<PAGE> 1
As filed with the Securities and Exchange Commission
on January 31, 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. 18 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 19 /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 Margaret A. Sheehan, Esq.
AmSouth Mutual Funds Ropes & Gray
3435 Stelzer Road 1301 K Street, N.W.
Columbus, Ohio 43219 Suite 800 East
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)
/X/ 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 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, 1995 on September 28, 1995.
<PAGE> 2
Part A
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Alabama Tax-Free 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. 17 to the
Registrant's Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on November 1, 1995.
<PAGE> 3
CROSS REFERENCE SHEET
Part A
<TABLE>
<CAPTION>
Form N-1A Item No. Prospectus Caption
PROSPECTUS FOR AMSOUTH PRIME OBLIGATIONS
FUND, AMSOUTH U.S. TREASURY FUND AND
AMSOUTH TAX EXEMPT FUND
<S> <C>
1. Cover Page .............................. Cover Page
2. Synopsis ................................ Fee Table
3. Condensed Financial
Information ............................ Condensed Financial
Information
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>
- 1 -
<PAGE> 4
AMSOUTH MUTUAL FUNDS
MONEY MARKET FUNDS
3435 Stelzer Road For current yield,
Columbus, Ohio 43219 purchase, and redemption
information, call (800) 451-8382
The AmSouth Mutual Funds Money Market Funds (the "Money Market Funds")
are three of twelve separate investment funds of AmSouth Mutual Funds (the
"Trust"), a diversified, open-end management investment company. All securities
or instruments in which the Money Market Funds invest have remaining maturities
of 397 days or less. Each Money Market Fund seeks to maintain a constant net
asset value of $1.00 per unit of beneficial interest, but there can be no
assurance that net asset value will not vary.
AMSOUTH PRIME OBLIGATIONS FUND (the "Prime Obligations Fund") seeks
current income with liquidity and stability of principal. The Prime Obligations
Fund invests in high quality United States dollar-denominated money market
instruments and other high-quality United States dollar-denominated instruments.
AMSOUTH U.S. TREASURY FUND (the "AmSouth U.S. Treasury Fund") seeks
current income with liquidity and stability of principal. The AmSouth U.S.
Treasury Fund invests exclusively in short-term obligations issued by the U.S.
Treasury, some of which may be subject to repurchase agreements collateralized
by U.S. Treasury obligation.
AMSOUTH TAX EXEMPT FUND (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 Tax Exempt Fund seeks to achieve this objective by investing in short-term
high-quality obligations. While the Tax Exempt Fund may invest in short-term
taxable obligations, under normal market conditions at least 80% of the Tax
Exempt Fund's net assets will be invested in obligations exempt from federal
income tax.
AmSouth Bank of Alabama, Birmingham, Alabama ("AmSouth"), acts as the
investment advisor to each Money Market Fund. BISYS Fund Services, Limited
Partnership ("BISYS Fund Services"), formerly The Winsbury Company, Columbus,
Ohio, acts as distributor to each Money Market Fund.
Each Money Market Fund has been divided into two classes of Shares
("Premier" Shares and "Classic" Shares). Premier and Classic Shares of a
particular Fund represent interests in the same investments and are identical in
all respects except that (i) Classic Shares bear the expense of the fee under
the Trust's Shareholder Servicing Plan (the "Plan"), which will cause the
Classic Shares to have a higher expense ratio and to pay
<PAGE> 5
lower dividends than those of the Premier Shares, and (ii) Classic Shares have
certain exclusive voting rights with respect to the Plan. The following
investors qualify to purchase a Money Market Fund's Premier Shares: (i)
investors who purchase Shares through a fiduciary, advisory, custodial
(non-retirement account), agency or similar account with the Trust Department of
AmSouth Bancorporation or one of its affiliates; (ii) investors who purchase
Shares of a Money Market Fund through a payroll deduction plan, a 401(k) Plan or
a 403(b) Plan which by its terms permits purchases of Shares; and (iii) orders
placed on behalf of other investment companies distributed by the Distributor
and its affiliated companies. All other investors are eligible to purchase
Classic Shares only. For further information concerning Premier Shares and
Classic Shares and the operation of the Plan, see "How to Purchase and Redeem
Shares" and "Management of AmSouth Mutual Funds."
This Prospectus relates only to the Money Market Funds. Interested
persons who wish to obtain a copy of the prospectuses of the AmSouth Equity
Fund, the AmSouth Regional Equity Fund, and the AmSouth Balanced Fund (the
"Growth Funds"); the AmSouth Bond Fund, the AmSouth Limited Maturity Fund, and
the AmSouth Government Income Fund (the "Income Funds"); or the AmSouth
Municipal Bond Fund, the AmSouth Alabama Tax-Free Fund and the AmSouth Florida
Tax-Free Fund (the "Tax-Free Funds") may contact the Distributor at the
telephone number shown above. Additional information about the Money Market
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 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 Money
Market 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 THE POSSIBLE LOSS OF PRINCIPAL.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE
THAT A FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE
-2-
<PAGE> 6
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 OF THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______, 1996.
-3-
<PAGE> 7
THE TRUST
The Trust is a diversified, open-end management investment company. The
Trust consists of twelve series of units of beneficial interest ("Shares"), each
representing interests in one of twelve separate investment funds (the "Funds").
This Prospectus relates only to the Money Market Funds. Interested
persons who wish to obtain a copy of the prospectuses of the Growth Funds, the
Income Funds or the Tax-Free Funds may contact the Trust at the telephone number
shown on the front cover of this Prospectus.
-4-
<PAGE> 8
FEE TABLE
<TABLE>
<CAPTION>
AmSouth
Prime Obligations U.S. Treasury Tax
Fund Fund Exempt Fund
Premier Classic Premier Classic Premier Classic
Shares Shares Shares Shares Shares Shares
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses(1)
Maximum Sales Load Imposed
on Purchases (as a percentage
of offering price) 0% 0% 0% 0% 0% 0%
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 (After Voluntary .40% .40% .40% .40% .20% .20%
Fee Reduction for the Tax Exempt
Fund)(3)
12b-1 Fees 0% 0% 0% 0% 0% 0%
Shareholder Servicing Fees 0% .25% 0% .25% 0% .25%
Other Expenses .29% .29% .30% .30% .34% .34%
----- ----- ----- ----- ----- -----
Total Fund Operating Expenses(4) .69% .94% .70% .95% .54% .79%
===== ===== ===== ===== ===== =====
</TABLE>
-5-
<PAGE> 9
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>
Prime Obligations Fund
Premier Shares $7 $22 $38 $86
Classic Shares $10 $30 $52 $115
AmSouth U.S. Treasury Fund
Premier Shares $7 $22 $39 $87
Classic Shares $10 $30 $53 $117
Tax Exempt Fund
Premier Shares $6 $17 $30 $68
Classic Shares $8 $25 $44 $98
</TABLE>
- --------------------
(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 a Money Market Fund. (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) Absent the voluntary reduction of investment advisory fees,
Management Fees as a percentage of average net assets would be .40% for the Tax
Exempt Fund. (See "MANAGEMENT OF AMSOUTH MUTUAL FUNDS - INVESTMENT ADVISOR.")
(4) In the absence of any voluntary reduction in investment advisory
fees, Total Fund Operating Expenses for Tax Exempt Fund are estimated to be .74%
for Premier Shares and .99% for Classic Shares.
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 Money Market
Fund will bear directly or indirectly. See "MANAGEMENT OF AMSOUTH MUTUAL FUNDS"
for a more complete discussion of annual operating expenses of the Money Market
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.
-6-
<PAGE> 10
FINANCIAL HIGHLIGHTS
The tables below set forth certain financial information concerning the
investment results for each of the Money Market Funds for the periods indicated.
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>
Prime Obligations Fund
Year Ended July 31,
--------------------------------------------------------------------
August 8,
1988 to
July 31,
1995 1994 1993 1992 1991 1990 1989(a)
---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- --------
Investment Activities
Net Investment income 0 .050 0.029 0.027 0.042 0.067 0.079 0.084
-------- -------- -------- -------- -------- -------- --------
Distributions
Net Investment Income (0.050) (0.029) (0.027) (0.042) (0.067) (0.079) (0.084)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ======== ========
Total Return 5.14% 2.94% 2.76% 4.28% 6.87% 8.16% 8.72%
Ratios/Supplemental Data:
Net Assets at end of period (000) $617,673 $577,331 $456,428 $457,511 $307,873 $298,498 $293,749
Ratio of expenses to
average net assets 0.69% 0.70% 0.71% 0.71% 0.72% 0.70% 0.58%(b)
Ratio of net investment income
to average net assets 5.04% 2.92% 2.73% 4.08% 6.61% 7.88% 8.69%(b)
Ratio of expenses to
average net assets* 0.72% 0.71%(b)
Ratio of net investment
income to average net assets* 7.86% 8.56%(b)
</TABLE>
- -------
* During the period the investment advisory and administration 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
-7-
<PAGE> 11
<TABLE>
<CAPTION>
AmSouth U.S. Treasury Fund
Year Ended July 31,
---------------------------------------------------------------------
September 8,
1988 to
July 31,
1995 1994 1993 1992 1991 1990 1989(a)
---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- --------
Investment Activities
Net Investment income 0.048 0.028 0.027 0.041 0.064 0.077 0.075
-------- -------- -------- -------- -------- -------- --------
Distributions
Net Investment Income (0.048) (0.028) (0.027) (0.041) (0.064) (0.077) (0.075)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ======== ========
Total Return 4.90% 2.80% 2.69% 4.15% 6.58% 8.04% 7.75%
Ratios/Supplemental Data:
Net Assets at end of period (000) $322,939 $300,603 $404,473 $339,666 $343,967 $239,291 $131,956
Ratio of expenses to
average net assets 0.70% 0.71% 0.72% 0.73% 0.72% 0.68% 0.61%(b)
Ratio of net investment income
to average net assets 4.81% 2.77% 2.66% 4.08% 6.28% 7.73% 8.31%(b)
Ratio of expenses to
average net assets* 0.73% 0.74%(b)
Ratio of net investment
income to average net assets* 7.68% 8.18%(b)
</TABLE>
- -------
* During the period the investment advisory and administration 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
-8-
<PAGE> 12
<TABLE>
<CAPTION>
Tax-Exempt Fund
Year Ended July 31,
------------------------------------------------------------------------
June 27,
1990 to
July 31,
1995 1994 1993 1992 1991 1990(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 0.032 0.019 0.021 0.030 0.046 0.011
--------- --------- --------- --------- --------- ---------
Distributions
Net Investment Income (0.032) (0.019) (0.021) (0.030) (0.046) (0.011)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ========= ========= ========= ========= =========
Total Return 3.22% 1.95% 2.16% 3.12% 4.69% 0.54%
Ratios/Supplemental Data:
Net Assets at end of period (000) $ 57,640 $ 60,923 $ 48,151 $ 38,392 $ 25,400 $ 28,246
Ratio of expenses to
average net assets 0.54% 0.57% 0.49% 0.65% 0.52% 0.21%(b)
Ratio of net investment income
to average net assets 3.15% 1.93% 2.12% 2.98% 4.59% 5.70%(b)
Ratio of expenses to
average net assets* 0.74% 0.77% 0.78% 0.77% 0.77% 0.81%(b)
Ratio of net investment
income to average net assets* 2.95% 1.73% 1.83% 2.86% 4.34% 5.10%(b)
</TABLE>
- -------
* During the period the investment advisory and/or administration 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
-9-
<PAGE> 13
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Prime Obligations Fund and the AmSouth
U.S. Treasury Fund is to seek current income with liquidity and stability of
principal. The investment objective of the Tax Exempt Fund is to seek 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.
Although the Prime Obligations Fund and the AmSouth U.S. Treasury Fund have the
same investment advisor and the same investment objective, their particular
portfolio securities and yield will ordinarily differ due to differences in the
types of investments permitted, cash flow, and the availability of particular
portfolio investments. Market conditions and interest rates may affect the types
and yields of securities held in each Fund. The investment objective of each
Money Market Fund is fundamental and may not be changed without a vote of the
outstanding Shares of that Fund (as defined below under "GENERAL INFORMATION -
Miscellaneous.") There can be, of course, no assurance that any Money Market
Fund will achieve its investment objective.
Changes in prevailing interest rates may affect the yield, and possibly
the net asset value, of each Fund. Each of the Money Market Funds invests only
in those securities and instruments considered by AmSouth to present minimal
credit risks under guidelines established by the Trust's Board of Trustees. All
securities or instruments in which each of the Money Market Funds invest have
remaining maturities of 397 days or less, although instruments subject to
repurchase agreements (and, in the case of the Tax Exempt Fund, certain variable
rate and floating rate instruments subject to demand features) may bear longer
maturities. The dollar-weighted average maturity of the securities in each Money
Market Fund will not exceed 90 days.
The Tax Exempt Fund is not intended to constitute a balanced investment
program and is not designed for investors seeking capital appreciation.
Investment in the Tax Exempt Fund would not be appropriate for tax-deferred
plans, such as IRA and Keogh plans. Investors should consult a tax or other
financial adviser to determine whether investment in the Tax Exempt Fund would
be appropriate.
The Prime Obligations Fund invests in U.S. dollar-denominated,
high-quality short-term debt instruments. Investments will be limited to those
obligations which, at the time of purchase, (i) possess the highest short-term
rating from at least two nationally recognized statistical rating organizations
(an "NRSRO") (for example, commercial paper rated "A-1" by Standard & Poor's
Corporation and "P-1" by Moody's Investors Service, Inc.) or (ii) do not possess
a rating (i.e., are unrated) but are determined to be of comparable quality to
the rated instruments eligible for purchase by the Fund under the guidelines
adopted by the Trustees. The Statement of Additional Information contains
further information concerning the rating and other requirements governing the
Prime Obligation Fund's investments, including information relating to the
treatment of securities subject to a tender or demand feature and securities
deemed to possess a rating based on comparable rated securities of the same
issuer.
-10-
<PAGE> 14
The Statement also identifies the NRSROs that may be utilized by AmSouth with
respect to portfolio investments for the Fund and provides a description of the
relevant ratings assigned by each such NRSRO.
The Prime Obligations Fund will invest in a variety of U.S. Treasury
obligations, differing in their interest rates, maturities, and times of
issuance, and other obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities. Obligations of certain agencies and
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association and the Export-Import Bank of the United States, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal National Mortgage Association, are supported by the right
of the issuer to borrow from the Treasury; others, such as those of the Student
Loan Marketing Association, are supported by the discretionary authority of the
U.S. Government to purchase the agency's obligations; still others, such as
those of the Federal Farm Credit Bank or the Federal Home Loan Mortgage
Corporation, 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. The Prime Obligations Fund will invest in the
obligations of such agencies or instrumentalities only when AmSouth believes
that the credit risk with respect thereto is minimal.
The Prime Obligations Fund may invest in bankers' acceptances
guaranteed by domestic and foreign banks if at the time of investment the
guarantor bank has capital, surplus, and undivided profits in excess of
$100,000,000 (as of the date of its most recently published financial
statements). The Prime Obligations Fund may invest in certificates of deposit
and demand and time deposits of domestic and foreign banks and savings and loan
associations if (a) at the time of investment the depository institution has
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.
The Prime Obligations Fund may also invest in Eurodollar Certificates
of Deposits ("ECDs") which are U.S. dollar denominated certificates of deposit
issued by offices of foreign and domestic banks located outside the United
States; Eurodollar Time Deposits ("ETDs") which are U.S. dollar denominated
deposits in a foreign branch of a U.S. bank or a foreign bank; Canadian Time
Deposits ("CTDs") which are essentially the same as ETDs except they are issued
by Canadian offices of major Canadian banks; and Yankee Certificates of Deposit
("Yankee CDs") 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.
The Prime Obligations Fund will not invest in excess of 10% of its net
assets in time deposits, including ETDs and CTDs but not including certificates
of deposit, with maturities in excess of seven days which are subject to
penalties upon early withdrawal.
-11-
<PAGE> 15
The Prime Obligations Fund may invest in commercial paper (including
variable amount master demand notes) issued by U.S. or foreign corporations. The
Prime Obligations Fund may also invest in Canadian Commercial Paper ("CCP"),
which is commercial paper issued by a Canadian corporation or a Canadian
counterpart of a U.S. corporation, and in Europaper, which is U.S. dollar
denominated commercial paper of a foreign issuer.
Variable amount master demand notes in which the Prime Obligations Fund
may invest are unsecured demand notes that permit the indebtedness thereunder to
vary, and that provide for periodic adjustments in the interest rate according
to the terms of the instrument. Because master demand notes are direct lending
arrangements between the Prime Obligations Fund and the issuer, they are not
normally traded. Although there is no secondary market in the notes, the Prime
Obligations Fund may demand payment of principal and accrued interest at any
time. While the notes are not typically rated by credit rating agencies, issuers
of variable amount master demand notes (which are normally manufacturing,
retail, financial, and other business concerns) must satisfy the same criteria
as to quality 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. In determining average weighted 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. The period of time remaining until the principal
amount can be recovered under a variable master demand note may not exceed seven
days.
Investments in ECDs, ETDs, CTDs, Yankee CDs, CCP, and Europaper may
subject the Prime Obligations Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of foreign withholding taxes on interest income,
possible seizure, currency blockage, nationalization, or expropriation of
foreign deposits, the possible establishment of exchange controls, or the
adoption of other foreign governmental restrictions which might adversely effect
the payment of principal and interest on such obligations. In addition, foreign
branches of U.S. banks and foreign banks may be subject to less stringent
reserve requirements and to different accounting, auditing, reporting, and
record keeping standards than those applicable to domestic branches of U.S.
banks. The Prime Obligations Fund will acquire securities issued by foreign
branches of U.S. banks, foreign banks, or other foreign issuers only when
AmSouth believes that the risks associated with such instruments are minimal and
only when such instruments are denominated and payable in United States dollars.
The Prime Obligations Fund may invest in funding agreements ("Funding
Agreements"), also known as guaranteed investment contracts, issued by insurance
companies. Pursuant to such agreements, the Prime Obligations Fund invests an
amount of cash with an insurance company and the insurance company credits such
investment on a monthly basis with guaranteed interest which is based on an
index. The Funding Agreements
-12-
<PAGE> 16
provide that this guaranteed interest will not be less than a certain minimum
rate. The Funding Agreements provide for adjustment of the interest rate monthly
and are considered variable rate instruments. The Prime Obligations Fund will
only purchase a Funding Agreement (i) when AmSouth has determined, under
guidelines established by the Board of Trustees, that the Funding Agreement
presents minimal credit risks to the Prime Obligations Fund and is of comparable
quality to instruments that are rated high quality by an NRSRO that is not an
affiliated person, as defined in the Investment Company Act of 1940, of the
issuer, or any insurer, guarantor, or provider of credit support for the
instrument and (ii) if it may receive all principal of and accrued interest on a
Funding Agreement at any time upon thirty days' written notice. Because the
Prime Obligations Fund may not receive the principal amount of a Funding
Agreement from the insurance company on seven days' notice or less, the Funding
Agreement is considered an illiquid investment, and, together with other
instruments in the Fund which are not readily marketable, may not exceed 10% of
the Fund's net assets. In determining average weighted portfolio maturity, a
Funding Agreement will be deemed to have a maturity equal to 30 days,
representing the period of time remaining until the principal amount can be
recovered through demand.
The Prime Obligations Fund may invest in the securities of other money
market funds that have similar policies and objectives, invest in securities of
equal or higher short-term ratings, and are in compliance with Rule 2a-7 under
the Investment Company Act of 1940.
The Prime Obligations Fund may also invest in short-term municipal
obligations.
The Amsouth U.S. Treasury Fund invests exclusively in short-term United
States dollar-denominated obligations issued by the U.S. Treasury. Such
obligations may include "stripped" U.S. Treasury obligations such as Treasury
Receipts issued by the U.S. Treasury representing either future interest or
principal payments. Stripped Treasury Securities are sold at a deep discount
because the buyer of those securities receives only the right to receive a
future fixed payment on the security and does not receive any rights to periodic
interest payments on the security. These securities may exhibit greater price
volatility then ordinary debt securities because of the manner in which their
principal and interest are returned to investors. Obligations purchased by the
AmSouth U.S. Treasury Fund may be subject to repurchase agreements
collateralized by the underlying U.S. Treasury obligation.
The Tax Exempt Fund invests primarily in bonds and 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 both
exempt from federal income tax and not treated as a preference item for purposes
of the federal alternative minimum tax for individuals ("Municipal Securities")
and which generally have remaining maturities of one year or less. The Tax
Exempt Fund may also invest up to 10% of the value of its total assets in the
securities of money market mutual funds which invest primarily in obligations
exempt from federal income tax. The Tax Exempt Fund will incur additional
expenses due to the duplication of expenses as a result of
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<PAGE> 17
investing in securities of such money market mutual funds. Additional
restrictions on the Tax Exempt Fund's investments in the securities of such
money market funds are contained in the Statement of Additional Information. As
a fundamental policy, under normal market conditions at least 80% of the Tax
Exempt Fund's total assets will be invested in Municipal Securities and in
securities of money market mutual funds which invest primarily in obligations
exempt from federal income tax.
It is a fundamental policy that, under normal market conditions, the
Tax Exempt Fund may invest up to 20% of its total assets in obligations, the
interest on which is either subject to regular federal income tax or treated as
a preference item for purposes of the federal alternative minimum tax for
individuals ("Taxable Obligations"). At times, AmSouth may determine that,
because of unstable conditions in the markets for Municipal Securities, pursuing
the Tax Exempt Fund's investment objective is inconsistent with the best
interests of the Shareholders of the Tax Exempt Fund. At such times, AmSouth may
use temporary defensive strategies differing from those designed to achieve the
Tax Exempt Fund's investment objective, by increasing the Tax Exempt Fund's
holdings in short-term Taxable Obligations to over 20% of the Tax Exempt Fund's
total assets and by holding uninvested cash reserves pending investment. Taxable
Obligations may include obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities (some of which may be subject to repurchase
agreements), certificates of deposit and bankers' acceptances of selected banks,
and commercial paper meeting the Tax Exempt Fund's quality standards (as
described below) for tax-exempt commercial paper. These obligations are
described further in the Statement of Additional Information.
The Tax Exempt Fund may also invest in private activity bonds
("industrial development bonds" under prior law). Interest on private activity
bonds (and industrial development bonds) is fully tax-exempt only if the bonds
fall within certain defined categories of qualified private activity bonds and
meet the requirements specified in those respective categories. Regardless of
whether they qualify for tax-exempt status, private activity bonds may subject
both individual and corporate investors to tax liability under the alternative
minimum tax. However, private activity bonds will only be considered Municipal
Securities for the purposes of this Prospectus if they do not have this effect
regarding individuals. For additional information on the federal alternative
minimum tax see "DIVIDENDS AND TAXES" below.
The Tax Exempt Fund will invest only in those Municipal Securities and
other obligations in which the Fund may invest which are considered by AmSouth,
pursuant to guidelines approved by the Board of Trustees, to present minimal
credit risks. In addition, 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 in the case of single-rated securities 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
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<PAGE> 18
Fund under the guidelines adopted by the Trustees. The Statement of Additional
Information contains further information concerning the rating and other
requirements governing the Tax Exempt Fund's investments, including information
relating to the treatment of securities subject to a tender or demand feature
and securities deemed to possess a rating based on comparable rated securities
of the same issuer. The Statement of Additional Information also identifies the
NRSROs that may be utilized by AmSouth with respect to portfolio investments for
the Fund and provides a description of the relevant ratings assigned by each
such NRSRO.
The two principal classifications of Municipal Securities which may be
held by the Tax Exempt Fund are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities, or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of the
facility being financed. Private activity bonds held by the Tax Exempt Fund are
in most cases revenue securities and are not payable from the unrestricted
revenues of the issuer. Consequently, the credit quality of private activity
bonds is usually directly related to the credit standing of the corporate user
of the facility involved.
Municipal Securities in which the Tax Exempt Fund may invest may also
include "moral obligation" bonds, which are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to meet
its debt service obligations from current revenues, it may draw on a reserve
fund, the restoration of which is a moral commitment but not a legal obligation
of the state or municipality that created the issuer.
Municipal Securities purchased by the Tax Exempt Fund may include rated
and unrated variable and floating rate tax-exempt notes, which may have a stated
maturity in excess of one year but which will, in such event, be subject to a
demand feature that will permit the Tax Exempt Fund to demand payment of the
principal of the note either (i) at any time upon not more than thirty days'
notice or (ii) at specified intervals not exceeding one year and upon no more
than thirty days' notice. There may be no active secondary market with respect
to a particular variable or floating rate note. Nevertheless, the periodic
readjustments of their interest rates tend to assure that their value to the Tax
Exempt Fund will approximate their par value. The Tax Exempt Fund may acquire
zero coupon obligations, which have greater price volatility than coupon
obligations and which will not result in the payment of interest until maturity.
Opinions relating to the validity of Municipal Securities and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Tax
Exempt Fund nor its investment advisor will review the proceedings relating to
the issuance of Municipal Securities or the basis for such opinions.
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<PAGE> 19
Although the Tax Exempt Fund presently does not intend to do so on a
regular basis, it may invest more than 25% of its total assets in Municipal
Securities which are related in such a way that an economic, business, or
political development or change affecting one such security would likewise
affect the other Municipal Securities. Examples of such securities are
obligations the repayment of which is dependent upon similar types of projects
or projects located in the same state. Such investments would be made only if
deemed necessary or appropriate by the Tax Exempt Fund's investment advisor. To
the extent that the Tax Exempt Fund's assets are concentrated in Municipal
Securities that are so related, the Tax Exempt Fund will be subject to the
peculiar risks presented by such Municipal Securities, such as negative
developments in a particular industry or state, to a greater extent than it
would be if the Tax Exempt Fund's assets were not so concentrated.
