<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 1, 1999
File No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
STI CLASSIC FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
2 OLIVER STREET
BOSTON, MASSACHUSETTS 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (800) 342-5734
MARK NAGLE
C/O SEI INVESTMENTS COMPANY
ONE FREEDOM VALLEY ROAD
OAKS, PENNSYLVANIA 19456
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copies to:
RICHARD W. GRANT, ESQ. JOHN H. GRADY, JR., ESQ.
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
1701 MARKET STREET 1701 MARKET STREET
PHILADELPHIA, PA 19103 PHILADELPHIA, PA 19103
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective on October 31, 1999
pursuant to Rule 488.
- --------------------------------------------------------------------------------
No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
- --------------------------------------------------------------------------------
<PAGE>
STI CLASSIC FUNDS
Cross Reference Sheet
<TABLE>
<CAPTION>
ITEMS REQUIRED BY FORM N-14
<S> <C>
Part A. INFORMATION REQUIRED IN REGISTRATION STATEMENT HEADING
PROSPECTUS
Item 1. Beginning of Registration Cover Page of Registration Statement
Statement and outside Front Cover
Page of Prospectus
Item 2. Beginning and Outside Back Cover Page Table of Contents
of Prospectus
Item 3. Synopsis and Risk Factors Synopsis; Risks
Item 4. Information About the Transaction Synopsis; Reasons for the Reorganization;
Information Relating to the Reorganization;
Agreement and Plan of Reorganization
Item 5. Information About the Registrant Prospectus Cover Page; Synopsis; Shareholder Rights
Item 6. Information About the Company Prospectus Cover Page; Synopsis; Reasons for the
Being Acquired Reorganization; Information Relating to the
Reorganization; Information About the Funds;
Shareholder Rights
Item 7. Voting Information Prospectus Cover Page; Notice of Special Meeting of
Shareholders; Synopsis; Form of Agreement and Plan
of Reorganization
Item 8. Interest of Certain Persons and Experts Voting Matters
Item 9. Additional Information Required Not applicable.
for Reoffering by Persons Deemed to be
Underwriters
Part B. INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL
INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. Additional Information About the Incorporated by Reference to the STI Classic Funds'
Registrant Prospectus and SAI
Item 13. Additional Information About the Incorporated by Reference to the CrestFunds'
Company Being Acquired Prospectus and SAI
<PAGE>
Item 14. Financial Statements Financial Statements
Part C. OTHER INFORMATION
Item 15. Indemnification Indemnification
Item 16. Exhibits Exhibits
Item 17. Undertakings Undertakings
</TABLE>
3
<PAGE>
-----------------
STI Classic Funds
-----------------
To STI Classic Funds Shareholders:
Enclosed with this letter is a proxy ballot, an N-14 combined
proxy/prospectus statement and related information concerning a special meeting
of shareholders of the STI Classic Emerging Markets Equity Fund and the Sunbelt
Equity Fund.
The purpose of this proxy package is to announce that a Shareholder
Meeting has been scheduled for December 10, 1999. The purpose of the meeting is
to submit the Agreement and Plan of Reorganization between the Emerging Markets
Equity Fund and the International Equity Fund, as well as the Sunbelt Equity
Fund and the Small Cap Growth Stock Fund.
The Trustees of the STI Classic Funds unanimously approved the
Reorganizations at meetings held on May 18, 1999 and August 17, 1999. In coming
to this conclusion, the Trustees considered a variety of factors including:
- the compatibility of the funds' objectives and policies
- the expense ratios of the combined funds
- the potential economies of scale to be gained by the merger
- the merger will be free from federal income taxes.
The details of the proposed Agreement and Plan of Reorganization are set
forth in the combined prospectus and proxy statement that accompanies this
letter. We encourage you to read them thoroughly. In addition, we have included
a list of commonly asked questions and answers on the next page.
If you and the other shareholders of your fund approve the proposed
reorganization of your fund and certain other conditions are satisfied, you will
be able to continue your investment program through ownership in a different STI
Classic Funds portfolio with similar objectives and policies.
Most shareholders cast their votes by filling out and signing the
enclosed proxy card. In order to conduct the Shareholder Meeting, a majority of
shares must be represented. YOUR VOTE IS VERY IMPORTANT. PLEASE EITHER SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED,
POSTAGE-PAID ENVELOPE, OR IN THE ALTERNATIVE, YOU MAY VOTE IN ANY ONE OF THE
OTHER TWO MANNERS DESCRIBED ON THE PROXY CARD.
We thank you for your continued confidence and support.
Sincerely,
Wilton Looney
CHAIRMAN OF THE BOARD
IMPORTANT PROXY INFORMATION ENCLOSED
-IMMEDIATE ACTION REQUIRED-
<PAGE>
QUESTIONS AND ANSWERS
FOR THE STI CLASSIC FUNDS'
SHAREHOLDER MEETING
Q. WHY ARE THE TRUSTEES PROPOSING TO REORGANIZE THE STI CLASSIC EMERGING
MARKETS EQUITY AND SUNBELT EQUITY FUNDS?
A. Before approving the reorganization of these funds, the Trustees
evaluated several factors, including the compatibility of each fund's
investment objective with the fund each will be reorganized into, and the
potential for improved shareholder service. After careful consideration,
they determined that the reorganizations are in the best interest of the
shareholders. Through this proxy, they are submitting the proposals for
reorganization to you for a vote.
Q. HOW WILL THIS AFFECT ME AS A SHAREHOLDER?
A. You will become a shareholder of another STI Classic Fund with similar
investment objectives and policies as the fund you currently hold.
There are NO SALES CHARGES on this transaction. Each shareholder will
receive shares of an STI Classic Fund equal in value to the shares of the
STI Classic Fund you currently hold. It is likely that the NAV per share
price of your fund shares may change. However, the number of shares that
you own will be adjusted so that there will be NO CHANGE in the market
value of your account as a result of the merger.
Q. WILL THE REORGANIZATION RESULT IN ANY TAXES?
A. Neither of the STI Classic Funds nor their shareholders will incur any
federal income tax as a result of the reorganizations.
Q. WHAT FUND(S) WILL I HOLD FOLLOWING THE REORGANIZATIONS?
A. The STI Classic Emerging Markets Equity Fund, Trust Class, shareholders
will receive Trust Class shares of the STI Classic International Equity
Fund. The STI Classic International Equity Fund has an investment
objective similar to the STI Classic Emerging Markets Equity Fund, but
seeks to achieve that objective by investing primarily in securities of
issuers located in countries with developed markets rather than issuers
located in countries with emerging markets.
The STI Classic Sunbelt Equity Fund shareholders will receive shares of
the Small Cap Growth Stock Fund. These Funds have similar investment
objectives but the STI Classic Small Cap Growth Stock Fund does not
concentrate its investments in any particular geographic location.
Shareholders of the Sunbelt
<PAGE>
Equity Fund will receive the same class of shares in which they are
currently invested.
Q. HOW DO THE STI CLASSIC FUNDS' TRUSTEES RECOMMEND THAT I VOTE?
A. After careful consideration, the Trustees unanimously recommend that you
vote "FOR" the proposed reorganizations. The Board also wishes to remind
you to vote ALL the proxy ballot cards you receive in any one of the four
manners described on the cards. This means that if you receive multiple
proxies and ballot cards because you are invested in both STI Classic
Funds, please vote each and every ballot card you receive in one of the
three manners of voting.
Q. WHO SHOULD I CONTACT WITH QUESTIONS ABOUT THIS PROXY?
A. If you have any questions regarding this proxy, please contact the
following for further information:
EMERGING MARKETS EQUITY FUND SHAREHOLDERS:
- - Contact your account administrator
SUNBELT EQUITY FUND SHAREHOLDERS:
- - TRUST SHARES - Contact your account administrator
- - INVESTOR AND/OR FLEX SHARES - Contact SunTrust Securities directly at
1-800-874-4770, or contact Additional Support Services at 1-888-784-3863.
PLEASE VOTE THE ENCLOSED PROXY BALLOT CARD.
YOUR VOTE IS IMPORTANT!
<PAGE>
STI CLASSIC FUNDS
2 Oliver Street
Boston, MA 02109
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 10, 1999
Notice is hereby given that a Special Meeting of Shareholders of the STI
Classic Funds (the "Trust"), with respect to its series the Sunbelt Equity Fund
and Emerging Markets Equity Fund (each a "Transferring Fund" and collectively,
the "Transferring Funds"), will be held at the offices of SEI Investments
Company, One Freedom Valley Drive, Oaks, PA 19456, on December 10, 1999 at 3:00
p.m., Eastern Time, for the purposes of considering the proposals set forth
below. The proposals, if approved, will result in the transfer of the assets and
stated liabilities of the Transferring Funds to two corresponding series of the
Trust, the Small Cap Growth Stock Fund and the International Equity Fund (each
an "Acquiring Fund" and collectively, the "Acquiring Funds"), respectively, in
return for shares of the corresponding Acquiring Funds (the "Reorganization").
Proposal 1: Approval of the Agreement and Plan of Reorganization (the
"Reorganization Agreement") as it relates to (i) the transfer
of all of the assets and certain stated liabilities of the
Sunbelt Equity Fund to the Small Cap Growth Stock Fund in
exchange for shares of the Acquiring Fund; and (ii) the
distribution of the Acquiring Fund's shares so received to
shareholders of the Transferring Fund.
Proposal 2: Approval of the Reorganization Agreement as it relates to (i)
the transfer of all of the assets and certain stated
liabilities of the Emerging Markets Equity Fund to the
International Equity Fund in exchange for shares of the
Acquiring Fund; and (ii) the distribution of the Acquiring
Fund's shares so received to shareholders of the Transferring
Fund.
Proposal 3: The transaction of such other business as may properly be
brought before the meeting.
Transferring Funds' shareholders of record as of the close of business on
October 11, 1999 (the "Shareholders") are entitled to notice of, and to vote at,
this meeting or any adjournment thereof. The Shareholders will vote on the
proposals, and the proposed Reorganization will be effected only if the
Shareholders approve the proposal.
<PAGE>
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY THE ACCOMPANYING
PROXY CARD WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. YOU
MAY EXECUTE THE PROXY CARD IN ONE OF THE THREE METHODS DESCRIBED IN THE PROXY
CARD. RETURNING THE PROXY CARD IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING A
WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING
THE MEETING AND VOTING IN PERSON.
Kevin P. Robins
Assistant Secretary
November 10, 1999
<PAGE>
PROXY STATEMENT/PROSPECTUS
STI CLASSIC FUNDS
2 OLIVER STREET
BOSTON, MA 02109
1-800-874-4770
SUNBELT EQUITY FUND
EMERGING MARKETS EQUITY FUND
NOVEMBER 10, 1999
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of STI Classic Funds (the
"Trust") in connection with the Special Meeting of Shareholders (the "Meeting")
of the Trust's Sunbelt Equity Fund and Emerging Markets Equity Fund (each a
"Transferring Fund" and collectively, the "Transferring Funds"), to be held on
December 10, 1999 at 3:00 p.m., Eastern Time, at the offices of SEI Investments
Company, One Freedom Valley Drive, Oaks, PA 19456. At the Meeting, shareholders
of the Transferring Funds ("Transferring Fund Shareholders") will be asked to
consider and approve a proposed Agreement and Plan of Reorganization dated ,
1999 (the "Reorganization Agreement"), by and between the Transferring Funds and
the Trust's Small Cap Growth Stock Fund and International Equity Fund (each an
"Acquiring Fund" and collectively, the "Acquiring Funds"), respectively. The
Transferring Funds and Acquiring Funds are referred to collectively as the
"Funds." A copy of the Reorganization Agreement is attached as Exhibit A.
Proposal 1: Approval of the Reorganization Agreement as it relates to
(i) the transfer of all of the assets and certain stated
liabilities of the Sunbelt Equity Fund to the Small Cap
Growth Stock Fund in exchange for shares of the Acquiring
Fund; and (ii) the distribution of the Acquiring Fund's
shares so received to Transferring Fund Shareholders.
Proposal 2: Approval of the Reorganization Agreement as it relates to
(i) the transfer of all of the assets and certain stated
liabilities of the Emerging Markets Equity Fund to the
International Equity Fund in exchange for shares of the
Acquiring Fund; and (ii) the distribution of the Acquiring
Fund's shares so received to Transferring Fund
Shareholders.
Proposal 3: The transaction of such other business as may properly be
brought before the meeting.
The Reorganization Agreement provides that each Transferring Fund will
transfer all of its assets and certain stated liabilities to its corresponding
Acquiring Fund. In exchange for the transfers of these assets and liabilities,
the Acquiring Fund will simultaneously issue shares to the Transferring Fund in
an amount equal in value to the net asset value of such Transferring Fund's
shares. This transfer is expected to occur on or about December 13, 1999.
<PAGE>
Immediately after the transfer of each Transferring Fund's assets and
liabilities, the Transferring Fund will make a liquidating distribution to
Transferring Fund Shareholders of the corresponding Acquiring Fund's shares
received, so that a holder of shares in the Transferring Fund at the Effective
Time of the Reorganization (as hereinafter defined) will receive a number of
shares of its corresponding Acquiring Fund with the same aggregate value as the
Transferring Fund Shareholder had in the Transferring Fund immediately before
the Reorganization. At the Effective Time of the Reorganization, Transferring
Fund Shareholders will become shareholders of the Acquiring Fund, and the
Transferring Fund's legal existence will be terminated.
The Transferring Funds and Acquiring Funds offer three classes of shares,
Trust Shares, Investor Shares and Flex Shares, except for the Emerging Markets
Equity Fund which only offers Trust Shares. Holders of Trust Shares of each
Transferring Fund will receive an amount of Trust Shares of its corresponding
Acquiring Fund equal in value to their Transferring Fund shares. Holders of
Investor Shares and Flex Shares of the Sunbelt Equity Fund will receive an
amount of Investor Shares and Flex Shares of the Small Cap Growth Stock Fund
equal in value to their respective Sunbelt Equity Fund shares.
The Trust is an open-end, management investment company registered under
the Investment Company Act of 1940 (the "1940 Act"). Each Fund is a separate
series of the Trust. Trusco Capital Management, Inc. ("Trusco") and STI Capital
Management, N.A. ("STI Capital") are each direct wholly-owned subsidiaries of
SunTrust Banks, Inc. ("SunTrust"), a Georgia corporation and a bank holding
company. Trusco is the investment adviser to the Small Cap Growth Stock Fund and
the Sunbelt Equity Fund. STI Capital is the investment adviser to the Emerging
Markets Equity Fund and the International Equity Fund (Trusco and STI Capital
are referred to collectively herein as the "Advisers"). Trusco is registered
under the Investment Advisers Act of 1940 (the "Advisers Act"). STI Capital is a
bank and is, therefore, not required to register as an investment adviser by
virtue of Section 202(a)(11)(A) of the Advisers Act.
This Proxy Statement/Prospectus sets forth concisely the information that
a Shareholder should know before voting on the Reorganization, and should be
retained for future reference. Certain additional relevant documents listed
below, which have been filed with the Securities and Exchange Commission
("SEC"), are incorporated in whole or in part by reference. A Statement of
Additional Information dated April 6, 1999, relating to this Proxy Statement/
Prospectus and the Reorganization, and including certain financial information
about the Transferring Funds and the Acquiring Funds, has been filed with the
SEC and is incorporated in its entirety into this Proxy Statement/Prospectus. A
copy of such Statement of Additional Information is available upon request and
without charge by writing to SEI Investments Distribution Co., One Freedom
Valley Drive, Oaks, PA 19456 or by calling toll-free 1-800-874-4770.
For a more detailed discussion of the investment objectives, policies,
risks and restrictions of the Funds, see the registration statement or
prospectuses contained in the registration statement for the Funds dated October
1, 1999 which have been filed with the SEC and are incorporated by reference
into this Proxy Statement/Prospectus insofar as they relate to the Funds, and
not to any other portfolio of the Trust described therein. Copies of the
prospectuses for the Funds accompany this Proxy Statement/Prospectus. A
Statement of Additional Information for the Funds dated October
-2-
<PAGE>
1, 1999 has been filed with the SEC, and is incorporated by reference into this
Proxy Statement/Prospectus. Copies are available upon request and without charge
by calling 1-800-874- 4770.
This Proxy Statement/Prospectus constitutes the proxy statement of the
Transferring Funds for the Meeting and is expected to be sent to Shareholders on
or about November 10, 1999.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-3-
<PAGE>
TABLE OF CONTENTS
PAGE
Synopsis....................................................................
The Reorganization...................................................
The Funds............................................................
Fees and Expenses....................................................
Investment Objectives, Policies and Restrictions.....................
The Funds' Purchase, Exchange and Redemption Procedures..............
Risks.......................................................................
Information Relating to the Reorganization..................................
Description of the Reorganization....................................
Federal Income Taxes.................................................
Capitalization.......................................................
Reasons for the Reorganization..............................................
Shareholder Rights..........................................................
Information About the Funds.................................................
Voting Matters..............................................................
Other Business..............................................................
Shareholder Inquiries.......................................................
Form of Agreement and Plan of Reorganization.......................Exhibit A
Management's Discussion of Fund Performance........................Exhibit B
-4-
<PAGE>
SYNOPSIS
This Synopsis is designed to allow you to compare the current fees,
investment objectives, policies and restrictions, and distribution, purchase,
exchange and redemption procedures of the Transferring Funds with those of the
Acquiring Fund. It is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus, or incorporated by reference into this Proxy
Statement/Prospectus. Shareholders should read this entire Proxy
Statement/Prospectus carefully. For more complete information, please read the
prospectus for each Fund.
