by
3:00 p.m. CST 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
and Tax-Exempt Money Market Fund
3:00 p.m. CST 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>
The NAV for each of 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. The NAV for each of 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.
77
<PAGE>
F.Dividends for each of the Mercantile Fund and Firstar Funds are declared and
paid as follows:
<TABLE>
<CAPTION>
Dividend
Declared/
Mercantile Fund Paid
--------------- ---------
<S> <C>
Treasury Money Market
Portfolio.................... D/M
Money Market Portfolio........ D/M
Tax-Exempt Money Market
Portfolio.................... D/M
Conning Money Market
Portfolio.................... D/M
U.S. Government Securities
Portfolio.................... D/M
Intermediate Corporate Bond
Portfolio.................... D/M
Bond Index Portfolio.......... D/M
Government & Corporate Bond
Portfolio.................... D/M
Short-Intermediate Municipal
Portfolio.................... D/M
Missouri Tax-Exempt Bond
Portfolio.................... D/M
National Municipal Bond
Portfolio.................... D/M
Balanced Portfolio............ M/M
Equity Income Portfolio....... M/M
Equity Index Portfolio........ M/M
Growth & Income Equity
Portfolio.................... M/M
Growth Equity Portfolio....... M/M
Small Cap Equity Portfolio.... Q/Q
Small Cap Equity Index
Portfolio.................... Q/Q
International Equity
Portfolio.................... Q/Q
</TABLE>
<TABLE>
<CAPTION>
Dividend
Declared/
Firstar Fund Paid
------------ ---------
<S> <C>
U.S. Treasury Money Market
Fund......................... D/M
Money Market Fund............. D/M
Tax-Exempt Money Market Fund.. D/M
Conning Money Market Fund..... D/M
U.S. Government Income Fund... M/M
Intermediate Bond Market
Fund......................... M/M
Aggregate Bond Fund........... M/M
Tax-Exempt Intermediate Bond
Fund......................... M/M
Missouri Tax-Exempt Bond
Fund......................... M/M
National Municipal Bond Fund.. M/M
Balanced Growth Fund.......... Q/Q
Equity Income Fund............ M/M
Equity Index Fund............. Q/Q
Growth and Income Fund........ Q/Q
Growth Fund................... A/A
Emerging Growth Fund.......... A/A
Small Cap Index Fund.......... 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 its net capital gains
to shareholders at least annually.
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 and/or expense reimbursement)
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 and/or expense reimbursement) 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 and/or expense reimbursement) which are higher after the
Reorganization. Fee waivers, however, are subject to termination.
The following tables (a) compare the fees and expenses as of April 30, 2000
for the Mercantile Funds and the Corresponding Firstar Funds and (b) show the
estimated fees and expenses for the Corresponding Firstar
78
<PAGE>
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 Funds 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
Funds. 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
for the period from the applicable effective time of the Reorganization
through October 31, 2001 total operating expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
79
<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)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Treasury Money Market Portfolio
is as follows:
Trust Shares--decrease .02% Trust II Shares--increase .23%
Institutional Shares--decrease Investor A Shares--decrease .02%
.02%
<TABLE>
<CAPTION>
Firstar
Firstar Stellar U.S. Treasury
Mercantile Treasury Money Market Combined Fund
Treasury Money Market Portfolio Fund* Fund Pro Forma
--------------------------------------------- --------------- ------------- -------------
Trust Trust II Institutional Investor A Institutional Institutional
Shares Shares Shares Shares Class Y 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) 0.40%(3) 0.40%(3) 0.40%(3) 0.50% ++ 0.44%
Distribution and Service
(12b-1) Fees........... None None None 0.25% None ++ None
Other Expenses (before
waivers)(4)............ 0.56% 0.31% 0.56% 0.31% 0.43% ++ 0.39%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(5)........... 0.96% 0.71% 0.96% 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
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 contemporaneously 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. The failure of the Firstar
Stellar Treasury Fund to reorganize into the Firstar U.S. Treasury Money
Market Fund as expected will not affect the Reorganization of the
Mercantile Treasury Money Market Portfolio into the Firstar U.S. Treasury
Money Market Fund and will have no material affect on the above expense
estimates.
++ 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:
<TABLE>
<S> <C>
Mercantile Treasury Money Market Portfolio....... 0.35%
</TABLE>
(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.
80
<PAGE>
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
Trust Trust II Institutional Investor A Class Y
Shares Shares Shares 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 fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Trust II Institutional Investor A Class Y
Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Firstar
Firstar Stellar U.S. Treasury
Mercantile Treasury Money Market Combined Fund
Treasury Money Market Portfolio Fund Fund Pro Forma
---------------------------------------- --------------- ------------- -------------
Trust Trust II Institutional Investor A Class Y Institutional Institutional
Shares Shares Shares Shares 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.
81
<PAGE>
MERCANTILE MONEY MARKET PORTFOLIO*
FIRSTAR MONEY MARKET FUND
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Money Market Portfolio is as
follows:
Trust Shares--decrease .01% Trust II Shares--increase .24%
Institutional Shares--decrease Investor A Shares--decrease .01%
.01%
Investor B Shares--decrease .76%
<TABLE>
<CAPTION>
Firstar
Mercantile Money Market Combined Fund
Money Market Portfolio Fund Pro Forma
---------------------------------------------------- ------------ -------------
Trust Trust II+ Institutional Investor A Investor B Retail A Retail A
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 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 5.00%(1) None None
Redemption Fees......... None None None None None None(2) None(2)
Exchange Fee............ None None 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% 0.50% 0.50%
Distribution and Service
(12b-1) Fees (before
waivers)............... None None None 0.25% 1.00% 0.25%(4) 0.25%(4)
Other Expenses (before
waivers)(5)............ 0.55% 0.30% 0.55% 0.30% 0.30% 0.79% 0.51%
---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses
(before waivers)(6)... 0.95% 0.70% 0.95% 0.95% 1.70% 1.54% 1.26%
==== ==== ==== ==== ==== ==== ====
</TABLE>
-------
* In the Reorganization, holders of each class of shares of the Mercantile
Money Market Portfolio will receive Retail A Shares of the Firstar Money
Market Fund.
+ It is expected that prior to the Reorganization certain shareholders for
whom Firstar Bank, N.A. or its affiliates have investment discretion will
have their Trust II Shares exchanged for shares of the Firstar
Institutional Money Market Fund; however, this exchange may occur after
the Reorganization with respect to certain shareholders.
(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 and $15.00 for each
non-systematic withdrawal from a retirement account for which Firstar
Bank, N.A. is a custodian.
(3) Management Fees (after waivers) would be:
<TABLE>
<S> <C>
Mercantile Money Market Portfolio................ 0.35%
Firstar Money Market Fund........................ 0.18%
Combined Fund Pro Forma.......................... 0.43%
</TABLE>
(4) Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<S> <C>
Firstar Money Market Fund........................ 0.03%
Combined Fund Pro Forma.......................... 0.01%
</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.
82
<PAGE>
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Trust II Institutional Investor A Investor B Retail A
Shares Shares Shares Shares Shares 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 fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Trust II Institutional Investor A Investor B Retail A
Shares Shares Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown on the above table:
<TABLE>
<CAPTION>
Firstar
Mercantile Money Market Combined Fund
Money Market Fund Fund Pro Forma
--------------------------------------------------------------- ------------ -------------
Trust Trust II Institutional Investor A Investor B Retail A Retail A
Shares Shares Shares Shares Shares Shares Shares
------ -------- ------------- ---------- ---------------------- ------------ -------------
Assuming Assuming No
Redemption Redemption
---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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.
83
<PAGE>
MERCANTILE TAX-EXEMPT MONEY MARKET PORTFOLIO+
FIRSTAR STELLAR TAX-FREE MONEY MARKET FUND+
FIRSTAR TAX-EXEMPT MONEY MARKET FUND
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Tax-Exempt Money Market
Portfolio is as follows:
Trust Shares--no change Trust II Shares--increase .25%
Investor A Shares--no change
<TABLE>
<CAPTION>
Firstar
Stellar Firstar
Mercantile Tax-Free Tax-Exempt
Tax-Exempt Money Market Money Market Money Market Combined Fund
Portfolio Fund* 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 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 (before
waivers)............... None None 0.25% 0.25%(3) ++ 0.25%(3) None 0.25%(3)
Other Expenses (before
waivers)............... 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 and holders of Class C Shares
of the Stellar Tax-Free Money Market 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 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 who
purchased their shares other than through an investment management, trust,
custody or other agency relationship with Firstar Bank, N.A. will each
receive Retail A Shares of the Firstar Tax-Exempt Money Market Fund.
* The Firstar Stellar Tax-Free Money Market Fund is expected to reorganize
into the Firstar Tax-Exempt Money Market Fund contemporaneously 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. The
failure of the Firstar Stellar Tax-Free Money Market Fund to reorganize
into the Firstar Tax-Exempt Money Market Fund as expected will not affect
the Reorganization of the Mercantile Tax-Exempt Money Market Portfolio
into the Firstar Tax-Exempt Money Market Fund and will have no material
affect on the above expense estimates.
++ 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.
(2) Management Fees (after waivers) would be:
<TABLE>
<S> <C>
Mercantile Tax-Exempt Money Market Portfolio..... 0.35%
Firstar Stellar Tax-Free Money Market Fund....... 0.50%
</TABLE>
84
<PAGE>
(3) Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<S> <C>
Firstar Stellar Tax-Free Money Market Fund....... 0.00%
Firstar Tax-Exempt Money Market Fund............. 0.00%
Combined Fund Pro Forma.......................... 0.00%
</TABLE>
(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 Institutional Retail A
Shares Shares Shares
------- ------------- --------
<S> <C> <C> <C>
Firstar 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>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Trust II Investor A Class C Institutional Retail A
Shares Shares Shares Shares Shares 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) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Firstar
Stellar Tax- Firstar
Mercantile Free Tax-Exempt
Tax-Exempt Money Market Money Market Money Market Combined Fund
Portfolio Fund 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>
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.
85
<PAGE>
MERCANTILE CONNING MONEY MARKET PORTFOLIO
FIRSTAR CONNING MONEY MARKET FUND(1)
After the Reorganization, former shareholders of the Mercantile Conning
Money Market Portfolio will bear the same expenses (after fee waivers and/or
expense reimbursements).
<TABLE>
<CAPTION>
Mercantile Conning
Money Market Combined Fund
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 (before waivers)(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 these Funds.
(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.
(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>
Shares
------
<S> <C>
Mercantile Conning Money Market Portfolio....... 0.82%
Combined Fund Pro Forma......................... 0.82%
</TABLE>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Shares
------
<S> <C>
Mercantile Conning Money Market Portfolio....... 0.99%
Combined Fund Pro Forma......................... 0.99%
</TABLE>
86
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed,
assuming (1) a 5% gross annual return and (2) Fund operating expenses remain
the same as those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Conning
Money Market Combined Fund
Portfolio Pro Forma
------------------ -------------
Shares Shares
------------------ -------------
<S> <C> <C>
1 year......................................... $ 150 $ 139
3 years........................................ $ 465 $ 434
5 years........................................ $ 803 $ 750
10 years....................................... $1,757 $1,646
</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.
87
<PAGE>
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)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile U.S. Government Securities
Portfolio is as follows:
Trust Shares--increase .05% Institutional Shares--no change
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
U.S. Government U.S. Government Combined Fund
Securities Portfolio Income Fund* Pro Forma
----------------------- ------------------ ---------------------
Trust Institutional Class A Class B Institutional Class Y
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 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 (before
waivers)............... None None 0.25%(5) 0.25%(5) None None
Other Expenses (before
waivers)............... 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 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.
* The Firstar Stellar U.S. Government Income Fund is expected to reorganize
into the Firstar U.S. Government Securities Fund contemporaneously 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 occur only
if the shareholders of the appropriate Funds approve each transaction. The
failure of the Firstar Stellar U.S. Government Income Fund to reorganize
into the Firstar U.S. Government Securities Fund as expected will not
affect the Reorganization of the Mercantile U.S. Government Securities
Portfolio into the Firstar U.S. Government Securities Fund and will have
no material affect on the above expense estimates.
(1) The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganization, 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.
88
<PAGE>
(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 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 Institutional Class A Class B
Shares Shares Shares Shares
------ ------------- ------- -------
<S> <C> <C> <C> <C>
Mercantile U.S. Government Securities
Portfolio........................... 0.23% 0.53% -- --
Firstar Stellar U.S. Government
Income Fund......................... -- -- 0.39% 0.39%
</TABLE>
(7) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Class A Class B Class Y
Shares Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
U.S. Government U.S. Government Combined Fund
Securities Portfolio Income Fund Pro Forma
-------------------- ------------------------------ ---------------------
Trust Institutional Class A Class B Institutional Class Y
Shares Shares Shares 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 $1,100 $ 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.
89
<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)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile U.S. Government Securities
Portfolio is as follows:
Investor A Shares--no change Investor B Shares--increase .05%
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
U.S. Government U.S. Government Combined Fund Pro
Securities Portfolio Income Fund* Forma
---------------------- ------------------ -------------------
Investor A Investor B Class A Class 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)........ 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 (before
waivers)............... 0.30% 1.00% 0.25%(5) 0.25%(5) 0.00%(6) 0.75%
Other Expenses (before
waivers)............... 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 the 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 contemporaneously 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 occur only
if the shareholders of the appropriate Funds approve each transaction. The
failure of the Firstar Stellar U.S. Government Income Fund to reorganize
into the Firstar U.S. Government Securities Fund as expected will not
affect the Reorganization of the Mercantile U.S. Government Securities
Portfolio into the Firstar U.S. Government Securities Fund and will have
no material affect on the above expense estimates.
(1) The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganization, 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.
90
<PAGE>
(3) A fee of $12.00 is charged for each wire redemption 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 distribution
(12b-1) fees for Class A Shares and Class B Shares for the current fiscal
year.
(6) The total of all distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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 Investor B Class A Class B
Shares Shares Shares 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 fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B Class A Class B Retail A Retail B
Shares Shares Shares Shares Shares Shares
---------- ---------- ------- ------- -------- --------
<S> <C> <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% 1.73%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
U.S. Government U.S. Government Combined Fund
Securities Portfolio Income Fund Pro Forma
--------------------------------- ------------------------------ -------------------------------
Investor A Investor B Class A Class B Retail A Retail B
Shares Shares Shares Shares Shares 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.
91
<PAGE>
MERCANTILE INTERMEDIATE CORPORATE BOND PORTFOLIO*
FIRSTAR INTERMEDIATE BOND MARKET FUND**
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Intermediate Corporate Bond
Portfolio is as follows:
Trust Shares--decrease .19% Institutional Shares--decrease .24%
Investor A Shares--decrease .24%
<TABLE>
<CAPTION>
Mercantile Firstar
Intermediate Corporate Intermediate Combined Fund
Bond Portfolio Bond Market Fund Pro Forma
---------------------------------- ------------------------------ ---------------------------------
Trust Institutional Investor A Institutional Class Y Retail A Institutional 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 4.00% None + 4.00% None None 4.00%
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)..... 0.55% 0.55% 0.55% 0.50%(2) + 0.50%(2) 0.50%(2) 0.50%(2) 0.50%(2)
Distribution and
Service (12b-1) Fees
(before waivers)..... None None 0.30% None + 0.00%(3) None None 0.00%(3)
Other Expenses (before
waivers)............. 0.64%(4) 0.64%(4) 0.34%(4) 0.20% + 0.45% 0.20% 0.45% 0.45%
---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(5)......... 1.19% 1.19% 1.19% 0.70% + 0.95% 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 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:
<TABLE>
<S> <C>
Firstar Intermediate Bond Market Fund............ 0.37%
Combined Fund Pro Forma.......................... 0.40%
</TABLE>
(3) The total of all distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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.
92
<PAGE>
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Investor A Class Y Retail A
Shares Shares Shares Shares Shares
------ ------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C>
Mercantile Intermediate
Corporate Bond
Portfolio............... 0.24% 0.54% 0.24% -- --
Firstar Intermediate Bond
Market Fund............. -- 0.20% -- N/A 0.45%
Combined Fund Pro Forma.. -- 0.20% -- 0.45% 0.45%
</TABLE>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Investor A Class Y Retail A
Shares Shares Shares Shares Shares
------ ------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C>
Mercantile Intermediate
Corporate Bond
Portfolio............... 0.79% 1.09% 1.09% -- --
Firstar Intermediate Bond
Market Fund............. -- 0.57% -- N/A 0.82%
Combined Fund Pro Forma.. -- 0.60% -- 0.85% 0.85%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar
Intermediate Corporate Intermediate Combined Fund
Bond Portfolio Bond Market Fund Pro Forma
------------------------------- ------------------------------ ------------------------------
Trust Institutional Investor A Institutional Class Y Retail A Institutional 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.................. $ 121 $ 121 $ 516 $ 72 N/A $ 493 $ 72 $ 97 $ 493
3 years................. $ 378 $ 378 $ 763 $224 N/A $ 691 $224 $ 303 $1,302
5 years................. $ 654 $ 654 $1,028 $390 N/A $ 904 $390 $ 525 $2,126
10 years................ $1,443 $1,443 $1,785 $871 N/A $1,502 $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.
93
<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)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Government & Corporate Bond
Portfolio is as follows:
Trust Shares--increase .01% Institutional Shares--decrease .04%
The effect of the Reorganization on the Total Fund Operating Expenses (after
fee waivers and/or expense reimbursements) borne by former shareholders of the
Mercantile Bond Index Portfolio is as follows:
Trust Shares--increase .15% Institutional Shares--increase .10%
<TABLE>
<CAPTION>
Mercantile
Government & Mercantile
Corporate Bond Bond Index Combined Fund
Portfolio Portfolio Pro Forma
----------------------- ----------------------- ---------------------
Trust Institutional Trust Institutional Institutional Class Y
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 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(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)............... 0.45% 0.45% 0.30% 0.30% 0.50%(3) 0.50%(3)
Distribution and Service
(12b-1) Fees........... None None None None None None
Other Expenses (before
waivers)............... 0.62%(4) 0.62%(4) 0.63%(4) 0.63%(4) 0.24% 0.49%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(5)........... 1.07% 1.07% 0.93% 0.93% 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. The failure of either Mercantile
Fund to reorganize into the Firstar Aggregate Bond will not affect the
Reorganization of the other Mercantile Fund into the Firstar Aggregate
Bond Fund and will have no material affect on the above expense
estimates.
(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 Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile Government & Corporate Bond Portfolio....... 0.22% 0.52%
Mercantile Bond Index Portfolio........................ 0.23% 0.53%
</TABLE>
94
<PAGE>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense Ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Class Y
Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile
Government & Mercantile
Corporate Bond Bond Index Combined Fund
Portfolio Portfolio Pro Forma
-------------------- -------------------- ---------------------
Trust Institutional Trust Institutional Institutional Class Y
Shares Shares Shares Shares Shares Shares
------ ------------- ------ ------------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
1 year......... $ 109 $ 109 $ 95 $ 95 $ 76 $ 101
3 years........ $ 340 $ 340 $ 296 $ 296 $237 $ 315
5 years........ $ 590 $ 590 $ 515 $ 515 $411 $ 547
10 years....... $1,306 $1,306 $1,143 $1,143 $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.
95
<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)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Government & Corporate Bond
Portfolio is as follows:
Investor A Shares--decrease .04% Investor B Shares--increase .01%
The Reorganization will also increase the Total Fund Operating Expenses
(after fee waivers and/or expense reimbursements) borne by former Investor A
shareholders of the Mercantile Bond Index Fund by .10%.
<TABLE>
<CAPTION>
Mercantile Government Mercantile
& Corporate Bond Bond Index Combined Fund Pro
Portfolio Portfolio Forma
---------------------- ---------- -------------------
Investor A Investor B Investor A 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)........ 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 (before
waivers)............... 0.30% 1.00% 0.30% 0.00%(5) 0.75%
Other Expenses (before
waivers)............... 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. The failure of either Mercantile
Fund to reorganize into the Firstar Aggregate Bond Fund will not affect
the Reorganization of the other Mercantile Fund into the Firstar Aggregate
Bond Fund and will have no material affect on the above expense estimates.
(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 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 distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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.
96
<PAGE>
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B
Shares 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 fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B Retail A Retail B
Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile
Government & Mercantile
Corporate Bond Bond Index Combined Fund
Portfolio Portfolio Pro Forma
--------------------------------- ----------- -------------------------------
Investor A Investor B Investor A 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.................. $ 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.
97
<PAGE>
MERCANTILE SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO*
FIRSTAR TAX-EXEMPT INTERMEDIATE BOND FUND
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Short-Intermediate Municipal
Portfolio is as follows:
Trust Shares--decrease .02% Investor A Shares--decrease .02%
<TABLE>
<CAPTION>
Mercantile
Short-
Intermediate Firstar
Municipal Tax-Exempt Combined Fund
Portfolio Intermediate Bond Fund Pro Forma
-------------------- ---------------------- ----------------------
Trust Investor A Institutional Retail A Institutional 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 4.00% None 4.00% None 4.00%
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(1) None None(1)
Exchange Fee............ None None None None None None
Annual Fund Operating
Expenses:
(as a percentage of
average net assets)
Management Fees (before
waivers)............... 0.55% 0.55% 0.50%(2) 0.50%(2) 0.50%(2) 0.50%(2)
Distribution and Service
(12b-1) Fees (before
waivers)............... None 0.30%(3) None 0.00%(4) None 0.00%(4)
Other Expenses (before
waivers)............... 0.62%(5) 0.32%(5) 0.36% 0.61% 0.36% 0.61%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(6)........... 1.17% 1.17% 0.86% 1.11% 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.
(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>
(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 distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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 Retail A
Shares Shares
------ --------
<S> <C> <C>
Mercantile Short-Intermediate Municipal Portfolio............ 0.22% 0.22%
</TABLE>
(6) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
98
<PAGE>
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Investor A Institutional Retail A
Shares Shares Shares Shares
------ ---------- ------------- --------
<S> <C> <C> <C> <C>
Mercantile Short-Intermediate
Municipal Portfolio............. 0.77% 1.02% -- --
Firstar Tax-Exempt Intermediate
Bond Fund....................... -- -- 0.67% 0.92%
Combined Fund Pro Forma.......... -- -- 0.75% 1.00%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile
Short-
Intermediate Firstar
Municipal Tax-Exempt Combined Fund
Portfolio Intermediate Bond Fund Pro Forma
----------------- ---------------------- ----------------------
Trust Investor A Institutional Retail A Institutional Retail A
Shares 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.
99
<PAGE>
MERCANTILE MISSOURI TAX-EXEMPT BOND PORTFOLIO*
FIRSTAR MISSOURI TAX-EXEMPT BOND FUND(1)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Missouri Tax-Exempt Bond
Portfolio is as follows:
Trust Shares--increase .06% Investor A Shares--increase .11%
Investor B Shares--increase .06%
<TABLE>
<CAPTION>
Mercantile
Missouri Tax-Exempt Bond Combined Fund
Portfolio Pro Forma
-------------------------------- ---------------------------------
Trust Investor A Investor 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 4.00% None 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 None 5.00%(2) None 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% 0.45% 0.45% 0.45% 0.45%
Distribution and Service
(12b-1) Fees (before
waivers)............... None 0.30%(4) 1.00% None 0.25%(4) 0.75%
Other Expenses (before
waivers)............... 0.61%(5) 0.31%(5) 0.31%(5) 0.27% 0.52% 0.52%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.06%(6) 1.06%(6) 1.76%(6) 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 those Funds.
(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.
(4) Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Retail A
Shares 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 Investor A Investor B
Shares Shares Shares
------ ---------- ----------
<S> <C> <C> <C>
Mercantile Missouri Tax-Exempt Bond
Portfolio................................... 0.21% 0.21% 0.21%
</TABLE>
100
<PAGE>
(6) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Investor A Investor B Retail A
Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile
Missouri Tax-Exempt Bond Combined Fund
Portfolio Pro Forma
---------------------------------------- ---------------------------------------------
Trust Investor A Investor B Institutional Retail A Retail B
Shares Shares Shares Shares Shares Shares
------ ---------- ---------------------- ------------- -------- ----------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year.................. $ 108 $ 504 $ 679 $ 179 $ 74 $ 519 $ 675 $ 175
3 years................. $ 337 $ 724 $ 854 $ 554 $230 $ 772 $ 842 $ 542
5 years................. $ 585 $ 961 $1,154 $ 954 $401 $1,044 $1,133 $ 933
10 years................ $1,294 $1,642 $1,719 $1,719 $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.
101
<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)
After the Reorganization, former holders of Trust Shares of the Mercantile
National Municipal Bond Portfolio will have the same Total Fund Operating
Expenses (after fee waivers and/or expense reimbursements).
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
National Municipal Insured Tax- Combined Fund
Bond Portfolio Free Bond Fund* Pro Forma
------------------ ------------------ -------------
Trust Class A Class B Institutional
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 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 (before
waivers)................. None 0.25%(4) 0.75%(4) None
Other Expenses (before
waivers)................. 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.
* The Firstar Stellar Insured Tax-Free Bond Fund is expected to reorganize
into the Firstar National Municipal Bond Fund contemporaneously 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 occur only if the
shareholders of the appropriate Funds approve each transaction. The
failure of the Firstar Stellar Insured Tax-Free Bond Fund to reorganize
into the Firstar National Municipal Bond Fund as expected will not affect
the Reorganization of the Mercantile National Municipal Bond Portfolio
into the Firstar National Municipal Bond Fund and will have no material
affect on the above expense estimates.
(1) The Firstar National Municipal Bond Fund has not yet commenced
operations. Upon consummation of the Reorganizations, 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
distribution (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.
102
<PAGE>
Other Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Class A Class B
Shares Shares 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 fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Class A Class B
Shares Shares Shares
------ ------- -------
<S> <C> <C> <C>
Mercantile National Municipal Bond Portfolio.......... 0.76% -- --
Firstar Stellar Insured Tax-Free Bond Fund............ -- 0.93% 0.93%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
National Municipal Insured Tax-Free Combined Fund
Bond Portfolio Bond Fund Pro Forma
------------------ ------------------------------ -------------
Trust Class A Class B Institutional
Shares Shares Shares 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.
103
<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)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile National Municipal Bond
Portfolio is as follows:
Investor A Shares--increase .05% Investor B Shares--no change
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
National Municipal Insured Tax-Free Combined Fund
Bond Portfolio Bond Fund* Pro Forma
---------------------- ------------------- -------------------
Investor A Investor B Class A Class 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)........ 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)................ 0.55% 0.55% 0.75%(4) 0.75%(4) 0.55% 0.55%
Distribution and Service
(12b-1) Fees (before
waivers)............... 0.30%(5) 1.00% 0.25%(5) 0.75%(5) 0.00%(6) 0.75%
Other Expenses (before
waivers)............... 0.31%(7) 0.31%(7) 0.47%(7) 0.47%(7) 0.46% 0.46%
---- ---- -------- -------- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.16%(8) 1.86%(8) 1.47%(8) 1.97%(8) 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 the 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 contemporaneously 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 occur only if the
shareholders of the appropriate Funds approve each transaction. The
failure of the Firstar Stellar Insured Tax-Free Bond Fund to reorganize
into the Firstar National Municipal Bond Fund as expected will not affect
the Reorganization of the Mercantile National Municipal Bond Portfolio
into the Firstar National Municipal Bond Fund and will have no material
affect on the above expense estimates.
(1) The Firstar National Municipal Bond Fund has not yet commenced
operations. Upon consummation of the Reorganization, 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.
104
<PAGE>
(3) A fee of $12.00 is charged for each wire redemption.
(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 Class A Class B
Shares Shares 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 distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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 Investor B Class A Class B
Shares Shares Shares 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>
(8) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B Class A Class B
Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Stellar
National Municipal Insured Tax-Free Combined Fund
Bond Portfolio Bond Fund Pro Forma
--------------------------------- ------------------------------ -------------------------------
Investor A Investor B Class A Class B Retail A Retail B
Shares Shares Shares Shares Shares 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.
105
<PAGE>
MERCANTILE BALANCED PORTFOLIO--TRUST SHARES AND INSTITUTIONAL SHARES*
FIRSTAR BALANCED GROWTH FUND--INSTITUTIONAL SHARES AND CLASS Y SHARES
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Balanced Portfolio is as
follows:
Trust Shares--decrease .01% Institutional Shares--decrease .06%
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Balanced Portfolio Balanced Growth Fund Pro Forma
----------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
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 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%(2) + 0.75%(2) 0.75%(2)
Distribution and Service
(12b-1) Fees........... None None None + None None
Other Expenses (before
waivers)............... 0.63%(3) 0.63%(3) 0.27% + 0.26% 0.51%
---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(4)........... 1.38% 1.38% 1.02% + 1.01% 1.26%
==== ==== ==== ==== ====
</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:
<TABLE>
<S> <C>
Firstar Balanced Growth Fund..................... 0.70%
Combined Fund Pro Forma.......................... 0.71%
</TABLE>
(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:
<TABLE>
<CAPTION>
Trust Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile Balanced Portfolio........................... 0.23% 0.53%
</TABLE>
(4) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
106
<PAGE>
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Class Y
Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Balanced Portfolio Balanced Growth Fund Pro Forma
-------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
Shares Shares Shares Shares Shares 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.
107
<PAGE>
MERCANTILE BALANCED PORTFOLIO--INVESTOR A SHARES AND INVESTOR B SHARES*
FIRSTAR BALANCED GROWTH FUND--RETAIL A SHARES AND RETAIL B SHARES
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Balanced Portfolio is as
follows:
Investor A Shares--decrease .06% Investor B Shares--decrease .01%
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund Pro
Balanced Portfolio Balanced Growth Fund 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%(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%(3) 0.75%(3) 0.75%(3) 0.75%(3)
Distribution and Service
(12b-1) Fees (before
waivers)............... 0.30% 1.00% 0.00%(4) 0.75% 0.00%(4) 0.75%
Other Expenses (before
waivers)............... 0.33%(5) 0.33%(5) 0.52% 0.52% 0.51% 0.51%
---- ---- ---------- ---------- ---- ----
Total Fund Operating
Expenses (before
waivers)(6)........... 1.38% 2.08% 1.27% 2.02% 1.26% 2.01%
==== ==== ========== ========== ==== ====
</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 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:
<TABLE>
<S> <C>
Firstar Balanced Growth Fund..................... 0.70%
Combined Fund Pro Forma.......................... 0.71%
</TABLE>
(4) The total of all distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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>
Investor A Investor B
Shares Shares
---------- ----------
<S> <C> <C>
Mercantile Balanced Portfolio.......................... 0.23% 0.23%
</TABLE>
(6) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the
108
<PAGE>
Reorganization through October 31, 2001, Total Fund Operating Expense
ratios will not exceed the pro forma after waiver expense ratios. These fee
waivers and expense reimbursements may be terminated at any time after
October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B Retail A Retail B
Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Balanced Portfolio Balanced Growth Fund Pro Forma
--------------------------------- ------------------------------- -------------------------------
Investor A Investor B Retail A Retail A Retail B
Shares Shares Shares Retail B Shares Shares 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................ $ 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.
109
<PAGE>
MERCANTILE EQUITY INCOME PORTFOLIO*
FIRSTAR EQUITY INCOME FUND(1)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Equity Income Portfolio is as
follows:
Trust Shares--increase .02% Institutional Shares--decrease .03%
Investor A Shares--decrease .03% Investor B Shares--increase .02%
<TABLE>
<CAPTION>
Mercantile Combined Fund
Equity Income Portfolio Pro Forma
---------------------------------------------- --------------------------------------------
Trust Institutional Investor A Investor B Institutional Class Y Retail A Retail B
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 5.50% None None None 5.50% None
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 5.00%(2) None None None 5.00%(2)
Redemption Fees......... None None None None None(3) None(3) None(3) None(3)
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)............... 0.75% 0.75% 0.75% 0.75% 0.75%(4) 0.75%(4) 0.75%(4) 0.75%(4)
Distribution and Service
(12b-1) Fees (before
waivers)............... None None 0.30% 1.00% None None 0.00%(5) 0.75%
Other Expenses (before
waivers)............... 0.63%(6) 0.63%(6) 0.33%(6) 0.33%(6) 0.28% 0.53% 0.53% 0.53%
---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses
(before waivers)(7)... 1.38% 1.38% 1.38% 2.08% 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 these Funds.
(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 0.72% for the Combined Fund Pro
Forma.
(5) The total of all distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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.
110
<PAGE>
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Investor A Investor B
Shares Shares Shares Shares
------ ------------- ---------- ----------
<S> <C> <C> <C> <C>
Mercantile Equity Income
Portfolio..................... 0.23% 0.53% 0.23% 0.23%
</TABLE>
(7) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Investor A Investor B Class Y Retail A Retail B
Shares Shares Shares Shares Shares Shares Shares
------ ------------- ---------- ---------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Combined Fund
Equity Income Portfolio Pro Forma
------------------------------------------------------ -----------------------------------------------------
Trust Institutional Investor A Investor B Institutional Class Y Retail A Retail B
Shares Shares Shares Shares Shares Shares Shares 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.