The Tax Exempt Fund may also purchase Municipal 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 thereby
involving the risk that the yield obtained in the transaction will be less than
that available in the market when delivery takes place. The Tax Exempt Fund will
generally not pay for such securities and no income accrues on the securities
until they are received. 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. The Tax Exempt Fund 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
by the Tax Exempt Fund to purchase "when-issued" securities will not exceed 60
days. In the event its commitments to purchase "when-issued" securities ever
exceeded 25% of the value of its assets, the Tax Exempt Fund's liquidity and the
investment advisor's ability to manage it might be adversely affected. The Tax
Exempt Fund does not intend to purchase "when-issued" securities for speculative
purposes but only for the purpose of acquiring portfolio securities.
The Tax Exempt Fund may acquire "puts" with respect to Municipal
Securities held in its portfolio. Under a put, the Tax Exempt Fund would have
the right to sell a specified Municipal Security within a specified period of
time at a specified price to a third party. A put would be sold, transferred, or
assigned only with the underlying Municipal Security. The Tax Exempt Fund will
acquire puts solely to either facilitate portfolio liquidity, shorten the
maturity of the underlying Municipal Securities, or permit the investment of the
Tax Exempt Fund's funds at a more favorable rate of return. The aggregate price
of a security subject to a put may be higher than the price which otherwise
would be paid for the security without such an option, thereby increasing the
security's cost and reducing its yield.
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<PAGE> 20
REPURCHASE AGREEMENTS
Securities held by the Money Market Funds may be subject to repurchase
agreements. If the seller under a repurchase agreement were to default on its
repurchase obligation or become insolvent, a Money Market 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 Money Market Fund were
delayed pending court action. Additionally, if the seller should be involved in
bankruptcy or insolvency proceedings, the Money Market Fund may incur delays and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Money Market Fund is treated as an unsecured creditor and
required to return the underlying security to the seller's estate. Except as
described below under "Investment Restrictions" there is no aggregate limitation
on the amount of any Money Market Fund's total assets that may be invested in
instruments which are subject to repurchase agreements.
REVERSE REPURCHASE AGREEMENTS
Each Money Market Fund 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 Money Market 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 Money Market Fund may decline below the price at which
the Money Market Fund is obligated to repurchase the securities.
ASSET-BACKED SECURITIES
The Prime Obligations Fund may invest in securities backed by
automobile receivables and credit-card receivables and other securities backed
by other types of receivables.
Offerings of Certificates for Automobile Receivables ("CARS") are
structured either as flow-through grantor trusts or as pay-through notes. CARS
structured as flow-through instruments represent ownership interests in a fixed
pool of receivables. CARS structured as pay-through notes are debt instruments
supported by the cash flows from the underlying assets. CARS may also be
structured as securities with fixed payment schedules which are generally issued
in multiple-classes. Cash-flow from the underlying receivables is directed first
to paying interest and then to retiring principal via paying down the two
respective classes of notes sequentially. Cash-flows on fixed-payment CARS are
certain, while cash- flows on other types of CARS issues depends on the
prepayment rate of the underlying automobile loans. Prepayments of automobile
loans are triggered mainly by automobile sales and trade-ins. Many people buy
new cars every two or three years, leading to rising prepayment rates as a pool
becomes more seasoned.
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<PAGE> 21
Certificates for Amortizing Revolving Debt ("CARDS") represent
participation in a fixed pool of credit card accounts. CARDS pay "interest only"
for a specified period. The CARD'S principal balance remains constant during
this period, while any cardholder repayments or new borrowings flow to the
issuer's participation. Once the principal amortization phase begins, the
balance declines with paydowns on the underlying portfolio. Cash flows on CARDS
are certain during the interest-only period. After this initial interest-only
period, the cash flow will depend on how fast cardholders repay their
borrowings. Historically, monthly cardholder repayment rates have been
relatively fast. As a consequence, CARDS amortize rapidly after the end of the
interest-only period. During this amortization period, the principal payments on
CARDS depend specifically on the method for allocating cardholder repayments to
investors. In many cases, the investor's participation is based on the ratio of
the CARDS' balance to the total credit card portfolio balance. This ratio can be
adjusted monthly or can be based on the balances at the beginning of the
amortization period. In some issues, investors are allocated most of the
repayments, regardless of the CARDS' balance. This method results in especially
fast amortization.
Credit support for asset-backed securities may be based on the
underlying assets or provided by a third party. Credit enhancement techniques
include letters of credit, insurance bonds, limited guarantees (which are
generally provided by the issuer), senior-subordinated structures and over
collateralization. Asset-backed securities purchased by the Prime Obligations
Fund will be subject to the same quality requirements as other securities
purchased by the Fund.
INVESTMENT RESTRICTIONS
Each of the Money Market 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).
Prime Obligations Fund
The Prime Obligations Fund may not:
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 the Prime
Obligations Fund's total assets would be invested in such issuer, except that
25% or less of the value of the Prime Obligations Fund's total assets may be
invested without regard to such 5% limitation. 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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<PAGE> 22
2. Purchase any securities which would cause more than 25% of the value
of the Prime Obligations 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, bank certificates of deposit or
bankers' acceptances issued by a domestic bank or by a U.S. branch of a foreign
bank provided that such U.S. branch is subject to the same regulation as United
States banks, and repurchase agreements secured by bank instruments or
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.
AmSouth U.S. Treasury Fund
The AmSouth U.S. Treasury Fund may not purchase securities other than
bills, notes, and bonds issued by the U.S. Treasury, certain of which securities
may be subject to repurchase agreements collateralized by the underlying U.S.
Treasury obligation.
Tax Exempt Fund
The Tax Exempt Fund may not:
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 its total assets
would be invested in such issuer (except that up to 25% of the value of the Tax
Exempt Fund's total assets may be invested without regard to such 5%
limitation). For purposes of this limitation, a security is considered to be
issued by the government entity (or entities) whose assets and revenues back the
security; with respect to a private activity bond that is backed only by the
assets and revenues of a non-government user, a security is considered to be
issued by such non-governmental user.
2. Purchase any securities which would cause 25% or more of the Tax
Exempt Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry; provided that this limitation shall not apply to Municipal
Securities; and provided, further, that for the purpose of this limitation only,
private activity bonds that are backed only by the assets and revenues of a
non-governmental user shall not be deemed to be Municipal Securities.
3. Acquire a put if, immediately after such acquisition, over 5% of the
total amortized cost value of the Tax Exempt Fund's assets would be subject to
puts from the same
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<PAGE> 23
institution (except that (i) up to 25% of the value of the Tax Exempt Fund's
total assets may be subject to puts without regard to such 5% limitation and
(ii) the 5% limitation is inapplicable to puts that, by their terms, would be
readily exercisable in the event of a default in payment of principal or
interest on the underlying securities). For the purpose of this investment
restriction and investment restriction No. 4 below, a put will be considered to
be from the party to whom the Tax Exempt Fund will look for payment of the
exercise price.
4. Acquire a put that, by its terms would be readily exercisable in the
event of a default in payment of principal and interest on the underlying
security or securities if, immediately after that acquisition, the amortized
cost value of the security or securities underlying that put, when aggregated
with the amortized cost value of any other securities issued or guaranteed by
the issuer of the put, would exceed 10% of the total amortized cost value of the
Tax Exempt Fund's assets.
Prime Obligations Fund, AmSouth U.S. Treasury Fund and Tax Exempt Fund
The Prime Obligations Fund, the AmSouth U.S. Treasury Fund and the Tax
Exempt Fund may not:
1. Borrow money or issue senior securities, except that each Money
Market 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 the Fund's total
assets at the time of its borrowing. A Money Market Fund will not purchase
securities while its borrowings (including reverse repurchase agreements) exceed
5% of its total assets.
2. Make loans, except that each Money Market Fund may purchase or hold
debt instruments in accordance with its investment objective and policies, may
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 of the Prime Obligations Fund and the
AmSouth U.S. Treasury Fund is determined and its Shares are priced as of 1:00
p.m. and 4:00 p.m., Eastern Time (the "Valuation Times") on each Business Day of
such Fund. The net asset value of the Tax Exempt Fund is determined and its
Shares are priced as of 12:00 noon and 4:00 p.m., Eastern Time (the "Valuation
Times") 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 Atlanta is open, except days on
which there
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<PAGE> 24
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 Money Market Fund, less the liabilities charged to that Fund, by the number of
the outstanding Shares of that Fund.
The assets in each Money Market Fund are valued based upon the
amortized cost method. Pursuant to rules and regulations of the Securities and
Exchange Commission regarding the use of the amortized cost method, each Money
Market Fund will maintain a dollar-weighted average portfolio maturity of 90
days or less. Although the Trust seeks to maintain each Money Market Fund's net
asset value per share at $1.00, there can be no assurance that net asset value
will not vary.
HOW TO PURCHASE AND REDEEM SHARES
Distributor
Each Money Market Fund has been divided into two classes of shares
("Premier" Shares and "Classic" Shares). Premier and Classic Shares of a
particular fund represent interests in the same investments and are identical in
all respects except that (i) Classic Shares bear the expense of the fee under
the Trust's Shareholder Servicing Plan (the "Plan"), which will cause the
Classic Shares to have a higher expense ratio and to pay lower dividends than
those of the Premier Shares, and (ii) Classic Shares have certain exclusive
voting rights with respect to the Plan. The following investors qualify to
purchase a Money Market Fund's Premier Shares: (i) Investors who purchase shares
through a fiduciary, advisory, custodial (non-retirement account), agency or
similar account with the Trust Department of Amsouth Bancorporation or one of
its affiliates; (ii) Investors who purchase shares of a Money Market Fund
through a payroll deduction plan, a 401(k) plan or a 403(b) plan which by its
terms permits purchases of shares; and (iii) orders placed on behalf of other
investment companies distributed by the distributor and its affiliated
companies. All other investors are eligible to purchase Classic Shares Only.
Premier and Classic Shares of the Money Market 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.
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<PAGE> 25
PURCHASES OF SHARES
Shares of the Money Market 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 a Money Market Fund.
Premier Shares
Premier Shares of the Money Market Funds sold to the Banks acting in a
fiduciary, advisory, custodial, 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 Premier Shares will be recorded by the Banks
and reflected in the account statements provided by the Banks to Customers.
Classic Shares
Investors may also purchase Classic Shares of a Money Market 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 L 1304, Columbus, Ohio 43260-1304. Subsequent purchases of
Shares of a Money Market 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.
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 or by wiring funds to the Trust's custodian. To make payment by wire,
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
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<PAGE> 26
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 net asset value
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.
The minimum investment is $1,000 for the initial purchase of Classic
Shares of a Money Market 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.
General
Shares of the Money Market Funds are purchased at the appropriate 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. An order to
purchase Shares will be deemed to have been received by the Distributor only
when federal funds with respect thereto are available to the Trust's custodian
for investment. Federal funds are monies credited to a bank's account within a
Federal Reserve Bank. Payment for an order to purchase Shares which is
transmitted by federal funds wire will be available the same day for investment
by
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<PAGE> 27
the Trust's custodian, if received prior to the last Valuation Time (see
"VALUATION OF SHARES"). Payments transmitted by other means (such as by check
drawn on a member of the Federal Reserve System) will normally be converted into
federal funds within two banking days after receipt. The Trust strongly
recommends that investors of substantial amounts use federal funds to purchase
Shares.
Purchases of Shares of a Money Market Fund will be effected only on a
Business Day (as defined in "VALUATION OF SHARES") of such Money Market Fund. An
order received prior to a Valuation Time on any Business Day will be executed at
the net asset value determined as of the next Valuation Time on the date of
receipt. An order received after the last Valuation Time on any Business Day
will be executed at the net asset value determined as of the next Valuation Time
on the next Business Day. Shares of the Prime Obligations Fund and the AmSouth
U.S. Treasury Fund purchased before 1:00 p.m., Eastern Time, begin earning
dividends on the same Business Day. Shares of the Tax Exempt Fund purchased
before 12:00 noon, Eastern Time, begin earning dividends on the same Business
Day. All Shares of a Money Market Fund continue to earn dividends through the
day before their redemption.
There is no sales charge imposed by the Trust in connection with the
purchase of Shares in a Money Market Fund. Sales charges apply to purchases of
the other Funds of the Trust. 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 a
Money Market Fund. 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.
Exchanges
Shareholders may exchange Shares of any Money Market Fund for Shares of
any other Money Market Fund on the basis of the relative net asset value of the
Shares exchanged so long as they maintain the respective minimum account balance
in each Money Market Fund in which they own Shares. Shareholders may also
exchange Shares of a Money Market Fund for Shares of any Fund of the Trust 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 Money Market Fund 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 a Shareholder may only make such an exchange once during each calendar year
and only upon written request of such Shareholder. Shareholders must at the time
of purchase provide the Transfer Agent or the Distributor with sufficient
information to permit confirmation of qualification.
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<PAGE> 28
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.
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 Trust's transfer agent, BISYS Fund Services Ohio, Inc.
("Transfer Agent"), 3435 Stelzer Road, Columbus, Ohio 43219. Exchange 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 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.
Redemption of Shares
Shares may ordinarily be redeemed by mail or by telephone. However,
with respect to investments made on a customer's behalf by certain entities
(including the Banks), 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. For example, if a Customer has agreed with a Bank to maintain a minimum
balance in his or her account with the Bank, and the balance in that account
falls below that minimum, the Customer may be obliged to redeem, or the Bank may
redeem for and on behalf of the Customer, all or part of the Customer's Shares
of a Fund of the Trust to the extent necessary to maintain the required minimum
balance.
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> 29
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 financial institution 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 the Automated Clearing House to a designated
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.
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.
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<PAGE> 30
Check Writing Service
A Shareholder may write checks on his or her Fund account for $1,000 or
more. Once a Shareholder has signed and returned a signature card, he or she
will receive a supply of checks drawn on Huntington National Bank. The check may
be made payable to any person, and the Shareholder's account will continue to
earn dividends until the check clears. Because of the difficulty of determining
in advance the exact value of a Fund account, a Shareholder should not use a
check to close his or her account. The Shareholder's account will be charged a
fee on stopping payment of a check upon the Shareholder's request or if the
check cannot be honored because of insufficient funds or other valid reasons.
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. 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 same day payments upon redemption of Shares if the request for
redemption is received by the Transfer Agent before 12:00 noon, Eastern Time, on
a Business Day or, if the request for redemption is received after 12:00 noon,
Eastern Time, to honor requests for payment on the next Business Day, unless it
would be disadvantageous to the Trust or the Shareholders of the particular
Money Market 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 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 Money Market Fund has a
value of less than $250. Accordingly, an investor purchasing Shares of a Money
Market 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 Money Market Fund in his
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<PAGE> 31
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" and "VALUATION -
Valuation of the Money Market Funds" 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 Money Market Fund is declared daily as a
dividend to Shareholders of record at the close of business on the day of
declaration. The net income attributable to a Fund's Classic Shares and the
dividends payable on Classic Shares will be reduced by the shareholder service
fee assessed against such Shares under the Shareholder Servicing Plan (see
Administrator and Distributor below). Dividends will generally be paid monthly.
Distributable net capital gains (if any) will be distributed at least annually.
A Shareholder will automatically receive all income dividends and capital gains
distributions in additional full and fractional Shares of the same class at net
asset value as of the date of payment unless the Shareholder elects to receive
such dividends or distributions in cash. Reinvested dividends receive the same
tax treatment as dividends paid in cash. Such election, 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.
Dividends are paid in cash not later than seven Business Days after a
Shareholder's complete redemption of his or her Shares. 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.
Each Money Market Fund will be treated as a separate entity for federal
income tax purposes. Each Money Market Fund intends to qualify for treatment as
a "regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). If qualified, a Money Market Fund will not have to pay
federal taxes on amounts it distributes to Shareholders. Regulated investment
companies are subject to a federal excise tax if they do not distribute their
income on a timely basis. Each Money Market Fund intends to avoid paying federal
income and excise taxes by timely distributing all its net income and
substantially all its net capital gain income. Shareholders will be advised at
least annually as to the character for federal income tax purposes of
distributions made during the year.
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<PAGE> 32
Prime Obligations Fund and AmSouth U.S. Treasury Fund
Dividends will generally be taxable to a Shareholder as ordinary income
to the extent of the Shareholder's ratable share of each Fund's earnings and
profits as determined for tax purposes. Because all of the net investment income
of the Prime Obligations Fund and the AmSouth U.S. Treasury Fund is expected to
be interest income, it is anticipated that no distributions will qualify for the
dividends received deduction for corporate shareholders. The Prime Obligations
Fund and the AmSouth U.S. Treasury Fund do not expect to realize any long-term
capital gains and, therefore, do not foresee paying any "capital gains
dividends" as described in the Code. Dividends received by a Shareholder that
are derived from the AmSouth U.S. Treasury Fund's investments in U.S. government
obligations may not be eligible for exemption from state and local taxes even
though the income on such investments would have been exempt from state and
local taxes if the Shareholder directly held such investments. In addition, the
state and local tax exemption for interest earned on U.S. government obligations
may not extend to income earned on U.S. government obligations that are subject
to a repurchase agreement. Shareholders are advised to consult their own tax
advisors concerning their own tax situation and the application of state and
local taxes.
Tax Exempt Fund
The Tax Exempt Fund's Shareholders may treat as exempt interest and
exclude from gross income for federal income tax purposes dividends derived from
net exempt-interest income and designated by the Tax-Exempt Fund as
exempt-interest dividends. However, such dividends may be taxable to
Shareholders under state or local law as ordinary income even though all or a
portion of the amounts may be derived from interest on tax-exempt obligations
which, if realized directly, would be exempt from such taxes.
Dividends from the Tax Exempt Fund attributable to exempt-interest
income may cause the social security and railroad retirement benefits of
individual Shareholders to become taxable, or increase the amount that is
taxable. Interest on indebtedness incurred by a Shareholder to purchase or carry
Shares is not deductible for federal income tax purposes to the extent the Tax
Exempt Fund distributes exempt-interest dividends during the Shareholder's
taxable year. It is anticipated that distributions from the Tax Exempt Fund will
not be eligible for the dividends received deduction for corporate shareholders.
Gains on the sale of Shares in the Tax Exempt Fund will be subject to
federal, state and local taxes. If a Shareholder receives an exempt-interest
dividend with respect to any Share of the Fund and such Share is held for six
months or less, any loss on the sale or exchange of such Share will be
disallowed to the extent of the amount of such exempt-interest dividend.
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<PAGE> 33
To the extent dividends paid to Shareholders are derived from taxable
income (for example, from interest on certificates of deposit or repurchase
agreements) or from long-term or short-term capital gains, such dividends will
be subject to federal income tax and may be subject to state and local tax. A
Shareholder should consult his or her own tax advisor for any special advice.
Dividends attributable to interest on certain private activity bonds
issued after August 7, 1986 must be included in alternative minimum taxable
income of both individual and corporate Shareholders for the purpose of
determining liability (if any) for the applicable alternative minimum tax. All
tax-exempt interest dividends are required to be taken into account in
calculating the alternative minimum taxable income of corporations.
Additional information regarding federal taxes is contained in the
Statement of Additional Information under "ADDITIONAL PURCHASE AND REDEMPTION
INFORMATION - Additional Tax Information" and "Additional Tax Information
Concerning the Tax Exempt Fund."
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 Money Market
Funds and Shareholders. Potential investors are urged to consult their tax
advisors concerning their own tax situations and concerning the application of
state and local taxes which may differ from the federal income tax consequences
described above.
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):
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<PAGE> 34
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Trust During the Past 5 Years
- ---------------- ---------------- -----------------------
<S> <C> <C>
Dr. Dick D. Briggs, Jr. Trustee December 1995 to present, Emeritus
459 Boshell Building Professor and Eminent Scholar
1808 7th Avenue South Chair in Pulmonary Diseases,
UAB Medical Center Department of Medicine, University
Birmingham, Alabama 35294 of Alabama at Birmingham School of
Medicine; from 1981 to December
1995, Professor and Vice Chairman,
Department of Medicine, University
of Alabama at Birmingham School of
Medicine; from June 1988 to October
1922, President, Chief Executive
Officer and Medical Director,
University of Alabama Health
Services Foundation
Wendell D. Cleaver Trustee From September, 1993 to present,
209 Lakewood Drive, West retired; from December 1988 to
Mobile, Alabama 36608 August, 1993, Executive Vice
President, Chief Operating
Officer and Director, Mobile Gas
Service Corporation
J. David Huber* Trustee and President From June 1987 to present,
employee of BISYS Fund
Services, Limited Partnership
William J. Tomko* Chairman of the Board of From April 1987 to present,
Trustees employee of BISYS Fund Services,
Limited Partnership
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 North Carolina at Charlotte;
Charlotte, North Carolina 28223 until 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
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<PAGE> 35
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. Mr.
Huber and Mr. Tomko are employees of BISYS Fund Services. Mr. Huber also serves
as an executive officer of BISYS Fund Services.
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
Money Market Funds, AmSouth manages the Money Market 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.
Under an investment advisory agreement between the Trust and AmSouth,
the fee payable to AmSouth by each Money Market Fund for investment advisory
services is the lesser of (a) a fee computed daily and paid monthly at the
annual rate of forty one-hundredths of one percent (.40%) of such Money Market
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 AmSouth. 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 Money Market 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, 1995, AmSouth received
investment advisory fees amounting to .40% of the Prime Obligation Fund's
average net assets, .40% of the AmSouth U.S. Treasury Fund's average net assets
and .20% of the Tax Exempt Fund's average net assets.
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<PAGE> 36
Administrator and Distributor
BISYS Fund Services is the administrator for each Fund of the Trust,
and also acts as the Trust's principal underwriter and distributor (the
"Administrator" or the "Distributor," as the context indicates). BISYS Fund
Services 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 Money Market
Funds' administration and operation. Under a management and administration
agreement between the Trust and the Administrator, the fee payable by each Money
Market 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 Money Market 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 in writing 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 Money Market 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, 1995, BISYS Fund Services
received administration fees amounting to .20% of the Prime Obligation Fund's
average net assets, .20% of the AmSouth U.S. Treasury Fund's average net assets
and .20% of the Tax Exempt Fund's average net assets.
The Trust has adopted a Shareholder Servicing Plan permitting payment
of compensation to financial institutions that agree to provide certain
administrative support services for their customers or account holders. Each
Money Market Fund has entered into a specific arrangement with BISYS Fund
Services for the provision of such services by BISYS Fund Services, and
reimburses BISYS Fund Services for its cost of providing these services, subject
to a maximum annual rate of twenty-five one-hundredths of one percent (0.25%)
of the average daily net assets of the Classic Shares of each Money Market Fund.
Sub-Administrator
Effective August 1, 1995, AmSouth became the Sub-Administrator to the
Trust pursuant to an agreement between the Administrator and AmSouth. Pursuant
to this agreement, 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.
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<PAGE> 37
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 Money Market Fund. No Money Market Fund
will bear, directly or indirectly, the cost of any activity primarily intended
to result in the distribution of Shares of such Money Market 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 Money Market 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.
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 twelve
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 Bond
Fund, the AmSouth Municipal Bond Fund, the AmSouth Limited Maturity Fund, the
AmSouth Balanced Fund, the AmSouth Government Income Fund, the AmSouth Alabama
Tax Free Fund and the AmSouth Florida Tax-Free Fund. 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).
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
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<PAGE> 38
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.
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 January 2, 1996 AmSouth was the beneficial owner of approximately
44.6% of the outstanding shares of the Premier Class of the Prime Obligations
Fund and 46.7% of the outstanding shares of the Tax Exempt Fund, and may be
deemed to be a "controlling person" of each of the Prime Obligations Fund and
the Tax Exempt Fund within the meaning of the Investment Company Act of 1940.
Custodian
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, the Money Market Funds' annualized "yield" and
"effective yield" and total return may be presented in advertisements and sales
literature.
The "yield" of a Money Market Fund is based upon the income earned by
the Money Market Fund over a seven-day period and then annualized, i.e. the
income earned in the period is assumed to be earned every seven days over a
52-week period and is stated as a percentage of the investment. The "effective
yield" of a Money Market Fund is calculated similarly but when annualized, the
income earned by the investment is assumed to be reinvested in Shares of the
Fund and thus compounded in the course of a 52-week period. The effective yield
will be higher than the yield because of the compounding effect of this assumed
reinvestment.
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<PAGE> 39
The Tax Exempt Fund may also present its "tax equivalent yield" and
"tax equivalent effective yield" which reflect the amount of income subject to
federal income taxation that a taxpayer in a stated 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. The tax equivalent
yield and tax equivalent effective yield will be significantly higher than the
yield and effective yield of the Tax Exempt Fund.
Total return is calculated for the past year and the period since the
establishment of a Money Market Fund. Average annual total return is measured by
comparing the value of an investment in a Money Market Fund at the beginning of
the relevant period to the redemption value of the investment at the end of the
period (assuming immediate reinvestment of any dividends or capital gains
distributions) and annualizing the result. Aggregate total return is calculated
similarly to average annual total return except that the return figure is
aggregated over the relevant period instead of annualized.
Investors may also judge the performance of each Money Market 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. and Donoghue's MONEY FUND REPORT. 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., Morningstar, Inc., CDA/Wiesenberger,
Pensions and Investments, U.S.A. Today and local newspapers and periodicals.
Such publications may refer to Classic Shares as Class A Shares and Premier
Shares as Class Y Shares. 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.
Information about performance of a Money Market Fund is based on the
Money Market Fund's record up to a certain date and is not intended to indicate
future performance. Yield and total return of any investment is generally a
function of portfolio quality and maturity, type of investments and operating
expenses. Yields and total return of each Money Market Fund will fluctuate. Any
fees charged by the Banks to their customers in connection with investment in a
Money Market Fund are not reflected in the Fund's performance information.
Miscellaneous
Shareholders will receive unaudited semi-annual reports and annual
reports audited by independent public accountants.
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<PAGE> 40
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 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> 41
INVESTMENT ADVISOR
AmSouth Bank of Alabama
1901 Sixth Avenue North
Birmingham, AL 35203
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> 42
TABLE OF CONTENTS
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The Trust ...........................................................