THE REORGANIZATION
BACKGROUND. Pursuant to the Reorganization Agreement between the
participating series (attached hereto as Exhibit A), the Transferring Funds will
transfer all of their assets and certain stated liabilities to the Acquiring
Funds in exchange solely for shares of the Acquiring Funds. The Transferring
Funds will distribute the Acquiring Funds' shares that they receive to their
Shareholders in liquidation. The result of the Reorganization is that
Shareholders will become shareholders of the corresponding Acquiring Funds. No
front-end sales charges or contingent deferred sales charges will be imposed in
connection with these transactions. Further, all expenses associated with the
Reorganization will be borne by SunTrust and/or its subsidiaries, rather than
the Funds and the shareholders thereof.
The Board of Trustees of the Trust, including the Trustees who are not
"interested persons" within the meaning of Section 2(a)(19) of the 1940 Act, has
concluded that the Reorganization would be in the best interests of the
Shareholders, and that the interests of the Shareholders would not be diluted as
a result of the transactions contemplated by the Reorganization. The Board of
Trustees recommends that you vote for approval of the Reorganization Agreement.
TAX CONSEQUENCES. The Reorganization is intended to qualify for federal
income tax purposes as a tax-free reorganization. If so, Shareholders will not
recognize gain or loss in the transaction.
SPECIAL CONSIDERATIONS AND RISK FACTORS. Although the investment
objectives and policies of the Funds are generally similar, there are certain
differences. Therefore, an investment in the Acquiring Funds may involve
investment risks that are, in some respects, different from those of the
Transferring Funds. For a more complete discussion of the risks associated with
the respective Funds, see "RISKS," below.
THE FUNDS
BUSINESS OF THE FUNDS. The Trust is an open-end, management investment
company, which offers redeemable shares in 36 separate investment portfolios. It
was organized as a Massachusetts business trust on January 15, 1992. The Funds,
with the exception of the Emerging Markets Equity Fund, offer three classes of
shares, Trust Shares, Investor Shares, and Flex Shares. The classes differ with
respect to minimum investment requirements, distribution and shareholder
servicing costs,
-5-
<PAGE>
front-end sales charges and contingent deferred sales charges, as set forth in
the Funds' prospectuses. The Emerging Markets Fund only offers a single class of
shares, Trust Shares.
FEES AND EXPENSES
Under the Reorganization Agreement, each Transferring Fund will transfer
all its assets and certain stated liabilities to its respective Acquiring Fund.
The following comparative fee tables show the fees for the Funds. The pro forma
tables show the fees you would pay, including the estimated ongoing operating
expenses of each Fund, if the Reorganization is approved. Both sets of tables
show fees and expenses without any waivers. The footnotes following the tables
show what the actual fees and expenses will be after waivers, if any.
SUNBELT EQUITY FUND - SMALL CAP GROWTH STOCK FUND
COMPARISON OF SHAREHOLDER TRANSACTION FEES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE
IMPOSED ON PURCHASE (AS A (LOAD) (AS A PERCENTAGE OF NET
FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
SUNBELT EQUITY FUND (Trust None None
Shares)
- -------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND None None
(Trust Shares)
- -------------------------------------------------------------------------------------------------
SUNBELT EQUITY FUND (Investor 3.75% None
Shares)
- -------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND 3.75% None
(Investor Shares)
- -------------------------------------------------------------------------------------------------
SUNBELT EQUITY FUND (Flex None 2.00%
Shares)
- -------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND None 2.00%
(Flex Shares)
- -------------------------------------------------------------------------------------------------
</TABLE>
COMPARISON OF ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
DISTRIBUTION
INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING
FUND FEES FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUNBELT EQUITY FUND 1.15% NONE .15% 1.30%
(Trust Class)*
- ---------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK 1.15% NONE .34% 1.49%
FUND (Trust Shares)+
- ---------------------------------------------------------------------------------------------------
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
DISTRIBUTION
INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING
FUND FEES FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUNBELT EQUITY FUND 1.15% .43% .20% 1.78%
(Investor Shares)*
- ---------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK 1.15% .50% .25% 1.90%
FUND (Investor Shares)+
- ---------------------------------------------------------------------------------------------------
SUNBELT EQUITY FUND 1.15% 1.00% .51% 2.66%
(Flex Shares)*
- ---------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK 1.15% 1.00% 1.04% 3.19%
FUND (Flex Shares)+
- ---------------------------------------------------------------------------------------------------
</TABLE>
* The table shows the highest expenses that could be currently charged to
the Sunbelt Equity Fund. Actual expenses are lower because the Advisers and the
Distributor are voluntarily waiving a portion of their fees. Actual Investment
Advisory Fees and Total Operating Expenses for Trust Shares are 1.02% and 1.17%,
respectively. Actual Investment Advisory Fees, Distribution Fees and Total
Operating Expenses for Investor Shares are 1.02%, .40% and 1.62%, respectively.
Actual Investment Advisory Fees, Distribution Fees and Total Operating Expenses
for Flex Shares are 1.02%, .69% and 2.22%, respectively. The Advisers and the
Distributor could discontinue these voluntary waivers at any time.
+ The table shows the highest expenses that could be currently charged to
the Small Cap Growth Stock Fund. Actual expenses are lower because the
Advisers are voluntarily waiving a portion of their fees. Actual Investment
Advisory Fees and Total Operating Expenses for Trust Shares are .86% and
1.20%, respectively. Investment Advisory Fees, Distribution Fees and Total
Operating Expenses for Investor Shares will be .86%, .44% and 1.55%,
respectively (Investor Shares of the Fund will not be available until after
the Reorganization is approved). Actual Investment Advisory Fees, Distribution
Fees and Total Operating Expenses for Flex Shares are .86%, .35% and 2.25%,
respectively. The Advisers and the Distributor could discontinue these
voluntary waivers at any time.
PRO FORMA SHAREHOLDER TRANSACTION FEES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE
IMPOSED ON PURCHASE (AS A (LOAD) (AS A PERCENTAGE OF NET
FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
SMALL CAP GROWTH STOCK FUND None None
(Trust Shares)
- -------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND 3.75% None
(Investor Shares)
- -------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND None 2.00%
(Flex Shares)
- -------------------------------------------------------------------------------------------------
</TABLE>
PRO FORMA ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)+
-7-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
DISTRIBUTION
INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING
FUND FEES FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SMALL CAP GROWTH STOCK 1.15% None .34% 1.49%
FUND (Trust Shares)
- ---------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK 1.15% .50% .25% 1.90%
FUND (Investor Shares)
- ---------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK 1.15% 1.00% 1.04% 3.19%
FUND (Flex Shares)
- ---------------------------------------------------------------------------------------------------
</TABLE>
+ The table shows the highest expenses that could be currently charged to
the Small Cap Growth Stock Fund following the Reorganization. Actual expenses
will be lower because the Adviser is voluntarily waiving a portion of its
fees. Investment Advisory Fees and Total Operating Expenses for Trust Shares
will be .86% and 1.20%, respectively. Investment Advisory Fees, Distribution
Fees and Total Operating Expenses for Investor Shares will be .86%, .44% and
1.55%, respectively. Investment Advisory Fees, Distribution Fees and Total
Operating Expenses for Flex Shares will be .86%, .35% and 2.25%, respectively.
The Adviser could discontinue these voluntary waivers at any time.
EXAMPLES
These examples are intended to help you compare the cost of investing in each
Fund with the cost of investing in other mutual funds.
The examples assume that you invest $10,000 in each Fund for the time periods
indicated, that your investment has a 5% return each year and that each Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions you would pay the following expenses if you
redeem all of your shares at the end of the time periods indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SUNBELT EQUITY FUND (Trust Class) $132 $412 $713 $1,568
- --------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND (Trust $152 $471 $813 $1,779
Shares)
- --------------------------------------------------------------------------------------------------------
SUNBELT EQUITY FUND (Investor Shares) $549 $914 $1,303 $2,391
- --------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND $561 $950 $1,363 $2,514
(Investor Shares)
- --------------------------------------------------------------------------------------------------------
SUNBELT EQUITY FUND (Flex Shares) $469 $826 $1,410 $2,993
- --------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND (Flex $522 $983 $1,669 $3,494
Shares)
- --------------------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
PRO FORMA EXAMPLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SMALL CAP GROWTH STOCK FUND (Trust $152 $471 $813 $1,779
Shares)
- --------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND $561 $950 $1,363 $2,514
(Investor Shares)
- --------------------------------------------------------------------------------------------------------
SMALL CAP GROWTH STOCK FUND (Flex $522 $983 $1,669 $3,494
Shares)
- --------------------------------------------------------------------------------------------------------
</TABLE>
The Examples above should not be considered a representation of future expenses
of the Funds. Actual expenses may be greater or less than those shown.
EMERGING MARKETS EQUITY FUND - INTERNATIONAL EQUITY FUND
COMPARISON OF SHAREHOLDER TRANSACTION FEES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE
IMPOSED ON PURCHASE (AS A (LOAD) (AS A PERCENTAGE OF NET
FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
EMERGING MARKETS EQUITY FUND None None
(Trust Shares)
- -------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND (Trust None None
Shares)
- -------------------------------------------------------------------------------------------------
</TABLE>
COMPARISON OF ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
DISTRIBUTION
INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING
FUND FEES FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EMERGING MARKETS 1.30% 0.00% .31% 1.61%
EQUITY FUND (Trust
Class)*
- ---------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY 1.25% 0.00% .28% 1.53%
FUND (Trust Shares)+
- ---------------------------------------------------------------------------------------------------
</TABLE>
* The table shows the highest expenses that could be currently charged to
the Emerging Markets Equity Fund. Actual expenses are lower because the Adviser
and the Distributor are voluntarily waiving a portion of their fees. Actual
Investment Advisory Fees, Distribution Fees, Other Expenses and Total Operating
Expenses for Trust Shares are 1.26%, 0.00%, .31% and 1.57%, respectively. The
Advisers and the Distributor could discontinue these voluntary waivers at any
time.
+ The table shows the highest expenses that could be currently charged to
the International Equity Fund. Actual expenses are lower because the Adviser is
voluntarily waiving a portion of its fees. Actual Investment Advisory Fees
-9-
<PAGE>
and Total Operating Expenses for Trust Shares are 1.20% and 1.48%, respectively.
The Adviser could discontinue these voluntary waivers at any time.
PRO FORMA SHAREHOLDER FEES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
MAXIMUM SALES CHARGE (LOAD) MAXIMUM DEFERRED SALES CHARGE
IMPOSED ON PURCHASE (AS A (LOAD) (AS A PERCENTAGE OF NET
FUND PERCENTAGE OF OFFERING PRICE) ASSET VALUE)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INTERNATIONAL EQUITY FUND (Trust None None
Shares)
- -------------------------------------------------------------------------------------------------
</TABLE>
PRO FORMA ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)+
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
DISTRIBUTION
INVESTMENT ADVISORY (12b-1) OTHER TOTAL OPERATING
FUND FEES FEES EXPENSES EXPENSES
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTERNATIONAL EQUITY 1.25% 0.00% .28% 1.53%
FUND (Trust Shares)
- ---------------------------------------------------------------------------------------------------
</TABLE>
+ The table shows the highest expenses that could be currently charged to
the International Equity Fund following the Reorganization. Actual expenses
will be lower because the Adviser is voluntarily waiving a portion of its
fees. Actual Investment Advisory Fees and Total Operating Expenses for Trust
Shares will be 1.20% and 1.48%, respectively. The Adviser could discontinue
these voluntary waivers at any time.
EXAMPLES
These examples are intended to help you compare the cost of investing in each
Fund with the cost of investing in other mutual funds.
The examples assume that you invest $10,000 in each Fund for the time periods
indicated, that your investment has a 5% return each year and that each Fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions you would pay the following expenses if you
redeem all of your shares at the end of the time periods indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EMERGING MARKETS EQUITY FUND $164 $508 $876 $1,911
(Trust Class)
- --------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND (Trust $156 $483 $834 $1,824
Shares)
- --------------------------------------------------------------------------------------------------------
</TABLE>
-10-
<PAGE>
PRO FORMA EXAMPLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTERNATIONAL EQUITY FUND (Trust $156 $483 $834 $1,824
Shares)
- --------------------------------------------------------------------------------------------------------
</TABLE>
The Examples above should not be considered a representation of future expenses
of the Funds. Actual expenses may be greater or less than those shown.
INVESTMENT ADVISERS. Trusco and STI Capital are direct wholly-owned
subsidiaries of SunTrust and are investment advisers to the Funds. Trusco is
located at 50 Hurt Plaza, Suite 1400, Atlanta, GA 30303, and had approximately
$30 billion of assets under management as of July 1, 1999. STI Capital is
located at P.O. Box 3808, Orlando, FL 32802, and had approximately $14.5 billion
of assets under management as of July 1, 1999.
INVESTMENT ADVISORY FEES. The following table compares management fees
paid to the Advisers for the Transferring Funds and the Acquiring Funds,
respectively. The table shows advisory fees before any waivers ("Contractual")
and advisory fees after any waivers ("Net Waivers"). The fees listed are as of
the dates stated in the footnotes following the table.
<TABLE>
<CAPTION>
TRANSFERRING FUNDS FEE ACQUIRING FUNDS FEE
<S> <C> <C> <C>
Sunbelt Equity Fund* Small Cap Growth Stock Fund*
Contractual.............................. 1.15% Contractual................................. 1.15%
Net Waivers.............................. 1.02% Net Waivers................................. .86%
Emerging Markets Equity Fund* International Equity Fund*
Contractual.............................. 1.30% Contractual................................. 1.25%
Net Waivers.............................. 1.26% Net Waivers................................. 1.20%
</TABLE>
* The Net Waiver fees for the Funds are based on the Advisers voluntarily
agreeing to waive a portion of advisory fees for the fiscal year ending
May 31, 1999.
DISTRIBUTION FEES. The distributor for the Funds is SEI Investments
Distribution Co. (the "Distributor"). The Distribution Fees payable to the
Distributor for Investor Shares are lower for the Sunbelt Equity Fund than for
the Small Cap Growth Stock Fund. The Distribution Fees payable to the
Distributor for Flex Shares are the same for the Sunbelt Equity Fund and the
Small Cap Growth Stock Fund.
SALES LOADS AND CONTINGENT DEFERRED SALES CHARGES. The following chart
compares front-end sales loads and contingent deferred sales charges ("CDSC")
for the Sunbelt Equity Fund and the Small Cap Growth Stock Fund. The Trust
Shares of the Funds are not subject to such charges.
-11-
<PAGE>
<TABLE>
<CAPTION>
TRANSFERRING FUNDS FEE ACQUIRING FUNDS CHARGE
<S> <C> <C> <C>
Sunbelt Equity Fund Small Cap Growth Stock Fund
Investor Shares - Front-End Load.......... 3.75% Investor Shares - Front-End Load.......... 3.75%
Flex Shares - CDSC....................... 2.00% Flex Shares - CDSC....................... 2.00%
</TABLE>
CONTINGENT DEFERRED SALES CHARGES. Flex Shares are subject to a 2.0% CDSC
that decreases to 0% after the first year.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS.
THIS SECTION WILL HELP YOU COMPARE THE INVESTMENT OBJECTIVES AND POLICIES
OF THE TRANSFERRING FUNDS AND THE ACQUIRING FUNDS. PLEASE BE AWARE THAT THIS IS
ONLY A BRIEF DISCUSSION. MORE COMPLETE INFORMATION MAY BE FOUND IN THE
TRANSFERRING FUNDS' AND ACQUIRING FUNDS' PROSPECTUSES.
SUNBELT EQUITY FUND
The investment objective of the Sunbelt Equity Fund is to provide capital
appreciation. It invests in companies that are headquartered and/or conduct a
substantial portion of their business in the southern region of the U.S. which
includes Texas, Arkansas, Alabama, Mississippi, Tennessee, Kentucky, Florida,
Virginia, Georgia, North Carolina, South Carolina and Louisiana. The Advisor's
strategy is to focus on companies with favorable earning characteristics.
SMALL CAP GROWTH STOCK FUND
The investment objective of the Small Cap Growth Stock Fund is to provide
long-term capital appreciation. It invests primarily in U.S. companies that
demonstrate above-average growth potential, with market capitalizations of up to
$3 billion.
DIFFERENCES: The Sunbelt Equity Fund invests substantially all of its
assets in common stocks and other equity securities of companies in the southern
region of the U.S., while the Small Cap Growth Stock Fund may invest in
companies located anywhere in the U.S. Also, the Small Cap Growth Stock Fund
invests in companies with a market capitalization of up to about $3 billion,
while the Sunbelt Equity Fund has no restriction based on market capitalization.
EMERGING MARKETS EQUITY FUND
The investment objective of the Emerging Markets Equity Fund is to
provide long-term capital appreciation. The Fund primarily invests in
undervalued common stocks and other equity securities of foreign issuers located
in countries with emerging markets.
-12-
<PAGE>
INTERNATIONAL EQUITY FUND
The investment objective of the International Equity Fund is to provide
long-term capital appreciation. The Fund invests primarily in common stocks and
other equity securities of foreign companies the Adviser believes are trading at
a discount. The Fund invests primarily in developed countries, but may invest in
countries with emerging markets.
DIFFERENCES: The Emerging Markets Equity Fund invests primarily in stocks
of issuers located in emerging market countries, while the International Equity
Fund invests primarily in developed countries, and less in emerging markets
countries.
THE FUNDS' PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES
PURCHASE PROCEDURES.
The Funds have the same procedures for purchasing shares. Shares of the
Funds, other than Trust Shares, may be purchased directly from the Acquiring
Funds by mail, telephone, wire, direct deposit, or Automated Clearing House.
