AMSOUTH MUTUAL FUNDS, 497, 1997-09-10

AMSOUTH MUTUAL FUNDS
497, 1997-09-10

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<PAGE> 1

AMSOUTH MUTUAL FUNDS
CAPITAL APPRECIATION FUNDS

CLASSIC SHARES AND CLASS B SHARES

<TABLE>
<S> <C>
3435 Stelzer Road For current yield, purchase, and redemption
Columbus, Ohio 43219 information, call (800) 451-8382
</TABLE>

The Capital Appreciation Funds (the "Capital Appreciation Funds") are six
of fourteen series of units of beneficial interest ("Shares") each representing
interests in one of fourteen separate investment funds (the "Funds") of AmSouth
Mutual Funds (the "Trust"), an open-end management investment company. Each
Capital Appreciation Fund has its own investment objective and the net asset
value per share of each Capital Appreciation Fund will fluctuate as the value of
such Capital Appreciation Fund's investment portfolio changes in response to
changing market conditions and other factors. Each Capital Appreciation Fund
offers Premier Shares, Classic Shares and Class B Shares. The Shares of the
Capital Appreciation Funds outstanding on August 31, 1997, were redesignated as
Classic Shares. Currently, Shares are not being offered in the Small Cap Fund.

AMSOUTH EQUITY FUND (the "Equity Fund") seeks growth of capital by
investing primarily in a diversified portfolio of common stocks and securities
convertible into common stocks such as convertible bonds and convertible
preferred stocks. The production of income is an incidental objective. The
Advisor will seek opportunities for the Equity Fund in securities that are
believed to represent investment value.

AMSOUTH REGIONAL EQUITY FUND (the "Regional Equity Fund") seeks growth of
capital by investing primarily in a diversified portfolio of common stocks and
securities convertible into common stocks, such as convertible bonds and
convertible preferred stocks, of companies headquartered in the Southern Region
of the United States. The Southern Region of the United States includes Alabama,
Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina,
Tennessee and Virginia. The production of income is an incidental objective. The
Advisor will seek opportunities for the Regional Equity Fund in securities that
are believed to represent investment value.

AMSOUTH BALANCED FUND (the "Balanced Fund") seeks to obtain long-term
capital growth and produce a reasonable amount of current income through a
moderately aggressive investment strategy. The Balanced Fund seeks to achieve
this objective by investing in a broadly diversified portfolio of securities,
including common stocks, preferred stocks and bonds. The Advisor will seek
opportunities for the Balanced Fund in securities that are believed to represent
investment value.

AMSOUTH CAPITAL GROWTH FUND (the "Capital Growth Fund") seeks long-term
capital appreciation and growth of income by investing primarily in a
diversified portfolio of common stocks and securities convertible into common
stocks such as convertible bonds and convertible preferred stocks.

AMSOUTH SMALL CAP FUND (the "Small Cap Fund") seeks capital appreciation by
investing primarily in a diversified portfolio of securities consisting of
common stocks and securities convertible into common stocks such as convertible
bonds and convertible preferred stock. Any current income generated from these
securities is incidental to the investment objective of the Fund. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
common stocks and securities convertible into common stocks such as convertible
bonds and convertible preferred stock of companies with a market capitalization
of less than $1 billion.

AMSOUTH EQUITY INCOME FUND (the "Equity Income Fund") seeks above average
income and capital appreciation by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks such as
convertible bonds and convertible preferred stock. Under normal market
conditions, the Fund will invest at least 65% of its total assets in
income-producing equity securities including common stock, preferred stock, and
securities convertible into common stocks such as convertible bonds and
convertible preferred stock. The portion of the Fund's total assets invested in
common stock,
<PAGE> 2

preferred stock, and convertible securities will vary according to the Fund's
assessment of market and economic conditions and outlook.

AmSouth Bank, Birmingham, Alabama ("AmSouth") acts as the investment
advisor to each Capital Appreciation Fund ("Advisor"). Rockhaven Asset
Management, LLC ("Rockhaven") acts as the investment sub-advisor to the Equity
Income Fund. Peachtree Asset Management, LLC ("Rockhaven") acts as the
investment sub-advisor to the Capital Growth Fund. BISYS Fund Services, Limited
Partnership ("BISYS Fund Services"), Columbus, Ohio, acts as the Capital
Appreciation Funds' distributor ("Distributor").

Each Capital Appreciation Fund has been divided into three classes of
Shares, Premier Shares, Classic Shares and Class B Shares. The following
investors qualify to purchase Premier Shares: (i) investors for whom AmSouth
acts in a fiduciary, advisory, custodial, agency or similar capacity through an
account with its Trust Department; (ii) investors who purchase Shares of a Fund
through 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 or Class B Shares only.

This Prospectus relates only to the Classic Shares and Class B Shares of
the Capital Appreciation Funds, which are offered to the general public. Premier
Shares of the Capital Appreciation Funds are offered through a separate
prospectus. Interested persons who wish to obtain a copy of the prospectuses of
the AmSouth Prime Obligations Fund, the AmSouth U.S. Treasury Fund, and the
AmSouth Tax Exempt Fund (the "Money Market Funds"), and the AmSouth Bond Fund,
the AmSouth Limited Maturity Fund, the AmSouth Government Income Fund, the
AmSouth Municipal Bond Fund, and the AmSouth Florida Tax-Free Fund (the "Income
Funds") may contact the Distributor at the telephone number shown above.
Additional information about the Capital Appreciation Funds, contained in a
Statement of Additional Information, has been filed with the Securities and
Exchange Commission and is available upon request without charge by writing to
the Trust at its address or by calling the Trust at the telephone number shown
above. The Statement of 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 Classic
Shares and Class B Shares of the Capital Appreciation Funds that a prospective
investor ought to know before investing. Investors should read this Prospectus
and retain it for future reference.

THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY AMSOUTH OR ANY OF ITS AFFILIATES. THE TRUST'S SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR BY ANY OTHER AGENCY. AN INVESTMENT IN THE TRUST'S SHARES INVOLVES INVESTMENT
RISKS, INCLUDING LOSS OF PRINCIPAL.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------

The date of this prospectus is September 1, 1997, as amended September 10, 1997.
<PAGE> 3

FEE TABLE

<TABLE>
<CAPTION>
REGIONAL EQUITY
EQUITY CAPITAL GROWTH SMALL CAP EQUITY INCOME
FUND FUND BALANCED FUND FUND FUND FUND
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B
CLASSIC SHARES CLASSIC SHARES CLASSIC SHARES CLASSIC SHARES CLASSIC SHARES CLASSIC SHARES
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES(1)
Maximum Sales Load
Imposed on
Purchases (as a
percentage of
offering
price).......... 4.50% 0% 4.50% 0% 4.50% 0% 4.50% 0% 4.50% 0% 4.50% 0%
Maximum Sales Load
Imposed on
Reinvested
Dividends (as a
percentage of
offering
price).......... 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Deferred Sales
Load (as a
percentage of
original
purchase price
or redemption
proceeds, as
applicable)..... 0% 5.00% 0% 5.00% 0% 5.00% 0% 5.00% 0% 5.00% 0% 5.00%
Redemption Fees
(as a percentage
of amount
redeemed, if
applicable)(2)... 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Exchange Fee...... $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
ANNUAL FUND
OPERATING EXPENSES
(as a percentage
of net assets)
Management
Fees.......... .80% .80% .80% .80% .80%(3) .80%(3) .80% .80% .90% .90% .80% .80%
12b-1 Fees...... .00% 1.00% .00% 1.00% .00% 1.00% .00% 1.00% .00% 1.00% .00% 1.00%
Shareholder
Servicing
Fees.......... .25% .00% .25% .00% .25% .00% .25% .00% .25% .00% .25% .00%
Other Expenses
(after
voluntary fee
reduction)(4)... .22% .22% .25% .25% .24% .24% .27% .27% .27% .27% .27% .27%
------- ------- ------ ------ ----- ----- ------- ------- ------ ------ ----- -----
Total Fund
Operating
Expenses(5)
(after
voluntary fee
reduction).... 1.27% 2.02% 1.30% 2.05% 1.29% 2.04% 1.32% 2.07% 1.42% 2.17% 1.32% 2.07%
======= ======= ====== ====== ===== ===== ======= ======= ====== ====== ===== =====
</TABLE>

- ------------
(1) Financial Institutions may charge a Customer's (as defined in the
Prospectus) account fees for automatic investment and other cash management
services provided in connection with investment in the Funds. (See "HOW TO
PURCHASE AND REDEEM SHARES--Purchases of Shares.")
(2) A wire redemption charge is deducted from the amount of a wire redemption
payment made at the request of a shareholder. (See "HOW TO PURCHASE AND
REDEEM SHARES--Redemption by Telephone.")
(3) Amounts have been restated to reflect current fees.
(4) Absent the voluntary reduction of administration fees, Other Expenses would
be 0.31% for the Equity Fund, 0.33% for the Regional Equity Fund and 0.31%
for the Balanced Fund. Other Expenses for the Capital Growth Fund, Small Cap
Fund, and Equity Income Fund are based on estimates for the current fiscal
year.
(5) In the absence of any voluntary reduction of administration fees, Total Fund
Operating Expenses for the Classic Shares would be 1.36% for the Equity
Fund, 1.38% for the Regional Equity Fund and 1.36% for the Balanced Fund. In
the absence of any voluntary reduction of administration fees, Total Fund
Operating Expenses for the Class B Shares would be 2.11% for the Equity
Fund, 2.13% for the Regional Equity Fund and 2.11% for the Balanced Fund.

3
<PAGE> 4

EXAMPLE:

You would pay the following expenses on a $1,000 investment in Classic Shares,
assuming (1) 5% annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Fund.............................................................. $ 57 $83 $ 112 $191
Regional Equity Fund..................................................... $ 58 $84 $ 113 $195
Balanced Fund............................................................ $ 58 $84 $ 113 $194
Capital Growth Fund...................................................... $ 58 $85 N/A N/A
Small Cap Fund........................................................... $ 59 $88 N/A N/A
Equity Income Fund....................................................... $ 58 $85 N/A N/A
</TABLE>

- ------------

You would pay the following expenses on a $1,000 investment in Class B Shares,
assuming (1) deduction of the applicable Contingent Deferred Sales Charge; and
(2) 5% annual return.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Fund
Assuming a complete redemption at end of period........................ $ 71 $ 93 $ 129 $216
Assuming no redemption................................................. $ 21 $ 63 $ 109 $216
Regional Equity Fund
Assuming a complete redemption at end of period........................ $ 71 $ 94 $ 130 $218
Assuming no redemption................................................. $ 21 $ 64 $ 110 $218
Balanced Fund
Assuming a complete redemption at end of period........................ $ 71 $ 94 $ 130 $217
Assuming no redemption................................................. $ 21 $ 64 $ 110 $217
Capital Growth Fund
Assuming a complete redemption at end of period........................ $ 71 $ 95 N/A N/A
Assuming no redemption................................................. $ 21 $ 65 N/A N/A
Small Cap Fund
Assuming a complete redemption at end of period........................ $ 72 $ 98 N/A N/A
Assuming no redemption................................................. $ 22 $ 68 N/A N/A
Equity Income Fund
Assuming a complete redemption at end of period........................ $ 71 $ 95 N/A N/A
Assuming no redemption................................................. $ 21 $ 65 N/A N/A
</TABLE>

The purpose of the tables above is to assist a potential investor in
understanding the various costs and expenses that an investor in the Classic
Shares or Class B Shares of each Capital Appreciation Fund will bear directly or
indirectly. See "MANAGEMENT OF AMSOUTH MUTUAL FUNDS" for a more complete
discussion of annual operating expenses. THE FOREGOING EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.

Long-term shareholders may pay more than the equivalent of the maximum
front-end sales charges otherwise permitted by NASD Rules.

The information set forth in the foregoing tables and examples relates only to
Classic Shares and Class B Shares. The Trust also offers Premier Shares of each
Capital Appreciation Fund which are subject to the same expenses except that
there are no sales charges nor distribution or shareholder servicing expenses
charged to Premier Shares. (See "MANAGEMENT OF AMSOUTH MUTUAL FUNDS"--
"Investment Advisor" and "Distributor.")

4
<PAGE> 5

FINANCIAL HIGHLIGHTS

The tables below set forth certain financial information concerning the
investment results for each of the Funds for the period from commencement of
operations to January 31, 1997. The information from the commencement of
operations to July 31, 1996 is a part of the financial statements audited by
Coopers & Lybrand L.L.P., independent accountants for the Trust, whose report on
the Trust's financial statements for the year ended July 31, 1996 appears in the
Statement of Additional Information. The information for the period ended
January 31, 1997 is unaudited. The Small Cap Fund, Capital Growth Fund, and
Equity Income Fund had not commenced operations as of January 31, 1997. Further
financial data is incorporated by reference into in the Statement of Additional
Information.

<TABLE>
<CAPTION>
EQUITY FUND
------------------------------------------------------------------------ DECEMBER 1,
YEAR ENDED JULY 31, 1988 TO
------------------------------------------------------------------------ JULY 31,
1996 1995 1994 1993 1992 1991 1990 1989(A)
SIX MONTHS -------- -------- -------- -------- -------- ------- ------- -----------
ENDED
JANUARY 31,
1997
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD... $ 17.62 $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57 $ 11.99 $ 12.18 $ 10.00
----------- -------- -------- -------- -------- -------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment
income.............. 0.16 0.33 0.33 0.28 0.28 0.32 0.36 0.37 0.22
Net realized and
unrealized gains
from investments.... 2.30 1.48 2.39 0.83 1.48 1.20 0.61 (0.17) 2.16
----------- -------- -------- -------- -------- -------- ------- ------- -------
Total from Investment
Activities.......... 2.46 1.81 2.72 1.11 1.76 1.52 0.97 0.20 2.38
----------- -------- -------- -------- -------- -------- ------- ------- -------
DISTRIBUTIONS
Net investment
income.............. (0.17) (0.33) (0.32) (0.28) (0.29) (0.33) (0.37) (0.35) (0.20)
Net realized gains.... (1.04) (0.61) (0.47) (0.39) (0.49) (0.36) (0.02) (0.04) --
----------- -------- -------- -------- -------- -------- ------- ------- -------
Total Distributions... (1.21) (0.94) (0.79) (0.67) (0.78) (0.69) (0.39) (0.39) (0.20)
----------- -------- -------- -------- -------- -------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................ $18.87 $ 17.62 $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57 $ 11.99 $ 12.18
=========== ======== ======== ======== ======== ======== ======= ======= =======
Total Return (Excludes
Sales Charge)....... 14.32%(c) 11.09% 19.27% 7.90% 13.81% 12.94% 8.46% 1.66% 24.06%(c)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end of
period (000)........ $ 419,009 $374,622 $275,757 $205,611 $153,074 $107,934 $32,406 $14,383 $ 5,476
Ratio of expenses to
average net
assets.............. 1.01%(b) 1.02% 1.03% 0.94% 0.95% 1.01% 1.15% 1.11% 1.16%(b)
Ratio of net
investment income to
average net
assets.............. 1.71%(b) 1.86% 2.17% 1.93% 2.08% 2.50% 3.16% 3.16% 2.91%(b)
Ratio of expenses to
average net
assets*............. 1.09%(b) 1.11% 1.11% 1.11% 1.13% 1.15% 1.26% 1.41% 2.34%(b)
Ratio of net
investment income to
average net
assets*............. 1.63%(b) 1.77% 2.09% 1.76% 1.90% 2.36% 3.04% 2.86% 1.73%(b)
PORTFOLIO TURNOVER..... 11.94% 19.11% 19.46% 11.37% 15.12% 113.12% 15.78% 14.89% 4.03%
Average commission
rate paid(d)........ $ 0.0668 $ 0.0700 -- -- -- -- -- -- --
</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.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.

5
<PAGE> 6

SIX MONTHS REGIONAL EQUITY FUND
ENDED ----------------------------------------------------------------- DECEMBER 1,
JANUARY 31, YEAR ENDED JULY 31, 1988 TO
1997 ----------------------------------------------------------------- JULY 31,
----------- 1996 1995 1994 1993 1992 1991 1990 1989(A)
(UNAUDITED) ------- ------- ------- ------- ------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD............... $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86 $ 13.44 $12.45 $11.64 $ 10.00
----------- ------- ------- ------- ------- ------- ------ ------ -------
INVESTMENT ACTIVITIES
Net investment income... 0.15 0.26 0.23 0.23 0.19 0.23 0.26 0.23 0.14
Net realized and
unrealized gains from
investments........... 3.79 2.20 2.26 0.58 2.09 2.34 1.20 0.84 1.64
----------- ------- ------- ------- ------- ------- ------ ------ -------
Total from Investment
Activities............ 3.94 2.46 2.49 0.81 2.28 2.57 1.46 1.07 1.78
----------- ------- ------- ------- ------- ------- ------ ------ -------
DISTRIBUTIONS
Net investment income... (0.15) (0.26) (0.23) (0.23) (0.20) (0.23) (0.26) (0.22) (0.14)
Net realized gains...... (0.49) (0.19) -- (0.41) (0.20) (0.92) (0.21) (0.04) --
------- -------
In excess of net
realized gains........ -- -- -- (0.23) -- -- -- -- --
----------- ------- ------- ------- ------- ------- ------ ------ -------
Total Distributions..... (0.64) (0.45) (0.23) (0.87) (0.40) (1.15) (0.47) (0.26) (0.14)
----------- ------- ------- ------- ------- ------- ------ ------ -------
NET ASSET VALUE, END OF
PERIOD.................. $24.25 $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86 $13.44 $12.45 $ 11.64
=========== ======= ======= ======= ======= ======= ====== ====== =======
Total Return (Excludes
Sales Charge)......... 18.96%(c) 13.10% 15.10% 4.87% 15.53% 20.66% 12.52% 9.41% 17.79%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of
period (000).......... $ 120,448 $93,584 $68,501 $54,744 $41,347 $15,707 $7,853 $3,161 $ 2,523
Ratio of expenses to
average net assets.... 1.03%(b) 1.05% 1.07% 0.79% 0.80% 0.91% 0.79% 1.22% 1.41%(b)
Ratio of net investment
income to average net
assets................ 1.22%(b) 1.30% 1.35% 1.36% 1.17% 1.61% 2.21% 1.92% 1.98%(b)
Ratio of expenses to
average net assets*... 1.11%(b) 1.13% 1.15% 1.24% 1.28% 1.36% 1.58% 2.32% 2.65%(b)
Ratio of net investment
income to average net
assets*............... 1.14%(b) 1.22% 1.27% 0.90% 0.69% 1.16% 1.42% 0.82% 0.74%(b)
PORTFOLIO TURNOVER........ 7.45% 8.22% 14.25% 5.83% 10.22% 24.99% 14.41% 14.00% 1.13%
Average commission rate
paid(d)................. $0.0829 $0.0827 -- -- -- -- -- -- --
</TABLE>

- ------------

6
<PAGE> 7

BALANCED FUND
-----------------------------------------------
SIX MONTHS DECEMBER 19,
ENDED YEAR ENDED JULY 31, 1991 TO
JANUARY 31, ----------------------------------------------- JULY 31,
1997 1996 1995 1994 1993 1992(A)
----------- -------- -------- -------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 13.03 $ 12.76 $ 11.81 $ 11.86 $ 11.12 $ 10.00
-------- -------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income.............. 0.25 0.47 0.47 0.42 0.44 0.27
Net realized and unrealized gains
from investments................. 0.99 0.58 1.24 0.18 0.80 1.09
-------- -------- -------- -------- -------- --------
Total from Investment Activities... 1.24 1.05 1.71 0.60 1.24 1.36
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income.............. (0.27) (0.47) (0.46) (0.42) (0.45) (0.24)
Net realized gains................. (0.58) (0.31) (0.30) (0.23) (0.05) --
-------- -------- -------- -------- -------- --------
Total Distributions................ (0.85) (0.78) (0.76) (0.65) (0.50) (0.24)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD....... $ 13.42 $ 13.03 $ 12.76 $ 11.81 $ 11.86 $ 11.12
======== ======== ======== ======== ======== ========
Total Return (Excludes Sales
Charge).......................... 9.73%(c) 8.37% 15.27% 5.13% 11.47% 13.71%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)............................ $ 355,980 $338,425 $295,509 $236,306 $179,134 $143,813
Ratio of expenses to average net
assets........................... 1.02%(b) 0.98% 0.94% 0.84% 0.84% 0.83%(b)
Ratio of net investment income to
average net assets............... 3.62%(b) 3.61% 3.91% 3.56% 3.90% 4.45%(b)
Ratio of expenses to average net
assets*.......................... 1.10%(b) 1.11% 1.12% 1.11% 1.12% 1.17%(b)
Ratio of net investment income to
average net assets*.............. 3.54%(b) 3.48% 3.73% 3.28% 3.62% 4.10%(b)
PORTFOLIO TURNOVER................... 13.57% 20.47% 16.97% 14.43% 11.09% 23.18%
Average commission rate paid(d).... $ 0.0760 $ 0.0773 -- -- -- --
</TABLE>

- ------------

7
<PAGE> 8

<TABLE>
<CAPTION>
EQUITY INCOME FUND
------------------
MARCH 20, 1997
THROUGH
JULY 31, 1997
(UNAUDITED)
------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................... $ 10.00
========
INVESTMENT ACTIVITIES
Net Investment income............................................ 0.07
Net realized and unrealized gains from investments............... 1.71
--------
Total from Investment Activities................................. 1.78
========
DISTRIBUTIONS
Net investment income............................................ (0.06)
Net realized gains............................................... 0.00
--------
Total Distributions.............................................. (0.06)
========
NET ASSET VALUE, END OF PERIOD..................................... $ 11.72
========
Total Return (Excludes Sales Charge)............................... 17.81%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000)................................ $ 22,273
Ratio of expenses to average net assets.......................... 1.28%(b)
Ratio of net investment income to average net assets............. 2.11%(b)
Ratio of expenses to average net assets*......................... 1.49%(b)
Ratio of net investment income to average net assets*............ 1.89%(b)
PORTFOLIO TURNOVER................................................. 27.38%
Average commission rate paid(d).................................. $ 0.0600
</TABLE>

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8
<PAGE> 9

INVESTMENT OBJECTIVES AND POLICIES

The investment objective of a Capital Appreciation Fund may not be changed
without a majority of the outstanding shares of that Fund (as defined in
"GENERAL INFORMATION--Miscellaneous"). There can be no assurance that the
investment objectives of any of the Capital Appreciation Funds will be achieved.

THE EQUITY FUND AND THE REGIONAL EQUITY FUND seek capital growth by investing
primarily in a diversified portfolio of common stock and securities convertible
into common stock, such as convertible bonds and convertible preferred stock. In
the case of the Regional Equity Fund, such securities must be issued by
companies headquartered in the Southern Region of the United States which
includes Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina,
South Carolina, Tennessee and Virginia. The production of current income is an
incidental objective of both the Equity Fund and the Regional Equity Fund.

THE EQUITY INCOME FUND seeks above average income and capital appreciation by
investing primarily in a diversified portfolio of common stocks, preferred
stocks, and securities that are convertible into common stocks, such as
convertible bonds and convertible preferred stock. Under normal market
conditions, the Fund will invest at least 65% of its total assets in
income-producing equity securities including common stock, preferred stock, and
securities convertible into common stocks such as convertible bonds and
convertible preferred stock. The portion of the Fund's total assets invested in
common stock, preferred stock, and convertible securities will vary according to
the Fund's assessment of market and economic conditions and outlook.

The Advisor will seek to invest in equity securities which are believed to
represent investment value. Factors which the Advisor may consider in selecting
equity securities include industry and company fundamentals, historical price
relationships, and/or underlying asset value.

With respect to the Equity, Regional Equity, and Balanced Funds, the Advisor
will use a variety of economic projections, technical analysis, and earnings
projections in formulating individual stock purchase and sale decisions. The
Advisor will select investments that it believes have basic investment value
which will eventually be recognized by other investors, thus increasing their
value to the Funds. In the selection of the investments for the Equity, Regional
Equity, and Balanced Funds, the Advisor may therefore be making investment
decisions which could be contrary to the present expectations of other
professional investors. These decisions may involve greater risks compared to
other mutual funds, of either (a) more accurate assessment by other investors,
in which case losses may be incurred by a Fund, or (b) long delay in investor
recognition of the accuracy of the investment decisions of a Fund, in which case
invested capital of a Capital Appreciation Fund in an individual security

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or group of securities may not appreciate for an extended period.

In managing the Capital Growth Fund and Small Cap Fund, the Advisor will seek
securities with potential to produce above-average earnings growth. Issuers
include companies with a history of above-average growth or companies that are
expected to enter periods of above-average growth or are positioned in emerging
growth industries. Should the expected growth potential of such companies fail
to be realized, a loss may be incurred.

The equity securities in which the Capital Appreciation Funds may invest may
be subject to wider fluctuations in value than some other forms of investment.
Depending upon the performance of a Capital Appreciation Fund's investments, the
net asset value per Share of such Fund may decrease instead of increase.

Each Capital Appreciation Fund may provide current income. The Balanced Fund
and the Equity Income Fund are expected to produce a higher level of current
income than the other Capital Appreciation Funds.

Most companies in which the Equity, Regional Equity, Balanced, Capital Growth,
and Equity Income Funds will invest will be listed on national securities
exchanges. Stocks held by the Small Cap Fund will frequently be traded over the
counter.

THE EQUITY FUND will normally invest at least 80% of the value of its total
assets in common stocks and securities convertible into common stocks, such as
convertible bonds and convertible preferred stocks, believed by the Advisor to
be undervalued. Under normal market conditions, the Equity Fund may also invest
up to 20% of the value of its total assets in preferred stocks, corporate bonds,
notes, and warrants, and obligations with maturities of 12 months or less such
as commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, money market mutual
funds, obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Equity Fund may increase its holdings in short-term obligations to
over 20% of its total assets and may also hold uninvested cash pending
investment. The Fund may also write covered call options. See "Options."

THE REGIONAL EQUITY FUND will normally invest at least 65% of the value of its
total assets in common stocks and securities convertible into common stocks
believed by the Advisor to be undervalued of companies headquartered in the
Southern Region as defined above. Under normal market conditions, the Regional
Equity Fund may also invest up to 35% of the value of its total assets in common
stocks and securities convertible into common stock of companies headquartered
outside the Southern Region, preferred stocks, corporate bonds, notes, and
warrants, and obligations with maturities of 12 months or less such as
commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, money market mutual
funds, obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Regional Equity Fund may increase its holdings in short-term
obligations to over 35% of its total assets and may also hold uninvested cash
pending investment. The Regional Equity Fund may also write covered call
options. See "Options."

The Regional Equity Fund will normally invest at least 65% of the value of its
total assets in common stock and securities convertible into common stock of
companies headquartered in the Southern Region. There can be no assurance that
the economy of the Southern Region or the companies headquartered in the
Southern Region will grow in the future or that a company headquartered in the
Southern Region whose assets, revenues or employees are located substantially
outside of the Southern Region will share in any economic growth of the Southern
Region. Additionally, any localized negative economic factors or possible
physical disasters in the

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<PAGE> 11

Southern Region area could have a much greater impact on the Regional Equity
Fund's assets than on similar funds whose investments are geographically more
diverse.

THE BALANCED FUND will normally invest in equity securities consisting of
common stocks but may also invest in other equity-type securities such as
warrants, preferred stocks and convertible debt instruments. The Fund's equity
investments will be in companies with a favorable outlook and believed by the
Advisor to be undervalued. The Balanced Fund's debt securities will consist of
securities such as bonds, notes, debentures and money market instruments. The
average dollar-weighted portfolio maturity of debt securities held by the
Balanced Fund will vary according to market conditions and interest rate cycles
and will range between 1 year and 30 years under normal market conditions. The
Balanced Fund's debt securities will consist of high grade securities, which are
those securities rated in one of the three highest rating categories by a
nationally recognized statistical rating organization (an "NRSRO") at the time
of purchase, or if not rated, found the by the Advisor under guidelines
established by the Trust's Board of Trustees to be of comparable quality. (For a
further description of these bond ratings, see the Appendix to the Trust's
Statement of Additional Information.) In the event that the rating of any debt
securities held by the Balanced Fund falls below the third highest by an NRSRO
the Fund will not be obligated to dispose of such obligations and may continue
to hold such obligations if, in the opinion of the Advisor, such investment is
considered appropriate under the circumstances. The Balanced Fund may also write
covered call options. See "Options."

It is a fundamental policy of the Balanced Fund that it will invest at least
25% of its total assets in fixed-income securities. For this purpose,
fixed-income securities include debt securities, preferred stock and that
portion of the value of securities convertible into common stock, including
convertible preferred stock and convertible debt, which is attributable to the
fixed-income characteristics of those securities.

The portion of the Balanced Fund's assets invested in equity and debt
securities will vary in accordance with economic conditions, the general level
of common stock prices, interest rates and other relevant considerations,
including the risks associated with each investment medium. Although the
Balanced Fund seeks to reduce the risks associated with any one investment
medium by utilizing a variety of investments, performance will depend upon
additional factors such as timing and mix and the ability of the Advisor to
judge and react to changing market conditions.

THE CAPITAL GROWTH FUND will normally invest at least 65% of the value of its
total assets in common stocks and securities convertible into common stocks,
such as convertible bonds and convertible preferred stocks, believed by the
Advisor to have attractive potential for growth. Under normal market conditions,
the Capital Growth Fund may also invest up to 35% of the value of their total
assets in preferred stocks, corporate bonds, notes, and warrants, and
obligations with maturities of 12 months or less such as commercial paper
(including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, money market mutual funds,
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Capital Growth Fund may increase its holdings in short-term
obligations to over 35% of their total assets and may also hold uninvested cash
pending investment. The Capital Growth Fund may also write covered call options.
See "Options."

THE SMALL CAP FUND will normally invest at least 65% of its total assets in
common stocks and securities convertible into common stocks such as convertible
bonds and convertible preferred stock of companies with a market capitalization
of less than $1 billion determined at the time the security is purchased. Under
normal market conditions, the Small Cap Fund may invest up to 35% of the value
of its total assets in common stocks and securities convertible into common
stocks of companies with a

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<PAGE> 12

market capitalization of greater than $1 billion determined at the time the
security is purchased, preferred stocks, corporate bonds, notes, and warrants,
and obligations with maturities of 12 months or less such as commercial paper
(including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, money market mutual funds,
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Small Cap Fund may increase its holdings in short-term obligations
to over 35% of its total assets and may also hold uninvested cash pending
investment. The Small Cap Fund may also write covered call options. See
"Options."

While small capital company securities may offer a greater capital
appreciation potential than investments in mid- or large-cap company securities,
they may also present greater risks. Small capital company securities tend to be
more sensitive to changes in earnings expectations and have lower trading
volumes than mid-to large-cap company securities and, as a result, they may
experience more abrupt and erratic price movements. Any current income produced
by a security is not a primary factor in the selection of investments.

The Small Cap Fund may also invest in investment grade debt securities, that
is, securities rated "BBB" or higher by an NRSRO at the time of purchase. If the
rating of a security falls below investment grade, the Advisor will consider
whatever action is appropriate consistent with the Fund's investment objectives
and policies. See the Appendix to the Statement of Additional Information for a
discussion of rating categories.

The Small Cap Fund is managed in accordance with a value philosophy. This
approach consists of developing a diversified portfolio of securities consistent
with the Fund's investment objective and selected primarily on the basis of the
Advisor's judgment that the securities have an underlying value, or potential
value, which exceeds their current prices. The basis and quantification of the
economic worth, or basic value of individual companies reflects the Advisor's
assessment of a company's assets and the company's prospects for earning growth
over the next 1 1/2-to-3 years. The Advisor relies primarily on the knowledge,
experience and judgment of its own research staff, but also receives and uses
information from a variety of outside sources, including brokerage firms,
electronic data bases, specialized research firms and technical journals.

