<PAGE> 1
As filed with the Securities and Exchange Commission
on December 23, 1996
-----------------
Registration Nos. 33-21660 and 811-5551
--------------------------------------
-------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT [ ]
OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 20 [X]
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [ ]
Amendment No. 21 [X]
--
AMSOUTH MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
---------------------------------------
(Address of Principal Executive Offices)
(800) 451-8379
--------------
(Registrant's Telephone Number, Including Area Code)
Name and address
of agent for service: Copy to:
--------------------- --------
Mr. J. David Huber Alan G. Priest, Esq.
AmSouth Mutual Funds Ropes & Gray
3435 Stelzer Road 1301 K Street, N.W., Suite 800 East
Columbus, Ohio 43219 Washington, D.C. 20005
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[X] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
The Registrant has registered an indefinite number or amount of its
shares of beneficial interest under the Securities Act of 1933 pursuant to Rule
24f-2. The Registrant has filed a Rule 24f-2 Notice with respect to the
Registrant's fiscal year ended July 31, 1996 on September 25, 1996.
<PAGE> 2
Part A
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Florida Tax-Free Fund
AmSouth Municipal Bond Fund
The information required by Items 1 through 9 for the above-referenced
investment portfolios of AmSouth Mutual Funds (the "Registrant") is hereby
incorporated by reference to Part A of Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on November 27, 1996.
<PAGE> 3
CROSS REFERENCE SHEET
- ---------------------
Part A
Form N-1A Item No. Prospectus Caption
- ------------------ ------------------
PROSPECTUS FOR AMSOUTH EQUITY FUND,
AMSOUTH REGIONAL EQUITY FUND , AMSOUTH BALANCED FUND,
AMSOUTH CAPITAL GROWTH FUND,
AMSOUTH SMALL CAP FUND, AND AMSOUTH
EQUITY INCOME FUND
<TABLE>
<S> <C>
1. Cover Page............................... Cover Page
2. Synopsis................................. Fee Table
3. Condensed Financial Information.......... Financial Highlights
4. General Description of Registrant........ The Trust; Investment Objective
and Policies; Investment
Restrictions; General Information -
Description of the Trust and Its
Shares
5. Management of the Fund................... Management of AmSouth Mutual
Funds; General Information -
Custodian and Transfer Agent
6. Capital Stock and Other Securities The Trust; How to Purchase and
Redeem Shares; Dividends and
Taxes; General Information -
Description of the Trust and Its
Shares; General Information -
Miscellaneous
7. Purchase of Securities Being Offered Valuation of Shares; How to
Purchase and Redeem Shares
8. Redemption or Repurchase................. How to Purchase and Redeem
Shares
9. Legal Proceedings........................ Inapplicable
</TABLE>
<PAGE> 4
AMSOUTH MUTUAL FUNDS
CAPITAL APPRECIATION FUNDS
3435 Stelzer Road For current yield, purchase,
Columbus, Ohio 43219 and redemption information,
call (800) 451-8382
The AmSouth Capital Appreciation Funds (the "Capital Appreciation
Funds") are six of fourteen series of units of beneficial interest ("Shares")
each representing interests in one of fourteen separate investment funds (the
"Funds") of AmSouth Mutual Funds (the "Trust"), an open-end management
investment company. Each of the Capital Appreciation Funds has a different
investment objective and the net asset value per share of each Capital
Appreciation Fund will fluctuate as the value of such Capital Appreciation
Fund's investment portfolio changes in response to changing market conditions
and other factors.
AMSOUTH EQUITY FUND (the "Equity Fund") seeks growth of capital by
investing primarily in a diversified portfolio of common stocks and securities
convertible into common stocks such as convertible bonds and convertible
preferred stocks. The production of income is an incidental objective. AmSouth
Bank of Alabama, Birmingham, Alabama ("AmSouth"), the Capital Appreciation
Funds' investment advisor, will seek opportunities for the Equity Fund in
securities that are believed to represent investment value. (See "INVESTMENT
OBJECTIVES AND POLICIES.")
AMSOUTH REGIONAL EQUITY FUND (the "Regional Equity Fund") seeks growth
of capital by investing primarily in a diversified portfolio of common stocks
and securities convertible into common stocks, such as convertible bonds and
convertible preferred stocks, of companies headquartered in the Southern Region
of the United States. The Southern Region of the United States includes Alabama,
Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina,
Tennessee and Virginia. The production of income is an incidental objective.
AmSouth will seek opportunities for the Regional Equity Fund in securities that
are believed to represent investment value. (See "INVESTMENT OBJECTIVES AND
POLICIES.")
AMSOUTH BALANCED FUND (the "Balanced Fund") seeks to obtain long-term
capital growth and produce a reasonable amount of current income through a
moderately aggressive investment strategy. The Balanced Fund seeks to achieve
this objective by investing in a broadly diversified portfolio of securities,
including common stocks, preferred stocks and bonds. AmSouth will seek
opportunities for the Balanced Fund in securities that are believed to represent
investment value. (See "INVESTMENT OBJECTIVES AND POLICIES.")
<PAGE> 5
AMSOUTH CAPITAL GROWTH FUND (the "Capital Growth Fund") seeks long-
term capital appreciation and growth of income by investing primarily in a
diversified portfolio of common stocks and securities convertible into common
stocks such as convertible bonds and convertible preferred stocks. (See
"INVESTMENT OBJECTIVES AND POLICIES.")
THE AMSOUTH SMALL CAP FUND (the "Small Cap Fund") seeks capital
appreciation by investing primarily in a diversified portfolio of securities
consisting of common stocks and securities convertible into common stocks such
as convertible bonds and convertible preferred stock. Any current income
generated from these securities is incidental to the investment objective of the
Fund. Under normal market conditions, the Fund will invest at least 65% of its
total assets in common stocks and securities convertible into common stocks such
as convertible bonds and convertible preferred stock of companies with a market
capitalization of less than $1 billion. (See "INVESTMENT OBJECTIVES AND
POLICIES.")
THE AMSOUTH EQUITY INCOME FUND (the "Equity Income Fund") seeks above
average income and capital appreciation by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks such as
convertible bonds and convertible preferred stock. Under normal market
conditions, the Fund will invest at least 65% of its total assets in
income-producing equity securities including common stock, preferred stock, and
securities convertible into common stocks such as convertible bonds and
convertible preferred stock. The portion of the Fund's total assets invested in
common stock, preferred stock, and convertible securities will vary according to
the Fund's assessment of market and economic conditions and outlook. (See
"INVESTMENT OBJECTIVES AND POLICIES.")
AmSouth Bank of Alabama, Birmingham, Alabama ("AmSouth"), acts as the
investment advisor to each Capital Appreciation Fund. BISYS Fund Services,
Limited Partnership ("BISYS Fund Services"), Columbus, Ohio, acts as the Capital
Appreciation Funds' distributor.
This Prospectus relates only to the Capital Appreciation Funds.
Interested persons who wish to obtain a copy of the prospectuses of the AmSouth
Prime Obligations Fund, the AmSouth U.S. Treasury Fund, and the AmSouth Tax
Exempt Fund (the "Money Market Funds"), and the AmSouth Bond Fund, the AmSouth
Limited Maturity Fund, the AmSouth Government Income Fund, the AmSouth Municipal
Bond Fund, and the AmSouth Florida Tax-Free Fund (the "Income Funds") may
contact the Trust's distributor at the telephone number shown above. Additional
information about the Capital Appreciation Funds, contained in a Statement of
Additional Information, has been filed with the Securities and Exchange
Commission and is available upon request without charge by writing to the Trust
at its address or by calling the Trust at the telephone number shown above. The
Statement of
-2-
<PAGE> 6
Additional Information bears the same date as this Prospectus and is
incorporated by reference in its entirety into this Prospectus.
This Prospectus sets forth concisely the information about the Capital
Appreciation Funds that a prospective investor ought to know before investing.
Investors should read this Prospectus and retain it for future reference.
THE TRUST'S SHARES ARE NOT DEPOSITS
OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY
AMSOUTH OR ANY OF ITS AFFILIATES. THE TRUST'S
SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR BY ANY OTHER AGENCY.
AN INVESTMENT IN THE TRUST'S SHARES INVOLVES INVESTMENT RISKS,
INCLUDING LOSS OF PRINCIPAL.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION")
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------
The date of this prospectus is March _, 1997.
-3-
<PAGE> 7
<TABLE>
<CAPTION>
FEE TABLE
Regional Capital Equity
Equity Equity Balanced Growth Small Income
Fund Fund Fund Fund Cap Fund Fund
------ -------- -------- ------ ------------ -------
SHAREHOLDER TRANSACTION EXPENSES(1)
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
Maximum Sales Load Imposed on
Reinvested Dividends (as a percentage
of offering price) 0% 0% 0% 0% 0% 0%
Deferred Sales Load (as a percentage
of original purchase price or redemption
proceeds, as applicable) 0% 0% 0% 0% 0% 0%
Redemption Fees (as a percentage
of amount redeemed, if applicable)(2) 0% 0% 0% 0% 0% 0%
Exchange Fee $0 $0 $0 $0 $0 $0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fees .80% .80% .80%(3) .80%(4) .90%(4) .80%
12b-1 Fees .00% .00% .00% .00% .00% .00%
Other Expenses (After Voluntary Fee Reduction) .22%(5) .25%(5) .24%(5) .27% .27% .27%
Total Fund Operating Expenses 1.02%(6) 1.05%(6) 1.04%(6) 1.07% 1.17% 1.07%
(After Voluntary Fee Reductions)
</TABLE>
<PAGE> 8
Example:
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Fund $55 $76 $ 99 $164
Regional Equity Fund $55 $77 $100 $167
Balanced Fund $55 $77 $100 $166
Capital Growth Fund $55 $78 N/A N/A
Small Capital Fund $56 $80 N/A N/A
Equity Income Fund $55 $78 N/A N/A
<FN>
- --------------------
1 AmSouth Bank of Alabama and its correspondent or affiliated banks may
charge a Customer's (as defined in the Prospectus) account fees for automatic
investment and other cash management services provided in connection with
investment in the Funds. (See "HOW TO PURCHASE AND REDEEM SHARES - Purchases of
Shares.")
2 A wire redemption charge is deducted from the amount of a wire
redemption payment made at the request of a shareholder. (See "HOW TO PURCHASE
AND REDEEM SHARES - Redemption by Telephone.")
3 Amounts have been restated to reflect current fees.
4 This fee may vary for the Capital Growth Fund between 0.60% and 1.00%
based on its performance and this fee may vary between 0.70% and 1.10%
for the Small Cap Fund based on its performance. (See "MANAGEMENT OF THE AMSOUTH
MUTUAL FUNDS--Management Fee.")
5 Absent the voluntary reduction of administration fees, Other Expenses
would be 0.31% for the Equity Fund, 0.33% for the Regional Equity Fund and 0.31%
for the Balanced Fund. Other Expenses for the Capital Growth Fund, Small Cap
Fund, and Equity Income Fund are based on estimates for the current fiscal year.
6 In the absence of any voluntary reduction of administration fees,
Total Fund Operating Expenses would be 1.11% for the Equity Fund, 1.13% for the
Regional Equity Fund and 1.11% for the Balanced Fund.
</TABLE>
The purpose of the table above is to assist an investor in the Fund in
understanding the various costs and expenses that an investor in a Capital
Appreciation Fund will bear directly or indirectly. See "MANAGEMENT OF AMSOUTH
MUTUAL FUNDS" for a more complete discussion of annual operating expenses of the
Capital Appreciation Funds. THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
-5-
<PAGE> 9
FINANCIAL HIGHLIGHTS
The table below sets forth certain financial information concerning the
investment results for the Capital Appreciation Funds for the periods indicated.
The Capital Growth Fund, Small Cap Fund and Equity Income Fund had not
commenced operations as of July 31, 1996. This information has been derived
from financial statements audited by Coopers & Lybrand L.L.P., independent
accountants for the Trust, whose report thereon is included in the Statement
of Additional Information. Further financial data is included in the Statement
of Additional Information.
<TABLE>
<CAPTION>
Equity Fund
-----------
Year Ended July 31,
---------------------------------------------------------------------------------------------
December 1
1988 to
July 31,
1996 1995 1994 1993 1992 1991 1990 1989(a)
---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57 $11.99 $12.18 $10.00
-------- -------- -------- -------- -------- -------- -------- -------
Investment Activities
Net Investment income 0.33 0.33 0.28 0.28 0.32 0.36 0.37 0.22
Net realized and unrealized
gains on investments 1.48 2.39 0.83 1.48 1.20 0.61 (0.17) 2.16
-------- -------- -------- -------- -------- -------- -------- -------
Total from Investment Activities 1.81 2.72 1.11 1.76 1.52 0.97 0.20 2.38
-------- -------- -------- -------- -------- -------- -------- -------
Distributions
Net investment income (0.33) (0.32) (0.28) (0.29) (0.33) (0.37) (0.35) (0.20)
Net realized gains (0.61) (0.47) (0.39) (0.49) (0.36) (0.02) (0.04)
-------- -------- -------- -------- -------- -------- -------- -------
Total Distributions (0.94) (0.79) (0.67) (0.78) (0.69) (0.39) (0.39) (0.20)
-------- -------- -------- -------- -------- -------- -------- -------
Net Asset Value, End of Period $ 17.62 $ 16.75 $14.82 $14.38 $ 13.40 $12.57 $ 11.99 $ 12.18
======== ======== ======== ======== ======== ======== ======== =======
Total Return (Excluding Sales Charge) 11.09% 19.27% 7.90% 13.81% 12.94% 8.46% 1.66% 24.06%
Ratios/Supplemental Data:
Net Assets at end of period (000) $374,622 $275,757 $205,611 $153,074 $107,934 $ 32,406 $ 14,383 $ 5,476
Ratio of expenses to average net assets 1.02% 1.03% 0.94% 0.95% 1.01% 1.15% 1.11% 1.16%(b)
Ratio of net investment income to average 1.86% 2.17% 1.93% 2.08% 2.50% 3.16% 3.16% 2.91%(b)
net assets
Ratio of expenses to average net assets* 1.11% 1.11% 1.11% 1.13% 1.15% 1.26% 1.41% 2.34%(b)
Ratio of net investment income to average 1.77% 2.09% 1.76% 1.90% 2.36% 3.04% 2.86% 1.73%(b)
net assets*
Portfolio Turnover 19.11% 19.46% 11.37% 15.12% 113.12% 15.78% 14.89% 4.03%
Average commission rate(c) $ 0.0700
- ---------
* During the period certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios would
have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Represents the total dollar amount of commissions paid on portfolio transactions divided by total number of shares purchased
and sold by the Fund for which commissions were charged.
</TABLE>
-6-
<PAGE> 10
<TABLE>
<CAPTION>
Regional Equity Fund
--------------------
Year Ended July 31,
-------------------------------------------------------------------------------------------
December 1,
1988 to
July 31,
1996 1995 1994 1993 1992 1991 1990 1989(a)
---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.94 $ 16.68 $ 16.74 $ 14.86 $ 13.44 $ 12.45 $ 11.64 $ 10.00
------- -------- -------- -------- ------- ------- ------- -------
Investment Activities
Net Investment income 0.26 0.23 0.23 0.19 0.23 0.26 0.23 0.14
Net realized and unrealized
gains on investments 2.20 2.26 0.58 2.09 2.34 1.20 0.84 1.64
------- -------- -------- -------- ------- ------- ------- -------
Total from Investment Activities 2.46 2.49 0.81 2.28 2.57 1.46 1.07 1.78
------- -------- -------- -------- ------- ------- ------- -------
Distributions
Net investment income (0.26) (0.23) (0.23) (0.20) (0.23) (0.26) (0.22) (0.14)
Net realized gains (0.19) (0.41) (0.20) (0.92) (0.21) (0.04)
In excess of net realized gains (0.23)
------- -------- -------- -------- ------- ------- ------- -------
Total Distributions (0.45) (0.23) (0.87) (0.40) (1.15) (0.47) (0.26) (0.14)
------- -------- -------- -------- ------- ------- ------- -------
Net Asset Value, End of Period $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86 $ 13.44 $ 12.45 $ 11.64
======= ======== ======== ======== ======= ======= ======= =======
Total Return (Excluding Sales Charge) 13.10% 15.10% 4.87% 15.53% 20.66% 12.52% 9.41% 17.79%
Ratios/Supplemental Data:
Net Assets at end of period (000) $93,584 $ 68,501 $ 54,744 $ 41,347 $15,707 $ 7,853 $ 3,161 $ 2,523
Ratio of expenses to average net assets 1.05% 1.07% 0.79% 0.80% 0.91% 0.79% 1.22% 1.41%(b)
Ratio of net investment income to average 1.30% 1.35% 1.36% 1.17% 1.61% 2.21% 1.92% 1.98%(b)
net assets
Ratio of expenses to average net assets* 1.13% 1.15% 1.24% 1.28% 1.36% 1.58% 2.32% 2.65%(b)
Ratio of net investment income to average 1.22% 1.27% 0.90% 0.69% 1.16% 1.42% 0.82% 0.74%(b)
net assets*
Portfolio Turnover 8.22% 14.25% 5.83% 10.22% 24.99% 14.41% 14.00% 1.13%
Average commission rate paid(c) $ 0.0827
- ---------
<FN>
* During the period certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios would
have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Represents the total dollar amount of commissions paid on portfolio transactions divided by total number of shares purchased
and sold by the Fund for which commissions were charged.
</TABLE>
-7-
<PAGE> 11
<TABLE>
<CAPTION>
Balanced Fund
-------------
Year Ended July 31,
------------------------------------------------------------------------------
December 19,
1991 to
to July 31,
1996 1995 1994 1993 1992(a)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 12.76 $ 11.81 $ 11.86 $ 11.12 $ 10.00
-------- --------- --------- --------- --------
Investment Activities
Net Investment income 0.47 0.47 0.42 0.44 0.27
Net realized and unrealized
gains on investments 0.58 1.24 0.18 0.80 1.09
-------- --------- --------- --------- --------
Total from Investment Activities 1.05 1.71 0.60 1.24 1.36
-------- --------- --------- --------- --------
Distributions
Net investment income (0.47) (0.46) (0.42) (0.45) (0.24)
Net realized gains (0.31) (0.30) (0.23) (0.05)
-------- --------- --------- --------- --------
Total Distributions (0.78) (0.76) (0.65) (0.50) (0.24)
-------- --------- --------- --------- --------
Net Asset Value, End of Period $ 13.03 $ 12.76 $ $ 11.81 $ 11.86 $ 11.12
======== ========= ========= ========= ========
Total Return (Excluding Sales Charge) 8.37% 15.27% 5.13% 11.47% 13.71%(c)
Ratios/Supplemental Data:
Net Assets at end of period (000) $338,425 $ 295,509 $ 236,306 $ 179,134 $143,813
Ratio of expenses to average net assets 0.98% 0.94% 0.84% 0.84% 0.83%(b)
Ratio of net investment income to average 3.61% 3.91% 3.56% 3.90% 4.45%(b)
net assets
Ratio of expenses to average net assets* 1.11% 1.12% 1.11% 1.12% 1.17%(b)
Ratio of net investment income to average 3.48% 3.73% 3.28% 3.62% 4.10%(b)
net assets*
Portfolio Turnover 20.47% 16.97% 14.43% 11.09% 23.18%
Average commission rate paid (d) $ 0.0773
- -----------
* During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Not annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
-8-
</TABLE>
<PAGE> 12
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of a Capital Appreciation Fund may not be
changed without a majority of the outstanding shares of that Fund (as defined in
"GENERAL INFORMATION -Miscellaneous"). There can be no assurance that the
investment objectives of any of the Capital Appreciation Funds will be achieved.
THE EQUITY FUND AND THE REGIONAL EQUITY FUND seek capital growth by
investing primarily in a diversified portfolio of common stock and securities
convertible into common stock, such as convertible bonds and convertible
preferred stock. In the case of the Regional Equity Fund, such securities must
be issued by companies headquartered in the Southern Region of the United States
which includes Alabama, Florida, Georgia, Louisiana, Mississippi, North
Carolina, South Carolina, Tennessee and Virginia. The production of current
income is an incidental objective of both the Equity Fund and the Regional
Equity Fund.
THE BALANCED FUND seeks to obtain long-term capital growth and produce
a reasonable amount of current income through a moderately aggressive investment
strategy. The Balanced Fund seeks to achieve this objective by investing in a
broadly diversified portfolio of securities, including common stocks, preferred
stocks and bonds.
THE CAPITAL GROWTH FUND seeks long-term capital appreciation and growth
of income by investing primarily in a diversified portfolio of common stocks and
securities convertible into common stocks such as convertible bonds and
convertible preferred stocks.
THE SMALL CAP FUND seeks capital appreciation by investing primarily in
a diversified portfolio of securities consisting of common stocks and securities
convertible into common stocks such as convertible bonds and convertible
preferred stocks. Any current income generated from these securities is
incidental to the investment objective of the Fund. Under normal market
conditions, the Fund will invest at least 65% of its total assets in common
stocks and securities convertible into common stocks of companies with a market
capitalization of less than $1 billion determined at the time the security is
purchased.
THE AMSOUTH EQUITY INCOME FUND seeks above average income and capital
appreciation by investing primarily in a diversified portfolio of common stocks,
preferred stocks, and securities that are convertible into common stocks, such
as convertible bonds and convertible preferred stock. Under normal market
conditions, the Fund will invest at least 65% of its total assets in
income-producing equity securities including common stock, preferred stock, and
securities convertible into common stocks such as convertible bonds and
convertible preferred stock. The portion of the Fund's total assets invested in
-9-
<PAGE> 13
common stock, preferred stock, and convertible securities will vary according to
the Fund's assessment of market and economic conditions and outlook.
As investment advisor to the Equity, Regional Equity, and Balanced
Funds, AmSouth will seek to invest in equity securities which are believed to
represent investment value. Factors which AmSouth may consider in selecting
equity securities include industry and company fundamentals, historical price
relationships, and/or underlying asset value.
As investment adviser to the Equity, Regional Equity, and Balanced
Funds, AmSouth will use a variety of economic projections, technical analysis,
and earnings projections in formulating individual stock purchase and sale
decisions. AmSouth will select investments that it believes have basic
investment value which will eventually be recognized by other investors, thus
increasing their value to the Funds. In the selection of the investments for the
Equity, Regional Equity, and Balanced Funds, AmSouth may therefore be making
investment decisions which could be contrary to the present expectations of
other professional investors. These decisions may involve greater risks compared
to other mutual funds, of either (a) more accurate assessment by other
investors, in which case losses may be incurred by a Fund, or (b) long delay in
investor recognition of the accuracy of the investment decisions of a Fund, in
which case invested capital of a Capital Appreciation Fund in an individual
security or group of securities may not appreciate for an extended period.
In managing the Capital Growth Fund and Small Cap Fund, AmSouth will
seek securities with potential to produce above-average earnings growth. Issuers
include companies with a history of above-average growth or companies that are
expected to enter periods of above-average growth or are positioned in emerging
growth industries. Should the expected growth potential of such companies fail
to be realized, a loss may be incurred.
The equity securities in which the Capital Appreciation Funds may
invest may be subject to wider fluctuations in value than some other forms of
investment. Depending upon the performance of a Capital Appreciation Fund's
investments, the net asset value per Share of such Fund may decrease instead of
increase.
Each Capital Appreciation Fund may provide current income. The Balanced
Fund and the Equity Income Fund are expected to produce a higher level of
current income than the other Capital Appreciation Funds.
Most companies in which the Equity, Regional Equity, Balanced, Capital
Growth, and Equity Income Funds will invest will be listed on national
securities exchanges. Stocks held by the Small Cap Fund will frequently be
traded over the counter.
-10-
<PAGE> 14
THE EQUITY FUND will normally invest at least 80% of the value of its
total assets in common stocks and securities convertible into common stocks,
such as convertible bonds and convertible preferred stocks, believed by AmSouth
to be undervalued. Under normal market conditions, the Equity Fund may also
invest up to 20% of the value of its total assets in preferred stocks, corporate
bonds, notes, and warrants, and obligations with maturities of 12 months or less
such as commercial paper (including variable amount master demand notes),
bankers' acceptances, certificates of deposit, repurchase agreements, money
market mutual funds, obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, and demand and time deposits of domestic and
foreign banks and savings and loan associations. If deemed appropriate for
temporary defensive purposes, the Equity Fund may increase its holdings in
short-term obligations to over 20% of its total assets and may also hold
uninvested cash pending investment. The Fund may also write covered call
options. See "Options."
THE REGIONAL EQUITY FUND will normally invest at least 65% of the value
of its total assets in common stocks and securities convertible into common
stocks believed by AmSouth to be undervalued of companies headquartered in the
Southern Region as defined above. Under normal market conditions, the Regional
Equity Fund may also invest up to 35% of the value of its total assets in common
stocks and securities convertible into common stock of companies headquartered
outside the Southern Region, preferred stocks, corporate bonds, notes, and
warrants, and obligations with maturities of 12 months or less such as
commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, money market mutual
funds, obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Regional Equity Fund may increase its holdings in short-term
obligations to over 35% of its total assets and may also hold uninvested cash
pending investment. The Regional Equity Fund may also write covered call
options. See "Options."
The Regional Equity Fund will normally invest at least 65% of the value
of its total assets in common stock and securities convertible into common stock
of companies headquartered in the Southern Region. There can be no assurance
that the economy of the Southern Region or the companies headquartered in the
Southern Region will grow in the future or that a company headquartered in the
Southern Region whose assets, revenues or employees are located substantially
outside of the Southern Region will share in any economic growth of the Southern
Region. Additionally, any localized negative economic factors or possible
physical disasters in the Southern Region area could have a much greater impact
on the Regional Equity Fund's assets than on similar funds whose investments are
geographically more diverse.
THE BALANCED FUND will normally invest in equity securities consisting
of common stocks but may also invest in other equity-type securities such as
warrants, preferred stocks and convertible debt instruments. The Fund's equity
investments will be in companies with a
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favorable outlook and believed by AmSouth to be undervalued. The Balanced Fund's
debt securities will consist of securities such as bonds, notes, debentures and
money market instruments. The average dollar-weighted portfolio maturity of debt
securities held by the Balanced Fund will vary according to market conditions
and interest rate cycles and will range between 1 year and 30 years under normal
market conditions. The Balanced Fund's debt securities will consist of high
grade securities, which are those securities rated in one of the three highest
rating categories by a nationally recognized statistical rating organization (an
"NRSRO") at the time of purchase, or if not rated, found the by the investment
advisor under guidelines established by the Trust's Board of Trustees to be of
comparable quality. (For a further description of these bond ratings, see the
Appendix to the Trust's Statement of Additional Information.) In the event that
the rating of any debt securities held by the Balanced Fund falls below the
third highest by an NRSRO the Fund will not be obligated to dispose of such
obligations and may continue to hold such obligations if, in the opinion of
AmSouth, such investment is considered appropriate under the circumstances. The
Balanced Fund may also write covered call options. See "Options."
It is a fundamental policy of the Balanced Fund that it will invest at
least 25% of its total assets in fixed-income securities. For this purpose,
fixed-income securities include debt securities, preferred stock and that
portion of the value of securities convertible into common stock, including
convertible preferred stock and convertible debt, which is attributable to the
fixed-income characteristics of those securities.
The portion of the Balanced Fund's assets invested in equity and debt
securities will vary in accordance with economic conditions, the general level
of common stock prices, interest rates and other relevant considerations,
including the risks associated with each investment medium. Although the
Balanced Fund seeks to reduce the risks associated with any one investment
medium by utilizing a variety of investments, performance will depend upon
additional factors such as timing and mix and the ability of AmSouth to judge
and react to changing market conditions.
The Capital Growth Fund will normally invest at least 65% of the value
of its total assets in common stocks and securities convertible into common
stocks, such as convertible bonds and convertible preferred stocks, believed by
AmSouth to have attractive potential for growth. Under normal market conditions,
the Capital Growth Fund may also invest up to 35% of the value of their total
assets in preferred stocks, corporate bonds, notes, and warrants, and
obligations with maturities of 12 months or less such as commercial paper
(including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, money market mutual funds,
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Capital Growth Fund may increase its holdings in short-term
obligations to over 35%
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of their total assets and may also hold uninvested cash pending investment.
The Capital Growth Fund may also write covered call options. See "Options."
The Small Cap Fund will normally invest at least 65% of its total
assets in common stocks and securities convertible into common stocks such as
convertible bonds and convertible preferred stock of companies with a market
capitalization of less than $1 billion determined at the time the security is
purchased. Under normal market conditions, the Small Cap Fund may invest up to
35% of the value of its total assets in preferred stocks, corporate bonds,
notes, and warrants, and obligations with maturities of 12 months or less such
as commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, money market mutual
funds, obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, Small Cap Fund may increase its holdings in short-term obligations to
over 35% of its total assets and may also hold uninvested cash pending
investment. The Small Cap Fund may also write covered call options. See
"Options."
While small-capital company securities may offer a greater capital
appreciation potential than investments in mid- or large-capital company
securities, they may also present greater risks. Small cap company securities
tend to be more sensitive to changes in earnings expectations and have lower
trading volumes than mid-to large-cap company securities and, as a result, they
may experience more abrupt and erratic price movements. Any current income
produced by a security is not a primary factor in the selection of investments.
The Small Cap Fund may also invest in investment grade debt securities,
that is, securities rated "BBB" or higher by an NRSRO at the time of purchase.
If the rating of a security falls below investment grade, the Investment Advisor
will consider whatever action is appropriate consistent with the Fund's
investment objectives and policies. See the Appendix to the Statement of
Additional Information for a discussion of rating categories.
In pursuit of its objective, the Small Cap Fund may employ certain
active investment management techniques including forward foreign currency
exchange contracts, options and futures contracts on currencies, securities and
securities indices and options on such futures contracts. These techniques may
be employed in an attempt to hedge foreign currency risks and other risks
associated with the Fund's portfolio securities. See the Statement of Additional
Information for a description of these investment practices and associated
risks.
The Small Cap Fund is managed in accordance with a value philosophy.
This approach consists of developing a diversified portfolio of securities
consistent with the
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Fund's investment objective and selected primarily on the basis of the advisor's
judgment that the securities have an underlying value, or potential value, which
exceeds their current prices. The basis and quantification of the economic
worth, or basic value of individual companies reflects the advisor's assessment
of a company's assets and the company's prospects for earning growth over the
next 1 1/2-to-3 years. The advisor relies primarily on the knowledge, experience
and judgment of its own research staff, but also receives and uses information
from a variety of outside sources, including brokerage firms, electronic data
bases, specialized research firms and technical journals.
The Equity Income Fund will normally invest at least 65% of the value
of its total assets in income-producing equity securities such as common stocks,
preferred stocks, and securities convertible into common stocks, such as
convertible bonds and convertible preferred stocks. The portion of the Fund's
total assets invested in common stocks, preferred stocks, and convertible
securities will vary according to the Fund's assessment of market and economic
conditions and outlook. Under normal market conditions, the Equity Income Fund
may also invest up to 35% of the value of its total assets in corporate bonds,
notes, and warrants, and obligations with maturities of 12 months or less such
as commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, money market mutual
funds, obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Equity Income Fund may increase its holdings in short-term
obligations to over 35% of its total assets and may also hold uninvested cash
pending investment. The Equity Income Fund may also write covered call options.
See "Options."
The Equity Income Fund's stock selection emphasizes those common stocks
in each sector that have good value, attractive yield, and dividend growth
potential. The Fund will utilize convertible securities because such securities
typically offer higher yields and good potential for capital appreciation.
FOREIGN INVESTMENTS
Each of the Capital Appreciation Funds may invest in foreign securities
through the purchase of American Depository Receipts or the purchase of
securities on the Toronto Stock Exchange, but will not do so if immediately
after a purchase and as a result of the purchase the total value of such foreign
securities owned by such Fund would exceed 25% (20% for the Balanced Fund) of
the value of the total assets of such Fund. Each of the Capital Appreciation
Funds may also invest in securities issued by foreign branches of U.S. banks and
foreign banks and in Canadian Commercial Paper and Europaper. Investment in
foreign securities is subject to special risks, such as future adverse political
and economic developments, possible seizure, currency blockage, nationalization,
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation
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at the source and the adoption of other foreign governmental restrictions.
Additional risks include currency exchange risks, less publicly available
information, the risk that companies may not be subject to the accounting,
auditing and financial reporting standards and requirements of U.S. companies,
the risk that foreign securities markets may have less volume and therefore less
liquidity and greater price volatility than U.S. securities, and the risk that
custodian and brokerage costs may be higher.
CONVERTIBLE SECURITIES
Each of the Capital Appreciation Funds may invest in convertible
securities. Convertible securities are fixed income-securities which may be
exchanged or converted into a predetermined number of the issuer's underlying
common stock at the option of the holder during a specified time period.
Convertible securities may take the form of convertible preferred stock,
convertible bonds or debentures, units consisting of "usable" bonds and warrants
or a combination of the features of several of these securities. Each Capital
Appreciation Fund other than the Balanced Fund and the Equity Income Fund may
invest in convertible securities rated "BBB" or higher by an NRSRO at the time
of investment, or if unrated, of comparable quality. The Equity Income Fund may
invest in convertible securities rated "BB" or lower by an NRSRO at the time of
investment, or if unrated, of comparable quality. The Balanced Fund may invest
in convertible securities rated "A" or higher by an NRSRO or, if unrated, of
comparable quality. If a convertible security falls below these minimum ratings
after a Fund has purchased it, a Fund is not required to drop the convertible
bond from its portfolio, but will consider appropriate action. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for different investment objectives.
Securities which are rated "BB" or lower by Standard & Poor's or "Ba"
or lower by Moody's either have speculative characteristics or are speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligations. A description of the rating categories is
contained in the Appendix to the Statement of Additional Information. There is
no lower limit with respect to rating categories for convertible securities in
which the Equity Income Fund may invest.
Corporate debt obligations that are not determined to be
investment-grade are high-yield, high-risk bonds, typically subject to greater
market fluctuations and greater risk of loss of income and principal due to an
issuer's default. To a greater extent than investment-grade securities, lower
rated securities tend to reflect short-term corporate, economic and market
developments, as well as investor perceptions or the issuer's credit quality.
Because investments in lower rated securities involve greater investment risk,
achievement of the Equity Income Fund's investment objective may be more
dependent on the Adviser's credit analysis than would be the case if the Equity
Income Fund were investing in higher rated securities. High yield securities may
be more susceptible to real or perceived adverse economic and competitive
industry conditions than investment grade
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securities. A projection of an economic downturn, for example, could cause a
decline in high yield prices because the advent of a recession could lessen the
ability of a highly leveraged company to make principal and interest payments on
its debt securities. In addition, the secondary trading market for high yield
securities may be less liquid than the market for higher grade securities. The
market prices of debt securities also generally fluctuate with changes in
interest rates so that the Equity Income Fund's net asset value can be expected
to decrease as long-term interest rates rise and to increase as long-term rates
fall. In addition, lower rated securities may be more difficult to dispose of or
to value than high-rated, lower-yielding securities. AmSouth attempts to reduce
the risks described above through diversification of the portfolio and by credit
analysis of each issuer as well as by monitoring broad economic trends and
corporate and legislative developments.
Convertible bonds and convertible preferred stocks are fixed-income
securities that generally retain the investment characteristics of fixed-income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed-income
of a bond or the dividend preference of a preferred stock until the holder
elects to exercise the conversion privilege. Usable bonds are corporate bonds
that can be used in whole or in part, customarily at full face value, in lieu of
cash to purchase the issuer's common stock. When owned as part of a unit along
with warrants, which are options to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bond's maturity. Convertible securities are senior to equity securities, and,
therefore, have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar non-convertible securities of the same
company. The interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with generally higher yields than
common stocks, but lower than non-convertible securities of similar quality.
The Capital Appreciation Funds will exchange or convert the convertible
securities held in portfolio into shares of the underlying common stock in
instances in which, in the opinion of AmSouth, the investment characteristics of
the underlying common shares will assist a Fund in achieving its investment
objectives. Otherwise, a Fund will hold or trade the convertible securities. In
selecting convertible securities for a Fund, the Adviser evaluates the
investment characteristics of the convertible security as a fixed-income
instrument, and the investment potential of the underlying equity security for
capital appreciation. In evaluating these matters with respect to a particular
convertible security, the Adviser considers numerous factors, including the
economic and political outlook, the value of the security relative to other
investment alternatives, trends in the determinants of the issuer's profits, and
the issuer's management capability and practices.
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As with all debt securities, the market values of convertible
securities tend to increase when interest rates decline and, conversely, tend to
decline when interest rates increase.
WHEN-ISSUED SECURITIES
Each of the Capital Appreciation Funds may also purchase securities on
a "when- issued" basis. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield, and
thereby involve a risk that the yield obtained in the transaction will be less
than those available in the market when delivery takes place. The Capital
Appreciation Funds will generally not pay for such securities or start earning
interest on them until they are received. When a Capital Appreciation Fund
agrees to purchase securities on a "when-issued" basis, the Trust's custodian
will set aside cash or liquid securities equal to the amount of the commitment
in a segregated account. Securities purchased on a "when-issued" basis are
recorded as an asset and are subject to changes in value based upon changes in
the general level of interest rates. Each of the Capital Appreciation Funds
expects that commitments to purchase "when-issued" securities will not exceed
25% of the value of its total assets under normal market conditions, and that a
commitment to purchase "when-issued" securities will not exceed 60 days. In the
event its commitment to purchase "when-issued" securities ever exceeded 25% of
the value of its total assets, a Capital Appreciation Fund's liquidity and the
investment advisor's ability to manage it might be adversely affected. The
Capital Appreciation Funds do not intend to purchase "when-issued" securities
for speculative purposes, but only for the purpose of acquiring portfolio
securities.
OPTIONS
Each of the Capital Appreciation Funds may engage in writing call
options from time to time as AmSouth deems to be appropriate. Options are
written solely as covered call options (options on securities owned by the
Fund). Such options must be listed on a national securities exchange and issued
by the Options Clearing Corporation. In order to close out an option position, a
Capital Appreciation Fund will enter into a "closing purchase transaction" --
the purchase of a call option on the same security with the same exercise price
and expiration date as any call option which it may previously have written on
any particular securities. When the portfolio security is sold, the Capital
Appreciation Fund effects a closing purchase transaction so as to close out any
existing call option on that security. If the Capital Appreciation Fund is
unable to effect a closing purchase transaction, it will not be able to sell the
underlying security until the option expires or the Capital Appreciation Fund
delivers the underlying security upon exercise. When writing a covered call
option, a Capital Appreciation Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security above
the exercise price, but retains the risk of loss should the price of the
security decline.
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The Balanced Fund may purchase put options from time to time as AmSouth
deems to be appropriate. A put is a right to sell a specified security (or
securities) within a specified period of time at a specified exercise price.
Puts may be acquired by the Balanced Fund to facilitate the liquidity of the
portfolio assets. Puts may also be used to facilitate the reinvestment of assets
at a rate of return more favorable than that of the underlying security. The
Balanced Fund may sell, transfer, or assign a put only in conjunction with the
sale, transfer, or assignment of the underlying security or securities. The
amount payable to the Balanced Fund upon its exercise of a "put" is normally (i)
the Balanced Fund's acquisition cost of the securities subject to the put
(excluding any accrued interest which the Fund paid on the acquisition), less
any amortized market premium or plus any accreted market or original issue
discount during the period the Balanced Fund owned the securities, plus (ii) all
interest accrued on the securities since the last interest payment date during
that period. The Balanced Fund will generally acquire puts only where the puts
are available without the payment of any direct or indirect consideration.
However, if necessary or advisable, the Fund may pay for puts either separately
in cash or by paying a higher price for portfolio securities which are acquired
subject to the puts (thus reducing the yield to maturity otherwise available for
the same securities). The Balanced Fund intends to enter into puts only with
dealers, banks, and broker-dealers which, in the Investment Advisor's opinion,
present minimal credit risks.
REPURCHASE AGREEMENTS
Securities held by the Capital Appreciation Funds may be subject to
repurchase agreements. If the seller under a repurchase agreement were to
default on its repurchase obligation or become insolvent, the Capital
Appreciation Fund would suffer a loss to the extent that the proceeds from a
sale of the underlying portfolio securities were less than the repurchase price
under the agreement, or to the extent that the disposition of such securities by
the Capital Appreciation Fund were delayed pending court action. Additionally,
if the seller should be involved in bankruptcy or insolvency proceedings, the
Capital Appreciation Fund may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the Capital
Appreciation Fund is treated as an unsecured creditor and required to return the
underlying security to the seller's estate.
REVERSE REPURCHASE AGREEMENTS
Each of the Capital Appreciation Funds may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, a Capital
Appreciation Fund would sell portfolio securities to financial institutions such
as banks and broker-dealers, and agree to repurchase them at a mutually
agreed-upon date and price. Reverse repurchase agreements involve the risk that
the market value of the securities sold by a Capital Appreciation Fund may
decline below the price at which the Fund is obligated to repurchase the
securities.
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REAL ESTATE INVESTMENT TRUSTS
The Capital Growth Fund, Small Cap Fund, and Equity Income Fund may
invest in real estate investment trusts. Real estate investment trusts are
sensitive to factors such as changes in real estate values and property taxes,
interest rates, cash flow of underlying real estate assets, overbuilding, and
the management skill and creditworthiness of the issuer. Real estate may also be
affected by tax and regulatory requirements, such as
those relating to the environment.
OTHER INVESTMENT PRACTICES
Each Capital Appreciation Fund may invest up to 5% of the value of its
total assets in the securities of any one money market mutual fund including
Shares of the AmSouth Prime Obligations Fund and the AmSouth U.S. Treasury Fund
(the "AmSouth Money Market Funds"), provided that no more than 10% of a Capital
Appreciation Fund's total assets may be invested in the securities of money
market mutual funds in the aggregate. In order to avoid the imposition of
additional fees as a result of investments by the Capital Appreciation Funds in
the AmSouth Money Market Funds, the Investment Advisor and the Administrator
will reduce that portion of their usual service fees from each Capital
Appreciation Fund by an amount equal to their service fees from the AmSouth
Money Market Funds that are attributable to those Capital Appreciation Fund
investments. The Investment Advisor and the Administrator will promptly forward
such fees to the Capital Appreciation Funds. Each Capital Appreciation Fund will
incur additional expenses due to the duplication of expenses as a result of
investing in securities of other unaffiliated money market mutual funds.
Additional restrictions regarding the Capital Appreciation Funds' investments in
the securities of an unaffiliated money market fund and/or the AmSouth Prime
Obligations Fund and the AmSouth U.S. Treasury Fund are contained in the
Statement of Additional Information.
In order to generate additional income, each Capital Appreciation Fund
may, from time to time, lend its portfolio securities to broker-dealers, banks
or institutional borrowers of securities. While the lending of securities may
subject a Capital Appreciation Fund to certain risks, such as delays or the
inability to regain the securities in the event the borrower were to default on
its lending agreement or enter into bankruptcy, the Capital Appreciation Fund
will receive 100% collateral in the form of cash or U.S. Government securities.
This collateral will be valued daily by AmSouth and should the market value of
the loaned securities increase, the borrower will furnish additional collateral
to the Capital Appreciation Fund. During the time portfolio securities are on
loan, the borrower pays the Capital Appreciation Fund any dividends or interest
paid on such securities. Loans are subject to termination by the Capital
Appreciation Funds or the borrower at any time. While the Capital Appreciation
Funds do not have the right to vote securities on loan, the Capital Appreciation
Funds intend to terminate the loan and regain the right to vote if that is
considered important with respect to the investment. The Capital Appreciation
Funds will only enter into loan arrangements with
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<PAGE> 23
broker-dealers, banks or other institutions which AmSouth has determined are
creditworthy under guidelines established by the Trust's Board of Trustees.
Each Capital Appreciation Fund may engage in the technique of
short-term trading. Such trading involves the selling of securities held for a
short time, ranging from several months to less than a day. The object of such
short-term trading is to increase the potential for capital appreciation and/or
income of the Capital Appreciation Fund in order to take advantage of what
AmSouth believes are changes in market, industry or individual company
conditions or outlook. Any such trading would increase the turnover rate of a
Capital Appreciation Fund and its transaction costs.
Each Capital Appreciation Fund will not invest more than 15% of its net
assets in time deposits with maturities in excess of seven days which are
subject to penalties upon early withdrawal.
The portfolio turnover of each Capital Appreciation Fund may vary
greatly from year to year as well as within a particular year. High turnover
rates will generally result in higher transaction costs and higher levels of
taxable realized gains to the Fund's shareholders. Portfolio turnover for the
Capital Growth Fund, Small Cap Fund, and Equity Income Fund is not expected to
exceed 200% in the coming year. The portfolio turnover rate for the fiscal year
ended July 31, 1996 was 19.11% for the Equity Fund; 8.22% for the Regional
Equity Fund and for the Balanced Fund, 13.65% for the common stock portion of
its portfolio and 6.82% for the fixed income portion of its portfolio.
INVESTMENT RESTRICTIONS
Each of the Capital Appreciation Funds is subject to a number of
investment restrictions that may be changed only by a vote of a majority of the
outstanding shares of that Fund (see "GENERAL INFORMATION - Miscellaneous" in
this prospectus).
No Capital Appreciation Fund may:
1. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, more than 5% of the value of such Capital
Appreciation Fund's total assets would be invested in such issuer, or such
Capital Appreciation Fund would hold more than 10% of any class of securities of
the issuer or more than 10% of the outstanding voting securities of the issuer,
except that up to 25% of the value of each Capital Appreciation Fund's total
assets may be invested without regard to such limitations. There is no limit to
the percentage of assets that may be invested in U.S. Treasury bills, notes, or
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
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2. Purchase any securities which would cause 25% or more of the value
of such Capital Appreciation Fund's total assets at the time of purchase to be
invested in securities of one or more issuers conducting their principal
business activities in the same industry, provided that (a) there is no
limitation with respect to obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities and repurchase agreements
secured by obligations of the U.S. Government or its agencies or
instrumentalities; (b) wholly-owned finance companies will be considered to be
in the industries of their parents if their activities are primarily related to
financing the activities of their parents; and (c) utilities will be divided
according to their services. For example, gas, gas transmission, electric and
gas, electric, and telephone will each be considered a separate industry.
