<PAGE> 1
As filed with the Securities and Exchange Commission
on June 17, 1998
Registration Nos. 33-21660 and 811-5551
---------------------------------------
----------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT ____
OF 1933 / /
----
____
Pre-Effective Amendment No. / /
----
____
Post-Effective Amendment No. 27 / X /
----
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT ____
COMPANY ACT OF 1940 / /
----
____
Amendment No. 28 / X /
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AMSOUTH MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road, Columbus, Ohio 43219
---------------------------------------
(Address of Principal Executive Offices)
(800) 451-8379
--------------
(Registrant's Telephone Number, Including Area Code)
Name and address
of agent for service: Copy to:
--------------------- --------
Mr. J. David Huber Alan G. Priest, Esq.
AmSouth Mutual Funds Ropes & Gray
3435 Stelzer Road 1301 K Street, N.W., Suite 800 East
Columbus, Ohio 43219 Washington, D.C. 20005
It is proposed that this filing will become effective (check appropriate box)
____
/ / immediately upon filing pursuant to paragraph (b)
----
____
/ / on ___________, 1998 pursuant to paragraph (b)
----
____
/ / 60 days after filing pursuant to paragraph (a)(i)
----
____
/ / on (date) pursuant to paragraph (a)(i)
----
____
/ X / 75 days after filing pursuant to paragraph (a)(ii)
----
____
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485
----
____
/ / This post-effective amendment designates a new effective date for a
---- previously filed post-effective amendment
<PAGE> 2
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Municipal Bond Fund
The information required by Items 1 through 9 for the above-referenced
investment portfolios of the AmSouth Mutual Funds (the "Registrant") is hereby
incorporated by reference to Part A of Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on November 26, 1997.
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
The information required by Items 1 through 9 for the Premier Shares
only of the above-referenced investment portfolios of the Registrant is hereby
incorporated by reference to Part A of Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on November 26, 1997.
<PAGE> 3
CROSS REFERENCE SHEET
- - ---------------------
Part A
Form N-1A Item No. Prospectus Caption
- - ------------------ ------------------
PROSPECTUS FOR AMSOUTH EQUITY FUND,
-----------------------------------
AMSOUTH REGIONAL EQUITY FUND, AMSOUTH BALANCED FUND,
----------------------------------------------------
AMSOUTH CAPITAL GROWTH FUND,
----------------------------
AMSOUTH SMALL CAP FUND, AMSOUTH
-------------------------------
EQUITY INCOME FUND, AMSOUTH ENHANCED MARKET FUND,
-------------------------------------------------
AND AMSOUTH LARGE CAP GROWTH FUND
---------------------------------
CLASSIC SHARES AND CLASS B SHARES
1. Cover Page............................... Cover Page
2. Synopsis................................. Fee Table
3. Condensed Financial Information.......... Financial Highlights; General
Information - Performance
Information
4. General Description of Registrant........ The Trust; Investment Objective
and Policies; Investment
Restrictions; General Information
- Description of the Trust and
Its Shares
5. Management of the Fund................... Management of AmSouth Mutual
Funds; General Information -
Custodian and Transfer Agent
6. Capital Stock and Other Securities....... The Trust; How to Purchase and
Redeem Shares; Dividends and
Taxes; General Information -
Description of the Trust and Its
Shares; General Information -
Miscellaneous
7. Purchase of Securities Being Offered..... Valuation of Shares; How to
Purchase and Redeem Shares
8. Redemption or Repurchase................. How to Purchase and Redeem Shares
9. Legal Proceedings........................ Inapplicable
<PAGE> 4
AMSOUTH MUTUAL FUNDS
CAPITAL APPRECIATION FUNDS
CLASSIC SHARES AND CLASS B SHARES
3435 Stelzer Road For current yield, purchase,
Columbus, Ohio 43219 and redemption information,
call (800) 451-8382
The Capital Appreciation Funds (the "Capital Appreciation Funds") are
eight of sixteen series of units of beneficial interest ("Shares") each
representing interests in one of sixteen 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. As
of the date of this Prospectus, Premier Shares of the Large Cap Growth Fund and
the Enhanced Market Fund are not being offered. The Shares of the Capital
Appreciation Funds outstanding on August 31, 1997, were redesignated as Classic
Shares.
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
<PAGE> 5
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. The Fund
seeks to achieve growth of income over the long term.
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 80% of its
total assets in common stocks and securities convertible into common stocks such
as convertible bonds and convertible preferred stock of companies with market
capitalizations that are equivalent to the capitalization of the companies in
the Russell 2000 Growth Index at the time of purchase. As of the date of this
Prospectus, such smaller companies will have a market capitalization between $50
million and $2 billion at the time of purchase.
AMSOUTH EQUITY INCOME FUND (the "Equity Income Fund") seeks above
average income and capital appreciation by investing primarily in a diversified
portfolio of common stocks and securities convertible into common stocks such as
convertible bonds and convertible preferred stock. Under normal market
conditions, the Fund will invest at least 65% of its total assets in
income-producing equity securities including common stock, preferred stock, and
securities convertible into common stocks such as convertible bonds and
convertible preferred stock. The portion of the Fund's total assets invested in
common stock, preferred stock, and convertible securities will vary according to
the Fund's assessment of market and economic conditions and outlook.
AMSOUTH LARGE CAP GROWTH FUND (the "Large Cap Growth Fund") seeks
long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks such as convertible bonds and
convertible preferred stocks. The Fund is non-diversified concentrating on
companies which possess a dominant market share and typically have a history of
stable earnings growth. 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 with
market capitalizations that are greater than $2 billion at the time of purchase.
AMSOUTH ENHANCED MARKET FUND (the "Enhanced Market Fund") seeks
long-term growth of capital by investing primarily in a diversified portfolio of
common stock and securities convertible into common stocks such as convertible
bonds and
-2-
<PAGE> 6
convertible preferred stocks. Under normal market conditions the Fund will
invest at least 80% of its total assets in equity securities listed in the
Standard & Poor's 500 Index ("S&P 500"). The Fund invests primarily in S&P 500
securities that are determined, through the use of a quantitative investment
approach emphasizing technical factors, to be undervalued compared to others in
the market sector.
AmSouth Bank, Birmingham, Alabama ("AmSouth") acts as the investment
advisor to each Capital Appreciation Fund ("Advisor"). Rockhaven Asset
Management, LLC ("Rockhaven" or "Sub-Advisor") acts as the investment
sub-advisor to the Equity Income Fund. Peachtree Asset Management ("Peachtree"
or "Sub-Advisor") acts as the investment sub-advisor to the Capital Growth Fund.
Sawgrass Asset Management, LLC ("Sawgrass" or "Sub-Advisor") acts as the
investment sub-advisor to the Small Cap Fund. Oakbrook Investments, LLC
("Oakbrook" or "Sub-Advisor") acts as the investment sub-advisor to the Enhanced
Market Fund and the Large Cap 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"); 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");
and the Premier Shares of the Capital Appreciation Funds, the Money Market Funds
and 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.
-3-
<PAGE> 7
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 ____________, 1998.
-4-
<PAGE> 8
<TABLE>
FEE TABLE
<CAPTION>
Equity Regional 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 0.80% 0.80% 0.80% 0.80% 0.80%(3) 0.80%(3) 0.80% 0.80% 1.20% 1.20% 0.80% 0.80%
12b-1 Fees 0.00% 1.00% 0.00% 1.00% 0.00% 1.00% 0.00% 1.00% 0.00% 1.00% 0.00% 1.00%
Shareholder Servicing
Fees 0.25% 0.00% 0.25% 0.00% 0.25% 0.00% 0.25% 0.00% 0.25% 0.00% 0.25% 0.00%
Other Expenses
(after voluntary
fee reduction)(5) 0.22% 0.22% 0.25% 0.25% 0.24% 0.24% 0.27% 0.27% 0.27% 0.27% 0.27% 0.27%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Operating
expenses(6) (after
voluntary fee
reduction) 1.27% 2.02% 1.30% 2.05% 1.29% 2.04% 1.32% 2.07% 1.72% 2.47% 1.32% 2.07%
==== ==== ==== ==== ==== ===== ==== ==== ==== ==== ==== ====
</TABLE>
-5-
<PAGE> 9
<TABLE>
FEE TABLE
<CAPTION>
Enhanced Market Large Cap Growth
Fund Fund
---- ----
Classic Class B Shares Classic Class B Shares
<S> <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%
Maximum Sales Load Imposed on
Reinvested Dividends (as a percentage
of offering price) 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%
Redemption Fees (as a percentage
of amount redeemed, if applicable)(2) 0% 0% 0% 0%
Exchange Fee $ 0 $ 0 $ 0 $ 0
Annual Fund Operating Expenses
- - ------------------------------
(as a percentage of net assets)
Management Fees 0.45% 0.45% 0.80% 0.80%
12b-1 Fees 0.00% 1.00% 0.00% 1.00%
Shareholder Servicing Fees(4) 0.00% 0.00% 0.00% 0.00%
(after voluntary fee reduction)
Other Expenses(5) 0.50% 0.50% 0.50% 0.50%
---- ---- ---- ----
Total Fund Operating Expenses(6)
(after voluntary fee reduction) .95% 1.95% 1.30% 2.30%
==== ==== ==== ====
</TABLE>
-6-
<PAGE> 10
(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 shareholder servicing fees for
the Classic Shares of the Large Cap Growth Fund and Enhanced Market Fund,
shareholder servicing fees would be 0.25%. This voluntary fee reduction could be
removed at any time.
(5) Absent the voluntary reduction of administration fees, Other
Expenses would be 0.31% for the Equity Fund, 0.33% for the Regional Equity Fund,
0.31% for the Balanced Fund and 0.27% for the Equity Income Fund. Other Expenses
are being waived for the Enhanced Market Fund and Large Cap Growth Fund until
the respective Fund has $10,000,000 in assets. Other Expenses for the Capital
Growth Fund , the Small Cap Fund, the Enhanced Market Fund and the Large Cap
Growth Fund are based on estimates for the current fiscal year.
(6) In the absence of any voluntary reduction of administration fees,
Total Fund Operating Expenses for the Classic Shares would be 1.36% for the
Equity Fund, 1.38% for the Regional Equity Fund, 1.36% for the Balanced Fund and
1.32% for the Equity Income Fund. In the absence of any voluntary reduction of
shareholder servicing fees, Total Fund Operating Expenses for the Classic Shares
would be 1.20% for the Enhanced Market Fund and 1.55% for the Large Cap Growth
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, 2.11% for the Balanced Fund and 2.07%
for the Equity Income Fund.
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
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 $62 $97 N/A N/A
Equity Income Fund $58 $85 N/A N/A
Enhanced Market Fund $54 $74 N/A N/A
Large Cap Growth Fund $58 $84 N/A N/A
- - --------------------
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.
-7-
<PAGE> 11
<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 $75 $107 N/A N/A
Assuming no redemption $25 $ 77 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
Large Cap Growth Fund
Assuming a complete
redemption at end of period $73 $102 N/A N/A
Assuming no redemption $23 $ 72 N/A N/A
Enhanced Market Fund
Assuming a complete
redemption at end of period $70 $ 91 N/A N/A
Assuming no redemption $20 $ 61 N/A N/A
</TABLE>
-8-
<PAGE> 12
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.")
-9-
<PAGE> 13
FINANCIAL HIGHLIGHTS
The tables below set forth certain financial information concerning the
investment results for each of the Funds (with the exception of the Capital
Growth Fund, Small Cap Fund, Large Cap Growth Fund and Enhanced Market Fund) for
the period from commencement of operations to July 31, 1997. The information
from the commencement of operations to July 31, 1997 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, 1997 appears in the Statement of Additional Information. The Capital Growth
Fund , the Small Cap Fund, the Enhanced Market Fund and the Large Cap Growth
Fund had not commenced operations as of July 31, 1997. Unaudited financial
information is also included for the Capital Appreciation Funds (except the
Small Cap Fund, Enhanced Market Fund and the Large Cap Growth Fund) for the six
month period ended January 31, 1998. Further financial data is incorporated by
reference into in the Statement of Additional Information.