Fee Table ...........................................................
Financial Highlights ................................................
Investment Objective and Policies....................................
Investment Restrictions..............................................
Valuation of Shares..................................................
How to Purchase and Redeem Share.....................................
Dividends and Taxes..................................................
Management of The AmSouth Mutual Fund................................
General Information..................................................
</TABLE>
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.
-39-
<PAGE> 43
AMSOUTH MUTUAL FUNDS
MONEY MARKET FUNDS
AmSouth Bank of Alabama
Investment Advisor
BISYS Fund Services, Limited Partnership
Prospectus dated , 1996.
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<PAGE> 44
CROSS REFERENCE SHEET
Part B
<TABLE>
<CAPTION>
Form N-1A Item No. Caption
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<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
4. 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> 45
AMSOUTH MUTUAL FUNDS
Statement of Additional Information
______________, 1996
-----------------
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, AND AmSouth Tax Exempt Fund, each dated the same
date hereof, and AmSouth Equity Fund, AmSouth Regional Equity Fund, AmSouth
Bond Fund, AmSouth Limited Maturity Fund, AmSouth Balanced Fund, AmSouth
Government Income Fund, AmSouth Municipal Bond Fund, AmSouth Alabama Tax-Free
Fund, and AmSouth Florida Tax-Free Fund, each dated November 30, 1995
(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> 46
TABLE OF CONTENTS
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AMSOUTH MUTUAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Additional Information on Portfolio Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Additional Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Valuation of the Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Valuation of the Growth Funds, the Income Funds, and the Tax-Free Funds . . . . . . . . . . . . . . . . 19
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Matters Affecting Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Additional Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Additional Tax Information Concerning the Tax Exempt Fund and Tax-Free Funds . . . . . . . . . . . . . 22
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Investment Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Glass-Steagall Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Manager and Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Sub-Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Shareholder Servicing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Transfer Agent and Fund Accounting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Yields of the Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Yields of the Growth Funds, the Income Funds, and the Tax-Free Funds . . . . . . . . . . . . . . . . . 40
Calculation of Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Performance Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
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<PAGE> 47
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<S> <C>
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Organization and Description of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Shareholder Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
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<PAGE> 48
STATEMENT OF ADDITIONAL INFORMATION
AMSOUTH MUTUAL FUNDS
AmSouth Mutual Funds (the "Trust") is a diversified, open-end management
investment company. The Trust consists of twelve series of units of beneficial
interest ("Shares"), each representing interests in one of twelve 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" and, collectively with the Equity
Fund and the Regional Equity Fund, the "Growth Funds"), AmSouth Bond Fund (the
"Bond Fund"), AmSouth Limited Maturity Fund (the "Limited Maturity Fund"),
AmSouth Government Income Fund (the "Government Income Fund" and, collectively
with the Bond Fund and the Limited Maturity Fund, the "Income Funds"), AmSouth
Municipal Bond Fund (the "Municipal Bond Fund"), AmSouth Alabama Tax-Free Fund
(the "Alabama Fund") and AmSouth Florida Tax-Free Fund (the "Florida Fund" and,
together with the Municipal Bond Fund and the Alabama Fund the "Tax-Free
Funds"). The AmSouth Alabama Tax-Free and Municipal Bond Funds 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.
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
<PAGE> 49
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 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
B-2
<PAGE> 50
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 Growth Funds, the Income
Funds and the Tax-Free 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 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
B-3
<PAGE> 51
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 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,
B-4
<PAGE> 52
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
securities or other liquid high quality debt securities in the case of the Money
Market Funds, the Income Funds and the Tax-Free Funds or other liquid,
high-grade debt securities, in the case of the Growth 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
B-5
<PAGE> 53
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.
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.
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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 Alabama Fund 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 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.
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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 on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.
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, 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
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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 Growth Funds and the Income Funds 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 Growth Funds and the Income Funds
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 Growth Funds
and the Income Funds 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.)
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 Growth Funds
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and the Income Funds 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 Growth Funds nor the Income Funds 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. Neither the
Growth Funds nor the Income Funds 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 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.
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Call options written by the Growth Funds and the Income Funds 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 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
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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.
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.
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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.
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.
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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 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
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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.
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.
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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);
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 Growth
Funds, the Income Funds and the Tax-Free Funds may purchase securities 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
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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 and the Regional Equity 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.
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, 1994, portfolio turnover for the Equity Fund, the
Regional Equity Fund, the Limited Maturity Fund, the Government Income Fund and
the Bond Fund was 11.37%, 5.83%, 48.06%, 122.94%, and 30.90%, respectively. In
the fiscal year ended July 31, 1994, the portfolio turnover rate for the
Balanced Fund was 11.28% with respect to the common stock portion of its
portfolio and 19.21% 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
B-17
<PAGE> 65
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 Alabama Fund and 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 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
B-18
<PAGE> 66
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.
Valuation of the Growth Funds, the Income Funds, and the Tax-Free Funds
The value of the portfolio securities held by each of the Growth Funds,
the Income Funds and the Tax-Free 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 Growth Funds, the Income Funds and the Tax-Free 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
B-19
<PAGE> 67
(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 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.
B-20
<PAGE> 68
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 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
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<PAGE> 69
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 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.
B-22
<PAGE> 70
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."
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 TaxFree 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).
B-23
<PAGE> 71
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 Alabama Fund, Alabama 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-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* President From June 1987 to present, employee of BISYS
Fund Services, Limited Partnership.
</TABLE>
B-24
<PAGE> 72
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address With the Trust During Past 5 Years
- ---------------- ---------------- -------------------
<S> <C> <C>
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 July, 1981 to present, President of
Leigh Investments Consulting (investments
firm).
William J. Tomko* Treasurer and From April 1987 to present,
Chairman of the employee of BISYS Fund Services,
Board of Trustees Inc.
Scott A. Englehart Secretary From October, 1990 to present, employee of
BISYS Fund Services, Limited Partnership.
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.
Stephen G. Mintos Assistant Secretary From January 1987 to present, employee of
BISYS Fund Services, Limited Partnership.
</TABLE>
* Mr. Huber and Mr. Tomko, Trustees of the Trust, are "interested persons" of
the Trust as defined in the 1940 Act.
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, Tomko, Landreth, Grimm,
Englehart, Martinez and Mintos and Mme. Metz are employees of BISYS Fund
Services, Limited Partnership.
B-25
<PAGE> 73
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. $9,000 None None $9,000
Homer H.
Turner $9,000 None None $9,000
Wendell D.
Cleaver $9,000 None None $9,000
Dick D. Briggs,
Jr. $9,000 None None $9,000
</TABLE>
(1) Figures are for the Trust's fiscal year ended July 31, 1995.
Investment Advisor
Investment advisory and management services are provided to the Money Market
Funds, the Growth Funds, the Income Funds (except the Limited Maturity Fund) and
the Tax-Free Funds 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 Growth 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,
B-26
<PAGE> 74
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.
In selecting investments for each of the Income Funds, the Tax-Free 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 Alabama Fund sixty-five one-hundredths of one percent
(.65%) annually; the Florida Fund -sixty-five one-hundredths of one percent
(.65%) annually; and the Municipal Bond Fund - sixty-five one-hundredths of one
percent (.65%) 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.
For the fiscal years ended July 31, 1995, July 31, 1994 and July 31, 1993,
AmSouth received $2,184,158, $1,976,523 and $1,864,934, respectively, from the
Prime Obligations Fund. For the fiscal years ended July 31, 1995, July 31, 1994,
and July 31, 1993, AmSouth received $1,245,378, $1,225,805, and $1,217,749,
respectively, from the U.S. Treasury Fund. For the fiscal years ended July 31,
1995, July 31, 1994, and July 31, 1993, AmSouth received $125,213, $126,354, and
$101,723, for the Tax Exempt Fund. For the fiscal years ended July 31, 1995,
July 31, 1994, and July 31, 1993, investment advisory fees paid to AmSouth
reflect voluntary reductions in investment advisory fees of $125,213, $126,354,
and $101,723, respectively, for the Tax Exempt Fund.
B-27
<PAGE> 75
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 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, 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. For the fiscal year ended July 31, 1993, AmSouth
received $868,490, $97,507, $312,423, $228,299, and $961,216 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, 1993, investment
advisory fees paid to AmSouth reflect voluntary fee reductions of $125,059,
$98,069, $93,827, $68,770, and $321,179, for the Equity Fund, the Regional
Equity Fund, the Bond Fund, the Limited Maturity Fund and the Balanced 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.
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, 1997 as to each of the Money Market Funds,
the Growth 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
B-28
<PAGE> 76
voting Shares of that Fund (as defined under "GENERAL INFORMATION
- -Miscellaneous" in the respective Prospectus of the Money Market Funds, the
Growth Funds, the Income Funds, and the Tax-Free 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, 1997 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 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.
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<PAGE> 77
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, the
Tax-Free 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.
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
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<PAGE> 78
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. For
the fiscal years ended July 31, 1993, July 31, 1994, and July 31, 1995, none of
the Funds, other than the Equity Fund, the Regional Equity Fund and the Balanced
Fund, paid any brokerage commissions. For the fiscal years ended July 31, 1993,
July 31, 1994 and July 31, 1995, the Equity Fund paid $133,574, $165,774, and
$229,387, respectively, in total brokerage commissions, the Regional Equity Fund
paid $58,785, $40,001, and $54,179.44, respectively, in total brokerage
commissions, and the Balanced Fund paid $82,819, $136,083, and $107,901.62,
respectively, in total brokerage commissions.
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 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
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<PAGE> 79
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 GlassSteagall 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
BISYS serves as general manager and administrator (the "Administrator") to
each Fund of the Trust pursuant to the Management and Administration Agreement
dated as of October 1, 1990 (the "Administration Agreement"). The Administrator
assists in supervising all operations of each Fund (other than those performed
by AmSouth under the Advisory Agreements, those performed by Bank of California,
N.A. ("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). The Administrator is a
broker-dealer registered with the Securities and Exchange Commission, and is a
member of the National Association of Securities Dealers, Inc. The Administrator
provides financial services to institutional clients.
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 company which is a provider of information processing, loan
servicing
B-32
<PAGE> 80
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 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 in writing 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, 1995, July 31, 1994, and July 31, 1993,
BISYS received $1,092,079, $988,262, and $932,467, respectively, from the Prime
Obligations Fund. For the fiscal years ended July 31, 1995, July 31, 1994, and
July 31, 1993, BISYS received $622,689, $612,904, and $608,874, respectively,
from the U.S. Treasury Fund. For the fiscal years ended July 31, 1995, July 31,
1994, and July 31, 1993, BISYS received $125,213, $126,354, and $55,090,
respectively, from the Tax Exempt Fund. For the fiscal years ended July 31,
1995, July 31, 1994, and July 31, 1993, management and administration fees paid
to BISYS reflect voluntary reductions in management and administration fees of
$0, $0, and $46,632, respectively, for the Tax Exempt Fund.
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
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<PAGE> 81
$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 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.
For the fiscal year ended July 31, 1993, BISYS received $148,884, $29,252,
$74,981, $5,366 and $192,243 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, 1993, management and administration fees paid to
BISYS reflect voluntary fee reductions of $99,503, $19,642, $50,018, $86,040,
and $128,356, 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 (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.
The Administration Agreement shall, unless sooner terminated as provided in
the Administration Agreement (described below), continue until December 31,
1997. 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.
The Administration Agreement was approved by the Shareholders of the Money
Market Funds, the Equity Fund, the Regional Equity Fund, the Bond Fund, the
Limited Maturity Fund and the Balanced Fund on March 8, 1993.
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<PAGE> 82
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-Administrator
Effective August 1, 1995, AmSouth became the Sub-Administrator to the Trust
pursuant to an agreement between the Administrator and AmSouth 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 ten one-hundredths of one percent of each Fund's
average net assets.
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, 1997, and from year to year
thereafter if such continuance is approved at least annually (i) by 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
B-35
<PAGE> 83
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, 1995 no fees were paid by any Money
Market Fund under the Shareholder Servicing Plan because the Classic Class had
not yet commenced operations.
Custodian
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,
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<PAGE> 84
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 0.05% of such Fund's average daily net assets, subject to a minimum
annual fee of $40,000 for the Tax Exempt Fund and $30,000 for each other Fund
plus out-of-pocket expenses. For the fiscal Years ended July 31, 1995, July 31,
1994 and July 31, 1993, BISYS Ohio received $254,753, $289,092 and $233,117,
respectively, from the Prime Obligations Fund. For the fiscal years ended July
31, 1995, July 31, 1994 and July 31, 1993, BISYS Ohio received $147,544,
$179,572 and $152,219, respectively, from the U.S. Treasury Fund. For the fiscal
years ended July 31, 1995, July 31, 1994 and July 31, 1993, BISYS Ohio received
$32,145, $59,090 and $25,431, respectively, from the Tax Exempt Fund. For the
fiscal years ended July 31, 1995, July 31, 1994 and July 31, 1993, BISYS Ohio
received $114,437, $120,225 and $62,035, respectively, from the Equity Fund. For
the fiscal years ended July 31, 1995, July 31, 1994 and July 31, 1993, BISYS
Ohio received $30,766, $79,071 and $12,188, respectively, from the Regional
Equity Fund. For the fiscal years ended July 31, 1995, July 31, 1994 and July
31, 1993, BISYS Ohio received $50,807, $64,501 and $31,242, respectively, from
the Bond Fund. For the fiscal years ended July 31, 1995, July 31, 1994 and July
31, 1993, BISYS Ohio received $28,353, $58,805 and $22,830, respectively, from
the Limited Maturity Fund. For the fiscal years ended July 31, 1995, July 31,
1994 and July 31, 1993, BISYS Ohio received $128,452, $133,846 and $80,101,
respectively, from the Balanced Fund for fund accounting services and
reimbursement of expenses. For the fiscal year ended July 31, 1995 and for the
period from commencement of operations (October 1, 1993) through July 31, 1994,
BISYS Ohio received $12,846 and $28,546, respectively, from the Government
Income Fund for fund accounting services and reimbursement of expenses. For the
period from commencement of operations (September 30, 1994) through July 31,
1995, BISYS Ohio received $22,258 from the Florida Fund for fund accounting
services and reimbursement of expenses.
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<PAGE> 85
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
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<PAGE> 86
declared on both the original share and any 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, 1995, 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 5.41% 5.56%
U.S. Treasury Fund 5.11% 5.25%
Tax Exempt Fund 3.20% 3.25%
</TABLE>
For the 7-day period ending July 31, 1995, the tax equivalent yield and the
tax equivalent effective yield of the Premier Class of the Tax Exempt Fund were
5.30% and 5.38% 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.
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<PAGE> 87
No yield information is available for the Classic Shares of the Money Market
Funds, as the Classic Class has not yet commenced operations as of the date of
this Statement of Additional Information.
Yields of the Growth Funds, the Income Funds, and the Tax-Free Funds
As summarized in the Prospectuses under the heading "Performance
Information," yields of the Growth 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 Growth Funds, the
Income Funds and the Tax-Free 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 Growth Funds, the Income Funds and the
Tax-Free 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 Growth Funds, the Income Funds and the Tax-Free Funds are
specifically advised that share prices, expressed as the net asset values per
share, will vary just as yields will vary.
For the 30-day period ending July 31, 1995, the Equity Fund had a yield of
1.88%, the Regional Equity Fund had a yield of 1.20%, the Balanced Fund had a
yield of 3.20%, the Bond Fund had a yield of 5.42%, the Limited Maturity Fund
had a yield
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of 5.15%, the Government Income Fund had a yield of 4.81% and the Florida Fund
had a yield of 6.37%.
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 five-year period ended July 31, 1995 the annualized total return was
4.39%, 4.21% and 3.02% for the Premier Shares of the Prime Obligations Fund, the
U.S. Treasury Fund, and the Tax Exempt Fund, respectively. For the five-year
period ended July 31, 1995 the annualized total return was 11.38%, 8.05%, 6.42%,
and 12.57% for the Equity Fund, the Bond Fund, the Limited Maturity Fund, and
the Regional Equity Fund, respectively.
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, 1995
(the end of the Trust's fiscal year), annualized total return was 12.25%, 13.53%
and 8.50% 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, 1995, the annualized total return for the Limited Maturity Fund
was 7.07%. For the period from December 19, 1991 (commencement of operations)
through July 31, 1995, annualized total return for the Balanced Fund was 11.17%.
For the period from August 8, 1988 (commencement of operations) through July 31,
1995, annualized total return was 5.54% for the Premier Shares of the Prime
Obligations Fund. For the period from September 8, 1988 (commencement of
operations) through July 31, 1995, annualized total return was 5.33% for the
Premier Shares of the U.S. Treasury Fund. For the period from June 27, 1990
(commencement of operations) through July 31, 1995, annualized total return was
3.07% for the Premier Shares of the Tax Exempt Fund. For the period from October
1, 1993 (commencement of operations) through July 31, 1995, annualized total
return was 2.64% for the Government Income Fund.
B-41
<PAGE> 89
For the period from September 30, 1994 (commencement of operations) through July
31, 1995, annualized total return was 3.33% for the Florida Fund.
For the fiscal year ended July 31, 1995, annual total return was 5.14%,
4.90% and 3.22% for the Premier Shares of the Prime Obligations Fund, the U.S.
Treasury Fund AND the Tax Exempt Fund, respectively. For the fiscal year ended
July 31, 1995, annual total return was 13.89%, 9.90%, 6.38%, 4.39%, 10.05% AND
5.21% FOR the Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited
Maturity Fund, the Balanced Fund, and the Government Income Fund, respectively.
No total return information is available for the Classic Shares of the Money
Market Funds, as the Classic Class has not commenced operations as of the date
of this Statement of Additional Information.
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") system. Only those over-the-counter
stocks having only one market maker or traded on exchanges are excluded.
B-42
<PAGE> 90
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 twelve series of Shares which represent interests in the Prime Obligations
Fund, the 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 Alabama Fund, the Florida Fund and the Balanced
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.
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
B-43
<PAGE> 91
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.
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.
B-44
<PAGE> 92
As of January 2, 1996, the trustees and officers of the Trust, as a Group,
owned less than 1% of the Premier Shares of any of the Prime Obligations Fund,
the U.S. Treasury Fund and the Tax Exempt Fund. As of January 2, 1996, the
trustees and officers of the Trust, as a Group, also owned less than 1% of the
Shares of any of 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, the Alabama Fund and the Florida Fund. As of
January 2, 1996, AmSouth, 1901 Sixth Avenue-North, Birmingham, Alabama, was the
Shareholder of record of 76.31% the outstanding voting Shares of the Premier
Class of the Prime Obligations Fund, 90.38% the outstanding voting Shares of the
Premier Class of the U.S. Treasury Fund, 71.37% of the outstanding voting Shares
of the Premier Class of the Tax Exempt Fund, 91.51% of the outstanding voting
Shares of the Equity Fund, 61.12% of the outstanding voting Shares of the
Regional Equity Fund, 92.97% of the outstanding voting Shares of the Bond Fund,
91.86% of the outstanding voting Shares of the Limited Maturity Fund, 87.20% of
the outstanding voting Shares of the Balanced Fund, 0% of the outstanding voting
Shares of the Government Income Fund, and 90.89% of the outstanding voting
Shares of the Florida Fund. 44.55% of the outstanding voting Shares of the
Premier Class of the Prime Obligations Fund, 14.55% of the outstanding voting
Shares of the Premier Class of the U.S. Treasury Fund, 46.70% of the outstanding
voting Shares of the Premier Class of the Tax Exempt Fund, 80.34% of the
outstanding voting Shares of the Equity Fund, 50.89% of the outstanding voting
Shares of the Regional Equity Fund, 78.38% of the Shares of the Bond Fund,
82.65% of the outstanding voting Shares of the Limited Maturity Fund, 80.52% of
the outstanding voting Shares of the Balanced Fund, 0% of the outstanding voting
Shares of the Government Income Fund, and 88.07% 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 January 2, 1996 National Financial Services Corporation, One World
Financial Center, 200 Liberty Street, New York, New York 10281, was the
Shareholder of record of 15.32% of the outstanding voting Shares of the Premier
Class of the Prime Obligations Fund, 26.47% of the outstanding voting Shares of
the Premier Class of the Tax Exempt Fund, and 5.80% 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 January
2, 1996:
B-45
<PAGE> 93
Tax Exempt Fund -- Premier Shares
<TABLE>
<CAPTION>
Number of
Name and Address Shares Percentage
- ---------------- ------ ----------
<S> <C> <C>
Johnston Children Marital 5,712,729.39 8.00%
Agency
Mr. Vivian G. Johnston, Jr.
c/o Fran Siebert
P.O. Box 123
Mobile, AL 36601
</TABLE>
Limited Maturity Fund
<TABLE>
<CAPTION>
Number of
Name and Address Shares Percentage
- ---------------- ------ ----------
<S> <C> <C>
Acipco Fixed Income Fund 334,998.724 5.59%
American Cast Iron Pipe Co.
Attn: J.M. Cook
P.O. Box 2727
Birmingham, AL 35202
</TABLE>
Regional Equity Fund
<TABLE>
<CAPTION>
Number of
Name and Address Shares Percentage
- ---------------- ------ ----------
<S> <C> <C>
AmSouth Bancorporation 205,103.652 5.12%
Retirement Trust
AmSouth Bank
Attn: Anne Eady
P.O. Box 11426
Birmingham, AL 35202
</TABLE>
B-46
<PAGE> 94
U.S. Treasury Fund -- Premier Shares
<TABLE>
<CAPTION>
Number of
Name and Address Shares Percentage
- ---------------- ------ ----------
<S> <C> <C>
Retirement SYSTEMS OF Alabama 79,096,389.38 20.95%
Attn: Betty Cody
135 Montgomery Street
Montgomery, AL 36130
</TABLE>
Equity Fund
<TABLE>
<CAPTION>
Number of
Name and Address Shares Percentage
- ---------------- ------ ----------
<S> <C> <C>
AmSouth Bancorporation 1,825,910.296 9.00%
Thrift Plan
AmSouth Bank
Attn: Anne Eady
P.O. Box 11426
Birmingham, AL 35202
</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-47
<PAGE> 95
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, 1995, 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, 1995 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, 1995, 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.L.P.
Columbus, Ohio
September 22, 1995
B-48
<PAGE> 96
AMSOUTH MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
July 31, 1995
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 ...................................... $ 575,672 $ 79,833 $ 57,467
Repurchase agreements ............................ 55,251 243,784
--------- --------- ---------
630,923 323,617 57,467
Interest receivable .............................. 1,412 870 361
Prepaid expenses ................................. 18 12 3
--------- --------- ---------
Total Assets ................................. 632,353 324,499 57,831
--------- --------- ---------
LIABILITIES:
Dividends payable ................................ 2,906 1,393 162
Payable to brokers for investments purchased ..... 11,296
Accrued expenses and other payables:
Investment advisory fees ....................... 216 108 10
Administration fees ............................ 38 19 4
Accounting and transfer agent fees ............. 16 10 3
Other .......................................... 208 30 12
--------- --------- ---------
Total Liabilities ............................ 14,680 1,560 191
--------- --------- ---------
NET ASSETS:
Capital .......................................... 617,696 322,938 57,640
Accumulated undistributed net realized gains
(losses) from investment
transactions .................................... (23) 1
--------- --------- ---------
Net Assets ................................... $ 617,673 $ 322,939 $ 57,640
========= ========= =========
Outstanding units of beneficial interest
(shares) ........................................ 617,696 322,939 57,640
========= ========= =========
Net asset value--offering and redemption price per
share ........................................... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Investments, at cost ............................. $ 630,923 $ 323,617 $ 57,467
========= ========= =========
</TABLE>
See notes to financial statements.
B-49
<PAGE> 97
AMSOUTH MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
July 31, 1995
Amounts in Thousands Except per Share Amounts
<TABLE>
<CAPTION>
LIMITED GOVERNMENT FLORIDA
BOND MATURITY INCOME TAX-FREE
FUND FUND FUND FUND
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value ................... $ 92,761 $ 58,924 $ 16,540 $ 47,725
Interest receivable ..................... 1,939 900 260 619
Receivable for capital shares issued .... 10 6
Unamoritized organizational costs ....... 3
Prepaid expenses ........................ 3 2 2
-------- -------- -------- --------
Total Assets ........................ 94,713 59,826 16,800 48,355
-------- -------- -------- --------
LIABILITIES:
Payable for capital shares redeemed ..... 2 113
Accrued expenses and other payables:
Investment advisory fees .............. 27 17 3 8
Administration fees ................... 3 2 1 2
Accounting and transfer agent fees .... 3 3 1 2
Other ................................. 7 6 3 10
-------- -------- -------- --------
Total Liabilities ................... 42 28 121 22
-------- -------- -------- --------
NET ASSETS:
Capital ................................. 91,896 61,119 17,266 46,876
Undistributed (distributions in excess
of) net investment income .............. 298 198 102 114
Net unrealized appreciation (deprecia-
tion) from investments ................. 1,451 (297) (238) 1,350
Accumulated undistributed net realized
gains (losses) from investment
transactions ........................... 1,026 (1,222) (451) (7)
-------- -------- -------- --------
Net Assets .......................... $ 94,671 $ 59,798 $ 16,679 $ 48,333
======== ======== ======== ========
Outstanding units of beneficial interest
(shares) ............................... 8,740 5,745 1,748 4,683
======== ======== ======== ========
Net asset value--redemption price per
share .................................. $ 10.83 $ 10.41 $ 9.54 $ 10.32
======== ======== ======== ========
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 . $ 11.16 $ 10.73 $ 9.84 $ 10.64
======== ======== ======== ========
Investments, at cost .................... $ 91,310 $ 59,221 $ 16,778 $ 46,375
======== ======== ======== ========
</TABLE>
See notes to financial statements.