111
<PAGE>
MERCANTILE EQUITY INDEX PORTFOLIO*
FIRSTAR EQUITY INDEX FUND
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or reimbursements) borne by
former shareholders of the Mercantile Equity Index Portfolio is as follows:
Trust Shares--decrease .18% Institutional Shares--decrease .23%
Investor A Shares--decrease .23%
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Equity Index Portfolio Equity Index Fund Pro Forma
---------------------------------- ------------------------------ ---------------------------------
Trust Institutional Investor A Institutional Class Y Retail A Institutional 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
(before waivers)..... None None 0.30% None + 0.00%(3) None None 0.00%(3)
Other Expenses (before
waivers)............. 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.
+ 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:
<TABLE>
<S> <C>
Firstar Equity Index Fund........................ 0.19%
Combined Fund Pro Forma.......................... 0.20%
</TABLE>
(3) The total of all distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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 Institutional Retail A
Shares Shares Shares
------ ------------- --------
<S> <C> <C> <C>
Mercantile Equity Index Portfolio.............. 0.25% 0.55% 0.25%
</TABLE>
112
<PAGE>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Investor A Class Y Retail A
Shares Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Equity Index Portfolio Equity Index Fund Pro Forma
------------------------------- ---------------------------- ------------------------------
Trust Institutional Investor A Institutional Class Y Retail Institutional 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.
113
<PAGE>
MERCANTILE GROWTH & INCOME EQUITY PORTFOLIO--TRUST SHARES AND INSTITUTIONAL
SHARES*
FIRSTAR GROWTH AND INCOME FUND--INSTITUTIONAL SHARES ANDCLASS Y SHARES
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Growth & Income Equity
Portfolio is as follows:
Trust Shares--increase .20% Institutional Shares--increase .15%
<TABLE>
<CAPTION>
Mercantile
Growth & Firstar
Income Equity Growth and Income Combined Fund
Portfolio Fund Pro Forma
----------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
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 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 (before
waivers)............... 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.
(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 Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile Growth & Income Equity Portfolio............. 0.19% 0.49%
</TABLE>
(3) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, total fund operating expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile Growth & Income Equity Portfolio............. 0.74% 1.04%
</TABLE>
114
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile
Growth & Firstar
Income Equity Growth and Income Combined Fund
Portfolio Fund Pro Forma
-------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
Shares Shares Shares Shares Shares 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.
115
<PAGE>
MERCANTILE GROWTH & INCOME EQUITY PORTFOLIO--INVESTOR A SHARES & INVESTOR B
SHARES*
FIRSTAR GROWTH AND INCOME FUND--RETAIL A SHARES &RETAIL B SHARES
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Growth & Income Equity
Portfolio is as follows:
Investor A Shares--increase .15% Investor B Shares--increase .20%
<TABLE>
<CAPTION>
Mercantile
Growth & Firstar
Income Equity Growth and Income Combined Fund Pro
Portfolio Fund 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%(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)............... 0.55% 0.55% 0.75% 0.75% 0.75% 0.75%
Distribution and Service
(12b-1) Fees (before
waivers)............... 0.30% 1.00% 0.00%(3) 0.75% 0.00%(3) 0.75%
Other Expenses (before
waivers)............... 0.29%(4) 0.29%(4) 0.44% 0.44% 0.44% 0.44%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.14%(5) 1.84%(5) 1.19% 1.94% 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 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 distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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>
Investor A Investor B
Shares Shares
---------- ----------
<S> <C> <C>
Mercantile Growth & Income Equity Portfolio............ 0.19% 0.19%
</TABLE>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
116
<PAGE>
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B
Shares Shares
---------- ----------
<S> <C> <C>
Mercantile Growth & Income Equity Portfolio............ 1.04% 1.74%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar
Growth & Growth and
Income Equity Income Combined Fund
Portfolio Fund Pro Forma
--------------------------------- ------------------------------- -------------------------------
Investor A Investor B Retail A Retail B Retail A Retail B
Shares Shares Shares Shares Shares 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.
117
<PAGE>
MERCANTILE GROWTH EQUITY PORTFOLIO--TRUST SHARES AND INSTITUTIONAL SHARES*
FIRSTAR GROWTH FUND--INSTITUTIONAL SHARES AND CLASS Y SHARES**
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Growth Equity Portfolio is as
follows:
Trust Shares--decrease .03% Institutional Shares--decrease .08%
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Growth Equity Portfolio Growth Fund Pro Forma
-------------------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
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 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 Expenses (before
waivers)............... 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.
(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 Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile Growth Equity Portfolio...................... 0.22% 0.52%
</TABLE>
(3) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile Growth Equity Portfolio...................... 0.97% 1.27%
</TABLE>
118
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Growth Equity Portfolio Large Growth Fund Pro Forma
------------------------ --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
Shares Shares Shares Shares Shares Shares
------------------------ ------------- ------- ------------- -------
<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.
119
<PAGE>
MERCANTILE GROWTH EQUITY PORTFOLIO--INVESTOR A SHARES & INVESTOR B SHARES*
FIRSTAR GROWTH FUND--RETAIL A SHARES & RETAIL B SHARES**
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Growth Equity Portfolio is as
follows:
Investor A Shares--decrease .08% Investor B Shares--decrease .03%
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund Pro
Growth Equity Portfolio Growth Fund 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%(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 (before
waivers)............... 0.30% 1.00% 0.00%(3) 0.75% 0.00%(3) 0.75%
Other Expenses (before
waivers)............... 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.
(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 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 distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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>
Investor A Investor B
Shares Shares
---------- ----------
<S> <C> <C>
Mercantile Growth Equity Portfolio..................... 0.22% 0.22%
</TABLE>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
120
<PAGE>
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B
Shares Shares
---------- ----------
<S> <C> <C>
Mercantile Growth Equity Portfolio..................... 1.27% 1.97%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Growth Equity Portfolio Growth Fund Pro Forma
--------------------------------- ------------------------------- -------------------------------
Investor A Investor B Retail A Retail B Retail A Retail B
Shares Shares Shares Shares Shares 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................ $ 682 $ 710 $ 210 $ 666 $ 698 $ 198 $ 665 $ 697 $ 197
3 years............... $ 960 $ 949 $ 649 $ 910 $ 912 $ 612 $ 907 $ 909 $ 609
5 years............... $1,259 $1,314 $1,114 $1,173 $1,252 $1,052 $1,168 $1,247 $1,047
10 years.............. $2,106 $2,057 $2,057 $1,925 $1,902 $1,902 $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.
121
<PAGE>
MERCANTILE SMALL CAP EQUITY PORTFOLIO--TRUST SHARES AND INSTITUTIONAL SHARES*
FIRSTAR EMERGING GROWTH FUND--INSTITUTIONAL SHARES AND CLASS Y SHARES(1)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Small Cap Equity Portfolio is
as follows:
Trust Shares--no change Institutional Shares--decrease .05%
<TABLE>
<CAPTION>
Mercantile
Small Cap Equity Firstar Combined Fund
Portfolio Emerging Growth Fund Pro Forma
----------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
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 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)............... 0.75% 0.75% 0.75% + 0.75%(3) 0.75%(3)
Distribution and Service
(12b-1) Fees........... None None None + None None
Other Expenses (before
waivers)............... 0.61%(4) 0.61%(4) 0.31% + 0.22% 0.47%
---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.36%(5) 1.36%(5) 1.06% + 0.97%(5) 1.22%(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.
(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 Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile Small Cap Equity Portfolio................... 0.21% 0.51%
</TABLE>
(5) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
122
<PAGE>
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Class Y
Shares Shares Shares
------ ------------- -------
<S> <C> <C> <C>
Mercantile Small Cap Equity Portfolio........... 0.96% 1.26% --
Combined Fund Pro Forma......................... -- 0.96% 1.21%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile
Small Cap Equity Firstar Combined Fund
Portfolio Emerging Growth Fund Pro Forma
-------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
Shares Shares Shares Shares Shares 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.
123
<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)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Small Cap Equity Portfolio is
as follows:
Investor A Shares--decrease .05% Investor B Shares--no change
<TABLE>
<CAPTION>
Mercantile Firstar
Small Cap Equity Emerging Growth Combined Fund
Portfolio 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
redemption proceeds)... 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)............... 0.75% 0.75% 0.75% 0.75% 0.75%(4) 0.75%(4)
Distribution and Service
(12b-1) Fees (before
waivers)............... 0.30% 1.00% 0.00%(5) 0.75% 0.00%(5) 0.75%
Other Expenses (before
waivers)............... 0.31%(6) 0.31%(6) 0.56% 0.56% 0.47% 0.47%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.36%(7) 2.06%(7) 1.31% 2.06% 1.22%(7) 1.97%(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.
(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 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 distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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 Investor B
Shares Shares
---------- ----------
<S> <C> <C>
Mercantile Small Cap Equity Portfolio.................. 0.21% 0.21%
</TABLE>
124
<PAGE>
(7) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B Retail A Retail B
Shares Shares Shares Shares
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Mercantile Small Cap Equity
Portfolio........................ 1.26% 1.96% -- --
Combined Fund Pro Forma........... -- -- 1.21% 1.96%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar Combined Fund
Small Cap Equity Portfolio Emerging Growth Fund Pro Forma
--------------------------------- ------------------------------- -------------------------------
Investor A Investor B Retail A Retail B Retail A Retail B
Shares Shares Shares Shares Shares 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.
125
<PAGE>
MERCANTILE SMALL CAP EQUITY INDEX PORTFOLIO*
FIRSTAR SMALL CAP INDEX FUND(1)
As further detailed below, the effect of the Reorganization on the total
fund operating expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile Small Cap Equity Index
Portfolio is as follows:
Trust Shares--no change Institutional Shares--decrease .05%
Investor A Shares--decrease .05%
<TABLE>
<CAPTION>
Mercantile
Small Cap Equity Index Combined Fund
Portfolio 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 (before
waivers)............... None None 0.30% None None 0.00%(4)
Other Expenses (before
waivers)............... 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.
(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 those Funds.
(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 distribution (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 Retail A Shares. The Fund does not expect to
pay distribution (12b-1) fees with respect to 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 Institutional Investor A
Shares Shares Shares
------ ------------- ----------
<S> <C> <C> <C>
Mercantile Small Cap Equity Index
Portfolio................................ 0.28% 0.58% 0.28%
</TABLE>
(6) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the
126
<PAGE>
Reorganization through October 31, 2001, Total Fund Operating Expense
ratios will not exceed the pro forma after waiver expense ratios. These fee
waivers and expense reimbursements may be terminated at any time after
October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Investor A Class Y Retail A
Shares Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile
Small Cap Equity Combined Fund
Index Portfolio Pro Forma
------------------------------- ------------------------------
Trust Institutional Investor A Institutional Class Y Retail A
Shares Shares Shares Shares Shares 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 $413 $ 547 $1,067
10 years........ $1,317 $1,317 $1,795 $920 $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.
127
<PAGE>
MERCANTILE INTERNATIONAL EQUITY PORTFOLIO--TRUST SHARES AND INSTITUTIONAL
SHARES*
FIRSTAR CORE INTERNATIONAL EQUITY FUND--INSTITUTIONAL SHARES AND CLASS Y
SHARES(1)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile International Equity Portfolio
is as follows:
Trust Shares--no change Institutional Shares--decrease .05%
<TABLE>
<CAPTION>
Mercantile Firstar
International Core International Combined Fund
Equity Portfolio Equity Fund Pro Forma
----------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
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 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 (before
waivers)............... 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.
+ 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:
<TABLE>
<S> <C>
Mercantile International Equity Portfolio........ 0.94%
Firstar Core International Equity Fund........... 0.83%
Combined Fund Pro Forma.......................... 0.94%
</TABLE>
(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 Institutional
Shares Shares
------ -------------
<S> <C> <C>
Mercantile International Equity Portfolio............... 0.32% 0.62%
</TABLE>
(5) As a result of fee waivers and/or expense reimbursements, Total Fund
Operating Expenses are expected to be less than the amounts shown above.
These fee waivers and/or reimbursements are made in
128
<PAGE>
order to keep the annual fees and expenses of the Funds at a certain level.
FIRMCO has committed to waiving/reimbursing fees as needed to ensure that
for the period from the applicable effective time of the Reorganization
through October 31, 2001, Total Fund Operating Expense ratios will not
exceed the pro forma after waiver expense ratios. These fee waivers and
expense reimbursements may be terminated at any time after October 31, 2001
at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Class Y
Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar
International Core International Combined Fund
Equity Portfolio Equity Fund Pro Forma
-------------------- --------------------- ---------------------
Trust Institutional Institutional Class Y Institutional Class Y
Shares Shares Shares Shares Shares 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.
129
<PAGE>
MERCANTILE INTERNATIONAL EQUITY PORTFOLIO--INVESTOR A SHARES AND INVESTOR B
SHARES*
FIRSTAR CORE INTERNATIONAL EQUITY FUND--RETAIL A SHARES ANDRETAIL B SHARES(1)
As further detailed below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by former shareholders of the Mercantile International Equity Portfolio
is as follows:
Investor A Shares--decrease .05% Investor B Shares--no change
<TABLE>
<CAPTION>
Mercantile Firstar
International Core International Combined Fund
Equity Portfolio Equity 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 (before
waivers)............... 0.30% 1.00% 0.25%(5) 0.75% 0.25%(5) 0.75%
Other Expenses (before
waivers)............... 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 the Mercantile International Equity Portfolio will receive Retail A
Shares and Retail B Shares, respectively, of the Firstar Core
International Equity Fund.
(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 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:
<TABLE>
<S> <C>
Mercantile International Equity Portfolio........ 0.94%
Firstar Core International Equity Fund........... 0.83%
Combined Fund Pro Forma.......................... 0.94%
</TABLE>
(5) The Firstar Core International Equity Fund and Combined Fund Pro Forma do
not intend to pay distribution (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:
<TABLE>
<CAPTION>
Investor A Investor B
Shares Shares
---------- ----------
<S> <C> <C>
Mercantile International Equity Portfolio.............. 0.32% 0.32%
</TABLE>
130
<PAGE>
(7) As a result of fee waivers and/or expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that for the
period from the applicable effective time of the Reorganization through
October 31, 2001, Total Fund Operating Expense ratios will not exceed the
pro forma after waiver expense ratios. These fee waivers and expense
reimbursements may be terminated at any time after October 31, 2001 at
FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B Retail A Retail B
Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Firstar
International Core International Combined Fund
Equity Portfolio Equity Fund Pro Forma
--------------------------------- ------------------------------- -------------------------------
Investor A Investor B Retail A Retail B Retail A Retail B
Shares Shares Shares Shares Shares 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.
131
<PAGE>
Performance Comparisons of the Existing Firstar Funds and Corresponding
Mercantile Funds.
The following section provides a comparison of the total return performance
of the Reorganizing Mercantile Funds and the Existing Firstar Funds and is
followed by the Management Discussion of Firstar Fund Performance which was
included in the Firstar Annual Report for the fiscal year ended October 31,
1999.
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 July 31, 2000. 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.
Total Return Performance
(As of July 31, 2000)
<TABLE>
<CAPTION>
Mercantile Firstar
Money Market Money Market
Portfolio Fund
----------------------------------------------------------------------------------- --------------
Investor B Shares
(with applicable
Trust Trust II Institutional Investor A contingent deferred Retail A
Shares Shares Shares Shares sales 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 Inception........ 4.55% (12/1/90) 4.91% (11/10/98) 4.70% (1/3/94) 5.28% (3/24/83) 4.02% (1/26/96) 5.43% (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>
<TABLE>
<CAPTION>
Mercantile Firstar
Tax-Exempt Tax-Exempt
Money Market Money Market
Portfolio Fund
-------------- --------------
Investor A Retail A
Shares 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>
132
<PAGE>
<TABLE>
<CAPTION>
Mercantile Firstar
Intermediate Intermediate
Corporate Bond Bond Market
Portfolio Fund
------------------- --------------------
Trust Shares Institutional Shares
------------------- --------------------
<S> <C> <C>
1 Year.............................. -0.87% 1.88%
5 Years............................. N/A 6.16%
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
<CAPTION>
Mercantile Firstar
Intermediate Intermediate
Corporate Bond Bond Market
Portfolio Fund
------------------- --------------------
Investor A Shares Retail A Shares
------------------- --------------------
(with maximum (with maximum
4.00% sales charge) 4.00% sales charge)
<S> <C> <C>
1 Year.............................. -5.11% -2.43%
5 Years............................. N/A 5.05%
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
<CAPTION>
Mercantile
Mercantile Government &
Bond Index Corporate Bond
Portfolio 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
<CAPTION>
Mercantile
Mercantile Government &
Bond Index Corporate Bond
Portfolio 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>
133
<PAGE>
<TABLE>
<CAPTION>
Mercantile
Mercantile Government &
Bond Index Corporate Bond
Portfolio Portfolio
------------------- --------------------
Investor A Shares Investor A Shares
------------------- --------------------
(with maximum (with maximum
4.00% sales charge) 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
<CAPTION>
Mercantile Firstar
Short-Intermediate Tax-Exempt
Municipal Intermediate Bond
Portfolio Fund
------------------- --------------------
Trust Shares Institutional Shares
------------------- --------------------
<S> <C> <C>
1 Year.............................. -0.11% 0.08%
5 Years............................. N/A 4.45%
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
<CAPTION>
Mercantile Firstar
Short-Intermediate Tax-Exempt
Municipal Intermediate Bond
Portfolio Fund
------------------- --------------------
Investor A Shares Retail A Shares
------------------- --------------------
(with maximum (with maximum
4.00% sales charge) 4.00% sales charge)
<S> <C> <C>
1 Year.............................. -4.12% -4.21%
5 Years............................. N/A 3.35%
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
<CAPTION>
Mercantile Firstar
Balanced Balanced Growth
Portfolio Fund
------------------- --------------------
Trust Shares Institutional Shares
------------------- --------------------
<S> <C> <C>
1 Year.............................. 2.94% 14.44%
5 Years............................. 12.87% 14.81%
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
<CAPTION>
Mercantile Firstar
Balanced Balanced Growth
Portfolio Fund
------------------- --------------------
Investor A Shares Retail A Shares
------------------- --------------------
(with maximum (with maximum
5.50% sales charge) 5.50% sales charge)
<S> <C> <C>
1 Year.............................. -3.10% 7.90%
5 Years............................. 11.28% 13.26%
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>
134
<PAGE>
<TABLE>
<CAPTION>
Mercantile Firstar
Balanced Balanced Growth
Portfolio Fund
------------------- -------------------
Investor B Shares Retail B Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... -2.30% 8.30%
5 Years.............................. 11.51% 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
<CAPTION>
Mercantile Firstar
Equity Index Equity Index
Portfolio Fund
------------------- -------------------
Institutional
Trust Shares 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
<CAPTION>
Mercantile Firstar
Equity Index Equity Index
Portfolio Fund
------------------- -------------------
Investor A Shares Retail A Shares
------------------- -------------------
(with maximum (with maximum
5.50% sales charge) 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
<CAPTION>
Mercantile
Growth & Income Firstar
Equity Growth & Income
Portfolio Fund
------------------- -------------------
Institutional
Trust Shares 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
<CAPTION>
Mercantile
Growth & Income Firstar
Equity Growth & Income
Portfolio Fund
------------------- -------------------
Investor A Shares Retail A Shares
------------------- -------------------
(with maximum (with maximum
5.50% sales charge) 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) 12.41% (12/29/89)
Best Quarter......................... 12.00%/Q4 "98 12.41%/Q4 "98
Worst Quarter........................ -19.12%/Q3 "98 -13.84%Q3 "98
</TABLE>
135
<PAGE>
<TABLE>
<CAPTION>
Mercantile
Growth & Income Firstar
Equity Growth & Income
Portfolio Fund
------------------- -------------------
Investor B Shares Retail B Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... -0.64% -1.35%
5 Years.............................. 16.98% 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
<CAPTION>
Mercantile Firstar
Growth Equity Growth
Portfolio Fund
------------------- -------------------
Institutional
Trust Shares Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... 24.13% 21.22%
5 Years.............................. N/A 22.11%
Since Inception...................... 18.85% (11/24/97) 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
<CAPTION>
Mercantile Firstar
Growth Equity Growth
Portfolio Fund
------------------- -------------------
Investor A Shares Retail A Shares
------------------- -------------------
(with maximum (with maximum
5.50% sales charge) 5.50% sales charge)
<S> <C> <C>
1 Year............................... 17.00% 14.24%
5 Years.............................. 23.98% 20.46%
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
<CAPTION>
Mercantile Firstar
Growth Equity Growth
Portfolio Fund
------------------- -------------------
Investor B Shares Retail B Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... 17.87% 14.97%
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
<CAPTION>
Mercantile Firstar
Small Cap Equity Emerging Growth
Portfolio Fund
------------------- -------------------
Institutional
Trust Shares Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... 40.15% 39.06%
5 Years.............................. 12.36% 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>
136
<PAGE>
<TABLE>
<CAPTION>
Mercantile Firstar
Small Cap Equity Emerging Growth
Portfolio Fund
------------------- -------------------
Investor A Shares Retail A Shares
------------------- -------------------
(with maximum (with maximum
5.50% sales charge) 5.50% sales charge)
<S> <C> <C>
1 Year............................... 32.08% 31.27%
5 Years.............................. 10.76% 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
<CAPTION>
Mercantile Firstar
Small Cap Equity Emerging Growth
Portfolio Fund
------------------- -------------------
Investor B Shares Retail B Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... 33.90% 32.77%
5 Years.............................. 11.01% 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
<CAPTION>
Mercantile
International Firstar
Equity Core International
Portfolio Equity Fund
------------------- -------------------
Institutional
Trust Shares Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... 25.13% N/A
5 Years.............................. 14.23% N/A
Since Inception...................... 12.58% (4/4/94) 0.52% (11/4/99)
Best Quarter......................... 27.60%/Q4 '99 0.29%/Q2 '00
Worst Quarter........................ -16.98%/Q3 '98 -8.81%/Q3 '00
<CAPTION>
Mercantile
International Firstar
Equity Core International
Portfolio Equity Fund
------------------- -------------------
Investor A Shares Retail A Shares
------------------- -------------------
(with maximum 5.50% (with maximum 5.50%
sales charge) sales charge)
<S> <C> <C>
1 Year............................... 17.92% N/A
5 Years.............................. 12.61% N/A
Since Inception...................... 11.19% (5/2/94) -5.21% (11/4/99)
Best Quarter......................... 27.41%/Q4 '99 0.19%/Q2 '00
Worst Quarter........................ -17.12%/Q3 '98 -8.92%/Q3 '00
<CAPTION>
Mercantile
International Firstar
Equity Core International
Portfolio Equity Fund
------------------- -------------------
Investor B Shares Retail B Shares
------------------- -------------------
<S> <C> <C>
1 Year............................... 18.85% N/A
5 Years.............................. 12.82% N/A
Since Inception...................... 14.49% (3/6/95) -5.00% (11/4/99)
Best Quarter......................... 27.17%/Q4 '99 0.00%/Q2 '99
Worst Quarter........................ -17.24%/Q3 '98 -9.05%/Q3 '00
</TABLE>
137
<PAGE>
Management Discussion of Fund Performance.
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.
138
<PAGE>
[GRAPH]
FIRSTAR INTERMEDIATE LEHMAN BROTHERS
BOND MARKET FUND INTERMIATE GOV'T/
INSTITUTIONAL CORP. BOND(4)
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
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Since Inception
------ ------- ------- -----------------
<S> <C> <C> <C> <C>
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 (2)................... (2.2) 4.1 5.9 5.3 (1/5/93)
Firstar Intermediate Bond Market
Fund--B--No Load.................... -- -- -- 1.0 (3/1/99)(1)
Firstar Intermediate Bond Market
Fund--B--Load(3).................... -- -- -- (4.0) (3/1/99)(1)
Lehman Brothers Intermediate
Gov't./Corp. Bond Index(4).......... 1.0 5.8 7.1 6.1 (1/5/93)
</TABLE>
-------
A = Series A (retail class)
B = Series B (retail class)
(1) Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
(2) Reflects maximum sales charge of 3.75%.
(3) Reflects maximum deferred sales charge of 5.00%.
(4) 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
criteria: 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.
139
<PAGE>
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.
<TABLE>
<CAPTION>
Sector Distribution 10/31/99
----------------------------
<S> <C>
U.S. Treasury....................................................... 18%
U.S. Government Agency.............................................. 0%
Mortgage-Backed(1).................................................. 6%
Finance, Banking, Brokerage......................................... 33%
Industrial.......................................................... 9%
Utility............................................................. 3%
International/Yankee................................................ 11%
Asset-Backed........................................................ 16%
Cash and Other...................................................... 4%
----
Total............................................................. 100%
====
</TABLE>
<TABLE>
<CAPTION>
Portfolio Composition 10/31/99
------------------------------
<S> <C>
Average Maturity............................................... 5.5 Years
Average Duration............................................... 3.4 Years
</TABLE>
--------
(1) incl. U.S. Gov't. Agency-Backed
<TABLE>
<CAPTION>
Quality Distribution 10/31/99
-----------------------------
<S> <C>
U.S. Treasury...................................................... 18%
U.S. Government Agency............................................. 3%
Aaa................................................................ 24%
Aa................................................................. 8%
A.................................................................. 28%
Baa................................................................ 19%
Ba................................................................. 0%
-----
Total............................................................ 100%
=====
<CAPTION>
SEC 30-Day Yield
----------------
<S> <C>
Institutional...................................................... 6.37%
A--No Load......................................................... 6.11%
A--Load............................................................ 5.88%
B--No Load......................................................... 5.36%
<CAPTION>
Total Fund Net Assets 10/31/99
------------------------------
<S> <C>
$318,031,682
</TABLE>
140
<PAGE>
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.
[GRAPH]
LEHMAN BROTHERS
FIRSTAR TAX EXEMPT 5 YEAR GENERAL
INTERMEDIATE BOND FUND OBLIGATION BOND INDEX(4)
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
141
<PAGE>
This chart assumes an initial investment of $10,000 made on 2/8/93
(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
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Since Inception
------ ------- ------- -----------------
<S> <C> <C> <C> <C> <C>
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(2).................... (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)(1)
Firstar Tax-Exempt Intermediate Bond
Fund--B--Load(3) ................... -- -- -- (6.4) (3/1/99)(1)
Lehman Brothers 5 Year General
Obligation Bond Index(4)............ 1.1 4.7 5.8 5.1 (2/8/93)
</TABLE>
--------
A = Series A (retail class)
B =Series B (retail class)
(1)Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
(2) Reflects maximum sales charge of 3.75%.
(3) Reflects maximum deferred sales charge of 5.00%.
(4) 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.
142
<PAGE>
<TABLE>
<CAPTION>
Sector Distribution 10/31/99
----------------------------
<S> <C>
General Obligations................................................. 8%
Escrowed/Prerefunded................................................ 68%
Insured............................................................. 18%
Revenue............................................................. 3%
Cash and Other...................................................... 3%
----
Total............................................................... 100%
====
</TABLE>
<TABLE>
<CAPTION>
Quality Distribution 10/31/99
-----------------------------
<S> <C>
Aaa................................................................. 89%
Aa.................................................................. 11%
----
Total............................................................. 100%
====
</TABLE>
<TABLE>
<CAPTION>
Portfolio Composition 10/31/99
------------------------------
<S> <C>
Average Maturity............................................... 5.0 Years
Average Duration............................................... 4.1 Years
</TABLE>
<TABLE>
<CAPTION>
Sec 30-Day Yield
----------------
<S> <C>
Institutional...................................................... 4.19%
A--No Load......................................................... 3.94%
A--Load............................................................ 3.79%
B--No Load......................................................... 3.19%
</TABLE>
<TABLE>
<CAPTION>
Total Fund
Net Assets
10/31/99
----------
<S> <C>
$85,123,822
</TABLE>
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.
143
<PAGE>
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.
[LINE GRAPH]
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.
144
<PAGE>
Average Annual Rate of Return (%)
For Periods Ended October 31, 1999
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Since Inception
------ ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
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(2)............................ 0.8 8.9 11.7 9.7 (3/30/92)
Firstar Balanced Growth Fund--B--No
Load............................... -- -- -- 0.3 (3/1/99)(1)
Firstar Balanced Growth Fund--B--
Load(3)............................ -- -- -- (4.7) (3/1/99)(1)
Lipper Balanced Fund Index(4)....... 12.6 14.5 15.1 12.5 (3/30/92)
S&P 500 Stock Index(5).............. 25.7 26.5 26.0 20.0 (3/30/92)
</TABLE>
-------
A = Series A (retail class)
B = Series B (retail class)
(1) Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
(2) Reflects maximum sales charge of 4.50%.
(3) Reflects maximum deferred sales charge of 5.00%.
(4) 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.
(5) The S&P 500 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.
<TABLE>
<CAPTION>
Top 5 Equity Holdings 10/31/99
------------------------------
<S> <C>
American International Group........................................ 1.1%
Microsoft Corporation............................................... 1.0%
SunGard Data Systems................................................ 1.0%
State Street Corporation............................................ 1.0%
Protective Life Corporation......................................... 1.0%
</TABLE>
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
<TABLE>
<CAPTION>
Total Fund
Net Assets
10/31/99
----------
<S> <C>
$235,174,312
</TABLE>
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.
145
<PAGE>
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.
[LINE GRAPH]
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
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Since Inception
------ ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
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(2).............................. 19.4 23.9 24.2 16.4 (12/29/89)
Firstar Equity Index Fund--B--No
Load................................. -- -- -- 9.9 (3/1/99)(1)
Firstar Equity Index Fund--B--Load(3)
..................................... -- -- -- 4.9 (3/1/99)(1)
S&P 500 Stock Index(4)................ 25.7 26.5 26.0 17.6 (12/29/89)
</TABLE>
-------
A = Series A (retail class)
B = Series B (retail class)
(1) Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
(2) Reflects maximum sales charge of 4.50%.
146
<PAGE>
(3) Reflects maximum deferred sales charge of 5.00%.
(4) The S&P 500 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.
<TABLE>
<CAPTION>
Top 5 Equity Holdings 10/31/99
------------------------------
<S> <C>
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.
<CAPTION>
Total Fund Net Assets 10/31/99
------------------------------
<S> <C>
$715,021,181
</TABLE>
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
147
<PAGE>
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.
[GRAPH]
FIRSTSTAR GROWTH AND S&P 500
INCOME FUND STOCK
INSTITUTIONAL INDEX(4)
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 13,864 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
148
<PAGE>
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
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years Since Inception
------ ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
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(2)........................... 6.8 18.0 21.0 13.9 (12/29/89)
Firstar Growth and Income Fund--B--
No Load........................... -- -- -- 3.2 (3/1/99)(1)
Firstar Growth and Income Fund--B--
Load(3)........................... -- -- -- (1.8) (3/1/99)(1)
S&P 500 Stock Index(4)............. 25.7 26.5 26.0 17.6 (12/29/89)
</TABLE>
--------
A = Series A (retail class)
B = Series B (retail class)
(1) Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
(2) Reflects maximum sales charge of 4.50%.
(3) Reflects maximum deferred sales charge of 5.00%.
(4) The S&P 500 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.
<TABLE>
<CAPTION>
Top 5 Equity Holdings 10/31/99
------------------------------
<S> <C>
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%
</TABLE>
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
<TABLE>
<CAPTION>
Total Fund
Net Assets
10/31/99
----------
<S> <C>
$726,895,945
</TABLE>
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
149
<PAGE>
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.
150
<PAGE>
We appreciate your continued support of Firstar Growth Fund.
[GRAPH]
FIRSTAR S&P 500
GROWTH FUND 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
<TABLE>
<CAPTION>
Since
1 Year 3 Years 5 Years Inception
------ ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
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(2)................ 12.6 17.4 18.0 14.2 (12/29/92)
Firstar Growth Fund--B--
No Load................ -- -- -- 2.3 (3/1/99)(1)
Firstar Growth Fund--B--
Load(3)................ -- -- -- (2.7) (3/1/99)(1)
S&P 500 Stock Index(4).. 25.7 26.5 26.0 20.7 (12/29/92)
</TABLE>
-------
A = Series A (retail class)
B = Series B (retail class)
(1) Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
(2) Reflects maximum sales charge of 4.50%.
(3) Reflects maximum deferred sales charge of 5.00%.
(4) The S&P 500 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.
151
<PAGE>
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.
<TABLE>
<CAPTION>
Top 5 Equity Holdings 10/31/99
------------------------------
<S> <C>
American International Group........................................ 2.9%
Microsoft Corporation............................................... 2.8%
State Street Corporation............................................ 2.8%
Tyco International, Ltd. ........................................... 2.8%
MCI Worldcom, Inc. ................................................. 2.7%
</TABLE>
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
<TABLE>
<CAPTION>
Total Fund
Net Assets
10/31/99
----------
<S> <C>
$354,792,347
</TABLE>
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
152
<PAGE>
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.