Trust Shares are sold to financial institutions or intermediaries, including
subsidiaries of SunTrust on behalf of accounts for which they act as fiduciary,
agent, investment advisor, or custodian. As a result, Trust Shares may be
purchased through accounts maintained with financial institutions and
potentially through a Preferred Portfolio Account (an asset allocation account
available through SunTrust Securities, Inc.). The minimum purchase for Investor
Shares is $2,000, and for Flex Shares is $5,000 ($2,000 for retirement plans).
Additional Investor or Flex Shares may be purchased for a minimum of $1,000.
The net asset value ("NAV") of the Funds is calculated once each day the
New York Stock Exchange ("NYSE") is open for business (a "Business Day"), at the
regularly scheduled close of normal trading on the NYSE (normally, 4:00 p.m.
Eastern time). The NAV per share is calculated by dividing the total market
value of each Fund's investments and other assets, less any liabilities, by the
total outstanding shares of that Fund.
The Funds may suspend a shareholder's right to sell shares if the NYSE
restricts trading, the SEC declares an emergency or for other reasons. More
information about this is in the Funds' Statement of Additional Information,
incorporated herein by reference.
EXCHANGE PRIVILEGES.
The Funds have the same procedures for exchanging shares. For Investor
Shares and Flex Shares, exchange requests must be for an amount of at least
$1,000. For each shareholder, exchanges are allowed up to four times during a
calendar year. This exchange privilege may be changed or canceled at any time
upon 60 days' notice. Investor Shares of the Funds (including Funds not
participating in the Reorganization) may be exchanged for Investor Shares of any
other Fund. If shares are exchanged that were purchased without a sales charge
or with a lower sales charge into a Fund with a sales charge or with a higher
sales charge, the exchange is subject to an incremental sales charge (e.g., the
difference between the lower and higher applicable sales charges). If shares
-13-
<PAGE>
are exchanged into a Fund with the same, lower or no sales charge there is no
incremental sales charge for the exchange. Flex Shares of any Fund may be
exchanged for Flex Shares of any other Fund. No contingent deferred sales charge
is imposed on redemptions of Flex Shares acquired in an exchange, provided the
shares are held for at least one year from the initial purchase.
REDEMPTION PROCEDURES.
The Funds have the same procedures for the redemption of shares. Shares
may be redeemed on any Business Day by contacting the Funds directly by mail or
telephone, or shareholders may contact their financial institution by mail or
telephone (for Trust Shares, shareholders must contact their financial
institution). To sell shares by telephone, the amount of the sale must be at
least $1,000. For redemptions of $25,000 or more, the Funds must be notified in
writing and a signature guarantee (a notarized signature is not sufficient) must
be included. The sale price of each share will be the next NAV determined after
a request is received less, in the case of Flex Shares, any applicable deferred
sales charge. Shareholders with account balances of $10,000 or more may use the
systematic withdrawal plan. Under the plan, shareholders may arrange monthly,
quarterly, semi-annual or annual automatic withdrawals of at least $50 from any
Fund.
REDEMPTIONS IN KIND
Each Fund generally pays sale (redemption) proceeds in cash. However,
under unusual conditions that make the payment of cash unwise (and for the
protection of a Fund's remaining shareholders) a Fund may pay all or part of a
shareholder's redemption proceeds in liquid securities with a market value equal
to the redemption price (redemption in kind). Although it is highly unlikely
that shares would ever be redeemed in kind, shareholders would have to pay
brokerage costs to sell the securities distributed to them, as well as taxes on
any capital gains from the sale as with any redemption.
DIVIDEND POLICIES.
Both the Sunbelt Equity Fund and the Small Cap Growth Stock Fund declare
and distribute income quarterly. The Emerging Markets Equity Fund and the
International Equity Fund declare and distribute income annually. Capital gains,
if any, are distributed at least annually.
RISKS
Since each Transferring and Acquiring fund purchases equity securities,
each Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Historically, the equity markets have moved in cycles,
and the value of the Fund's equity securities may fluctuate drastically from
day-to-day. Individual companies may report poor results or be negatively
affected by industry and/or economic trends and developments. The prices of
securities issued by such companies may suffer a decline in response. These
factors contribute to price volatility, which is the principal risk of investing
in the Fund. Other than this risk common to each Fund, the Funds are subject to
certain additional risks.
-14-
<PAGE>
SUNBELT EQUITY FUND
Because the Fund focuses its investments in southern companies, economic
conditions in or government policies imposed by southern states may cause the
Fund to be more volatile than an equity fund that invests in companies located
across the U.S.
SMALL CAP GROWTH STOCK FUND
Since it purchases common stocks, the Fund is subject to the risk that
stock prices will fall over short or extended periods of time. Historically, the
stock markets have moved in cycles, and the value of the Fund's common stocks
may fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of stocks issued by such companies may suffer a decline
in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. The Fund is also subject to the risk
that its market segment, small capitalization growth stocks, may under perform
other equity market segments or the equity markets as a whole.
The smaller capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small companies may have limited product lines,
markets and financial resources, and may depend upon a relatively small
management group. Therefore, small cap stocks may be more volatile than those of
larger companies. These securities may be traded over-the-counter or listed on
an exchange and may or may not pay dividends.
RISK DIFFERENCES: Because the Sunbelt Equity Fund invests in southern companies,
economic conditions in or government policies imposed by southern states may
cause the Fund to be more volatile than the Small Cap Growth Stock Fund which
invests in companies located across the U.S. However, the small cap stocks in
the Small Cap Growth Stock Fund may be more volatile than the large cap stocks
in the Sunbelt Equity Fund.
EMERGING MARKETS EQUITY FUND
Investments in foreign markets may be more volatile than investments in
U.S. markets. Investments in emerging foreign markets may be more volatile than
investments in developed foreign markets. Diplomatic, political or economic
developments in a foreign country may cause investments in that country to lose
money. These developments may occur more frequently in emerging market
countries. Emerging market securities may be even more susceptible to political
or economic developments than those in more developed countries. The value of
the U.S. dollar may rise, causing reduced returns for U.S. persons investing
abroad. A foreign country may not have the same accounting and financial
reporting standards as the U.S. Some emerging market countries may have little
to no accounting or financial reporting standards. Foreign stock markets,
brokers and companies are generally subject to less supervision and regulation
than their U.S. counterparts. There may be little to no supervision and
regulation in some emerging market countries.
-15-
<PAGE>
INTERNATIONAL EQUITY FUND
The International Equity Fund invests primarily in common stocks of
foreign companies. As a result, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Stock markets tend to
move in cycles, with periods of rising prices and periods of falling prices.
This price volatility is the principal risk of investing in the Fund. In
addition, investments in foreign markets may be more volatile than investments
in U.S. markets. Diplomatic, political or economic developments may cause
foreign investments to lose money. The value of the U.S. dollar may rise,
causing reduced returns for U.S. persons investing abroad. A foreign country may
not have the same accounting and financial reporting standards as the U.S. stock
markets, brokers and companies are generally subject to less supervision and
regulation than their U.S. counterparts. Emerging markets securities may be even
more susceptible to these risks.
DIFFERENCES: Because the Emerging Markets Equity Fund invests primarily in
emerging foreign markets, the Fund's investments may be more volatile than
investments in developed foreign markets. Diplomatic, political or economic
developments in a foreign country may cause investments in that country to lose
money. These developments may occur more frequently in emerging market
countries. Emerging market securities may be even more susceptible to political
or economic developments than those in more developed countries.
INFORMATION RELATING TO THE REORGANIZATION
DESCRIPTION OF THE REORGANIZATION. The following summary is qualified in
its entirety by reference to the Reorganization Agreement found in Exhibit A.
The Reorganization Agreement provides that all of the assets and stated
liabilities of the Transferring Funds will be transferred to the Acquiring Funds
at the Effective Time of the Reorganization. In exchange for the transfer of
these assets, the Acquiring Funds will simultaneously issue at the Effective
Time of the Reorganization a number of full and fractional shares of the
Acquiring Funds to the Transferring Funds equal in value to the net asset value
of the Transferring Funds immediately prior to the Effective Time of the
Reorganization.
Following the transfer of assets and liabilities in exchange for
Acquiring Funds shares, the Transferring Funds will distribute, in complete
liquidation, PRO RATA to their shareholders of record all the shares of the
Acquiring Funds so received. Shareholders of the Transferring Funds owning
shares at the Effective Time of the Reorganization will receive a number of
shares of the applicable class of the corresponding Acquiring Funds with the
same aggregate value as the shareholder had in the Transferring Funds
immediately before the Reorganization. Such distribution will be accomplished by
the establishment of accounts in the names of the Transferring Funds'
shareholders on the share records of Acquiring Funds' transfer agent. Each
account will represent the respective pro rata number of full and fractional
shares of the Acquiring Funds due to the shareholders of the Transferring Funds.
The Acquiring Funds do not issue share certificates to shareholders. Shares of
the Acquiring Funds to be issued will have no preemptive or conversion rights.
No front-end sales loads or contingent deferred sales charges will be imposed in
connection with the receipt of such
-16-
<PAGE>
shares by the Transferring Funds' shareholders. The Transferring Funds' legal
existence will then be terminated.
The Reorganization Agreement provides for the Reorganization to occur on
December 13, 1999 (the "Effective Time").
The Reorganization Agreement contains customary representations,
warranties and conditions designed to ensure that the Reorganization is fair to
each party. The Reorganization Agreement provides that the consummation of the
Reorganization is contingent upon, among other things, (i) approval of the
Reorganization Agreement by Transferring Fund Shareholders, (ii) the receipt by
the Transferring Funds and the Acquiring Funds of a tax opinion to the effect
that the Reorganization will be tax-free to the Transferring Funds and the
Acquiring Funds and their shareholders, and (iii) receipt by the Transferring
Fund and the Acquiring Fund of an order from the SEC permitting the
Reorganization. The Reorganization Agreement may be terminated and abandoned
with respect to the Acquiring Funds and/or the Transferring Funds, without
penalty, by resolution of the Board of Trustees of the Trust or at the
discretion of any duly authorized officer of the Trust, at any time prior to the
Effective Time, if circumstances should develop that, in the opinion of such
Board or officer, make proceeding with the Reorganization Agreement inadvisable.
COSTS OF REORGANIZATION. Unless otherwise provided, the Reorganization
expenses will be borne by SunTrust or its subsidiaries. Such expenses include,
without limitation: (a) expenses associated with the preparation and filing of
this Prospectus/Proxy Statement; (b) postage; (c) printing; (d) accounting fees;
(e) legal fees incurred by each of the Transferring and Acquiring Funds; and (f)
solicitation costs of the transaction.
FEDERAL INCOME TAXES. The combination of the Transferring Funds and the
Acquiring Funds in the Reorganization is intended to qualify for federal income
tax purposes as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended. If so, neither the Transferring Funds nor
their shareholders will recognize gain or loss as a result of the
Reorganization; the tax basis of the Acquiring Funds shares received will be the
same as the basis of the Transferring Funds shares exchanged; and the holding
period of the Acquiring Funds shares received will include the holding period of
the Transferring Funds shares exchanged, provided that the shares exchanged were
held as capital assets at the time of the Reorganization. As a condition to the
closing of the Reorganization, the Trust will receive an opinion from counsel to
the Transferring Funds to that effect. No tax ruling from the Internal Revenue
Service regarding the Reorganization has been requested. The opinion of counsel
is not binding on the Internal Revenue Service and does not preclude the
Internal Revenue Service from adopting a contrary position. Shareholders should
consult their own tax advisers concerning the potential tax consequences of the
Reorganization to them, including foreign, state and local tax consequences.
CAPITALIZATION. The following table sets forth as of May 31, 1999 (i) the
capitalization of each Acquiring Fund; (ii) the capitalization of each
Transferring Fund; and (iii) the pro forma combined capitalization of the Funds
assuming the Reorganization has been approved.
-17-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Fund Net Assets Net Asset Value Per Share Shares Outstanding (000)
- ---- ---------- ------------------------- ------------------
(000)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sunbelt Equity Fund
Trust Shares $197,215 $11.09 17,784
Investor Shares $ 16,949 $10.76 1,575
Flex Shares $ 4,395 $10.65 416
Total $218,559 19,775
- ------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Stock Fund
Trust Shares $152,413 $14.57 10,464
Investor Shares N/A N/A N/A
Flex Shares $ 4,841 $17.40 425
Total $157,254 10,889
- ------------------------------------------------------------------------------------------------------------------------
PRO FORMA Small Cap Growth Stock Fund
Trust Shares $349,628 $14.57 24,018
Investor Shares $ 16,949 $10.00 1,695
Flex Shares $ 9,236 $17.40 730
Total $375,813 26,443
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Emerging Markets Equity Fund
Trust Shares $ 26,751 $ 8.12 3,294
Total $ 26,751 3,294
- ------------------------------------------------------------------------------------------------------------------------
International Equity Fund
Trust Shares $573,255 $12.97 44,211
Total $573,255* $12.97 44,211+
- ------------------------------------------------------------------------------------------------------------------------
PRO FORMA International Equity Fund
Trust Shares $600,006 $12.97 46,274
Total $600,006* $12.97 46,274+
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Totals do not include $14,145 for Investor Shares and $17,103 for Flex
Shares Classes of the Fund which are not included in the Reorganization.
+ Totals do not include 1,095 for Investor Shares and 1,357 for Flex
Shares, Classes of the Fund which are not involved in the Reorganization.
REASONS FOR THE REORGANIZATION
At meetings held on May 18, 1999 and August 17, 1999, the Board of
Trustees of the Funds reviewed the proposed Reorganization. They received
detailed information, including materials describing the Reorganization in terms
of relative net assets, current and pro forma expenses, performance and
comparative investment objectives, and policies and restrictions.
After thorough consideration, the Board approved submission of the
proposed Reorganization to Shareholders, concluding that participation in the
Reorganization is in the best interests of the Transferring and Acquiring Funds
and that the interests of existing Shareholders of the Transferring and
Acquiring Funds will not be diluted as a result of the Reorganization.
In particular, the Board reached the following conclusions:
-18-
<PAGE>
THE TERMS AND CONDITIONS OF THE REORGANIZATION. The Board approved the terms of
the Reorganization Agreement, and in particular, requirements that the transfer
of assets in exchange for shares of the Acquiring Funds will be at relative net
asset value. In this regard, the Board concluded that the terms of the
Reorganization do not involve overreaching on the part of any person concerned
and that the conditions and policies of Rule 17a-8 under the 1940 Act will, to
the extent possible, be followed. The Board also took note of the fact that no
sales charges would be imposed in connection with the Reorganization. The Board
also noted that the Reorganization would be submitted to the Transferring Funds'
Shareholders.
LACK OF DILUTION TO SHAREHOLDER INTEREST. The Board noted that neither the
Transferring nor the Acquiring Funds would not bear any expenses in connection
with the Reorganization.
RELATIVE EXPENSE RATIOS. The Board carefully reviewed information regarding
comparative expense ratios (respective current and pro forma expense ratios are
set forth in the "Fees and Expenses" section, above.) The Board concluded that
expense ratios will generally be comparable.
THE COMPARATIVE PERFORMANCE RECORDS. The Board reviewed detailed comparative
performance information, taking into account performance over both the
short-term and the longer term. The Board determined that the performance of the
Small Cap Growth Stock Fund was superior to the performance of the Sunbelt
Equity Fund. The Board also determined that the performance of the Emerging
Markets Equity Fund and the International Equity Fund is generally comparable.
COMPATIBILITY OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Board
concluded that the investment objectives, policies and restrictions of the
respective Funds are substantially identical. With respect to each Fund's
policies, the Board determined that, although their were some substantial
differences between the Transferring and Acquiring Funds, each Transferring
Fund's investment policies was compatible with its respective Acquiring Fund. In
particular, the Small Cap Growth Stock Fund can and does invest in securities of
issuers located in the southern states, just as the Sunbelt Equity Fund can and
does invest in securities of companies with capitalizations of under $3 billion.
Similarly, even though the International Equity Fund primarily invests in
companies located in developed countries, it can and does invest in emerging
markets.
THE EXPERIENCE AND EXPERTISE OF THE INVESTMENT ADVISERS. The Board noted that
Trusco and STI Capital will remain as investment advisers to the Acquiring
Funds.
ASSUMPTION OF LIABILITIES. The Board took note of the fact that, under the
Reorganization Agreement, the Acquiring Funds expect to acquire substantially
all of the liabilities of the Transferring Funds, other than those for which
specific reserves have been set aside.
TAX CONSEQUENCES. The Board concluded that the Reorganization is expected to be
free from federal income taxes.
SHAREHOLDER LIABILITIES AND RIGHTS. The Board concluded that there would be no
substantial change in potential shareholder liability or in shareholder rights.
-19-
<PAGE>
SHAREHOLDER RIGHTS
THE FUNDS
GENERAL. The Trust was established as a business trust under
Massachusetts law by a Declaration of Trust dated January 15, 1992. The Trust is
also governed by its By-laws and by applicable Massachusetts law.
SHARES. The Trust is authorized to issue an unlimited number of shares of
beneficial interest, without par value, from an unlimited number of series of
shares. Currently, the Trust consists of 36 separate investment series, some of
which offer up to three of five different classes of shares, Trust Shares,
Investor Shares, Flex Shares, Corporate Trust Shares and Institutional Shares
(the Funds participating in the Reorganization do not offer Corporate Trust
Shares and Institutional Shares). The five classes differ with respect to
minimum investment requirements, fund expenses, distribution and shareholder
servicing costs, front-end sales loads and contingent deferred sales charges, as
set forth in the Funds' prospectuses. The shares of each Fund have no preference
as to conversion, exchange, dividends, retirement or other features, and have no
preemptive rights.