<TABLE>
<CAPTION>
Equity Fund
--------------------------------------------------------------------------------------------------------
Six Months Ended December
January 31, 1998 Year Ended July 31, 1, 1988
---------------- ---------------------------------------------------------------------- to
(unaudited) July 31,
Classic(a) B Shares(a) 1997 1996 1995 1994 1993 1992 1991 1990 1989(f)
---------- ----------- ---- ---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 23.35 $ 23.16 $ 17.62 $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57 $ 11.99 $ 12.18 $10.00
------- ------- -------- -------- -------- -------- -------- -------- -------- ------- ------
INVESTMENT ACTIVITIES
Net investment income 0.06 0.04 0.30 0.33 0.33 0.28 0.28 0.32 0.36 0.37 0.22
Net realized and
unrealized gains
(losses) from
investments 0.55 0.71 6.77 1.48 2.39 0.83 1.48 1.20 0.61 (0.17) 2.16
------- ------- -------- -------- -------- -------- -------- -------- -------- ------- ------
Total from
Investment
Activities 0.61 0.75 7.07 1.81 2.72 1.11 1.76 1.52 0.97 0.20 2.38
------- ------- -------- -------- -------- -------- -------- -------- -------- ------- ------
DISTRIBUTIONS
Net investment income (0.10) (0.06) (0.30) (0.33) (0.32) (0.28) (0.29) (0.33) (0.37) (0.35) (0.20)
Net realized gains
from investment
transactions (1.25) (1.25) (1.04) (0.61) (0.47) (0.39) (0.49) (0.36) (0.02) (0.04) --
------- ------- -------- -------- -------- -------- -------- -------- -------- ------- ------
Total Distributions (1.35) (1.31) (1.34) (0.94) (0.79) (0.67) (0.78) (0.69) (0.39) (0.39) (0.20)
------- ------- -------- -------- -------- -------- -------- -------- -------- ------- ------
NET ASSET VALUE,
END OF PERIOD $ 22.61 $ 22.60 $ 23.35 $ 17.62 $ 16.75 $ 14.82 $ 14.38 $ 13.40 $ 12.57 $ 11.99 $12.18
======= ======= ======== ======== ======== ======== ======== ======== ======== ======= ======
Total Return (excludes
sales charge) 2.65%(c) 2.42%(c) 42.35% 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) $61,808 $ 2,602 $974,985 $374,622 $275,757 $205,611 $153,074 $107,934 $ 32,406 $14,383 $5,476
Ratio of expenses to
average net assets 1.16%(b) 2.07%(b) 1.06% 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 0.82%(b) 0.07%(b) 1.52% 1.86% 2.17% 1.93% 2.08% 2.50% 3.16% 3.16% 2.91%(b)
Ratio of expenses to
average net assets* 1.16%(b) 2.07%(b) 1.10% 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* 0.82%(b) 0.07%(b) 1.48% 1.77% 2.09% 1.76% 1.90% 2.36% 3.04% 2.86% 1.73%(b)
Portfolio turnover (d) 6.25% 6.25% 24.47% 19.11% 19.46% 11.37% 15.12% 113.12% 15.78% 14.89% 4.03%
Average commission rate
paid (e) $0.0700 $0.0700 $ 0.0657 $ 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) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, exchanged their shares for either the Fund's
Classic Shares or Premier Shares. For reporting purposes, past
performance numbers (prior to September 2, 1997) are being reflected as
Classic Shares. The Class B Shares also became effective on September
2, 1997.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(e) Represents the dollar amount of commissions paid on portfolio
transactions divided by the total number of portfolio shares purchased
and sold for which commissions were charged and is calculated on the
basis of the portfolio as a whole without distinguishing between the
classes of shares issued. Disclosure is not required for periods ending
prior to September 1, 1996.
(f) Period from commencement of operations.
-10-
<PAGE> 14
<TABLE>
<CAPTION>
Regional Equity Fund
------------------------------------------------------------------------------------------------------
Six Months Ended December
January 31, 1998 Year Ended July 31, 1, 1988
---------------- -------------------------------------------------------------------- to
(unaudited) July 31,
Classic(a) B Shares(a) 1997 1996 1995 1994 1993 1992 1991 1990 1989(f)
---------- ----------- ---- ---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 28.23 $ 28.50 $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86 $ 13.44 $12.45 $11.64 $10.00
------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
INVESTMENT ACTIVITIES
Net investment income
(loss) 0.04 (0.01) 0.24 0.26 0.23 0.23 0.19 0.23 0.26 0.23 0.14
Net realized and
unrealized gains
(losses) from
investments 0.27 (0.03) 7.77 2.20 2.26 0.58 2.09 2.34 1.20 0.84 1.64
------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Total from
Investment
Activities 0.31 (0.04) 8.01 2.46 2.49 0.81 2.28 2.57 1.46 1.07 1.78
------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
DISTRIBUTIONS
Net investment income (0.05) (0.02) (0.24) (0.26) (0.23) (0.23) (0.20) (0.23) (0.26) (0.22) (0.14)
Net realized gains
from investment
transactions (0.93) (0.93) (0.49) (0.19) -- (0.41) (0.20) (0.92) (0.21) (0.04) --
In excess of net
realized gains -- -- -- -- -- (0.23) -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
Total Distributions (0.98) (0.95) (0.73) (0.45) (0.23) (0.87) (0.40) (1.15) (0.47) (0.26) (0.14)
------- ------- ------- ------- ------- ------- ------- ------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $ 27.56 $ 27.51 $ 28.23 $ 20.95 $ 18.94 $ 16.68 $ 16.74 $ 14.86 $13.44 $12.45 $11.64
======= ======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Total Return (excludes
sales charge) 0.96%(c) 0.68%(c) 39.02% 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) $47,966 $ 1,047 $149,838 $93,584 $68,501 $54,744 $41,347 $15,707 $7,853 $3,161 $2,523
Ratio of expenses to
average net assets 1.25%(b) 2.08%(b) 1.06% 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 0.22%(b) (0.43)%(b) 0.99% 1.30% 1.35% 1.36% 1.17% 1.61% 2.21% 1.92% 1.98%(b)
Ratio of expenses to
average net assets* 1.25%(b) 2.08%(b) 1.10% 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* 0.22%(b) (0.43)%(b) 0.95% 1.22% 1.27% 0.90% 0.69% 1.16% 1.42% 0.82% 0.74%(b)
Portfolio turnover (d) 3.48% 3.48% 10.30% 8.22% 14.25% 5.83% 10.22% 24.99% 14.41% 14.00% 1.13%
Average commission rate
paid (e) $0.0621 $0.0621 $0.0760 $0.0827 -- -- -- -- -- -- --
</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) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, exchanged their shares for either the Fund's
Classic Shares or Premier Shares. For reporting purposes, past
performance numbers (prior to September 2, 1997) are being reflected as
Classic Shares. The Class B Shares also became effective on September
2, 1997.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(e) Represents the dollar amount of commissions paid on portfolio
transactions divided by the total number of portfolio shares purchased
and sold for which commissions were charged and is calculated on the
basis of the portfolio as a whole without distinguishing between the
classes of shares issued. Disclosure is not required for periods ending
prior to September 1, 1996.
(f) Period from commencement of operations.
-11-
<PAGE> 15
<TABLE>
<CAPTION>
Balanced Fund
-----------------------------------------------------------------------------------------
Six Months Ended December
January 31, 1998 Year Ended July 31, 19, 1991
---------------- ---------------------------------------------------- to
(unaudited) July 31,
Classic(a) B Shares(a) 1997 1996 1995 1994 1993 1992(f)
---------- ----------- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 15.21 $ 15.03 $ 13.03 $ 12.76 $ 11.81 $ 11.86 $ 11.12 $ 10.00
------- ------- -------- -------- -------- -------- -------- --------
INVESTMENT ACTIVITIES
Net investment income 0.18 0.16 0.48 0.47 0.47 0.42 0.44 0.27
Net realized and
unrealized gains
from investments 0.36 0.51 2.78 0.58 1.24 0.18 0.80 1.09
------- ------- -------- -------- -------- -------- -------- --------
Total from
Investment
Activities 0.54 0.67 3.26 1.05 1.71 0.60 1.24 1.36
------- ------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
Net investment income (0.21) (0.18) (0.50) (0.47) (0.46) (0.42) (0.45) (0.24)
Net realized gains
from investment
transactions (0.97) (0.97) (0.58) (0.31) (0.30) (0.23) (0.05) --
------- ------- -------- -------- -------- -------- -------- --------
Total Distributions (1.18) (1.15) (1.08) (0.78) (0.76) (0.65) (0.50) (0.24)
------- ------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE,
END OF PERIOD $ 14.57 $ 14.55 $ 15.21 $ 13.03 $ 12.76 $ 11.81 $ 11.86 $ 11.12
======= ======= ======== ======== ======== ======== ======== ========
Total Return (excludes
sales charge) 3.72%(c) 3.37%(c) 26.42% 8.37% 15.27% 5.13% 11.47% 13.71(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of
period (000) $49,167 $ 1,614 $372,769 $338,425 $295,509 $236,306 $179,134 $143,813
Ratio of expenses to
average net assets 1.20%(b) 2.08%(b) 1.05% 0.98% 0.94% 0.84% 0.84% 0.83%(b)
Ratio of net investment
income to average net
assets 2.87%(b) 1.98%(b) 3.49% 3.61% 3.91% 3.56% 3.90% 4.45%(b)
Ratio of expenses to
average net assets* 1.20%(b) 2.08%(b) 1.10% 1.11% 1.12% 1.11% 1.12% 1.17%(b)
Ratio of net investment
income to average net
assets* 2.87%(b) 1.98%(b) 3.44% 3.48% 3.73% 3.28% 3.62% 4.10%(b)
Portfolio turnover (d) 9.90% 9.90% 25.00% 20.47% 16.97% 14.43% 11.09% 23.18%
Average commission rate
paid (e) $0.0750 $0.0750 $ 0.0734 $ 0.0773 -- -- -- --
</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) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, exchanged their shares for either the Fund's
Classic Shares or Premier Shares. For reporting purposes, past
performance numbers (prior to September 2, 1997) are being reflected as
Classic Shares. The Class B Shares also became effective on September
2, 1997.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(e) Represents the dollar amount of commissions paid on portfolio
transactions divided by the total number of portfolio shares purchased
and sold for which commissions were charged and is calculated on the
basis of the portfolio as a whole without distinguishing between the
classes of shares issued. Disclosure is not required for periods ending
prior to September 1, 1996.
(f) Period from commencement of operations.
-12-
<PAGE> 16
<TABLE>
<CAPTION>
Equity Income Fund
-----------------------------------------
Six Months Ended
January 31, 1998
------------------------ March 20, 1997
(unaudited) to
Classic(a) B Shares(a) July 31, 1997(f)
---------- ----------- ----------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.72 $ 11.61 $ 10.00
------- ------- -------
INVESTMENT ACTIVITIES
Net investment income (loss) 0.13 0.09 0.07
Net realized and unrealized gains
from investments 0.20 0.30 1.71
------- ------- -------
Total from Investment Activities 0.33 0.39 1.78
------- ------- -------
DISTRIBUTIONS
Net investment income (0.13) (0.10) (0.06)
Net realized gains from investment
transactions (0.41) (0.41) --
------- ------- -------
Total Distributions (0.54) (0.51) (0.06)
------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 11.51 $ 11.49 $ 11.72
======= ======= =======
Total Return (excludes sales charge) 2.89%(c) 2.50%(c) 17.81%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000) $23,593 $ 2,973 $22,273
Ratio of expenses to average net
assets 1.42%(b) 2.18%(b) 1.30%(b)
Ratio of net investment income to
average net assets 2.21%(b) 1.65%(b) 2.13%(b)
Ratio of expenses to average net
assets* 1.42%(b) 2.18%(b) 1.51%(b)
Ratio of net investment income to
average net assets* 2.21%(b) 1.65%(b) 1.92%(b)
Portfolio turnover (d) 51.52% 51.52% 27.38%
Average commission rate paid (e) $0.0599 $0.0599 $0.0600
</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) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, exchanged their shares for either the Fund's
Classic Shares or Premier Shares. For reporting purposes, past
performance numbers (prior to September 2, 1997) are being reflected as
Classic Shares. The Class B Shares also became effective on September
2, 1997.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(e) Represents the dollar amount of commissions paid on portfolio
transactions divided by the total number of portfolio shares purchased
and sold for which commissions were charged and is calculated on the
basis of the portfolio as a whole without distinguishing between the
classes of shares issued.
(f) Period from commencement of operations.
-13-
<PAGE> 17
<TABLE>
<CAPTION>
Capital Growth Fund
----------------------------
August 4, 1997 to
January 31, 1998 (f)
(unaudited)
Classic(a) B Shares(a)
---------- -----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 9.82
------- -------
INVESTMENT ACTIVITIES
Net investment income (loss) (0.02) (0.03)
Net realized and unrealized gains from investments 0.16 0.32
------- -------
Total from Investment Activities 0.14 0.29
------- -------
DISTRIBUTIONS
Net investment income -- --
Net realized gains from investment transactions -- --
------- -------
Total Distributions -- --
------- -------
NET ASSET VALUE, END OF PERIOD $ 10.14 $ 10.11
======= =======
Total Return (excludes sales charge) 6.18%(c) 5.86%(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000) $ 4,838 $ 1,298
Ratio of expenses to average net assets 1.75%(b) 2.19%(b)
Ratio of net investment income to average net assets (0.69)%(b) (1.19)%(b)
Ratio of expenses to average net assets* 1.89%(b) 2.33%(b)
Ratio of net investment income to average net assets* (0.83)%(b) (1.33)%(b)
Portfolio turnover (d) 39.84% 39.84%
Average commission rate paid (e) $0.0411 $0.0411
</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) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, exchanged their Shares for either the Fund's
Classic Shares or Premier Shares. For reporting purposes, past
performance numbers (prior to September 2, 1997) are being reflected as
Classic Shares. The Class B Shares also became effective on September
2, 1997.