B-50
<PAGE> 98
AMSOUTH MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
July 31, 1995
Amounts in Thousands Except per Share Amounts
<TABLE>
<CAPTION>
REGIONAL
EQUITY EQUITY BALANCED
FUND FUND FUND
-------- -------- --------
<S> <C> <C> <C>
ASSETS:
Investments, at value ............................ $276,747 $ 68,542 $293,727
Interest and dividends receivable ................ 745 63 2,807
Receivable for capital shares issued ............. 83 45 164
Receivable from brokers for investments sold ..... 1 1
Prepaid expenses ................................. 11 2 13
-------- -------- --------
Total Assets ................................. 277,586 68,653 296,712
-------- -------- --------
LIABILITIES:
Payable for capital shares redeemed .............. 27 111 47
Payable to brokers for investments purchased ..... 1,643 986
Accrued expenses and other payables:
Investment advisory fees ....................... 126 31 118
Administration fees ............................ 10 2 11
Accounting and transfer agent fees ............. 4 2 9
Other .......................................... 19 6 32
-------- -------- --------
Total Liabilities ............................ 1,829 152 1,203
-------- -------- --------
NET ASSETS:
Capital .......................................... 221,297 56,810 256,477
Undistributed (distributions in excess of) net in-
vestment income ................................. 267 (3) 568
Net unrealized appreciation from investments ..... 47,236 11,655 33,123
Accumulated undistributed net realized gains from
investment transactions ......................... 6,957 39 5,341
-------- -------- --------
Net Assets ................................... $275,757 $ 68,501 $295,509
======== ======== ========
Outstanding units of beneficial interest (shares) 16,466 3,617 23,161
======== ======== ========
Net asset value--redemption price per share ...... $ 16.75 $ 18.94 $ 12.76
======== ======== ========
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 ................................. $ 17.54 $ 19.83 $ 13.36
======== ======== ========
Investments, at cost ............................. $229,511 $ 56,887 $260,604
======== ======== ========
</TABLE>
See notes to financial statements.
B-51
<PAGE> 99
AMSOUTH MUTUAL FUNDS
STATEMENTS OF OPERATIONS
For the year ended July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
PRIME U.S. TAX
OBLIGATIONS TREASURY EXEMPT
FUND FUND FUND
----------- -------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income ................................ $ 31,291 $ 17,162 $ 2,308
-------- -------- --------
Total Income ................................. 31,291 17,162 2,308
-------- -------- --------
EXPENSES:
Investment advisory fees ....................... 2,184 1,245 250
Administration fees ............................ 1,092 623 125
Custodian and accounting fees .................. 297 176 40
Legal and audit fees ........................... 71 46 9
Trustees' fees and expenses .................... 15 8 2
Transfer agent fees ............................ 43 32 20
Registration and filing fees ................... 32 14 9
Printing fees .................................. 29 19 4
Other .......................................... 18 10 2
Expenses voluntarily reduced by investment advi-
sor ........................................... (125)
-------- -------- --------
Total Expenses ............................... 3,781 2,173 336
-------- -------- --------
Net Investment Income .......................... 27,510 14,989 1,972
-------- -------- --------
REALIZED GAINS FROM INVESTMENT TRANSACTIONS:
Net realized gains from investment
transactions .................................. 1
-------- -------- --------
Change in net assets resulting from operations . $ 27,510 $ 14,990 $ 1,972
======== ======== ========
</TABLE>
See notes to financial statements.
B-52
<PAGE> 100
AMSOUTH MUTUAL FUNDS
STATEMENTS OF OPERATIONS
For the year ended July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
LIMITED GOVERNMENT FLORIDA
BOND MATURITY INCOME TAX-FREE
FUND FUND FUND FUND (A)
------- -------- ---------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income ........................................... $ 6,811 $ 3,292 $ 1,155 $ 1,766
------- ------- ------- -------
Total Income ............................................ 6,811 3,292 1,155 1,766
------- ------- ------- -------
EXPENSES:
Investment advisory fees .................................. 600 330 97 236
Administration fees ....................................... 184 101 29 51
Custodian and accounting fees ............................. 57 34 19 26
Legal and audit fees ...................................... 12 8 3 7
Organizational costs ...................................... 9
Trustees' fees and expenses ............................... 2 2 1
Transfer agent fees ....................................... 28 27 19 15
Registration and filing fees .............................. 15 12 8 6
Printing fees ............................................. 8 5 1 15
Other ..................................................... 2 2 1
Expenses voluntarily reduced by investment
advisor and
administrator ............................................ (212) (117) (90) (112)
------- ------- ------- -------
Total Expenses .......................................... 696 404 86 255
------- ------- ------- -------
Net Investment Income ..................................... 6,115 2,888 1,069 1,511
------- ------- ------- -------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions .. 993 (730) (217) (7)
Change in unrealized appreciation from investments ........ 2,305 1,456 354 1,350
------- ------- ------- -------
Net realized/unrealized gains from investments ............ 3,298 726 137 1,343
------- ------- ------- -------
Change in net assets resulting from operations ............ $ 9,413 $ 3,614 $ 1,206 $ 2,854
======= ======= ======= =======
</TABLE>
- --------
(a) Period from September 30, 1994 (commencement of operations) to July 31,
1995.
See notes to financial statements.
B-53
<PAGE> 101
AMSOUTH MUTUAL FUNDS
STATEMENTS OF OPERATIONS
For the year ended July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
REGIONAL
EQUITY EQUITY BALANCED
FUND FUND FUND
------- -------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income..................................... $ 1,036 $ 257 $ 8,305
Dividend income..................................... 6,336 1,192 4,218
------- ------ -------
Total Income...................................... 7,372 1,449 12,523
------- ------ -------
EXPENSES:
Investment advisory fees............................ 1,844 479 2,067
Administration fees................................. 461 120 517
Custodian and accounting fees....................... 127 36 143
Legal and audit fees................................ 30 8 36
Trustees' fees and expenses......................... 6 2 8
Transfer agent fees................................. 39 30 59
Registration and filing fees........................ 34 8 38
Printing fees....................................... 15 4 18
Other............................................... 8 1 7
Expenses voluntarily reduced by investment advisor
and administrator.................................. (188) (48) (468)
------- ------ -------
Total Expenses.................................... 2,376 640 2,425
------- ------ -------
Net Investment Income............................... 4,996 809 10,098
------- ------ -------
REALIZED/UNREALIZED GAINS FROM INVESTMENTS:
Net realized gains from investment transactions..... 11,383 904 8,851
Change in unrealized appreciation from investments.. 26,642 7,072 19,475
------- ------ -------
Net realized/unrealized gains from investment trans-
actions............................................ 38,025 7,976 28,326
------- ------ -------
Change in net assets resulting from operations...... $43,021 $8,785 $38,424
======= ====== =======
</TABLE>
See notes to financial statements.
B-54
<PAGE> 102
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended July 31, 1995 and 1994
Amounts in Thousands
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND U.S. TREASURY FUND TAX EXEMPT FUND
------------------------ ---------------------- --------------------
1995 1994 1995 1994 1995 1994
----------- ----------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income. $ 27,510 $ 14,446 $ 14,989 $ 8,496 $ 1,972 $ 1,217
Net realized gains
from investment
transactions......... 1
----------- ----------- --------- ----------- --------- ---------
Change in net assets
resulting from
operations............. 27,510 14,446 14,990 8,496 1,972 1,217
----------- ----------- --------- ----------- --------- ---------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income............... (27,510) (14,446) (14,989) (8,496) (1,972) (1,217)
----------- ----------- --------- ----------- --------- ---------
Change in net assets
from shareholder
distributions.......... (27,510) (14,446) (14,989) (8,496) (1,972) (1,217)
----------- ----------- --------- ----------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued............... 1,597,046 1,467,212 900,697 1,107,807 99,365 115,575
Dividends reinvested.. 5,036 1,813 2,103 1,400 311 217
Cost of shares
redeemed............. (1,561,740) (1,348,122) (880,465) (1,213,077) (102,959) (103,020)
----------- ----------- --------- ----------- --------- ---------
Change in net assets
from share
transactions........... 40,342 120,903 22,335 (103,870) (3,283) 12,772
----------- ----------- --------- ----------- --------- ---------
Change in net assets.... 40,342 120,903 22,336 (103,870) (3,283) 12,772
NET ASSETS:
Beginning of period... 577,331 456,428 300,603 404,473 60,923 48,151
----------- ----------- --------- ----------- --------- ---------
End of period......... $ 617,673 $ 577,331 $ 322,939 $ 300,603 $ 57,640 $ 60,923
=========== =========== ========= =========== ========= =========
SHARE TRANSACTIONS:
Issued................ 1,597,046 1,467,212 900,697 1,107,807 99,365 115,575
Reinvested............ 5,036 1,813 2,103 1,400 311 217
Redeemed.............. (1,561,740) (1,348,122) (880,465) (1,213,077) (102,959) (103,020)
----------- ----------- --------- ----------- --------- ---------
Change in shares........ 40,342 120,903 22,335 (103,870) (3,283) 12,772
=========== =========== ========= =========== ========= =========
</TABLE>
See notes to financial statements.
B-55
<PAGE> 103
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended July 31, 1995 and 1994
Amounts in Thousands
<TABLE>
<CAPTION>
BOND FUND LIMITED MATURITY FUND
---------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income .............. $ 6,115 $ 4,449 $ 2,888 $ 2,832
Net realized gains (losses) from
investment transactions ........... 993 384 (730) (478)
Net change in unrealized
appreciation (depreciation) from
investments ....................... 2,305 (4,689) 1,456 (1,969)
-------- -------- -------- --------
Change in net assets resulting from
operations .......................... 9,413 144 3,614 385
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ......... (6,084) (4,439) (2,844) (2,817)
From net realized gains from
investment transactions ........... (328) (215) (15)
In excess of net realized gains
from investment transactions ...... (695)
-------- -------- -------- --------
Change in net assets from
shareholder distributions ........... (6,412) (4,654) (2,844) (3,527)
-------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued ........ 38,646 42,500 23,917 33,748
Dividends reinvested ............... 3,257 344 894 236
Cost of shares redeemed ............ (29,705) (24,639) (17,443) (33,115)
-------- -------- -------- --------
Change in net assets from share
transactions ........................ 12,198 18,205 7,368 869
-------- -------- -------- --------
Change in net assets ................. 15,199 13,695 8,138 (2,273)
NET ASSETS:
Beginning of period ................ 79,472 65,777 51,660 53,933
-------- -------- -------- --------
End of period ...................... $ 94,671 $ 79,472 $ 59,798 $ 51,660
======== ======== ======== ========
SHARE TRANSACTIONS:
Issued ............................. 3,719 3,897 2,327 3,193
Reinvested ......................... 314 31 88 23
Redeemed ........................... (2,800) (2,247) (1,718) (3,159)
-------- -------- -------- --------
Change in shares ..................... 1,233 1,681 697 57
======== ======== ======== ========
</TABLE>
See notes to financial statements.
B-56
<PAGE> 104
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
GOVERNMENT INCOME FUND FLORIDA TAX-FREE FUND
------------------------- ---------------------
YEAR OCTOBER 1, SEPTEMBER 30,
ENDED 1993 TO 1994 TO
JULY 31, JULY 31, JULY 31,
1995 1994(A) 1995(A)
----------- ------------ ---------------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income ................................. $ 1,069 $ 1,182 $ 1,511
Net realized losses from investment transactions ...... (217) (673) (7)
Net change in unrealized appreciation (depreciation)
from investments ..................................... 354 (592) 1,350
-------- -------- --------
Change in net assets resulting from operations .......... 1,206 (83) 2,854
-------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ............................ (967) (742) (1,397)
Tax return of capital ................................. (135) (351)
-------- -------- --------
Change in net assets from shareholder distributions ..... (1,102) (1,093) (1,397)
-------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued ........................... 6,654 34,269 53,611
Dividends reinvested .................................. 723 1,092 40
Cost of shares redeemed ............................... (6,267) (18,720) (6,775)
-------- -------- --------
Change in net assets from
share transactions ..................................... 1,110 16,641 46,876
-------- -------- --------
Change in net assets .................................... 1,214 15,465 48,333
NET ASSETS:
Beginning of period ................................... 15,465
-------- -------- --------
End of period ......................................... $ 16,679 $ 15,465 $ 48,333
======== ======== ========
SHARE TRANSACTIONS:
Issued ................................................ 711 3,437 5,353
Reinvested ............................................ 78 113 4
Redeemed .............................................. (672) (1,919) (674)
-------- -------- --------
Change in shares ........................................ 117 1,631 4,683
======== ======== ========
</TABLE>
- --------
(a) Period from commencement of operations.
See notes to financial statements.
B-57
<PAGE> 105
AMSOUTH MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended July 31, 1995 and 1994
Amounts in Thousands
<TABLE>
<CAPTION>
EQUITY FUND REGIONAL EQUITY FUND BALANCED FUND
------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income .................... $ 4,996 $ 3,428 $ 809 $ 669 $ 10,098 $ 7,487
Net realized gains
from investment transactions ............ 11,383 5,214 904 311 8,851 4,135
Net change in unrealized appreciation
(depreciation) from investments ......... 26,642 4,172 7,072 935 19,475 (2,301)
--------- --------- --------- --------- --------- ---------
Change in net assets
resulting from operations ................. 43,021 12,814 8,785 1,915 38,424 9,321
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income ............... (4,796) (3,407) (808) (672) (9,889) (7,397)
From net realized gains from investment
transactions ............................ (6,679) (4,355) (1,124) (6,217) (3,704)
In excess of net realized gains from
investment transactions ................. (622)
--------- --------- --------- --------- --------- ---------
Change in net assets from shareholder
distributions ............................. (11,475) (7,762) (808) (2,418) (16,106) (11,101)
--------- --------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued .............. 75,477 92,091 16,875 19,564 69,297 96,945
Dividends reinvested ..................... 6,461 441 454 1,073 10,838 543
Cost of shares redeemed .................. (43,338) (45,047) (11,549) (6,737) (43,250) (38,536)
--------- --------- --------- --------- --------- ---------
Change in net assets from share
transactions .............................. 38,600 47,485 5,780 13,900 36,885 58,952
--------- --------- --------- --------- --------- ---------
Change in net assets ....................... 70,146 52,537 13,757 13,397 59,203 57,172
NET ASSETS:
Beginning of period ...................... 205,611 153,074 54,744 41,347 236,306 179,134
--------- --------- --------- --------- --------- ---------
End of period ............................ $ 275,757 $ 205,611 $ 68,501 $ 54,744 $ 295,509 $ 236,306
========= ========= ========= ========= ========= =========
SHARE TRANSACTIONS:
Issued ................................... 4,997 6,246 970 1,148 5,839 8,112
Reinvested ............................... 450 30 26 63 939 46
Redeemed ................................. (2,851) (3,052) (662) (397) (3,630) (3,245)
--------- --------- --------- --------- --------- ---------
Change in shares ........................... 2,596 3,224 334 814 3,148 4,913
========= ========= ========= ========= ========= =========
</TABLE>
See notes to financial statements.
B-58
<PAGE> 106
AMSOUTH MUTUAL FUNDS
PRIME OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ---------------------------------------------------------- ---------
<S> <C>
CERTIFICATES OF DEPOSIT (1.6%):
Yankee--Japanese (1.6%):
10,000 Sanwa Bank, 6.04%, 8/14/95................................ $ 10,000
--------
Total Certificates of Deposit 10,000
--------
COMMERCIAL PAPER (69.3%):
Agriculture (0.8%):
5,000 Cargill, Inc., 6.26%, 8/7/95.............................. 4,995
--------
Asset Backed (7.7%):
5,100 Cooperative Assoc. of Tractor Dealers, 6.20%, 9/6/95...... 5,068
10,000 Cooperative Assoc. of Tractor Dealers, 5.93%, 11/9/95..... 9,835
8,699 Redwood Receivables Corp., 5.78%, 9/6/95.................. 8,649
8,000 Strategic Asset Funding Co., 5.95%, 8/8/95................ 7,991
10,000 Strategic Asset Funding Co., 5.92%, 10/2/95............... 9,898
6,000 Strategic Asset Funding Co., 5.85%, 10/31/95.............. 5,911
--------
47,352
--------
Banking (3.2%):
10,000 Bankers Trust Corp., 5.69%, 10/10/95...................... 9,889
10,000 Norwest Corp., 5.91%, 8/29/95............................. 9,954
--------
19,843
--------
Financial Services (18.1%):
5,000 American Express Credit Corp., 5.90%, 11/13/95............ 4,915
10,000 American Express Credit Corp., 5.55%, 4/23/96............. 9,590
10,000 Associates Corp. of America, 5.96%, 8/1/95................ 10,000
10,000 Ford Motor Credit Corp., 5.85%, 1/30/96................... 9,704
10,000 General Electric Capital Services, 6.65%, 10/5/95......... 9,880
10,000 General Motors Acceptance Corp., 5.92%, 9/8/95............ 9,937
8,000 General Motors Acceptance Corp., 5.75%, 9/29/95........... 7,925
10,000 IBM Credit Corp., 5.96%, 8/7/95........................... 9,990
10,000 Sears Roebuck Acceptance Corp., 5.95% 8/4/95............. 9,995
10,000 Sears Roebuck Acceptance Corp., 5.96%, 8/18/95........... 9,972
10,000 Toyota Motor Credit Corp., 6.63%, 10/13/95............... 9,865
10,000 Toyota Motor Credit Corp., 6.40%, 11/13/95............... 9,815
--------
111,588
--------
Food Products (0.8%):
5,000 McCormick & Co., Inc., 5.80%, 2/9/96..................... 4,845
--------
Insurance (1.3%):
7,925 American Bankers Insurance Group, 5.97%, 8/10/95......... 7,913
--------
Pharmaceuticals & Chemicals (1.6%):
10,000 Sandoz Corp., 6.12%, 8/23/95............................. 9,963
--------
Retail Stores (7.1%):
10,000 Southland Corp., 5.89%, 9/22/95.......................... 9,915
10,000 Southland Corp., 5.92%, 9/8/95........................... 9,938
4,290 Southland Corp., 5.66%, 10/17/95......................... 4,238
10,000 Spiegel Funding Corp., 5.93%, 8/21/95.................... 9,967
10,000 Spiegel Funding Corp., 5.90%, 9/14/95.................... 9,928
--------
43,986
--------
Security Brokers & Dealers (7.2%):
5,000 First Boston Corp., 6.13%, 8/21/95....................... 4,983
10,000 First Boston Corp., 6.18%, 9/11/95....................... 9,930
10,000 Merrill Lynch, 6.11%, 1/12/96............................ 9,722
10,000 Smith Barney, Inc., 5.95%, 8/2/95........................ 9,998
10,000 Smith Barney, Inc., 5.95%, 8/9/95........................ 9,987
--------
44,620
--------
Services--Equipment Rental & Leasing (0.8%):
5,000 International Lease Finance Corp., 5.77%, 2/1/96......... 4,853
--------
Canadian Commercial Paper (1.6%):
10,000 Province of Quebec, 6.23%, 12/1/95....................... 9,789
--------
French Commercial Paper (4.4%):
10,000 Accor S.A., Banque Natonale De Paris, 5.90%, 9/7/95...... 9,939
</TABLE>
Continued
B-59
<PAGE> 107
AMSOUTH MUTUAL FUNDS
PRIME OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------- ---------
<S> <C>
COMMERCIAL PAPER, CONTINUED:
French Commercial Paper, continued:
17,000 Society Generale, 5.97%, 8/9/95.......................... $ 16,977
--------
26,916
--------
Japanese Commercial Paper (7.5%):
5,000 Hitachi Credit America Corp., 6.13%, 8/16/95............. 4,987
3,000 Hitachi Credit America Corp., 5.63%, 10/12/95............ 2,966
6,000 Hitachi Credit America Corp., 5.63% 10/17/95............. 5,928
6,000 Hitachi Credit America Corp., 5.62%, 12/18/95............ 5,870
7,650 Mitsubishi Motor Credit, 5.70%, 9/29/95.................. 7,579
9,300 Mitsubishi Motor Credit, 5.92%, 9/5/95................... 9,246
10,000 Sharp Electronics Corp., 5.70%, 12/15/95................. 9,785
--------
46,361
--------
Mortgage--Financing (1.6%):
10,000 Prudential Finance Ltd, 5.97%, 8/14/95................... 9,978
--------
Netherland (4.0%):
5,000 Internationale Nederlanden U.S. Funding Corp., 5.95%,
8/28/95................................................. 4,978
10,000 Internationale Nederlanden U.S. Funding Corp., 5.65%,
10/16/95................................................ 9,881
10,000 Internationale Nederlanden U.S. Funding Corp., 5.90%,
9/18/95................................................. 9,921
--------
24,780
--------
Swedish (1.6%):
10,000 Kingdom of Sweden, 5.60%, 2/21/96........................ 9,683
--------
Total Commercial Paper 427,465
--------
CORPORATE BONDS (7.8%):
Banking (1.6%):
10,000 Bankers Trust Co., 5.88%**, 12/7/95...................... 10,000
--------
Financial Services (4.3%):
5,000 American General Finance Corp., 4.98%, 3/26/96............ $ 4,964
11,025 Ford Capital, 9.00%, 6/1/96............................... 11,296
10,000 General Electric Capital Corp., 5.79%**, 8/1/96........... 9,985
--------
26,245
--------
Security Brokers & Dealers (1.1%):
7,000 Merrill Lynch & Co., Inc., 5.89%**, 1/3/96................ 7,000
--------
United Kingdom (0.8%):
5,000 Hanson Overseas, 5.50%, 1/15/96........................... 4,987
--------
Total Corporate Bonds 48,232
--------
GUARANTEED INSURANCE CONTRACTS (4.0%):
12,500 Commonwealth Life Insurance Co. G.I.C., 6.39%*, 8/1/19.... 12,500
12,500 Peoples Security Life G.I.C., 6.34%*, 8/1/19.............. 12,500
--------
Total Guaranteed Insurance Contracts 25,000
--------
MEDIUM TERM NOTES (7.3%):
Financial Services (7.3%):
10,000 Beta Finance Inc., 6.05%**, 9/7/95........................ 9,999
10,000 Beta Finance, Inc., 5.95%**, 6/17/96...................... 10,000
10,000 CIT Group Holding, 5.95%**, 9/18/95....................... 9,998
10,000 IBM Credit Corp., 5.70% 7/19/96........................... 9,997
5,000 John Deere Capital, 5.50%, 10/30/95....................... 4,987
--------
Total Medium Term Notes 44,981
--------
TAXABLE MUNICIPAL BONDS (1.6%):
New York (1.6%):
10,000 New York City, Series B-11, 6.24%**, 8/15/22.............. 10,000
--------
Total Taxable Municipal Bonds 10,000
--------
</TABLE>
Continued
B-60
<PAGE> 108
AMSOUTH MUTUAL FUNDS
PRIME OBLIGATIONS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ---------------------------------------------------------- ---------
<S> <C>
U.S. GOVERNMENT AGENCIES (1.6%):
10,000 Federal Farm Credit Bank, 5.92%**, 6/17/96................ $ 9,994
--------
Total U.S. Government Agencies 9,994
--------
Total Investments 575,672
--------
REPURCHASE AGREEMENTS (8.9%):
55,251 First Boston Corp., 5.85%, 8/1/95 (Collateralized by
57,880 FNMA Discount Notes, 0.00%, 11/22/95, market
value $56,908)........................................ $ 55,251
--------
Total Repurchase Agreements 55,251
--------
Total (Cost-$630,923)(a) $630,923
========
</TABLE>
- --------
Percentages indicated are based on net assets of $617,673.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Guaranteed Insurance Contracts ("GIC") are securities with yields that vary
with a designated market index. These securities are payable three months
after presentation for payment. The rate reflected on the Schedule of
Portfolio Investments is the rate in effect at July 31, 1995.
** 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, 1995.
See notes to financial statements.
B-61
<PAGE> 109
AMSOUTH MUTUAL FUNDS
U.S. TREASURY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
U.S. TREASURY BILLS (12.3%):
<S> <C>
5,000 5.85%, 8/3/95........................................... $ 4,998
5,000 5.90%, 8/17/95.......................................... 4,986
10,000 5.53%, 8/24/95.......................................... 9,963
5,000 5.61%, 9/21/95.......................................... 4,960
5,000 5.51%, 11/2/95.......................................... 4,929
5,000 5.98%, 11/16/95......................................... 4,911
5,000 5.31%, 12/7/95.......................................... 4,906
--------
Total U.S. Treasury Bills 39,653
--------
U.S. TREASURY NOTES (12.4%):
10,000 7.88%, 2/15/96.......................................... 10,078
5,000 9.38%, 4/15/96.......................................... 5,101
5,000 5.50%, 4/30/96.......................................... 4,972
5,000 7.63%, 4/30/96.......................................... 5,056
5,000 4.25%, 5/15/96.......................................... 4,944
5,000 5.88%, 5/31/96.......................................... 5,004
5,000 6.13%, 7/31/96.......................................... 5,025
--------
Total U.S. Treasury Notes 40,180
--------
Total Investments 79,833
--------
REPURCHASE AGREEMENTS (75.5%):
76,000 First Boston Corp., 5.83%, 8/1/95, (Collateralized by
56,586, U.S. Treasury Bonds, 11.63%, 11/15/04, market
value $77,712)......................................... $ 76,000
REPURCHASE AGREEMENTS, CONTINUED:
15,500 First Union, 5.69%, 8/8/95, (Collateralized by 15,655,
U.S. Treasury Notes, 4.38%-6.75%, 11/15/96-6/30/99,
market value $15,823).................................. 15,500
15,250 Hong Kong Shanghi BancCorp., 5.70%, 8/1/95,
(Collateralized by 15,485, U.S. Treasury Notes, 6.00%,
6/30/96, market value $15,582)......................... 15,250
15,500 Lehman Brothers, Inc., 5.69%, 8/2/95, (Collateralized by
14,785, U.S. Treasury Notes, 7.75%, 11/30/99, market
value $15,820)......................................... 15,500
75,784 Merrill Lynch & Co., 5.82%, 8/1/95, (Collateralized by
77,345, U.S. Treasury Notes, 5.63%, 6/30/97 market
value $77,301)......................................... 75,784
15,500 Prudential Bache, 5.68%, 8/3/95, (Collateralized by
15,500, U.S. Treasury Notes, 6.50%, 5/15/97, market
value $15,849)......................................... 15,500
15,000 Sanwa Bank, 5.70%, 8/7/95, (Collateralized by 14,664,
U.S. Treasury Notes, 6.88%, 2/28/97, market value
$15,306)............................................... 15,000
15,250 Smith Barney Shearson, Inc., 5.68%, 8/7/95
(Collateralized by 15,660, U.S. Treasury Strips,
11.75%, 5/15/96, market value $14,944 and 635, U.S.
