SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
STI CLASSIC VARIABLE TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:______________________________________________
2) Form, Schedule or Registration Statement No.:________________________
3) Filing Party:________________________________________________________
4) Date Filed:_______________________
STI CLASSIC FUNDS
STI CLASSIC VARIABLE TRUST
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 15, 2004
Notice is hereby given that a Special Meeting of Shareholders of STI
Classic Funds and STI Classic Variable Trust (each a "Trust" and together, the
"Trusts") will be held at the offices of BISYS Fund Services Ohio, Inc., 100
Summer Street, Suite 1500, Boston, MA 02110, on November 15, 2004 at 9:30 a.m.
Eastern Time (the "Special Meeting"). The Special Meeting is being called for
the purpose of considering the proposals set forth below and to transact such
other business as may be properly brought before the Special Meeting.
PROPOSAL 1: To consider and vote on the election of members to the Board of
Trustees of the Trusts.
PROPOSAL 2: To approve the investment subadvisory agreement between Trusco
Capital Management, Inc. and Zevenbergen Capital Investments LLC
with respect to STI Classic Funds' Aggressive Growth Stock Fund and
Emerging Growth Stock Fund.
Only shareholders of the Trusts at the close of business on September
23, 2004, are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE COMPLETE
AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. A POSTAGE PAID ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE SO THAT YOU MAY RETURN YOUR PROXY CARD AS SOON AS POSSIBLE.
YOU MAY ALSO VOTE EASILY AND QUICKLY BY TELEPHONE OR THROUGH THE INTERNET AS
DESCRIBED IN THE ENCLOSED PROXY CARD. TO DO SO, PLEASE FOLLOW THE INSTRUCTIONS
INCLUDED ON YOUR ENCLOSED PROXY CARD. IT IS MOST IMPORTANT AND IN YOUR INTEREST
FOR YOU TO VOTE SO THAT A QUORUM WILL BE PRESENT AND A MAXIMUM NUMBER OF SHARES
MAY BE VOTED. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
/s/ R. Jeffrey Young
---------------------------
R. Jeffrey Young
President
Dated: , 2004
STI CLASSIC FUNDS
STI CLASSIC VARIABLE TRUST
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
--------------------------
JOINT PROXY STATEMENT
--------------------------
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 15, 2004
This joint proxy statement is furnished by the Board of Trustees of STI
Classic Funds and STI Classic Variable Trust (each a "Trust" and together, the
"Trusts") in connection with the solicitation of proxies for use at the special
meeting of shareholders (the "Special Meeting") of each Trust to be held on
Monday, November 15, 2004, at 9:30 a.m. Eastern Time, or at any adjournment
thereof, at the offices of BISYS Fund Services Ohio, Inc., 100 Summer Street,
Suite 1500, Boston, MA 02110. It is expected that the Notice of Special Meeting,
this proxy statement, and a proxy card will be mailed to shareholders on or
about October 11, 2004.
SUMMARY
At the Special Meeting, the following shareholders will be asked to
vote on the following proposals:
<Table>
<Caption>
DESCRIPTION OF PROPOSAL SHAREHOLDERS SOLICITED
To consider and vote on the election of members to the All shareholders of STI Classic Funds and STI
Board of Trustees of the Trusts Classic Variable Trust
To approve the investment subadvisory agreement
between Trusco Capital Management, Inc. and All shareholders of STI Classic Funds' Aggressive
Zevenbergen Capital Investments LLC with respect to Growth Stock Fund and Emerging Growth Stock
STI Classic Funds' Aggressive Growth Stock Fund and Fund
Emerging Growth Stock Fund
</Table>
If you do not expect to be present at the Special Meeting and wish your
shares to be voted, please vote your proxy by mail, telephone or Internet
allowing sufficient time for the proxy to be received on or before the close of
business on November 14, 2004. If your proxy is properly returned by that date,
shares represented by your proxy will be voted at the Special Meeting in
accordance with your instructions. However, if no instructions are specified on
the proxy with respect to a proposal, the proxy will be voted FOR the approval
of the proposal and in accordance with the judgment of the persons appointed as
proxies upon any other matter that may properly come before the Special Meeting.
Shareholders may revoke their proxies at any time prior to the time they are
voted by giving written notice to the Secretary of the Trusts, by delivering a
subsequently dated proxy, or by attending and voting at the Special Meeting.
The close of business on September 23, 2004 has been fixed as the
record date (the "Record Date") for the determination of shareholders entitled
to notice of, and to vote at, the Special Meeting and any adjournment thereof.
Each full share will be entitled to one vote at the Special Meeting and each
fraction of a share will be entitled to the fraction of a vote equal to the
proportion of a full share represented by the fractional share. As of the Record
Date, the Trusts had the following shares outstanding:
STI CLASSIC FUNDS
CORPORATE
A B TRUST INSTITUTIONAL L T TOTAL SHARES
FUND SHARES SHARES SHARES SHARES SHARES SHARES OUTSTANDING
Aggressive Growth Stock Fund 8,404 8,780 3,620,440
Balanced Fund 760,342 4,820,736 20,000,592
Capital Appreciation Fund 11,895,908 8,312,892 124,370,731
Classic Institutional Cash
Management Money Market Fund 2,697,874,787
Classic Institutional High Quality
Bond Fund 4,410,434 12,240,053
Classic Institutional Short-Term
Bond Fund 3,415,669
Classic Institutional Super Short
Income Plus Fund 43,837,761 71,701,580
Classic Institutional Total Return
Bond Fund 1,445,123 3,292,127
Classic Institutional U.S.
Government Securities Money
Market Fund 890,682,362
Classic Institutional U.S.
Government Securities Super Short
Income Plus Fund
Classic Institutional U.S. Treasury
Securities Money Market Fund 1,365,964,249 387,656,245
Emerging Growth Stock Fund 8,342 2,593 1,783,034
Florida Tax-Exempt Bond Fund 635,036 1,490,797 14,259,863
Georgia Tax-Exempt Bond Fund 250,167 1,113,829 9,427,438
Growth and Income Fund 3,071,709 6,347,068 53,867,550
High Income Fund 210,673 8,994,372 6,530,348
Information and Technology Fund 185 953,562 1,154,678
International Equity Fund 712,696 800,941 34,794,268
International Equity Index Fund 1,418,900 510,433 32,734,464
Investment Grade Bond Fund 2,924,602 2,070,108 52,777,924
Investment Grade Tax-Exempt Bond Fund 1,607,644 1,630,977 19,424,176
Life Vision Aggressive Growth Fund 92,008 465,838 3,820,592
Life Vision Conservative Fund 37,252 482,719 3,787
Life Vision Growth and Income Fund 232,845 1,389,503 7,481,493
Life Vision Moderate Growth Fund 428,656 1,376,051 12,071,223
Limited-Term Federal Mortgage
Securities Fund 844,442 4,953,681 43,453
Maryland Municipal Bond Fund 1,582,559 2,844,999
Mid-Cap Equity Fund 1,778,974 1,563,398 16,436,708
Mid-Cap Value Equity Fund 92,792 692,059 15,177,515
Prime Quality Money Market Fund 1,886,887,700 15,387,238 2,988,847,517
Short-Term Bond Fund 635,935 2,046,151 27,560,117
Short-Term U.S. Treasury Securities
Fund 1,218,698 4,900,668 8,791,097
Small Cap Growth Stock Fund 2,188,470 1,951,764 38,208,114
Small Cap Value Equity Fund 253,045 2,403,910 35,502,818
Strategic Income Fund 417,759 9,532,799 10,800,745
Strategic Quantitative Equity Fund 17,682 131,065 6,015,904
Tax-Exempt Money Market Fund 278,434,599 984,873,789
Tax Sensitive Growth Stock Fund 30,608 3,704,030 4,945,031
U.S. Government Securities Fund 827,363 1,546,617 28,486,372
U.S. Government Securities Money
Market Fund 234,940,177 585,427,931
CORPORATE
A B TRUST INSTITUTIONAL L T TOTAL SHARES
FUND SHARES SHARES SHARES SHARES SHARES SHARES OUTSTANDING
U.S. Treasury Money Market Fund 401,084 1,361,021,065
Value Income Stock Fund 6,236,607 4,821,869 64,501,177
Virginia Intermediate Municipal
Bond Fund 1,063,280 17,409,334
Virginia Municipal Bond Fund 18,258 795,143 4,395,552
Virginia Tax-Free Money Market
Fund 110,732,382 197,755,573
STI CLASSIC VARIABLE TRUST
FUND TOTAL SHARES OUTSTANDING
Capital Appreciation Fund 3,456,659
Growth and Income Fund 1,019,304
International Equity Fund 631,199
Investment Grade Bond Fund 1,701,640
Mid-Cap Equity Fund 1,453,655
Small Cap Value Equity Fund 1,398,292
Value Income Stock Fund 3,284,893
EXPENSES
The expenses of the Special Meeting will be borne proportionately by
each series of each Trust based on the assets of such series. The solicitation
of proxies will be largely by mail, but may include telephonic, Internet or oral
communication by officers and service providers of the Trusts.