THE EQUITY INCOME FUND will normally invest at least 65% of the value of its
total assets in income-producing equity securities such as common stocks,
preferred stocks, and securities convertible into common stocks, such as
convertible bonds and convertible preferred stocks. The portion of the Fund's
total assets invested in common stocks, preferred stocks, and convertible
securities will vary according to the Sub-Advisor's assessment of market and
economic conditions and outlook. Under normal market conditions, the Equity
Income Fund may also invest up to 35% of the value of its total assets in
corporate bonds, notes, and warrants, and obligations with maturities of 12
months or less such as commercial paper (including variable amount master demand
notes), bankers' acceptances, certificates of deposit, repurchase agreements,
money market mutual funds, obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, and demand and time deposits of
domestic and foreign banks and savings and loan associations. If deemed
appropriate for temporary defensive purposes, the Equity Income Fund may
increase its holdings in short-term obligations to over 35% of its total assets
and may also hold uninvested cash pending investment. The Equity Income Fund may
also write covered call options. See "Options."

The Equity Income Fund's stock selection emphasizes those common stocks in
each sector that have good value, attractive yield, and dividend growth
potential. The Fund will utilize convertible securities because such securities
typically offer higher yields and good potential for capital appreciation.

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FOREIGN INVESTMENTS

Each of the Capital Appreciation Funds may invest in foreign securities
through the purchase of American Depository Receipts or the purchase of
securities on the Toronto Stock Exchange, but will not do so if immediately
after a purchase and as a result of the purchase the total value of such foreign
securities owned by such Fund would exceed 25% (20% for the Balanced Fund) of
the value of the total assets of such Fund. Each of the Capital Appreciation
Funds may also invest in securities issued by foreign branches of U.S. banks and
foreign banks and in Canadian Commercial Paper and Europaper. Investment in
foreign securities is subject to special risks, such as future adverse political
and economic developments, possible seizure, currency blockage, nationalization,
or expropriation of foreign investments, less stringent disclosure requirements,
the possible establishment of exchange controls or taxation at the source and
the adoption of other foreign governmental restrictions. Additional risks
include currency exchange risks, less publicly available information, the risk
that companies may not be subject to the accounting, auditing and financial
reporting standards and requirements of U.S. companies, the risk that foreign
securities markets may have less volume and therefore less liquidity and greater
price volatility than U.S. securities, and the risk that custodian and brokerage
costs may be higher.

CONVERTIBLE SECURITIES

Each of the Capital Appreciation Funds may invest in convertible securities.
Convertible securities are fixed income-securities which may be exchanged or
converted into a predetermined number of the issuer's underlying common stock at
the option of the holder during a specified time period. Convertible securities
may take the form of convertible preferred stock, convertible bonds or
debentures, units consisting of "usable" bonds and warrants or a combination of
the features of several of these securities. Each Capital Appreciation Fund
other than the Balanced Fund may invest in convertible securities rated "BBB" or
higher by an NRSRO at the time of investment, or if unrated, of comparable
quality. The Equity Income Fund may invest in convertible securities rated "BB"
or lower by an NRSRO at the time of investment, or if unrated, of comparable
quality. The Balanced Fund may invest in convertible securities rated "A" or
higher by an NRSRO or, if unrated, of comparable quality. If a convertible
security falls below these minimum ratings after a Fund has purchased it, a Fund
is not required to drop the convertible bond from its portfolio, but will
consider appropriate action. The investment characteristics of each convertible
security vary widely, which allows convertible securities to be employed for
different investment objectives.

Securities which are rated "BB" or lower by Standard & Poor's or "Ba" or lower
by Moody's either have speculative characteristics or are speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligations. A description of the rating categories is contained in
the Appendix to the Statement of Additional Information. There is no lower limit
with respect to rating categories for convertible securities in which the Equity
Income Fund may invest.

Corporate debt obligations that are not determined to be investment-grade are
high-yield, high-risk bonds, typically subject to greater market fluctuations
and greater risk of loss of income and principal due to an issuer's default. To
a greater extent than investment-grade securities, lower rated securities tend
to reflect short-term corporate, economic and market developments, as well as
investor perceptions or the issuer's credit quality. Because investments in
lower rated securities involve greater investment risk, achievement of the
Equity Income Fund's investment objective may be more dependent on the
Sub-Advisor's credit analysis than would be the case if the Equity Income Fund
were investing in higher rated securities. High yield securities may be more
susceptible to real or perceived adverse economic and competitive industry
conditions than investment grade securities. A projection of an economic
downturn, for example, could cause a decline in high yield prices because the
advent of a recession could lessen the ability of a highly leveraged company to
make principal and interest pay-

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<PAGE> 14

ments on its debt securities. In addition, the secondary trading market for high
yield securities may be less liquid than the market for higher grade securities.
The market prices of debt securities also generally fluctuate with changes in
interest rates so that the Equity Income Fund's net asset value can be expected
to decrease as long-term interest rates rise and to increase as long-term rates
fall. In addition, lower rated securities may be more difficult to dispose of or
to value than high-rated, lower-yielding securities. The Sub-Advisor attempts to
reduce the risks described above through diversification of the portfolio and by
credit analysis of each issuer as well as by monitoring broad economic trends
and corporate and legislative developments.

Convertible bonds and convertible preferred stocks are fixed-income securities
that generally retain the investment characteristics of fixed-income securities
until they have been converted but also react to movements in the underlying
equity securities. The holder is entitled to receive the fixed-income of a bond
or the dividend preference of a preferred stock until the holder elects to
exercise the conversion privilege. Usable bonds are corporate bonds that can be
used in whole or in part, customarily at full face value, in lieu of cash to
purchase the issuer's common stock. When owned as part of a unit along with
warrants, which are options to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bond's maturity. Convertible securities are senior to equity securities, and,
therefore, have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar non-convertible securities of the same
company. The interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with generally higher yields than
common stocks, but lower than non-convertible securities of similar quality.

The Capital Appreciation Funds will exchange or convert the convertible
securities held in portfolio into shares of the underlying common stock in
instances in which, in the opinion of the Advisor or Sub-Advisor, the investment
characteristics of the underlying common shares will assist a Fund in achieving
its investment objectives. Otherwise, a Fund will hold or trade the convertible
securities. In selecting convertible securities for a Fund, the Advisor or
Sub-Advisor evaluates the investment characteristics of the convertible security
as a fixed income instrument, and the investment potential of the underlying
equity security for capital appreciation. In evaluating these matters with
respect to a particular convertible security, the Advisor or Sub-Advisor
considers numerous factors, including the economic and political outlook, the
value of the security relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's management capability and
practices.

As with all debt securities, the market values of convertible securities tend
to increase when interest rates decline and, conversely, tend to decline when
interest rates increase.

WHEN-ISSUED SECURITIES

Each of the Capital Appreciation Funds may also purchase securities on a
"when-issued" basis. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and yield, and
thereby involve a risk that the yield obtained in the transaction will be less
than those available in the market when delivery takes place. The Capital
Appreciation Funds will generally not pay for such securities or start earning
interest on them until they are received. When a Capital Appreciation Fund
agrees to purchase securities on a "when-issued" basis, the Trust's custodian
will set aside cash or liquid securities equal to the amount of the commitment
in a segregated account. Securities purchased on a "when-issued" basis are
recorded as an asset and are subject to changes in value based upon changes in
the general level of interest rates. Each of the Capital Appreciation Funds
expects that commitments to purchase "when-issued" securities will not exceed
25% of the value of its total assets under normal market conditions, and that a
commitment to purchase "when-issued" securities will not exceed 60 days. In the
event its commitment to purchase "when-issued" securities ever exceeded 25% of
the

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value of its total assets, a Capital Appreciation Fund's liquidity and the
Advisor's or Sub-Advisor's ability to manage it might be adversely affected. The
Capital Appreciation Funds do not intend to purchase "when-issued" securities
for speculative purposes, but only for the purpose of acquiring portfolio
securities.

OPTIONS

Each of the Capital Appreciation Funds may engage in writing call options from
time to time as the Advisor or Sub-Advisor deems to be appropriate. Options are
written solely as covered call options (options on securities owned by the
Fund). Such options must be issued by the Options Clearing Corporation and may
or may not be listed on a national securities exchange. In order to close out an
option position, a Capital Appreciation Fund will enter into a "closing purchase
transaction"--the purchase of a call option on the same security with the same
exercise price and expiration date as any call option which it may previously
have written on any particular securities. When the portfolio security is sold,
the Capital Appreciation Fund effects a closing purchase transaction so as to
close out any existing call option on that security. If the Capital Appreciation
Fund is unable to effect a closing purchase transaction, it will not be able to
sell the underlying security until the option expires or the Capital
Appreciation Fund delivers the underlying security upon exercise. When writing a
covered call option, a Capital Appreciation Fund, in return for the premium,
gives up the opportunity for profit from a price increase in the underlying
security above the exercise price, but retains the risk of loss should the price
of the security decline.

The Balanced Fund may purchase put options from time to time as the Advisor
deems to be appropriate. A put is a right to sell a specified security (or
securities) within a specified period of time at a specified exercise price.
Puts may be acquired by the Balanced Fund to facilitate the liquidity of the
portfolio assets. Puts may also be used to facilitate the reinvestment of assets
at a rate of return more favorable than that of the underlying security. The
Balanced Fund may sell, transfer, or assign a put only in conjunction with the
sale, transfer, or assignment of the underlying security or securities. The
amount payable to the Balanced Fund upon its exercise of a "put" is normally (i)
the Balanced Fund's acquisition cost of the securities subject to the put
(excluding any accrued interest which the Fund paid on the acquisition), less
any amortized market premium or plus any accreted market or original issue
discount during the period the Balanced Fund owned the securities, plus (ii) all
interest accrued on the securities since the last interest payment date during
that period. The Balanced Fund will generally acquire puts only where the puts
are available without the payment of any direct or indirect consideration.
However, if necessary or advisable, the Fund may pay for puts either separately
in cash or by paying a higher price for portfolio securities which are acquired
subject to the puts (thus reducing the yield to maturity otherwise available for
the same securities). The Balanced Fund intends to enter into puts only with
dealers, banks, and broker-dealers which, in the Advisor's opinion, present
minimal credit risks.

REPURCHASE AGREEMENTS

Securities held by the Capital Appreciation Funds may be subject to repurchase
agreements. If the seller under a repurchase agreement were to default on its
repurchase obligation or become insolvent, the Capital Appreciation Fund would
suffer a loss to the extent that the proceeds from a sale of the underlying
portfolio securities were less than the repurchase price under the agreement, or
to the extent that the disposition of such securities by the Capital
Appreciation Fund were delayed pending court action. Additionally, if the seller
should be involved in bankruptcy or insolvency proceedings, the Capital
Appreciation Fund may incur delay and costs in selling the underlying security
or may suffer a loss of principal and interest if the Capital Appreciation Fund
is treated as an unsecured creditor and required to return the underlying
security to the seller's estate.

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REVERSE REPURCHASE AGREEMENTS

Each of the Capital Appreciation Funds may borrow funds for temporary purposes
by entering into reverse repurchase agreements in accordance with the investment
restrictions described below. Pursuant to such agreements, a Capital
Appreciation Fund would sell portfolio securities to financial institutions such
as banks and broker-dealers, and agree to repurchase them at a mutually
agreed-upon date and price. Reverse repurchase agreements involve the risk that
the market value of the securities sold by a Capital Appreciation Fund may
decline below the price at which the Fund is obligated to repurchase the
securities.

REAL ESTATE INVESTMENT TRUSTS

The Capital Growth Fund, Small Cap Fund, and Equity Income Fund may invest in
real estate investment trusts. Real estate investment trusts are sensitive to
factors such as changes in real estate values and property taxes, interest
rates, cash flow of underlying real estate assets, overbuilding, and the
management skill and creditworthiness of the issuer. Real estate may also be
affected by tax and regulatory requirements, such as those relating to the
environment.

OTHER INVESTMENT PRACTICES

Each Capital Appreciation Fund may invest up to 5% of the value of its total
assets in the securities of any one money market mutual fund including Shares of
the AmSouth Prime Obligations Fund and the AmSouth U.S. Treasury Fund (the
"AmSouth Money Market Funds"), provided that no more than 10% of a Capital
Appreciation Fund's total assets may be invested in the securities of money
market mutual funds in the aggregate. In order to avoid the imposition of
additional fees as a result of investments by the Capital Appreciation Funds in
the AmSouth Money Market Funds, the Advisor and the Administrator will reduce
that portion of their usual service fees from each Capital Appreciation Fund by
an amount equal to their service fees from the AmSouth Money Market Funds that
are attributable to those Capital Appreciation Fund investments. The Advisor and
the Administrator will promptly forward such fees to the Capital Appreciation
Funds. Each Capital Appreciation Fund will incur additional expenses due to the
duplication of expenses as a result of investing in securities of other
unaffiliated money market mutual funds. Additional restrictions regarding the
Capital Appreciation Funds' investments in the securities of an unaffiliated
money market fund and/or the AmSouth Prime Obligations Fund and the AmSouth U.S.
Treasury Fund are contained in the Statement of Additional Information.

In order to generate additional income, each Capital Appreciation Fund may,
from time to time, lend its portfolio securities to broker-dealers, banks or
institutional borrowers of securities which are not affiliated directly or
indirectly with the Trust. While the lending of securities may subject a Capital
Appreciation Fund to certain risks, such as delays or the inability to regain
the securities in the event the borrower were to default on its lending
agreement or enter into bankruptcy, the Capital Appreciation Fund will receive
100% collateral in the form of cash or other liquid securities. This collateral
will be valued daily by the Advisor or Sub-Advisor and should the market value
of the loaned securities increase, the borrower will furnish additional
collateral to the Capital Appreciation Fund. During the time portfolio
securities are on loan, the borrower pays the Capital Appreciation Fund any
dividends or interest paid on such securities. Loans are subject to termination
by the Capital Appreciation Funds or the borrower at any time. While the Capital
Appreciation Funds do not have the right to vote securities on loan, the Capital
Appreciation Funds intend to terminate the loan and regain the right to vote if
that is considered important with respect to the investment. The Capital
Appreciation Funds will only enter into loan arrangements with broker-dealers,
banks or other institutions which the Advisor or Sub-Advisor has determined are
creditworthy under guidelines established by the Trust's Board of Trustees.

Each Capital Appreciation Fund may engage in the technique of short-term
trading. Such trading involves the selling of securities held for a short

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<PAGE> 17

time, ranging from several months to less than a day. The object of such
short-term trading is to increase the potential for capital appreciation and/or
income of the Capital Appreciation Fund in order to take advantage of what the
Advisor or Sub-Advisor believes are changes in market, industry or individual
company conditions or outlook. Any such trading would increase the turnover rate
of a Capital Appreciation Fund and its transaction costs.

Each Capital Appreciation Fund will not invest more than 15% of its net assets
in time deposits with maturities in excess of seven days which are subject to
penalties upon early withdrawal.

The portfolio turnover of each Capital Appreciation Fund may vary greatly from
year to year as well as within a particular year. High turnover rates will
generally result in higher transaction costs and higher levels of taxable
realized gains to the Fund's shareholders. Portfolio turnover for the Capital
Growth Fund, Small Cap Fund, and Equity Income Fund is not expected to exceed
200% in the coming year.

INVESTMENT RESTRICTIONS

Each of the Capital Appreciation Funds is subject to a number of investment
restrictions that may be changed only by a vote of a majority of the outstanding
shares of that Fund (see "GENERAL INFORMATION--Miscellaneous" in this
prospectus).

No Capital Appreciation Fund may:

1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, if,
immediately after such purchase, more than 5% of the value of such Capital
Appreciation Fund's total assets would be invested in such issuer, or such
Capital Appreciation Fund would hold more than 10% of any class of securities of
the issuer or more than 10% of the outstanding voting securities of the issuer,
except that up to 25% of the value of each Capital Appreciation Fund's total
assets may be invested without regard to such limitations. There is no limit to
the percentage of assets that may be invested in U.S. Treasury bills, notes, or
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

2. Purchase any securities which would cause 25% or more of the value of such
Capital Appreciation Fund's total assets at the time of purchase to be invested
in securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation with
respect to obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities and repurchase agreements secured by obligations
of the U.S. Government or its agencies or instrumentalities; (b) wholly-owned
finance companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents; and (c) utilities will be divided according to their services. For
example, gas, gas transmission, electric and gas, electric, and telephone will
each be considered a separate industry.

3. Borrow money or issue senior securities, except that each Capital
Appreciation Fund may borrow from banks or enter into reverse repurchase
agreements for temporary purposes in amounts up to 10% of the value of its total
assets at the time of such borrowing; or mortgage, pledge, or hypothecate any
assets, except in connection with any such borrowing and in amounts not in
excess of the lesser of the dollar amounts borrowed or 10% of the value of such
Capital Appreciation Fund's total assets at the time of its borrowing. A Capital
Appreciation Fund will not purchase securities while borrowings (including
reverse repurchase agreements) in excess of 5% of its total assets are
outstanding.

4. Make loans, except that each Capital Appreciation Fund may purchase or hold
debt securities and lend portfolio securities in accordance with its investment
objective and policies, and may enter into repurchase agreements.

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VALUATION OF SHARES

The net asset value of each Capital Appreciation Fund is determined and its
Shares are priced as of 4:00 p.m., Eastern Time (the "Valuation Time") on each
Business Day of such Fund. As used herein a "Business Day" constitutes any day
on which the New York Stock Exchange (the "NYSE") is open for trading and the
Federal Reserve Bank of Atlanta is open, except days on which there are not
sufficient changes in the value of the Fund's portfolio securities that the
Fund's net asset value might be materially affected, or days during which no
Shares are tendered for redemption and no orders to purchase Shares are
received. Currently, either the NYSE or the Federal Reserve Bank of Atlanta is
closed on the customary national business holidays of New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day.
Net asset value per Share for purposes of pricing sales and redemptions is
calculated by dividing the value of all securities and other assets belonging to
a Capital Appreciation Fund, less the liabilities charged to that Class, by the
number of the outstanding Shares of that Class. The net asset value per Share of
each Capital Appreciation Fund will fluctuate as the value of its investment
portfolio changes.

The securities in each Capital Appreciation Fund will be valued at market
value. If market quotations are not available, the securities will be valued by
a method which the Board of Trustees of the Trust believes accurately reflects
fair value. For further information about valuation of investments in the
Capital Appreciation Funds, see the Statement of Additional Information.

HOW TO PURCHASE AND REDEEM SHARES

DISTRIBUTOR

Shares in each of the Capital Appreciation Funds are sold on a continuous
basis by the Trust's distributor, BISYS Fund Services (the "Distributor"). The
principal office of the Distributor is 3435 Stelzer Road, Columbus, Ohio 43219.
If you wish to purchase Shares, contact the Trust at (800) 451-8382.

Each Capital Appreciation Fund has been divided into three classes of Shares,
Premier Shares, Classic Shares and Class B Shares. The three classes 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 "Servicing Plan"), which will cause
the Classic Shares to have a higher expense ratio and to pay lower dividends
than those of the Premier Shares, (ii) Class B Shares bear the expense of the
fee under the Trust's Distribution and Shareholder Services Plan (the
"Distribution Plan"), which will cause the Class B Shares to have a higher
expense ratio and to pay a lower dividend than those of the Classic Shares or
Premier Shares, (iii) Classic Shares have certain exclusive voting rights with
respect to the Servicing Plan and Class B Shares have certain exclusive voting
rights with respect to the Distribution Plan, and (iv) Classic Shares are
subject to a front-end sales charge and Class B Shares are subject to a
contingent deferred sales charge. The following investors qualify to purchase
Premier Shares: (i) investors for whom AmSouth acts in a fiduciary, advisory,
custodial, agency or similar capacity through an account with its Trust
Department; (ii) investors who purchase Shares of a Fund through 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 or Class B Shares only.

18
<PAGE> 19

PURCHASES OF CLASSIC SHARES AND CLASS B SHARES

Shares of the Capital Appreciation Funds may be purchased through procedures
established by the Distributor in connection with requirements of qualified
accounts maintained by or on behalf of certain persons ("Customers") by AmSouth
or financial institutions that provide certain administrative support services
for their customers or account holders (collectively, "Financial Institutions").
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 Financial Institution and its Customer are
invested by the Distributor in Shares of the Capital Appreciation Funds. These
procedures may also include transactions whereby AmSouth as agent purchases
Shares of the Capital Appreciation Funds in amounts that correspond to the
market value of securities sold to the Capital Appreciation Funds by AmSouth as
agent.

Shares of the Trust sold to Financial Institutions acting in a fiduciary,
advisory, custodial, agency, or other similar capacity on behalf of Customers
will normally be held of record by the Financial Institutions. With respect to
Shares so sold, it is the responsibility of the particular Financial Institution
to transmit purchase or redemption orders to the Distributor and to deliver
federal funds for purchase on a timely basis. Beneficial ownership of the Shares
will be recorded by the Financial Institutions and reflected in the account
statements provided by the Financial Institutions to Customers.

Depending upon the terms of a particular Customer account, the Financial
Institutions may charge a Customer's account fees for automatic investment and
other cash management services provided in connection with investment in the
Capital Appreciation Funds. Information concerning these services and any
charges can be obtained from the Financial Institutions. This Prospectus should
be read in conjunction with any such information received from the Financial
Institutions.

Investors may also purchase Classic Shares and Class B Shares of a Capital
Appreciation Fund by completing and signing an Account Registration Form and
mailing it, together with a check (or other negotiable bank draft or money
order) in at least the minimum initial purchase amount, payable to the Trust, in
care of AmSouth Mutual Funds, P.O. Box 182733, Columbus, Ohio 43218-2733.
Subsequent purchases of Classic Shares or Class B Shares of a Capital
Appreciation Fund may be made at any time by mailing a check (or other
negotiable bank draft or money order) payable to the Trust, to the above
address.

If an Account Registration Form has been previously received by the
Distributor, investors may also purchase Classic Shares and Class B Shares
either by telephone or by wiring funds to the Trust's custodian. Telephone
orders may be placed by calling the Trust at (800) 451-8382. Payment for Shares
ordered by telephone may be made by check and must be received by the Trust's
custodian within three days of the telephone order. If payment is not received
within three days or a check timely received does not clear, the purchase will
be canceled and the investor could be liable for any losses or fees incurred. In
the case of purchases of Shares effected by wiring funds to the Trust's
custodian, investors must call the Trust at (800) 451-8382 to obtain
instructions regarding the bank account number into which the funds should be
wired and other pertinent information.

Investors may also purchase Classic Shares and Class B Shares by arranging
systematic monthly, bi-monthly or quarterly investments into the Funds with the
Trust's Automatic Investment Plan ("AIP"). The minimum investment amounts are
$50 per transfer and the maximum amount with respect to any transfer is
$100,000. After investors give the Trust proper authorization, their bank
accounts, which must be with banks that are members of the Automated Clearing
House, will be debited accordingly to purchase Shares. Investors will receive a
confirmation from the Trust for every transaction, and a withdrawal will appear
on their bank statements.

To participate in AIP, investors must complete the appropriate sections of the
Account Registration

19
<PAGE> 20

form or call for instructions. This form may be obtained by calling the Trust at
(800) 451-8382. The amount investors specify will automatically be invested in
Shares at the specified Fund's public offering price per Share next determined
after the debit is made.

To change the frequency or amount invested, written instructions must be
received by the Trust at least seven Business Days in advance of the next
transfer. If the bank or bank account number is changed, instructions must be
received by the Trust at least 20 Business Days in advance. In order to change a
bank or bank account number, investors also must have their signature guaranteed
by a bank, broker, dealer, credit union, securities exchange, securities
association, clearing agency or savings association, as those terms are defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934 (an "Eligible
Guarantor Institution"). Signature guarantees are described more fully under
"REDEMPTION BY MAIL" below. If there are insufficient funds in the investor's
designated bank account to cover the Shares purchased using AIP, the investor's
bank may charge the investor a fee or may refuse to honor the transfer
instruction (in which case no Fund Shares will be purchased).

Investors should check with their banks to determine whether they are members
of the Automated Clearing House and whether their banks charge a fee for
transferring funds through the Automated Clearing House. Expenses incurred by
the Funds related to AIP are borne by the Funds and therefore there is no direct
charge by the Funds to investors for use of these services.

Classic Shares and Class B Shares of each Capital Appreciation Fund are
purchased at the public offering price per Share, which is the net asset value
per Share (see "VALUATION OF SHARES") next determined after receipt by the
Distributor of an order in good form to purchase Shares plus the applicable
sales charge at the time of purchase in the case of Classic Shares as described
below. Purchases of Shares of a Capital Appreciation Fund will be effected only
on a Business Day (as defined in "VALUATION OF SHARES") of such Fund. An order
received prior to the Valuation Time on any Business Day will be executed based
on the net asset value determined as of the Valuation Time on the date of
receipt. An order received after the Valuation Time on any Business Day will be
executed based on the net asset value determined as of the next Business Day.

In case of orders for the purchase of Shares placed through a broker-dealer,
the applicable public offering price will be calculated with reference to the
net asset value as so determined, but only if the broker-dealer receives the
order prior to the Valuation Time for that day and transmits it to the
Distributor prior to its close of business that same day (normally 4:00 p.m.
Eastern Time). The broker-dealer is responsible for transmitting such orders by
close of business. If the broker-dealer fails to do so, the investor's right to
that day's closing price must be settled between the investor and the
broker-dealer.

The minimum investment is $1,000 for the initial purchase of Classic Shares
and Class B Shares of a Capital Appreciation Fund by an investor. There is no
minimum investment for subsequent purchases; however, as described above, the
minimum subsequent investment when using AIP is $50 per transfer. The minimum
initial investment amount may be waived if purchases are made in connection with
Individual Retirement Accounts, Keogh plans or similar plans. For information on
IRAs or Keoghs or similar plans, contact AmSouth at 800-451-8382.

The maximum investment is $250,000 for total purchases of Class B Shares.
There is no limit on the amount of Classic Shares that may be purchased.

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.

20
<PAGE> 21

record by Financial Institutions but beneficially owned by a Customer,
confirmations of purchases, exchanges, and redemptions of Classic Shares or
Class B Shares by a Financial Institution will be sent to the Customer by the
Financial Institution. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Shares will not be issued.

SALES CHARGE--CLASSIC SHARES

The public offering price of a Classic Share of a Capital Appreciation Fund
equals its net asset value plus a sales charge. BISYS receives this sales charge
as Distributor and may re-allow a portion of it as dealer discounts and
brokerage commissions. However, BISYS, at its sole discretion, may pay certain
dealers all or part of the portion of the sales charges it receives. A broker or
dealer who receives a reallowance in excess of 90% of the sales charge may be
deemed to be an "underwriter" for purposes of the Securities Act of 1933.

<TABLE>
<CAPTION>
SALES CHARGE AS DEALER
A PERCENTAGE OF SALES CHARGE AS ALLOWANCE
NET AMOUNT A PERCENTAGE OF AS A PERCENTAGE
AMOUNT OF PURCHASE INVESTED OFFERING PRICE OF OFFERING PRICE
- ---------------------------------------------------- --------------- --------------- -----------------
<S> <C> <C> <C>
Less than $50,000................................... 4.71% 4.50% 4.05%
$50,000 but less than $100,000...................... 4.17% 4.00% 3.60%
$100,000 but less than $250,000..................... 3.09% 3.00% 2.70%
$250,000 but less than $500,000..................... 2.04% 2.00% 1.80%
$500,000 but less than $1,000,000................... 1.01% 1.00% .90%
$1,000,000 or more.................................. -0-* -0-* -0-*
</TABLE>

- ---------

* Classic Shares are offered at net asset value without an initial sales
charge but are subject to a Contingent Deferred Sales Charge equal to 1% of
the lesser of the value of the Shares redeemed (exclusive of reinvested
dividends and capital gains distributions) or the total cost of such Shares
in the event of a Share redemption within twelve months following the
purchase of $1 million or more in Classic Shares. The Distributor will
provide additional compensation in an amount up to 1.00% of the offering
price of Classic Shares of the Funds for sales of $1 million to $5 million
and 0.50% for sales over $5 million.

From time to time dealers who receive dealer discounts and broker commissions
from the Distributor may reallow all or a portion of such dealer discounts and
broker commissions to other dealers or brokers.

The sales charges set forth in the table above are applicable to purchases
made at one time by any purchaser (a "Purchaser"), which includes: (i) an
individual, his or her spouse and children under the age of 21; (ii) a trustee
or other fiduciary of a single trust estate or single fiduciary account; or
(iii) any other organized group of persons, whether incorporated or not,
provided that such organization has been in existence for at least six months
and has some purpose other than the purchase of redeemable securities of a
registered investment company. In order to qualify for a lower sales charge, all
orders from a Purchaser will have to be placed through a single investment
dealer and identified at the time of purchase as originating from the same
Purchaser, although such orders may be placed into more than one discrete
account which identifies the Purchasers.

SALES CHARGE WAIVERS

The following classes of investors may purchase Classic Shares of a Capital
Appreciation Fund with no sales charge in the manner described below (which may
be changed or eliminated at any time by the Distributor):

21
<PAGE> 22

(1) Existing Shareholders of a Capital Appreciation Fund upon the reinvestment
of dividend and capital gain distributions;

(2) Officers, trustees, directors, employees and retired employees of the
Trust, AmSouth Bancorporation and its affiliates, and BISYS Fund Services and
its affiliates (and spouses and children of each of the foregoing);

(3) Employees (and their spouses and children under the age of 21) of any
broker-dealer with which the Distributor enters into a dealer agreement to sell
Shares of the Funds;

(4) Investors who purchase Shares of a Fund through a payroll deduction plan;
and

(5) Investors who purchase Shares of a Capital Appreciation Fund through
certain broker-dealers, registered investment advisors and other financial
institutions that have entered into an agreement with the Distributor, which
includes a requirement that such shares be sold for the benefit of clients
participating in a "wrap account," asset allocation or a similar program under
which such clients pay a fee to such broker-dealer, registered investment
advisor or other financial institution.

From time to time, for special promotional purposes, the Distributor may offer
special concessions to enable investors to purchase shares of a Fund offered by
the Trust at net asset value without payment of a front-end charge. To qualify
for a net asset value purchase, the investor must pay for such purchase with the
proceeds from the redemption of shares of a non-affiliated mutual fund on which
a front-end sales charge was paid. A qualifying purchase of shares must occur
within 30 days of prior redemption and must be evidenced by a confirmation of
the redemption transaction. At the time of purchase, the investment
representative must notify the Distributor that the purchase qualifies for a
purchase at net asset value and provide sufficient information to permit
confirmation of qualification. Proceeds from the redemption of shares on which
no front-end sales charge was paid do not qualify for a purchase at net asset
value.

The Distributor may also periodically waive the sales charge for all investors
with respect to any Capital Appreciation Fund.

LETTER OF INTENT

By checking the Letter of Intent box on the account application, a shareholder
becomes eligible for reduced sales charges applicable to the total amount
invested in Classic Shares of a Capital Appreciation Fund over a 13-month period
(beginning up to 90 days prior to the date indicated on the account
application). The Trust's Transfer Agent will hold in escrow 5% of the amount
indicated for payment of the higher sales charge if a shareholder does not
purchase the full amount indicated on the account application. Upon completion
of the total minimum investment specified on the account application, the escrow
will be released, and an adjustment will be made to reflect any reduced sales
charge applicable to shares purchased during the 90-day period prior to
submission of the account application. Additionally, if the total purchases
within the 13-month period exceed the amount specified, an adjustment will be
made to reflect further reduced sales charges applicable to such purchases. All
such adjustments will be made at the conclusion of the 13-month period in the
form of additional shares credited to the shareholder's account at the then
current Public Offering Price applicable to a single purchase of the total
amount of the total purchases. If total purchases are less than the amount
specified, escrowed shares may be involuntarily redeemed to pay the additional
sales charge. Checking a Letter of Intent box does not bind an investor to
purchase, or the Fund to sell, the full amount indicated at the sales load in
effect at the time of signing, but an investor must complete the intended
purchase to obtain the reduced sales load.

For further information about Letters of Intent, interested investors should
contact the Trust at (800) 451-8382. This program, however, may be modified or
eliminated at any time or from time to time by the Distributor without notice.

22
<PAGE> 23

CONCURRENT PURCHASES AND RIGHT OF ACCUMULATION

A Purchaser may qualify for a reduced sales charge by combining concurrent
purchases of Classic Shares of a Capital Appreciation Fund and one or more of
the other Funds of the Trust sold with a sales charge or by combining a current
purchase of Classic Shares of a Capital Appreciation Fund with prior purchases
of Classic Shares of any Fund of the Trust sold subject to a sales charge. The
applicable sales charge is based on the sum of (i) the Purchaser's current
purchase of shares of any Fund sold with a sales charge plus (ii) the then
current net asset value of all Shares held by the Purchaser in any Fund sold
with a sales charge. To receive the applicable public offering price pursuant to
the right of accumulation Shareholders must at the time of purchase provide the
Transfer Agent or the Distributor with sufficient information to permit
confirmation of qualification. Accumulation privileges may be amended or
terminated without notice at any time by the Distributor.