(b) Annualized.
(c) Not annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(e) Represents the dollar amount of commissions paid on portfolio
transactions divided by the total number of portfolio shares purchased
and sold for which commissions were charged and is calculated on the
basis of the portfolio as a whole without distinguishing between the
classes of shares issued.
(f) Period from commencement of operations.
-14-
<PAGE> 18
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 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 Capital Appreciation 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
The investment objective of the Equity Fund is to 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 production of current income is an incidental objective of
the Equity Fund.
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."
-15-
<PAGE> 19
With respect to the Equity Fund, 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
Fund. In the selection of the investments for the Fund, 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 the Fund,
or (b) long delay in investor recognition of the accuracy of the investment
decisions of the Fund, in which case invested capital of the Fund in an
individual security or group of securities may not appreciate for an extended
period.
The Regional Equity Fund
The investment objective of the Regional Equity Fund is to 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 production of current income is an incidental
objective of the Regional Equity Fund.
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. 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."
With respect to the Regional Equity Fund, 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
Fund. In the selection of the investments for the Regional Equity Fund, the
Advisor may therefore be making investment decisions
-16-
<PAGE> 20
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 the Fund, or (b) long delay in investor recognition of
the accuracy of the investment decisions of the Fund, in which case invested
capital of the Fund in an individual security or group of securities may not
appreciate for an extended period.
There can be no assurance that the economy of the Southern Region or
the companies headquartered in the Southern Region will grow in the future or
that a company headquartered in the Southern Region whose assets, revenues or
employees are located substantially outside of the Southern Region will share in
any economic growth of the Southern Region. Additionally, any localized negative
economic factors or possible physical disasters in the Southern Region area
could have a much greater impact on the Regional Equity Fund's assets than on
similar funds whose investments are geographically more diverse.
The Balanced Fund
The investment objective of the Balanced Fund is to seek 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 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."
-17-
<PAGE> 21
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.
With respect to the Balanced Fund, 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
Fund. In the selection of the investments for the Balanced Fund, 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 the Fund,
or (b) long delay in investor recognition of the accuracy of the investment
decisions of the Fund, in which case invested capital of the Fund in an
individual security or group of securities may not appreciate for an extended
period.
The Capital Growth Fund
The investment objective of the Capital Growth Fund is to seek
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 Fund
seeks to achieve growth of income over the long term.
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 Sub-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
-18-
<PAGE> 22
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."
In managing the Capital Growth Fund, the Sub-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 Small Cap Fund
The investment objective of the Small Cap Fund is to seek 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 Small Cap Fund will normally invest
at least 80% of its total assets in common stocks and securities convertible
into common stocks such as convertible bonds and convertible preferred stock of
companies with market capitalizations that are equivalent to the capitalization
of the companies in the Russell 2000 Growth Index at the time of purchase. As of
the date of this Prospectus, such smaller companies will have a market
capitalization between $50 million and $2 billion at the time of purchase. Under
normal market conditions, the Small Cap Fund may invest up to 20% of the value
of its total assets in common stocks and securities convertible into common
stocks of companies with a market capitalization of greater than $2 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 20% 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
-19-
<PAGE> 23
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.
In managing the Small Cap Fund, the Sub-Advisor seeks smaller
companies with above-average growth potential. Factors the Sub-Advisor typically
considers in selecting securities include positive changes in earnings estimates
for future growth, higher than market average profitability, a strategic
position in a specialized market and fundamental value.
The Equity Income Fund
The investment objective of the Equity Income Fund is to seek 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.
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."
-20-
<PAGE> 24
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.
The Sub-Advisor will seek to invest in equity securities which are
believed to represent investment value. Factors which the Sub-Advisor may
consider in selecting equity securities include industry and company
fundamentals, historical price relationships, and/or underlying asset value.
The Large Cap Growth Fund
The investment objective of the Large Cap Growth Fund is to seek
long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks such as convertible bonds and
convertible preferred stocks. The Fund is non-diversified.
Under normal market conditions, the Large Cap Growth 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 market capitalizations that are greater than
$2 billion at the time of purchase. Under normal market conditions, the Large
Cap Growth 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 market
capitalizations less than $2 billion, 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 Large Cap Growth Fund may increase its holdings in short-term
obligations to over 35% of its total assets and may also hold uninvested cash
pending investment. Stock futures and option contracts, stock index futures and
index option contracts may be used to hedge cash and maintain exposure to the
U.S. equity market. See "Options" and "Futures."
The Large Cap Growth Fund seeks to obtain its investment objective by
investing primarily in companies that possess a dominant market share and have a
barrier, such as a patent or well-known brand name, that shields its market
share and profits from competitors. These companies typically have long records
of stable earnings growth. The Sub-Advisor continuously monitors a universe of
companies that possess a dominant market share to look for opportunities to
purchase such stocks at reasonable prices.
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In managing the investment portfolio for the Large Cap Growth Fund, the
Sub-Advisor may focus on a relatively limited number of stocks (i.e., generally
25 or less). The Sub-Advisor believes that this investment strategy has the
potential for higher total returns than an investment strategy calling for
investment in a larger number of securities. However, the use of this focused
investment strategy may increase the volatility of the Fund's investment
performance. If the securities in which the Fund invests perform poorly, this
Fund could incur greater losses than it would have had it been invested in a
greater number of securities.
Enhanced Market Fund
The investment objective of the Enhanced Market Fund is to seek to
produce long-term growth of capital by investing primarily in a diversified
portfolio of common stock and securities convertible into common stocks such as
convertible bonds and convertible preferred stock.
Under normal market conditions, the Enhanced Market Fund will invest at
least 80% of its total assets in equity securities drawn from the S&P 500 Index.
Under normal market conditions, the Enhanced Market Fund may invest up to 20% of
the value of its total assets in equity securities not held in the S&P 500,
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 Enhanced Market Fund may
increase its holdings in short-term obligations to over 20% of its total assets
and may also hold uninvested cash pending investment. Stock futures and option
contracts, stock index futures and index option contracts may be used to hedge
cash and maintain exposure to the U.S. equity market. See "Options" and
"Futures."
The Fund seeks to obtain its investment objective by investing
primarily in a broadly diversified portfolio of S&P 500 stocks that are
determined, through the use of a quantitative investment approach emphasizing
technical factors, to be undervalued compared to others in their market sector.
The Fund seeks to maintain risk characteristics similar to that of the S&P 500.
The Sub-Advisor's stock selection process utilizes computer-aided
quantitative analysis. The Sub-Advisor's computer models use many types of data,
but emphasize technical data such as price and volume information. Applying
these models to stocks within the S&P 500, the Sub-Advisor hopes to generate
more capital growth than that of the S&P 500. The Sub-Advisor's emphasis on
technical analyses can result in significant shifts in portfolio holdings at
different times. However, stringent risk controls at the
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style, industry and individual stock levels help ensure the Fund maintains risk
characteristics similar to those of the S&P 500.
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
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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
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 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 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.
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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 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
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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, the Enhanced Market Fund and the Large Cap Growth
Fund may purchase put options from time to time as the Advisor or Sub-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 Funds 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 Funds 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 accreted
market or original issue discount during the period the Fund owned the
securities, plus (ii) all interest accrued on the securities since the last
interest payment date during that period. The Funds will generally acquire puts
only where the puts are available without the payment of any direct or indirect
consideration. However, if necessary or advisable, a Fund may pay for puts
either separately in cash or by paying a higher price for portfolio securities
which are acquired subject to the puts (thus reducing the yield to maturity
otherwise available for the same securities). Each Fund intends to enter into
puts only with dealers, banks, and broker-dealers which, in the Advisor's or
Sub-Advisor's opinion, present minimal credit risks.
FUTURES CONTRACTS
To the extent consistent with its investment objective, the Large Cap
Growth Fund and Enhanced Market Fund may also invest in futures contracts and
options on futures contracts to commit funds awaiting investment, to maintain
cash liquidity or for other hedging purposes. The value of a Fund's contracts
may equal or exceed 100% of the Fund's total assets, although a Fund will not
purchase or sell a futures contract unless immediately afterwards the aggregate
amount of margin deposits on its existing futures positions plus the amount of
premiums paid for related futures options entered into for other than bona fide
hedging purposes is 5% or less of its net assets.
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Futures contracts obligate a Fund, at maturity, to take or make
delivery of securities, the cash value of a securities index or a stated
quantity of a foreign currency. A Fund may sell a futures contract in order to
offset an expected decrease in the value of its portfolio positions that might
otherwise result from a market decline or currency exchange fluctuation. A Fund
may do so either to hedge the value of its securities portfolio as a whole, or
to protect against declines occurring prior to sales of securities in the value
of the securities to be sold. In addition, a Fund may utilize futures contracts
in anticipation of changes in the composition of its holdings or in currency
exchange rates.
The Large Cap Growth Fund and Enhanced Market Fund may purchase and
sell call and put options on futures contracts traded on an exchange or board of
trade. When a Fund purchases an option on a futures contract, it has the right
to assume a position as a purchaser or a seller of a futures contract at a
specified exercise price during the option period. When a Fund sells an option
on a futures contract, it becomes obligated to sell or buy a futures contract if
the option is exercised. In connection with a Fund's position in a futures
contract or related option, a Fund will create a segregated account of liquid
assets or will otherwise cover its position in accordance with applicable SEC
requirements.
The risks related to the use of futures contracts include: (i) the
correlation between movements in the market price of the portfolio investments
(held or intended for purchase) being hedged and in the price of the futures
contract may be imperfect; (ii) possible lack of a liquid secondary market for
closing out futures positions; (iii) the need for additional portfolio
management skills and techniques; (iv) losses due to unanticipated market
movements; and (v) a purchaser's inability to predict correctly the direction of
securities prices, interest rates, currency exchange rates, and other economic
factors. Successful use of futures is subject to the ability correctly to
predict movements in the direction of the market. For example, if a Fund uses
futures contracts as a hedge against the possibility of a decline in the market
adversely affecting securities held by it and securities prices increase
instead, the Fund will lose part or all of the benefit of the increased value of
its securities that it has hedged because the Fund will have approximately equal
offsetting losses in its future positions. The risk of loss in trading futures
contracts in some strategies can be substantial, due both to the low margin
deposits required, and the extremely high degree of leverage involved in futures
pricing. As a result, a relatively small price movement in a futures contract
may result in immediate and substantial loss or gain to the investor. Thus, a
purchase or sale of a futures contract may result in losses or gains in excess
of the amount invested in the contract.
A Fund's ability to engage in options and futures transactions and to
sell related securities may be limited by tax considerations.
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REPURCHASE AGREEMENTS
Securities held by the Capital Appreciation Funds may be subject to
repurchase agreements. If the seller under a repurchase agreement were to
default on its repurchase obligation or become insolvent, the Capital
Appreciation Fund would suffer a loss to the extent that the proceeds from a
sale of the underlying portfolio securities were less than the repurchase price
under the agreement, or to the extent that the disposition of such securities by
the Capital Appreciation Fund were delayed pending court action. Additionally,
if the seller should be involved in bankruptcy or insolvency proceedings, the
Capital Appreciation Fund may incur delay and costs in selling the underlying
security or may suffer a loss of principal and interest if the Capital
Appreciation Fund is treated as an unsecured creditor and required to return the
underlying security to the seller's estate.
REVERSE REPURCHASE AGREEMENTS
Each of the Capital Appreciation Funds may borrow funds for temporary
purposes by entering into reverse repurchase agreements in accordance with the
investment restrictions described below. Pursuant to such agreements, a Capital
Appreciation Fund would sell portfolio securities to financial institutions such
as banks and broker-dealers, and agree to repurchase them at a mutually
agreed-upon date and price. Reverse repurchase agreements involve the risk that
the market value of the securities sold by a Capital Appreciation Fund may
decline below the price at which the Fund is obligated to repurchase the
securities.
REAL ESTATE INVESTMENT TRUSTS
The Capital Growth Fund, Small Cap Fund, Equity Income Fund, and
Enhanced Market 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
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<PAGE> 32
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 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.