UPON REQUEST, EACH TRUST WILL FURNISH TO ITS SHAREHOLDERS, WITHOUT
CHARGE, A COPY OF ITS ANNUAL REPORT (FOR STI CLASSIC FUNDS, FISCAL YEAR ENDED
MAY 31, 2004, AND FOR STI CLASSIC VARIABLE TRUST, FISCAL YEAR ENDED DECEMBER 31,
2003). IN ADDITION, THE SEMI-ANNUAL REPORT FOR STI CLASSIC VARIABLE TRUST FOR
THE PERIOD ENDED JUNE 30, 2004 IS ALSO AVAILABLE WITHOUT CHARGE. THE ANNUAL
REPORTS AND SEMI-ANNUAL REPORT MAY BE OBTAINED BY WRITING TO THE TRUSTS C/O
BISYS FUND SERVICES, LIMITED PARTNERSHIP, 3435 STELZER ROAD, COLUMBUS, OHIO
43219 OR BY CALLING 1-800-428-6970.
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DISCUSSION OF PROPOSAL 1: ELECTION OF THE BOARD OF TRUSTEES
PROPOSAL 1: TO CONSIDER AND VOTE ON THE ELECTION OF MEMBERS TO THE BOARD OF
TRUSTEES OF THE TRUSTS
SHAREHOLDERS VOTING ON PROPOSAL 1: SHAREHOLDERS OF STI CLASSIC FUNDS AND STI
CLASSIC VARIABLE TRUST
SUMMARY
At the Special Meeting, it is proposed that nine Trustees be elected to
hold office until their successors are duly elected and qualified. The persons
named in the accompanying proxy intend, in the absence of contrary instructions,
to vote all proxies on behalf of the shareholders for the election of Richard W.
Courts, II, Clarence H. Ridley, Thomas C. Gallagher, F. Wendell Gooch, James O.
Robbins, Jonathan T. Walton, Sydney E. Harris, Warren Y. Jobe, and Charles D.
Winslow (each a "Nominee" and collectively, the "Nominees"). FOR THE REASONS
DISCUSSED BELOW, THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION
OF ALL NOMINEES.
GENERAL INFORMATION
You are being asked to approve the election of the Nominees as Trustees
of the Trusts because regulations recently adopted by the SEC will soon require
75% of the members of the Trusts' Board to be independent. Currently, 66% of the
Board's members are independent. As explained below, shareholder approval is
necessary to increase the number of independent members of the Board.
The Trusts' Board of Trustees currently consists of six Trustees, four
of whom have been elected by shareholder vote and two of whom have been
appointed by the Board. At a meeting held on August 20, 2004, the Board of
Trustees approved the nomination of Thomas C. Gallagher, F. Wendell Gooch, James
O. Robbins, Jonathan T. Walton, Richard W. Courts II, and Clarence H. Ridley,
each of whom is a current member of the Board. If approved by shareholders at
the Special Meeting, they will continue to serve as members of the Board of
Trustees of the Trusts. At the meeting, the Board of Trustees also approved the
nomination of Sydney E. Harris, Warren Y. Jobe, and Charles D. Winslow, each a
Trustee candidate to the Board. If approved by shareholders at the Special
Meeting, they will begin serving as members of the Board of Trustees of the
Trusts immediately after the Special Meeting.
Section 16(a) of the Investment Company Act of 1940 (the "1940 Act")
requires the trustees of an investment company to be elected by shareholder
vote. Nonetheless, the 1940 Act permits a board to fill vacancies on the board,
without seeking shareholder approval, if immediately after filling vacancies at
least two-thirds of the members have been elected. However, if at any time less
than a majority of members have been elected by shareholders, a shareholder
meeting to elect members must be held within 60 days.
If the three Trustee candidates were appointed by the Board, the Board
would have less than two-thirds of its members elected by shareholder vote. In
light of the legal requirements under the 1940 Act, the Board would at that time
be required to call a shareholder meeting for the election of trustees. As a
result, rather than having the Board appoint the three Trustee candidates, the
Board has determined that it would be in the best interests of the shareholders
to call a shareholder meeting at this time and recommend the election of each
Nominee.
Each of the Nominees has consented to being named in this proxy
statement and serving as a Trustee if elected. The Trusts know of no reason why
any Nominee would be unable or unwilling to serve if elected. Because the Trusts
do not hold regular annual shareholder meetings, each Nominee, if elected, will
hold office until the earlier of his resignation or his successor is duly
appointed or elected and qualified.
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INFORMATION REGARDING TRUSTEES AND NOMINEES
The following information is provided for each Nominee. As of September
23, 2004, the Nominees and officers of the Trusts, as a group, beneficially
owned less than 1% of the total outstanding shares of each Trust.
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
OVERSEEN BY
POSITION(S) TERM OF OFFICE TRUSTEE OR OTHER DIRECTORSHIPS
NAME, ADDRESS, HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY TRUSTEE OR
AND AGE THE TRUSTS TIME SERVED DURING PAST 5 YEARS TRUSTEE* NOMINEE FOR TRUSTEE
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NOMINEES FOR INTERESTED TRUSTEES (CURRENTLY SERVE AS INTERESTED TRUSTEES)**
Richard W. Trustee No set term; Chairman of the Board of 59 Director, Cousins
Courts, II, 68 served since Atlantic Investment Company Properties, Inc.;
November 2001 since 1970. Director, Genuine
Parts Company;
Director, Piedmont
Hospital; Director,
SunTrust Bank,
Atlanta; Chairman,
Courts Foundation;
Chairman, J. Bulow
Campbell Foundation
Clarence H. Trustee No set term; Chairman of the Board of 59 Director, Carvel
Ridley, 62 served since Haverty Furniture Companies Corp.; Director,
November 2001 since 2001. Partner at Crawford & Co.;
King and Spalding LLP (law Director, High
firm) from 1977 to 2000. Museum of Atlanta;
Chairman, St.
Joseph's Hospital
Atlanta.
NOMINEES FOR INDEPENDENT TRUSTEES (CURRENTLY SERVE AS INDEPENDENT TRUSTEES)**
Thomas C. Trustee No set term; President and CEO, Genuine 59 Director, Shepherd
Gallagher, 56 served since May Parts Company Wholesale Center; Director,
2000 Distribution. NAPA; Director,
Genuine Parts
Company; Director,
Oxford Industries;
Director, Stone
Mountain Industrial
Park; Trustee, The
Lovett School.
F. Wendell Trustee No set term; Retired. 59 Current Trustee on
Gooch, 71 served since May the Board of
1992 Trustees for the SEI
Family of Funds and
The Capitol Mutual
Funds.
James O. Trustee No set term; President and Chief 59 Director, Cox
Robbins, 62 served since May Executive Officer, Cox Communications;
2000 Communications, Inc., 1985 Director, National
to present. Cable and
Telecommunications
Association;
Director, Discovery
Channel; Director,
5
NUMBER OF
PORTFOLIOS IN
FUND COMPLEX
OVERSEEN BY
POSITION(S) TERM OF OFFICE TRUSTEE OR OTHER DIRECTORSHIPS
NAME, ADDRESS, HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) NOMINEE FOR HELD BY TRUSTEE OR
AND AGE THE TRUSTS TIME SERVED DURING PAST 5 YEARS TRUSTEE* NOMINEE FOR TRUSTEE
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Cable Labs;
Director, C-Span;
Trustee, St. Paul's
Schools.