3. Borrow money or issue senior securities, except that each Capital
Appreciation Fund may borrow from banks or enter into reverse repurchase
agreements for temporary purposes in amounts up to 10% of the value of its total
assets at the time of such borrowing; or mortgage, pledge, or hypothecate any
assets, except in connection with any such borrowing and in amounts not in
excess of the lesser of the dollar amounts borrowed or 10% of the value of such
Capital Appreciation Fund's total assets at the time of its borrowing. A Capital
Appreciation Fund will not purchase securities while borrowings (including
reverse repurchase agreements) in excess of 5% of its total assets are
outstanding.
4. Make loans, except that each Capital Appreciation Fund may purchase
or hold debt securities and lend portfolio securities in accordance with its
investment objective and policies, and may enter into repurchase agreements.
VALUATION OF SHARES
The net asset value of each Capital Appreciation Fund is determined and
its Shares are priced as of 4:00 p.m., Eastern Time (the "Valuation Time") on
each Business Day of such Fund. As used herein a "Business Day" constitutes any
day on which the New York Stock Exchange (the "NYSE") is open for trading and
the Federal Reserve Bank of Atlanta is open, except days on which there are not
sufficient changes in the value of the Fund's portfolio securities that the
Fund's net asset value might be materially affected, or days during which no
Shares are tendered for redemption and no orders to purchase Shares are
received. Currently, either the NYSE or the Federal Reserve Bank of Atlanta is
closed on the customary national business holidays of New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day.
Net asset value per Share for purposes of pricing sales and redemptions is
calculated by dividing the value of all securities and other assets belonging to
a Capital Appreciation Fund, less the liabilities charged to that Fund, by the
number of the outstanding Shares of that Fund. The net asset value per Share of
each Capital Appreciation Fund will fluctuate as the value of its investment
portfolio changes.
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The securities in each Capital Appreciation Fund will be valued at
market value. If market quotations are not available, the securities will be
valued by a method which the Board of Trustees of the Trust believes accurately
reflects fair value. For further information about valuation of investments in
the Capital Appreciation Funds, see the Statement of Additional Information.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in each of the Capital Appreciation Funds are sold on a
continuous basis by the Trust's distributor, BISYS Fund Services (the
"Distributor"). The principal office of the Distributor is 3435 Stelzer Road,
Columbus, Ohio 43219. If you wish to purchase Shares, contact the Trust at (800)
451-8382.
PURCHASES OF SHARES
Shares of the Capital Appreciation Funds may be purchased through
procedures established by the Distributor in connection with requirements of
qualified accounts maintained by or on behalf of certain persons ("Customers")
by AmSouth or its correspondent or affiliated banks (collectively, the "Banks").
These procedures may include instructions under which a Customer's account is
"swept" automatically no less frequently than weekly and amounts in excess of a
minimum amount agreed upon by a Bank and its Customer are invested by the
Distributor in Shares of the Capital Appreciation Funds. These procedures may
also include transactions whereby AmSouth as agent purchases Shares of the
Capital Appreciation Funds in amounts that correspond to the market value of
securities sold to the Capital Appreciation Funds by AmSouth as agent.
Shares of the Trust sold to the Banks acting in a fiduciary, advisory,
custodial, agency, or other similar capacity on behalf of Customers will
normally be held of record by the Banks. With respect to Shares so sold, it is
the responsibility of the particular Bank to transmit purchase or redemption
orders to the Distributor and to deliver federal funds for purchase on a timely
basis. Beneficial ownership of the Shares will be recorded by the Banks and
reflected in the account statements provided by the Banks to Customers.
Investors may also purchase Shares of a Capital Appreciation Fund by
completing and signing an Account Registration Form and mailing it, together
with a check (or other negotiable bank draft or money order) in at least the
minimum initial purchase amount, payable to the Trust, in care of AmSouth Mutual
Funds, Department L1304, Columbus, Ohio 43260-1304. Subsequent purchases of
Shares of a Capital Appreciation Fund may be made at any time by mailing a check
(or other negotiable bank draft or money order) payable to the Trust, to the
above address.
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<PAGE> 26
If an Account Registration Form has been previously received by the
Distributor, investors may also purchase Shares either by telephone or by wiring
funds to the Trust's custodian. Telephone orders may be placed by calling the
Trust at (800) 451-8382. Payment for Shares ordered by telephone may be made by
check and must be received by the Trust's custodian within seven days of the
telephone order. If payment is not received within seven days or a check timely
received does not clear, the purchase will be cancelled and the investor could
be liable for any losses or fees incurred. In the case of purchases of Shares
effected by wiring funds to the Trust's custodian, investors must call the Trust
at (800) 451-8382 to obtain instructions regarding the bank account number into
which the funds should be wired and other pertinent information.
Investors may also purchase Shares by arranging systematic monthly,
bi-monthly or quarterly investments into the Funds with the Trust's Automatic
Investment Plan ("AIP"). The minimum investment amounts are $50 per transfer and
the maximum amount with respect to any transfer is $100,000. After investors
give the Trust proper authorization, their bank accounts, which must be with
banks that are members of the Automated Clearing House, will be debited
accordingly to purchase Shares. Investors will receive a confirmation from the
Trust for every transaction, and a withdrawal will appear on their bank
statements.
To participate in AIP, investors must complete the appropriate sections
of the Account Registration form or call for instructions. This form may be
obtained by calling the Trust at (800) 451-8382. The amount investors specify
will automatically be invested in Shares at the specified Fund's public offering
price per Share next determined after the debit is made.
To change the frequency or amount invested, written instructions must
be received by the Trust at least seven Business Days in advance of the next
transfer. If the bank or bank account number is changed, instructions must be
received by the Trust at least 20 Business Days in advance. In order to change a
bank or bank account number, investors also must have their signature guaranteed
by a bank, broker, dealer, credit union, securities exchange, securities
association, clearing agency or savings association, as those terms are defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934 (an "Eligible
Guarantor Institution"). Signature guarantees are described more fully under
"REDEMPTION BY MAIL" below. If there are insufficient funds in the investor's
designated bank account to cover the Shares purchased using AIP, the investor's
bank may charge the investor a fee or may refuse to honor the transfer
instruction (in which case no Fund Shares will be purchased).
Investors should check with their banks to determine whether they are
members of the Automated Clearing House and whether their banks charge a fee for
transferring funds through the Automated Clearing House. Expenses incurred by
the Funds related to AIP are borne by the Funds and therefore there is no direct
charge by the Funds to investors for use of these services.
-23-
<PAGE> 27
Shares of each Capital Appreciation Fund are purchased at the public
offering price per Share, which is the net asset value per Share (see "VALUATION
OF SHARES") next determined after receipt by the Distributor of an order in good
form to purchase Shares plus the applicable sales charge as described below.
Purchases of Shares of a Capital Appreciation Fund will be effected only on a
Business Day (as defined in "VALUATION OF SHARES") of such Fund. An order
received prior to the Valuation Time on any Business Day will be executed based
on the net asset value determined as of the Valuation Time on the date of
receipt. An order received after the Valuation Time on any Business Day will be
executed based on the net asset value determined as of the next Business Day.
In case of orders for the purchase of Shares placed through a
broker-dealer, the applicable public offering price will be calculated with
reference to the net asset value as so determined, but only if the broker-dealer
receives the order prior to the Valuation Time for that day and transmits it to
the Distributor prior to its close of business that same day (normally 4:00 p.m.
Eastern Time). The broker-dealer is responsible for transmitting such orders by
4:00 p.m. If the broker-dealer fails to do so, the investor's right to that
day's closing price must be settled between the investor and the broker-dealer.
The minimum investment is $1,000 for the initial purchase of Shares of
a Capital Appreciation Fund by an investor. There is no minimum investment for
subsequent purchases; however, as described above, the minimum subsequent
investment when using AIP is $50 per transfer. The minimum initial investment
amount may be waived if purchases are made in connection with Individual
Retirement Accounts, Keogh plans or similar plans. For information on IRAs or
Keoghs or similar plans, contact AmSouth at (800) 444-4727.
Depending upon the terms of a particular Customer account, the Banks
may charge a Customer's account fees for automatic investment and other cash
management services provided in connection with investment in the Capital
Appreciation Funds. Information concerning these services and any charges can be
obtained from the Banks. This Prospectus should be read in conjunction with any
such information received from the Banks.
The Trust reserves the right to reject any order for the purchase of
its Shares in whole or in part, including purchases made with foreign and third
party checks.
Every Shareholder will receive a confirmation of each new transaction
in his or her account, which will also show the total number of Shares of the
particular Fund owned by the Shareholder. Reports of purchases and redemptions
of Shares by Banks on behalf of their Customers will be sent by the Banks to
their Customers. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Shares will not be issued.
-24-
<PAGE> 28
SALES CHARGE
The public offering price of a share of a Capital Appreciation Fund
equals its net asset value plus a sales charge. BISYS Fund Services receives
this sales charge as Distributor and may re-allow a portion of it as dealer
discounts and brokerage commissions. However, BISYS Fund Services, at its sole
discretion, may pay certain dealers all or part of the portion of the sales
charges it receives. A broker or dealer who receives a reallowance in excess of
90% of the sales charge may be deemed to be an "underwriter" for purposes of the
Securities Act of 1933.
<TABLE>
<CAPTION>
Sales Charge as Dealer
a Percentage of Sales Charge as Allowance
Net Amount a Percentage of as a Percentage
Amount of Purchase Invested Offering Price of Offering Price
- ------------------ --------------- --------------- -----------------
<S> <C> <C> <C>
Less than $50,000...................... 4.71% 4.50% 4.05%
$50,000 but less than $100,000......... 4.17% 4.00% 3.60%
$100,000 but less than $250,000........ 3.09% 3.00% 2.70%
$250,000 but less than $500,000........ 2.04% 2.00% 1.80%
$500,000 but less than $1,000,000 1.01% 1.00% .90%
$1,000,000 or more..................... -0- -0- -0-
</TABLE>
From time to time dealers who receive dealer discounts and broker
commissions from the Distributor may reallow all or a portion of such dealer
discounts and broker commissions to other dealers or brokers. The Distributor,
at its expense, will also provide additional compensation to dealers in
connection with sales of Shares of any of the Funds. Such compensation will
include financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding one or more Funds of the Trust, and/or other
dealer-sponsored special events. In some instances, this compensation will be
made available only to certain dealers whose representatives have sold a
significant amount of such Shares. Compensation will include payment for travel
expenses, including lodging, incurred in connection with trips taken by invited
registered representatives and members of their families to location within or
outside the United States for meetings or seminars of a business nature.
Compensation will also include the following types of non-cash compensation
offered through sales contests: (1) vacation trips, including the provision of
travel arrangements and lodging at luxury resorts at an exotic location, (2)
tickets for entertainment events (such as concerts, cruises and sporting events)
and (3) merchandise (such as clothing, trophies, clocks and pens). Dealers may
not use sales of a Fund's Shares to qualify for this compensation to the extent
such may be prohibited by the laws of any state or any self-regulatory agency,
such as the National Association of Securities Dealers, Inc. None of the
aforementioned compensation is paid for by any Fund or its Shareholders.
The sales charges set forth in the table above are applicable to
purchases made at one time by any purchaser (a "Purchaser"), which includes: (i)
an individual, his or her spouse
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<PAGE> 29
and children under the age of 21; (ii) a trustee or other fiduciary of a single
trust estate or single fiduciary account; or (iii) any other organized group of
persons, whether incorporated or not, provided that such organization has been
in existence for at least six months and has some purpose other than the
purchase of redeemable securities of a registered investment company. In order
to qualify for a lower sales charge, all orders from a Purchaser will have to be
placed through a single investment dealer and identified at the time of purchase
as originating from the same Purchaser, although such orders may be placed into
more than one discrete account which identifies the Purchasers.
SALES CHARGE WAIVERS
The following classes of investors may purchase Shares of a Capital
Appreciation Fund with no sales charge in the manner described below (which may
be changed or eliminated at any time by the Distributor):
(1) Existing Shareholders of a Capital Appreciation Fund upon the
reinvestment of dividend and capital gain distributions;
(2) Officers, trustees, directors, employees and retired employees of
the Trust, AmSouth Bancorporation and its affiliates, and BISYS Fund Services
and its affiliates (and spouses and children of each of the foregoing);
(3) Investors for whom AmSouth Bancorporation or one of its affiliates
acts in a fiduciary, advisory, custodial, agency or similar capacity through an
account with the Trust Department of AmSouth Bancorporation or one of its
affiliates;
(4) Investors who purchase Shares of a Capital Appreciation Fund
through a 401(k) plan or a 403(b) plan which by its terms permits purchases of
Shares;
(5) Employees (and their spouses and children under the age of 21) of
any broker-dealer with which the Distributor enters into a dealer agreement to
sell Shares of the Funds;
(6) Orders placed on behalf of other investment companies distributed
by the Distributor and its affiliated companies; and
(7) Investors who purchase Shares of a Capital Appreciation Fund
through certain broker-dealers, registered investment advisers and other
financial institutions that have entered into an agreement with the Distributor,
which includes a requirement that such shares be sold for the benefit of clients
participating in a "wrap account," asset allocation or a similar program under
which such clients pay a fee to such broker-dealer, registered investment
advisor or other financial institution.
-26-
<PAGE> 30
From time to time, for special promotional purposes, the Distributor
may offer special concessions to enable investors to purchase shares of a Fund
offered by the Trust at net asset value without payment of a front-end charge.
To qualify for a net asset value purchase, the investor must pay for such
purchase with the proceeds from the redemption of shares of a non-affiliated
mutual fund on which a front-end sales charge was paid. A qualifying purchase of
shares must occur within 30 days of prior redemption and must be evidenced by a
confirmation of the redemption transaction. At the time of purchase, the
investment representative must notify the Distributor that the purchase
qualifies for a purchase at net asset value and provide sufficient information
to permit confirmation of qualification. Proceeds from the redemption of shares
on which no front-end sales charge was paid do not qualify for a purchase at net
asset value.
The Distributor may also periodically waive the sales charge for all
investors with respect to any Capital Appreciation Fund.
LETTER OF INTENT
By checking the Letter of Intent box on the account application, a
shareholder becomes eligible for reduced sales charges applicable to the total
amount invested in shares of a Capital Appreciation Fund over a 13-month period
(beginning up to 90 days prior to the date indicated on the account
application). The Trust's Transfer Agent will hold in escrow 5% of the amount
indicated for payment of the higher sales charge if a shareholder does not
purchase the full amount indicated on the account application. Upon completion
of the total minimum investment specified on the account application, the escrow
will be released, and an adjustment will be made to reflect any reduced sales
charge applicable to shares purchased during the 90-day period prior to
submission of the account application. Additionally, if the total purchases
within the 13-month period exceed the amount specified, an adjustment will be
made to reflect further reduced sales charges applicable to such purchases. All
such adjustments will be made at the conclusion of the 13-month period in the
form of additional shares credited to the shareholder's account at the then
current Public Offering Price applicable to a single purchase of the total
amount of the total purchases. If total purchases are less than the amount
specified, escrowed shares may be involuntarily redeemed to pay the additional
sales charge. Checking a Letter of Intent box does not bind an investor to
purchase, or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but an investor must complete the intended
purchase to obtain the reduced sales load.
For further information about Letters of Intent, interested investors
should contact the Trust at (800) 451-8382. This program, however, may be
modified or eliminated at any time or from time to time by the Distributor
without notice.
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<PAGE> 31
CONCURRENT PURCHASES AND RIGHT OF ACCUMULATION
A Purchaser may qualify for a reduced sales charge by combining
concurrent purchases of Shares of a Capital Appreciation Fund and one or more of
the other Funds of the Trust sold with a sales charge or by combining a current
purchase of Shares of a Capital Appreciation Fund with prior purchases of Shares
of any Fund of the Trust sold subject to a sales charge. The applicable sales
charge is based on the sum of (i) the Purchaser's current purchase of shares of
any Fund sold with a sales charge plus (ii) the then current net asset value of
all Shares held by the Purchaser in any Fund sold with a sales charge. To
receive the applicable public offering price pursuant to the right of
accumulation Shareholders must at the time of purchase provide the Transfer
Agent or the Distributor with sufficient information to permit confirmation of
qualification. Accumulation privileges may be amended or terminated without
notice at any time by the Distributor.
EXCHANGE PRIVILEGE
Shareholders may exchange Shares of any Capital Appreciation Fund on
the basis of the relative net asset value of the Shares exchanged, without
payment of a sales charge, for Shares of any other Fund of the Trust so long as
they maintain the respective minimum account balance in each Fund in which they
own Shares. Shareholders may exchange Shares of a Fund without a sales charge
for Shares of a Fund with a sales charge, by paying the applicable sales charge,
so long as they maintain the respective minimum account balances in each Fund in
which they own Shares. Shares of a Fund without a sales charge that were
acquired through an exchange of Shares of a Fund with respect to which a sales
charge was paid may be exchanged for Shares of a Fund with a sales charge
without payment of a sales charge provided that such an exchange may only be
made once during each calendar year and only upon the written request of a
Shareholder. Shareholders must at the time of purchase provide the Transfer
Agent or the Distributor with sufficient information to permit confirmation of
qualification.
An exchange is considered to be a sale of Shares for federal income tax
purposes on which a Shareholder may realize a capital gain or loss. In general,
if a Shareholder exchanges Capital Appreciation Fund Shares for Shares of
another Fund without paying a sales charge, the gain or loss on the sale of the
Capital Appreciation Fund Shares will be calculated without taking into account
the sales charge paid on the Capital Appreciation Fund Shares if the Shares were
held less than 91 days. The sales charge will instead be added to the basis of
the Fund Shares acquired in the exchange. The application of this rule will
increase the gain or reduce the loss that the Shareholder would otherwise
recognize on the exchange of the Shares of the Capital Appreciation Fund.
Before an exchange can be effected, a Shareholder must receive a
current prospectus of the Fund into which the Shares are exchanged. An exchange
may be made by calling the Trust at (800) 451-8382 or by mailing written
instructions to the Transfer Agent. Exchange
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<PAGE> 32
privileges may be exercised only in those states where Shares of such other
Funds of the Trust may legally be sold, and may be amended or terminated at any
time upon sixty (60) days' notice.
The Trust's exchange privilege is not intended to afford shareholders a
way to speculate on short-term movements in the market. Accordingly, in order to
prevent excessive use of the exchange privilege that may potentially disrupt the
management of the Trust and increase transaction costs, the Trust has
established a policy of limiting excessive exchange activity. Exchange activity
will not be deemed excessive if limited to four substantive exchange redemptions
from a Fund during any calendar year.
DIRECTED DIVIDEND OPTION
Shareholders can elect to have dividend distributions (capital gains,
dividends, dividends and capital gains) paid by check or reinvested within the
Fund or reinvested in other AmSouth Mutual Funds of the same shareholder
registration without a sales charge. To participate in the Directed Dividend
Option, a shareholder must maintain a minimum balance of $1,000 in each Fund
into which he or she plans to reinvest dividends.
The Directed Dividend Option may be modified or terminated without
notice. In addition, the Trust may suspend a shareholder's Directed Dividend
Option without notice if the account balance is less than the minimum $1,000.
Participation in the Option may be terminated or changed by the shareholder at
anytime by writing the Distributor. The Directed Dividend Option is not
available to participants in an AmSouth Mutual Funds IRA.
REDEMPTION OF SHARES
Shares may ordinarily be redeemed by mail or by telephone. However, all
or part of a Customer's Shares may be redeemed in accordance with instructions
and limitations pertaining to his or her account at a Bank.
REDEMPTION BY MAIL
A written request for redemption must be received by the Transfer Agent
in order to constitute a valid tender for redemption. The Transfer Agent will
require a signature guarantee by an eligible guarantor institution. For purposes
of this policy, the term "eligible guarantor institution" shall include banks,
brokers, dealers, credit unions, securities exchanges and associations, clearing
agencies and savings associations as those terms are defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. The Transfer Agent reserves the right
to reject any signature guarantee if (1) it has reason to believe that the
signature is not genuine, (2) it has reason to believe that the transaction
would otherwise be improper, or (3) the guarantor institution is a broker or
dealer that is neither a member of a clearing corporation nor maintains net
capital of at least $100,000. The signature guarantee
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<PAGE> 33
requirement will be waived if the following conditions apply: (1) the redemption
check is payable to the Shareholder(s) of record; and (2) the redemption check
is mailed to the Shareholder(s) at the address of record or the proceeds are
either mailed or wired to a financial institution account previously designated.
There is no charge for having redemption requests mailed to a designated bank
account.
REDEMPTION BY TELEPHONE
A Shareholder may have the payment of redemption requests wired or
mailed directly to a domestic commercial bank account previously designated by
the Shareholder on the Account Registration Form. Under most circumstances, such
payments will be transmitted on the next Business Day following receipt of a
valid request for redemption. Such wire redemption requests may be made by the
Shareholder by telephone to the Transfer Agent. The Transfer Agent may reduce
the amount of a wire redemption payment from the maximum wire redemption charge
of $15.00. Such charge is presently $7.00 for each wire redemption. There is no
charge for having payment of redemption requests mailed or sent via Automated
Clearing House to a designated bank account. For telephone redemptions, call the
Trust at (800) 451-8382. The Trust will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine; if these procedures are
not followed, the Trust may be liable for any losses due to unauthorized or
fraudulent instructions. These procedures include recording all phone
conversations, sending confirmations to Shareholders within 72 hours of the
telephone transaction, verifying the account name and a shareholder's account
number or tax identification number and sending redemption proceeds only to the
address of record or to a previously authorized account.
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per Share next
determined after the Shares are properly tendered for redemption, as described
above. The proceeds paid upon redemption of Shares in a Capital Appreciation
Fund may be more or less than the amount invested. Payment to Shareholders for
Shares redeemed will be made within seven days after receipt by the Transfer
Agent of the request for redemption. However, to the greatest extent possible,
the Trust will attempt to honor requests from Shareholders for next Business Day
payments upon redemption of Shares if the request for redemption is received by
the Transfer Agent before 4:00 p.m., Eastern Time, on a Business Day or, if the
request for redemption is received after 4:00 p.m., Eastern Time, to honor
requests for payment within two Business Days, unless it would be
disadvantageous to the Trust or the Shareholders of the particular Capital
Appreciation Fund to sell or liquidate portfolio securities in an amount
sufficient to satisfy requests for payments in that manner.
At various times, the Trust may be requested to redeem Shares for which
it has not yet received good payment. In such circumstances, the Trust may delay
the forwarding of proceeds only until payment has been collected for the
purchase of such Shares which may
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<PAGE> 34
take up to 15 days or more. To avoid delay in payment upon redemption shortly
after purchasing Shares, investors should purchase Shares by certified or bank
check or by wire transfer. The Trust intends to pay cash for all Shares
redeemed, but under abnormal conditions which make payment in cash unwise, the
Trust may make payment wholly or partly in portfolio securities at their then
market value equal to the redemption price. In such cases, an investor may incur
brokerage costs in converting such securities to cash.
Due to the relatively high cost of handling small investments, the
Trust reserves the right to redeem, at net asset value, the Shares of any
Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder, the account of such Shareholder in any Capital Appreciation Fund
has a value of less than $250. Accordingly, an investor purchasing Shares of a
Capital Appreciation Fund in only the minimum investment amount may be subject
to such involuntary redemption if he or she thereafter redeems some of his or
her Shares. Before the Trust exercises its right to redeem such Shares and to
send the proceeds to the Shareholder, the Shareholder will be given notice that
the value of the Shares of a Capital Appreciation Fund in his or her account is
less than the minimum amount and will be allowed 60 days to make an additional
investment in an amount which will increase the value of the account to at least
$250.
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION" in the
Statement of Additional Information for examples of when the Trust may suspend
the right of redemption or redeem Shares involuntarily if it appears appropriate
to do so in light of the Trust's responsibilities under the Investment Company
Act of 1940.
DIVIDENDS AND TAXES
The net income of each of the Capital Appreciation Funds will be
declared monthly as a dividend to Shareholders at the close of business on the
day of declaration. Dividends will generally be paid monthly. Distributable net
realized capital gains are distributed annually to Shareholders of record. A
Shareholder will automatically receive all income dividends and capital gains
distributions in additional full and fractional Shares unless the Shareholder
elects to receive such dividends or distributions in cash. Dividends and
distributions are reinvested without a sales charge as of the ex-dividend date
using the net asset value determined on that date and are credited to a
Shareholder's account on the payment date. Reinvested dividends and
distributions receive the same tax treatment as dividends and distributions paid
in cash. Dividends are generally taxable when received. However, dividends
declared in October, November, or December to Shareholders of record during
those months and paid during the following January are treated for tax purposes
as if they were received by each Shareholder on December 31 of the prior year.
Elections to receive dividends or distributions in cash, or any revocation
thereof, must be made in writing to the Transfer Agent at 3435 Stelzer Road,
Columbus, Ohio 43219, and will become effective with respect to dividends and
distributions having record dates after its receipt by the Transfer Agent.
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<PAGE> 35
Each of the Capital Appreciation Funds is treated as a separate entity
for Federal income tax purposes. Each of the Capital Appreciation Funds intends
to qualify as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). If they so qualify, the Capital Appreciation
Funds will not have to pay federal income taxes on net income and net capital
gain income that they distribute to shareholders. Regulated investment companies
are also subject to a federal excise tax if they do not distribute their income
on a timely basis. The Capital Appreciation Funds intend to avoid paying federal
income and excise taxes by timely distributing substantially all their net
income and net investment capital gain income.
A distribution to a Shareholder of net investment income (generally the
Fund's ordinary income) and the excess, if any, of net short-term capital gain
over net long-term loss will be taxable to the Shareholder as ordinary income.
The 70% dividends-received deduction for corporations generally will apply to
the Fund's distributions to corporations to the extent such distributions
represent amounts that would qualify for the dividends-received deduction when
received by the Fund if the Fund were a regular corporation and are designated
by the Fund as qualifying for the dividends-received deduction.
A distribution by a Capital Appreciation Fund of the excess of net
long-term capital gain over net short-term capital loss designated by such Fund
as a capital gain dividend is taxable to Shareholders as long-term capital gain,
regardless of how long the Shareholder has held Shares in such Fund. Such
distributions are not eligible for the dividends-received deduction.
Prior to purchasing Shares of a Capital Appreciation Fund, the impact
of dividends or capital gains distributions which are expected to be declared or
have been declared, but not paid, should be carefully considered. Dividends or
capital gains distributions paid after a purchase of Shares are subject to
federal income taxes, although in some circumstances the dividend or
distribution may be, as an economic matter, a return of capital. A Shareholder
should consult his or her own adviser for any special advice.
Dividends received by a Shareholder that are derived from a Capital
Appreciation Fund's investments in U.S. government obligations may not be
entitled to the exemptions from state and local income taxes that would be
available if the Shareholder had purchased U.S. government obligations directly.
A Shareholder will generally recognize capital gain or loss on the sale
or exchange of shares in a Capital Appreciation Fund. If a Shareholder receives
a capital gain dividend with respect to a Share of a Capital Appreciation Fund
and such Share is held for six months or less, any loss on the sale or exchange
of such Share shall be treated as a long-term capital loss to the extent of the
capital gain dividend.
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<PAGE> 36
The foregoing discussion is limited to federal income tax consequences
and is based on tax laws and regulations which are in effect as of the date of
this Prospectus; such laws and regulations may be changed by legislative or
administrative actions. The foregoing is also intended only as a brief summary
of some of the important tax considerations generally affecting the Capital
Appreciation Funds and their Shareholders. Potential investors in the Capital
Appreciation Funds are urged to consult their tax advisers concerning their own
tax situation and concerning the application of state and local taxes which may
differ from the federal income tax consequences described above.
Shareholders will be advised at least annually as to the character for
federal income tax purposes of distributions made during the year.
MANAGEMENT OF AMSOUTH MUTUAL FUNDS
TRUSTEES OF THE TRUST
Overall responsibility for management of the Trust rests with the Board
of Trustees of the Trust, who are elected by the Shareholders of the Trust.
There are currently six Trustees, two of whom are "interested persons" of the
Trust within the meaning of that term under the Investment Company Act of 1940.
The Trustees, in turn, elect the officers of the Trust to supervise actively its
day-to-day operations. The Trustees of the Trust, their current addresses, and
principal occupations during the past five years are as follows (if no address
is listed, the address is 3435 Stelzer Road, Columbus, Ohio 43219):
Position(s) Held Principal Occupation
Name and Address With the Trust During the Past 5 Years
- ---------------- ---------------- -----------------------
Dr. Dick D. Briggs, Jr. Trustee From 1981 to present, Professor
459 DER Building and Vice Chairman, Dept. of
1808 7th Avenue South Medicine, Univ. of Alabama at
UAB Medical Center Birmingham School of Medicine;
Birmingham, Alabama 35294 from December 1995 to present,
Physician, University of Alabama
Health Services Foundation; from
1988 to 1992, President, CEO and
Medical Director, Univ. of
Alabama Health Services
Foundation
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<PAGE> 37
<TABLE>
<CAPTION>
<S> <C> <C>
Wendell D. Cleaver Trustee From September 3, 1993 to
209 Lakewood Drive, West present, retired; from December,
Mobile, Alabama 36608 1988 to August, 1993, Executive
Vice President, Chief Operating
Officer and Director, Mobile Gas
Service Corporation
J. David Huber* Trustee From June 1987 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services, Limited Partnership
Sean M. Kelly* Chairman of the Board of From 1993 to present, Senior Vice
150 2nd Avenue North, Suite 1170 Trustees, President President of Client Services of
St. Petersburg, Florida 33701 BISYS Fund Services; prior to
1993, Senior Vice President of
Concord Financial Group (now
BISYS Fund Services)
Homer H. Turner, Jr. Trustee From June 1991 to present,
729 Cary Drive retired; until June 1991, Vice
Auburn, Alabama 36830 President, Birmingham Division,
Alabama Power Company
James H. Woodward, Jr. Trustee From July 1989 to present,
The University of North Chancellor, The University of
Carolina at Charlotte Charlotte, North Carolina at Charlotte; until
North Carolina 28223 July 1989, Senior Vice President,
University College, University of
Alabama at Birmingham
</TABLE>
- --------------------------
* Indicates an "interested person" of the Trust as defined in the
Investment Company Act of 1940.
The Trustees receive fees and are reimbursed for expenses in connection
with each meeting of the Board of Trustees they attend. However, no officer or
employee of BISYS Fund Services, or BISYS Fund Services Ohio, Inc. receives any
compensation from the Trust for acting as a Trustee. The officers of the Trust
(see the Statement of Additional Information) receive no compensation directly
from the Trust for performing the duties of their offices. BISYS Fund Services
receives fees from the Trust for acting as Administrator and BISYS Fund Services
Ohio, Inc. receives fees from the Trust for acting as Transfer Agent for and for
providing fund accounting services to the Trust. Messrs. Huber and Kelly are
officers and employees of BISYS Fund Services.
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<PAGE> 38
INVESTMENT ADVISOR
AmSouth is the investment advisor of each Fund of the Trust. AmSouth is
the principal bank affiliate of AmSouth Bancorporation, one of the largest
banking institutions headquartered in the mid-south region. AmSouth
Bancorporation reported assets as of December 31, 1995 of $17.7 billion and
operated 273 banking offices in Alabama, Florida, Georgia and Tennessee. AmSouth
has provided investment management services through its Trust Investment
Department since 1915. As of December 31, 1995, AmSouth and its affiliates had
over $6.8 billion in assets under discretionary management and provided custody
services for an additional $12.5 billion in securities. AmSouth is the largest
provider of trust services in Alabama. AmSouth serves as administrator for over
$12 billion in bond issues, and its Trust Natural Resources and Real Estate
Department is a major manager of timberland, mineral, oil and gas properties and
other real estate interests.
Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the respective investment objectives and restrictions of the
Capital Appreciation Funds, AmSouth manages the Capital Appreciation Funds,
makes decisions with respect to and places orders for all purchases and sales of
their investment securities, and maintains their records relating to such
purchases and sales. Pedro Verdu, CFA, is the portfolio manager for the Capital
Appreciation Funds and, as such, has had primary responsibility for the
day-to-day portfolio management of each of these Funds since their inception.
Mr. Verdu has twenty-four years of experience as an analyst and portfolio
manager; he is currently the Director of Equity Investing at AmSouth.
Under an investment advisory agreement between the Trust and AmSouth,
the fee payable to AmSouth by the Equity, Regional Equity, Balanced and Equity
Income Funds for investment advisory services is the lesser of (a) a fee
computed daily and paid monthly at the annual rate of eighty one-hundredths of
one percent (.80%) of such Fund's average daily net assets or (b) such fee as
may from time to time be agreed upon in writing by the Group and AmSouth. While
this fee is higher than the advisory fee paid by most mutual funds, it is
believed to be comparable to advisory fees paid by many funds having similar
objectives and policies. A fee agreed to in writing from time to time by the
Group and AmSouth may be significantly lower than the fee calculated at the
annual rate and the effect of such lower fee would be to lower a Fund's expenses
and increase the net income of the Fund during the period when such lower fee is
in effect.
During the Trust's fiscal year ended July 31, 1996 AmSouth received
investment advisory fees amounting to 0.80% of the Equity Fund's average net
assets, 0.80% of the Regional Equity Fund's average net assets and 0.75% of the
Balanced Fund's average net assets after voluntary fee reductions with respect
to the Balanced Fund.
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<PAGE> 39
MANAGEMENT FEE
As compensation for its management services and certain expenses which
AmSouth incurs on behalf of the Capital Growth and Small Cap Funds, the
Trust pays AmSouth a management fee that is comprised of two components. The
first component is a basic fee computed daily and payable monthly at the annual
rate of eighty one-hundredths of one percent (0.80%) of the Capital Growth
Fund's average daily net assets and ninety one-hundredths of one percent
(0.90%) of the Small Cap Fund's average daily net assets (the "Basic Fee").
The second component is a performance fee adjustment.
The Basic Fee is subject to an upward or downward adjustment, depending
on whether, and to what extent, the investment performance of the Capital Growth
and Small Cap Funds for the performance period exceeds, or is exceeded by,
the record of the appropriate benchmark index for each Fund over the same
period. The performance period consists of the current month and the prior 11
months ("performance period"). Each percentage point of difference (up to a
maximum of +10) is multiplied by a performance adjustment rate of 0.02%. Thus,
the maximum annualized adjustment rate is +0.20%. This performance comparison is
made at the end of each month. One twelfth (1/12) of this rate is then applied
to each Fund's average net assets for the entire performance period, giving a
dollar amount that will be added to (or subtracted from) the Basic Fee.
The Capital Growth and Small Cap Funds' performance is calculated
based on its net asset value per share. For purposes of calculating the
performance adjustment, any dividends or capital gains distributions paid by
each Fund are treated as if reinvested in Fund shares at the net asset value
per share as of the record date for payment. The record for the appropriate
index is based on change in value and is adjusted for any cash distributions
from the companies whose securities comprise an index.
Because the adjustment to the Basic Fee is based on the comparative
performance of each Fund and the record of its corresponding index, the
controlling factor is not whether Fund performance is up or down, but whether it
is up or down more or less than the record of corresponding index. Moreover, the
comparative investment record of each fund is based solely on the relevant
performance period without regard to the cumulative performance over a longer or
shorter period of time.
The Basic Fee for the Capital Growth Fund is subject to an upward or
downward adjustment, depending on whether and to what extent, the investment
performance of the Fund for the performance period exceeds, or is exceeded by,
the record of the Standard and Poor's (the "S&P 500 Index") over the same
period. The S&P 500 Index is comprised of 500 domestic stocks chosen for market
size, liquidity, and industry group representation. It is a market-value
weighted index (stock price times number of shares
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<PAGE> 40
outstanding), with each stock's weight in the S&P 500 Index proportionate to its
market value. The S&P 500 Index does not contain the 500 largest stocks, as
measured by market capitalization.
The Basic Fee for the Small Cap Fund is subject to an upward or
downward adjustment, depending on whether and to what extent, the investment
performance of the Fund for the performance period exceeds, or is exceeded by,
the record of the Russell 2000 Index (the "Russell 2000 Index") over the same
period. The Russell 2000 Index is comprised of the 2,000 smallest securities
among the 3,000 largest U.S. securities as determined by total market
capitalization, the Russell 2000 Index representing approximately 12% (as of
December 10, 1996) of the largest 3000 U.S. securities in total market
capitalization. As of December 10, 1996, the average market capitalization of
companies on the Russell 2000 Index is $421 million. The largest company in the
index has an approximate market capitalization of $1,018 million.
The performance adjustment is illustrated by the following hypothetical
example, assuming that the net asset value of a Fund and the level of the
corresponding Index were $10 and 100, respectively, on the first day of the
performance period.
<TABLE>
<CAPTION>
Investment Performance* Cumulative Change
----------------------- -----------------
Percentage
First Day End of Period Absolute Points
--------- ------------- -------- ----------
<S> <C> <C> <C> <C>
Fund $ 10 $ 13 +$ 3 + 30%
Index 100 123 + 23 + 23%
<FN>
* Reflects performance at net asset value. Any dividends or capital gains
distributions paid by the Fund are treated as if reinvested in shares of the
Fund at net asset value as of the payment date and any dividends paid on
securities which comprise the index are treated as if reinvested on the
ex-dividend date.
</TABLE>
The difference in relative performance for the performance period is +7
percentage points. Accordingly, the annualized management fee rate for the last
month of the performance period would be calculated as follows: One-twelfth of
the Basic Fee (0.80% for the Capital Growth Fund and 0.90% for the Small Cap
Fund) would be applied to the Fund's average daily net assets for the month
resulting in a dollar amount. The +7 percentage point difference is multiplied
by the performance adjustment rate of 0.02% producing a rate of 0.14%.
One-twelfth of this rate is then applied to the average daily net assets of the
Fund over the performance period resulting in a dollar amount which is added to
the dollar amount of the Basic Fee. The management fee paid is the dollar amount
calculated for the performance period. If the investment performance of the Fund
during the performance period was exceeded by the record of the corresponding
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<PAGE> 41
index, the dollar amount of performance adjustment would be deducted from the
Basic Fee.
Because the adjustment to the Basic Fee is based on the comparative
performance of a Fund and the record of the corresponding index, the controlling
factor is not whether Fund performance is up or down, but whether it is up or
down more or less than the record of the corresponding index. Moreover, the
comparative investment of the Fund is based solely on the relevant performance
period without regard to the cumulative performance over a longer or shorter
period of time.
The Capital Growth Fund and the Small Cap Fund for the first 11 months
of each Fund's operation would pay AmSouth a management fee equal to each Fund's
respective Basic Fee (0.80% of the Capital Growth Fund's average daily net
assets and 0.90% of the Small Cap Fund's average daily net assets). Beginning in
the 12th month following commencement of operations of a Fund, the performance
adjustment, if any, to the Basic Fee for each Fund will be made as described
above. The performance period initially used for calculating any performance
adjustment to each Fund's respective Basic Fee will begin on the first day of a
Fund's operations until a total of 12 months has been reached. Thus, no
performance adjustment to a Fund's Basic Fee will be made until a Fund's 12th
month of operations.
ADMINISTRATOR AND DISTRIBUTOR
ASO Services Company ("ASO") is the administrator for each Fund of the
Trust, and BISYS Fund Services ("BISYS") acts as the Trust's principal
underwriter and distributor (the "Administrator" and the "Distributor,"
respectively). ASO is a wholly-owned subsidiary of BISYS. BISYS is a subsidiary
of The BISYS Group, Inc., 150 Clove Road, Little Falls, New Jersey 07424, a
publicly owned company engaged in information processing, loan servicing and
401(k) administration and recordkeeping services to and through banking and
other financial organizations.
The Administrator generally assists in all aspects of the Capital
Appreciation Funds' administration and operation. Under a management and
administration agreement between the Trust and the Administrator, the fee
payable by each Capital Appreciation Fund to the Administrator for
administration services is the lesser of (a) a fee computed at the annual rate
of twenty one-hundredths of one percent (.20%) of such Capital Appreciation
Fund's average daily net assets or (b) such fee as may from time to time be
agreed upon by the Trust and the Administrator. A fee agreed to from time to
time by the Trust and the Administrator may be significantly lower than the fee
calculated at the annual rate and the effect of such lower fee would be to lower
a Capital Appreciation Fund's expenses and increase the net income of the Fund
during the period when such lower fee is in effect.
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<PAGE> 42
ASO succeeded BISYS as Administrator on April 1, 1996. During the
Trust's fiscal year ended July 31, 1996, BISYS and ASO received administration
fees, after voluntary fee reductions, amounting to 0.11% of the Equity Fund's
average net assets, 0.12% of the Regional Equity Fund's average net assets and
0.11%of the Balanced Fund's average net assets.
SUB-ADMINISTRATORS
Effective August 1, 1995, AmSouth became the Sub-Administrator to the
Trust. Pursuant to its current agreement with the Administrator, AmSouth has
assumed certain of the Administrator's duties, for which AmSouth receives a fee,
paid by the Administrator, calculated at an annual rate of up to ten
one-hundredths of one percent (.10%) of each Fund's average net assets.
Effective April 1, 1996, BISYS Fund Services was retained by the
Administrator as Sub-Administrator to the Trust. Pursuant to its agreement with
the Administrator, BISYS Fund Services is entitled to compensation as mutually
agreed from time to time by it and the Administrator.
EXPENSES
AmSouth and the Administrator each bear all expenses in connection with
the performance of their services as Investment Advisor and Administrator,
respectively, other than the cost of securities (including brokerage
commissions, if any) purchased for a Capital Appreciation Fund. No Capital
Appreciation Fund will bear, directly or indirectly, the cost of any activity
primarily intended to result in the distribution of Shares of such Capital
Appreciation Fund; such costs will be borne by the Distributor.
BANKING LAWS
AmSouth believes that it possesses the legal authority to perform the
investment advisory services for the Capital Appreciation Funds contemplated by
its investment advisory agreement with the Trust and described in this
Prospectus without violation of applicable banking laws and regulations, and has
so represented in its investment advisory agreement with the Trust. Future
changes in federal or state statutes and regulations relating to permissible
activities of banks or bank holding companies and their subsidiaries and
affiliates as well as further judicial or administrative decisions or
interpretations of present and future statutes and regulations could change the
manner in which AmSouth could continue to perform such services for the Trust.
See "MANAGEMENT OF The Trust - Glass-Steagall Act" in the Statement of
Additional Information for further discussion of applicable banking laws and
regulations.
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<PAGE> 43
GENERAL INFORMATION
DESCRIPTION OF THE TRUST AND ITS SHARES
The Trust was organized as a Massachusetts business trust on October 1,
1987. The Trust has an unlimited number of authorized shares of beneficial
interest which may, without shareholder approval, be divided into an unlimited
number of series of such shares, and which are presently divided into fourteen
series of shares, one for each of the following Funds: the AmSouth Prime
Obligations Fund, the AmSouth U.S. Treasury Fund, the AmSouth Tax Exempt Fund,
the AmSouth Equity Fund, the AmSouth Regional Equity Fund, the AmSouth Balanced
Fund, the AmSouth Bond Fund, the AmSouth Limited Maturity Fund, the AmSouth
Government Income Fund, the AmSouth Municipal Bond Fund, the AmSouth Florida
Tax-Free Fund, the AmSouth Capital Growth Fund, the AmSouth Small Cap Fund,
and the AmSouth Equity Income Fund. Each Fund, except the AmSouth Florida
Tax-Free Fund, is a diversified fund under the Investment Company Act of 1940,
as amended. Each Share represents an equal proportionate interest in a Fund with
other Shares of the same series, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund as
are declared at the discretion of the Trustees (see "Miscellaneous" below).
Shareholders are entitled to one vote per share (with proportional
voting for fractional shares) on such matters as Shareholders are entitled to
vote. Shareholders vote as a single class except (i) when required by the
Investment Company Act of 1940, shares shall be voted by individual series and
(ii) when the Trustees have determined that the matter affects only the
interests of one or more series, then only Shareholders of such series shall be
entitled to vote thereon.
Overall responsibility for the management of the Trust is vested in the
Board of Trustees. See "MANAGEMENT OF AmSouth Mutual Funds - Trustees of the
Trust." Individual Trustees are elected by the Shareholders and may be removed
by the Board of Trustees or Shareholders at a meeting held for such purpose in
accordance with the provisions of the Declaration of Trust and the By-laws of
the Trust and Massachusetts law. See "ADDITIONAL INFORMATION - Miscellaneous" in
the Statement of Additional Information for further information.
As of November 16, 1996, AmSouth Bank of Alabama, 1901 Sixth Avenue
North, Birmingham, AL 35203, was the Shareholder of record of approximately
90.76% of the outstanding shares of the Equity Fund, 66.88% of the outstanding
shares of the Regional Equity Fund, and 87.63% of the outstanding shares of the
Balanced Fund. AmSouth Bank of Alabama was the beneficial owner of approximately
42.68% of the outstanding shares of the Equity Fund, 39.72% of the outstanding
shares of the Regional Equity Fund and 51.42% of the outstanding shares of the
Balanced Fund, and may be deemed to be a "controlling person" of each of the
Equity Fund, the Regional Equity Fund and the Balanced Fund within the meaning
of the Investment Company Act of 1940.
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<PAGE> 44
CUSTODIAN
It is expected that AmSouth Bank of Alabama will become custodian for
the Trust in the second calendar quarter of 1997. Until that time, Union Bank of
California, N.A. serves as custodian for the Trust.
TRANSFER AGENT AND FUND ACCOUNTING SERVICES
BISYS Fund Services Ohio, Inc. serves as transfer agent for and
provides fund accounting services to the Trust.
PERFORMANCE INFORMATION
From time to time performance information for a Capital Appreciation
Fund showing its total return and/or yield may be presented in advertisements
and sales literature. Average annual total return will be calculated for the
past year and the period since the establishment of the Capital Appreciation
Fund. Total return is measured by comparing the value of an investment in the
Capital Appreciation Fund at the beginning of the relevant period to the
redemption value of the investment at the end of the period (assuming the
investor paid the maximum sales load on the investment and assuming immediate
reinvestment of any dividends or capital gains distributions). Aggregate total
return is calculated similarly to average total return except that the return
figure is aggregated over the relevant period instead of annualized. Yield will
be computed by dividing the Capital Appreciation Fund's net investment income
per share earned during a recent one-month period by the Capital Appreciation
Fund's per share maximum offering price (reduced by any undeclared earned income
expected to be paid shortly as a dividend) on the last day of the period and
annualizing the result.