[GRAPH]
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
<TABLE>
<CAPTION>
Since
1 Year Inception
------ --------------
<S> <C> <C> <C>
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(2).............. (7.1) (4.9) (8/15/97)
Firstar Emerging Growth Fund--B--No Load.............. -- (3.3) (3/1/99)(1)
Firstar Emerging Growth Fund--B--Load(3).............. -- (8.2) (3/1/99)(1)
S&P Smallcap 600 Index(4)............................. 12.0 2.3 (8/15/97)
Wilshire Next 1750 Index(5)........................... 18.9 6.0 (8/15/97)
</TABLE>
153
<PAGE>
--------
A= Series A (retail class)
B= Series B (retail class)
(1) Series B performance for the period March 1, 1999 to October 31, 1999 is
not annualized.
(2) Reflects maximum sales charge of 4.50%.
(3) Reflects maximum deferred sales charge of 5.00%.
(4) The S&P SmallCap 600 Index is a capitalization weighted index that
measures the performance of selected U.S. stocks with small market
capitalizations.
(5) 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.
<TABLE>
<CAPTION>
Top 5 Equity Holdings 10/31/99
------------------------------
<S> <C>
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%
</TABLE>
Portfolio holdings are subject to change and are not a representation of the
Fund's entire portfolio holdings.
<TABLE>
<CAPTION>
Total Fund Net
Assets
10/31/99
--------------
<S> <C>
$149,315,954
</TABLE>
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 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 "Shareholder
Transactions and Services of the Firstar Funds and the Corresponding
Mercantile Funds."
154
<PAGE>
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.
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 $6,000.
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:
<TABLE>
<CAPTION>
Shares
Outstanding
and
Entitled to
Mercantile Fund Vote
--------------- -----------
<S> <C>
Money Market Funds:
Treasury Money Market Portfolio
Investor A Shares................................................. 76,037
Institutional Shares.............................................. 26,972,534
Trust Shares...................................................... 46,814,321
Trust II Shares................................................... 68,453,402
-----------
Total........................................................... 142,316,294
Money Market Portfolio
Investor A Shares................................................. 8,135,646
Investor B Shares................................................. 51,232
Institutional Shares.............................................. 34,883,248
Trust Shares...................................................... 326,120
Trust II Shares................................................... 240,559,568
Total........................................................... 283,955,814
</TABLE>
155
<PAGE>
<TABLE>
<CAPTION>
Shares
Outstanding
and
Entitled to
Mercantile Fund Vote
--------------- -----------
<S> <C>
Tax-Exempt Money Market Portfolio
Investor A Shares................................................. 145,259
Trust Shares...................................................... 91
Trust II Shares................................................... 102,273,966
-----------
Total........................................................... 102,419,316
Conning Money Market Portfolio Shares
Shares............................................................ 203,546,062
Bond Funds:
U.S. Government Securities Portfolio
Investor A Shares................................................. 357,227
Investor B Shares................................................. 13,190
Institutional Shares.............................................. 514,140
Trust Shares...................................................... 5,334,652
-----------
Total........................................................... 6,219,209
Intermediate Corporate Bond Portfolio
Investor A Shares................................................. 46,068
Institutional Shares.............................................. 99,860
Trust Shares...................................................... 3,786,490
-----------
Total........................................................... 3,932,418
Bond Index Portfolio
Investor A Shares................................................. 84,041
Institutional Shares.............................................. 2,061,743
Trust Shares...................................................... 14,365,298
-----------
Total........................................................... 16,511,082
Government & Corporate Bond Portfolio
Investor A Shares................................................. 300,601
Investor B Shares................................................. 63,423
Institutional Shares.............................................. 1,535,697
Trust Shares...................................................... 11,062,464
-----------
Total........................................................... 12,962,185
Tax-Exempt Bond Funds:
Short-Intermediate Municipal Portfolio
Investor A Shares................................................. 4 ,554
Trust Shares...................................................... 2,515,747
-----------
Total........................................................... 2,520,301
Missouri Tax-Exempt Bond Portfolio
Investor A Shares................................................. 1,746,214
Investor B Shares................................................. 250,852
Trust Shares...................................................... 10,791,359
-----------
Total........................................................... 12,788,425
National Municipal Bond Portfolio
Investor A Shares................................................. 156,533
Investor B Shares................................................. 66,875
Trust Shares...................................................... 25,839,954
-----------
Total........................................................... 26,063,362
Stock Funds:
Balanced Portfolio
Investor A Shares................................................. 821,307
Investor B Shares................................................. 169,729
Institutional Shares.............................................. 4,605,682
Trust Shares...................................................... 1,690,673
-----------
Total........................................................... 7,287,391
</TABLE>
156
<PAGE>
<TABLE>
<CAPTION>
Shares
Outstanding
and
Entitled to
Mercantile Fund Vote
--------------- -----------
<S> <C>
Equity Income Portfolio
Investor A Shares................................................ 121,964
Investor B Shares................................................ 95,785
Institutional Shares............................................. 13,083
Trust Shares..................................................... 7,759,477
----------
Total.......................................................... 7,990,309
Equity Index Portfolio
Investor A Shares................................................ 169,471
Institutional Shares............................................. 2,141,936
Trust Shares..................................................... 3,893,627
----------
Total.......................................................... 6,205,034
Growth & Income Equity Portfolio
Investor A Shares................................................ 2,426,064
Investor B Shares................................................ 518,423
Institutional Shares............................................. 4,311,690
Trust Shares..................................................... 11,360,638
----------
Total.......................................................... 18,616,815
Growth Equity Portfolio
Investor A Shares................................................ 373,957
Investor B Shares................................................ 98,877
Institutional Shares............................................. 151,206
Trust Shares..................................................... 4,863,260
----------
Total.......................................................... 5,487,300
Small Cap Equity Portfolio
Investor A Shares................................................ 544,471
Investor B Shares................................................ 76,313
Institutional Shares............................................. 245,811
Trust Shares..................................................... 7,737,524
----------
Total.......................................................... 8,604,119
Small Cap Equity Index Portfolio
Investor A Shares................................................ 15,030
Institutional Shares............................................. 1,548,422
Trust Shares..................................................... 4,852,719
----------
Total.......................................................... 6,416,171
International Equity Portfolio
Investor A Shares................................................ 241,914
Investor B Shares................................................ 48,992
Institutional Shares............................................. 1,077,877
Trust Shares..................................................... 7,708,923
----------
Total.......................................................... 9,077,706
</TABLE>
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.
157
<PAGE>
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; 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.
158
<PAGE>
Table VI(A)
<TABLE>
<CAPTION>
Percentage Percentage Pro Forma
Class; Amount of Shares of Class of Fund Percentage
Mercantile Fund Name and Address Owned; Type of Ownership Owned Owned Post Closing
--------------- ---------------- ------------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Treasury Money Market National Financial Serv. Investor A; 68,720; 90.40% 0.04% 0.00%
Portfolio.............. 1 World Financial Ctr. Record
200 Liberty St. 5th Fl.
New York, NY 10281
Dorothy Borgmeyer Investor A; 5,749; 7.56% 0.00% 0.00%
41 Berry Oaks Lane Record
Saint Louis, MO 63122
Firstar Bank N.A. Institutional; 23,603,075; 87.51% 16.58% 0.57%
PO Box 387 Record
Saint Louis, MO 63166
Hare & Co. Trust; 46,440,979; 99.20% 32.63% 1.07%
The Bank of New York Record
1 Wall St. #2
New York, NY 10286
Firstar Bank N.A. Trust II; 57,267,893; 83.66% 40.23% 1.38%
PO Box 387 Record
Saint Louis, MO 63166
Pacific Century Trust Trust II; 9,884,772; 14.44% 6.94% 0.24%
PO Box 3170 Record
Honolulu, HI 96802
Money Market Portfolio.. Public Safety Equipment Investor A; 2,753,602; 33.84% 0.97% 0.58%
10986 N. Warson Rd. Record
Saint Louis, MO 63114
National Financial Serv. Investor A; 1,203,329; 14.79% 0.42% 0.25%
1 World Financial Ctr. Record
200 Liberty St. 5th Fl.
New York, NY 10281
United Penecostal Church Investor A; 646,343; 8.07% 0.23% 0.14%
8855 Dunn Rd. Record
Hazelwood, MO 63042
Richard Crippa Investor A; 603,610; 7.42% 0.21% 0.13%
17930 Argonne Estates Dr Record
Florissant, MO 63042
Homer Turner & Investor B; 6801; 13.27% 0.00% 0.00%
Edna Turner Record
33409 E Pink Hill Rd
Grain Valley, MO 64029
John Hill Investor B; 5,464; 10.67% 0.00% 0.00%
806 Bitterfield Dr. Record
Ballwin, MO 63011
Sandra Hill Investor B; 5,464; 10.67% 0.00% 0.00%
806 Bitterfield Dr. Record
Ballwin, MO 63011
National Financial Serv. Investor B; 5,013; 9.78% 0.00% 0.00%
PO Box 3908 Record
New York, NY 10008
Alberta Buenemann Investor B; 4,149; 8.10% 0.00% 0.00%
1649 Sand Run Rd. Record
Troy, MO 63379
Firstar Bank N.A. Institutional; 13,245,883; 37.97% 4.66% 2.78%
PO Box 387 Record
Saint Louis, MO 63166
</TABLE>
159
<PAGE>
<TABLE>
<CAPTION>
Percentage Percentage Pro Forma
Class; Amount of Shares of Class of Fund Percentage
Mercantile Fund Name and Address Owned; Type of Ownership Owned Owned Post Closing
--------------- ---------------- ------------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Bisys BD Services, Inc. Institutional; 3,579,976; 10.26% 1.26% 0.75%
PO Box 4054 Record
Concord, CA 94524
First Union National Bank Trust; 326,120; 100% 0.11% 0.07%
1525 W W T Harris Blvd Record
Charlotte, NC 28288
Firstar Bank N.A. Trust II; 163,550,428; 67.99% 57.60% 34.37%
PO Box 387 Record
Saint Louis, MO 63166
Pacific Century Trust Trust II; 75,588,991; 31.42% 26.62% 15.89%
PO Box 3170 Record
Honolulu, HI 96802
Tax-Exempt Money Market
Portfolio.............. Jill K. Stratemeier Investor A; 95,778; 65.94% 0.09% 0.02%
Exec. Estate of Record
John Matthews
PO Box 893
Parsons, KS 67357
National Financial Serv. Investor A; 28,298; 19.49% 0.03% 0.00%
200 Liberty St. 5th FL Record
New York, NY 10281
Benjamin Sandler & Investor A; 16,021; 11.03% 0.01% 0.00%
Louise Sandler Record
14440 White Birch Valley
Chesterfield, MO 63017
Firstar Bank N.A. Trust II; 99,254,935; 97.04% 96.91% 21.10%
PO Box 387 Record
Saint Louis, MO 63166
Conning Money
Market Portfolio....... Pershing Omnibus Account Investor A; 203,498,596; 99.98% 99.98% 99.98%
1 Pershing Plz Record
Jersey City, NJ 07399
U.S. Government
Securities Portfolio... Marcal Rope Rigging Inc. Investor A; 18,245; 5.11% 0.29% 0.08%
Employer Profit Sh. Plan Record
PO Box 477
Alton, IL 62002
National Financial Serv. Investor B; 10,012; 75.91% 0.16% 0.04%
200 Liberty St. 5th FL Record
New York, NY 10281
Evelyn Sutton Investor B; 1,043; 7.90% 0.00% 0.00%
510 N. Main Cross St. Record
Bowling Green, MO 63334
Stanley Markenson & Investor B; 679; 5.14% 0.00% 0.00%
Shirley Markenson Record
362 Hibler Ct.
Creve Coevr, MO 63141
Rextex & Co Institutional; 286,696; 55.76% 4.61% 1.28%
PO Box 387 Record
Saint Louis, MO 63166
Bisys BD Services, Inc. Institutional; 31,291; 6.09% 0.50% 0.14%
PO Box 4054 Record
Concord, CA 94524
</TABLE>
160
<PAGE>
<TABLE>
<CAPTION>
Class; Amount of Shares Percentage Percentage Pro Forma
Owned; of Class of Fund Percentage
Mercantile Fund Name and Address Type of Ownership Owned Owned Post Closing
--------------- ---------------- ----------------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Capinco Institutional; 196,128; 38.15% 3.15% 0.88%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 4,895,872; 91.77% 78.72% 21.92%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 277,042; 5.19% 4.45% 1.24%
PO Box 1787 Record
Milwaukee, WI 53201
Intermediate Corporate
Bond Portfolio......... David Otten, Sr. Investor A; 8,796; 19.09% 0.22% 0.02%
300 Derhake Rd. Record
Florissant, MO 63031
James Lynch Investor A; 7,565; 16.42% 0.19% 0.02%
915 Highmont Dr. Record
Ferguson, MO 63135
Robert Barclay Investor A; 5,691; 12.35% 0.14% 0.01%
1612 Tamarack Dr. Record
Saint Charles, MO 63301
Lynn Prescott Investor A; 4,928; 10.69% 0.12% 0.01%
4180 Rincon Circle Record
Palo Alto, CA 94306
Alice Jones Investor A; 3,266; 7.08% 0.08% 0.01%
213 S. Clay #2 Record
Kirkwood, MO 63122
National Financial Serv. Investor A; 13,515; 29.33% 0.34% 0.03%
200 Liberty St. 5th FL Record
New York, NY 10281
Capinco Institutional; 99,860; 100.00% 2.53% 0.22%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 3,499,170; 92.40% 88.98% 7.70%
PO Box 1787 Record
Milwaukee, WI 53201
Bond Index Portfolio.... David Otten Investor A; 14,762; 17.56% 0.09% 0.05%
300 Derhake Rd. Record
Florissant, MO 63031
James Lynch Investor A; 13,665; 16.25% 0.08% 0.05%
915 Highmont Dr. Record
Ferguson, MO 63135
National Financial Serv. Investor A; 25,718; 30.60% 0.15% 0.09%
200 Liberty St. 5th FL Record
New York, NY 10281
Silvia Leth Investor A; 5,136; 6.11% 0.03% 0.02%
26332 Sand Canyon Rd. Record
Cheyenne, CA 91351
Robert Barclay Investor A; 4834; 5.75% 0.03% 0.02%
1612 Tamarack Dr. Record
Saint Charles, MO 63301
George Swartz & Investor A; 4413; 5.25% 0.02% 0.01%
Donna Swartz Record
2203 Marian Place
Venice, CA 90291
</TABLE>
161
<PAGE>
<TABLE>
<CAPTION>
Percentage Percentage Pro Forma
Class; Amount of Shares of Class of Fund Percentage
Mercantile Fund Name and Address Owned; Type of Ownership Owned Owned Post Closing
--------------- ---------------- ------------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Firstar Bank Trustee Institutional; 997,262; 48.37% 6.04% 3.38%
Horizon Record
PO Box 387
Saint Louis, MO 63166
Capinco Institutional; 1,051,721; 51.01% 6.37% 3.57%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Institutional; 13,635,364; 94.92% 82.58% 46.26%
PO Box 1787 Record
Milwaukee, WI 53201
Government & Corporate
Bond Portfolio......... Shirley Schuepbach & Investor A; 21,276; 7.08% 0.16% 0.07%
Janet Gillespie Record
13738 Michael Rd.
Highland, IL 62249
Eugene Tucker Investor A; 21,028; 6.99% 0.14% 0.07%
1517 Rue Renee Record
Saint Louis, MO 63122
National Financial Serv. Investor B; 41,098; 64.80% 0.31% 0.14%
200 Liberty St. 5th FL Record
New York, NY 10281
Homer Turner & Investor B; 4801; 7.57% 0.03% 0.02%
Edna Turner Record
33409 E. Pink Hill Rd.
Grain Valley, MO 64029
Rextex & Co Institutional; 610,140; 39.73% 4.70% 2.07%
PO Box 387 Record
Saint Louis, MO 63166
Muggs & Co Institutional; 487,038; 28.46% 3.76% 1.65%
PO Box 1787 Record
Milwaukee, WI 53201
Bisys BD Services Institutional; 96,744; 6.30% 0.74% 0.33%
PO Box 4054 Record
Concord, CA 94524
Capinco Institutional; 336,937; 21.94% 2.60% 1.14%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 2,771,775; 25.05% 21.38% 9.40%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 7,934,546; 71.72% 61.21% 26.92%
PO Box 1787 Record
Milwaukee, WI 53201
Short-Intermediate
Municipal Portfolio.... George Richardson & Investor A; 2,536; 55.68% 0.10% 0.02%
Amelia Richardson Record
2120 Ingalls Circle
O'Fallon, MO 63366
National Financial Serv. Investor A; 2,017; 44.32% 0.08% 0.02%
200 Liberty St. 5th FL Record
New York, NY 10281
Band & Co Trust; 2,452,053; 97.47% 97.29% 20.39%
PO Box 1787 Record
Milwaukee, WI 53201
</TABLE>
162
<PAGE>
<TABLE>
<CAPTION>
Percentage Percentage Pro Forma
Class; Amount of Shares of Class of Fund Percentage
Mercantile Fund Name and Address Owned; Type of Ownership Owned Owned Post Closing
--------------- ---------------- ------------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Missouri Tax-Exempt Bond
Portfolio.............. National Financial Serv. Investor B; 202,563; 80.75% 1.58% 1.58%
200 Liberty St. 5th FL Record
New York, NY 10281
Band & Co Trust; 9,235,159; 85.58% 72.21% 72.21%
PO Box 1787 Record
Milwaukee, WI 53201
Firstar Trust Trust; 1,137,875; 10.54% 8.89% 8.89%
PO Box 1787 Record
Milwaukee, WI 53201
National Municipal Bond
Portfolio.............. National Financial Serv. Investor A; 103,524; 66.13% 0.39% 0.25%
200 Liberty St. 5th FL Record
New York, NY 10281
Gail Ruga Investor A; 10,495; 6.70% 0.04% 0.03%
430 W 2nd St. Record
Chillicothe, OH 45601
Kim Wheeler Investor A; 10,495; 6.70% 0.04% 0.03%
1003 S. 19th St. Record
Rogers, AR 72758
George Richardson & Investor A; 8,423; 5.38% 0.03% 0.02%
Amelia Richardson Record
2120 Ingalls Circle
O'Fallon, MO 63366
National Financial Serv. Investor B; 66,875; 100.00% 0.25% 0.16%
200 Liberty St. 5th FL Record
New York, NY 10281
Band & Co Trust; 25,637,601; 99.21% 98.36% 61.46%
PO Box 1787 Record
Milwaukee, WI 53201
Balanced Portfolio...... Wayne Brunk Investor B; 14,888; 8.77% 0.20% 0.11%
17825 Highway 71 Record
Saint Joseph, MO 64505
Firstar Bank Trustee Institutional; 2,897,124; 62.90% 39.76% 21.10%
Horizon Record
PO Box 387
Saint Louis, MO 63166
Rextex & Co Institutional; 832,325; 18.07% 11.42% 6.06%
PO Box 387 Record
Saint Louis, MO 63166
Muggs & Co Institutional; 355,438; 7.72% 4.88% 2.59%
PO Box 1787 Record
Milwaukee, WI 53201
Bisys BD Services, Inc. Institutional; 285,537; 7.00% 3.91% 2.08%
PO Box 4054 Record
Concord, CA 94524
Band & Co Trust; 88,083; 5.21% 1.21% 0.64%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 1,595,597; 94.38% 21.90% 11.62%
PO Box 1787 Record
Milwaukee, WI 53201
Equity Income
Portfolio.............. National Financial Serv. Investor A; 88,272; 72.37% 1.10% 0.64%
200 Liberty St. 5th FL Record
New York, NY 10281
</TABLE>
163
<PAGE>
<TABLE>
<CAPTION>
Percentage Percentage Pro Forma
Class; Amount of Shares of Class of Fund Percentage
Mercantile Fund Name and Address Owned; Type of Ownership Owned Owned Post Closing
--------------- ---------------- ------------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
National Financial Serv. Investor B; 81,640; 85.23% 1.02% 0.59%
200 Liberty St. 5th FL Record
New York, NY 10281
Bisys BD Services, Inc. Institutional; 8,384; 64.07% 0.10% 0.06%
PO Box 4054 Record
Concord, CA 94524
Band & Co Institutional; 1,412; 10.79% 0.00% 0.00%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Institutional; 2,605; 19.91% 0.00% 0.00%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 2,651,923; 34.17% 33.19% 19.31%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 2,800,620; 36.09% 35.05% 20.39%
PO Box 1787 Record
Milwaukee, WI 53201
Firstar Trust Trust; 2,240,385; 28.87% 28.03% 16.31%
PO Box 1787 Record
Milwaukee, WI 53201
Equity Index Portfolio.. Sisters of St. Francis Investor A; 11,024; 6.50% 0.18% 0.08%
PO Box 9020 Record
2120 Central Ave.
Alton, IL 62002
Firstar Bank--Trustee Institutional; 1,243,357; 58.04% 20.03% 8.51%
Horizon Record
PO Box 387
Saint Louis, MO 63166
Capinco Institutional; 875,865; 40.89% 14.11% 6.00%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 703,688; 18.07% 11.34% 4.81%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 3,107,073; 79.80% 50.07% 21.25%
PO Box 1787 Record
Milwaukee, WI 53201
Growth & Income Equity
Portfolio.............. Firstar Bank--Trustee Institutional; 3,316,723; 76.92% 17.81% 9.82%
Horizon Record
PO Box 387
Saint Louis, MO 63166
Bisys BD Services, Inc. Institutional; 304,380; 7.06% 1.63% 0.90%
PO Box 4054 Record
Concord, CA 94524
Rextex & Co Institutional; 239,654; 5.55% 1.29% 0.71%
PO Box 387 Record
Saint Louis, MO 63166
Capinco Institutional; 397,654; 8.62% 2.14% 1.18%
PO Box 1787 Record
Milwaukee, WI 53201
Conref & Co Trust; 5,683,667; 50.02% 30.53% 16.83%
PO Box 387 Record
Saint Louis, MO 63166
</TABLE>
164
<PAGE>
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage Pro Forma
Shares Owned; of Class of Fund Percentage
Mercantile Fund Name and Address Type of Ownership Owned Owned Post Closing
--------------- ---------------- ----------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Band & Co Trust; 3,796,763; 33.42% 20.39% 11.25%
PO Box 1787 Record
Milwaukee, WI 53201
Firstar Bank Trust; 1,615,365; 14.21% 8.67% 4.78%
PO Box 1787 Record
Milwaukee, WI 53201
Growth Equity
Portfolio.............. Tiger Limited Partnership Investor A; 27,833; 7.44% 0.51% 0.20%
9109 Watson Road Record
Saint Louis, MO 63126
Muggs & Co Institutional; 48,393; 32.00% 0.88% 0.34%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Institutional; 98,294; 65.01% 1.79% 0.69%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 2,798,802; 57.55% 51.01% 19.77%
PO Box 1787 Record
Milwaukee, WI 53201
Firstar Bank Trust; 518,110; 10.65% 9.44% 3.66%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 1,284,454; 26.41% 23.41% 9.07%
PO Box 1787 Record
Milwaukee, WI 53201
Small Cap Equity
Portfolio.............. Rextex & Co Institutional; 53,179; 21.63% 0.62% 0.22%
PO Box 387 Record
Saint Louis, MO 63166
Capinco Institutional; 97,420; 39.63% 1.13% 0.39%
PO Box 1787 Record
Milwaukee, WI 53201
Firstar Trust Institutional; 21,649; 8.81% 0.25% 0.09%
PO Box 1787 Record
Milwaukee, WI 53201
Bisys BD Services, Inc. Institutional; 34,736; 14.13% 0.40% 0.14%
PO Box 4054 Record
Concord, CA 94524
Muggs & Co Institutional; 27,598; 11.23% 0.32% 0.11%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 4,946,229; 63.93% 57.49% 20.05%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 1,456,484; 18.82% 16.93% 5.90%
PO Box 1787 Record
Milwaukee, WI 53201
Bankers Trust Trust; 697,502; 9.01% 8.11% 2.83%
FBO Sheet Metal Local 36 Record
648 Grassmere Park Road
Nashville, TN 37211
Small Cap Equity Index
Portfolio.............. National Financial Serv. Investor A; 13,644; 90.78% 0.21% 0.21%
200 Liberty St. 5th FL Record
New York, NY 10281
</TABLE>
165
<PAGE>
<TABLE>
<CAPTION>
Percentage Percentage Pro Forma
Class; Amount of Shares of Class of Fund Percentage
Mercantile Fund Name and Address Owned; Type of Ownership Owned Owned Post Closing
--------------- ---------------- ------------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Firstar Bank Institutional; 1,302,755; 84.13% 20.30% 20.30%
PO Box 387 Record
Saint Louis, MO 63166
Muggs & Co Institutional; 185,695; 11.99% 2.89% 2.89%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 4,485,058; 92.42% 69.90% 69.90%
PO Box 1787 Record
Milwaukee, WI 53201
International Equity
Portfolio.............. Frances Dakers Investor A; 35,194; 14.55% 0.38% 0.26%
200 East 89th Street Record
New York, NY 10128
Firstar Bank--Trustee Institutional; 682,073; 63.28% 7.51% 5.13%
Horizon Record
PO Box 387
Saint Louis, MO 63166
Muggs & Co Institutional; 161,549; 14.99% 1.78% 1.22%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Institutional; 161,565; 14.99% 1.78% 1.22%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Trust; 445,226; 5.78% 4.90% 3.35%
PO Box 1787 Record
Milwaukee, WI 53201
Capinco Trust; 3,422,311; 44.39% 37.70% 25.74%
PO Box 1787 Record
Milwaukee, WI 53201
Band & Co Trust; 3,227,960; 41.87% 35.56% 24.28%
PO Box 1787 Record
Milwaukee, WI 53201
</TABLE>
166
<PAGE>
Table VI(B)
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage Pro Forma
Shares Owned; of Class of Fund Percentage
Stellar Fund Name and Address Type of Ownership Owned Owned Post Closing
------------ ---------------- ----------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Treasury Fund........... National Financial Serv. Investor C; 366,218,035; 16.31% 9.46% 8.84%
1 World Financial Ctr. Record
200 Liberty St. 5th Fl.
New York, NY 10281
Firstar Bank NA Investor C; 1,506,428,141; 67.12% 38.92% 36.34%
777 E. Wisconsin Ave. Record
Milwaukee, WI 53202
Firstar Bank N.A. Investor C; 240,577,999; 10.72% 6.21% 5.80%
1555 N. Rivercenter Dr Record
Milwaukee, WI 53212
Band & Co Investor Y; 251,532,382; 15.47% 6.50% 6.07%
PO Box 2054 Record
Milwaukee, WI 53201
Firstar Bank N.A. Investor Y; 1,369,488,277; 84.22% 35.38% 33.04%
1555 N. Rivercenter Dr Record
Milwaukee, WI 53212
Tax-Free Money Money
Market Fund............ Firstar Bank NA Investor A; 183,985,379; 90.83% 90.83% 3.62%
777 E. Wisconsin Ave. Record
Milwaukee, WI 53202
National Financial Serv. Investor A; 18,233,229; 9.00% 9.00% 3.88%
1 World Financial Ctr. Record
200 Liberty St. 5th Fl.
New York, NY 10281
U.S. Government
Income Fund............ Kathleen Hyland Investor B; 30,219; 21.20% 0.19% 0.14%
3367 Parkcrest Lane Record
Cincinnati, OH 45211
Donna Fox Investor B; 9,587; 6.72% 0.06% 0.04%
333 Collier Dr. Record
Doylestown, OH 44230
Gregg Pittenger Investor B; 7,862; 5.51% 0.04% 0.04%
3430 Dresden Street Record
Columbus, OH 43224
Band & Co Investor A; 10,338,351; 64.70% 64.13% 46.28%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co. Investor A; 4,857,801; 30.40% 30.13% 21.74%
PO Box 1787 Record
Milwaukee, WI 53201
Insured Tax-Free Bond
Fund................... Band & Co Investor A; 14,672,969; 93.81% 93.75% 35.18%
PO Box 1787 Record
Milwaukee, WI 53201
Pauline Dithmart Investor B; 9,908; 100% 0.06% 0.02%
1141 15th Ave. South Record
Clinton, IA 52732
</TABLE>
167
<PAGE>
Table VI(C)
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage Pro Forma
Shares Owned; of Class of Fund Percentage
Firstar Fund Name and Address Type of Ownership Owned Owned Post Closing
------------ ---------------- ----------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Money Market Fund....... Band & Co. Investor A; 31,335,494; 16.33% 16.33% 6.59%
PO Box 2054 Record
Milwaukee, WI 53201
U.S. Treasury Money
Market Fund............ Band & Co. Investor A; 89,298,602; 67.51% 67.51% 2.15%
PO Box 2054 Record
Milwaukee, WI 53201
Fandl & Co Investor A; 37,781,000; 28.56% 28.56% 0.91%
777 E. Wisconsin Ave. Record
Milwaukee, WI 53201
Tax-Exempt Money Market
Fund................... Band & Co. Investor A; 136,229,512; 82.38% 82.38% 28.96%
PO Box 2054 Record
Milwaukee, WI 53201
Mercantile Bank NA Investor A; 22,769,368; 13.77% 13.77% 4.84%
PO Box 387 Record
Saint Louis, MO 63166
Intermediate Bond Market
Fund................... Band & Co. Institutional; 20,753,724; 53.61% 49.97% 45.65%
PO Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 12,992,228; 33.56% 31.28% 28.58%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Institutional; 2,624,318; 6.78% 6.32% 5.77%
PO Box 1787 Record
Milwaukee, WI 53201
McWood & Co Investor A; 724,105; 26.00% 1.74% 1.59%
100 Tryon Road Record
Raleigh, NC 27603
Michael Wood Investor B; 4,353; 12.93% 0.01% 0.01%
413 Cedar Ridge Road Record
Strafford, MO 65757
Harry Hoth Investor B; 3,997; 11.87% 0.00% 0.00%
2209 Saint Celia St. Record
Dubuque, IA 52002
Gail Peters Investor B; 3,236; 9.61% 0.00% 0.00%
1304 S. 28th St. Record
Milwaukee, WI 53215
Charlotte Chenault Investor B; 2,583; 7.67% 0.00% 0.00%
1843 Kinney Ave. Record
Cincinnati, OH 45207
Kenneth Bachelder & Investor B; 1,698; 5.04% 0.00% 0.00%
Rose Bachelder Record
1204 Farnam St.
Davenport, IA 52803
Tax-Exempt Intermediate
Bond Fund.............. Band & Co. Institutional; 5,954,418; 73.64% 62.65% 49.52%
PO Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 1,759,397; 21.76% 18.51% 14.63%
PO Box 1787 Record
Milwaukee, WI 53201
A & O Research & Dev. Investor A; 94,869; 6.78% 1.00% 0.79%
6 Oakbrook Club Dr. Record
Oakbrook, IL 60523
</TABLE>
168
<PAGE>
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage Pro Forma
Shares Owned; of Class of Fund Percentage
Firstar Fund Name and Address Type of Ownership Owned Owned Post Closing
------------ ---------------- ----------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Dorothy Shienbrood Investor B; 15,278; 75.09% 0.16% 0.13%
7802 5th Ave. Record
Kenosha, WI 53143
Carolyn Goodwin & Investor B; 2,538; 12.47% 0.03% 0.02%
William Behnke Record
2480 Wenatchee Lane
Cincinnati, OH 45230
Charlotte Chenault Investor B; 2,529; 12.42% 0.03% 0.02%
1843 Kinney Ave. Record
Cincinnati, OH 45207
New York, NY 10008
Balanced Growth Fund.... CapinCo Institutional; 2,005,035; 42.00% 31.11% 14.60%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Institutional; 2,597,266; 54.40% 40.30% 18.91%
PO Box 1787 Record
Milwaukee, WI 53201
National Financial Serv. Investor A; 817,184; 50.56% 12.68% 5.95%
PO Box 3908 Record
New York, NY 10008
Gary Brown Investor B; 3,174; 5.81% 0.05% 0.02%
219 Audley Dr. Record
Sun Prairie, WI 53590
Growth and Income Fund.. Band & Co. Institutional; 1,537,588; 13.78% 10.15% 4.55%
PO Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 6,385,612; 57.24% 42.16% 18.91%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Institutional; 2,063,090; 18.49% 13.62% 6.11%
PO Box 1787 Record
Milwaukee, WI 53201
National Financial Serv. Investor A; 2,320,900; 59.26% 15.32% 6.87%
PO Box 3908 Record
New York, NY 10008
Equity Index Fund....... Band & Co. Institutional; 646,757; 9.51% 7.69% 4.42%
PO Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 2,803,529; 41.20% 33.32% 19.18%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Institutional; 2,952,428; 43.39% 35.09% 20.20%
PO Box 1787 Record
Milwaukee, WI 53201
Growth Fund............. Band & Co. Institutional; 1,417,907; 19.12% 16.36% 10.02%
PO Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 4,068,734; 54.85% 46.94% 28.74%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Institutional; 1,533,232; 20.67% 17.69% 10.83%
PO Box 1787 Record
Milwaukee, WI 53201
</TABLE>
169
<PAGE>
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage Pro Forma
Shares Owned; of Class of Fund Percentage
Firstar Fund Name and Address Type of Ownership Owned Owned Post Closing
------------ ---------------- ----------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Donaldson Lufkin Jenrette Investor B; 12,298; 26.76% 0.14% 0.08%
PO Box 2052 Record
Jersey City, NJ 07303
Emerging Growth Fund.... Band & Co. Institutional; 1,516,954; 10.00% 9.44% 6.15%
PO Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 11,744,455; 77.39% 73.11% 47.61%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Institutional; 1,006,487; 6.63% 6.26% 4.08%
PO Box 1787 Record
Milwaukee, WI 53201
Firstar Trust Institutional; 886,818; 5.84% 5.52% 3.59%
PO Box 1787 Record
Milwaukee, WI 53201
Jeanne Yoder Investor B; 3,891; 13.31% 0.02% 0.02%
5400 E. Valle Vista Record
Phoenix, AR 85018
Henrietta Henderson Investor B; 1,889; 6.46% 0.00% 0.00%
5118 Section Ave. Record
Cincinnati, OH 45212
Katherine Messmann Investor B; 1,823; 6.32% 0.00% 0.00%
W5302 Biederman Road Record
Johnson Creek, WI 53038
Core International
Equity Fund............ CapinCo Institutional; 1,249,107; 29.73% 29.63% 9.40%
PO Box 1787 Record
Milwaukee, WI 53201
Muggs & Co Institutional; 2,889,879; 68.79% 68.55% 21.74%
PO Box 1787 Record
Milwaukee, WI 53201
John Cleary Investor A; 1,487; 47.82% 0.03% 0.01%
2840 N 78th St. Record
Milwaukee, WI 53222
Tommy Jones Investor A; 570; 18.33% 0.01% 0.00%
9013 Hilltop Circle Record
Maysville, KY 41056
Raymond Eischeid Investor A; 504; 16.21% 0.00% 0.00%
103 S. Hill Circle Record
Council Bluffs, IA 53590
Loni Helmenstine Investor A; 188; 6.04% 0.00% 0.00%
647 Robin Dr. Record
Sun Prairie, WI 53590
Eldon Cline Investor B; 2,014; 16.81% 0.05% 0.02%
234 Valley View Dr. Record
Augusta, KY 41002
Mona Burns Investor B; 1,310; 10.93% 0.03% 0.01%
4008 Wind Rush Lane Record
Naysville, KY 41056
Roy Workman & Investor B; 1,237; 10.32% 0.03% 0.01%
Jo Ann Workman Record
PO Box 212
Aberdeen, OH 45101
</TABLE>
170
<PAGE>
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage Pro Forma
Firstar Shares Owned; of Class of Fund Percentage
Fund Name and Address Type of Ownership Owned Owned Post Closing
------- ---------------- ----------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Zenobia Lojewska Investor B; 1,007; 8.40% 0.02% 0.01%
20 E. Hampton Road Record
Holyoke, MA 01040
Terri Lenne Huddleston Investor B; 988; 8.24% 0.01% 0.01%
4950 Big Perry Road Record
Morehead, KY 40351
</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 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.