SALES CHARGE--CLASS B SHARES

Class B Shares are not subject to a sales charge when they are purchased, but
are subject to a sales charge (the "Contingent Deferred Sales Charge") if a
Shareholder redeems them prior to the sixth anniversary of purchase. When a
Shareholder purchases Class B Shares, the full purchase amount is invested
directly in the applicable Fund. Class B Shares of each Fund are subject to an
ongoing distribution and shareholder service fee at an annual rate of 1.00% of
such Fund's average daily net assets as provided in the Distribution Plan
(described below under "The Distributor"). This ongoing fee will cause Class B
Shares to have a higher expense ratio and to pay lower dividends than Classic
Shares. Class B Shares convert automatically to Classic Shares after eight
years, commencing from the end of the calendar month in which the purchase order
was accepted under the circumstances and subject to the qualifications described
in this Prospectus.

Proceeds from the Contingent Deferred Sales Charge and the distribution and
shareholder service fees under the Distribution Plan are payable to the
Distributor to defray the expenses of advance brokerage commissions and expenses
related to providing distribution-related and Shareholder services to the Fund
in connection with the sale of the Class B Shares, such as the payment of
compensation to dealers and agents selling Class B Shares. A dealer commission
of 4.00% of the original purchase price of the Class B Shares of the Fund will
be paid to financial institutions and intermediaries. However, the Distributor
may, in its sole discretion, pay a higher dealer commission.

CONTINGENT DEFERRED SALES CHARGE

If the Shareholder redeems Class B Shares prior to the sixth anniversary of
purchase, the Shareholder will pay a Contingent Deferred Sales Charge at the
rates set forth below. The Contingent Deferred Sales Charge is assessed on an
amount equal to the lesser of the then-current market value or the cost of the
Shares being redeemed. Accordingly, no sales charge is imposed on increases in
net asset value above the initial purchase price. In addition, no charge is
assessed on Shares derived from reinvestment of dividends or capital gain
distributions.

The amount of the Contingent Deferred Sales Charge, if any, varies depending
on the number of years from the time of payment for the purchase of Class B
Shares until the time of redemption of such Shares. Solely for purposes of
determining the number of years from the time of any payment for the purchase of
Shares, all payments during a month

23
<PAGE> 24

are aggregated and deemed to have been made on the first day of the month.

<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES CHARGE AS A
YEAR(S) PERCENTAGE OF
SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
- -------- ------------------
<S> <C>
0-1 5.00%
1-2 4.00%
2-3 3.00%
3-4 3.00%
4-5 2.00%
5-6 1.00%
6-7 None
7-8 None
</TABLE>

In determining whether a particular redemption is subject to a Contingent
Deferred Sales Charge, it is assumed that the redemption is first of any Classic
Shares in the Shareholder's Fund account (unless the Shareholder elects to have
Class B Shares redeemed first) or Shares representing capital appreciation, next
of Shares acquired pursuant to reinvestment of dividends and capital gain
distributions, and finally of other Shares held by the Shareholder for the
longest period of time. This method should result in the lowest possible sales
charge.

To provide an example, assume you purchased 100 Shares at $10 per share (a
total cost of $1,000) and prior to the second anniversary after purchase, the
net asset value per share is $12 and during such time you have acquired 10
additional Shares through dividends paid in Shares. If you then make your first
redemption of 50 Shares (proceeds of $600), 10 Shares will not be subject to
charge because you received them as dividends. With respect to the remaining 40
Shares, the charge is applied only to the original cost of $10 per share and not
to the increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds is subject to a Contingent Deferred Sales Charge at a rate
of 4.00% (the applicable rate prior to the second anniversary after purchase).

The Contingent Deferred Sales Charge is waived on redemption of Shares: (i)
following the death or disability (as defined in the Code) of a Shareholder or a
participant or beneficiary of a qualifying retirement plan if redemption is made
within one year of such death or disability; or (ii) to the extent that the
redemption represents a minimum required distribution from an Individual
Retirement Account or other qualifying retirement plan to a Shareholder who has
attained the age of 70 1/2. A Shareholder or his or her representative should
contact the Transfer Agent to determine whether a retirement plan qualifies for
a waiver and must notify the Transfer Agent prior to the time of redemption if
such circumstances exist and the Shareholder is eligible for this waiver. In
addition, the following circumstances are not deemed to result in a "redemption"
of Class B Shares for purposes of the assessment of a Contingent Deferred Sales
Charge, which is therefore waived: (i) plans of reorganization of the Fund, such
as mergers, asset acquisitions and exchange offers to which the Fund is a party;
or (ii) exchanges for Class B Shares of other Funds of the Trust as described
under "Exchange Privilege."

CONVERSION FEATURE

Class B Shares include all Shares purchased pursuant to the Contingent
Deferred Sales Charge which have been outstanding for less than the period
ending eight years after the end of the month in which the shares were
purchased. At the end of this period, Class B Shares will automatically convert
to Classic Shares and will be subject to the lower distribution and Shareholder
service fees charged to Classic Shares. Such conversion will be on the basis of
the relative net asset values of the two classes, without the imposition of any
sales charge, fee or other charge. The conversion is not a taxable event to a
Shareholder.

For purposes of conversion to Classic Shares, shares received as dividends and
other distributions paid on Class B Shares in a Shareholder's Fund account will
be considered to be held in a separate sub-account. Each time any Class B Shares
in a Shareholder's Fund account (other than those in the sub-account) convert to
Classic Shares, a pro-rata portion of the Class B Shares in the sub-account will
also convert to Classic Shares.

24
<PAGE> 25

If a Shareholder effects one or more exchanges among Class B Shares of the
Funds of the Trust during the eight-year period, the Trust will aggregate the
holding periods for the shares of each Fund of the Trust for purposes of
calculating that eight-year period. Because the per share net asset value of the
Classic Shares may be higher than that of the Class B Shares at the time of
conversion, a Shareholder may receive fewer Classic Shares than the number of
Class B Shares converted, although the dollar value will be the same.

ADDITIONAL INFORMATION REGARDING BROKER COMPENSATION

The Distributor, at its expense, will also provide additional compensation to
dealers in connection with sales of Classic Shares and Class B Shares of any of
the Funds. Such compensation will include financial assistance to dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public, advertising campaigns regarding one or more Funds of
the Trust, and/or other dealer-sponsored special events. In some instances, this
compensation will be made available only to certain dealers whose
representatives have sold a significant amount of such Shares. Compensation will
include payment for travel expenses, including lodging, incurred in connection
with trips taken by invited registered representatives and members of their
families to locations within or outside the United States for meetings or
seminars of a business nature. Compensation will also include the following
types of non-cash compensation offered through sales contests: (1) vacation
trips, including the provision of travel arrangements and lodging at luxury
resorts at an exotic location, (2) tickets for entertainment events (such as
concerts, cruises and sporting events) and (3) merchandise (such as clothing,
trophies, clocks and pens). Dealers may not use sales of a Fund's Shares to
qualify for this compensation to the extent such may be prohibited by the laws
of any state or any self-regulatory agency, such as the National Association of
Securities Dealers, Inc. None of the aforementioned compensation is paid for by
any Fund or its Shareholders.

EXCHANGE PRIVILEGE

CLASSIC SHARES

Classic Shares of each Fund may be exchanged for Classic Shares of the other
Funds, provided that the Shareholder making the exchange is eligible on the date
of the exchange to purchase Classic Shares (with certain exceptions and subject
to the terms and conditions described in this prospectus). Classic Shares may
not be exchanged for Class B Shares of the other Funds, and may be exchanged for
Premier Shares of the other Funds only if the Shareholder becomes eligible to
purchase Premier Shares. Shareholders may exchange their Classic Shares for
Classic Shares of a Fund with the same or lower sales charge on the basis of the
relative net asset value of the Classic Shares exchanged. Shareholders may
exchange their Classic Shares for Classic Shares of a Fund with a higher sales
charge by paying the difference between the two sales charges. Shareholders may
also exchange Classic Shares of a Money Market Fund, for which no sales load was
paid, for Classic Shares of a variable net asset value Fund ("Variable NAV
Fund"). Under such circumstances, the cost of the acquired Classic Shares will
be the net asset value per share plus the appropriate sales load. If Classic
Shares of a Money Market Fund were acquired in a previous exchange involving
Shares of a Variable NAV Fund, then such Shares of the Money Market Fund may be
exchanged for Shares of a Variable NAV Fund without payment of any additional
sales load within a twelve month period. Under such circumstances, the
Shareholder must notify the Distributor that a sales load was originally paid.
Depending upon the terms of a particular Customer account, a Participating
Organization may charge a fee with regard to such an exchange. Information about
such charges will be supplied by the Participating Organization.

CLASS B

Class B Shares of each Fund may be exchanged for Class B Shares of the other
Funds on the basis of relative net asset value per Class B Share, without the
payment of any Contingent Deferred Sales Charge which might otherwise be due
upon re-

25
<PAGE> 26

demption of the outstanding Class B Shares. Investors should note that, as of
the date of this prospectus, Class B Shares were not yet being offered in the
Government Income Fund, Limited Maturity Fund, Florida Fund and Municipal Bond
Fund, thus, no exchanges may be effected for Class B Shares of these Funds. For
purposes of computing the Contingent Deferred Sales Charge that may be payable
upon a disposition of the newly acquired Class B Shares, the holding period for
outstanding Class B Shares of the Fund from which the exchange was made is
"tacked" to the holding period of the newly acquired Class B Shares. For
purposes of calculating the eight-year holding period applicable to the newly
acquired Class B Shares, the newly acquired Class B Shares shall be deemed to
have been issued on the date of receipt of the Shareholder's order to purchase
the outstanding Class B Shares of the Fund from which the exchange was made.

Class B Shares may not be exchanged for Classic Shares of the other Funds, and
may be exchanged for Premier Shares of the other Funds only if the Shareholder
becomes eligible to purchase Premier Shares. A Contingent Deferred Sales Charge
will apply as described in "How To Purchase and Redeem Shares" -- "Class B
Shares" to exchanges of Class B Shares for Premier Shares.

ADDITIONAL INFORMATION ABOUT EXCHANGES

An exchange is considered to be a sale of Shares for federal income tax
purposes on which a Shareholder may realize a capital gain or loss. In general,
if a Shareholder exchanges Capital Appreciation Fund Shares for Shares of
another Fund without paying a sales charge, the gain or loss on the sale of the
Capital Appreciation Fund Shares will be calculated without taking into account
the sales charge paid on the Capital Appreciation Fund Shares if the Shares were
held less than 91 days. The sales charge will instead be added to the basis of
the Fund Shares acquired in the exchange. The application of this rule will
increase the gain or reduce the loss that the Shareholder would otherwise
recognize on the exchange of the Shares of the Capital Appreciation Fund.

Before an exchange can be effected, a Shareholder must receive a current
prospectus of the Fund and class into which the Shares are exchanged. An
exchange may be made by calling the Trust at (800) 451-8382 or by mailing
written instructions to the Transfer Agent. Exchange privileges may be exercised
only in those states where Shares of such other Funds of the Trust may legally
be sold, and may be amended or terminated at any time upon sixty (60) days'
notice.

The Trust's exchange privilege is not intended to afford shareholders a way to
speculate on short-term movements in the market. Accordingly, in order to
prevent excessive use of the exchange privilege that may potentially disrupt the
management of the Trust and increase transaction costs, the Trust has
established a policy of limiting excessive exchange activity. Exchange activity
will not be deemed excessive if limited to four substantive exchange redemptions
from a Fund during any calendar year.

AUTO EXCHANGE

AmSouth Mutual Funds Auto Exchange enables Shareholders to make regular,
automatic withdrawals from Classic Shares and Class B Shares of the AmSouth
Prime Obligations Fund and use those proceeds to benefit from
dollar-cost-averaging by automatically making purchases of shares of the same
Class of another AmSouth Mutual Fund. With shareholder authorization, the
Trust's transfer agent will withdraw the amount specified (subject to the
applicable minimums) from the shareholder's Prime Obligations Fund account and
will automatically invest that amount in Classic Shares or Class B Shares of the
AmSouth Mutual Fund designated by the Shareholder at the public offering price
on the date of such deduction. In order to participate in the Auto Exchange,
Shareholders must have a minimum initial purchase of $10,000 in their Prime
Obligations Fund account and maintain a minimum account balance of $1,000.

To participate in the Auto Exchange, Shareholders should complete the
appropriate section of the Account Registration Form, which can be acquired by
calling the Distributor. To change the Auto

26
<PAGE> 27

Exchange instructions or to discontinue the feature, a Shareholder must send a
written request to the AmSouth Mutual Funds, P.O. Box 182733, Columbus, OH
43218-2733. The Auto Exchange may be amended or terminated without notice at any
time by the Distributor.

DIRECTED DIVIDEND OPTION

Shareholders can elect to have dividend distributions (capital gains,
dividends, dividends and capital gains) paid by check or reinvested within the
Fund or reinvested in other AmSouth Mutual Funds of the same shareholder
registration without a sales charge. To participate in the Directed Dividend
Option, a shareholder must maintain a minimum balance of $1,000 in each Fund
into which he or she plans to reinvest dividends.

The Directed Dividend Option may be modified or terminated without notice. In
addition, the Trust may suspend a shareholder's Directed Dividend Option without
notice if the account balance is less than the minimum $1,000. Participation in
the Option may be terminated or changed by the shareholder at anytime by writing
the Distributor. The Directed Dividend Option is not available to participants
in an AmSouth Mutual Funds IRA.

REDEMPTION OF SHARES

Shareholders may redeem their Classic Shares without charge, and their Class B
Shares subject to the applicable Contingent Deferred Sales Charge, on any day
that net asset value is calculated (see "VALUATION OF SHARES") Shares may
ordinarily be redeemed by mail or by telephone. However, all or part of a
Customer's Shares may be redeemed in accordance with instructions and
limitations pertaining to his or her account at a Financial Institution. For
example, if a Customer has agreed with a Financial Institution to maintain a
minimum balance in his or her account with the Financial Institution, and the
balance in that account falls below that minimum, the Customer may be obliged to
redeem, or the Financial Institution 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 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

27
<PAGE> 28

sent via Automated Clearing House to a designated bank account. For telephone
redemptions, call the Trust at (800) 451-8382. The Trust will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if these procedures are not followed, the Trust may be liable for any losses due
to unauthorized or fraudulent instructions. These procedures include recording
all phone conversations, sending confirmations to Shareholders within 72 hours
of the telephone transaction, verifying the account name and a shareholder's
account number or tax identification number and sending redemption proceeds only
to the address of record or to a previously authorized account.

During periods of significant economic or market change, telephone redemptions
may be difficult to complete. If a Shareholder is unable to contact the
Distributor by telephone, a Shareholder may also mail the redemption request to
the Distributor at the address listed above under "HOW TO REDEEM
SHARES--Redemption by Mail."

PAYMENTS TO SHAREHOLDERS

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 Capital Appreciation Fund has a value of less
than $250. Accordingly, an investor purchasing Shares of a Capital Appreciation
Fund in only the minimum investment amount may be subject to such involuntary
redemption if he or she thereafter redeems some of his or her Shares. Before the
Trust exercises its right to redeem such Shares and to send the proceeds to the
Shareholder, the Shareholder will be given notice that the value of the Shares
of a Capital Appreciation Fund in his or her account is less than the minimum
amount and will be allowed 60 days to make an additional investment in an amount
which will increase the value of the account to at least $250.

See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION" in the Statement of
Additional Information for examples of when the Trust may suspend the right of
redemption or redeem Shares involuntarily if it appears appropriate to do so in
light of the Trust's responsibilities under the Investment Company Act of 1940.

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<PAGE> 29

DIVIDENDS AND TAXES

The net income of each of the Capital Appreciation Funds will be declared
monthly as a dividend to Shareholders at the close of business on the day of
declaration. Dividends will generally be paid monthly. Distributable net
realized capital gains are distributed at least annually to Shareholders of
record. A Shareholder will automatically receive all income dividends and
capital gains distributions in additional full and fractional Shares unless the
Shareholder elects to receive such dividends or distributions in cash. Dividends
and distributions are reinvested without a sales charge as of the ex-dividend
date using the net asset value determined on that date and are credited to a
Shareholder's account on the payment date. Reinvested dividends and
distributions receive the same tax treatment as dividends and distributions paid
in cash. Dividends are generally taxable when received. However, dividends
declared in October, November, or December to Shareholders of record during
those months and paid during the following January are treated for tax purposes
as if they were received by each Shareholder on December 31 of the prior year.
Elections to receive dividends or distributions in cash, or any revocation
thereof, must be made in writing to the Transfer Agent at 3435 Stelzer Road,
Columbus, Ohio 43219, and will become effective with respect to dividends and
distributions having record dates after its receipt by the Transfer Agent.

Each of the Capital Appreciation Funds is treated as a separate entity for
Federal income tax purposes. Each of the Capital Appreciation Funds intends to
qualify as a "regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"). If they so qualify, the Capital Appreciation
Funds will not have to pay federal income taxes on net income and net capital
gain income that they distribute to shareholders. Regulated investment companies
are also subject to a federal excise tax if they do not distribute their income
on a timely basis. The Capital Appreciation Funds intend to avoid paying federal
income and excise taxes by timely distributing substantially all their net
income and net investment capital gain income.

A distribution to a Shareholder of net investment income (generally the Fund's
ordinary income) and the excess, if any, of net short-term capital gain over net
long-term loss will be taxable to the Shareholder as ordinary income. The 70%
dividends-received deduction for corporations generally will apply to the Fund's
distributions to corporations to the extent such distributions represent amounts
that would qualify for the dividends-received deduction when received by the
Fund if the Fund were a regular corporation and are designated by the Fund as
qualifying for the dividends-received deduction.

A distribution by a Capital Appreciation Fund of the excess of net long-term
capital gain over net short-term capital loss designated by such Fund as a
capital gain dividend is taxable to Shareholders as long-term capital gain,
regardless of how long the Shareholder has held Shares in such Fund. Such
distributions are not eligible for the dividends-received deduction.

The amount of dividends payable with respect to the Premier Shares will exceed
dividends on Classic Shares, and the amount of dividends on Classic Shares will
exceed the dividends on Class B Shares, as a result of the Shareholder Services
Plan fee applicable to Classic Shares and the Distribution and Shareholder
Services Plan fee applicable to Class B Shares.

Prior to purchasing Shares of a Capital Appreciation Fund, the impact of
dividends or capital gains distributions which are expected to be declared or
have been declared, but not paid, should be carefully considered. Dividends or
capital gains distributions paid after a purchase of Shares are subject to
federal income taxes, although in some circumstances the dividend or
distribution may be, as an economic matter, a return of capital. A Shareholder
should consult his or her own advisor for any special advice.

Dividends received by a Shareholder that are derived from a Capital
Appreciation Fund's investments in U.S. government obligations may not be
entitled to the exemptions from state and local

29
<PAGE> 30

income taxes that would be available if the Shareholder had purchased U.S.
government obligations directly.

A Shareholder will generally recognize capital gain or loss on the sale or
exchange of shares in a Capital Appreciation Fund. If a Shareholder receives a
capital gain dividend with respect to a Share of a Capital Appreciation Fund and
such Share is held for six months or less, any loss on the sale or exchange of
such Share shall be treated as a long-term capital loss to the extent of the
capital gain dividend.

The foregoing discussion is limited to federal income tax consequences and is
based on tax laws and regulations which are in effect as of the date of this
Prospectus; such laws and regulations may be changed by legislative or
administrative actions. The foregoing is also intended only as a brief summary
of some of the important tax considerations generally affecting the Capital
Appreciation Funds and their Shareholders. Potential investors in the Capital
Appreciation Funds are urged to consult their tax advisors concerning their own
tax situation and concerning the application of state and local taxes which may
differ from the federal income tax consequences described above.

Shareholders will be advised at least annually as to the character for federal
income tax purposes of distributions made during the year.

Additional Information regarding federal taxes is contained in the Statement
of Additional Information under "ADDITIONAL PURCHASE AND REDEMPTION
INFORMATION--Additional Tax Information."

30
<PAGE> 31

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):

<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING THE PAST 5 YEARS
- ------------------------------ ------------------ -------------------------------------------
<S> <C> <C>
George R. Landreth* Chairman From December 1992 to present, employee of
BISYS Fund Services BISYS Fund Services, Limited Partnership;
3435 Stelzer Road from July 1991 to December 1992, employee
Columbus, Ohio 43219 of PNC Financial Corp.; from October 1984
to July 1991, employee of The Central Trust
Co., N.A.
Dr. Dick D. Briggs, Jr. Trustee From 1981 to present, Professor and Vice
459 DER Building Chairman, Dept. of Medicine, Univ. of
1808 7th Avenue South Alabama at Birmingham School of Medicine;
UAB Medical Center from December 1995 to present, Physician,
Birmingham, Alabama 35294 University of Alabama Health Services
Foundation; from 1988 to 1992, President,
CEO and Medical Director, Univ. of Alabama
Health Services Foundation
Wendell D. Cleaver Trustee From September 3, 1993 to present, retired;
209 Lakewood Drive, West from December, 1988 to August, 1993,
Mobile, Alabama 36608 Executive Vice President, Chief Operating
Officer and Director, Mobile Gas Service
Corporation
J. David Huber* Trustee From June 1987 to present, employee of
3435 Stelzer Road BISYS Fund Services, Limited Partnership
Columbus, Ohio 43219
Homer H. Turner, Jr. Trustee From June 1991 to present, retired; until
729 Cary Drive June 1991, Vice President, Birmingham
Auburn, Alabama 36830 Division, Alabama Power Company
James H. Woodward, Jr. Trustee From July 1989 to present, Chancellor, The
The University of North University of North Carolina at Charlotte;
Carolina at Charlotte until July 1989, Senior Vice President,
Charlotte, North Carolina University College, University of Alabama
28223 at Birmingham
</TABLE>

- ------------

* Indicates an "interested person" of the Trust as defined in the Investment
Company Act of 1940.

31
<PAGE> 32

The Trustees receive fees and are reimbursed for expenses in connection with
each meeting of the Board of Trustees they attend. However, no officer or
employee of BISYS Fund Services, or BISYS Fund Services Ohio, Inc. receives any
compensation from the Trust for acting as a Trustee. The officers of the Trust
(see the Statement of Additional Information) receive no compensation directly
from the Trust for performing the duties of their offices. BISYS Fund Services
receives fees from the Trust for acting as Administrator and BISYS Fund Services
Ohio, Inc. receives fees from the Trust for acting as Transfer Agent for and for
providing fund accounting services to the Trust. Messrs. Huber and Landreth are
executive officers and employees of BISYS Fund Services.

INVESTMENT ADVISOR

AmSouth is the Advisor of each Fund of the Trust. AmSouth is the bank
affiliate of AmSouth Bancorporation, one of the largest banking institutions
headquartered in the midsouth region. AmSouth Bancorporation reported assets as
of December 31, 1996 of $18.4 billion and operated 272 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, 1996, AmSouth and its affiliates had over $7.1 billion in assets
under discretionary management and provided custody services for an additional
$13.4 billion in securities. AmSouth is the largest provider of trust services
in Alabama. AmSouth serves as administrator for over $12 billion in bond issues,
and its Trust Natural Resources and Real Estate Department is a major manager of
timberland, mineral, oil and gas properties and other real estate interests.

Subject to the general supervision of the Trust's Board of Trustees and in
accordance with the respective investment objectives and restrictions of the
Capital Appreciation Funds, the Advisor manages the Capital Appreciation Funds
(except for the Equity Income Fund), and therefore makes decisions with respect
to and places orders for all purchases and sales of their investment securities,
and maintains their records relating to such purchases and sales. Pedro Verdu,
CFA, is the portfolio manager for each Capital Appreciation Fund (except the
Equity Income Fund) and, as such, has had primary responsibility for the day-to-
day portfolio management of each of these Funds since their inception. Mr. Verdu
has twenty-four years of experience as an analyst and portfolio manager; he is
currently the Director of Equity Investing at AmSouth.

Under an investment advisory agreement between the Trust and the Advisor, the
fee payable to the Advisor by the Equity, Regional Equity, Balanced, Equity
Income, and Capital Growth Funds for investment advisory services is the lesser
of (a) a fee computed daily and paid monthly at the annual rate of eighty
one-hundredths of one percent (.80%) of such Fund's average daily net assets or
(b) such fee as may from time to time be agreed upon in writing by the Trust and
the Advisor. The fee payable for the Advisor by the Small Cap Fund for
investment advisory services is the lesser of (a) a fee computed daily and paid
monthly at the annual rate of ninety one-hundredths of one percent (.90%) 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 Advisor. While this fee is higher
than the advisory fee paid by most mutual funds, it is believed to be comparable
to advisory fees paid by many funds having similar objectives and policies. A
fee agreed to in writing from time to time by the Trust and the Advisor may be
significantly lower than the fee calculated at the annual rate and the effect of
such lower fee would be to lower a Fund's expenses and increase the net income
of the Fund during the period when such lower fee is in effect.

During the Trust's fiscal year ended July 31, 1996, the Advisor received
investment advisory fees amounting to .80% of the Equity Fund's average daily
net assets, .80% of the Regional Equity Fund's average daily net assets and .75%
of the Balanced Fund's average daily net assets after voluntary fee reductions
with respect to the Balanced Fund.

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<PAGE> 33

INVESTMENT SUB-ADVISORS

Rockhaven Asset Management, LLC ("Rockhaven") serves as Sub-Advisor to the
Equity Income Fund pursuant to a Sub-Advisory Agreement with the Advisor. Under
the SubAdvisory Agreement, the Sub-Advisor manages the Fund, selects
investments, and places all order for purchases and sales of securities, subject
to the general supervision of the Trust's Board of Trustees and the Advisor in
accordance with the Fund's investment objective, policies, and restrictions.

Rockhaven is 50% owned by AmSouth and 50% owned by Mr. Christopher H. Wiles.
Rockhaven was organized in 1997 to perform advisory services for investment
companies and has its principal offices at 100 First Avenue, Suite 1050,
Pittsburgh, PA 15222.

For its services and expenses incurred under the Sub-Advisory Agreement, the
SubAdvisor is entitled to a fee, payable by the Advisor. The fee is computed
daily and paid monthly at the annual rate of forty-eight one-hundredths of one
percent (.48%) of the Fund's average daily net assets or such lower fee as may
be agreed upon in writing by the Advisor and Sub-Advisor.

Mr. Wiles is the portfolio manager for the Equity Income Fund, and, as such,
has the primary responsibility for the day-to-day portfolio management of the
Fund. Mr. Wiles is the President and Chief Investment Officer of Rockhaven. From
August 1, 1991 to January 31, 1997, he was the portfolio manager of the
Federated Equity Income Fund.

The cumulative total return for the Class A Shares of the Federated Equity
Income Fund from August 1, 1991 through January 31, 1997 was 139.82%, absent the
imposition of a sales charge. The cumulative total return for the same period
for the Standard & Poor's Composite Stock Price Index ("S&P 500 Index") was
135.09%. The cumulative total return for the Class B Shares of the Federated
Equity Income Fund from September 27, 1994 (date of initial public offering)
through January 31, 1997 was 62.64%, absent the imposition of a contingent
deferred sales charge. The cumulative total return for the same period for the
S&P 500 Index was 79.69%. At January 31, 1997, the Federated Equity Income Fund
had approximately $970 million in net assets. As portfolio manager of the
Federated Equity Income Fund, Mr. Wiles had full discretionary authority over
the selection of investments for that fund. Average annual total returns for the
one-year, three-year, and five-year periods ended January 31, 1997 and for the
entire period during which Mr. Wiles managed the Class A Shares of the Federated
Equity Income Fund and for the one-year and since inception period for the Class
B Shares of the Federated Equity Income Fund compared with the performance of
the S&P 500 Index and the Lipper Equity Income Fund Index were:

33
<PAGE> 34

PRIOR PERFORMANCE OF CLASS A SHARES AND
CLASS B SHARES OF THE FEDERATED EQUITY INCOME FUND

<TABLE>
<CAPTION>
FEDERATED S&P 500 LIPPER EQUITY
EQUITY INCOME FUND+* INDEX@ INCOME FUND INDEX#
-------------------- ------- ------------------
<S> <C> <C> <C>
CLASS A SHARES (absent imposition of sales charge)
One Year.......................................... 23.26% 26.34% 19.48%
Three Years....................................... 17.03% 20.72% 15.09%
Five Years........................................ 16.51% 17.02% 14.73%
August 1, 1991 through January 31, 1997........... 17.25% 16.78% 14.99%
CLASS A SHARES (assuming imposition of the
Federated Equity Income Fund's maximum sales
charge)
One Year.......................................... 16.48%
Three Years....................................... 14.85%
Five Years........................................ 15.20%
August 1, 1991 through January 31, 1997........... 16.05%

CLASS B SHARES (absent imposition of contingent
deferred sales charge)
One Year.......................................... 22.26% 26.34% 19.48%
September 27, 1994 through January 31, 1997....... 23.15% 28.44% 20.65%
CLASS B SHARES (assuming imposition of the
Federated Equity Income Fund's maximum
contingent deferred sales charge)
One Year.......................................... 16.76%
September 27, 1994 through January 31, 1997....... 22.79%
</TABLE>

- ---------------

+ Average annual total return reflects changes in share prices and reinvestment
of dividends and distributions and is net of fund expenses.

* During the period from August 1, 1991 through January 31, 1997, the operating
expense ratio of the Class A Shares (the shares most similar to the Classic
Shares of the AmSouth Equity Income Fund) of the Federated Equity Income Fund
ranged from .95% to 1.05% of the fund's average daily net assets. During the
period from September 27, 1994 through January 31, 1997 the operating expense
ratio for the Class B Shares of the Federated Equity Income Fund ranged from
1.80% to 1.87% of the fund's average daily net assets. The operating expenses
of the Class A Shares and Class B Shares of the Federated Equity Income Fund
were lower than the projected operating expenses of the Classic Shares and
Class B Shares, respectively, of the AmSouth Equity Income Fund. If the
actual operating expenses of the AmSouth Equity Fund are higher than the
historical operating expenses of the Federated Equity Income Fund, this could
negatively affect performance.

@ The S&P 500 Index is an unmanaged index of common stocks that is considered to
be generally representative of the United States stock market. The Index is
adjusted to reflect reinvestment of dividends.

# The Lipper Equity Income Fund Index is equally weighted and composed of the
largest mutual funds within its investment objective. These funds seek high
current income and growth of income through investing 60% or more of their
respective portfolios in equity securities.

34
<PAGE> 35

HISTORICAL PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. The Federated
Equity Income Fund is a separate fund and its historical performance is not
indicative of the potential performance of the AmSouth Equity Income Fund. Share
prices and investment returns will fluctuate reflecting market conditions, as
well as changes in company-specific fundamentals of portfolio securities.

Christopher Wiles was the Federated Equity Income Fund's portfolio manager
from August 1, 1991 to January 31, 1997. Mr. Wiles joined Federated Investors in
1990 and served as a Vice President of the fund's investment advisor from 1992
and Senior Vice President from October, 1996 to January 31, 1997. Mr. Wiles
served as Assistant Vice President of the fund's investment advisor in 1991. Mr.
Wiles is a Chartered Financial Analyst and received his M.B.A. in Finance from
Cleveland State University.

Peachtree Asset Management ("Peachtree") serves as investment sub-adviser to
the Capital Growth Fund, pursuant to a Sub-Advisory Agreement with AmSouth. The
Capital Growth Fund commenced operations on August 1, 1997. Under the
Sub-Advisory Agreement, Peachtree manages the Fund, selects investments, and
places all orders for purchases and sales of securities, subject to the general
supervision of the Trust's Board of Trustees and AmSouth in accordance with the
Fund's investment objectives, policies and restrictions.