Jonathan T. Trustee No set term; Retired. 59 Trustee, W.K.
Walton, 74 served since Kellogg Foundation.
February 1998
NOMINEES FOR INDEPENDENT TRUSTEES (CURRENTLY TRUSTEE CANDIDATES)**
Sydney E. Harris, N/A N/A Dean of Robinson College of 59 Director, The
55 Business, Georgia State ServiceMaster
University since 1997. Company; Director,
Total System
Services, Inc.
Warren Y. Jobe, 63 N/A N/A Retired. Senior Vice 59 Director, WellPoint
President of Southern Health Networks;
Company and Executive Vice Director, Unisource
President of Georgia Power Energy Corp. and
from 1998 to 2001. Tucson Electric
Power.
Charles D. N/A N/A Retired. 59 Chairman of the
Winslow, 69 Board, Electronic
Business Services,
Inc.
* The "Fund Complex" consists of STI Classic Funds and STI Classic Variable
Trust.
** Trustees who are not deemed to be "interested persons" of the Trusts as
defined in the 1940 Act are referred to as "Independent Trustees." Trustees
who are deemed to be "interested persons" of the Trusts are referred to as
"Interested Trustees." Mr. Courts is deemed an interested Trustee because
of his directorships with affiliates of the Trusts' investment adviser,
Trusco Capital Management, Inc. (the "Adviser"). Mr. Ridley is deemed an
Interested Trustee because of his material business relationships with the
parent to the Adviser.
COMPENSATION OF TRUSTEES AND OFFICERS
The officers of the Trusts do not receive any direct compensation from
their respective Trust. Each Trustee who is not an officer, employee or director
of the Trusts' investment adviser or its affiliates receives an aggregate annual
fee plus a fee per meeting attended (plus reimbursement for reasonable
out-of-pocket expenses incurred in connection with attendance at Board and
committee meetings) from the relevant Trust. Payment of such fees and expenses
is allocated between each Trust. The aggregate compensation payable by the
Trusts to each of the Trustees serving during their respective fiscal years is
set forth in the compensation tables below.
STI CLASSIC FUNDS (AS OF MAY 31, 2004)
TOTAL
PENSION OR RETIREMENT COMPENSATION
AGGREGATE BENEFITS ESTIMATED ANNUAL FROM FUND AND FUND
COMPENSATION ACCRUED AS PART BENEFITS UPON COMPLEX PAID TO
NAME OF TRUSTEE FROM THE TRUST OF FUND EXPENSES RETIREMENT TRUSTEE*
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Richard W. Courts, II $38,500 N/A N/A $42,000
Clarence H. Ridley $40,000 N/A N/A $43,500
Thomas Gallagher $46,000 N/A N/A $50,500
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TOTAL
PENSION OR RETIREMENT COMPENSATION
AGGREGATE BENEFITS ESTIMATED ANNUAL FROM FUND AND FUND
COMPENSATION ACCRUED AS PART BENEFITS UPON COMPLEX PAID TO
NAME OF TRUSTEE FROM THE TRUST OF FUND EXPENSES RETIREMENT TRUSTEE*
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F. Wendell Gooch $38,500 N/A N/A $42,000
James O. Robbins $38,500 N/A N/A $42,000
Jonathan T. Walton $40,000 N/A N/A $43,500
* The "Fund Complex" consists of STI Classic Funds and STI Classic Variable
Trust.
STI CLASSIC VARIABLE TRUST (AS OF DECEMBER 31, 2003)
TOTAL
PENSION OR RETIREMENT COMPENSATION
AGGREGATE BENEFITS ESTIMATED ANNUAL FROM FUND AND FUND
COMPENSATION FROM THE ACCRUED AS PART BENEFITS UPON COMPLEX PAID TO
NAME OF TRUSTEE TRUST OF FUND EXPENSES RETIREMENT TRUSTEE*
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Richard W. Courts, II $2,100 N/A N/A $35,000
Clarence H. Ridley $2,600 N/A N/A $40,500
Thomas Gallagher $3,200 N/A N/A $45,500
F. Wendell Gooch $2,600 N/A N/A $39,000
James O. Robbins $2,600 N/A N/A $37,500
Jonathan T. Walton $2,600 N/A N/A $40,500
* The "Fund Complex" consists of STI Classic Funds and STI Classic Variable
Trust.
OWNERSHIP OF FUND SECURITIES
The tables below show the dollar range of equity securities
beneficially owned by each Nominee as of December 31, 2003.
STI CLASSIC FUNDS
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL FUNDS OVERSEEN OR
TO BE OVERSEEN BY TRUSTEE OR
NOMINEE IN FAMILY OF INVESTMENT
NAME OF NOMINEE DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND COMPANIES
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Richard W. Courts, II None None
Clarence H. Ridley None None
Thomas C. Gallagher $1-$10,000 (Capital Appreciation Fund) $10,001-$50,000
$1-$10,000 (Growth and Income Fund)
$1-$10,000 (Information and Technology Fund)
$1-$10,000 (Prime Quality Money Market Fund)
$1-$10,000 (Small Cap Growth Stock Fund)
$1-$10,000 (Small Cap Value Equity Fund)
$1-$10,000 (Tax Sensitive Growth Stock Fund)
$1-$10,000 (Value Income Stock Fund)
F. Wendell Gooch $10,001-$50,000 (Information and Technology Fund) $50,001-$100,000
$10,001-$50,000 (Tax Sensitive Growth Stock Fund)
James O. Robbins None None
Jonathan T. Walton $1-$10,000 (Information and Technology Fund) $10,001-$50,000
$1-$10,000 (Small Cap Growth Stock Fund)
$1-$10,000 (Tax Sensitive Growth Stock Fund)
$10,001-$50,000 (Capital Appreciation Fund)
$1-$10,000 (Prime Quality Money Market Fund)
7
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL FUNDS OVERSEEN OR
TO BE OVERSEEN BY TRUSTEE OR
NOMINEE IN FAMILY OF INVESTMENT
NAME OF NOMINEE DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND COMPANIES
- ------------------------------------------------------------------------------------------------------------------------------------
$10,001-$50,000 (Small Cap Value Equity Fund)
$10,001-$50,000 (Value Income Stock Fund)
Sydney E. Harris None None
Warren Y. Jobe None None
Charles D. Winslow None None
STI CLASSIC VARIABLE TRUST
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL FUNDS OVERSEEN OR TO
DOLLAR RANGE OF EQUITY SECURITIES IN BE OVERSEEN BY TRUSTEE OR NOMINEE IN
NAME OF NOMINEE THE FUND FAMILY OF INVESTMENT COMPANIES
- ------------------------------------------------------------------------------------------------------------------------------------
Richard W. Courts, II None None
Clarence H. Ridley None None
Thomas C. Gallagher None None
F. Wendell Gooch None None
James O. Robbins None None
Jonathan T. Walton None None
Sydney E. Harris None None
Warren Y. Jobe None None
Charles D. Winslow None None
MEETINGS AND COMMITTEES OF THE BOARD OF TRUSTEES
The Board of Trustees held four regular meetings during STI Classic
Funds' most recent fiscal year ended May 31, 2004, and four regular meetings
during STI Classic Variable Trust's most recent fiscal year ended December 31,
2003. In addition, the Board of Trustees held three special meetings during STI
Classic Funds' most recent fiscal year and three special meetings during STI
Classic Variable Trust's most recent fiscal year.
The Board of Trustees has an Audit Committee, which operates pursuant
to a written charter approved by the Board and is composed of all of the
Independent Trustees. On behalf of each Trust, the Audit Committee makes
recommendations to the full Board of Trustees with respect to the engagement of
independent auditors. The Audit Committee reviews, with the independent
auditors, the results of the audit engagement and matters having a material
effect on the Trust's financial operations. The members of the Trusts' Audit
Committee currently are Thomas C. Gallagher, F. Wendell Gooch, James O. Robbins,
and Jonathan T. Walton, each of whom is an Independent Trustee. Mr. Gooch is
Chairman of the Audit Committee. If elected at the Special Meeting, Messrs.
Gallagher, Gooch, Walton, and Robbins will continue to serve on the Audit
Committee and Messrs. Harris, Jobe, and Winslow will also serve going forward.