Treasury Bonds, 9.5%, 11/15/95 market value $623)...... 15,250
--------
Total Repurchase Agreements 243,784
--------
Total (Cost-$323,617)(a) $323,617
========
</TABLE>
- --------
Percentages indicated are based on net assets of $322,939.
(a) Cost for federal income tax and financial reporting purposes are the same.
See notes to financial statements.
B-62
<PAGE> 110
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<S> <C>
MUNICIPAL BONDS (96.6%):
Alabama (10.7%):
2,000 City of Birmingham, Alabama General Obligation Bonds,
3.75%*, 5/1/19**....................................... $ 2,000
500 Huntsville, Alabama Refunding Sewage Revenue, 7.75%,
10/1/09................................................ 513
2,000 Mobile, Alabama Industrial Development Board, Pollution
Control Revenue, Series B, 3.85%*,7/1/18**............. 2,000
1,665 Stevenson, Alabama Industrial Development Board,
Environmental Improvement Revenue, 3.90%, 11/1/16...... 1,665
---------
6,178
---------
Arizona (5.2%):
1,000 Mesa, Arizona Municipal Development Corp., Special Tax
Bonds 1985, 3.70%, 1/1/08.............................. 1,000
2,000 West Orange Memorial Hospital, Series A-1, 3.75%,
10/10/95............................................... 2,000
---------
3,000
---------
Colorado (2.1%):
200 Adams County, Colorado Industrial Development Revenue,
Revenue Bonds, 3.90%*, 12/1/15**....................... 200
1,000 Arapahoe County, Colorado Capital Improvement,
Transferred Highway Revenue E-470 Pj, Series G, 4.45%,
8/31/26................................................ 1,000
---------
1,200
---------
Connecticut (3.5%):
2,000 Connecticut State Special Assessment Unemployment
Compensation, Series C, 3.90%, 11/15/01................ 2,001
---------
Delaware (4.3%):
1,300 Franciscan Health Systems, Wilmington, Delaware, Series
86A, 3.90%*, 7/1/11**.................................. 1,300
1,200 Franciscan Health Systems, Wilmington, Delaware, Series
1986B, 3.90%, 7/1/11**................................. 1,200
---------
2,500
---------
Florida (7.3%):
1,650 Dade County, Florida Solid Waste System, 10.00%,
10/1/10................................................ 1,697
2,250 Dade County, Florida Special Obligation, Revenue Bonds,
4.05%*, 10/1/10**...................................... 2,250
300 Florida Housing Finance Authority, Multi-Family Lake
North, Series 1984D, 3.75%*, 6/1/07**.................. 300
---------
4,247
---------
Georgia (8.1%):
1,100 Cobb County, Georgia Housing Authority Multi-Family
Housing Revenue, Revenue Bonds, 3.90%*, 6/1/23**....... 1,100
2,500 Columbus, Georgia Downtown Development Authority,
Industrial Development Revenue, Arsenal Place Project,
3.90%*, 8/1/15**....................................... 2,500
500 Savannah, Georgia Downtown Development Authority,
3.85%*, 9/1/97**....................................... 500
350 Savannah, Georgia Downtown Development Authority,
3.85%*, 9/1/97**....................................... 350
200 Turner County, Georgia Development Authority, Industrial
Development Revenue, Coats & Clark Inc., 4.00%*,
10/1/98**.............................................. 200
---------
4,650
---------
Illinois (5.8%):
975 Illinois Health Facility, 3.90%*, 5/15/19............... 975
1,350 Illinois Health Facilities Authority Revenue Bonds--
Alexian Hospital, 3.35%, 1/1/16........................ 1,350
1,000 Sauget, Illinois Regional Wastewater Treatment, 4.00%,
5/1/96................................................. 999
---------
3,324
---------
Iowa (0.2%):
100 Chariton, Iowa Industrial Development, Vee Food Stores,
3.75%*, 11/1/04**...................................... 100
---------
</TABLE>
Continued
B-63
<PAGE> 111
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------- ---------
<S> <C>
MUNICIPAL BONDS, CONTINUED:
Louisiana (6.1%):
1,500 Louisiana Recovery District, 3.90%*, 7/1/97**........... $ 1,500
2,000 Louisiana State Recovery District Sales Tax Revenue,
Series 1988, 3.90%*, 7/1/98**.......................... 2,000
-------
3,500
-------
Minnesota (1.2%):
200 Austin, Minnesota Commercial Development Revenue, Vee
Food Stores, 3.75%*, 12/1/04**......................... 200
500 Minnesota State General Obligation, 8.10%, 8/1/98**..... 500
-------
700
-------
Missouri (10.8%):
1,000 Missouri State Environmental Improvement & Energy
Resources Authority, Pollution Control Revenue,
3.30%, 6/1/15.......................................... 1,000
1,000 Missouri State Environmental Improvement & Energy
Resources Authority, Pollution Control Revenue, 4.10%,
6/1/15................................................. 1,000
1,000 Missouri State Environmental Improvement & Energy
Resources Authority, 3.75%, 6/1/15..................... 1,000
685 Missouri State Industrial Development Board, Series 2,
3.95%*, 2/1/00**....................................... 685
535 Missouri State Industrial Development Board, Lot 2,
Series F, 3.95%*, 2/1/04**............................. 535
2,000 St. Charles County, Missouri Industrial Development
Authority, Industrial Revenue, 3.85%*, 12/1/07**....... 2,000
-------
6,220
-------
Nebraska (2.4%):
1,400 Nebraska Educational Facility Authority, 3.80%*,
12/1/00**.............................................. 1,400
-------
Pennsylvania (3.5%):
1,000 Delaware County, Pennsylvania Industrial Development
Authority, Pollution Control Revenue, Series B 1988,
(Philadelphia Electric Co.), 3.50%, 12/1/12............ 1,000
Pennsylvania State, Certificates of Participation,
1,000 4.25%, 6/1/96.......................................... 1,002
-------
2,002
-------
Tennessee (2.4%):
800 Tennessee State School Board Authority, Higher
Educational Facilities, Bond Anticipation Notes,
3.75%*, 3/1/98**....................................... 800
600 Tennessee State School Board Authority, Adjusted Higher
Education Bonds, Anticipation Notes, Series B, 3.75%*,
3/1/98**............................................... 600
-------
1,400
-------
Texas (18.1%):
500 Austin, Texas Utility System Revenue, 9.75%, 11/15/97... 518
1,000 Board of Regents of Texas A&M University, System
Permanent University, Subject Lien Notes, Series B,
3.85%, 7/1/17.......................................... 1,000
1,000 Dallas, Texas Waterworks & Sewer System, 9.00%, 4/1/96.. 1,034
1,170 Dallas-Fort Worth, Texas International Airport Board,
3.65%, 11/1/02......................................... 1,170
1,500 Health Care Systems, Harris County, Texas, 4.15%,
1/1/15................................................. 1,500
2,000 Lone Star, Texas Airport Improvement Authority, 3.85%,
12/1/14................................................ 2,000
1,200 North Central, Texas, Series C, 3.90%*, 12/1/15......... 1,200
1,000 North Central, Texas Health Facility Development Corp.,
Series 1985D (Presbyterian Medical Center), 3.90%*,
12/1/15**.............................................. 1,000
</TABLE>
Continued
B-64
<PAGE> 112
AMSOUTH MUTUAL FUNDS
TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------------------------------- ---------
MUNICIPAL BONDS, CONTINUED:
<S> <C> <C>
Texas, continued:
1,000 Texas Public Finance Authority, General Obligation, 3.25%, 10/5/95.............. $ 1,000
-------
10,422
-------
Washington (2.0%):
1,130 Washington State Health Care Facilities, 4.20%, 11/15/95........................ 1,132
-------
West Virginia (1.2%):
700 Putnam County, West Virginia, Industrial Revenue, 3.75%*, 11/1/12**............. 700
-------
Wisconsin (1.7%):
1,000 Milwaukee, Wisconsin Revenue, Service B, 4.75%, 8/25/95.......................... 1,000
-------
Total Municipal Bonds................................................................... 55,676
-------
INVESTMENT COMPANIES (3.1%):
250 Federated Tax Free Trust Mutual Fund............................................. 250
1,541 Fidelity Institutional Tax Exempt Cash Portfolio................................. 1,541
-------
Total Investment Companies.............................................................. 1,791
-------
Total (Cost-$57,467)(a)................................................................. $57,467
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $57,640.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit of other credit and/or liquidity agreements. The interest rate,
which will change periodically, is based upon bank prime rates or an index
of market rates. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect at July 31, 1995.
** 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.
See notes to financial statements.
B-65
<PAGE> 113
AMSOUTH MUTUAL FUNDS
BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------------ ------
<S> <C> <C>
CORPORATE BONDS (40.3%):
Aircraft (1.9%):
1,750 Boeing Co., 8.38%, 3/1/96................................... $1,770
------
Appliances (0.6%):
500 Whirlpool Corp., 9.50%, 6/15/00............................. 556
------
Automotive (2.7%):
1,570 Ford Capital Corp., 9.13%, 5/1/98........................... 1,672
800 General Motors Corp., 9.63%, 12/1/00........................ 893
------
2,565
------
Banking (5.4%):
1,070 Bank of America, 9.50%, 4/1/01.............................. 1,198
1,000 Bankers Trust Co., 9.50%, 6/14/00........................... 1,090
1,600 NationsBank Corp., 5.38%, 4/15/00........................... 1,518
1,250 SunTrust Banks, Inc., 8.38%, 3/1/96......................... 1,267
------
5,073
------
Brokerage Services (4.1%):
1,000 Bear Stearns & Co., 6.50%, 6/15/00.......................... 979
1,000 Merrill Lynch & Co., 9.00%, 5/1/98.......................... 1,056
750 Merrill Lynch & Co., 8.25%, 11/15/99........................ 788
1,000 Morgan Stanley Group, Inc., 9.25%, 3/1/98................... 1,063
------
3,886
------
Entertainment (1.1%):
1,000 Columbia Picture Entertainment, Inc., 9.88%, 2/1/98......... 1,060
------
Farm Equipment Manufacturer (0.5%):
470 Deere & Co., 9.13%, 7/1/96.................................. 481
------
Financial Services (7.0%):
500 Associates Corp., 8.63%, 6/15/97............................ 521
1,000 Associates Corp., 6.25%, 3/15/99............................ 990
2,000 Avco Financial, 5.50%, 4/1/00............................... 1,890
500 Beneficial Corp., 9.90%, 11/17/97........................... 537
1,300 British Telcom Finance, Inc., 9.38%, 2/15/99................ 1,419
300 CIT Group Holdings, Inc., 8.75%, 7/1/97..................... 313
1,000 Margaretten Financial, 6.75%, 6/15/00....................... 991
------
6,661
------
Industrial Goods & Services (0.5%):
500 Hanson Overseas, 5.50%, 1/15/96............................. 499
------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
CORPORATE BONDS, CONTINUED:
<S> <C> <C>
Insurance (5.3%):
1,000 Aon Corp., 6.88%, 10/1/99.................................. $1,006
1,600 Capital Holding Corp., 9.20%, 4/17/01...................... 1,748
800 Chubb Corp., 8.75%, 11/15/99............................... 844
1,300 Torchmark Corp., 9.63%, 5/1/98............................. 1,391
------
4,989
------
Oil & Gas Exploration (1.7%):
1,450 BP America, 9.38%, 11/1/00................................. 1,620
------
Pharmaceuticals (1.1%):
1,000 McKesson Corp., 8.63%, 2/1/98.............................. 1,049
------
Railroads (2.6%):
1,500 Union Pacific Corp., 6.25%, 3/15/99........................ 1,478
1,000 Union Pacific Corp., 7.00%, 6/15/00........................ 1,009
------
2,487
------
Utilities--Electric (4.3%):
470 National Rural Utilities, 9.50%, 5/15/97................... 496
1,500 Northern States Power, 7.88%, 10/1/01...................... 1,577
1,000 Southern California Edison, 5.60%, 12/15/98................ 976
1,000 Virginia Electric & Power, 7.25%, 3/1/97................... 1,015
------
4,064
------
Utilities--Telephone (1.5%):
1,500 General Telephone & Electric-California, 5.63%, 2/1/01..... 1,418
------
Total Corporate Bonds................................................ 38,178
------
U.S. GOVERNMENT AGENCIES (2.0%):
2,000 Federal Home Loan Mortgage Corp., 5.40%, 11/1/00........... 1,887
------
Total U.S. Government Agencies....................................... 1,887
------
U.S. TREASURY NOTES (47.1%):
1,500 7.88%, 4/15/98............................................. 1,568
3,000 6.38%, 1/15/99............................................. 3,027
11,000 7.50%, 11/15/01............................................ 11,674
17,000 6.38%, 8/15/02............................................. 17,022
9,000 5.75%, 8/15/03............................................. 8,614
2,500 7.50%, 11/15/16............................................ 2,661
------
Total U.S. Treasury Notes 44,566
------
</TABLE>
Continued
B-66
<PAGE> 114
AMSOUTH MUTUAL FUNDS
BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<S> <C> <C>
U.S. TREASURY STRIP (5.5%):
9,000 0.00%, 2/15/04............................................. $ 5,191
-------
Total U.S. Government Agencies....................................... 5,191
-------
INVESTMENT COMPANIES (3.1%):
2,938 AmSouth Prime Obligations Fund 2,938
1 AmSouth U.S. Treasury Fund 1
-------
Total Investment Companies 2,939
-------
Total (Cost-$91,310)(a) $92,761
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $94,671.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation $2,274
Unrealized depreciation (823)
------
Net unrealized appreciation $1,451
======
See notes to financial statements.
B-67
<PAGE> 115
AMSOUTH MUTUAL FUNDS
LIMITED MATURITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<S> <C> <C>
CORPORATE BONDS (71.7%):
Banking (20.3%):
500 Chemical Banking, 6.63%, 1/15/98........................... $ 501
1,000 Comerica, 5.95% 9/15/97.................................... 993
2,000 First Union Corp., 6.75%, 1/15/98,......................... 2,020
1,000 Huntington National Bank, 4.48%, 10/14/96.................. 981
3,000 Mellon Financial, 6.50% 12/1/97............................ 3,011
2,540 NationsBank Corp., 6.63%, 1/15/98.......................... 2,553
2,000 Security Pacific Corp., 8.49%, 12/27/96.................... 2,058
-------
12,117
-------
Beverages (2.5%):
1,500 PepsiCo., Inc., 5.46%, 7/1/98.............................. 1,463
-------
Chemicals (3.3%):
2,000 Dow Capital, 5.75%, 9/15/97................................ 1,967
-------
Electrical & Electronic (3.4%):
2,000 Sony Capital Corp., 6.98%, 7/2/97.......................... 2,027
-------
Financial Services (21.2%):
1,000 American General Finance, 5.80%, 4/1/97.................... 993
2,700 Associates Corp. of North America, 7.50%, 5/15/99.......... 2,781
2,000 Beneficial Corp., 7.32%, 11/17/99.......................... 2,042
500 Commercial Credit Co., 6.75%, 1/15/97...................... 503
1,500 Ford Motor Credit Corp., 5.63%, 12/15/98................... 1,457
1,500 Ford Motor Credit Corp., 6.00%, 3/24/98.................... 1,483
1,500 Household Finance Corp., 5.74%, 1/22/96.................... 1,498
2,000 Norwest Financial, 5.20%, 4/29/97.......................... 1,965
-------
12,722
-------
Food Products (4.2%):
2,500 General Mills, 7.13%, 10/3/97.............................. 2,541
-------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<S> <C> <C>
CORPORATE BONDS, CONTINUED:
Insurance (3.5%):
2,000 American General Corp., 7.70%, 10/15/99.................... $ 2,073
-------
Leasing (3.5%):
2,000 USL Capital Corp., 8.13%, 2/15/00.......................... 2,095
-------
Security Brokers & Dealers (3.3%):
2,000 Dean Witter Discover & Co., 6.00%, 3/1/98.................. 1,980
-------
Utilities--Electric (6.5%):
2,000 Florida Power & Light, 5.70%, 3/5/98....................... 1,972
1,950 Georgia Power, 6.13%, 9/1/99............................... 1,918
-------
3,890
-------
Total Corporate Bonds 42,875
-------
U.S. GOVERNMENT AGENCIES (1.6%):
1,000 Federal Home Loan Mortgage Corp., 4.75%, 11/16/98.......... 973
-------
Total U.S. Government Agencies 973
-------
U.S. TREASURY NOTES (21.8%):
3,000 6.50%, 5/15/97............................................. 3,031
8,500 6.13%, 5/15/98............................................. 8,524
1,500 6.25%, 5/31/00............................................. 1,503
-------
Total U.S. Treasury Notes 13,058
-------
INVESTMENT COMPANIES (3.4%):
1,913 AmSouth Prime Obligations Fund............................. 1,913
105 AmSouth U.S. Treasury Fund................................. 105
-------
Total Investment Companies 2,018
-------
Total (Cost-$59,221)(a) $58,924
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $59,798.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
Unrealized appreciation $ 548
Unrealized depreciation (845)
-----
Net unrealized depreciation $(297)
=====
See notes to financial statements.
B-68
<PAGE> 116
AMSOUTH MUTUAL FUNDS
GOVERNMENT INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------------ -------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES (37.8%):
Government National Mortgage Assoc.:
81 9.50%, 5/15/18.............................................. $ 86
123 9.00%, 6/15/18.............................................. 128
144 9.00%, 8/15/18.............................................. 151
177 9.50%, 2/15/19.............................................. 187
264 9.50%, 6/15/19.............................................. 279
21 9.50%, 7/15/19.............................................. 22
299 9.00%, 10/15/19............................................. 313
141 9.00%, 10/15/19............................................. 148
93 8.50%, 12/15/19............................................. 96
199 9.00%, 12/15/19............................................. 208
230 9.00%, 1/15/20.............................................. 241
138 9.00%, 3/15/20.............................................. 144
176 9.00%, 5/15/20.............................................. 184
81 9.50%, 5/15/20.............................................. 85
51 9.50%, 9/15/20.............................................. 54
489 9.50%, 9/15/20.............................................. 518
345 9.50%, 11/15/20............................................. 365
76 9.00%, 11/15/20............................................. 80
183 8.50%, 11/15/20............................................. 189
286 9.50%, 11/15/20............................................. 303
104 9.50%, 12/15/20............................................. 110
17 9.50%, 12/15/20............................................. 18
25 9.50%, 1/15/21.............................................. 27
529 9.00%, 2/15/21.............................................. 554
2 9.50%, 6/15/21.............................................. 2
211 8.50%, 8/15/21.............................................. 218
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES. CONTINUED:
Government National Mortgage Assoc., continued:
68 8.50%, 8/15/21............................................. $ 70
379 9.50%, 8/15/21............................................. 401
171 9.00%, 9/15/21............................................. 179
84 9.00%, 9/15/21............................................. 88
140 8.50%, 10/15/21............................................ 144
248 9.00%, 10/15/21............................................ 260
182 9.00%, 1/15/22............................................. 191
30 9.00%, 4/15/22............................................. 32
140 9.00%, 6/15/22............................................. 147
61 9.00%, 9/15/22............................................. 64
20 8.50%, 2/15/23............................................. 21
-------
Total U.S. Government Agencies 6,307
-------
U.S. TREASURY NOTES (56.4%):
2,000 6.25%, 1/31/97............................................. 2,013
1,000 8.13%, 2/15/98............................................. 1,049
1,500 8.00%, 8/15/99............................................. 1,598
2,000 7.13%, 2/29/00............................................. 2,072
1,000 7.50%, 2/15/05............................................. 1,072
1,500 7.50%, 11/15/16............................................ 1,596
-------
Total U.S. Treasury Notes 9,400
-------
INVESTMENT COMPANIES (5.0%):
833 AmSouth U.S. Treasury Fund................................. 833
-------
Total Investment Companies 833
-------
Total (Cost-$16,778) (a) $16,540
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $16,679.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
Unrealized appreciation $ 195
Unrealized depreciation (433)
-----
Net unrealized depreciation $(238)
=====
See notes to financial statements.
B-69
<PAGE> 117
AMSOUTH MUTUAL FUNDS
FLORIDA TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------------------------------------------ -------
<S> <C> <C>
MUNICIPAL BONDS (93.4%):
Florida (93.4%):
1,000 Alachua County, Florida School District, 5.50%, 1/1/03..................................... $ 1,000
1,000 Cape Coral, Florida Special Obligation, Revenue, 5.50%, 7/1/99............................. 1,040
900 Cape Coral, Florida Special Tax Assessment, 6.30%, 7/1/96.................................. 919
500 Clay County, Florida Utilities System Revenue, 4.30%, 11/1/00.............................. 496
500 Clay County, Florida Utilities System Revenue, 4.40%, 11/1/01.............................. 494
1,000 Clearwater, Florida Water & Sewer Revenue, 4.75%, 12/1/00.................................. 1,015
1,000 Dade County, Florida Aviation Authority, Series 1994 B, 6.25%, 10/1/04..................... 1,095
1,000 Davie, Florida Water & Sewer Revenue, Revenue Bonds, 5.20%, 10/1/99........................ 1,027
1,000 Dunes, Florida Community Development District, 5.00%, 10/1/98.............................. 1,000
500 Florida Board of Education, Series H, 6.90%, 5/1/98........................................ 537
1,000 Florida Department of Natural Resources, 6.30%., 7/1/04.................................... 1,079
1,000 Florida Division of Bond Finance, Natural Reserve Preservation 2,000-A, 5.40%, 7/1/07...... 1,011
1,000 Florida Housing Finance Agency, Revenue Bonds, 6.63%, 2/1/08............................... 1,014
1,000 Florida State, Broward County Expressway Authority-A, 6.50%, 7/1/04........................ 1,042
1,000 Florida State Divisional Board Finance Department, Revenue Bonds, 6.70%, 7/1/96............ 1,025
1,000 Florida State Sunshine Skyway, 6.60%, 7/1/08............................................... 1,062
1,000 Florida State Turnpike Authority, Revenue Bonds, 7.25%, 7/1/96............................. 1,030
470 Hernando County, Florida Water & Sewer Revenue, Revenue Bonds, 5.10%, 6/1/98............... 482
1,000 Hillsborough County, Florida Board, Certicate of Participation, 4.60%, 7/1/97.............. 1,012
750 Hillsborough County, Florida Environmental Land, 6.00%, 7/1/03............................. 810
1,000 Hillsborough County, Florida Solid Waste, Revenue Bonds, 5.30%, 10/1/03.................... 1,035
1,000 Homestead, Florida Special Insurance Assesment, 4.90%, 9/1/00.............................. 1,019
1,000 Jacksonville, Florida District Water & Sewer, 5.20%, 10/1/02............................... 1,033
500 Jacksonville, Florida Electric Authority, 6.95%, 10/1/04................................... 542
1,000 Lake County, Florida Sales Revenue, 5.13%, 12/1/98......................................... 1,031
1,000 Lee County, Florida Capital Improvements Revenue, Series B, 4.75%, 10/1/00................. 1,014
1,000 Lee County, Florida Local Option Gas Tax Revenue, 4.50%, 10/1/01........................... 994
1,000 Martin County, Florida, 3.80%, 8/1/98...................... 987
1,000 Miami, Florida Tax Anticipation Notes, Series 1994, 5.00%, 9/28/95......................... 1,002
1,000 Miami Beach, Florida, General Obligation, 4.00%, 9/1/95.... 1,000
1,000 Miami Beach, Florida Water & Sewer Revenue, 5.38%, 9/1/08.. 1,001
1,000 Miramar, Florida Wastewater Improvement, Bonds, Series 1994, 6.25%, 10/1/05................ 1,090
650 Miramar, Florida Water Improvement Assessment, 4.50%, 10/1/01.............................. 646
585 Miramar, Florida Water Improvement Assessment, 4.35%, 10/1/00.............................. 582
1,000 Orange County, Florida Sales Tax, Series A, 4.38%, 1/1/01.. 988
1,000 Orlando Utilities Community Water & Electric, 5.00%, 10/1/99............................... 1,026
1,000 Orlando & Orange County Expressway Authority, 4.80%, 7/1/01................................ 1,012
1,000 Ormond Beach, Florida Water & Sewer, Revenue Bonds, 5.60%, 9/1/99.......................... 1,049
1,000 Pasco County, Florida Water & Sewer Revenue, 5.50%, 10/1/03................................ 1,042
1,000 Pembroke Pines, Florida Public Improvement, 4.63%, 10/1/00................................. 1,008
1,000 Polk County, Florida Capital Improvement, 4.30%, 12/1/02................................... 968
</TABLE>
Continued
B-70
<PAGE> 118
AMSOUTH MUTUAL FUNDS
FLORIDA TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------------------------------------------------- -------
<S> <C> <C>
MUNICIPAL BONDS, CONTINUED:
Florida, continued:
1,000 Port of Palm Beach, Florida Revenue Bonds, 6.25%, 09/1/08........................................... $ 1,054
910 Punta Gorda, Florida Utilities Revenue Bonds, 5.00%, 1/1/98......................................... 928
455 St. John's County, Florida Road Development, Transportation Improvements, 5.20%, 10/1/99............ 471
600 St. Lucie County, Florida Sales Tax, 4.20%, 10/1/01................................................. 586
800 St. Lucie County, Florida Sales Tax, 4.30%, 10/1/02................................................. 775
1,000 Seminole County, Florida Local Option Gas Tax, 5.00%,10/1/02........................................ 1,020
1,000 Seminole County, Florida School District, 5.20%, 8/1/97............................................. 1,023
1,000 Volusia County, Florida Sales Tax, 5.00%, 10/1/96................................................... 1,014
-------
Total Municipal Bonds 45,130
-------
INVESTMENT COMPANIES (5.4%):
580 AmSouth Tax Exempt Money Market Fund................................................................ 580
2,015 Dreyfus Florida Money Market Fund................................................................... 2,015
-------
Total Investment Companies 2,595
-------
Total (Cost-$46,375)(a) $47,725
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $48,333.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation $1,350
Unrealized depreciation
------
Net unrealized appreciation $1,350
======
See notes to financial statements.