Investors may also judge the performance of each Capital Appreciation
Fund by comparing its performance to the performance of other mutual funds with
comparable investment objectives and policies through various mutual fund or
market indices and data such as that provided by Lipper Analytical Services,
Inc. Comparisons may also be made to indices or data published in Money
Magazine, Forbes, Barron's, The Wall Street Journal, The New York Times,
Business Week, American Banker, Fortune, Institutional Investor, Ibbotson
Associates, Inc., Morning Star, Inc., CDA/Wiesenberger, Pensions and
Investments, U.S.A. Today, and local newspapers and periodicals. In addition to
performance information, general information about these Funds that appears in a
publication such as those mentioned above may be included in advertisements,
sales literature and in reports to Shareholders. Additional performance
information is contained in the Trust's Annual Report, which is available free
of charge by calling the number on the front page of the prospectus.
-41-
<PAGE> 45
Information about the performance of a Capital Appreciation Fund is
based on the Capital Appreciation Fund's record up to a certain date and is not
intended to indicate future performance. Yield and total return are functions of
the type and quality of instruments held in a Capital Appreciation Fund,
operating expenses, and marketing conditions. Any fees charged by a Bank with
respect to customer accounts investing in Shares of a Capital Appreciation Fund
will not be included in performance calculations.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports and annual
reports audited by independent public accountants.
As used in this Prospectus and in the Statement of Additional
Information, "assets belonging to a Fund" means the consideration received by
the Trust upon the issuance or sale of Shares in that Fund, together with all
income, earnings, profits, and proceeds derived from the investment thereof,
including any proceeds from the sale, exchange, or liquidation of such
investments, and any funds or payments derived from any reinvestment of such
proceeds, and any general assets of the Trust not readily identified as
belonging to a particular Fund that are allocated to that Fund by the Trust's
Board of Trustees. The Board of Trustees may allocate such general assets in any
manner it deems fair and equitable. It is anticipated that the factor that will
be used by the Board of Trustees in making allocations of general assets to
particular Funds will be the relative net assets of the respective Funds at the
time of allocation. Assets belonging to a particular Fund are charged with the
direct liabilities and expenses in respect of that Fund, and with a share of the
general liabilities and expenses of the Trust not readily identified as
belonging to a particular Fund that are allocated to that Fund in proportion to
the relative net assets of the respective Funds at the time of allocation. The
timing of allocations of general assets and general liabilities and expenses of
the Trust to particular Funds will be determined by the Board of Trustees of the
Trust and will be in accordance with generally accepted accounting principles.
Determinations by the Board of Trustees of the Trust as to the timing of the
allocation of general liabilities and expenses and as to the timing and
allocable portion of any general assets with respect to a particular Fund are
conclusive.
As used in this Prospectus and in the Statement of Additional
Information, a "vote of a majority of the outstanding Shares" of the Trust or a
particular Fund means the affirmative vote, at a meeting of Shareholders duly
called, of the lesser of (a) 67% or more of the votes of Shareholders of the
Trust or such Fund present at such meeting at which the holders of more than 50%
of the votes attributable to the Shareholders of record of the Trust or such
Fund are represented in person or by proxy, or (b) the holders of more than 50%
of the outstanding votes of Shareholders of the Trust or such Fund.
Under Massachusetts law, Shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Trust's Declaration of Trust disclaims Shareholder liability for
acts or obligations of the Trust and requires that notice of
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<PAGE> 46
such disclaimer be given in every agreement, obligation or instrument entered
into or executed by the Trust or the Trustees. The Declaration of Trust provides
for indemnification out of a Fund's property for all loss and expense of any
Shareholder of such Fund held liable on account of being or having been a
Shareholder. Thus, the risk of a Shareholder incurring financial loss on account
of Shareholder liability is limited to circumstances in which a Fund would be
unable to meet its obligations.
Inquiries regarding the Trust may be directed in writing to the Trust
at 3435 Stelzer Road, Columbus, Ohio 43219, or by calling toll free (800)
451-8382.
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<PAGE> 47
AMSOUTH MUTUAL FUNDS
INVESTMENT ADVISOR
AmSouth Bank of Alabama
1901 Sixth
Avenue North Birmingham, AL 35203
ADMINISTRATOR
ASO Services Company
3435 Stelzer Road
Columbus, OH 43219
DISTRIBUTOR
BISYS Fund Services, Limited Partnership
3435 Stelzer Road
Columbus, OH 43219
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, DC 20005-3333
TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219
AUDITORS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
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<PAGE> 48
TABLE OF CONTENTS
Page
The Trust..................................................................
Fee Table .................................................................
Financial Highlights ......................................................
Investment Objective and Policies .........................................
Investment Restrictions ...................................................
Valuation of Shares .......................................................
How to Purchase and Redeem Shares .........................................
Dividends and Taxes .......................................................
Management of AmSouth Mutual Funds ........................................
General Information .......................................................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
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<PAGE> 49
AMSOUTH MUTUAL FUNDS
CAPITAL APPRECIATION FUNDS
AmSouth Bank of Alabama
Investment Advisor
BISYS FUND SERVICES, LIMITED PARTNERSHIP
Prospectus dated March __, 1997
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<PAGE> 50
CROSS REFERENCE SHEET
- ---------------------
<TABLE>
<CAPTION>
Part B
Form N-1A Item No. Caption
- ------------------ -------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Additional Information - Description of Shares
13. Investment Objectives and Policies Investment objectives and policies
14. Management of the Trust Management of the Trust
15. Control Persons and Principal
Holders of Securities Miscellaneous
16. Investment Advisory and
Other Services Management of the Trust
17. Brokerage Allocation Management of the Trust
18. Capital Stock and Other
Securities Valuation; Additional Purchase and Redemption
Information; Management of the Trust;
Redemptions; Additional Information
19. Purchase, Redemption and Pricing
of Securities Being Offered Valuation; Additional Purchase and Redemption
Information; Management of the Trust
20. Tax Status Additional Purchase and Redemption Information
21. Underwriters Management of the Trust
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 51
AMSOUTH MUTUAL FUNDS
Statement of Additional Information
March __, 1997
-----------------
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectuses of AmSouth Prime Obligations Fund, AmSouth
U.S. Treasury Fund, AmSouth Tax Exempt Fund, AmSouth Government Income Fund,
AmSouth Bond Fund, AmSouth Limited Maturity Fund, AmSouth Municipal Bond Fund,
and AmSouth Florida Tax-Free Fund each dated as of November 30, 1996, and
AmSouth Equity Fund, AmSouth Regional Equity Fund, AmSouth Balanced Fund,
AmSouth Capital Growth Fund, AmSouth Small Cap Fund and AmSouth Equity Income
Fund, each dated as of the date hereof (the "Prospectuses"). This Statement of
Additional Information is incorporated by reference in its entirety into those
Prospectuses. Copies of the Prospectuses may be obtained by writing AmSouth
Mutual Funds at 3435 Stelzer Road, Columbus, Ohio 43219, or by telephoning toll
free (800) 451-8382.
<PAGE> 52
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
AMSOUTH MUTUAL FUNDS.......................................................................1
INVESTMENT OBJECTIVES AND POLICIES.........................................................1
Additional Information on Portfolio Instruments........................................1
Investment Restrictions...............................................................17
Additional Investment Restrictions....................................................18
Portfolio Turnover....................................................................19
VALUATION.................................................................................19
Valuation of the Money Market Funds...................................................20
Valuation of the Capital Appreciation Funds and the Income Funds......................21
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................................21
Purchase of Shares....................................................................21
Matters Affecting Redemption..........................................................22
Additional Tax Information............................................................22
Additional Tax Information Concerning the Tax Exempt Fund and Tax-Free Funds..........24
MANAGEMENT OF THE TRUST...................................................................26
Officers .............................................................................26
Investment Advisor....................................................................28
Portfolio Transactions................................................................32
Glass-Steagall Act....................................................................33
Manager and Administrator.............................................................34
Expenses .............................................................................37
Sub-Administrators....................................................................37
Distributor...........................................................................37
Shareholder Servicing Plan............................................................38
Custodian.............................................................................39
Transfer Agent and Fund Accounting Services...........................................39
Auditors .............................................................................40
Legal Counsel.........................................................................40
PERFORMANCE INFORMATION...................................................................40
Yields of the Money Market Funds......................................................40
Yields of the Capital Appreciation Funds and the Income Funds.........................42
Calculation of Total Return...........................................................43
</TABLE>
B-i
<PAGE> 53
<TABLE>
<S> <C>
Performance Comparisons...............................................................44
ADDITIONAL INFORMATION....................................................................45
Organization and Description of Shares................................................45
Shareholder Liability.................................................................46
APPENDIX..................................................................................49
</TABLE>
B-ii
<PAGE> 54
STATEMENT OF ADDITIONAL INFORMATION
AMSOUTH MUTUAL FUNDS
AmSouth Mutual Funds (the "Trust") is an open-end management investment
company. The Trust consists of fourteen series of units of beneficial interest
("Shares"), each representing interests in one of fourteen separate investment
portfolios: AmSouth Prime Obligations Fund (the "Prime Obligations Fund"),
AmSouth U.S. Treasury Fund (the "U.S. Treasury Fund"), AmSouth Tax Exempt Fund
(the "Tax Exempt Fund" and, collectively, with the Prime Obligations Fund and
the U.S. Treasury Fund, the "Money Market Funds"), AmSouth Equity Fund (the
"Equity Fund"), AmSouth Regional Equity Fund (the "Regional Equity Fund"),
AmSouth Balanced Fund (the ("Balanced Fund"), AmSouth Capital Growth Fund (the
"Capital Growth Fund"), AmSouth Small Cap Fund (the "Small Cap Fund"), and
AmSouth Equity Income Fund (the "Equity Income Fund" and, collectively with the
Equity Fund , the Regional Equity Fund, the Balanced Fund, the Capital Growth
Fund, and the Small Cap Fund, the "Capital Appreciation Funds"), AmSouth Bond
Fund (the "Bond Fund"), AmSouth Limited Maturity Fund (the "Limited Maturity
Fund"), AmSouth Government Income Fund (the "Government Income Fund") AmSouth
Municipal Bond Fund (the "Municipal Bond Fund"), and AmSouth Florida Tax-Free
Fund (the "Florida Fund"and, collectively with the Bond Fund, the Limited
Maturity Fund, the Government Income Fund and the Municipal Bond Fund, the
"Income Funds," and the Florida Fund and the Municipal Bond Fund sometimes
collectively referred to herein as the "Tax-Free Funds.") The Municipal Bond
Fund , the Capital Growth Fund, the Small Cap Fund, and the Equity Income Fund
are not currently offering shares. The Money Market Funds offer to the public
two classes of shares: Premier Shares and Classic Shares. All other Funds offer
only one class of shares. Much of the information contained in this Statement of
Additional Information expands on subjects discussed in the Prospectuses.
Capitalized terms not defined herein are defined in the Prospectuses. No
investment in Shares of a Fund should be made without first reading that Fund's
Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS
The following policies supplement the investment objectives,
restrictions and policies of each Fund of the Trust as set forth in the
respective Prospectus for that Fund.
HIGH QUALITY INVESTMENTS WITH REGARD TO THE MONEY MARKET FUNDS. As noted in the
Prospectuses for the Money Market Funds, each such Fund may invest only in
obligations determined by AmSouth to present minimal credit risks under
guidelines adopted by the Trust's Trustees.
<PAGE> 55
With regard to the Prime Obligations Fund, investments will be limited
to those obligations which, at the time of purchase, (i) possess the highest
short-term ratings from at least two NRSROs; or (ii) do not possess a rating,
(I.E., are unrated) but are determined by the Investment Adviser, AmSouth Bank
of Alabama ("AmSouth") to be of comparable quality to the rated instruments
eligible for purchase by the Fund under guidelines adopted by the Trustees. With
regard to the Tax Exempt Fund, investments will be limited to those obligations
which, at the time of purchase, (i) possess one of the two highest short-term
ratings from an NRSRO; or (ii) possess, in the case of multiple-rated
securities, one of the two highest short-term ratings by at least two NRSROs; or
(iii) do not possess a rating, (I.E., are unrated) but are determined by AmSouth
to be of comparable quality to the rated instruments eligible for purchase by
the Fund under the guidelines adopted by the Trustees. For purposes of these
investment limitations, a security that has not received a rating will be deemed
to possess the rating assigned to an outstanding class of the issuer's
short-term debt obligations if determined by AmSouth to be comparable in
priority and security to the obligation selected for purchase by a Fund. (The
above-described securities which may be purchased by the Prime Obligations Fund
and the Tax Exempt Fund are hereinafter referred to as "Eligible Securities.")
A security subject to a tender or demand feature will be considered an
Eligible Security only if both the demand feature and the underlying security
possess a high quality rating or, if such do not possess a rating, (I.E., are
unrated) but are determined by AmSouth to be of comparable quality; provided,
however, that where the demand feature would be readily exercisable in the event
of a default in payment of principal or interest on the underlying security, the
obligation may be acquired based on the rating possessed by the demand feature
or, if the demand feature does not possess a rating, a determination of
comparable quality by AmSouth. A security which at the time of issuance had a
maturity exceeding 397 days but, at the same time of purchase, has a remaining
maturity of 397 days or less, is not considered an Eligible Security if it does
not possess a high quality rating and the long-term rating, if any, is not
within the two highest rating categories of an NRSRO.
The Prime Obligations Fund will not invest more than 5% of its total
assets in the securities of any one issuer, except that the Fund may invest up
to 25% of its total assets in the securities of a single issuer for a period of
up to three business days. If a percentage limitation is satisfied at the time
of purchase, a later increase in such percentage resulting from a change in the
Fund's net asset value or a subsequent change in a security's qualification as
an Eligible Security will not constitute a violation of the limitation. In
addition, there is no limit on the percentage of the Fund's assets that may be
invested in obligations issued or guaranteed by the U.S. Government, its
agencies, and instrumentalities and repurchase agreements fully collateralized
by such obligations.
Under the guidelines adopted by the Trust's Trustees and in accordance
with Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"),
AmSouth may be required promptly to dispose of an obligation held in a Fund's
portfolio in the event of certain
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developments that indicate a diminishment of the instrument's credit quality,
such as where an NRSRO downgrades an obligation below the second highest rating
category, or in the event of a default relating to the financial condition of
the issuer.
The Appendix to this Statement of Additional Information identifies
each NRSRO that may be utilized by AmSouth with regard to portfolio investments
for the Funds and provides a description of relevant ratings assigned by each
such NRSRO. A rating by an NRSRO may be utilized only where the NRSRO is neither
controlling, controlled by, or under common control with the issuer of, or any
issuer, guarantor, or provider of credit support for, the instrument.
BANKERS' ACCEPTANCES AND CERTIFICATES OF DEPOSIT. All of the Funds of
the Trust except the U.S. Treasury Fund may invest in bankers' acceptances,
certificates of deposit, and demand and time deposits. Bankers' acceptances are
negotiable drafts or bills of exchange typically drawn by an importer or
exporter to pay for specific merchandise, which are "accepted" by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value
of the instrument on maturity. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank or a savings
and loan association for a definite period of time and earning a specified
return.
Bankers' acceptances will be those guaranteed by domestic and foreign
banks, if at the time of purchase, such banks have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements). Certificates of deposit and demand and
time deposits will be those of domestic and foreign banks and savings and loan
associations, if (a) at the time of purchase they have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements) or (b) the principal amount of the
instrument is insured in full by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER. Each Fund, except for the U.S. Treasury Fund, may
invest in commercial paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Issues of commercial paper normally have
maturities of less than nine months and fixed rates of return.
Each Fund except the U.S. Treasury Fund, the Tax Exempt Fund, and the
Tax-Free Funds may invest in (i) Canadian Commercial Paper, which is commercial
paper issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and (ii) Europaper, which is U.S. dollar-denominated commercial
paper of an issue located in Europe.
VARIABLE AMOUNT MASTER DEMAND NOTES. Variable amount master demand
notes, in which the Prime Obligations Fund, the Capital Appreciation Funds, and
the Income Funds may invest, are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic readjustments in the
interest rate according to the terms of the instrument. They are also referred
to as variable rate demand notes. Because these notes are direct lending
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arrangements between a Fund and the issuer, they are not normally traded.
Although there may be no secondary market in the notes, a Fund may demand
payment of principal and accrued interest at any time or during specified
periods not exceeding one year, depending upon the instrument involved, and may
resell the note at any time to a third party. The absence of such an active
secondary market, however, could make it difficult for the Funds to dispose of a
variable amount master demand note if the issuer defaulted on its payment
obligations or during periods when the Funds are not entitled to exercise their
demand rights, and the Funds could, for this or other reasons, suffer a loss to
the extent of the default. While the notes are not typically rated by credit
rating agencies, issuers of variable amount master demand notes must satisfy the
same criteria as set forth above for commercial paper. AmSouth will consider the
earning power, cash flow, and other liquidity ratios of the issuers of such
notes and will continuously monitor their financial status and ability to meet
payment on demand. Where necessary to ensure that a note is of "high quality," a
Fund will require that the issuer's obligation to pay the principal of the note
be backed by an unconditional bank letter or line of credit, guarantee or
commitment to lend. In determining the dollar-weighted average portfolio
maturity, a variable amount master demand note will be deemed to have a maturity
equal to the period of time remaining until the principal amount can be
recovered from the issuer through demand.
FOREIGN INVESTMENT. All of the Funds except the U.S. Treasury Fund and
the Tax-Free Funds may, subject to their investment objectives, restrictions and
policies, invest in certain obligations or securities of foreign issuers.
Permissible investments include Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar denominated certificates of deposit issued by branches of
foreign and domestic banks located outside the United States, Yankee
Certificates of Deposit ("Yankee CTDs") which are certificates of deposit issued
by a U.S. branch of a foreign bank denominated in U.S. dollars and held in the
United States, Eurodollar Time Deposits ("ETD's") which are U.S. dollar
denominated deposits in a foreign branch of a U.S. bank or a foreign bank, and
Canadian Time Deposits ("CTD's") which are U.S. dollar denominated certificates
of deposit issued by Canadian offices of major Canadian Banks. Investments in
securities issued by foreign branches of U.S. banks, foreign banks, or other
foreign issuers, including American Depository Receipts ("ADRs") and securities
purchased on foreign securities exchanges, may subject the Funds to investment
risks that differ in some respects from those related to investment in
obligations of U.S. domestic issuers or in U.S. securities markets. Such risks
include future adverse political and economic developments, possible seizure,
currency blockage, nationalization or expropriation of foreign investments, less
stringent disclosure requirements, the possible establishment of exchange
controls or taxation at the source, and the adoption of other foreign
governmental restrictions. Additional risks include currency exchange risks,
less publicly available information, the risk that companies may not be subject
to the accounting, auditing and financial reporting standards and requirements
of U.S. companies, the risk that foreign securities markets may have less volume
and therefore many securities traded in these markets may be less liquid and
their prices more volatile than U.S. securities, and the risk that custodian and
brokerage costs may be higher. Foreign issuers of securities or obligations are
often subject to accounting treatment and
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engage in business practices different from those respecting domestic issuers of
similar securities or obligations. Foreign branches of U.S. banks and foreign
banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks. A Fund will acquire such
securities only when AmSouth believes the risks associated with such investments
are minimal.
REPURCHASE AGREEMENTS. Securities held by each of the Trust's Funds may
be subject to repurchase agreements. Under the terms of a repurchase agreement,
a Fund would acquire securities from member banks of the Federal Deposit
Insurance Corporation with capital, surplus, and undivided profits of not less
than $100,000,000 (as of the date of their most recently published financial
statements) and from registered broker-dealers which AmSouth deems creditworthy
under guidelines approved by the Board of Trustees, subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. The repurchase price would generally equal the price paid by the Fund
plus interest negotiated on the basis of current short-term rates, which may be
more or less than the rate on the underlying portfolio securities. The seller
under a repurchase agreement will be required to maintain the value of
collateral held pursuant to the agreement at not less than the repurchase price
(including accrued interest) and AmSouth will monitor the collateral's value to
ensure that it equals or exceeds the repurchase price (including accrued
interest). In addition, securities subject to repurchase agreements will be held
in a segregated account. If the seller were to default on its repurchase
obligation or become insolvent, the Fund holding such obligation would suffer a
loss to the extent that the proceeds from a sale of the underlying portfolio
securities were less than the repurchase price under the agreement, or to the
extent that the disposition of such securities by the Fund were delayed pending
court action. Additionally, if the seller should be involved in bankruptcy or
insolvency proceedings, a Fund may incur delay and costs in selling the
underlying security or may suffer a loss of principal and interest if the Fund
is treated as an unsecured creditor and required to return the underlying
security to the seller's estate. Securities subject to repurchase agreements
will be held by the Trust's custodian or another qualified custodian or in the
Federal Reserve/Treasury book-entry system. Repurchase agreements are considered
to be loans by a Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. As discussed in the Prospectuses, each
of the Trust's Funds may borrow funds for temporary purposes by entering into
reverse repurchase agreements in accordance with the Fund's investment
restrictions. Pursuant to such agreements, a Fund would sell portfolio
securities to financial institutions such as banks and broker-dealers, and agree
to repurchase the securities at a mutually agreed-upon date and price. Each Fund
intends to enter into reverse repurchase agreements only to avoid otherwise
selling securities during unfavorable market conditions to meet redemptions. At
the time a Fund enters into a reverse repurchase agreement, it will place in a
segregated custodial account assets consistent with the Fund's investment
restrictions having a value equal to the repurchase price (including accrued
interest), and will subsequently monitor the account to ensure that such
equivalent value is maintained. Such assets will include U.S. Government
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securities or other liquid high quality debt securities in the case of the Money
Market Funds and the Income Funds or other liquid, high-grade debt securities,
in the case of the Capital Appreciation Funds. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which a Fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered to be borrowings by a
Fund under the 1940 Act.
U.S. Government obligations. The U.S. Treasury Fund will invest
exclusively in bills, notes and bonds issued by the U.S. Treasury. Such
obligations are supported by the full faith and credit of the U.S. Government.
Each of the other Funds may invest in such obligations and in other obligations
issued or guaranteed by the U.S. Government, its agencies and instrumentalities.
Such other obligations may include those which are supported by the full faith
and credit of the U.S. Government; others which are supported by the right of
the issuer to borrow from the Treasury; others which are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; and still others which are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored agencies or
instrumentalities if it is not obligated to do so by law. A Fund will invest in
the obligations of such agencies and instrumentalities only when AmSouth
believes that the credit risk with respect thereto is minimal.
VARIABLE AND FLOATING RATE NOTES. The Tax Exempt Fund, the Bond Fund,
the Limited Maturity Fund and the Tax-Free Funds may acquire variable and
floating rate notes, subject to each Fund's investment objective, policies and
restrictions. A variable rate note is one whose terms provide "for the
readjustment of its interest rate on set dates and which, upon such
readjustment, can reasonably be expected to have a market value that
approximates its par value. A floating rate note is one whose terms provide for
the readjustment of its interest rate whenever a specified interest rate changes
and which, at any time, can reasonably be expected to have a market value that
approximates its par value. Such notes are frequently not rated by credit rating
agencies; however, unrated variable and floating rate notes purchased by a Fund
will be determined by AmSouth under guidelines established by the Trust's Board
of Trustees to be of comparable quality at the time of purchase to rated
instruments eligible for purchase under the Fund's investment policies. In
making such determinations, AmSouth will consider the earning power, cash flow
and other liquidity ratios of the issuers of such notes (such issuers include
financial, merchandising, bank holding and other companies) and will
continuously monitor their financial condition. Although there may be no active
secondary market with respect to a particular variable or floating rate note
purchased by a Fund, the Fund may resell the note at any time to a third party.
The absence of an active secondary market, however, could make it difficult for
the Fund to dispose of a variable or floating rate note in the event the issuer
of the note defaulted on its payment obligations and the Fund could, as a result
or for other reasons, suffer a loss to the extent of the default. Variable or
floating rate notes may be secured by bank letters of credit or drafts.
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Variable or floating rate notes acquired by the Tax Exempt Fund may
have maturities of more than one year and variable or floating rate notes
acquired by the Limited Maturity Fund may have maturities of more than three
years, as follows:
1. A note that is issued or guaranteed by the U.S. Government or any
agency thereof which has a variable rate of interest readjusted no less
frequently than annually will be deemed by a Fund to have a maturity equal to
the period remaining until the next readjustment of the interest rate.
2. A variable rate note, the principal amount of which is scheduled on
the face of the instrument to be paid in one year or less, will be deemed by a
Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate note that is subject to a demand feature will be
deemed by a Fund to have a maturity equal to the longer of the period remaining
until the next readjustment of the interest rate or the period remaining until
the principal amount can be recovered through demand.
4. A floating rate note that is subject to a demand feature will be
deemed by a Fund to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on no
more than thirty days' notice or at specified intervals not exceeding one year
in the case of the Tax Exempt Fund and not exceeding three years in the case of
the Limited Maturity Fund and upon no more than 30 days' notice.
MUNICIPAL SECURITIES. Under normal market conditions, the Tax Exempt
Fund and the Municipal Bond Fund will be primarily invested in bonds (and in the
case of the Tax Exempt Fund, notes) issued by or on behalf of states (including
the District of Columbia), territories, and possessions of the United States and
their respective authorities, agencies, instrumentalities, and political
subdivisions, the interest on which is exempt from federal income tax
("Municipal Securities"). Under normal market conditions, the Tax Exempt Fund
and the Municipal Bond Fund will invest at least 80% of their total assets, and
the Florida Fund may invest up to 20% of its total assets, in Municipal
Securities, the interest on which is not treated as a preference item for
purposes of the federal alternative minimum tax.
Municipal Securities include debt obligations issued by governmental
entities to obtain funds for various public purposes, such as the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses, and the extension of loans to other
public institutions and facilities. Private activity bonds that are issued by or
on behalf of public authorities to finance various privately-operated facilities
are
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included within the term Municipal Securities if the interest paid thereon is
exempt from both federal income tax and not treated as a preference item for
individuals for purposes of the federal alternative minimum tax.
Municipal Securities may also include General Obligation Notes, Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Project
Notes, Tax-Exempt Commercial Paper, Construction Loan Notes and other forms of
short-term tax-exempt loans. Such instruments are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues.
Project Notes are issued by a state or local housing agency and are
sold by the Department of Housing and Urban Development. While the issuing
agency has the primary obligation with respect to its Project Notes, they are
also secured by the full faith and credit of the United States through
agreements with the issuing authority which provide that, if required, the
federal government will lend the issuer an amount equal to the principal of and
interest on the Project Notes.
As described in the prospectuses of the Tax Exempt Fund and the
Tax-Free Funds, the two principal classifications of Municipal Securities
consist of "general obligation" and "revenue" issues. A Fund permitted to invest
in Municipal Securities may also acquire "moral obligation" issues, which are
normally issued by special purpose authorities. There are, of course, variations
in the quality of Municipal Securities, both within a particular classification
and between classifications, and the yields on Municipal Securities depend upon
a variety of factors, including general money market conditions, the financial
condition of the issuer, general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating of
the issue. The ratings of NRSROs represent their opinions as to the quality of
Municipal Securities. It should be emphasized, however, that ratings are general
and are not absolute standards of quality, and Municipal Securities with the
same maturity, interest rate and rating may have different yields, while
Municipal Securities of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to purchases by the Tax Exempt Fund,
an issue of Municipal Securities may cease to be rated or its rating may be
reduced below the minimum rating required for purchase by the Tax Exempt Fund.
Neither event would under all circumstances require the elimination of such an
obligation from the Fund's investment portfolio. However, the obligation
generally would be retained only if such retention was determined by the Board
of Trustees to be in the best interests of the Fund.
An issuer's obligations under its Municipal Securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the federal bankruptcy code, and laws, if
any, which may be enacted by Congress or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon the enforcement of such obligations or upon the ability of municipalities
to levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest
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on and principal of its Municipal Securities may be materially adversely
affected by litigation or other conditions.
High Yield Securities. The Equity Income Fund may invest in high yield
convertible securities. High yield securities are securities that are rated
below investment grade by an NRSRO (e.g., "BB" or lower by S&P and "Ba" or lower
by Moody's). Other terms used to describe such securities include "lower rated
bonds," "non-investment grade bonds" and "junk bonds." Generally, lower rated
debt securities provide a higher yield than higher rated debt securities of
similar maturity, but are subject to a greater degree of risk with respect to
the ability of the issuer to meet its principal and interest obligations.
Issuers of high yield securities may not be as strong financially as those
issuing higher rated securities. The securities are regarded as predominantly
speculative. The market value of high yield securities may fluctuate more than
the market value of higher rated securities, since high yield securities tend to
reflect short-term corporate and market developments to a greater extent than
higher rated securities, which fluctuate primarily in response to the general
level of interest rates, assuming that there has been no change in the
fundamental interest rates, assuming that there has been no change in the
fundamental quality of such securities. The market prices of fixed income
securities generally fall when interest rates rise. Conversely, the market
prices of fixed-income securities generally rise when interest rates fall.
Additional risks of high yield securities include limited liquidity and
secondary market support. As a result, the prices of high yield securities may
decline rapidly in the event that a significant number of holders decide to
sell. Changes in expectations regarding an individual issuer, an industry or
high yield securities generally could reduce market liquidity for such
securities and make their sale by the Equity Income Fund more difficult, at
least in the absence of price concessions. Reduced liquidity also could
adversely affect the Equity Income Fund's ability to accurately value high yield
securities. Issuers of high yield securities also are more vulnerable to real or
perceived economic changes (for instance, an economic downturn or prolonged
period of rising interest rates), political changes or adverse developments
specific to the issuer. Adverse economic, political or other developments may
impair the issuer's ability to service principal and interest obligations, to
meet projected business goals and to obtain additional financing, particularly
if the issuer is highly leveraged. In the event of a default, the Equity Income
Fund would experience a reduction of its income and could expect a decline in
the market value of the defaulted securities.
WHEN-ISSUED SECURITIES. As discussed in the Prospectuses, each Fund
except the Prime Obligations Fund and the U.S. Treasury Fund may purchase
securities on a when-issued basis (i.e., for delivery beyond the normal
settlement date at a stated price and yield). When a Fund agrees to purchase
securities on a when-issued basis, the Fund's custodian will set aside cash or
liquid portfolio securities equal to the amount of the commitment in a separate
account. Normally, the custodian will set aside portfolio securities to satisfy
the purchase commitment,
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and in such a case, the Fund may be required subsequently to place additional
assets in the separate account in order to assure that the value of the account
remains equal to the amount of the Fund's commitment. It may be expected that
the Fund's net assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when it sets aside
cash. In addition, because a Fund will set aside cash or liquid portfolio
securities to satisfy its purchase commitments in the manner described above, a
Fund's liquidity and the ability of AmSouth to manage it might be affected in
the event its commitments to purchase when-issued securities ever exceeded 25%
of the value of its assets.
When a Fund engages in when-issued transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. No Fund intends to purchase when-issued securities for
speculative purposes but only in furtherance of its investment objective.
CALLS. The Capital Appreciation Funds and the Bond Fund, Limited
Maturity Fund, and Government Income Fund may write (sell) "covered" call
options and purchase options to close out options previously written by it. Such
options must be listed on a National Securities Exchange and issued by the
Options Clearing Corporation. The purpose of writing covered call options is to
generate additional premium income for a Fund. This premium income will serve to
enhance the Fund's total return and will reduce the effect of any price decline
of the security involved in the option. Covered call options will generally be
written on securities which, in AmSouth's opinion, are not expected to make any
major price moves in the near future but which, over the long term, are deemed
to be attractive investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a certain
date (the expiration date). So long as the obligation of the writer of a call
option continues, he or she may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring him or her to deliver
the underlying security against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by repurchasing an option
identical to that previously sold. To secure his or her obligation to deliver
the underlying security in the case of a call option, a writer is required to
deposit in escrow the underlying security or other assets in accordance with the
rules of the Options Clearing Corporation. The Capital Appreciation Funds and
the Bond Fund, Limited Maturity Fund, and Government Income Fund will write only
covered call options. This means that the Fund will only write a call option on
a security which it already owns. (In order to comply with the requirements of
the securities laws in several states, each of the Capital Appreciation Funds
and the Bond Fund, Limited Maturity Fund, and Government Income Fund will not
write a covered call option if, as a result, the aggregate market value of all
portfolio securities covering call options or subject to put options exceeds 25%
of the market value of the its total assets.)
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Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with a Fund's
investment objectives. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which the Capital Appreciation Funds
and the Bond Fund, Limited Maturity Fund, and Government Income Fund will not
do), but capable of enhancing a Fund's total return. When writing a covered call
option, a Fund, in return for the premium, gives up the opportunity for profit
from a price increase in the underlying security above the exercise price, but
retains the risk of loss should the price of the security decline. Unlike one
who owns securities not subject to an option, neither the Capital Appreciation
Funds nor the Bond Fund, Limited Maturity Fund, and Government Income Fund have
any control over when they may be required to sell the underlying securities,
since they may be assigned an exercise notice at any time prior to the
expiration of their obligation as a writer. If a call option which the Fund has
written expires, the Fund will realize a gain in the amount of the premium;
however, such gain may be offset by a decline in the market value of the
underlying security during the option period. If the call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security.
The security covering the call will be maintained in a segregated account of the
Fund's custodian. The Capital Appreciation Funds, the Bond Fund, Limited
Maturity Fund, and Government Income Fund will consider a security covered by a
call to be "pledged" as that term is used in its policy which limits the
pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium a
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, AmSouth, in determining whether a particular
call option should be written on a particular security, will consider the
reasonableness of the anticipated premium and the likelihood that a liquid
secondary market will exist for those options. The premium received by a Fund
for writing covered call options will be recorded as a liability in the Fund's
statement of assets and liabilities. This liability will be adjusted daily to
the option's current market value, which will be the latest sale price at the
time at which the net asset value per share of the Fund is computed (close of
the New York Stock Exchange), or, in the absence of such sale, the latest asked
price. The liability will be extinguished upon expiration of the option, the
purchase of an identical option in the closing transaction, or delivery of the
underlying security upon the exercise of the option.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit a Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both. If a Fund desires to sell a particular security from its portfolio on
which it has written a call option, it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that the Fund
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will be able to effect such closing transactions at a favorable price. If a Fund
cannot enter into such a transaction, it may be required to hold a security that
it might otherwise have sold, in which case it would continue to be at market
risk on the security. This could result in higher transaction costs. A Fund will
pay transaction costs in connection with the writing of options to close out
previously written options. Such transaction costs are normally higher than
those applicable to purchases and sales of portfolio securities.
Call options written by the Capital Appreciation Funds, the Bond Fund,
Limited Maturity Fund, and Government Income Fund will normally have expiration
dates of less than nine months from the date written. The exercise price of the
options may be below, equal to, or above the current market values of the
underlying securities at the time the options are written. From time to time, a
Fund may purchase an underlying security for delivery in accordance with an
exercise notice of a call option assigned to it, rather than delivering such
security from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by a Fund.
PUTS. The Tax Exempt Fund and the Tax-Free Funds may acquire "puts"
with respect to Municipal Securities held in their portfolios, and the Balanced
Fund, the Bond Fund, and the Limited Maturity Fund may acquire "puts" with
respect to debt securities held in their portfolios. A put is a right to sell a
specified security (or securities) within a specified period of time at a
specified exercise price. The Tax Exempt Fund, the Tax-Free Funds, the Bond
Fund, the Balanced Fund, and the Limited Maturity Fund may sell, transfer, or
assign a put only in conjunction with the sale, transfer, or assignment of the
underlying security or securities.
The amount payable to a Fund upon its exercise of a "put" is normally
(i) the Fund's acquisition cost of the securities subject to the put (excluding
any accrued interest which the Fund paid on the acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date during that period.
Puts may be acquired by a Fund to facilitate the liquidity of the
portfolio assets. Puts may also be used to facilitate the reinvestment of assets
at a rate of return more favorable than that of the underlying security. Puts
may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of the Tax Exempt Fund's assets pursuant to Rule 2a-7 under
the 1940 Act. See "Variable and
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Floating Rate Notes" and "Valuation of the Prime Obligations Fund, the U.S.
Treasury Fund and the Tax Exempt Fund" in this Statement of Additional
Information.
The Limited Maturity Fund will acquire puts solely to shorten the
maturity of the underlying debt security.
The Tax Exempt Fund, the Tax-Free Funds and the Limited Maturity Fund
will generally acquire puts only where the puts are available without the
payment of any direct or indirect consideration. However, if necessary or
advisable, a Fund may pay for puts either separately in cash or by paying a
higher price for portfolio securities which are acquired subject to the puts
(thus reducing the yield to maturity otherwise available for the same
securities).
The Tax Exempt Fund, the Tax-Free Funds and the Limited Maturity Fund
intend to enter into puts only with dealers, banks, and broker-dealers which, in
AmSouth's opinion, present minimal credit risks.
FUTURES CONTRACTS. The Government Income Fund may enter into futures contracts
and options on futures contracts for the purposes of remaining fully invested
and reducing transaction costs. Futures contracts provide for the future sale by
one party and purchase by another party of a specified amount of a specific
security, class of securities, or an index at a specified future time and at a
specified price. A stock index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the stock
index value at the close of trading of the contracts and the price at which the
futures contract is originally struck. Futures contracts which are standardized
as to maturity date and underlying financial instrument are traded on national
futures exchanges. Futures exchanges and trading are regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission ("CFTC"), a
U.S. Government Agency.
Although futures contracts by their terms call for actual delivery and
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by taking an opposite position ("buying a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. A futures
contract on a securities index is an agreement obligating either party to pay,
and entitling the other party to receive, while the contract is outstanding,
cash payments based on the level of a specified securities index. The
acquisition of put and call options on futures contracts will, respectively,
give the Fund the right (but not the obligation), for a specified price, to sell
or to purchase the underlying futures contract, upon exercise of the option, at
any time during the option period. Brokerage commissions are incurred when a
futures contract is bought or sold.
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Futures traders are required to make a good faith margin deposit in
cash or government securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Initial margin deposits on futures contracts are customarily
set at levels much lower than the prices at which the underlying securities are
purchased and sold, typically ranging upward from less than 5% of the value of
the contract being traded.
After a futures contract position is opened, the value of the contract
is marked-to- market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Government
Income Fund expects to earn interest income on its margin deposits.
Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Government Income Fund intends to use
futures contracts only for bona fide hedging purposes.
When interest rates are expected to rise or market values of portfolio
securities are expected to fall, the Government Income Fund can seek through the
sale of futures contracts to offset a decline in the value of its portfolio
securities. When interest rates are expected to fall or market values are
expected to rise, the Fund, through the purchase of such contracts, can attempt
to secure better rates or prices for the Fund than might later be available in
the market when it effects anticipated purchases.
Regulations of the CFTC applicable to the Government Income Fund
require that all of its futures transactions constitute bona fide hedging
transactions. The Government Income Fund will only sell futures contracts to
protect securities it owns against price declines or purchase contracts to
protect against an increase in the price of securities it intends to purchase.
As evidence of this hedging interest, the Government Income Fund expects that
approximately 75% of its futures contract purchases will be "completed," that
is, equivalent amounts of related securities will have been purchased or are
being purchased by the Fund upon sale of open futures contracts.
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Although techniques other than the sale and purchase of futures
contracts could be used to control the Government Income Fund's exposure to
market fluctuations, the use of futures contracts may be a more effective means
of hedging this exposure. While the Government Income Fund will incur commission
expenses in both opening and closing out futures positions, these costs are
lower than transactions costs incurred in the purchase and sale of the
underlying securities.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS. The Government Income Fund will
not enter into futures contract transactions to the extent that, immediately
thereafter, the sum of its initial margin deposits on open contracts exceeds 5%
of the market value of the Fund's total assets. In addition, the Government
Income Fund will not enter into futures contracts to the extent that the value
of the futures contracts held would exceed 10% of the Fund's total assets.
Futures transactions will be limited to the extent necessary to maintain each
Portfolio's qualification as a regulated investment company.
The Government Income Fund has undertaken to restrict its futures
contract trading as follows: first, the Fund will not engage in transactions in
futures contracts for speculative purposes; second, the Fund will not market
itself to the public as a commodity pool or otherwise as a vehicle for trading
in the commodities futures or commodity options markets; third, the Fund will
disclose to all prospective shareholders (the "Shareholders") the purpose of and
limitations on its commodity futures trading; fourth, the Fund will submit to
the Commodity Futures Trading Commission ("CFTC") special calls for information.
Accordingly, registration as a commodities pool operator with the CFTC is not
required.
In addition to the margin restrictions discussed above, transactions in
futures contracts may involve the segregation of funds pursuant to requirements
imposed by the Securities and Exchange Commission. Under those requirements,
where the Government Income Fund has a long position in a futures contract, it
may be required to establish a segregated account (not with a futures commission
merchant or broker) containing cash or certain liquid assets equal to the
purchase price of the contract (less any margin on deposit). For a short
position in futures or forward contracts held by the Government Income Fund,
those requirements may mandate the establishment of a segregated account (not
with a futures commission merchant or broker) with cash or certain liquid assets
that, when added to the amounts deposited as margin, equal the market value of
the instruments underlying the futures contracts (but are not less than the
price at which the short positions were established). However, segregation of
assets is not required if the Government Income Fund "covers" a long position.
For example, instead of segregating assets, the Fund, when holding a long
position in a futures contract, could purchase a put option on the same futures
contract with a strike price as high or higher than the price of the contract
held by the Fund. In addition, where the Government Income Fund takes short
positions, or engages in sales of call options, it need not segregate assets if
it "covers" these positions. For example, where the Fund holds a short position
in a futures contract, it may cover by owning the instruments underlying the
contract. The Fund may also cover such a position by holding a call option
permitting it to purchase the same futures
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contract at a price no higher than the price at which the short position was
established. Where the Government Income Fund sells a call option on a futures
contract, it may cover either by entering into a long position in the same
contract at a price no higher than the strike price of the call option or by
owning the instruments underlying the futures contract. The Government Income
Fund could also cover this position by holding a separate call option permitting
it to purchase the same futures contract at a price no higher than the strike
price of the call option sold by the Fund.
RISK FACTORS IN FUTURES TRANSACTIONS. Positions in futures contracts may be
closed out only on an exchange that provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, the Government Income Fund would continue to be required to make
daily cash payments to maintain the required margin. In such situations, if the
Government Income Fund has insufficient cash, it may have to sell portfolio
securities to meet daily margin requirements at a time when it may be
disadvantageous to do so. In addition, the Government Income Fund may be
required to make delivery of the instruments underlying futures contracts it
holds. The inability to close options and futures positions also could have an
adverse impact on the ability to effectively hedge them. The Government Income
Fund will minimize the risk that it will be unable to close out a futures
contract by only entering into futures contracts that are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. Because the deposit
requirements in the futures markets are less onerous than margin requirements in
the securities market, there may be increased participation by speculators in
the futures market which may also cause temporary price distortions. A
relatively small price movement in a futures contract may result in immediate
and substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. However, because the
futures strategies engaged in by the Government Income Fund are only for hedging
purposes, AmSouth does not believe that the Government Income Fund is subject to
the risks of loss frequently associated with futures transactions. The
Government Income Fund would presumably have sustained comparable losses if,
instead of the futures contract, it had invested in the underlying financial
instrument and sold it after the decline.
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Utilization of futures transactions by the Government Income Fund does
involve the risk of imperfect or no correlation where the securities underlying
futures contract have different maturities than the portfolio securities being
hedged. It is also possible that the Government Income Fund could both lose
money on futures contracts and also experience a decline in value of its
portfolio securities. There is also the risk of loss by the Fund of margin
deposits in the event of bankruptcy of a broker with whom the Fund has an open
position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore does
not limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
INVESTMENT RESTRICTIONS
The following investment restrictions may be changed with respect to a
particular Fund only by a vote of a majority of the outstanding voting Shares of
that Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Prospectuses).
None of the Funds of the Trust may:
1. Purchase securities on margin, sell securities short, participate on
a joint or joint and several basis in any securities trading account, or
underwrite the securities of other issuers, except to the extent that a Fund may
be deemed to be an underwriter under certain securities laws in the disposition
of "restricted securities" acquired in accordance with such Fund's investment
objectives, restrictions and policies;
2. Purchase or sell commodities, commodity contracts (including futures
contracts), oil, gas or mineral exploration or development programs, or real
estate (although investments by all of the Funds except the U.S. Treasury Fund
in marketable securities of companies engaged in such activities and in
securities secured by real estate or interests therein are not hereby precluded
and investment in real estate investment trusts are permitted for the Capital
Growth, Small Cap and Equity Income Funds);
3. Invest in securities of other investment companies, except as such
securities may be acquired as part of a merger, consolidation, reorganization,
or acquisition of assets; PROVIDED, HOWEVER, that the Capital Appreciation Funds
and the Income Funds may purchase securities
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of a money market fund, including securities of both the Prime Obligations Fund
and the U.S. Treasury Fund (and in the case of the Tax-Free Funds, securities of
the Tax Exempt Fund) and the Tax Exempt Fund and Prime Obligations Fund may
purchase securities of a money market fund which invests primarily in high
quality short-term obligations exempt from federal income tax, if, with respect
to each such Fund, immediately after such purchase, the acquiring Fund, does not
own in the aggregate (i) more than 3% of the acquired company's outstanding
voting securities, (ii) securities issued by the acquired company having an
aggregate value in excess of 5% of the value of the total assets of the
acquiring Fund, or (iii) securities issued by the acquired company and all other
investment companies (other than Treasury stock of the acquiring Fund) having an
aggregate value in excess of 10% of the value of the acquiring Fund's total
assets;
4. Invest in any issuer for purposes of exercising control or
management;
5. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust or the officers or directors of its investment adviser
owning beneficially more than one-half of 1% of the securities of such issuer
together own beneficially more than 5% of such securities; and
6. Invest more than 10% of total assets in the securities of issuers
which together with any predecessors have a record of less than three years of
continuous operation.
The Prime Obligations Fund and the U.S. Treasury Fund may not buy
common stocks or voting securities, or state, municipal, or private activity
bonds. The Money Market Funds and the Tax-Free Funds may not write or purchase
call options. None of the Funds may write put options. The Prime Obligations
Fund, the U.S. Treasury Fund, the Equity Fund , the Regional Equity Fund, the
Capital Growth Fund, the Small Cap Fund, and the Equity Income Fund may not
purchase put options. The Tax Exempt Fund and the Tax-Free Funds may not invest
in private activity bonds where the payment of principal and interest are the
responsibility of a company (including its predecessors) with less than three
years of continuous operation.