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<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,
as supplemented, 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) September 18, 2000, as supplemented, with respect to the
Firstar U.S. Government Securities, Firstar Aggregate Bond and Firstar
National Municipal Bond Funds, and (iii) September 14, 2000, as supplemented,
with respect to Institutional Shares of the Firstar Money Market Funds and
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.
Information included in this Proxy/Prospectus concerning Mercantile was
provided by Mercantile.
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<PAGE>
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.
The annual financial statements and financial highlights of the Stellar
Treasury Fund for the fiscal year ended November 30, 1999 have been audited by
Arthur Andersen LLP, independent public 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 semi-annual financial statements and financial highlights of
the Stellar Treasury Fund 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.
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.
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APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
FIRSTAR FUNDS, INC.
AND
MERCANTILE MUTUAL FUNDS, INC.
DATED AS OF JULY 11, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Certain Definitions.................................................. I-2
2. The Reorganization................................................... I-2
3. Calculations......................................................... I-4
4. Valuation of Assets.................................................. I-5
5. Valuation Times...................................................... I-6
6. Effective Time of the Reorganization................................. I-6
7. Termination of Mercantile............................................ I-7
8. Certain Representations, Warranties, Covenants and Agreements of Mer-
cantile.............................................................. I-7
9. Certain Representations, Warranties, Covenants and Agreements of
Firstar.............................................................. I-9
10. Shareholder Action on Behalf of the Mercantile Funds................. I-11
11. Shareholder Action on behalf of Firstar.............................. I-11
12. N-14 Registration Statement.......................................... I-12
13. Firstar Conditions................................................... I-12
14. Mercantile Conditions................................................ I-13
15. Tax Opinion.......................................................... I-14
16. Tax Documents........................................................ I-15
17. Further Assurances................................................... I-15
18. Termination of Representations and Warranties........................ I-15
19. Termination of Agreement............................................. I-16
20. Amendment and Waiver................................................. I-16
21. Governing Law........................................................ I-16
22. Successors and Assigns............................................... I-16
23. Beneficiaries........................................................ I-16
24. Notices.............................................................. I-16
25. Expenses............................................................. I-17
26. Entire Agreement..................................................... I-17
27. Counterparts......................................................... I-17
28. Failure of One Fund to Consummate the Transactions................... I-17
29. No Brokers or Finders................................................ I-17
30. Validity............................................................. I-17
31. Effect of Facsimile Signature........................................ I-17
32. Headings............................................................. I-18
33. Firstar Liability.................................................... I-18
34. Mercantile Liability................................................. I-18
</TABLE>
i
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the 11th day of July, 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");
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");
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;
I-1
<PAGE>
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.
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 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 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.
I-2
<PAGE>
(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 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 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
I-3
<PAGE>
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.
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:
(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:
(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
I-4
<PAGE>
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
(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 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 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
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<PAGE>
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.
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 November 24, 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
December 8, 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.
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 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
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<PAGE>
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 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 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 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.
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<PAGE>
(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 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 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,
I-8
<PAGE>
Mercantile, on behalf of each Continuing Mercantile Fund, shall have full
right, power and authority to sell, assign, transfer and deliver the 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 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.
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
I-9
<PAGE>
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 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).
(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 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
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<PAGE>
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 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 four 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 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
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<PAGE>
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 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 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 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
I-12
<PAGE>
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
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.
(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 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.
I-13
<PAGE>
(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 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 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;
I-14
<PAGE>
(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;
(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 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 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;
I-15
<PAGE>
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:
(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.
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
I-16
<PAGE>
With copies to:
W. Bruce McConnel, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18th & 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
18th & 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.
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 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.
I-17
<PAGE>
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.
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.
[Signatures Omitted]
I-18
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Mercantile Fund and Share Class Firstar Fund and Share Class
------------------------------- ----------------------------
<S> <C>
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 Series Institutional Shares
2 Shares)
Trust Shares (Class B--Special Series 1 Institutional Shares
Shares)
Trust II Shares (Class B--Special Series 3 Institutional Shares
Shares)
Mercantile Money Market Portfolio Firstar Money Market Fund
Investor A Shares (Class A Shares) Retail A Shares
Investor B Shares (Class A--Special Series 3 Retail A Shares
Shares)
Institutional Shares (Class A--Special Series Retail A Shares
2 Shares)
Trust Shares (Class A--Special Series 1 Retail A Shares
Shares)
Trust II Shares (Class A--Special Series 4 Retail A Shares
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 Series 1 Institutional Shares
Shares)
Trust II Shares (Class J--Special Series 2 Institutional Shares
Shares)
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 Retail B Shares
Shares)
Institutional Shares (Class E--Special Series Class Y Shares
2 Shares)
Trust Shares (Class E--Special Series 1 Institutional Shares
Shares)
Mercantile Intermediate Corporate Bond
Portfolio Firstar Intermediate Bond Market Fund
Investor A Shares (Class O Shares) Retail A Shares
Institutional Shares (Class O--Special Series Class Y Shares
2 Shares)
Trust Shares (Class O--Special Series 1 Institutional Shares
Shares)
Mercantile Government & Corporate Bond Portfolio Firstar Aggregate Bond Fund
Investor A Shares (Class D Shares) Retail A Shares
Investor B Shares (Class D--Special Series 3 Retail B Shares
Shares)
Institutional Shares (Class D--Special Series Class Y Shares
2 Shares)
Trust Shares (Class D--Special Series 1 Institutional Shares
Shares)
Mercantile Bond Index Portfolio Firstar Aggregate Bond Fund
Investor A Shares (Class Q Shares) Retail A Shares
Institutional Shares (Class Q--Special Series Class Y Shares
2 Shares)
Trust Shares (Class Q--Special Series 1 Institutional Shares
Shares)
Mercantile Short-Intermediate Municipal Firstar Tax-Exempt Intermediate Bond
Portfolio Fund
Investor A Shares (Class I Shares) Retail A Shares
Trust Shares (Class I--Special Series 1 Institutional Shares
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 Retail B Shares
Shares)
Trust Shares (Class K--Special Series 1 Institutional Shares
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 Retail B Shares
Shares)
Trust Shares (Class N--Special Series 1 Institutional Shares
Shares)
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Mercantile Fund and Share Class Firstar Fund and Share Class
------------------------------- ----------------------------
<S> <C>
Mercantile Balanced Portfolio Firstar Balanced Growth Fund
Investor A Shares (Class G Shares) Retail A Shares
Investor B Shares (Class G--Special Series 3 Retail B Shares
Shares)
Institutional Shares (Class G--Special Series Class Y Shares
2 Shares)
Trust Shares (Class G--Special Series 1 Institutional Shares
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 Retail B Shares
Shares)
Institutional Shares (Class M--Special Series Class Y Shares
2 Shares)
Trust Shares (Class M--Special Series 1 Institutional Shares
Shares)
Mercantile Equity Index Portfolio Firstar Equity Index Fund
Investor A Shares (Class P Shares) Retail A Shares
Institutional Shares (Class P--Special Series Class Y Shares
2 Shares)
Trust Shares (Class P--Special Series 1 Institutional Shares
Shares)
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 Retail B Shares
Shares)
Institutional Shares (Class C--Special Series Class Y Shares
2 Shares)
Trust Shares (Class C--Special Series 1 Institutional Shares
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 Retail B Shares
Shares)
Institutional Shares (Class S--Special Series Class Y Shares
2 Shares)
Trust Shares (Class S--Special Series 1 Institutional Shares
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 Retail B Shares
Shares)
Institutional Shares (Class F--Special Series Class Y Shares
2 Shares)
Trust Shares (Class F--Special Series 1 Institutional Shares
Shares)
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 Class Y Shares
2 Shares)
Trust Shares (Class R--Special Series 1 Institutional Shares
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 Retail B Shares
Shares)
Institutional Shares (Class H--Special Series Class Y Shares
2 Shares)
Trust Shares (Class H--Special Series 1 Institutional Shares
Shares)
</TABLE>
A-2
<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
October 7, 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 24, 2000 at the offices of Stellar's special counsel,
Drinker Biddle & Reath LLP, One Logan Square, 18th 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 June 7, 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.
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.
1
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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 late November or early
December 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, each of which 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, each of
which 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 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;
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(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.
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.
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,
/s/ Bruce Laning
Bruce Laning
President
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FIRSTAR FUNDS, INC.
October 7, 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 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 24, 2000. If all necessary approvals are obtained, the proposed
reorganization will likely take place in late November or early December 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.
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.
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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.
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. Consummation of the
Mercantile and Select reorganizations is subject to numerous conditions
described in the relevant reorganization agreement, including approval by the
shareholders of Mercantile and Select. If the Reorganization Agreement is
approved by the Stellar shareholders at the Special Meeting, it is expected
that the Stellar reorganization will be completed whether or not the
Mercantile reorganization or Select reorganization are completed.
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
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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>
<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 Retail A Shares
an 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 Firstar Ohio Tax-Exempt Money Market Fund
Fund
Class C Shares not purchased through Retail A Shares
an 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 Retail B Shares
an 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 U.S. Government Income Fund Firstar U.S. Government Securities Fund
Class A Shares not purchased through Retail A Shares
an 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 Retail B Shares
an 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>
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<TABLE>
<S> <C>
Stellar Fund and Share Class 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 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 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
</TABLE>
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<TABLE>
<S> <C>
Stellar Capital Appreciation Fund Firstar MidCap Index Fund
Class A Shares not purchased 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 not purchased 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 International Equity Fund Firstar Global Equity Fund
Class A Shares Institutional Shares
</TABLE>
Stellar Fund shareholders who do not wish to be reorganized into the Firstar
Funds and have their Stellar Fund shares exchanged for shares of a
corresponding Firstar Fund should redeem their shares prior to the
consummation of the reorganization. If you redeem your shares, you will
recognize a taxable gain or loss based on the difference between your tax
basis in the shares and the amount you receive for them. In addition, if you
redeem your shares prior to the reorganization and your shares are subject to
a contingent deferred sales load, your redemption proceeds will be reduced by
any applicable sales load.
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 front-end 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" in the accompanying Proxy/Prospectus for additional
information.
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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 24, 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 24, 2000, at the offices of Stellar's special
counsel, Drinker Biddle & Reath LLP, One Logan Square, 18th & 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; 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
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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
/s/ Bruce Laning
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.
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COMBINED PROXY STATEMENT/PROSPECTUS
October 7, 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, 18th & Cherry Streets, Philadelphia, Pennsylvania, on
November 24, 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
June 7, 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 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
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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 dated October 7, 2000 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 (and September 14,
2000 (as supplemented), with respect to Institutional Shares of the Firstar
U.S. Treasury Money Market Fund and Firstar Tax-Exempt Money Market Fund), for
the designated share classes, and September 18, 2000 (as supplemented), 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 October 23, 2000.
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.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FEE TABLES................................................................ 1
Table I-A............................................................... 1
Table I-B............................................................... 2
Table I-C............................................................... 3
SUMMARY................................................................... 5
Proposed Reorganization................................................. 5
Overview of the Funds................................................... 7
Table II.............................................................. 9
Federal Income Tax Consequences......................................... 10
Stellar and Firstar Board Consideration................................. 10
Principal Risk Factors.................................................. 10
Voting Information...................................................... 18
THE REORGANIZATION........................................................ 18
Reasons for the Reorganization.......................................... 18
Description of the Reorganization Agreement............................. 18
Table III(A).......................................................... 18
Table III(B).......................................................... 20
Stellar Board Consideration............................................. 21
Capitalization.......................................................... 22
Table IV.............................................................. 23
Federal Income Tax Considerations....................................... 31
COMPARISON OF STELLAR FUNDS AND FIRSTAR FUNDS............................. 32
Investment Objectives and Policies Generally............................ 32
Fund-by-Fund Analysis................................................... 33
Stellar Treasury Fund and Firstar U.S. Treasury Money Market Fund...... 33
Stellar Tax-Free Money Market Fund and Firstar Tax-Exempt Money Market
Fund................................................................. 34
Stellar U.S. Government Income Fund and Firstar U.S. Government
Securities Fund...................................................... 35
Stellar Insured Tax-Free Bond Fund and Firstar National Municipal Bond
Fund................................................................. 36
Stellar Fund and Firstar Balanced Income Fund.......................... 37
Stellar Capital Appreciation Fund and Firstar MidCap Index Fund........ 38
Investment Advisory Services............................................ 39
Table V............................................................... 39
Other Service Providers for the Stellar Funds and the Firstar Funds..... 39
Sales Loads, Distribution and Shareholder Servicing Arrangements for
Stellar................................................................ 40
Sales Loads, Distribution and Shareholder Servicing Arrangements for
Firstar................................................................ 42
Administration Agreements............................................... 43
Shareholder Transactions and Services of the Firstar Funds and the
Corresponding Stellar Funds............................................ 43
Fees and Expenses....................................................... 51
Performance Comparisons of the Existing Firstar Funds and Corresponding
Stellar Funds.......................................................... 89
Management Discussion of Fund Performance............................... 92
Share Structure......................................................... 94
Comparison of Trust and Corporate Structure............................. 95
VOTING MATTERS............................................................ 95
General Information..................................................... 95
Shareholder and Board Approvals......................................... 96
Principal Shareholders.................................................. 96
Table VI(A)........................................................... 97
Table VI(B)........................................................... 100
Table VI(C)........................................................... 102
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Quorum................................................................... 103
Annual Meetings and Shareholder Meetings................................. 103
ADDITIONAL INFORMATION ABOUT FIRSTAR....................................... 103
ADDITIONAL INFORMATION ABOUT STELLAR....................................... 104
FINANCIAL STATEMENTS....................................................... 104
OTHER BUSINESS............................................................. 104
SHAREHOLDER INQUIRIES...................................................... 105
APPENDIX I FORM OF AGREEMENT AND PLAN OF REORGANIZATION................... I-1
</TABLE>
ii
<PAGE>
FEE TABLES
Table I-A
(After Fee Waivers and/or Expense Reimbursements)
The following table shows 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, 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 for
the period from the applicable effective time of the Reorganization for each
respective Stellar Fund through 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.
<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
-------------------------------------------------------------------------------
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>
1
<PAGE>
Table I-B
(Before Fee Waivers and/or Expense Reimbursements)
The following table shows 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, before fee waivers and/or expense
reimbursements, based upon the fee arrangements and commitments that will be
in place upon consummation of the Reorganization.
<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
-------------------------------------------------------------------------------
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>
2
<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.
FIRMCO has committed to waive fees and reimburse expenses as needed to
ensure that for the period from the applicable effective time of the
Reorganization for each respective Stellar Fund through 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 this Table. These
fee waivers and expense reimbursements may be terminated at any time after
October 31, 2001.
Detailed pro forma expense information for each proposed reorganization is
included below in the section entitled "Comparison of Stellar Funds and
Firstar Funds--Fees and Expenses."
Total Expense Information
<TABLE>
<CAPTION>
Pro Forma
Total Total Total
Operating Operating Operating
Expenses Corresponding Expenses Combined Fund/ Share Expenses
Stellar Fund/ Before/After Firstar Fund/ Share Before/After Class Before/After
Share Class Waivers 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+ 1.70%/1.36% Retail B Shares n/a Retail B Shares 2.24%/1.70%
Class B Shares++ 1.70%/1.36% Institutional Shares n/a Institutional Shares 1.24%/1.20%
--------------------------------------------------------------------------------------------------
Stellar U. S. Government Firstar U. S. Government Firstar U. S. Government
Income Fund Securities Fund Securities Fund
Class A Shares# 1.33%/0.99% Retail A Shares n/a Retail A Shares 1.08%/0.98%
Class A Shares## 1.33%/0.99% Institutional Shares n/a Institutional Shares 0.83%/0.73%
Class B Shares+ 1.33%/0.99% Retail B Shares n/a Retail B Shares 1.83%/1.73%
Class B Shares++ 1.33%/0.99% Institutional Shares n/a Institutional Shares 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%
--------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Total Total Total
Operating Operating Operating
Expenses Corresponding Expenses Combined Fund/ Share Expenses
Stellar Before/After Firstar Fund/ Share Before/After Class Before/After
Fund/Share Class Waivers Class Waivers Post-Reorganization Waivers
---------------- ------------ -------------------- ------------ -------------------- ------------
<S> <C> <C> <C> <C> <C>
Stock Funds:
Stellar Growth Firstar Large Cap Firstar Large Cap
Equity 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 Firstar Relative Firstar Relative
Value Fund Value Fund (shell) Value 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 Fund Technology Fund (shell) Technology Fund (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%
--------------------------------------------------------------------------------------------------
Stellar Capital Firstar MidCap Firstar MidCap
Appreciation Fund Index Fund Index Fund
Class A Shares# 1.70%/1.36% Retail A Shares 0.90%/0.75% Retail A Shares 0.85%/0.75%
Class A Shares## 1.70%/1.36% Institutional Shares 0.65%/0.50% Institutional Shares 0.60%/0.50%
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 the corresponding Firstar Fund with respect to such Class C
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.
# 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.
4
<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, and in the prospectuses and
statements of additional information of Firstar and Stellar.
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 two weeks 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:
<TABLE>
<CAPTION>
Stellar Fund and Share Class Firstar Fund and Share Class
---------------------------- ----------------------------
<S> <C>
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.
--------------------------------------------------------------------------------------
Firstar Ohio Tax-Exempt Money Market
Stellar Ohio Tax-Free Money Market Fund 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.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Stellar Fund and Share Class Firstar Fund and Share Class
---------------------------- ----------------------------
<S> <C>
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 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.
--------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Stellar Fund and Share Class Firstar Fund and Share Class
---------------------------- ----------------------------
<S> <C>
Stellar Capital Appreciation Fund Firstar MidCap Index 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 International Equity Fund Firstar Global Equity Fund
Class A Shares Institutional Shares
</TABLE>
The Reorganization is expected to occur in late November or early December
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 Reorganization--Description of the
Reorganization Agreement" below.
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 and Seeks to provide a high level of current
current income consistent with stability of income exempt from state income taxes
principal. consistent with liquidity, the preservation
of capital and a stable net asset value.
</TABLE>
7
<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 from Seeks to provide a high level of current
federal regular income tax consistent with income exempt from federal income taxes
stability of principal. consistent with liquidity, the preservation
of capital and a stable net asset value.
</TABLE>
<TABLE>
<S> <C>
Stellar U.S. Government Income Fund Firstar U.S. Government Securities Fund
Seeks to provide current income. The fund's Seeks a high rate of current income that is
second objective is to achieve capital consistent with relative stability of
appreciation. principal.
</TABLE>
<TABLE>
<S> <C>
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Bond Fund
Seeks to provide current income exempt from Seeks as high a level of current income
federal income tax by primarily purchasing exempt from regular federal income tax as
insured municipal bonds. is consistent with conservation of capital.
</TABLE>
<TABLE>
<S> <C>
Stellar Fund Firstar Balanced Income Fund
Seeks to maximize total return derived from Seeks to provide current income and the
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.
</TABLE>
<TABLE>
<S> <C>
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.
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 Generally"
and "Comparison of Stellar Funds and Firstar Funds--Fund-by-Fund Analysis"
below.
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
8
<PAGE>
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.
<TABLE>
<CAPTION>
Differential between
Firstar and Stellar
contractual advisory fee
Fund rate*
---- -------------------------
<S> <C>
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
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
Firstar MidCap Index Fund............................. 0.70% lower
Firstar Global Equity Fund............................ same contractual fee rate
</TABLE>
--------
* 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 and/or expense reimbursements)
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
and/or expense reimbursements) 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 and/or expense reimbursements)
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 and/or expense reimbursements) that are lower after the
Reorganization; and (v) Stellar Class Y shareholders will have total operating
expense ratios (after fee waivers and/or expense reimbursements) 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. For a more
detailed summary of fees and expenses, see "Comparison of Stellar Funds and
Firstar Funds--Fees and Expenses" below.
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
9
<PAGE>
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 Services of the Firstar Funds and the Corresponding Stellar Funds" and
"Comparison of Stellar Funds and Firstar Funds--Share Structure" below.
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 with respect to the Firstar Funds, 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 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--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 their respective classes 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 of its corresponding Stellar Fund. Accordingly, an investment
in an Existing Firstar
10
<PAGE>
Fund involves risks that are the same as or similar to those of investing in
its corresponding Stellar Fund. The Reorganization of certain Stellar Funds
into Existing Firstar Funds will expose the shareholders of the Reorganizing
Stellar Funds to the following additional principal risk factors (capitalized
terms are defined in the table following the chart):
<TABLE>
<CAPTION>
The Corresponding Firstar Fund
will carry the following
If a shareholder invests in the following additional
Reorganizing Stellar Fund: principal risk factors:
----------------------------------------- ------------------------------
<S> <C>
Stellar Tax-Free Money Market Fund Concentration Risk
Stellar U.S. Government Income Fund Repurchase Agreement Risk
Stellar Insured Tax-Free Bond Fund Prepayment Risk
Extension Risk
Concentration Risk
Stellar Fund Derivatives Risk
Convertible Securities Risk
Stellar Capital Appreciation Fund Derivatives Risk
Mid-Cap Index Risk
Futures Risk
</TABLE>
All of 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 in a Fund All Firstar Funds
is not a deposit in a bank and is not insured by the All Stellar Funds
Federal Deposit Insurance Corporation or any other
government agency.
-------------------------------------------------------------------------------
Credit Risk--An issuer of fixed income securities Firstar Money Market and Bond
may default on its obligation to pay interest and Funds, and Firstar Large Cap
repay principal, causing the value of your Growth, Relative Value, Science &
investment to decline. Changes in the credit rating Technology, Balanced Income and
of a security or in the issuer's financial condition Global Equity Funds
could also affect the value of your investment. All Stellar Funds
</TABLE>
-------------------------------------------------------------------------------
11
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Interest Rate Risk--In general, bond prices rise Firstar Money Market and Bond
when interest rates fall and fall when interest Funds, and Firstar Large Cap
rates rise. Long term bonds, stripped securities and Growth, Relative Value, Science &
zero coupon securities are more susceptible to those Technology, Balanced Income and
fluctuations than short-term bonds. Changes in Global Equity Funds
interest rates will also affect a Fund's yield. A Stellar Money Market and Bond
decline in interest rates may lead to a decline in a Funds, and Stellar Growth Equity,
Fund's yield. Lower rated securities are subject to Relative Value, Science &
greater interest rate risk than higher rated Technology, Stellar and
securities. International Equity Funds
---------------------------------------------------------------------------------------
Fixed Income Risk--The rate of income on Fund shares Firstar Money Market and Bond
will vary from day to day so that the dividends on Funds
your investment will vary. Stellar Money Market and Bond
Funds
---------------------------------------------------------------------------------------
Market Risk--The value of the securities in which a Firstar Bond and Equity Funds
Fund invests may go up or down in response to the Stellar Bond and Equity Funds
prospects of individual companies and/or general
economic conditions.
---------------------------------------------------------------------------------------
Volatility Risk--The value of your investment will Firstar Bond and Equity Funds
go up and down with the value of the investments Stellar Bond and Equity Funds
that a Fund holds. You may lose money if you invest
in a Fund.
---------------------------------------------------------------------------------------
Money Market Risk--Although a Fund seeks to preserve Firstar Money Market Funds
the value of your investment at $1.00 per share, it Stellar Money Market Funds
is possible to lose money by investing in a Fund.
---------------------------------------------------------------------------------------
Bond Selection Risk--Bonds selected by the Firstar Bond Funds
investment adviser may decline in value or not Stellar Bond Funds
increase in value when the bond market in general is
rising.
---------------------------------------------------------------------------------------
Stock Selection Risk--The stocks selected by the Firstar Equity Funds
investment adviser may decline in value or not Stellar Equity Funds
increase in value when the stock market in general
is rising.
---------------------------------------------------------------------------------------
Liquidity Risk--Certain securities may be difficult Firstar Strategic Income and U.S.
or impossible to sell at the time and price that the Government Securities Funds
investment adviser would like to sell. The Stellar Strategic Income and U.S.
investment adviser may have to lower the price, sell Government Income Funds and
other securities instead or forgo an investment Stellar Equity Funds
opportunity, any of which could have a negative
effect on fund management or performance.
---------------------------------------------------------------------------------------
Foreign Investment Risk--A Fund's investments in Firstar Strategic Income, Large
foreign securities are subject to foreign risks. Cap Growth, Relative Value and
Foreign stocks involve special risks not typically Global Equity Funds
associated with U.S. stocks. The stocks held by a Stellar Strategic Income, U.S.
Fund may underperform other types of stocks, and Government Income, Growth Equity,
they may not increase or may decline in value. Relative Value, Stellar, Capital
Foreign investments may be riskier than U.S. Appreciation and International
investments because of factors such as foreign Equity Funds
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.
---------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Futures and Options on Futures Risk--A Fund may use Firstar National Municipal Bond,
futures and options on futures for hedging purposes Large Cap Growth, Science and
only. The hedging strategy may not be successful if Technology and Global Equity
the portfolio manager is unable to accurately Funds
predict movements in the prices of individual Stellar U.S. Government Income,
securities held by a Fund or if the strategy does Insured Tax-Free Bond, Growth
not correlate well with a Fund's investments. The Equity, Science & Technology,
use of futures and options on futures may produce a Capital Appreciation and
loss for a Fund, even when used only for hedging International Equity Funds
purposes and you could lose money because of a
Fund's use of options.
---------------------------------------------------------------------------------------
Small and Medium Size Companies Risk--A Fund may Firstar Large Cap Growth, Science
invest in the stocks of small- to medium-size & Technology, MidCap Index and
companies. Small- and medium-size companies often Global Equity Funds
have narrower markets and more limited managerial Stellar Growth Equity, Science &
and financial resources than larger, more Technology, Stellar, Capital
established companies. As a result, their Appreciation and International
performance can be more volatile and they face Equity Funds
greater risk of business failure, which could
increase the volatility of a Fund's portfolio.
---------------------------------------------------------------------------------------
Prepayment Risk--An issuer may exercise its right to Firstar Strategic Income, U.S.
pay principal on an obligation held by a Fund (such Government Securities, National
as a mortgage- or asset-backed security) earlier Municipal Bond, Large Cap Growth
than expected. This may happen when there is a and Balanced Income Funds
decline in interest rates. These events may make a Stellar Strategic Income, U.S.
Fund unable to recoup its initial investment and may Government Income, Growth Equity
result in reduced yields. and Stellar Funds
---------------------------------------------------------------------------------------
Extension Risk--An issuer may exercise its right to Firstar Strategic Income, U.S.
pay principal on an obligation held by a Fund (such Government Securities, National
as a mortgage-backed or asset-backed security) later Municipal Bond, Large Cap Growth
than expected. This may happen when there is a rise and Balanced Income Funds
in interest rates. Under such circumstances, the Stellar Strategic Income, U.S.
value of the obligation will decrease and a Fund Government Income, Growth Equity
will also suffer from the inability to invest in and Stellar Funds
higher yielding securities.
---------------------------------------------------------------------------------------
Derivatives Risk--Certain investments may be more Firstar Large Cap Growth,
sensitive to or otherwise not react in tandem with Relative Value, Balanced Income
interest rate changes or market movements and may be and MidCap Index Funds
leveraged. Stellar Growth Equity and
Relative Value Funds
---------------------------------------------------------------------------------------
Tax Risk--A Fund may be more adversely impacted by Firstar Tax-Exempt Money Market,
changes in tax rates and policies than other funds. Ohio Tax-Exempt Money Market and
National Municipal Bond Funds
Stellar Tax-Free Money Market,
Ohio Tax-Free Money Market and
Insured Tax-Free Bond Funds
---------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Real Estate Investment Trust (REIT) Risk--Equity and Firstar Strategic Income and
mortgage REITs depend on management skills and are Large Cap Growth Funds
not diversified. As a result, REITs are subject to Stellar Strategic Income, Growth
the risk of financing either single projects or any Equity and Stellar Funds
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 a state or Firstar Tax-Exempt Money Market,
local government issuer to make payments can be Ohio Tax-Exempt Money Market and
affected by many factors, including economic National Municipal Bond Funds
conditions, the flow of tax revenues and changes in Stellar Tax-Free Money Market,
the level of federal, state or local aid. Some Ohio Tax-Free Money Market and
municipal securities are payable only from limited Insured Tax-Free Bond Funds
revenue sources or by private entities.
--------------------------------------------------------------------------------
Non-Diversification Risk--The Fund is non- Firstar Ohio Tax-Exempt Money
diversified, which means that it can invest a large Market and Science & Technology
percentage of its assets in a small number of Funds
issuers. As a result, a change in the value of any Stellar Ohio Tax-Free Money
one investment held by the Fund may affect the Market and Science & Technology
overall value of the Fund more than it would affect Funds
a diversified fund, which holds more investments.
--------------------------------------------------------------------------------
Municipal Lease Obligations Risk--A Fund may acquire Firstar Tax-Exempt Money Market
municipal lease obligations that are issued by a and National Municipal Bond Funds
state or local government or authority to acquire Stellar Tax-Free Money Market and
land and a wide variety of equipment and facilities. Insured Tax-Free Bond Funds
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.
--------------------------------------------------------------------------------
Portfolio Turnover Risk--The investment adviser may Firstar Strategic Income Fund
engage in active trading of its portfolio securities Stellar Strategic Income and
to achieve its investment goals. This practice could Capital 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 more than 25% Firstar Tax-Exempt Money Market
of its total assets in municipal obligations issued and National Municipal Bond Fund
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.
--------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Repurchase Agreement Risk--A Fund may enter into Firstar U.S. Government
repurchase agreements in which banks, broker dealers Securities Fund
and other financial institutions sell securities to Stellar Treasury Fund
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 Fund Firstar Tax-Exempt Money Market
purchases may be backed by letters of credit issued Fund
by banks and other financial institutions. Adverse Stellar Tax-Free Money Market
developments affecting banks could have a negative Fund
effect on the Fund's portfolio securities.
--------------------------------------------------------------------------------
Investment in Ohio Risk--Ohio's economy is largely Firstar Ohio Tax-Exempt Money
composed of manufacturing which is concentrated in Market Fund
the automobile sector and other durable goods. The Stellar Ohio Tax-Free Money
exposure to these industries, particularly the auto Market Fund
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 state 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 invest more than Firstar Ohio Tax-Exempt Money
25% of its total assets in securities credit- Market Fund
enhanced by banks. Any bankruptcy, receivership, Stellar Ohio Tax-Free Money
default or change in the credit quality of the party Market Fund
providing the credit enhancement may adversely
affect the quality and marketability of the
underlying security causing the Fund to lose money.