Peachtree is a division of Smith Barney Mutual Funds Management Inc.
("SBMFM"), a wholly-owned subsidiary of Smith Barney Holdings Inc., which in
turn is a wholly-owned subsidiary of Travelers Group Inc. Peachtree has
performed advisory services since 1994 for institutional clients, and has its
principal offices at 303 Peachtree Street, N.E., Atlanta, GA 30308. SBMFM and
its predecessors have been providing investment advisory services to mutual
funds since 1968. As of December 31, 1996, SBMFM had aggregate assets under
management of approximately $80 billion.

For its services and expenses incurred under the Sub-Advisory Agreement,
Peachtree is entitled to a fee payable by AmSouth, computed daily and paid
monthly at the annual rate of forty-eight one-hundredths of one percent (.48%)
of the Fund's average daily net assets or such lower fee as may be agreed upon
in writing by AmSouth and Peachtree.

Dennis A. Johnson is the portfolio manager for the Capital Growth Fund, and,
as such has the primary responsibility for the day-to-day portfolio management
of the Fund. Mr. Johnson, who has been employed by Peachtree since 1994, is
President and Chief Investment Officer of Peachtree. From 1989 to 1994, Mr.
Johnson was Vice President and Portfolio Manager at Trusco Capital, the
investment management subsidiary of Trust Company Bank, Atlanta, Georgia.

ADMINISTRATOR

ASO Services Company ("ASO") is the administrator for each Fund of the Trust
(the "Administrator"). ASO is a wholly-owned subsidiary of BISYS. BISYS is a
subsidiary of The BISYS Group, Inc., 150 Clove Road, Little Falls, New Jersey
07424, a publicly owned company engaged in information processing, loan
servicing and 401(k) administration and recordkeeping services to and through
banking and other financial organizations.

The Administrator generally assists in all aspects of the Capital Appreciation
Funds' administration and operation. Under a management and administration
agreement between the Trust and the Administrator, the fee payable by each
Capital Appreciation Fund to the Administrator for administration services is
the lesser of (a) a fee computed at the annual rate of twenty one-hundredths of
one percent (.20%) of such Capital Appreciation Fund's average daily net assets
or (b) such fee as may from time to time be agreed upon by the Trust and the
Administrator. A fee agreed to from time to time by the Trust and the
Administrator may be significantly lower than the fee calculated at the annual
rate and the effect of such lower fee would be to lower a Capital Appreciation
Fund's expenses and increase the net income of the Fund during the period when
such lower fee is in effect.

35
<PAGE> 36

ASO succeeded BISYS as Administrator on April 1, 1996. During the Trust's
fiscal year ended July 31, 1996, BISYS and ASO received administration fees,
after voluntary fee reductions, amounting to .11% of the Equity Fund's average
daily net assets, .12% of the Regional Equity Fund's average daily net assets
and .11% of the Balanced Fund's average daily net assets.

SUB-ADMINISTRATORS

AmSouth serves as a Sub-Administrator to the Trust. Pursuant to its current
agreement with the Administrator, AmSouth has assumed certain of the
Administrator's duties, for which AmSouth receives a fee, paid by the
Administrator, calculated at an annual rate of up to ten one-hundredths of one
percent (.10%) of each Fund's average daily net assets.

BISYS Fund Services serves as a Sub-Administrator to the Trust. Pursuant to
its agreement with the Administrator, BISYS Fund Services is entitled to
compensation as mutually agreed from time to time by it and the Administrator.

DISTRIBUTOR

BISYS Fund Services acts as the Trust's principal underwriter and distributor
(the "Distributor") pursuant to a Distribution Agreement under which shares are
sold on a continuous basis.

Classic Shares of the Trust are subject to a Shareholder Servicing Plan (the
"Servicing Plan") permitting payment of compensation to financial institutions
that agree to provide certain administrative support services for their
customers or account holders. Each Fund has entered into a specific arrangement
with BISYS for the provision of such services by BISYS, and reimburses BISYS for
its cost of providing these services, subject to a maximum annual rate of
twenty-five one-hundredths of one percent (.25%) of the average daily net assets
of the Classic Shares of each Fund.

Under the Trust's Distribution and Shareholder Services Plan (the
"Distribution Plan"), Class B Shares of a Fund will pay a monthly distribution
fee to the Distributor as compensation for its services in connection with the
Distribution Plan at an annual rate equal to one percent (1.00%) of the average
daily net assets of Class B Shares of each Fund which includes Shareholder
Servicing fee of .25% of the average daily net assets of the Class B Shares of
each Fund. The Distributor may periodically waive all or a portion of the fee
with respect to a Fund in order to increase the net investment income of the
Fund available for distribution as dividends. The Distributor may apply the B
Share Fee toward the following: (i) compensation for its services or expenses in
connection with distribution assistance with respect to such Fund's B Shares;
(ii) payments to financial institutions and intermediaries (such as banks,
savings and loan associations, insurance companies, and investment counselors)
as brokerage commissions in connection with the sale of such Fund's B Shares;
and (iii) payments to financial institutions and intermediaries (such as banks,
savings and loan associations, insurance companies, and investment counselors),
broker-dealers, and the Distributor's affiliates and subsidiaries as
compensation for services and/or reimbursement of expenses incurred in
connection with distribution or shareholder services with respect to such Fund's
B Shares.

All payments by the Distributor for distribution assistance or shareholder
services under the Distribution Plan will be made pursuant to an agreement (a
"Servicing Agreement") between the Distributor and such bank, other financial
institution or intermediary, broker-dealer, or affiliate or subsidiary of the
Distributor (hereinafter referred to individually as "Participating
Organizations"). A Servicing Agreement will relate to the provision of
distribution assistance in connection with the distribution of a Fund's Class B
Shares to the Participating Organization's customers on whose behalf the
investment in such Shares is made and/or to the provision of shareholder
services to the Participating Organization's customers owning a Fund's Class B
Shares. Under the Distribution Plan, a Participating Organization may include
AmSouth or a subsidiary bank or nonbank affiliates, or the subsidiaries or
affiliates of those banks. A Servicing Agreement entered into

36
<PAGE> 37

with a bank (or any of its subsidiaries or affiliates) will contain a
representation that the bank (or subsidiary or affiliate) believes that it
possesses the legal authority to perform the services contemplated by the
Servicing Agreement without violation of applicable banking laws (including the
Glass-Steagall Act) and regulations.

The distribution fee will be payable without regard to whether the amount of
the fee is more or less than the actual expenses incurred in a particular year
by the Distributor in connection with distribution assistance or shareholder
services rendered by the Distributor itself or incurred by the Distributor
pursuant to the Servicing Agreements entered into under the Distribution Plan.
If the amount of the distribution fee is greater than the Distributor's actual
expenses incurred in a particular year (and the Distributor does not waive that
portion of the distribution fee), the Distributor will realize a profit in that
year from the distribution fee. If the amount of the distribution fee is less
than the Distributor's actual expenses incurred in a particular year, the
Distributor will realize a loss in that year under the Distribution Plan and
will not recover from a Fund the excess of expenses for the year over the
distribution fee, unless actual expenses incurred in a later year in which the
Distribution Plan remains in effect were less than the distribution fee paid in
that later year.

The Glass-Steagall Act and other applicable laws prohibit banks generally from
engaging in the business of underwriting securities, but in general do not
prohibit banks from purchasing securities as agent for and upon the order of
customers. Accordingly, the Trust will require banks acting as Participating
Organizations to provide only those services which, in the banks' opinion, are
consistent with the then current legal requirements. It is possible, however,
that future legislative, judicial or administrative action affecting the
securities activities of banks will cause the Trust to alter or discontinue its
arrangements with banks that act as Participating Organizations, or change its
method of operations. It is not anticipated, however, that any change in a
Fund's method of operations would affect its net asset value per share or result
in financial loss to any customer.

EXPENSES

AmSouth and the Administrator each bear all expenses in connection with the
performance of their services as Advisor and Administrator, respectively, other
than the cost of securities (including brokerage commissions, if any) purchased
for a Capital Appreciation Fund. No Capital Appreciation Fund will bear,
directly or indirectly, the cost of any activity primarily intended to result in
the distribution of Shares of such Capital Appreciation Fund; such costs will be
borne by the Distributor.

As a general matter, expenses are allocated to the Premier, Classic, and Class
B Shares of a Fund on the basis of the relative net asset value of each class.
At present, the only expenses that will be borne solely by Classic and Class B
Shares, other than in accordance with the relative net asset value of the class,
are expenses under the Servicing Plan which relates only to the Classic Shares
and the Distribution Plan which relates only to the Class B Shares.

BANKING LAWS

AmSouth believes that it possesses the legal authority to perform the
investment advisory services for the Capital Appreciation Funds contemplated by
its investment advisory agreement with the Trust and described in this
Prospectus without violation of applicable banking laws and regulations, and has
so represented in its investment advisory agreement with the Trust. Future
changes in federal or state statutes and regulations relating to permissible
activities of banks or bank holding companies and their subsidiaries and
affiliates as well as further judicial or administrative decisions or
interpretations of present and future statutes and regulations could change the
manner in which AmSouth could continue to perform such services for the Trust.
See "MANAGEMENT OF The Trust--Glass-Steagall Act" in the Statement of Additional
Information for further discussion of applicable banking laws and regulations.

37
<PAGE> 38

GENERAL INFORMATION

DESCRIPTION OF THE TRUST AND ITS SHARES

The Trust was organized as a Massachusetts business trust on October 1, 1987.
The Trust has an unlimited number of authorized shares of beneficial interest
which may, without shareholder approval, be divided into an unlimited number of
series of such shares, and which are presently divided into fourteen series of
shares, one for each of the following Funds: the AmSouth Prime Obligations Fund,
the AmSouth U.S. Treasury Fund, the AmSouth Tax Exempt Fund, the AmSouth Equity
Fund, the AmSouth Regional Equity Fund, the AmSouth Balanced Fund, the AmSouth
Bond Fund, the AmSouth Limited Maturity Fund, the AmSouth Government Income
Fund, the AmSouth Municipal Bond Fund, the AmSouth Florida TaxFree Fund, the
AmSouth Capital Growth Fund, the AmSouth Small Cap Fund, and the AmSouth Equity
Income Fund. Each Fund, except the AmSouth Florida Tax-Free Fund, is a
diversified fund under the Investment Company Act of 1940, as amended. Each Fund
offers three classes of Shares: Premier, Classic and Class B Shares, except for
the AmSouth U.S. Treasury Fund and Tax Exempt Fund which offer only Premier
Shares and Classic Shares. As of the date of this Prospectus, however, Class B
Shares were not offered in Government Income Fund, Limited Maturity Fund,
Florida Fund, and Municipal Bond 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 the aggregate and not by series or class on all
matters except (i) when required by the Investment Company Act of 1940, shares
shall be voted by individual series or class, (ii) when the Trustees have
determined that the matter affects only the interests of one or more series or
class, and (iii) only the holders of Classic Shares will vote on matters
submitted to shareholder vote with regard to the Servicing Plan and (iv) only
the holders of Class B Shares will vote on matters submitted to shareholder vote
with regard to the Distribution 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 August 21, 1997, AmSouth Bank, 1901 Sixth Avenue North, Birmingham, AL
35203, was the Shareholder of record of approximately 94.92% of the outstanding
shares of the Equity Fund, 68.22% of the outstanding shares of the Regional
Equity Fund, 86.78% of the outstanding shares of the Balanced Fund, and 19.58%
of the outstanding shares of the Equity Income Fund. AmSouth Bank was the
beneficial owner of approximately 61.73% of the outstanding shares of the Equity
Fund, 54.67% of the outstanding shares of the Regional Equity Fund and 81.58% of
the outstanding shares of the Balanced Fund, and may be deemed to be a
"controlling person" of each of the above-mentioned Funds within the meaning of
the Investment Company Act of 1940.

CUSTODIAN

As of April 17, 1997, AmSouth serves as custodian for the Trust ("Custodian").
Pursuant to the Custodian Agreement with the Trust, the Custodian receives
compensation from each Fund for such services in an amount equal to an
asset-based fee.

38
<PAGE> 39

TRANSFER AGENT AND FUND ACCOUNTING

BISYS Fund Services Ohio, Inc. serves as transfer agent for and provides fund
accounting services to the Trust.

PERFORMANCE INFORMATION

From time to time performance information for the Classic Shares and Class B
Shares of a Capital Appreciation Fund showing its total return and/or yield may
be presented in advertisements and sales literature. Average annual total return
will be calculated for the past year, five years (if applicable) and the period
since the establishment of a Capital Appreciation Fund. Total return is measured
by comparing the value of an investment in the Capital Appreciation Fund at the
beginning of the relevant period to the redemption value of the investment at
the end of the period (assuming the investor paid the maximum sales load on the
investment and assuming immediate reinvestment of any dividends or capital gains
distributions). Aggregate total return is calculated similarly to average total
return except that the return figure is aggregated over the relevant period
instead of annualized. Yield will be computed by dividing the Capital
Appreciation Fund's net investment income per share earned during a recent
one-month period by the Capital Appreciation Fund's per share maximum offering
price (reduced by any undeclared earned income expected to be paid shortly as a
dividend) on the last day of the period and annualizing the result.

Yield, effective yield, and total return will be calculated separately for
each Class of Shares. Because Classic Shares are subject to lower Shareholder
Services fees than Class B Shares, the yield and total return for Classic Shares
will be higher than that of the Class B Shares for the same period. Because
Premier Shares are not subject to the Distribution and Shareholder Services
fees, the yield and total return for Premier Shares will be higher than that of
the Classic and Class B Shares for the same period.

Investors may also judge the performance of each Capital Appreciation Fund by
comparing its performance to the performance of other mutual funds with
comparable investment objectives and policies through various mutual fund or
market indices and data such as that provided by Lipper Analytical Services,
Inc. Comparisons may also be made to indices or data published in Money
Magazine, Forbes, Barron's, The Wall Street Journal, The New York Times,
Business Week, American Banker, Fortune, Institutional Investor, Ibbotson
Associates, Inc., Morning Star, Inc., CDA/Wiesenberger, Pensions and
Investments, U.S.A. Today, and local newspapers and periodicals. In addition to
performance information, general information about these Funds that appears in a
publication such as those mentioned above may be included in advertisements,
sales literature and in reports to Shareholders. Additional performance
information is contained in the Trust's Annual Report, which is available free
of charge by calling the number on the front page of the prospectus.

Information about the performance of a Capital Appreciation Fund is based on
the Capital Appreciation Fund's record up to a certain date and is not intended
to indicate future performance. Yield and total return are functions of the type
and quality of instruments held in a Capital Appreciation Fund, operating
expenses, and marketing conditions. Any fees charged by a Financial Institution
with respect to customer accounts investing in Shares of a Capital Appreciation
Fund will not be included in performance calculations.

MISCELLANEOUS

Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants.

As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to a Fund" means the consideration received by the Trust upon
the issuance or sale of Shares in that Fund, together with all income, earnings,
profits, and proceeds derived from the investment thereof, including any
proceeds from the sale, exchange, or liquidation of such investments, and any
funds or payments derived from any reinvestment of such proceeds, and any
general assets of the Trust not

39
<PAGE> 40

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 P.O.
Box 182733, Columbus, Ohio 43218-2733, or by calling toll free (800) 451-8382.

40
<PAGE> 41

AMSOUTH MUTUAL FUNDS

INVESTMENT ADVISOR

LOGO
AmSouth Bank
1901 Sixth Avenue North
Birmingham, AL 35203

INVESTMENT SUB-ADVISORS
(Equity Income Fund Only)
Rockhaven Asset Management, LLC
100 First Avenue, Suite 1050
Pittsburgh, PA 15222

(Capital Growth Fund Only)
Peachtree Asset Management
A Division of Smith Barney Mutual Funds Management Inc.
One Peachtree Center
Atlanta, GA 30308

ADMINISTRATOR
ASO Services Company
3435 Stelzer Road
Columbus, OH 43219

DISTRIBUTOR
BISYS Fund Services, Limited Partnership
3435 Stelzer Road
Columbus, OH 43219

LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, DC 20005-3333

TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219

AUDITORS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Fee Table...................................... 3
Financial Highlights........................... 5
Investment Objectives and Policies............. 9
Investment Restrictions........................ 17
Valuation of Shares............................ 18
How to Purchase and Redeem Shares.............. 18
Dividends and Taxes............................ 29
Management of AmSouth Mutual Funds............. 31
General Information............................ 38
</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.

AS3P091097
<PAGE> 42
A M S O U T H M U T U A L F U N D S
---------------------------------------
=======================================

[LOGO]
AMSOUTH BANK
Investment Advisor

C A P I T A L
APPRECIATION
F U N D S

A M S O U T H
MUTUAL FUNDS

NOT FDIC INSURED

BISYS FUND SERVICES, DISTRIBUTOR
Prospectus dated September 1, 1997;
as amended September 8, 1997
<PAGE> 43

AMSOUTH MUTUAL FUNDS
PREMIER SHARES

<TABLE>
<S> <C>
3435 Stelzer Road For current yield, purchase, and redemption
Columbus, Ohio 43219 information, call (800) 451-8382
</TABLE>

The AmSouth Prime Obligations Fund (the "Prime Obligations Fund"), the AmSouth
U.S. Treasury Fund (the "AmSouth U.S. Treasury Fund"), and the AmSouth Tax
Exempt Fund (the "Tax Exempt Fund") (collectively, the "Money Market Funds"),
the AmSouth Bond Fund (the "Bond Fund"), the AmSouth Limited Maturity Fund (the
"Limited Maturity Fund"), the AmSouth Government Income Fund (the "Government
Income Fund"), the AmSouth Florida Tax-Free Fund (the "Florida Fund"), and the
AmSouth Municipal Bond Fund (the "Municipal Bond Fund") (collectively, "the
Income Funds" and the Florida Fund and Municipal Bond Fund sometimes
collectively referred to herein as "the Tax-Free Funds"), and the AmSouth Equity
Fund (the "Equity Fund"), the AmSouth Regional Equity Fund (the "Regional Equity
Fund"), the AmSouth Balanced Fund (the "Balanced Fund"), the AmSouth Capital
Growth Fund ( the "Capital Growth Fund"), the AmSouth Small Cap Fund (the "Small
Cap Fund"), and the AmSouth Equity Income Fund (the "Equity Income Fund")
(collectively, the "Capital Appreciation Funds") are fourteen series of units of
beneficial interest ("Shares") each representing interests in one of fourteen
separate investment funds (the "Funds") of AmSouth Mutual Funds (the "Trust"),
an open-end management investment company. 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. Each Income Fund and Capital Appreciation has its own
investment objective and the net asset value per share of each Income Fund and
Capital Appreciation Fund will fluctuate as the value of such Fund's investment
portfolio changes in response to changing market interest rates and other
factors. The Shares of the Income Funds and the Capital Appreciation Funds
outstanding on August 31, 1997, have been redesignated as Classic Shares.
AMSOUTH 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 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 obligations.
AMSOUTH 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 total assets will
be invested in obligations exempt from federal income tax.
AMSOUTH BOND FUND seeks current income consistent with the preservation of
capital. The Fund seeks to achieve this objective by investing in long-term
bonds and other fixed-income securities. These investments may include debt
securities issued by United States corporations and debt securities issued or
guaranteed by the United States Government or its agencies or instrumentalities
as well as zero-coupon obligations. The Bond Fund invests in fixed-income
securities with a maturity in excess of one year, although such securities can
have maturities of thirty years or longer.
AMSOUTH LIMITED MATURITY FUND seeks current income consistent with the
preservation of capital. The Fund seeks to achieve this objective by investing
in bonds (including debentures), notes and other debt securities which have a
stated or remaining maturity of five years or less or which have an
unconditional redemption feature that will permit the Limited Maturity Fund to
require the issuer of the security to redeem the security within five years from
the date of purchase or for which the Limited Maturity Fund has acquired an
unconditional "put" to sell the security within five years from the date of
purchase. These investments may include debt securities issued by United States
corporations and debt securities issued or guaranteed by the United States
Government or its agencies or instrumentalities as well as zero-coupon
obligations.
AMSOUTH GOVERNMENT INCOME FUND seeks current income consistent with the
preservation of capital. The Fund seeks to achieve this objective by investing,
under normal market conditions, at least 65% of the value of its total assets in
obligations issued or guaranteed by the U.S. Government its agencies or
instrumentalities.
AMSOUTH FLORIDA TAX-FREE FUND seeks to produce as high a level of current
interest income exempt from federal income taxes and Florida intangible taxes as
is consistent with the preservation of capital. The Florida Fund seeks to
achieve this objective by investing in high-grade obligations. While the Florida
Fund may invest in taxable obligations, under normal market conditions at least
80% of the Florida Fund's net assets will be invested in obligations exempt from
both federal personal income tax and, as at year-end, the Florida intangible
personal property tax. The Fund is non-diversified and therefore may invest more
than 5% of its total assets in the obligations of one issuer.
AMSOUTH MUNICIPAL BOND 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. The Municipal Bond Fund seeks to achieve this objective
by investing in high-grade obligations. While the Municipal Bond Fund may invest
in taxable obligations, under normal market conditions at least 80% of the
Municipal Bond Fund's net assets will be invested in obligations exempt from
federal income tax. The Municipal Bond Fund is a diversified fund.
AMSOUTH EQUITY FUND seeks growth of capital by investing primarily in a
diversified portfolio of common stocks and securities convertible into common
stocks such as convertible bonds and convertible preferred stocks. The
production of income is an incidental objective. The Advisor will seek
opportunities for the Equity Fund in securities that are believed to represent
investment value.
<PAGE> 44

AMSOUTH REGIONAL EQUITY FUND seeks growth of capital by investing primarily in
a diversified portfolio of common stocks and securities convertible into common
stocks, such as convertible bonds and convertible preferred stocks, of companies
headquartered in the Southern Region of the United States. The Southern Region
of the United States includes Alabama, Florida, Georgia, Louisiana, Mississippi,
North Carolina, South Carolina, Tennessee and Virginia. The production of income
is an incidental objective. The Advisor will seek opportunities for the Regional
Equity Fund in securities that are believed to represent investment value.
AMSOUTH BALANCED FUND seeks to obtain long-term capital growth and produce a
reasonable amount of current income through a moderately aggressive investment
strategy. The Balanced Fund seeks to achieve this objective by investing in a
broadly diversified portfolio of securities, including common stocks, preferred
stocks and bonds. The Advisor will seek opportunities for the Balanced Fund in
securities that are believed to represent investment value.
AMSOUTH CAPITAL GROWTH FUND seeks long-term capital appreciation and growth of
income by investing primarily in a diversified portfolio of common stocks and
securities convertible into common stocks such as convertible bonds and
convertible preferred stocks.
AMSOUTH SMALL CAP FUND seeks capital appreciation by investing primarily in a
diversified portfolio of securities consisting of common stocks and securities
convertible into common stocks such as convertible bonds and convertible
preferred stock. Any current income generated from these securities is
incidental to the investment objective of the Fund. Under normal market
conditions, the Fund will invest at least 65% of its total assets in common
stocks and securities convertible into common stocks such as convertible bonds
and convertible preferred stock of companies with a market capitalization of
less than $1 billion.
AMSOUTH EQUITY INCOME FUND seeks above average income and capital appreciation
by investing primarily in a diversified portfolio of common stocks and
securities convertible into common stocks such as convertible bonds and
convertible preferred stock.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in income-producing equity securities including common stock, preferred
stock, and securities convertible into common stocks such as convertible bonds
and convertible preferred stock. The portion of the Fund's total assets invested
in common stock, preferred stock, and convertible securities will vary according
to the Fund's assessment of market and economic conditions and outlook.
AmSouth Bank, Birmingham, Alabama ("AmSouth"), acts as the investment advisor
to each Fund of the Trust (the "Advisor"). Rockhaven Asset Management, LLC
("Rockhaven") acts as the investment sub-advisor to the Equity Income Fund
("Sub-Advisor"). Peachtree Asset Management ("Peachtree") acts as the investment
sub-advisor to the Capital Growth Fund. BISYS Fund Services, Limited Partnership
("BISYS Fund Services"), Columbus, Ohio, acts as the Trust's distributor
("Distributor").
Each Fund has been divided into three classes of Shares, Premier Shares,
Classic Shares and Class B Shares, except that the AmSouth U.S. Treasury Fund
and the Tax-Exempt Fund are divided into Premier Shares and Classic Shares only.
The following investors qualify to purchase Premier Shares: (i) investors for
whom AmSouth acts in a fiduciary, advisory, custodial, agency or similar
capacity through an account with its Trust Department; (ii) investors who
purchase Shares of a Fund through 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 or Class
B Shares only. As of the date of this Prospectus, the Small Cap Fund is not
currently offering Shares.
This Prospectus relates only to the Premier Shares of the Funds. Interested
persons who wish to obtain a copy of the prospectuses of Classic Shares and
Class B Shares of the Money Market Funds, the Income Funds and the Capital
Appreciation Funds may contact the Trust's distributor at the telephone number
shown above. Additional information about the 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 Premier Shares
of the 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
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
AN INVESTMENT IN A MONEY MARKET 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
------------------------
The date of this prospectus is September 1, 1997, as amended September 10, 1997.
<PAGE> 45

FEE TABLE FOR THE MONEY MARKET FUNDS

<TABLE>
<CAPTION>
PRIME AMSOUTH
OBLIGATIONS U.S. TREASURY TAX
FUND FUND EXEMPT FUND
----------- ------------- -----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)............................................................ 0% 0% 0%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage
of offering price)................................................ 0% 0% 0%
Deferred Sales Load (as a percentage of original purchase price or
redemption proceeds, as applicable)............................... 0% 0% 0%
Redemption Fees (as a percentage of amount redeemed, if
applicable)(2).................................................... 0% 0% 0%
Exchange Fee........................................................ $0 $0 $0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fees (after voluntary fee reduction for the Tax Exempt
Fund)........................................................... 0.40% 0.40% 0.20%(3)
12b-1 Fees........................................................ 0% 0% 0%
Other Expenses.................................................... 0.31% 0.31% 0.34%
---- ---- ----
Total Fund Operating Expenses (after voluntary fee reduction for
the Tax Exempt Fund)............................................ 0.71% 0.71% 0.54%(4)
==== ==== ====
</TABLE>

EXAMPLE
You would pay the following expenses on a $1,000 investment in Premier
Shares, 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................................................ $7 $23 $40 $ 88
AmSouth U.S. Treasury Fund............................................ $7 $23 $40 $ 88
Tax Exempt Fund....................................................... $6 $17 $30 $ 68
</TABLE>

Premier Shares are not subject to a 12b-1 fee and are not sold pursuant to a
sales charge.
The purpose of the table above is to assist a potential investor in
understanding the various costs and expenses that an investor in Premier Shares
of 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.

3
<PAGE> 46

FEE TABLE FOR THE INCOME FUNDS

<TABLE>
<CAPTION>
LIMITED GOVERNMENT MUNICIPAL
BOND MATURITY INCOME FLORIDA BOND
FUND FUND FUND FUND FUND
------- -------- ---------- ------- ---------
PREMIER PREMIER PREMIER PREMIER PREMIER
SHARES SHARES SHARES SHARES SHARES
<S> <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%
Maximum Sales Load Imposed on Reinvested Dividends (as
a percentage of offering price)..................... 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%
Redemption Fees (as a percentage of amount redeemed,
if applicable)(2)................................... 0% 0% 0% 0% 0%
Exchange Fee.......................................... $0 $0 $0 $0 $0
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
Management Fees
(after voluntary fee reduction)(3).................. .50% .50% .30% .30% .40
12b-1 Fees............................................ .00% .00% .00% .00% .00
Other Expenses (after voluntary fee reduction)(4)..... .25% .26% .35% .29% .30
---- ---- ---- ---- ----
Total Fund Operating Expenses (after voluntary fee
reduction)(6)....................................... .75% .76% .65% .59% .70%
==== ==== ==== ==== ====
</TABLE>

- ------------
(1) AmSouth may charge a Customer's (as defined in the Prospectus) account fees
for automatic investment and other cash management services provided in
connection with investment in the 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 .65% for each Income Fund.
(See "MANAGEMENT OF AMSOUTH MUTUAL FUNDS--Investment Advisor.")
(4) Absent the voluntary reduction of administration fees, Other Expenses as a
percentage of average net assets would be 0.33% for the Bond Fund, 0.34% for
the Limited Maturity Fund, 0.45% for the Government Income Fund and 0.39%
for the Florida Fund and are estimated to be 0.38% for the Municipal Bond
Fund. (See "MANAGEMENT OF AMSOUTH MUTUAL FUNDS--Administrator and
Distributor.")
(5) Other expenses for the Municipal Bond Fund are based on estimated amounts
for the current fiscal year.
(6) In the absence of any voluntary reduction in investment advisory fees and
administration fees, Total Fund Operating Expenses would be 0.98% for the
Bond Fund, 0.99% for the Limited Maturity Fund, 1.10% for the Government
Income Fund, 1.04% for the Florida Fund, and are estimated to be 1.03% for
the Municipal Bond Fund.

EXAMPLE
You would pay the following expenses on a $1,000 investment in Premier
Shares, 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>
Bond Fund............................................................. $ 8 $24 $42 $ 93
Limited Maturity Fund................................................. $ 8 $24 $42 $ 94
Government Income Fund................................................ $ 7 $21 $36 $ 81
Florida Fund.......................................................... $ 6 $19 $33 $ 74
Municipal Bond Fund................................................... $ 7 $22 N/A N/A
</TABLE>

Premier Shares are not subject to a 12b-1 fee and are not sold pursuant to a
sales charge.
The purpose of the table above is to assist an investor in the Premier
Shares of the Income Funds in understanding the various costs and expenses that
an investor will bear directly or indirectly. See "MANAGEMENT OF AMSOUTH MUTUAL
FUNDS" for a more complete discussion of annual operating expenses of the Income
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.

4
<PAGE> 47

FEE TABLE FOR THE CAPITAL APPRECIATION FUNDS

<TABLE>
<CAPTION>
REGIONAL CAPITAL EQUITY
EQUITY EQUITY BALANCED GROWTH SMALL INCOME
FUND FUND FUND FUND CAP FUND FUND
------- -------- -------- ------- -------- -------
PREMIER PREMIER PREMIER PREMIER PREMIER PREMIER
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................................. .80% .80% .80%(3) .80% .90% .80%
12b-1 Fees...................................... .00% .00% .00% .00% .00% .00%
Other Expenses (after voluntary fee
reduction)(4)................................. .22% .25% .24% .27% .27% .27%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses (after voluntary
fee reductions)............................... 1.02%(5) 1.05%(5) 1.04%(3,5) 1.07% 1.17% 1.07%
==== ==== ==== ==== ==== ====
</TABLE>

EXAMPLE
You would pay the following expenses on a $1,000 investment in Premier
Shares, assuming (1) 5% annual return and (2) redemption at the end of each time
period:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Fund........................................................... $ 10 $32 $56 $125
Regional Equity Fund.................................................. $ 11 $33 $58 $128
Balanced Fund......................................................... $ 11 $33 $57 $127
Capital Growth Fund................................................... $ 11 $34 N/A N/A
Small Cap Fund........................................................ $ 12 $37 N/A N/A
Equity Income Fund.................................................... $ 11 $34 N/A N/A
</TABLE>

Premier Shares are not subject to a 12b-1 fee and are not sold pursuant to a
sales charge.
The purpose of the table above is to assist a potential investor in
understanding the various costs and expenses that an investor in Premier Shares
of a Capital Appreciation Fund will bear directly or indirectly. See "MANAGEMENT
OF AMSOUTH MUTUAL FUNDS" for a more complete discussion of annual operating
expenses of the Capital Appreciation Funds. THE FOREGOING EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.