If any percentage restriction described above is satisfied at the time
of investment, a later increase or decrease in such percentage resulting from a
change in asset value will not constitute a violation of such restriction.
ADDITIONAL INVESTMENT RESTRICTIONS
The following investment restriction is non-fundamental and may be
changed by a vote of the majority of the Board of Trustees: No Fund will invest
more than 15% of its net assets in securities that are restricted as to resale,
or for which no readily available market exists, including repurchase agreements
providing for settlement more than seven days after notice.
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PORTFOLIO TURNOVER
The portfolio turnover rate for each of the Trust's Funds is calculated
by dividing the lesser of a Fund's purchases or sales of portfolio securities
for the year by the monthly average value of the portfolio securities. The
calculation excludes all securities whose maturities at the time of acquisition
were one year or less. Portfolio turnover with respect to each of the Money
Market Funds is expected to be zero percent for regulatory purposes.
In the fiscal year ended July 31, 1996, portfolio turnover for the
Equity Fund, the Regional Equity Fund, the Limited Maturity Fund, the Government
Income Fund, the Bond Fund and the Florida Fund was 19.11%, 8.22%, 29.56%,
78.31%, 9.60% and 12.21%, respectively. In the fiscal year ended July 31, 1996,
the portfolio turnover rate for the Balanced Fund was 13.65% with respect to the
common stock portion of its portfolio and 6.82% with respect to the other
portion of its portfolio.
In the fiscal year ended July 31, 1995, portfolio turnover for the
Equity Fund, the Regional Equity Fund, the Limited Maturity Fund, the Government
Income Fund, the Bond Fund and the Florida Fund was 19.46%, 14.25%, 38.11%,
27.32%, 17.70% and 2.33%, respectively. In the fiscal year ended July 31, 1995,
the portfolio turnover rate for the Balanced Fund was 16.62% with respect to the
common stock portion of its portfolio and 10.07% with respect to the other
portion of its portfolio. The portfolio turnover rate may vary greatly from year
to year as well as within a particular year, and may also be affected by cash
requirements for redemptions of Shares and, in the case of the Tax Exempt Fund
and the Tax-Free Funds, by requirements which enable these Funds to receive
certain favorable tax treatments. A higher portfolio turnover rate may lead to
increased taxes and transaction costs. Portfolio turnover will not be a limiting
factor in making investment decisions.
The Tax-Free Funds will not purchase securities solely for the purpose
of short-term trading. The turnover rates for the Funds will not be a factor
preventing either the sale or the purchase of securities when the investment
advisor believes investment considerations warrant such sale or purchase. The
annual portfolio turnover rate of the Municipal Bond Fund is not expected to
exceed 50%. However, the portfolio turnover rate for each of the Tax-Free Funds
may vary greatly from year to year as well as within a particular year. High
turnover rates will generally result in higher transaction costs to the Funds
and may result in higher levels of taxable realized gains to the Funds'
Shareholders.
VALUATION
As indicated in the Prospectuses, the net asset value of each Fund is
determined and the Shares of each Fund are priced as of 4:00 p.m., Eastern Time
(the "Valuation Time") on each Business Day of the Fund. As used herein a
"Business Day" constitutes any day on which the New York Stock Exchange (the
"NYSE") is open for trading and the Federal Reserve Bank of
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Atlanta is open, except days on which there are not sufficient changes in the
value of the Fund's portfolio securities that the Fund's net asset value might
be materially affected, or days during which no Shares are tendered for
redemption and no orders to purchase Shares are received. Currently, either the
NYSE or the Federal Reserve Bank of Atlanta is closed on the customary national
business holidays of New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veteran's Day, Thanksgiving Day and Christmas Day.
VALUATION OF THE MONEY MARKET FUNDS
The Money Market Funds have elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the 1940 Act. This involves valuing an
instrument at its cost initially and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. This method may result in
periods during which value, as determined by amortized cost, is higher or lower
than the price the Fund would receive if it sold the instrument. The value of
securities in these Funds can be expected to vary inversely with changes in
prevailing interest rates.
Pursuant to Rule 2a-7, each Money Market Fund will maintain a
dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per Share, provided that no Fund will
purchase any security with a remaining maturity of more than thirteen months
(securities subject to repurchase agreements may bear longer maturities) nor
maintain a dollar-weighted average portfolio maturity which exceeds 90 days. The
Trust's Board of Trustees has also undertaken to establish procedures reasonably
designed, taking into account current market conditions and the Fund's
investment objective, to stabilize the net asset value per Share of the Money
Market Funds for purposes of sales and redemptions at $1.00. These procedures
include review by the Trustees, at such intervals as they deem appropriate, to
determine the extent, if any, to which the net asset value per Share of each
Fund calculated by using available market quotations deviates from $1.00 per
Share. In the event such deviation exceeds one-half of one percent, Rule 2a-7
requires that the Board of Trustees promptly consider what action, if any,
should be initiated. If the Trustees believe that the extent of any deviation
from a Fund's $1.00 amortized cost price per Share may result in material
dilution or other unfair results to new or existing investors, they will take
such steps as they consider appropriate to eliminate or reduce to the extent
reasonably practicable any such dilution or unfair results. These steps may
include selling portfolio instruments prior to maturity, shortening the
dollar-weighted average portfolio maturity, withholding or reducing dividends,
reducing the number of a Fund's outstanding Shares without monetary
consideration, or utilizing a net asset value per Share determined by using
available market quotations.
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VALUATION OF THE CAPITAL APPRECIATION FUNDS AND THE INCOME FUNDS
The value of the portfolio securities held by each of the Capital
Appreciation Funds and the Income Funds for purposes of determining such Fund's
net asset value per Share will be established on the basis of current valuations
provided by Muller Data Corporation or Kenny S&P Evaluation Services, whose
procedures shall be monitored by the Administrator, and which valuations shall
be the fair market value of such securities.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares in each of the Trust's Funds are sold on a continuous basis by
BISYS Fund Services, Limited Partnership ("BISYS"), and BISYS has agreed to use
appropriate efforts to solicit all purchase orders. In addition to purchasing
Shares directly from BISYS, Shares may be purchased through procedures
established by BISYS in connection with the requirements of accounts at AmSouth,
or AmSouth's affiliated or correspondent banks. Customers purchasing Shares of
the Trust may include officers, directors, or employees of AmSouth or AmSouth's
affiliated or correspondent banks.
PURCHASE OF SHARES
As stated in the relevant Prospectuses, the public offering price of
Shares of the Capital Appreciation Funds and the Income Funds is their net asset
value computed after the sale plus a sales charge which varies based upon the
quantity purchased. The public offering price of such Shares of the Trust is
calculated by dividing net asset value by the difference (expressed as a
decimal) between 100% and the sales charge percentage of the offering price
applicable to the purchase (see "How to Purchase and Redeem Shares" in the
relevant Prospectuses). The offering price is rounded to two decimal places each
time a computation is made. The sales charge scale set forth in a Fund's
Prospectus applies to purchases of Shares of such a Fund alone, by any person,
including members of a family unit (i.e., husband, wife and minor children) and
bona fide trustees and also applies to purchases made under a Rights of
Accumulation or a Letter of Intent.
Certain sales are made without a sales charge, as described in the
relevant Prospectuses under the caption "Sales Charge Waivers", to promote
goodwill with employees and others with whom BISYS, AmSouth and/or the Trust
have business relationships, and because the sales effort, if any, involved in
making such sales is negligible.
As the Trust's principal underwriter, BISYS acts as principal in
selling shares of the Trust to dealers. BISYS re-allows a portion of the sales
charge as dealer discounts and brokerage commissions. Dealer allowances
expressed as a percentage of the offering price for all offering prices are set
forth in the relevant Prospectuses (see "How to Purchase and Redeem Shares").
From time to time, BISYS may make expense reimbursements for special
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training of a dealer's registered representatives in group meetings or to help
pay the expenses of sales contests. In some instances, promotional incentives to
dealers may be offered only to certain dealers who have sold or may sell
significant amounts of Group shares. Neither BISYS nor dealers are permitted to
delay the placement of orders to benefit themselves by a price change.
MATTERS AFFECTING REDEMPTION
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission, (b) the Exchange is closed for other
than customary weekend and holiday closings, (c) the Securities and Exchange
Commission has by order permitted such suspension, or (d) an emergency exists as
determined by the Securities and Exchange Commission.
The Trust may redeem Shares involuntarily if redemption appears
appropriate in light of the Trust's responsibilities under the 1940 Act. See
"Valuation of the Money Market Funds" above.
ADDITIONAL TAX INFORMATION
It is the policy of each of the Trust's Funds to qualify for the
favorable tax treatment accorded regulated investment companies under Subchapter
M of the Code. By following such policy, the Trust's Funds expect to eliminate
or reduce to a nominal amount the federal income taxes to which such Fund may be
subject.
In order to qualify for the special tax treatment accorded regulated
investment companies and their Shareholders, a Fund must, among other things,
(a) derive at least 90% of its gross income from dividends, interest, payments
with respect to certain securities loans, and gains from the sale of stock,
securities, and foreign currencies, or other income (including but not limited
to gains from options, futures, or forward contracts) derived with respect to
its business of investing in such stock, securities, or currencies; (b) derive
less than 30% of its gross income from the sale or other disposition of certain
assets (including stocks and securities) held for less than three months; (c)
each year distribute at least 90% of its dividend, interest (including
tax-exempt interest), certain other income and the excess, if any, of its net
short-term capital gains over its net long-term capital losses; and (d)
diversify its holdings so that, at the end of each fiscal quarter (i) at least
50% of the market value of its assets is represented by cash, cash items, U.S.
Government securities, securities of other regulated investment companies, and
other securities, limited in respect of any one issuer to a value not greater
than 5% of the value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities (other than those of the U.S. Government or
other regulated investment companies) of any one issuer or of two or more
issuers which the Fund controls and which are engaged in
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the same, similar, or related trades or businesses. The 30% of gross income test
described above may restrict a Fund's ability to sell certain assets held (or
considered under Code rules to have been held) for less than three months and to
engage in certain hedging transactions (including hedging transactions in
options and futures) that in some circumstances could cause certain Fund assets
to be treated as held for less than three months.
A non-deductible excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they have a non-calendar taxable year) an amount equal to 98% of their "ordinary
income" (as defined) for the calendar year plus 98% of their capital gain net
income for the 1-year period ending on October 31 of such calendar year plus any
undistributed amounts from the previous year. For the foregoing purposes, a Fund
is treated as having distributed any amount on which it is subject to income tax
for any taxable year ending in such calendar year. If distributions during a
calendar year by a Fund were less than the required amount, the Fund would be
subject to a non-deductible excise tax equal to 4% of the deficiency.
Each of the Trust's Funds will be required in certain cases to withhold
and remit to the United States Treasury 31% of taxable dividends and other
distributions paid to any Shareholder who has provided either an incorrect
taxpayer identification number or no number at all, who is subject to
withholding by the Internal Revenue Service for failure properly to report
payments of interest or dividends, or who fails to provide a certified statement
that he or she is not subject to "backup withholding."
A Fund's transactions in options, foreign-currency-denominated
securities, and certain other investment and hedging activities of the Fund,
will be subject to special tax rules (including "mark-to-market," "straddle,"
"wash sale," and "short sale" rules), the effect of which may be to accelerate
income to the Fund, defer losses to the Fund, cause adjustments in the holding
periods of the Fund's assets, convert short-term capital losses into long-term
capital losses, and otherwise affect the character of the Fund's income. These
rules could therefore affect the amount, timing, and character of distributions
to Shareholders. Income earned as a result of these transactions would, in
general, not be eligible for the dividends received deduction or for treatment
as exempt-interest dividends when distributed to Shareholders. The Funds will
endeavor to make any available elections pertaining to these transactions in a
manner believed to be in the best interest of the Funds.
Although the Funds each expect to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of their activities in states and localities in which
their offices are maintained, in which their agents or independent contractors
are located, or in which they are otherwise deemed to be conducting business,
the Funds may be subject to the tax laws of such states or localities. If for
any taxable year the Funds do not qualify for the special federal tax treatment
afforded regulated investment companies, all of their taxable income will be
subject to federal income tax at regular corporate rates at the Fund level
(without any deduction for distributions to their
B-23
<PAGE> 77
Shareholders). In addition, distributions to Shareholders will be taxed as
ordinary income even if the distributions are attributable to capital gains or
exempt interest earned by the Fund.
Information set forth in the Prospectuses and this Statement of
Additional Information which relates to Federal taxation is only a summary of
some of the important Federal tax considerations generally affecting purchasers
of Shares of the Trust's Funds. No attempt has been made to present a detailed
explanation of the Federal income tax treatment of a Fund or its Shareholders
and this discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of Shares of a Fund are urged to consult their
tax advisers with specific reference to their own tax situation. In addition,
the tax discussion in the Prospectuses and this Statement of Additional
Information is based on tax laws and regulations which are in effect on the date
of the Prospectuses and this Statement of Additional Information; such laws and
regulations may be changed by legislative or administrative action.
ADDITIONAL TAX INFORMATION CONCERNING THE TAX EXEMPT FUND AND TAX-FREE FUNDS
As indicated in the prospectuses of the Tax Exempt Fund and the
Tax-Free Funds, these Funds are designed to provide Shareholders with current
tax-exempt interest income. The Funds are not intended to constitute a balanced
investment program and are not designed for investors seeking capital
appreciation or maximum tax-exempt income irrespective of fluctuations in
principal. Shares of the Tax Exempt Fund and the Tax-Free Funds would not be
suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, so-called Keogh or H.R. 10 plans,
and individual retirement accounts. Such plans and accounts are generally
tax-exempt and, therefore, would not gain any additional benefit from the
dividends of the Tax Exempt Fund and the Tax-Free Funds, being tax-exempt, and
such dividends would be ultimately taxable to the beneficiaries when distributed
to them.
In addition, the Tax Exempt Fund and the Tax-Free Funds may not be
appropriate investments for Shareholders that may be "substantial users" of
facilities financed by private activity bonds or "related persons" thereof.
"Substantial user" is defined under U.S. Treasury Regulations to include a
non-exempt person who regularly uses a part of such facilities in his trade or
business, and whose gross revenues derived with respect to the facilities
financed by the issuance of bonds represent more than 5% of the total revenues
derived by all users of such facilities, or who occupies more than 5% of the
usable area of such facilities, or for whom such facilities or a part thereof
were specifically constructed, reconstructed or acquired. "Related person"
includes certain related natural persons, affiliated corporations, a partnership
and its partners and an S Corporation and its Shareholders. Each Shareholder
that may be considered a "substantial user" should consult a tax adviser with
respect to whether exempt-interest dividends would retain the exclusion under
Section 103 of the Code if the Shareholder were treated as a "substantial user"
or a "related person."
B-24
<PAGE> 78
The Code permits a regulated investment company which invests at least
50% of its assets in tax-free Municipal Securities to pass through to its
investors, tax-free, net Municipal Securities interest income. The policy of the
Tax Exempt Fund and the Tax-Free Funds is to pay each year as dividends
substantially all such Fund's Municipal Securities interest income net of
certain deductions. An exempt-interest dividend is any dividend or part thereof
(other than a capital gain dividend) paid by the Tax Exempt Fund and the
Tax-Free Funds and designated as an exempt-interest dividend in a written notice
mailed to Shareholders after the close of such Fund's taxable year, but not to
exceed in the aggregate the net Municipal Securities interest received by the
Fund during the taxable year. The percentage of the total dividends paid for any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all Shareholders receiving dividends from the Tax Exempt Fund and the
Tax-Free Funds during such year, regardless of the period for which the Shares
were held.
While the Tax Exempt Fund and the Tax-Free Funds do not expect to
realize any significant amount of long-term capital gains, any net realized
long-term capital gains will be distributed annually. The Tax Exempt Fund and
the Tax-Free Funds will have no tax liability with respect to such gains and the
distributions will be taxable to Shareholders as long-term capital gains,
regardless of how long a Shareholder has held the Shares of the Funds. Such
distributions will be designated as a capital gains dividend in a written notice
mailed by the Tax Exempt Fund and the Tax-Free Funds to Shareholders after the
close of the Fund's taxable year.
While the Tax Exempt Fund and the Tax-Free Funds do not expect to earn
any significant amount of investment company taxable income, taxable income
earned by the Funds will be distributed to Shareholders. In general, the
investment company taxable income will be the taxable income of the Fund (for
example, short-term capital gains) subject to certain adjustments and excluding
the excess of any net long-term capital gains for the taxable year over the net
short-term capital loss, if any, for such year. Any such income will be taxable
to Shareholders as ordinary income (whether paid in cash or additional Shares).
As indicated in the prospectuses of the Tax Exempt Fund and the
Tax-Free Funds, the Funds may acquire puts with respect to Municipal Securities
(and in the case of the Florida Fund, Florida Municipal Securities) held in
their portfolios. See "INVESTMENT OBJECTIVES AND POLICIES - Additional
Information on Portfolio Instruments - Puts" in this Statement of Additional
Information. The policy of the Tax Exempt Fund and the Tax- Free Funds is to
limit their acquisition of puts to those under which the Fund will be treated
for Federal income tax purposes as the owner of the Municipal Securities
acquired subject to the put and the interest on the Municipal Securities will be
tax-exempt to such Fund. Although the Internal Revenue Service has issued a
published ruling that provides some guidance regarding the tax consequences of
the purchase of puts, there is currently no guidance available from the Internal
Revenue Service that definitively establishes the tax consequences of many of
the types of puts that the Tax Exempt Fund and the Tax-
B-26
<PAGE> 79
Free Funds could acquire under the 1940 Act. Therefore, although the Tax Exempt
Fund and the Tax- Free Funds will only acquire a put after concluding that it
will have the tax consequences described above, the Internal Revenue Service
could reach a different conclusion from that of the Funds. If the Tax Exempt
Fund and the Tax-Free Funds were not treated as the owner of the Municipal
Securities, income from such securities would probably not be tax-exempt.
The foregoing is only a summary of some of the important Federal tax
considerations generally affecting purchasers of Shares of the Tax Exempt Fund
and the Tax-Free Funds. No attempt has been made to present a detailed
explanation of the Federal income tax treatment of the Tax Exempt Fund and the
Tax-Free Funds or their Shareholders and this discussion is not intended as a
substitute for careful tax planning. Accordingly, potential purchasers of Shares
of the Tax Exempt Fund and the Tax-Free Funds are urged to consult their tax
advisers with specific reference to their own tax situation. In addition, the
foregoing discussion is based on tax laws and regulations which are in effect on
the date of this Statement of Additional Information; such laws and regulations
may be changed by legislative or administrative action.
MANAGEMENT OF THE TRUST
OFFICERS
The officers of each Fund of the Trust, their current addresses, and
principal occupations during the past five years are as follows (if no address
is listed, the address is 3435 Stelzer Road, Columbus, Ohio 43219):
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Trust During Past 5 Years
- ---------------- ---------------- -------------------
<S> <C> <C>
J. David Huber* Trustee From June 1987 to present, employee of BISYS
Fund Services, Limited Partnership.
Sean M. Kelly* Chairman of the Board From 1993 to present, Senior Vice President of
of Trustees, President Client Services of BISYS Fund Services; prior
to 1993, Senior Vice President of Concord
Financial Group (now BISYS Fund Services)
George A. Landreth Vice President From December 1992 to present, employee of
BISYS Fund Services, Limited Partnership;
from July 1991 to December 1992, employee of
PNC Financial Corp.; from October 1984 to
July 1991, employee of The Central Trust Co.,
N.A.
Walter B. Grimm Vice President From June, 1992 to present, employee of BISYS
Fund Services, Limited Partnership; from 1990
to 1992, President and CEO, Security
Bancshares; from July, 1981 to present,
President of Leigh Investments Consulting
(investments firm).
</TABLE>
B-26
<PAGE> 80
<TABLE>
<S> <C> <C>
Kevin Martin Treasurer From February 1996, to
present, employee of BISYS
Fund Services, Limited
Partnership, from 1984 to
February 1996, Senior Manager,
Ernst & Young.
John F. Calvano Secretary From October, 1994 to present,
employee of BISYS Fund
Services, Limited Partnership;
from July, 1992 to August,
1994, investment
representative, BA Investment
Services; and from October,
1986 to July, 1994, Marketing
Manager, Great Western
Investment Management.
George O. Martinez Assistant Secretary From March, 1995 to present,
Senior Vice President and
Director of Legal and
Compliance Services, BISYS
Fund Services, Limited
Partnership; from June, 1989
to March, 1995, Vice President
and Associate General Counsel,
Alliance Capital Management.
Alaina V. Metz Assistant Secretary From June, 1995 to present,
Chief Administrator,
Administrative and Regulatory
Services, BISYS Fund Services,
Limited Partnership; from May,
1989 to June, 1995,
Supervisor, Mutual Fund Legal
Department, Alliance Capital
Management.
Scott A. Englehart Assistant Secretary From October, 1990 to present,
employee of BISYS Fund
Services, Limited Partnership.
<FN>
* Messrs. Huber and Kelly, Trustees of the Trust, are "interested persons" of
the Trust as defined in the 1940 Act.
</TABLE>
The officers of the Trust receive no compensation directly from the
Trust for performing the duties of their offices. BISYS receives fees from the
Trust for acting as Administrator and BISYS Fund Services Ohio, Inc. receives
fees from the Trust for acting as Transfer Agent for and for providing fund
accounting services to the Trust. Messrs. Huber, Calvano, Martin, Kelly,
Landreth, Grimm, Englehart, and Martinez and Mme. Metz are employees of BISYS
Fund Services, Limited Partnership.
B-27
<PAGE> 81
COMPENSATION TABLE 1
<TABLE>
<CAPTION>
Pension or
Retirement Total
Aggregate Benefits Estimated Compensation
Compensation Accrued Annual from AmSouth
Name of from AmSouth As Part of Benefits Upon Mutual Funds
Position Mutual Funds Fund Expenses Retirement Paid to Trustee
- -------- ------------ ------------- ---------- ---------------
<S> <C> <C> <C> <C>
J. David Huber None None None None
William J.
Tomko None None None None
James H.
Woodward, Jr. 11,250 None None 11,250
Homer H.
Turner 11,250 None None 11,250
Wendell D.
Cleaver 11,250 None None 11,250
Dick D. Briggs,
Jr. 11,250 None None 11,250
Sean M. Kelly None None None None
<FN>
1 Figures are for the Trust's fiscal year ended July 31, 1996.
</TABLE>
INVESTMENT ADVISOR
Investment advisory and management services are provided to the Money
Market Funds, the Capital Appreciation Funds and the Income Funds (except the
Limited Maturity Fund) by AmSouth pursuant to the Investment Advisory Agreement
dated as of August 1, 1988, as amended (the "First Investment Advisory
Agreement"). Investment advisory and management services are provided to the
Limited Maturity Fund by AmSouth pursuant to the Investment Advisory Agreement
dated as of January 20, 1989, as amended (the "Second Investment Advisory
Agreement" collectively with the First and Second Investment Advisory Agreement,
the "Advisory Agreements").
In selecting investments for each of the Capital Appreciation Funds,
AmSouth employs the "value investing" method. A primary theory of value
investing is that many investors tend to exaggerate both prosperity and problems
in market valuations. This method, which may conflict with the prevailing mood
of the market, involves the use of independent judgment backed by careful
analysis of market data. AmSouth's approach when selecting investment for each
of these Funds is to attempt to buy and sell securities that are temporarily
mispriced relative to long-term value.
B-28
<PAGE> 82
In selecting investments for each of the Income Funds and the Balanced
Fund, AmSouth attempts to anticipate interest rates, thereby capitalizing on
cyclical movements in the bond markets. AmSouth seeks to achieve this goal
through active management of the buying and selling of fixed-income securities
in anticipation of changes in yields.
Under the Advisory Agreements, the fee payable to AmSouth by the Funds
for investment advisory services is the lesser of (a) such fee as may from time
to time be agreed upon in writing by the Trust and AmSouth or (b) a fee computed
daily and paid monthly based on the average daily net assets of each Fund as
follows: the Prime Obligations Fund - forty one-hundredths of one percent (.40%)
annually; the Equity Fund - eighty one-hundredths of one percent (.80%)
annually; the Regional Equity Fund - eighty one-hundredths of one percent (.80%)
annually; the U.S. Treasury Fund - forty one-hundredths of one percent (.40%)
annually; the Tax Exempt Fund - forty one-hundredths of one percent (.40%)
annually; the Bond Fund - sixty-five one-hundredths of one percent (.65%)
annually; the Limited Maturity Fund - sixty-five one-hundredths of one percent
(.65%) annually; the Balanced Fund - eighty one-hundredths of one percent (.80%)
annually; the Government Income Fund - sixty-five one-hundredths of one percent
(.65%) annually; the Florida Fund - sixty-five one-hundredths of one percent
(.65%) annually; the Municipal Bond Fund - sixty-five one-hundredths of one
percent (.65%) annually; and the Equity Income Fund - eighty one-hundredths of
one percent (.80%) annually. A fee agreed to in writing from time to time by the
Trust and AmSouth may be significantly lower than the fee calculated at the
annual rate and the effect of such lower fee would be to lower a Fund's expenses
and increase the net income of such Fund during the period when such lower fee
is in effect.
As compensation for its management services and certain expenses which
AmSouth incurs on behalf of the Capital Growth and Small Cap Funds, the
Trust pays AmSouth a management fee that is comprised of two components. The
first component is a basic fee computed daily and payable monthly at the annual
rate of eighty one-hundredths of one percent (0.80%) of the Capital Growth
Fund's average daily net assets and ninety one-hundredths of one percent (0.90%)
of the Small Cap Fund's average daily net assets (the "Basic Fee"). The
second component is a performance fee adjustment.
The Basic Fee is subject to an upward or downward adjustment, depending
on whether, and to what extent, the investment performance of the Capital Growth
and Small Cap Funds for the performance period exceeds, or is exceeded by,
the record of the appropriate benchmark index for each Fund over the same
period. The performance period consists of the current month and the prior 11
months ("performance period"). Each percentage point of difference (up to a
maximum of +/-10) is multiplied by a performance adjustment rate of 0.02%. Thus,
the maximum annualized adjustment rate is +/-0.20%. This performance comparison
is made at the end of each month. One twelfth (1/12) of this rate is then
applied to each Fund's average net assets for the entire performance period,
giving a dollar amount that will be added to (or subtracted from) the Basic Fee.
B-29
<PAGE> 83
The Capital Growth and Small Cap Funds' performance is calculated based
on its net asset value per share. For purposes of calculating the performance
adjustment, any dividends or capital gains distributions paid by each Fund are
treated as if reinvested in Fund shares at the net asset value per share as of
the record date for payment. The record for the appropriate index is based on
change in value and is adjusted for any cash distributions from the companies
whose securities comprise an index.
For the fiscal years ended July 31, 1996, July 31, 1995, and July 31,
1994, AmSouth received $2,459,885, $2,184,158, and $1,976,523, respectively,
from the Prime Obligations Fund. For the fiscal years ended July 31, 1996, July
31, 1995, and July 31, 1994, AmSouth received $1,588,850, $1,245,378, and
$1,225,805, respectively, from the U.S. Treasury Fund. For the fiscal years
ended July 31, 1996, July 31, 1995, and July 31, 1994, AmSouth received
$133,336, $125,213, and $126,354 for the Tax Exempt Fund. For the fiscal years
ended July 31, 1996, July 31, 1995, and July 31, 1994, investment advisory fees
paid to AmSouth reflect voluntary reductions in investment advisory fees of
$133,340, $125,213, and $126,354, respectively, for the Tax Exempt Fund.
For the fiscal year ended July 31, 1996, AmSouth received $2,706,627,
$669,502, $547,123, $292,620, $2,429,049, $52,834, and $146,775 from the Equity
Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the
Balanced Fund, the Government Income Fund, and Florida Fund, respectively. For
the fiscal year ended July 31, 1996, investment advisory fees paid to AmSouth
reflect voluntary fee reductions of $962, $165,186, $87,670, $169,405, $61,522,
and $171,316, for the Regional Equity Fund, the Bond Fund, the Limited Maturity
Fund, the Balanced Fund, the Government Income Fund, and Florida Fund,
respectively.
For the fiscal year ended July 31, 1995, AmSouth received $1,841,031,
$478,789, $461,002, $253,511, $1,807,557, and $29,835 from the Equity Fund, the
Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the Balanced
Fund and the Government Income Fund, respectively. For the fiscal year ended
July 31, 1995, investment advisory fees paid to AmSouth reflect voluntary fee
reductions of $3,057, $302, $138,571, $76,328, $259,520, and $66,952, for the
Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund,
the Balanced Fund and the Government Income Fund. For the period from
commencement of operations (September 30, 1994) through July 31, 1995, AmSouth
received $124,256 from the Florida Fund, which reflects a voluntary reduction in
fees of $111,697.
For the fiscal year ended July 31, 1994, AmSouth received $1,253,256,
$209,061, $352,480, $280,251, and $1,274,752 from the Equity Fund, the Regional
Equity Fund, the Bond Fund, the Limited Maturity Fund and the Balanced Fund,
respectively. For the fiscal year ended July 31, 1994, investment advisory fees
paid to AmSouth reflect voluntary fee reductions of $165,048, $184,505,
$105,953, $83,946, and $408,227, for the Equity Fund,
B-30
<PAGE> 84
the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund and the
Balanced Fund. For the period from commencement of operations October 1, 1993
through July 31, 1994, AmSouth received $0 from the Government Income Fund,
which reflects a voluntary reduction in fees of $117,065.
Each of the Advisory Agreements provides that AmSouth shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of such Advisory Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of AmSouth in the performance of its
duties, or from reckless disregard by AmSouth of its duties and obligations
thereunder.
Unless sooner terminated, the First Investment Advisory Agreement will
continue in effect until January 31, 1998 as to each of the Money Market Funds,
the Capital Appreciation Funds, the Tax-Free Funds, the Bond Fund and the
Government Income Fund and for successive one-year periods if such continuance
is approved at least annually by the Trust's Board of Trustees or by vote of the
holders of a majority of the outstanding voting Shares of that Fund (as defined
under "GENERAL INFORMATION -Miscellaneous" in the respective Prospectus of the
Money Market Funds, the Capital Appreciation Funds and the Income Funds), and a
majority of the Trustees who are not parties to the First Investment Advisory
Agreement or interested persons (as defined in the 1940 Act) of any party to the
First Investment Advisory Agreement by votes cast in person at a meeting called
for such purpose.
Unless sooner terminated, the Second Investment Advisory Agreement will
continue in effect as to the Limited Maturity Fund until January 31, 1998 and
for successive one-year periods thereafter if such continuance is approved at
least annually by the Trust's Board of Trustees or by vote of the holders of a
majority of the outstanding voting Shares of the Limited Maturity Fund (as
defined under "GENERAL INFORMATION - Miscellaneous" in the Prospectus of the
Income Funds), and a majority of the Trustees who are not parties to the Second
Investment Advisory Agreement or interested persons (as defined in the 1940 Act)
of any party to the Second Investment Advisory Agreement by votes cast in person
at a meeting called for such purpose. The Advisory Agreements are terminable as
to a particular Fund at any time on 60 days' written notice without penalty by
the Trustees, by vote of the holders of a majority of the outstanding voting
Shares of that Fund, or by AmSouth. The Advisory Agreements also terminate
automatically in the event of any assignment, as defined in the 1940 Act.
On December 5, 1990, the First Investment Advisory Agreement was
approved by the Shareholders of the Prime Obligations Fund, the U.S. Treasury
Fund, the Equity Fund, the Regional Equity Fund and the Bond Fund and the Second
Advisory Agreement was approved by the Shareholders of the Limited Maturity
Fund. On March 8, 1993, the First Investment Advisory Agreement was approved by
the Shareholders of the Prime Obligations Fund, the U.S. Treasury Fund, the Tax
Exempt Fund, the Equity Fund, the Regional Equity Fund, the
B-31
<PAGE> 85
Bond Fund, and the Balanced Fund, and the Second Advisory Agreement was approved
by the Shareholders of the Limited Maturity Fund.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Funds may
include descriptions of the investment advisor including, but not limited to,
(i) descriptions of the advisor's operations; and (ii) descriptions of certain
personnel and their functions; and (iii) statistics and rankings related to the
advisor's operations.
AmSouth also serves as Sub-Administrator for the Trust. See
"SUB-ADMINISTRATOR" below.
PORTFOLIO TRANSACTIONS
Pursuant to the Advisory Agreements, AmSouth determines, subject to the
general supervision of the Board of Trustees of the Trust and in accordance with
each Fund's investment objective, policies and restrictions, which securities
are to be purchased and sold by a Fund, and which brokers are to be eligible to
execute such Fund's portfolio transactions. Purchases and sales of portfolio
securities with respect to the Money Market Funds, the Income Funds and the
Balanced Fund (with respect to its debt securities) usually are principal
transactions in which portfolio securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. Purchases
from underwriters of portfolio securities include a commission or concession
paid by the issuer to the underwriter and purchases from dealers serving as
market makers may include the spread between the bid and asked price.
Transactions on stock exchanges involve the payment of a negotiated brokerage
commissions. Transactions in over-the-counter market are generally principal
transactions with dealers. With respect to over-the-counter market, the Trust,
where possible, will deal directly with dealers who make a market in the
securities involved except in those circumstances where better price and
execution are available elsewhere. While AmSouth generally seeks competitive
spreads or commissions, the Trust may not necessarily pay the lowest spread or
commission available on each transaction, for reasons discussed below.
Allocation of transactions, including their frequency, to various
dealers is determined by AmSouth in its best judgment and in a manner deemed
fair and reasonable to Shareholders. The primary consideration is prompt
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, dealers who provide supplemental investment research to
AmSouth may receive orders for transactions on behalf of the Trust. Information
so received is in addition to and not in lieu of services required to be
performed by AmSouth and does not reduce the advisory fees payable to AmSouth by
the Trust. Such information may be useful to AmSouth in serving both the Trust
and other clients and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to AmSouth in carrying out
its obligations to the Trust.
B-32
<PAGE> 86
The Trust will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with AmSouth, BISYS, or their
affiliates, and will not give preference to AmSouth's correspondents with
respect to such transactions, securities, savings deposits, repurchase
agreements, and reverse repurchase agreements.
Investment decisions for each Fund of the Trust are made independently
from those for the other Funds or any other investment company or account
managed by AmSouth. Any such other investment company or account may also invest
in the same securities as the Trust. When a purchase or sale of the same
security is made at substantially the same time on behalf of a Fund and another
Fund, investment company or account, the transaction will be averaged as to
price and available investments will be allocated as to amount in a manner which
AmSouth believes to be equitable to the Fund(s) and such other investment
company or account. In some instances, this investment procedure may adversely
affect the price paid or received by a Fund or the size of the position obtained
by a Fund. To the extent permitted by law, AmSouth may aggregate the securities
to be sold or purchased for a Fund with those to be sold or purchased for the
other Funds or for other investment companies or accounts in order to obtain
best execution. As provided by each of the Advisory Agreements, in making
investment recommendations for the Trust, AmSouth will not inquire or take into
consideration whether an issuer of securities proposed for purchase or sale by
the Trust is a customer of AmSouth, its parent or its subsidiaries or affiliates
and, in dealing with its customers, AmSouth, its parent, subsidiaries, and
affiliates will not inquire or take into consideration whether securities of
such customers are held by the Trust.
During the fiscal year ended July 31, 1996, the Equity Fund paid
aggregate brokerage commissions in the amount of $265,581.82. During the fiscal
year ended July 31, 1996, the Regional Equity Fund paid aggregate brokerage
commissions in the amount of $167,771.64. During the fiscal year ended July 31,
1996, the Balanced Fund paid aggregate brokerage commissions in the amount of
$489,564.65.
GLASS-STEAGALL ACT
In 1971, the United States Supreme Court held in INVESTMENT COMPANY
INSTITUTE V. CAMP that the Federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a mutual fund for
the collective investment of managing agency accounts. Subsequently, the Board
of Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment advisor, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in BOARD OF
B-33
<PAGE> 87
GOVERNORS OF THE FEDERAL RESERVE SYSTEM V. INVESTMENT COMPANY INSTITUTE that the
Board did not exceed its authority under the Holding Company Act when it adopted
its regulation and interpretation authorizing bank holding companies and their
non-bank affiliates to act as investment advisors to registered closed-end
investment companies. In the BOARD OF GOVERNORS case, the Supreme Court also
stated that if a national bank complied with the restrictions imposed by the
Board in its regulation and interpretation authorizing bank holding companies
and their non-bank affiliates to act as investment advisors to investment
companies, a national bank performing investment advisory services for an
investment company would not violate the Glass-Steagall Act.
AmSouth believes that it possesses the legal authority to perform the
services for each Fund contemplated by the Advisory Agreements regarding that
Fund and described in the Prospectus of that Fund and this Statement of
Additional Information and has so represented in the Advisory Agreement
regarding that Fund. Future changes in either federal or state statutes and
regulations relating to the permissible activities of banks or bank holding
companies and the subsidiaries or affiliates of those entities, as well as
further judicial or administrative decisions or interpretations of present and
future statutes and regulations, could prevent or restrict AmSouth from
continuing to perform such services for the Trust. Depending upon the nature of
any changes in the services which could be provided by AmSouth, the Board of
Trustees of the Trust would review the Trust's relationship with AmSouth and
consider taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of AmSouth or its affiliated and
correspondent banks in connection with customer purchases of Shares of the
Trust, the Banks might be required to alter materially or discontinue the
services offered by them to customers. It is not anticipated, however, that any
change in the Trust's method of operations would affect its net asset value per
Share or result in financial losses to any customer.
MANAGER AND ADMINISTRATOR
ASO Services Company serves as general manager and administrator (the
"Administrator") to each Fund of the Trust pursuant to the Management and
Administration Agreement dated as of April 1, 1996 (the "Administration
Agreement"). During the Trust's fiscal year ended July 31, 1996 ASO Services
Company succeeded BISYS Fund Services as Administrator on April 1. 1996. ASO
Services Company is a wholly-owned subsidiary of BISYS. The Administrator
assists in supervising all operations of each Fund (other than those performed
by AmSouth under the Advisory Agreements, those performed by Union Bank of
California, N.A. ("Union Bank of California") under its custodial services
agreement with the Trust and those performed by BISYS Fund Services Ohio, Inc.
under its transfer agency and fund accounting agreements with the Trust).
On October 1, 1993, The Winsbury Company and its affiliated companies,
including the Winsbury Service Corporation, were acquired by The BISYS Group,
Inc. a publicly held
B-34
<PAGE> 88
company which is a provider of information processing, loan servicing and 401(k)
administration and record-keeping services to and through banking and other
financial organizations.
Under the Administration Agreement, the Administrator has agreed to
monitor the net asset value per Share of the Money Market Funds, to maintain
office facilities for the Trust, to maintain the Trust's financial accounts and
records, and to furnish the Trust statistical and research data and certain
bookkeeping services, and certain other services required by the Trust. The
Administrator prepares annual and semi-annual reports to the Securities and
Exchange Commission, prepares Federal and state tax returns, prepares filings
with state securities commissions, and generally assists in supervising all
aspects of the Trust's operations other than those performed by AmSouth under
the Advisory Agreements, those by Union Bank of California under its custodial
services agreement with the Trust and those performed by BISYS Fund Services
Ohio, Inc. under its transfer agency and fund accounting agreements with the
Trust. Under the Administration Agreement, the Administrator may delegate all or
any part of its responsibilities thereunder.
Under the Administration Agreement for expenses assumed and services
provided as manager and administrator, the Administrator receives a fee from
each Fund equal to the lesser of (a) a fee computed at the annual rate of twenty
one-hundredths of one percent (.20%) of such Fund's average daily net assets; or
(b) such fee as may from time to time be agreed upon in writing by the Trust and
the Administrator. A fee agreed to from time to time by the Trust and the
Administrator may be significantly lower than the fee calculated at the annual
rate and the effect of such lower fee would be to lower a Fund's expenses and
increase the net income of such Fund during the period when such lower fee is in
effect. Each Fund also bears expenses incurred in pricing securities owned by
the Fund.
For the fiscal years ended July 31, 1996, July 31, 1995 and July 31,
1994, BISYS and ASO Services Company received $1,229,842, $1,092,079 and
$988,262, respectively, from the Prime Obligations Fund. For the fiscal years
ended July 31, 1996, July 31, 1995 and July 31, 1994, BISYS and ASO Services
Company received $794,425, $622,689, and $612,904, respectively, from the U.S.
Treasury Fund. For the fiscal years ended July 31, 1996, July 31, 1995 and July
31, 1994, BISYS and ASO Services Company received $133,336, $125,213 and
$126,354, respectively, from the Tax Exempt Fund. For the fiscal year ended
July, 1996, management and administration fees reflect voluntary reductions in
management and administration fees of $1,000 for the Tax Exempt Fund.
For the fiscal year ended July 31, 1996, BISYS and ASO Services Company
received $406,464, $100,491, $131,382, $70,255, $389,624, $17,620 and $48,936
from the Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited
Maturity Fund, the Balanced Fund and the Government Income Fund, and the Florida
Fund respectively. For the fiscal year ended July 31, 1996, management and
administration fees reflect voluntary fee reductions of $309,086, $67,125,
$87,790, $46,757, $259,990, $17,567, and $48,938 for the Equity
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Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the
Balanced Fund, Government Income Fund and the Florida Fund, respectively.
For the fiscal year ended July 31, 1995, BISYS received $276,383,
$71,818, $110,640, $60,867, $308,216, and $6,300 from the Equity Fund, the
Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the Balanced
Fund and the Government Income Fund, respectively. For the fiscal year ended
July 31, 1995, management and administration fees paid to BISYS reflect
voluntary fee reductions of $184,639, $47,954, $73,844, $40,622, $208,553, and
$23,481 for the Equity Fund, the Regional Equity Fund, the Bond Fund, the
Limited Maturity Fund, the Balanced Fund and the Government Income Fund,
respectively. For the period from commencement of operations (September 30,
1994) through July 31, 1995, BISYS received $50,848 from the Florida Fund, which
reflects a voluntary reduction in fees of $21,753.
For the fiscal year ended July 31, 1994, BISYS received $212,573,
$58,991, $84,589, $67,244, and $252,259 from the Equity Fund, the Regional
Equity Fund, the Bond Fund, the Limited Maturity Fund and the Balanced Fund,
respectively. For the fiscal year ended July 31, 1994, management and
administration fees paid to BISYS reflect voluntary fee reductions of $142,003,
$39,401, $56,467, $44,817 and $168,486 for the Equity Fund, the Regional Equity
Fund, the Bond Fund, the Limited Maturity Fund and the Balanced Fund,
respectively. For the period from commencement of operations (October 1, 1993)
through July 31, 1994, BISYS received $0 from the Government Income Fund, which
reflects a voluntary reduction in fees of $36,020.
The Administration Agreement shall, unless sooner terminated as
provided in the Administration Agreement (described below), continue until
December 31, 2000. Thereafter, the Administration Agreement shall be renewed
automatically for successive five-year terms, unless written notice not to renew
is given by the non-renewing party to the other party at least 60 days' prior to
the expiration of the then-current term. The Administration Agreement is
terminable with respect to a particular Fund only upon mutual agreement of the
parties to the Administration Agreement and for cause (as defined in the
Administration Agreement) by the party alleging cause, on not less than 60 days'
notice by the Trust's Board of Trustees or by the Administrator.
The Administration Agreement provides that the Administrator shall not
be liable for any loss suffered by the Trust in connection with the matters to
which the Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
from the reckless disregard by the Administrator of its obligations and duties
thereunder.
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EXPENSES
Each Fund bears the following expenses relating to its operations:
taxes, interest, any brokerage fees and commissions, fees of the Trustees of the
Trust, Securities and Exchange Commission fees, state securities qualification
fees, costs of preparing and printing prospectuses for regulatory purposes and
for distribution to current Shareholders, outside auditing and legal expenses,
advisory and administration fees, fees and out-of-pocket expenses of the
custodian and the transfer agent, dividend disbursing agents fees, fees and
out-of-pocket expenses for fund accounting services, expenses incurred for
pricing securities owned by it, certain insurance premiums, costs of maintenance
of its existence, costs of Shareholders' and Trustees' reports and meetings, and
any extraordinary expenses incurred in its operation.
If total expenses incurred by any of the Funds in any fiscal year
exceed expense limitations imposed by applicable state securities regulations,
AmSouth and the Administrator will reduce their own fees by the amount of such
excess in proportion to their respective fees. As of the date of the
Prospectuses and this Statement of Additional Information, there are no state
expense limitations applicable to the Trust. Any fee reduction by AmSouth and
the Administrator will be estimated daily and reconciled on a monthly basis.
Fees imposed upon customer accounts by AmSouth or its affiliated or
correspondent banks for cash management services are not included within Trust
expenses for purposes of any such expense limitation.
SUB-ADMINISTRATORS
Effective August 1, 1995, AmSouth was retained by BISYS as the
Sub-Administrator to the Trust pursuant to an agreement between the
Administrator and AmSouth. On April 1, 1996, AmSouth entered into an Agreement
with AmSouth Services Corporation as the Sub- Administrator of the Trust.
Pursuant to this agreement, AmSouth Bank of Alabama has assumed certain of the
Administrator's duties, for which AmSouth receives a fee, paid by the
Administrator, calculated at an annual rate of up to (.10%) ten one-hundredths
of one percent of each Fund's average net assets. For the fiscal year ended July
31, 1996, AmSouth received $1,125,000 with respect to the Trust.
Effective April 1, 1996 BISYS Fund Services was retained by the
Administrator as the Sub-Administrator to the Trust. Pursuant to its agreement
with the Administrator, BISYS Fund Services is entitled to compensation as
mutually agreed upon from time to time by it and the Administrator.
DISTRIBUTOR
BISYS serves as distributor to each Fund of the Trust pursuant to the
Distribution Agreement dated as of October 1, 1993 (the "Distribution
Agreement"). The Distribution Agreement provides that, unless sooner terminated
it will continue in effect until January 31, 1998, and from year to year
thereafter if such continuance is approved at least annually (i) by
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the Trust's Board of Trustees or by the vote of a majority of the outstanding
Shares of the Funds or Fund subject to such Distribution Agreement, and (ii) by
the vote of a majority of the Trustees of the Trust who are not parties to such
Distribution Agreement or interested persons (as defined in the Investment
Company Act of 1940) of any party to such Distribution Agreement, cast in person
at a meeting called for the purpose of voting on such approval. The Distribution
Agreement may be terminated in the event of any assignment, as defined in the
1940 Act.
SHAREHOLDER SERVICING PLAN
A Shareholder Servicing Plan for the Trust was initially approved on
December 6, 1995 by the Trust's Board of Trustees, including a majority of the
trustees who are not interested persons of the Trust (as defined in the 1940
Act) and who have no direct or indirect financial interest in the Shareholder
Servicing Plan (the "Independent Trustees"). The Shareholder Servicing Plan
reflects the creation of the Classic Shares, and provides for fees only upon
that Class. Currently, only the Money Market Funds offer Classic Shares.