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Portfolio turnover for the Capital Growth Fund, Small Cap Fund, Equity
Income Fund and Enhanced Market Fund is not expected to exceed 200% in the
coming year. Portfolio turnover for the Large Cap Growth Fund is estimated not
to exceed 50% 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).
The Capital Appreciation Funds 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 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. This investment restriction does not apply to the Large Cap
Growth Fund.
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 (33-1/3 with respect to the Large Cap
Growth Fund); 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 (33-1/3 with respect to the
Large Cap Growth
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Fund). 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.
DIVERSIFICATION
The Large Cap Growth Fund is a non-diversified fund under the
Investment Company Act of 1940. This means it may concentrate its investments in
the securities of a limited number of issuers. Under the Internal Revenue Code
of 1986, as amended, at the end of each fiscal quarter the Fund must
nevertheless diversify its portfolio such that, with respect to 50% of its total
assets, not more than 25% of its assets is invested in the securities of any one
issuer (other than U.S. Government Securities or securities of other regulated
investment companies), and with respect to the remainder of its total assets, no
more than 5% of its assets is invested in the securities of any one issuer
(other than U.S. Government Securities or securities of other regulated
investment companies).
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.
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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.
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.
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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.
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To participate in AIP, investors must complete the appropriate sections
of the Account Registration form or call for instructions. This form may be
obtained by calling the Trust at (800) 451-8382. The amount investors specify
will automatically be invested in Shares at the specified Fund's public offering
price per Share next determined after the debit is made.
To change the frequency or amount invested, written instructions must
be received by the Trust at least seven Business Days in advance of the next
transfer. If the bank or bank account number is changed, instructions must be
received by the Trust at least 20 Business Days in advance. In order to change a
bank or bank account number, investors also must have their signature guaranteed
by a bank, broker, dealer, credit union, securities exchange, securities
association, clearing agency or savings association, as those terms are defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934 (an "Eligible
Guarantor Institution"). Signature guarantees are described more fully under
"REDEMPTION BY MAIL" below. If there are insufficient funds in the investor's
designated bank account to cover the Shares purchased using AIP, the investor's
bank may charge the investor a fee or may refuse to honor the transfer
instruction (in which case no Fund Shares will be purchased).
Investors should check with their banks to determine whether they are
members of the Automated Clearing House and whether their banks charge a fee for
transferring funds through the Automated Clearing House. Expenses incurred by
the Funds related to AIP are borne by the Funds and therefore there is no direct
charge by the Funds to investors for use of these services.
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.
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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.
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. In the case of Classic Shares and
Class B Shares held of 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
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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% 0.90%
$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):
(1) Existing Shareholders of a Capital Appreciation Fund upon the
reinvestment of dividend and capital gain distributions;
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(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). BISYS Fund Services, Inc. (the "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,
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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.
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.
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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 are aggregated and deemed to have been
made on the first day of the month.
CONTINGENT
DEFERRED
SALES CHARGE AS A
YEAR(S) PERCENTAGE OF
SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
-------- -----------------
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
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
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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
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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.
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, subject to a minimum initial investment. 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
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<PAGE> 45
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, during a
twelve month period, a Shareholder acquires Classic Shares of a Money Market
Fund from an exchange involving Shares of a Variable NAV Fund, then such Shares
of the Money Market Fund may be exchanged back for Shares of a Variable NAV Fund
without the payment of any additional sales load. 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 SHARES
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 redemption 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 not apply to exchanges of Class B Shares for Premier Shares.
ADDITIONAL INFORMATION ABOUT EXCHANGES
An exchange from one Fund to another Fund is considered to be a taxable
event for federal income tax purposes on which a Shareholder may realize a
capital gain or loss. If a Shareholder exchanges Capital Appreciation Fund
Shares for Shares of another Fund without paying a sales charge on the exchange,
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 original
Shares if they were held less than 91 days. The sales charge will instead be
added to
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<PAGE> 46
the basis of the Fund Shares acquired in the exchange. This treatment will
increase the gain or reduce the loss that the Shareholder would otherwise
recognize on the exchange.
Before exchanging Shares, a Shareholder must receive a current
prospectus describing the Shares to be acquired. 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 may legally be sold, and may be amended or terminated at any time upon
sixty (60) days' prior notice to Shareholders.
The Exchange Privilege is not intended to afford shareholders a way to
speculate on short-term movements in the market. Excessive exchange transactions
may potentially disrupt the management of the Trust and increase transaction
costs. Accordingly, in order to prevent excessive use of the Exchange Privilege,
the Trust has established a policy of prohibiting excessive exchange activity.
Exchange activity will not be deemed excessive if limited to four substantive
exchange redemptions from a Fund during a 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 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.
REINSTATEMENT PRIVILEGE
The Reinstatement Privilege enables investors who have redeemed Classic
Shares to repurchase, within 90 days of such redemption, Classic Shares in an
amount not to exceed the redemption proceeds received at a purchase price equal
to the then-current net asset value determined after a reinstatement request and
payment are received by the Transfer Agent.
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<PAGE> 47
This privilege also enables investors to reinstate their account for the purpose
of exercising the Exchange Privilege. To use the Reinstatement Privilege, you
must submit a written reinstatement request to the Transfer Agent. The
reinstatement request and the payment must be received within 90 days of the
trade date of the redemption.
DIRECTED DIVIDEND OPTION
Shareholders can elect to have dividend distributions (capital gains
and dividends) 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
at AmSouth Mutual Funds, 3435 Stelzer Road, Columbus, Ohio 43219, 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
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<PAGE> 48
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 previously designated bank account.
There is no charge for having redemption requests mailed to a designated bank
account.
REDEMPTION BY TELEPHONE
A Shareholder may have the payment of redemption requests wired or
mailed directly to a domestic commercial bank account previously designated by
the Shareholder on the Account Registration Form. Under most circumstances, such
payments will be transmitted on the next Business Day following the receipt of a
valid request for redemption. Wire redemption requests may be made by the
Shareholder by telephone to the Transfer Agent. The wire redemption charge is
currently $7.00, however, such charge may be reduced by the Transfer Agent.
There is no charge for having payment of redemption requests mailed or sent via
Automated Clearing House to a designated bank account. For telephone
redemptions, call the Trust at (800) 451-8382. The Trust will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
if these procedures are not followed, the Trust may be liable for any losses due
to unauthorized or fraudulent instructions. These procedures include recording
all phone conversations, sending confirmations to Shareholders within 72 hours
of the telephone transaction, verifying the account name and a shareholder's
account number or tax identification number and sending redemption proceeds only
to the address of record or to a previously authorized account.
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 PURCHASE AND REDEEM
SHARES--Redemption by Mail."
PAYMENTS TO SHAREHOLDERS
Redemption orders are effected at the net asset value per Share next
determined after the Shares are properly tendered for redemption, as described
above. The proceeds paid upon redemption of Shares in a Capital Appreciation
Fund may be more or less than the amount invested. Payment to Shareholders for
Shares redeemed will be made within seven days after receipt by the Transfer
Agent of the request for redemption. However, to the greatest extent possible,
the Trust will attempt to honor requests from Shareholders for next Business Day
payments upon redemption of Shares if the request for redemption is received by
the Transfer Agent before the Valuation Time on a Business Day or, if the
request for redemption is received after the Valuation Time to honor requests
for payment within two Business Days, unless it would be disadvantageous to the
Trust or the Shareholders of the particular Capital
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<PAGE> 49
Appreciation Fund to sell or liquidate portfolio securities in an amount
sufficient to satisfy requests for payments in that manner.
At various times, the Trust may be requested to redeem Shares for which
it has not yet received good payment. In such circumstances, the Trust may delay
the forwarding of proceeds only until payment has been collected for the
purchase of such Shares which may take up to 15 days or more. To avoid delay in
payment upon redemption shortly after purchasing Shares, investors should
purchase Shares by certified or bank check or by wire transfer. The Trust
intends to pay cash for all Shares redeemed, but under abnormal conditions which
make payment in cash unwise, the Trust may make payment wholly or partly in
portfolio securities at their then market value equal to the redemption price.
In such cases, an investor may incur brokerage costs in converting such
securities to cash.
Due to the relatively high cost of handling small investments, the
Trust reserves the right to redeem, at net asset value, the Shares of any
Shareholder if, because of redemptions of Shares by or on behalf of the
Shareholder, the account of such Shareholder in any Capital Appreciation Fund
has a value of less than $250. Accordingly, an investor purchasing Shares of a
Capital Appreciation Fund in only the minimum investment amount may be subject
to such involuntary redemption if he or she thereafter redeems some of his or
her Shares. Before the Trust exercises its right to redeem such Shares and to
send the proceeds to the Shareholder, the Shareholder will be given notice that
the value of the Shares of a Capital Appreciation Fund in his or her account is
less than the minimum amount and will be allowed 60 days to make an additional
investment in an amount which will increase the value of the account to at least
$250.
See "ADDITIONAL PURCHASE AND REDEMPTION INFORMATION" in the
Statement of Additional Information for examples of when the Trust may suspend
the right of redemption or redeem Shares involuntarily if it appears appropriate
to do so in light of the Trust's responsibilities under the Investment Company
Act of 1940.
DIVIDENDS AND TAXES
The net income of each of the Capital Appreciation Funds will be
declared monthly as a dividend to Shareholders at the close of business on the
day of declaration. Dividends will generally be paid monthly. Distributable net
realized capital gains are distributed 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,
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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 AmSouth
Mutual Funds, 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 capital gain income.
A distribution to a Shareholder of net investment income (generally a
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 that meet the holding period
requirements in the Code 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 designated by a Capital Appreciation Fund as deriving
from net gains on securities held for more than one year but not more than 18
months or from net gains on securities held for more than 18 months is taxable
to Shareholders as such, 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
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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 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."
MANAGEMENT OF AMSOUTH MUTUAL FUNDS
TRUSTEES OF THE TRUST
Overall responsibility for management of the Trust rests with the Board
of Trustees of the Trust, who are elected by the Shareholders of the Trust.
There are currently six Trustees, two of whom are "interested persons" of the
Trust within the meaning of that term under the Investment Company Act of 1940.
The Trustees, in turn, elect the officers of the Trust to supervise actively its
day-to-day operations. The Trustees of the Trust, their current addresses, and
principal occupations during the past five years are as follows (if no address
is listed, the address is 3435 Stelzer Road, Columbus, Ohio 43219):
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Position(s) Held Principal Occupation
Name and Address With the Trust During the Past 5 Years
- - ---------------- -------------- -----------------------
George R. Landreth* Chairman From December 1992 to present,
BISYS Fund Services employee of BISYS Fund
3435 Stelzer Road Services, Limited Partnership;
Columbus, Ohio 43219 from July 1991 to December
1992, employee of PNC
Financial Corp.; from October
1984 to July 1991, employee of
The Central Trust Co., N.A.
Dick D. Briggs, Jr., M.D. Trustee From September 1989 to
459 DER Building present, Emeritus Professor
1808 7th Avenue South and Eminent Scholar Chair,
UAB Medical Center Univ. of Alabama at
Birmingham, Alabama 35294 Birmingham; from October 1979
to present, Physician,
University of Alabama Health
Services Foundation; from 1981
to 1995, Professor and Vice
Chairman, Dept. of Medicine,
Univ. of Alabama at Birmingham
School of Medicine; from 1988
to 1992, President, CEO and
Medical Director, Univ. of
Alabama Health Services
Foundation
Wendell D. Cleaver Trustee From September 3, 1993 to
209 Lakewood Drive, West present, retired; from
Mobile, Alabama 36608 December, 1988 to August,
1993, Executive Vice
President, Chief Operating
Officer and Director, Mobile
Gas Service Corporation
J. David Huber* Trustee From June 1987 to present,
3435 Stelzer Road employee of BISYS Fund
Columbus, Ohio 43219 Services, Limited Partnership
Homer H. Turner, Jr. Trustee From June 1991 to present,
751 Cary Drive retired; until June 1991, Vice
Auburn, Alabama 36830-2505 President, Birmingham
Division, Alabama Power
Company
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James H. Woodward, Jr. Trustee From 1996 to present, Trustee,
The University of North The Sessions Group; from July
Carolina at Charlotte 1989 to present, Chancellor,
Charlotte, North Carolina The University of North
28223 Carolina at Charlotte; from
April 1997 to present,
Trustee, BISYS Variable
Insurance Funds; from August
1984 to July 1989, Senior Vice
President, University College,
University of Alabama at
Birmingham
- - --------------------------
* Indicates an "interested person" of the Trust as defined in the
Investment Company Act of 1940.