--------------------------------------------------------------------------------
Options Risk--A Fund may use options for hedging Firstar Strategic Income Fund
purposes only. The hedging strategy may not be Stellar Strategic Income and
successful if the portfolio manager is unable to Stellar Funds
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.
--------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Value Style Investing Risk--Different types of Firstar Relative Value Fund
equity securities tend to shift in and out of favor Stellar Relative Value Fund
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 may decline Firstar Science & Technology Fund
in price due to industry specific developments. Stellar Science & Technology Fund
Companies in the same or similar industries may
share common characteristics and are more likely to
react to industry specific market or economic
developments.
--------------------------------------------------------------------------------
Science and Technology Concentration Risk--Science Firstar Science & Technology Fund
and technology related companies face special risks Stellar Science & Technology Fund
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 performance Firstar Science & Technology Fund
impact on a Fund with small asset base. The impact Stellar Science & Technology Fund
of IPOs on a Fund's performance will decrease as a
Fund's asset size increases.
--------------------------------------------------------------------------------
High Yield Bond Risk--High yield bonds (generally Firstar Global Equity Fund
referred to as junk bonds) are considered Stellar International Equity Fund
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.
--------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Underlying Funds Risk--A Fund's performance directly Firstar Global Equity Fund
relates to the performance of the funds in which it Stellar International Equity Fund
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 Transaction Risk-- Stellar Treasury Fund
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.
--------------------------------------------------------------------------------
Industrial Development Bond Concentration Risk--The Stellar Insured Tax-Free Bond
Fund may invest more than 25% of its assets in Fund
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 securities Firstar Balanced Income Fund
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.
--------------------------------------------------------------------------------
Mid-Cap Index Risk--The Fund's investments follow Firstar MidCap Index Fund
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.
--------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Principal Risk Funds Subject to Risk
-------------- ---------------------
<S> <C>
Futures Risk--The Fund invests in futures contracts. Firstar MidCap Index Fund
Futures contracts could cause the Fund to track the
S&P MidCap 400 Index less closely if they don't
perform as expected.
</TABLE>
-------------------------------------------------------------------------------
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 Special Meeting. 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.
Shareholders of different Stellar Funds and of different classes of each
such Fund will be affected differently by the Reorganization. Some Firstar
Funds will have different operating expenses and investment policies than
their corresponding Stellar Fund. For more information please see "Comparison
of Stellar Funds and Firstar Funds" below.
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.
Table III(A)
<TABLE>
<CAPTION>
Reorganizing Stellar Fund and Share Class Existing Firstar Fund and Share Class
----------------------------------------- -------------------------------------
<S> <C>
Stellar Treasury Fund Firstar U.S. Treasury Money Market Fund
Class C Shares Retail A Shares
Class Y Shares Institutional Shares
</TABLE>
-------------------------------------------------------------------------------
18
<PAGE>
<TABLE>
<CAPTION>
Reorganizing Stellar Fund and Share Class Existing Firstar Fund and Share Class
----------------------------------------- -------------------------------------
<S> <C>
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 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.
--------------------------------------------------------------------------------
Stellar Capital Appreciation Fund Firstar MidCap Index 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>
--------------------------------------------------------------------------------
19
<PAGE>
<TABLE>
<CAPTION>
Reorganizing Stellar Fund and Share Class Existing Firstar Fund and Share Class
----------------------------------------- -------------------------------------
<S> <C>
Stellar Fund Firstar Balanced Income Fund
Class A Shares Retail A Shares
Class B Shares Retail B Shares
Class Y Shares Institutional Shares
</TABLE>
-------------------------------------------------------------------------------
Table III(B)
<TABLE>
<CAPTION>
Continuing Stellar Fund and Share Class Shell Firstar Fund and Share Class
--------------------------------------- ----------------------------------
<S> <C>
Firstar Ohio Tax-Exempt Money Market
Stellar Ohio Tax-Free Money Market Fund 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.
</TABLE>
-------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
-------------------------------------------------------------------------------
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 applicable 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 applicable 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 applicable 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.
20
<PAGE>
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 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. An application requesting relief with respect
to Section 17(a) of the 1940 Act has been filed with the SEC and it is
expected that the SEC will issue an order granting such relief prior to the
Reorganization.
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 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.
21
<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 classes of the corresponding
Stellar Funds before the Reorganization. See "Fee Tables--Table I-C--Total
Expense Information" above and "Comparison of Stellar Funds and Firstar
Funds--Fees and Expenses" below for more information. The Stellar Trustees
also considered, however, that many shareholders of such Funds had purchased
their shares through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A. and would be receiving Institutional
Shares of the Corresponding Firstar Fund with lower expenses than what they
had while invested in the relevant Stellar Fund. The Stellar Trustees 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 for the period from the applicable
effective time of the Reorganization for each respective Stellar Fund through
October 31, 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 their respective share classes, 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
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.
22
<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 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 B + Fund C) and (b) the combination of the
Mercantile Treasury Money Market Portfolio, the Stellar Treasury Fund and the
Firstar U.S. Treasury Money Market Fund (Pro forma Combined Fund = Fund A +
Fund B + Fund C).
<TABLE>
<CAPTION>
Mercantile Stellar Firstar U.S. Pro Forma
Treasury Money Treasury Treasury Money Pro Forma Combined Fund
Market Portfolio Fund+ Market Fund Combined Fund (Fund A + Fund B
(Fund A) (Fund B) (Fund C) (Fund B + Fund C) + Fund C)
---------------------- ---------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Total Net --# $1,205,547,115 $116,686,783 $1,322,233,898 $1,322,233,898
Assets......... (Class C Shares) (Retail A Shares) (Retail A Shares) (Retail A Shares)
---------------------------------------------------------------------------------------------------------
$501,196 $2,177,195,841 $0 $2,177,195,841 $2,433,734,181
(Institutional Shares) (Class Y Shares) (Institutional Shares)* (Institutional Shares) (Institutional Shares)
$189,391,544
(Trust Shares)
$66,569,413
(Trust II Shares)
$76,187
(Investor A Shares)
---------------------------------------------------------------------------------------------------------
Shares --# 1,205,547,115 116,686,783 1,322,233,898 1,322,233,898
Outstanding.... (Class C Shares) (Retail A Shares) (Retail A Shares) (Retail A Shares)
---------------------------------------------------------------------------------------------------------
501,196 2,177,195,841 0 2,177,195,841 2,433,734,181
(Institutional Shares) (Class Y Shares) (Institutional Shares)* (Institutional Shares) (Institutional Shares)
189,391,544
(Trust Shares)
66,569,413
(Trust II Shares)
76,187
(Investor A Shares)
---------------------------------------------------------------------------------------------------------
Net Asset Value --# $1.00 $1.00 $1.00 $1.00
Per Share...... (Class C Shares) (Retail A Shares) (Retail A Shares) (Retail A Shares)
---------------------------------------------------------------------------------------------------------
$1.00 $1.00 $0 $1.00 $1.00
(Institutional Shares) (Class Y Shares) (Institutional Shares)* (Institutional Shares) (Institutional Shares)
$1.00
(Trust Shares)
$1.00
(Trust II Shares)
$1.00
(Investor A Shares)
---------------------------------------------------------------------------------------------------------
</TABLE>
--------
+ The Stellar Treasury Fund will be the accounting survivor for financial
statement purposes.
# Investor A Shares, Institutional Shares, Trust Shares and Trust II Shares of
the Mercantile Treasury Money Market Portfolio are proposed to be
reorganized into Institutional Shares of the Firstar U.S. Treasury Money
Market Fund.
* Institutional Shares of the Firstar U.S. Treasury Money Market Fund have not
commenced operations as of the date of this Proxy/Prospectus.
23
<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 B + Fund C) and (b) the combination of the
Mercantile Tax-Exempt Money Market Portfolio, the Stellar Tax-Free Money
Market Fund and the Firstar Tax-Exempt Money Market Fund (Pro forma Combined
Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
Mercantile Stellar Pro Forma
Tax-Exempt Money Tax-Free Money Firstar Pro Forma Combined Fund
Market Portfolio Market Fund Tax-Exempt Money Market Combined Fund (Fund A + Fund B +
(Fund A) (Fund B) Fund+ (Fund C) (Fund B + Fund C) Fund C)
------------------- ------------------ ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Total Net $234,683 $14,399,232 $158,937,927 $173,337,164 $173,571,842
Assets......... (Investor A Shares) (Class C Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------------------------------------------------
$31,673,760 $180,179,005 $0 $180,179,005 $323,717,385
(Trust Shares) (Class C Shares)## (Institutional Shares)* (Institutional Shares) (Institutional Shares)
$111,864,620
(Trust II Shares)++
--------------------------------------------------------------------------------------------------------
Shares 234,683 14,399,232 158,937,927 173,337,164 173,571,842
Outstanding.... (Investor A Shares) (Class C Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------------------------------------------------
31,673,760 180,179,005 0 180,179,005 323,717,385
(Trust Shares) (Class C Shares)## (Institutional Shares)* (Institutional Shares) (Institutional Shares)
111,864,620
(Trust II Shares)++
--------------------------------------------------------------------------------------------------------
Net Asset Value $1.00 $1.00 $1.00 $1.00 $1.00
Per Share...... (Investor A Shares) (Class C Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------------------------------------------------
$1.00 $1.00 $0 $1.00 $1.00
(Trust Shares) (Class C Shares)## (Institutional Shares)* (Institutional Shares) (Institutional Shares)
$1.00
(Trust II Shares)++
--------------------------------------------------------------------------------------------------------
</TABLE>
--------
+ The Firstar Tax-Exempt Money Market Fund will be the accounting survivor
for financial statement purposes.
++ Trust II Shares of the Mercantile Tax-Exempt Money Market Portfolio are
proposed to be reorganized into Institutional Shares of the Firstar Tax-
Exempt Money Market Fund.
* Institutional Shares of the Firstar Tax-Exempt Money Market Fund have not
commenced operations as of the date of this Proxy/Prospectus.
# Not purchased through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A.
## Purchased through an investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
24
<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>
Stellar Ohio Tax-
Free Money Market Pro Forma
Fund+ Combined Fund
------------------ ----------------------
<S> <C> <C>
Total Net Assets...................... $308,788 $308,788
(Class C Shares)# (Retail A Shares)
---------------------------------
$61,448,744 $61,448,744
(Class C Shares)## (Institutional Shares)
---------------------------------
Shares Outstanding.................... 308,788 308,788
(Class C Shares)# (Retail A Shares)
---------------------------------
61,448,744 61,448,744
(Class C Shares)## (Institutional Shares)
---------------------------------
Net Asset Value Per Share............. $1.00 $1.00
(Class C Shares)# (Retail A Shares)
---------------------------------
$1.00 $1.00
(Class C Shares)## (Institutional Shares)
---------------------------------
</TABLE>
--------
+ The Stellar Ohio Tax-Free Money Market Fund will be the accounting survivor
for financial statement purposes.
# Not purchased through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A.
## Purchased through an investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
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>
Stellar Strategic Pro Forma
Income Fund+ Combined Fund
------------------ ----------------------
<S> <C> <C>
Total Net Assets...................... $8 $8
(Class A Shares) (Retail A Shares)
---------------------------------
$35,207,626 $35,207,626
(Class B Shares)# (Retail B Shares)
---------------------------------
$106,758,607 $106,758,607
(Class B Shares)## (Institutional Shares)
---------------------------------
Shares Outstanding.................... 1 1
(Class A Shares) (Retail A Shares)
---------------------------------
4,201,163 4,201,163
(Class B Shares)# (Retail B Shares)
---------------------------------
12,739,012 12,739,012
(Class B Shares)## (Institutional Shares)
---------------------------------
Net Asset Value Per Share............. $8.38 $8.38
(Class A Shares) (Retail A Shares)
---------------------------------
$8.38 $8.38
(Class B Shares)# (Retail B Shares)
---------------------------------
$8.38 $8.38
(Class B Shares)## (Institutional Shares)
---------------------------------
</TABLE>
--------
+ The Stellar Strategic Income Fund will be the accounting survivor for
financial statement purposes.
# Not purchased through an investment management, trust, custody or other
agency relationship with Firstar Bank, N.A.
## Purchased through an investment management, trust, custody or other agency
relationship with Firstar Bank, N.A.
25
<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 B + Fund C) and (b) the combination of the
Mercantile U.S. Government Securities Portfolio, the Stellar U.S. Government
Income Fund and the Firstar U.S. Government Securities Fund (Pro forma
Combined Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
Mercantile Stellar Firstar Pro Forma
U.S. Government U.S. Government U.S. Government Pro Forma Combined Fund (Fund A
Securities Portfolio+ Income Fund Securities Fund Combined Fund + Fund B +
(Fund A) (Fund B) (Fund C)* (Fund B + Fund C) Fund C)
---------------------- ------------------ ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Total Net $3,837,184 $7,949,243 $0 $7,949,243 $11,789,427
Assets......... (Investor A Shares) (Class A Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------------------------------------------------
$175,105 $1,283,016 $0 $1,283,016 $1,458,121
(Investor B Shares) (Class B Shares)# (Retail B Shares) (Retail B Shares) (Retail B Shares)
--------------------------------------------------------------------------------------------------------
$51,713,926 $154,809,000 $0 $154,822,000 $206,509,926
(Trust Shares) (Class A Shares)## (Institutional Shares) (Institutional Shares) (Institutional Shares)
$13,000
(Class B Shares)##
--------------------------------------------------------------------------------------------------------
$7,288,887 $7,288,887
(Institutional Shares) (Class Y Shares)
--------------------------------------------------------------------------------------------------------
Shares 375,980 850,186 0 850,186 1,154,824
Outstanding.... (Investor A Shares) (Class A Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------------------------------------------------
17,130 137,368 0 137,368 142,670
(Investor B Shares) (Class B Shares)# (Retail B Shares) (Retail B Shares) (Retail B Shares)
--------------------------------------------------------------------------------------------------------
5,066,947 16,561,349 0 16,562,689 20,228,161
(Trust Shares) (Class A Shares)## (Institutional Shares) (Institutional Shares) (Institutional Shares)
1,340
(Class B Shares)##
--------------------------------------------------------------------------------------------------------
716,895 716,895
(Institutional Shares) (Class Y Shares)
--------------------------------------------------------------------------------------------------------
Net Asset Value $10.22 $9.35 $0 $9.35 $10.22
Per Share...... (Investor A Shares) (Class A Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------------------------------------------------
$10.22 $9.34 $0 $9.34 $10.22
(Investor B Shares) (Class B Shares)# (Retail B Shares) (Retail B Shares) (Retail B Shares)
--------------------------------------------------------------------------------------------------------
$10.21 $9.35 $0 $9.34 $10.21
(Trust Shares) (Class A Shares)## (Institutional Shares) (Institutional Shares) (Institutional Shares)
$9.34
(Class B Shares)##
--------------------------------------------------------------------------------------------------------
$10.17 $10.17
(Institutional Shares) (Class Y Shares)
--------------------------------------------------------------------------------------------------------
</TABLE>
--------
+ The Mercantile U.S. Government Securities Portfolio will be the accounting
survivor for financial statement purposes.
* The Firstar U.S. Government Securities Fund has not commenced operations as
of the date of this Proxy/Prospectus.
# Not purchased through an investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
## Purchased through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
26
<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 B + Fund C) and (b) the combination of the
Mercantile National Municipal Bond Portfolio, the Stellar Insured Tax-Free
Bond Fund and the Firstar National Municipal Bond Fund (Pro forma Combined
Fund = Fund A + Fund B + Fund C).
<TABLE>
<CAPTION>
Mercantile Stellar Firstar
National Municipal Insured Tax-Free National Municipal Pro Forma Pro Forma
Bond Portfolio+ Bond Fund Bond Fund Combined Fund (Fund B Combined Fund (Fund A
(Fund A) (Fund B) (Fund C)* + Fund C) + Fund B + Fund C)
------------------- ------------------ ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Total Net $1,460,740 $3,942,091 $0 $3,942,091 $5,402,831
Assets......... (Investor A Shares) (Class A Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
------------------------------------------------------------------------------------------------------
$638,533 $10 $0 $10 $638,543
(Investor B Shares) (Class B Shares)# (Retail B Shares) (Retail B Shares) (Retail B Shares)
------------------------------------------------------------------------------------------------------
$265,768,912 $153,781,532 $0 $153,781,532 $419,524,544
(Trust Shares) (Class A Shares)## (Institutional Shares) (Institutional Shares) (Institutional Shares)
$0
(Class B Shares)##
------------------------------------------------------------------------------------------------------
Shares 155,456 406,392 0 406,392 574,469
Outstanding.... (Investor A Shares) (Class A Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
------------------------------------------------------------------------------------------------------
68,048 1 0 1 68,049
(Investor B Shares) (Class B Shares)# (Retail B Shares) (Retail B Shares) (Retail B Shares)
------------------------------------------------------------------------------------------------------
28,342,537 15,596,504 0 15,596,504 44,733,531
(Trust Shares) (Class A Shares)## (Institutional Shares) (Institutional Shares) (Institutional Shares)
0
(Class B Shares)##
------------------------------------------------------------------------------------------------------
Net Asset Value $9.40 $9.86 $0 $9.86 $9.40
Per Share...... (Investor A Shares) (Class A Shares)# (Retail A Shares) (Retail A Shares) (Retail A Shares)
------------------------------------------------------------------------------------------------------
$9.38 $9.86 $0 $9.86 $9.38
(Investor B Shares) (Class B Shares)# (Retail B Shares) (Retail B Shares) (Retail B Shares)
------------------------------------------------------------------------------------------------------
$9.38 $9.86 $0 $9.86 $9.38
(Trust Shares) (Class A Shares)## (Institutional Shares) (Institutional Shares) (Institutional Shares)
$9.86
(Class B Shares)##
------------------------------------------------------------------------------------------------------
</TABLE>
--------
+ The Mercantile National Municipal Bond Portfolio will be the accounting
survivor for financial statement purposes.
* The Firstar National Municipal Bond Fund has not commenced operations as of
the date of this Proxy/Prospectus.
# Not purchased through an investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
## Purchased through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
27
<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>
Stellar
Growth Equity Pro Forma
Fund+ Combined Fund
---------------- ----------------------
<S> <C> <C>
Total Net Assets........................ $49,957 $49,957
(Class A Shares) (Retail A Shares)
---------------------------------------
$105,755,728 $105,755,728
(Class B Shares) (Retail B Shares)
---------------------------------------
$229,824,690 $229,824,690
(Class Y Shares) (Institutional Shares)
---------------------------------------
Shares Outstanding...................... 1,873 1,873
(Class A Shares) (Retail A Shares)
---------------------------------------
3,729,807 3,729,807
(Class B Shares) (Retail B Shares)
---------------------------------------
8,594,146 8,594,146
(Class Y Shares) (Institutional Shares)
---------------------------------------
Net Asset Value Per Share............... $26.67 $26.67
(Class A Shares) (Retail A Shares)
---------------------------------------
$26.68 $26.68
(Class B Shares) (Retail B Shares)
---------------------------------------
$26.74 $26.74
(Class Y Shares) (Institutional Shares)
---------------------------------------
</TABLE>
--------
+ The Stellar Growth Equity Fund will be the accounting survivor for financial
statement purposes.
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>
Stellar
Relative Value Pro Forma
Fund+ Combined Fund
---------------- ----------------------
<S> <C> <C>
Total Net Assets........................ $49,829,001 $49,829,001
(Class A Shares) (Retail A Shares)
---------------------------------------
$16,032,485 $16,032,485
(Class B Shares) (Retail B Shares)
---------------------------------------
$480,124,570 $480,124,570
(Class Y Shares) (Institutional Shares)
---------------------------------------
Shares Outstanding...................... 1,732,644 1,732,644
(Class A Shares) (Retail A Shares)
---------------------------------------
559,231 559,231
(Class B Shares) (Retail B Shares)
---------------------------------------
16,669,077 16,669,077
(Class Y Shares) (Institutional Shares)
---------------------------------------
Net Asset Value Per Share............... $28.76 $28.76
(Class A Shares) (Retail A Shares)
---------------------------------------
$28.67 $28.67
(Class B Shares) (Retail B Shares)
---------------------------------------
$28.80 $28.80
(Class Y Shares) (Institutional Shares)
---------------------------------------
</TABLE>
--------
+ The Stellar Relative Value Fund will be the accounting survivor for financial
statement purposes.
28
<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>
Stellar
Science & Pro Forma
Technology Fund+ Combined Fund
---------------- ----------------------
<S> <C> <C>
Total Net Assets........................ $211,248 $211,248
(Class A Shares) (Retail A Shares)
---------------------------------------
$11,506,274 $11,506,274
(Class B Shares) (Retail B Shares)
---------------------------------------
$96,276,755 $96,276,755
(Class Y Shares) (Institutional Shares)
---------------------------------------
Shares Outstanding...................... 10,727 10,727
(Class A Shares) (Retail A Shares)
---------------------------------------
584,798 584,798
(Class B Shares) (Retail B Shares)
---------------------------------------
4,864,570 4,864,570
(Class Y Shares) (Institutional Shares)
---------------------------------------
Net Asset Value Per Share............... $19.69 $19.69
(Class A Shares) (Retail A Shares)
---------------------------------------
$19.68 $19.68
(Class B Shares) (Retail B Shares)
---------------------------------------
$19.79 $19.79
(Class Y Shares) (Institutional Shares)
---------------------------------------
</TABLE>
--------
+ The Stellar Science & Technology Fund will be the accounting survivor for
financial statement purposes.
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>
Firstar Pro Forma
Stellar Fund Balanced Income Fund+ Combined Fund
---------------- ---------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $39,721,166 $11,413,492 $51,119,658
(Class A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------
$13,591 $3,581,529 $3,595,120
(Class B Shares) (Retail B Shares) (Retail B Shares)
--------------------------------------------------------------
$44,343,011 $76,997,876 $121,324,887
(Class Y Shares) (Institutional Shares) (Institutional Shares)
--------------------------------------------------------------
Shares Outstanding...... 2,897,018 1,040,347 4,664,441
(Class A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------
991 310,980 312,218
(Class B Shares) (Retail B Shares) (Retail B Shares)
--------------------------------------------------------------
3,234,974 7,056,887 11,093,955
(Class Y Shares) (Institutional Shares) (Institutional Shares)
--------------------------------------------------------------
Net Asset Value Per $13.71 $10.96 $10.96
Share.................. (Class A Shares) (Retail A Shares) (Retail A Shares)
--------------------------------------------------------------
$13.71 $10.98 $10.98
(Class B Shares) (Retail B Shares) (Retail B Shares)
--------------------------------------------------------------
$13.71 $10.98 $10.98
(Class Y Shares) (Institutional Shares) (Institutional Shares)
--------------------------------------------------------------
</TABLE>
--------
+ The Firstar Balanced Income Fund will be the accounting survivor for
financial statement purposes.
29
<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>
Stellar
Capital Firstar Pro Forma
Appreciation Fund MidCap Index Fund+ Combined Fund
------------------ ---------------------- ----------------------
<S> <C> <C> <C>
Total Net Assets........ $87,896,862 $1,390,713 $89,248,575
(Class A Shares)# (Retail A Shares) (Retail A Shares)
----------------------------------------------------------------
$14 $294,776 $294,790
(Class B Shares)# (Retail B Shares) (Retail B Shares)
----------------------------------------------------------------
$0 $102,814,800 $102,814,800
(Class A Shares)## (Institutional Shares) (Institutional Shares)
$0
(Class B Shares)##
----------------------------------------------------------------
Shares Outstanding...... 6,220,364 119,386 7,660,833
(Class A Shares)# (Retail A Shares) (Retail A Shares)
----------------------------------------------------------------
1 25,354 25,355
(Class B Shares)# (Retail B Shares) (Retail B Shares)
----------------------------------------------------------------
0 8,828,042 8,828,042
(Class A Shares)## (Institutional Shares) (Institutional Shares)
0
(Class B Shares)##
----------------------------------------------------------------
Net Asset Value Per $14.13 $11.65 $11.65
Share.................. (Class A Shares)# (Retail A Shares) (Retail A Shares)
----------------------------------------------------------------
$14.13 $11.63 $11.63
(Class B Shares)# (Retail B Shares) (Retail B Shares)
----------------------------------------------------------------
$14.13 $11.65 $11.65
(Class A Shares)## (Institutional Shares) (Institutional Shares)
$14.13
(Class B Shares)##
----------------------------------------------------------------
</TABLE>
--------
+ The Firstar MidCap Index Fund will be the accounting survivor for financial
statement purposes.
# Not purchased through an investment management, trust, custody, or other
agency relationship with Firstar Bank, N.A.
## Purchased through an investment management, trust, custody, or other agency
relationship with Firstar Bank, N.A.
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>
Stellar
International Pro Forma
Equity Fund+ Combined Fund
----------------- ----------------------
<S> <C> <C>
Total Net Assets....................... $72,975,632 $72,975,632
(Retail A Shares) (Institutional Shares)
----------------------------------------
Shares Outstanding..................... 5,351,316 5,351,316
(Retail A Shares) (Institutional Shares)
----------------------------------------
Net Asset Value Per Share.............. $13.64 $13.64
(Retail A Shares) (Institutional Shares)
----------------------------------------
</TABLE>
--------
+ The Stellar International Equity Fund will be the accounting survivor for
financial statement purposes.
30
<PAGE>
Federal Income Tax Considerations. Each Firstar Fund and each Stellar Fund
intends to qualify as of the applicable 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 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.
31
<PAGE>
COMPARISON OF STELLAR FUNDS AND FIRSTAR FUNDS
Investment Objectives and Policies Generally. 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 generally
in this section and followed by a more detailed fund-by fund analysis below.
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 Generally. 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 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 Generally. 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 Firstar
National Municipal Bond Fund invests at least 80% of its total assets in
municipal securities that pay interest that is exempt from federal income tax.
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 is not
subject to the alternative minimum 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.
32
<PAGE>
Reorganizing Equity Funds Generally. 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 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 adviser 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.
Fund-by-Fund Analysis. This Fund-by-Fund analysis provides additional
information concerning 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 section. 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.
33
<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 statistical rating organizations ("NRSROs") (or one such rating if
only one NRSRO 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 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, 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.
34
<PAGE>
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 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.
35
<PAGE>
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.
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.
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
36
<PAGE>
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 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.
37
<PAGE>
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.
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 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 400 Index, to keep its assets substantially exposed
to the market (as represented by the 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 400 Index.
38
<PAGE>
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 adviser and sub-adviser 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>
Advisory Fees
Before/After
Waivers
(Pro Forma
Advisory Fees After Giving
Before/After Effect to the
Stellar Fund Waivers Corresponding Firstar Fund Reorganization)
------------ ------------- -------------------------- ---------------
<S> <C> <C> <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%
---------------------------------------------------------------------------------------------------------
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 4/10 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
39
<PAGE>
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>
It is expected that prior to the Reorganization Arthur Andersen LLP will
resign as Stellar's independent accountants and that management will recommend
that the Board of Trustees of Stellar select PricewaterhouseCoopers LLP as
Stellar's new independent accountants.
Sales Loads, Distribution 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 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 below in
"Shareholder Transactions and Services of the Firstar Funds and the
Corresponding Stellar Funds." 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 below in "Shareholder
Transactions and Services of the Firstar Funds and the Corresponding Stellar
Funds."
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
40
<PAGE>
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.
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 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.
41
<PAGE>
Sales Loads, 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 below in "Shareholder
Transactions and Services of the Firstar Funds and the Corresponding Stellar
Funds." 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 below in "Shareholder Transactions and Services of the
Firstar Funds and the Corresponding Stellar Funds."
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.
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.
42
<PAGE>
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.
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 Services of the Firstar Funds and the
Corresponding Stellar Funds.
This section 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
43
<PAGE>
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>
Shareholder
Organization
Sales Charge as a Sales Charge as a Reallowance as a
Percentage of Percentage of Percentage
Amount of Offering Price Net Asset Value of Offering Price
Transaction ----------------------- ----------------------- -----------------------
taOffering 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>
For the Stellar International Equity Fund:
<TABLE>
<CAPTION>
Dealer
Sales Charge as a Sales Charge as a Reallowance as a
Percentage of Percentage of Net Percentage of
Amount of Offering Price Asset Value Offering Price
Transaction --------------------- --------------------- ---------------------
at Offering Stellar International Stellar International Stellar International
Price 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>
Contingent Deferred
Sales Charge
(as % of dollar amount
Number of Years Elapsed Since Purchase 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.
(b)Letter of Intent
(i)Stellar Class A Shares
If an investor intends to purchase at least $100,000 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
44
<PAGE>
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 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 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, the 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").
(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 60 days, to reinvest the redemption
proceeds at the next-determined 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 an investor sells shares of a Firstar Fund or of any fund in the
Firstar family of funds, the investor may reinvest some or all of the
proceeds 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 (1) an employee, director, retiree or
Firstar Bank or its affiliates and registered representative of
members of their families Firstar Corporation or its
(including parents, grandparents, affiliates or of Firstar Funds,
siblings, spouses, children, and Inc. or a spouse, parent, in-law,
in-laws) of such employees or sibling or child of such an
retired employees; individual;
(2) Firstar trust customers of Firstar (2) an investor that purchases through
Corporation and its subsidiaries; certain broker-dealers who have
and agreed to provide certain services
with respect to shares of the
Firstar Funds, including Charles
Schwab Mutual Fund Marketplace(R).
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Stellar Firstar
------- -------
<S> <C>
(3) non-trust customers of financial (3) an investor that takes part in an
advisers. 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;
(4) any purchases for an investor's
medical savings account for which
Firstar Corporation or an
affiliate serves in a custodial
capacity; and
(5) purchases through certain external
organizations that have entered
into a service agreement with
Firstar or its affiliates.
</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 (1) certain exchanges of Firstar
Firstar Bank or its affiliates and shares described below;
members of their families
(including parents, grandparents,
siblings, spouses, children, and
in-laws) of such employees or
retired employees;
(2) Firstar trust customers of Firstar (2) the redemption is in connection
Corporation and its subsidiaries; with shares sold for certain
retirement distributions or
because of disability or death;
(3) non-trust customers of financial (3) the redemption is effected
advisers; pursuant to Firstar's right to
liquidate a shareholder's account
if the aggregate net asset value
of Retail B Shares held in the
account is less than Firstar's
minimum account balance;
(4) redemptions made following death (4) the redemption results from
or disability (as defined by the certain tax-free returns from IRAs
IRS); of excess contributions;
(5) redemptions made as minimum (5) Redemptions made pursuant to the
required distributions under an systematic withdrawal plan
IRA or other retirement plan to a (discussed below);
shareholder who is 70 1/2 years
old or older; and
(6) involuntary redemptions made in (6) the redemption is in connection
shareholder accounts that do not with the combination of a Firstar
have the required minimum balance. Fund with any other investment
company registered under the 1940
Act by merger, acquisition of
assets, or by any other
transaction; and
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Stellar Firstar
------- -------
<S> <C>
(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.
</TABLE>
B.Purchase Policies
The following chart compares the existing purchase policies of the Stellar
Funds and the Firstar Funds.
<TABLE>
<CAPTION>
Class A, B and C Shares Retail A and Retail B Shares
of the Stellar Funds of the Firstar Funds
----------------------- ----------------------------
<S> <C> <C>
Minimum Initial $1,000 for individuals; $500 $1,000 (waived if you
Investment for Education IRA customers; participate in the Periodic
$25 for Firstar Bank Investment Plan)
employees and members of
their immediate family, and
persons contributing to
Simple IRAs; and, for Class
A and B shares of the
Stellar Bond Funds, $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)
<CAPTION>
Class Y Shares Institutional Shares of
of the Stellar Funds the Firstar Funds
-------------------- -----------------------
<S> <C> <C>
$1,000 for trust or No
institutional customers of
Firstar Bank ($1,000 may be
determined by combining the
amount in all mutual fund
accounts the investor
maintains with Firstar Bank)
<CAPTION>
Retail A and Retail B Shares
Class A, B and C Shares of
of the Stellar Funds the Firstar Funds
----------------------- ----------------------------
<S> <C> <C>
Minimum Subsequent None, except $25 if investor $50
Investments participates in Automatic
Investment Plan
<CAPTION>
Class Y Shares of Institutional Shares of
the Stellar Funds the Firstar Funds
----------------- -----------------------
<S> <C> <C>
None, except $25 if investor None
participates in Automatic
Investment Plan
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Retail A and Retail B Shares
Class A, B and C Shares of of
the Stellar Funds the Firstar Funds
-------------------------- ----------------------------
<S> <C> <C>
Purchase Methods By telephone (Firstar Bank Through a shareholder
customers only); by mail; by organization; by mail;
wire; through the Automatic automatically through the
Investment Plan; through Periodic Investment Plan and
shareholder service ConvertiFund account; by
organizations; by exchange wire; and by Internet
(except for initial
purchases)
<CAPTION>
Class Y Shares of Institutional Shares of
the Stellar Funds the Firstar Funds
----------------- -----------------------
<S> <C> <C>
By telephone (Firstar Bank Purchases are effected
customers only); by mail; by pursuant to a customer's
wire; automatic investment; account at Firstar Bank,
through shareholder service N.A. Trust Department, or at
organizations; by exchange another chosen institution
or broker-dealer pursuant to
procedures established in
connection with the
requirements of the account.