The Shareholder Servicing Plan may be terminated with respect to any
Money Market Fund by a vote of a majority of the Independent Trustees, or by a
vote of a majority of the outstanding Classic Shares of that Money Market Fund.
The Shareholder Servicing Plan may be amended by vote of the Trust's Board of
Trustees, including a majority of the Independent Trustees, cast in person at a
meeting called for such purpose, except that any change in the Shareholder
Servicing Plan that would materially increase the shareholder servicing fee with
respect to a Money Market Fund requires the approval of the holders of that
Money Market Fund's Classic Class. The Trust's Board of Trustees will review on
a quarterly and annual basis written reports of the amounts received and
expended under the Shareholder Servicing Plan (including amounts expended by the
Distributor to Participating Organizations pursuant to the Servicing Agreements
entered into under the Shareholder Servicing Plan) indicating the purposes for
which such expenditures were made.
The fee of .25% of average daily net assets of the Classic Shares of
each Money Market Fund payable under the Trust's Shareholder Servicing Plan, to
which Classic Shares of each Money Market Fund of the Trust are subject, is
described in the Money Market Fund Prospectus.
For the fiscal year ended July 31, 1996 BISYS received $4,607 with
respect to the Classic Shares of the AmSouth U.S. Treasury Fund (which reflects
a fee reduction of $6,912); $41,777 with respect to the Classic Shares of the
Prime Obligations Fund (which reflects a fee reduction of $62,669); and $4,960
with respect to the Classic Shares of the Tax-Exempt Fund (which reflects a fee
reduction of $7,440). For the fiscal year ended July 31, 1995 no fees were paid
by any Money Market Fund under the Shareholder Servicing Plan.
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<PAGE> 92
CUSTODIAN
Union Bank of California (the "Custodian") serves as custodian to each
Fund of the Trust pursuant to a Custodial Services Agreement with the Trust. The
Custodian's responsibilities include safeguarding and controlling the Trust's
cash and securities, handling the receipt and delivery of securities, and
collecting interest and dividends on the Trust's investments.
TRANSFER AGENT AND FUND ACCOUNTING SERVICES
BISYS Fund Services Ohio, Inc. ("BISYS Ohio") serves as transfer agent
to each Fund of the Trust pursuant to a Transfer Agency and Shareholder Service
Agreement with the Trust.
BISYS Ohio also provides fund accounting services to each of the Funds
pursuant to a Fund Accounting Agreement with the Trust. Under the Fund
Accounting Agreement, BISYS Ohio receives a fee from each Fund at the annual
rate of 0.03% of such Fund's average daily net assets, plus out-of-pocket
expenses, subject to a minimum annual fee of $40,000 for each tax exempt fund
and $30,000 for each taxable Fund and the Money Market Funds may be subject to
an additional fee of $10,000 for each Class. For the fiscal years ended July 31,
1996, July 31, 1995 and July 31, 1994, BISYS Ohio received $254,753 and
$289,092, respectively, from the Prime Obligations Fund. For the fiscal years
ended July 31, 1996, July 31, 1995 and July 31, 1994, BISYS Ohio received
$147,544 and $179,572, respectively, from the U.S. Treasury Fund. For the fiscal
years ended July 31, 1996, July 31, 1995 and July 31, 1994, BISYS Ohio received
$32,145 and $59,090, respectively, from the Tax Exempt Fund. For the fiscal
years ended July 31, 1996, July 31, 1995, and July 31, 1994, BISYS Ohio received
$145,583, $114,437, and $120,225 respectively, from the Equity Fund. For the
fiscal years ended July 31, 1996, July 31, 1995, and July 31, 1994, BISYS Ohio
received $36,049, $30,766, and $79,071, respectively, from the Regional Equity
Fund. For the fiscal years ended July 31, 1996, July 31, 1995, and July 31,
1994, BISYS Ohio received $46,931, $50,807, and $64,501, respectively, from the
Bond Fund. For the fiscal years ended July 31, 1996, July 31, 1995, and July 31,
1994, BISYS Ohio received $26,388, $28,353, and $58,805, respectively, from the
Limited Maturity Fund. For the fiscal years ended July 31, 1996, July 31, 1995,
and July 31, 1994, BISYS Ohio received $141,803, $128,452, and $133,846,
respectively, from the Balanced Fund for fund accounting services and
reimbursement of expenses. For the fiscal year ended July 31, 1996, July 31,
1995 and for the period from commencement of operations (October 1, 1993)
through July 31, 1994, BISYS Ohio received $7,849, $12,846 and $28,546,
respectively, from the Government Income Fund for fund accounting services and
reimbursement of expenses. For the fiscal year ended July 31, 1996 and for the
period from commencement of operations (September 30, 1994) through July 31,
1995, BISYS Ohio received $21,614 and $22,258 from the Florida Fund for fund
accounting services and reimbursement of expenses.
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<PAGE> 93
AUDITORS
The financial information appearing in the Prospectuses under
"FINANCIAL HIGHLIGHTS" has been derived from financial statements of the Trust
appearing in this Statement of Additional Information which have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
appearing elsewhere herein, and are included in reliance upon such report and on
the authority of such firm as experts in auditing and accounting. Coopers &
Lybrand L.L.P.'s address is 100 East Broad Street, Columbus, Ohio 43215.
LEGAL COUNSEL
Ropes & Gray, One Franklin Square, 1301 K Street, N.W., Suite 800 East,
Washington, DC 20005-3333 are counsel to the Trust.
PERFORMANCE INFORMATION
GENERAL
From time to time, the Trust may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principals (such
as the effects of inflation, the power of compounding and the benefits of
dollar-cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for one or more of the
Funds within the Trust; (5) descriptions of investment strategies for one or
more of such Funds; (6) descriptions or comparisons of various investment
products, which may or may not include the Funds; (7) comparisons of investment
products (including the Funds) with relevant market or industry indices or other
appropriate benchmarks; and (8) discussions of fund rankings or ratings by
recognized rating organizations.
YIELDS OF THE MONEY MARKET FUNDS
As summarized in the Prospectus of the Money Market Funds under the
heading "Performance Information," the "yield" of each of those Funds for a
seven-day period (a "base period") will be computed by determining the "net
change in value" (calculated as set forth below) of a hypothetical account
having a balance of one share at the beginning of the period, dividing the net
change in account value by the value of the account at the beginning of the base
period to obtain the base period return, and multiplying the base period return
by 365/7 with the resulting yield figure carried to the nearest hundredth of one
percent. Net changes in value of a hypothetical account will include the value
of additional shares purchased with dividends from the original share and
dividends declared on both the original share and any
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<PAGE> 94
such additional shares, but will not include realized gains or losses or
unrealized appreciation or depreciation on portfolio investments. Yield may also
be calculated on a compound basis (the "effective yield") which assumes that net
income is reinvested in Fund shares at the same rate as net income is earned for
the base period.
The Tax Exempt Fund may also advertise a "tax equivalent yield" and a
"tax equivalent effective yield." Tax equivalent yield will be computed by
dividing that portion of the Tax Exempt Fund's yield which is tax-exempt by the
difference between one and a stated income tax rate and adding the product to
that portion, if any, of the yield of the Fund that is not tax-exempt. The tax
equivalent effective yield for the Tax Exempt Fund is computed by dividing that
portion of the effective yield of the Tax Exempt Fund which is tax-exempt by the
difference between one and a stated income tax rate and adding the product to
that portion, if any, of the effective yield of the Fund that is not tax-exempt.
The yield and effective yield of each of the Money Market Funds and the
tax equivalent yield and the tax equivalent effective yield of the Tax Exempt
Fund will vary in response to fluctuations in interest rates and in the expenses
of the Fund. For comparative purposes the current and effective yields should be
compared to current and effective yields offered by competing financial
institutions for that base period only and calculated by the methods described
above.
For the seven-day period ended July 31, 1996, the yield and effective
yield of the Premier Class of each Money Market Fund calculated as described
above was as follows:
<TABLE>
<CAPTION>
Effective
Fund Yield Yield
---- ----- -----
<S> <C> <C>
Prime Obligations Fund 4.78% 4.89%
U.S. Treasury Fund 4.55% 4.66%
Tax Exempt Fund 3.00% 3.05%
</TABLE>
For the 7-day period ending July 31, 1996, the tax equivalent yield and
the tax equivalent effective yield of the Premier Class of the Tax Exempt Fund
were 4.97% and 5.05%, respectively, and the tax equivalent yield and the
tax-equivalent effective yield of the Classic Class of the Tax Exempt Fund was
4.80% and 4.87%, respectively, which reflect the amount of income subject to
federal income taxation that a taxpayer in a 39.6% tax bracket would have to
earn in order to obtain the same after-tax income as that derived from the
"yield" and "effective yield," respectively, of the Tax Exempt Fund.
For the seven-day period ended July 31, 1996, the yield and effective
yield of the Classic Class of each Money Market Fund calculated as described
above was as follows:
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<PAGE> 95
<TABLE>
<CAPTION>
Effective
Fund Yield Yield
---- ----- -----
<S> <C> <C>
Prime Obligations Fund 4.68% 4.79%
U.S. Treasury Fund 4.45% 4.55%
Tax Exempt Fund 2.90% 2.94%
</TABLE>
YIELDS OF THE CAPITAL APPRECIATION FUNDS AND THE INCOME FUNDS
As summarized in the Prospectuses under the heading "Performance
Information," yields of the Capital Appreciation Funds, the Income Funds and the
Tax-Free Funds will be computed by annualizing net investment income per share
for a recent 30-day period and dividing that amount by the maximum offering
price per share (reduced by any undeclared earned income expected to be paid
shortly as a dividend) on the last trading day of that period. Net investment
income will reflect amortization of any market value premium or discount of
fixed-income securities (except for obligations backed by mortgages or other
assets) and may include recognition of a pro rata portion of the stated dividend
rate of dividend paying portfolio securities. The yield of each of the Capital
Appreciation Funds and the Income Funds will vary from time to time depending
upon market conditions, the composition of the Fund's portfolios and operating
expenses of the Trust allocated to each Fund. These factors and possible
differences in the methods used in calculating yield should be considered when
comparing a Fund's yield to yields published for other investment companies and
other investment vehicles. Yield should also be considered relative to changes
in the value of the Fund's shares and to the relative risks associated with the
investment objectives and policies of the Capital Appreciation Funds and the
Income Funds.
The Tax-Free Funds may also advertise a "tax equivalent yield" and a
"tax equivalent effective yield." Tax equivalent yield will be computed by
dividing that portion of each Fund's yield which is tax-exempt by the difference
between one and a stated income tax rate and adding the product to that portion,
if any, of the yield of the Fund that is not tax-exempt. The tax equivalent
effective yield for the Tax-Free Funds is computed by dividing that portion of
the effective yield of the Fund which is tax-exempt by the difference between
one and a stated income tax rate and adding the product to that portion, if any,
of the effective yield of the Fund that is not tax-exempt.
At any time in the future, yields and total return may be higher or
lower than past yields and there can be no assurance that any historical results
will continue.
Investors in the Capital Appreciation Funds and the Income Funds are
specifically advised that share prices, expressed as the net asset values per
share, will vary just as yields will vary.
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<PAGE> 96
For the 30-day period ending July 31, 1996, the Equity Fund had a yield
of 1.70%, the Regional Equity Fund had a yield of 1.25%, the Balanced Fund had a
yield of 3.56%, the Bond Fund had a yield of 6.09%, the Limited Maturity Fund
had a yield of 5.63%, the Government Income Fund had a yield of 6.09% and the
Florida Fund had a yield of 4.05%.
CALCULATION OF TOTAL RETURN
Total Return is a measure of the change in value of an investment in a
Fund over the period covered, assuming the investor paid the current maximum
applicable sales charge on the investment and that any dividends or capital
gains distributions were reinvested in the Fund immediately rather than paid to
the investor in cash. The formula for calculating Total Return includes four
steps: (1) adding to the total number of shares purchased by a hypothetical
$1,000 investment in the Fund all additional shares which would have been
purchased if all dividends and distributions paid or distributed during the
period had been immediately reinvested; (2) calculating the value of the
hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares owned at the end of the period by the net
asset value per share on the last trading day of the period; (3) assuming
redemption at the end of the period; and (4) dividing this account value for the
hypothetical investor by the initial $1,000 investment and annualizing the
result for periods of less than one year.
For the fiscal year ended July 31, 1996, annual total return was 5.10%,
4.93% and 3.15% for the Premier Shares and Classic Shares of the Prime
Obligations Fund, the U.S.
Treasury Fund, and the Tax Exempt Fund, respectively.
For the fiscal year ended July 31, 1996, annual total return was
11.09%, 13.10%, 4.40%, 4.74%, 8.37%, 4.91% and 4.24% for the Equity Fund, the
Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the Balanced
Fund, Government Income Fund, and the Florida Fund, respectively.
For the five-year period ended July 31, 1996 the average annual total
return was 4.04% for the Premier Shares and the Classic Shares of the Prime
Obligations Fund; 3.89% for the Premier Shares and the Classic Shares of the
U.S. Treasury Fund; and 2.72% for the Premier Shares and the Classic Shares of
the Tax Exempt Fund. For the five-year period ended July 31, 1996 the average
annual total return was 11.91%, 7.32%, 5.58%, and 12.70% the Equity Fund, the
Bond Fund, the Limited Maturity Fund, and the Regional Equity Fund,
respectively.
For the period from December 19, 1991 (commencement of operations)
through July 31, 1996, average annual total return for the Balanced Fund was
10.55%. For the period from October 1, 1993 (commencement of operations) through
July 31, 1996, average annual total return was 3.43% for the Government Income
Fund. For the period from
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<PAGE> 97
September 30, 1994 (commencement of operations) through July 31, 1996, average
annual total return was 4.12% for the Florida Fund.
For the period from December 1, 1988 (commencement of operations of the
Equity Fund, the Regional Equity Fund and the Bond Fund) through July 31, 1996,
average annual total return was 12.10%, 13.47% and 7.95% for the Equity Fund,
the Regional Equity Fund and the Bond Fund, respectively. For the period from
February 1, 1989 (commencement of operations) through July 31, 1996, the average
annual total return for the Limited Maturity Fund was 6.75%. For the period from
August 8, 1988 (commencement of operations) through July 31, 1996, average
annual total return was 5.48% for the Premier Shares and for the Classic Shares
of the Prime Obligations Fund. For the period from September 8, 1988
(commencement of operations) through July 31, 1996, average annual total return
was 5.28% for the Premier Shares and for the Classic Shares of the U.S. Treasury
Fund. For the period from June 27, 1990 (commencement of operations) through
July 31, 1996, average annual total return was 3.08% for the Premier Shares and
for the Classic Shares of the Tax Exempt Fund.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. From time to time, performance information for
the Funds showing their average annual total return and/or yield may be included
in advertisements or in information furnished to present or prospective
Shareholders and the ranking of those performance figures relative to such
figures for groups of mutual funds categorized by Lipper Analytical Services as
having the same investment objectives may be included in advertisements.
Total return and/or yield may also be used to compare the performance
of the Funds against certain widely acknowledged standards or indices for stock
and bond market performance. The Standard & Poor's Composite Index of 500 Stocks
(the "S&P 500") is a market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 Stocks relative to the base period
1941-43. The S&P 500 is composed almost entirely of common stocks of companies
listed on the New York Stock Exchange, although the common stocks of a few
companies listed on the American Stock Exchange or traded over-the-counter are
included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Price Index (the "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ")
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<PAGE> 98
system. Only those over-the-counter stocks having only one market maker or
traded on exchanges are excluded.
The Shearson Lehman Government Bond Index (the "SL Government Index")
is a measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage backed securities, flower bonds and foreign targeted issues
are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized
statistical rating agency.
ALL FUNDS. Current yields or performance will fluctuate from time to time and
are not necessarily representative of future results. Accordingly, a Fund's
yield or performance may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and
performance are functions of a quality, composition, and maturity, as well as
expenses allocated to the Fund. Fees imposed upon customer accounts by AmSouth
or its affiliated or correspondent banks for cash management services will
reduce a Fund's effective yield to Customers.
ADDITIONAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES
The Trust was organized as a Massachusetts business trust by the
Agreement and Declaration of Trust, dated October 1, 1987, under the name "Shelf
Registration Trust IV." The Trust's name was changed to "The ASO Outlook Group"
as of April 12, 1988 and to "AmSouth Mutual Funds" as of August 19, 1993 by
amendments to the Agreement and Declaration of Trust. A copy of the Trust's
Agreement and Declaration of Trust, as amended (the "Declaration of Trust") is
on file with the Secretary of State of The Commonwealth of Massachusetts. The
Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of Shares, which are units of beneficial interest. The Trust presently
has fourteen series of Shares which represent interests in the Prime Obligations
Fund, the AmSouth U.S. Treasury Fund, the Tax Exempt Fund, the Equity Fund, the
Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the Municipal
Bond Fund, the Government Income Fund, the Florida Fund, the Capital Growth
Fund, the Small Cap Fund, and the Equity Income Fund. The Trust's Declaration of
Trust authorizes the Board of Trustees to divide or redivide any unissued Shares
of the Trust into one or more additional series.
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<PAGE> 99
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Trustees may grant in its
discretion. When issued for payment as described in the Prospectuses and this
Statement of Additional Information, the Trust's Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
Shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general assets
not belonging to any particular Fund which are available for distribution.
As described in the text of the Prospectuses following the caption
"GENERAL INFORMATION -- Description of the Trust and its Shares," Shares of the
Trust are entitled to one vote per share (with proportional voting for
fractional shares) on such matters as Shareholders are entitled to vote.
Shareholders vote in the aggregate and not by series or class on all matters
except (i) when required by the 1940 Act, shares shall be voted by individual
series, (ii) when the Trustees have determined that the matter affects only the
interests of one or more series or class, then only Shareholders of such series
or class shall be entitled to vote thereon, and (iii) only the holders of
Classic Shares will be entitled to vote on matters submitted to Shareholder vote
with regard to the Shareholder Servicing Plan. There will normally be no
meetings of Shareholders for the purposes of electing Trustees unless and until
such time as less than a majority of the Trustees have been elected by the
Shareholders, at which time the Trustees then in office will call a
Shareholders' meeting for the election of Trustees. In addition, Trustees may be
removed from office by a written consent signed by the holders of two-thirds of
the outstanding voting Shares of the Trust and filed with the Trust's custodian
or by vote of the holders of two-thirds of the outstanding voting Shares of the
Trust at a meeting duly called for the purpose, which meeting shall be held upon
the written request of the holders of not less than 10% of the outstanding
voting Shares of any Fund. Except as set forth above, the Trustees shall
continue to hold office and may appoint their successors.
SHAREHOLDER LIABILITY
Under Massachusetts law, Shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Trust's Declaration of Trust disclaims Shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in every agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for indemnification
out of a Fund's property for all loss and expense of any Shareholder of such
Fund held liable on account of being or having been a Shareholder. Thus, the
risk of a Shareholder incurring financial loss on account of Shareholder
liability is limited to circumstances in which a Fund would be unable to meet
its obligations.
B-46
<PAGE> 100
The Trust is registered with the Securities and Exchange Commission as
a management investment company. Such registration does not involve supervision
by the Securities and Exchange Commission of the management or policies of the
Trust.
As of November 16, 1996, the trustees and officers of the Trust, as a
Group, owned less than 1% of the Premier Shares and of the Classic Shares of any
of the Prime Obligations Fund, the U.S. Treasury Fund and the Tax Exempt Fund,
and the Equity Fund, the Regional Equity Fund, the Tax Exempt Fund, the Bond
Fund, the Limited Maturity Fund, the Balanced Fund, the Municipal Bond Fund, the
Government Income Fund, and the Florida Fund. As of November 16, 1996, AmSouth,
1901 Sixth Avenue-North, Birmingham, Alabama, was the Shareholder of record of
92.56% of the outstanding voting Shares of the Premier Shares of the Prime
Obligations Fund, 97.56% of the outstanding voting Shares of the Premier Shares
of the U.S. Treasury Fund, 98.46% of the outstanding voting Shares of the
Premier Shares of the Tax Exempt Fund, 90.76% of the outstanding voting Shares
of the Equity Fund, 66.89% of the outstanding voting Shares of the Regional
Equity Fund, 95.13% of the outstanding voting Shares of the Bond Fund, 91.02% of
the outstanding voting Shares of the Limited Maturity Fund, 87.63% of the
outstanding voting Shares of the Balanced Fund, and 88.38% of the outstanding
voting Shares of the Florida Fund. 59.83% of the outstanding voting Shares of
the Premier Class of the Prime Obligations Fund, 72.76% of the outstanding
voting Shares of the Premier Class of the U.S. Treasury Fund, 74.73% of the
outstanding voting Shares of the Premier Class of the Tax Exempt Fund, 42.68% of
the outstanding voting Shares of the Equity Fund, 39.72% of the outstanding
voting Shares of the Regional Equity Fund, 82.55% of the outstanding voting
Shares of the Bond Fund, 59.77% of the outstanding voting Shares of the Limited
Maturity Fund, 51.42% of the outstanding voting Shares of the Balanced Fund, and
88.38% of the outstanding voting Shares of the Florida Fund were also owned
beneficially by AmSouth because it possessed or shared investment or voting
power with respect to such Shares. Under the 1940 Act, AmSouth may be deemed to
be a controlling person of the Premier Class of the Prime Obligations Fund, the
Premier Class of the Tax Exempt Fund, the Equity Fund, the Regional Equity Fund,
the Bond Fund, the Limited Maturity Fund, the Balanced Fund and the Florida
Fund. The ultimate parent of AmSouth is AmSouth Bancorporation.
As of November 16, 1996 National Financial Services Corporation, One
World Financial Center, 200 Liberty Street, New York, New York 10281, was the
Shareholder of record of 92.34% of the outstanding voting Shares of the Classic
Shares of the Prime Obligations Fund, 87.45% of the outstanding voting Shares of
the Classic Shares of the Tax Exempt Fund, and 25.45% of the Government Income
Fund.
The following table indicates each additional person known by the group
to own beneficially 5% or more of the Shares of a Fund of the Trust as of
November 16, 1996:
B-47
<PAGE> 101
Prime Obligations Fund -- Classic Shares
----------------------------------------
<TABLE>
<CAPTION>
Number of
Name and Address Shares Percentage
- ---------------- ------ ----------
<S> <C> <C>
Wayne Killian 6,062,258.90 5.72%
403 Cagnouster North
Shoal Creek, AL 35242
<CAPTION>
U.S. Treasury Fund -- Classic Shares
------------------------------------
Number of
Name and Address Shares Percentage
- ---------------- ------ ----------
<S> <C> <C>
Association of Edison 702,190.39 5.28%
Illumination
600 18th Street North
Birmingham, AL 35291
</TABLE>
The Prospectuses of the Funds and this Statement of Additional
Information omit certain of the information contained in the Registration
Statement filed with the Securities and Exchange Commission. Copies of such
information may be obtained from the Securities and Exchange Commission upon
payment of the prescribed fee.
The Prospectuses of the Funds and this Statement of Additional
Information are not an offering of the securities herein described in any state
in which such offering may not lawfully be made. No salesman, dealer, or other
person is authorized to give any information or make any representation other
than those contained in the Prospectuses of the Funds and this Statement of
Additional Information.
B-48
<PAGE> 102
APPENDIX
COMMERCIAL PAPER RATINGS. Commercial paper ratings of Standard & Poor's
Corporation ("S&P") are current assessments of the likelihood of timely payment
of debt considered short-term in the relevant market. Commercial paper rated A-1
by S&P indicates that the degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted A-1+. Commercial paper rated A-2 by S&P indicates that capacity for
timely payment on issues is satisfactory. However, the relative degree of safety
is not as high as for issues designated A- 1. Commercial paper rated A-3
indicates capacity for timely payment. It is, however, more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations. Commercial paper rated B is regarded as having only speculative
capacity for timely payment. Commercial paper rated C is assigned to short-term
debt obligations with a doubtful capacity for payment. Commercial paper rated D
represents an issue in default or when interest payments or principal payments
are not made on the date due, even if the applicable grace period has not
expired.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Issuers rated Prime-1 (or related
supporting institutions) are considered to have a superior ability for repayment
of senior short-term debt obligations. Issuers rated Prime-2 (or related
supporting institutions) have a strong ability for repayment of senior
short-term promissory obligations. This will normally be evidenced by many of
the characteristics of Prime-1 rated issuers, but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained. Issuers rated
Prime-3 (or related supporting institutions) have an acceptable ability for
repayment of short-term obligations. The effect of industry characteristics and
market composition may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt protection measurements
and may require relatively high financial leverage. Adequate alternate liquidity
is maintained. Issuers rated Not Prime do not fall within any of the Prime
rating categories.
Commercial paper rated F-1 by Fitch Information Service ("Fitch") is
regarded as having the strongest degree of assurance for timely payments.
Commercial paper rated F-2 by Fitch is regarded as having a satisfactory degree
of assurance of timely payment, but that margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings. Commercial paper rated F-3 has an adequate
degree of assurance for timely payment but near-term adverse changes could cause
these securities to be rated below investment grade. Issues rated F-S have
characteristics suggesting a minimal degree of assurance for timely payment and
are vulnerable to near term adverse changes in financial and
B-49
<PAGE> 103
economic conditions. The plus (+) sign is used after a rating symbol to
designate the relative position of an issuer within the rating category.
CORPORATE DEBT AND STATE AND MUNICIPAL BOND RATINGS
STANDARD & POOR'S CORPORATION. Debt rated AAA has the highest rating
assigned by S&P. Capacity to pay interest and repay principal is extremely
strong. Debt rated AA has a very strong capacity to pay interest and to repay
principal and differs from the highest rated issues only in small degree. Debt
rated A has a strong capacity to pay interest and repay principal although it is
somewhat more susceptible to adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories. Debt rated BBB is
regarded as having an adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
the higher rated categories.
BB -- Debt rated "BB" has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
B -- Debt rated "B" has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
CCC -- Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal. The "CCC" rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied "B" or "B-" rating.
CC -- The rating "CC" typically is applied to debt subordinated to
senior debt that is assigned an actual or implied "CCC" debt rating.
C -- The rating "C" typically is applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
B-50
<PAGE> 104
C1 -- The rating "C1" is reserved for income bonds on which no interest
is being paid.
D -- Debt rated "D" is in payment default. The "D" rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
To provide more detailed indications of credit quality, the ratings
from AA to A may be modified by the addition of a plus or minus sign to show
relative standing within this major rating category.
MOODY'S INVESTOR SERVICES. Bonds that are rated Aaa by Moody's are
judged to be of the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues. Bonds that are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat larger
than in Aaa securities. Bonds that are rated A by Moody's possess many favorable
investment attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment some time in the future. Bonds that are rated Baa are considered
medium-grade obligations; they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
B-51
<PAGE> 105
Caa -- Bonds which are rated Caa are not of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Those bonds within the Aa, A, and Baa categories that Moody's believes
possess the strongest credit attributes within those categories are designated
by the symbols Aa1, A1, and Baa1 .
OTHER RATINGS OF MUNICIPAL OBLIGATIONS
The following summarizes the two highest ratings used by Moody's
ratings for state and municipal short-term obligations. Obligations bearing
MIG-1 and VMIG-1 designations are of the best quality, enjoying strong
protection by established cash flows , superior liquidity support or
demonstrated broad-based access to the market for refinancing. Obligations rated
"MIG-2" or "VMIG-2" denote high quality with ample margins of protection
although not so large as in the preceding rating group.
S&P SP-1 and SP-2 municipal note rating (the two highest ratings
assigned) are described as follows:
"SP-1" Strong capacity to pay principal and interest. Issues
determined to possess very strong characteristics are given a plus (+)
designation.
"SP-2" Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term
of the notes.
PREFERRED STOCK RATINGS
The following summarizes the ratings used by Moody's for preferred
stock:
"aaa" An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
"aa" An issue which is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance that
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
B-52
<PAGE> 106
"a" An issue which is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat greater
than in the "aaa" and "aa" classification, earnings and asset
protection are, nevertheless, expected to be maintained at adequate
levels.
The following summarizes the ratings used by Standard & Poor's for
preferred stock:
"AAA" This is the highest rating that may be assigned by Standard &
Poor's to a preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.
"AA" A preferred stock issue rated "AA" also qualifies as a
high-quality, fixed income security. The capacity to pay preferred
stock obligations is very strong, although not as overwhelming as for
issues rated "AAA."
"A" An issue rated "A" is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions.
"BBB" An issue rated "BBB" is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened
capacity to make payments for a preferred stock in this category than
for issues in the "A" category.
"BB," "B," "CCC" Preferred stock rated "BB," "B," and "CCC" are
regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. "BB" indicates
the lowest degree of speculation and "CCC" the highest. While such
issues will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to
adverse conditions.
"CC" The rating "CC" is reserved for a preferred stock issue in
arrears on dividends or sinking fund payments but that is currently
paying.
"C" A preferred stock rated "C" is a nonpaying issue.
"D" A preferred stock rated "D" is a nonpaying issue with the issuer
in default on debt instruments.
"N.R." This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.
B-53
<PAGE> 107
"Plus (+) or minus (-)" To provide more detailed indications of
preferred stock quality, ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
B-54
<PAGE> 108
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of AmSouth Mutual Funds
We have audited the accompanying statements of assets and liabilities of
AmSouth Mutual Funds (comprising, respectively, Prime Obligations Fund, U.S.
Treasury Fund, Tax-Exempt Fund, Bond Fund, Limited Maturity Fund, Government
Income Fund, Florida Tax-Free Fund, Equity Fund, Regional Equity Fund and
Balanced Fund), including the schedules of portfolio investments, as of July
31, 1996, and the related statements of operations, statements of changes in
net assets, and the financial highlights for each of the periods presented.
These financial statements and financial highlights are the responsibility of
AmSouth Mutual Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1996 by correspondence with the custodian and brokers or other auditing
procedures where confirmations from brokers were not received. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds comprising AmSouth Mutual Funds as of July 31, 1996,
and the results of their operations and the changes in their net assets and the
financial highlights for the periods referred to above in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.LP.
Columbus, Ohio
September 23, 1996
-11-
<PAGE> 109
AMSOUTH MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
July 31, 1996
(Amounts in Thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
PRIME U.S. TAX-
OBLIGATIONS TREASURY EXEMPT
FUND FUND FUND
----------- -------- -------
<S> <C> <C> <C>
ASSETS:
Investments, at amortized cost................ $550,508 $288,046 $60,387
Repurchase agreements, at cost................ 53,872 92,610
-------- -------- -------
604,380 380,656 60,387
Interest receivable........................... 2,019 1,455 525
Prepaid expenses and other assets............. 12 7 2
-------- -------- -------
Total Assets.............................. 606,411 382,118 60,914
-------- -------- -------
LIABILITIES:
Cash overdraft................................ 14 1
Dividends payable............................. 2,424 1,473 144
Accrued expenses and other payables:
Investment advisory fees.................... 205 130 11
Administration fees......................... 26 17 3
Shareholder servicing fees.................. 10 1 1
Accounting and transfer agent fees.......... 55 20 12
Other....................................... 60 52 15
-------- -------- -------
Total Liabilities......................... 2,794 1,693 187
-------- -------- -------
NET ASSETS:
Capital....................................... 603,626 380,424 60,727
Accumulated undistributed net realized gains
(losses) from investment transactions........ (9) 1 --
-------- -------- -------
Net Assets................................ $603,617 $380,425 $60,727
======== ======== =======
Net Assets
Classic Shares.............................. 125,075 12,263 17,116
Premier Shares.............................. 478,542 368,162 43,611
-------- -------- -------
603,617 380,425 60,727
======== ======== =======
Outstanding units of beneficial interest
(shares)
Classic Shares.............................. 125,081 12,262 17,116
Premier Shares.............................. 478,560 368,161 43,611
-------- -------- -------
603,641 380,423 60,727
======== ======== =======
Net asset value--offering and redemption
Classic Shares.............................. $ 1.00 $ 1.00 $ 1.00
======== ======== =======
Premier Shares.............................. $ 1.00 $ 1.00 $ 1.00
======== ======== =======
</TABLE>
See notes to financial statements.
-12-
<PAGE> 110
AMSOUTH MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
July 31, 1996
(Amounts in Thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
FLORIDA
LIMITED GOVERNMENT TAX-
BOND MATURITY INCOME FREE
FUND FUND FUND FUND
-------- -------- ---------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost $130,877;
$45,837; $15,971; and $47,077,
respectively)........................ $129,980 $45,265 $15,724 $48,257
Interest and dividends receivable..... 2,802 748 144 637
Receivable for capital shares issued.. 5 18 -- --
Prepaid expenses and other assets..... 2 2 2 1
-------- ------- ------- -------
Total Assets...................... 132,789 46,033 15,870 48,895
-------- ------- ------- -------
LIABILITIES:
Payable for capital shares redeemed... -- 1 104 --
Accrued expenses and other payables:
Investment advisory fees............ 40 14 3 9
Administration fees................. 3 1 -- 1
Accounting and transfer agent fees.. 3 4 3 2
Other............................... 6 8 8 14
-------- ------- ------- -------
Total Liabilities................. 52 28 118 26
-------- ------- ------- -------
NET ASSETS:
Capital............................... 133,287 47,893 16,591 47,495
Undistributed net investment income... 487 152 -- 124
Net unrealized appreciation
(depreciation) from investments...... (897) (572) (247) 1,180
Accumulated undistributed net realized
gains (losses) from investment
transactions......................... (140) (1,468) (592) 70
-------- ------- ------- -------
Net Assets........................ $132,737 $46,005 $15,752 $48,869
======== ======= ======= =======
Outstanding units of beneficial
interest (shares).................... 12,598 4,462 1,676 4,745
======== ======= ======= =======
Net asset value--redemption price per
share................................ $ 10.54 $ 10.31 $ 9.40 $ 10.30
======== ======= ======= =======
Maximum Sales Charge.................. 3.00% 3.00% 3.00% 3.00%
-------- ------- ------- -------
Maximum Offering Price (100%/(100%-
Maximum Sales Charge) of net asset
value rounded to the nearest cent)
per share............................ $ 10.87 $ 10.63 $ 9.69 $ 10.62
======== ======= ======= =======
</TABLE>
See notes to financial statements.
-13-
<PAGE> 111
AMSOUTH MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
July 31, 1996
(Amounts in Thousands, except Per Share Amounts)
<TABLE>
<CAPTION>
REGIONAL
EQUITY EQUITY BALANCED
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value (Cost $320,099; $75,423; and
$302,295, respectively).......................... $374,192 $93,564 $334,850
Interest and dividends receivable................. 817 107 3,735
Receivable for capital shares issued.............. 247 18 87
Receivable from brokers for investments sold...... 1 -- --
Prepaid expenses and other assets................. 11 2 16
-------- ------- --------
Total Assets.................................. 375,268 93,691 338,688
-------- ------- --------
LIABILITIES:
Payable for capital shares redeemed............... 21 43 53
Payable to brokers for investments purchased...... 379
Accrued expenses and other payables:
Investment advisory fees........................ 181 45 162
Administration fees............................. 10 2 9
Accounting and transfer agent fees.............. 21 5 14
Other........................................... 34 12 25
-------- ------- --------
Total Liabilities............................. 646 107 263
-------- ------- --------
NET ASSETS:
Capital........................................... 303,678 74,248 293,043
Undistributed net investment income............... 260 20 659
Net unrealized appreciation from investments...... 54,093 18,141 32,555
Accumulated undistributed net realized gains from
investment transactions.......................... 16,591 1,175 12,168
-------- ------- --------
Net Assets.................................... $374,622 $93,584 $338,425
======== ======= ========
Outstanding units of beneficial interest (shares). 21,256 4,467 25,965
======== ======= ========
Net asset value--redemption price per share....... $ 17.62 $ 20.95 $ 13.03
======== ======= ========
Maximum Sales Charge.............................. 4.50% 4.50% 4.50%
-------- ------- --------
Maximum Offering Price (100%/(100%-Maximum Sales
Charge) of net asset value rounded to the nearest
cent) per share.................................. $ 18.45 $ 21.94 $ 13.64
======== ======= ========
</TABLE>
See notes to financial statements.
-14-
<PAGE> 112
AMSOUTH MUTUAL FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRIME U.S. TAX
OBLIGATIONS TREASURY EXEMPT
FUND FUND FUND
----------- -------- ------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income.................................... $35,026 $21,946 $2,434
------- ------- ------
Total Income..................................... 35,026 21,946 2,434
------- ------- ------
EXPENSES:
Investment advisory fees........................... 2,460 1,589 267
Administration fees................................ 1,230 794 133
Shareholder servicing fees (Classic Shares)........ 105 11 12
Custodian and accounting fees...................... 308 209 34
Legal and audit fees............................... 99 59 12
Trustees' fees and expenses........................ 23 13 2
Transfer agent fees................................ 169 95 32
Registration and filing fees....................... 24 20 9
Printing fees...................................... 38 24 4
Other.............................................. 18 10 1
------- ------- ------
Total Expenses................................... 4,474 2,824 506
Expenses voluntarily reduced....................... (63) (7) (140)
------- ------- ------
Net Expenses..................................... 4,411 2,817 366
------- ------- ------
Net Investment Income.............................. 30,615 19,129 2,068
------- ------- ------
Change in net assets resulting from operations..... $30,615 $19,129 $2,068
======= ======= ======
</TABLE>
See notes to financial statements.
-15-
<PAGE> 113
AMSOUTH MUTUAL FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
LIMITED GOVERNMENT FLORIDA
BOND MATURITY INCOME TAX-FREE
FUND FUND FUND FUND
------- -------- ---------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.......................... $ 7,522 $3,652 $1,312 $2,404
------- ------ ------ ------
Total Income........................... 7,522 3,652 1,312 2,404
------- ------ ------ ------
EXPENSES:
Investment advisory fees................. 712 380 114 318
Administration fees...................... 219 117 35 98
Custodian and accounting fees............ 57 31 14 32
Legal and audit fees..................... 14 9 3 8
Trustees' fees and expenses.............. 4 2 1 2
Transfer agent fees...................... 38 25 18 19
Registration and filing fees............. 12 9 6 13
Printing fees............................ 12 5 1 13
Other.................................... 2 2 1 4
------- ------ ------ ------
Total Expenses......................... 1,070 580 193 507
Expenses voluntarily reduced by
investment advisor and administrator.... (253) (134) (79) (220)
------- ------ ------ ------
Net Expenses........................... 817 446 114 287
------- ------ ------ ------
Net Investment Income.................... 6,705 3,206 1,198 2,117
------- ------ ------ ------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from
investment transactions................. (140) (229) (352) 97
Change in unrealized depreciation from
investments............................. (2,348) (275) (9) (169)
------- ------ ------ ------
Net realized/unrealized gains from
investments............................. (2,488) (504) (361) (72)
------- ------ ------ ------
Change in net assets resulting from
operations.............................. $ 4,217 $2,702 $ 837 $2,045
======= ====== ====== ======
</TABLE>
See notes to financial statements.
-16-
<PAGE> 114
AMSOUTH MUTUAL FUNDS
STATEMENTS OF OPERATIONS
For the Year Ended July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
REGIONAL
EQUITY EQUITY BALANCED
FUND FUND FUND
------- -------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income..................................... $ 1,532 $ 387 $10,340
Dividend income..................................... 8,258 1,583 4,562
------- ------ -------
Total Income...................................... 9,790 1,970 14,902
------- ------ -------
EXPENSES:
Investment advisory fees............................ 2,707 671 2,598
Administration fees................................. 715 167 650
Custodian and accounting fees....................... 163 41 159
Legal and audit fees................................ 39 11 42
Trustees' fees and expenses......................... 10 2 9
Transfer agent fees................................. 98 42 94
Registration and filing fees........................ 21 8 23
Printing fees....................................... 20 4 19
Other............................................... 7 2 8
------- ------ -------
Total Expenses.................................... 3,780 948 3,602
Expenses voluntarily reduced by investment advisor
and administrator.................................. (309) (68) (429)
------- ------ -------
Net Expenses...................................... 3,471 880 3,173
------- ------ -------
Net Investment Income............................... 6,319 1,090 11,729
------- ------ -------
REALIZED/UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions..... 20,434 1,891 14,292
Change in unrealized appreciation (depreciation)
from investments................................... 6,857 6,486 (568)
------- ------ -------
Net realized/unrealized gains from investments...... 27,291 8,377 13,724
------- ------ -------
Change in net assets resulting from operations...... $33,610 $9,467 $25,453
======= ====== =======
</TABLE>
See notes to financial statements.
-17-
<PAGE> 115
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND U.S. TREASURY FUND TAX EXEMPT FUND
------------------------ ---------------------- --------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JULY 31, JULY 31, JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995 1996 1995
----------- ----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income. $ 30,615 $ 27,510 $ 19,129 $ 14,989 $ 2,068 $ 1,972
Net realized gains
from investment
transactions......... -- -- -- 1 -- --
----------- ----------- ----------- --------- --------- ---------
Change in net assets
resulting from
operations............. 30,615 27,510 19,129 14,990 2,068 1,972
----------- ----------- ----------- --------- --------- ---------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income:
Classic Shares (a).... (1,925) -- (204) -- (140) --
Premier Shares (a).... (28,690) (27,510) (18,925) (14,989) (1,928) (1,972)
----------- ----------- ----------- --------- --------- ---------
Change in net assets
from shareholder
distributions.......... (30,615) (27,510) (19,129) (14,989) (2,068) (1,972)
----------- ----------- ----------- --------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 1,554,362 1,597,046 1,097,998 900,697 138,969 99,365
Dividends reinvested.. 7,423 5,036 1,973 2,103 531 311
Cost of shares
redeemed............. (1,575,841) (1,561,740) (1,042,485) (880,465) (136,413) (102,959)
----------- ----------- ----------- --------- --------- ---------
Change in net assets
from share
transactions........... (14,056) 40,342 57,486 22,335 3,087 (3,283)
----------- ----------- ----------- --------- --------- ---------
Change in net assets.... (14,056) 40,342 57,486 22,336 3,087 (3,283)
NET ASSETS:
Beginning of period... 617,673 577,331 322,939 300,603 57,640 60,923
----------- ----------- ----------- --------- --------- ---------
End of period......... $ 603,617 $ 617,673 $ 380,425 $ 322,939 $ 60,727 $ 57,640
=========== =========== =========== ========= ========= =========
SHARE TRANSACTIONS:
Issued................ 1,554,362 1,597,046 1,097,998 900,697 138,969 99,365
Reinvested............ 7,423 5,036 1,973 2,103 531 311
Redeemed.............. (1,575,841) (1,561,740) (1,042,485) (880,465) (136,413) (102,959)
----------- ----------- ----------- --------- --------- ---------
Change in shares........ (14,056) 40,342 57,486 22,335 3,087 (3,283)
=========== =========== =========== ========= ========= =========
</TABLE>
- --------
(a) Effective April 1, 1996 the Funds' existing shares, which were previously
unclassified, were designated Premier Shares and the Fund commenced
offering Classic Shares.
See notes to financial statements.
-18-
<PAGE> 116
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
BOND FUND LIMITED MATURITY FUND
--------------------- ---------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............ $ 6,705 $ 6,115 $ 3,206 $ 2,888
Net realized gains (losses) from
investment transactions......... (140) 993 (229) (730)
Net change in unrealized
appreciation (depreciation) from
investments..................... (2,348) 2,305 (275) 1,456
-------- -------- -------- --------
Change in net assets resulting from
operations........................ 4,217 9,413 2,702 3,614
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income....... (6,517) (6,084) (3,206) (2,844)
In excess of net investment
income.......................... -- -- (63) --
From net realized gains from
investment transactions......... -- (328) -- --
In excess of net realized gains
from investment transactions.... (1,025) -- -- --
-------- -------- -------- --------
Change in net assets from
shareholder distributions......... (7,542) (6,412) (3,269) (2,844)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...... 57,993 38,646 16,713 23,917
Dividends reinvested............. 5,036 3,257 1,563 894
Cost of shares redeemed.......... (21,638) (29,705) (31,502) (17,443)
-------- -------- -------- --------
Change in net assets from share
transactions...................... 41,391 12,198 (13,226) 7,368
-------- -------- -------- --------
Change in net assets............... 38,066 15,199 (13,793) 8,138
NET ASSETS:
Beginning of period.............. 94,671 79,472 59,798 51,660
-------- -------- -------- --------
End of period.................... $132,737 $ 94,671 $ 46,005 $ 59,798
======== ======== ======== ========
SHARE TRANSACTIONS:
Issued........................... 5,396 3,719 1,602 2,327
Reinvested....................... 467 314 150 88
Redeemed......................... (2,005) (2,800) (3,036) (1,718)
-------- -------- -------- --------
Change in shares................... 3,858 1,233 (1,284) 697
======== ======== ======== ========
</TABLE>
See notes to financial statements.
-19-
<PAGE> 117
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
GOVERNMENT INCOME FUND FLORIDA TAX-FREE FUND
-------------------------- ------------------------
SEPTEMBER 30,
YEAR ENDED YEAR ENDED YEAR ENDED 1994 TO
JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995(a)
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income... $ 1,198 $ 1,069 $ 2,117 $ 1,511
Net realized gains
(losses) from
investment
transactions........... (352) (217) 97 (7)
Net change in unrealized
appreciation
(depreciation) from
investments............ (9) 354 (169) 1,350
----------- ----------- ------- -------
Change in net assets
resulting from
operations............... 837 1,206 2,045 2,854
----------- ----------- ------- -------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................. (1,089) (967) (2,107) (1,397)
From net realized gains
from investment
transactions........... -- -- (20) --
Tax return of capital... (10) (135) -- --
----------- ----------- ------- -------
Change in net assets from
shareholder
distributions............ (1,099) (1,102) (2,127) (1,397)
----------- ----------- ------- -------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................. 5,601 6,654 10,538 53,611
Dividends reinvested.... 574 723 134 40
Cost of shares redeemed. (6,840) (6,267) (10,054) (6,775)
----------- ----------- ------- -------
Change in net assets from
share transactions....... (665) 1,110 618 46,876
----------- ----------- ------- -------
Change in net assets...... (927) 1,214 536 48,333
NET ASSETS:
Beginning of period..... 16,679 15,465 48,333 --
----------- ----------- ------- -------
End of period........... $15,752 $16,679 $48,869 $48,333
=========== =========== ======= =======
SHARE TRANSACTIONS:
Issued.................. 584 711 1,023 5,353
Reinvested.............. 60 78 13 4
Redeemed................ (715) (672) (974) (674)
----------- ----------- ------- -------
Change in shares.......... (71) 117 62 4,683
=========== =========== ======= =======
</TABLE>
- --------
(a) Period from commencement of operations.