The Trustees receive fees and are reimbursed for expenses in connection
with each meeting of the Board of Trustees they attend. However, no officer or
employee of BISYS Fund Services, or BISYS Fund Services, 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, 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 mid-south region. AmSouth Bancorporation reported assets as
of March 31, 1998 of $19.4 billion and operated 270 banking offices and over 600
ATM locations in Alabama, Florida, Georgia and Tennessee. AmSouth has provided
investment management services through its Trust Investment Department since
1915. As of March 31, 1998, AmSouth and its affiliates had over $8.7 billion in
assets under discretionary management and provided custody services for an
additional $21.6 billion in securities. AmSouth is the largest provider of trust
services in Alabama, 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 Equity Fund, Regional Equity
Fund and Balanced 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 the Equity Fund, Regional Equity Fund and
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<PAGE> 54
Balanced 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, Capital Growth, and Large Cap 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 (0.80%) 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 one hundred
twenty one-hundredths of one percent (1.20%) of such Fund's average daily net
assets or (b) such fee as may from time to time be agreed upon in writing by the
Trust and the Advisor. The fee payable to the Advisor by the Enhanced Market
Fund for investment advisory services is the lesser of (a) a fee computed daily
and paid monthly at the annual rate of forty-five one-hundredths of one percent
(0.45%) 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 the fees
are higher than the advisory fee paid by most mutual funds, they are 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, 1997, the Advisor
received investment advisory fees amounting to 0.80% of the Equity Fund's
average daily net assets, 0.80% of the Regional Equity Fund's average daily net
assets and 0.80% of the Balanced Fund's average daily net assets. For the period
from March 20, 1997 to July 31, 1997, the Advisor received investment advisory
fees amounting to 0.80% of the Equity Income Fund's average daily net assets.
INVESTMENT SUB-ADVISORS
ROCKHAVEN
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 Sub-Advisory Agreement, the Sub-Advisor 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 the
Advisor in accordance with the Fund's investment objective, policies, and
restrictions.
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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 Sub-Advisor 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 (0.48%) 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:
PRIOR PERFORMANCE OF CLASS A SHARES AND CLASS B SHARES
OF THE FEDERATED EQUITY INCOME FUND
Federated Lipper
Equity S&P 500 Equity Income
Income Fund+* Index @ Fund Index #
------------- ------- -------------
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%
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<PAGE> 56
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%
+ 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 0.95% 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.
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.
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<PAGE> 57
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
Peachtree Asset Management ("Peachtree" or "Sub-Advisor") serves as
investment sub-advisor to the Capital Growth Fund, pursuant to a Sub-Advisory
Agreement with AmSouth. The Capital Growth Fund commenced operations on August
4, 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 February 28, 1998, SBMFM had aggregate assets under
management of approximately $100 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
(0.48%) 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.
Sawgrass
Sawgrass Asset Management, LLC ("Sawgrass") serves as investment
sub-adviser to the Small Cap Fund, pursuant to a Sub-Advisory Agreement with
AmSouth. The Small Cap Fund commenced operations as of March 2, 1998. Under the
Sub-Advisory
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<PAGE> 58
Agreement, Sawgrass 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.
Sawgrass is 50% owned by AmSouth and 50% owned by Sawgrass Asset
Management, Inc. Sawgrass Asset Management, Inc. is controlled by Mr. Dean
McQuiddy, Mr. Brian Monroe and Mr. Andrew Cantor. Sawgrass was organized in
January, 1998 to perform advisory services for investment companies and other
institutional clients and has its principal offices at 4337 Pablo Oaks Court,
Jacksonville, FL 32224.
For its services and expenses incurred under the Sub-Advisory
Agreement, the Sub-Advisor is entitled to a fee, payable by the Advisor. The fee
is computed daily and paid monthly at the annual rate of eighty-four
one-hundredths of one percent (0.84%) 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. Dean McQuiddy, CFA, is the portfolio manager for the Small Cap
Fund, and, as such, has the primary responsibility for the day-to-day portfolio
management of the Fund. He received his B.S. in Finance from the University of
Florida. Mr. McQuiddy holds membership in the Association of Management and
Research. He has 16 years of investment experience. Mr. McQuiddy is a principal
of Sawgrass. From January, 1987 to December 31, 1997, Mr. McQuiddy was the
portfolio manager of the Employee Benefits Small Capitalization Fund, a common
trust fund managed by Barnett Bank for employee benefit plan accounts. On
January 4, 1994, the Employee Benefits Small Capitalization Fund transferred the
majority of its assets to the Emerald Small Capitalization Fund. Mr. McQuiddy
was the portfolio manager for the Emerald Small Capitalization Fund through
December 31, 1997.
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<PAGE> 59
OAKBROOK
OakBrook Investments, LLC ("OakBrook") serves as Sub-Advisor to the
Enhanced Market Fund and the Large Cap Growth Fund pursuant to a Sub-Advisory
Agreement with the Advisor. Under the Sub-Advisory Agreement, the Sub-Advisor
manages the Funds, 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 the Advisor in accordance with each Fund's investment objective,
policies, and restrictions.
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<PAGE> 60
OakBrook is 50% owned by AmSouth and 50% owned by Neil Wright, Janna
Sampson and Peter Jankovskis. OakBrook was organized in February, 1998 to
perform advisory services for investment companies and other institutional
clients and has its principal offices at 701 Warrenville Road, Suite 135, Lisle,
IL 60532.
For its services and expenses incurred under the Sub-Advisory
Agreement, the Sub-Advisor is entitled to a fee, payable by the Advisor. The fee
is computed daily and paid monthly at the annual rate of fifty-six
one-hundredths of one percent (0.56%) with respect to the Large Cap Growth Fund
and thirty-two one-hundredths of one percent (0.32%) with respect to the
Enhanced Market Fund or such lower fee as may be agreed upon in writing by the
Advisor and Sub-Advisor.
The Large Cap Growth Fund and the Enhanced Market Fund are managed by a
team from OakBrook Investments, LLC. Dr. Neil Wright, Ms. Janna Sampson and Dr.
Peter Jankovskis are the portfolio managers for the Enhanced Market and Large
Cap Growth Funds. They have managed both Funds since their inception and, as
such, have the primary responsibility for the day-to-day portfolio management of
the Funds. Dr. Wright is OakBrook's President and the Chief Investment Officer.
He holds a doctorate in economics. From 1993 to 1997, Dr. Wright was the Chief
Investment Officer of ANB Investment Management & Trust Co. ("ANB"). He managed
ANB's Large Cap Growth Fund and other equity funds since 1981. Ms. Sampson is
OakBrook's Director of Portfolio Management. She holds a Master of Arts degree
in economics. From 1993 to 1997, Ms. Sampson was Senior Portfolio Manager for
ANB. She has worked in the investment field since 1981 and was a portfolio
manager at ANB since 1987. Dr. Jankovskis is OakBrook's Director of Research. He
holds a doctorate in economics. He has conducted economic research since 1988.
From August, 1992 to July, 1996, Dr. Jankovskis was the Investment Strategist
for ANB and from July, 1996 to December, 1997 was the Manager of Research for
ANB.
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 (0.20%) 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
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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.
During the Trust's fiscal year ended July 31, 1997, ASO received
administration fees, after voluntary fee reductions, amounting to 0.11% of the
Equity Fund's average daily net assets, 0.12% of the Regional Equity Fund's
average daily net assets and 0.11% of the Balanced Fund's average daily net
assets. For the period from March 20, 1997 to July 31, 1997, ASO received
administration fees amounting to 0.20% of the Equity Income 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 (0.10%) 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 (0.25%) 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 0.25% 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
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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 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
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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.
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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 sixteen
series of shares, one for each of the following Funds: the AmSouth Prime
Obligations Fund, the AmSouth U.S. Treasury Fund, the AmSouth Tax Exempt Fund,
the AmSouth Equity Fund, the AmSouth Regional Equity Fund, the AmSouth Balanced
Fund, the AmSouth Bond Fund, the AmSouth Limited Maturity Fund, the AmSouth
Government Income Fund, the AmSouth Municipal Bond Fund, the AmSouth Florida
Tax-Free Fund, the AmSouth Capital Growth Fund, the AmSouth Small Cap Fund, the
AmSouth Equity Income Fund, the AmSouth Enhanced Market Fund and the AmSouth
Large Cap Growth Fund. Each Fund, except the AmSouth Florida Tax-Free Fund and
the AmSouth Large Cap Growth 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 AmSouth 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
AmSouth Government Income Fund, AmSouth Limited Maturity Fund, AmSouth Florida
Fund and AmSouth Municipal Bond Fund. As of the date of this Prospectus however,
Premier Shares were not offered in AmSouth Enhanced Market Fund and AmSouth
Large Cap Growth 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.
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<PAGE> 65
CUSTODIAN
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.
TRANSFER AGENT AND FUND ACCOUNTING
BISYS Fund Services, 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
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<PAGE> 66
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 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
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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 AmSouth
Mutual Funds 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 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
(Small Cap Fund Only)
Sawgrass Asset Management, LLC
4337 Pablo Oaks Court
Jacksonville, FL 32224
(Large Cap Growth Fund and
Enhanced Market Fund Only)
OakBrook Investments, LLC
701 Warrenville Road, Suite 135
Lisle, IL 60532
ADMINISTRATOR
ASO Services Company
3435 Stelzer Road
Columbus, OH 43219
DISTRIBUTOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, OH 43219
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LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, DC 20005-3333
TRANSFER AGENT
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, OH 43219
AUDITORS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
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TABLE OF CONTENTS
Page
----
Fee Table .........................................................
Financial Highlights ..............................................
Investment Objective and Policies .................................
Investment Restrictions ...........................................
Valuation of Shares ...............................................
How to Purchase and Redeem Shares .................................
Dividends and Taxes ...............................................
Management of AmSouth Mutual Funds ................................
General Information ...............................................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
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<PAGE> 71
AMSOUTH MUTUAL FUNDS
AMSOUTH BANK
Investment Advisor
CAPITAL APPRECIATION FUNDS
AMSOUTH MUTUAL FUNDS
NOT FDIC INSURED
BISYS FUND SERVICES, DISTRIBUTOR
Prospectus dated ____________, 1998
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<PAGE> 72
CROSS REFERENCE SHEET
- - ---------------------
Part B
<TABLE>
<CAPTION>
Form N-1A Item No. Caption
- - ------------------ -------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Additional Information - Description of Shares
13. Investment Objectives and Policies Investment Objectives and Policies
14. Management of the Trust Management of the Trust
15. Control Persons and Principal
Holders of Securities Miscellaneous
16. Investment Advisory and
Other Services Management of the Trust
17. Brokerage Allocation Management of the Trust
18. Capital Stock and Other
Securities Valuation; Additional Purchase and Redemption
Information; Management of the Trust;
Redemptions; Additional Information
19. Purchase, Redemption and Pricing
of Securities Being Offered Valuation; Additional Purchase and Redemption
Information; Management of the Trust
20. Tax Status Additional Purchase and Redemption Information
21. Underwriters Management of the Trust
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 73
AMSOUTH MUTUAL FUNDS
Statement of Additional Information
______________, 1998
-----------------
This Statement of Additional Information is not a Prospectus, but should be read
in conjunction with the Prospectus of the AmSouth Prime Obligations Fund, the
AmSouth U.S. Treasury Fund, the AmSouth Tax Exempt Fund, the AmSouth Government
Income Fund, the AmSouth Bond Fund, the AmSouth Limited Maturity Fund, the
AmSouth Municipal Bond Fund, the AmSouth Florida Tax-Free Fund, each dated
December 1, 1997, the AmSouth Equity Fund, the AmSouth Regional Equity Fund, the
AmSouth Balanced Fund, the AmSouth Capital Growth Fund, the AmSouth Small Cap
Fund, the AmSouth Equity Income Fund, the AmSouth Large Cap Growth Fund and the
AmSouth Enhanced Market Fund (each a "Fund" and collectively the "Funds"), each
dated ____________, 1998. This Statement of Additional Information is
incorporated by reference in its entirety into each Prospectus. A copy of each
Fund's Prospectus may be obtained by writing to AmSouth Mutual Funds at P.O. Box
182733, Columbus, Ohio 43218-2733, or by telephoning toll free (800) 451-8382.