The Audit Committee met 2 times during STI Classic Funds' most recent fiscal
year and 2 times during STI Classic Variable Trust's most recent fiscal year.
The Board of Trustees also has a Nominating Committee composed of all
of the Independent Trustees. The Nominating Committee's principal responsibility
is to consider, recommend, and nominate trustee candidates to the Board. The
Nominating Committee does not have a charter or specific procedures in place to
consider nominees recommended by shareholders, but would consider such nominees
if submitted in accordance with Rule 14a-8 of the Securities Exchange Act of
1934 in conjunction with a shareholder meeting to consider the election of
Trustees. The members of the Nominating Committee currently are Messrs.
Gallagher, Gooch,
8
Robbins and Walton, each of whom is an Independent Trustee. Mr. Gooch is
Chairman of the Nominating Committee. If elected at the Special Meeting, Messrs.
Gallagher, Gooch, Robbins, and Walton will continue to serve on the Nominating
Committee and Messrs. Harris, Jobe, and Winslow will also serve going forward.
The Nominating Committee met 1 time during STI Classic Funds' most recent fiscal
year and did not meet during STI Classic Variable Trust's most recent fiscal
year.
COMMUNICATIONS WITH THE BOARD
Shareholders wishing to submit written communications to the Board
should send their communications c/o BISYS Fund Services Ohio, Inc., 3435
Stelzer Road, Columbus, Ohio 43219. Any such communications received will be
reviewed by the Board at its next regularly scheduled meeting.
BOARD APPROVAL OF THE ELECTION OF TRUSTEES
At the meeting of the Board of Trustees held on August 20, 2004, the
Board of Trustees voted to approve a Special Shareholder Meeting to elect each
of the Nominees as Trustee of the Trusts. In voting to approve a Special
Shareholder Meeting to elect the Nominees, the Board of Trustees considered the
Nominees' experience and qualifications and determined that each Nominee is
qualified to serve or continue to serve as a Trustee.
SHAREHOLDER APPROVAL OF THE ELECTION OF TRUSTEES
At the Special Meeting, it is proposed that nine Trustees be elected to
hold office until their successors are duly elected and qualified. The election
of Trustees requires the affirmative vote of a plurality of all votes cast at
the Special Meeting, provided that a majority of the shares entitled to vote are
present in person or by proxy at the Special Meeting. The persons named in the
accompanying proxy intend, in the absence of contrary instructions, to vote all
proxies on behalf of the shareholders for the election of Richard W. Courts, II,
Clarence H. Ridley, Thomas C. Gallagher, F. Wendell Gooch, James O. Robbins,
Jonathan T. Walton, Sydney E. Harris, Warren Y. Jobe, and Charles D. Winslow. If
you return your proxy but give no voting instructions, your shares will be voted
FOR all Nominees named herein. If the Nominees are not approved by shareholders
of the Trusts, the current Boards of Trustees will remain in place and will
consider alternative nominations.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU
VOTE FOR EACH OF THE NOMINEES
DISCUSSION OF PROPOSAL 2: APPROVAL OF NEW SUBADVISORY AGREEMENT
PROPOSAL 2: TO APPROVE A NEW SUBADVISORY AGREEMENT BETWEEN TRUSCO CAPITAL
MANAGEMENT, INC. AND ZEVENBERGEN CAPITAL INVESTMENTS LLC WITH RESPECT TO STI
CLASSIC FUNDS' AGGRESSIVE GROWTH STOCK FUND AND EMERGING GROWTH STOCK FUND.
SHAREHOLDERS VOTING ON PROPOSAL 2: SHAREHOLDERS OF STI CLASSIC FUNDS' AGGRESSIVE
GROWTH STOCK FUND AND EMERGING GROWTH STOCK FUND.
SUMMARY
At the Special Meeting, it is proposed that a new investment
subadvisory agreement (the "New Subadvisory Agreement") between Trusco Capital
Management, Inc. (the "Adviser") and Zevenbergen Capital Investments LLC (the
"Subadviser") be approved by shareholders of STI Classic Funds' Aggressive
Growth Stock Fund and Emerging Growth Stock Fund (each a "Fund" and together,
the "Funds"). The persons named in the accompanying proxy intend, in the absence
of contrary instructions, to vote all proxies on behalf of the shareholders for
the approval of the New Subadvisory Agreement. FOR THE REASONS DISCUSSED BELOW,
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE NEW
SUBADVISORY AGREEMENT.
GENERAL INFORMATION
You are being asked to approve the New Subadvisory Agreement for the
Funds. The Adviser serves as investment adviser to the Funds pursuant to an
investment advisory agreement dated June 15, 1993. The Adviser continuously
reviews, supervises and administers each Fund's investment program. The
Subadviser serves as the subadviser to the Funds and manages the portfolios of
the Funds on a day-to-day basis pursuant to an investment subadvisory agreement
with the Adviser dated February 20, 2004 (the "Old Subadvisory Agreement"). The
Adviser oversees the Subadviser to ensure compliance with the Funds' investment
policies and guidelines and monitors the Subadviser's adherence to its
investment style. The Board of Trustees of STI Classic Funds supervises the
Adviser and the Subadviser and establishes policies that the Adviser and
Subadviser must follow in their management activities.
On October 1, 2004, the Adviser acquired a controlling interest in the
Subadviser (the "Acquisition"). The 1940 Act, which regulates investment
companies such as the Trusts, requires an investment subadvisory agreement
between an investment adviser and its subadviser to terminate automatically
whenever there is a change in control of either entity. After an investment
subadvisory agreement terminates, shareholders are required to approve a new
agreement between an investment adviser and the investment subadviser. In
anticipation of the Acquisition, the Board of Trustees of STI Classic Funds
approved an interim investment subadvisory agreement (the "Interim Subadvisory
Agreement") for the Funds so that, upon the consummation of the Acquisition, the
Funds will continue to be managed by the Subadviser. In order for the Subadviser
to continue as the investment subadviser beyond the 150-day term of the Interim
Subadvisory Agreement, and to receive all of the subadvisory fees under those
agreements, shareholders must approve the New Subadvisory Agreement (attached
hereto as Exhibit A) within the 150-day period ending on February 27, 2005.
The New Subadvisory Agreement is identical in all material respects to
the Old Subadvisory Agreement and the Interim Subadvisory Agreement. Fees
payable to the Subadviser under the New Subadvisory Agreement are identical to
those payable under the Old Subadvisory Agreement and the Interim Subadvisory
Agreement. More information about the New Subadvisory Agreement is included
below.
THE ADVISER AND SUBADVISER
The Adviser is a professional investment management firm registered
with the SEC under the Investment Advisers Act of 1940. The Board of Trustees
supervises the Adviser and establishes policies that the Adviser must follow in
its management activities. The principal business address of the Adviser is 50
Hurt
10
Plaza, Suite 1400, Atlanta, Georgia 30303. As of June 30, 2004, the Adviser had
discretionary management authority with respect to approximately $66 billion of
assets under management.
The Subadviser was founded in 1987 and manages domestic growth equity
assets. The firm's client base is comprised of a blend of institutional
tax-exempt and taxable separately managed accounts. As a domestic growth equity
manager, the Subadviser manages assets for a variety of entities, including
public funds, foundations, endowments, corporations, pooled accounts, and
private individuals. The Subadviser selects, buys, and sells securities for the
Aggressive Growth Stock Fund and the Emerging Growth Stock Fund under the
supervision of the Adviser and the Board of Trustees. The principal business
address of the Subadviser is 601 Union Street, Suite 4600, Seattle, Washington
98101. As of June 30, 2004, the Subadviser had approximately $1 billion of
assets under management.
Listed below are the names and principal occupations of each of the
directors and principal executive officers of the Subadviser. The principal
business address of each director and principal executive officer, as it relates
to his or her duties with the Subadviser, is 601 Union Street, Suite 4600,
Seattle, Washington 98101.