Institutions and broker-
dealers purchasing shares on
behalf of their customers
may do so by mail or by wire
</TABLE>
C.Redemption Procedures
<TABLE>
<CAPTION>
Retail A and Retail B Shares
Class A, B and C Shares of of
the Stellar Funds the Firstar Funds
-------------------------- ----------------------------
<S> <C> <C>
Through an authorized Yes Yes
selling or 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 Yes (minimum of $25 per pay Yes ($5,000 account minimum
plan period) and $50 minimum per
transaction)
By Internet No Yes (maximum redemption
amount for internet
redemptions is $25,000).
Checkwriting feature No Yes for Retail A Shares
($250 minimum and only for
the money market funds)
<CAPTION>
Class Y Shares of Institutional Shares of
the Stellar Funds the Firstar Funds
----------------- -----------------------
<S> <C> <C>
Through an authorized Yes Yes
selling or servicing
agent, or through a
shareholder
organization
By mail; telephone; Yes Follow established
wire; or by Internet procedures of customer's
financial institution.
By systematic withdrawal No No
plan
Checkwriting feature No Yes ($250 minimum and only
for money market funds)
</TABLE>
48
<PAGE>
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.
Firstar may redeem a shareholder's account in Retail A, Retail B, and
Institutional Shares if the balance in such 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.
D.Share Exchanges
<TABLE>
<CAPTION>
Retail A and Retail B Shares
Class A, B and C Shares of of
the Stellar Funds the Firstar Funds
-------------------------- ----------------------------
<S> <C> <C>
Through an Authorized
Selling or Servicing
Agent.................. Yes Yes
By mail................. Yes Yes
By telephone............ Yes Yes (privilege automatically
applies to all shareholders)
Through No Yes
ConvertiFund(R)........
Minimum................. $1,000 $1,000
<CAPTION>
Class Y Shares of Institutional Shares of
the Stellar Funds the Firstar Funds
----------------- -----------------------
<S> <C> <C>
Through an Authorized
Selling or Servicing
Agent.................. No Yes
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 a shareholder is 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).
. Y Shares of a non-money market fund are exchangeable for Institutional
Shares of a money market fund.
Unless a shareholder qualifies 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 the Prospectus for such Retail B Shares. 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.
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.
49
<PAGE>
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:
<TABLE>
<CAPTION>
Time of
Calculation Stellar Funds Firstar Funds
----------- ------------- -------------
<S> <C> <C>
9:00 a.m., CST Tax-Free Money Market Fund
Ohio Tax-Free Money Market
Fund
---------------------------------------------------------------------------
9:00 a.m., CST Ohio Tax-Exempt Money Market
and Fund
3:00 p.m., CST
---------------------------------------------------------------------------
11:30 a.m., CST Tax-Exempt Money Market Fund
and
3:00 p.m., CST
---------------------------------------------------------------------------
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
---------------------------------------------------------------------------
</TABLE>
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.
F.Dividends for each of the Stellar Funds and Firstar Funds are declared and
paid as follows:
<TABLE>
<CAPTION>
Dividend
Stellar Fund Declared/Paid
------------ -------------
<S> <C>
Treasury Fund.............. D/M
Tax-Free Money Market
Fund...................... D/M
Ohio Tax-Free Money Market
Fund...................... D/M
U.S. Government Income
Fund...................... D/M
Insured Tax-Free Bond
Fund...................... M/M
Strategic Income Fund...... D/M
Relative Value Fund........ Q/Q
Stellar Fund............... Q/Q
Growth Equity Fund......... A/A
Science & Technology Fund.. A/A
Capital Appreciation Fund.. A/A
International Equity Fund.. A/A
</TABLE>
<TABLE>
<CAPTION>
Dividend
Firstar Fund Declared/Paid
------------ -------------
<S> <C>
U.S. Treasury Money Market
Fund...................... D/M
Tax-Exempt Money Market
Fund...................... D/M
Ohio Tax-Free Money Market
Fund...................... D/M
U.S. Government Securities
Fund...................... M/M
National Municipal Bond
Fund...................... M/M
Strategic Income Fund...... M/M
Relative Value Fund........ A/A
Balanced Income Fund....... Q/Q
Large Cap Growth Fund...... A/A
Science & Technology Fund.. A/A
Mid Cap Index 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.
50
<PAGE>
Fees and Expenses.
As discussed further below, certain Stellar shareholders will be reorganized
into share classes with higher total fund operating expenses. More
specifically, 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 and/or expense reimbursements) 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 and/or expense
reimbursements) 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 and/or expense
reimbursements) 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 and/or expense reimbursements)
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.
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 and/or expense reimbursements) 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, Capital Appreciation 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 and/or expense reimbursements) 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
and/or expense reimbursements) 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.
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
51
<PAGE>
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 for the period from the applicable effective time of the
reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
52
<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/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Treasury Fund is as follows:
Class Y Shares--decrease 0.05%
<TABLE>
<CAPTION>
Firstar
Mercantile Stellar U.S. Treasury
Treasury Money Market Treasury Money Market Combined Fund
Portfolio* Fund 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) 0.40%(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 (before
waivers)(4)............ 0.31%(5) 0.56% 0.31% 0.56% 0.43% ++ 0.39%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(5)........... 0.96% 0.96% 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 contemporaneously 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. The failure of the Mercantile Treasury
Money Market Portfolio to reorganize into the Firstar U.S. Treasury Money
Market Fund as expected will not affect the Reorganization of the Stellar
Treasury Fund into the Firstar U.S. Treasury Money Market Fund and will
have no material affect on the above expense estimates.
++Institutional Shares will not be issued until the Reorganization is
effective.
(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:
<TABLE>
<S> <C>
Mercantile Treasury Money Market Portfolio....... 0.35%
</TABLE>
53
<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:
<TABLE>
<CAPTION>
Investor A Trust Trust II Institutional Class Y
Shares Shares Shares Shares 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 fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Trust Trust II Institutional Class Y
Shares Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Firstar
Stellar U.S. Treasury
Mercantile Treasury Money Market Combined Fund
Treasury Money Market Portfolio* Fund 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.
54
<PAGE>
STELLAR TREASURY FUND--CLASS C SHARES+
FIRSTAR U.S. TREASURY MONEY MARKET FUND--RETAIL A SHARES(/1/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Treasury Fund is as follows:
Class C Shares--decrease 0.05%
<TABLE>
<CAPTION>
Firstar
Stellar U.S. Treasury Combined
Treasury Money Market Fund
Fund Fund Pro Forma
-------- ------------- ---------
Class C Retail A 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 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
(before waivers)........................... 0.25%(4) 0.25%(4) 0.25%(4)
Other Expenses (before waivers)............. 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 contemporaneously 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. The failure of the
Mercantile Treasury Money Market Portfolio to reorganize into the Firstar
U.S. Treasury Money Market Fund as expected will not affect the
Reorganization of the Stellar Treasury Fund into the Firstar U.S. Treasury
Money Market Fund and will have no material affect on the above expense
estimates.
(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:
<TABLE>
<S> <C>
Firstar U.S. Treasury Money Market Fund.......... 0.49%
</TABLE>
(4) Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<S> <C>
Stellar Treasury Fund............................ 0.15%
Firstar U.S. Treasury Money Market Fund.......... 0.00%
Combined Fund Pro Forma.......................... 0.15%
</TABLE>
55
<PAGE>
(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 Retail A
Shares Shares
------- --------
<S> <C> <C>
Stellar Treasury Fund....................................... 0.34% --
Combined Fund Pro Forma..................................... -- 0.35%
</TABLE>
(6) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class C Retail A
Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Firstar
Stellar U.S. Treasury Combined
Treasury Money Market Fund
Fund Fund Pro Forma
-------- ------------- ---------
Class C Retail A Retail A
Shares Shares 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.
56
<PAGE>
MERCANTILE TAX-EXEMPT MONEY MARKET PORTFOLIO+
STELLAR TAX-FREE MONEY MARKET FUND+
FIRSTAR TAX-EXEMPT MONEY MARKET FUND
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Tax-Free Money Market Fund is as
follows:
Class C Shares--decrease 0.12%
<TABLE>
<CAPTION>
Mercantile Stellar Firstar
Tax-Exempt Tax-Free Tax-Exempt Combined
Money Market Money Market Money Market Fund
Portfolio* Fund 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 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 (before
waivers)............... None None 0.25% 0.25%(3) ++ 0.25%(3) None 0.25%(3)
Other Expenses (before
waivers)............... 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 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 Tax Exempt Money Market Fund.
All other holders of Class C Shares of the Stellar Tax Free Money Market
Fund will 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 contemporaneously 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. The failure of the Mercantile
Tax-Exempt Money Market Portfolio to reorganize into the Firstar Tax-Exempt
Money Market Fund as expected will not affect the Reorganization of the
Stellar Tax-Free Money Market Fund into the Firstar Tax-Exempt Money Market
Fund and will have no material affect on the above expense estimates.
++Institutional Shares will not be issued until the Reorganization is
effective.
(1) A fee of $12.00 is charged for each wire redemption.
(2) Management Fees (after waivers) would be:
<TABLE>
<S> <C>
Mercantile Tax-Exempt Money Market Portfolio..... 0.35%
Stellar Tax-Free Money Market Fund............... 0.50%
</TABLE>
57
<PAGE>
(3) Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<S> <C>
Stellar Tax-Free Money Market Fund............... 0.00%
Firstar Tax-Exempt Money Market Fund............. 0.00%
Combined Fund Pro Forma.......................... 0.00%
</TABLE>
(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 Class C Retail A
Shares Shares 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>
(5) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Trust II Investor A Class C Institutional Retail A
Shares Shares Shares Shares Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as
those shown in the above table:
<TABLE>
<CAPTION>
Mercantile Stellar Firstar
Tax-Exempt Tax-Free Tax-Exempt Combined
Money Market Money Market Money Market Fund
Portfolio Fund 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>
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.
58
<PAGE>
STELLAR OHIO TAX-FREE MONEY MARKET FUND*
FIRSTAR OHIO TAX-EXEMPT MONEY MARKET FUND(/1/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Ohio Tax-Free Money Market Fund is as
follows:
Class C Shares--decrease 0.02%
<TABLE>
<CAPTION>
Stellar Ohio
Tax-Free
Money Market Combined
Fund Fund Pro Forma
------------ ----------------------
Class C Institutional 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 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
(before waivers)........................ 0.25%(4) None 0.25%(4)
Other Expenses (before waivers) (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.
(3) Management Fees (after waivers) would be:
<TABLE>
<S> <C>
Stellar Ohio Tax-Free Money Market Fund.......... 0.35%
Combined Fund Pro Forma.......................... 0.34%
</TABLE>
(4) Distribution and Service (12b-1) Fees (after waivers) would be:
<TABLE>
<CAPTION>
Class C Retail A
Shares 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."
59
<PAGE>
"Other Expenses" (after waivers) would be:
<TABLE>
<CAPTION>
Class C Institutional Retail A
Shares Shares 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 fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any
time after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class C Institutional Retail A
Shares Shares Shares
------- ------------- --------
<S> <C> <C> <C>
Stellar Ohio Tax-Free Money Market Fund..... 0.81% -- --
Combined Fund Pro Forma..................... -- 0.79% 0.79%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at the
end of each period shown, assuming (1) a 5% gross annual return and (2) Fund
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
Stellar
Ohio
Tax-Free
Money Market Combined Fund
Fund Pro Forma
------------ -------------
Class C Institutional Retail A
Shares Shares 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.
60
<PAGE>
STELLAR STRATEGIC INCOME FUND*
FIRSTAR STRATEGIC INCOME FUND(/1/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Strategic Income Fund is as follows:
Class A Shares--increase 0.09%
Class B Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--increase
0.34%
Class B Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.16%
<TABLE>
<CAPTION>
Stellar
Strategic Combined Fund
Income Fund Pro Forma
------------------ ---------------------------------
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)........ 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%(4) 0.95%(4) 0.95%(4)
Distribution and Service
(12b-1) Fees (before
waivers)(5)............ 0.25% 0.25% None 0.25% 0.75%
Other Expenses (before
waivers)............... 0.50%(6) 0.50%(6) 0.29% 0.54% 0.54%
---- ---- ---- ---- ----
Total Fund Operating
Expenses
(before waivers)(7).... 1.70% 1.70% 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.
(4) Management Fees (after waivers) would be 0.91% for the Combined Fund Pro
Forma.
61
<PAGE>
(5) Distribution and Service (12b-1) Fees (after waivers) are expected to be:
<TABLE>
<CAPTION>
Class A/Retail A Class B/Retail B
Shares Shares
---------------- ----------------
<S> <C> <C>
Stellar Strategic Income Fund.............. 0.00% 0.00%
Combined Fund Pro Forma.................... 0.00% 0.25%
</TABLE>
(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 Class B
Shares Shares
------- -------
<S> <C> <C>
Stellar Strategic Income Fund................................ 0.41% 0.41%
</TABLE>
(7) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Fund through October 31, 2001. These
fee waivers and expense reimbursements may be terminated at any time after
October 31, 2001 at FIRMCO's discretion.
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>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at the
end of the period shown, assuming (1) a 5% gross annual return and (2) Fund
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
Stellar
Strategic Income Fund Combined Fund Pro Forma
------------------------------ ---------------------------------------------
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.................. $ 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.
62
<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/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar U.S. Government Income Fund is as
follows:
Class A Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
.01%
Class A Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.-- decrease
0.26%
Class B Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--increase
0.74%
Class B Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.26%
<TABLE>
<CAPTION>
Mercantile Stellar
U.S. Government U.S. Government Combined
Securities Income Fund
Portfolio* Fund Pro Forma
----------------------- ------------------ ---------------------
Trust Institutional Class A Class B Institutional Class Y
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 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 (before
waivers)............... None None 0.25%(5) 0.25%(5) None None
Other Expenses (before
waivers)............... 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.
* The Mercantile U.S. Government Securities Portfolio is expected to
reorganize into the Firstar U.S. Government Securities Fund
contemporaneously 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
63
<PAGE>
only occur if the shareholders of the appropriate Funds approve each
transaction. The failure of the Mercantile U.S. Government Securities
Portfolio to reorganize into the Firstar U.S. Government Securities Fund as
expected will not affect the Reorganization of the Stellar U.S. Government
Income Fund into the Firstar U.S. Government Securities Fund and will have
no material affect on the above expense estimates.
(1) The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganization, 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 Institutional Class A Class B
Shares Shares Shares 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 fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Institutional Class A Class B Class Y
Shares Shares Shares Shares 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>
64
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile Stellar
U.S. Government U.S. Government Combined Fund
Securities Portfolio Income Fund Pro Forma
-------------------- ------------------------------ ---------------------
Trust Institutional Class A Class B Institutional Class Y
Shares Shares Shares 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.
65
<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/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar U.S. Government Income Fund is as
follows:
Class A Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
.01%
Class A Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.26%
Class B Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--increase
0.74%
Class B Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.26%
<TABLE>
<CAPTION>
Mercantile Stellar
U.S. Government U.S. Government Combined Fund Pro
Securities Portfolio* Income Fund Forma
---------------------- ------------------ -------------------
Investor A Investor B Class A Class 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)........ 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 (before
waivers)............... 0.30% 1.00% 0.25%(5) 0.25%(5) 0.00%(6) 0.75%
Other Expenses (before
waivers)............... 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
contemporaneously 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. The failure of the
66
<PAGE>
Mercantile U.S. Government Securities Portfolio to reorganize into the
Firstar U.S. Government Securities Fund as expected will not affect the
Reorganization of the Stellar U.S. Government Income Fund into the Firstar
U.S. Government Securities Fund and will have no material affect on the
above expense estimates.
(1) The Firstar U.S. Government Securities Fund has not yet commenced
operations. Upon consummation of the Reorganization, 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, 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 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 Investor B Class A Class B
Shares Shares Shares 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%
(8) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<CAPTION>
Investor A Investor B Class A/Retail A Class B/Retail B
Shares Shares Shares 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>
67
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile Stellar
U.S. Government Securities U.S. Government Combined Fund
Portfolio Income Fund Pro Forma
--------------------------------- ------------------------------ -------------------------------
Investor A Investor B Class A Class B Retail A Retail B
Shares Shares Shares Shares Shares 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 $ 805 $ 721 $ 421 $ 730 $ 876 $ 576
5 years................ $ 972 $1,164 $ 964 $1,100 $ 929 $ 729 $ 972 $1,190 $ 990
10 years............... $1,664 $1,741 $1,741 $1,937 $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.
68
<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/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Insured Tax-Free Bond Fund is as
follows:
Class A Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--increase
0.08%
Class A Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.17%
Class B Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--increase
0.83%
Class B Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.17%
<TABLE>
<CAPTION>
Mercantile Stellar
National Insured
Municipal Bond Tax-Free Combined Fund
Portfolio* Bond Fund Pro Forma
-------------- ------------------ -------------
Trust Class A Class B Institutional
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 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 (before waivers)...... None 0.25%(4) 0.75%(4) None
Other Expenses (before
waivers)...................... 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.
* 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
69
<PAGE>
shareholders of the appropriate Funds approve each transaction. The failure
of the Mercantile National Municipal Bond Portfolio to reorganize into the
Firstar National Municipal Bond Fund as expected will not affect the
reorganization of the Stellar Insured Tax-Free Bond Fund into the Firstar
National Municipal Bond Fund and will have no material affect on the above
expense estimates.
(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 Class A Class B
Shares Shares 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 fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any
time after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Trust Class A Class B
Shares Shares Shares
------ ------- -------
<S> <C> <C> <C>
Mercantile National Municipal Bond Portfolio......... 0.76% -- --
Stellar Insured Tax-Free Bond Fund................... -- 0.93% 0.93%
</TABLE>
70
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile
National Municipal Bond Stellar Combined Fund
Portfolio Insured Tax-Free Bond Fund Pro Forma
------------------------ ------------------------------ -------------
Trust Class A Class B Institutional
Shares Shares Shares 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.
71
<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/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Insured Tax-Free Bond Fund is as
follows:
Class A Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--increase
0.08%
Class A Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.17%
Class B Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--increase
0.83%
Class B Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.17%
<TABLE>
<CAPTION>
Mercantile Stellar
National Municipal Insured Tax- Combined Fund Pro
Bond Portfolio* Free Bond Fund Forma
---------------------- ------------------ -------------------
Investor A Investor B Class A Class 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)........ 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).. 0.55% 0.55% 0.75%(4) 0.75%(4) 0.55% 0.55%
Distribution and Service
(12b-1) Fees (before
waivers)............... 0.30%(5) 1.00% 0.25%(5) 0.75%(5) 0.00%(6) 0.75%
Other Expenses (before
waivers)............... 0.31%(7) 0.31%(7) 0.47%(7) 0.47%(7) 0.46% 0.46%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.16%(8) 1.86%(8) 1.47%(8) 1.97%(8) 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.
* The Mercantile National Municipal Bond Portfolio is expected to reorganize
into the Firstar National Municipal Bond Fund contemporaneously 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. The failure of the Mercantile
National Municipal Bond Portfolio to reorganize into the Firstar National
Municipal Bond Fund as expected will not affect the Reorganization of the
Stellar Insured Tax-Free Bond Fund into the Firstar National Municipal Bond
Fund and will have no material affect on the above expense estimates.
(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-
72
<PAGE>
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.
(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 Class A Class B
Shares Shares 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 Investor B Class A Class B
Shares Shares Shares 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>
(8) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Investor A Investor B Class A Class B
Shares Shares Shares 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>
73
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment, assuming (1) a
5% gross annual return and (2) Fund operating expenses remain the same as those
shown in the above table:
<TABLE>
<CAPTION>
Mercantile
National Municipal Bond Stellar Combined Fund
Portfolio Insured Tax-Free Bond Fund Pro Forma
-------------------------------- ----------------------------- ------------------------------
Investor A Investor B Class A Class B Retail A Retail B
Shares Shares Shares Shares Shares 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.................. $ 513 $ 689 $ 189 $ 544 $ 700 $ 200 $ 499 $ 679 $ 179
3 years................. $ 754 $ 885 $ 585 $ 846 $ 918 $ 618 $ 709 $ 854 $ 554
5 years................. $1,013 $1,206 $1,006 $1,171 $1,262 $1,062 $ 936 $1,154 $ 954
10 years................ $1,753 $1,829 $1,829 $2,087 $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.
74
<PAGE>
STELLAR GROWTH EQUITY FUND*
FIRSTAR LARGE CAP GROWTH FUND(/1/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Growth Equity Fund is as follows:
Class Y Shares--remain the same
Class A Shares--remain the same
Class B Shares--increase 0.75%
<TABLE>
<CAPTION>
Stellar Combined Fund
Growth Equity Fund Pro Forma
----------------------------- ---------------------------------
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%(2) None None 5.00%(2)
Redemption Fees......... None None None 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)............... 0.75% 0.75% 0.75% 0.95%(4) 0.95%(4) 0.95%(4)
Distribution and Service
(12b-1) Fees (before
waivers)............... None 0.25% 0.25% None 0.00%(5) 0.75%
Other Expenses (before
waivers)............... 0.48%(6) 0.48%(6) 0.48%(6) 0.23% 0.48% 0.48%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(7)........... 1.23% 1.48% 1.48% 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.
(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 Class A Class B
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Stellar Growth Equity Fund........................... 0.39% 0.39% 0.39%
</TABLE>
75
<PAGE>
(7) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class A/ Class B/
Class Y Retail A Retail B Institutional
Shares 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>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at the
end of each period shown, assuming (1) a 5% gross annual return and (2) Fund
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
Stellar Growth Equity Fund Combined Fund Pro Forma
-------------------------------------- ---------------------------------------------
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.................. $ 125 $ 692 $ 651 $ 151 $ 120 $ 688 $ 721 $ 221
3 years................. $ 390 $ 992 $ 768 $ 468 $ 375 $ 978 $ 982 $ 682
5 years................. $ 676 $1,313 $1,008 $ 808 $ 649 $1,289 $1,369 $1,169
10 years................ $1,489 $2,221 $1,768 $1,768 $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.
76
<PAGE>
STELLAR RELATIVE VALUE FUND*
FIRSTAR RELATIVE VALUE FUND(/1/)
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Relative Value Fund is as follows:
Class Y Shares--decrease 0.16%
Class A Shares--decrease 0.16%
Class B Shares--increase 0.59%
<TABLE>
<CAPTION>
Stellar Relative Value
Fund Combined Fund Pro Forma
----------------------------- ---------------------------------
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%(2) None None 5.00%(2)
Redemption Fees......... None None None 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)............... 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
Distribution and Service
(12b-1) Fees (before
waivers)............... None 0.25% 0.25% None 0.00%(4) 0.75%
Other Expenses (before
waivers)............... 0.47%(5) 0.47%(5) 0.47%(5) 0.22% 0.47% 0.47%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.22%(6) 1.47%(6) 1.47%(6) 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 Value 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.
(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 Class A Class B
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Stellar Relative Value Fund.......................... 0.38% 0.38% 0.38%
</TABLE>
(6) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to
77
<PAGE>
waiving/reimbursing fees as needed to ensure that Total Fund Operating
Expense ratios will not exceed the pro forma after waiver expense ratios
for the period from the applicable effective time of the Reorganization for
each respective Firstar Fund through October 31, 2001. These fee waivers
and expense reimbursements may be terminated at any time after October 31,
2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class Y Class A Class B
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Stellar Relative Value Fund.......................... 1.13% 1.38% 1.38%
</TABLE>
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 Combined Fund
Relative Value Fund Pro Forma
-------------------------------------- ---------------------------------------------
Class Y Class A Class B Institutional Retail A Retail B
Shares Shares Shares Shares Shares Shares
------- ------- ---------------------- ------------- -------- ----------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year.................. $ 124 $ 691 $ 650 $ 150 $ 99 $ 667 $ 700 $ 200
3 years................. $ 387 $ 989 $ 765 $ 465 $ 309 $ 916 $ 918 $ 618
5 years................. $ 670 $1,309 $1,003 $ 803 $ 536 $1,183 $1,262 $1,062
10 years................ $1,477 $2,211 $1,757 $1,757 $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.
78
<PAGE>
STELLAR SCIENCE & TECHNOLOGY FUND*
FIRSTAR SCIENCE & TECHNOLOGY FUND(/1/)
As discussed further below, the effect of the Reorganization on the total
fund operating expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Science & Technology Fund is as
follows:
Class Y Shares--remain the same
Class A Shares--remain the same
Class B Shares--increase 0.25%
<TABLE>
<CAPTION>
Stellar Science &
Technology Fund Combined Fund Pro Forma
----------------------------- ---------------------------------
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%(2) None None 5.00%(2)
Redemption Fees......... None None None 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)............... 0.90% 0.90% 0.90% 1.05% 1.05% 1.05%
Distribution and Service
(12b-1) Fees (before
waivers)............... None 0.25% 0.75% None 0.00%(4) 0.75%
Other Expenses (before
waivers)............... 0.50%(5) 0.50%(5) 0.50%(5) 0.26% 0.51% 0.51%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers).............. 1.40%(6) 1.65%(6) 2.15%(6) 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.
(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 Class A Class B
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Stellar Science & Technology Fund.................... 0.41% 0.41% 0.41%
</TABLE>
79
<PAGE>
(6) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class Y Class A Class B
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Stellar Science & Technology Fund.................... 1.31% 1.56% 2.06%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at the
end of each period shown, assuming (1) a 5% gross annual return and (2) Fund
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
Stellar Combined Fund
Science & Technology Fund Pro Forma
-------------------------------------- ---------------------------------------------
Class Y Class A Class B Institutional Retail A Retail B
Shares Shares Shares Shares Shares Shares
------- ------- ---------------------- ------------- -------- ----------------------
Assuming Assuming No Assuming Assuming No
Redemption Redemption Redemption Redemption
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year.................. $ 143 $ 709 $ 718 $ 218 $ 133 $ 700 $ 734 $ 234
3 years................. $ 443 $1,042 $ 973 $ 673 $ 415 $1,016 $1,021 $ 721
5 years................. $ 766 $1,398 $1,354 $1,154 $ 718 $1,353 $1,435 $1,235
10 years................ $1,680 $2,397 $2,240 $2,240 $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.
80
<PAGE>
STELLAR FUND*
FIRSTAR BALANCED INCOME FUND
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Fund is as follows:
Class Y Shares--decrease 0.41%
Class A Shares--decrease 0.41%
Class B Shares--decrease 0.16%
<TABLE>
<CAPTION>
Stellar Firstar Combined Fund
Fund Balanced Income Fund Pro Forma
----------------------------- --------------------------------- ---------------------------------
Class Y Class A Class B Institutional Retail A Retail B Institutional Retail A Retail B
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 5.50% None None 5.50% None None 5.50% None
Maximum Sales Load
Imposed on Reinvested
Dividends.............. None None None 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) None None 5.00%(1)
Redemption Fees......... None None None None(2) None(2) None(2) None(2) None(2) None(2)
Exchange Fee............ None None None 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% 0.75%(3) 0.75%(3) 0.75%(3)
Distribution and Service
(12b-1) Fees (before
waivers)............... None 0.25% 0.75% None 0.00%(4) 0.75% None 0.00%(4) 0.75%
Other Expenses (before
waivers)............... 0.52%(5) 0.52%(5) 0.52%(5) 0.41% 0.66% 0.66% 0.33% 0.58% 0.58%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(6)........... 1.47% 1.72% 2.22% 1.16% 1.41% 2.16% 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:
<TABLE>
<S> <C>
Firstar Balanced Income Fund..................... 0.56%
Combined Fund Pro Forma.......................... 0.64%
</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.
81
<PAGE>
(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 Class A Class B
Shares Shares Shares
------- ------- -------
<S> <C> <C> <C>
Stellar Fund......................................... 0.43% 0.43% 0.43%
</TABLE>
(6) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class Y Class A/Retail A Class B/Retail B Institutional
Shares 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>
82
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at the
end of each period shown, assuming (1) a 5% gross annual return and (2) Fund
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
Stellar
Fund
---------------------------------------------
Class Y Class A Class B
Shares Shares Shares
------------- -------- ----------------------
Assuming Assuming No
Redemption Redemption
---------- -----------
<S> <C> <C> <C> <C>
1 year............................ $ 150 $ 715 $ 725 $ 225
3 years........................... $ 465 $1,062 $ 994 $ 694
5 years........................... $ 803 $1,432 $1,390 $1,190
10 years.......................... $1,757 $2,469 $2,314 $2,314
<CAPTION>
Firstar
Balanced Income Fund
---------------------------------------------
Institutional Retail A Retail B
Shares Shares Shares
------------- -------- ----------------------
Assuming Assuming No
Redemption Redemption
---------- -----------
<S> <C> <C> <C> <C>
1 year............................ $ 118 $ 686 $ 719 $ 219
3 years........................... $ 368 $ 972 $ 976 $ 676
5 years........................... $ 638 $1,279 $1,359 $1,159
10 years.......................... $1,409 $2,148 $2,128 $2,128
<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............................ $ 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.
83
<PAGE>
STELLAR CAPITAL APPRECIATION FUND*
FIRSTAR MIDCAP INDEX FUND
As discussed further below, the effect of the Reorganization on the Total
Fund Operating Expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar Capital Appreciation Fund is as
follows:
Class A Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.61%
Class A Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.86%
Class B Shares not purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
0.61%
Class B Shares purchased through an investment management, trust,
custody, or other agency relationship with Firstar Bank, N.A.--decrease
1.61%
<TABLE>
<CAPTION>
Stellar Capital
Appreciation Firstar MidCap Combined Fund
Fund Index Fund Pro Forma
------------------ --------------------------------- ---------------------------------
Class A Class B Institutional Retail A Retail B Institutional Retail A Retail B
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)........ 5.50% None None 5.50% None None 5.50% None
Maximum Sales Load
Imposed on Reinvested
Dividends.............. None None None None None None None None
Maximum Deferred Sales
Load (as a Percentage
of redemption
proceeds).............. None 5.00%(1) None None 5.00%(1) None None 5.00%(1)
Redemption Fees......... None None None(2) None(2) None(2) None(2) None(2) None(2)
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)............... 0.95% 0.95% 0.25%(3) 0.25%(3) 0.25%(3) 0.25%(3) 0.25%(3) 0.25%(3)
Distribution and Service
(12b-1) Fees (before
waivers)............... 0.25%(4) 0.75% None 0.00%(5) 0.75% None 0.00%(5) 0.75%
Other Expenses (before
waivers)............... 0.50%(6) 0.50%(6) 0.40% 0.65% 0.65% 0.35% 0.60% 0.60%
---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses (before
waivers)(7)........... 1.70% 2.20% 0.65% 0.90% 1.65% 0.60% 0.85% 1.60%
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
--------
* In the Reorganization, holders of Class A 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 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.
84
<PAGE>
(3) Management Fees (after waivers) would be:
<TABLE>
<S> <C>
Firstar MidCap Index Fund........................ 0.10%
Combined Fund Pro Forma.......................... 0.15%
</TABLE>
(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 Class B
Shares Shares
------- -------
<S> <C> <C>
Stellar Capital Appreciation Fund............................ 0.41% 0.41%
</TABLE>
(7) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class A/ Class B/
Retail A 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>
85
<PAGE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at the
end of each period shown, assuming (1) a 5% gross annual return and (2) Fund
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
Stellar
Capital Appreciation Fund
------------------------------
Class A Class B
Shares Shares
------- ----------------------
Assuming Assuming No
Redemption Redemption
---------- -----------
<S> <C> <C> <C>
1 year........................................... $ 713 $ 723 $ 223
3 years.......................................... $1,056 $ 988 $ 688
5 years.......................................... $1,422 $1,380 $1,180
10 years......................................... $2,488 $2,293 $2,293
</TABLE>
<TABLE>
<CAPTION>
Firstar
MidCap Index Fund
---------------------------------------------
Institutional Retail A Retail B
Shares Shares Shares
------------- -------- ----------------------
Assuming Assuming No
Redemption Redemption
---------- -----------
<S> <C> <C> <C> <C>
1 year............................ $ 66 $ 637 $ 668 $ 168
3 years........................... $208 $ 821 $ 820 $ 520
5 years........................... $362 $1,021 $1,097 $ 897
10 years.......................... $810 $1,597 $1,571 $1,571
</TABLE>
<TABLE>
<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.
86
<PAGE>
STELLAR INTERNATIONAL EQUITY FUND*
FIRSTAR GLOBAL EQUITY FUND(/1/)
As discussed further below, the effect of the Reorganization on the total
fund operating expenses (after fee waivers and/or expense reimbursements)
borne by the shareholders of the Stellar International Equity Fund is as
follows:
Class A Shares--decrease 0.16%
<TABLE>
<CAPTION>
Stellar
International Combined Fund
Equity Fund Pro Forma
------------- -------------
Class A Institutional
Shares Shares
------------- -------------
<S> <C> <C>
Shareholder Transaction Expenses: 1.50% None
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price).....................