<PAGE> 74
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
Page
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<S> <C>
AMSOUTH MUTUAL FUNDS.....................................................................1
INVESTMENT OBJECTIVES AND POLICIES.......................................................1
Additional Information on Portfolio Instruments......................................1
Investment Restrictions.............................................................14
Additional Investment Restrictions..................................................15
Portfolio Turnover..................................................................15
VALUATION...............................................................................16
Valuation of the Money Market Funds.................................................17
Valuation of the Capital Appreciation Funds and the Income Funds....................18
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION..........................................18
Purchase of Shares..................................................................18
Matters Affecting Redemption........................................................19
Additional Tax Information..........................................................19
Additional Tax Information Concerning the Tax Exempt Fund and Tax-Free Funds........21
MANAGEMENT OF THE TRUST.................................................................23
Officers ...........................................................................23
Investment Advisor..................................................................25
Portfolio Transactions..............................................................29
Glass-Steagall Act..................................................................31
Administrator.......................................................................32
Expenses ...........................................................................34
Sub-Administrators..................................................................35
Distributor.........................................................................35
Custodian...........................................................................36
Transfer Agent and Fund Accounting Services.........................................36
Auditors ...........................................................................37
Legal Counsel.......................................................................37
PERFORMANCE INFORMATION.................................................................37
Yields of the Money Market Funds....................................................38
Yield of the Capital Appreciation Funds, the Income Funds and the
Tax-Free Funds.............................................................39
Calculation of Total Return.........................................................41
</TABLE>
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<PAGE> 75
<TABLE>
<S> <C>
Performance Comparisons.............................................................43
ADDITIONAL INFORMATION..................................................................44
Organization and Description of Shares..............................................44
Shareholder Liability...............................................................45
FINANCIAL STATEMENTS....................................................................50
APPENDIX................................................................................51
</TABLE>
B-ii
<PAGE> 76
STATEMENT OF ADDITIONAL INFORMATION
AMSOUTH MUTUAL FUNDS
AmSouth Mutual Funds (the "Trust") is an open-end management investment
company. The Trust consists of sixteen series of units of beneficial interest
("Shares"), each representing interests in one of sixteen separate investment
portfolios (each a "Fund"): the AmSouth Prime Obligations Fund (the "Prime
Obligations Fund"), the AmSouth U.S. Treasury Fund (the "U.S. Treasury Fund"),
the AmSouth Tax Exempt Fund (the "Tax Exempt Fund," and these three Funds being
collectively referred to as the "Money Market Funds"), 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"), the AmSouth Equity Income Fund (the "Equity Income Fund"), the
AmSouth Large Cap Growth Fund ("the "Large Cap Growth Fund"), and the AmSouth
Enhanced Market Fund (the "Enhanced Market Fund") and these eight Funds being
collectively referred to as the "Capital Appreciation 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 Municipal Bond Fund (the "Municipal Bond Fund"), and the AmSouth Florida
Tax-Free Fund (the "Florida Fund" and these five Funds being collectively
referred to as the "Income Funds"). The Florida Fund and the Municipal Bond Fund
are also collectively referred to herein as the "Tax-Free Funds." The Funds
offer three classes of Shares: Premier Shares, Classic Shares, and Class B
Shares, except for the U.S. Treasury Fund and Tax Exempt Fund which offers two
classes of Shares: Premier Shares and Classic Shares. Currently, Class B Shares
are not being offered in the Limited Maturity Fund, the Government Income Fund,
the Florida Fund and the Municipal Bond Fund. Currently, Premier Shares are not
being offered in the Enhanced Market and Large Cap Growth Funds. Much of the
information contained in this Statement of Additional Information expands on
subjects discussed in the Prospectuses. Capitalized terms not defined herein are
defined in the Prospectuses. No investment in Shares of a Fund should be made
without first reading that Fund's Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
Additional Information on Portfolio Instruments
- - -----------------------------------------------
The following policies supplement the investment objectives,
restrictions and policies of each Fund of the Trust as set forth in the
respective Prospectus for that Fund.
High Quality Investments With Regard to the Money Market Funds. As noted in the
Prospectuses for the Money Market Funds, each such Fund may invest only in
obligations determined by AmSouth Bank, Birmingham, Alabama ("AmSouth") the
investment advisor to
<PAGE> 77
the Trust ("Advisor") to present minimal credit risks under guidelines adopted
by the Trust's Trustees.
With regard to the Prime Obligations Fund, investments will be limited
to those obligations which, at the time of purchase, (i) possess the highest
short-term ratings from at least two NRSROs; or (ii) do not possess a rating,
(i.e., are unrated) but are determined by the Advisor to be of comparable
quality to the rated instruments eligible for purchase by the Fund under
guidelines adopted by the Trustees. With regard to the Tax Exempt Fund,
investments will be limited to those obligations which, at the time of purchase,
(i) possess one of the two highest short-term ratings from an NRSRO; or (ii)
possess, in the case of multiple-rated securities, one of the two highest
short-term ratings by at least two NRSROs; or (iii) do not possess a rating,
(i.e., are unrated) but are determined by the Advisor to be of comparable
quality to the rated instruments eligible for purchase by the Fund under the
guidelines adopted by the Trustees. For purposes of these investment
limitations, a security that has not received a rating will be deemed to possess
the rating assigned to an outstanding class of the issuer's short-term debt
obligations if determined by the Advisor to be comparable in priority and
security to the obligation selected for purchase by a Fund. (The above-described
securities which may be purchased by the Prime Obligations Fund and the Tax
Exempt Fund are hereinafter referred to as "Eligible Securities.")
A security subject to a tender or demand feature will be considered an
Eligible Security only if both the demand feature and the underlying security
possess a high quality rating or, if such do not possess a rating, (i.e., are
unrated) but are determined by the Advisor to be of comparable quality;
provided, however, that where the demand feature would be readily exercisable in
the event of a default in payment of principal or interest on the underlying
security, the obligation may be acquired based on the rating possessed by the
demand feature or, if the demand feature does not possess a rating, a
determination of comparable quality by the Advisor. A security which at the time
of issuance had a maturity exceeding 397 days but, at the same time of purchase,
has a remaining maturity of 397 days or less, is not considered an Eligible
Security if it does not possess a high quality rating and the long-term rating,
if any, is not within the two highest rating categories of an NRSRO.
The Prime Obligations Fund will not invest more than 5% of its total
assets in the securities of any one issuer, except that the Fund may invest up
to 25% of its total assets in the securities of a single issuer for a period of
up to three business days. If a percentage limitation is satisfied at the time
of purchase, a later increase in such percentage resulting from a change in the
Fund's net asset value or a subsequent change in a security's qualification as
an Eligible Security will not constitute a violation of the limitation. In
addition, there is no limit on the percentage of the Fund's assets that may be
invested in obligations issued or guaranteed by the U.S. government, its
agencies, and instrumentalities and repurchase agreements fully collateralized
by such obligations.
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Under the guidelines adopted by the Trust's Trustees and in accordance
with Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"), the
Advisor may be required promptly to dispose of an obligation held in a Fund's
portfolio in the event of certain developments that indicate a diminishment of
the instrument's credit quality, such as where an NRSRO downgrades an obligation
below the second highest rating category, or in the event of a default relating
to the financial condition of the issuer.
The Appendix to this Statement of Additional Information identifies
each NRSRO that may be utilized by the Advisor with regard to portfolio
investments for the Funds and provides a description of relevant ratings
assigned by each such NRSRO. A rating by an NRSRO may be utilized only where the
NRSRO is neither controlling, controlled by, or under common control with the
issuer of, or any issuer, guarantor, or provider of credit support for, the
instrument.
Bankers' Acceptances and Certificates of Deposit. All of the Funds of
the Trust except the U.S. Treasury Fund may invest in bankers' acceptances,
certificates of deposit, and demand and time deposits. Bankers' acceptances are
negotiable drafts or bills of exchange typically drawn by an importer or
exporter to pay for specific merchandise, which are "accepted" by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value
of the instrument on maturity. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank or a savings
and loan association for a definite period of time and earning a specified
return.
Bankers' acceptances will be those guaranteed by domestic and foreign
banks, if at the time of purchase, such banks have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements). Certificates of deposit and demand and
time deposits will be those of domestic and foreign banks and savings and loan
associations, if (a) at the time of purchase they have capital, surplus, and
undivided profits in excess of $100,000,000 (as of the date of their most
recently published financial statements) or (b) the principal amount of the
instrument is insured in full by the Federal Deposit Insurance Corporation.
Commercial Paper. Each Fund, except for the U.S. Treasury Fund, may
invest in commercial paper. Commercial paper consists of unsecured promissory
notes issued by corporations. Issues of commercial paper normally have
maturities of less than nine months and fixed rates of return.
Each Fund except the U.S. Treasury Fund, the Tax Exempt Fund, and the
Tax-Free Funds may invest in (i) Canadian Commercial Paper, which is commercial
paper issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and (ii) Europaper, which is U.S. dollar-denominated commercial
paper of an issue located in Europe.
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Variable Amount Master Demand Notes. Variable amount master demand
notes, in which the Prime Obligations Fund, the Capital Appreciation Funds, and
the Income Funds may invest, are unsecured demand notes that permit the
indebtedness thereunder to vary and provide for periodic readjustments in the
interest rate according to the terms of the instrument. They are also referred
to as variable rate demand notes. Because these notes are direct lending
arrangements between a Fund and the issuer, they are not normally traded.
Although there may be no secondary market in the notes, a Fund may demand
payment of principal and accrued interest at any time or during specified
periods not exceeding one year, depending upon the instrument involved, and may
resell the note at any time to a third party. The absence of such an active
secondary market, however, could make it difficult for the Funds to dispose of a
variable amount master demand note if the issuer defaulted on its payment
obligations or during periods when the Funds are not entitled to exercise their
demand rights, and the Funds could, for this or other reasons, suffer a loss to
the extent of the default. While the notes are not typically rated by credit
rating agencies, issuers of variable amount master demand notes must satisfy the
same criteria as set forth above for commercial paper. The Advisor or
Sub-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. Where necessary to
ensure that a note is of "high quality," a Fund will require that the issuer's
obligation to pay the principal of the note be backed by an unconditional bank
letter or line of credit, guarantee or commitment to lend. In determining the
dollar-weighted average portfolio maturity, a variable amount master demand note
will be deemed to have a maturity equal to the period of time remaining until
the principal amount can be recovered from the issuer through demand.
Foreign Investment. All of the Funds, except the U.S. Treasury Fund and
the Tax-Free Funds, may, subject to their investment objectives, restrictions
and policies, invest in certain obligations or securities of foreign issuers.
Permissible investments include Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar denominated certificates of deposit issued by branches of
foreign and domestic banks located outside the United States, Yankee
Certificates of Deposit ("Yankee CTDs") which are certificates of deposit issued
by a U.S. branch of a foreign bank denominated in U.S. dollars and held in the
United States, Eurodollar Time Deposits ("ETD's") which are U.S. dollar
denominated deposits in a foreign branch of a U.S. bank or a foreign bank, and
Canadian Time Deposits ("CTD's") which are U.S. dollar denominated certificates
of deposit issued by Canadian offices of major Canadian Banks. Investments in
securities issued by foreign branches of U.S. banks, foreign banks, or other
foreign issuers, including American Depository Receipts ("ADRs") and securities
purchased on foreign securities exchanges, may subject the Funds to investment
risks that differ in some respects from those related to investment in
obligations of U.S. domestic issuers or in U.S. securities markets. Such risks
include future adverse political and economic developments, possible seizure,
currency blockage, nationalization or expropriation of foreign investments, less
stringent disclosure requirements, the possible establishment of exchange
controls or taxation at the source, and the adoption of other foreign
governmental restrictions. Additional risks include currency exchange risks,
less publicly available information, the risk that
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companies may not be subject to the accounting, auditing and financial reporting
standards and requirements of U.S. companies, the risk that foreign securities
markets may have less volume and therefore many securities traded in these
markets may be less liquid and their prices more volatile than U.S. securities,
and the risk that custodian and brokerage costs may be higher. Foreign issuers
of securities or obligations are often subject to accounting treatment and
engage in business practices different from those respecting domestic issuers of
similar securities or obligations. Foreign branches of U.S. banks and foreign
banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks. A Fund will acquire such
securities only when the Advisor or Sub-Advisor believes the risks associated
with such investments are minimal.