B-71
<PAGE> 119
AMSOUTH MUTUAL FUNDS
EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands, except Shares and Principal Amount
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS (92.1%):
Aerospace (1.5%):
60,000 Boeing Co................................................. $ 4,020
--------
Aluminum (1.8%):
80,000 Alcan Aluminum Limited.................................... 2,710
40,000 Reynolds Metals Co........................................ 2,500
--------
5,210
--------
Apparel (1.4%):
250,000 Phillips Van Heusen....................................... 3,938
--------
Automobiles (1.9%):
185,000 Ford Motor Co............................................. 5,342
--------
Automotive Parts (1.3%):
150,000 Arvin Industries, Inc..................................... 3,487
--------
Banks--Money Centers (3.3%):
70,000 J.P. Morgan & Co., Inc.................................... 5,118
70,000 NationsBank Corp.......................................... 3,929
--------
9,047
--------
Chemicals--Specialty (2.7%):
195,000 Engelhard Corp............................................ 5,922
25,000 Great Lakes Chemical...................................... 1,641
--------
7,563
--------
Computers & Peripherals (2.7%):
68,000 I.B.M. Corp............................................... 7,403
--------
Conglomerates (1.3%):
49,000 TRW, Inc.................................................. 3,657
--------
Construction (0.6%):
110,000 Ryland Group.............................................. 1,650
--------
Electronic & Electrical (4.8%):
130,000 AMP, Inc.................................................. 5,606
80,000 Avnet, Inc................................................ 4,160
59,000 Harris Corp............................................... 3,366
--------
13,132
--------
Financial Services (1.4%):
100,000 American Express Co....................................... 3,850
--------
Food Processing & Packaging (3.5%):
176,000 Grand Metropolitan ADR.................................... 4,277
190,000 Sara Lee Corp............................................. 5,439
--------
9,716
--------
Forest Products--Lumber, Paper (1.7%):
100,000 Weyerhauser Co............................................ 4,675
--------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Health Care (2.3%):
90,000 Johnson & Johnson, Inc.................................... $ 6,458
--------
Hotels (0.9%):
35,000 Hilton Hotels Corp........................................ 2,564
--------
Household Goods--Appliances, Furnishings,
Electronics (0.9%):
45,000 Whirlpool Corp............................................ 2,599
--------
Industrial Services (1.1%):
100,000 Measurex Corp............................................. 3,024
--------
Insurance (2.1%):
95,000 Aetna Life & Casualty Co.................................. 5,878
--------
Insurance--Broker (3.4%):
200,000 Alexander & Alexander Services, Inc....................... 4,600
60,000 Marsh & McLennan Companies, Inc........................... 4,740
--------
9,340
--------
Insurance--Property, Casualty, Health (1.3%):
75,000 St. Paul Cos., Inc........................................ 3,656
--------
Manufacturing (0.6%):
52,000 Trinity Industries........................................ 1,742
--------
Medical Supplies (2.3%):
170,000 Baxter International, Inc................................. 6,333
--------
Metals--Fabrication (0.6%):
49,000 Kennametal, Inc........................................... 1,800
--------
Newspapers (3.6%):
100,000 Dow Jones & Co., Inc...................................... 3,550
115,000 Gannett Co., Inc.......................................... 6,296
--------
9,846
--------
Oil & Gas Exploration (3.6%):
130,000 Burlington Resources...................................... 5,054
240,000 USX--Marathon Group....................................... 4,830
--------
9,884
--------
Oil--Integrated Companies (1.8%):
75,000 Texaco, Inc............................................... 4,988
--------
Oilfield Equipment & Services (4.8%):
145,000 Baker Hughes, Inc......................................... 3,208
130,000 Dresser Industries, Inc................................... 2,990
50,000 McDermott International, Inc.............................. 1,231
85,000 Schlumberger Limited...................................... 5,695
--------
13,124
--------
</TABLE>
Continued
B-72
<PAGE> 120
AMSOUTH MUTUAL FUNDS
EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1994
Amounts in Thousands, except Shares and Principal Amount
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ---------------------------------------------------------- --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals (4.7%):
85,000 American Home Products Corp............................... $ 6,715
90,000 Bristol-Myers Squibb Co................................... 6,233
--------
12,948
--------
Photography (1.7%):
80,000 Eastman Kodak Co.......................................... 4,610
--------
Pollution Control Services & Equipment (1.5%):
130,000 WMX Technologies, Inc..................................... 4,063
--------
Publishing, Except Newspaper (2.3%):
115,000 Dun & Bradstreet Corp..................................... 6,469
--------
Railroads (3.5%):
60,000 Burlington Northern, Inc.................................. 4,155
65,000 CSX Corp.................................................. 5,452
--------
9,607
--------
Retail (1.7%):
155,000 Dillard Department Stores, Inc............................ 4,805
--------
Retail--Specialty Stores (4.7%):
150,000 The Gap................................................... 5,231
200,000 Hechinger Co. Class A..................................... 1,325
175,000 Melville Corp............................................. 6,300
--------
12,856
--------
Savings & Loans (1.4%):
180,000 Great Western Financial Corp.............................. $ 3,848
--------
Transportation Leasing & Trucking (1.3%):
150,000 Ryder Systems, Inc........................................ 3,731
--------
Utilities--Electric (1.0%):
120,000 Southern Co............................................... 2,640
--------
Utilities--Electric & Gas (0.9%):
100,000 Baltimore Gas & Electric.................................. 2,488
--------
Utilities--Telecommunications (8.0%):
125,000 A T & T Corp.............................................. 6,594
85,000 BellSouth Corp............................................ 5,759
120,000 Nynex Corp................................................ 4,950
140,000 Sprint Corp............................................... 4,794
--------
22,097
--------
Total Common Stocks 254,088
--------
INVESTMENT COMPANIES (8.2%):
12,852,676 AmSouth Prime Obligations Fund............................ 12,853
9,806,403 AmSouth U.S. Treasury Fund................................ 9,806
--------
Total Investment Companies 22,659
--------
Total (Cost-$229,511)(a) $276,747
========
</TABLE>
- --------
Percentages indicated are based on net assets of $275,757.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax reporting
of approximately $852. Cost for federal income purposes differs from value
by net unrealized appreciation of securities as follows:
Unrealized appreciation....... $50,040
Unrealized depreciation....... (3,656)
-------
Net unrealized appreciation... $46,384
=======
ADR--American Depository Receipt
See notes to financial statements.
B-73
<PAGE> 121
AMSOUTH MUTUAL FUNDS
REGIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands, except Shares and Principal Amount
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<S> <C>
COMMON STOCKS (94.1%):
Air Freight (2.0%):
20,000 Federal Express (b)........................................ $ 1,350
-------
Apparel (1.0%):
80,000 Delta Woodside Industries.................................. 700
-------
Automotive Parts (5.0%):
60,000 Discount Auto Parts, Inc. (b).............................. 1,890
40,000 Genuine Parts Co........................................... 1,510
-------
3,400
-------
Banking (11.3%):
35,000 Deposit Guaranty Corp...................................... 1,365
50,000 First Commerce Corp........................................ 1,525
30,000 First Tennessee National Corp.............................. 1,478
35,000 First Union Corp........................................... 1,711
30,000 NationsBank Corp........................................... 1,684
-------
7,763
-------
Building Materials (2.0%):
100,000 Interface, Inc............................................. 1,400
-------
Business Services (2.8%):
50,000 Equifax, Inc............................................... 1,919
-------
Chemicals--Specialty (2.1%):
130,000 Ethyl Corp................................................. 1,414
-------
Electronic & Electrical (3.5%):
20,000 Harris Corp................................................ 1,145
60,000 Scientific Atlanta, Inc.................................... 1,290
-------
2,435
-------
Food Processing & Packaging (4.7%):
90,000 Flowers Industries, Inc.................................... 1,654
90,000 Lance, Inc................................................. 1,597
-------
3,251
-------
Forest Products--Lumber, Paper (3.7%):
8,000 Georgia Pacific Corp....................................... 690
55,000 James River Corp........................................... 1,836
-------
2,526
-------
Furniture (1.1%):
23,333 Ladd Furniture............................................. 315
105,000 Winsloew Furniture, Inc. (b)............................... 446
-------
761
-------
Insurance (2.3%):
65,000 First Colony Corp.......................................... 1,584
-------
Manufacturing--Consumer Goods (2.0%):
70,000 Caraustar Industries, Inc.................................. $ 1,356
-------
Medical Services--Hospital, Hospital Management (9.9%):
160,000 HEALTHSOUTH Corp. (b)...................................... 3,080
67,500 Health Management Assoc., Inc. (b)......................... 2,168
80,000 Surgical Care Affiliates, Inc.............................. 1,520
-------
6,768
-------
Miscellaneous Manufacturing (3.1%):
60,000 Wolverine Tube, Inc. (b)................................... 2,100
-------
Oil & Gas Exploration, Production (3.3%):
25,000 Louisiana Land & Exploration Co............................ 994
13,000 Mobil Corp................................................. 1,271
-------
2,265
-------
Oilfield Equipment & Services (5.4%):
25,000 McDermott International, Inc............................... 616
100,000 Offshore Logistics (b)..................................... 1,312
60,000 Production Operators....................................... 1,755
-------
3,683
-------
Printing (2.1%):
65,000 John H. Harland Co......................................... 1,438
-------
Railroad & Railroad Holding Companies (2.6%):
25,000 Norfolk & Southern Co...................................... 1,816
-------
Restaurants (2.4%):
80,000 Cracker Barrel Old Country Store, Inc...................... 1,680
-------
Retail (9.3%):
110,000 Big B., Inc................................................ 1,650
100,000 Books A Million (b)........................................ 1,462
145,000 Hancock Fabrics............................................ 1,468
130,000 Stein Mart, Inc. (b)....................................... 1,787
-------
6,367
-------
Software & Computer Services (1.7%):
60,000 American Software, Inc..................................... 345
75,000 Intergraph Corp. (b)....................................... 853
-------
1,198
-------
Steel (2.3%):
80,000 Birmingham Steel Corp...................................... 1,560
-------
Transportation Leasing & Trucking (2.2%):
60,000 Ryder Systems, Inc......................................... 1,492
-------
</TABLE>
Continued
B-74
<PAGE> 122
AMSOUTH MUTUAL FUNDS
REGIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands, except Shares and Principal Amount
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<S> <C>
COMMON STOCKS, CONTINUED:
Utilities--Electric (3.8%):
30,000 Florida Progress Corp...................................... $ 923
75,000 Southern Co................................................ 1,650
-------
2,573
-------
Utilities--Telecommunications (2.5%):
25,000 BellSouth Corp............................................. 1,694
-------
Total Common Stocks 64,493
-------
INVESTMENT COMPANIES (5.9%):
3,248,004 AmSouth Prime Obligations Fund.............................. $ 3,248
800,834 AmSouth U.S. Treasury Fund ................................ 801
-------
Total Investment Companies 4,049
-------
Total (Cost-$56,887)(a) $68,542
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $68,501.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $15,161
Unrealized depreciation............................................. (3,506)
-------
Net unrealized appreciation......................................... $11,655
=======
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
B-75
<PAGE> 123
AMSOUTH MUTUAL FUNDS
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
July 31, 1995
Amounts in Thousands, except Shares and Principal Amount
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------------ ------
<S> <C>
COMMON STOCKS (53.6%):
Aerospace (1.0%):
45,000 Boeing Co................................................... $3,015
------
Aluminum (1.3%):
55,000 Alcan Aluminum Limited...................................... 1,863
32,000 Reynolds Metals Co.......................................... 2,000
------
3,863
------
Apparel (0.7%):
125,000 Phillips Van Heusen......................................... 1,969
------
Automobiles (1.2%):
120,000 Ford Motor Co............................................... 3,465
------
Automotive Parts (0.7%):
93,000 Arvin Industries, Inc....................................... 2,162
------
Banks--Money Centers (2.0%):
40,000 J.P. Morgan & Co., Inc...................................... 2,925
55,000 NationsBank Corp............................................ 3,087
------
6,012
------
Chemicals--Specialty (1.4%):
105,000 Engelhard Corp.............................................. 3,189
15,000 Great Lakes Chemical........................................ 984
------
4,173
------
Computers & Peripherals (1.6%):
42,000 I.B.M. Corp................................................. 4,573
------
Conglomerates (0.9%):
35,000 TRW, Inc.................................................... 2,612
------
Construction (0.4%):
81,000 Ryland Group................................................ 1,215
------
Electronic & Electrical--General (2.9%):
93,000 AMP, Inc.................................................... 4,011
45,000 Avnet, Inc.................................................. 2,340
38,000 Harris Corp................................................. 2,176
------
8,527
------
Financial Services (0.8%):
60,000 American Express Co......................................... 2,310
------
Food Processing & Packaging (1.8%):
81,000 Grand Metropolitan ADS...................................... 1,974
120,000 Sara Lee Corp............................................... 3,435
------
5,409
------
Forest Products--Lumber, Paper (1.0%):
60,000 Weyerhauser Co.............................................. $2,805
------
Health Care (1.6%):
67,000 Johnson & Johnson, Inc...................................... 4,807
------
Hotels (0.6%):
25,000 Hilton Hotels Corp.......................................... 1,831
------
Household Goods--Appliances, Furniture (0.5%):
25,000 Whirlpool Corp.............................................. 1,444
------
Industrial Services (1.0%):
100,000 Measurex Corp............................................... 3,025
------
Insurance--Broker (1.8%):
132,000 Alexander & Alexander Services, Inc......................... 3,036
30,000 Marsh & McLennan Co., Inc................................... 2,370
------
5,406
------
Insurance (1.1%):
51,000 Aetna Life & Casualty Co.................................... 3,155
------
Insurance--Property, Casualty, Health (1.0%):
60,000 St. Paul Companies, Inc..................................... 2,925
------
Manufacturing (0.2%):
21,000 Trinity Industries.......................................... 704
------
Medical Services (1.4%):
110,000 Baxter International, Inc................................... 4,098
------
Metals--Fabrication (0.4%):
31,000 Kennametal, Inc............................................. 1,143
------
Newspapers (1.6%):
32,600 Dow Jones & Co., Inc........................................ 1,157
63,000 Gannett Co., Inc............................................ 3,449
------
4,606
------
Oil & Gas Exploration, Production (2.1%):
93,000 Burlington Resources........................................ 3,615
123,000 USX--Marathon Group......................................... 2,475
------
6,090
------
Oil--Integrated Companies (1.3%):
59,000 Texaco, Inc................................................. 3,924
------
Oilfield Equipment & Services (3.2%):
105,000 Baker Hughes, Inc........................................... 2,323
100,000 Dresser Industries, Inc..................................... 2,300
</TABLE>
Continued
B-76
<PAGE> 124
AMSOUTH MUTUAL FUNDS
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands, except Shares and Principal Amount
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------------ ------
<S> <C>
COMMON STOCKS, CONTINUED:
Oilfield Equipment & Services, continued:
30,000 McDermott International, Inc................................ $ 739
60,000 Schlumberger Limited........................................ 4,020
------
9,382
------
Pharmaceuticals (2.9%):
50,000 American Home Products Corp................................. 3,950
65,000 Bristol-Myers Squibb Co..................................... 4,501
------
8,451
------
Photography (1.2%):
60,000 Eastman Kodak Co............................................ 3,458
------
Pollution Control Services & Equipment (0.7%):
67,000 WMX Technologies, Inc....................................... 2,094
------
Publishing, Except Newspaper (1.2%):
65,000 Dun & Bradstreet Corp....................................... 3,656
------
Railroads (2.0%):
36,000 Burlington Northern, Inc.................................... 2,493
40,000 CSX Corp.................................................... 3,355
------
5,848
------
Retail (0.8%):
75,000 Dillard Department Stores, Inc.............................. 2,325
------
Retail--Specialty Stores (2.5%):
85,000 The Gap..................................................... 2,964
170,000 Hechinger Co. Class A....................................... 1,126
95,000 Melville Corp............................................... 3,420
------
7,510
------
Savings & Loans (0.9%):
130,000 Great Western Financial Corp................................ 2,779
------
Transportation Leasing & Trucking (0.6%):
70,000 Ryder Systems, Inc.......................................... 1,741
------
Utilities--Electric (0.5%):
68,000 Southern Co................................................. 1,496
------
Utilities--Electric & Gas (0.4%):
53,000 Baltimore Gas & Electric.................................... 1,318
------
Utilities--Telecommunications (4.4%):
60,000 AT&T Corp................................................... 3,165
50,000 BellSouth Corp.............................................. 3,388
Utilities--Telecommunications, continued:
90,000 Nynex Corp................................................ $ 3,713
80,000 Sprint Corp............................................... 2,740
--------
13,006
--------
Total Common Stocks 158,332
--------
CORPORATE BONDS (12.9%):
Aircraft (0.3%):
1,000,000 Boeing Co., 8.38%, 3/1/96................................. 1,011
--------
Appliances (0.2%):
500,000 Whirlpool Corp., 9.50%, 6/15/00........................... 556
--------
Automotive (1.1%):
1,430,000 Ford Motor Credit Corp., 9.13%, 5/1/98.................... 1,523
1,000,000 Ford Motor Credit Corp., 5.63%, 1/15/99................... 970
700,000 General Motors Corp., 9.63%, 12/1/00...................... 781
--------
3,274
--------
Banking (2.3%):
930,000 Bank of America, 9.50%, 4/1/01............................ 1,042
1,000,000 Bankers Trust Co., 9.50%, 6/14/00......................... 1,090
1,000,000 Bankers Trust Co., 7.25%, 11/1/96......................... 1,011
2,500,000 Mellon Corp., 6.30%, 6/1/00............................... 2,463
1,250,000 SunTrust Banks, Inc., 8.38%, 3/1/96....................... 1,267
--------
6,873
--------
Entertainment (0.4%):
1,000,000 Columbia Picture Entertainment, Inc., 9.88%, 2/1/98....... 1,060
--------
Farm Equipment Manufacturer (0.2%):
530,000 Deere & Co., 9.13%, 7/1/96................................ 543
--------
Financial Services (2.5%):
1,000,000 American General Finance, 5.00%, 9/1/95................... 999
1,000,000 American General Finance, 7.70%, 11/15/97................. 1,016
500,000 Associates Corp., 8.63%, 6/15/97.......................... 521
500,000 Beneficial Corp., 9.90%, 11/17/97......................... 537
200,000 CIT Group Holdings, Inc., 8.75%, 7/1/97................... 209
1,000,000 Commercial Credit Co., 7.88%, 7/15/04..................... 1,055
1,000,000 Morgan Stanley Group, Inc., 9.25%, 3/1/98................. 1,063
2,000,000 Morgan Stanley Group, Inc., 8.10%, 6/24/02................ 2,105
--------
7,505
--------
</TABLE>
Continued
B-77
<PAGE> 125
AMSOUTH MUTUAL FUNDS
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
July 31, 1995
Amounts in Thousands, except Shares and Principal Amount
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------------------------------------- -------
<S> <C>
CORPORATE BONDS, CONTINUED:
Industrial Goods & Services (1.4%):
1,000,000 Hanson Overseas, 5.50%, 1/15/96............................ $ 998
1,000,000 WMX Technologies, Inc., 8.25%, 11/15/99.................... 1,055
2,000,000 Waste Management, Inc., 7.70%, 10/1/02..................... 2,103
-------
4,156
-------
Insurance (1.5%):
1,000,000 Allstate Corp., 5.88%, 6/15/98............................. 980
1,400,000 Capital Holding Corp., 9.20%, 4/17/01...................... 1,530
700,000 Chubb Corp., 8.75%, 11/15/99............................... 738
1,200,000 Torchmark Corp., 9.63%, 5/1/98............................. 1,284
-------
4,532
-------
Oil & Gas Exploration (0.9%):
1,550,000 BP America, 9.38%, 11/1/00................................. 1,732
1,000,000 Dresser Industries, Inc., 6.25%, 6/1/00.................... 980
-------
2,712
-------
Pharmaceuticals (0.4%):
1,000,000 McKesson Corp., 8.63%, 2/1/98.............................. 1,049
-------
Security Brokers & Dealers (0.3%):
1,000,000 Dean Witter Discover & Co., 6.00%, 3/1/98.................. 990
-------
Utilities--Electric (0.9%):
530,000 National Rural, 9.50%, 5/15/97............................. 559
900,000 Pennsylvania Power & Light, 6.00%, 6/1/00.................. 883
1,200,000 Virginia Electric & Power, 7.25%, 3/1/97................... 1,218
-------
2,660
-------
Utilities--Telephone (0.5%):
1,200,000 British Telcom Finance, Inc., 9.38%, 2/15/99............. $ 1,310
--------
Total Corporate Bonds 38,231
--------
U.S. TREASURY NOTES (24.2%):
10,000,000 6.38%, 6/30/97........................................... 10,093
5,100,000 7.88%, 4/15/98........................................... 5,332
1,800,000 9.25%, 8/15/98........................................... 1,957
1,000,000 4.75%, 9/30/98........................................... 963
3,400,000 6.38%, 1/15/99........................................... 3,431
1,000,000 6.38%, 7/15/99........................................... 1,008
1,000,000 6.00%, 10/15/99.......................................... 995
1,000,000 7.13%, 2/29/00........................................... 1,036
4,000,000 7.75%, 2/15/01........................................... 4,284
23,000,000 6.38%, 8/15/02........................................... 23,029
11,300,000 5.75%, 8/15/03........................................... 10,816
8,000,000 7.50%, 11/15/16.......................................... 8,515
--------
Total U.S. Treasury Notes 71,459
--------
U.S. TREASURY STRIP (2.3%):
12,000,000 0.00%, 2/15/04........................................... 6,921
--------
Total U.S. Treasury Strip 6,921
--------
INVESTMENT COMPANIES (6.4%):
14,101,522 AmSouth Prime Obligations Fund........................... 14,102
4,681,694 AmSouth U.S. Treasury Fund............................... 4,682
--------
Total Investment Companies 18,784
--------
Total (Cost-$260,604)(a) $293,727
========
</TABLE>
- --------
Percentages indicated are based on net assets of $295,509.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $36,450
Unrealized depreciation............................................. (3,327)
-------
Net unrealized appreciation......................................... $33,123
=======
</TABLE>
See notes to financial statements.
B-78
<PAGE> 126
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
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. Between the date of organization and the dates
of commencement of operations, the Trust had no operations other than
incurring organizational expenses and the sale of initial units of beneficial
interest ("shares").
The Trust is authorized to issue an unlimited number of shares 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. AmSouth serves as investment advisor to the Funds.
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.
SECURITIES VALUATION:
Investments of the Prime Obligations Fund, the U.S. Treasury Fund and the
Tax Exempt Fund (collectively, "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
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 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 (collectively, "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.
Continued
B-79
<PAGE> 127
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1995
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.
Gains or losses realized on 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.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly
and distributable net realized capital gains, if any, are declared and
distributed annually for the money market funds. Dividends from net
investment income are declared and paid monthly and distributable net
realized capital gains, if any, are declared and distributed annually for
the variable net asset value funds.
During the year ended July 31, 1994, the Funds adopted Statement of
Position 93-2, Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions
by Investment Companies. Accordingly, timing differences relating to
shareholder distributions are reflected in the components of net assets and
permanent book and tax basis differences relating to shareholder
distributions have been reclassified to additional paid-in capital. The
Funds have elected not to restate prior years' financial statements and
financial highlights. Net investment income, net realized gains and net
assets were not affected by this change.
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.
Continued
B-80
<PAGE> 128
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1995
FEDERAL INCOME TAXES:
It is the policy of each Fund to qualify or 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.
UNAMORTIZED ORGANIZATIONAL COSTS:
Costs incurred by the Trust in connection with its organization and
registration of shares have been deferred and are amortized using the
straight-line method over a period of two years from the commencement of
the public offering of shares of each of the Funds.
3.PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended July 31, 1995:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Bond Fund.......................................... $26,464,216 $15,553,987
Limited Maturity Fund.............................. 25,289,506 18,770,084
Government Income Fund............................. 4,563,601 3,925,588
Florida Tax-Free Fund(a)........................... 42,747,533 888,973
Equity Fund........................................ 69,337,269 41,488,737
Regional Equity Fund............................... 14,264,215 7,933,451
Balanced Fund...................................... 66,536,343 41,306,885
</TABLE>
(a) Period from September 30, 1994 (commencement of operations) to July 31,
1995.
4.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.
The Winsbury Company Limited Partnership d/b/a The Winsbury Company
("Winsbury") is an Ohio limited partnership. The sole general partner of
Winsbury is BISYS Fund Services, Inc. The sole limited partner of Winsbury is
WC Subsidiary Corporation. BISYS Fund Services, Inc., BISYS Fund Services,
Ohio, Inc., and WC Subsidiary Corporation are all subsidiaries of The BISYS
Group, Inc. On or about October 1, 1995, Winsbury will change its name to
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services.