VOTING REQUIREMENTS. Shareholders are entitled to one vote for each full
share held and fractional votes for fractional shares. On any matter submitted
to a vote of shareholders, all shares of the Trust entitled to vote shall be
voted on by individual series or class, except that (i) when so required by the
1940 Act, then shares shall be voted in the aggregate and not by individual
series or class, and (ii) when the trustees of the Trust (the "Trustees") have
determined that the matter only affects the interest of one or more series or
class, then only shareholders of such series or class(es) shall be entitled to
vote. The Trust's Declaration of Trust provides that any action may be taken or
authorized upon the concurrence of a majority of the aggregate number of votes
entitled to be cast thereon, subject to any applicable requirements of the 1940
Act.
SHAREHOLDER MEETINGS. Annual meetings of shareholders will not be held,
but special meetings of shareholders may be held under certain circumstances. A
special meeting of the shareholders may be called at any time by the Trustees,
by the president or, if the Trustees and the president shall fail to call any
meeting of shareholders for a period of 30 days after written application of one
or more shareholders who hold at least 10% of all shares issued and outstanding
and entitled to vote at the meeting, then such shareholders may call the
meeting.
ELECTION AND TERM OF TRUSTEES. The Funds' affairs are supervised by the
Trustees under the laws governing business trusts in the state of Massachusetts.
Trustees of the Trust are elected by shareholders holding a majority of shares
entitled to vote. Trustees hold office until their successors are duly elected
and qualified or until their death, removal or resignation. Shareholders may
remove a Trustee by vote of a majority of the votes entitled to vote, with or
without cause. A Trustee elected thereby serves for the balance of the term of
the removed Trustee.
SHAREHOLDER LIABILITY. Pursuant to the Trust's Declaration of Trust,
shareholders of the Funds generally are not personally liable for the acts,
omissions or obligations of the Trustees or the Trust.
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<PAGE>
LIABILITY OF TRUSTEES. The Trustees shall not be personally liable for
any obligation of the Trust. The Trust will indemnify its Trustees and officers
against all liabilities and expenses except for liabilities arising from such
person's willful misfeasance, bad faith, gross negligence or reckless disregard
of that person's duties.
The foregoing is only a summary of certain rights of shareholders of the
Funds under the Declaration of Trust and By-Laws, state law and the 1940 Act and
is not a complete description of provisions contained in those sources.
Shareholders should refer to the provisions of state law, the 1940 Act and rules
thereunder directly for a more thorough description.
INFORMATION ABOUT THE FUNDS
Information concerning the operation and management of the Funds is
incorporated herein by reference to the current prospectuses relating to the
Funds dated October 1, 1999, which are incorporated by reference herein solely
with respect to those participating Funds and copies of which accompany this
Proxy Statement/Prospectus. Additional information about the Funds is included
in the Statement of Additional Information for the Funds dated October 1, 1999,
which is available upon request and without charge by calling 1-800-874-4770.
The Statement of Additional Information has been filed with the SEC.
The Funds are each subject to the informational requirements of the
Securities Exchange Act of 1934 and the 1940 Act, and in accordance therewith
file reports and other information, including proxy material and charter
documents, with the SEC. These items may be inspected and copied at the Public
Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
INTEREST OF CERTAIN PERSONS IN THE TRANSACTIONS. SunTrust may be deemed
to have an interest in the Reorganization because certain of its subsidiaries
provide investment advisory services to the Funds pursuant to advisory
agreements with the Funds. Future growth of the Acquiring Fund can be expected
to increase the total amount of fees payable to these subsidiaries and to reduce
the number of fees required to be waived to maintain total fees of the Funds at
agreed upon levels.
FINANCIAL STATEMENTS. The financial statements of the Funds contained in
the Funds' annual report to shareholders for the fiscal year ended May 31, 1999
have been audited by Arthur Andersen, LLP, its independent accountants. These
financial statements, as well as pro forma financial statements reflecting the
Acquiring Funds after the Reorganization, are incorporated by reference into
this Proxy Statement/Prospectus insofar as such financial statements relate to
the Funds, and not to any other funds that are part of the Trust and described
therein. The Funds will furnish, without charge, a copy of their most recent
Semi-Annual Report succeeding their Annual Report, if any, on request. Requests
should be directed to SEI Investments Distribution Co., Oaks, PA 19456 or by
calling 1-800-874-4770.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
REORGANIZATION AGREEMENT.
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<PAGE>
VOTING MATTERS
GENERAL INFORMATION. This Proxy Statement/Prospectus is being furnished
in connection with the solicitation of proxies by the Board of Trustees of the
Transferring Funds in connection with the Meeting. It is expected that the
solicitation of proxies will be primarily by mail. Officers and service
contractors of the Funds may also solicit proxies by telephone, facsimile,
Internet or in person. The cost of solicitation will be borne directly or
indirectly, by SunTrust.
VOTING RIGHTS AND REQUIRED VOTE. Each share, or fraction thereof, of a
Transferring Fund is entitled to one vote, or fraction thereof. Approval of the
Reorganization Agreement requires the affirmative vote of a majority of the
aggregate number of votes entitled to be cast. Any shareholder giving a proxy
may revoke it at any time before it is exercised by submitting to the Trust a
written notice of revocation or a subsequently executed proxy or by attending
the Meeting and voting in person. The proposed Reorganization will be voted upon
by the shareholders of the Transferring Funds.
Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or if no specification is made, the
shares will be voted "FOR" the approval of the Reorganization Agreement. It is
not anticipated that any matters other than the adoption of the Reorganization
Agreement will be brought before the Meeting. Should other business properly be
brought before the Meeting, it is intended that the accompanying proxies will be
voted in accordance with the judgment of the persons named as such proxies. For
the purposes of determining the presence of a quorum for transacting business at
the Meeting, abstentions and broker "non-votes" (that is, proxies from brokers
or nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power) will be treated as shares that are present but which have not been voted.
For this reason, abstentions and broker non-votes will have the effect of a "NO"
vote for purposes of obtaining the requisite approval of the Reorganization
Agreement.
If sufficient votes in favor of the proposals set forth in the Notice of
the Special Meeting are not received by the time scheduled for the meeting, the
persons named as proxies may propose one or more adjournments of the Meeting for
a reasonable period of time to permit further solicitation of proxies with
respect to the proposals. Any such adjournment will require the affirmative vote
of a majority of the votes cast on the question in person or by proxy at the
session of the Meeting to be adjourned. The persons named as proxies will vote
in favor of such adjournment those proxies which they are entitled to vote in
favor of the proposals. They will vote against any such adjournment those
proxies required to be voted against the proposals. The costs of any additional
solicitation and of any adjourned session will be borne by SunTrust.
RECORD DATE AND OUTSTANDING SHARES. Only shareholders of record of the
Transferring Funds at the close of business on October 11, 1999 (the "Record
Date") are entitled to notice of and to vote at the Meeting and any postponement
or adjournment thereof. At the close of business on the Record Date the
following shares were outstanding and entitled to vote:
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<PAGE>
- --------------------------------------------------------------------------------
SUNBELT EQUITY FUND OUTSTANDING SHARES
- --------------------------------------------------------------------------------
Trust Shares ...........................
- --------------------------------------------------------------------------------
Investor Shares........................
- --------------------------------------------------------------------------------
Flex Shares.............................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EMERGING MARKETS EQUITY FUND OUTSTANDING SHARES
- --------------------------------------------------------------------------------
Trust Shares ...........................
- --------------------------------------------------------------------------------
Investor Shares........................
- --------------------------------------------------------------------------------
Flex Shares.............................
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
TRANSFERRING FUNDS. As of the Record Date, the officers and Trustees of
the Transferring Funds, as a group, beneficially owned less than 1% of the
outstanding Trust Shares, Investor Shares and Flex shares of the Transferring
Funds. As of the Record Date, to the best of the knowledge of the Transferring
Funds, the following persons owned of record or beneficially 5% or more of the
outstanding shares of each of the three classes of the Transferring Funds:
- --------------------------------------------------------------------------------
PERCENTAGE TYPE OF
NAME AND ADDRESS CLASS OWNERSHIP OWNERSHIP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Record and Beneficial Ownership.
** Record Ownership Only.
+ Beneficial Owner Only.
ACQUIRING FUNDS. As of the Record Date, the officers and Trustees of the
Acquiring Funds, as a group, beneficially owned less than 1% of the outstanding
Trust Shares, Investor Shares and Flex Shares of the Acquiring Funds. As of the
Record Date, to the best of the knowledge of the Acquiring Funds, the following
persons owned of record or beneficially 5% or more of the outstanding shares of
each of the three classes of the Acquiring Funds:
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<PAGE>
- --------------------------------------------------------------------------------
PERCENTAGE TYPE OF
NAME AND ADDRESS CLASS OWNERSHIP OWNERSHIP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Record and Beneficial Ownership.
** Record Ownership Only.
+ Beneficial Owner Only.
EXPENSES. In order to obtain the necessary quorum at the Meeting,
additional solicitations may be made by mail, telephone, telegraph, facsimile or
personal interview by representatives of the Trust or the Advisers at an
estimated cost of approximately $______. All costs of solicitation (including
the printing and mailing of this proxy statement, meeting notice and form of
proxy, as well as any necessary supplementary solicitations) will be paid by
SunTrust. Persons holding shares as nominees will, upon request, be reimbursed
for their reasonable expenses in sending soliciting material to their
principals.
OTHER BUSINESS
The Board of Trustees know of no other business to be brought before the
Meeting. However, if any other matters come before the Meeting, it is the
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Funds in writing at the
address on the cover page of this Proxy Statement/Prospectus or by telephoning
1-800-874-4770.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO VOTE BY MAIL, THE INTERNET, OR IN PERSON AT THE MEETING. INFORMATION ON THE
VARIOUS MANNERS OF VOTING ARE SET FORTH IN THE ENCLOSED PROXY.
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<PAGE>
EXHIBIT A
FORM OF AGREEMENT AND PLAN
OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is dated as of , 1999 (the
"Agreement"), by and between the STI Classic Funds (the "Trust") on behalf of
its Sunbelt Equity Fund and Emerging Markets Equity Fund (the "Transferring
Funds"), and the Trust on behalf of its Small Cap Growth Stock Fund and
International Equity Fund (the "Acquiring Funds"), respectively.
WHEREAS, the Trust was organized under Massachusetts law as a business
trust under a Declaration of Trust dated January 15, 1992, as amended and
restated;
WHEREAS, the Trust is an open-end management investment company registered
under the 1940 Act and the Reorganizing and Transferring Funds are duly
organized and validly existing series of the Trust;
NOW, THEREFORE, the parties hereto agree to effect (i) the transfer of all
of the assets of each Transferring Fund solely in exchange for (a) the
assumption by its corresponding Acquiring Fund of certain stated liabilities of
such Transferring Fund and (b) beneficial shares of such Acquiring Fund followed
by the distribution, at the Effective Time (as defined in Section 9 of this
Agreement), of such beneficial shares of such Acquiring Fund to the holders of
beneficial shares of the Transferring Fund on the terms and conditions
hereinafter set forth in liquidation of such Transferring Fund (the
"Reorganization"). The beneficial shares of each Acquiring Fund that are given
in exchange for the assets of its corresponding Transferring Fund are referred
to hereinafter as the "Acquiring Fund Shares," and the beneficial shares of each
Transferring Fund that are held by the holders of such shares at the Effective
Time are referred to hereinafter as the "Transferring Fund Shares." The parties
hereto covenant and agree as follows:
1. PLAN OF REORGANIZATION. At the Effective Time, each Transferring Fund
will assign, deliver and otherwise transfer all of its assets and good and
marketable title thereto, free and clear of all liens, encumbrances and adverse
claims except as provided in this Agreement, and assign certain stated
liabilities as are set forth in a statement of assets and liabilities, to be
prepared as of the Effective Time (the "Statement of Assets and Liabilities") to
its corresponding Acquiring Fund and the Acquiring Fund shall acquire all such
assets, and shall assume all such liabilities of the Transferring Fund, in
exchange for delivery to the Transferring Fund by the Acquiring Fund of a number
of its Acquiring Fund Shares (both full and fractional) equivalent in value to
the Transferring Fund Shares of the Transferring Fund outstanding immediately
prior to the Effective Time. The assets and stated liabilities of the
Transferring Fund, as set forth in a statement of assets and liabilities shall
be exclusively assigned to and assumed by the Acquiring Fund. All debts,
liabilities, obligations and duties of the Transferring Fund, to the extent that
they exist at or after the Effective Time and are stated in a statement of
assets and liabilities, shall after the Effective Time attach to the Acquiring
Fund and may be enforced against the Acquiring Fund to the same extent as if the
same had been incurred by the Acquiring Fund.
A-1
<PAGE>
2. TRANSFER OF ASSETS. The assets of each Transferring Fund to be
transferred to its corresponding Acquiring Fund shall include, without
limitation, all cash, cash equivalents, securities, receivables (including
interest and dividends receivable) as set forth in a statement of assets and
liabilities, as well as any claims or rights of action or rights to register
shares under applicable securities laws, any books or records of such
Transferring Fund and other property owned by such Transferring Fund at the
Effective Time.
3. REORGANIZATION OF THE TRANSFERRING FUND. At the Effective Time, each
Transferring Fund will liquidate and the Acquiring Fund Shares (both full and
fractional) received by the Transferring Fund will be distributed to the
shareholders of record of the Transferring Fund as of the Effective Time in
exchange for Transferring Fund Shares and in complete liquidation of the
Transferring Fund. Each shareholder of the Transferring Fund will receive a
number of Acquiring Fund Shares equal in value to the Transferring Fund Shares
held by that shareholder. Such liquidation and distribution will be accompanied
by the establishment of an open account on the share records of the Acquiring
Fund in the name of each shareholder of record of the Transferring Fund and
representing the respective number of Acquiring Fund Shares due such
shareholder. As soon as practicable after the Effective Time, but not later than
December 13, 1999, the Trust shall take all steps as shall be necessary and
proper to effect a complete termination of the Transferring Fund.
4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUNDS. Each Acquiring
Fund represents and warrants to its corresponding Transferring Fund as follows:
(a) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Fund Shares to
be issued in connection with the Reorganization have been duly authorized
and upon consummation of the Reorganization will be validly issued, fully
paid and nonassessable.
(b) LIABILITIES. There are no liabilities of the Acquiring Fund, whether
or not determined or determinable, other than liabilities disclosed or
provided for in the Acquiring Fund's statement of assets and liabilities,
if any, and liabilities incurred in the ordinary course of business prior
to the Effective Time or otherwise previously disclosed to the
Transferring Fund, none of which has been materially adverse to the
business, assets or results of operations of the Acquiring Fund.
(c) LITIGATION. Except as previously disclosed to the Transferring Fund,
there are no claims, actions, suits or proceedings pending or, to the
actual knowledge of the Acquiring Fund, threatened which would materially
adversely affect any of the Acquiring Fund or its assets or business or
which would prevent or hinder in any material respect consummation of the
reorganization contemplated hereby.
(d) TAXES. As of the Effective Time, all federal and other tax returns and
reports of the Acquiring Fund required by law to have been filed shall
have been filed, and all other taxes shall have been paid so far as due,
or provision shall have been made for the payment thereof, and to the best
of the Acquiring Fund's knowledge, no such return is currently under audit
and no assessment has been asserted with respect to any of such returns.
A-2
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE TRANSFERRING FUNDS. Each
Transferring Fund represents and warrants to its corresponding Acquiring Fund as
follows:
(a) MARKETABLE TITLE TO ASSETS. The Transferring Fund will have, at the
Effective Time, good and marketable title to, and full right, power and
authority to sell, assign, transfer and deliver, the assets to be
transferred to the Acquiring Fund. Upon delivery and payment for such
assets, the Acquiring Fund will have good and marketable title to such
assets without restriction on the transfer thereof free and clear of all
liens, encumbrances and adverse claims.
(b) LIABILITIES. There are no liabilities of the Transferring Fund,
whether or not determined or determinable, other than liabilities
disclosed or provided for in the Transferring Fund's Statement of Assets
and Liabilities, and liabilities incurred in the ordinary course of
business prior to the Effective Time or otherwise previously disclosed to
the Acquiring Fund, none of which has been materially adverse to the
business, assets or results of operations of the Transferring Fund.
(c) LITIGATION. Except as previously disclosed to the Acquiring Fund,
there are no claims, actions, suits or proceedings pending or, to the
knowledge of the Transferring Fund, threatened which would materially
adversely affect the Transferring Fund or its assets or business or which
would prevent or hinder in any material respect consummation of the
reorganization contemplated hereby.
(d) TAXES. As of the Effective Time, all federal and other tax returns and
reports of the Transferring Fund required by law to have been filed shall
have been filed, and all other taxes shall have been paid so far as due,
or provision shall have been made for the payment thereof, and to the best
of the Transferring Fund's knowledge, no such return is currently under
audit and no assessment has been asserted with respect to any of such
returns.
6. CONDITION PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS. All
representations and warranties of the Transferring Funds contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the reorganization contemplated by
this Agreement, as of the Effective Time, with the same force and effect as if
made on and as of the Effective Time.
7. CONDITION PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUNDS. All
representations and warranties of the Acquiring Funds contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the reorganization contemplated by
this Agreement, as of the Effective Time, with the same force and effect as if
made on and as of the Effective Time.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUNDS
AND THE ACQUIRING FUNDS. The obligations of the Transferring Funds and the
Acquiring Funds to effectuate this Agreement shall be subject to the
satisfaction of each of the following conditions:
A-3
<PAGE>
(a) Such authority from the Securities and Exchange Commission (the "SEC")
as may be necessary to permit the parties to carry out the reorganization
contemplated by this Agreement shall have been received.