NAME POSITION WITH THE SUBADVISER
---- ----------------------------
Nancy A. Zevenbergen President and Chief Investment Officer
Brooke de Boutray Managing Director and Portfolio Manager
Lisa Foley Managing Director and Investment Officer
Leslie Tubbs Managing Director and Portfolio Manager
THE NEW SUBADVISORY AGREEMENT
A form of the New Subadvisory Agreement is attached to this proxy
statement as Exhibit A. The New Subadvisory Agreement is identical to the Old
Subadvisory Agreement, except for dates of execution, effectiveness and
termination. The Subadviser's fee rates for its services to the Funds under the
New Subadvisory Agreement is the same as its fee rates under the corresponding
Old Subadvisory Agreement.
Under the New Subadvisory Agreement, the Subadviser makes the
investment decisions for and continuously reviews, supervises, and administers
the investment program of the Aggressive Growth Stock Fund and the Emerging
Growth Stock Fund, subject to the supervision of, and policies established by,
the Adviser and the Trustees of STI Classic Funds. After the initial two year
term, the continuance of the New Subadvisory Agreement with respect to either
Fund must be specifically approved at least annually by (i) the vote of the
Trustees or a vote of the shareholders of the Fund and (ii) the vote of a
majority of the Trustees who are not parties to the New Subadvisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The New Subadvisory Agreement will
terminate automatically in the event of its assignment and is terminable at any
time without penalty by (i) the Trustees of STI Classic Funds or, with respect
to either Fund, by a majority of the outstanding shares of that Fund, (ii) the
Adviser at any time on not less than 30 days nor more than 60 days written
notice to the Subadviser, or (iii) the Subadviser on 90 days written notice to
the Adviser. The New Subadvisory Agreement provides that the Subadviser shall
not be protected against any liability by reason of willful misfeasance, bad
faith, or negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties thereunder.
For the fiscal year ended May 31, 2004, the Funds paid the following aggregate
brokerage commissions on portfolio transactions effected by affiliated brokers:
11
AGGREGATE
AMOUNT OF PERCENTAGE OF
COMMISSIONS THE FUND'S
PAID TO ANY AGGREGATE
AFFILIATED BROKERAGE
FUND BROKER AFFILIATED BROKER AND RELATIONSHIP COMMISSIONS
---- ------ ---------------------------------- -----------
Aggressive Growth Stock Fund
Emerging Growth Stock Fund
[DISCLOSE THE AMOUNT OF ANY FEES PAID BY THE FUND TO THE INVESTMENT SUBADVISER,
ITS AFFILIATED PERSONS OR ANY AFFILIATED PERSONS OF SUCH PERSONS DURING THE MOST
RECENT FISCAL YEAR FOR SERVICES OTHER THAN SUBADVISORY SERVICES/BROKERAGE
COMMISSIONS. STATE WHETHER THESE SERVICES WILL CONTINUE].
BOARD APPROVAL OF THE NEW SUBADVISORY AGREEMENT
At a meeting on August 20, 2004, the Board of Trustees of STI Classic
Funds approved the New Subadvisory Agreement, under which, subject to approval
by each Fund's shareholders, the Subadviser will continue to serve as investment
subadviser to each Fund. At the meeting, the Board evaluated information from
the Subadviser in order to consider the Subadviser's fee and other aspects of
the New Subadvisory Agreement. The Trustees discussed all the relevant
information that the Board received at the meeting and discussed the approval of
the New Subadvisory Agreement in light of this information. In its
deliberations, the Board did not identify any single piece of information that
was all-important or controlling. Based on the Board's deliberations and its
evaluation of the information described above, the Board, including all of the
Independent Trustees, unanimously agreed to approve the New Subadvisory
Agreement.
SHAREHOLDER APPROVAL OF THE NEW SUBADVISORY AGREEMENT
At the Special Meeting, it is proposed that the New Subadvisory
Agreement between the Adviser and the Subadviser be approved by shareholders of
the Funds. The approval of the New Subadvisory Agreement requires the
affirmative vote of a majority of the outstanding voting securities of each of
the Funds. With respect to the approval of the New Subadvisory Agreement, the
term "majority of the outstanding voting securities" means the vote of (a) 67%
or more of the voting securities of each Fund present at such meeting, if the
holders of more than 50% of the outstanding voting securities of such Fund are
present or represented by proxy, or (b) more than 50% of the outstanding voting
securities of each Fund, whichever is less. The persons named in the
accompanying proxy intend, in the absence of contrary instructions, to vote all
proxies on behalf of the shareholders for the approval of the New Subadvisory
Agreement. If you return your proxy but give no voting instructions, your shares
will be voted FOR the approval of the New Subadvisory Agreement. If the New
Subadvisory Agreement is not approved by shareholders of the Funds, then the
Interim Subadvisory Agreement will remain in effect while the Board of Trustees
considers alternatives.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU
VOTE FOR APPROVAL OF THE NEW SUBADVISORY AGREEMENT
12
ADDITIONAL INFORMATION
EXECUTIVE OFFICERS OF THE TRUSTS
Information about the Trusts' current principal executive officers is
set forth below.
TERM OF NUMBER OF
OFFICE AND FUNDS IN THE
POSITION WITH THE LENGTH OF PRINCIPAL OCCUPATION DURING THE PAST FUND COMPLEX TO
NAME AND AGE TRUSTS TIME SERVED FIVE YEARS BE OVERSEEN
- ------------ ------ ----------- ---------- -----------
R. Jeffrey Young, 40 President No set term; Senior Vice President of Relationship 59
served since Management at BISYS Fund Services since
June 2004 April 2000. Vice President of Client
Services at BISYS Fund Services from May
1997 to April 2000.
Bryan C. Haft, 39 Treasurer and Chief No set term; Vice President of Financial Administration 59
Financial Officer served since at BISYS Fund Services since July 2000.
June 2004 Director of Administration Services at
BISYS Fund Services from May 1998 to July
2000.
Deborah A. Lamb, 51 Chief Compliance No set term; Chief Compliance Officer and Vice President 59
Officer, Vice served since of Trusco Capital Management, Inc. since
President, and _________ March 2003 and President of Investment
Assistant Secretary Industry Consultants, LLC since June 2000.
Director of Compliance at INVESCO, Inc.
from March 1995 to June 2000.
Kathleen Lentz, 44 Vice President and No set term; Vice President and Manager of Special 59
Assistant Secretary served since Entities in Financial Intelligence Unit of
_________ SunTrust Bank since 2002. Vice President of
the Third Party Mutual Funds Unit of
SunTrust Bank from 1996 to 2002.
Alaina V. Metz, 37 Assistant Secretary No set term; Vice President of Blue Sky Compliance at 59
served since BISYS Fund Services since January 2002.
July 2004 Chief Administrative Officer of Blue Sky
Compliance at BISYS Fund Services from June
1995 to January 2002.
Julie M. Powers, 34 Assistant Secretary No set term; Senior Paralegal of Legal Services at BISYS 59
served since Fund Services since June 2000. Paralegal at
June 2004 Phillips, Lytle, Hitchcock, Blaine & Huber
LLP (law firm) from March 1998 to June 2000.
Traci Thelen, 31 Secretary No set term; Counsel of Legal Services at BISYS Fund 59
served since Services since July 2004. General Counsel
June 2004 of ALPS Mutual Funds Services, Inc. from
May 2002 to July 2004, after serving as
Associate Counsel from October 1999 to May
2002.
INVESTMENT ADVISER
Trusco Capital Management, Inc., 50 Hurt Plaza, Suite 1400, Atlanta,
Georgia 30303, serves as the Trusts' investment adviser and is an indirect
wholly-owned subsidiary of SunTrust Banks, Inc., 303 Peachtree Street, NE,
Atlanta, Georgia 30308.
13
INVESTMENT SUBADVISER
Zevenbergen Capital Investments LLC, 601 Union Street, Suite 4600,
Seattle, Washington 98101, serves as the subadviser to STI Classic Funds'
Aggressive Growth Stock Fund and Emerging Growth Stock Fund.
ADMINISTRATOR
BISYS Fund Services Ohio, Inc. (the "Administrator"), an Ohio
corporation, has its principal business offices at 3435 Stelzer Road, Columbus,
Ohio 43219. The Administrator and its affiliates provide administration and
distribution services to other investment companies.
DISTRIBUTOR AND PRINCIPAL UNDERWRITER
BISYS Fund Services, Limited Partnership (the "Distributor"), located
at 3435 Stelzer Road, Columbus, Ohio 43219, serves as the Trusts' distributor.