Continued
B-81
<PAGE> 129
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1995
Winsbury, with whom certain officers and trustees of the Trust are affiliated,
serves the Funds as administrator. Such officers and trustees are paid no fees
directly by the Funds for serving as officers and trustees of the Trust. Under
the terms of the administration agreement, Winsbury's fees are computed daily
as a percentage of the average net assets of each of the Funds. Winsbury 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, 1995, Winsbury received $922,000 from commissions earned on sales of
shares of Funds' variable net asset funds of which $6,000 was allowed to
AmSouth, an investment dealer of the Funds' shares and $854,000 was allowed to
other dealers of the funds shares. Winsbury receives no fees from the Funds
for providing distribution services to money market funds. BISYS Fund Services
Ohio, Inc. (the "Company"), an affiliate of Winsbury, 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, 1995:
<TABLE>
<CAPTION>
PRIME U.S. TAX
OBLIGATIONS TREASURY EXEMPT
FUND FUND FUND
----------- -------- ----------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets).......... 0.40% 0.40% 0.40%
Voluntary fee reductions (000)............... $ 125
ADMINISTRATION FEES:
Annual fee (percentage of average net as-
sets)....................................... 0.20% 0.20% 0.20%
TRANSFER AGENT AND MUTUAL FUND ACCOUNTANT
FEES (000).................................. $ 317 $ 188 $ 53
</TABLE>
<TABLE>
<CAPTION>
LIMITED GOVERNMENT
BOND MATURITY INCOME
FUND FUND FUND
----------- -------- ----------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets).......... 0.65% 0.65% 0.65%
Voluntary fee reductions (000)............... $ 138 $ 76 $ 67
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets).......... 0.20% 0.20% 0.20%
Voluntary fee reductions (000)............... $ 74 $ 41 $ 23
TRANSFER AGENT AND MUTUAL FUND ACCOUNTANT
FEES (000) ................................. $ 80 $ 56 $ 32
</TABLE>
Continued
B-82
<PAGE> 130
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1995
<TABLE>
<CAPTION>
FLORIDA
TAX-FREE EQUITY
FUND (A) FUND
-------- --------
<S> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)......................... 0.65% 0.80%
Voluntary fee reductions (000).............................. $ 112 $ 3
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)......................... .20% 0.20%
Voluntary fee reductions (000).............................. $ 185
TRANSFER AGENT AND MUTUAL FUND ACCOUNTANT FEES (000)........ $ 38 $ 156
</TABLE>
<TABLE>
<CAPTION>
REGIONAL
EQUITY BALANCED
FUND FUND
-------- --------
<S> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)......................... 0.80% 0.80%
Voluntary fee reductions (000).............................. $260
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)......................... 0.20% 0.20%
Voluntary fee reductions (000).............................. $48 $208
TRANSFER AGENT AND MUTUAL FUND ACCOUNTANT FEES (000)........ $61 $190
</TABLE>
(a) For the period from September 30, 1994 (commencement of operations)
through July 31, 1995.
5.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,
1995:
<TABLE>
<CAPTION>
REGIONAL
EQUITY EQUITY BALANCED
FUND FUND FUND
------ -------- --------
<S> <C> <C> <C>
Dividend Income (000) ............................... $6,336 $1,192 $4,218
Dividend Income Per Share ........................... $0.273 $0.193 $0.154
</TABLE>
6.FEDERAL INCOME TAXES:
For federal income tax purposes, the following Funds have capital loss
carryforwards as of July 31, 1995, which are available to offset future gains,
if any (amounts in thousands):
<TABLE>
<CAPTION>
AMOUNT EXPIRES
------ -------
<S> <C> <C>
Limited Maturity Fund ......................................... 838 2003
Government Income Fund ........................................ 165 2003
</TABLE>
B-83
<PAGE> 131
AMSOUTH MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
July 31, 1995
7.EXEMPT-INTEREST INCOME DESIGNATIONS (UNAUDITED):
The AmSouth Mutual Funds designate the following exempt-interest dividends for
the taxable year ended July 31, 1995:
<TABLE>
<CAPTION>
FLORIDA TAX
TAX-FREE EXEMPT
FUND FUND
-------- ------
<S> <C> <C>
Exempt-Interest Dividends (000) .............................. 1,392 1,967
Exempt-Interest Dividends Per Share .......................... 0.319 0.032
</TABLE>
The percentage break-down of the exempt-interest income by state for the Tax
Exempt Fund's taxable year ended July 31, 1995 was as follows:
<TABLE>
<S> <C>
Alabama............................................................ 10.6%
Arizona............................................................ 3.7
California......................................................... 0.9
Colorado........................................................... 2.8
Connecticut........................................................ 2.3
Delaware........................................................... 4.1
Florida............................................................ 11.6
Georgia............................................................ 7.1
Hawaii............................................................. 0.7
Illinois........................................................... 8.9
Indiana............................................................ 0.4
Iowa............................................................... 0.4
Louisiana.......................................................... 2.8
Maryland........................................................... 1.2
Massachusetts...................................................... 2.1
Minnesota.......................................................... 1.7
Missouri........................................................... 7.8
Nebraska........................................................... 1.5
New Mexico......................................................... 0.2
New York........................................................... 0.1
North Carolina..................................................... 2.9
Oregon............................................................. 0.2
Pennsylvania....................................................... 3.9
South Dakota....................................................... 0.6
Tennessee.......................................................... 4.0
Texas.............................................................. 12.3
Virginia........................................................... 1.6
Washington......................................................... 0.1
West Virginia...................................................... 1.2
Wisconsin.......................................................... 1.5
Wyoming............................................................ 0.8
-----
Total.............................................................. 100.0%
=====
</TABLE>
B-84
<PAGE> 132
See notes to financial statements.
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
----------------------------------------------------
YEAR ENDED JULY 31,
----------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income....... 0.050 0.029 0.027 0.042 0.067
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income....... (0.050) (0.029) (0.027) (0.042) (0.067)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Return................. 5.14% 2.94% 2.76% 4.28% 6.87%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)...................... $617,673 $577,331 $456,428 $457,511 $307,873
Ratio of expenses to average
net assets................. 0.69% 0.70% 0.71% 0.71% 0.72%
Ratio of net investment
income to average net
assets..................... 5.04% 2.92% 2.73% 4.08% 6.61%
</TABLE>
See notes to financial statements.
B-85
<PAGE> 133
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. TREASURY FUND
----------------------------------------------------
YEAR ENDED JULY 31,
----------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income....... 0.048 0.028 0.027 0.041 0.064
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income....... (0.048) (0.028) (0.027) (0.041) (0.064)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Return................. 4.90% 2.80% 2.69% 4.15% 6.58%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)...................... $322,939 $300,603 $404,473 $339,666 $343,967
Ratio of expenses to average
net assets................. 0.70% 0.71% 0.72% 0.73% 0.72%
Ratio of net investment
income to average net
assets..................... 4.81% 2.77% 2.66% 4.08% 6.28%
</TABLE>
See notes to financial statements.
B-86
<PAGE> 134
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
TAX EXEMPT FUND
----------------------------------------------------
YEAR ENDED JULY 31,
----------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income....... 0.032 0.019 0.021 0.030 0.046
-------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income....... (0.032) (0.019) (0.021) (0.030) (0.046)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERI-
OD.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Return................. 3.22% 1.95% 2.16% 3.12% 4.69%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)...................... $ 57,640 $ 60,923 $ 48,151 $ 38,392 $ 25,400
Ratio of expenses to average
net assets................. 0.54% 0.57% 0.49% 0.65% 0.52%
Ratio of net investment
income to average net
assets..................... 3.15% 1.93% 2.12% 2.98% 4.59%
Ratio of expenses to average
net assets *............... 0.74% 0.77% 0.78% 0.77% 0.77%
Ratio of net investment in-
come to average net
assets *................... 2.95% 1.73% 1.83% 2.86% 4.34%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
B-87
<PAGE> 135
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BOND FUND
-----------------------------------------------
YEAR ENDED JULY 31,
-----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................ $ 10.59 $ 11.29 $ 11.29 $ 10.42 $ 10.39
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income............ 0.69 0.69 0.71 0.74 0.74
Net realized and unrealized gains
(losses) from
investments..................... 0.28 (0.66) 0.33 0.91 0.05
------- ------- ------- ------- -------
Total from Investment Activities
........................... 0.97 0.03 1.04 1.65 0.79
------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income............ (0.69) (0.70) (0.71) (0.73) (0.74)
Net realized gains............... (0.04) (0.03) (0.33) (0.05) (0.02)
------- ------- ------- ------- -------
Total Distributions............. (0.73) (0.73) (1.04) (0.78) (0.76)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.... $ 10.83 $ 10.59 $ 11.29 $ 11.29 $ 10.42
======= ======= ======= ======= =======
Total Return (excludes sales
charge).......................... 9.70% 0.23% 9.80% 16.41% 7.99%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................... $94,671 $79,472 $65,777 $60,156 $26,008
Ratio of expenses to average net
assets.......................... 0.75% 0.78% 0.78% 0.82% 0.93%
Ratio of net investment income to
average net assets.............. 6.63% 6.31% 6.37% 6.94% 7.26%
Ratio of expenses to average net
assets *........................ 0.98% 1.01% 1.01% 1.01% 1.11%
Ratio of net investment income to
average net
assets *........................ 6.40% 6.08% 6.14% 6.75% 7.09%
Portfolio turnover................ 17.70% 30.90% 14.98% 240.64% 181.77%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
B-88
<PAGE> 136
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
LIMITED MATURITY FUND
-----------------------------------------------
YEAR ENDED JULY 31,
-----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 10.23 $ 10.81 $ 10.81 $ 10.44 $ 10.29
------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income........ 0.58 0.54 0.60 0.70 0.73
Net realized and unrealized
gains (losses) from
investments................. 0.17 (0.45) 0.09 0.45 0.17
------- ------- ------- ------- -------
Total from Investment
Activities.................... 0.75 0.09 0.69 1.15 0.90
------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income........ (0.57) (0.54) (0.61) (0.69) (0.73)
Net realized gains........... (0.08) (0.09) (0.02)
In excess of net realized
gains....................... (0.13)
------- ------- ------- ------- -------
Total Distributions......... (0.57) (0.67) (0.69) (0.78) (0.75)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 10.41 $ 10.23 $ 10.81 $ 10.81 $ 10.44
======= ======= ======= ======= =======
Total Return (excludes sales
charge)...................... 7.65% 0.77% 6.72% 11.48% 9.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)....................... $59,798 $51,660 $53,933 $38,206 $11,112
Ratio of expenses to average
net assets.................. 0.80% 0.79% 0.69% 0.68% 0.85%
Ratio of net investment
income to average net
assets...................... 5.69% 5.05% 5.67% 6.78% 7.19%
Ratio of expenses to average
net assets *................ 1.03% 1.02% 1.03% 1.03% 1.20%
Ratio of net investment
income to average
net assets *................ 5.46% 4.82% 5.33% 6.43% 6.84%
Portfolio turnover............ 38.11% 48.06% 141.27% 35.64% 85.08%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have beeen as indicated.
See notes to financial statements.
B-89
<PAGE> 137
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FLORIDA
TAX-FREE
GOVERNMENT INCOME FUND FUND
-------------------------- ------------------
YEAR ENDED OCTOBER 1, 1993 SEPTEMBER 30, 1994
JULY 31, TO JULY 31, TO JULY 31,
1995 1994(A) 1995(A)
---------- --------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $ 9.48 $ 10.00 $ 10.00
------- ------- -------
INVESTMENT ACTIVITIES
Net investment income.......... 0.68 0.54 0.34
Net realized and unrealized
gains (losses) from
investments................... 0.08 (0.57) 0.30
------- ------- -------
Total from Investment
Activities...................... 0.76 (0.03) 0.64
------- ------- -------
DISTRIBUTIONS
Net investment income.......... (0.70) (0.33) (0.32)
Tax return of capital.......... (0.16)
------- ------- -------
Total Distributions........... (0.70) (0.49) (0.32)
------- ------- -------
NET ASSET VALUE, END OF PERIOD.. $ 9.54 $ 9.48 $ 10.32
======= ======= =======
Total Return (excludes sales
charge)........................ 8.43% (0.26%)(c) 6.53%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)......................... $16,679 $15,465 $48,333
Ratio of expenses to average
net assets.................... 0.58% 0.37%(b) 0.70%(b)
Ratio of net investment income
to average net assets......... 7.18% 6.56%(b) 4.16%(b)
Ratio of expenses to average
net assets *.................. 1.19% 1.22%(b) 1.01%(b)
Ratio of net investment income
to average net assets *....... 6.57% 5.71%(b) 3.86%(b)
Portfolio turnover.............. 27.32% 122.94% 2.33%
</TABLE>
- --------
* 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.
See notes to financial statements.
B-90
<PAGE> 138
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY FUND
-----------------------------------------------
YEAR ENDED JULY 31,
-----------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 14.82 $ 14.38 $ 13.40 $ 12.57 $ 11.99
-------- -------- -------- -------- -------
INVESTMENT ACTIVITIES
Net investment income........ 0.33 0.28 0.28 0.32 0.36
Net realized and unrealized
gains from investments...... 2.39 0.83 1.48 1.20 0.61
-------- -------- -------- -------- -------
Total from Investment
Activities.................... 2.72 1.11 1.76 1.52 0.97
-------- -------- -------- -------- -------
DISTRIBUTIONS
Net investment income........ (0.32) (0.28) (0.29) (0.33) (0.37)
Net realized gains........... (0.47) (0.39) (0.49) (0.36) (0.02)
-------- -------- -------- -------- -------
Total Distributions......... (0.79) (0.67) (0.78) (0.69) (0.39)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF
PERIOD........................ $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57
======== ======== ======== ======== =======
Total Return (excludes sales
charge)...................... 19.27% 7.90% 13.81% 12.94% 8.46%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)....................... $275,757 $205,611 $153,074 $107,934 $32,406
Ratio of expenses to average
net assets.................. 1.03% 0.94% 0.95% 1.01% 1.15%
Ratio of net investment
income to average net
assets...................... 2.17% 1.93% 2.08% 2.50% 3.16%
Ratio of expenses to average
net assets *................ 1.11% 1.11% 1.13% 1.15% 1.26%
Ratio of net investment
income to average net assets
*........................... 2.09% 1.76% 1.90% 2.36% 3.04%
Portfolio turnover............ 19.46% 11.37% 15.12% 113.12% 15.78%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
B-91
<PAGE> 139
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
REGIONAL EQUITY FUND
----------------------------------------------
YEAR ENDED JULY 31,
----------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 16.68 $ 16.74 $ 14.86 $ 13.44 $12.45
------- ------- ------- ------- ------
INVESTMENT ACTIVITIES
Net investment income............. 0.23 0.23 0.19 0.23 0.26
Net realized and unrealized gains
from investments................. 2.26 0.58 2.09 2.34 1.20
------- ------- ------- ------- ------
Total from Investment Activities. 2.49 0.81 2.28 2.57 1.46
------- ------- ------- ------- ------
DISTRIBUTIONS
Net investment income............. (0.23) (0.23) (0.20) (0.23) (0.26)
Net realized gains................ (0.41) (0.20) (0.92) (0.21)
In excess of net realized gains... (0.23)
------- ------- ------- ------- ------
Total Distributions.............. (0.23) (0.87) (0.40) (1.15) (0.47)
------- ------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD..... $ 18.94 $ 16.68 $ 16.74 $ 14.86 $13.44
======= ======= ======= ======= ======
Total Return (excludes sales
charge)........................... 15.10% 4.87% 15.53% 20.66% 12.52%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000). $68,501 $54,744 $41,347 $15,707 $7,853
Ratio of expenses to average net
assets........................... 1.07% 0.79% 0.80% 0.91% 0.79%
Ratio of net investment income to
average net assets............... 1.35% 1.36% 1.17% 1.61% 2.21%
Ratio of expenses to average net
assets *......................... 1.15% 1.24% 1.28% 1.36% 1.58%
Ratio of net investment income to
average net assets *............. 1.27% 0.90% 0.69% 1.16% 1.42%
Portfolio turnover................. 14.25% 5.83% 10.22% 24.99% 14.41%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
B-92
<PAGE> 140
AMSOUTH MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
BALANCED FUND
---------------------------------------------
DECEMBER 19,
YEAR ENDED JULY 31, 1991 TO
------------------------------ JULY 31,
1995 1994 1993 1992 (A)
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................... $ 11.81 $ 11.86 $ 11.12 $ 10.00
-------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income............ 0.47 0.42 0.44 0.27
Net realized and unrealized gains
from investments................ 1.24 0.18 0.80 1.09
-------- -------- -------- --------
Total from Investment
Activities..................... 1.71 0.60 1.24 1.36
-------- -------- -------- --------
DISTRIBUTIONS
Net investment income............ (0.46) (0.42) (0.45) (0.24)
Net realized gain................ (0.30) (0.23) (0.05)
-------- -------- -------- --------
Total Distributions............. (0.76) (0.65) (0.50) (0.24)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD.... $ 12.76 $ 11.81 $ 11.86 $ 11.12
======== ======== ======== ========
Total Return (excludes sales
charge).......................... 15.27% 5.13% 11.47% 13.71%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)........................... $295,509 $236,306 $179,134 $143,813
Ratio of expenses to average net
assets.......................... 0.94% 0.84% 0.84% 0.83%(b)
Ratio of net investment income to
average net assets.............. 3.91% 3.56% 3.90% 4.45%(b)
Ratio of expenses to average net
assets *........................ 1.12% 1.11% 1.12% 1.17%(b)
Ratio of net investment income to
average
net assets *.................... 3.73% 3.28% 3.62% 4.10%(b)
Portfolio turnover................ 16.97% 14.43% 11.09% 23.18%
</TABLE>
- --------
* 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.
See notes to financial statements.
B-93
<PAGE> 141
APPENDIX
Commercial Paper Ratings. Commercial paper ratings of Standard & Poor's
Corporation ("S&P") are current assessments of the likelihood of timely payment
of debts having original maturities of no more than 365 days. Commercial paper
rated A-1 by S&P indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics are denoted A-1+. Commercial paper rated A-2
by S&P indicates that capacity for timely payment on issues is strong. 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, somewhat 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 an adequate capacity for timely
payment. However, such capacity may be damaged by changing conditions or
short-term adversities. Commercial paper rated D represents an issue either in
default or expected to be in default upon maturity.
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 capacity for
repayment of short-term promissory obligations. Issuers rated Prime-2 (or
related supporting institutions) have a strong capacity for repayment of
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, will be more subject to variations.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained. Issuers rated
Prime-3 have an acceptable capacity for repayment of short-term promissory
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 the requirement for
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 Investors 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 an assurance of timely
payment only slightly less than the strongest rating, i.e., F-1. Commercial
paper rated F-3 has a satisfactory degree of assurance for timely payment but
the margin of safety is not as great as the two higher categories. Issues rated
F-4 have characteristics suggesting that the degree of assurance for timely
payment is minimal and is susceptible to near term adverse change due to less
favorable financial or economic conditions. The plus (+) sign is used after a
rating symbol to designate the relative position of an issuer within the rating
category.
B-94
<PAGE> 142
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.
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 edge." 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.
Moody's applies numerical modifiers (1, 2, and 3) with respect to bonds
rated Aa, A or Baa. The modifier 1 indicates that the bond being rated ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.
B-95
<PAGE> 143
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 from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both. 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" Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
"SP-2" Satisfactory capacity to pay principal and interest.
Preferred Stock Ratings
The following summarizes the three highest 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.
"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 three highest 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.
B-96
<PAGE> 144
"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.
B-97
<PAGE> 145
Part C of Post-Effective Amendment No. 18
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) (a) Agreement and Declaration of Trust (the
"Declaration of Trust") dated as of October 1,
1987 -- incorporated by reference to the
Registrant's initial Registration Statement on
Form N-1A (File No. 33-21660).
(b) Amendment No. 1 to Declaration of Trust, dated
as of April 12, 1988 -- incorporated by
reference to the Registrant's initial
Registration Statement on Form N-1A (File No.
33-21660).
(c) Amendment No. 2 to 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.
C-1
<PAGE> 146
(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) 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 to Investment Advisory Agreement
dated as of December 5, 1989 between the Group
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) 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).
(d) Amended Schedule to the 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. 11
to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
C-2
<PAGE> 147
(e) 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).
(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) 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).
(d) 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).
(e) 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
C-3
<PAGE> 148
No. 17 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(9) (a) Management and Administration Agreement dated as
of October 1, 1990 between the Registrant and
The Winsbury Company--incorporated by reference
to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(b) Amended Schedule to the Management and
Administration Agreement dated as of October 1,
1990 between the Registrant and The Winsbury
Company is incorporated by reference to
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(c) Amended Schedule to the Management and
Administration 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).
(d) Sub-Administration Agreement between The
Winsbury Company Limited Partnership and AmSouth
Bank of Alabama -- incorporated by reference to
Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on Form
N-1A (File No. 33-21660).
(e) 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- Effective Amendment No. 3 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(f) Amended Schedule D to the Transfer Agency and
Shareholder Services Agreement dated as of April
5, 1993 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).
C-4
<PAGE> 149
(g) 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).
(h) Fund Accounting Agreement dated as of October 1,
1990 between the Registrant and The Winsbury
Service Corporation -- incorporated by reference
to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(i) Amended Schedule to the Fund Accounting
Agreement dated as of October 1, 1990 between
the Registrant and the Winsbury Service
Corporation is incorporated by reference to
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(j) Amended Schedule to the Fund Accounting
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).
(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.
(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).
C-5
<PAGE> 150
(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 Equity
Fund
(e) Financial Data Schedule for the AmSouth Regional
Equity Fund
(f) Financial Data Schedule for the AmSouth Balanced
Fund
(g) Financial Data Schedule for the AmSouth Bond
Fund
C-6
<PAGE> 151
(h) Financial Data Schedule for the AmSouth Limited
Maturity Fund
(i) Financial Data Schedule for the AmSouth
Government Income Fund
(j) 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 adopted by the
Board of Trustees on December 6, 1995 is filed
herewith.
(18) (b) Shareholder Servicing Plan for AmSouth Mutual
Funds adopted by the Board of Trustees on
December 6, 1995 is filed herewith.
(18) (c) Model Shareholder Servicing Agreement for
AmSouth Mutual Funds adopted by the Board of
Trustees on December 6, 1995 is filed herewith.
Powers of Attorney of the Trustees, dated September 25, 1992.
- -------------
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, Alabama Tax-Free Fund, Florida Tax- Free Fund, or
Balanced Fund.
C-7
<PAGE> 152
Item 26. Number of Holders of Securities
As of January 2, 1996, the number of record holders of Premier
Shares 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 49
U.S. Treasury Fund 29
Tax Exempt Fund 21
Equity Fund 2,426
Regional Equity Fund 3,162
Bond Fund 412
Limited Maturity Fund 194
Municipal Bond Fund 0
Balanced Fund 2,597
Government Income Fund 621
Alabama Tax-Free Fund 0
Florida Tax-Free Fund 74
</TABLE>
C-8
<PAGE> 153
As of January 2 1996, the number of record holders of Classic
Shares of the Registrant's respective series of shares were as
follows:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF SERVICE RECORD HOLDERS
--------------- --------------
<S> <C>
PRIME OBLIGATIONS FUND 0
U.S. TREASURY FUND 0
TAX-EXEMPT FUND 0
</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
C-9
<PAGE> 154
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 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
C-10
<PAGE> 155
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
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.
C-11
<PAGE> 156
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.
<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
Elmer B. Harris President and Chief Executive Officer, Alabama
Director Power Company, 600 N. 18th Street,
Birmingham, Alabama
James I. Harrison, Jr. Chairman and Chief Executive Officer, Harco,
Director Inc., Tuscaloosa, Alabama
Donald E. Hess President and Chief Executive Officer, Parisian,
Director Inc., 750 Lakeshore Parkway, Birmingham,
Alabama
Mrs. H. Taylor Morrisette Chairman, HTM Investment & Development,
Director Inc., Mobile, Alabama
C. Dowd Ritter None
Director, and Chief Operating
Officer of the Board
</TABLE>
C-12
<PAGE> 157
<TABLE>
<S> <C>
W. A. Williamson, Jr. Chairman, Kowaliga Capital, Inc.
Director Montgomery, Alabama
John W. Woods None
Director, Chairman of the
Board and Chief Executive
Officer
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
George A. Budd None
Executive Vice President
and Chief Technology Officer
Daniel H. Carmichael None
Senior Vice President
A. Brian Crawford None
Senior Vice President
and Regional Executive
Dennis J. Dill None
Executive Vice President
and Chief Accounting Officer
David B. Edmonds None
Executive Vice President
James W. Emison None
Executive Vice President
Sloan D. Gibson, IV None
Senior Executive Vice President
</TABLE>
C-13
<PAGE> 158
<TABLE>
<S> <C>
O.B. Grayson Hall, Jr. None
Executive Vice President
Kristin M. Hudak None
Senior Executive Vice President and
Chief Financial Officer
Robert A. Hunter None
Executive Vice President
C. Rogers Hyche None
Senior Vice President
and Regional Executive
John D. Kottmeyer None
Executive Vice President
W. Charles Mayer, III None
Senior Executive Vice President
Candice W. Rogers None
Senior Executive Vice President
William R. Seifert None
Executive Vice President
Gail W. Stevens None
Executive Vice President
M. List Underwood, Jr. None
Executive Vice President
Michael W. Underwood None
Executive Vice President
D. Lee Weathers None
Executive Vice President
Stephen A. Yoder None
Executive Vice President
</TABLE>
C-14
<PAGE> 159
Item 29. Principal Underwriter.
(a) BISYS Fund Services, Limited Partnership ("BISYS Fund Services"),
formerly The Winsbury Company, acts as distributor and administrator 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:
<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>
C-15
<PAGE> 160
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
(Administrator and Distributor)
(4) Bank of California, N.A.
475 Sansome Street
San Francisco, CA 94111
(Custodian)
(5) 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.
C-16
<PAGE> 161
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.
C-17
<PAGE> 162
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
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 31st day of January, 1996.