(b) The Registration Statement on Form N-1A of the Acquiring Funds shall
be effective under the Securities Act of 1933 (the "1933 Act"), and, to
the best knowledge of the Acquiring Funds, no investigation or proceeding
for that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
(c) The Acquiring Funds have filed all documents and paid all fees
required to permit their shares to be offered to the public in all states
of the United States, the Commonwealth of Puerto Rico and the District of
Columbia (except where such qualifications are not required) so as to
permit the transfer contemplated by this Agreement to be consummated.
(d) Each Transferring Fund and Acquiring Fund shall have received on or
before the Effective Time an opinion of counsel satisfactory to the
Transferring Fund and the Acquiring Fund substantially to the effect that
the Reorganization, as a tax-free reorganization, will have the following
federal income tax consequences for Transferring Fund shareholders, each
Transferring Fund, and its corresponding Acquiring Fund:
1. No gain or loss will be recognized by the Transferring Fund upon the
transfer of its assets in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of the Transferring Fund's
stated liabilities;
2. No gain or loss will be recognized by the Acquiring Fund on its
receipt of the Transferring Fund's assets in exchange for Acquiring
Fund Shares and the assumption by the Acquiring Fund of the
Transferring Fund's liabilities;
3. The basis of the Transferring Fund's assets in the Acquiring Fund's
hands will be the same as the basis of those assets in the
Transferring Fund's hands immediately before the Reorganization;
4. The Acquiring Fund's holding period for the assets transferred to
the Acquiring Fund by the Transferring Fund will include the holding
period of those assets in the Transferring Fund's hands immediately
before the Reorganization;
5. No gain or loss will be recognized by the Transferring Fund on the
distribution of Acquiring Fund Shares to the Transferring Fund's
shareholders in exchange for Transferring Fund Shares;
6. No gain or loss will be recognized by the Transferring Fund's
shareholders as a result of the Transferring Fund's distribution of
Acquiring Fund Shares
A-4
<PAGE>
to the Transferring Fund's shareholders in exchange for the
Transferring Fund's shareholders' Transferring Fund Shares;
7. The basis of the Acquiring Fund Shares received by the Transferring
Fund's shareholders will be the same as the adjusted basis of that
Transferring Fund's shareholders' Transferring Fund Shares
surrendered in exchange therefor; and
8. The holding period of the Acquiring Fund Shares received by the
Transferring Fund's shareholders will include the Transferring
Fund's share holders' holding period for the Transferring Fund's
shareholders' Transferring Fund Shares surrendered in exchange
therefor, provided that said Transferring Fund Shares were held as
capital assets on the date of the Reorganization.
(e) A vote approving this Agreement and the Reorganization contemplated
hereby shall have been adopted by at least a majority of the outstanding
shares of the Transferring Funds entitled to vote at an annual or special
meeting.
(f) The Board of Trustees of the Trust, at a meeting duly called for such
purpose, shall have authorized the issuance by each Acquiring Fund of
Acquiring Fund Shares at the Effective Time in exchange for the assets of
its corresponding Transferring Fund pursuant to the terms and provisions
of this Agreement.
9. EFFECTIVE TIME OF THE REORGANIZATION. The exchange of the Transferring
Funds' assets for corresponding Acquiring Fund Shares shall be effective as of
the close of business on December 13, 1999, or at such other time and date as
fixed by the mutual consent of the parties (the "Effective Time").
10. TERMINATION. This Agreement and the reorganization contemplated hereby
may be terminated and abandoned with respect to the Acquiring Fund and/or the
Transferring Fund, without penalty, by resolution of the Board of Trustees of
the Trust or at the discretion of any duly authorized officer of the Trust, at
any time prior to the Effective Time, if circumstances should develop that, in
the opinion of such Board or officer, make proceeding with the Agreement
inadvisable.
11. AMENDMENT AND WAIVER. This Agreement may be amended, modified or
supplemented in such manner as may be mutually agreed upon in writing by the
parties; PROVIDED, THAT no such amendment may have the effect of changing the
provisions for determining the number or value of Acquiring Fund Shares to be
paid to the Transferring Funds' shareholders under this Agreement to the
detriment of the Transferring Funds' shareholders without their further
approval. Furthermore, either party may waive any breach by the other party or
the failure to satisfy any of the conditions to its obligations (such waiver to
be in writing and authorized by the President or any Vice President of the
waiving party with or without the approval of such party's shareholders).
A-5
<PAGE>
12. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Massachusetts.
13. FEES AND EXPENSES.
(a) Each Acquiring Fund and corresponding Transferring Fund represent and
warrant to each other that there are no brokers or finders entitled to
receive any payments in connection with the reorganization provided for
herein.
(b) Except as otherwise provided for herein, all expenses of the
reorganization contemplated by this Agreement incurred by each Fund will
be borne by SunTrust Banks, Inc. Such expenses include, without
limitation, (i) expenses incurred in connection with the entering into and
the carrying out of the provisions of this Agreement; (ii) expenses
associated with the preparation and filing of the Prospectus/Proxy
Statement on Form N-14 under the 1933 Act; (iii) registration or
qualification fees and expenses of preparing and filing such forms as are
necessary under applicable state securities laws to qualify the Acquiring
Fund Shares to be issued in connection herewith in each state in which the
Transferring Funds' shareholders are resident as of the date of the
mailing of the Proxy Statement to such shareholders; (iv) postage; (v)
printing; (vi) accounting fees; (vii) legal fees; and (viii) solicitation
costs of the transaction.
14. HEADINGS, COUNTERPARTS, ASSIGNMENT.
(a) The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not effect in any way the meaning or
interpretation of this Agreement.
(b) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
(c) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation (other than the
parties hereto and their respective successors and assigns) any rights or
remedies under or by reason of this Agreement.
15. ENTIRE AGREEMENT. Each Acquiring Fund and Transferring Fund agree that
neither party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the
parties. The representations, warranties and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall survive
the consummation of the reorganization contemplated hereunder.
A-6
<PAGE>
16. FURTHER ASSURANCES. Each Acquiring Fund and Transferring Fund shall
take such further action as may be necessary or desirable and proper to
consummate the reorganization contemplated hereby.
17. BINDING NATURE OF AGREEMENT. As provided in the Trust's Declaration of
Trust, as amended and supplemented to date, this Agreement was executed by the
undersigned officers of the Trust, on behalf of the Acquiring Funds and the
Transferring Funds, as officers and not individually, and the obligations of
this Agreement are not binding upon the undersigned officers individually, but
are binding only upon the assets and property of the Trust. Moreover, no series
of the Trust shall be liable for the obligations of any other series of the
Trust.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
STI CLASSIC FUNDS,
on behalf of its series,
SUNBELT EQUITY FUND, and
EMERGING MARKETS EQUITY FUND
By ___________________________________
Name:
Title:
STI CLASSIC FUNDS,
on behalf of its series,
SMALL CAP GROWTH STOCK FUND, and
INTERNATIONAL EQUITY FUND
By ___________________________________
Name:
Title:
A-7
<PAGE>
STI CLASSIC INTERNATIONAL EQUITY FUND
The STI Classic International Equity Fund ("The Fund") invests in equity
securities of foreign issuers and seeks to provide long term capital
appreciation. We strive to obtain investment results that outperform the
international markets and the average international mutual funds. The Fund
focuses on sector and company fundamentals specifically looking for companies
that exhibit top managements, quality products and sound financial positions.
Our goal is to find companies that fit the above criteria but are still selling
at a discount to their global peers.
The Fund's performance for the year June 1998 to May 1999 was -7.43% (Trust
Shares) vs. MSCI EAFE of 4.36%.
Over the past year, many changes have occurred. Eleven western european
countries combined currencies to create one common currency, the Euro, Asia has
rallied off its bottom, and many markets have seen +50% returns. Brazil and
Latin America experienced a collapse, only to quickly rebound after Brazil
depegged its currency from the dollar. Japan has also rebounded off its lows due
to economic stimulus packages and positive news flow, though earnings are still
lagging. Recent concern over increasing growth has caused economic over-heating
concerns across the European community where the Fund maintains its largest
weighting. Many of the cyclical and commodity oriented companies have rallied on
the back of the expectation of strong growth and inflation. While we do have
exposure to these sectors, we do not believe this outperformance will continue.
Financial companies have been the hardest hit as interest rate concerns have
been a heavy burden on bond prices and fears of slower growth have tempered the
performance of insurance companies and banks. This weakness has provided
opportunities as we believe the markets have over-corrected for such fears.
The Fund added some Brazilian and Mexican equities in February including Tele
Norte, a fixed line telephone operator in Brazil and Telefonos de Mexico,
Mexico's dominant phone company. These investments have experienced tremendous
strength since their addition. We continue to monitor Latin America and Asia for
value opportunities.
Concerning the future outlook for international markets, we continue to see
value across Europe and expect to remain overweighted here. Japan has rallied on
hopes, not fundamentals, and we remain underweighted. We have added names in
Japan such as Takefuji, a consumer finance company and FamilyMart, Japan's
second largest convenient store operator. While we see some fundamentals turning
in Japan, the changes are company specific. In our opinion, the macro picture
remains mired in high unemployment, overvalued assets, and zero growth.
/s/ Ned Dau
Ned Dau
Managing Director
<PAGE>
TRUST SHARES
<TABLE>
-------------------------------------------------------------
Annualized Annualized Cumulative
One Year 3 Year Inception Inception
Return Return to Date to Date
-------------------------------------------------------------
<S> <C> <C> <C>
-7.43% 11.62% 14.12% 58.55%
-------------------------------------------------------------
</TABLE>
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
STI Classic
International
Equity Fund, MSCI EAFE
Trust Shares Index, in U.S.$
<S> <C> <C>
1/31/95 10,000 10,000
5/31/95 11,637 10,862
5/31/96 15,179 12,021
5/31/97 18,714 12,928
5/31/98 22,807 14,365
5/31/99 21,112 14,991
</TABLE>
INVESTOR SHARES
<TABLE>
-------------------------------------------------------------
Annualized Annualized Cumulative
One Year 3 Year Inception Inception
Return Return to Date to Date
-------------------------------------------------------------
<S> <C> <C> <C>
-7.82% 11.19% 12.62% 49.85% Without load
-11.27% 9.79% 11.36% 44.18% With load
-------------------------------------------------------------
</TABLE>
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
STI Classic
International
Equity Fund, MSCI EAFE
Investor Shares Index, in U.S.$
<S> <C> <C>
1/31/95 9,625 10,000
5/31/95 11,201 10,862
5/31/96 14,585 12,021
5/31/97 17,918 12,928
5/31/98 21,750 14,365
5/31/99 20,049 14,991
</TABLE>
FLEX SHARES
<TABLE>
-------------------------------------------------------------
Annualized Annualized Cumulative
One Year 3 Year Inception Inception
Return Return to Date to Date
-------------------------------------------------------------
<S> <C> <C> <C>
-8.48% 10.40% 11.89% 46.56% Without load
-------------------------------------------------------------
-10.19% With load
--------------
</TABLE>
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
STI Classic
International
Equity Fund, MSCI EAFE
Flex Shares Index, in U.S.$
<S> <C> <C>
1/31/95 10,000 10,000
5/31/95 11,637 10,862
5/31/96 15,139 12,021
5/31/97 18,467 12,928
5/31/98 22,260 14,365
5/31/99 20,372 14,991
</TABLE>
Past performance is no indication of future performance.
The Funds' comparative benchmarks do not include the annual operating expenses
incurred by the Fund.
<PAGE>
STI CLASSIC SMALL CAP GROWTH STOCK FUND
The objective of the STI Classic Small Cap Growth Stock Fund (the "Fund") is to
provide long-term capital appreciation by investing in smaller companies,
domiciled primarily in the U.S., with market capitalizations ranging from $50
million to $3 billion. The philosophy of the Fund is that a portfolio of small
capitalization companies with positive earnings characteristics and reasonable
valuation will provide superior returns over time.
The Fund invests in stocks of companies that are currently demonstrating strong
earnings trends, characterized by solid historical earnings growth, high
earnings and sales growth momentum, and positive earnings estimate revisions and
earnings surprises. However, we try not to pay huge premiums for these
companies. Consequently, we identify those companies that are reasonably valued
relative to their earnings trends and relative to our universe of companies. In
addition, we look for companies that have a history of generating high returns
on invested capital and/or are demonstrating improving returns.
The investment process of the Fund features a two-tiered strategy that includes
a quantitative methodology to identify those companies with the best combination
of the aforementioned characteristics and a qualitative overlay that involves
basic fundamental analysis of each company. Our investment team looks at each
company to understand the company's basic business model and competitive
environment surrounding the company. In addition, we dig into the financials of
each company, analyzing the income statement and balance sheet in order to
identify any accounting irregularities, understand the capital structure of the
company, how the company has grown in the past, and how it intends to fund its
growth in the future.
The Fund features a very disciplined approach for both the buying and selling of
stocks. Furthermore, we exercise portfolio management techniques that are geared
toward risk aversion, unlike most other aggressive small cap growth portfolios.
The Fund equal-weights the portfolio among the top 15% to 20% of stocks in our
investment universe (approximately 150-160 companies). Thus, we maintain a very
diversified portfolio taking on very little company specific risk. In addition,
we maintain controlled sector weightings to keep the portfolio from becoming
over-concentrated in one particular economic sector.
We are confident that our process will provide excellent risk-adjusted returns
over time relative to the S&P Small Cap 600 Index and relative to other small
cap mutual funds. We are very pleased with the Fund's results since inception on
October 8, 1998 and feel very comfortable with how the portfolio is currently
positioned. Since late March 1999, the broadening of the market has brought
about a resurgence in small cap stock returns. Should this trend continue, this
will be an excellent year for the STI Classic Small Cap Growth Stock Fund.
/s/ Mark D. Garfinkel
Mark D. Garfinkel, CFA
Vice President and Portfolio Manager
<PAGE>
TRUST SHARES*
<TABLE>
<CAPTION>
--------------
Cumulative
Inception
to Date
--------------
<S> <C>
45.70%
--------------
</TABLE>
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
STI Classic
Small Cap Growth
Stock Fund, S&P Small Cap
Trust Shares 600 Index
<S> <C> <C>
10/31/98 10,000 10,000
5/31/99 12,070 11,168
</TABLE>
FLEX SHARES*
<TABLE>
<CAPTION>
--------------
Cumulative
Inception
to Date
--------------
<S> <C>
44.78% Without load
--------------
42.78% With load
--------------
</TABLE>
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
STI Classic
Small Cap Growth
Stock Fund, S&P Small Cap
Flex Shares 600 Index
<S> <C> <C>
10/31/98 10,000 10,000
5/31/99 11,764 11,168
</TABLE>
*Commenced operations on October 8, 1998.
Past performance is no indication of future performance.
The Funds' comparative benchmarks do not include the annual operating expenses
incurred by the Fund.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
STI CLASSIC FUNDS
2 OLIVER STREET
BOSTON, MA 02109
1-800-874-4770
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Proxy Statement/Prospectus dated November 10, 1999
for the Special Meeting of Shareholders of the STI Classic Funds' (the "Trust")
Sunbelt Equity Fund and Emerging Markets Equity Fund (the "Transferring Funds"),
to be held on December 10, 1999. Copies of the Proxy Statement/Prospectus may be
obtained at no charge by calling at 1-800- 874-4770. Unless otherwise indicated,
capitalized terms used herein and not otherwise defined have the same meanings
as are given to them in the Proxy Statement/Prospectus.
Further information about the Transferring Funds and the Trust's Small Cap
Growth Stock Fund and International Equity Fund (the "Acquiring Funds" and,
together with the Transferring Funds, the "Funds") is contained in and
incorporated by reference to the Funds' Statement of Additional Information
dated October 1, 1999, a copy of which is included herewith. The audited
financial statements and related independent accountant's report for the Funds
contained in the Annual Report dated May 31, 1999 is hereby incorporated herein
by reference insofar as they relate to the Funds. No other parts of the Annual
Report are incorporated by reference herein.
The date of this Statement of Additional Information is November 10, 1999.