The Distributor is a wholly-owned subsidiary of BISYS Group, Inc.
5% SHAREHOLDERS
As of the Record Date, the following persons were the only persons who
were record owners or, to the knowledge of the Trusts, were beneficial owners of
5% or more of the outstanding shares of each fund of the Trusts, as described
below:
NAME AND ADDRESS OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS
-------------- ---------------- -------------------- -------------------
INDEPENDENT ACCOUNTANTS OF THE TRUSTS
PricewaterhouseCoopers LLP ("PwC") serves as independent accountants
for the Trusts. PwC has informed the Trusts that it has no material direct or
indirect financial interest in the Trusts. Representatives of PwC are not
expected to be present at the Special Meeting, but will be available by
telephone should questions arise.
AUDIT FEES. Audit fees include amounts related to the audit of each
Trust's annual financial statements and services normally provided by PwC in
connection with each Trust's statutory and regulatory filings During the fiscal
years ended May 31, 2003 and May 31, 2004, STI Classic Funds was billed $448,509
and $563,000, respectively, in audit fees. During the fiscal years ended
December 31, 2002 and December 31, 2003, STI Classic Variable Trust was billed
$71,697 and $76,485, respectively, in audit fees.
AUDIT-RELATED FEES. Below are the aggregate fees billed in each Trust's
last two fiscal years for assurance and related services by PwC that are
reasonably related to the performance of the audit of the Trusts' financial
statements and are not reported under "Audit Fees" above.
14
STI CLASSIC FUNDS
ALL OTHER FEES AND
ALL FEES AND SERVICES TO ALL FEES AND SERVICES TO SERVICES TO SERVICE
THE TRUST THAT WERE PRE- SERVICE AFFILIATES THAT AFFILIATES THAT DID NOT
APPROVED WERE PRE-APPROVED REQUIRE PRE-APPROVAL
---------------------------- ---------------------------- --------------------------
Fiscal Year Ended 2004 $72,000(1) $60,000(2) $1,795,277(3)
Fiscal Year Ended 2003 $61,500(1) $0 $1,498,453(3)
(1) Services related to security count examinations under Rule 17f-2 of the
Investment Company Act for 2004 and 2003 fiscal years.
(2) Services related to the audit of the controls around custody operations at
SunTrust Bank (SAS No. 70) in 2003.
(3) Non-audit services relate principally to certain technical accounting advice
on financial products of the Bank; Sarbanes-Oxley 404 implementation; and tax
compliance services to other entities controlled by SunTrust Banks, Inc.
STI CLASSIC VARIABLE TRUST
ALL OTHER FEES AND
ALL FEES AND SERVICES TO ALL FEES AND SERVICES TO SERVICES TO SERVICE
THE TRUST THAT WERE PRE- SERVICE AFFILIATES THAT AFFILIATES THAT DID NOT
APPROVED WERE PRE-APPROVED REQUIRE PRE-APPROVAL
---------------------------- ---------------------------- --------------------------
Fiscal Year Ended 2003 $10,500(1) $60,000(3) $771,250(4)
Fiscal Year Ended 2002 $23,560(1)(2) $0 $2,685,000(5)
(1) Services related to security count examinations under Rule 17f-2 of the
Investment Company Act for 2003 and 2002.
(2) Services related to performance of agreed-upon procedures in connection with
the Trust's N-14 for the merger of Quality Growth Stock Fund into the Capital
Appreciation Fund in 2002.
(3) Services related to the audit of the controls around custody operations at
SunTrust Bank (SAS No. 70) in 2003.
(4) Non-audit services relate principally to certain technical accounting advice
on financial products of the Bank; Sarbanes-Oxley 404 implementation; and tax
compliance services to other entities controlled by SunTrust Banks, Inc.
(5) Non-audit services relate principally to the implementation of management
reporting system completed by PwC Consulting (now IBM) in 1Q02; controls and
process reviews; and, tax compliance services to other entities controlled by
SunTrust Bank.
TAX FEES. PwC did not bill either Trust for any services related to tax
compliance, tax advice, or tax planning during either Trust's two most recently
completed fiscal years.
ALL OTHER FEES. PwC did not bill either Trust for other products and
services, other than the services reported above, for each Trust's two most
recently completed fiscal years.
AGGREGATE NON-AUDIT FEES. The aggregate non-audit fees billed by PwC
for each of STI Classic Funds' last two fiscal years were $1,855,277 and
$1,498,453, respectively, for services rendered to STI Classic Funds and related
entities. The aggregate non-audit fees billed by PwC for each of STI Classic
Variable Trust's last two fiscal years were $841,750 and $2,708,560,
respectively.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. The Trust' Audit
Committee has adopted pre-approval policies and procedures to provide a
framework for the Audit Committee's consideration of audit and non-audit
services by the Trusts' independent accountants. The policies and procedures
require that any audit and non-audit services provided to the Trusts, and any
non-audit services provided to certain of the Trusts' service providers that
relate directly to the operations and financial reporting of the Trusts, are
subject to approval by the Audit Committee before such services are provided.
The policies and procedures also provide for Audit Committee ratification of
inadvertent non-audit services subject to certain conditions. In addition, the
Audit Committee has delegated to the Chair of the Audit Committee the authority
to approve certain non-audit services to the extent such services are not
otherwise pre-approved by the entire Audit Committee.
BOARD CONSIDERATION OF NON-AUDIT SERVICES. The Trusts' Audit Committee
has reviewed and considered whether the provision of non-audit services that
were rendered to the Trusts' investment adviser, and any entity controlling,
controlled by, or under common control with the investment adviser that provides
15
ongoing services to the Trusts, that were not pre-approved pursuant to paragraph
(c)(7) (ii) of Rule 2-01 of Regulation S-X is compatible with maintaining PwC's
independence.
SUBMISSION OF SHAREHOLDER PROPOSALS
Each Trust is organized as a business trust under the laws of the
Commonwealth of Massachusetts. As such, the Trusts are not required to, and do
not, have annual meetings. Nonetheless, the Board of Trustees may call a special
meeting of shareholders for action by shareholder vote as may be required by the
1940 Act or as required or permitted by the Declaration of Trust and By-Laws of
each Trust. Shareholders who wish to present a proposal for action at a future
meeting should submit a written proposal to the appropriate Trust for inclusion
in a future proxy statement. The Board of Trustees will give consideration to
shareholder suggestions as to nominees for the Board of Trustees. Shareholders
retain the right to request that a meeting of the shareholders be held for the
purpose of considering matters requiring shareholder approval.
VOTING AND OTHER MATTERS
Abstentions and "broker non-votes" will not be counted for or against
the proposal but will be counted for purposes of determining whether a quorum is
present. The Trusts believe that brokers who hold shares as record owners for
beneficial owners have the authority under the rules of the various stock
exchanges to vote those shares with respect to the proposals when they have not
received instructions from beneficial owners.
No business other than the matters described above is expected to come
before the Special Meeting, but should any matter incident to the conduct of the
Special Meeting or any question as to an adjournment of the Special Meeting
arise, the persons named in the enclosed proxy will vote thereon according to
their best judgment in the interest of the Trusts.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND WHO WISH
TO HAVE THEIR SHARES VOTED ARE REQUESTED TO VOTE BY MAIL, TELEPHONE OR INTERNET
AS EXPLAINED IN THE INSTRUCTIONS INCLUDED ON YOUR PROXY CARD.
By Order of the Trustees,
/s/ R. Jeffrey Young
R. Jeffrey Young
President
Dated: ___________, 2004
16
EXHIBIT A
FORM OF INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of the ____ day of _________, 2004, between Trusco
Capital Management, Inc. (the "Adviser") and Zevenbergen Capital Investments LLC
(the "Subadviser").