See notes to financial statements.
-20-
<PAGE> 118
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Amounts in Thousands)
<TABLE>
<CAPTION>
EQUITY FUND REGIONAL EQUITY FUND BALANCED FUND
--------------------- --------------------- ---------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income. $ 6,319 $ 4,996 $ 1,090 $ 809 $ 11,729 $ 10,098
Net realized gains
from investment
transactions......... 20,434 11,383 1,891 904 14,292 8,851
Net change in
unrealized
appreciation
(depreciation)
from investments..... 6,857 26,642 6,486 7,072 (568) 19,475
-------- -------- ------- ------- -------- --------
Change in net assets
resulting from
operations............. 33,610 43,021 9,467 8,785 25,453 38,424
-------- -------- ------- ------- -------- --------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (6,319) (4,796) (1,069) (808) (11,648) (9,889)
In excess of net
investment income.... (7) -- -- -- -- --
From net realized
gains from investment
transactions......... (10,800) (6,679) (755) -- (7,455) (6,217)
-------- -------- ------- ------- -------- --------
Change in net assets
from shareholder
distributions.......... (17,126) (11,475) (1,824) (808) (19,103) (16,106)
-------- -------- ------- ------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 140,796 75,477 26,244 16,875 93,191 69,297
Dividends reinvested.. 10,225 6,461 1,130 454 14,962 10,838
Cost of shares
redeemed............. (68,640) (43,338) (9,934) (11,549) (71,587) (43,250)
-------- -------- ------- ------- -------- --------
Change in net assets
from share
transactions........... 82,381 38,600 17,440 5,780 36,566 36,885
-------- -------- ------- ------- -------- --------
Change in net assets.... 98,865 70,146 25,083 13,757 42,916 59,203
NET ASSETS:
Beginning of period... 275,757 205,611 68,501 54,744 295,509 236,306
-------- -------- ------- ------- -------- --------
End of period......... $374,622 $275,757 $93,584 $68,501 $338,425 $295,509
======== ======== ======= ======= ======== ========
SHARE TRANSACTIONS:
Issued................ 8,082 4,997 1,277 970 7,104 5,839
Reinvested............ 597 450 55 26 1,148 939
Redeemed.............. (3,888) (2,851) (482) (662) (5,449) (3,630)
-------- -------- ------- ------- -------- --------
Change in shares........ 4,791 2,596 850 334 2,803 3,148
======== ======== ======= ======= ======== ========
</TABLE>
See notes to financial statements.
-21-
<PAGE> 119
AMSOUTH MUTUAL FUNDS
PRIME OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------- ---------
<C> <S> <C>
CERTIFICATES OF DEPOSIT (1.7%):
Euro Certificate of Deposits (1.7%):
$10,000 Bank of Tokyo, Mitsubishi, Ltd., 5.62%, 10/30/96 $ 10,000
--------
Total Certificates of Deposit 10,000
--------
COMMERCIAL PAPER (64.5%):
Asset Backed (8.4%):
1,000 Cooper River Funding, Inc., 5.40%, 8/23/96............... 997
10,000 Greenwich Funding Corp., 5.34%, 9/3/96................... 9,951
10,000 Greenwich Funding Corp., 5.37%, 9/4/96................... 9,949
9,730 Redwood Receivables Corp., 5.37%, 8/28/96................ 9,691
5,000 Sigma Finance Inc., 5.38%, 8/9/96........................ 4,994
1,100 Sigma Finance Inc., 5.43%, 9/16/96....................... 1,092
9,000 Sigma Finance Inc., 5.45%, 10/8/96....................... 8,907
5,000 Sigma Finance Inc., 5.45%, 10/15/96...................... 4,943
--------
50,524
--------
Automotive (11.0%):
10,000 Daimler-Benz North America Corp., 5.38%, 9/10/96......... 9,940
10,000 Daimler-Benz North America Corp., 5.39%, 9/10/96......... 9,940
10,000 Ford Motor Credit Co., 5.45%, 10/9/96.................... 9,896
15,000 General Motors Acceptance Corp., 5.45%, 9/6/96........... 14,918
5,000 General Motors Acceptance Corp., 5.35%, 12/13/96......... 4,900
5,000 Mitsubishi Motors Credit of America, Inc., 5.45%, 8/5/96. 4,997
10,000 Mitsubishi Motors Credit of America, Inc., 5.50%,
10/17/96................................................ 9,882
1,750 Toyota Motor Credit Corp., 5.38%, 9/4/96................. 1,741
--------
66,214
--------
Beverages (1.6%):
10,000 The Coca-Cola Co., 5.45%, 10/4/96........................ 9,903
--------
Chemicals (2.5%):
10,000 Engelhard Corp., 5.43%, 10/16/96......................... 9,885
5,000 Monsanto Co., 5.40%, 10/16/96............................ 4,943
--------
14,828
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------- ---------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Domestic Banking (0.8%):
$5,000 Banc One Corp., 5.35%, 8/23/96........................... $ 4,984
--------
Financial Services (10.3%):
5,000 General Electric Capital Corp., 5.55%, 3/25/97........... 4,818
10,000 Island Finance Puerto Rico, Inc., 5.40%, 9/17/96......... 9,930
10,000 Island Finance Puerto Rico, Inc., 5.48%, 10/9/96......... 9,895
13,000 Norwest Corp., 5.44%, 10/11/96........................... 12,861
10,000 Pemex Capital, Inc., 5.45%, 10/10/96..................... 9,894
15,000 Queensland Treasury Corp., 5.49%, 10/7/96................ 14,847
--------
62,245
--------
Foreign Banking (4.3%):
11,000 ABN-Amro North America Finance Corp., 4.95%, 8/22/96..... 10,968
5,000 Abbey National N. A., 5.05%, 3/3/97...................... 4,988
10,000 Toronto Dominion Holdings, 5.40%, 10/8/96................ 9,898
--------
25,854
--------
Governments (Foreign) (3.2%):
10,000 Canadian Wheat Board, 5.35%, 9/13/96..................... 9,936
10,000 Province of British Columbia, 5.32%, 10/3/96............. 9,907
--------
19,843
--------
Health Care (2.1%):
10,000 Glaxo-Wellcome, PLC, 5.30%, 8/13/96...................... 9,982
3,000 Glaxo-Wellcome, PLC, 5.37%, 9/16/96...................... 2,979
--------
12,961
--------
Industrial Goods & Services (4.2%):
8,250 Cargill, Inc., 5.36%, 9/24/96............................ 8,184
10,000 Cargill, Inc., 5.43%, 10/10/96........................... 9,894
7,000 North Hill Finance, 5.32%, 8/6/96........................ 6,995
--------
25,073
--------
Insurance (2.6%):
5,000 Great West Life & Annuity Insurance Co., 5.37%, 8/9/96... 4,994
5,000 Great West Life & Annuity Insurance Co., 5.33%, 9/6/96... 4,973
6,000 Internationale Nederlanden U.S. Insurance Holdings, Inc.,
5.28%, 8/21/96.......................................... 5,982
--------
15,949
--------
</TABLE>
Continued
-22-
<PAGE> 120
AMSOUTH MUTUAL FUNDS
PRIME OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ---------------------------------------------------------- ---------
<C> <S> <C>
COMMERCIAL PAPER, CONTINUED:
Leasing (3.3%):
$ 5,000 Hitachi Credit America Corp., 5.45%, 9/27/96.............. $ 4,957
5,000 Hitachi Credit America Corp., 5.47%, 11/14/96............. 4,920
10,000 International Lease Finance, 5.40%, 10/17/96.............. 9,885
--------
19,762
--------
Manufacturing--Miscellaneous (1.3%):
5,000 Mitsubishi International Corp., 5.33%, 8/30/96............ 4,979
2,625 Mitsubishi International Corp., 5.40%, 8/30/96............ 2,613
--------
7,592
--------
Security Brokers & Dealers (7.9%):
10,000 Bear Stearns & Co., Inc., 5.34%, 10/1/96.................. 9,910
10,000 C.S. First Boston, 5.49%, 4/1/97*......................... 10,000
10,000 Goldman Sachs Group, LP, 5.32%, 9/4/96.................... 9,950
5,000 Merrill Lynch & Co., Inc., 5.28%, 8/15/96................. 4,990
3,000 Merrill Lynch & Co., Inc., 5.40%, 9/3/96.................. 2,985
10,000 Merrill Lynch & Co., Inc., 5.49%, 1/15/97*................ 10,000
--------
47,835
--------
Telecommunications Equipment (0.8%):
5,000 Lucent Technologies, 5.34%, 9/23/96....................... 4,961
--------
Telecommunications (0.2%):
1,000 AT&T Corp., 5.40%, 8/27/96................................ 996
--------
Total Commercial Paper 389,524
--------
CORPORATE BONDS (2.7%):
Banking--Domestic (0.8%):
5,000 First Chicago NBD Corp., 7.88%, 1/21/97................... 5,046
--------
Financial Services (1.7%):
4,245 American General Finance Corp., 6.63%, 6/1/97............. 4,258
2,000 Paccar Financial Corp., 5.43%, 6/2/97..................... 1,989
3,000 American General Finance, 5.80%, 4/1/97................... 3,008
--------
6,247
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ---------------------------------------------------------- ---------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Utility--Electric (0.3%):
$ 2,000 Portland General Electric Co., 6.76%, 1/15/97............. $ 2,007
--------
Total Corporate Bonds 16,308
--------
GUARANTEED INSURANCE CONTRACTS (4.1%):
12,500 Commonwealth Life Insurance Co., 5.73%, 8/1/19* (b)....... 12,500
12,500 Peoples Security Life, 5.68%, 8/1/19* (b)................. 12,500
--------
Total Guaranteed Insurance Contracts 25,000
--------
MEDIUM TERM NOTES (14.7%):
Automotive (2.9%):
2,600 Ford Motor Credit Corp., 7.88%, 10/15/96.................. 2,611
5,100 Toyota Motor Credit Co., 6.88%, 10/15/96.................. 5,116
10,000 Toyota Motor Credit Co., 5.00%, 2/26/97................... 9,993
--------
17,720
--------
Banking (4.9%):
4,155 Bankers Trust, 7.25%, 11/1/96............................. 4,175
15,000 Comerica Bank of Detroit, 5.40%, 9/18/96*................. 14,999
5,000 PNC Bank, N.A., 5.42%, 1/6/97*............................ 4,999
975 Security Pacific Corp., 8.49%, 12/27/96................... 999
4,000 Wachovia Bank, 6.20%, 8/5/96.............................. 4,000
--------
29,172
--------
Farm Equipment (0.3%):
2,000 John Deere Capital Corp., 4.63%, 9/2/96................... 1,999
--------
Financial Services (4.9%):
10,000 General Electric Capital Corp., 5.49%, 8/1/96*............ 10,000
4,300 General Electric Capital Corp., 7.85%, 2/1/97............. 4,353
5,000 Norwest Financial Inc., 4.97%, 10/29/96................... 4,992
10,300 Norwest Corp., 7.88%, 1/30/97............................. 10,399
--------
29,744
--------
Insurance (0.9%):
5,000 ITT Hartford, 7.25%, 12/1/96.............................. 5,030
--------
Leasing (0.8%):
5,000 International Lease Finance, 5.88%, 2/1/97................ 5,013
--------
Total Medium Term Notes 89,678
--------
</TABLE>
Continued
-23-
<PAGE> 121
AMSOUTH MUTUAL FUNDS
PRIME OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ------------------------------------- ---------
<S> <C> <C>
MUNICIPAL BONDS (1.7%):
New York (1.7%):
$10,000 New York City, 5.34%, 8/20/96, FGIC*. $ 10,000
--------
Total Municipal Bonds 10,000
--------
U.S. GOVERNMENT AGENCIES (1.8%):
11,000 Federal National Mortgage Assoc.,
5.30%, 10/18/96*.................... 10,998
--------
Total U.S. Government Agencies 10,998
--------
Total Investments 550,508
--------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ------------------------------------- ---------
<S> <C> <C>
REPURCHASE AGREEMENTS (8.9%):
54,443 First Boston Corp., 5.75%, 8/1/96;
(Collateralized by 57,355
U.S. Government Agency Securities,
5.29%-5.51%, 8/5/96-11/4/96,
market value--$56,564)...............$ 53,872
--------
Total Repurchase Agreements 53,872
--------
Total (Cost--$604,380)(a) $604,380
========
<FN>
- -------
Percentages indicated are based on net assets of $603,617.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market interest rates. The rates reflected on the Schedule of Portfolio
Investments is the rate in effect at July 31, 1996.
(b) Put and demand features exist allowing the Fund to require the repurchase
of the instrument quarterly.
FGIC--Insured by Financial Guaranty Insurance Corp.
</TABLE>
See notes to financial statements.
-24-
<PAGE> 122
AMSOUTH MUTUAL FUNDS
U.S. TREASURY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------- ---------
<C> <S> <C>
U.S. TREASURY BILLS (57.0%):
$25,000 4.99%, 8/1/96............................................ $ 25,000
5,000 5.04%, 8/8/96............................................ 4,995
25,000 5.14%, 8/15/96........................................... 24,951
5,000 5.08%, 8/22/96........................................... 4,986
10,000 5.13%, 9/5/96............................................ 9,951
25,000 5.11%, 9/12/96........................................... 24,851
10,000 5.11%, 9/19/96........................................... 9,930
20,000 5.18%, 10/3/96........................................... 19,822
5,000 5.18%, 10/10/96.......................................... 4,950
25,000 5.19%, 10/17/96.......................................... 24,725
20,000 5.14%, 10/31/96.......................................... 19,740
10,000 5.07%, 11/14/96.......................................... 9,858
5,000 5.11%, 11/14/96.......................................... 4,929
5,000 5.33%, 12/5/96........................................... 4,909
6,000 4.65%, 12/12/96.......................................... 5,899
6,000 4.90%, 1/9/97............................................ 5,875
6,000 5.48%, 5/29/97........................................... 5,725
6,000 5.54%, 6/26/97........................................... 5,701
--------
Total U.S. Treasury Bills 216,797
--------
U.S. TREASURY NOTES (18.7%):
20,000 6.25%, 8/31/96........................................... 20,010
5,000 6.50%, 9/30/96........................................... 5,006
6,000 8.00%, 10/15/96.......................................... 6,033
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<C> <S> <C>
U.S. TREASURY NOTES, CONTINUED :
$ 6,000 4.38%, 11/15/96......................................... $ 5,988
6,000 7.25%, 11/15/96......................................... 6,034
5,000 7.50%, 1/31/97.......................................... 5,045
6,000 4.75%, 2/15/97.......................................... 5,997
6,000 6.88%, 2/28/97.......................................... 6,053
5,000 6.88%, 3/31/97.......................................... 5,045
6,000 6.50%, 4/30/97.......................................... 6,038
--------
Total U.S. Treasury Notes 71,249
--------
Total Investments 288,046
--------
REPURCHASE AGREEMENTS (24.3%):
46,305 First Boston Corp., 5.60%, 8/1/96, (Collateralized by
46,685 U.S. Treasury Notes, 7.50%, 12/31/96, market
value - $47,345)....................................... 46,305
46,305 Merrill Lynch & Co., 5.60%, 8/1/96, (Collateralized by
35,794 U.S. Treasury Bonds, 10.75%-12.38%, 5/15/03-
5/15/04, market value-- $47,232)....................... 46,305
--------
Total Repurchase Agreements 92,610
--------
Total (Cost--$380,656)(a) $380,656
========
</TABLE>
- --------
Percentages indicated are based on net assets of $380,425.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
See notes to financial statements.
-25-
<PAGE> 123
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<C> <S> <C>
ANTICIPATION NOTES (17.3%):
Alabama (0.5%):
$ 325 Mobile, Water & Sewer Revenue Bonds, 4.00%, 1/1/97,
FGIC................................................... $ 326
-------
Colorado (2.5%):
1,500 Colorado General Fund Tax, RANs, 4.50%, 6/27/97......... 1,509
-------
Connecticut (0.5%):
305 Connecticut State Development, 3.75%, 12/15/96.......... 305
-------
Georgia (0.7%):
425 Dekalb, GO, 3.45%, 10/1/96.............................. 425
-------
Hawaii (0.7%):
500 Hawaii State, GO, 3.40%, 11/1/96........................ 499
-------
Illinois (2.5%):
500 Du Page County, 6.80%, 1/1/97........................... 516
1,000 Illinois School District, 6.30%, 1/1/97, FGIC........... 1,011
-------
1,527
-------
Massachusetts (0.4%):
250 Massachusetts State, GO, 7.13%, 10/1/05, Pre-refunded on
10/1/96 @102........................................... 257
-------
Minnesota (1.2%):
705 Minneapolis & St. Paul Housing Authority, 3.85%,
8/15/96, CGIC.......................................... 705
-------
Missouri (0.6%):
340 University of Missouri, 9.50%, 11/9/09, Pre-refunded on
11/1/96 @103........................................... 355
-------
New Jersey (0.2%):
100 Union County, 6.00%, 8/1/96............................. 100
-------
Oregon (0.6%):
330 Oregon State, 12.54%, 9/1/07**.......................... 339
-------
Tennessee (3.6%):
1,600 Tennessee State School Board Authority Higher Education,
Bonds Anticipation Notes, Series B, 3.55%, 3/1/98, LOC:
Swiss Bank*............................................ 1,600
600 Tennessee State School Board Authority Higher
Educational Facilities, Bond Anticipation Notes, 3.55%,
3/1/98, LOC: Swiss Bank*............................... 600
-------
2,200
-------
Texas (3.3%):
465 Lubbock, GO, 6.30%, 2/15/97............................. 472
1,500 Texas State Tax & Revenue, Series A, 4.75%, 8/30/96..... 1,501
-------
1,973
-------
Total Anticipation Notes 10,520
-------
</TABLE>
Continued
-26-
<PAGE> 124
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<C> <S> <C>
DEMAND NOTES (39.9%):
Alabama (14.2%):
$ 150 Arab Revenue Bonds, 3.75%, 8/1/00, LOC: Bank of Tokyo*.. $ 150
2,000 City of Birmingham, GO, 3.62%, 5/1/19, LOC: First
Alabama Bank*.......................................... 2,000
1,000 Columbia Industrial Development Board, 3.60%, 10/1/22,
LOC: Alabama Power*.................................... 1,000
2,000 Mobile, Industrial Development Board, PCR, Series B,
3.70%, 8/1/17*......................................... 2,000
1,800 North Alabama Environmental Improvement Authority, PCR,
3.65%, 12/1/00*........................................ 1,800
1,665 Stevenson, Industrial Development Board, Environmental
Improvement Revenue Refunding, Series 1986, 3.65%,
11/1/16, LOC: Credit Suisse*........................... 1,665
-------
8,615
-------
California (0.8%):
500 La Regional Airport Improvement Corp., 3.65%, 12/1/24*.. 500
-------
Colorado (0.3%):
200 Adams County, Individual Development Revenue, 3.65%,
12/1/15, LOC: Barclays Bank*........................... 200
-------
Delaware (0.3%):
200 Wilmington, Franciscan Health System, Series 1986B,
3.65%, 7/1/11, LOC: Toronto Dominion*.................. 200
-------
Georgia (3.4%):
1,100 Cobb County Housing Authority, MFH Revenue, 3.65%,
6/1/23 LOC: Societe Generale*.......................... 1,100
500 Savannah, Downtown Development Authority, 3.65%, 9/1/97,
LOC: National West*.................................... 500
350 Savannah, Downtown Development Authority, 3.65%, 9/1/98,
LOC: National West*.................................... 350
100 Turner County Development Authority, Industrial
Development Revenue, Coats & Clark, Inc., 3.65%,
10/1/98, LOC: Wachovia Bank*........................... 100
-------
2,050
-------
Illinois (2.4%):
965 Health Facility Revenue, Franciscan Nuns, 3.65%,
5/15/19*............................................... 965
500 O'Hare International Airport, 3.60%, 1/1/15*............ 500
-------
1,465
-------
Missouri (5.2%):
535 Missouri State Industrial Development Board, Lot 2,
Series F, 3.75%, 2/1/04*............................... 535
585 Missouri State Industrial Development Board, Series 2,
3.75%, 2/1/00 LOC: Union Bank of Switzerland*.......... 585
2,000 St. Charles County, Industrial Development Authority,
3.65%, 12/1/07 LOC: Bank of America*................... 2,000
-------
3,120
-------
Nebraska (2.3%):
1,400 Nebraska Educational Facility Authority, 3.75%,
12/1/00*............................................... 1,400
-------
North Carolina (0.2%):
100 Alamance Industrial Facility, PCR, 3.70%, 4/1/15, LOC:
PNC KY*................................................ 100
-------
Ohio (1.5%):
900 Hamilton County Health Care Facilities, 3.62%, 7/1/17,
LOC: Fifth Third*...................................... 900
-------
</TABLE>
Continued
-27-
<PAGE> 125
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<C> <S> <C>
DEMAND NOTES, CONTINUED
Oregon (1.9%):
$ 500 Franciscan Health, Series 1985A, 3.65%, 12/1/24*........ $ 500
100 Oregon State, Series 73E, 3.50%, 12/1/16*............... 100
550 Oregon State, Series 73, 3.50%, 12/1/17*................ 550
-------
1,150
-------
Tennessee (3.6%):
1,200 Metropolitan Nashville Airport, 3.40%, 10/1/12*......... 1,200
1,000 Tennessee State School Bond Authority, 3.55%, 3/1/98,
LOC: Swiss Bank*....................................... 1,000
-------
2,200
-------
Texas (2.6%):
500 Grapevine, 3.65%, 12/1/24*.............................. 500
500 Lone Star Airport Improvement Authority, 3.85%, 12/1/14
LOC: Royal Bank of Canada*............................. 500
600 Lone Star Airport Improvement Authority 5, 3.65%,
12/1/14 LOC: Royal Bank of Canada*..................... 600
-------
1,600
-------
West Virginia (1.2%):
700 Putnam County, Industrial Revenue, 3.55%, 11/1/12 LOC:
Union Bank of Switzerland*............................. 700
-------
Total Demand Notes 24,200
-------
MUNICIPAL BONDS (26.7%):
Alabama (1.7%):
1,000 Jacksonville, 3.65%, 9/1/12, LOC: Wachovia Bank*........ 1,000
-------
Arizona (3.2%):
500 Arizona Health Facility Authority Revenue, 3.65%,
10/1/15*............................................... 500
900 Phoenix, GO, 3.65%, 6/1/20, LOC: Morgan Guaranty*....... 900
500 Scottsdale, Certificates, 7.70%, 11/1/00, Pre-refunded
on 11/1/96 @102, FGIC.................................. 515
-------
1,915
-------
Connecticut (1.2%):
745 Connecticut State Tax Obligation Revenue, 3.60%,
10/1/96, FGIC.......................................... 745
-------
Georgia (2.2%):
1,000 Georgia State, Preferred, 6.75%, 9/1/96................. 1,023
310 Georgia State, GO, 7.50%, 5/1/05, Pre-refunded on 5/1/97
@102**................................................. 324
-------
1,347
-------
Hawaii (1.6%):
970 Kauai County, 6.70%, 2/1/06, Pre-refunded on 2/1/97
@100, MBIA............................................. 985
-------
Illinois (3.6%):
700 Chicago, GO, 3.65%, 10/31/96, LOC: Morgan Guaranty*..... 700
1,400 Du Page Water Revenue, 6.88%, 5/1/14.................... 1,458
-------
2,158
-------
</TABLE>
Continued
-28-
<PAGE> 126
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Iowa (1.0%):
$ 585 Ottumwa Hospital Facility, 9.63%, 11/1/10, Pre-refunded
on 11/1/96 @103........................................ $ 611
-------
Kansas (1.7%):
500 Topeka, GO, 7.50%, 10/1/05, Pre-refunded on 10/1/96
@100................................................... 503
100 Wichita, GO, 3.50%, 9/1/96.............................. 100
200 Wichita, GO, 6.80%, 9/1/96.............................. 200
215 Wichita, GO, 6.75%, 12/1/96............................. 217
-------
1,020
-------
Massachusetts (0.5%):
300 Worcester, GO, 6.80%, 9/4/96............................ 307
-------
Michigan (1.7%):
1,000 Detroit Sewer District Revenue, 6.75%, 7/1/01........... 1,044
-------
Nevada (0.5%):
300 Nevada State, GO, 5.00%, 9/1/96......................... 300
-------
New Jersey (0.3%):
205 Essex County, Law Improvement, 5.88%, 10/1/96........... 206
-------
New York (2.7%):
500 New York City, GO, 3.65%, 8/1/23, LOC: Morgan Guaranty*. 500
1,100 New York State Dorm Authority Revenue, 6.30%, 11/1/96... 1,107
-------
1,607
-------
Ohio (0.3%):
200 North Royalton City Schools, GO, 4.35%, 12/1/96, MBIA... 200
-------
Pennsylvania (1.7%):
1,000 Pennsylvania State Revenue, Series A, 7.88%, 12/1/06,
Pre-refunded on 12/1/96 @102**......................... 1,033
-------
South Carolina (0.8%):
500 South Carolina State Capital Improvement, 6.70%, 8/1/98,
Pre-refunded on 8/1/96 @102............................ 510
-------
Texas (2.0%):
100 Dallas County Revenue Bond, 5.00%, 5/15/97, AMBAC....... 101
105 Lewisville Water & Sewer Revenue Bond, 7.65%, 2/15/97... 107
1,000 San Antonio, GO, 5.10%, 8/1/96.......................... 1,000
-------
1,208
-------
Total Municipal Bonds 16,196
-------
SHORT TERM PUTS (3.3%):
Connecticut (3.3%):
2,000 State Special Assessment Unemployment Compensation,
Series C, 3.90%, 11/15/01**............................ 2,000
-------
Total Short Term Puts 2,000
-------
</TABLE>
Continued
-29-
<PAGE> 127
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<C> <S> <C>
TAX FREE COMMERCIAL PAPER (9.2%):
Louisiana (1.8%):
$1,100 Louisiana, Pollution Facility Authority, 3.35%,
1/1/15**............................................... $ 1,100
-------
Missouri (3.3%):
2,000 Missouri State Environmental Improvement & Energy
Resources Authority, PCR, 3.35%, 6/1/15, LOC: Union
Bank of Switzerland.................................... 2,000
-------
Texas (1.6%):
1,000 Texas A&M Board of Regents, University Fund Subordinate
Notes, Series B, 3.40%, 7/1/17**....................... 1,000
-------
Washington (2.5%):
1,500 Seattle Municipal Light & Power, 3.70%, 2/4/97, LOC:
Morgan Guaranty........................................ 1,500
-------
Total Tax Free Commercial Paper 5,600
-------
INVESTMENT COMPANIES (3.1%):
394 Federated Tax Free Trust Mutual Fund.................... 394
1,477 Goldman Sachs Tax Free Fund............................. 1,477
-------
Total Investment Companies 1,871
-------
Total (Cost--$60,387)(a) $60,387
=======
<FN>
- --------
Percentages indicated are based on net assets of $60,727.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate,
which will change periodically, is based upon bank prime rates or an index
of market interest rates. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect at July 31, 1996.
** Put and demand features exist allowing the Fund to require the repurchase
of the instrument within variable time periods including daily, weekly,
monthly, or semiannually.
AMBAC--Insured by AMBAC Indemnity Corporation
CGIC--Insured by Capital Guaranty Insurance Company
FGIC--Insured by Financial Guaranty Insurance Corporation
GO--General Obligation
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Insurance Association
MFH--Multi-Family Housing
PCR--Pollution Control Revenue
RANs--Revenue Anticipation Notes
</TABLE>
See notes to financial statements.
-30-
<PAGE> 128
AMSOUTH MUTUAL FUNDS
BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS (31.5%):
Appliances (0.4%):
$ 500 Whirlpool Corp., 9.50%, 6/15/00........................... $ 543
--------
Automotive (1.9%):
1,570 Ford Capital, 9.13%, 5/1/98............................... 1,637
800 General Motors Corp., 9.63%, 12/1/00...................... 875
--------
2,512
--------
Banking (4.1%):
1,070 Bank of America, 9.50%, 4/1/01............................ 1,170
1,000 Bankers Trust Co., 9.50%, 6/14/00......................... 1,076
2,306 NationsBank Corp., 5.38%, 4/15/00......................... 2,194
1,000 SunTrust Banks, Inc., 7.38%, 7/1/06....................... 999
--------
5,439
--------
Brokerage Services (2.9%):
1,000 Bear Stearns & Co., Inc., 6.50%, 6/15/00.................. 981
1,000 Merrill Lynch & Co., Inc., 9.00%, 5/1/98.................. 1,041
750 Merrill Lynch & Co., Inc., 8.25%, 11/15/99................ 780
1,000 Morgan Stanley Group, Inc., 9.25%, 3/1/98................. 1,040
--------
3,842
--------
Entertainment (0.8%):
1,000 Columbia Picture Entertainment, Inc., 9.88%, 2/1/98....... 1,038
--------
Financial Services (5.0%):
500 Associates Corp., 8.63%, 6/15/97.......................... 510
1,000 Associates Corp., 6.25%, 3/15/99.......................... 991
2,000 Avco Financial, 5.50%, 4/1/00............................. 1,913
500 Beneficial Corp., 9.90%, 11/17/97......................... 521
1,300 British Telcom Finance, Inc., 9.38%, 2/15/99.............. 1,383
300 CIT Group Holdings, Inc., 8.75%, 7/1/97................... 307
1,000 Margaretten Financial, 6.75%, 6/15/00..................... 990
--------
6,615
--------
Industrial Goods & Services (1.6%):
1,050 Browning Ferris International, 6.10%, 1/15/03............. 995
1,156 Rockwell International, 6.63%, 6/1/05..................... 1,113
--------
2,108
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Insurance (3.6%):
$ 1,000 AON Corp., 6.88%, 10/1/99................................. $ 1,000
1,600 Capital Holding Corp., 9.20%, 4/17/01..................... 1,732
640 Chubb Corp., 8.75%, 11/15/99.............................. 674
1,300 Torchmark Corp., 9.63%, 5/1/98............................ 1,360
--------
4,766
--------
Oil & Gas Exploration & Production Services (1.2%):
1,450 BP America, 9.38%, 11/1/00 ............................... 1,582
--------
Pharmaceuticals (0.8%):
1,000 McKesson Corp., 8.63%, 2/1/98 ............................ 1,030
--------
Railroads (1.9%):
1,500 Union Pacific Corp., 6.25%, 3/15/99....................... 1,479
1,000 Union Pacific Corp., 7.00%, 6/15/00....................... 1,000
--------
2,479
--------
Utility--Electric (4.5%):
1,000 Con Edison, 6.63%, 2/1/02................................. 984
470 National Rural, 9.50%, 5/15/97............................ 481
1,500 Northern States Power, 7.88%, 10/1/01..................... 1,551
1,000 Oklahoma Gas & Electric, 6.25%, 10/15/00.................. 974
1,000 Southern California Edison, 5.60%, 12/15/98............... 979
1,000 Virginia Electric & Power, 7.25%, 3/1/97.................. 1,006
--------
5,975
--------
Utility--Telephone (2.8%):
1,000 General Telephone & Electric, 5.82%, 12/1/99.............. 972
2,000 General Telephone & Electric-California, 5.63%, 2/1/01.... 1,898
1,000 BellSouth Telecommunications, 6.25%, 5/15/03.............. 964
--------
3,834
--------
Total Corporate Bonds 41,763
--------
U.S. GOVERNMENT AGENCIES (2.2%):
Federal Home Loan Mortgage Corp.:
2,000 5.40%, 11/1/00............................................ 1,901
</TABLE>
Continued
-31-
<PAGE> 129
AMSOUTH MUTUAL FUNDS
BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc.:
$ 1,000 6.40%, 5/2/01............................................. $ 985
--------
Total U.S. Government Agencies 2,886
--------
U.S. TREASURY BONDS (18.5%):
4,500 7.50%, 11/15/16........................................... 4,698
22,000 6.25%, 8/15/23............................................ 19,823
--------
Total U.S. Treasury Bonds 24,521
--------
U.S. TREASURY NOTES (39.9%):
3,000 6.38%, 1/15/99............................................ 3,004
11,000 7.50%, 11/15/01........................................... 11,432
17,000 6.38%, 8/15/02............................................ 16,784
13,000 5.75%, 8/15/03............................................ 12,314
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
U.S. TREASURY NOTES, CONTINUED:
$10,000 5.88%, 11/15/05........................................... $ 9,376
--------
Total U.S. Treasury Notes 52,910
--------
U.S. TREASURY STRIPS (5.0%):
11,000 5.30%, 2/15/04............................................ 6,659
--------
Total U.S. Treasury Strips 6,659
--------
INVESTMENT COMPANIES (0.9%):
1,238 AmSouth Prime Obligations Fund............................ 1,238
3 AmSouth U.S. Treasury Fund................................ 3
--------
Total Investment Companies 1,241
--------
Total (Cost--$130,877)(a) $129,980
========
<FN>
- --------
Percentages indicated are based on net assets of $132,737.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in
thousands):
Unrealized appreciation $1,553
Unrealized depreciation (2,450)
-------
Net unrealized depreciation $ (897)
=======
</TABLE>
See notes to financial statements.
-32-
<PAGE> 130
AMSOUTH MUTUAL FUNDS
LIMITED MATURITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<C> <S> <C>
CORPORATE BONDS (85.1%):
Banking (24.1%):
500 Chemical Banking, 6.63%, 1/15/98........................... $ 501
1,000 Comerica, 5.95%, 9/15/97................................... 995
2,000 First Union Corp., 6.75%, 1/15/98.......................... 2,010
1,000 Huntington National Bank, 4.48%, 10/14/96.................. 997
2,000 Mellon Financial, 6.50%, 12/1/97........................... 2,000
2,540 NationsBank Corp., 6.63%, 1/15/98.......................... 2,550
2,000 Security Pacific Corp., 8.49%, 12/27/96.................... 2,015
-------
11,068
-------
Beverages (3.2%):
1,500 PepsiCo., Inc., 5.46%, 7/1/98.............................. 1,472
-------
Brokerage Services (4.3%):
2,000 Dean Witter Discover & Co., 6.00%, 3/1/98 1,988
-------
Chemicals (4.3%):
2,000 Dow Capital, 5.75%, 9/15/97................................ 1,995
-------
Electric Utility (8.5%):
2,000 Florida Power & Light, 5.70%, 3/5/98....................... 1,978
1,950 Georgia Power, 6.13%, 9/1/99............................... 1,917
-------
3,895
-------
Electrical & Electronic (4.4%):
2,000 Sony Capital Corp., 6.98%, 7/2/97.......................... 2,022
-------
Financial Services (17.9%):
1,200 Associates Corp. of North America, 7.50%, 5/15/99.......... 1,224
2,000 Beneficial Corp., 7.32%, 11/17/99.......................... 2,030
500 Commercial Credit Co., 6.75%, 1/15/97...................... 502
1,500 Ford Motor Credit Corp., 6.00%, 3/24/98.................... 1,491
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Financial Services, continued:
2,000 Norwest Financial, Inc., 5.20%, 4/29/97.................... $ 1,991
1,000 American General Finance, 5.80%, 4/1/97.................... 998
-------
8,236
-------
Food Products (9.5%):
2,500 General Mills, 7.13%, 10/3/97.............................. 2,524
1,850 Grand Metro Investment, 6.50%, 9/15/99..................... 1,833
-------
4,357
-------
Insurance (4.5%):
2,000 American General Corp., 7.70%, 10/15/99.................... 2,053
-------
Leasing (4.5%):
2,000 USL Capital Corp., 8.13%, 2/15/00.......................... 2,067
-------
Total Corporate Bonds 39,153
-------
U.S. GOVERNMENT AGENCIES (2.1%):
1,000 Federal Home Loan Mortgage Corp., 5.75%, 11/16/98.......... 984
-------
Total U.S. Government Agencies 984
-------
U.S. TREASURY NOTES (10.5%):
5,000 5.63%, 11/30/00............................................ 4,828
-------
Total U.S. Treasury Notes 4,828
-------
INVESTMENT COMPANIES (0.7%):
300 AmSouth Prime Obligations Fund............................. 300
-------
Total Investment Companies 300
-------
Total (Cost--$45,837)(a) $45,265
=======
<FN>
- --------
Percentages indicated are based on net assets of $46,005.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in
thousands):
Unrealized appreciation $ 373
Unrealized depreciation (945)
-----
Net unrealized appreciation $(572)
=====
</TABLE>
See notes to financial statements.
-33-
<PAGE> 131
AMSOUTH MUTUAL FUNDS
GOVERNMENT INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------------ -------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (67.2%):
Government National Mortgage Assoc.:
$ 66 9.50%, 5/15/18.............................................. $ 70
93 9.00%, 6/15/18.............................................. 97
116 9.00%, 8/15/18.............................................. 122
132 9.50%, 2/15/19.............................................. 141
196 9.50%, 6/15/19.............................................. 208
21 9.50%, 7/15/19.............................................. 22
343 9.00%, 10/15/19............................................. 357
145 9.00%, 12/15/19............................................. 151
74 8.50%, 12/15/19............................................. 75
153 9.00%, 1/15/20.............................................. 160
78 9.00%, 3/15/20.............................................. 81
118 9.00%, 5/15/20.............................................. 123
74 9.50%, 5/15/20.............................................. 79
394 9.50%, 9/15/20.............................................. 418
159 8.50%, 11/15/20............................................. 163
75 9.00%, 11/15/20............................................. 78
456 9.50%, 11/15/20............................................. 484
86 9.50%, 12/15/20............................................. 91
22 9.50%, 1/15/21.............................................. 24
458 9.00%, 2/15/21.............................................. 477
243 8.50%, 8/15/21.............................................. 248
267 9.50%, 8/15/21.............................................. 284
197 9.00%, 9/15/21.............................................. 206
90 8.50%, 10/15/21............................................. 92
175 9.00%, 10/15/21............................................. 183
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 153 9.00%, 1/15/22............................................. $ 160
26 9.00%, 4/15/22............................................. 27
104 9.00%, 6/15/22............................................. 108
25 9.00%, 9/15/22............................................. 26
17 8.50%, 2/15/23............................................. 17
221 7.50%, 6/15/24............................................. 218
1,001 7.50%, 7/15/25............................................. 984
495 7.50%, 8/15/25............................................. 487
3,226 7.50%, 9/15/25............................................. 3,171
470 7.50%, 12/15/25............................................ 462
495 8.00%, 7/15/26............................................. 498
-------
Total U.S. Government Agencies 10,592
-------
U.S. TREASURY BONDS (9.9%):
1,500 7.50%, 11/15/16............................................ 1,566
-------
Total U.S. Treasury Bonds 1,566
-------
U.S. TREASURY NOTES (21.2%):
3,400 6.50%, 5/15/05............................................. 3,340
-------
Total U.S. Treasury Notes 3,340
-------
INVESTMENT COMPANIES (1.4%):
226 AmSouth U.S. Treasury Fund................................. 226
-------
Total Investment Companies 226
-------
Total (Cost--$15,971)(a) $15,724
=======
<FN>
- --------
Percentages indicated are based on net assets of $15,752.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
Unrealized appreciation $ 93
Unrealized depreciation (340)
-----
Net unrealized depreciation $(247)
=====
</TABLE>
See notes to financial statements.
-34-
<PAGE> 132
AMSOUTH MUTUAL FUNDS
FLORIDA TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------------ ------
<C> <S> <C>
FLORIDA MUNICIPAL BONDS (92.7%):
$ 545 Altamonte Springs, Health Facility, 5.60%, 10/1/10.......... $ 556
500 Board of Education, Series H, 6.90%, 5/1/98................. 524
655 Brevard County, Solid Waste Disposal System, 5.63%, 4/1/08.. 652
1,000 Broward County Expressway Authority, Series A, 6.50%,
7/1/04..................................................... 1,022
1,000 Cape Coral, Special Obligation, 5.50%, 7/1/99............... 1,032
1,000 Clearwater, Water & Sewer Revenue, 4.75%, 12/1/00........... 1,012
1,000 Dade County, Aviation Authority, Series 1994 B, 6.25%,
10/1/04, AMBAC............................................. 1,092
725 Dade County, School Board, Series A, 5.20%, 5/1/06.......... 729
1,000 Davie, Water & Sewer Revenue, 5.20%, 10/1/99................ 1,023
1,000 Department of Natural Resources, Preservation 2000, 6.30%,
7/1/04, MBIA............................................... 1,071
1,000 Division of Bond Finance, Natural Reserve Preservation 2000,
Series A, 5.40%, 7/1/07, MBIA.............................. 1,011
1,000 Dunes, Community Development District, 5.00%, 10/1/98....... 1,004
1,000 Dunes, Community Development District, 5.50%, 10/1/07....... 991
500 Gulf Breeze, Local Government, 5.90%, 12/10/10.............. 506
470 Hernando County, Water & Sewer Revenue, 5.10%, 6/1/98....... 479
1,000 Hillsborough County, Board, 4.60%, 7/1/97................... 1,007
750 Hillsborough County, Environmental Land, 6.00%, 7/1/03*..... 805
1,000 Hillsborough County, Solid Waste, 5.30%, 10/1/03............ 1,033
1,000 Homestead, Special Insurance Assessment, 4.90%, 9/1/00...... 1,016
1,000 Housing Finance Agency, 6.63%, 2/1/08*...................... 1,002
810 Housing Finance Agency, Series 1995 A-1, 5.65%, 1/1/09...... 803
1,000 Jacksonville, District Water & Sewer, 5.20%, 10/1/02........ 1,030
500 Jacksonville, Electric Authority, 6.95%, 10/1/04............ 536
1,000 Lake County, Sales Revenue, 5.13%, 12/1/98.................. 1,023
1,000 Lee County, Capital Improvements Revenue, Series B, 4.75%,
10/1/00.................................................... 1,012
1,000 Lee County, Local Option Gas Tax Revenue, 4.50%, 10/1/01.... 998
500 Manatee County School Board, 5.75%, 7/1/09.................. 517
1,000 Martin County, 3.80%, 8/1/98................................ 994
1,000 Miami Beach, Water & Sewer Revenue, 5.38%, 9/1/08........... 1,009
955 Miramar, Wastewater Improvement, Series 1994, 6.25%,
10/1/05.................................................... 1,041
595 Miramar, Water Improvement, 4.50%, 10/1/01.................. 594
1,000 Orange County, Sales Tax, Series A, 4.38%, 1/1/01........... 994
1,000 Orlando & Orange County Expressway Authority, 4.80%, 7/1/01. 1,011
1,000 Orlando Utilities, Community Water & Electric, 5.00%, 1,021
10/1/99....................................................
1,000 Ormond Beach, Water & Sewer, 5.60%, 9/1/99.................. 1,038
1,000 Pasco County, Water & Sewer Revenue, Series A, 5.50%,
10/1/03, FGIC.............................................. 1,042
1,000 Pembroke Pines, Public Improvement, 4.63%, 10/1/00.......... 1,007
1,000 Polk County, Capital Improvement, 4.30%, 12/1/02............ 973
1,000 Port of Palm Beach, Revenue Bonds, 6.25%, 9/1/08............ 1,065
910 Punta Gorda, Utilities, 5.00%, 1/1/98....................... 922
</TABLE>
Continued
-35-
<PAGE> 133
AMSOUTH MUTUAL FUNDS
FLORIDA TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<C> <S> <C>
FLORIDA MUNICIPAL BONDS CONTINUED:
$ 455 St. Johns County, Road Development, 5.20%, 10/1/99......... $ 467
1,000 St. Johns River, Water, 5.10%, 7/1/09...................... 977
600 St. Lucie County, Sales Tax, 4.20%, 10/1/01................ 587
800 St. Lucie County, Sales Tax, 4.30%, 10/1/02................ 776
625 St. Lucie County, Special Assessment, 5.10%, 11/1/04....... 621
1,000 Seminole County, Local Option Gas Tax, 5.00%, 10/1/02...... 1,019
1,000 Seminole County, School District, GO, 5.20%, 8/1/97........ 1,013
1,000 State Sunshine Skyway, 6.60%, 7/1/08* 1,061
1,000 Tallahassee, Utility System Revenue, 5.80%, 10/1/08........ 1,041
550 Tampa, Solid Waste Revenue, 4.90%, 10/1/02, FGIC........... 556
1,000 Volusia County, Sales Tax, 5.00%, 10/1/96.................. 1,002
-------
Total Florida Municipal Bonds....................................... 45,317
-------
INVESTMENT COMPANIES (6.0%):
547 AmSouth Tax Exempt Money Market Fund....................... 547
2,393 Dreyfus Florida Money Market Fund.......................... 2,393
-------
Total Investment Companies.......................................... 2,940
-------
Total (Cost--$47,077)(a)............................................ $48,257
=======
<FN>
- --------
Percentages indicated are based on net assets of $48,869.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation............................................. $ 1,236
Unrealized depreciation............................................. (56)
-------
Net unrealized appreciation......................................... $ 1,180
=======
* Put and demand features exist allowing the Fund to require the repurchase of
the instrument within variable time periods including daily, weekly, monthly,
or semiannually.
AMBAC--Insured by AMBAC Indemnity Corporation
FGIC--Insured by Financial Guaranty Insurance Corporation
GO--General Obligation
MBIA--Insured by Municipal Bond Insurance Association
</TABLE>
See notes to financial statements.