5
<PAGE> 48

FINANCIAL HIGHLIGHTS

The tables below set forth certain financial information concerning the
investment results for each of the Funds for the period of commencement of
operations to January 31, 1997. The information from the commencement of
operations to July 31, 1996 is a part of the financial statements audited by
Coopers & Lybrand L.L.P., independent accountants for the Trust, whose report on
the Trust's financial statements for the year ended July 31, 1996 appears in the
Statement of Additional Information. The information for the period ended
January 31, 1997 is unaudited. The Municipal Bond Fund, Capital Growth Fund,
Small Cap Fund and Equity Income Fund had not commenced operations as of January
31, 1997. Further financial data is incorporated by reference into the Statement
of Additional Information.
<TABLE>
<CAPTION>
PRIME OBLIGATIONS FUND
SIX ----------------------------------------------------------------------------
MONTHS
ENDED YEAR ENDED JULY 31,
JANUARY 31, ----------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
----------- ---------- -------- -------- -------- -------- -------- --------
PREMIER(b) PREMIER(b)
----------- ----------
(UNAUDITED)
<S> <C> <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 $ 1.000
----------- ---------- -------- -------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income........... 0.024 0.016 0 .050 0.029 0.027 0.042 0.067 0.079
----------- ---------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income........... (0.024) (0.016) (0.050) (0.029) (0.027) (0.042) (0.067) (0.079)
----------- ---------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
============ =========== ========= ========= ========= ========= ========= =========
Total Return.................... 2.46%(d) 5.10% 5.14% 2.94% 2.76% 4.28% 6.87% 8.16%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end
of period (000)............... $ 450,867 $478,542 $617,673 $577,331 $456,428 $457,511 $307,873 $298,498
Ratio of expenses to average net
assets........................ 0.68%(c) 0.71% 0.69% 0.70% 0.71% 0.71% 0.72% 0.70%
Ratio of net investment income
to average net assets......... 4.83%(c) 5.01% 5.04% 2.92% 2.73% 4.08% 6.61% 7.88%
Ratio of expenses to average net
assets*....................... (e) (e) (e) (e) (e) (e) (e) 0.72%
Ratio of net investment income
to average net assets*........ (e) (e) (e) (e) (e) (e) (e) 7.86%

AUGUST 8,
1988 TO
JULY 31,
1989(a)
----------
<S> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................... $ 1.000
----------
INVESTMENT ACTIVITIES
Net investment income........... 0.084
----------
DISTRIBUTIONS
Net investment income........... (0.084)
----------
NET ASSET VALUE, END OF PERIOD... $ 1.000
==========
Total Return.................... 8.72%(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end
of period (000)............... $293,749
Ratio of expenses to average net
assets........................ 0.58%(c)
Ratio of net investment income
to average net assets......... 8.69%(c)
Ratio of expenses to average net
assets*....................... 0.71%(c)
Ratio of net investment income
to average net assets*........ 8.56%(c)
</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) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund Commenced
offering Classic Shares.
(c) Annualized.
(d) Not annualized.
(e) There were no waivers during the period.

6
<PAGE> 49
<TABLE>
<CAPTION>
AMSOUTH U.S. TREASURY FUND
----------------------------------------------------------------------------
SIX MONTHS SEPTEMBER 8,
ENDED YEAR ENDED JULY 31, 1988 TO
JANUARY 31, ---------------------------------------------------------------------------- JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989(a)
----------- ---------- -------- -------- -------- -------- -------- -------- ------------
PREMIER(b) PREMIER(b)
----------- ----------
(UNAUDITED)
<S> <C> <C> <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 $ 1.000 $ 1.000
----------- ---------- -------- -------- -------- -------- -------- -------- ------------
INVESTMENT
ACTIVITIES
Net investment
income.......... 0.023 0.015 0.048 0.028 0.027 0.041 0.064 0.077 0.075
----------- ---------- -------- -------- -------- -------- -------- -------- ------------
DISTRIBUTIONS
Net investment
income.......... (0.023) (0.015) (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 $ 1.000 $ 1.000
============ =========== ========= ========= ========= ========= ========= ========= ============
Total Return....... 2.33%(d) 4.93% 4.90% 2.80% 2.69% 4.15% 6.58% 8.04% 7.75%(d)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end
of period
(000)........... $ 312,929 $368,162 $322,939 $300,603 $404,473 $339,666 $343,967 $239,291 $131,956
Ratio of expenses
to average net
assets.......... 0.70%(c) 0.71% 0.70% 0.71% 0.72% 0.73% 0.72% 0.68% 0.61%(c)
Ratio of net
investment
income to
average
net assets...... 4.58%(c) 4.82% 4.81% 2.77% 2.66% 4.08% 6.28% 7.73% 8.31%(c)
Ratio of expenses
to average net
assets*......... (e) (e) (e) (e) (e) (e) (e) 0.73% 0.74%(c)
Ratio of net
investment
income to
average
net assets*..... (e) (e) (e) (e) (e) (e) (e) 7.68% 8.18%(c)
</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) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(c) Annualized.
(d) Not annualized.
(e) There were no waivers during the period.

7
<PAGE> 50

<TABLE>
<CAPTION>
TAX EXEMPT FUND
--------------------------------------------------------------
SIX MONTHS JUNE 27,
ENDED YEAR ENDED JULY 31, 1988 TO
JANUARY 31, -------------------------------------------------------------- JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990(a)
----------- ------- ------- ------- ------- ------- ------- --------
PREMIER(b) PREMIER(b)
----------- -------
(UNAUDITED)
<S> <C> <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 $ 1.000
-------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income.............. 0.015 0.010 0.032 0.019 0.021 0.030 0.046 0.011
-------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income.............. (0.015) (0.010) (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 $ 1.000 $ 1.000
======== ======== ======== ======== ======== ======== ======== ========
Total Return....................... 1.55%(d) 3.15% 3.22% 1.95% 2.16% 3.12% 4.69% 0.54%(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)............................ $66,974 $43,611 $57,640 $60,923 $48,151 $38,392 $25,400 $28,246
Ratio of expenses to average net
assets........................... 0.51%(c) 0.54% 0.54% 0.57% 0.49% 0.65% 0.52% 0.21%(c)
Ratio of net investment income
to average net assets............ 3.07%(c) 3.11% 3.15% 1.93% 2.12% 2.98% 4.59% 5.70%(c)
Ratio of expenses to average net
assets*.......................... 0.71%(c) 0.74% 0.74% 0.77% 0.78% 0.77% 0.77% 0.81%(c)
Ratio of net investment income
to average net assets*........... 2.87%(c) 2.91% 2.95% 1.73% 1.83% 2.86% 4.34% 5.10%(c)
</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) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(c) Annualized.
(d) Not annualized.

8
<PAGE> 51

<TABLE>
<CAPTION>
BOND FUND
--------------------------------------------------------------------
SIX MONTHS DECEMBER 1,
ENDED YEAR ENDED JULY 31, 1988 TO
JANUARY 31, -------------------------------------------------------------------- JULY 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989(a)
----------- -------- ------- ------- ------- ------- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 10.54 $ 10.83 $ 10.59 $ 11.29 $ 11.29 $ 10.42 $ 10.39 $ 10.61 $ 10.00
----------- -------- ------- ------- ------- ------- ------- ------- -----
INVESTMENT ACTIVITIES
Net investment income....... 0.32 0.65 0.69 0.69 0.71 0.74 0.74 0.77 0.50
Net realized and unrealized
gains (losses) from
investments............... 0.15 (0.18) 0.28 (0.66) 0.33 0.91 0.05 (0.21) 0.56
----------- -------- ------- ------- ------- ------- ------- ------- -----
Total from Investment
Activities................ 0.47 0.47 0.97 0.03 1.04 1.65 0.79 0.56 1.06
----------- -------- ------- ------- ------- ------- ------- ------- -----
DISTRIBUTIONS
Net investment income....... (0.36) (0.65) (0.69) (0.70) (0.71) (0.73) (0.74) (0.75) (0.45)
Net realized gains.......... -- -- (0.04) (0.03) (0.33) (0.05) (0.02) (0.03) --
----------- -------- ------- ------- ------- ------- ------- ------- -----
In excess of net realized
gain...................... -- (0.11) -- -- -- -- -- -- --
----------- -------- ------- ------- ------- ------- ------- ------- -----
Total Distributions......... (0.36) (0.76) (0.73) (0.73) (1.04) (0.78) (0.76) (0.78) (0.45)
----------- -------- ------- ------- ------- ------- ------- ------- -----
NET ASSET VALUE, END OF
PERIOD...................... $ 10.65 $ 10.54 $ 10.83 $ 10.59 $ 11.29 $ 11.29 $ 10.42 $ 10.39 $ 10.61
============ ========= ======== ======== ======== ======== ======== ======== =============
Total Return
(Excludes Sales Charge)... 4.53%(c) 4.40% 9.70% 0.23% 9.80% 16.41% 7.99% 5.54% 10.91%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)..................... $ 132,112 $132,737 $94,671 $79,472 $65,777 $60,156 $26,008 $17,518 $ 4,954
Ratio of expenses to average
net assets................ 0.75%(b) 0.75% 0.75% 0.78% 0.78% 0.82% 0.93% 0.84% 1.10%(b)
Ratio of net investment
income to average
net assets................ 6.03%(b) 6.12% 6.63% 6.31% 6.37% 6.94% 7.26% 7.82% 7.47%(b)
Ratio of expenses to average
net assets*............... 0.98%(b) 0.98% 0.98% 1.01% 1.01% 1.01% 1.11% 1.21% 2.28%(b)
Ratio of net investment
income to average net
assets*................... 5.80%(b) 5.89% 6.40% 6.08% 6.14% 6.75% 7.09% 7.45% 6.29%(b)
PORTFOLIO TURNOVER........... 11.20% 9.60% 17.70% 30.90% 14.98% 240.64% 181.77% 53.52% 0.00%
</TABLE>

- ------------

9
<PAGE> 52
<TABLE>
<CAPTION>
LIMITED MATURITY FUND
-------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, -------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
---------------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.. $ 10.31 $ 10.41 $ 10.23 $ 10.81 $ 10.81 $ 10.44 $ 10.29
------- ------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income................ 0.30 0.58 0.58 0.54 0.60 0.70 0.73
Net realized and unrealized gains
(losses) from investments.......... 0.04 (0.10) 0.17 (0.45) 0.09 0.45 0.17
------- ------- ------- ------- ------- ------- -------
Total from Investment Activities..... 0.34 0.48 0.75 0.09 0.69 1.15 0.90
------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS
Net investment income................ (0.33) (0.57) (0.57) (0.54) (0.61) (0.69) (0.73)
In excess of net investment income... -- (0.01) -- -- -- -- --
Net realized gains................... -- -- -- -- (0.08) (0.09) (0.02)
In excess of net realized gains...... -- -- -- (0.13) -- -- --
------- ------- ------- ------- ------- ------- -------
Total Distributions.................. (0.33) (0.58) (0.57) (0.67) (0.69) (0.78) (0.75)
------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........ $ 10.32 $ 10.31 $ 10.41 $ 10.23 $ 10.81 $ 10.81 $ 10.44
======= ======= ======= ======= ======= ======= =======
Total Return (Excludes Sales
Charge)............................ 3.29%(c) 4.74% 7.65% 0.77% 6.72% 11.48% 9.06%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).... $ 41,087 $46,005 $59,798 $51,660 $53,933 $38,206 $11,112
Ratio of expenses to average net
assets............................. 0.77%(b) 0.76% 0.80% 0.79% 0.69% 0.68% 0.85%
Ratio of net investment income to
average net assets................. 5.56%(b) 5.48% 5.69% 5.05% 5.67% 6.78% 7.19%
Ratio of expenses to average net
assets*............................ 1.00%(b) 0.99% 1.03% 1.02% 1.03% 1.03% 1.20%
Ratio of net investment income to
average net assets*................ 5.33%(b) 5.25% 5.46% 4.82% 5.33% 6.43% 6.84%
PORTFOLIO TURNOVER.................... 42.36% 29.56% 38.11% 48.06% 141.27% 35.64% 85.08%

FEBRUARY 1,
1988 TO
JULY 31,
1990 1989(a)
------ -----------

<S> <C<C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.. $10.35 $ 10.00
------- -------
INVESTMENT ACTIVITIES
Net investment income................ 0.72 0.35
Net realized and unrealized gains
(losses) from investments.......... (0.05) 0.32
------- -------
Total from Investment Activities..... 0.67 0.67
------- -------
DISTRIBUTIONS
Net investment income................ (0.70) (0.32)
In excess of net investment income... -- --
Net realized gains................... (0.03) --
In excess of net realized gains...... -- --
------- -------
Total Distributions.................. (0.73) (0.32)
------- -------
NET ASSET VALUE, END OF PERIOD........ $10.29 $ 10.35
======= =======
Total Return (Excludes Sales
Charge)............................ 6.80% 6.87%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).... $5,983 $ 3,165
Ratio of expenses to average net
assets............................. 1.02% 1.41%(b)
Ratio of net investment income to
average net assets................. 7.23% 6.82%(b)
Ratio of expenses to average net
assets*............................ 1.45% 2.72%(b)
Ratio of net investment income to
average net assets*................ 6.80% 5.51%(b)
PORTFOLIO TURNOVER.................... 119.69% 28.28%
</TABLE>

- ------------

10
<PAGE> 53

<TABLE>
<CAPTION>
GOVERNMENT INCOME FUND
--------------------------------------
YEAR ENDED
SIX MONTHS ENDED JULY 31, OCTOBER 1, 1993
JANUARY 31, ------------------ TO JULY 31,
1997 1996 1995 1994(a)
---------------- ------- ------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 9.40 $ 9.54 $ 9.48 $ 10.00
------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income...................... 0.26 0.66 0.68 0.54
Net realized and unrealized gains (losses)
from investments........................ 0.20 (0.20) 0.08 (0.57)
------- ------- ------- -------
Total from Investment Activities........... 0.46 0.46 0.76 (0.03)
------- ------- ------- -------
DISTRIBUTIONS
Net investment income...................... (0.27) (0.59) (0.70) (0.33)
Tax return of capital...................... -- (0.01) -- (0.16)
------- ------- ------- -------
Total Distributions........................ (0.27) (0.60) (0.70) (0.49)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............... $ 9.59 $ 9.40 $ 9.54 $ 9.48
======= ======= ======= =======
Total Return (Excludes Sales Charge)....... 4.95%(c) 4.91% 8.43% (0.26)%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).......... $ 13,762 $15,752 $16,679 $15,465
Ratio of expenses to average net assets.... 0.72%(b) 0.65% 0.58% 0.37%(b)
Ratio of net investment income to average
net assets.............................. 5.49%(b) 6.81% 7.18% 6.56%(b)
Ratio of expenses to average net assets*... 1.17%(b) 1.10% 1.19% 1.22%(b)
Ratio of net investment income to average
net assets*............................. 5.04%(b) 6.36% 6.57% 5.71%(b)
PORTFOLIO TURNOVER........................... 2.65% 78.31% 27.32% 122.94%
</TABLE>

11
<PAGE> 54

<TABLE>
<CAPTION>
FLORIDA TAX-FREE FUND
----------------------------------------------------
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30, 1994
JANUARY 31, JULY 31, TO JULY 31,
1997 1996 1995(a)
---------------- ---------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 10.30 $ 10.32 $ 10.00
---------------- ---------- ----------
INVESTMENT ACTIVITIES
Net investment income........................... 0.22 0.45 0.34
Net realized and unrealized gains (losses) from
investments.................................. 0.05 (0.01) 0.30
---------------- ---------- ----------
Total from Investment Activities................ 0.27 0.44 0.64
---------------- ---------- ----------
DISTRIBUTIONS
Net investment income........................... (0.25) (0.45) (0.32)
Net realized gains.............................. (0.01) (0.01) --
---------------- ---------- ----------
Total Distributions............................. (0.26) (0.46) (0.32)
---------------- ---------- ----------
NET ASSET VALUE, END OF PERIOD.................... $ 10.31 $ 10.30 $ 10.32
============= ======== ==============
Total Return (Excludes Sales Charge).............. 2.71%(c) 4.24% 6.53%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Asset at end of period (000)................ $ 52,825 $ 48,869 $ 48,333
Ratio of expenses to average net assets......... 0.54%(b) 0.59% 0.70%(b)
Ratio of net investment income to average net
assets....................................... 4.35%(b) 4.33% 4.16%(b)
Ratio of expenses to average net assets*........ 0.99%(b) 1.04% 1.01%(b)
Ratio of net investment income to average net
assets*...................................... 3.90%(b) 3.88% 3.86%(b)
PORTFOLIO TURNOVER................................ 2.30% 12.21% 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.

12
<PAGE> 55
<TABLE>
<CAPTION>
EQUITY FUND
------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, ------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
---------------- -------- -------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 17.62 $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57 $ 11.99
-------- -------- -------- -------- -------- -------- -------
INVESTMENT ACTIVITIES
Net Investment income........ 0.16 0.33 0.33 0.28 0.28 0.32 0.36
Net realized and unrealized
gains from investments..... 2.30 1.48 2.39 0.83 1.48 1.20 0.61
-------- -------- -------- -------- -------- -------- -------
Total from Investment
Activities................. 2.46 1.81 2.72 1.11 1.76 1.52 0.97
-------- -------- -------- -------- -------- -------- -------
DISTRIBUTIONS
Net investment income........ (0.17) (0.33) (0.32) (0.28) (0.29) (0.33) (0.37)
Net realized gains........... (1.04) (0.61) (0.47) (0.39) (0.49) (0.36) (0.02)
-------- -------- -------- -------- -------- -------- -------
Total Distributions.......... (1.21) (0.94) (0.79) (0.67) (0.78) (0.69) (0.39)
-------- -------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF
PERIOD....................... $ 18.87 $ 17.62 $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57
======== ======== ======== ======== ======== ======== =======
Total Return (Excludes Sales
Charge)...................... 14.32%(c) 11.09% 19.27% 7.90% 13.81% 12.94% 8.46%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)...................... $419,009 $374,622 $275,757 $205,611 $153,074 $107,934 $32,406
Ratio of expenses to average
net assets................. 1.01%(b) 1.02% 1.03% 0.94% 0.95% 1.01% 1.15%
Ratio of net investment
income to average net
assets..................... 1.71%(b) 1.86% 2.17% 1.93% 2.08% 2.50% 3.16%
Ratio of expenses to average
net assets*................ 1.09%(b) 1.11% 1.11% 1.11% 1.13% 1.15% 1.26%
Ratio of net investment
income to average net
assets*.................... 1.63%(b) 1.77% 2.09% 1.76% 1.90% 2.36% 3.04%
PORTFOLIO TURNOVER............ 11.94% 19.11% 19.46% 11.37% 15.12% 113.12% 15.78%
Average commission rate
paid(d).................... $ 0.0668 $ 0.0700 -- -- -- -- --

DECEMBER 1,
1988 TO
JULY 31,
1990 1989(a)
------- -----------

<S> <C<C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 12.18 $ 10.00
------- ------
INVESTMENT ACTIVITIES
Net Investment income........ 0.37 0.22
Net realized and unrealized
gains from investments..... (0.17) 2.16
------- ------
Total from Investment
Activities................. 0.20 2.38
------- ------
DISTRIBUTIONS
Net investment income........ (0.35) (0.20)
Net realized gains........... (0.04) --
------- ------
Total Distributions.......... (0.39) (0.20)
------- ------
NET ASSET VALUE, END OF
PERIOD....................... $ 11.99 $ 12.18
======= ======
Total Return (Excludes Sales
Charge)...................... 1.66% 24.06%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period
(000)...................... $14,383 $ 5,476
Ratio of expenses to average
net assets................. 1.11% 1.16%(b)
Ratio of net investment
income to average net
assets..................... 3.16% 2.91%(b)
Ratio of expenses to average
net assets*................ 1.41% 2.34%(b)
Ratio of net investment
income to average net
assets*.................... 2.86% 1.73%(b)
PORTFOLIO TURNOVER............ 14.89% 4.03%
Average commission rate
paid(d).................... -- --
</TABLE>

- ------------

13
<PAGE> 56
<TABLE>
<CAPTION>
REGIONAL EQUITY FUND
-----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31,
JANUARY 31, -----------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
---------------- ------- ------- ------- ------- ------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............. $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86 $ 13.44 $12.45 $11.64
------- ------- ------- ------- ------- ------- ------ ------
INVESTMENT
ACTIVITIES
Net investment
income........... 0.15 0.26 0.23 0.23 0.19 0.23 0.26 0.23
Net realized and
unrealized gains
from
investments...... 3.79 2.20 2.26 0.58 2.09 2.34 1.20 0.84
------- ------- ------- ------- ------- ------- ------ ------
Total from
Investment
Activities....... 3.94 2.46 2.49 0.81 2.28 2.57 1.46 1.07
------- ------- ------- ------- ------- ------- ------ ------
DISTRIBUTIONS
Net investment
income........... (0.15) (0.26) (0.23) (0.23) (0.20) (0.23) (0.26) (0.22)
Net realized
gains............ (0.49) (0.19) -- (0.41) (0.20) (0.92) (0.21) (0.04)
-------
In excess of net
realized gains... -- -- -- (0.23) -- -- -- --
------- ------- ------- ------- ------- ------- ------ ------
Total
Distributions.... (0.64) (0.45) (0.23) (0.87) (0.40) (1.15) (0.47) (0.26)
------- ------- ------- ------- ------- ------- ------ ------
NET ASSET VALUE, END
OF PERIOD.......... $ 24.25 $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86 $13.44 $12.45
=================== ======== ======== ======== ======== ======== ======= =======
Total Return
(Excludes Sales
Charge).......... 18.96%(c) 13.10% 15.10% 4.87% 15.53% 20.66% 12.52% 9.41%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end
of period
(000)............ $120,448 $93,584 $68,501 $54,744 $41,347 $15,707 $7,853 $3,161
Ratio of expenses
to average net
assets........... 1.03%(b) 1.05% 1.07% 0.79% 0.80% 0.91% 0.79% 1.22%
Ratio of net
investment income
to average net
assets........... 1.22%(b) 1.30% 1.35% 1.36% 1.17% 1.61% 2.21% 1.92%
Ratio of expenses
to average net
assets*.......... 1.11%(b) 1.13% 1.15% 1.24% 1.28% 1.36% 1.58% 2.32%
Ratio of net
investment income
to average net
assets*.......... 1.14%(b) 1.22% 1.27% 0.90% 0.69% 1.16% 1.42% 0.82%
PORTFOLIO
TURNOVER........... 7.45% 8.22% 14.25% 5.83% 10.22% 24.99% 14.41% 14.00%
Average commission
rate paid(d)..... $ 0.0829 $0.0827 -- -- -- -- -- --

DECEMBER 1,
1988 TO
JULY 31,
1989(a)
-----------

<S> <C<C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............. $ 10.00
-----
INVESTMENT
ACTIVITIES
Net investment
income........... 0.14
Net realized and
unrealized gains
from
investments...... 1.64
-----
Total from
Investment
Activities....... 1.78
-----
DISTRIBUTIONS
Net investment
income........... (0.14)
Net realized
gains............ --
-----
In excess of net
realized gains... --
-----
Total
Distributions.... (0.14)
-----
NET ASSET VALUE, END
OF PERIOD.......... $ 11.64
=============
Total Return
(Excludes Sales
Charge).......... 17.79%(c)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets at end
of period
(000)............ $ 2,523
Ratio of expenses
to average net
assets........... 1.41%(b)
Ratio of net
investment income
to average net
assets........... 1.98%(b)
Ratio of expenses
to average net
assets*.......... 2.65%(b)
Ratio of net
investment income
to average net
assets*.......... 0.74%(b)
PORTFOLIO
TURNOVER........... 1.13%
Average commission
rate paid(d)..... --
</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.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of shares purchased and sold by the
Fund for which commissions were charged.

14
<PAGE> 57

<TABLE>
<CAPTION>
BALANCED FUND
--------------------------------------------
DECEMBER 19,
SIX MONTHS ENDED YEAR ENDED JULY 31, 1991 TO
JANUARY 31, -------------------------------------------- JULY 31,
1997 1996 1995 1994 1993 1992(a)
---------------- -------- -------- -------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 13.03 $ 12.76 $ 11.81 $ 11.86 $ 11.12 $ 10.00
-------- -------- -------- -------- -------- ------------
INVESTMENT ACTIVITIES
Net Investment income............... 0.25 0.47 0.47 0.42 0.44 0.27
Net realized and unrealized gains
from investments.................. 0.99 0.58 1.24 0.18 0.80 1.09
-------- -------- -------- -------- -------- ------------
Total from Investment Activities.... 1.24 1.05 1.71 0.60 1.24 1.36
-------- -------- -------- -------- -------- ------------
DISTRIBUTIONS
Net investment income............... (0.27) (0.47) (0.46) (0.42) (0.45) (0.24)
Net realized gains.................. (0.58) (0.31) (0.30) (0.23) (0.05) --
-------- -------- -------- -------- -------- ------------
Total Distributions................. (0.85) (0.78) (0.76) (0.65) (0.50) (0.24)
-------- -------- -------- -------- -------- ------------
NET ASSET VALUE, END OF PERIOD........ $ 13.42 $ 13.03 $ 12.76 $ 11.81 $ 11.86 $ 11.12
=============== ======== ======== ======== ======== ============
Total Return (Excludes Sales
Charge)........................... 9.73%(c) 8.37% 15.27% 5.13% 11.47% 13.71%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000)... $355,980 $338,425 $295,509 $236,306 $179,134 $143,813
Ratio of expenses to average net
assets............................ 1.02%(b) 0.98% 0.94% 0.84% 0.84% 0.83%(b)
Ratio of net investment income to
average net assets................ 3.62%(b) 3.61% 3.91% 3.56% 3.90% 4.45%(b)
Ratio of expenses to average net
assets*........................... 1.10%(b) 1.11% 1.12% 1.11% 1.12% 1.17%(b)
Ratio of net investment income to
average net assets*............... 3.54%(b) 3.48% 3.73% 3.28% 3.62% 4.10%(b)
PORTFOLIO TURNOVER.................... 13.57% 20.47% 16.97% 14.43% 11.09% 23.18%
Average commission rate paid(d)..... $ 0.0760 $ 0.0773 -- -- -- --
</TABLE>

15
<PAGE> 58

<TABLE>
<CAPTION>
EQUITY INCOME FUND
------------------
MARCH 20, 1997
THROUGH
JULY 31, 1997
------------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................... $ 10.00
----------
INVESTMENT ACTIVITIES
Net investment income................................................ 0.07
Net realized and unrealized gains from investments................... 1.71
----------
Total from Investment Activities..................................... 1.78
----------
DISTRIBUTIONS
Net investment income................................................ (0.06)
Net realized gains................................................... 0.00
----------
Total Distributions.................................................. (0.06)
----------
NET ASSET VALUE, END OF PERIOD......................................... $ 11.72
==============
Total Return (Excludes Sales Charge)................................. 17.81%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).................................... $ 22,273
Ratio of expenses to average net assets.............................. 1.28%(b)
Ratio of net investment income to average net assets................. 2.11%(b)
Ratio of expenses to average net assets*............................. 1.49%(b)
Ratio of net investment income to average net assets*................ 1.89%(b)
PORTFOLIO TURNOVER..................................................... 27.38%
Average commission rate paid(d)...................................... $ 0.0600
</TABLE>

16
<PAGE> 59

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of each Fund is fundamental and may not be changed
without a vote of a majority of the outstanding Shares of that Fund (as defined
below under "GENERAL INFORMATION--Miscellaneous" in this prospectus). There can
be, of course, no assurance that any Fund will achieve its investment objective.

THE PRIME OBLIGATIONS AND AMSOUTH U.S. TREASURY FUNDS

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. Although the Prime Obligations Fund and the AmSouth U.S. Treasury
Fund have the same 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.

Changes in prevailing interest rates may affect the yield, and possibly the
net asset value, of each Fund. Each Money Market Fund invests only in those
securities and instruments considered by the Advisor 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 may bear longer maturities. The dollar-weighted average
maturity of the securities in each Money Market Fund will not exceed 90 days.

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 one NRSRO if only rated by one
NRSRO 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. The Statement also identifies the NRSROs
that may be utilized by the Advisor 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 the Advisor believes
that the credit risk with respect thereto is minimal.

17
<PAGE> 60

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.

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. The Advisor 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.

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 BOND FUND AND LIMITED
MATURITY FUND

THE BOND FUND seeks current income consistent with the preservation of
capital. The Bond Fund invests in long-term bonds and other fixed-income
securities. The Bond Fund's investments primarily consist of, but are not
limited to, debt obligations such as bonds, notes and debentures, which are
issued by United States corporations or issued or guaranteed by the United
States Government or its agencies or instrumentalities. The Bond Fund invests in
debt securities only if they are rated at time of purchase in one of the three
highest rating categories by an NRSRO, or including all subclassifications
indicated by modifiers of such "A" ratings. See "Appendix" to the Statement of
Additional Information for an explanation of these ratings.

18
<PAGE> 61

The Bond Fund invests in fixed-income securities with a maturity in excess of
one year, except for amounts held in cash equivalents. Fixed-income securities
can have maturities of thirty years or more. The Bond Fund will invest at least
65% of the value of its total assets in bonds (including debentures), except
that, when market conditions indicate a temporary defensive investment strategy
as determined by the Advisor, more than 35% of the Bond Fund's total assets may
be held in cash and cash equivalents. "Cash equivalents" are short-term,
interest-bearing instruments or deposits. The purpose of cash equivalents is to
provide income at money market rates while minimizing the risk of decline in
value to the maximum extent possible. The instruments may include, but are not
limited to, commercial paper, certificates of deposit, repurchase agreements,
bankers' acceptances, United States Treasury Bills, bank money market deposit
accounts and money market mutual funds. The Bond Fund will purchase commercial
paper rated at the time of purchase in the highest rating category by an NRSRO
or, if not rated, found by the Advisor under guidelines established by the
Trust's Board of Trustees to be of comparable quality. See "Appendix" to the
Statement of Additional Information for an explanation of these ratings.

THE LIMITED MATURITY FUND seeks current income consistent with the
preservation of capital. The Limited Maturity Fund invests in bonds (including
debentures), notes and other debt securities which have a stated or remaining
maturity of five years or less or which have an unconditional redemption feature
that will permit the Limited Maturity Fund to require the issuer of the security
to redeem the security within five years from the date of purchase by the
Limited Maturity Fund or for which the Limited Maturity Fund has acquired an
unconditional "put" to sell the security within five years from the date of
purchase by the Limited Maturity Fund.

The Limited Maturity Fund's investments consist primarily of, but are not
limited to, debt securities such as bonds, notes and debentures, which are
issued by United States corporations or issued or guaranteed by the United
States Government or its agencies or instrumentalities. The Limited Maturity
Fund invests in debt securities only if they are rated at time of purchase in
one of the three highest rating categories by an NRSRO or, if not rated, found
by the Advisor under guidelines established by the Trust's Board of Trustees to
be of comparable quality. See "Appendix" to the Statement of Additional
Information for an explanation of these ratings.

Under normal circumstances, the Limited Maturity Fund will invest at least 65%
of the value of its total assets in bonds (including debentures), notes and
other debt securities which have a stated or remaining maturity of five years or
less or which have an unconditional redemption feature that will permit the
Limited Maturity Fund to require the issuer of the security to redeem the
security within five years from the date of purchase by The Limited Maturity
Fund or for which the Limited Maturity Fund has acquired an unconditional "put"
to sell the security within five years from the date of purchase by the Limited
Maturity Fund. The remainder of the Limited Maturity Fund's assets will be
invested in cash, cash equivalents and government and corporate bonds, including
without limitation cash or money-market instruments, commercial paper,
certificates of deposit, repurchase agreements, bankers' acceptances, U.S.
Treasury Bills, obligations of the U.S. Government and its agencies, bank money
market deposit accounts and money market mutual funds. The Limited Maturity Fund
will purchase commercial paper rated at the time of purchase in the highest
rating category by an NRSRO or, if not rated, found by the Advisor under
guidelines established by the Trust's Board of Trustees to be of comparable
quality. See "Appendix" to the Statement of Additional Information for an
explanation of these ratings. At times, the Advisor may determine that it is not
in the best interests of Shareholders of the Limited Maturity Fund to invest 65%
of The Limited Maturity Fund's total assets in bonds, debentures, notes and
other debt securities. At such times, the Fund may follow the temporary
defensive investment strategy of investing more than 35% of its total assets in
cash, cash equivalents and corporate bonds with remaining

19
<PAGE> 62

maturities of less than 1 year. There is no way to
predict when, or for how long, the Limited Maturity Fund may pursue such a
defensive investment strategy.

At the time of purchase of a debt security with a stated or remaining maturity
in excess of five years from the date of purchase by the Limited Maturity Fund,
the Limited Maturity Fund may acquire a "put" with respect to such debt
securities. Under a "put", the Limited Maturity Fund would have the right to
sell the debt security within a specified period of time at a specified minimum
price. The Limited Maturity Fund will only acquire puts from dealers, banks and
broker-dealers which the Advisor has determined are creditworthy under
guidelines established by the Trust's Board of Trustees. A put will be sold,
transferred, or assigned by the Limited Maturity Fund only with the underlying
debt security. The Limited Maturity Fund will acquire puts solely to shorten the
maturity of the underlying debt security. 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.