WHEREAS, the STI Classic Funds (the "Trust"), a Massachusetts business
trust, is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into investment advisory agreements
with the Trust (the "Advisory Agreements") pursuant to which the Adviser acts as
investment adviser to the series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Subadviser to provide investment advisory services to the Adviser in
connection with the management of the series of the Trust set forth on Schedule
A attached hereto (each a "Fund," and collectively, the "Funds"), as such
schedule may be amended by mutual agreement of the parties hereto, and the
Subadviser is willing to render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUBADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Subadviser shall manage all of the
securities and other assets of each Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the
Assets in accordance with the Fund's investment objectives, policies,
and restrictions as stated in each Fund's then current prospectus and
statement of additional information, as may be amended or supplemented
from time to time (referred to collectively as the "Prospectus"), and
subject to the following:
(a) The Subadviser will provide investment advisory services to the Fund
and shall, in such capacity, determine from time to time what Assets
will be purchased, retained, or sold by the Fund, and what portion of
the Assets will be invested or held uninvested in cash, subject to the
direction of the Adviser and the Board of Trustees of the Trust.
(b) In the performance of its duties and obligations under this Agreement,
the Subadviser shall act in conformity with the Trust's Declaration of
Trust (as defined herein), the Prospectus, and the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 (the "Code"), and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
(c) The Subadviser shall determine the Assets to be purchased or sold
by each Fund as provided in subparagraph (a) above and will place
orders with or through such persons, brokers or dealers to carry out
the policy with respect to brokerage set forth in each Fund's
Prospectus or as the Board of Trustees or the Adviser may direct in
writing from time to time, in conformity with all federal securities
laws. In executing Fund transactions and selecting brokers or dealers,
the Subadviser will use its best efforts to seek on behalf of each Fund
the best overall terms available. In assessing the best overall terms
available for any transaction, the Subadviser shall consider all
factors that it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available, and
in selecting the broker-dealer to execute a particular transaction, the
Subadviser may also consider the brokerage and research services
provided (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934 (the "Exchange Act")). Consistent with any
guidelines established by the Board of Trustees of the Trust and
Section 28(e) of the Exchange Act, the Subadviser is authorized to pay
to a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for each Fund that is in excess
of the amount of commission another broker or dealer would have charged
for effecting that transaction if, but only if, the Subadviser
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer viewed in terms of that particular transaction
or in terms of the overall responsibilities of the Subadviser to its
discretionary clients, including the Funds. In addition, the Subadviser
is authorized to allocate purchase and sale orders for securities to
brokers or dealers (including brokers and dealers that are affiliated
with the Adviser, Subadviser, or the Trust's principal underwriter) if
the Subadviser believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified
firms. In no instance, however, will the Funds' Assets be purchased
from or sold to the Adviser, Subadviser, the Trust's principal
underwriter, or any affiliated person of either the Trust, Adviser, the
Subadviser, or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Subadviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5),
(b)(6), (b)(7), (b)(9), (b)(10), and (b)(11) and paragraph (f) of Rule
31a-1 under the 1940 Act. The Subadviser shall provide to the Adviser
or the Board of Trustees such periodic and special reports, balance
sheets or financial information, and such other information with regard
to its affairs as the Adviser or Board of Trustees may reasonably
request.
The Subadviser shall keep the books and records relating to the Assets
required to be maintained by the Subadviser under this Agreement and
shall timely furnish to the Adviser all information relating to the
Subadviser's services under this Agreement needed by the Adviser to
keep the other books and records of the Funds required by Rule 31a-1
under the 1940 Act. The Subadviser shall also furnish to the Adviser
any other information relating to the Assets that is required to be
filed by the Adviser or the Trust with the SEC or sent to shareholders
under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Trust obtains from
the SEC. The Subadviser agrees that all records that it maintains on
behalf of the Funds are property of the Funds and the Subadviser will
surrender promptly to the Funds any of such records upon the Funds'
request; provided, however, that the Subadviser may retain a copy of
such records. In addition, for the duration of this Agreement, the
Subadviser shall preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by
it pursuant to this Agreement, and shall transfer said records to any
successor subadviser upon the termination of this Agreement (or, if
there is no successor subadviser, to the Adviser).
(e) The Subadviser shall provide the Funds' custodian on each business day
with information relating to all transactions concerning the Funds'
Assets and shall provide the Adviser with such information upon request
by the Adviser.
(f) The investment management services provided by the Subadviser under
this Agreement are not to be deemed exclusive and the Subadviser shall
be free to render similar services to others as long as such services
do not impair the services rendered to the Adviser or the Trust.
(g) The Subadviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Subadviser's ability to fulfill
its commitment under this Agreement.
(h) The Subadviser shall not be responsible for reviewing proxy
solicitation materials or voting and handling proxies in relation to
the securities held as Assets in the Funds. If the Subadviser receives
a misdirected proxy, it shall promptly forward such misdirected proxy
to the Adviser.
(i) In performance of its duties and obligations under this Agreement,
the Subadviser shall not consult with any other subadviser to the Funds
or a subadviser to a portfolio that is under common control with the
2
Funds concerning the Assets, except as permitted by the policies and
procedures of the Funds. The Subadviser shall not provide investment
advice to any assets of the Funds other than the Assets.
Services to be furnished by the Subadviser under this Agreement may be
furnished through the medium of any of the Subadviser's control
affiliates, partners, officers or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have
responsibility for all services to be provided to the Funds pursuant to
the Advisory Agreements and shall oversee and review the Subadviser's
performance of its duties under this Agreement; provided, however, that
in connection with its management of the Assets, nothing herein shall
be construed to relieve the Subadviser of responsibility for compliance
with the Trust's Declaration of Trust (as defined herein), the
Prospectus, the instructions and directions of the Board of Trustees of
the Trust, the requirements of the 1940 Act, the Code, and all other
applicable federal and state laws and regulations, as each is amended
from time to time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Subadviser with
copies of each of the following documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement
and Declaration of Trust, as in effect on the date of this Agreement
and as amended from time to time, herein called the "Declaration of
Trust");
(b) By-Laws of the Trust as in effect on the date of this Agreement and as
amended from time to time; and
(c) Prospectus of each Fund.
4. COMPENSATION TO THE SUBADVISER. For the services to be provided by the
Subadviser pursuant to this Agreement, the Adviser will pay the
Subadviser, and the Subadviser agrees to accept as full compensation
therefor, a subadvisory fee at the rate specified in Schedule B
attached hereto and made part of this Agreement. The fee will be
calculated based on the average daily value of the Assets under the
Subadviser's management and will be paid to the Subadviser quarterly.
Except as may otherwise be prohibited by law or regulation (including
any then current SEC staff interpretation), the Subadviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Subadviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities, or
damages (including reasonable attorney's fees and other related
expenses) howsoever arising from or in connection with the performance
of the Subadviser's obligations under this Agreement; provided,
however, that the Subadviser's obligation under this Paragraph 5 shall
be reduced to the extent that the claim against, or the loss,
liability, or damage experienced by the Adviser, is caused by or is
otherwise directly related to the Adviser's own willful misfeasance,
bad faith, or negligence, or to the reckless disregard of its duties
under this Agreement.
The Adviser shall indemnify and hold harmless the Subadviser from and
against any and all claims, losses, liabilities, or damages (including
reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Adviser's
obligations under this Agreement; provided, however, that the Adviser's
obligation under this Paragraph 5 shall be reduced to the extent that
the claim against, or the loss, liability, or damage experienced by the
Subadviser, is caused by or is otherwise directly related to the
Subadviser's own willful misfeasance, bad faith, or negligence, or to
the reckless disregard of its duties under this Agreement.
6. DURATION AND TERMINATION. With respect to a Fund, this Agreement shall
become effective upon approval by the Trust's Board of Trustees and its
execution by the parties hereto, and approval of the Agreement by a
majority of the outstanding voting securities of that Fund.
3
This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act; provided,
however, that this Agreement may be terminated with respect to the
Funds (a) by the Funds at any time, without the payment of any penalty,
by the vote of a majority of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Funds, (b) by the
Adviser at any time, without the payment of any penalty, on not more
than 60 days nor less than 30 days written notice to the Subadviser, or
(c) by the Subadviser at any time, without the payment of any penalty,
on 90 days written notice to the Adviser. This Agreement shall
terminate automatically and immediately in the event of its assignment
or in the event of a termination of the relevant Advisory Agreement
with the Trust. As used in this Paragraph 6, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have
the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exceptions as may be granted by
the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed
as being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
9. NOTICE: Any notice, advice, or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by
registered, certified, or overnight mail, postage prepaid, and
addressed by the party giving notice to the other party at the last
address furnished by the other party:
To the Adviser at: Trusco Capital Management, Inc.