AMSOUTH MUTUAL FUNDS,
Registrant
*/s/ J. David Huber
------------------------
J. David Huber
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement of AmSouth Mutual Funds has been signed below by the
following persons in the capacities indicated on the 31st day of January, 1996.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
*/s/J. David Huber Trustee, President January 31, 1996
----------------------------
J. David Huber Chief Executive Officer
*/s/William J. Tomko Chairman of the Board January 31, 1996
----------------------------
William J. Tomko Chief Financial Officer
Chief Accounting Officer
*/s/James H. Woodward, Jr. Trustee January 31, 1996
----------------------------
James H. Woodward, Jr.
*/s/ Homer H. Turner, Jr. Trustee January 31, 1996
----------------------------
Homer H. Turner, Jr.
*/s/ Wendell D. Cleaver Trustee January 31, 1996
----------------------------
Wendell D. Cleaver
*/s/ Dick D. Briggs, Jr. Trustee January 31, 1996
----------------------------
Dick D. Briggs, Jr.
* By /s/ Margaret A. Sheehan January 31, 1996
-----------------------
Margaret A. Sheehan,
Attorney-in-fact
</TABLE>
C-18
<PAGE> 163
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> 164
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> 165
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> 166
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> 167
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> 168
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> 169
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
11(a) Consent of Coopers & Lybrand L.L.P.
11(b) Consent of Ropes & Gray
18(a) Multiple Class Plan for the AmSouth Prime Obligations Fund,
the AmSouth U.S. Treasury Fund and the AmSouth Tax Exempt
Fund.
18(b) Shareholder Servicing Plan for AmSouth Mutual Funds
18(c) Model Shareholder Servicing Agreement for AmSouth Mutual
Funds.
27(a) Financial Data Schedule for AmSouth Prime Obligations Fund -
Premier Shares
27(b) Financial Data Schedule for AmSouth U.S. Treasury Fund -
Premier Shares
27(c) Financial Data Schedule for AmSouth Tax Exempt Fund - Premier
Shares
27(d) Financial Data Schedule for AmSouth Equity Fund
27(e) Financial Data Schedule for AmSouth Regional Equity Fund
27(f) Financial Data Schedule for AmSouth Balanced Fund
27(g) Financial Data Schedule for AmSouth Bond Fund
27(h) Financial Data Schedule for AmSouth Limited Maturity Fund
27(i) Financial Data Schedule for AmSouth Government Income Fund
27(j) Financial Data Schedule for AmSouth Florida Tax-Free Fund
</TABLE>
<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. 18 to the
Registration Statement on Form N-1A (File Nos. 33-21660 and 811-5551) of the
AmSouth Mutual Funds of our report dated September 22, 1995 on our audits of
the financial statements 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,
1995 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 and under the
caption "Auditors" in the Statement of Additional Information of the AmSouth
Mutual Funds in Post-Effective Amendment No 18 to the Registration Statement on
Form N-1A (File Nos. 33-21660 and 811-5551).
Coopers & Lybrand L.L.P.
Columbus, Ohio
January 26, 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. 18 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.
January 31, 1996
<PAGE> 1
EXHIBIT 18(a)
Multiple Class Plan for the
AmSouth Prime Obligations Fund,
the AmSouth U.S. Treasury Fund
and the AmSouth Tax Exempt Fund
<PAGE> 2
MULTIPLE CLASS PLAN
FOR AMSOUTH MUTUAL FUNDS
This constitutes a MULTIPLE CLASS PLAN (the "Plan") of AmSouth Mutual
Funds, a Massachusetts business trust (the "Trust"), adopted pursuant to Rule
18f-3(d) under the Investment Company Act of 1940, as amended (the "1940 Act").
The Plan is applicable to each series of the Trust's units of beneficial
interest (each a "Fund" and collectively the "Funds") set forth in Schedule I,
as amended from time to time.
WHEREAS, it is desirable to enable the Trust to have flexibility in
meeting the investment and shareholder servicing needs of its current and future
investors; and
WHEREAS, the Board of Trustees of the Trust (the "Board of Trustees"),
including a majority of the Trustees who are not "interested persons" of the
Trust, as such term is defined by the 1940 Act, mindful of the requirements
imposed by Rule 18f-3(d) under the 1940 Act, has determined to adopt this Plan
to enable the Funds to provide appropriate services to certain designated
classes of shareholders of the Funds;
NOW, THEREFORE, the Trust designates the Plan as follows:
1. Designation of Classes. Each Fund shall offer its units of
beneficial interest ("Shares") in two classes: Trust Shares and Service Shares.
2. Redesignation of Existing Shares. The currently outstanding Shares
of each Fund shall be redesignated as Trust Shares.
3. Purchases. Service Shares are distributed to the general public
pursuant to procedures outlined in the Trust's Registration Statement. Trust
Shares may be purchased through procedures established by the distributor in
connection with the requirements of fiduciary, advisory, agency, custodial and
other similar accounts maintained by or on behalf of Customers of AmSouth Bank
of Alabama or one of its affiliates, as outlined in the Trust's Registration
Statement. Service Shares are subject to a minimum initial purchase amount. A
minimum initial purchase amount does not apply to purchases of Trust Shares.
4. Shareholder Services. Service Shareholders may make automatic
investments in a Fund from their bank accounts. Service Shareholders may also
make regular exchanges and redemptions of Service Shares. These services are not
offered to Shareholders of Trust Shares.
<PAGE> 3
5. Sales Charges.
Trust Shares
Trust Shares are not subject to a sales charge at the time of purchase
or upon redemption.
Service Shares
Service Shares, except Service Shares of any money market funds, are
subject to a sales charge at the time of purchase. The sales charge is based on
a percentage of the offering price and may vary based on the amount of purchase.
Sales charges may be waived in accordance with the current Registration
Statement.
6. Shareholder Services Fee.
Trust Shares
Trust Shares are not subject to a shareholder services fee.
Service Shares
Service Shares are subject to a shareholder services fee assessed in
accordance with the shareholder services plan adopted by the Trust (the "Plan")
(the "Service Share Fee").
7. Exchanges
Trust Shares
Trust Shares of a Fund may be exchanged for Trust Shares of another
Fund. Trust Shares may also be exchanged for Service Shares, if the Shareholder
ceases to be eligible to purchase Trust Shares.
Service Shares
Service Shares may be exchanged for Service Shares of another Fund.
Service Shares may be exchanged for Trust Shares only if the Shareholder becomes
eligible to purchase Trust Shares.
8. Redemptions. Trust Shares and Service Shares may be redeemed without
charge.
9. Voting Rights. Each Share held entitles the Shareholder of record to
one vote. Each Fund will vote separately on matters relating solely to that
Fund. Each class of a Fund
-2-
<PAGE> 4
shall have exclusive voting rights on any matter submitted to Shareholders that
relates solely to that class, and shall have separate voting rights on any
matter submitted to Shareholders in which the interests of one class differ from
the interests of any other class. However, all Fund Shareholders will have equal
voting rights on matters that affect all Fund Shareholders equally.
10. Expense Allocation. Each class shall pay the expenses associated
with its different distribution and shareholder services arrangement. Each class
may, at the Board's discretion, also pay a different share of other expenses,
not including advisory or custodial fees or other expenses related to the
management of the Trust's assets, if these expenses are actually incurred in a
different amount by that class, or if the class receives services of a different
kind or to a different degree than other classes. All other expenses will be
allocated to each class on the basis of the relative net asset value of that
class in relation to the net asset value of the Fund.
11. Dividends. The amount of dividends payable on Trust Shares may be
more than the dividends payable on Service Shares because of the Service Share
Fee charged to Service Shares pursuant to the Plan.
12. Termination and Amendment. This Plan may be terminated or amended
pursuant to the requirement of Rule 18f-3(d) under the 1940 Act.
13. The names "AmSouth Mutual Funds" and "Trustees of AmSouth Mutual
Funds" refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated June 25, 1993 to which reference is hereby made and a
copy of which is on file at the office of the Secretary of State of the
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed. The obligations of AmSouth
Mutual Funds entered into in the name or on behalf thereof by any of the Trust,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, Shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series and/or class of Shares of the Trust must look solely to the
assets of the Trust belonging to such series and/or class for the enforcement of
any claims against the Trust.
[SEAL] AMSOUTH MUTUAL FUNDS
By: /s/
---------------------------------
Dated: December 6, 1995
-3-
<PAGE> 1
EXHIBIT 18(b)
Shareholder Servicing Plan for
the AmSouth Mutual Fund
<PAGE> 2
AMSOUTH MUTUAL FUNDS
SHAREHOLDER SERVICING PLAN
This Shareholder Servicing Plan (the "Plan") is adopted by AmSouth
Mutual Funds, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Trust"), on behalf of each of its Funds (individually, a
"Fund," and collectively, the "Funds") set forth in Schedule I, as amended from
time to time, subject to the following terms and conditions:
SECTION 1. ANNUAL FEES.
Shareholder Services Fee. Each Fund (or class thereof, as the case may
be) may pay to the distributor of its shares (the "Distributor") or financial
institutions that provide certain services to the Funds, a shareholder services
fee under the Plan at an annual rate not to exceed 0.25% of the average daily
net assets of the Fund or Class attributable to the Distributor or financial
institution thereof (the "Services Fee").
Adjustment to Fees. Any Fund may pay a Services Fee to the Distributor
or financial institution at a lesser rate than the fees specified in Section 1
hereof as agreed upon by the Board of Trustees and the Distributor or financial
institution and approved in the manner specified in Section 3 of this Plan.
Payment of Fees. The Services Fee will be calculated daily and paid
monthly by each Fund at the annual rates indicated above.
SECTION 2. EXPENSES COVERED BY THE PLAN.
Services Fees may be used by the Distributor or financial institution
for payments to financial institutions and persons who provide administrative
and support services to their customers who may from time to time beneficially
own shares, which may include (i) establishing and maintaining accounts and
records relating to shareholders; (ii) processing dividend and distribution
payments from the Fund on behalf of shareholders; (iii) periodically providing
information to shareholders showing their positions in shares and integrating
such statements with those of other transactions and balances in shareholders'
other accounts serviced by such financial institution; (iv) arranging for bank
wires; (v) responding to shareholder inquiries relating to the services
performed; (vi) responding to routine inquiries from shareholders concerning
their investments; (vii) providing subaccounting with respect to shares
beneficially owned by shareholders, or the information to the Fund necessary for
subaccounting; (viii) if required by law, forwarding shareholder communications
from the Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to
shareholders; (ix) assisting in processing purchase,
<PAGE> 3
exchange and redemption requests from shareholders and in placing such orders
with our service contractors; (x) assisting shareholders in changing dividend
options, account designations and addresses; (xi) providing shareholders with a
service that invests the assets of their accounts in shares pursuant to specific
or pre-authorized instructions; and (xii) providing such other similar services
as the Fund may reasonably request to the extent the Distributor or financial
institution is permitted to do so under applicable statutes, rules and
regulations.
SECTION 3. APPROVAL OF TRUSTEES.
Neither the Plan nor any related agreements will take effect until
approved by a majority of both (a) the full Board of Trustees of the Trust and
(b) those Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to it (the "Qualified Trustees"), cast in person at a meeting
called for the purpose of voting on the Plan and the related agreements.
SECTION 4. CONTINUANCE OF THE PLAN.
The Plan will continue in effect until [DATE: ONE YEAR FROM EXECUTION],
and thereafter for successive twelve-month periods, provided, however, that such
continuance is specifically approved at least annually by the Trustees of the
Fund and by a majority of the Qualified Trustees.
SECTION 5. TERMINATION.
The Plan may be terminated at any time with respect to a Fund (i) by
the Trust without the payment of any penalty, by the vote of a majority of the
outstanding voting securities of the Fund (or, the shareholders of a particular
class, if applicable) or (ii) by a vote of the Qualified Trustees. The Plan may
remain in effect with respect to a Fund even if the Plan has been terminated in
accordance with this Section 5 with respect to any other Fund.
SECTION 6. AMENDMENTS.
No material amendment to the Plan may be made unless approved by the
Trust's Board of Trustees in the manner described in Section 3 above.
SECTION 7. SELECTION OF CERTAIN TRUSTEES.
While the Plan is in effect, the selection and nomination of the
Trust's Trustees who are not interested persons of the Fund will be committed to
the discretion of the Trustees then in office who are not interested persons of
the Trust.
-2-
<PAGE> 4
SECTION 8. WRITTEN REPORTS.
In each year during which the Plan remains in effect, a person
authorized to direct the disposition of monies paid or payable by a Fund
pursuant to the Plan or any related agreement will prepare and furnish to the
Trust's Board of Trustees, and the Board will review, at least quarterly,
written reports complying with the requirements of the Rule which set out the
amounts expended under the Plan and the purposes for which those expenditures
were made.
SECTION 9. PRESERVATION OF MATERIALS.
The Trust will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 8 above, for a period of not
less than six years (the first two years in an easily accessible place) from the
date of the Plan, agreement or report.
SECTION 10. LIMIT OF LIABILITY.
The limitation of shareholder liability set forth in the Trust's
Declaration of Trust is hereby acknowledged. The obligations of the Trust under
this Plan, if any, shall not be binding upon the Trustees individually or upon
holders of shares of the Trust individually but shall be binding only upon the
assets and property of the Trust, and upon the Trustees insofar as they hold
title thereto.
SECTION 11. MEANINGS OF CERTAIN TERMS.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the Investment Company Act of 1940.
IN WITNESS WHEREOF, the Trust executed this Plan as of December 6,
1995.
AmSouth Mutual Funds
By: /s/
--------------------------
President
-3-
<PAGE> 5
SCHEDULE I
This Shareholder Servicing Plan shall be adopted with respect to the
following Funds (and Classes) of AmSouth Mutual Funds:
Name of Fund Class
------------ -----
AmSouth Prime Obligations Fund Service Class
AmSouth U.S. Treasury Fund Service Class
AmSouth Tax Exempt Fund Service Class
-4-
<PAGE> 1
EXHIBIT 18(c)
Model Shareholder Servicing Agreement for AmSouth Mutual Funds.
<PAGE> 2
SHAREHOLDER SERVICING AGREEMENT
AMSOUTH MUTUAL FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
To: ___________________________
We (the "Trust") wish to enter into this Servicing Agreement with you
concerning the provision of support services to your client ("Clients") who may
from time to time beneficially own shares ("Shares") of the Funds (the "Funds")
offered by us.
The terms and conditions of this Servicing Agreement are as follows:
SECTION 1. You agree to provide the following support services to
Clients who may from time to time beneficially own Shares:(1) (i) establishing
and maintaining accounts and records relating to Clients that invest in Shares;
(ii) processing dividend and distribution payments from us on behalf of Clients;
(iii) periodically providing information to Clients showing their positions in
Shares and integrating such statements with those of other transactions and
balances in Clients' other accounts serviced by you; (iv) arranging for bank
wires; (v) responding to Client inquiries relating to the services performed by
you; (vi) responding to routine inquiries from Clients concerning their
investments in Shares; (vii) providing subaccounting with respect to Shares
beneficially owned by Clients, or the information to us necessary for
subaccounting; (viii) if required by law, forwarding shareholder communications
from us (such as proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to Clients; (ix)
assisting in processing purchase, exchange and redemption requests from Clients
and in placing such orders with our service contractors; (x) assisting Clients
in changing dividend options, account designations and addresses; (xi) providing
Clients with a service that invests the assets of their accounts in Shares
pursuant to specific or pre-authorized instructions; and (xii) providing such
other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules and regulations.
SECTION 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
services and assistance to Clients.
____________________
(1) Series may be modified or omitted in the particular case and items
renumbered.
<PAGE> 3
SECTION 3. Neither you nor any of your officers, employees or agents
are authorized to make any representations concerning us or the Shares except
those contained in our then current prospectuses and statement of additional
information, copies of which will be supplied by us to you, or in such
supplemental literature or advertising as may be authorized by us in writing.
SECTION 4. For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for us in
any matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions, or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of Shares (or orders relating to the same) by or on
behalf of Clients. You and your employees will be available upon request during
normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
SECTION 5. In consideration of the services and facilities provided by
you hereunder, we will pay to you, and you will accept as full payment therefor,
a fee at the annual rate of [________] one-hundredths of one percent (.__%) of
the average daily net asset value of the shares beneficially owned by your
Clients for whom you are the dealer of record or holder of record or with whom
you have a servicing relationship (the "Clients' Shares"), which fee will be
computed daily (on the basis of 360-day year) and payable monthly. For purposes
of determining the fees payable under this Section 5, the average daily net
asset value of the Clients' Shares will be computed in the manner specified in
our Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of Shares for purposes of
purchases and redemptions. By your written acceptance of this Agreement, you
agree to and do waive such portion of any fee payable to you hereunder to the
extent necessary to assure that such fee and other expenses required to be
accrued by us on any day with respect to the Clients' Share in any Fund that
declares its net investment income as a dividend to shareholders on a daily
basis does not exceed the income to be accrued by us to such Shares on that day.
The fee rate stated above may be prospectively increased or decreased by us, in
our sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of Shares, including
the sale of Shares to you for the account of any Client or Clients.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by us pursuant to this Agreement will provide to our Board of
Trustees, and our trustees will review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
In addition, you will furnish us or our designees with such information as we or
they may reasonably request, (including, without limitation, periodic
certifications confirming the provision to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of
-2-
<PAGE> 4
Trustees concerning this Agreement and the monies paid or payable by us pursuant
hereto, as well as any other reports or filings that may be required by law.
SECTION 7. We may enter into other similar Servicing Agreements with
any other person or persons without your consent.
SECTION 8. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) the compensation payable to you in connection with
the investment of your Clients' assets in Shares will be disclosed by you to
your Clients, will be authorized by your Clients and will not be excessive; and
(ii) the services provided by you under this Agreement will in no event be
primarily intended to result in the sale of Shares.
SECTION 9. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue automatically for successive annual
periods provided such continuance is specifically approved at least annually by
us in the manner described in Section 12. This Agreement is terminable without
penalty at any time by us (which termination may be by a vote of a majority of
the Disinterested Trustees as defined in Section 12) or by you upon written
notice to the other party hereto.
SECTION 10. All notices and other communications to either you or us
will be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunication device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
SECTION 11. This Agreement will be construed in accordance with the
laws of the State of [OHIO] and is non-assignable by the parties hereto.
SECTION 12. This Agreement has been approved by vote of a majority of
(i) our Board of Trustees and (ii) those Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940) of us and have no
direct or indirect financial interest in this Agreement ("Disinterested
Trustees"), cast in person at a meeting called for the purpose of voting on such
approval.
SECTION 13. The names "AmSouth Mutual Funds" and the "Board of
Trustees" refer respectively to the Trust created and the Trustees, as trustees
but not individually or personally, acting from time to time under an Amended
and Restated Declaration of Trust filed at the office of the State Secretary of
the Commonwealth of Massachusetts on August 23, 1993. The obligations of
"AmSouth Mutual Funds" entered into in the name or on behalf thereof by any of
the Trustees, representatives or agents are made not individually but in such
capacities, and are not binding upon any of the Trustees, Shareholders or
representatives of the Trust personally, but bind only the Trust Property (as
defined in the Declaration of Trust), and
-3-
<PAGE> 5
all persons dealing with any class of Shares of ours must look solely to the
Trust Property belonging to such class for the enforcement of any claims against
us.
If you agree to be legally bound by the provisions of this Agreement,
please sign A copy of this letter where indicated below and promptly return it
to us, c/o BISYS Fund Services, Administrator, 3435 Stelzer Road, Columbus, Ohio
43219-3035.
Very truly yours.
AMSOUTH MUTUAL FUNDS
Date: __________________________ By: _______________________________
(Authorized Officer)
Title: ____________________________
Accepted and Agreed to:
Date: __________________________ By: _______________________________
(Authorized Officer)
Title:
-4-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27
Financial Data Schedules
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 1
<NAME> PRIME OBLIGATIONS FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 630,923
<INVESTMENTS-AT-VALUE> 630,923
<RECEIVABLES> 1,412
<ASSETS-OTHER> 18
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 632,353
<PAYABLE-FOR-SECURITIES> 11,296
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,384
<TOTAL-LIABILITIES> 14,680
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 617,696
<SHARES-COMMON-STOCK> 617,696
<SHARES-COMMON-PRIOR> 577,354
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 23
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 617,673
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 31,291
<OTHER-INCOME> 0
<EXPENSES-NET> 3,781
<NET-INVESTMENT-INCOME> 27,510
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 27,510
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 27,510
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,597,046
<NUMBER-OF-SHARES-REDEEMED> 1,561,740
<SHARES-REINVESTED> 5,036
<NET-CHANGE-IN-ASSETS> 40,342
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 23
<GROSS-ADVISORY-FEES> 2,184
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,781
<AVERAGE-NET-ASSETS> 545,785
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 2
<NAME> U.S. TREASURY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 323,617
<INVESTMENTS-AT-VALUE> 323,617
<RECEIVABLES> 870
<ASSETS-OTHER> 12
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 324,499
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,560
<TOTAL-LIABILITIES> 1,560
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 322,938
<SHARES-COMMON-STOCK> 322,939
<SHARES-COMMON-PRIOR> 300,603
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 322,939
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17,162
<OTHER-INCOME> 0
<EXPENSES-NET> 2,173
<NET-INVESTMENT-INCOME> 14,989
<REALIZED-GAINS-CURRENT> 1
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 14,990
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 14,989
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 900,697
<NUMBER-OF-SHARES-REDEEMED> 880,465
<SHARES-REINVESTED> 2,103
<NET-CHANGE-IN-ASSETS> 22,336
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,245
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,173
<AVERAGE-NET-ASSETS> 311,344
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .048
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .048
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 7
<NAME> TAX EXEMPT FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 57,467
<INVESTMENTS-AT-VALUE> 57,467
<RECEIVABLES> 361
<ASSETS-OTHER> 3
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57,831
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191
<TOTAL-LIABILITIES> 191
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,640
<SHARES-COMMON-STOCK> 57,640
<SHARES-COMMON-PRIOR> 60,923
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 57,640
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,308
<OTHER-INCOME> 0
<EXPENSES-NET> 336
<NET-INVESTMENT-INCOME> 1,972
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,972
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,972
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,997
<NUMBER-OF-SHARES-REDEEMED> 2,851
<SHARES-REINVESTED> 450
<NET-CHANGE-IN-ASSETS> 70,146
<ACCUMULATED-NII-PRIOR> 67
<ACCUMULATED-GAINS-PRIOR> 2,253
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,844
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,564
<AVERAGE-NET-ASSETS> 230,511
<PER-SHARE-NAV-BEGIN> 14.82
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 2.39
<PER-SHARE-DIVIDEND> 0.32
<PER-SHARE-DISTRIBUTIONS> 0.47
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.75
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 4
<NAME> EQUITY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 229,511
<INVESTMENTS-AT-VALUE> 276,747
<RECEIVABLES> 828
<ASSETS-OTHER> 11
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 277,586
<PAYABLE-FOR-SECURITIES> 1,643
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186
<TOTAL-LIABILITIES> 1,829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 221,297
<SHARES-COMMON-STOCK> 16,466
<SHARES-COMMON-PRIOR> 13,870
<ACCUMULATED-NII-CURRENT> 267
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,957
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 47,236
<NET-ASSETS> 275,757
<DIVIDEND-INCOME> 6,336
<INTEREST-INCOME> 0
<OTHER-INCOME> 1,036
<EXPENSES-NET> 2,376
<NET-INVESTMENT-INCOME> 4,996
<REALIZED-GAINS-CURRENT> 11,383
<APPREC-INCREASE-CURRENT> 26,642
<NET-CHANGE-FROM-OPS> 43,021
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,796
<DISTRIBUTIONS-OF-GAINS> 6,679
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 99,365
<NUMBER-OF-SHARES-REDEEMED> 102,959
<SHARES-REINVESTED> 311
<NET-CHANGE-IN-ASSETS> (3,283)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 250
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 461
<AVERAGE-NET-ASSETS> 62,607
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.032
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.032
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 5
<NAME> REGIONAL EQUITY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 56,887
<INVESTMENTS-AT-VALUE> 68,542
<RECEIVABLES> 109
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 68,653
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 152
<TOTAL-LIABILITIES> 152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,810
<SHARES-COMMON-STOCK> 3,617
<SHARES-COMMON-PRIOR> 3,283
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 3
<ACCUMULATED-NET-GAINS> 39
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,655
<NET-ASSETS> 68,501
<DIVIDEND-INCOME> 1,192
<INTEREST-INCOME> 257
<OTHER-INCOME> 0
<EXPENSES-NET> 640
<NET-INVESTMENT-INCOME> 809
<REALIZED-GAINS-CURRENT> 904
<APPREC-INCREASE-CURRENT> 7,072
<NET-CHANGE-FROM-OPS> 8,785
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 808
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 970
<NUMBER-OF-SHARES-REDEEMED> 662
<SHARES-REINVESTED> 26
<NET-CHANGE-IN-ASSETS> 13,757
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 4
<OVERDIST-NET-GAINS-PRIOR> 865
<GROSS-ADVISORY-FEES> 479
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 688
<AVERAGE-NET-ASSETS> 59,886
<PER-SHARE-NAV-BEGIN> 16.68
<PER-SHARE-NII> .23
<PER-SHARE-GAIN-APPREC> 2.26
<PER-SHARE-DIVIDEND> .23
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.94
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 8
<NAME> BALANCED FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 3
<NAME> BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
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<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 7,507
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<OVERDISTRIBUTION-GAINS> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 6
<NAME> LIMITED MATURITY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 59,221
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<RECEIVABLES> 900
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<ACCUM-APPREC-OR-DEPREC> (297)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 9
<NAME> GOVERNMENT INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 16,778
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<OTHER-ITEMS-ASSETS> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 10
<NAME> FLORIDA TAX-FREE BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> SEP-30-1994
<PERIOD-END> JUL-31-1995
<INVESTMENTS-AT-COST> 46,375
<INVESTMENTS-AT-VALUE> 47,725
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