MASTER DEMAND NOTES

The Bond and Limited Maturity Funds may also invest in master demand notes in
order to satisfy short-term needs or, if warranted, as part of their temporary
defensive investment strategy. Such notes are demand obligations that permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to arrangements between the issuer and a United States commercial bank acting as
agent for the payees of such notes. Master demand notes are callable on demand
by an Income Fund, but are not marketable to third parties. Master demand notes
are direct lending arrangements between an Income Fund and the issuer of such
notes. The quality of master demand notes will be reviewed by the Advisor of the
Income Funds at least quarterly, which review will consider the earning power,
cash flow and debt-to-equity ratios indicating the borrower's ability to pay
principal together with accrued interest on demand. While master demand notes
are not typically rated by credit rating agencies, issuers of such notes must
satisfy the same criteria for the Bond Fund and the Limited Maturity Fund set
forth above for commercial paper.

VARIABLE AND FLOATING RATE NOTES

The Bond Fund and the Limited Maturity Fund may acquire rated and unrated
variable and floating rate notes. Variable and floating rate notes are
frequently not rated by credit rating agencies; however, unrated variable and
floating rate notes purchased by an Income Fund will be determined by the
Advisor 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. 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 an Income Fund will approximate their par value.

It is anticipated that the only non-income producing securities to be held in
the Bond Fund and Limited Maturity Fund will be zero-coupon obligations
evidencing ownership of future interest and principal payments on United States
Treasury Bonds. Such zero-coupon obligations pay no current interest and are
typically sold at prices greatly discounted from par value, with par value to be
paid to the holder at maturity. The return on a zero-coupon obligation, when
held to maturity, equals the difference between the par value and the original
purchase price. Zero-coupon obligations have greater price volatility than
coupon obligations and such obligations will be purchased when the yield spread,
in light of the obligation's duration, is considered advantageous. The Bond Fund
will only purchase zero-coupon obligations if, at the time of purchase, such
investments do not exceed 15% of the value of the Bond Fund's total assets, and
the Limited Maturity Fund will only purchase zero-coupon obligations if, at the
time of purchase, such investments do not exceed 25% of the value of the Limited
Maturity Fund's total assets.

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<PAGE> 63

An increase in interest rates will generally reduce the value of the
investments in the Funds and a decline in interest rates will generally increase
the value of those investments. Depending upon prevailing market conditions, the
Advisor may purchase debt securities at a discount from face value, which
produces a yield greater than the coupon rate. Conversely, if debt securities
are purchased at a premium over face value, the yield will be lower than the
coupon rate. In making investment decisions, the Advisor will consider many
factors other than current yield, including the preservation of capital,
maturity, and yield to maturity.

THE GOVERNMENT INCOME FUND

THE GOVERNMENT INCOME FUND seeks current income consistent with preservation
of capital. The Government Income Fund invests at least 65% of its total assets
in obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, although up to 35% of the value of its total assets may be
invested in other types of debt securities, preferred stocks and options.
Consistent with the foregoing, under normal market conditions, the Government
Income Fund will invest up to 80% of the value of its total assets in
mortgage-related securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, such as the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC"), and in mortgage-related
securities issued by nongovernmental entities which are rated, at the time of
purchase, in one of the three highest rating categories by an NRSRO or, if
unrated, which the Advisor deems present attractive opportunities and are of
comparable quality. For a description of the rating symbols of each NRSRO, see
the Appendix to the Statement of Additional Information.

The Government Income Fund may also hold some short-term obligations (with
maturities of 12 months or less) consisting of domestic and foreign commercial
paper (including variable amount master demand notes), bankers' acceptances,
certificates of deposit and time deposits of domestic and foreign branches of
U.S. banks and foreign banks, and repurchase and reverse repurchase agreements.
The Government Income Fund may also invest in corporate debt securities that are
rated at the time of purchase in one of the three highest rating categories by
an NRSRO or, if not rated, found by the Advisor under guidelines established by
the Trust's Board of Trustees to be of comparable quality.

U.S. GOVERNMENT OBLIGATIONS

The types of U.S. Government obligations, including mortgage-related
securities, invested in by the Government Income Fund includes obligations
issued or guaranteed as to payment of principal and interest by the full faith
and credit of the U.S. Treasury, such as Treasury bills, notes, bonds and
certificates of indebtedness, and obligations issued or guaranteed by the
agencies or instrumentalities of the U.S. Government, but not supported by such
full faith and credit. Obligations of the U.S. Treasury include "stripped" U.S.
Treasury Obligations such as Treasury Receipts, representing either future
interest or principal payments. Stripped securities are issued at a discount to
their "face value" and may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors.

Obligations of certain agencies and instrumentalities of the U.S. Government,
such as GNMA 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 FNMA,
are supported by the right of the issuer to borrow from the Treasury; others 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
Banks or FHLMC, 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 principal governmental (i.e., backed by the full faith and credit of the
United States Govern-

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<PAGE> 64

ment) guarantor of mortgage-related securities is GNMA. GNMA is a wholly-owned
United States Government corporation within the Department of Housing and Urban
Development. GNMA is authorized to guarantee, with the full faith and credit of
the U.S. Government, the timely payment of principal and interest on securities
issued by institutions approved by GNMA (such as savings and loan institutions,
commercial banks and mortgage bankers) and backed by pools of FHA-insured or
VA-guaranteed mortgages.

Government-related (i.e., not backed by the full faith and credit of the
United States Government) guarantors include FNMA and FHLMC. FNMA and FHLMC are
government-sponsored corporations owned entirely by private stockholders.
Pass-through securities issued by FNMA and FHLMC are guaranteed as to timely
payment of principal and interest by FNMA and FHLMC but are not backed by the
full faith and credit of the U.S. Government.

MORTGAGE-RELATED SECURITIES--IN GENERAL

Mortgage-related securities have mortgage obligations backing such securities,
including among others, conventional thirty year fixed rate mortgage
obligations, graduated payment mortgage obligations, fifteen year mortgage
obligations, and adjustable rate mortgage obligations. All of these mortgage
obligations can be used to create pass-through securities. A pass-through
security is created when mortgage obligations are pooled together and undivided
interests in the pool or pools are sold. The cash flow from the mortgage
obligations is passed through to the holders of the securities in the form of
periodic payments of interest, principal and prepayments (net of a service fee).
Prepayments occur when the holder of an individual mortgage obligation prepays
the remaining principal before the mortgage obligation's scheduled maturity
date. As a result of the pass-through of prepayments of principal on the
underlying securities, mortgage-backed securities are often subject to more
rapid prepayment of principal than their stated maturity would indicate. Because
the prepayment characteristics of the underlying mortgage obligations vary, it
is not possible to predict accurately the realized yield or average life of a
particular issue of pass-through certificates. Prepayment rates are important
because of their effect on the yield and price of the securities. Accelerated
prepayments have an adverse impact on yields for pass-throughs purchased at a
premium (i.e., a price in excess of principal amount) and may involve additional
risk of loss of principal because the premium may not have been fully amortized
at the time the obligation is repaid. The opposite is true for pass-throughs
purchased at a discount. The Government Income Fund may purchase
mortgage-related securities at a premium or at a discount.

MORTGAGE-RELATED SECURITIES ISSUED BY
NONGOVERNMENTAL ENTITIES

The Government Income Fund may invest in mortgage-related securities issued by
nongovernmental entities. Commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers and other secondary
market issues also create passthrough pools of conventional residential mortgage
loans. Such issuers may also be the originators of the underlying mortgage loans
as well as the guarantors of the mortgage-related securities. Pools created by
such nongovernmental issuers generally offer a higher rate of interest than
government and government-related pools because there are not direct or indirect
government guarantees of payments in the former pools. However, timely payment
of interest and principal of these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. Such insurance and guarantees and the
creditworthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets the Government Income Fund's
investment quality standards. There can be no assurance that the private
insurers can meet their obligations under the policies. The Government Income
Fund may buy mortgage-related securities without insurance or guarantees if
through an exam-

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<PAGE> 65

ination of the loan experience and practices of the poolers the Advisor
determines that the securities meet the Government Income Fund's quality
standards. Although the market for such securities is becoming increasingly
liquid, securities issued by certain private organizations may not be readily
marketable. The Government Income Fund will not purchase mortgage-related
securities or any other assets which in the Advisor's opinion are illiquid, if
as a result, more than 15% of the value of the Government Income Fund's net
assets will be illiquid.

COLLATERALIZED MORTGAGE OBLIGATIONS

Mortgage-related securities in which the Government Income Fund may invest may
also include collateralized mortgage obligations ("CMOs"). CMOs are debt
obligations issued generally by finance subsidiaries or trusts that are secured
by mortgage-backed certificates, including, in many cases, certificates issued
by government-related guarantors, including GNMA, FNMA and FHLMC, together with
certain funds and other collateral. Although payment of the principal of and
interest on the mortgage-backed certificates pledged to secure the CMOs may be
guaranteed by GNMA, FNMA or FHLMC, the CMOs represent obligations solely of the
issuer and are not insured or guaranteed by GNMA, FHLMC, FNMA or any other
governmental agency, or by any other person or entity. The issuers of the CMOs
typically have no significant assets other than those pledged as collateral for
the obligations. The staff of the Securities and Exchange Commission has
determined that certain issuers of CMOs are investment companies for purposes of
the Investment Company Act of 1940, as amended (the "1940 Act").

CMOs may include Stripped Mortgage Securities. Such securities are derivative
multiclass mortgage securities issued by agencies or instrumentalities of the
U.S. Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing. Stripped
Mortgage Securities are usually structured with two classes that receive
different proportions of the interest and principal distributions on a pool of
mortgage assets. A common type of Stripped Mortgage Security will have one class
receiving all of the interest from the mortgage assets (the interest-only or
"IO" class), while the other class will receive all of the principal (the
principal-only or "PO" class). The yield to maturity on an IO class is extremely
sensitive to the rate of principal payments (including prepayments) on the
related underlying mortgage assets, and a rapid rate of principal payments may
have a material adverse effect on the securities' yield to maturity. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the Fund may fail to fully recoup its initial investment in these
securities even if the security is rated AAA or Aaa.

The Stripped Mortgage Securities held by the Fund will be considered liquid
securities only under guidelines established by the Trust's Board of Trustees,
and the Fund will not purchase a Stripped Mortgage Security that is illiquid if,
as a result thereof, more than 15% of the value of the Fund's net assets would
be invested in such securities and other illiquid securities.

In reliance on a recent staff interpretation, the Government Income Fund's
investment in certain qualifying CMOs, including CMOs that have elected to be
treated as Real Estate Mortgage Investment Conduits (REMICs), are not subject to
the 1940 Act's limitation on acquiring interests in other investment companies.
In order to be able to rely on the staff's interpretation, the CMOs and REMICs
must be unmanaged, fixed-asset issuers, that (a) invest primarily in
mortgaged-backed securities, (b) do not issue redeemable securities, (c) operate
under general exemptive orders exempting them from all provisions of the 1940
Act, and (d) are not registered or regulated under the 1940 Act as investment
companies. To the extent that the Government Income Fund selects CMOs or REMICs
that do not meet the above requirements, the Government Income Fund's investment
in such securities will be subject to the limitations on its investment in
investment company securities as set forth under "INVESTMENT OBJECTIVES

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<PAGE> 66

AND POLICIES--Investment Restrictions" in the Statement of Additional
Information.

The Government Income Fund expects that governmental, government-related or
private entities may create mortgage loan pools offering pass-through
investments in addition to those described above. The mortgages underlying these
securities may be alternative mortgage instruments, that is, mortgage
instruments whose principal or interest payments may vary or whose terms to
maturity may be different from customary long-term fixed rate mortgages. As new
types of mortgage-related securities are developed and offered to investors, the
Advisor will, consistent with the Government Income Fund's investment objective,
policies and quality standards, consider making investments in such new types of
securities.

THE TAX EXEMPT FUND, FLORIDA FUND AND MUNICIPAL BOND FUND

THE TAX EXEMPT FUND seeks 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 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 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.

Changes in prevailing interest rates may affect the yield, and possibly the
net asset value, of the Tax Exempt Fund. The Tax Exempt Fund invests only in
those securities and instruments considered by the Advisor to present minimal
credit risks under guidelines established by the Trust's Board of Trustees. All
securities or instruments in which the Fund invests have remaining maturities of
397 days or less, although instruments subject to repurchase agreements and
certain variable rate and floating rate instruments subject to demand features
may bear longer maturities. The dollar-weighted average maturity of the
securities in the Tax Exempt 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 advisor to determine whether investment in the Tax Exempt Fund would
be appropriate.

THE FLORIDA FUND seeks to produce as high a level of current interest income
exempt from federal income taxes and Florida intangibles taxes as is consistent
with the preservation of capital. The Florida Fund invests primarily in bonds,
notes and warrants generally issued by or on behalf of the State of Florida and
its political subdivisions, the interest on which, in the opinion of the
issuer's bond counsel at the time of issuance, is exempt from federal income
tax, is not treated as a preference item for purposes of the federal alternative
minimum tax for individuals, and is exempt from the Florida Intangible Personal
Property Tax ("Florida Municipal Securities"). As a fundamental policy, under
normal market conditions at least 80% of the Florida Fund's net assets will be
invested in Florida Municipal Securities.

THE MUNICIPAL BOND FUND seeks to produce as high a level of current federal
tax-exempt income,

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<PAGE> 67

as is consistent with the preservation of capital. The Municipal Bond Fund
invests primarily in Municipal Securities, as defined above. As a fundamental
policy, under normal market conditions at least 80% of the Municipal Bond Funds'
net 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. Additionally, as a fundamental policy, under normal market
conditions at least 65% of the Municipal Bond Fund's total assets will be
invested in bonds.

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 federal income taxation or treated as a
preference item for purposes of the federal alternative minimum tax ("Taxable
Obligations"). Under normal market conditions, the Florida Fund and the
Municipal Bond Fund may invest up to 20% of its net assets in Taxable
Obligations. The Florida Fund may also invest in Municipal Securities. At times,
the Advisor may determine that, because of unstable conditions in the markets
for Municipal Securities or Florida Municipal Securities (hereinafter referred
to collectively as "Eligible Municipal Securities"), pursuing the Funds' basic
investment strategies is inconsistent with the best interests of the
Shareholders of the Funds. At such times, the Advisor may use temporary
defensive strategies differing from those designed to achieve the Funds'
investment objectives. With regard to the Tax Exempt Fund, the Advisor may
increase its holdings in short-term Taxable Obligations to over 20% of its total
assets and hold uninvested cash reserves pending investment. With regard to the
Tax-Free Funds, the Advisor may increase each Fund's holdings in Taxable
Obligations to over 20% of each Fund's net assets, and with respect to the
Florida Fund, increase its holdings in Municipal Securities to over 20% of net
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, demand and time deposits, bankers'
acceptances of selected banks, and commercial paper meeting the Funds' 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 and the Tax-Free Funds 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
Eligible 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."

The Tax Exempt Fund will invest only in those Municipal Securities and other
obligations which are considered by the Advisor, 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 the
Advisor 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 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 uti-

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<PAGE> 68

lized by the Advisor with respect to portfolio investments for the Fund and
provides a description of the relevant ratings assigned by each such NRSRO.

The Tax-Free Funds may invest in Eligible Municipal Securities that are rated
at the time of purchase within the three highest rating groups assigned by a
nationally recognized statistical rating organization (an "NRSRO"). The Tax-Free
Funds may also purchase Eligible Municipal Securities that are unrated at the
time of purchase but are determined to be of comparable quality by the Advisor
pursuant to guidelines approved by the Trust's Board of Trustees. Eligible
Municipal Securities may be purchased in reliance upon a rating only when the
rating organization is not affiliated with the issuer or guarantor of the
securities. The applicable ratings are described in the Appendix to the
Statement of Additional Information.

The two principal classifications of Eligible Municipal Securities that may be
held by the Tax-Free Funds and 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 Funds 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.

Eligible Municipal Securities 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.

Opinions relating to the validity of Eligible 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, the Tax-Free Funds nor the Advisor will review the proceedings
relating to the issuance of Eligible Municipal Securities or the basis for such
opinions.

Although the Municipal Bond Fund and the Tax Exempt Fund do not presently
intend to do so on a regular basis, each may invest more than 25% of its total
assets in Municipal Securities that 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. An example 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 Advisor. To the extent that a
Fund's assets are concentrated in Municipal Securities that are so related, a
Fund will be subject to the peculiar risks presented by such securities, such as
negative developments in a particular industry or state, to a greater extent
than it would be if the Fund's assets were not so concentrated.

The Tax Exempt Fund and the Tax-Free Funds may acquire "puts" with respect to
Eligible Municipal Securities held in their portfolios. Under a put, the Funds
would have the right to sell a specified Eligible 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 Eligible Municipal
Security. The Funds will acquire puts solely to facilitate portfolio liquidity,
shorten the maturity of the underlying Eligible Municipal Securities, or permit
the investment of the Funds' at a more favorable rate of return. The Tax-Free
Funds expect that they will generally acquire puts only where the puts are
available without the payment of any direct or indirect consideration. However,
if necessary or ad-

26
<PAGE> 69

visable, the TaxFree Funds may pay for a put separately in cash. 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.

The Tax-Free Funds may also invest in master demand notes in order to satisfy
short-term needs or, if warranted, as part of its temporary defensive investment
strategy. Such notes are demand obligations that permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements
between the issuer and a United States commercial bank acting as agent for the
payees of such notes. Master demand notes are callable on demand by the Funds,
but are not marketable to third parties. Master demand notes are direct lending
arrangements between the Fund and the issuer of such notes. The Advisor will
review the quality of master demand notes at least quarterly, and will consider
the earning power, cash flow and debt-to-equity ratios indicating the borrower's
ability to pay principal together with accrued interest on demand. While master
demand notes are not typically rated by credit rating agencies, issuers of such
notes must satisfy the same criteria for the Funds set forth above for
commercial paper.

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. The Tax-Free Funds may also acquire rated and unrated
variable and floating rate notes. Variable and floating rate notes are
frequently not rated by credit rating agencies; however, unrated variable and
floating rate notes purchased by the Funds will be determined by the Advisor
under guidelines established by the Board of Trustees to be of comparable
quality at the time of purchase to rated instruments eligible for purchase under
the Funds' investment policies. 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 Funds will approximate their par value.

The Tax Exempt Fund and the Tax-Free Funds may acquire zero coupon
obligations. Such zero-coupon obligations pay no current interest and are
typically sold at prices greatly discounted from par value, with par value to be
paid to the holder at maturity. The return on a zero-coupon obligation, when
held to maturity, equals the difference between the par value and the original
purchase price. Zero-coupon obligations have greater price volatility than
coupon obligations and such obligations will be purchased when the yield spread,
in light of the obligation's duration, is considered advantageous. The Tax-Free
Funds will only purchase zero-coupon obligations if, at the time of purchase,
such investments do not exceed 20% of the value of the Florida Fund's total
assets and 25% of the Municipal Bond Fund's total assets.

An increase in interest rates will generally reduce the value of the
investments in the Tax-Free Funds and a decline in interest rates will generally
increase the value of those investments. Depending upon prevailing market
conditions, the Advisor may purchase debt securities at a discount from face
value, which produces a yield greater than the coupon rate. Conversely, if debt
securities are purchased at a premium over face value, the yield will be lower
than the coupon rate. In making investment decisions, the Advisor will consider
many factors besides current yield, including the preservation of capital,
maturity, and yield to maturity.

THE MUNICIPAL BOND FUND--CONCENTRATION

The Municipal Bond Fund may invest 25% or more of its total assets in bonds,
notes and warrants generally issued by or on behalf of the State of Alabama and
its political subdivisions, the interest on which, in the opinion of the
issuer's bond counsel at the time of issuance, is exempt form both federal
income tax and Alabama personal income tax and is

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<PAGE> 70

not treated as a preference item for purposes of the federal alternative minimum
tax for individuals ("Alabama Municipal Securities"). Because of the relatively
small number of issuers of Alabama Municipal Securities, the Fund is more likely
to invest a higher percentage of its assets in the securities of a single
issuer. This concentration involves an increased risk of loss if the issuer is
unable to make interest or principal payments or if the market value of such
securities were to decline. Concentration of this nature may cause greater
fluctuation in the net asset value of the Fund's Shares.

GENERAL ECONOMIC CHARACTERISTICS OF ALABAMA

Alabama ranks twenty-second in the nation in total population, with over four
million residents in 1995. Its economy has historically been based primarily on
agriculture, textiles, mineral extraction and iron and steel production,
although the state has diversified into health care related industries and other
service-oriented sectors. Overall job growth rate was 4.0% for the period from
1992 to 1994. Alabama's per capita income in 1996 was ranked thirty-ninth in the
nation. Currently Alabama's general obligations are rated Aa by Moody's and AA
by Standard and Poor's.

BALANCED BUDGET AND PRO-RATION PROCEDURES

Section 213 of the Constitution of Alabama, as amended, requires that annual
financial operations of Alabama must be on a balanced budget. The Constitution
also prohibits the state from incurring general obligation debt unless
authorized by an amendment to the Constitution. Amendments to the Constitution
have generally been adopted through a procedure that requires each amendment to
be proposed by a favorable vote of three-fifths of all the members of each house
of the Legislature and thereafter approved by a majority of the voters of the
state voting in a statewide election.

Alabama has statutory budget provisions which create a proration procedure in
the event that estimated budget resources in a fiscal year are insufficient to
pay in full all appropriations for such fiscal year. The Alabama state budget is
composed of two funds--the General Fund and the Education Fund. Proration of
either Fund is possible in any fiscal year, and proration may have a material
adverse effect on entities dependent on state funding, including certain issuers
of Alabama Municipal Securities held in the Alabama Fund.

Court decisions have indicated that certain state expenses necessary for
essential functions of government are not subject to proration under applicable
law. The Supreme Court of Alabama has held that the debt prohibition contained
in the constitutional amendment does not apply to obligations incurred for
current operating expenses payable during the current fiscal year, debts
incurred by separate public corporations, or state debt incurred to repel
invasion or suppress insurrection. The state may also make temporary loans not
exceeding $300,000 to cover deficits in the state treasury. Limited obligation
debt may be authorized by the legislature without amendment to the Constitution.
The state has followed the practice of financing certain capital improvement
programs--principally for highways, education and improvements to the State
Docks--through the issuance of limited obligation bonds payable solely out of
certain taxes and other revenues specifically pledged for their payment and not
from the general revenues of the state.

GENERAL OBLIGATION WARRANTS

Municipalities and counties in Alabama traditionally have issued general
obligation warrants to finance various public improvements. Alabama statutes
authorizing the issuance of such interest-bearing warrants do not require an
election prior to issuance. On the other hand, the Constitution of Alabama
(Section 222) provides that general obligation bonds may not be issued without
an election.

The Supreme Court of Alabama validated certain general obligation warrants
issued by the City of Hoover, reaffirming that such obligations did not require
an election under sec. 222 of the Constitution of Alabama. In so holding, the
Court found that warrants are not "bonds" within the meaning of sec. 222.
According to the Court, warrants are not negotiable instruments and transferees
of warrants

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cannot be holders in due course. Therefore, a transferee of warrants is subject
to all defenses that the issuer of such warrants may have against the
transferor.

County boards of education may borrow money by issuing interest-bearing
warrants payable solely out of such board's allocated or apportioned share of
specified tax. The county board's apportioned share of such tax may be
diminished upon the establishment of a city school system, which could
jeopardize the payment of the county board's warrants.

LIMITED TAXING AUTHORITY

Political subdivisions of the state have limited taxing authority. Ad valorem
taxes may be levied only as authorized by the Alabama Constitution. In order to
increase the rate at which any ad valorem tax is levied above the limit
otherwise provided in the Constitution, the proposed increase must be proposed
by the governing body of the taxing authority after a public hearing, approved
by an act of the Alabama Legislature and approved at an election within the
taxing authority's jurisdiction. In addition, the Alabama Constitution limits
the total amount of state, county, municipal and other ad valorem taxes that may
be imposed on any class of property in any one tax year. This limitation is
expressed in terms of a specified percentage of the market value of such
property.

Specific authorizing legislation is required for the levy of taxes by local
governments. In addition, the rate at which such taxes are levied may be limited
to the authorizing legislation or judicial precedent. For example, the Alabama
Supreme Court has held that sales and use taxes, which usually comprise a
significant portion of the revenues for local governments, may not be levied at
rates that are confiscatory or unreasonable. The total sales tax (state and
local) in some jurisdictions is 9%. State and local governments in Alabama are
more dependent on general and special sales taxes than are state and local
governments in many states. Because sales taxes are less stable sources of
revenue than are property taxes, state and local governments in Alabama may be
subject to shortfalls in revenue due to economic cycles.

PRIORITY FOR ESSENTIAL GOVERNMENTAL FUNCTIONS

Numerous decisions of the Alabama Supreme Court hold that a governmental unit
may first use its taxes and other revenues to pay the expenses of providing
necessary governmental services before paying debt service on its bonds,
warrants or other indebtedness.

CHALLENGE TO EDUCATION FUNDING

On April 1, 1993, Montgomery Circuit Court Judge Gene Reese ruled that an
unconstitutional disparity exists among Alabama's school districts because of
inequitable distribution of tax funds. Judge Reese issued an order calling for a
new design for the distribution of funds for educational purposes as well as a
new system for funding public education.

On January 10, 1997, the Alabama Supreme Court affirmed Judge Reese's ruling.
The court stated that the Alabama Legislature must develop a plan within one
year to correct the unconstitutional disparity. Any allocation of funds away
from school districts could impair the ability of such districts to service
debt.

THE FLORIDA FUND--DIVERSIFICATION AND
CONCENTRATION

The Florida Fund is a non-diversified fund under the Investment Company Act of
1940 (the "1940 Act") and may concentrate its investments in the securities of a
limited number of issuers. Under the Internal Revenue Code of 1986, as amended
(the "Code"), the Florida Fund generally may not invest in a manner such that at
the end of each fiscal quarter, (i) more than 25% of its total assets are
represented by securities of any one issuer (other than U.S. government
securities) and (ii) with respect to 50% of its total assets, more than 5% of
its total assets are represented by in the securities of any one issuer (other
than U.S. government securities). Thus, the Florida Fund generally may each
invest up to 25% of its total assets in the securities of

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each of any two issuers. Because of the relatively small number of issuers of
Florida Municipal Securities, the Florida Fund is more likely to invest a higher
percentage of its assets in the securities of a single issuer than an investment
company that invests in a broad range of tax-exempt securities. This
concentration involves an increased risk of loss if the issuer is unable to make
interest or principal payments or if the market value of such securities were to
decline. Concentration of this nature may cause greater fluctuation in the net
asset value of the Florida Fund's shares.

GENERAL ECONOMIC CHARACTERISTICS OF FLORIDA

Florida ranks fourth in the nation in total population, with over 12.9 million
residents in 1990, and has been one of the fastest growing states in the nation.
Historically, tourism, agriculture, construction and manufacturing have
constituted the most important sectors of the state's economy. Construction
activity slows during periods of high interest rates or cyclical downturns. The
service sector employs the largest number of people in Florida. While wages in
the service sector tend to be lower than in manufacturing and other sectors of
the economy, the service sector traditionally has been less sensitive to
business cycles. Currently, Florida's general obligations are rated AA by both
Moody's and Standard and Poor's.

The southern and central portions of Florida's economy, in particular, rely
heavily on tourism and are sensitive to changes in the tourism industry. For
example, tourism in Florida has been adversely affected by publicity regarding
violent crimes against tourists, particularly tourists from abroad. Gasoline
price hikes and/or shortages from an oil embargo or other oil shortage could
severely affect U.S. tourism in the state, which is heavily dependent on
automobiles as the primary form of transportation.

South Florida also is susceptible to international trade and currency
imbalances due to its geographic location as the gateway to Latin America and
its involvement in foreign trade and investment. The central portion of the
state is affected by conditions in the phosphate and agriculture industries,
especially citrus and sugar. Northern Florida's economy is more heavily tied to
military bases, some of which are closing or scaling back as a result of Federal
budget cutbacks, and the lumber and paper industries.

The entire state can be affected by severe weather conditions including
hurricanes. The impact of severe hurricanes on the fiscal resources of the state
and local governments is difficult to assess.

SOURCES OF STATE AND LOCAL REVENUES

Florida's Constitution prohibits deficit spending by the state for
governmental operations. Florida does not have a personal income tax. An
amendment to the state's Constitution would be required in order to institute an
income tax, and passage of such an amendment is believed to be unlikely due to
the relatively large number of retirees living in the state as well as to the
general unpopularity of tax increases in the current political climate. A
two-thirds approval of voters voting in an election is now required for the
addition of any new taxes to the Florida Constitution. The principal sources of
state revenues are a 6% sales tax, state lottery, motor fuels tax, corporate
income tax, and miscellaneous other revenue sources, including beverage tax and
licenses, cigarette tax, documentary stamp taxes and an intangible tax.
Dependence on the sales tax may subject state revenues to more volatility than
would be the case if Florida had a personal income tax, with sales tax
collections adversely affected during recessions and periods when tourism
declines.

Taxation by units of government other than the state is permitted only to the
extent that Florida's legislature enacts enabling legislation. The principle
sources of county and municipal government revenues are ad valorem property
taxes, state revenue sharing, and miscellaneous other revenue sources, including
utilities services fees and local option fees. The principal sources of revenues
for Florida's school districts are ad valorem property taxes and state revenue
sharing, including revenues from a state lottery. The state Constitution imposes
millage

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limits, including a 10-mill limit each on county, municipal and school ad
valorem taxes. Effective January 1, 1995, Florida's voters amended the state
Constitution to limit annual increases in the assessed value of homestead
property to the lesser of 3% of the prior year's assessment or the percentage
change in the Consumer Price Index during the preceding calendar year. The
limitation on increases in assessment of homestead property could eventually
lead to ratings revisions that could have a negative impact on the prices of
obligations funded with this source of taxation. However, the effect of the
limit will be tempered by reassessments of homestead property at market value
when sold.

Units of state and local government in Florida will continue to face spending
pressures due to infrastructure needs for an expanding population, especially in
view of growth management laws enacted by Florida's legislature. These laws
include concurrency requirements that impose building moratoriums unless roads
and other infrastructure are added concurrently with additional commercial or
residential developments.

TYPES OF INDEBTEDNESS

The two principal types of indebtedness issued by state or local units of
government in Florida are "general obligation bonds" and "revenue bonds."
General obligation bonds are secured by a pledge of the full faith, credit and
taxing power of the governmental entity issuing the bonds. They can be issued in
Florida only after a referendum in which the voters in the jurisdictional limits
of the jurisdiction issuing the bonds approve their issuance. Revenue bonds are
payable only from the revenues derived from a facility or class of facilities
or, in some cases, from the proceeds of a special tax or other specific revenue
source. Revenue bonds are not secured by the full faith, credit and taxing power
of the governmental issuer.

MARKET RISK CAUSED BY INTANGIBLE TAX CONSIDERATIONS

As a normal policy, on January 1 of each calendar year the Florida Fund
intends to own only assets which are exempt from the Florida Intangible Tax.
Accordingly, it is possible that the Florida Fund, in disposing of non-exempt
assets to meet this policy objective, might sustain losses which might not
otherwise be incurred absent this policy of avoiding the Florida Intangible Tax.

CAPITAL APPRECIATION FUNDS

The Advisor to the Equity, Regional Equity, and Balanced Funds will use a
variety of economic projections, technical analysis, and earnings projections in
formulating individual stock purchase and sale decisions. The Advisor will
select investments that it believes have basic investment value which will
eventually be recognized by other investors, thus increasing their value to the
Funds. In the selection of the investments for the Equity, Regional Equity, and
Balanced Funds, the Advisor may therefore be making investment decisions which
could be contrary to the present expectations of other professional investors.
These decisions may involve greater risks compared to other mutual funds, of
either (a) more accurate assessment by other investors, in which case losses may
be incurred by a Fund, or (b) long delay in investor recognition of the accuracy
of the investment decisions of a Fund, in which case invested capital of a
Capital Appreciation Fund in an individual security or group of securities may
not appreciate for an extended period.