-36-
<PAGE> 134
AMSOUTH MUTUAL FUNDS
EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands, except Shares or Principal Amounts)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ --------
<C> <S> <C>
COMMERCIAL PAPER (1.4%):
$5,085,000 IBM Credit Corp., 5.32%, 8/14/96...................... $ 5,075
--------
Total Commercial Paper 5,075
--------
COMMON STOCKS (92.2%):
Aerospace/Defense (1.3%):
53,000 TRW, Inc.............................................. 4,790
--------
Aluminum (0.8%):
96,000 Alcan Aluminum, Ltd................................... 2,856
--------
Apparel (0.9%):
320,000 Phillips Van Heusen................................... 3,440
--------
Automobiles (1.8%):
205,000 Ford Motor Co......................................... 6,662
--------
Automotive Parts (1.1%):
195,000 Arvin Industries, Inc................................. 4,217
--------
Banking (5.4%):
330,000 Great Western Financial Corp.......................... 7,837
80,000 J.P. Morgan & Co., Inc................................ 6,880
65,000 NationsBank Corp...................................... 5,582
--------
20,299
--------
Chemicals--Specialty (1.2%):
220,000 Engelhard Corp........................................ 4,510
--------
Computers & Peripherals (1.9%):
65,000 IBM Corp.............................................. 7,012
--------
Construction (0.4%):
110,000 Ryland Group.......................................... 1,636
--------
Electronic & Electrical (2.9%):
210,000 AMP, Inc.............................................. 8,111
61,000 Avnet, Inc............................................ 2,661
--------
10,772
--------
Financial Services (2.7%):
82,000 American Express Co................................... 3,588
116,000 Dun & Bradstreet Corp................................. 6,670
--------
10,258
--------
Food Processing & Packaging (4.5%):
323,280 Grand Metropolitan, ADR............................... 8,809
250,000 Sara Lee Corp......................................... 8,000
--------
16,809
--------
Forest Products--Lumber, Paper (2.0%):
180,000 Weyerhauser Co........................................ 7,515
--------
Gold & Silver Mining (1.0%)
220,000 Homestake Mining...................................... 3,603
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care (2.8%):
121,583 Aetna Services, Inc.....................................$ 7,067
105,000 United Healthcare Corp.................................. 3,544
--------
10,611
--------
Industrial Services (1.0%):
130,000 Measurex Corp........................................... 3,591
--------
Insurance--Broker (2.8%):
220,000 Alexander & Alexander Services, Inc..................... 3,630
76,000 Marsh & McLennan Cos., Inc.............................. 6,888
--------
10,518
--------
Insurance--Property, Casualty Health & Other (2.5%):
180,000 St. Paul Cos., Inc...................................... 9,315
--------
Manufacturing--Capital Goods (0.4%):
48,800 Kennametal, Inc......................................... 1,513
--------
Medical Supplies (2.0%):
185,000 Baxter International, Inc............................... 7,701
--------
Newspapers (4.6%):
215,000 Dow Jones & Co., Inc.................................... 8,412
137,000 Gannett Co., Inc........................................ 8,991
--------
17,403
--------
Oil & Gas Exploration, Production & Services (8.5%):
200,000 Burlington Resources.................................... 8,550
300,000 Sun Company, Inc........................................ 7,762
101,000 Texaco, Inc............................................. 8,585
330,000 USX--Marathon Group..................................... 6,765
--------
31,662
--------
Oilfield Equipment & Services (3.6%):
130,000 Dresser Industries, Inc................................. 3,510
170,000 McDermott International, Inc............................ 3,081
85,000 Schlumberger, Limited................................... 6,800
--------
13,391
--------
Pharmaceuticals (6.9%):
150,000 American Home Products Corp............................. 8,513
76,000 Bristol-Myers Squibb Co................................. 6,583
120,000 Johnson & Johnson, Inc.................................. 5,730
120,000 Pharmacia & Upjohn, Inc................................. 4,950
--------
25,776
--------
Photography (0.7%):
33,000 Eastman Kodak Co........................................ 2,462
--------
Pollution Control Services & Equipment (2.2%):
275,000 WMX Technologies, Inc................................... 8,147
--------
</TABLE>
Continued
-37-
<PAGE> 135
AMSOUTH MUTUAL FUNDS
EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands, except Shares or Principal Amounts)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Railroad (1.8%):
$142,000 CSX Corp................................................... $ 6,852
--------
Retail (11.6%):
195,000 Dayton Hudson Corp......................................... 5,899
230,000 Dillard Department Stores, Inc............................. 7,216
200,000 Hechinger Co............................................... 700
150,000 May Department Stores...................................... 6,731
215,000 Melville Corp.............................................. 8,412
250,000 The Gap.................................................... 7,438
300,000 Wal-Mart Stores, Inc....................................... 7,200
--------
43,596
--------
Services (Non-Financial) (0.6%):
105,000 Rollins, Inc............................................... 2,205
--------
Telecommunications (0.3%):
50,333 360 Communications Co.(b).................................. 1,164
--------
Transportation--Marine (0.3%):
65,000 Kirby Corp.(b)............................................. 1,040
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Transportation Leasing & Trucking (2.2%):
$215,000 Ryder Systems, Inc........................................ $ 5,724
148,000 US Freightways Corp....................................... 2,618
--------
8,342
--------
Utilities--Electric & Gas (2.7%):
180,000 Baltimore Gas & Electric.................................. 4,635
250,000 Southern Co............................................... 5,656
--------
10,291
--------
Utilities--Telecommunications (6.8%):
120,000 AT&T Corp................................................. 6,255
170,000 BellSouth Corp............................................ 6,970
131,000 Nynex Corp................................................ 5,879
170,000 Sprint Corp............................................... 6,226
--------
25,330
--------
Total Common Stocks 345,289
--------
INVESTMENT COMPANIES (6.4%):
16,331,461 AmSouth Prime Obligations Fund............................ 16,331
7,497,161 AmSouth U.S. Treasury Fund................................ 7,497
--------
Total Investment Companies 23,828
--------
Total (Cost--$320,099)(a) $374,192
========
<FN>
- --------
Percentages indicated are based on net assets of $374,622.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax reporting purposes by the amount of losses
recognized for financial reporting purposes in excess of federal income
tax reporting of approximately $487. Cost for federal income tax purposes
differs from value by net unrealized appreciation of securities as
follows:
Unrealized appreciation........ $62,989
Unrealized depreciation........ (9,383)
-------
Net unrealized appreciation.... $53,606
=======
(b) Represents non-income producing securities.
ADR--American Depository Receipt
</TABLE>
See notes to financial statements.
-38-
<PAGE> 136
AMSOUTH MUTUAL FUNDS
REGIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands, except Shares)
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------------------------------------------------------- -------
<C> <S> <C>
COMMON STOCKS (90.3%):
Air Freight (1.7%):
20,000 Federal Express(b)......................................... $ 1,555
-------
Apparel (2.6%):
80,000 Delta Woodside Industries.................................. 380
60,000 Russell Corp............................................... 2,010
-------
2,390
-------
Automotive Parts (3.9%):
75,000 Discount Auto Parts, Inc.(b)............................... 1,781
45,000 Genuine Parts Co........................................... 1,907
-------
3,688
-------
Banking (10.0%):
35,000 Deposit Guaranty Corp...................................... 1,601
50,000 First Commerce Corp........................................ 1,737
60,000 First Tennessee National Corp.............................. 1,770
35,000 First Union Corp........................................... 2,223
24,000 NationsBank Corp........................................... 2,061
-------
9,392
-------
Building Materials (1.8%):
110,000 Interface, Inc............................................. 1,664
-------
Chemicals--Specialty (2.0%):
210,000 Ethyl Corp................................................. 1,890
-------
Electronic & Electrical (2.1%):
150,000 Scientific Atlanta, Inc.................................... 2,006
-------
Food Processing & Packaging (5.0%):
145,000 Flowers Industries, Inc.................................... 2,483
130,000 Lance, Inc................................................. 2,178
-------
4,661
-------
Forest Products--Lumber, Paper (4.1%):
80,000 Carauster Industries, Inc.................................. 2,210
65,000 James River Corp........................................... 1,641
-------
3,851
-------
Furniture (0.7%):
105,000 Winsloew Furniture, Inc.(b)................................ 628
-------
Insurance (5.3%):
100,000 Equifax, Inc............................................... 2,513
80,000 First Colony Corp.......................................... 2,450
-------
4,963
-------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------------------------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Manufacturing (2.5%):
65,000 Wolverine Tube, Inc.(b).................................... $ 2,308
-------
Medical Services (11.7%):
100,000 Coventry Corp.(b).......................................... 1,250
220,000 HEALTHSOUTH Rehabilitation Corp.(b)........................ 6,683
151,875 Health Management Assoc., Inc.............................. 3,056
-------
10,989
-------
Oil & Gas Exploration, Production & Services (5.8%):
40,000 Louisiana Land & Exploration Co............................ 2,160
13,000 Mobil Corp................................................. 1,435
60,000 Production Operators....................................... 1,875
-------
5,470
-------
Oilfield Equipment & Services (2.8%):
60,000 McDermott International, Inc............................... 1,088
120,000 Offshore Logistics(b)...................................... 1,500
-------
2,588
-------
Printing (2.6%):
100,000 John H. Harland Co......................................... 2,425
-------
Railroad (2.2%):
25,000 Norfolk & Southern Co...................................... 2,022
-------
Restaurants (2.5%):
110,000 Cracker Barrel Old Country Store, Inc...................... 2,337
-------
Retail (8.0%):
170,000 Big B., Inc................................................ 1,636
150,000 Books A Million(b)......................................... 975
170,000 Hancock Fabrics............................................ 1,445
160,000 Stein Mart, Inc.(b)........................................ 3,400
-------
7,456
-------
Services (Non-Financial) (1.0%):
45,000 Rollins, Inc............................................... 945
-------
Steel (3.0%):
115,000 Birmingham Steel Corp...................................... 1,869
20,000 Nucor Corp................................................. 937
-------
2,806
-------
Transportation Leasing & Trucking (2.3%):
80,000 Ryder Systems, Inc......................................... 2,130
-------
</TABLE>
Continued
-39-
<PAGE> 137
AMSOUTH MUTUAL FUNDS
REGIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands, except Shares)
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------------------------------------------------------- -------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Utilities--Electric (4.4%):
55,000 Florida Progress Corp...................................... $ 1,842
100,000 Southern Co................................................ 2,263
-------
4,105
-------
Utilities--Telecommunications (2.4%):
55,000 BellSouth Corp............................................. 2,255
-------
Total Common Stocks 84,524
-------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------------------------------------------------------- -------
<C> <S> <C>
INVESTMENT COMPANIES (9.7%):
4,680,576 AmSouth Prime Obligations Fund............................. $ 4,680
4,360,002 AmSouth U.S. Treasury Fund................................. 4,360
-------
Total Investment Companies 9,040
-------
Total (Cost--$75,423)(a) $93,564
=======
<FN>
- --------
Percentages indicated are based on net assets of $93,584.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation....... $22,680
Unrealized depreciation....... (4,539)
-------
Net unrealized appreciation... $18,141
=======
(b) Represents non-income producing securities.
</TABLE>
See notes to financial statements.
-40-
<PAGE> 138
AMSOUTH MUTUAL FUNDS
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1996
(Amounts in Thousands, except Shares and Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
COMMON STOCKS (49.1%):
Aerospace/Defense (0.9%):
35,000 TRW, Inc.................................................. $ 3,163
--------
Aluminum (0.5%):
55,000 Alcan Aluminum Limited.................................... 1,636
--------
Apparel (0.4%):
140,000 Phillips Van Heusen....................................... 1,505
--------
Automobiles (1.1%):
120,000 Ford Motor Co............................................. 3,900
--------
Automotive Parts (0.6%):
101,000 Arvin Industries, Inc..................................... 2,148
--------
Banking (3.3%):
150,000 Great Western Financial Corp.............................. 3,562
40,000 J.P. Morgan & Co., Inc. .................................. 3,440
49,000 NationsBank Corp. ........................................ 4,208
--------
11,210
--------
Chemicals--Specialty (0.6%):
100,000 Engelhard Corp............................................ 2,050
--------
Computers & Peripherals (0.9%):
27,000 IBM Corp.................................................. 2,913
--------
Construction (0.3%):
76,000 Ryland Group.............................................. 1,130
--------
Electronic & Electrical (1.6%):
103,000 AMP, Inc. ................................................ 3,978
32,000 Avnet, Inc. .............................................. 1,396
--------
5,374
--------
Financial Services (1.4%):
45,000 American Express Co....................................... 1,969
48,000 Dun & Bradstreet Corp..................................... 2,760
--------
4,729
--------
Food Processing & Packaging (2.2%):
129,189 Grand Metropolitan ADR.................................... 3,520
120,000 Sara Lee Corp............................................. 3,840
--------
7,360
--------
Forest Products--Lumber, Paper (1.0%):
80,000 Weyerhauser Co. .......................................... 3,340
--------
Gold & Silver Mining (0.5%):
95,000 Homestake Mining.......................................... 1,556
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Health Care (1.3%):
57,182 Aetna, Inc.(b)............................................ $ 3,324
35,000 United Healthcare Corp.................................... 1,181
--------
4,505
--------
Industrial Services (0.8%):
100,000 Measurex Corp. ........................................... 2,762
--------
Insurance--Broker (1.4%):
132,000 Alexander & Alexander Services, Inc. ..................... 2,178
30,000 Marsh & McLennan Cos., Inc. .............................. 2,719
--------
4,897
--------
Insurance--Property, Casualty, Health & Other (1.1%):
75,000 St. Paul Cos., Inc........................................ 3,881
--------
Manufacturing--Capital Goods (0.3%):
31,000 Kennametal, Inc........................................... 961
--------
Medical Supplies (1.4%):
110,000 Baxter International, Inc................................. 4,579
--------
Newspapers (2.1%):
77,000 Dow Jones & Co., Inc...................................... 3,013
63,000 Gannett Co., Inc.......................................... 4,134
--------
7,147
--------
Oil & Gas Exploration, Production, & Services (5.0%):
120,000 Burlington Resources...................................... 5,130
145,000 Sun Company, Inc.......................................... 3,752
59,000 Texaco, Inc............................................... 5,015
150,000 USX--Marathon Group....................................... 3,075
--------
16,972
--------
Oilfield Equipment & Services (2.3%):
100,000 Dresser Industries, Inc................................... 2,700
60,000 McDermott International, Inc.............................. 1,088
50,000 Schlumberger, Limited..................................... 4,000
--------
7,788
--------
Pharmaceuticals (3.6%):
81,000 American Home Products Corp............................... 4,597
40,000 Bristol-Myers Squibb Co. ................................. 3,465
52,000 Johnson & Johnson, Inc. .................................. 2,483
40,000 Pharmacia & Upjohn, Inc................................... 1,650
--------
12,195
--------
</TABLE>
Continued
-41-
<PAGE> 139
AMSOUTH MUTUAL FUNDS
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands, except Shares and Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Photography (0.4%):
18,000 Eastman Kodak Co.......................................... $ 1,343
--------
Pollution Control Services & Equipment (1.0%):
115,000 WMX Technologies, Inc..................................... 3,407
--------
Railroads (1.1%):
80,000 CSX Corp. ................................................ 3,860
--------
Retail (5.2%):
54,000 Dayton Hudson Corp........................................ 1,633
85,000 Dillard Department Stores, Inc............................ 2,667
170,000 Hechinger Co.............................................. 595
60,000 May Department Stores..................................... 2,692
100,000 Melville Corp............................................. 3,913
135,000 The Gap................................................... 4,016
81,000 Wal-Mart Stores, Inc...................................... 1,944
--------
17,460
--------
Services (Non-Financial) (0.2%):
25,000 Rollins, Inc.............................................. 525
--------
Telecommunications (0.2%):
26,666 360 Communications Co.(b)................................. 617
--------
Transportation Leasing & Trucking (0.9%):
70,000 Ryder Systems, Inc........................................ 1,864
63,000 US Freightways Corp....................................... 1,114
--------
2,978
--------
Transportation--Marine (0.1%):
30,000 Kirby Corp.(b)............................................ 480
--------
Utilities--Electric (1.2%):
73,000 Baltimore Gas & Electric.................................. 1,880
100,000 Southern Co............................................... 2,263
--------
4,143
--------
Utilities--Telecommunications (4.0%):
55,000 AT&T Corp................................................. 2,867
90,000 BellSouth Corp............................................ 3,690
90,000 Nynex Corp................................................ 4,039
80,000 Sprint Corp............................................... 2,930
--------
13,526
--------
Total Common Stocks................................................. 166,076
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<C> <S> <C>
CORPORATE BONDS (16.2%):
Appliances (0.2%):
500,000 Whirlpool Corp., 9.50%, 6/15/00............................ $ 543
-------
Automotive (1.0%):
1,430,000 Ford Capital, 9.13%, 5/1/98................................ 1,491
1,000,000 Ford Motor Credit Corp., 5.63%, 1/15/99.................... 977
700,000 General Motors Corp., 9.63%, 12/1/00....................... 766
-------
3,234
-------
Banking (3.4%):
930,000 Bank of America, 9.50%, 4/1/01............................. 1,017
1,000,000 Bankers Trust Co., 7.25%, 11/1/96.......................... 1,002
1,000,000 Bankers Trust Co., 9.50%, 6/14/00.......................... 1,076
2,500,000 Mellon Corporation, 6.30%, 6/1/00.......................... 2,447
4,185,000 NationsBank Corp., 5.38%, 4/15/00.......................... 3,981
2,000,000 SunTrust Banks, Inc., 7.38%, 7/1/06........................ 1,998
-------
11,521
-------
Brokerage Services (2.0%):
4,000,000 Dean Witter Discover & Co., 6.00%, 3/1/98.................. 3,975
2,000,000 Merrill Lynch, 6.0%, 3/1/01................................ 1,918
1,000,000 Morgan Stanley Group, Inc., 9.25%, 3/1/98.................. 1,040
-------
6,933
-------
Entertainment (0.3%):
1,000,000 Columbia Picture Entertainment, Inc., 9.88%, 2/1/98........ 1,037
-------
Financial--Commercial (1.2%):
4,000,000 Associates Corp. N.A., 6.75%, 7/15/01...................... 3,950
-------
Financial Services (2.0%):
1,000,000 American General Finance, 7.70%, 11/15/97.................. 1,016
500,000 Associates Corp., 8.63%, 6/15/97........................... 510
500,000 Beneficial Corp., 9.90%, 11/17/97.......................... 521
1,200,000 British Telcom Finance, Inc., 9.38%, 2/15/99............... 1,227
200,000 CIT Group Holdings, Inc., 8.75%, 7/1/97.................... 205
1,000,000 Commercial Credit Co., 7.88%, 7/15/04...................... 1,035
</TABLE>
Continued
-42-
<PAGE> 140
AMSOUTH MUTUAL FUNDS
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1996
(Amounts in Thousands, except Shares and Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Financial Services, continued:
2,000,000 Morgan Stanley Group, Inc., 8.10%, 6/24/02................ $ 2,092
--------
6,656
--------
Food Products (0.3%):
1,000,000 H.J. Heinz Co., 6.75%, 10/15/99........................... 999
--------
Industrial Goods & Services (1.3%):
500,000 Browning Ferris International, 6.10%, 1/15/03............. 474
1,000,000 Dresser Industries, Inc., 6.25%, 6/1/00................... 979
2,000,000 Waste Management, 7.70%, 10/1/02.......................... 2,065
1,000,000 WMX Technologies, Inc., 8.25%, 11/15/99................... 1,043
--------
4,561
--------
Insurance (1.3%):
1,000,000 Allstate Corp., 5.88%, 6/15/98............................ 987
1,400,000 Capital Holding Corp., 9.20%, 4/17/01..................... 1,516
560,000 Chubb Corp., 8.75%, 11/15/99.............................. 590
1,200,000 Torchmark Corp., 9.63%, 5/1/98............................ 1,256
--------
4,349
--------
Oil & Gas Exploration & Production Services (0.5%):
1,550,000 BP America, 9.38%, 11/1/00................................ 1,691
--------
Pharmaceuticals (0.3%):
1,000,000 McKesson Corp., 8.63%, 2/1/98............................. 1,030
--------
Retail Stores (0.6%):
4,000,000 Wal-Mart Stores, Inc., 6.75%, 5/15/02..................... 1,980
--------
Technology (0.5%):
1,730,000 Lucent Technologies, Inc., 6.90%, 7/15/01................. 1,723
--------
Utility--Electric (1.3%):
530,000 National Rural, 9.50%, 5/15/97............................ 543
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- --------------------------------------------------------- --------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Utility--Electric, continued:
2,000,000 Oklahoma Gas & Electric, 6.25%, 10/15/00................. $ 1,947
900,000 Pennsylvania Power & Light, 6.00%, 6/1/00................ 872
1,200,000 Virginia Electric & Power, 7.25%, 3/1/97................. 1,207
--------
4,569
--------
Total Corporate Bonds 54,776
--------
U.S. TREASURY BONDS (7.6%):
11,000,000 7.50%, 11/15/16.......................................... 11,484
16,000,000 6.25%, 8/15/23........................................... 14,417
--------
Total U.S. Treasury Bonds 25,901
--------
U.S. TREASURY NOTES (20.7%):
3,000,000 6.38%, 6/30/97........................................... 3,013
5,100,000 7.88%, 4/15/98........................................... 5,240
1,800,000 9.25%, 8/15/98........................................... 1,903
3,400,000 6.38%, 1/15/99........................................... 3,406
1,000,000 7.13%, 2/29/00........................................... 1,020
4,000,000 7.75%, 2/15/01........................................... 4,186
25,000,000 6.38%, 8/15/02........................................... 24,682
18,300,000 5.75%, 8/15/03........................................... 17,334
10,000,000 5.88%, 11/15/05.......................................... 9,376
--------
Total U.S. Treasury Notes 70,160
--------
U.S. TREASURY STRIPS (2.1%):
12,000,000 7.01%, 2/15/04........................................... 7,264
--------
Total U.S. Treasury Strips 7,264
--------
INVESTMENT COMPANIES (3.2%):
10,667,552 AmSouth Prime Obligations Fund........................... 10,668
5,005 AmSouth U.S. Treasury Fund............................... 5
--------
Total Investment Companies 10,673
--------
Total (Cost--$302,295)(a) $334,850
========
<FN>
- --------
Percentages indicated are based on net assets of $338,425.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation........ $39,738
Unrealized depreciation........ (7,183)
-------
Net unrealized appreciation.... $32,555
=======
(b) Represents non-income producing securities.
ADR--American Depository Receipt
</TABLE>
See notes to financial statements.
-43-
<PAGE> 141
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
July 31, 1996
1. ORGANIZATION:
AmSouth Mutual Funds (the "Trust") was organized on August 5, 1988, and is
registered under the Investment Company Act of 1940, as amended, ("the 1940
Act") as a diversified, open-end investment company established as a
Massachusetts business trust.
The Trust is authorized to issue an unlimited number of shares (units of
beneficial interest) without par value. The Trust currently offers shares of
the AmSouth Prime Obligations Fund, the AmSouth U.S. Treasury Fund, the
AmSouth Tax-Exempt Fund, the AmSouth Bond Fund, the AmSouth Limited Maturity
Fund, the AmSouth Government Income Fund, the AmSouth Florida Tax-Free Fund,
the AmSouth Equity Fund, the AmSouth Regional Equity Fund, and the AmSouth
Balanced Fund (collectively, "the Funds" and individually "a Fund"). The
AmSouth Alabama Tax-Free Fund and the AmSouth Municipal Bond Fund have not
yet commenced operations. Sales of shares of the Funds may be made to
customers of AmSouth Bank of Alabama, ("AmSouth") and its affiliates, to all
accounts of correspondent banks of AmSouth and to the general public.
The Prime Obligations Fund, the U.S. Treasury Fund and the Tax Exempt Fund
(the "money market funds") each offer two classes of shares: Classic Shares
and Premier Shares. Effective April 1, 1996, the existing shares of the money
market funds, which were previously unclassified, were designated Premier
Shares, and the money market funds commenced offering Classic Shares. Shares
of the Bond Fund, Limited Maturity Fund, the Government Income Fund, the
Florida Tax-Free Fund, the Equity Fund, the Regional Equity Fund and the
Balanced Fund (the "variable net asset value funds") are not classified.
The Prime Obligations Fund and the U.S. Treasury Fund seek current income
with liquidity and stability of principal. The Tax Exempt Fund seeks to
produce as high a level of current interest income exempt from federal income
taxes as is consistent with the preservation of capital and relative
stability of principal. The Bond Fund and the Limited Maturity Fund seek
current income, consistent with the preservation of capital. The Government
Income Fund seeks to provide a high level of current income consistent with
prudent investment risk. The Florida Tax-Free Fund seeks to produce as high a
level of current interest income exempt from federal income taxes and Florida
intangibles taxes as is consistent with the preservation of capital. The
Equity Fund and the Regional Equity Fund seek growth of capital. The Balanced
Fund seeks to obtain long-term capital growth and current income.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Investments of the money market funds are valued at either amortized cost,
which approximates market value, or at original cost which, combined with
accrued interest, approximates market value. Under the
Continued
-44-
<PAGE> 142
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1996
amortized cost method, discount or premium is amortized on a constant basis
to the maturity of the security. In addition, the money market funds may
not (a) purchase any instrument with a remaining maturity greater than
thirteen months unless such instrument is subject to a demand feature, or
(b) maintain a dollar-weighted average maturity which exceeds 90 days.
Investments in common stocks, corporate bonds, municipal bonds, commercial
paper and U.S. Government securities of the variable net asset value funds
are valued at their market values determined on the basis of the mean
between the latest available bid and asked prices in the principal market
(closing sales prices if the principal market is an exchange) in which such
securities are normally traded. Investments in investment companies are
valued at their net asset values as reported by such companies. The
differences between cost and market values of such investments are
reflected as unrealized appreciation or depreciation.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the pro rata amortization of
premium or discount. Dividend income is recorded on the ex-dividend date.
Realized gains or losses from sales of securities are determined by
comparing the identified cost of the security lot sold with the net sales
proceeds.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements from member banks of the
Federal Deposit Insurance Corporation and from registered broker/dealers
which AmSouth deems creditworthy under guidelines approved by the Board of
Trustees, subject to the seller's agreement to repurchase such securities
at a mutually agreed-upon date and price. The repurchase price generally
equals the price paid by the Funds plus interest negotiated on the basis of
current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller, under a repurchase agreement,
is required to maintain the value of collateral held pursuant to the
agreement at not less than the repurchase price (including accrued
interest). Securities subject to repurchase agreements are held by the
Funds' custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to
be loans by a Fund under the 1940 Act.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS:
Each Fund may purchase securities on a "when-issued" basis. When-issued
securities are securities purchased for delivery beyond the normal
settlement date at a stated price and/or yield obtained may be more or less
than those available in the market when delivery takes place. Securities
purchased on a when-issued basis are recorded as an asset and are subject
to changes in value based upon changes in the general level of interest
rates. A segregated account is established and the Funds maintain cash and
marketable securities at least equal in value to commitments for when-
issued securities. Securities purchased on a when-issued basis do not earn
income until the settlement date.
Continued
-45-
<PAGE> 143
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1996
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly
for the money market funds. Dividends from net investment income are
declared and paid monthly for the variable net asset value funds.
Distributable net realized gains, if any, are declared and distributed
annually.
Dividends from net investment income and from net realized capital gains
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for mortgage-backed securities,
expiring capital loss carryforwards and deferrals of certain losses.
Permanent book and tax basis differences are reflected in the components of
net assets.
FEDERAL INCOME TAXES:
It is the policy of each Fund to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or substantially
all, federal income taxes.
OTHER:
Expenses that are directly related to one of the Funds are charged directly
to that Fund. Other operating expenses for the Trust are prorated to the
Funds on the basis of relative net assets.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended July 31, 1996:
<TABLE>
<CAPTION>
PURCHASES SALES
------------- -----------
<S> <C> <C>
Bond Fund.......................................... $ 50,913,891 $10,050,508
Limited Maturity Fund.............................. 16,463,380 27,907,166
Government Income Fund............................. 13,416,678 13,263,486
Florida Tax-Free Fund.............................. 7,971,931 5,619,012
Equity Fund........................................ 123,289,431 59,379,724
Regional Equity Fund............................... 17,947,105 6,293,543
Balanced Fund...................................... 97,603,876 62,732,272
</TABLE>
Continued
-46-
<PAGE> 144
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1996
4. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Funds which offer multiple classes of
shares for the years ended July 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
PRIME TAX EXEMPT
OBLIGATIONS FUND U.S. TREASURY FUND FUND
---------------------- ---------------------- ------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
For the period April 1,
1996 through July 31, 1996:
Classic Shares (a):
Shares issued ........ $ 165,419 165,419 $ 9,207 9,207 $ 9,803 9,803
Dividends reinvested.. 1,963 1,963 222 222 143 143
Shares redeemed....... (191,139) (191,139) (13,986) (13,986) (9,019) (9,019)
---------- ---------- ---------- ---------- -------- --------
Net increase.......... $ (23,757) (23,757) $ (4,557) (4,557) $ 927 927
========== ========== ========== ========== ======== ========
For the year ended July
31, 1996:
Premier Shares (a):
Shares issued......... $1,388,943 1,388,943 $1,088,791 1,088,791 $129,166 129,166
Dividends reinvested.. 5,460 5,460 1,751 1,751 388 388
Shares redeemed....... (1,384,702) (1,384,702) (1,028,499) (1,028,499) (127,394) (127,394)
---------- ---------- ---------- ---------- -------- --------
Net decrease.......... $ 9,701 9,701 $ 62,043 62,043 $ 2,160 2,160
========== ========== ========== ========== ======== ========
For the year ended July
31, 1995:
Shares issued......... $1,597,046 1,597,046 $ 900,697 900,697 $ 99,365 99,365
Dividends reinvested.. 5,036 5,036 2,103 2,103 311 311
Shares redeemed....... (1,561,740) (1,561,740) (880,465) (880,465) (102,959) (102,959)
---------- ---------- ---------- ---------- -------- --------
Net increase
(decrease)........... $ 40,342 40,342 $ 22,335 22,335 $ (3,283) (3,283)
========== ========== ========== ========== ======== ========
<FN>
- --------
(a) Effective April 1, 1996, the Funds' existing shares, which were previously
unclassified, were designated Premier Shares, and the Fund commenced
offering Classic Shares.
</TABLE>
5. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to each of the Funds by AmSouth.
Under the terms of the investment advisory agreement, AmSouth is entitled to
receive fees based on a percentage of the average net assets of each of the
Funds.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Ohio") are subsidiaries of the BISYS Group, Inc.
ASO Services Company, a wholly-owned subsidiary of The BISYS Group, Inc.,
serves the Funds as administrator. BISYS, with whom certain officers and
trustees of the Trust are affiliated, serves the Funds as sub-administrator.
Such officers and trustees are paid no fees directly by the Funds for serving
as officers and
Continued
-47-
<PAGE> 145
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1996
trustees of the Trust. Prior to April 1, 1996, BISYS served the Funds as
administrator. Under the terms of the administration agreement, ASO Services
Company's fees are computed daily as 0.20% of the average net assets of each
of the Funds. The terms of the current administration agreement are
substantially the same as the former administration agreement. BISYS also
serves as the Funds' distributor and is entitled to receive commissions on
sales of shares of the variable net asset value funds. For the year ended
July 31, 1996, BISYS received $1,093,457 from commissions earned on sales of
shares of the Funds' variable net asset value funds of which $1,071,932 was
reallowed to AmSouth, an investment dealer of the Funds' shares and other
dealers of the Funds' shares. BISYS receives no fees from the Funds for
providing distribution services to money market funds. BISYS Ohio serves the
Funds as Transfer Agent and Mutual Fund Accountant. Under the terms of the
Transfer Agent and Accounting Agreement, the Company's fees are based on the
number of shareholders and as a percentage of average net assets,
respectively.
Fees may be voluntarily reduced to assist the Funds in maintaining
competitive expense ratios. Information regarding these transactions is as
follows for the year ended July 31, 1996 (amounts in thousands):
<TABLE>
<CAPTION>
INVESTMENT ADVISORY FEES
--------------------------------
ANNUAL FEE AS SHAREHOLDER
A PERCENTAGE OF ADMINISTRATION SERVICING FEES TRANSFER AGENT
AVERAGE DAILY FEES VOLUNTARILY FEES VOLUNTARILY VOLUNTARILY AND MUTUAL FUND
NET ASSETS REDUCED REDUCED REDUCED ACCOUNTANT FEES
--------------- ---------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Prime Obligations Fund.. 0.40% $ -- $ -- $63 $440
U.S. Treasury Fund...... 0.40% -- -- 7 272
Tax-Exempt Fund......... 0.40% 133 -- 7 67
Bond Fund............... 0.65% 165 88 -- 89
Limited Maturity Fund... 0.65% 87 47 -- 54
Government Income Fund.. 0.65% 61 18 -- 31
Florida Tax-Free Fund... 0.65% 171 49 -- 48
Equity Fund............. 0.80% -- 309 -- 244
Regional Equity Fund.... 0.80% 1 67 -- 78
Balanced Fund........... 0.80% 169 260 -- 237
</TABLE>
6. ELIGIBLE DISTRIBUTIONS: (UNAUDITED)
The AmSouth Mutual Funds designate the following eligible distributions for
the dividends received deductions for corporations for the year ended July
31, 1996:
<TABLE>
<CAPTION>
REGIONAL
EQUITY EQUITY BALANCED
FUND FUND FUND
------ -------- --------
<S> <C> <C> <C>
Dividend Income (000)................................ $8,258 $1,583 $4,562
Dividend Income Per Share............................ $0.281 $0.213 $0.145
</TABLE>
Continued
-48-
<PAGE> 146
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1996
7. EXEMPT-INTEREST INCOME DESIGNATIONS (UNAUDITED):
The AmSouth Mutual Funds designate the following exempt-interest dividends
for the taxable year ended July 31, 1996:
<TABLE>
<CAPTION>
FLORIDA TAX
TAX-FREE EXEMPT
FUND FUND
-------- ------
<S> <C> <C>
Exempt-Interest Dividends (000).............................. $2,107 $2,065
Exempt-Interest Dividends Per Share.......................... 0.449 --
Exempt-Interest Dividends Per Share--Classic Shares.......... -- 0.031
Exempt-Interest Dividends Per Share--Premier Shares.......... -- 0.010
</TABLE>
The percentage break-down of the exempt-interest income by state for the Tax
Exempt Fund's taxable year ended July 31, 1996 was as follows:
<TABLE>
<S> <C>
Alabama.................................................................. 9.2%
Arizona.................................................................. 3.5
California............................................................... 0.6
Colorado................................................................. 1.7
Connecticut.............................................................. 4.0
Delaware................................................................. 2.7
District of Columbia..................................................... 0.3
Florida.................................................................. 5.4
Georgia.................................................................. 6.5
Hawaii................................................................... 1.4
Illinois................................................................. 7.2
Indiana.................................................................. 0.2
Iowa..................................................................... 1.6
Kansas................................................................... 0.4
Louisiana................................................................ 3.2
Maryland................................................................. 0.2
Massachusetts............................................................ 0.5
Michigan................................................................. 0.9
Minnesota................................................................ 0.7
Mississippi.............................................................. 0.2
Missouri................................................................. 8.1
Nebraska................................................................. 3.1
Nevada................................................................... 0.3
New Jersey............................................................... 0.4
New York................................................................. 3.6
North Carolina........................................................... 0.4
Ohio..................................................................... 0.1
</TABLE>
Continued
-49-
<PAGE> 147
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
July 31, 1996
<TABLE>
<S> <C>
Oregon................................................................. 2.3%
Pennsylvania........................................................... 2.1
South Carolina......................................................... 1.8
Tennessee.............................................................. 6.1
Texas.................................................................. 16.0
Utah................................................................... 0.9
Virginia............................................................... 1.0
Washington............................................................. 2.3
West Virginia.......................................................... 1.0
Wisconsin.............................................................. 0.1
-----
Total.................................................................. 100.0%
=====
</TABLE>
8. FEDERAL INCOME TAX INFORMATION:
The following table presents capital gain dividend distributions from long-
term capital gains for the following Funds for the year ended July 31, 1996
(amounts in thousands):
<TABLE>
<S> <C>
Bond Fund.............................................................. $ 173
Florida Tax-Free Fund.................................................. 20
Equity Fund............................................................ 9,256
Regional Equity Fund................................................... 756
Balanced Fund.......................................................... 6,408
</TABLE>
At July 31, 1996, the following Funds have capital loss carryforwards which
are available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
AMOUNT EXPIRES
------ -------
<S> <C> <C>
Prime Obligations Fund........................................ $ 9 2001
Bond Fund..................................................... 28 2004
Limited Maturity Fund......................................... 478 2002
Limited Maturity Fund......................................... 730 2003
Limited Maturity Fund......................................... 4 2004
Government Income Fund........................................ 165 2003
Government Income Fund........................................ 239 2004
</TABLE>
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the fiscal year ended
July 31, 1997. The following Funds had such losses (amounts in thousands):
<TABLE>
<S> <C>
Bond Fund................................................................ $112
Limited Maturity Fund.................................................... 241
Government Income Fund................................................... 188
</TABLE>
-50-
<PAGE> 148
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
--------------------------------------------------------------------
YEAR ENDED JULY 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------------- -------- -------- -------- --------
CLASSIC (A) PREMIER (A)
----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income.. 0.050 0.016 0.050 0.029 0.027 0.042
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income.. (0.050) (0.016) (0.050) (0.029) (0.027) (0.042)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ========
Total Return............ 5.07%(d) 5.10% 5.14% 2.94% 2.76% 4.28%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000).......... $125,075 $478,542 $617,673 $577,331 $456,428 $457,511
Ratio of expenses to
average net assets.... 0.72% 0.71%(b) 0.69% 0.70% 0.71% 0.71%
Ratio of net investment
income to average net
assets................ 5.08% 4.71%(b) 5.04% 2.92% 2.73% 4.08%
Ratio of expenses to
average net assets*... 0.87% (c) (c) (c) (c) (c)
Ratio of net investment
income to average net
assets*............... 4.93% (c) (c) (c) (c) (c)
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(b) Annualized.
(c) There were no waivers during the period.
(d) Represents total return for the Premier Shares for the period from August
1, 1995 to March 31, 1995 plus the total return for the Classic Shares for
the period from April 1, 1996 to July 31, 1996.
</TABLE>
See notes to financial statements.
-51-
<PAGE> 149
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY FUND
-------------------------------------------------------------------
YEAR ENDED JULY 31,
-------------------------------------------------------------------
1996 1995 1994 1993 1992
------------------------- -------- -------- -------- --------
CLASSIC (A) PREMIER (A)
----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- -------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income.. 0.048 0.015 0.048 0.028 0.027 0.041
------- -------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income.. (0.048) (0.015) (0.048) (0.028) (0.027) (0.041)
------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======== ======== ======== ======== ========
Total Return............ 4.90%(d) 4.93% 4.90% 2.80% 2.69% 4.15%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000).......... $12,263 $368,162 $322,939 $300,603 $404,473 $339,666
Ratio of expenses to
average net assets.... 0.71% 0.72%(b) 0.70% 0.71% 0.72% 0.73%
Ratio of net investment
income to average net
assets................ 4.94% 4.54%(b) 4.81% 2.77% 2.66% 4.08%
Ratio of expenses to
average net assets*... 0.86% (c) (c) (c) (c) (c)
Ratio of net investment
income to average net
assets*............... 4.79% (c) (c) (c) (c) (c)
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(b) Annualized.
(c) There were no waivers during the period.
(d) Represents total return for the Premier Shares for the period from August
1, 1995 to March 31, 1995 plus the total return for the Classic Shares for
the period from April 1, 1996 to July 31, 1996.
</TABLE>
See notes to financial statements.
-52-
<PAGE> 150
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TAX EXEMPT FUND
--------------------------------------------------------------
YEAR ENDED JULY 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
------------------------- ------- ------- ------- -------
CLASSIC (a) PREMIER (a)
----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income.. 0.031 0.010 0.032 0.019 0.021 0.030
------- ------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income.. (0.031) (0.010) (0.032) (0.019) (0.021) (0.030)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return............ 3.12%(c) 3.15% 3.22% 1.95% 2.16% 3.12%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000).......... $17,116 $43,611 $57,640 $60,923 $48,151 $38,392
Ratio of expenses to
average net assets.... 0.54% 0.58%(b) 0.54% 0.57% 0.49% 0.65%
Ratio of net investment
income to average net
assets................ 3.16% 2.93%(b) 3.15% 1.93% 2.12% 2.98%
Ratio of expenses to
average net assets*... 0.69% 0.78%(b) 0.74% 0.77% 0.78% 0.77%
Ratio of net investment
income to average net
assets*............... 3.01% 2.73%(b) 2.95% 1.73% 1.83% 2.86%
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(b) Annualized.
(c) Represents the total return for the Premier Shares for the period from
August 1, 1995 to March 31, 1995 plus the total return for the Classic
Shares for the period from April 1, 1996 to July 31, 1996.
</TABLE>
See notes to financial statements.
-53-
<PAGE> 151
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BOND FUND
--------------------------------------------
YEAR ENDED JULY 31,
--------------------------------------------
1996 1995 1994 1993 1992
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................... $ 10.83 $ 10.59 $ 11.29 $ 11.29 $ 10.42
-------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income........... 0.65 0.69 0.69 0.71 0.74
Net realized and unrealized
gains (losses) from
investments.................... (0.18) 0.28 (0.66) 0.33 0.91
-------- ------- ------- ------- -------
Total from Investment
Activities.................... 0.47 0.97 0.03 1.04 1.65
-------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income........... (0.65) (0.69) (0.70) (0.71) (0.73)
Net realized gains.............. -- (0.04) (0.03) (0.33) (0.05)
In excess of net realized gains. (0.11) -- -- -- --
-------- ------- ------- ------- -------
Total Distributions............ (0.76) (0.73) (0.73) (1.04) (0.78)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD... $ 10.54 $ 10.83 $ 10.59 $ 11.29 $ 11.29
======== ======= ======= ======= =======
Total Return (excludes sales
charge)......................... 4.40% 9.70% 0.23% 9.80% 16.41%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000).......................... $132,737 $94,671 $79,472 $65,777 $60,156
Ratio of expenses to average net
assets......................... 0.75% 0.75% 0.78% 0.78% 0.82%
Ratio of net investment income
to average
net assets..................... 6.12% 6.63% 6.31% 6.37% 6.94%
Ratio of expenses to average net
assets*........................ 0.98% 0.98% 1.01% 1.01% 1.01%
Ratio of net investment income
to average
net assets*.................... 5.89% 6.40% 6.08% 6.14% 6.75%
Portfolio turnover............... 9.60% 17.70% 30.90% 14.98% 240.64%
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
</TABLE>
See notes to financial statements.
-54-
<PAGE> 152
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED MATURITY FUND
-------------------------------------------
YEAR ENDED JULY 31,
-------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 10.41 $ 10.23 $ 10.81 $ 10.81 $ 10.44
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income............ 0.58 0.58 0.54 0.60 0.70
Net realized and unrealized gains
(losses) from investments....... (0.10) 0.17 (0.45) 0.09 0.45
------- ------- ------- ------- -------
Total from Investment
Activities..................... 0.48 0.75 0.09 0.69 1.15
------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income............ (0.57) (0.57) (0.54) (0.61) (0.69)
In excess of net investment
income.......................... (0.01) -- -- -- --
Net realized gains............... -- -- -- (0.08) (0.09)
In excess of net realized gains.. -- -- (0.13) -- --
------- ------- ------- ------- -------
Total Distributions............. (0.58) (0.57) (0.67) (0.69) (0.78)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.... $ 10.31 $ 10.41 $ 10.23 $ 10.81 $ 10.81
======= ======= ======= ======= =======
Total Return (excludes sales
charge).......................... 4.74% 7.65% 0.77% 6.72% 11.48%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................... $46,005 $59,798 $51,660 $53,933 $38,206
Ratio of expenses to average net
assets.......................... 0.76% 0.80% 0.79% 0.69% 0.68%
Ratio of net investment income to
average net assets.............. 5.48% 5.69% 5.05% 5.67% 6.78%
Ratio of expenses to average net
assets*......................... 0.99% 1.03% 1.02% 1.03% 1.03%
Ratio of net investment income to
average net assets*............. 5.25% 5.46% 4.82% 5.33% 6.43%
Portfolio turnover................ 29.56% 38.11% 48.06% 141.27% 35.64%
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
</TABLE>
See notes to financial statements.
-55-
<PAGE> 153
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GOVERNMENT INCOME FUND FLORIDA TAX-FREE FUND
------------------------------------- -----------------------------
YEAR ENDED YEAR ENDED OCTOBER 1, 1993 YEAR ENDED SEPTEMBER 30, 1994
JULY 31, JULY 31, TO JULY 31, JULY 31, TO JULY 31,
1996 1995 1994(a) 1996 1995(a)
---------- ---------- --------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 9.54 $ 9.48 $ 10.00 $ 10.32 $ 10.00
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income.. 0.66 0.68 0.54 0.45 0.34
Net realized and
unrealized gains
(losses) from invest-
ments................. (0.20) 0.08 (0.57) (0.01) 0.30
------- ------- ------- ------- -------
Total from Investment
Activities........... 0.46 0.76 (0.03) 0.44 0.64
------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income.. (0.59) (0.70) (0.33) (0.45) (0.32)
Net realized gains..... -- -- -- (0.01) --
Tax return of capital.. (0.01) -- (0.16) -- --
------- ------- ------- ------- -------
Total Distributions... (0.60) (0.70) (0.49) (0.46) (0.32)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $ 9.40 $ 9.54 $ 9.48 $ 10.30 $ 10.32
======= ======= ======= ======= =======
Total Return (excludes
sales charge).......... 4.91% 8.43% (0.26%)(c) 4.24% 6.53%(c)
RATIOS/SUPPLEMENTAL DA-
TA:
Net Assets at end of
period (000).......... $15,752 $16,679 $15,465 $48,869 $48,333
Ratio of expenses to
average net assets.... 0.65% 0.58% 0.37%(b) 0.59% 0.70%(b)
Ratio of net investment
income to average net
assets................ 6.81% 7.18% 6.56%(b) 4.33% 4.16%(b)
Ratio of expenses to
average net assets*... 1.10% 1.19% 1.22%(b) 1.04% 1.01%(b)
Ratio of net investment
income to average net
assets*............... 6.36% 6.57% 5.71%(b) 3.88% 3.86%(b)
Portfolio turnover...... 78.31% 27.32% 122.94% 12.21% 2.33%
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Not annualized.
</TABLE>
See notes to financial statements.