<PAGE>
A&I
Pro Forma Statement of Assets and Liabilities (Unaudited)
STI Classic Funds Small Cap Growth Stock Fund
May 31, 1999
(000)
<TABLE>
<CAPTION>
Pro Forma
Combines STI
STI Classic STI Classic Classic Funds
Funds Small Funds Sunbell Small Cap
Cap Growth Equity Pro Forma Growth Stock
Stock Fund Fund Adjustments Fund
<S> <C> <C> <C> <C>
ASSETS
Total Investments at Market Value (Cost $148,958, $166,595
and $315,553) $162,338 $214,586 $376,924
Cash (333) 1,969 1,636
Accrued Income 28 42 70
Receivables for Investment Securities Sold 4,483 4,909 9,392
Receivables for Capital Shares Sold 27 18 45
Other Receivables 22 0 22
Other Assets 13 28 41
-------------- -------------- --------------
Total Assets 166,578 221,552 388,130
-------------- -------------- --------------
LIABILITIES
Accrued Expenses (198) (420) (618)
Payable for Investment Securities Purchased (7,317) (2,520) (9,837)
Payable for Capital Shares Redeemed (51) (53) (104)
-------------- -------------- --------------
Total Liabilities (7,566) (2,993) (10,559)
-------------- -------------- --------------
159,012 218,559
NET ASSETS
Portfolio shares of the Trust Class (unlimited authorization - no
par value) based on (10,464,063, 17,784,188, 24,018,386)
outstanding shares of beneficial interest 137,985 166,929 304,914
Portfolio shares of the Investor Class (unlimited authorization -
no par value) based on (1,574,615, 1,694,895) outstanding
shares of beneficial interest 0 14,344 14,344
Portfolio shares of the Flex Class (unlimited authorization - no
par value) based on (425,752, 416,394, 729,679) outstanding
shares of beneficial interest 6,037 5,996 12,035
Undistributed net investment income 0 0 0
Accumulated net realized gain (loss) on investments 1,046 (16,703) (15,657)
Net unrealized appreciation on investments 13,380 47,991 61,371
-------------- -------------- --------------
Total Net Assets $158,448 $218,559 $377,007
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Net Asset Value, Offering and Redemption Price Per Share -
Trust Shares $14.55 $11.09 $14.55
-------------- -------------- --------------
-------------- -------------- --------------
Net Asset Value and Redemption Price Per Share - Investor
Shares $10.00 $10.76
-------------- --------------
-------------- --------------
Net Asset Value, Offering and Redemption Price Per Share -
Investor Shares $11.18 $11.18
-------------- --------------
-------------- --------------
Net Asset Value, Offering and Redemption Price Per Share -
Flex Shares $14.46 $10.55 $14.46
-------------- -------------- --------------
-------------- -------------- --------------
$159,012 $218,559 $377,571
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
Page 1
<PAGE>
Pro Forma Combining Statement of Operations
Period Ended May 31, 1999
<TABLE>
<CAPTION>
STI Small STI
Cap Growth Sunbelt Pro Forma
Stock Fund Equity Fund Combined Adjustments Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 119 $ 187 $ 306 $ 306
Dividend Income 77 1,415 1,492 1,492
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment income 196 1,602 1,798 1,798
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 314 3,788 4,102 4,102
Trustees' fees - 12 12 12
Administrative personnel and services fees 21 258 279 279
Custodian and recordkeeping fees and expenses 7 19 26 26
Transfer Agent Fees-Trust Shares 11 12 23 -7 16
Transfer Agent Fees-Investor Shares 12 12 12
Transfer Agent Fees-Flex Shares 9 23 32 -3 29
Transfer Agent Out of Pocket Fees 15 61 76 76
Fund share registration costs 16 14 30 30
Auditing fees 4 12 16 16
Legal fees 4 25 29 29
Printing and postage 10 61 71 71
Insurance premiums - - - -
Distribution services fees-Investor Shares - 97 97 2 99
Distribution services fees-Flex Shares 12 63 75 75
Amortization of deferred organizational costs - 10 10 10
Miscellaneous 1 - 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses 424 4,467 4,891 (8) 4,883
- ------------------------------------------------------------------------------------------------------------------------------------
Deduct- 0
Waiver of investment advisory fees (79) (417) (496) 105 (391)
Waiver of distribution services fees-Investor Shares - (7) (7) (38) (45)
Waiver of distribution services fees-Flex Shares (8) (20) (28) 3 (25)
- ------------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 337 4,023 4,360 4,422
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (141) (2,421) (2,562) (2,624)
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments: 0
Net realized gain (loss) on investments (identified cost basis) 2,335 (16,055) (13,720) (13,720)
Net change in unrealized appreciation (depreciation) on investments 4,550 (79,885) (75,335) (75,335)
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 6,885 (95,940) (89,055) (89,055)
- ------------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,744 $ (96,361) (91,617) (91,679)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STI CLASSIC FUNDS
Sunbelt Equity Fund
Special Meeting of the Shareholders
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, DECEMBER 10, 1999
The undersigned, revoking previous proxies with respect to the Shares
(defined below), hereby appoints Kevin Robins and Todd Cipperman as proxies and
each of them, each with full power of substitution, to vote at the Special
Meeting of Shareholders of the Sunbelt Equity Fund, a series of the STI Classic
Funds (the "Trust"), to be held in the offices of SEI Investments, One Freedom
Valley Drive, Oaks, Pennsylvania 19456, on Friday, December 10, 1999, at 3:00
p.m. (Eastern Time), and any adjournments or postponements thereof (the
"Meeting") all shares of beneficial interest of said Trust that the undersigned
would be entitled to vote if personally present at the Meeting ("Shares") on the
proposal set forth below with respect to the proposed Agreement and Plan of
Reorganization (the "Reorganization Agreement") between the Sunbelt Equity Fund
and the Small Cap Growth Fund, a corresponding series of the Trust, and on any
other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
( X PLEASE MARK YOUR CHOICES LIKE THIS ON THE PROPOSAL)
---
Proposal: Approve the Reorganization Agreement as it relates to the
Sunbelt Equity Fund and the Small Cap Growth Fund:
____For ____Against ____Abstain
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY
THE SIGNING SHAREHOLDER(S). IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY
EXECUTED PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL
AND WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
<PAGE>
The undersigned acknowledges receipt with this Proxy of a copy of the
Notice of Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this Proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated:_______________, 1999
____________________________________
Signature of Shareholder
____________________________________
Signature (Joint owners)
YOU CAN VOTE BY MAIL, INTERNET, OR IN PERSON.
- - TO VOTE BY MAIL, PLEASE DATE, SIGN AND RETURN THIS CARD USING THE
ENCLOSED, POSTAGE-PAID ENVELOPE.
- - YOU MAY ALSO SUBMIT YOUR VOTE OVER THE INTERNET AT WWW.PROXYVOTE.COM.
- - FINALLY, YOU MAY VOTE IN PERSON BY ATTENDING THE MEETING ON DECEMBER 10,
1999.
<PAGE>
STI CLASSIC FUNDS
Emerging Markets Equity Fund
Special Meeting of the Shareholders
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, DECEMBER 10, 1999
The undersigned, revoking previous proxies with respect to the Shares
(defined below), hereby appoints Kevin Robins and Todd Cipperman as proxies and
each of them, each with full power of substitution, to vote at the Special
Meeting of Shareholders of the Emerging Markets Equity Fund, a series of the STI
Classic Funds (the "Trust"), to be held in the offices of SEI Investments, One
Freedom Valley Drive, Oaks, Pennsylvania 19456, on Friday, December 10, 1999, at
3:00 p.m. (Eastern Time), and any adjournments or postponements thereof (the
"Meeting") all shares of beneficial interest of said Trust that the undersigned
would be entitled to vote if personally present at the Meeting ("Shares") on the
proposal set forth below with repect to the proposed Agreement and Plan of
Reorganization (the "Reorganization Agreement") between the Emerging Markets
Equity Fund and the International Equity Fund, a corresponding series of the
Trust, and on any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
( X PLEASE MARK YOUR CHOICES LIKE THIS ON THE PROPOSAL)
---
Proposal: Approve the Reorganization Agreement as it relates to the
Emerging Markets and the International Equity Fund:
____For ____Against ____Abstain
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY
THE SIGNING SHAREHOLDER(S). IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY
EXECUTED PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL
AND WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.
<PAGE>
The undersigned acknowledges receipt with this Proxy of a copy of the
Notice of Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this Proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated:_______________, 1999
____________________________________
Signature of Shareholder
____________________________________
Signature (Joint owners)
YOU CAN VOTE BY MAIL, INTERNET, OR IN PERSON.
- - TO VOTE BY MAIL, PLEASE DATE, SIGN AND RETURN THIS CARD USING THE
ENCLOSED, POSTAGE-PAID ENVELOPE.
- - YOU MAY ALSO SUBMIT YOUR VOTE OVER THE INTERNET AT WWW.PROXYVOTE.COM.
- - FINALLY, YOU MAY VOTE IN PERSON BY ATTENDING THE MEETING ON DECEMBER 10,
1999.
<PAGE>
STI CLASSIC FUNDS
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FORM N-14
PART C
OTHER INFORMATION
Item 15. INDEMNIFICATION.
Article VIII of the Registrant's Agreement and Declaration of Trust filed as
Exhibit (a) to the Registration Statement is incorporated by reference. Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 16. Exhibits
(1) Agreement and Declaration of Trust - originally filed with
Registrant's Registration Statement on Form N-1A filed
February 12, 1992 and incorporated by reference to Exhibit 1
of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed on Form N-1A with the SEC via
EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
(2)(a) By-Laws - originally filed with Registrant's Pre-Effective
Amendment No. 1 filed on Form N-1A April 23, 1992 and
incorporated by reference to Exhibit 2 of Post- Effective
Amendment No. 15 to the Registrant's Registration Statement
filed on Form N-1A with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(2)(b) Amended By-Laws - incorporated by reference to Exhibit
(b)(2) of Post-Effective Amendment No. 23 to the
Registrant's Registration Statement filed on Form N-1A with
the SEC via EDGAR Accession No. 0001047469-98-027407 on July
15, 1998.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is filed
herewith.
(5) Not applicable.
(6)(a) Revised Investment Advisory Agreement with Trusco Capital
Management, Inc. - as originally filed with Registrant's
Post-Effective Amendment No. 5 filed August 2, 1993 on Form
N-1A and incorporated by reference to Exhibit 5(c) of Post-
Effective Amendment No. 15 to the Registrant's Registration
Statement filed on Form N-1A with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
4
<PAGE>
(6)(b) Investment Advisory Agreement with American National Bank
and Trust Company - as originally filed with Registrant's
Post-Effective Amendment No. 6 filed on Form N-1A October
22, 1993 and as Exhibit 5(d) of Post-Effective Amendment No.
15 to the Registrant's Registration Statement filed with the
SEC on Form N-1A via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(6)(c) Investment Advisory Agreement with Sun Bank
CapitalManagement, National Association (now STI Capital
Management, N.A. - as originally filed with Registrant's
Post-Effective Amendment No. 6 on Form N-1A filed October
22, 1993 and incorporated by reference to Exhibit 5(e) of
Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC on Form N-1A via
EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
(6)(d) Investment Advisory Agreement with Trust Company Bank (now
SunTrust Bank, Atlanta) - as originally filed with
Registrant's Post-Effective Amendment No. 6 on Form N-1A
filed October 22, 1993 and incorporated by reference to
Exhibit D(4) of Post-Effective Amendment No. 24 to the
Registrant's Statement filed with the SEC via EDGAR
Accession No. 0001047469-98-028802 on July 30, 1998.
(6)(e) Revised Schedule A to the Revised Investment Advisory
Agreement with Trustco Capital Management, Inc. is
incorporated by reference to Exhibit D(5) of Post-Effective
Amendment No. 32 to the Registrant's Registration Statement
on Form N-1A filed with the SEC via EDGAR accession number
0001047469-99-037088 on September 28, 1999.
(7)(a) Distribution Agreement - incorporated by reference to
Exhibit 6 of Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on Form N-1A filed with
the SEC via EDGAR Accession No. 0000912057-96-021336 on
September 27, 1996.
(8) Not applicable.
(9)(a) Custodian Agreement with Trust Company Bank dated February
1, 1994 - originally filed with Registrant's Post-Effective
Amendment No. 13 on Form N-1A filed September 28, 1995 and
incorporated by reference to Exhibit 8(b) of Post- Effective
Amendment No. 15 to the Registrant's Registration Statement
filed on Form N-1A with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(9)(b) Custodian Agreement with the Bank of California -
incorporated by reference to Exhibit 8(a) of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement
filed on Form N-1A with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(9)(c) Fourth Amendment to Custodian Agreement by and between STI
Trust & Investment Operations, Inc. and The Bank of New York
dated May 6, 1997 - incorporated by reference to Exhibit
8(d) of Post-Effective Amendment No. 21 to the Registrant's
Registration Statement filed on Form N-1A with the SEC via
EDGAR Accession No. 0000912057-97-032207 on September 30,
1997.
(10) Not applicable.
(11) Opinion and Consent of Morgan, Lewis & Bockius LLP that
shares will be validly issued, fully paid and non-assessable
is filed herewith.
(12)(a) Opinion and Consent of Morgan, Lewis & Bockius LLP as to tax
matters and consequences for Small Cap Growth Stock Fund is
filed herewith.
(12)(b) Opinion and Consent of Morgan, Lewis & Bockius LLP as to tax
matters for the International Equity Fund is filed herewith.
5
<PAGE>
(13)(a) Transfer Agent Agreement with Federated Services Company
dated May 14, 1994 - originally filed with Post-Effective
Amendment No. 9 on Form N-1A filed September 22, 1994 and
incorporated by reference to Exhibit 8(c) of Post-Effective
Amendment No. 15 to the Registrant's Registration Statement
on Form N-1A filed with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(13)(b) Administration Agreement with SEI Financial Management
Corporation dated May 29, 1995 - originally filed with
Post-Effective Amendment No. 12 on Form N-1A filed August
17, 1995 and incorporated by reference to Exhibit 9(a) of
Post- Effective Amendment No. 15 to the Registrant's
Registration Statement filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(13)(c) Consent to Assignment and Assumption of the
Administration Agreement between STI Classic Funds and SEI
Financial Management Corporation - incorporated by reference
to Exhibit 9(b) of Post-Effective Amendment No. 21 to the
Registrant's Registration Statement filed on Form N-1A with
the SEC via EDGAR Accession No. 0000912057-97-032207 on
September 30, 1997.
(14) Consent of Arthur Andersen LLP is filed herewith.
(15) Not applicable.
(16) Not applicable.
(17)(a) Prospectuses and SAIs for the Trust Shares, Investor Shares,
Flex Shares, and Institutional Shares of STI Classic Funds
dated October 1, 1999- incorporated by reference
Post-Effective Amendment No. 32 to Registrant's Registration
Statement on Form N-1A with the SEC via EDGAR accession
number 0001047469-99-037088 as filed September 28, 1999.
(17)(b) Audited Financial Statements for the STI Classic Funds dated
May 31, 1999 - incorporated by reference to the Registrant's
N-30 D filing with the SEC as filed August 3, 1999.
Item 17. Undertakings.
The registrant agrees that prior to any public reoffering of the securities
registered through the use of a prospectus which is a part of this registration
statement by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will
contain the information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 this Registration Statement has
been signed on behalf of STI Classic Funds in the city of Oaks, and state of,
Pennsylvania on the 1st day of October, 1999.
STI Classic Funds
By: /s/ Mark Nagle
-------------------------------
Mark Nagle, President and Chief
Executive Officer
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated:
* Trustee October 1, 1999
- -------------------------
F. Wendell Gooch
* Trustee October 1, 1999
- -------------------------
Daniel S. Goodrum
* Trustee October 1, 1999
- -------------------------
Wilton Looney
* Trustee October 1, 1999
- -------------------------
Champney A. McNair
* Trustee October 1, 1999
- -------------------------
T. Gordy Germany
* Trustee October 1, 1999
- -------------------------
Bernard F. Sliger
* Trustee October 1, 1999
- -------------------------
Jonathan T. Walton
* Trustee October 1, 1999
- -------------------------
William H. Cammack
/s/ Mark Nagle President, Chief October 1, 1999
- ------------------------- Executive Officer &
Mark Nagle Chief Financial Officer
* By: /s/ Mark Nagle
----------------------------------
Mark Nagle, With Power of Attorney
previously filed
7
<PAGE>
Exhibit Index
(1) Agreement and Declaration of Trust - originally filed with
Registrant's Registration Statement on Form N- 1A filed February 12,
1992 and incorporated by reference to Exhibit 1 of Post-Effective
Amendment No. 15 on to the Registrant's Registration Statement filed
on Form N-1A with the SEC via EDGAR Accession No. 0000912057-96-015938
on July 31, 1996.
(2)(a) By-Laws - originally filed with Registrant's Pre-Effective Amendment
No. 1 on Form N-1A filed April 23, 1992 and incorporated by reference
to Exhibit 2 of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed on Form N-1A with the SEC via EDGAR
Accession No. 0000912057-96- 015938 on July 31, 1996.
(2)(b) Amended By-Laws - incorporated by reference to Exhibit (b)(2) of
Post-Effective Amendment No. 23 on Form N-1A to the Registrant's
Registration Statement filed with the SEC via EDGAR Accession No.
0001047469-98-027407 on July 15, 1998.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is filed herewith.
(5) Not applicable.
(6)(a) Revised Investment Advisory Agreement with Trusco Capital Management,
Inc. - as originally filed with Registrant's Post-Effective Amendment
No. 5 on Form N-1A filed August 2, 1993 and incorporated by reference
to Exhibit 5(c) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed on Form N-1A with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(6)(b) Investment Advisory Agreement with American National Bank and Trust
Company - as originally filed with Registrant's Post-Effective
Amendment No. 6 filed on Form N-1A October 22, 1993 and as Exhibit
5(d) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement filed on Form N-1A with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(6)(c) Investment Advisory Agreement with Sun Bank Capital Management,
National Association (now STI Capital Management, N.A. - as originally
filed with Registrant's Post-Effective Amendment No. 6 on Form N-1A
filed October 22, 1993 and incorporated by reference to Exhibit 5(e)
of Post-Effective Amendment No. 15 to the Registrant's Registration
Statement filed on Form N-1A with the SEC via EDGAR Accession No.
0000912057-96-015938 on July 31, 1996.
(6)(d) Investment Advisory Agreement with Trust Company Bank (now SunTrust
Bank, Atlanta) - as originally filed with Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed October 22, 1993 and incorporated
by reference to Exhibit D(4) of Post-Effective Amendment No. 24 to the
Registrant's Registation Statement on Form N-1A filed with the SEC via
EDGAR Accession No. 0001047469-98- 028802 on July 30, 1998.
(6)(e) Revised Schedule A to the Revised Investment Advisory Agreement with
Trustco Capital Management, Inc. is incorporated by reference to
Exhibit D(5) of Post-Effective Amendment No. 32 to the Registrant's
Registration Statement on Form N-1A filed with the SEC via EDGAR
accession number 0001047469-99-037088 on September 28, 1999.
(7)(a) Distribution Agreement - incorporated by reference to Exhibit 6 of
Post-Effective Amendment No. 16 to the Registrant's Registration
Statement on Form N-1A filed with the SEC via EDGAR Accession No.
0000912057-96-021336 on September 27, 1996.
(8) Not applicable.