Repurchase Agreements. Securities held by each Fund may be subject to
repurchase agreements. Under the terms of a repurchase agreement, a Fund would
acquire securities from member banks of the Federal Deposit Insurance
Corporation with capital, surplus, and undivided profits of not less than
$100,000,000 (as of the date of their most recently published financial
statements) and from registered broker-dealers which the Advisor or Sub-Advisor
deems creditworthy under guidelines approved by the Board of Trustees, subject
to the seller's agreement to repurchase such securities at a mutually
agreed-upon date and price. The repurchase price would generally equal the price
paid by the Fund plus interest negotiated on the basis of current short-term
rates, which may be more or less than the rate on the underlying portfolio
securities. The seller under a repurchase agreement will be required to maintain
the value of collateral held pursuant to the agreement at not less than the
repurchase price (including accrued interest) and the Advisor or Sub-Advisor
will monitor the collateral's value to ensure that it equals or exceeds the
repurchase price (including accrued interest). In addition, securities subject
to repurchase agreements will be held in a segregated account. If the seller
were to default on its repurchase obligation or become insolvent, the Fund
holding such obligation would suffer a loss to the extent that the proceeds from
a sale of the underlying portfolio securities were less than the repurchase
price under the agreement, or to the extent that the disposition of such
securities by the Fund were delayed pending court action. Additionally, if the
seller should be involved in bankruptcy or insolvency proceedings, a Fund may
incur delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the Fund is treated as an unsecured creditor and
required to return the underlying security to the seller's estate. Securities
subject to repurchase agreements will be held by the Trust's custodian or
another qualified custodian or in the Federal Reserve/Treasury book-entry
system. Repurchase agreements are considered to be loans by a Fund under the
1940 Act.
Reverse Repurchase Agreements. As discussed in each Prospectus, each
Fund may borrow funds for temporary purposes by entering into reverse repurchase
agreements in accordance with the Fund's investment restrictions. Pursuant to
such an agreement, a Fund would sell portfolio securities to financial
institutions such as banks and broker-dealers, and agree to repurchase the
securities at a mutually agreed-upon date and price. Each Fund intends to enter
into reverse repurchase agreements only to avoid otherwise selling securities
during
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unfavorable market conditions to meet redemptions. At the time a Fund enters
into a reverse repurchase agreement, it will place in a segregated custodial
account assets consistent with the Fund's investment restrictions having a value
equal to the repurchase price (including accrued interest), and will
subsequently monitor the account to ensure that such equivalent value is
maintained. Such assets will include U.S. government securities or other liquid
high quality debt securities in the case of the Money Market Funds and the
Income Funds or other liquid, high-grade debt securities, in the case of the
Capital Appreciation Funds. Reverse repurchase agreements involve the risk that
the market value of the securities sold by a Fund may decline below the price at
which a Fund is obligated to repurchase the securities. Reverse repurchase
agreements are considered to be borrowings by a Fund under the 1940 Act.
U.S. Government Obligations. The U.S. Treasury Fund will invest
exclusively in bills, notes and bonds issued by the U.S. Treasury. Such
obligations are supported by the full faith and credit of the U.S. government.
Each of the other Funds may invest in such obligations and in other obligations
issued or guaranteed by the U.S. government, its agencies and instrumentalities.
Such other obligations may include those which are supported by the full faith
and credit of the U.S. government; others which are supported by the right of
the issuer to borrow from the Treasury; others which are supported by the
discretionary authority of the U.S. government to purchase the agency's
obligations; and still others which are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. government would
provide financial support to U.S. government-sponsored agencies or
instrumentalities if it is not obligated to do so by law. A Fund will invest in
the obligations of such agencies and instrumentalities only when the Advisor or
Sub-Advisor believes that the credit risk with respect thereto is minimal.
Variable and Floating Rate Notes. The Tax Exempt Fund, the Bond Fund,
the Limited Maturity Fund and the Tax-Free Funds may acquire variable and
floating rate notes, subject to each Fund's investment objective, policies and
restrictions. A variable rate note is one whose terms provide "for the
readjustment of its interest rate on set dates and which, upon such
readjustment, can reasonably be expected to have a market value that
approximates its par value. A floating rate note is one whose terms provide for
the readjustment of its interest rate whenever a specified interest rate changes
and which, at any time, can reasonably be expected to have a market value that
approximates its par value. Such notes are frequently not rated by credit rating
agencies; however, unrated variable and floating rate notes purchased by a Fund
will be determined by 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. In
making such determinations, the Advisor will consider the earning power, cash
flow and other liquidity ratios of the issuers of such notes (such issuers
include financial, merchandising, bank holding and other companies) and will
continuously monitor their financial condition. Although there may be no active
secondary market with respect to a particular variable or floating rate note
purchased by a Fund, the Fund may resell the note at any time to a third party.
The absence of an active secondary market, however, could make it difficult for
the Fund to dispose of a variable or
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floating rate note in the event the issuer of the note defaulted on its payment
obligations and the Fund could, as a result or for other reasons, suffer a loss
to the extent of the default. Variable or floating rate notes may be secured by
bank letters of credit or drafts.
For purposes of the Tax-Exempt Fund, the Bond Fund, the Limited
Maturity Fund and the Tax-Free Funds, the maturities of the variable and
floating rate notes will be determined in accordance with Rule 2a-7 under the
1940 Act.
Municipal Securities. Under normal market conditions, the Tax Exempt
Fund and the Municipal Bond Fund will be primarily invested in bonds (and in the
case of the Tax Exempt Fund, notes) issued by or on behalf of states (including
the District of Columbia), territories, and possessions of the United States and
their respective authorities, agencies, instrumentalities, and political
subdivisions, the interest on which is exempt from federal income tax
("Municipal Securities"). Under normal market conditions, the Tax Exempt Fund
will invest at least 80% of its total assets, the Municipal Bond Fund will
invest at least 80% of its net assets, and the Florida Fund may invest up to 20%
of its net assets in Municipal Securities, the interest on which is not treated
as a preference item for purposes of the federal alternative minimum tax.
Municipal Securities include debt obligations issued by governmental
entities to obtain funds for various public purposes, such as the construction
of a wide range of public facilities, the refunding of outstanding obligations,
the payment of general operating expenses, and the extension of loans to other
public institutions and facilities. Private activity bonds that are issued by or
on behalf of public authorities to finance various privately-operated facilities
are included within the term Municipal Securities if the interest paid thereon
is exempt from both federal income tax and not treated as a preference item for
individuals for purposes of the federal alternative minimum tax.
Municipal Securities may also include General Obligation Notes, Tax
Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Project
Notes, Tax-Exempt Commercial Paper, Construction Loan Notes and other forms of
short-term tax-exempt loans. Such instruments are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues.
Project Notes are issued by a state or local housing agency and are
sold by the Department of Housing and Urban Development. While the issuing
agency has the primary obligation with respect to its Project Notes, they are
also secured by the full faith and credit of the United States through
agreements with the issuing authority which provide that, if required, the
federal government will lend the issuer an amount equal to the principal of and
interest on the Project Notes.
As described in the Prospectuses of the Tax Exempt Fund and the
Tax-Free Funds, the two principal classifications of Municipal Securities
consist of "general obligation" and
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"revenue" issues. A Fund permitted to invest in Municipal Securities may also
acquire "moral obligation" issues, which are normally issued by special purpose
authorities. There are, of course, variations in the quality of Municipal
Securities, both within a particular classification and between classifications,
and the yields on Municipal Securities depend upon a variety of factors,
including general money market conditions, the financial condition of the
issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
The ratings of NRSROs represent their opinions as to the quality of Municipal
Securities. It should be emphasized, however, that ratings are general and are
not absolute standards of quality, and Municipal Securities with the same
maturity, interest rate and rating may have different yields, while Municipal
Securities of the same maturity and interest rate with different ratings may
have the same yield. Subsequent to purchases by the Tax Exempt Fund, an issue of
Municipal Securities may cease to be rated or its rating may be reduced below
the minimum rating required for purchase by the Tax Exempt Fund. Neither event
would under all circumstances require the elimination of such an obligation from
the Fund's investment portfolio. However, the obligation generally would be
retained only if such retention was determined by the Board of Trustees to be in
the best interests of the Fund.
An issuer's obligations under its Municipal Securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the federal bankruptcy code, and laws, if
any, which may be enacted by Congress or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon the enforcement of such obligations or upon the ability of municipalities
to levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.
High Yield Securities. The Equity Income Fund may invest in high yield
convertible securities. High yield securities are securities that are rated
below investment grade by an NRSRO (e.g., "BB" or lower by S&P and "Ba" or lower
by Moody's). Other terms used to describe such securities include "lower rated
bonds," "non-investment grade bonds" and "junk bonds." Generally, lower rated
debt securities provide a higher yield than higher rated debt securities of
similar maturity, but are subject to a greater degree of risk with respect to
the ability of the issuer to meet its principal and interest obligations.
Issuers of high yield securities may not be as strong financially as those
issuing higher rated securities. The securities are regarded as predominantly
speculative. The market value of high yield securities may fluctuate more than
the market value of higher rated securities, since high yield securities tend to
reflect short-term corporate and market developments to a greater extent than
higher rated securities, which fluctuate primarily in response to the general
level of interest rates, assuming that there has been no change in the
fundamental interest rates, assuming that there has been no change in the
fundamental quality of such securities. The market prices of fixed income
securities generally fall when interest rates rise. Conversely, the market
prices of fixed-income securities generally rise when interest rates fall.
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Additional risks of high yield securities include limited liquidity and
secondary market support. As a result, the prices of high yield securities may
decline rapidly in the event that a significant number of holders decide to
sell. Changes in expectations regarding an individual issuer, an industry or
high yield securities generally could reduce market liquidity for such
securities and make their sale by the Equity Income Fund more difficult, at
least in the absence of price concessions. Reduced liquidity also could
adversely affect the Equity Income Fund's ability to accurately value high yield
securities. Issuers of high yield securities also are more vulnerable to real or
perceived economic changes (for instance, an economic downturn or prolonged
period of rising interest rates), political changes or adverse developments
specific to the issuer. Adverse economic, political or other developments may
impair the issuer's ability to service principal and interest obligations, to
meet projected business goals and to obtain additional financing, particularly
if the issuer is highly leveraged. In the event of a default, the Equity Income
Fund would experience a reduction of its income and could expect a decline in
the market value of the defaulted securities.
When-Issued Securities. As discussed in the Prospectuses, each Fund
except the Prime Obligations Fund and the U.S. Treasury Fund may purchase
securities on a when-issued basis (i.e., for delivery beyond the normal
settlement date at a stated price and yield). When a Fund agrees to purchase
securities on a when-issued basis, the Fund's custodian will set aside cash or
liquid portfolio securities equal to the amount of the commitment in a separate
account. Normally, the custodian will set aside portfolio securities to satisfy
the purchase commitment, and in such a case, the Fund may be required
subsequently to place additional assets in the separate account in order to
assure that the value of the account remains equal to the amount of the Fund's
commitment. It may be expected that the Fund's net assets will fluctuate to a
greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. In addition, because a Fund will set
aside cash or liquid portfolio securities to satisfy its purchase commitments in
the manner described above, a Fund's liquidity and the ability of the Advisor or
Sub-Advisor to manage it might be affected in the event its commitments to
purchase when-issued securities ever exceeded 25% of the value of its total
assets.
When a Fund engages in when-issued transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result in the
Fund incurring a loss or missing the opportunity to obtain a price considered to
be advantageous. No Fund intends to purchase when-issued securities for
speculative purposes but only in furtherance of its investment objective.
Calls. The Capital Appreciation Funds, the Bond Fund, the Limited
Maturity Fund and the Government Income Fund may write (sell) "covered" call
options and purchase options to close out options previously written by it. Such
options must be issued by the Options Clearing Corporation and may or may not be
listed on a National Securities Exchange. The purpose of writing covered call
options is to generate additional premium income for a Fund. This premium income
will serve to enhance the Fund's total return and will reduce the effect
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of any price decline of the security involved in the option. Covered call
options will generally be written on securities which, in the Advisor's or
Sub-Advisor's opinion, are not expected to make any major price moves in the
near future but which, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a
security at a specified price (the exercise price) at any time until a certain
date (the expiration date). So long as the obligation of the writer of a call
option continues, he or she may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring him or her to deliver
the underlying security against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at which
the writer effects a closing purchase transaction by repurchasing an option
identical to that previously sold. To secure his or her obligation to deliver
the underlying security in the case of a call option, a writer is required to
deposit in escrow the underlying security or other assets in accordance with the
rules of the Options Clearing Corporation. The Capital Appreciation Funds, the
Bond Fund, the Limited Maturity Fund and the Government Income Fund will write
only covered call options. This means that a Fund will only write a call option
on a security which it already owns.
Fund securities on which call options may be written will be purchased
solely on the basis of investment considerations consistent with a Fund's
investment objectives. The writing of covered call options is a conservative
investment technique believed to involve relatively little risk (in contrast to
the writing of naked or uncovered options, which the Capital Appreciation Funds,
the Bond Fund, the Limited Maturity Fund and the Government Income Fund will not
do), but capable of enhancing a Fund's total return. When writing a covered call
option, a Fund, in return for the premium, gives up the opportunity for profit
from a price increase in the underlying security above the exercise price, but
retains the risk of loss should the price of the security decline. Unlike when a
Fund owns securities not subject to an option, the Capital Appreciation Funds,
the Bond Fund, the Limited Maturity Fund and the Government Income Fund will not
have any control over when they may be required to sell the underlying
securities, since they may be assigned an exercise notice at any time prior to
the expiration of their obligation as a writer. If a call option which the Fund
has written expires, the Fund will realize a gain in the amount of the premium;
however, such gain may be offset by a decline in the market value of the
underlying security during the option period. If the call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security.