-56-
<PAGE> 154
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY FUND
------------------------------------------------
YEAR ENDED JULY 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57
-------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income....... 0.33 0.33 0.28 0.28 0.32
Net realized and unrealized
gains from investments..... 1.48 2.39 0.83 1.48 1.20
-------- -------- -------- -------- --------
Total from Investment
Activities................ 1.81 2.72 1.11 1.76 1.52
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income....... (0.33) (0.32) (0.28) (0.29) (0.33)
Net realized gains.......... (0.61) (0.47) (0.39) (0.49) (0.36)
-------- -------- -------- -------- --------
Total Distributions........ (0.94) (0.79) (0.67) (0.78) (0.69)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD...................... $ 17.62 $ 16.75 $ 14.82 $ 14.38 $ 13.40
======== ======== ======== ======== ========
Total Return (excludes sales
charge)..................... 11.09% 19.27% 7.90% 13.81% 12.94%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)...................... $374,622 $275,757 $205,611 $153,074 $107,934
Ratio of expenses to average
net assets................. 1.02% 1.03% 0.94% 0.95% 1.01%
Ratio of net investment
income to average
net assets................. 1.86% 2.17% 1.93% 2.08% 2.50%
Ratio of expenses to average
net assets*................ 1.11% 1.11% 1.11% 1.13% 1.15%
Ratio of net investment
income to average
net assets*................ 1.77% 2.09% 1.76% 1.90% 2.36%
Portfolio turnover........... 19.11% 19.46% 11.37% 15.12% 113.12%
Average commission rate (a).. $ 0.0700 -- -- -- --
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
</TABLE>
See notes to financial statements.
-57-
<PAGE> 155
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
REGIONAL EQUITY FUND
-------------------------------------------
YEAR ENDED JULY 31,
-------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 18.94 $ 16.68 $ 16.74 $ 14.86 $ 13.44
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income............ 0.26 0.23 0.23 0.19 0.23
Net realized and unrealized gains
from investments................ 2.20 2.26 0.58 2.09 2.34
------- ------- ------- ------- -------
Total from Investment
Activities..................... 2.46 2.49 0.81 2.28 2.57
------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income............ (0.26) (0.23) (0.23) (0.20) (0.23)
Net realized gains............... (0.19) -- (0.41) (0.20) (0.92)
In excess of net realized gains.. -- -- (0.23) -- --
------- ------- ------- ------- -------
Total Distributions............. (0.45) (0.23) (0.87) (0.40) (1.15)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.... $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86
======= ======= ======= ======= =======
Total Return (excludes sales
charge).......................... 13.10% 15.10% 4.87% 15.53% 20.66%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................... $93,584 $68,501 $54,744 $41,347 $15,707
Ratio of expenses to average net
assets.......................... 1.05% 1.07% 0.79% 0.80% 0.91%
Ratio of net investment income to
average net assets.............. 1.30% 1.35% 1.36% 1.17% 1.61%
Ratio of expenses to average net
assets*......................... 1.13% 1.15% 1.24% 1.28% 1.36%
Ratio of net investment income to
average net assets*............. 1.22% 1.27% 0.90% 0.69% 1.16%
Portfolio turnover................ 8.22% 14.25% 5.83% 10.22% 24.99%
Average commission rate paid (a).. $0.0827 -- -- -- --
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
</TABLE>
See notes to financial statements.
-58-
<PAGE> 156
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BALANCED FUND
---------------------------------------------------------
YEAR ENDED JULY 31, DECEMBER 19, 1991
-------------------------------------- TO JULY 31,
1996 1995 1994 1993 1992(a)
-------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 12.76 $ 11.81 $ 11.86 $ 11.12 $ 10.00
-------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income.. 0.47 0.47 0.42 0.44 0.27
Net realized and
unrealized gains from
investments........... 0.58 1.24 0.18 0.80 1.09
-------- -------- -------- -------- --------
Total from Investment
Activities........... 1.05 1.71 0.60 1.24 1.36
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income.. (0.47) (0.46) (0.42) (0.45) (0.24)
Net realized gains..... (0.31) (0.30) (0.23) (0.05) --
-------- -------- -------- -------- --------
Total Distributions... (0.78) (0.76) (0.65) (0.50) (0.24)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................. $ 13.03 $ 12.76 $ 11.81 $ 11.86 $ 11.12
======== ======== ======== ======== ========
Total Return (excludes
sales charge).......... 8.37% 15.27% 5.13% 11.47% 13.71%(c)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000).......... $338,425 $295,509 $236,306 $179,134 $143,813
Ratio of expenses to
average net assets.... 0.98% 0.94% 0.84% 0.84% 0.83%(b)
Ratio of net investment
income to average net
assets................ 3.61% 3.91% 3.56% 3.90% 4.45%(b)
Ratio of expenses to
average net assets*... 1.11% 1.12% 1.11% 1.12% 1.17%(b)
Ratio of net investment
income to average net
assets*............... 3.48% 3.73% 3.28% 3.62% 4.10%(b)
Portfolio turnover...... 20.47% 16.97% 14.43% 11.09% 23.18%
Average commission rate
paid (d)............... $0.7727 -- -- -- --
<FN>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Annualized.
(c) Not annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.
</TABLE>
See notes to financial statements.
-59-
<PAGE> 157
Part C of Post-Effective Amendment No. 20
to
Registration Statement
of
AMSOUTH MUTUAL FUNDS
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements.
All required financial statements are included in Parts A
and B hereof.
(b) Exhibits:
(1) Amended Declaration of Trust, dated as of June 25, 1993 and
filed on August 19, 1993 -- incorporated by reference to
Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A (File No. 33-21660).
(2) (a) By-laws -- incorporated by reference to the
Registrant's initial Registration Statement on Form
N-1A (File No. 33-21660).
(b) Amendment No. 1 to By-laws -- incorporated by reference
to Post-Effective Amendment No. 3 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(3) None.
(4) (a) Article III, Sections 4 and 5; Article IV, Sections 1
and 6; Article V; Article VIII, Section 4; and Article
IX, Sections 1, 4 and 7 of the Amended Declaration of
Trust -- incorporated by reference to Post-Effective
Amendment No. 11 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(b) Article 11 of The By-laws -- incorporated by reference
to the Registrant's initial Registration Statement on
Form N-1A (File No. 33-21660).
C-1
<PAGE> 158
(c) Amendment No. 1 to By-laws -- incorporated by reference
to Post-Effective Amendment No. 3 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(5) (a) Investment Advisory Agreement dated as of August 1,
1988 between the Registrant and AmSouth Bank N.A. --
incorporated by reference to Post-Effective Amendment
No. 1 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(b) Amendment No. 1 dated as of December 5, 1989 to
Investment Advisory Agreement dated as of August 1,
1988 between the Registrant and AmSouth Bank N.A.
--incorporated by reference to Post-Effective Amendment
No. 4 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(c) Amended Schedule to the Investment Advisory Agreement
between the Registrant and AmSouth Bank N.A. with
respect to the Florida Tax-Free Fund -- incorporated by
reference to Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on Form N-1A (File
No. 33-21660).
(d) Form of Amended Schedule A to the Investment Advisory
Agreement between the Registrant and AmSouth Bank, N.A.
is filed herewith.
(e) Investment Advisory Agreement between the Group and
AmSouth Bank N.A. dated as of January 20, 1989 with
respect to The ASO Outlook Group Limited Maturity Fund
-- incorporated by reference to Post-Effective
Amendment No. 2 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(f) Amendment No. 1 dated as of December 5, 1989 to the
Investment Advisory Agreement dated as of January 20,
1989 between the Registrant and AmSouth Bank, N.A.
--incorporated by reference to Post-Effective Amendment
No. 4 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
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(6) (a) Distribution Agreement dated as of October 1, 1993
between the Registrant and The Winsbury Company --
incorporated by reference to Post-Effective Amendment
No. 12 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(b) Amended Schedule to the Distribution Agreement between
the Registrant and The Winsbury Company with respect to
the Florida Tax-Free Fund -- incorporated by reference
to Post- Effective Amendment No. 14 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(c) Form of Amended Schedule A to the Distribution
Agreement between the Registrant and The Winsbury
Company Limited Partnership is filed herewith.
(d) Dealer Agreement between The Winsbury Company and
AmSouth Investment Services, Inc. -- incorporated by
reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File
No. 33-21660).
(e) Dealer Agreement between The Winsbury Company and
National Financial Services Corporation -- incorporated
by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File
No. 33-21660).
(f) Dealer Agreement between The Winsbury Company and
AmSouth Bank N.A. -- incorporated by reference to Post-
Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(7) None.
(8) (a) Custodial Services Agreement dated as of May 25, 1995
between the Registrant and Bank of California, N.A. --
incorporated by reference to Post-Effective Amendment
No. 17 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
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<PAGE> 160
(b) Form of Schedule A to the Custodian Agreement between
the Registrant and Bank of California, N.A. is filed
herewith.
(c) Form of Custodian Agreement between the Registrant and
AmSouth Bank of Alabama -- incorporated by reference to
Post-Effective Amendment No. 19 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(9) (a) Management and Administration Agreement dated as of
April 1, 1996 between the Registrant and ASO Services
Company -- incorporated by reference to Post-Effective
Amendment No. 19 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(b) Form of Amended Schedule A to the Management and
Administration Agreement between the Registrant and ASO
Services Company is filed herewith.
(c) Sub-Administration Agreement between ASO Services
Company and AmSouth Bank of Alabama -- incorporated by
reference to Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on Form N-1A (File
No. 33-21660).
(d) Form of Amended Schedules A and B to the
Sub-Administration Agreement between ASO Services
Company and AmSouth Bank of Alabama is filed herewith.
(e) Sub-Administration Agreement between ASO Services
Company and BISYS -- incorporated by reference to
Post-Effective Amendment No. 19 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(f) Form of Amended Schedules A and B to the
Sub-Administration Agreement between ASO Services
Company and BISYS Fund Services is filed herewith.
(g) Transfer Agency and Shareholder Service Agreement dated
as of January 16, 1989 between the Registrant and The
Winsbury Service Corporation) -- incorporated by
reference to Post-
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<PAGE> 161
Effective Amendment No. 3 to the Registrant's
Registration Statement on Form N-1A (File No.33-21660).
(h) Amended Schedule D dated as of April 5, 1993 to the
Transfer Agency and Shareholder Services Agreement
between the Registrant and The Winsbury Service
Corporation -- incorporated by reference to
Post-Effective Amendment No. 13 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(i) Amended Schedule to the Transfer Agency and Shareholder
Services Agreement between the Registrant and The
Winsbury Service Corporation with respect to the
Florida Tax-Free Fund -- incorporated by reference to
Post-Effective Amendment No. 14 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(j) Form of Amended Schedule A to the Transfer Agency and
Shareholder Services Agreement between Registrant and
the Winsbury Service Corporation is filed herewith.
(k) Fund Accounting Agreement dated as of April 1, 1996
between the Registrant and BISYS Fund Services
--incorporated by reference to Post-Effective Amendment
No. 19 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(l) Form of Amended Schedule A to the Fund Accounting
Agreement between the Registrant and BISYS Fund
Services, Inc. is filed herewith.
(10) Opinion of Ropes & Gray -- incorporated by reference to Pre-
Effective Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(11) (a) Consent of Coopers & Lybrand L.L.P. is filed herewith.
(b) Consent of Ropes & Gray is filed herewith.
(12) None.
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<PAGE> 162
(13) (a) Purchase Agreement between the Registrant and Winsbury
Associates incorporated by reference to Post-Effective
Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(b) Purchase Agreement between the Registrant and Winsbury
Associates dated October 31, 1991 incorporated by
reference to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A (File
No. 33-21660).
(c) Purchase Agreement between the Registrant and Winsbury
Associates relating to the Alabama Tax-Free Fund and
the Government Income Fund is incorporated by reference
to Post-Effective Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(d) Purchase Agreement between the Registrant and Winsbury
Service Corporation relating to the Florida Tax-Free
Fund is incorporated by reference to Post-Effective
Amendment No. 13 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(14) None.
(15) None.
(16) Performance Calculation Schedules are incorporated by
reference to Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on Form N-1A (File No.
33-21660).
(17) (a) Financial Data Schedule for the AmSouth Prime
Obligations Fund - Premier Shares
(b) Financial Data Schedule for the AmSouth U.S. Treasury
Fund - Premier Shares
(c) Financial Data Schedule for the AmSouth Tax Exempt Fund
- Premier Shares
(d) Financial Data Schedule for the AmSouth Prime
Obligations Fund -- Classic Shares
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<PAGE> 163
(e) Financial Data Schedule for the AmSouth U.S. Treasury
Fund -- Classic Shares
(f) Financial Data Schedule for the AmSouth Tax-Exempt Fund
-- Classic Shares
(g) Financial Data Schedule for the AmSouth Equity Fund
(h) Financial Data Schedule for the AmSouth Regional Equity
Fund
(i) Financial Data Schedule for the AmSouth Balanced Fund
(j) Financial Data Schedule for the AmSouth Bond Fund
(k) Financial Data Schedule for the AmSouth Limited
Maturity Fund
(l) Financial Data Schedule for the AmSouth Government
Income Fund
(m) Financial Data Schedule for the AmSouth Florida
Tax-Free Fund
(18) (a) Multiple Class Plan for the AmSouth Prime Obligations
Fund, the AmSouth U.S. Treasury Fund and the AmSouth
Tax Exempt Fund is incorporated by reference to Exhibit
18(a) to Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on Form N-1A (File
No. 33-21660).
(b) Shareholder Servicing Plan for AmSouth Mutual Funds
adopted by the Board of Trustees on December 6, 1995 is
incorporated by reference to Exhibit 18(b) to
Post-Effective Amendment No. 18 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(c) Model Shareholder Servicing Agreement for AmSouth
Mutual Funds adopted by the Board of Trustees on
December 6, 1995 is incorporated by reference to
Exhibit 18(c) to Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on Form N-1A (File
No. 33-21660).
C-7
<PAGE> 164
- -------------
Item 25. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------
As of the effective date of this Registration Statement, there are no
persons controlled by or under common control with the Registrant's
Prime Obligations Fund, Equity Fund, Regional Equity Fund, U.S.
Treasury Fund, Tax Exempt Fund, Bond Fund, Limited Maturity Fund,
Municipal Bond Fund, Government Income Fund, Florida Tax-Free Fund, or
Balanced Fund.
Item 26. Number of Holders of Securities
-------------------------------
As of November 1, 1996, the number of record holders of the
Registrant's respective series of shares were as follows:
<TABLE>
<CAPTION>
Number of
Title of Series Record Holders
--------------- --------------
<S> <C>
Prime Obligations Fund -- Premier Shares 8
U.S. Treasury Fund -- Premier Shares 9
Tax Exempt Fund -- Premier Shares 4
Prime Obligations Fund -- Classic Shares 26
U.S. Treasury Fund -- Classic Shares 13
Tax-Exempt Fund -- Classic Shares 16
Equity Fund 2,874
Regional Equity Fund 3,163
Bond Fund 378
Limited Maturity Fund 164
Municipal Bond Fund 10,031
Balanced Fund 2,783
</TABLE>
C-8
<PAGE> 165
<TABLE>
<S> <C>
Government Income Fund 534
Florida Tax-Free Fund 59
</TABLE>
Item 27. Indemnification
---------------
Article VIII, Sections 1 and 2 of the Registrant's Declaration of
Trust provides as follows:
"Trustees, Officers, etc.
-------------------------
Section 1. The Trust shall indemnify each of its Trustees and officers
(including persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter
referred to as a "Covered Person") against all liabilities and
expenses, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees
reasonably incurred by any Covered Person in connection with the
defense or disposition of any action, suit or other proceeding,
whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such Covered Person may
be or may have been threatened, while in office or thereafter, by
reason of being or having been such a Covered Person except with
respect to any matter as to which such Covered Person shall have been
finally adjudicated in any such action, suit or other proceeding to be
liable to the Trust or its Shareholders by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Expenses, including counsel fees so incurred by any such Covered
Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time to time
by the Trust in advance of the final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is not
authorized under this Article, provided, however, that either (a) such
Covered Person shall have provided appropriate security for such
undertaking, (b) the Trust shall be insured against losses arising
from any such advance payments or (c) either a majority of the
disinterested Trustees acting on the matter (provided that a majority
of the disinterested Trustees then in office act on the matter), or
independent legal counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as opposed to a full
C-9
<PAGE> 166
trial type inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Article.
Compromise Payment
------------------
Section 2. As to any matter disposed of (whether by a compromise
payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the
proceeding was brought, that such Covered Person either (a) did not
act in good faith in the reasonable belief that his action was in the
best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office, indemnification shall be provided if (a)
approved as in the best interests of the Trust, after notice that it
involves such indemnification, by at least a majority of the
disinterested Trustees acting on the matter (provided that a majority
of the disinterested Trustees then in office act on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that such Covered Person acted
in good faith in the reasonable belief that his action was in the best
interests of the Trust and is not liable to the Trust or its
Shareholders by reasons of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his or her office, or (b) there has been obtained an opinion in
writing of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry) to the
effect that such Covered Person appears to have acted in good faith in
the reasonable belief that his action was in the best interests of the
Trust and that such indemnification would not protect such Person
against any liability to the Trust to which he would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the
recovery from any Covered Person of any amount paid to such Covered
Person in accordance with this Section as indemnification if such
Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the
Trust or to have been liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling
persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such
C-10
<PAGE> 167
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Indemnification for the Group's principal underwriter is provided for
in the Distribution Agreement incorporated herein by reference as
Exhibits 6(a).
In addition, the Trust maintains a directors and officer liability
insurance policy with a maximum coverage of $3,000,000.
Item 28. Business and Other Connections of Investment Advisor.
-----------------------------------------------------
AmSouth Bank of Alabama ("AmSouth") is the investment advisor of each
Fund of the Trust. AmSouth is the principal bank affiliate of AmSouth
Bancorporation, one of the largest banking institutions headquartered
in the mid-south region. AmSouth Bancorporation reported assets as of
December 31, 1995 of $17.7 billion and operated 273 banking offices in
Alabama, Florida, Georgia and Tennessee. AmSouth has provided
investment management services through its Trust Investment Department
since 1915. As of December 31, 1995, AmSouth and its affiliates had
over $6.8 billion in assets under discretionary management and
provided custody services for an additional $12.5 billion in
securities. AmSouth is the largest provider of trust services in
Alabama. AmSouth serves as administrator for over $12 billion in bond
issues, and its Trust Natural Resources and Real Estate Department is
a major manager of timberland, mineral, oil and gas properties and
other real estate interests.
There is set forth below information as to any other business,
vocation or employment of a substantial nature (other than service in
wholly-owned subsidiaries or the parent corporation of AmSouth Bank)
in which each director or senior officer of the Registrant's
investment adviser is, or at any time during the past two fiscal years
has been, engaged for his own account or in the capacity of director,
officer, employee, partner or trustee.
C-11
<PAGE> 168
<TABLE>
<CAPTION>
Name and Position with Other business, profession,
AmSouth Bank of Alabama AmSouth Bank vocation, or employment
- ----------------------- ------------------------------------
<S> <C>
George W. Barber, Jr. Chairman of the Board, Barber Dairies, Inc.,
Director 39 Barber Ct., Birmingham, Alabama
William D. Biggs, Sr. Partner, Carillon Beach, Panama City, Florida
Director
William J. Cabaniss, Jr. President, Precision Grinding Inc.,
Director P.O. Box 19925, Birmingham, Alabama
M. Miller Gorrie Chairman, Brasfield and Gorrie General
Director Contractor Inc., 7916 2nd Avenue South,
Birmingham, Alabama
James I. Harrison, Jr. Chairman and Chief Executive Officer, Harco,
Director Inc., 3925 Rice Mine Road, Tuscaloosa,
Alabama
Mrs. H. Taylor Morrisette Chairman, HTM Investment & Development,
Director Inc., Mobile, Alabama
C. Dowd Ritte None
Director, and Chief Operating
Officer of the Board
Carl Albright, Jr. None
Executive Vice President
and Regional Executive
Michael C. Baker None
Senior Executive Vice President
Marie A. Bone None
Senior Vice President
and Regional Executive
Dennis J. Dill None
Executive Vice President
and Chief Accounting Officer
</TABLE>
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<PAGE> 169
David B. Edmonds None
Executive Vice President
James W. Emison None
Executive Vice President
Sloan D. Gibson, IV None
Senior Executive Vice President
O.B. Grayson Hall, Jr. None
Executive Vice President
W. Charles Mayer, III
Director and Senior Executive Vice
President
R. Craig Holley None
Senior Vice President
and Regional Executive
Item 29. Principal Underwriter.
----------------------
(a) BISYS Fund Services, Limited Partnership ("BISYS Fund Services"),
formerly The Winsbury Company, acts as distributor for the Registrant.
BISYS Fund Services also distributes the securities of The HighMark
Group, The Parkstone Group of Funds, The Victory Portfolios, The
Sessions Group, the Conestoga Family of Funds, the American Performance
Funds, The Arch Fund, Inc., the BB&T Mutual Funds Group, the
Marketwatch Funds, The Coventry Group, The Pacific Capital Funds, the
MMA Praxis Mutual Funds, The Riverfront Funds, Inc., the Qualivest
Funds and the Summit Investment Trust, each of which is a management
investment company. The parent of BISYS Fund Services is The BISYS
Group, Inc.
(b) Partners of BISYS Fund Services as of the date of this filing are
as follows:
C-13
<PAGE> 170
<TABLE>
<CAPTION>
Positions and Offices with Positions and
Name and Principal BISYS Fund Services, Offices with
Business Addresses Limited Partnership The Registrant
- ------------------ ------------------- --------------
<S> <C> <C>
BISYS Fund Services, Sole General None
Limited Partnership Partner
3435 Stelzer Road
Columbus, OH 43219
WC Subsidiary Sole Limited None
Corporation Partner
150 Clove Road
Little Falls, NJ 07424
The BISYS Group, Inc. Sole Shareholder None
150 Clove Road
Little Falls, NJ 07424
</TABLE>
Item 30. Location of Accounts and Records
--------------------------------
Persons maintaining physical possession of accounts, books and
other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the rules promulgated
thereunder are as follows:
(1) AmSouth Mutual Funds
3435 Stelzer Road
Columbus, Ohio 43219
Attention: Secretary
(Registrant)
(2) AmSouth Bank of Alabama
1901 Sixth Avenue - North
Birmingham, Alabama 35203
Attention: Trust Investments
(Investment Advisor)
(3) BISYS Fund Services, Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
(Distributor)
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<PAGE> 171
(4) ASO Services Company
3435 Stelzer Road
Columbus, Ohio 43219
(Administrator)
(5) Union Bank of California, N.A.
475 Sansome Street
San Francisco, CA 94111
(Custodian)
(6) BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
(Transfer and Shareholder Servicing Agent,
Provider of Fund Accounting Services)
Item 31. Management Services
-------------------
None.
Item 32. Undertakings
------------
The Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting upon the question
of removal of one or more trustees when requested to do so
by the holders of at least 10% of the outstanding voting
shares of any series of the Trust and will assist in
shareholder communication in connection with calling a
meeting for the purpose of removing one or more trustees.
The Registrant undertakes to furnish to each person to
whom a prospectus is delivered a copy of the Registrant's
latest annual report to shareholders upon request and
without charge.
The Registrant undertakes on behalf of the AmSouth Capital Growth
Fund, the AmSouth Small Cap Fund and the AmSouth Equity Income Fund
to file a post-effective amendment, including financial statements
which need not be certified, within four to six months from the
commencement of operations of each of the Capital Growth Fund, the
Small Cap Fund and the Equity Income Fund.
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<PAGE> 172
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this Amendment
No. 20 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Washington, District of
Columbia on the 23rd day of December, 1996.
AMSOUTH MUTUAL FUNDS,
Registrant
*/s/ Sean M. Kelly
---------------------------
Sean M. Kelly
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment No.
20 to the Registration Statement of AmSouth Mutual Funds has been signed below
by the following persons in the capacities indicated on the 23rd day of
December, 1996.
Signature Title Date
- --------- ----- ----
*/s/ J. David Huber Trustee December 23, 1996
--------------------------
J. David Huber
*/s/ Sean M. Kelly Chairman, President December 23, 1996
--------------------------
Sean M. Kelly
*/s/ Kevin Martin Treasurer December 23, 1996
--------------------------
Kevin Martin
*/s/ James H. Woodward, Jr. Trustee December 23, 1996
--------------------------
James H. Woodward, Jr.
*/s/ Homer H. Turner, Jr. Trustee December 23, 1996
--------------------------
Homer H. Turner, Jr.
*/s/ Wendell D. Cleaver Trustee December 23, 1996
--------------------------
Wendell D. Cleaver
*/s/ Dick D. Briggs, Jr. Trustee December 23, 1996
--------------------------
Dick D. Briggs, Jr.
* By /s/ Alan G. Priest December 23, 1996
-----------------------
Alan G. Priest,
Attorney-in-fact, pursuant to Powers of Attorney filed herewith
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<PAGE> 173
POWER OF ATTORNEY
-----------------
Dick D. Briggs, Jr. whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee Dick D. Briggs, Jr. and/or officer of the Trust any and
all such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 12 October 1993 /s/ Dick D. Briggs, Jr.
------------------------ ---------------------------
Dick D. Briggs, Jr.
<PAGE> 174
POWER OF ATTORNEY
-----------------
Wendell D. Cleaver whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee Wendell D. Cleaver and/or officer of the Trust any and
all such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: October 7, 1993 /s/ Wendell Cleaver
------------------------ ---------------------------
Wendell D. Cleaver
<PAGE> 175
POWER OF ATTORNEY
-----------------
J. David Huber whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A. Sheehan, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable AmSouth Mutual
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee J. David Huber and/or officer of the Trust any and all
such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 9/25/92 /s/ J. David Huber
------------------------ ---------------------------
J. David Huber
<PAGE> 176
POWER OF ATTORNEY
-----------------
William J. Tomko whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A. Sheehan, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable AmSouth Mutual
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee William J. Tomko and/or officer of the Trust any and
all such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 9/25/92 /s/ William J. Tomko
------------------------ ---------------------------
William J. Tomko
<PAGE> 177
POWER OF ATTORNEY
-----------------
James H. Woodward, Jr. whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee James H. Woodward, Jr. and/or officer of the Trust any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 9/25/92 /s/ James H. Woodward, Jr.
------------------------ ---------------------------
James H. Woodward, Jr.
<PAGE> 178
POWER OF ATTORNEY
-----------------
Homer H. Turner, Jr. whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee Homer H. Turner, Jr. and/or officer of the Trust any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: September 25, 1992 /s/ Homer H. Turner, Jr.
------------------------ ---------------------------
Homer H. Turner, Jr.
<PAGE> 179
POWER OF ATTORNEY
-----------------
Sean M. Kelly whose signature appears below, does hereby constitute and
appoint Martin E. Lybecker, Alan G. Priest, and Francoise M. Haan, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable AmSouth Mutual
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee Sean M. Kelly and/or officer of the Trust any and all
such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 10/1/96 /s/ Sean M. Kelly
------------------------ ---------------------------
Sean M. Kelly
<PAGE> 180
POWER OF ATTORNEY
-----------------
Kevin Martin whose signature appears below, does hereby constitute and
appoint Martin E. Lybecker, Alan G. Priest, and Francoise M. Haan, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable AmSouth Mutual
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee and/or officer of the Trust any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue thereof.
Dated: 11/18/96 /s/ Kevin Martin
------------------------ ---------------------------
Kevin Martin
<PAGE> 181
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
5(d) Form of Amended Schedule A to the Investment Advisory Agreement
between the Registrant and AmSouth Bank, N.A.
6(c) Form of Amended Schedule A to the Distribution Agreement
between the Registrant and The Winsbury Company Limited
Partnership.
8(b) Form of Amended Schedule A to the Custodian Agreement
between the Registrant and Bank of California, N.A.
9(b) Form of Amended Schedule A to the Management and
Administration Agreement between the Registrant and ASO
Services Company.
9(d) Form of Amended Schedules A and B to the Sub-Administration
Agreement between ASO Services Company and AmSouth Bank of
Alabama.
9(f) Form of Amended Schedules A and B to the Sub-Administration
Agreement between ASO Services Company and BISYS Fund Services.
9(j) Form of Amended Schedule A to the Transfer Agency and
Shareholder Services Agreement between Registrant and the
Winsbury Service Corporation.
9(l) Form of Amended Schedule A to the Fund Accounting Agreement
between the Registrant and BISYS Fund Services , Inc.
11(a) Consent of Coopers & Lybrand L.L.P.
11(b) Consent of Ropes & Gray
27(a) Financial Data Schedule for the AmSouth Prime Obligations
Fund -- Premier Shares
27(b) Financial Data Schedule for the AmSouth U.S. Treasury Fund --
Premier Shares
27(c) Financial Data Schedule for the AmSouth Tax Exempt Fund --
Premier Shares
</TABLE>
<PAGE> 182
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
27(d) Financial Data Schedule for the AmSouth Prime Obligations
Fund -- Classic Shares
27(e) Financial Data Schedule for the AmSouth U.S. Treasury
Fund -- Classic Shares
27(f) Financial Data Schedule for the AmSouth Tax-Exempt
Fund -- Classic Shares
27(g) Financial Data Schedule for the AmSouth Equity Fund
27(h) Financial Data Schedule for the AmSouth Regional Equity Fund
27(i) Financial Data Schedule for the AmSouth Balanced Fund
27(j) Financial Data Schedule for the AmSouth Bond Fund
27(k) Financial Data Schedule for the AmSouth Limited Maturity Fund
27(l) Financial Data Schedule for the AmSouth Government Income
Fund
27(m) Financial Data Schedule for the AmSouth Florida Tax-Free Fund
</TABLE>
-2-
<PAGE> 1
EXHIBIT 5(d)
FORM OF AMENDED SCHEDULE A TO THE INVESTMENT
ADVISORY AGREEMENT BETWEEN THE REGISTRANT AND
AMSOUTH BANK, N.A.
<PAGE> 2
FORM OF SCHEDULE A
TO THE INVESTMENT ADVISORY AGREEMENT
DATED AS OF AUGUST 1, 1988 BETWEEN
THE ASO OUTLOOK GROUP
AND
AMSOUTH BANK, N.A.
AS OF ________________, 1997
<TABLE>
<CAPTION>
Name of Fund
------------
<S> <C>
AmSouth Mutual Funds Annual rate of forty one-hundredths of one percent (.40%) of
Prime Obligations Fund AmSouth Mutual Funds Prime
Obligations Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one percent (.80%)
Equity Fund of AmSouth Mutual Funds Equity Fund's average daily net
assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one percent (.80%)
Regional Equity Fund of AmSouth Mutual Funds Regional Equity Fund's average daily
net assets.
AmSouth Mutual Funds Annual rate of forty one-hundredths of one percent (.40%) of
U.S. Treasury Fund AmSouth Mutual Funds U.S. Treasury Fund's average daily net
assets.
AmSouth Mutual Funds Annual rate of forty one-hundredths of one percent (.40%) of
Tax Exempt Fund AmSouth Mutual Funds Tax Exempt Fund's average daily net
assets.
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one percent
Bond Fund (.65%) of AmSouth Mutual Funds Bond Fund's average daily net
assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one percent (.80%)
Balanced Fund of AmSouth Mutual Funds Balanced Fund's average daily net
assets.
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one percent
Municipal Bond Fund (.65%) of AmSouth Mutual Funds Municipal Bond Fund's average
daily net assets.
</TABLE>
A-1
<PAGE> 3
<TABLE>
<S> <C>
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one percent
Government Income Fund (.65%) of AmSouth Mutual Funds Government Income Fund's
average daily net assets.
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one percent
Florida Tax-Free Fund (.65%) of AmSouth Mutual Funds Florida Tax-Free Fund's
average daily net assets.
AmSouth Mutual Funds Annual Basic Rate of eighty one-hundredths of one percent
Capital Growth Fund (.80%) of AmSouth Mutual Funds Capital Growth Fund's average
daily net assets.*
AmSouth Mutual Funds Annual Basic Rate of ninety one-hundredths of one percent
Small Cap Fund (.90%) of AmSouth Mutual Funds Small Cap Fund's average
daily net assets.**
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one percent (.80%)
Equity Income Fund of AmSouth Mutual Funds Equity Income Fund's average daily
net assets.
</TABLE>
AMSOUTH BANK, N.A. AMSOUTH MUTUAL FUNDS
By:____________________________ By:____________________________
Name:__________________________ Name:__________________________
Title:_________________________ Title:_________________________
- --------
* This Basic Fee is subject to adjustments under an incentive fee tied to the
performance of the Fund as compared to the performance of the S&P 500
Index. The maximum adjusted Basic Fee resulting from such adjustment shall
be an annual rate of 1 percent (1.00%) of the Fund's average daily net
assets and the minimum adjusted Basic Fee shall be an annual rate of 60
one-hundredths of one percent (.60%) of the Fund's average daily net
assets. The adjusted Basic Fee shall be calculated monthly by adding or
subtracting from the Basic Fee the product achieved by multiplying an
adjustment rate of 2 one-hundredths of one percent (.02%) of the Fund's
average daily net assets by the percentage by which the Fund's performance
differs from that of the S&P 500 Index over the previous 12 month period.
** This Basic Fee is subject to adjustments under an incentive fee tied to the
performance of the Fund as compared to the performance of the Russell 2000
Index. The maximum adjusted Basic Fee resulting from such adjustment shall
be an annual rate of (1.10%) of the Fund's average daily net assets and the
minimum adjusted Basic Fee shall be an annual rate of 70 one-hundredths of
one percent (.70%) of the Fund's average daily net assets. The adjusted
Basic Fee shall be calculated monthly by adding or subtracting from the
Basic Fee the product achieved by multiplying an adjustment rate of 2
one-hundredths of one percent (.02%) of the Fund's average daily net assets
by the percentage by which the Fund's performance differs from that of the
Russell 2000 Index over the previous 12 month period.
A-2
<PAGE> 1
EXHIBIT 6(c)
FORM OF AMENDED SCHEDULE A TO THE DISTRIBUTION AGREEMENT
BETWEEN THE REGISTRANT AND THE WINSBURY COMPANY LIMITED PARTNERSHIP
<PAGE> 2
As of ________________, 1997
FORM OF SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
AMSOUTH MUTUAL FUNDS
AND
THE WINSBURY COMPANY LIMITED PARTNERSHIP
DATED _____________, 1997
NAME OF FUND
------------
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Bond Fund
AmSouth Limited Maturity Fund
AmSouth Municipal Bond Fund
AmSouth Balanced Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AMSOUTH MUTUAL FUNDS
By:_________________________
Name:
Title:
THE WINSBURY COMPANY
LIMITED PARTNERSHIP
By:_________________________
Name:
Title:
A-1
<PAGE> 1
EXHIBIT 8(c)
FORM OF AMENDED SCHEDULE A TO THE CUSTODIAN AGREEMENT
BETWEEN THE REGISTRANT AND BANK OF CALIFORNIA
<PAGE> 2
Form of
Schedule A - Funds
<TABLE>
<S> <C>
001 Prime Obligations (PO)
002 U.S. Treasury (UST)
003 Tax Exempt (TE)
004 Bond (B)
005 Limited Maturity (LM)
006 Equity (E)
007 Regional Equity (RE)
008 Government Income (GI)
009 Balanced (BAL)
010 Municipal Bond (MB)
011 Florida Tax-Free (FTF)
012 Capital Growth (CG)
013 Small Cap (SC)
014 Equity Income (EI)
</TABLE>
The AmSouth Mutual Funds
By: _______________________________
Title: ___________________________
Date: ____________________________
The Bank of California, N.A.
By: ______________________________
Title: ___________________________
Date: ____________________________
A-1
<PAGE> 1
EXHIBIT 9(b)
FORM OF AMENDED SCHEDULE A TO THE MANAGEMENT AND
ADMINISTRATION AGREEMENT BETWEEN THE REGISTRANT AND ASO SERVICES COMPANY
<PAGE> 2
Dated: As of ______________, 1997
FORM OF SCHEDULE A
TO THE
MANAGEMENT AND ADMINISTRATION AGREEMENT
BETWEEN AMSOUTH MUTUAL FUNDS AND
ASO SERVICES COMPANY
DATED AS OF , 1997
Name of Fund Compensation* Date
- ------------ ------------- ----
AmSouth Prime Annual Rate of twenty As of _________, 1997
Obligations, U.S. hundredths of one-percent
Treasury, Tax Exempt, (.20%) of each such Fund's
Equity, Regional Equity, average daily net assets
Balanced, Bond, Limited
Maturity, Municipal
Bond, Government
Income, Florida Tax-Free,
Capital Growth, Small
Cap, and Equity Income
Funds.
AMSOUTH MUTUAL FUNDS
By:
--------------------------
Title:
-----------------------
ASO SERVICES COMPANY
By:
--------------------------
Title:
-----------------------
- ------------------------
*All fees are computed daily and paid periodically.
A-1
<PAGE> 1
EXHIBIT 9(d)
FORM OF AMENDED SCHEDULES A AND B TO THE
SUB-ADMINISTRATION AGREEMENT BETWEEN ASO SERVICES
COMPANY AND AMSOUTH BANK OF ALABAMA
<PAGE> 2
Dated: ____________, 1997
FORM OF SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
AMSOUTH BANK OF ALABAMA
NAME OF FUND
- ------------
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Bond Fund
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
ASO SERVICES COMPANY
By: ___________________________
Title: ________________________
AMSOUTH BANK OF ALABAMA
By: ___________________________
Title: ________________________
A-1
<PAGE> 3
Dated: ________________, 1997
FORM OF SCHEDULE B
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
AMSOUTH BANK OF ALABAMA
<TABLE>
<CAPTION>
Name of Fund Compensation*
- ------------ -------------
<S> <C>
AmSouth Prime Obligations Fund Such percentage of ASC's compensation received pursuant to
AmSouth U.S. Treasury Fund the Management and Administration Agreement with the Trust
AmSouth Tax Exempt Fund as shall be agreed upon from time to time between the
AmSouth Equity Fund parties, but in no event to exceed an annual rate of ten
AmSouth Regional Equity Fund one-hundredths of one percent (.10%) of each such Fund's
AmSouth Balanced Fund average daily net assets.
AmSouth Bond Fund
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
</TABLE>
ASO SERVICES COMPANY
By: ___________________________
Title: ________________________
AMSOUTH BANK OF ALABAMA
By: ___________________________
Title: ________________________
- ------------------
*All fees are computed daily and paid periodically
B-1
<PAGE> 1
EXHIBIT 9(f)
FORM OF AMENDED SCHEDULES A AND B TO THE
SUB-ADMINISTRATION AGREEMENT BETWEEN ASO SERVICES
COMPANY AND BISYS FUND SERVICES
<PAGE> 2
Dated: ________________, 1997
FORM OF SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
BISYS FUND SERVICES
NAME OF FUND
- ------------
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund A
AmSouth Balanced Fund
AmSouth Bond Fund
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Capital Fund
AmSouth Equity Income Fund
ASO SERVICES COMPANY
By: ___________________________
Title: ________________________
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
By: ___________________________
Title: ________________________
A-1
<PAGE> 3
Dated: __________________, 1997
FORM OF SCHEDULE B
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
BISYS FUND SERVICES
<TABLE>
<CAPTION>
Name of Fund Compensation*
- ------------ -------------
<S> <C>
AmSouth Prime Obligations Fund Such percentage of ASC's compensation received pursuant to
AmSouth U.S. Treasury Fund the Management and Administration Agreement with the Trust
AmSouth Tax Exempt Fund as shall be agreed upon from time to time between the
AmSouth Equity Fund parties.
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Bond Fund
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Capital Fund
AmSouth Equity Income Fund
</TABLE>
ASO SERVICES COMPANY
By: ___________________________
Title: ________________________
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
By: ___________________________
Title: ________________________
- ------------------
*All fees are computed daily and paid periodically
B-1
<PAGE> 1
EXHIBIT 9(j)
FORM OF AMENDED SCHEDULE A TO THE TRANSFER AGENCY AND
SHAREHOLDER SERVICES AGREEMENT BETWEEN REGISTRANT
AND THE WINSBURY SERVICE CORPORATION
<PAGE> 2
As of __________________, 1997
FORM OF SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN AMSOUTH MUTUAL FUNDS
AND THE WINSBURY SERVICE CORPORATION
NAME OF FUND
------------
The Prime Obligations Fund
The U.S. Treasury Fund
The Tax Exempt Fund
The Bond Fund
The Equity Fund
The Regional Equity Fund
The Limited Maturity Fund
The Government Income Fund
The Florida Tax-Free Fund
The Capital Growth Fund
The Small Capital Fund
The Equity Income Fund
A-1
<PAGE> 1
EXHIBIT 9(l)
FORM OF AMENDED SCHEDULE A TO THE FUND ACCOUNTING
AGREEMENT BETWEEN THE REGISTRANT AND BISYS FUND
SERVICES, INC.
<PAGE> 2
Dated: ___________, 1997
FORM OF SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
AMSOUTH MUTUAL FUNDS
AND
BISYS FUND SERVICES, INC.
FEES
----
BISYS Ohio shall be entitled to receive a fee from each Fund at the
annual rate of three one-hundredths of one percent (.03%) of each Fund's average
daily net assets plus BISYS Ohio's reasonable out-of-pocket expenses incurred in
the performance of its services as provided in Section 4 of the Fund Accounting
Agreement to which this Schedule A is attached. In its sole discretion, BISYS
may impose a minimum annual fee of up to $30,000 per taxable Fund and $40,000
per tax-exempt Fund. Funds that have two or more classes of shares each having
different net asset values or paying different daily dividends may be subject to
an additional annual fee of $10,000 per additional class.
AMSOUTH MUTUAL FUNDS BISYS FUND SERVICES, INC.
By:_________________________ By:____________________________
A-1
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COOPERS & LYBRAND L.L.P.
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A (File No. 33-21660) of AmSouth Mutual Funds
of our report dated September 23, 1996 on our audits of the financial statements
and financial highlights of the Prime Obligations Fund, the U.S. Treasury Fund,
the Tax-Exempt Fund, the Bond Fund, the Limited Maturity Fund, the Government
Income Fund, the Florida Tax-Free Fund, the Equity Fund, the Regional Equity
Fund, and the Balanced Fund constituting the AmSouth Mutual Funds as of July 31,
1996 and for the periods then ended referred to in our report included in the
Statement of Additional Information. We also consent to the references to our
firm under the caption "Financial Highlights" in the Prospectus for the Capital
Appreciation Funds relating to the Equity Fund, the Regional Equity Fund, the
Balanced Fund, the Capital Growth Fund, the Small Cap Fund and the Equity Income
Fund and under the caption "Auditors" in the Statement of Additional Information
of AmSouth Mutual Funds in Post-Effective Amendment No. 20 to the Registration
Statement on Form N-1A (File No. 33-21660).
/s/ Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND, L.L.P.
Columbus, Ohio
December 23, 1996
<PAGE> 1
EXHIBIT 11(b)
CONSENT OF ROPES & GRAY
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the caption "Legal Counsel" included in or made a part of the
Post-Effective Amendment No. 20 to the Registration Statement of AmSouth Mutual
Funds on Form N-1A under the Securities Act of 1933, as amended.
/s/ Ropes & Gray
ROPES & GRAY
Washington, D.C.
December 23, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 1
<NAME> AMSOUTH MUTUAL FUNDS PRIME OBLIGATIONS FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 550508
<INVESTMENTS-AT-VALUE> 550508
<RECEIVABLES> 2019
<ASSETS-OTHER> 12
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 606411
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 2794
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 603626
<SHARES-COMMON-STOCK> 125081<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 9
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 603617
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35026
<OTHER-INCOME> 0
<EXPENSES-NET> 4411
<NET-INVESTMENT-INCOME> 30615
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 30615
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1925<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 165419<F1>
<NUMBER-OF-SHARES-REDEEMED> 191139<F1>
<SHARES-REINVESTED> 1963<F1>
<NET-CHANGE-IN-ASSETS> (14056)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 23
<GROSS-ADVISORY-FEES> 2460
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4474
<AVERAGE-NET-ASSETS> 451643567<F1>
<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> .050<F1>
<PER-SHARE-GAIN-APPREC> 0<F1>
<PER-SHARE-DIVIDEND> .050<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 1.00<F1>
<EXPENSE-RATIO> .072<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 1
<NAME> AMSOUTH MUTUAL FUNDS PRIME OBLIGATIONS FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 550508
<INVESTMENTS-AT-VALUE> 550508
<RECEIVABLES> 2019
<ASSETS-OTHER> 12
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 606411
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 2794
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 603626
<SHARES-COMMON-STOCK> 478560<F1>
<SHARES-COMMON-PRIOR> 617696<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 9
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 603617
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 35026
<OTHER-INCOME> 0
<EXPENSES-NET> 4411
<NET-INVESTMENT-INCOME> 30615
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 30615
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 28690<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 1388943<F1>
<NUMBER-OF-SHARES-REDEEMED> 1384702<F1>
<SHARES-REINVESTED> 5460<F1>
<NET-CHANGE-IN-ASSETS> (14056)
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<F1>Premier Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 10
<NAME> AMSOUTH MUTUAL FUNDS FLORIDA TAX FREE FUND
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<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 2
<NAME> AMSOUTH MUTUAL FUNDS U.S. TREASURY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> AUG-01-1995
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<PER-SHARE-NAV-BEGIN> 1.00<F1>
<PER-SHARE-NII> .048<F1>
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 2
<NAME> AMSOUTH MUTUAL FUNDS U.S. TREASURY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
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<INVESTMENTS-AT-VALUE> 288046
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<FN>
<F1>Premier Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 3
<NAME> AMSOUTH MUTUAL FUNS BOND FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
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<ACCUM-APPREC-OR-DEPREC> (897)
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 4
<NAME> AMSOUTH MUTUAL FUNDS EQUITY FUND
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
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<NUMBER> 5
<NAME> AMSOUTH MUTUAL FUNDS REGIONAL EQUITY
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
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<NUMBER> 6
<NAME> AMSOUTH MUTUAL FUND LIMITED MATURITY
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<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUND
<SERIES>
<NUMBER> 7
<NAME> AMSOUTH MUTUAL FUND TAX EXEMPT
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<S> <C>
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<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUND
<SERIES>
<NUMBER> 7
<NAME> AMSOUTH MUTUAL FUND TAX EXEMPT
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<S> <C>
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