(9)(a) Custodian Agreement with Trust Company Bank dated February 1, 1994 -
originally filed with Registrant's Post- Effective Amendment No. 13 on
Form N-1A filed September 28, 1995 and incorporated by reference to
Exhibit
8
<PAGE>
8(b) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form N-1A filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(9)(b) Custodian Agreement with the Bank of California - incorporated by
reference to Exhibit 8(a) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement on Form N-1A filed with the SEC
via EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
(9)(c) Fourth Amendment to Custodian Agreement by and between STI Trust &
Investment Operations, Inc. and The Bank of New York dated May 6, 1997
- incorporated by reference to Exhibit 8(d) of Post-Effective
Amendment No. 21 to the Registrant's Registration Statement on Form
N-1A filed with the SEC via EDGAR Accession No. 0000912057-97-032207
on September 30, 1997.
(10) Not applicable.
(11) Opinion and Consent of Morgan, Lewis & Bockius LLP that shares will be
validly issued, fully paid and non- assessable is filed herewith.
(12)(a) Opinion and Consent of Morgan, Lewis & Bockius LLP as to tax matters
and consequences for the Small Cap Growth Stock Fund is filed
herewith.
(12)(b) Opinion and Consent of Morgan, Lewis & Bockius LLP as to tax matters
for the International Equity Fund is filed herewith.
(13)(a) Transfer Agent Agreement with Federated Services Company dated May 14,
1994 - originally filed with Post- Effective Amendment No. 9 on Form
N-1A filed September 22, 1994 and incorporated by reference to Exhibit
8(c) of Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form N-1A filed with the SEC via EDGAR
Accession No. 0000912057-96-015938 on July 31, 1996.
(13)(b) Administration Agreement with SEI Financial Management Corporation
dated May 29, 1995 - originally filed with Post-Effective Amendment
No. 12 on Form N-1A filed August 17, 1995 and incorporated by
reference to Exhibit 9(a) of Post-Effective Amendment No. 15 to the
Registrant's Registration Statement on Form N-1A filed with the SEC
via EDGAR Accession No. 0000912057-96-015938 on July 31, 1996.
(13)(c) Consent to Assignment and Assumption of the Administration Agreement
between STI Classic Funds and SEI Financial Management Corporation -
incorporated by reference to Exhibit 9(b) of Post-Effective Amendment
No. 21 to the Registrant's Registration Statement on Form N-1A filed
with the SEC via EDGAR Assession No. 0000912057-97-032207 on September
30, 1997.
(14) Consent of Arthur Andersen LLP is filed herewith.
(15) Not applicable.
(16) Not applicable.
(17)(a) Prospectuses and SAIs for the Trust Shares, Investor Shares, Flex
Shares, and Institutional Shares of STI Classic Funds dated October 1,
1999- incorporated by reference Post-Effective Amendment No. 32 to
Registrant's Registration Statement on Form N-1A with the SEC via
EDGAR accession number 0001047469-99-037088 as filed September 28,
1999.
(17)(b) Audited Financial Statements for the STI Classic Funds dated May 31,
1999 - incorporated by reference to the N-30 D filing with the SEC as
filed August 3, 1999.
9
<PAGE>
FORM OF AGREEMENT AND PLAN
OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is dated as of , 1999 (the
"Agreement"), by and between the STI Classic Funds (the "Trust") on behalf of
its Sunbelt Equity Fund and Emerging Markets Equity Fund (the "Transferring
Funds"), and the Trust on behalf of its Small Cap Growth Stock Fund and
International Equity Fund (the "Acquiring Funds"), respectively.
WHEREAS, the Trust was organized under Massachusetts law as a business
trust under a Declaration of Trust dated January 15, 1992, as amended and
restated;
WHEREAS, the Trust is an open-end management investment company registered
under the 1940 Act and the Reorganizing and Transferring Funds are duly
organized and validly existing series of the Trust;
NOW, THEREFORE, the parties hereto agree to effect (i) the transfer of all
of the assets of each Transferring Fund solely in exchange for (a) the
assumption by its corresponding Acquiring Fund of certain stated liabilities of
such Transferring Fund and (b) beneficial shares of such Acquiring Fund followed
by the distribution, at the Effective Time (as defined in Section 9 of this
Agreement), of such beneficial shares of such Acquiring Fund to the holders of
beneficial shares of the Transferring Fund on the terms and conditions
hereinafter set forth in liquidation of such Transferring Fund (the
"Reorganization"). The beneficial shares of each Acquiring Fund that are given
in exchange for the assets of its corresponding Transferring Fund are referred
to hereinafter as the "Acquiring Fund Shares," and the beneficial shares of each
Transferring Fund that are held by the holders of such shares at the Effective
Time are referred to hereinafter as the "Transferring Fund Shares." The parties
hereto covenant and agree as follows:
1. PLAN OF REORGANIZATION. At the Effective Time, each Transferring Fund
will assign, deliver and otherwise transfer all of its assets and good and
marketable title thereto, free and clear of all liens, encumbrances and adverse
claims except as provided in this Agreement, and assign certain stated
liabilities as are set forth in a statement of assets and liabilities, to be
prepared as of the Effective Time (the "Statement of Assets and Liabilities") to
its corresponding Acquiring Fund and the Acquiring Fund shall acquire all such
assets, and shall assume all such liabilities of the Transferring Fund, in
exchange for delivery to the Transferring Fund by the Acquiring Fund of a number
of its Acquiring Fund Shares (both full and fractional) equivalent in value to
the Transferring Fund Shares of the Transferring Fund outstanding immediately
prior to the Effective Time. The assets and stated liabilities of the
Transferring Fund, as set forth in a statement of assets and liabilities shall
be exclusively assigned to and assumed by the Acquiring Fund. All debts,
liabilities, obligations and duties of the Transferring Fund, to the extent that
they exist at or after the Effective Time and are stated in a statement of
assets and liabilities, shall after the Effective Time attach to the Acquiring
Fund and may be enforced against the Acquiring Fund to the same extent as if the
same had been incurred by the Acquiring Fund.
A-1
<PAGE>
2. TRANSFER OF ASSETS. The assets of each Transferring Fund to be
transferred to its corresponding Acquiring Fund shall include, without
limitation, all cash, cash equivalents, securities, receivables (including
interest and dividends receivable) as set forth in a statement of assets and
liabilities, as well as any claims or rights of action or rights to register
shares under applicable securities laws, any books or records of such
Transferring Fund and other property owned by such Transferring Fund at the
Effective Time.
3. REORGANIZATION OF THE TRANSFERRING FUND. At the Effective Time, each
Transferring Fund will liquidate and the Acquiring Fund Shares (both full and
fractional) received by the Transferring Fund will be distributed to the
shareholders of record of the Transferring Fund as of the Effective Time in
exchange for Transferring Fund Shares and in complete liquidation of the
Transferring Fund. Each shareholder of the Transferring Fund will receive a
number of Acquiring Fund Shares equal in value to the Transferring Fund Shares
held by that shareholder. Such liquidation and distribution will be accompanied
by the establishment of an open account on the share records of the Acquiring
Fund in the name of each shareholder of record of the Transferring Fund and
representing the respective number of Acquiring Fund Shares due such
shareholder. As soon as practicable after the Effective Time, but not later than
December 13, 1999, the Trust shall take all steps as shall be necessary and
proper to effect a complete termination of the Transferring Fund.
4. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING FUNDS. Each Acquiring
Fund represents and warrants to its corresponding Transferring Fund as follows:
(a) SHARES TO BE ISSUED UPON REORGANIZATION. The Acquiring Fund Shares to
be issued in connection with the Reorganization have been duly authorized
and upon consummation of the Reorganization will be validly issued, fully
paid and nonassessable.
(b) LIABILITIES. There are no liabilities of the Acquiring Fund, whether
or not determined or determinable, other than liabilities disclosed or
provided for in the Acquiring Fund's statement of assets and liabilities,
if any, and liabilities incurred in the ordinary course of business prior
to the Effective Time or otherwise previously disclosed to the
Transferring Fund, none of which has been materially adverse to the
business, assets or results of operations of the Acquiring Fund.
(c) LITIGATION. Except as previously disclosed to the Transferring Fund,
there are no claims, actions, suits or proceedings pending or, to the
actual knowledge of the Acquiring Fund, threatened which would materially
adversely affect any of the Acquiring Fund or its assets or business or
which would prevent or hinder in any material respect consummation of the
reorganization contemplated hereby.
(d) TAXES. As of the Effective Time, all federal and other tax returns and
reports of the Acquiring Fund required by law to have been filed shall
have been filed, and all other taxes shall have been paid so far as due,
or provision shall have been made for the payment thereof, and to the best
of the Acquiring Fund's knowledge, no such return is currently under audit
and no assessment has been asserted with respect to any of such returns.
A-2
<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF THE TRANSFERRING FUNDS. Each
Transferring Fund represents and warrants to its corresponding Acquiring Fund as
follows:
(a) MARKETABLE TITLE TO ASSETS. The Transferring Fund will have, at the
Effective Time, good and marketable title to, and full right, power and
authority to sell, assign, transfer and deliver, the assets to be
transferred to the Acquiring Fund. Upon delivery and payment for such
assets, the Acquiring Fund will have good and marketable title to such
assets without restriction on the transfer thereof free and clear of all
liens, encumbrances and adverse claims.
(b) LIABILITIES. There are no liabilities of the Transferring Fund,
whether or not determined or determinable, other than liabilities
disclosed or provided for in the Transferring Fund's Statement of Assets
and Liabilities, and liabilities incurred in the ordinary course of
business prior to the Effective Time or otherwise previously disclosed to
the Acquiring Fund, none of which has been materially adverse to the
business, assets or results of operations of the Transferring Fund.
(c) LITIGATION. Except as previously disclosed to the Acquiring Fund,
there are no claims, actions, suits or proceedings pending or, to the
knowledge of the Transferring Fund, threatened which would materially
adversely affect the Transferring Fund or its assets or business or which
would prevent or hinder in any material respect consummation of the
reorganization contemplated hereby.
(d) TAXES. As of the Effective Time, all federal and other tax returns and
reports of the Transferring Fund required by law to have been filed shall
have been filed, and all other taxes shall have been paid so far as due,
or provision shall have been made for the payment thereof, and to the best
of the Transferring Fund's knowledge, no such return is currently under
audit and no assessment has been asserted with respect to any of such
returns.
6. CONDITION PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS. All
representations and warranties of the Transferring Funds contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the reorganization contemplated by
this Agreement, as of the Effective Time, with the same force and effect as if
made on and as of the Effective Time.
7. CONDITION PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUNDS. All
representations and warranties of the Acquiring Funds contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the reorganization contemplated by
this Agreement, as of the Effective Time, with the same force and effect as if
made on and as of the Effective Time.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRANSFERRING FUNDS
AND THE ACQUIRING FUNDS. The obligations of the Transferring Funds and the
Acquiring Funds to effectuate this Agreement shall be subject to the
satisfaction of each of the following conditions:
A-3
<PAGE>
(a) Such authority from the Securities and Exchange Commission (the "SEC")
as may be necessary to permit the parties to carry out the reorganization
contemplated by this Agreement shall have been received.
(b) The Registration Statement on Form N-1A of the Acquiring Funds shall
be effective under the Securities Act of 1933 (the "1933 Act"), and, to
the best knowledge of the Acquiring Funds, no investigation or proceeding
for that purpose shall have been instituted or be pending, threatened or
contemplated under the 1933 Act.
(c) The Acquiring Funds have filed all documents and paid all fees
required to permit their shares to be offered to the public in all states
of the United States, the Commonwealth of Puerto Rico and the District of
Columbia (except where such qualifications are not required) so as to
permit the transfer contemplated by this Agreement to be consummated.
(d) Each Transferring Fund and Acquiring Fund shall have received on or
before the Effective Time an opinion of counsel satisfactory to the
Transferring Fund and the Acquiring Fund substantially to the effect that
the Reorganization, as a tax-free reorganization, will have the following
federal income tax consequences for Transferring Fund shareholders, each
Transferring Fund, and its corresponding Acquiring Fund:
1. No gain or loss will be recognized by the Transferring Fund upon the
transfer of its assets in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of the Transferring Fund's
stated liabilities;
2. No gain or loss will be recognized by the Acquiring Fund on its
receipt of the Transferring Fund's assets in exchange for Acquiring
Fund Shares and the assumption by the Acquiring Fund of the
Transferring Fund's liabilities;
3. The basis of the Transferring Fund's assets in the Acquiring Fund's
hands will be the same as the basis of those assets in the
Transferring Fund's hands immediately before the Reorganization;
4. The Acquiring Fund's holding period for the assets transferred to
the Acquiring Fund by the Transferring Fund will include the holding
period of those assets in the Transferring Fund's hands immediately
before the Reorganization;
5. No gain or loss will be recognized by the Transferring Fund on the
distribution of Acquiring Fund Shares to the Transferring Fund's
shareholders in exchange for Transferring Fund Shares;
6. No gain or loss will be recognized by the Transferring Fund's
shareholders as a result of the Transferring Fund's distribution of
Acquiring Fund Shares
A-4
<PAGE>
to the Transferring Fund's shareholders in exchange for the
Transferring Fund's shareholders' Transferring Fund Shares;
7. The basis of the Acquiring Fund Shares received by the Transferring
Fund's shareholders will be the same as the adjusted basis of that
Transferring Fund's shareholders' Transferring Fund Shares
surrendered in exchange therefor; and
8. The holding period of the Acquiring Fund Shares received by the
Transferring Fund's shareholders will include the Transferring
Fund's shareholders' holding period for the Transferring Fund's
shareholders' Transferring Fund Shares surrendered in exchange
therefor, provided that said Transferring Fund Shares were held as
capital assets on the date of the Reorganization.
(e) A vote approving this Agreement and the Reorganization contemplated
hereby shall have been adopted by at least a majority of the outstanding
shares of the Transferring Funds entitled to vote at an annual or special
meeting.
(f) The Board of Trustees of the Trust, at a meeting duly called for such
purpose, shall have authorized the issuance by each Acquiring Fund of
Acquiring Fund Shares at the Effective Time in exchange for the assets of
its corresponding Transferring Fund pursuant to the terms and provisions
of this Agreement.
9. EFFECTIVE TIME OF THE REORGANIZATION. The exchange of the Transferring
Funds' assets for corresponding Acquiring Fund Shares shall be effective as of
the close of business on December 13, 1999, or at such other time and date as
fixed by the mutual consent of the parties (the "Effective Time").
10. TERMINATION. This Agreement and the reorganization contemplated hereby
may be terminated and abandoned with respect to the Acquiring Fund and/or the
Transferring Fund, without penalty, by resolution of the Board of Trustees of
the Trust or at the discretion of any duly authorized officer of the Trust, at
any time prior to the Effective Time, if circumstances should develop that, in
the opinion of such Board or officer, make proceeding with the Agreement
inadvisable.
11. AMENDMENT AND WAIVER. This Agreement may be amended, modified or
supplemented in such manner as may be mutually agreed upon in writing by the
parties; PROVIDED, THAT no such amendment may have the effect of changing the
provisions for determining the number or value of Acquiring Fund Shares to be
paid to the Transferring Funds' shareholders under this Agreement to the
detriment of the Transferring Funds' shareholders without their further
approval. Furthermore, either party may waive any breach by the other party or
the failure to satisfy any of the conditions to its obligations (such waiver to
be in writing and authorized by the President or any Vice President of the
waiving party with or without the approval of such party's shareholders).
A-5
<PAGE>
12. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Massachusetts.
13. FEES AND EXPENSES.
(a) Each Acquiring Fund and corresponding Transferring Fund represent and
warrant to each other that there are no brokers or finders entitled to
receive any payments in connection with the reorganization provided for
herein.
(b) Except as otherwise provided for herein, all expenses of the
reorganization contemplated by this Agreement incurred by each Fund will
be borne by SunTrust Banks, Inc. Such expenses include, without
limitation, (i) expenses incurred in connection with the entering into and
the carrying out of the provisions of this Agreement; (ii) expenses
associated with the preparation and filing of the Prospectus/Proxy
Statement on Form N-14 under the 1933 Act; (iii) registration or
qualification fees and expenses of preparing and filing such forms as are
necessary under applicable state securities laws to qualify the Acquiring
Fund Shares to be issued in connection herewith in each state in which the
Transferring Funds' shareholders are resident as of the date of the
mailing of the Proxy Statement to such shareholders; (iv) postage; (v)
printing; (vi) accounting fees; (vii) legal fees; and (viii) solicitation
costs of the transaction.
14. HEADINGS, COUNTERPARTS, ASSIGNMENT.
(a) The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not effect in any way the meaning or
interpretation of this Agreement.
(b) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
(c) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other party.
Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation (other than the
parties hereto and their respective successors and assigns) any rights or
remedies under or by reason of this Agreement.
15. ENTIRE AGREEMENT. Each Acquiring Fund and Transferring Fund agree that
neither party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the
parties. The representations, warranties and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall survive
the consummation of the reorganization contemplated hereunder.
A-6
<PAGE>
16. FURTHER ASSURANCES. Each Acquiring Fund and Transferring Fund shall
take such further action as may be necessary or desirable and proper to
consummate the reorganization contemplated hereby.