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 (before
waivers).......................................... 0.25%(4) None
Other Expenses (before waivers).................... 0.52%(5) 0.33%(5)
---- ----
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 $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 0.70% for the Combined Fund Pro
Forma.
(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:
<TABLE>
<CAPTION>
Class A
Shares
-------
<S> <C>
Stellar International Equity Fund.................................... 0.43%
Combined Fund Pro Forma.............................................. 0.32%
</TABLE>
(6) As a result of fee waivers and/or the expense reimbursements, 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. FIRMCO has
committed to waiving/reimbursing fees as needed to ensure that Total Fund
Operating Expense ratios will not exceed the pro forma after waiver
expense ratios for the period from the applicable effective time of the
Reorganization for each respective Firstar Fund through October 31, 2001.
These fee waivers and expense reimbursements may be terminated at any time
after October 31, 2001 at FIRMCO's discretion.
87
<PAGE>
Total Fund Operating Expenses (after waivers) would be:
<TABLE>
<CAPTION>
Class A Institutional
Shares Shares
------- -------------
<S> <C> <C>
Stellar International Equity Fund...................... 1.18% --
Combined Fund Pro Forma................................ -- 1.02%
</TABLE>
Example:*
You would pay the following expenses on a $10,000 investment redeemed at the
end of each period shown, assuming (1) a 5% gross annual return and (2) Fund
operating expenses remain the same as those shown in the above table:
<TABLE>
<CAPTION>
Stellar
International
Equity Combined Fund
Fund Pro Forma
------------- -------------
Class A Institutional
Shares 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.
88
<PAGE>
Performance Comparisons of the Existing Firstar Funds and their
Corresponding Stellar Funds.
The following section is a comparison of the total return performance of the
Reorganizing Stellar Funds with the total return performance of the Existing
Firstar Funds and is followed by the Management Discussion of Firstar Fund
Performance which was included in the Firstar Annual Report for the fiscal
year ended October 31, 1999.
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.
Total Return Performance
(As of 7/31/00)
<TABLE>
<CAPTION>
Firstar
Stellar U.S. Treasury
Treasury Money Market
Fund Fund
-------------- --------------
Retail A
Class C Shares 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
</TABLE>
<TABLE>
<CAPTION>
Firstar
Stellar Tax-Exempt
Tax-Free Money Money Market
Market Fund Fund
-------------- --------------
Retail A
Class C Shares 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
</TABLE>
89
<PAGE>
<TABLE>
<CAPTION>
Mercantile
Stellar U.S. Government
U.S. Government Securities
Income Fund Portfolio
--------------- ----------------
Investor
Class A Shares A Shares (with
(with 4.00% 4.00%
sales charge) 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
<CAPTION>
Mercantile
Stellar U.S. Government
U.S. Government Securities
Income Fund Portfolio
--------------- ----------------
Investor B
Class B Shares Shares
--------------- ----------------
(With
applicable (With applicable
contingent contingent
deferred sales deferred sales
charge) 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 Securities
Income Fund 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
<CAPTION>
Stellar Mercantile
Insured National
Tax-Free Municipal Bond
Bond Fund Portfolio
--------------- ----------------
Investor A
Class A Shares Shares
--------------- ----------------
(with 4.00% (with 4.00%
sales charge) 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
Stellar Balanced Income
Fund Fund*
--------------- ----------------
Class A Shares Retail A Shares
--------------- ----------------
(with 4.00% (with 5.50%
sales charge) sales charge)
<S> <C> <C>
1 Year................................. 5.43% -3.38%
5 Years................................ 10.68% 13.78%
10 Years............................... N/A 12.83%
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
Firstar
Stellar Balanced Income
Fund Fund*
---------------- ---------------
Class A Shares Retail A Shares
---------------- ---------------
(with 4.00% (with 5.50%
sales charge) sales charge)
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
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>
<TABLE>
<CAPTION>
Firstar
Stellar Balanced Income
Fund Fund*
---------------- ---------------
Institutional
Class Y Shares 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.
91
<PAGE>
Management Discussion of Fund Performance.
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 its 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.
92
<PAGE>
[GRAPH]
FIRSTAR
BALANCED
INCOME LIPPER
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 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
<TABLE>
<CAPTION>
1 Year Since Inception
------ ------------------
<S> <C> <C>
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(1).......... 1.2% 7.0% (12/1/97)
Firstar Balanced Income Fund--B--No Load.......... -- 2.0% (3/1/99)(2)
Firstar Balanced Income Fund--B--Load(3).......... -- (3.0)% (3/1/99)(2)
Lipper Balanced Fund Index(4)..................... 12.6% 11.0% (12/1/97)
S&P 500 Stock Index(5)............................ 25.7% 22.1% (12/1/97)
</TABLE>
--------
A = Series A (Retail shares)
B = Series B (Retail shares)
(1) Reflects maximum sales charge of 4.50%.
(2) Series B performance for the period March 1, 1999 to October 31, 1999
is not annualized.
(3) Reflects maximum deferred sales charge of 5.00%.
(4) 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.
(5) 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.
93
<PAGE>
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.
<TABLE>
<CAPTION>
Top 5 Equity Holdings 10/31/99
------------------------------
<S> <C>
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%
</TABLE>
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
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).
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 interests 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.
94
<PAGE>
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 "Shareholder Transactions and Services of the Firstar Funds and the
Corresponding Stellar Funds."
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 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 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 $6,000.
95
<PAGE>
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>
Shares Outstanding
Stellar Funds and Entitled to Vote
------------- --------------------
<S> <C>
Treasury Fund......................................... 3,870,371,990
Tax-Free Money Market Fund............................ 202,546,704
Ohio Tax-Free Money Market Fund....................... 63,795,162
Strategic Income Fund................................. 15,487,353
U. S. Government Income Fund.......................... 16,120,853
Insured Tax-Free Bond Fund............................ 15,649,838
Growth Equity Fund.................................... 12,856,515
Relative Value Fund................................... 18,303,758
Science & Technology Fund............................. 6,587,175
Stellar Fund.......................................... 5,778,685
Capital Appreciation Fund............................. 5,230,775
International Equity Fund............................. 5,607,214
</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 June 7, 2000 subject to the Board's receipt from FIRMCO of additional
information on certain aspects of the Reorganization. This information was
received and on July 20, 2000 Stellar's Board of Trustees ratified the actions
it had taken on June 7, 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 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 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.
96
<PAGE>
Table VI(A)
<TABLE>
<CAPTION>
Pro Forma
Percentage
of the
Class; Amount of Percentage Percentage Fund Owned
Shares Owned; of Class of Fund Post-
Stellar Fund Name and Address Type of Ownership Owned Owned Closing
------------ ---------------- ----------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Treasury Fund........... National Investor C; 16.31% 16.31% 8.84%
Financial Serv. 366,218,035
1 World Record
Financial Ctr.
200 Liberty St.
5th Fl.
New York, NY
10281
Firstar Bank NA Investor C; 67.12% 38.92% 36.34%
777 E. Wisconsin 1,506,428,141
Ave. Record
Milwaukee, WI
53202
Firstar Bank Investor C; 10.72% 6.21% 5.80%
N.A. 240,577,999
1555 N. Record
Rivercenter Dr.
Milwaukee, WI
53212
Band & Co. Investor Y; 15.47% 6.50% 6.07%
P.O. Box 2054 251,532,382
Milwaukee, WI Record
53201
Firstar Bank Investor Y; 84.22% 35.38% 33.04%
N.A. 1,369,488,277
1555 N. Record
Rivercenter Dr.
Milwaukee, WI
53212
Tax-Free Money Market Firstar Bank NA Investor A; 90.83% 90.83% 3.62%
Fund................... 777 E. Wisconsin 183,985,379
Ave. Record
Milwaukee, WI
53202
National Investor A; 9.00% 9.00% 3.88%
Financial Serv. 18,233,229
1 World Record
Financial Ctr.
200 Liberty St.
5th Fl.
New York, NY
10281
Ohio Tax-Free Money
Market Fund............ Firstar Bank NA Investor A; 99.53% 99.53% 99.53%
777 E. Wisconsin 63,498,681
Ave. Record
Milwaukee, WI
53202
Strategic Income Fund... Helen Frejkowski Investor A; 80.46% 0.01% 0.01%
6552 Rolling 2,306
Glen Dr. Record
Huber Heights,
OH 45424
Marianne Schwada Investor A; 19.46% 0.00% 0.00%
106 E. Beech St. 558
Shelbina, MO Record
63468
Band & Co. Investor B; 60.15% 60.14% 60.14%
P.O. Box 1787 9,314,159
Milwaukee, WI Record
53201
Muggs & Co. Investor B; 15.03% 15.02% 15.02%
P.O. Box 1787 2,327,503
Milwaukee, WI Record
53201
U.S. Government Income Kathleen Hyland Investor B; 21.20% 0.19% 0.14%
Fund................... 3367 Parkcrest 30,219
Lane Record
Cincinnati, OH
45211
Donna Fox Investor B; 6.72% 0.06% 0.04%
333 Collier Dr. 9,587
Doylestown, OH Record
44230
Gregg Pittenger Investor B; 5.51% 0.04% 0.04%
3430 Dresden 7,862
Street Record
Columbus, OH
43224
</TABLE>
97
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Percentage
of the
Class; Amount of Percentage Percentage Fund Owned
Shares Owned; of Class of Fund Post-
Stellar Fund Name and Address Type of Ownership Owned Owned Closing
------------ ---------------- ----------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Band & Co. Investor A; 64.70% 64.13% 46.28%
P.O. Box 1787 10,338,351
Milwaukee, WI Record
53201
Muggs & Co. Investor A; 30.40% 30.13% 21.74%
P.O. Box 1787 4,857,801
Milwaukee, WI Record
53201
Insured Tax-Free Bond Band & Co. Investor A; 93.81% 93.75% 35.18%
Fund................... P.O. Box 1787 14,672,969
Milwaukee, WI Record
53201
Pauline Dithmart Investor A; 100% 0.06% 0.02%
1141 15th Ave. 18,233,229
South Record
Clinton, IA
52732
Growth Equity Fund...... Shirley Investor A; 8.00% 0.02% 0.02%
Guillermin 2,534
553 Bells Run Record
Road
Sardina, OH
45171
Samuel Rouchion Investor A; 5.23% 0.00% 0.00%
835 Harmony Dr. 1,656
Gahanna, OH Record
43230
Band & Co. Investor Y; 45.18% 31.54% 31.54%
P.O. Box 1787 4,055,419
Milwaukee, WI Record
53201
Muggs & Co. Investor Y; 49.45% 34.52% 34.52%
P.O. Box 1787 4,438,609
Milwaukee, WI Record
53201
Relative Value Fund..... Band & Co. Investor Y; 34.21% 30.37% 30.37%
P.O. Box 1787 5,558,663
Milwaukee, WI Record
53201
Muggs & Co. Investor Y; 59.78% 53.06% 53.06%
P.O. Box 1787 9,712,510
Milwaukee, WI Record
53201
Science & Technology Kenneth Krueger Investor A; 6.64% 0.07% 0.07%
Fund................... 459 Berwick 4,773
Circle Record
Aurora, OH 44202
Alan Spaeth Investor A; 5.34% 0.06% 0.06%
W 6168 Oak Lane 3,836
Tomahawk, WI Record
54487
Band & Co. Investor A; 24.41% 21.70% 21.70%
P.O. Box 1787 1,429,458
Milwaukee, WI Record
53201
Muggs & Co. Investor A; 66.78% 59.36% 59.36%
P.O. Box 1787 3,909,931
Milwaukee, WI Record
53201
Stellar Fund............ Jacqueline Investor B; 19.61% 0.05% 0.02%
Schmitt 2,610
14 Montrose St. Record
Ludlow, KY 41016
Howard Tinnell Investor B; 12.68% 0.02% 0.01%
Sr. 1,687
414 Summit Dr. Record
Ft. Mitchell, KY
41017
Janet Mack Investor B; 10.02% 0.02% 0.01%
4331Virginia 1,334
Ave. Record
Cincinnati, OH
45223
</TABLE>
98
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Percentage
of the
Class; Amount of Percentage Percentage Fund Owned
Shares Owned; of Class of Fund Post-
Stellar Fund Name and Address Type of Ownership Owned Owned Closing
------------ ---------------- ----------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Bette Haberthier Investor B; 966 7.26% 0.00% 0.00%
2512 Judd Dr. Record
Lawrenceburg, IN
47025
Maynard Mitchell Investor B; 879 6.60% 0.00% 0.00%
6580 Lostcreek Record
Shelby Rd.
Fletcher, OH
45326
Joan Delpico Investor B; 726 5.45% 0.00% 0.00%
318 Woodcliffe Record
Place Dr.
Chesterfield, MO
63005
Band & Co. Investor Y; 13.94% 7.28% 2.99%
P.O. Box 1787 420,717
Milwaukee, WI Record
53201
Muggs & Co. Investor Y; 85.06% 44.44% 18.25%
P.O. Box 1787 2,567,763
Milwaukee, WI Record
53201
Capital Appreciation Band & Co. Investor A; 25.02% 25.01% 8.57%
Fund................... P.O. Box 1787 1,308,443
Milwaukee, WI Record
53201
Muggs & Co. Investor A; 71.70% 71.67% 24.54%
P.O. Box 1787 3,748,746
Milwaukee, WI Record
53201
Howard Tinnell Investor B; 74.45% 0.03% 0.01%
Sr. 1,728
414 Summit Dr. Record
Ft. Mitchell, KY
41017
International Equity Band & Co. Investor A; 34.34% 34.34% 34.34%
Fund................... P.O. Box 1787 1,925,371
Milwaukee, WI Record
53201
Muggs & Co. Investor A; 61.34% 61.34% 61.34%
P.O. Box 1787 3,439,685
Milwaukee, WI Record
53201
</TABLE>
99
<PAGE>
Table VI(B)
<TABLE>
<CAPTION>
Pro Forma
Percentage
Percentage of the Fund
Class; Amount of Shares Percentage of Fund Owned
Mercantile Fund Name and Address Owned; Type of Ownership of Class Owned Post-Closing
--------------- ---------------- ------------------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Treasury Money Market
Portfolio.............. National Financial Serv. Investor A; 68,720 90.40% 0.04% 0.00%
1 World Financial Ctr. Record
200 Liberty St., 5th Fl.
New York, NY 10281
Dorothy Borgmeyer Investor A; 5,749 7.56% 0.00% 0.00%
41 Berry Oaks Lane Record
Saint Louis, MO 63122
Firstar Bank N.A. Institutional; 23,603,075 87.51% 16.58% 0.57%
P.O. Box 387 Record
Saint Louis, MO 63166
Hare & Co. Trust; 46,440,979 99.20% 32.63% 1.07%
The Bank of New York Record
1 Wall St. #2
New York, NY 10286
Firstar Bank N.A. Trust II; 57,267,893 83.66% 40.23% 1.38%
P.O. Box 387 Record
Saint Louis, MO 63166
Pacific Century Trust Trust II; 9,884,772 14.44% 6.94% 0.24%
P.O. Box 3170 Record
Honolulu, HI 96802
Tax-Exempt Money Market
Portfolio.............. Jill K. Stratemeier Investor A; 95,778 65.94% 0.09% 0.02%
Exec. Estate of John Matthews Record
P.O. Box 893
Parsons, KS 67357
National Financial Serv. Investor A; 28,298 19.49% 0.03% 0.00%
200 Liberty St., 5th Fl. Record
New York, NY 10281
Benjamin Sandler & Louise Sandler Investor A; 16,021 11.03% 0.01% 0.00%
14440 White Birch Valley Record
Chesterfield, MO 63017
Firstar Bank N.A. Trust II; 99,254,935 97.04% 96.91% 21.10%
P.O. Box 387 Record
Saint Louis, MO 63166
U.S. Government
Securities Portfolio...
Marcal Rope Rigging Inc. Investor A; 18,245 5.11% 0.29% 0.08%
Employer Profit Sh. Plan Record
P.O. Box 477
Alton, IL 62002
National Financial Serv. Investor B; 10,012 75.91% 0.16% 0.04%
200 Liberty St., 5th Fl. Record
New York, NY 10281
Evelyn Sutton Investor B; 1,043 7.90% 0.00% 0.00%
510 N. Main Cross St. Record
Bowling Green, MO 63334
Stanley Markenson & Shirley Markenson Investor B; 679 5.14% 0.00% 0.00%
362 Hibler Ct. Record
Creve Coevr, MO 63141
Rextex & Co. Institutional; 286,696 55.76% 4.61% 1.28%
P.O. Box 387 Record
Saint Louis, MO 63166
</TABLE>
100
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Percentage
Class; Amount of Percentage of the Fund
Shares Owned; Type of Percentage of Fund Owned
Mercantile Fund Name and Address Ownership of Class Owned Post-Closing
--------------- ---------------- --------------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Bisys BD Services, Inc. Institutional; 31,291 6.09% 0.50% 0.14%
P.O. Box 4054 Record
Concord, CA 94524
Capino Institutional; 196,128 38.15% 3.15% 0.88%
P.O. Box 1787 Record
Milwaukee, WI 53201
Band & Co. Trust; 4,895,872 91.77% 78.72% 21.92%
P.O. Box 1787 Record
Milwaukee, WI 53201
Capino Trust; 277,042 5.19% 4.45% 1.24%
P.O. Box 1787 Record
Milwaukee, WI 53201
National Municipal Bond
Portfolio.............. National Financial Serv. Investor A; 103,524 66.13% 0.39% 0.25%
200 Liberty St., 5th Fl. Record
New York, NY 10281
Gail Ruga Investor A; 10,495 6.70% 0.04% 0.03%
430 W. 2nd St. Record
Chillicothe, OH 45601
Kim Wheeler Investor A; 10,495 6.70% 0.04% 0.03%
1003 S. 19th St. Record
Rogers, AR 72758
George Richardson & Amelia Richardson Investor A; 8,423 5.38% 0.03% 0.02%
2120 Ingalls Circle Record
O'Fallon, MO 63366
National Financial Serv. Investor B; 66,875 100.00% 0.25% 0.16%
200 Liberty St., 5th Fl. Record
New York, NY 10281
Band & Co. Trust; 25,637,601 99.21% 98.36% 61.46%
P.O. Box 1787 Record
Milwaukee, WI 53201
</TABLE>
101
<PAGE>
Table VI(C)
<TABLE>
<CAPTION>
Pro Forma
Class; Amount of Shares Percentage Percentage of the
Owned; Percentage of Fund Fund Owned
Firstar Fund Name and Address Type of Ownership of Class Owned Post-Closing
------------ ---------------- ----------------------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Money
Market Fund............ Band & Co. Investor A; 89,298,602 67.51% 67.51% 2.15%
P.O. Box 2054 Record
Milwaukee, WI 53201
Fandl & Co. Investor A; 37,781,000 28.56% 28.56% 0.91%
777 E. Wisconsin Ave. Record
Milwaukee, WI 53201
Tax-Exempt Money
Market Fund............ Band & Co. Investor A; 136,229,512 82.38% 82.38% 28.96%
P.O. Box 2054 Record
Milwaukee, WI 53201
Mercantile Bank NA Investor A; 22,769,368 13.77% 13.77% 4.84%
P.O. Box 387 Record
St. Louis, MO 63166
MidCap Index Fund....... Band & Co. Institutional; 1,103,053 11.21% 10.98% 7.22%
P.O. Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 7,350,879 74.72% 73.20% 48.13%
P.O. Box 1787 Record
Milwaukee, WI 53201
Muggs & Co. Institutional; 1,139,110 11.58% 11.34% 7.46%
P.O. Box 1787 Record
Milwaukee, WI 53201
Richard Bertrand Investor A; 8,455 5.86% 0.08% 0.05%
2019 Hillside Ct. Record
Delafield, WI 53018
Pamela Webster Investor A; 8,107 5.62% 0.08% 0.05%
901 S. Raynor Ave. Record
Union Grove, WI 53182
Balanced Income Fund.... Band & Co. Institutional; 1,616,833 23.61% 19.50% 11.49%
P.O. Box 2054 Record
Milwaukee, WI 53201
CapinCo Institutional; 1,705,932 24.91% 20.58% 12.13%
P.O. Box 1787 Record
Milwaukee, WI 53201
Muggs & Co. Institutional; 3,524,254 51.46% 42.51% 25.05%
P.O. Box 1787 Record
Milwaukee, WI 53201
Dennis Singleton Investor B; 24,341 5.87% 0.29% 0.17%
5031 Strathaven Dr. Record
Dayton, OH 45424
</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.
102
<PAGE>
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.
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 18, 2000 (as
supplemented); (3) Y Shares of the Firstar non-money market funds is included
in their prospectus and statement of additional information dated September
18, 2000 (as supplemented) 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 September 14, 2000 (as
supplemented), 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.
103
<PAGE>
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. 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.
The annual financial statements and financial highlights of the Mercantile
U.S. Government Securities Portfolio and Mercantile National Municipal Bond
Portfolio 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 U.S. Government Securities Portfolio and Mercantile National
Municipal Bond Portfolio 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
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.
104
<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.
105
<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
FIRSTAR FUNDS, INC.
AND
FIRSTAR STELLAR FUNDS
DATED AS OF JUNE 7, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. CERTAIN DEFINITIONS................................................ I-2
2. THE REORGANIZATION................................................. I-2
3. CALCULATIONS....................................................... I-4
4. VALUATION OF ASSETS................................................ I-8
5. VALUATION TIMES.................................................... I-8
6. EFFECTIVE TIME OF THE REORGANIZATION............................... I-9
7. TERMINATION OF STELLAR............................................. I-9
8. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF I-10
STELLAR............................................................
9. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF I-12
FIRSTAR............................................................
10. SHAREHOLDER ACTION ON BEHALF OF THE STELLAR FUNDS.................. I-13
11. SHAREHOLDER ACTION ON BEHALF OF FIRSTAR............................ I-14
12. N-14 REGISTRATION STATEMENT........................................ I-14
13. FIRSTAR CONDITIONS................................................. I-14
14. STELLAR CONDITIONS................................................. I-16
15. TAX OPINION........................................................ I-17
16. TAX DOCUMENTS...................................................... I-18
17. FURTHER ASSURANCES................................................. I-18
18. TERMINATION OF REPRESENTATIONS AND WARRANTIES...................... I-18
19. TERMINATION OF AGREEMENT........................................... I-18
20. AMENDMENT AND WAIVER............................................... I-18
21. GOVERNING LAW...................................................... I-18
22. SUCCESSORS AND ASSIGNS............................................. I-18
23. BENEFICIARIES...................................................... I-19
24. NOTICES............................................................ I-19
25. EXPENSES........................................................... I-19
26. ENTIRE AGREEMENT................................................... I-19
27. COUNTERPARTS....................................................... I-19
28. FAILURE OF ONE FUND TO CONSUMMATE THE TRANSACTIONS................. I-20
29. NO BROKERS OR FINDERS.............................................. I-20
30. VALIDITY........................................................... I-20
31. EFFECT OF FACSIMILE SIGNATURE...................................... I-20
32. HEADINGS........................................................... I-20
33. FIRSTAR LIABILITY.................................................. I-20
34. STELLAR LIABILITY.................................................. I-20
</TABLE>
i
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the 7th day of June, 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 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, 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:
I-1
<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.
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 (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;
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(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;
(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 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;
(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 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 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;
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<PAGE>
(viii) With respect to the Stellar Capital Appreciation 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 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 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.
(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
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<PAGE>
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:
(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
(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
(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.
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<PAGE>
(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 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 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 management, trust, custody or other agency
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<PAGE>
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 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 by the net asset value of one
Institutional 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 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.
(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
(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.
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<PAGE>
(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
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 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 November 24, 2000, or such
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<PAGE>
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 Stellar Funds shall be 4:00 p.m., Eastern
Time, on December 8, 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
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, 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
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<PAGE>
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:
(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 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 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.
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<PAGE>
(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 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 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 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
I-11
<PAGE>
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.
(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 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).
I-12
<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 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 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 four years thereafter, Firstar shall
provide or cause to be provided, liability 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,
I-13
<PAGE>
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.
(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 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.
(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
I-14
<PAGE>
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 and the Transfer Documents have been duly and validly
authorized, executed and delivered by Stellar and represent the legal,
valid and binding obligations of Stellar, enforceable against Stellar in
accordance with their 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 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.
(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.
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<PAGE>
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 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:
(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, 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.
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<PAGE>
(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.
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;
(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 Effective Time of the Reorganization,
subject to the conditions and limitations specified in the Code.
I-17
<PAGE>
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).
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.
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.
I-18
<PAGE>
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.
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
With copies to:
W. Bruce McConnel, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18th & 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
With copies to:
Kenneth L. Greenberg, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18th & 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.
I-19
<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.
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. 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.
[SIGNATURES OMITTED]
I-20
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Stellar Fund and Share Class Firstar Fund and Share Class
---------------------------- ----------------------------
<S> <C>
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 Retail A Shares
an 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-Free Money Market Fund
Class C Shares purchased other than through Retail A Shares
an 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 purchased other than through Retail B Shares
an 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 U.S. Government Income Fund Firstar U.S. Government Securities Fund
Class A Shares purchased other than through Retail A Shares
an 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 purchased other than through Retail B Shares
an 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>
A-1
<PAGE>
<TABLE>
<CAPTION>
Stellar Fund and Share Class Firstar Fund and Share Class
---------------------------- ----------------------------
<S> <C>
Stellar Insured Tax-Free Bond Fund Firstar National Municipal Bond Fund
Class A Shares purchased other than through Retail A Shares
an 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 purchased other than through Retail B Shares
an 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
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 & 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 purchased other than through Retail A Shares
an 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 purchased other than through Retail B Shares
an 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 International Equity Fund Firstar Global Equity Fund
Class A Shares Institutional Shares
</TABLE>
A-2
<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 24, 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
7, 2000 ("Combined Proxy Statement/Prospectus") for the Special Meeting of
Shareholders of the Mercantile Mutual Funds, Inc. ("Mercantile") to be held on
November 24, 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 Institutional Shares of the Firstar U.S.
Treasury Money Market Fund and Tax-Exempt Money Market Fund and 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 September 14, 2000, as supplemented.
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 September 18, 2000,
as supplemented.
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, as supplemented.
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 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 Class A and
Institutional Shares of the Stellar Treasury 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 7, 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 ("Stellar"), as applicable, to the Corresponding Firstar Funds
listed below, accounted for as if each transfer had occurred as of April 30,
2000. Under the proposed agreement and plan of reorganization, each Mercantile
Fund will be reorganized into the Firstar Fund listed directly opposite such
Stellar Fund in the table below. Those Mercantile Funds reorganizing 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 +
------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------------------------------------------------
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>
* 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.
At the same time that the Mercantile Funds are reorganized into the Firstar
Funds, it is expected that the investment portfolios of the 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 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. Consummation of the Stellar and Select reorganizations is
subject to numerous conditions described in the relevant reorganization
agreement, including approval by shareholders of Mercantile and Select. If the
Reorganization Agreement is approved by Mercantile shareholders at the Special
Meeting, it is
<PAGE>
expected that the Reorganization will be completed whether or not the Stellar
reorganization and Select reorganization are completed.
Pro forma financial information has been prepared for the reorganizations
of the (1) Mercantile Treasury Money Market Portfolio and Stellar Treasury Fund
into the Firstar U.S. Treasury Money Market Fund; (2) Mercantile Money Market
Portfolio into the Firstar Money Market Fund; (3) Mercantile Tax-Exempt Money
Market Portfolio and Stellar Tax-Free Money Market Fund into the Firstar Tax-
Exempt Money Market Fund; (4) Mercantile U.S. Government Securities Portfolio
and Stellar U.S. Government Income Fund into the Firstar U.S. Government
Securities Fund; (5) Mercantile Intermediate Corporate Bond Portfolio into the
Firstar Intermediate Bond Market Fund; (6) Mercantile Bond Index Portfolio and
Mercantile Government & Corporate Bond Portfolio into the Firstar Aggregate Bond
Fund; (7) Mercantile Short-Intermediate Municipal Portfolio into the Firstar
Tax-Exempt Intermediate Bond Fund; (8) Mercantile National Municipal Bond
Portfolio and Stellar Insured Tax-Free Bond Fund into the Firstar National
Municipal Bond Fund; (9) Mercantile Balanced Portfolio into the Firstar Balanced
Growth Fund; (10) Mercantile Equity Index Portfolio into the Firstar Equity
Index Fund; (11) Mercantile Growth & Income Equity Portfolio into the Firstar
Growth & Income Fund; (12) Mercantile Growth Equity Portfolio into the Firstar
Growth Fund; (13) Mercantile Small Cap Equity Portfolio into the Firstar
Emerging Growth Fund and (14) Mercantile International Equity Portfolio into the
Firstar Core International Equity Fund. Pro forma information has been provided
for the reorganizations of the (1) Mercantile Conning Money Market Portfolio
into the Firstar Conning Money Market Fund, (2) Mercantile Missouri Tax-Exempt
Bond Portfolio into the Firstar Missouri Tax-Exempt Bond Fund, (3) Mercantile
Equity Income Portfolio into the Firstar Equity Income Fund, and (4) Mercantile
Small Cap Equity Index Portfolio into the Firstar Small Cap Index Fund because
in each of the cases the Mercantile Fund is being reorganized into a newly
organized Firstar Fund that is being created to continue the operations of such
Stellar Fund and no portfolio offered by Stellar or Select is being
simultaneously reorganized into such Firstar Fund.
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 Fund shareholders or Firstar Stellar Fund shareholders will approve
the reorganization of their 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 Funds incorporated herein by reference in this Statement of Additional
Information. Each combination of the above Mercantile Funds (and Firstar Stellar
Funds, as applicable) and Firstar Funds will be accounted for as a tax-free
reorganization.
<PAGE>
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 24, 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 October
7, 2000 ("Combined Proxy Statement/Prospectus") for the Special Meeting of
Shareholders of the Firstar Stellar Funds ("Stellar") to be held on November 24,
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 September 18, 2000, as supplemented.
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 September 14, 2000, as supplemented.
-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 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,
Institutional Shares, Investor A Shares and Investor B Shares of the Mercantile
U.S. Government Securities Portfolio and Mercantile National Municipal Bond
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 7, 2000.
-2-
<PAGE>
<TABLE>
<S> <C>
GENERAL INFORMATION...................................................... 1
Introductory Note to Pro Forma Financial Information..................... 1
Pro Forma Financial Statements........................................... 1
</TABLE>
<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. 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*
------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------
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.
At the same time that the Stellar Funds are reorganized into the Firstar
Funds, it is expected that the investment portfolios offered by Mercantile and
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.
Pro forma financial information has been prepared for (1) the
reorganization of the Stellar Treasury Fund and Mercantile Treasury Money Market
Portfolio into the Firstar U.S. Treasury Money Market Fund, (2) the
reorganization of the Stellar Tax-Free Money Market Fund and Mercantile Tax-
Exempt Money Market Portfolio into the Firstar Tax-Exempt Money Market Fund, (3)
the reorganization of the Stellar Insured Tax-Free Bond Fund and Mercantile
National Municipal Bond Portfolio into the Firstar National Municipal Bond Fund,
(4) the reorganization of the Stellar U.S. Government Income Fund into the
Firstar U.S. Government Securities Fund, (5) the reorganization of the Stellar
Fund into the Firstar Balanced Income Fund, and (6) the reorganization of the
Stellar Capital Appreciation Fund into the Firstar MidCap Index Fund. Pro forma
information has not been provided for (1) the reorganization of the Stellar Ohio
Tax-Free Money Market Fund into the Firstar Ohio Tax-Exempt Money Market Fund,
(2) the reorganization of the Stellar Strategic Income Fund into the Firstar
Strategic Income Fund, (3) the reorganization of the Stellar Growth Equity Fund
into the Firstar Large Cap Growth Fund, (4) the reorganization of the Stellar
Relative Value Fund into the Firstar Relative Value Fund, (5) the reorganization
of the Stellar Science & Technology Fund into the Firstar Science & Technology
Fund and (6) the reorganization of the Stellar International Equity Fund into
the Firstar Global Equity Fund, because in each of these cases, the Stellar Fund
is being reorganized into a newly organized Firstar Fund that is being created
to continue the operations of such Stellar Fund and no portfolio offered by
Mercantile or Select is being simultaneously reorganized into such Firstar Fund.
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,
-2-
<PAGE>
Stellar Treasury Fund and Firstar U.S. Treasury Money Market Fund and the
combination of the Mercantile Tax-Exempt Money Market Portfolio, Stellar Tax-
Free Money Market Fund and Firstar Tax-Exempt Money Market Fund because it is
possible that only the Mercantile Fund shareholders or Stellar Fund shareholders
will approve the reorganization of their 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
Firstar Funds incorporated herein by reference in this Statement of Additional
Information. Each combination of the above Stellar Funds (and Mercantile Mutual
Funds, Inc., as applicable) and Firstar Funds will be accounted for as a tax-
free reorganization.