50 Hurt Plaza
Suite 1400
Atlanta, Georgia 30303
Attention: Paul L. Robertson, III
To the Subadviser at: Zevenbergen Capital Investments LLC
601 Union Street
Suite 4600
Seattle, Washington 98101
Attention: Nancy A. Zevenbergen
10. NON-HIRE/NON-SOLICITATION. The Subadviser hereby agrees that so long as
the Subadviser provides services to the Adviser or the Trust and for a
period of one year following the date on which the Subadviser ceases to
provide services to the Adviser and the Trust, the Subadviser shall not
for any reason, directly or indirectly, on the Subadviser's own behalf
or on behalf of others, hire any person employed by the Adviser,
whether or not such person is a full-time employee or whether or not
any person's employment is pursuant to a written agreement or is
at-will. The Subadviser further agrees that, to the extent that the
Subadviser breaches the covenant described in this paragraph, the
Adviser shall be entitled to pursue all appropriate remedies in law or
equity.
11. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior
agreements and understandings relating to this Agreement's subject
matter. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
In the event the terms of this Agreement are applicable to
more than one Fund, the Adviser is entering into this Agreement with
the Subadviser on behalf of the respective Funds severally and not
jointly, with the express intention that the provisions contained in
each numbered paragraph hereof shall be
4
understood as applying separately with respect to each Fund as if
contained in separate agreements between the Adviser and Subadviser for
each such Fund. In the event that this Agreement is made applicable to
any additional Funds by way of a schedule executed subsequent to the
date first indicated above, provisions of such schedule shall be deemed
to be incorporated into this Agreement as it relates to such Fund so
that, for example, the execution date for purposes of Paragraph 6 of
this Agreement with respect to such Fund shall be the execution date of
the relevant schedule.
12. MISCELLANEOUS.
(a) A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts and notice is hereby given
that the obligations of this instrument are not binding upon any of the
Trustees, officers or shareholders of the Fund or the Trust.
(b) Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation, or order
of the SEC, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation, or
order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
TRUSCO CAPITAL MANAGEMENT, INC. ZEVENBERGEN CAPITAL INVESTMENTS LLC
By: By:
---------------------------------- -----------------------------------
Name: Name:
--------------------------------- -----------------------------------
Title: Title:
--------------------------------- -----------------------------------
5
SCHEDULE A
TO THE
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
TRUSCO CAPITAL MANAGEMENT, INC.
AND
ZEVENBERGEN CAPITAL INVESTMENTS LLC
AS OF ___________, 2004
STI CLASSIC FUNDS
Aggressive Growth Stock Fund
Emerging Growth Stock Fund
6
SCHEDULE B
TO THE
INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
TRUSCO CAPITAL MANAGEMENT, INC.
AND
ZEVENBERGEN CAPITAL INVESTMENTS LLC
AS OF ___________, 2004
Pursuant to Paragraph 4, the Adviser shall pay the Subadviser compensation at an
annual rate as follows:
STI CLASSIC FUNDS
Aggressive Growth Stock Fund .625% of the average daily value of the assets
under the Subadviser's management, except that
for any compensation period during which the
Adviser waives any portion of the management
fee that the Fund is required to pay, the
Adviser will pay to the Subadviser 55% of the
amount of compensation the Adviser receives
from the Fund during that compensation period.
Emerging Growth Stock Fund .625% of the average daily value of the assets
under the Subadviser's management, except that
for any compensation period during which the
Adviser waives any portion of the management
fee that the Fund is required to pay, the
Adviser will pay to the Subadviser 55% of the
amount of compensation the Adviser receives
from the Fund during that compensation period.
The management fee will be paid to the Subadviser quarterly.
Agreed and Accepted:
TRUSCO CAPITAL MANAGEMENT, INC. ZEVENBERGEN CAPITAL INVESTMENTS LLC
By: By:
---------------------------------- ---------------------------------
Name: Name:
--------------------------------- ---------------------------------
Title: Title:
--------------------------------- ---------------------------------
7
[STI CLASSIC FUNDS LOGO]
VOTING OPTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
VOTING BY TOUCH-TONE PHONE VOTING BY INTERNET VOTING BY MAIL
1) Read the Proxy Statement and 1) Read the Proxy Statement and 1) Read the Proxy Statement.
have the voting instruction card have the voting instruction card
at hand. at hand. 2) Check one of the appropriate boxes on
the reverse side.
2) Call 1-888-221-0697. 2) Go to www.proxyweb.com
3) Sign and date the voting
3) Follow the recorded 3) Follow the on-line directions. instruction card below.
4) Return the voting instruction
card in the envelope
- ------------------------------------------------------------------------------------------------------------------------------------
- -------------------
999 999 999 999 999 <-
- -------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
FUND/INSURANCE COMPANY NAME PRINTS HERE
FUND/INSURANCE COMPANY NAME PRINTS HERE
The undersigned shareholder hereby appoints _______________ and ________________
as Proxies, each with the power to appoint his substitute, and authorizes them
to represent and to vote as designated on this form all shares owned directly
and or beneficially of the above-referenced fund (the Fund) held of record by
the undersigned on September 23, 2004 at the special meeting of shareholders of
the Fund to be held on November 15, 2004 at 9:30 A.M. or any adjournment
thereof.
\/ Dated: , 2004
------------------
PLEASE REMEMBER TO SIGN, DATE AND RETURN
THE PROXY, USING THE ENCLOSED ENVELOPE.
----------------------------------------
----------------------------------------
Signature (SIGN IN THE BOX)
Please sign exactly as your name appears
on the mailing. When shares are held by
joint tenants both should sign. When
signing as an attorney or as executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by an
authorized person.
\/ PLEASE TURN OVER AND COMPLETE \/
LABEL BELOW FOR MIS USE ONLY!
PO# M9476
STI CLASSIC FUNDS
ORIGINAL SIZE 1UP LRG 9-22-04 KD
SANDY (STI CLASSIC WITH LOGO SD)
CHANGED TO 2UP LRG 9-22-04 KD
MIS EDITS: # OF CHANGES __/__ PRF 1 __ PRF 2 __
OK TO PRINT AS IS* ____________ *By signing
this form you are authorizing MIS to print
this form in its current state.
- --------------------------------------------------
SIGNATURE OF PERSON AUTHORIZING PRINTING DATE
\/ PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK \/
OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
Shareholders Voting on Proposal 1: Shareholders of STI Classic Funds and STI
Classic Variable Trust. FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
Proposal 1: To consider and vote on the election of members to the Board of
Trustees of the Trusts.
(01) Richard W. Courts (06) Clarence H. Ridley [ ] [ ] [ ]
(02) Thomas C. Gallagher (07) James O. Robbins
(03) F. Wendell Gooch (08) Jonathan T. Walton
(04) Sydney E. Harris (09) Charles D. Winslow
(05) Warren Y. Jobe
*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEES, MARK "FOR ALL
EXCEPT" AND WRITE THE NUMBER(S) OF THE NOMINEE(S) ON THE LINE BELOW.
- --------------------------------------------------------------------------------
Shareholders Voting on Proposal 2: Shareholders of STI Classic Funds' Aggressive
Growth Stock Fund and Emerging Growth Stock Fund ONLY. FOR AGAINST ABSTAIN
Proposal 2: To approve a new subadvisory agreement between Trusco Capital [ ] [ ] [ ]
Management, Inc. and Zevenbergen Capital Investments LLC with
respect to STI Classic Funds' Aggressive Growth Stock Fund and
Emerging Growth Fund.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
\/ \/
LABEL BELOW FOR MIS USE ONLY!
PO# M9476
STI CLASSIC FUNDS
ORIGINAL SIZE 1UP OVERSIZE 9/20/04 TD
SANDY (STI CLASSIC WITH LOGO SD)
O.A. 9-20-04 KD
REVIEW #1 9-20-04 KD
CHANGED TO 2UP LRG 9-22-04 KD
MIS EDITS: # OF CHANGES __/__ PRF 1 __ PRF 2 __
OK TO PRINT AS IS* ____________ *By signing
this form you are authorizing MIS to print
this form in its current state.
- ---------------------------------------------------
SIGNATURE OF PERSON AUTHORIZING PRINTING DATE