In managing the Capital Growth Fund and Small Cap Fund, the Advisor will seek
securities with

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<PAGE> 74

potential to produce above-average earnings growth. Issuers include companies
with a history of above-average growth or companies that are expected to enter
periods of above-average growth or are positioned in emerging growth industries.
Should the expected growth potential of such companies fail to be realized, a
loss may be incurred.

THE EQUITY FUND seeks capital appreciation by investing primarily in a
diversified portfolio of common stock and securities convertible into common
stocks such as convertible bonds and convertible preferred stock. The Equity
Fund will normally invest at least 80% of the value of its total assets in
common stocks and securities convertible into common stocks, such as convertible
bonds and convertible preferred stocks, believed by the Advisor to be
undervalued. The production of current income is an incidental objective of the
Fund. Under normal market conditions, the Equity Fund may also invest up to 20%
of the value of its total assets in preferred stocks, corporate bonds, notes,
and warrants, and obligations with maturities of 12 months or less such as
commercial paper (including variable amount master demand notes), bankers'
acceptances, certificates of deposit, repurchase agreements, money market mutual
funds, obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Equity Fund may increase its holdings in short-term obligations to
over 20% of its total assets and may also hold uninvested cash pending
investment. The Fund may also write covered call options. See "Options."

THE REGIONAL EQUITY FUND seek capital growth by investing primarily in a
diversified portfolio of common stock and securities convertible into common
stock, such as convertible bonds and convertible preferred stock. The Regional
Equity Fund will normally invest at least 65% of the value of its total assets
in common stocks and securities convertible into common stocks believed by the
Advisor to be undervalued of companies headquartered in the Southern Region of
the United States, which includes Alabama, Florida, Georgia, Louisiana,
Mississippi, North Carolina, South Carolina, Tennessee and Virginia. The
production of current income is an incidental objective of the Fund. Under
normal market conditions, the Regional Equity Fund may also invest up to 35% of
the value of its total assets in common stocks and securities convertible into
common stock of companies headquartered outside the Southern Region, preferred
stocks, corporate bonds, notes, and warrants, and obligations with maturities of
12 months or less such as commercial paper (including variable amount master
demand notes), bankers' acceptances, certificates of deposit, repurchase
agreements, money market mutual funds, obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities, and demand and time
deposits of domestic and foreign banks and savings and loan associations. If
deemed appropriate for temporary defensive purposes, the Regional Equity Fund
may increase its holdings in short-term obligations to over 35% of its total
assets and may also hold uninvested cash pending investment. The Regional Equity
Fund may also write covered call options. See "Options."

There can be no assurance that the economy of the Southern Region or the
companies headquartered in the Southern Region will grow in the future or that a
company headquartered in the Southern Region whose assets, revenues or employees
are

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located substantially outside of the Southern Region will share in any economic
growth of the Southern Region. Additionally, any localized negative economic
factors or possible physical disasters in the Southern Region area could have a
much greater impact on the Regional Equity Fund's assets than on similar funds
whose investments are geographically more diverse.

THE BALANCED FUND seeks to obtain long-term capital growth and produce a
reasonable amount of current income through a moderately aggressive investment
strategy. The Balanced Fund seeks to achieve this objective by investing in a
broadly diversified portfolio of securities, including common stocks, preferred
stocks and bonds. The Balanced Fund will normally invest in equity securities
consisting of common stocks but may also invest in other equity-type securities
such as warrants, preferred stocks and convertible debt instruments. The Fund's
equity investments will be in companies with a favorable outlook and believed by
the Advisor to be undervalued. The Balanced Fund's debt securities will consist
of securities such as bonds, notes, debentures and money market instruments. The
average dollar-weighted portfolio maturity of debt securities held by the
Balanced Fund will vary according to market conditions and interest rate cycles
and will range between 1 year and 30 years under normal market conditions. The
Balanced Fund's debt securities will consist of high grade securities, which are
those securities rated in one of the three highest rating categories by an NRSRO
at the time of purchase, or if not rated, found the by the Advisor under
guidelines established by the Trust's Board of Trustees to be of comparable
quality. (For a further description of these bond ratings, see the Appendix to
the Trust's Statement of Additional Information.) In the event that the rating
of any debt securities held by the Balanced Fund falls below the third highest
by an NRSRO the Fund will not be obligated to dispose of such obligations and
may continue to hold such obligations if, in the opinion of the Advisor, such
investment is considered appropriate under the circumstances. The Balanced Fund
may also write covered call options. See "Options."

THE CAPITAL GROWTH FUND seeks long-term capital appreciation and growth of
income by investing primarily in a diversified portfolio of common stocks and
securities convertible into common stocks such as convertible bonds and
convertible preferred stocks. The Capital Growth Fund will normally invest at
least 65% of the value of its total assets in common stocks and securities
convertible into common stocks, such as convertible bonds and convertible
preferred stocks, believed by the Advisor to have attractive potential for
growth. Under normal market conditions, the Capital Growth Fund may also invest
up to 35% of the value of their total assets in preferred stocks, corporate
bonds, notes, and warrants, and obligations with maturities of 12 months or less
such as commercial paper (including variable amount master demand notes),
bankers' acceptances, certificates of deposit, repurchase agreements, money
market mutual funds, obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, and demand and time deposits of domestic and
foreign banks and savings and loan associations. If deemed appropriate for
temporary defensive purposes, the Capital Growth Fund may increase its holdings
in

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short-term obligations to over 35% of their total assets and may also hold
uninvested cash pending investment. The Capital Growth Fund may also write
covered call options. See "Options."

THE SMALL CAP FUND seeks capital appreciation by investing primarily in a
diversified portfolio of securities consisting of common stocks and securities
convertible into common stocks such as convertible bonds and convertible
preferred stocks. Any current income generated from these securities is
incidental to the investment objective of the Fund. Under normal market
conditions, the Fund will invest at least 65% of its total assets in common
stocks and securities convertible into common stocks of companies with a market
capitalization of less than $1 billion determined at the time the security is
purchased. Under normal market conditions, the Small Cap Fund may invest up to
35% of the value of its total assets in common stock and securities convertible
into common stocks of companies with a market capitalization of greater than $1
billion determine at the time the security is purchased, preferred stocks,
corporate bonds, notes, and warrants, and obligations with maturities of 12
months or less such as commercial paper (including variable amount master demand
notes), bankers' acceptances, certificates of deposit, repurchase agreements,
money market mutual funds, obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, and demand and time deposits of
domestic and foreign banks and savings and loan associations. If deemed
appropriate for temporary defensive purposes, Small Cap Fund may increase its
holdings in short-term obligations to over 35% of its total assets and may also
hold uninvested cash pending investment. The Small Cap Fund may also write
covered call options. See "Options."

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Under normal market conditions, the Equity Income Fund may also invest up to 35%
of the value of its total assets in corporate bonds, notes, and warrants, and
obligations with maturities of 12 months or less such as commercial paper
(including variable amount master demand notes), bankers' acceptances,
certificates of deposit, repurchase agreements, money market mutual funds,
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and demand and time deposits of domestic and foreign banks
and savings and loan associations. If deemed appropriate for temporary defensive
purposes, the Equity Income Fund may increase its holdings in short-term
obligations to over 35% of its total assets and may also hold uninvested cash
pending investment. The Equity Income Fund may also write covered call options.
See "Options."

REAL ESTATE INVESTMENT TRUSTS

CONVERTIBLE SECURITIES

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investing in higher rated securities. High yield securities may be more
susceptible to real or perceived adverse economic and competitive industry
conditions than investment grade securities. A projection of an economic
downturn, for example, could cause a decline in high yield prices because the
advent of a recession could lessen the ability of a highly leveraged company to
make principal and interest payments on its debt securities. In addition, the
secondary trading market for high yield securities may be less liquid than the
market for higher grade securities. The market prices of debt securities also
generally fluctuate with changes in interest rates so that the Equity Income
Fund's net asset value can be expected to decrease as long-term interest rates
rise and to increase as long-term rates fall. In addition, lower rated
securities may be more difficult to dispose of or to value than high-rated,
lower-yielding securities. The Sub-Advisor attempts to reduce the risks
described above through diversification of the portfolio and by credit analysis
of each issuer as well as by monitoring broad economic trends and corporate and
legislative developments.

The Capital Appreciation Funds will exchange or convert the convertible
securities held in portfolio into shares of the underlying common stock in
instances in which, in the opinion of the Advisor or Sub-Advisor, the investment
characteristics of the underlying common shares will assist a Fund in achieving
its investment objectives. Otherwise, a Fund will hold or trade the convertible
securities. In selecting convertible securities for a Fund, the Advisor or
Sub-Advisor evaluates the investment characteristics of the convertible security
as a fixed-income instrument, and the investment potential of the underlying
equity security for capital appreciation. In evaluating these matters with
respect to a particular convertible security, the Advisor or Sub-Advisor
considers numerous factors, including the economic and political outlook, the
value of the security relative to other investment alternatives, trends in the
determinants of the issuer's profits, and the issuer's management capability and
practices.

As with all debt securities, the market values of convertible securities tend
to increase when interest rates decline and, conversely, tend to decline when
interest rates increase.

OTHER INVESTMENTS

FOREIGN INVESTMENTS

The Prime Obligations Fund may 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

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("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.

The Prime Obligations Fund may also 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. The Prime Obligations Fund
will acquire securities issued by foreign branches of U.S. banks, foreign banks,
or other foreign issuers only when the Advisor believes that the risks
associated with such instruments are minimal and only when such instruments are
denominated and payable in United States dollars.

The Bond Fund may invest up to 20% of the value of its total assets and the
Limited Maturity Fund may invest up to 30% of its total assets in debt
securities of foreign issuers. Each Capital Appreciation Fund may invest in
foreign securities through the purchase of American Depository Receipts or the
purchase of securities on the Toronto Stock Exchange, but will not do so if
immediately after a purchase and as a result of the purchase the total value of
such foreign securities owned by such Fund would exceed 25% (20% for the
Balanced Fund) of the value of the total assets of such Fund. The Bond Fund, the
Limited Maturity Fund, and the Capital Appreciation Funds may also invest in
ECDs, ETDs, CTDs, Yankee CDs, CCP, and Europaper.

Investment in securities of foreign issuers is subject to special risks, such
as future adverse political and economic developments, the possible imposition
of withholding taxes on interest income, 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, or the adoption of other foreign governmental
restrictions. Additional risks include currency exchange risks, less publicly
available information, the risk that companies may not be subject to the
accounting, auditing and financial reporting standards and requirements of U.S.
companies, the risk that foreign securities markets may have less volume and
therefore less liquidity and greater price volatility than U.S. securities, and
the risk that custodian and brokerage costs may be higher. 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. To the extent that a Fund may invest in securities of foreign issuers
which are not traded on any exchange, there is a further risk that these
securities may not be readily marketable. The Income Funds will not hold foreign
currency as a result of such investments.

INSURANCE COMPANY FUNDING AGREEMENTS

The Prime Obligations Fund, the Bond Fund, and the Limited Maturity Fund may
invest in funding agreements, also known as guaranteed investment contracts,
("Funding Agreements") issued by insurance companies. Pursuant to such
agreements, the Bond Fund and Limited Maturity 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 provide that this guaranteed interest will not be less than a certain
minimum rate. The Prime Obligations Fund, the Bond Fund and the Limited Maturity
Fund will only purchase a Funding Agreement (i) when the Advisor has determined,
under guidelines established by the Board of Trustees, that the Funding
Agreement presents minimal credit risks to the Fund and is of comparable quality
to instru-

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ments 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, on any insurer,
guarantor, or provider of credit support for the instrument and (ii) with
respect to the Prime Obligations Fund, if it may receive all principal of and
accrued interest on a Funding Agreement at any time upon thirty days' written
notice. The Bond Fund and the Limited Maturity Fund may receive all principal of
and accrued interest on a Funding Agreement at any time upon thirty days'
written notice. Because a Fund may not receive the principal amount of a Funding
Agreement from the insurance company on seven days' notice or less, a Funding
Agreement is considered an illiquid investment, and, together with other
instruments in such Fund which are not readily marketable, will not exceed 10%
of the Prime Obligations Fund's net assets and 15% of the Bond Fund or Limited
Maturity Fund's net assets. With regard to the Prime Obligations Fund, 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.

ASSET-BACKED SECURITIES

The Prime Obligations Fund, the Bond Fund and the Limited Maturity 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 tradeins. Many people buy new
cars every two or three years, leading to rising prepayment rates as a pool
becomes more seasoned.

Certificates for Amortizing Revolving Debt ("CARDS") represent participation
in a fixed pool of credit card accounts. CARDS pay "interest only" for a
specified period, typically 18 months. 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. CARDS
generally have monthly payment schedules, weighted-average lives of 18-24 months
and stated final maturities ranging from 3 to 5 years. 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

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by the Fund. The Bond Fund and the Limited Maturity Fund will only purchase an
asset-backed security if it is rated at the time of purchase in one of the three
highest rating categories by an NRSRO or, if unrated, found by the Advisor under
guidelines established by the Trust's Board of Trustees to be of comparable
quality.

INVESTMENT TECHNIQUES

OPTIONS

The Bond Fund, Limited Maturity Fund, Government Income Fund, and the Capital
Appreciation Funds may engage in writing call options from time to time as the
Advisor or Sub-Advisor deems to be appropriate. Options are written solely as
covered call options (options on securities owned by a Fund). Such options must
be issued by the Options Clearing Corporation and may or may not be listed on a
national securities exchange. In order to close out an option position, a Fund
will enter into a "closing purchase transaction"--the purchase of a call option
on the same security with the same exercise price and expiration date as any
call option which it may previously have written on any particular securities.
When the portfolio security is sold, a Fund effects a closing purchase
transactions so as to close out any existing call option on that security. If a
Fund is unable to effect a closing purchase transaction so as to close out any
existing call option on that security. If a Fund is unable to effect a closing
purchase transaction, it will not be able to sell the underlying security until
the option expires or a Fund delivers the underlying security upon exercise.
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.

From time to time, the Bond Fund and the Limited Maturity Fund may also
purchase call options on any of the types of securities in which each Fund may
invest. A purchased call option gives a Fund the right to buy and obligates the
seller to sell the underlying security at a specified exercise price during the
option period. Purchasing call options is a specialized investment technique
that entails a substantial risk of a complete loss of the amounts paid as
premiums to writers of options.

From time to time, the Bond Fund and the Balanced Fund may purchase put
options as the Advisor deems to be appropriate. A put is a right to sell a
specified security (or securities) within a specified period of time at a
specified exercise price. Puts may be acquired by 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. The Bond Fund and the Balanced Fund may sell, transfer, or
assign a put only in conjunction with the sale, transfer or assignment of the
underlying security or securities. The amount payable to 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 which are acquired
subject to the puts (thus reducing the yield to maturity otherwise available for
the same securities). The Balanced Fund will generally acquire puts only where
the puts are available without the payment of any direct or indirect
consideration. However, if necessary or advisable, the Fund may pay for puts
either separately in cash or by paying a higher price for portfolio securities
which are acquired subject to puts (thus reducing the yield to maturity
otherwise available for the same securities). The Bond Fund intends to enter
into puts only with dealers, banks, and broker-dealers which, in the Advisor's
opinion, present minimal credit risks.

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For a discussion of the Limited Maturity Fund's ability to acquire puts, see
"The Bond Fund and the Limited Maturity Fund" in this prospectus.

For discussion of the Tax Exempt Fund's and the Tax-Free Funds' ability to
acquire puts, see "The Tax-Free Fund, the Florida Fund and the Municipal Bond
Fund" in this Prospectus.

WHEN-ISSUED SECURITIES

The Tax Exempt Fund, the Income Funds and the Capital Appreciation Funds may
also purchase securities on a "when-issued" basis. When-issued securities are
securities purchased for delivery beyond the normal settlement date at a stated
price and yield and thereby involve a risk that the yield obtained in the
transaction will be less than that available in the market when delivery takes
place. A Fund will generally not pay for such securities or start earning
interest on them until they are received. When a Fund agrees to purchase
securities on a "when-issued" basis, the Trust's custodian will set aside cash
or liquid securities equal to the amount of the commitment in a segregated
account. Securities purchased on a "when-issued" basis are recorded as an asset
and are subject to changes in value based upon changes in the general level of
interest rates. Each 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 to purchase "when-issued" securities
will not exceed 60 days. In the event that a Fund's commitment to purchase
"when-issued" securities ever exceeded 25% of the value of its total assets, a
Fund's liquidity and the Advisor's or Sub-Advisor's ability to manage it might
be adversely affected. The Funds do not intend to purchase "when-issued"
securities for speculation purposes, but only for the purpose of acquiring
portfolio securities.

REPURCHASE AGREEMENTS

Securities held by each Fund may be subject to repurchase agreements. If the
seller under a repurchase agreement were to default on its repurchase obligation
or become insolvent, a 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 a 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 a Fund is treated as an unsecured creditor and
required to return the underlying security to the seller's estate.

REVERSE REPURCHASE AGREEMENTS

Each 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 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 purchase 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.

OTHER INVESTMENT PRACTICES

Each Income Fund and Capital Appreciation Fund may invest up to 5% of the
value of its total assets in the securities of any one money market mutual fund
including Shares of the AmSouth Prime Obligations Fund, the AmSouth U.S.
Treasury Fund (and, with respect to the Tax-Free Funds, the AmSouth Tax Exempt
Fund), provided that no more than 10% of each Fund's total assets may be
invested in the securities of money market mutual funds in the aggregate. In
order to avoid the imposition of additional fees as a result of investments by
the a Fund in the Prime Obligations Fund and the AmSouth U.S. Treasury Fund (and
with respect to the Tax-Free Funds, the AmSouth Tax-Exempt Fund), the Advisor
and the Administrator will reduce that portion of their usual service fees from
each Fund by an amount equal to their service fees from the AmSouth Money Market
Funds that are attributable to those Fund invest-

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<PAGE> 83

ments. The Advisor and the Administrator will promptly forward such fees to the
Funds. Each Fund will incur additional expenses due to the duplication of
expenses as a result of investing in securities of other unaffiliated money
market mutual funds. Additional restrictions regarding the Funds' investments in
the securities of an unaffiliated money market fund and/or the AmSouth Money
Market Funds are contained in the Statement of Additional Information.

In order to generate additional income, the Bond Fund, Limited Maturity Fund,
Government Income Fund and the Capital Appreciation Funds may, from time to
time, lend its securities to broker-dealers, banks or institutional borrowers of
securities which are not affiliated directly or indirectly with the Trust. While
the lending of securities may subject the Funds to certain risks, such as delays
or an inability to regain the securities in the event the borrower were to
default on its lending agreement or enter into bankruptcy, each Fund will
receive 100% collateral in the form of cash or other liquid securities. This
collateral will be valued daily by the Advisor or Sub-Advisor and should the
market value of the loaned securities increase, the borrower will furnish
additional collateral to each Fund. During the time securities of a Fund are on
loan, the borrower pays the Fund any dividends or interest paid on such
securities. Loans are subject to termination by a Fund or the borrower at any
time. While the Funds do not have the right to vote securities on loan, each
Fund intends to terminate the loan and regain the right to vote if that is
considered important with respect to the investment. The Funds will only enter
into loan arrangements with broker-dealers, banks or other institutions which
the Advisor or Sub-Advisor has determined are creditworthy under guidelines
established by the Trust's Board of Trustees.

The Government Income Fund and the Capital Appreciation Funds may engage in
the technique of short-term trading. Such trading involves the selling of
securities held for a short time, ranging from several months to less than a
day. The object of such short-term trading is to increase the potential for
capital appreciation and/or income of the Government Income Fund in order to
take advantage of what the Advisor or Sub-Advisor believes are changes in
market, industry or individual company conditions or outlook. Any such trading
would increase the turnover rate of the Government Income Fund and its
transaction costs. The Bond Fund and Limited Maturity Funds will not purchase
securities solely for the purpose of short-term trading.

Each Capital Appreciation Fund will not invest more than 15% of its net assets
in time deposits with maturities in excess of seven days which are subject to
penalties upon early withdrawal.

The portfolio turnover of each Capital Appreciation Fund and Income Fund may
vary greatly from year to year as well as within a particular year. High
turnover rates will generally result in higher transaction costs and higher
levels of taxable realized gains to the Fund's shareholders. Portfolio turnover
for the Capital Growth Fund, Small Cap Fund, and Equity Income Fund is not
expected to exceed 200% in the coming year.

INVESTMENT RESTRICTIONS

Each Fund 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.

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

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<PAGE> 84

guaranteed by the U.S. Government or its agencies or instrumentalities.

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.

THE AMSOUTH U.S. TREASURY FUND MAY NOT:

1. 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.

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 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.

THE BOND FUND, LIMITED MATURITY FUND, GOVERNMENT INCOME FUND, MUNICIPAL BOND
FUND AND THE CAPITAL APPRECIATION FUNDS MAY NOT:

1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S.

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<PAGE> 85

Government or its agencies or instrumentalities, if, immediately after such
purchase, more than 5% of the value of such Fund's total assets would be
invested in such issuer, or such Fund would hold more than 10% of any class of
securities of the issuer or more than 10% of the outstanding voting securities
of the issuer, except that up to 25% of the value of each Fund's total assets
may be invested without regard to such limitations. There is no limit to the
percentage of assets that may be invested in U.S. Treasury bills, notes, or
other obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

THE INCOME FUNDS AND THE CAPITAL APPRECIATION FUNDS MAY NOT:

1. Purchase any securities which would cause more than 25% of the value of
such Income Fund's total assets at the time of purchase to be invested in
securities of one or more issuers conducting their principal business activities
in the same industry, provided that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and repurchase agreements secured by obligations of the U.S.
Government or its agencies or instrumentalities; (b) for the Bond Fund, the
Limited Maturity Fund, the Florida Fund, and the Municipal Bond Fund there is no
limitation with respect to Municipal Securities, which, for purposes of this
limitation only, do not include private activity bonds that are backed only by
the assets and revenues of a non-governmental user; (c) 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 (d) 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.

THE TAX-FREE FUNDS MAY NOT:

1. Write or sell puts, calls, straddles, spreads, or combinations thereof
except that the Funds may acquire puts with respect to Eligible Municipal
Securities and sell those puts in conjunction with a sale of those Eligible
Municipal Securities.

THE MONEY MARKET FUNDS, INCOME FUNDS, AND CAPITAL APPRECIATION FUNDS MAY NOT:

1. Borrow money or issue senior securities, except that each Fund may borrow
from banks or enter into reverse repurchase agreements for temporary emergency
purposes in amounts up to 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge, or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of such Fund's total assets at
the time of its borrowing. A Fund will not purchase securities while borrowings
(including reverse repurchase agreements) in excess of 5% of its total assets
are outstanding.

2. Make loans, except that each Fund may purchase or hold debt instruments in
accordance with its investment objective and policies, may lend Fund securities
in accordance with its investment objective and policies, and may enter into
repurchase agreements.

VALUATION OF SHARES

The net asset value of each Income Fund and Capital Appreciation Fund is
determined and its Shares are priced as of 4:00 p.m., Eastern Time (the
"Valuation Time") on each Business Day of such Fund. 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
("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 are not sufficient changes in the
value

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<PAGE> 86

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 Fund, less the liabilities charged to
that Class, by the number of the outstanding Shares of that Class. The net asset
value per Share of each Income Fund and Capital Appreciation Fund will fluctuate
as the value of its investment portfolio changes.

The securities in each Income Fund and Capital Appreciation Fund will be
valued at market value. If market quotations are not available, the securities
will be valued by a method which the Board of Trustees of the Trust believes
accurately reflects fair value. For further information about valuation of
investments in the Income Funds and Capital Appreciation Funds, see the
Statement of Additional Information.

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

Shares in each Fund 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.

Each Fund has been divided into three classes of Shares, Premier Shares,
Classic Shares and B Shares, except that the AmSouth U.S. Treasury Fund and Tax
Exempt Fund are divided into Premier Shares and Classic Shares only. Class B
Shares are not currently offered in the Limited Maturity Fund, Government Income
Fund, Florida Fund and Municipal Bond Fund. The three classes 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 "Servicing Plan"), which will cause the
Classic Shares to have a higher expense ratio and to pay lower dividends than
those of the Premier Shares, (ii) Class B Shares bear the expense of the fee
under the Trust's Distribution and Shareholder Services Plan (the "Distribution
Plan"), which will cause the Class B Shares to have a higher expense ratio and
to pay a lower dividend than those of the Classic Shares or Premier Shares,
(iii) Classic Shares have certain exclusive voting rights with respect to the
Servicing Plan and Class B Shares have certain exclusive voting rights with
respect to the Distribution Plan, and (iv) Classic Shares are subject to a
front-end sales charge and Class B Shares are subject to a contingent deferred
sales charge. The following investors qualify to purchase Premier Shares: (i)
investors for whom AmSouth acts in a fiduciary, advisory, custodial, agency or
similar capacity through an account with its Trust Department; (ii) investors
who purchase Shares of a Fund through 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 or Class
B Shares only.

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<PAGE> 87

PURCHASES OF PREMIER SHARES

Shares of the 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.

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 AmSouth and its Customer are invested by the
Distributor in Shares of a Money Market Fund.

Premier Shares of the Trust sold to AmSouth on behalf of Customers will
normally be held of record by AmSouth. With respect to Shares so sold, it is the
responsibility of AmSouth to transmit purchase or redemption orders to the
Distributor and to deliver federal funds for purchase on a timely basis.
Beneficial ownership of the Shares will be recorded by AmSouth and reflected in
the account statements provided by AmSouth to Customers.

Premier Shares of each Fund 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
Money Market Fund 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 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 Fund will be effected only on a Business Day (as
defined in "VALUATION OF SHARES") of such Fund. With respect to the Income Funds
and the Capital Appreciation Funds, an order received prior to the Valuation
Time on any Business Day will be executed based on the net asset value
determined as of the Valuation Time on the date of receipt. An order received
after the Valuation Time on any Business Day will be executed based on the net
asset value determined as of the next Business Day.

With respect to the Money Market Funds, 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.

In the case of orders for the purchase of Shares placed through a
broker-dealer, the applicable public offering price will be calculated with
reference to the net asset value as so determined, but only if the broker-dealer
receives the order prior to the Valuation Time for that day and transmits it to
the Distributor prior to its close of business that same day (normally 4:00 p.m.
Eastern Time). The broker-dealer is responsible for transmitting such orders by
close of business. If the broker-dealer fails to do so, the investor's right to
that day's closing price must be settled between the investor and the
broker-dealer.

There is no sales charge imposed by the Trust in connection with the purchase
of Premier Shares of a Fund. Sales charges apply to purchases of other classes.
Depending upon the terms of a particular

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<PAGE> 88

Customer account, AmSouth may charge a Customer's account fees for automatic
investment and other cash management services provided in connection with
investment in a Fund. Information concerning these services and any charges can
be obtained from AmSouth. This Prospectus should be read in conjunction with any
such information received from AmSouth.

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 drafts or 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, redemptions and
exchanges of Shares by AmSouth on behalf of its Customers will be sent by
AmSouth to its Customers. Shareholders may rely on these statements in lieu of
certificates. Certificates representing Shares will not be issued.

EXCHANGE PRIVILEGE

Premier Shares of each Fund may be exchanged for Premier Shares of the other
Funds, provided that the Shareholder making the exchange is eligible on the date
of the exchange to purchase Premier Shares (with certain exceptions and subject
to the terms and conditions described in this prospectus). Premier Shares of
each Fund may also be exchanged for Classic Shares, if the Shareholder ceases to
be eligible to purchase Premier Shares. Premier Shares of each Fund may not be
exchanged for Class B Shares.

The Trust does not impose a charge for processing exchanges of its Premier
Shares. However, the exchange of Premier Shares for Classic Shares will require
payment of the sales charge unless a sales charge waiver applies. Shareholders
may exchange their Premier Shares for Premier Shares of another Fund on the
basis of the relative net asset value of the Shares exchanged.

An exchange is considered to be a sale of Shares for federal income tax
purposes on which a Shareholder may realize a capital gain or loss. In general,
if a shareholder exchanges Income Fund shares for Shares of another Fund without
paying a sales charge, the gain or loss on the exchange of the Fund Shares will
be calculated without taking into account the sales charge paid on the Fund
Shares if the Fund Shares were held less than 91 days. The sales charge will
instead be added to the basis of the Fund Shares acquired in the exchange. The
application of this rule will increase the gain or reduce the loss that the
Shareholder would otherwise recognize on the exchange of the Shares of the Fund.

DIRECTED DIVIDEND OPTION

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<PAGE> 89

CHECK WRITING SERVICE

A Shareholder may write checks on his or her Prime Obligations 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.

REDEMPTION OF SHARES

Shares may ordinarily be redeemed by mail or by telephone. However, all or
part of a Customer's Shares may be redeemed in accordance with instructions and
limitations pertaining to his or her account at AmSouth. For example, if a
Customer has agreed with AmSouth to maintain a minimum balance in his or her
account with AmSouth, and the balance in that account falls below that minimum,
the Customer may be obliged to redeem, or AmSouth 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

REDEMPTION BY TELEPHONE

A Shareholder may have the payment of redemption requests wired or mailed
directly to a domestic commercial bank account previously designated by the
Shareholder on the Account Registration Form. Under most circumstances, such
payments will be transmitted on the next Business Day following receipt of a
valid request for redemption. Such wire redemption requests may be made by the
Shareholder by telephone to the Transfer Agent. The Transfer Agent may reduce
the amount of a wire redemption payment from the then maximum wire redemption
charge. 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 bank account. For telephone
redemptions, call the Trust at (800) 451-8382. The Trust will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if these procedures are not followed, the Trust may

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<PAGE> 90

be liable for any losses due to unauthorized or fraudulent instructions. These
procedures include recording all phone conversations, sending confirmations to
Shareholders within 72 hours of the telephone transaction, verifying the account
name and a shareholder's account number or tax identification number, and
sending redemption proceeds only to the address of record or to a previously
authorized account.

PAYMENTS TO SHAREHOLDERS

Redemption orders are effected at the net asset value per Share next
determined after the Shares are properly tendered for redemption, as described
above. The proceeds paid upon redemption of Shares in an Income Fund and a
Capital Appreciation Fund may be more or less than the amount invested. Payment
to Shareholders for Shares redeemed will be made within seven days after receipt
by the Transfer Agent of the request for redemption. However, to the greatest
extent possible, the Trust will attempt to honor requests from Income Fund and
Capital Appreciation Fund Shareholders for next Business Day payments upon
redemption of Shares if the request for redemption is received by the Transfer
Agent before 4:00 p.m., Eastern Time, on a Business Day or, if the request for
redemption is received after 4:00 p.m., Eastern Time, to honor requests for
payment within two Business Days, unless it would be disadvantageous to the
Trust or the Shareholders of the particular Income Fund to sell or liquidate
portfolio securities in an amount sufficient to satisfy requests for payments in
that manner. To the greatest extent possible, the Trust will attempt to honor
requests from Money Market Fund 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 current 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 Fund has a value of less than $250.
Accordingly, an investor purchasing Shares of a Fund in only the minimum
investment amount may be subject to such involuntary redemption if he or she
thereafter redeems some of his or her Shares. Before the Trust exercises its
right to redeem such Shares and to send the proceeds to the Shareholder, the
Shareholder will be given notice that the value of the Shares in his or her
account is less than the minimum amount and will be allowed 60 days to make an
additional investment in an amount which will increase the value of the account
to at least $250.

See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION" and "VALUATION--Valuation
of the Money Market Funds" in

48
<PAGE> 91

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

Each Fund is treated as a separate entity for federal income tax purposes.
Each Fund intends to qualify for treatment as a "regulated investment company"
under the Code. If it so qualifies, a Fund will not have to pay federal income
taxes on net income and net capital gain income that they distribute to
shareholders. Regulated investment companies are also subject to a federal
excise tax if they do not distribute their income on a timely basis. Each Fund
intends to avoid paying federal income and excise taxes by timely distributing
substantially all its net income and net capital gain income.

Additional information regarding federal taxes is contained in the Statement
of Additional Information under "ADDITIONAL PURCHASE AND REDEMPTION
INFORMATION--Additional Tax Information."