17. BINDING NATURE OF AGREEMENT. As provided in the Trust's Declaration of
Trust, as amended and supplemented to date, this Agreement was executed by the
undersigned officers of the Trust, on behalf of the Acquiring Funds and the
Transferring Funds, as officers and not individually, and the obligations of
this Agreement are not binding upon the undersigned officers individually, but
are binding only upon the assets and property of the Trust. Moreover, no series
of the Trust shall be liable for the obligations of any other series of the
Trust.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
STI CLASSIC FUNDS,
on behalf of its series,
SUNBELT EQUITY FUND, and
EMERGING MARKETS EQUITY FUND
By ___________________________________
Name:
Title:
STI CLASSIC FUNDS,
on behalf of its series,
SMALL CAP GROWTH STOCK FUND, and
INTERNATIONAL EQUITY FUND
By ___________________________________
Name:
Title:
A-7
<PAGE>
[MORGAN, LEWIS & BOCKIUS LLP LOGO APPEARS HERE]
October 1, 1999
STI Classic Funds
2 Oliver Street
Boston, Massachusetts 02109
RE: STI Classic Funds - Form N-14 Opinion
-------------------------------------
Ladies and Gentlemen:
We refer to the Registration Statement on Form N-14 (the "Registration
Statement") of the STI Classic Funds (the "Trust"), with respect to its series
the Sunbelt Equity Fund and Emerging Markets Equity Fund (the "Transferring
Funds"), relating to the transfer of all the assets and stated liabilities of
the Transferring Funds, in exchange for shares of the Trust's Small Cap Growth
Stock Fund and International Equity Fund (the "Acquiring Funds"), respectively,
followed by the distribution of such shares (the "Acquiring Funds' Shares") in
exchange for such Acquiring Funds' Shares in complete liquidation of the
Transferring Funds (the "Reorganization").
We have been requested by the Trust to furnish this opinion as Exhibit 11 to the
Registration Statement.
We have examined such records, documents, instruments, certificates of public
officials and of the Trust, made such inquiries of the Trust, and examined such
questions of law as we have deemed necessary for the purpose of rendering the
opinion set forth herein. We have assumed the genuineness of all signatures and
the authenticity of all items submitted to us as originals and the conformity
with originals of all items submitted to us as copies.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance of the Acquiring Funds' Shares by the Trust has been duly and
validly authorized by all appropriate action and, upon delivery thereof
and payment therefor in accordance with the Registration Statement, the
Acquiring Funds' Shares, when issued, will be duly authorized, validly
issued, fully paid and nonassessable by the Trust.
<PAGE>
We have not reviewed the securities laws of any state or territory in connection
with the proposed offering of the Acquiring Funds' Shares and we express no
opinion as to the legality of any offer of sale of Acquiring Funds' Shares under
any such state or territorial securities laws.
This opinion is intended only for your use in connection with the offering of
the Acquiring Funds' Shares and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as an exhibit to the Trust's
Registration Statement to be filed with the Securities and Exchange Commission.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
Morgan, Lewis & Bockius LLP
<PAGE>
September __, 1999
STI Classic Funds
2 Oliver Street
Boston, MA 02109
Re: AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN
STI CLASSIC FUNDS (THE "TRUST"), ON BEHALF OF ITS
SMALL CAP GROWTH STOCK FUND, AND THE TRUST
ON BEHALF OF ITS SUNBELT EQUITY FUND
Ladies and Gentlemen:
We have acted as counsel to STI Classic Funds (the "Trust"), a Massachusetts
business trust, in connection with the execution and delivery of the Agreement
and Plan of Reorganization (the "Agreement"), dated as of September __, 1999, by
and between the Trust, on behalf of its Small Cap Growth Stock Fund (the
"Acquiring Fund"), and the Trust on behalf of its Sunbelt Equity Fund (the
"Transferring Fund"), relating to the transfer of all the assets and liabilities
of the Transferring Fund in exchange for shares of the Acquiring Fund, followed
by the distribution of such Shares (the "Acquiring Fund's Shares") to the
holders of shares of the Transferring Fund ("Transferring Fund's Shares") in
exchange for such Transferring Fund's Shares in complete liquidation of the
Transferring Fund (the "Reorganization"), pursuant to the Agreement. This
opinion letter is delivered to you pursuant to Section 8(d) of the Agreement.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Agreement.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Agreement, and (ii) such other documents as we have deemed necessary or
appropriate in order to enable us to render the opinion below. In our
examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified,
<PAGE>
STI Classic Funds
September __, 1999
Page 2
conformed or photostatic copies and the authenticity of the originals of such
copies. Our opinion is based in part on the facts set forth below. We have not
undertaken an independent investigation or verification of these facts or of the
information set forth either in the aforementioned documents or in other
documents that we have reviewed.
1. The Reorganization will be consummated in compliance with the
material terms of the Agreement, and none of the material terms and
conditions therein have been waived or modified and neither party
has any plan or intention to waive or modify any such material
condition.
2. The Acquiring Fund and the Transferring Fund each have been and will
continue to be treated as a corporation for Federal income tax
purposes.
3. The fair market value of the Acquiring Fund's Shares to be received
by the Transferring Fund's shareholders in the Reorganization will
be approximately equal to the fair market value of the shares in the
Transferring Fund surrendered and exchanged therefor.
4. No consideration other than the Acquiring Fund's Shares and the
assumption by the Acquiring Fund of the stated liabilities of the
Transferring Fund will be issued in exchange for the assets of the
Transferring Fund in the Reorganization.
5. The Acquiring Fund has no plan or intention to sell additional
shares of beneficial interest in the Acquiring Fund or to redeem or
otherwise reacquire any of the Acquiring Fund's Shares issued in the
Reorganization other than in the ordinary course of its business as
a regulated investment company.
6. The Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the Transferring Fund's assets to be acquired by
it in the Reorganization except for dispositions made in the
ordinary course of its business as a regulated investment company.
7. Following the Reorganization, the Acquiring Fund will continue the
historic business of the Transferring Fund or use a significant
portion of the Transferring Fund's assets in its business.
<PAGE>
STI Classic Funds
September __, 1999
Page 3
8. Immediately following consummation of the Reorganization, the
Acquiring Fund will possess the same liabilities as those possessed
by the Transferring Fund immediately prior to the Reorganization.
The fair market value of the assets of the Transferring Fund
acquired by the Acquiring Fund will exceed the liabilities of the
Transferring Fund assumed by the Acquiring Fund plus the amount of
liabilities, if any, to which the acquired assets are subject.
9. There is no intercorporate indebtedness existing between the
Acquiring Fund and the Transferring Fund that was issued, acquired,
or will be settled at a discount.
10. The Acquiring Fund will meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for
qualification and treatment as a regulated investment company.
11. The Acquiring Fund does not own nor will it acquire prior to the
consummation of the Reorganization any shares of beneficial interest
in the Transferring Fund.
12. Not more than 25 percent of the value of the total assets of both
the Transferring Fund and the Acquiring Fund is invested in the
stock and securities of any one issuer and not more than 50 percent
of the value of those total assets is invested in the stock and
securities of five or fewer issuers.
Our opinion summarizes certain Federal income tax consequences of the
Reorganization to holders of shares in the Transferring Fund (individually, a
"Shareholder" and, collectively, the "Shareholders"). Our opinion does not
address all aspects of Federal income taxation that may be relevant to
particular Shareholders and may not be applicable to Shareholders who are not
citizens or residents of the United States. Further, our opinion does not
address the effect of any applicable foreign, state, local or other tax laws.
In rendering our opinion, we have considered the applicable provisions of the
Code, Treasury Regulations, pertinent judicial authorities, interpretive rulings
of the Internal Revenue Service and such other authorities as we have considered
relevant.
Based upon and subject to the foregoing, we are of the opinion that the
Reorganization will, under current law, constitute a tax-free reorganization
under Section 368(a) of the Code, and
<PAGE>
STI Classic Funds
September __, 1999
Page 4
that the Transferring Fund and Acquiring Fund will each be a party to the
reorganization within the meaning of Section 368(b) of the Code.
The Reorganization, as a tax-free reorganization, will have the following
Federal income tax consequences for the Shareholders, the Transferring Fund, and
the Acquiring Fund:
1. No gain or loss will be recognized by the Transferring Fund upon the
transfer of its assets in exchange solely for the Acquiring Fund's
Shares and the assumption by the Acquiring Fund of the Transferring
Fund's stated liabilities;
2. No gain or loss will be recognized by the Acquiring Fund on its
receipt of the Transferring Fund's assets in exchange for the
Acquiring Fund's Shares and the assumption by the Acquiring Fund of
the Transferring Fund's stated liabilities;
3. The basis of the Transferring Fund's assets in the Acquiring Fund's
hands will be the same as the basis of those assets in the
Transferring Fund's hands immediately before the Reorganization;
4. The Acquiring Fund's holding period for the assets transferred to
the Acquiring Fund by the Transferring Fund will include the holding
period of those assets in the Transferring Fund's hands immediately
before the Reorganization;
5. No gain or loss will be recognized by the Transferring Fund on the
distribution of the Acquiring Fund's Shares to the Transferring
Fund's shareholders in exchange for Transferring Fund's Shares;
6. No gain or loss will be recognized by the Transferring Fund's
shareholders as a result of the Transferring Fund's distribution of
Acquiring Fund's Shares to the Transferring Fund's shareholders in
exchange for the Transferring Fund's shareholders' Transferring
Fund's Shares;
7. The basis of the Acquiring Fund's Shares received by the
Transferring Fund's shareholders will be the same as the adjusted
basis of that
<PAGE>
STI Classic Funds
September __, 1999
Page 5
Transferring Fund's shareholders' Transferring Fund's Shares
surrendered in exchange therefor; and
8. The holding period of the Acquiring Fund's Shares received by the
Transferring Fund's shareholders will include the Transferring
Fund's shareholders' holding period for the Transferring Fund's
shareholders' Transferring Fund's Shares surrendered in exchange
therefor, provided that said Transferring Fund's Shares were held as
capital assets on the date of the Reorganization.
Except as set forth above, we express no opinion as to the tax consequences to
any party, whether Federal, state, local or foreign, of the Reorganization or
the Agreement or of any transactions related to the Reorganization or the
Agreement or contemplated by the Reorganization or the Agreement. This opinion
is being furnished to you on behalf of the Transferring Fund and the Acquiring
Fund in connection with the Reorganization and the Agreement and solely for your
benefit in connection therewith and may not be used or relied upon for any other
purpose and may not be circulated, quoted or otherwise referred to for any other
purpose without our express written consent.
Very truly yours,
<PAGE>
September , 1999
STI Classic Funds
2 Oliver Street
Boston, MA 02109
Re: AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN
STI CLASSIC FUNDS (THE "TRUST"), ON BEHALF OF ITS
INTERNATIONAL EQUITY FUND, AND THE TRUST ON
BEHALF OF ITS EMERGING MARKETS EQUITY FUND
Ladies and Gentlemen:
We have acted as counsel to STI Classic Funds (the "Trust"), a Massachusetts
business trust, in connection with the execution and delivery of the Agreement
and Plan of Reorganization (the "Agreement"), dated as of September __, 1999, by
and between the Trust, on behalf of its International Equity Fund (the
"Acquiring Fund"), and the Trust on behalf of its Emerging Markets Equity Fund
(the "Transferring Fund"), relating to the transfer of all the assets and
liabilities of the Transferring Fund in exchange for shares of the Acquiring
Fund, followed by the distribution of such Shares (the "Acquiring Fund's
Shares") to the holders of shares of the Transferring Fund ("Transferring Fund's
Shares") in exchange for such Transferring Fund's Shares in complete liquidation
of the Transferring Fund (the "Reorganization"), pursuant to the Agreement. This
opinion letter is delivered to you pursuant to Section 8(d) of the Agreement.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Agreement.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Agreement, and (ii) such other documents as we have deemed necessary or
appropriate in order to enable us to render the opinion below. In our
examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified,
<PAGE>
STI Classic Funds
September __, 1999
Page 2
conformed or photostatic copies and the authenticity of the originals of such
copies. Our opinion is based in part on the facts set forth below. We have not
undertaken an independent investigation or verification of these facts or of the
information set forth either in the aforementioned documents or in other
documents that we have reviewed.
1. The Reorganization will be consummated in compliance with the
material terms of the Agreement, and none of the material terms and
conditions therein have been waived or modified and neither party
has any plan or intention to waive or modify any such material
condition.
2. The Acquiring Fund and the Transferring Fund each have been and will
continue to be treated as a corporation for Federal income tax
purposes.
3. The fair market value of the Acquiring Fund's Shares to be received
by the Transferring Fund's shareholders in the Reorganization will
be approximately equal to the fair market value of the shares in the
Transferring Fund surrendered and exchanged therefor.
4. No consideration other than the Acquiring Fund's Shares and the
assumption by the Acquiring Fund of the stated liabilities of the
Transferring Fund will be issued in exchange for the assets of the
Transferring Fund in the Reorganization.
5. The Acquiring Fund has no plan or intention to sell additional
shares of beneficial interest in the Acquiring Fund or to redeem or
otherwise reacquire any of the Acquiring Fund's Shares issued in the
Reorganization other than in the ordinary course of its business as
a regulated investment company.
6. The Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the Transferring Fund's assets to be acquired by
it in the Reorganization except for dispositions made in the
ordinary course of its business as a regulated investment company.
7. Following the Reorganization, the Acquiring Fund will continue the
historic business of the Transferring Fund or use a significant
portion of the Transferring Fund's assets in its business.
8. Immediately following consummation of the Reorganization, the
Acquiring Fund will possess the same liabilities as those possessed
by the Transferring
<PAGE>
STI Classic Funds
September __, 1999
Page 3
Fund immediately prior to the Reorganization. The fair market value
of the assets of the Transferring Fund acquired by the Acquiring
Fund will exceed the liabilities of the Transferring Fund assumed by
the Acquiring Fund plus the amount of liabilities, if any, to which
the acquired assets are subject.
9. There is no intercorporate indebtedness existing between the
Acquiring Fund and the Transferring Fund that was issued, acquired,
or will be settled at a discount.
10. The Acquiring Fund will meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for
qualification and treatment as a regulated investment company.
11. The Acquiring Fund does not own nor will it acquire prior to the
consummation of the Reorganization any shares of beneficial interest
in the Transferring Fund.
12. Not more than 25 percent of the value of the total assets of both
the Transferring Fund and the Acquiring Fund is invested in the
stock and securities of any one issuer and not more than 50 percent
of the value of those total assets is invested in the stock and
securities of five or fewer issuers.
Our opinion summarizes certain Federal income tax consequences of the
Reorganization to holders of shares in the Transferring Fund (individually, a
"Shareholder" and, collectively, the "Shareholders"). Our opinion does not
address all aspects of Federal income taxation that may be relevant to
particular Shareholders and may not be applicable to Shareholders who are not
citizens or residents of the United States. Further, our opinion does not
address the effect of any applicable foreign, state, local or other tax laws.
In rendering our opinion, we have considered the applicable provisions of the
Code, Treasury Regulations, pertinent judicial authorities, interpretive rulings
of the Internal Revenue Service and such other authorities as we have considered
relevant.
Based upon and subject to the foregoing, we are of the opinion that the
Reorganization will, under current law, constitute a tax-free reorganization
under Section 368(a) of the Code, and that the Transferring Fund and Acquiring
Fund will each be a party to the reorganization within the meaning of Section
368(b) of the Code.
<PAGE>
STI Classic Funds
September __, 1999
Page 4
The Reorganization, as a tax-free reorganization, will have the following
Federal income tax consequences for the Shareholders, the Transferring Fund, and
the Acquiring Fund:
1. No gain or loss will be recognized by the Transferring Fund upon the
transfer of its assets in exchange solely for the Acquiring Fund's
Shares and the assumption by the Acquiring Fund of the Transferring
Fund's stated liabilities;
2. No gain or loss will be recognized by the Acquiring Fund on its
receipt of the Transferring Fund's assets in exchange for the
Acquiring Fund's Shares and the assumption by the Acquiring Fund of
the Transferring Fund's stated liabilities;
3. The basis of the Transferring Fund's assets in the Acquiring Fund's
hands will be the same as the basis of those assets in the
Transferring Fund's hands immediately before the Reorganization;
4. The Acquiring Fund's holding period for the assets transferred to
the Acquiring Fund by the Transferring Fund will include the holding
period of those assets in the Transferring Fund's hands immediately
before the Reorganization;
5. No gain or loss will be recognized by the Transferring Fund on the
distribution of the Acquiring Fund's Shares to the Transferring
Fund's shareholders in exchange for Transferring Fund's Shares;
6. No gain or loss will be recognized by the Transferring Fund's
shareholders as a result of the Transferring Fund's distribution of
Acquiring Fund's Shares to the Transferring Fund's shareholders in
exchange for the Transferring Fund's shareholders' Transferring
Fund's Shares;
7. The basis of the Acquiring Fund's Shares received by the
Transferring Fund's shareholders will be the same as the adjusted
basis of that Transferring Fund's shareholders' Transferring Fund's
Shares surrendered in exchange therefor; and
8. The holding period of the Acquiring Fund's Shares received by the
Transferring Fund's shareholders will include the Transferring
Fund's
<PAGE>
STI Classic Funds
September __, 1999
Page 5
shareholders' holding period for the Transferring Fund's
shareholders' Transferring Fund's Shares surrendered in exchange
therefor, provided that said Transferring Fund's Shares were held as
capital assets on the date of the Reorganization.
Except as set forth above, we express no opinion as to the tax consequences to
any party, whether Federal, state, local or foreign, of the Reorganization or
the Agreement or of any transactions related to the Reorganization or the
Agreement or contemplated by the Reorganization or the Agreement. This opinion
is being furnished to you on behalf of the Transferring Fund and the Acquiring
Fund in connection with the Reorganization and the Agreement and solely for your
benefit in connection therewith and may not be used or relied upon for any other
purpose and may not be circulated, quoted or otherwise referred to for any other
purpose without our express written consent.
Very truly yours,
<PAGE>
Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated July 23, 1999 on
the May 31, 1999 financial statements of STI Classic Funds, included in
Post-Effective Amendment No. 32 to the Registration Statement on Form N-1A dated
September 27, 1999, and to all references to our firm included in this Form N-14
Registration Statement.
/s/ Arthur Andersen LLP
Philadelphia, PA
September 28, 1999
