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