Pro Forma Financial Statements
-3-
<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>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN
53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Treasury Money Market Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Treasury Money Market Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRTMM KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE TREASURY MONEY MARKET PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc. and
Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates: (a) the transfer of substantially all of the assets and liabilities of
the Mercantile Treasury Money Market Portfolio to the Firstar U.S. Treasury Money Market Fund of
Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar U.S. Treasury Money
Market Fund of equal value; (b) the distribution of the shares of designated classes of the Firstar For Against Abstain
U.S. Treasury Money Market Fund to the shareholders of the Mercantile Treasury Money Market Portfolio
in liquidation of Mercantile Treasury Money Market Portfolio; (c) the transfer of substantially all [_] [_] [_]
of the assets and liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile
Mutual Funds, Inc. under state law and the deregistration of Mercantile Mutual Funds, Inc. under the
Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly come
before the Meeting.
</TABLE>
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney or executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
--------------------------------------- ------------------------------
--------------------------------------- ------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
--------------------------------------------------------------------------------
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Money Market Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Money Market Portfolio which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRMMP KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE MONEY MARKET PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc. and
Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates: (a) the transfer of substantially all of the assets and liabilities of
the Mercantile Money Market Portfolio to the Firstar Money Market Fund of Firstar Funds, Inc. in
exchange for shares of a designated class of the Firstar Money Market Fund of equal value; (b) the
distribution of shares of a designated class of the Firstar Money Market Fund to the shareholders of
the Mercantile Money Market Portfolio in liquidation of the Mercantile Money Market Portfolio; (c) For Against Abstain
the transfer of substantially all of the assets and liabilities of Mercantile Mutual Funds, Inc.; and
(d) the dissolution of Mercantile Mutual Funds, Inc. under state law and the deregistration of [_] [_] [_]
Mercantile Mutual Funds, Inc. under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly come
before the Meeting.
</TABLE>
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney or executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
--------------------------------------- ------------------------------
--------------------------------------- ------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
--------------------------------------------------------------------------------
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Tax-Exempt Money Market Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile Tax-
Exempt Money Market Portfolio which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRTEM KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
------------------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE TAX-EXEMPT MONEY MARKET PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Tax-Exempt Money Market Portfolio to the Firstar Tax-Exempt Money For Against Abstain
Market Fund of Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar
Tax-Exempt Money Market Fund of equal value; (b) the distribution of the shares designated classes [ ] [ ] [ ]
of the Firstar Tax-Exempt Money Market Fund to the shareholders of the Mercantile Tax-Exempt Money
Market Portfolio in liquidation of the Mercantile Tax-Exempt Money Market Portfolio; (c) the transfer
of substantially all of the assets and liabilities of Mercantile Mutual Funds, Inc.; and (d)
the dissolution of Mercantile Mutual Funds, Inc. under state law and the deregistration of Mercantile
Mutual Funds under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly come
before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or
executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
------------------------------------------- --------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Conning Money Market Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Conning Money Market Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1)Read the Proxy Statement and have the Proxy card
below at hand.
2)Call 1-800-690-6903
3)Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1)Read the Proxy Statement and have the Proxy card
below at hand.
2)Go to Website www.proxyvote.com
3)Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRMCM KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE CONNING MONEY MARKET PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between
Mercantile Mutual Funds, Inc. and Firstar Funds, Inc., attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides
for and contemplates: (a) the transfer of substantially all of the
assets and liabilities of the Mercantile Conning Money Market
Portfolio to the Firstar Conning Money Market Fund of Firstar Funds,
Inc. in exchange for shares of the Firstar Conning Money Market Fund For Against Abstain
of equal value; (b) the distribution of the shares of the Firstar
Conning Money Market Fund to the shareholders of the Mercantile [_] [_] [_]
Conning Money Market Portfolio in liquidation of the Mercantile Mutual
Funds, Inc.; (c) the transfer of substantially all of the assets and
liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution
of Mercantile Mutual Funds, Inc. under state law and the
deregistration of Mercantile Mutual Funds, Inc. under the Investment
Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign.
When signing as attorney or executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by president or other authorized officer.
If a partnership, please sign in partnership name by authorized person.
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile U.S. Government Securities Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile U.S.
Government Securities Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRUSG KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
-----------------------------------------------------------------------------------------------------------------------------------
MERCANTILE U.S. GOVERNMENT SECURITIES PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal <C> <C> <C>
<S>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds,
Inc. and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the
Meeting, which provides for and contemplates: (a) the transfer of substantially all of the
assets and liabilities of the Mercantile U.S. Government Securities Portfolio to the Firstar
U.S. Government Securities Fund of Firstar Funds, Inc. in exchange shares of designated classes
of the Firstar U.S. Government Securities Fund of equal value; (b) the distribution of the
shares of designated classes of the Firstar U.S. Government Securities Fund to the shareholders
of the Mercantile U.S. Government Securities Portfolio in liquidation of the Mercantile Mutual
Funds, Inc.; (c) the transfer of substantially all of the assets and liabilities of Mercantile For Against Abstain
Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual Funds, Inc. under state law
and the deregistration of Mercantile Mutual Funds, Inc. under the Investment Company Act of [_] [_] [_]
1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------------ ---------------------------------------
------------------------------------------------ ---------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Intermediate Corporate Bond Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Intermediate Corporate Bond Portfolio which the undersigned may be entitled to
vote with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRICB KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------
MERCANTILE INTERMEDIATE CORPORATE BOND PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds,
Inc. and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the
Meeting, which provides for and contemplates: (a) the transfer of substantially all of the
assets and liabilities of the Mercantile Intermediate Corporate Bond Portfolio to the Firstar
Intermediate Bond Market Fund of Firstar Funds, Inc. in exchange for shares of designated
classes of the Firstar Intermediate Bond Market Fund of equal value; (b) the distribution of
the shares of designated classes of the Firstar Intermediate Bond Market Fund to the
shareholders of the Mercantile Intermediate Corporate Bond Portfolio in liquidation of the
Mercantile Intermediate Corporate Bond Portfolio; (c) the transfer of substantially all of the For Against Abstain
assets and liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile
Mutual Funds, Inc. under state law and the deregistration of Mercantile Mutual Funds, Inc. [_] [_] [_]
under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------------ ---------------------------------
------------------------------------------------ ---------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Bond Index Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile Bond
Index Portfolio which the undersigned may be entitled to vote with respect to
the proposals set forth below, in accordance with the specification indicated,
if any, and with all the powers which the undersigned would possess if
personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRBIP KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE BOND INDEX PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual
Funds, Inc. and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus
for the Meeting, which provides for and contemplates: (a) the transfer of substantially
all of the assets and liabilities of the Mercantile Bond Index Portfolio to the Firstar
Aggregate Bond Fund of Firstar Funds, Inc. in exchange for shares of the Firstar Aggregate
Bond Fund of equal value; (b) the distribution of the shares of designated classes of the
Firstar Aggregate Bond Fund to the shareholders of Mercantile Bond Index Portfolio in
liquidation of the Mercantile Bond Index Portfolio; (c) the transfer of substantially all For Against Abstain
of the assets and liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of
Mercantile Mutual Funds, Inc. under state law and the deregistration of Mercantile Mutual [_] [_] [_]
Funds, Inc. under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------------ -------------------------------------------------
------------------------------------------------ -------------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Government & Corporate Bond Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Government & Corporate Bond Portfolio which the undersigned may be entitled to
vote with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRGAC KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE GOVERNMENT & CORPORATE BOND PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile
Mutual Funds, Inc., and Firstar Funds, Inc., attached to the Combined Proxy
Statement/Prospectus for the Meeting, which provides for and contemplates: (a) the
transfer of substantially all of the assets and liabilities of the Mercantile
Government & Corporate Bond Portfolio to the Firstar Aggregate Bond Fund of Firstar
Funds, Inc. in exchange for shares of designated classes of the Firstar Aggregate
Bond Fund of equal value; (b) the distribution of the shares of designated classes
of the Firstar Aggregate Bond Fund to the shareholders of the Mercantile Government
& Corporate Bond Portfolio in liquidation of Mercantile Government & Corporate Bond For Against Abstain
Portfolio; (c) the transfer of substantially all of the assets and liabilities of
Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual Funds, [_] [_] [_]
Inc. under state law and the deregistration of Mercantile Mutual Funds, Inc. under
the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as
may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
---------------------------------------------------- ----------------------------------------------
---------------------------------------------------- ----------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Short-Intermediate Municipal Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Short-Intermediate Municipal Portfolio which the undersigned may be entitled to
vote with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSIM KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE SHORT-INTERMEDIATE MUNICIPAL PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Short-Intermediate Municipal Portfolio to the Firstar Tax-Exempt
Intermediate Bond Fund of Firstar Funds, Inc. in exchange for shares of designated classes of
the Firstar Tax-Exempt Intermediate Bond Fund of equal value; (b) the distribution of the shares
of designated classes of the Firstar Tax-Exempt Intermediate Bond Fund to the shareholders of
the Mercantile Short-Intermediate Municipal Portfolio in liquidation of the Mercantile Short-
Intermediate Municipal Portfolio; (c) the transfer of substantially all of the assets and For Against Abstain
liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual Funds,
Inc. under state law and the deregistration of Mercantile Mutual Funds, Inc. under the Investment [_] [_] [_]
Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
--------------------------------------------- -------------------------------------------
--------------------------------------------- -------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Missouri Tax-Exempt Bond Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Missouri Tax-Exempt Bond Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRMTE KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE MISSOURI TAX-EXEMPT BOND PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Missouri Tax-Exempt Bond Portfolio to the Firstar Missouri Tax-
Exempt Bond Fund of Firstar Funds, Inc. in exchange for shares of designated classes of the
Firstar Missouri Tax-Exempt Bond Fund of equal value; (b) the distribution of the shares of For Against Abstain
designated classes of the Firstar Missouri Tax-Exempt Bond Fund to the shareholders of the
Mercantile Missouri Tax-Exempt Bond Portfolio in liquidation of the Mercantile Missouri Tax- [_] [_] [_]
Exempt Bond Portfolio; (c) the transfer of substantially all of the assets and liabilities of
Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual Funds, Inc. under
state law and the deregistration of Mercantile Mutual Funds, Inc. under the Investment Company
Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
---------------------------------------------- ----------------------------------
---------------------------------------------- ----------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile National Municipal Bond Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
National Municipal Bond Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRNMB KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE NATIONAL MUNICIPAL BOND PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile
Mutual Funds, Inc. and Firstar Funds, Inc., attached to the Combined Proxy
Statement/Prospectus for the Meeting, which provides for and contemplates: (a) the
transfer of substantially all of the assets and liabilities of the Mercantile
National Municipal Bond Portfolio to the Firstar National Municipal Bond Fund of
Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar
National Municipal Bond Fund of equal value; (b) the distribution of the shares of
designated classes of the Firstar National Municipal Bond Fund to the shareholders
of the Mercantile National Municipal Bond Portfolio in liquidation of the
Mercantile National Municipal Bond Portfolio; (c) the transfer of substantially all For Against Abstain
of the assets and liabilities of Mercantile Mutual Funds, Inc.; and (d) the
dissolution of Mercantile Mutual Funds, Inc. under state law and the deregistration [_] [_] [_]
of Mercantile Mutual Funds, Inc. under the Investment Company Act of 1940, as
amended.
2. In their discretion, the proxies are authorized to vote upon such other business as
may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------------ ---------------------------------------------
------------------------------------------------ ---------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Balanced Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Balanced Portfolio which the undersigned may be entitled to vote with respect to
the proposals set forth below, in accordance with the specification indicated,
if any, and with all the powers which the undersigned would possess if
personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRMBP KEEP THIS PORTION FOR YOUR RECORDS
---------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
---------------------------------------------------------------------------------------------------------------------------
MERCANTILE BALANCED PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds,
Inc. and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the
Meeting, which provides for and contemplates: (a) the transfer of substantially all of the
assets and liabilities of the Mercantile Balanced Portfolio to the Firstar Balanced Growth Fund
of Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar Balanced
Growth Fund of equal value; (b) the distribution of the shares of designated classes of the
Firstar Balanced Growth Fund to the shareholders of the Mercantile Balanced Portfolio in
liquidation of the Mercantile Balanced Portfolio; (c) the transfer of substantially all of the For Against Abstain
assets and liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile
Mutual Funds, Inc. under state law and the deregistration of Mercantile Mutual Funds, Inc. [_] [_] [_]
under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------------- -------------------------------------
------------------------------------------------- -------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Equity Income Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Equity Income Portfolio which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIREIP KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE EQUITY INCOME PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Equity Income Portfolio to the Firstar Equity Income Fund of
Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar Equity Income
Fund of equal value; (b) the distribution of the shares of designated classes of the Firstar For Against Abstain
Equity Income Fund to the shareholders of the Mercantile Equity Income Portfolio in liquidation
of the Mercantile Equity Income Portfolio; (c) the transfer of substantially all of the assets [_] [_] [_]
and liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual
Funds, Inc. under state law and the deregistration of Mercantile Mutual Funds, Inc. under the
Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------- -------------------------------------------
------------------------------------------- -------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Equity Index Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Equity Index Portfolio which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting
of Shareholders and the Combined Proxy Statement/Prospectus, dated October 7,
2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIREQP KEEP THIS PORTION FOR YOUR RECORDS
---------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
---------------------------------------------------------------------------------------------------------------------------------
MERCANTILE EQUITY INDEX PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Equity Index Portfolio to the Firstar Equity Index Fund of Firstar
Funds, Inc. in exchange for shares of designated classes of the Firstar Equity Index Fund of
equal value; (b) the distribution of the shares of designated classes of the Firstar Equity Index
Fund to the shareholders of the Mercantile Equity Index Portfolio in liquidation of the
Mercantile Equity Index Portfolio; (c) the transfer of substantially all of the assets and For Against Abstain
liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual Funds,
Inc. under state law and the deregistration of Mercantile Mutual Funds, Inc. under the Investment [_] [_] [_]
Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or
executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
--------------------------------------------- ------------------------------------------
--------------------------------------------- ------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Growth & Income Equity Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Growth & Income Equity Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRGIE KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE GROWTH & INCOME EQUITY PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Growth & Income Equity Portfolio to the Firstar Growth and Income For Against Abstain
Fund of Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar Growth [_] [_] [_]
and Income Fund of equal value; (b) the distribution of the shares of designated classes of the
Firstar Growth and Income Fund to the shareholders of the Mercantile Growth & Income Equity
Portfolio in liquidation of the Mercantile Growth & Income Equity Portfolio; (c) the transfer of
substantially all of the assets and liabilities of Mercantile Inc.; and (d) the dissolution of
Mercantile Mutual Funds, Inc. under state law and the deregistration of Mercantile Mutual Funds,
Inc. under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
--------------------------------------------- --------------------------------------------
--------------------------------------------- --------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Growth Equity Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Growth Equity Portfolio which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRMGE KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE GROWTH EQUITY PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Growth Equity Portfolio to the Firstar Growth Fund of Firstar
Funds, Inc. in exchange for shares of designated classes of the Firstar Growth Fund of equal
value; (b) the distribution of the shares of designated classes of the Firstar Growth Fund to For Against Abstain
the shareholders of the Mercantile Growth Equity Portfolio in liquidation of the Mercantile [_] [_] [_]
Growth Equity Portfolio; (c) the transfer of substantially all of the assets and liabilities of
Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual Funds, Inc. under
state law and the deregistration of Mercantile Mutual Funds, Inc. under the Investment Company
Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
--------------------------------------------- --------------------------------------------
--------------------------------------------- --------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Small Cap Equity Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Small Cap Equity Portfolio which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSME KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE SMALL CAP EQUITY PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Small Cap Equity Portfolio to the Firstar Emerging Growth Fund of
Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar Emerging Growth
Fund of equal value; (b) the distribution of the shares of designated classes of the Firstar For Against Abstain
Emerging Growth Fund to the shareholders of the Mercantile Small Cap Equity Portfolio in [_] [_] [_]
liquidation of the Mercantile Small Cap Equity Portfolio; (c) the transfer of substantially all
of the assets and liabilities of Mercantile Mutual Funds, Inc.; and (d) the dissolution of
Mercantile Mutual Funds, Inc. under state law and the deregistration of Mercantile Mutual Funds,
Inc. under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
--------------------------------------------- --------------------------------------------
--------------------------------------------- --------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile Small Cap Equity Index Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18/th/ and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern
Time) on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
Small Cap Equity Index Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSCE KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
MERCANTILE SMALL CAP EQUITY INDEX PORTFOLIO
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds, Inc.
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Mercantile Small Cap Equity Index Portfolio to the Firstar Small Cap Index
Fund of Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar Small
Cap Index Fund of equal value; (b) the distribution of the shares of designated classes of the For Against Abstain
Firstar Small Cap Index Fund to the shareholders of the Mercantile Small Cap Equity Index
Portfolio in liquidation of the Mercantile Small Cap Equity Index Portfolio; (c) the transfer [_] [_] [_]
of substantially all of the assets and liabilities of Mercantile Mutual Funds, Inc.; and (d)
the dissolution of Mercantile Mutual Funds, Inc. under state law and the deregistration of
Mercantile Mutual Funds, Inc. under the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------ ----------------------------------------
------------------------------------------ ----------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MERCANTILE MUTUAL FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
MERCANTILE MUTUAL FUNDS, INC.
Mercantile International Equity Portfolio
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Mercantile Mutual Funds, Inc. (the "Meeting") to be held at the offices of
Mercantile Mutual Funds, Inc.'s counsel, Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, PA, at 10:00 a.m. (Eastern Time)
on November 24, 2000, and at any adjournment or adjournments thereof. The
Proxies will cast votes according to the number of shares of the Mercantile
International Equity Portfolio which the undersigned may be entitled to vote
with respect to the proposals set forth below, in accordance with the
specification indicated, if any, and with all the powers which the undersigned
would possess if personally present. The undersigned hereby revokes any prior
proxy to vote at such meeting, and hereby ratifies and confirms all that said
attorneys and Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Directors of Mercantile Mutual Funds,
Inc., which unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRSTM KEEP THIS PORTION FOR YOUR RECORDS
----------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
----------------------------------------------------------------------------------------------------------------------------------
MERCANTILE INTERNATIONAL EQUITY PORTFOLIO
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Mercantile Mutual Funds,
Inc. and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the
Meeting, which provides for and contemplates: (a) the transfer of substantially all of the
assets and liabilities of the Mercantile International Equity Portfolio to the Firstar Core
International Equity Fund of Firstar Funds, Inc. in exchange for shares of designated classes
of the Firstar Core International Equity Fund of equal value; (b) the distribution of the
shares of designated classes of the Firstar Core International Equity Fund to the shareholders
of the Mercantile International Equity Portfolio in liquidation of the Mercantile International
Equity Portfolio; (c) the transfer of substantially all of the assets and liabilities of For Against Abstain
Mercantile Mutual Funds, Inc.; and (d) the dissolution of Mercantile Mutual Funds, Inc. under
state law and the deregistration of Mercantile Mutual Funds, Inc. under the Investment Company [_] [_] [_]
Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------------ --------------------------------------
------------------------------------------------ --------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Treasury Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar
Treasury Fund which the undersigned may be entitled to vote with respect to the
proposals set forth below, in accordance with the specification indicated, if
any, and with all the powers which the undersigned would possess if personally
present. The undersigned hereby revokes any prior proxy to vote at such meeting,
and hereby ratifies and confirms all that said attorneys and Proxies, or any of
them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSTR KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR TREASURY FUND
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between
Firstar Stellar Funds and Firstar Funds, Inc., attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides
for and contemplates: (a) the transfer of substantially all of the For Against Abstain
assets and liabilities of the Firstar Stellar Treasury Fund to the
Firstar U.S. Treasury Money Market Fund of Firstar Funds, Inc. in [_] [_] [_]
exchange for shares of designated classes of the Firstar U.S. Treasury
Money Market Fund of equal value; (b) the distribution of shares of
designated classes of the Firstar U.S. Treasury Money Market Fund to
shareholders of the Firstar Stellar Treasury Fund in liquidation of
the Firstar Stellar Treasury Fund; and (c) the deregistration under
the Investment Company Act of 1940, as amended, and the termination
under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
-------------------------------------------------- -----------------------------------------
-------------------------------------------------- -----------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Tax-Free Money Market Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar
Tax-Free Money Market Fund which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
FIRTFM
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR TAX-FREE MONEY MARKET FUND
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Firstar Stellar Funds and
Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Firstar Stellar Tax-Free Money Market Fund to the Firstar Tax-Exempt Money
Market Fund of Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar
Tax-Exempt Money Market Fund of equal value; (b) the distribution of the shares of designated
classes of the Firstar Tax-Exempt Money Market Fund to shareholders of the Firstar Stellar Tax- For Against Abstain
Free Money Market Fund in liquidation of the Firstar Stellar Tax-Free Money Market Fund; and
(c) the deregistration under the Investment Company Act of 1940, as amended, and the [_] [_] [_]
termination under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------- ---------------------------------------
------------------------------------------- ---------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Ohio Tax-Free Money Market Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar Ohio
Tax-Free Money Market Fund which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIROTF KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR OHIO TAX-FREE MONEY MARKET FUND
<S> <C> <C> <C>
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Firstar Stellar Funds
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the
Meeting, which provides for and contemplates: (a) the transfer of substantially all of
the assets and liabilities of the Firstar Stellar Ohio Tax-Free Money Market Fund to the For Against Abstain
Firstar Ohio Tax-Exempt Money Market Fund of Firstar Funds, Inc. in exchange for shares
of designated classes of the Firstar Ohio Tax-Exempt Money Market Fund of equal value; [_] [_] [_]
(b) the distribution of the shares of designated classes of the Firstar Ohio Tax-Exempt
Money Market Fund to shareholders of the Firstar Stellar Ohio Tax-Free Money Market Fund
in liquidation of the Firstar Stellar Ohio Tax-Free Money Market Fund; and (c) the
deregistration under the Investment Company Act of 1940, as amended, and the termination
under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
----------------------------------------------- ----------------------------------------------
----------------------------------------------- ----------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Strategic Income Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar
Strategic Income Fund which the undersigned may be entitled to vote with respect
to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSSI KEEP THIS PORTION FOR YOUR RECORDS
---------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
---------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR STRATEGIC INCOME FUND
<S> <C> <C> <C>
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Firstar Stellar Funds
and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the
Meeting, which provides for and contemplates: (a) the transfer of substantially all of
the assets and liabilities of the Firstar Stellar Strategic Income Fund to the Firstar For Against Abstain
Strategic Income Fund of Firstar Funds, Inc. in exchange for shares of designated classes
of the Firstar Strategic Income Fund of equal value; (b) the distribution of the shares [_] [_] [_]
of designated classes of the Firstar Strategic Income Fund to the shareholders of Firstar
Stellar Strategic Income Fund in liquidation of the Firstar Stellar Strategic Income
Fund; and (c) the deregistration under the Investment Company Act of 1940, as amended,
and the termination under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
----------------------------------------------- ----------------------------------------------
----------------------------------------------- ----------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar U.S. Government Income Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar U.S.
Government Income Fund which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRUGF KEEP THIS PORTION FOR YOUR RECORDS
-----------------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
-----------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR U.S. GOVERNMENT INCOME FUND
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between
Firstar Stellar Fund and Firstar Funds, Inc., attached to the Combined
Proxy Statement/Prospectus for the Meeting, which provides for and
contemplates: (a) the transfer of substantially all of the assets and For Against Abstain
liabilities of the Firstar Stellar U.S. Government Income Fund to the
Firstar U.S. Government Securities Fund of Firstar Funds, Inc. in [_] [_] [_]
exchange for shares of designated classes of the Firstar U.S.
Government Securities Fund of equal value; (b) the distribution of the
shares of designated classes of the Firstar U.S. Government Securities
Fund to shareholders of the Firstar Stellar U.S. Government Income
Fund in liquidation of the Firstar Stellar U.S. Government Income
Fund; and (c) the deregistration under the Investment Company Act of
1940, as amended, and the termination under state law of Firstar
Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
---------------------------------------------- -----------------------------------------
---------------------------------------------- -----------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Insured Tax-Free Bond Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar Insured
Tax-Free Bond Fund which the undersigned may be entitled to vote with respect to
the proposals set forth below, in accordance with the specification indicated,
if any, and with all the powers which the undersigned would possess if
personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRITF KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
--------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR INSURED TAX-FREE BOND FUND
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Firstar Stellar Funds and
Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates: (a) the transfer of substantially all of the assets and liabilities
of the Firstar Stellar Insured Tax-Free Bond Fund to the Firstar National Municipal Bond Fund of
Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar National Municipal
Bond Fund of equal value; (b) the distribution of shares of designated classes of the Firstar For Against Abstain
National Municipal Bond Fund to shareholders of the Firstar Stellar Insured Tax-Free Bond Fund
in liquidation of the Firstar Stellar Insured Tax-Free Bond Fund; and (c) the deregistration under [_] [_] [_]
the Investment Company Act of 1940, as amended, and the termination under state law of Firstar
Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
------------------------------------------------- ---------------------------------------
------------------------------------------------- ---------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Growth Equity Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18/th/ and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar Growth
Equity Fund which the undersigned may be entitled to vote with respect to the
proposals set forth below, in accordance with the specification indicated, if
any, and with all the powers which the undersigned would possess if personally
present. The undersigned hereby revokes any prior proxy to vote at such meeting,
and hereby ratifies and confirms all that said attorneys and Proxies, or any of
them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSGE KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
------------------------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR GROWTH EQUITY FUND
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between Firstar Stellar Funds and
Firstar Funds, Inc., attached to the Combined Proxy Statement /Prospectus for the Meeting,
which provides for and contemplates: (a) the transfer of substantially all of the assets and For Against Abstain
liabilities of the Firstar Stellar Growth Equity Fund to the Firstar Large Cap Growth Fund of
Firstar Funds, Inc. in exchange for shares of designated classes of the Firstar Large Cap Growth [_] [_] [_]
Fund of equal value; (b) the distribution of the shares of designated classes of the Firstar
Large Cap Growth Fund to shareholders of the Firstar Stellar Growth Equity Fund in liquidation
of the Firstar Stellar Growth Equity Fund; and (c) the deregistration under the Investment
Company Act of 1940, as amended, and the termination under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
---------------------------------------------- ----------------------------------------
---------------------------------------------- ----------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Relative Value Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar
Relative Value Fund which the undersigned may be entitled to vote with respect
to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRRVF KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR RELATIVE VALUE FUND
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Firstar Stellar
Funds and Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for
the Meeting, which provides for and contemplates: (a) the transfer of substantially all
of the assets and liabilities of the Firstar Stellar Relative Value Fund to the Firstar
Relative Value Fund of Firstar Funds, Inc. in exchange for shares of designated classes For Against Abstain
of the Firstar Relative Value Fund of equal value; (b) the distribution of the shares of
designated classes of the Firstar Relative Value Fund to shareholders of the Firstar [_] [_] [_]
Stellar Relative Value Fund in liquidation of the Firstar Stellar Relative Value Fund;
and (c) the deregistration under the Investment Company Act of 1940, as amended, and the
termination under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
----------------------------------------------- ------------------------------------
----------------------------------------------- ------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Science & Technology Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar Science
& Technology Fund which the undersigned may be entitled to vote with respect to
the proposals set forth below, in accordance with the specification indicated,
if any, and with all the powers which the undersigned would possess if
personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSTT KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
FIRSTAR STELLAR SCIENCE & TECHNOLOGY FUND
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between
Firstar Stellar Funds and Firstar Funds, Inc., attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
and contemplates: (a) the transfer of substantially all of the assets
and liabilities of the Firstar Stellar Science & Technology Fund to
the Firstar Science & Technology Fund of Firstar Funds, Inc. in
exchange for shares of designated classes of the Firstar Science &
Technology Fund of equal value; (b) the distribution of the shares of For Against Abstain
designated classes of the Firstar Science & Technology Fund to
shareholders of the Firstar Stellar Science & Technology Fund in [_] [_] [_]
liquidation of the Firstar Stellar Science & Technology Fund; and (c)
the deregistration under the Investment Company Act of 1940, as
amended, and the termination under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
---------------------------------------------- ---------------------------------------
---------------------------------------------- ---------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Stellar Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Stellar Fund which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or any of them, may
lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRSTF KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
------------------------------------------------------------------------------------------------------------------------------------
STELLAR FUND
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between
Firstar Stellar Funds and Firstar Funds, Inc., attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides for
and contemplates: (a) the transfer of substantially all of the assets
and liabilities of the Stellar Fund to the Firstar Balanced Income For Against Abstain
Fund of Firstar Funds, Inc. in exchange for shares of designated
classes of the Firstar Balanced Income Fund of equal value; (b) the [_] [_] [_]
distribution of shares of designated classes of the Firstar
Balanced Income Fund to shareholders of the Stellar Fund in
liquidation of the Stellar Fund; and (c) the deregistration under the
Investment Company Act of 1940, as amended, and the termination
under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
---------------------------------------------- ---------------------------------------------
---------------------------------------------- ---------------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar Capital Appreciation Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18th and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar Capital
Appreciation Fund which the undersigned may be entitled to vote with respect to
the proposals set forth below, in accordance with the specification indicated,
if any, and with all the powers which the undersigned would possess if
personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1)Read the Proxy Statement and have the Proxy card below at hand.
2)Call 1-800-690-6903
3)Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1)Read the Proxy Statement and have the Proxy card below at hand.
2)Go to Website www.proxyvote.com
3)Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<TABLE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FIRCAF KEEP THIS PORTION FOR YOUR RECORDS
------------------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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FIRSTAR STELLAR CAPITAL APPRECIATION FUND
This proxy will be voted as specified above with respect to the action to be
taken on the following proposal.
<S> <C> <C> <C>
Vote On Proposal
1. To approve the Agreement and Plan of Reorganization by and between
Firstar Stellar Funds and Firstar Funds, Inc., attached to the
Combined Proxy Statement/Prospectus for the Meeting, which provides
for and contemplates: (a) the transfer of substantially all of the
assets and liabilities of the Firstar Stellar Capital Appreciation
Fund to the Firstar MidCap Index Fund of Firstar Funds, Inc. in For Against Abstain
exchange for shares of designated classes of the Firstar MidCap Index
Fund of equal value; (b) the distribution of the shares of designated [_] [_] [_]
classes of the Firstar MidCap Index Fund to shareholders of the
Firstar Stellar Capital Appreciation Fund in liquidation of the
Firstar Stellar Capital Appreciation Fund; and (c) the deregistration
under the Investment Company Act of 1940, as amended, and the
termination under state law of Firstar Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
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<PAGE>
FIRSTAR STELLAR FUNDS
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WISCONSIN 53201-3011
PROXY CARD
FIRSTAR STELLAR FUNDS
Firstar Stellar International Equity Fund
Special Meeting of Shareholders - November 24, 2000
The undersigned hereby appoints Kieran G. Brown, Michael E. Dresnin and
Michelle M. Lombardo (the "Proxies") and each of them, attorneys and Proxies of
the undersigned, each with power of substitution and resubstitution, to attend,
vote and act for the undersigned at the Special Meeting of Shareholders of
Firstar Stellar Funds (the "Meeting") to be held at the offices of Firstar
Stellar Funds' special counsel, Drinker Biddle & Reath LLP, One Logan Square,
18/th/ and Cherry Streets, Philadelphia, PA at 10:00 a.m. (Eastern Time) on
November 24, 2000, and at any adjournment or adjournments thereof. The Proxies
will cast votes according to the number of shares of the Firstar Stellar
International Equity Fund which the undersigned may be entitled to vote with
respect to the proposals set forth below, in accordance with the specification
indicated, if any, and with all the powers which the undersigned would possess
if personally present. The undersigned hereby revokes any prior proxy to vote at
such meeting, and hereby ratifies and confirms all that said attorneys and
Proxies, or any of them, may lawfully do by virtue thereof.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Combined Proxy Statement/Prospectus, dated October 7, 2000.
This proxy is solicited by the Board of Trustees of Firstar Stellar Funds, which
unanimously recommends that you vote in favor of the proposal.
Please sign, date and return the proxy card promptly using the enclosed
envelope. Every properly signed proxy will be voted in the manner specified
hereon and, in the absence of specification, will be treated as granting
authority to vote "FOR" the proposal.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card
below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
FIRINE KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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FIRSTAR STELLAR INTERNATIONAL EQUITY FUND
This proxy will be voted as specified above with respect
to the action to be taken on the following proposal.
Vote On Proposal
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization by and between Firstar Stellar Funds and
Firstar Funds, Inc., attached to the Combined Proxy Statement/Prospectus for the Meeting, which
provides for and contemplates: (a) the transfer of substantially all of the assets and
liabilities of the Firstar Stellar International Equity Fund to the Firstar Global Equity Fund For Against Abstain
of Firstar Funds, Inc. in exchange for shares of a designated class of the Firstar Global Equity
Fund of equal value; (b) the distribution of the shares of a designated class of the Firstar [_] [_] [_]
Global Equity Fund to shareholders of the Firstar Stellar International Equity Fund in
liquidation of the Firstar Stellar International Equity Fund; and (c) the deregistration under
the Investment Company Act of 1940, as amended, and the termination under state law of Firstar
Stellar Funds.
2. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Meeting.
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney
or executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized
person.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owner) Date
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</TABLE>