The following 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 following is also intended only as a brief summary
of some of the important tax considerations generally affecting the 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
below.

Shareholders will be advised at least annually as to the character for federal
income tax purposes of distributions made during the year.

PRIME OBLIGATIONS FUND AND AMSOUTH
U.S. TREASURY FUND

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 P.O. Box 182733, Columbus, Ohio 43218-2733,
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.

Dividends will generally be taxable to a Shareholder as ordinary income to the
extent of the

49
<PAGE> 92

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.

THE INCOME FUNDS

A dividend for each Income Fund will be declared monthly at the close of
business on the day of declaration consisting of an amount of accumulated
undistributed net income of the Fund as determined to be necessary or
appropriate by the appropriate officers of the Trust. Dividends will generally
be paid monthly. Distributable net realized capital gains are distributed
annually to Shareholders of record. A Shareholder will automatically receive all
income dividends and capital gains distributions in additional full and
fractional Shares unless the Shareholder elects to receive such dividends or
distributions in cash. Dividends and distributions are reinvested without a
sales charge as of the ex-dividend date using the net asset value determined on
that date and are credited to a Shareholder's account on the payment date.
Reinvested dividends and distributions receive the same tax treatment as
dividends and distributions paid in cash. Dividends are generally taxable when
received. However, dividends declared in October, November, or December to
Shareholders of record during those months and paid during the following January
are treated for tax purposes as if they were received by each Shareholder on
December 31 of the prior year. Elections to receive dividends or distributions
in cash, or any revocation thereof, must be made in writing to the Transfer
Agent at P.O. Box 182733, Columbus, Ohio 43218-2733, and will become effective
with respect to dividends and distributions having record dates after its
receipt by the Transfer Agent.

BOND FUND, LIMITED MATURITY FUND, AND GOVERNMENT INCOME FUND

Distributions by the Bond Fund, Limited Maturity Fund, and Government Income
Fund of ordinary income and/or an excess of short-term capital gain over net
long-term loss are taxable to shareholders as ordinary income. It is not
expected that the dividends-received deduction for corporations will apply.

Distribution by the Bond Fund, Limited Maturity Fund, and Government Income
Fund of the excess of net long-term capital gain over net short-term capital
loss is taxable to Shareholders as long-term capital gain in the year in which
it is received, regardless of how long the Shareholder has held Shares in such
Fund. Such distributions are not eligible for the dividends-received deduction.

Prior to purchasing Shares of the Bond Fund, Limited Maturity Fund, and
Government Income Fund, the impact of dividends or capital gains distributions
which are expected to be declared or have been declared, but not paid, should be
carefully considered. Dividends or capital gains distributions paid after a
purchase of Shares are subject to federal income taxes, although in some
circumstances the dividends or distributions may be, as an economic matter, a
return of capital. A Shareholder should consult his or her own advisor for any
special advice.

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<PAGE> 93

Dividends received by a Shareholder that are derived from the Bond Fund,
Limited Maturity Fund, and Government Income Fund investments in U.S. Government
obligations may not be entitled to the exemptions from state and local income
taxes that would be available if the Shareholder had purchased U.S. Government
obligations directly.

A Shareholder will generally recognize long-term capital gain or loss on the
sale or exchange of shares in an Income Fund held by the Shareholder for more
than twelve months. If a Shareholder receives a capital gain dividend with
respect to a Share of the Bond Fund, Limited Maturity Fund, and Government
Income Fund and such Share is held for six months or less, any loss on the sale
or exchange of such Share shall be treated as a long-term capital loss to the
extent of the capital gain dividend.

The holder of a security issued with "original issue discount" (including a
zero-coupon United States Treasury security) is required to accrue as income
each year a portion of the discount at which the security was purchased, even
though the holder does not currently receive the interest payment in cash. A
security has original issue discount if its redemption price exceeds its issue
price by more than a de minimis amount. Accordingly, the Bond Fund, Limited
Maturity Fund, and Government Income Fund may be required to distribute each
year an amount which is greater than the total amount of cash interest the Fund
actually received. Such distributions may be made from the cash assets of the
Fund or by liquidation of its portfolio securities, if necessary. The Fund may
realize gains or losses from such liquidations. In the event the Fund realizes
net capital gains from such transactions, its shareholders may receive a larger
capital gain distribution, if any, than they would have in the absence of such
transactions.

TAX EXEMPT FUND, FLORIDA FUND, AND MUNICIPAL BOND FUND

The Tax Exempt and Tax-Free Funds' 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 Funds 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 and Tax-Free Funds attributable to
exempt-interest dividends 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 Funds distribute exempt-interest dividends during the Shareholder's taxable
year. The amount of the disallowed interest deduction is the total amount of
interest paid or accrued on the indebtedness multiplied by a fraction, the
numerator of which is the amount of exempt-interest dividends received by the
Shareholder and the denominator of which is the sum of the exempt-interest
dividends and taxable dividends received by the Shareholder (excluding capital
gain dividends received by the Shareholder and capital gains required to be
included in the Shareholder's computation of long-term capital gains under
Section 852(b)(3)(D) of the Code). It is anticipated that distributions from the
Tax Exempt and Tax-Free Funds will not be eligible for the dividends received
deduction for corporate shareholders.

Gains on the sale of Shares in the Tax Exempt and Tax-Free Funds 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.

The Tax Exempt Fund and the Tax-Free Funds may at times purchase Municipal
Securities at a discount from the price at which they were originally issued.
For federal income tax purposes, some

51
<PAGE> 94

or all of this market discount will be included in a Fund's ordinary income and
will be taxable to Shareholders as such when it is distributed to them.

To the extent dividends paid to Shareholders are derived from taxable income
(for example, from interest on certificates of deposit, market discount 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
individual and corporate Shareholders for the purpose of determining liability
(if any) for the applicable alternative minimum tax. All tax-exempt interest
dividends will be required to be taken into account in calculating the
alternative minimum taxable income of corporate shareholders.

ALABAMA TAXES

Section 40-18-14(2)f of the Alabama Code specifies that interest on
obligations of the State of Alabama and any county, municipality or other
political subdivision thereof is exempt from personal income tax. Section
40-18-14(2)d provides similar tax-exempt treatment for interest on obligations
of the United States or its Possessions (including Puerto Rico, Guam and the
Virgin Islands). In addition, Regulation Section 810-3-14-.02(4)(b)2 and an
Administrative ruling of the Alabama Department of Revenue dated March 1, 1990
extend these exemptions for interest to distributions from a regulated
investment company to the extent that they are paid out of interest earned on
such exempt obligations. Tax-exempt treatment is not available on distributions
from income earned on securities that are merely guaranteed by the federal
government (GNMAs, FNMAs, etc.), for repurchase agreements collateralized by
U.S. Government obligations or for obligations of other states to the extent
such investments are made by the Fund for temporary or defensive purposes. Such
interest will be taxable on a pro rata basis.

Any distributions of net short-term and net long-term capital gain earned by
the Fund are fully includable in each shareholder's Alabama taxable income as
dividend income and long-term capital gain, respectively. Both types of income
are currently taxed at ordinary rates.

The foregoing discussion 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 Alabama tax considerations
generally affecting the Municipal Fund and its Shareholders. Potential investors
are urged to consult their tax advisors concerning their own tax situation and
concerning the application of state and local (as well as federal) taxes.

FLORIDA TAXES

The State of Florida does not impose an income tax on individuals. Therefore,
distributions of the Florida Fund to individuals will not be subject to personal
income taxation in Florida. Corporations and other entities subject to the
Florida income tax will be subject to tax on distributions of investment income
and capital gains by the Fund. Distributions attributable to interest on
obligations of any state (including Florida), the District of Columbia, U.S.
possessions, or any political subdivision thereof, will be taxable to
corporations and other entities for Florida income tax purposes even though such
interest income is exempt from federal income tax. Similarly, distributions
attributable to interest on obligations of the United States and its territories
will be taxable to corporations and other entities under the Florida income tax.
For individuals and other entities subject to taxation in states and localities
other than Florida, distributions of the Fund will be subject to applicable
taxes imposed by such other states and localities.

In the opinion of special Florida tax counsel to the Fund, shareholders of the
Florida Fund who are subject to the Florida Intangible Personal Property Tax
(the "Intangible Tax") will not be subject to the Intangible Tax on shares of
the Florida Fund if,

52
<PAGE> 95

on the first day of the applicable calendar year, the assets of the Florida Fund
consist solely of obligations of Florida or its political subdivisions;
obligations of the United States, Puerto Rico, the Virgin Islands or Guam; or
bank deposits, cash or other assets which would be exempt from the Intangible
Tax if directly held by the shareholder. A ruling confirming this tax treatment
is being sought from the Florida Department of Revenue. As described above, it
is the Florida Fund's policy to invest at least 80% of its net assets in Florida
Municipal Securities exempt from the Intangible Tax under normal market
conditions. The Florida Fund intends to insure that, absent abnormal market
conditions, all of its assets held on January 1 of each year are exempt from the
Intangible Tax. Accordingly, the value of the Florida Fund shares held by a
shareholder should ordinarily be exempt from the Intangible Tax. However, if on
any January 1 the Florida Fund holds investments that are not exempt from the
Intangible Tax, the Florida Fund's shares could be wholly or partially subject
to the Intangible Tax for that year.

The foregoing discussion is intended only as a brief summary of the Florida
tax laws currently in effect which would generally affect the Florida Fund and
its shareholders. Potential investors are urged to consult with their Florida
tax counsel concerning their own tax situation.

THE CAPITAL APPRECIATION FUNDS

The net income of each of the Capital Appreciation Funds will be declared
monthly as a dividend to Shareholders at the close of business on the day of
declaration. Dividends will generally be paid monthly. Distributable net
realized capital gains are distributed at least annually to Shareholders of
record. A Shareholder will automatically receive all income dividends and
capital gains distributions in additional full and fractional Shares unless the
Shareholder elects to receive such dividends or distributions in cash. Dividends
and distributions are reinvested without a sales charge as of the ex-dividend
date using the net asset value determined on that date and are credited to a
Shareholder's account on the payment date. Reinvested dividends and
distributions receive the same tax treatment as dividends and distributions paid
in cash. Dividends are generally taxable when received. However, dividends
declared in October, November, or December to Shareholders of record during
those months and paid during the following January are treated for tax purposes
as if they were received by each Shareholder on December 31 of the prior year.
Elections to receive dividends or distributions in cash, or any revocation
thereof, must be made in writing to the Transfer Agent at P.O. Box 182733,
Columbus, Ohio 43218-2733, and will become effective with respect to dividends
and distributions having record dates after its receipt by the Transfer Agent.

53
<PAGE> 96

should consult his or her own advisor for any special advice.

Dividends received by a Shareholder that are derived from a Capital
Appreciation Fund's investments in U.S. government obligations may not be
entitled to the exemptions from state and local income taxes that would be
available if the Shareholder had purchased U.S. government obligations directly.

54
<PAGE> 97

MANAGEMENT OF AMSOUTH MUTUAL FUNDS

TRUSTEES OF THE TRUST

<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE TRUST DURING THE PAST 5 YEARS
- ------------------------------ ------------------ -------------------------------------------
<S> <C> <C>
George R. Landreth* Chairman From December 1992 to present, employee of
BISYS Fund Services BISYS Fund Services, Limited Partnership;
3435 Stelzer Road from July 1991 to December 1992, employee
Columbus, OH 43219 of PNC Financial Corp.; from October 1984
to July 1991, employee of The Central Trust
Co., N.A.
Dr. Dick D. Briggs, Jr. Trustee From 1981 to present, Professor and Vice
459 DER Building Chairman, Department of Medicine,
1808 7th Avenue South University of Alabama at Birmingham School
UAB Medical Center of Medicine; December 1995, to present,
Birmingham, Alabama 35294 Physician, University of Alabama Health
Services Foundation; from June 1988 to
October 1992, President, Chief Executive
Officer and Medical Director, University of
Alabama Health Services Foundation
Wendell D. Cleaver Trustee From September 3, 1993 to present, retired;
209 Lakewood Drive, West from December 1988 to August, 1993,
Mobile, Alabama 36608 Executive Vice President, Chief Operating
Officer and Director, Mobile Gas Service
Corporation
J. David Huber* Trustee From June 1987 to present, employee of
BISYS Fund Services BISYS Fund Services, Limited Partnership
3435 Stelzer Road
Columbus, OH 43219
Homer H. Turner, Jr. Trustee From June 1991 to present, retired; until
729 Cary Drive June 1991, Vice President, Birmingham
Auburn, Alabama 36830 Division, Alabama Power Company
James H. Woodward, Jr. Trustee From 1996 to present, Trustee of The
The University of North Sessions Group; from July 1989 to present,
Carolina at Charlotte Chancellor, The University of North
Charlotte, North Carolina Carolina at Charlotte; until July 1989,
28223 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.

55
<PAGE> 98

The Trustees receive fees and are reimbursed for expenses in connection with
each meeting of the Board of Trustees they attend. However, no officer or
employee of BISYS Fund Services, or BISYS Fund Services Ohio, Inc. receives any
compensation from the Trust for acting as a Trustee. The officers of the Trust
(see the Statement of Additional Information) receive no compensation directly
from the Trust for performing the duties of their offices. BISYS Fund Services
receives fees from the Trust for acting as Administrator and BISYS Fund Services
Ohio, Inc. receives fees from the Trust for acting as Transfer Agent for and for
providing fund accounting services to the Trust. Messrs. Huber and Landreth are
employees and executive officers of BISYS Fund Services.

INVESTMENT ADVISOR

Subject to the general supervision of the Trust's Board of Trustees and in
accordance with the respective investment objectives and restrictions of the
Funds, the Advisor manages the Funds (except with respect to the Equity Income
Fund), 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.

Brian B. Sullivan, CFA is the portfolio manager for the Bond Fund and, as
such, has had primary responsibility for the day-to-day portfolio management of
the Bond Fund since 1992. Mr. Sullivan has been a portfolio manager at AmSouth
since 1984, and is currently Senior Vice President and Trust Investment Officer
in charge of fixed income investments.

John P. Boston, CFA, is the portfolio manager for the Limited Maturity Fund
since August, 1995, and of the Government Income Fund since inception and, as
such, has primary responsibility for the day-to-day portfolio management of the
Limited Maturity and Government Income Funds. Mr. Boston has been associated
with AmSouth's Trust Investment Group for over five years and is currently a
Vice President and Trust Investment Officer.

Dorothy E. Thomas, CFA, is the portfolio manager for the Municipal Bond Fund
and since May 15, 1997 is the portfolio manager for the Florida Fund, and as
such, has primary responsibility for the day-to-day management of each Fund's
portfolio. Ms. Thomas has been associated with AmSouth's Trust Investment Group
for over ten years and is currently Vice President and Trust Investment Officer.

Pedro Verdu, CFA, is the portfolio manager for each Capital Appreciation Fund
(except the Equity Income Fund) and, as such, has had primary responsibility for
the day-to-day portfolio management of each of these Funds since their
inception. Mr. Verdu has twenty-four years of experience as an analyst and
portfolio manager; he is currently the Director of Equity Investing at AmSouth.

Under investment advisory agreements between the Trust and the Advisor, the
fee payable to the Advisor by each 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 each Money Market Fund's average daily
net assets; sixty-five

56
<PAGE> 99

one-hundredths of one percent (.65%) of each
Income Fund's average daily net assets; eighty one-hundredths of one percent
(.80%) of each of the Equity, Regional Equity, Balanced, Equity Income and
Capital Growth Fund's average daily net assets; and ninety one-hundredths of one
percent (.90%) of the Small Cap 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 Advisor.
With respect to the Capital Appreciation Funds, while this fee may be higher
than the advisory fee paid by most mutual funds, it is believed to be comparable
to advisory fees paid by many funds having similar objectives and policies. A
fee agreed to in writing from time to time by the Trust and the Advisor may be
significantly lower than the fee calculated at the annual rate and the effect of
such lower fee would be to lower a Fund's expenses and increase the net income
of the Fund during the period when such lower fee is in effect.

During the Trust's fiscal year ended July 31, 1996, the Advisor 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, after voluntary fee
reductions with respect to the Tax Exempt Fund.

During the Trust's fiscal year ended July 31, 1996, after voluntary fee
reductions, the Advisor received investment advisory fees amounting to 0.50% of
the Bond Fund's average net assets, .50% of the Limited Maturity Fund's average
net assets, .30% of the Government Income Fund's average net assets, and .30% of
the Florida Fund's average net assets. The Municipal Bond Fund had not commenced
operations as of July 31, 1996.

INVESTMENT SUB-ADVISORS

Rockhaven Asset Management, LLC ("Rockhaven") serves as sub-advisor to the
Equity Income Fund pursuant to a Sub-Advisory Agreement with the Advisor
("Sub-Advisor"). Under the Sub-Advisory Agreement, the Sub-Advisor manages the
Fund, selects investments, and places all order for purchases and sales of
securities, subject to the general supervision of the Trust's Board of Trustees
and the Advisor in accordance with the Fund's investment objective, policies,
and restrictions.

The cumulative total return for the Federated Equity Income Fund from August
1, 1991 through January 31, 1997 was 139.82%, absent the imposition of a sales
charge. The cumulative total return for the same period for the Standard &
Poor's Composite Stock Price Index ("S&P 500 Index") was 135.09%. At January 31,
1997, the Federated Equity Income Fund had approximately $970 million in net
assets. As portfolio manager of the Federated Equity Income Fund, Mr. Wiles had
full discretionary authority over the selection of invest-

57
<PAGE> 100

ments for that fund. Average annual total returns
for the one-year, three-year, and five-year periods ended January 31, 1997 and
for the entire period during which Mr. Wiles managed that fund compared with the
performance of the S&P 500 Index and the Lipper Equity Income Fund Index were:

PRIOR PERFORMANCE OF THE CLASS A
SHARES OF THE FEDERATED EQUITY INCOME FUND

<TABLE>
<CAPTION>
S&P
FEDERATED 500 LIPPER EQUITY
EQUITY INCOME FUND+* INDEX@ INCOME FUND INDEX#
-------------------- ------ ------------------
<S> <C> <C> <C>
CLASS A SHARES (absent imposition of sales
charge)
One Year......................................... 23.26% 26.34% 19.48%
Three Years...................................... 17.03% 20.72% 15.09%
Five Years....................................... 16.51% 17.02% 14.73%
August 1, 1991 through January 31, 1997.......... 17.25% 16.78% 14.99%

CLASS A SHARES (assuming imposition of the
Federated Equity Income Fund's maximum sales
charge)
One Year......................................... 16.48%
Three Year....................................... 14.85%
Five Year........................................ 15.20%
August 1, 1991 through January 31, 1997.......... 16.05%
</TABLE>

- ------------
+ Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

* During the period from August 1, 1991 through January 31, 1997, the
operating expense ratio of the Class A Shares of the Federated Equity Income
Fund ranged from .95% to 1.05% of the fund's average daily net assets. These
operating expenses were lower than the projected operating expenses of the
Premier Shares of the AmSouth Equity Income Fund. If the actual operating
expenses of the Premier Shares of the AmSouth Equity Income Fund are higher
than the historical operating expenses of the Class A Shares of the
Federated Equity Income Fund, this could negatively affect performance.

@ The S&P 500 Index is an unmanaged index of common stocks that is considered
to be generally representative of the United States stock market. The Index
is adjusted to reflect reinvestment of dividends.

The Federated Equity Income Fund does not offer Premier Shares, therefore the
performance data is shown for the Class A Shares, the shares most similar to
Premier Shares. However, since the Premier Shares of the AmSouth Equity Income
Fund do not impose a sales charge, the Federated Equity Income Fund performance
data, absent the imposition of a sales charge, reflects the most comparable past
performance.

58
<PAGE> 101

ADMINISTRATOR AND DISTRIBUTOR

ASO Service Company ("ASO") is the administrator for each Fund of the Trust
and BISYS Fund Services ("BISYS") acts as the Trust's principal underwriter and
distributor (the "Administrator" and the "Distributor," respectively). ASO is a
wholly owned subsidiary of BISYS. BISYS is a subsidiary of The BISYS Group,
Inc., 150 Clove Road, Little Falls, New Jersey 07424, a publicly owned company
engaged in information processing, loan servicing and 401(k) administration and
recordkeeping services to and through banking and other financial organizations.

The Administrator generally assists in all aspects of the Funds'
administration and operation. Under management and administration agreements
between the Trust, the fee payable by each 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 Income Fund's average
daily net assets or (b) such fee as may from time to time be agreed upon by the
Trust and the Administrator. A fee agreed to from time to time by the Trust and
the Administrator may be significantly lower than the fee calculated at the
annual rate and the effect of such lower fee would be to lower an Income Fund's
expenses and increase the net income of the Fund during the period when such
lower fee is in effect.

ASO succeeded BISYS as Administrator on April 1, 1996. During the Trust's
fiscal year ended July 31, 1996, BISYS and ASO received administration fees
amounting to .20% of each Money Market Fund's average daily net assets. During
the Trust's fiscal year ended July 31, 1996, BISYS and ASC received
administration fees, after voluntary fee reductions, amounting to .12% of the
Bond Fund's average daily net assets; .12% of the Limited

59
<PAGE> 102

Maturity Fund's average daily net assets; .10% of the Government Income Fund's
average daily net assets; .10% of the Florida Fund's average daily net assets;
.11% of the Equity Fund's average daily net assets, .12% of the Regional Equity
Fund's average daily net assets, and .11% of the Balanced Fund's average daily
net assets.

SUB-ADMINISTRATORS

BISYS Fund Services serves as a Sub-Administrator to the Trust. Pursuant to
its agreement with the Administrator, BISYS is entitled to compensation as
mutually agreed from time to time by it and the Administrator.

EXPENSES

AmSouth and the Administrator each bear all expenses in connection with the
performance of their services as Advisor and Administrator, respectively, other
than the cost of securities (including brokerage commissions, if any) purchased
for an Fund. No Fund will bear, directly or indirectly, the cost of any activity
primarily intended to result in the distribution of Shares of such Fund; such
costs will be borne by the Distributor.

As a general matter, expenses are allocated to the Classic, Class B, and
Premier Class of a Fund on the basis of the relative net asset value of each
Class. At present, the only expenses that will be borne solely by Classic and
Class B Shares, other than in accordance with the relative net asset value of
the Class, are expenses under the Servicing Plan with respect to the Classic
Shares and under the Distribution Plan with respect to the Class B Shares.

BANKING LAWS

AmSouth believes that it possesses the legal authority to perform the
investment advisory services for the 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

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<PAGE> 103

ment Income Fund and the AmSouth Florida Tax-Free Fund. Each Fund, except the
AmSouth Florida Tax-Free Fund, is diversified for purposes of the 1940 Act. Each
Fund offers three classes of shares: Premier, Classic and Class B Shares, except
the AmSouth U.S. Treasury Fund and Tax Exempt Fund which offer only Premier
Shares and Classic Shares. As of the date of this prospectus, however, Class B
Shares are not offered in the Limited Maturity Fund, Government Income Fund,
Florida Fund and Municipal Bond 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 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, (iii)
only the holders of Classic Shares will be entitled to vote on matters submitted
to Shareholder vote with regard to the Servicing Plan, and (iv) only the holders
of Class B Shares will be entitled to vote on matters submitted to Shareholder
vote with regard to the Distribution 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.

The Trust believes that as of August 21, 1997, AmSouth, 1901 Sixth Avenue
North, Birmingham, AL 35203, was the Shareholder of record of 98.81% of the
outstanding shares of the Premier Class of the Prime Obligations Fund, 98.98% of
the outstanding shares of the Premier Class of the AmSouth U.S. Treasury Fund,
and 98.98% of the Premier Class of the Tax Exempt Fund. As of August 21, 1997,
AmSouth was the beneficial owner of approximately 76.79% of the outstanding
shares of the Premier Shares of the Prime Obligations Fund, 11.55% of the
outstanding shares of the Premier Shares of the AmSouth U.S. Treasury Fund and
69.27% of the outstanding shares of the Premier Shares of the Tax Exempt Fund,
and may be deemed to be a "controlling person" of each of the Premier Shares of
the Prime Obligations Fund and the Tax Exempt Fund within the meaning of the
Investment Company Act of 1940.

The Trust believes as of August 21, 1997, AmSouth, 1901 Sixth Avenue North,
Birmingham, AL 35203, was the Shareholder of record of 98.01% of the outstanding
shares of the Bond Fund, 97.51% of the outstanding shares of the Limited
Maturity Fund, 88.18% of the outstanding shares of the Florida Fund; 94.92% of
the outstanding shares of the Equity Fund; 68.22% of the outstanding shares of
the Regional Equity Fund; and 86.78% of the outstanding shares of the Balanced
Fund. As of August 21, 1997, AmSouth was the beneficial owner of approximately
72.49% of the outstanding shares of the Bond Fund, 57.28% of the outstanding
shares of the Limited Maturity Fund; 61.73% of the outstanding shares of the
Equity Fund; 54.67% of the outstanding shares of the Regional Equity Fund; and
81.58% of the outstanding shares of the Balanced Fund and may be deemed to be a
"controlling person" of each of the above-mentioned Funds within the meaning of
the Investment Company Act of 1940.

CUSTODIAN

As of April 17, 1997, AmSouth serves as custodian for the Trust ("Custodian").
Pursuant to the Custodian Agreement with the Trust, the Custodian

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<PAGE> 104

receives compensation from each Fund for such services in an amount equal to an
asset-based fee.

TRANSFER AGENT AND FUND ACCOUNTING

BISYS Funds Services Ohio, Inc. serves as transfer agent for and provides fund
accounting services to the Trust.

PERFORMANCE INFORMATION

MUNICIPAL BOND FUND

The Municipal Bond Fund commenced operations on July 1, 1997 subsequent to the
transfer of assets by the Tax-Exempt Portfolio, a common trust fund, to the
Municipal Bond Fund in exchange for shares of the Municipal Bond Fund. The
Municipal Bond Fund's portfolio of investments on July 1, 1997 was the same as
the portfolio of the Tax-Exempt Portfolio immediately prior to the transfer.

The Tax-Exempt Portfolio is not a registered investment company as it is
exempt from registration under the 1940 Act. Since, in a practical sense, the
common trust fund constitutes a "predecessor" of the Fund, the Municipal Bond
Fund calculates the performance for each Class of the Fund for periods
commencing prior to the transfer of the Tax-Exempt Portfolio assets to the
Municipal Bond Fund by including the Tax-Exempt Portfolio's total return
adjusted to reflect the deduction of fees and expenses applicable to the Premier
Shares of the Fund as stated in the Fee Table in this prospectus (i.e., adjusted
to reflect anticipated expenses, net of management and administrative fee
waivers).

The Municipal Bond Fund from time to time may advertise certain investment
performance figures, as discussed below. These figures are based on historical
earnings, but past performance data is not necessarily indicative of future
performance of the Fund.

COMPARATIVE PERFORMANCE INFORMATION REGARDING
THE TAX-EXEMPT PORTFOLIO AND THE MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Tax-Exempt Portfolio......................................... 5.45% 5.21% 4.69% 5.92%
</TABLE>

- ------------
* Figures were calculated pursuant to a methodology established by the SEC and
do not reflect an imposition of a sales charge given that Premier Shares of
the Municipal Bond Fund are not subject to a sales charge.

The above-mentioned performance data includes the performance of the
Tax-Exempt Portfolio for the period before the Municipal Bond Fund commenced
operations adjusted to reflect the deduction of fees and expenses applicable to
the Premier Shares of the Municipal Bond Fund (i.e., adjusted to reflect
anticipated expenses, net of management and administrative fee waivers). The
Tax-Exempt Portfolio was not registered under the 1940 Act and therefore was not
subject to certain investment restrictions, limitations and diversification
requirements imposed by the Act and the Code. If the Tax-Exempt Portfolio had
been registered under the 1940 Act, its performance may have been adversely
affected. The investment objective, restrictions and guidelines of the Municipal
Bond Fund are substantially similar to the Tax Exempt Portfolio and both were
managed by the same personnel.

MONEY MARKET FUNDS

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

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<PAGE> 105

"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.

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, five years (if applicable) 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.

INCOME FUNDS AND CAPITAL APPRECIATION FUNDS

From time to time performance information for the Premier Shares of a Fund
showing its total return and/or yield may be presented in advertisements, sales
literature and Shareholder reports. Total return will be calculated for the past
year, five years (if applicable) and the period since the establishment of a
Fund. Average annual total return is measured by comparing the value of an
investment in a Fund at the beginning of the relevant period to the redemption
value of the investment at the end of the period (assuming the investor paid the
maximum sales load on the investment and assuming immediate reinvestment of any
dividends or capital gains distributions) and annualizing the difference.
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. Yield will be computed by dividing a Fund's net investment income
per share earned during a recent one-month period by the Fund's per share
maximum offering price (reduced by any undeclared earned income expected to be
paid shortly as a dividend) on the last day of the period and annualizing the
result. Each Fund may also present its total return and/or yield excluding the
effect of the sales charge.

The Tax-Free Funds may also present its "tax equivalent yield" which reflects
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 of the Funds. The tax equivalent yield
will be significantly higher than the yield of the Tax-Free Funds.

GENERAL

Yield, effective yield, tax-equivalent yield, and total return will be
calculated separately for each Class of Shares. Because Premier Shares are not
subject to a distribution and/or shareholder services fee, the yield and total
return for Premier Shares will be higher than that of the Classic and Class B
Shares for the same period.

Investors may also judge the performance of each Fund by comparing its
performance to the performance of other mutual funds with comparable investment
objectives and policies through various mutual fund or market indices and data
such as that provided by Lipper Analytical Services, Inc. Comparisons may also
be made to indices or data published in Money Magazine, Forbes, Barron's, The
Wall Street Journal, The New York Times, Business Week, American Banker,
Fortune, Institutional Investor, Ibbotson Associates, Inc., Morningstar Inc.,
CDA/Wiesenberger, Pensions and Investments, U.S.A. Today, and local newspapers.
In addition to performance information, general information about these Funds
that appears in a publication such as those mentioned above may be included in
adver-

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<PAGE> 106

tisements, 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 each Fund's performance is based on the Fund's record up to
a certain date and is not intended to indicate future performance. Yield and
total return are functions of the type and quality of instruments held in Fund,
operating expenses and market conditions. Yields and total return of each Fund
will fluctuate. Any fees charged by AmSouth with respect to accounts investing
in Shares of a Fund will not be included in performance calculations.

MISCELLANEOUS

Shareholders will receive unaudited semi-annual reports and annual reports
audited by independent public accountants.

As used in this Prospectus and in the Statement of Additional Information,
"assets belonging to a Fund" means the consideration received by the Fund upon
the issuance or sale of Shares in that Group, 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.

Inquiries regarding the Trust may be directed in writing to the Trust at P.O.
Box 182733, Columbus, Ohio 43218-2733, or by calling toll free (800) 451-8382.

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AMSOUTH MUTUAL FUNDS

INVESTMENT ADVISOR

[AMSOUTH LOGO]
AmSouth Bank
1901 Sixth Avenue North
Birmingham, AL 35203

INVESTMENT SUB-ADVISORS
(Equity Income Fund only)
Rockhaven Asset Management, LLC
100 First Avenue, Suite 1050
Pittsburgh, PA 15222

(Capital Growth Fund only)
Peachtree Asset Management
A Division of Smith Barney Mutual Funds Management Inc.
One Peachtree Center
Atlanta, GA 30308

DISTRIBUTOR
BISYS Fund Services, Limited Partnership
3435 Stelzer Road
Columbus, OH 43219

ADMINISTRATOR
ASO Services Company
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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Fee Table...................................... 3
Financial Highlights........................... 6
Investment Objective and Policies.............. 17
Investment Techniques.......................... 39
Investment Restrictions........................ 41
Valuation of Shares............................ 43
How to Purchase and Redeem Shares.............. 44
Dividends and Taxes............................ 49
Management of the AmSouth Mutual Funds......... 55
General Information............................ 60
</TABLE>

AS4P091097
<PAGE> 108
AMSOUTH MUTUAL FUNDS
====================

[AMSOUTH(R) LOGO]

AMSOUTH BANK
Investment Advisor

P R E M I E R

S H A R E S

[AMSOUTH MUTUAL FUNDS LOGO]

NOT FDIC INSURED

BISYS FUND SERVICES, DISTRIBUTOR
Prospectus dated September 1, 1997;
as amended September 8, 1997