The security covering the call will be maintained in a segregated account of the
Fund's custodian. The Capital Appreciation Funds, the Bond Fund, the Limited
Maturity Fund and the Government Income Fund will consider a security covered by
a call to be "pledged" as that term is used in its policy which limits the
pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium a
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the
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historical price volatility of the underlying security, and the length of the
option period. Once the decision to write a call option has been made, the
Advisor or Sub-Advisor, in determining whether a particular call option should
be written on a particular security, will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options. The premium received by a Fund for writing covered call
options will be recorded as a liability in the Fund's statement of assets and
liabilities. This liability will be adjusted daily to the option's current
market value, which will be the latest sale price at the time at which the net
asset value per share of the Fund is computed (close of the New York Stock
Exchange), or, in the absence of such sale, the latest asked price. The
liability will be extinguished upon expiration of the option, the purchase of an
identical option in the closing transaction, or delivery of the underlying
security upon the exercise of the option.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit a Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both. If a Fund desires to sell a particular security from its portfolio on
which it has written a call option, it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that the Fund will be able to effect such closing transactions at a
favorable price. If a Fund cannot enter into such a transaction, it may be
required to hold a security that it might otherwise have sold, in which case it
would continue to be at market risk on the security. This could result in higher
transaction costs. A Fund will pay transaction costs in connection with the
writing of options to close out previously written options. Such transaction
costs are normally higher than those applicable to purchases and sales of
portfolio securities.
Call options written by the Capital Appreciation Funds, the Bond Fund,
the Limited Maturity Fund and the Government Income Fund will normally have
expiration dates of less than nine months from the date written. The exercise
price of the options may be below, equal to, or above the current market values
of the underlying securities at the time the options are written. From time to
time, a Fund may purchase an underlying security for delivery in accordance with
an exercise notice of a call option assigned to it, rather than delivering such
security from its portfolio. In such cases, additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by a Fund.
Puts. The Tax Exempt Fund and the Tax-Free Funds may acquire "puts"
with respect to Municipal Securities held in their portfolios, and the Balanced
Fund, the Bond Fund, and the Limited Maturity Fund may acquire "puts" with
respect to debt securities held in their
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portfolios and the Enhanced Market Fund and Large Cap Growth Fund may acquire
"puts" with respect to equity securities held in their portfolios. A put is a
right to sell a specified security (or securities) within a specified period of
time at a specified exercise price. The Tax Exempt Fund, the Tax-Free Funds, the
Bond Fund, the Balanced Fund, the Limited Maturity Fund, the Enhanced Market
Fund, and the Large Cap Growth Fund may sell, transfer, or assign a put only in
conjunction with the sale, transfer, or assignment of the underlying security or
securities.
The amount payable to a Fund upon its exercise of a "put" is normally
(i) the Fund's acquisition cost of the securities subject to the put (excluding
any accrued interest which the Fund paid on the acquisition), less any amortized
market premium or plus any amortized market or original issue discount during
the period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date during that period.
Puts may be acquired by a Fund to facilitate the liquidity of the
portfolio assets. Puts may also be used to facilitate the reinvestment of assets
at a rate of return more favorable than that of the underlying security. Puts
may, under certain circumstances, also be used to shorten the maturity of
underlying variable rate or floating rate securities for purposes of calculating
the remaining maturity of those securities and the dollar-weighted average
portfolio maturity of the Tax Exempt Fund's assets pursuant to Rule 2a-7 under
the 1940 Act. See "Variable and Floating Rate Notes" and "Valuation of the Prime
Obligations Fund, the U.S. Treasury Fund and the Tax Exempt Fund" in this
Statement of Additional Information.
The Limited Maturity Fund will acquire puts solely to shorten the
maturity of the underlying debt security.
The Tax Exempt Fund, the Tax-Free Funds, the Limited Maturity Fund,
the Balanced Fund, the Enhanced Market Fund, and the Large Cap Growth Fund will
generally acquire puts only where the puts are available without the payment of
any direct or indirect consideration. However, if necessary or advisable, a Fund
may pay for puts either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to the puts (thus reducing the
yield to maturity otherwise available for the same securities).
The Tax Exempt Fund, the Tax-Free Funds, the Limited Maturity Fund, the
Balanced Fund, the Enhanced Market Fund, and the Large Cap Growth Fund intend to
enter into puts only with dealers, banks, and broker-dealers which, in the
Advisor's opinion, present minimal credit risks.
Futures Contracts and Related Options. The Enhanced Market Fund and the
Large Cap Growth Fund may invest in futures contracts and options thereon
(interest rate futures contracts or index futures contracts, as applicable).
Positions in futures contracts may be closed out only on an exchange which
provides a secondary market for such
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futures. However, there can be no assurance that a liquid secondary market will
exist for any particular futures contract at any specific time. Thus, it may not
be possible to close a futures position. In the event of adverse price
movements, the Fund would continue to be required to make daily cash payments to
maintain its required margin. In such situations, if a Fund has insufficient
cash, it may have to sell portfolio securities to meet daily margin requirements
at a time when it may be disadvantageous to do so. In addition, a Fund may be
required to make delivery of the instruments underlying the futures contracts it
holds. The inability to close options and futures positions also could have an
adverse impact on a Fund's ability to effectively hedge.
Successful use of futures by the Funds is also subject to an adviser's
or sub-adviser's ability to correctly predict movements in the direction of the
market. For example, if a Fund has hedged against the possibility of a decline
in the market adversely affecting securities held by it and securities prices
increase instead, a Fund will lose part or all of the benefit to the increased
value of its securities which it has hedged because it will have approximately
equal offsetting losses in its futures positions. In addition, in some
situations, if a Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may be, but
will not necessarily be, at increased prices which reflect the rising market. A
Fund may have to sell securities at a time when it may be disadvantageous to do
so.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit, before any deduction for the
transaction costs, if the contract were closed out. Thus, a purchase or sale of
a futures contract may result in losses in excess of the amount invested in the
contract.
Utilization of futures transactions by a Fund involves the risk of loss
by a Fund of margin deposits in the event of bankruptcy of a broker with whom a
Fund has an open position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement, during a particular
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<PAGE> 89
trading day and therefore does not limit potential losses, because the limit may
prevent the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting some futures traders to substantial losses.
The trading of futures contracts is also subject to the risk of trading
halts, suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
to impossible to liquidate existing positions or to recover excess variation
margin payments.
Investment Restrictions
- - -----------------------
The following investment restrictions may be changed with respect to a
particular Fund only by a vote of a majority of the outstanding voting Shares of
that Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the
Prospectuses).
None of the Funds may:
1. Purchase securities on margin, sell securities short, participate on
a joint or joint and several basis in any securities trading account, or
underwrite the securities of other issuers, except to the extent that a Fund may
be deemed to be an underwriter under certain securities laws in the disposition
of "restricted securities" acquired in accordance with such Fund's investment
objectives, restrictions and policies;
2. Purchase or sell commodities, commodity contracts (including futures
contracts with respect to each Fund other than the Small Cap, Enhanced Market
and Large Cap Growth Funds, which may purchase futures contracts), oil, gas or
mineral exploration or development programs, or real estate (although
investments by all of the Funds except the U.S. Treasury Fund in marketable
securities of companies engaged in such activities and in securities secured by
real estate or interests therein are not hereby precluded and investment in real
estate investment trusts are permitted for the Capital Growth Fund, the Small
Cap Fund, the Equity Income Fund, the Enhanced Market Fund and the Large Cap
Growth Fund);
3. Invest in securities of other investment companies, except as such
securities may be acquired as part of a merger, consolidation, reorganization,
or acquisition of assets; provided, however, that the Capital Appreciation Funds
and the Income Funds may purchase securities of a money market fund, including
securities of both the Prime Obligations Fund and the U.S. Treasury Fund (and in
the case of the Tax-Free Funds, securities of the Tax Exempt Fund) and the Tax
Exempt Fund and the Prime Obligations Fund may purchase securities of a money
market fund which invests primarily in high quality short-term obligations
exempt from federal income tax, if, with respect to each such Fund, immediately
after such purchase, the acquiring
B-14
<PAGE> 90
Fund, does not own in the aggregate (i) more than 3% of the acquired company's
outstanding voting securities, (ii) securities issued by the acquired company
having an aggregate value in excess of 5% of the value of the total assets of
the acquiring Fund, or (iii) securities issued by the acquired company and all
other investment companies (other than Treasury stock of the acquiring Fund)
having an aggregate value in excess of 10% of the value of the acquiring Fund's
total assets;
4. Invest in any issuer for purposes of exercising control or
management;
5. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust or the officers or directors of its investment advisor
owning beneficially more than one-half of 1% of the securities of such issuer
together own beneficially more than 5% of such securities; and
6. Invest more than 10% of total assets in the securities of issuers
which together with any predecessors have a record of less than three years of
continuous operation.
The Prime Obligations Fund and the U.S. Treasury Fund may not buy
common stocks or voting securities, or state, municipal, or private activity
bonds. The Money Market Funds and the Tax-Free Funds may not write or purchase
call options. None of the Funds (except the Enhanced Market and Large Cap Growth
Fund) may write put options. The Prime Obligations Fund, the U.S. Treasury Fund,
the Equity Fund, the Regional Equity Fund, the Capital Growth Fund and the
Equity Income Fund may not purchase put options. The Tax Exempt Fund and the
Tax-Free Funds may not invest in private activity bonds where the payment of
principal and interest are the responsibility of a company (including its
predecessors) with less than three years of continuous operation. As a
non-fundamental investment restriction with respect to the Small Cap Fund only,
the Small Cap Fund may not write or purchase put options.
If any percentage restriction described above is satisfied at the time
of investment, a later increase or decrease in such percentage resulting from a
change in asset value will not constitute a violation of such restriction.
Additional Investment Restrictions
- - ----------------------------------
The following investment restriction is non-fundamental and may be
changed by a vote of the majority of the Board of Trustees: No Fund will invest
more than 15% of its net assets in securities that are restricted as to resale,
or for which no readily available market exists, including repurchase agreements
providing for settlement more than seven days after notice.
Portfolio Turnover
- - ------------------
The portfolio turnover rate for each Fund is calculated by dividing the
lesser of a Fund's purchases or sales of portfolio securities for the year by
the monthly average value of
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<PAGE> 91
the portfolio securities. The calculation excludes all securities whose
maturities at the time of acquisition were one year or less. Portfolio turnover
with respect to each of the Money Market Funds is expected to be zero percent
for regulatory purposes.
In the fiscal year ended July 31, 1997, portfolio turnover for the
Equity Fund, the Regional Equity Fund, the Equity Income Fund, the Limited
Maturity Fund, the Government Income Fund, the Bond Fund and the Florida Fund
was 24.47%, 10.30%, 27.38%, 64.89%, 2.96%, 34.62% and 24.05%, respectively. For
the one month period ended July 31, 1997, portfolio turnover for the Municipal
Bond Fund was 0.31%. In the fiscal year ended July 31, 1997, the portfolio
turnover rate for the Balanced Fund was 15.80% with respect to the common stock
portion of its portfolio and 18.62% with respect to the other portion of its
portfolio.
In the fiscal year ended July 31, 1996, portfolio turnover for
the Equity Fund, the Regional Equity Fund, the Limited Maturity Fund, the
Government Income Fund, the Bond Fund and the Florida Fund was 19.11%, 8.22%,
29.56%, 78.31%, 9.60% and 12.21%, respectively. In the fiscal year ended July
31, 1996, the portfolio turnover rate for the Balanced Fund was 13.65% with
respect to the common stock portion of its portfolio and 6.82% with respect to
the other portion of its portfolio.
The portfolio turnover rate may vary greatly from year to year as well
as within a particular year, and may also be affected by cash requirements for
redemptions of Shares and, in the case of the Tax Exempt Fund and the Tax-Free
Funds, by requirements which enable these Funds to receive certain favorable tax
treatments. A higher portfolio turnover rate may lead to increased taxes and
transaction costs. Portfolio turnover will not be a limiting factor in making
investment decisions.
The Tax-Free Funds will not purchase securities solely for the purpose
of short-term trading. The turnover rates for the Funds will not be a factor
preventing either the sale or the purchase of securities when the Advisor
believes investment considerations warrant such sale or purchase. The annual
portfolio turnover rate of the Municipal Bond Fund is not expected to exceed
50%. However, the portfolio turnover rate for each of the Tax-Free Funds may
vary greatly from year to year as well as within a particular year. High
turnover rates will generally result in higher transaction costs to the Funds
and may result in higher levels of taxable realized gains to the Funds'
Shareholders.
VALUATION
As indicated in the Prospectuses, the net asset value of each Fund is
determined and the Shares of each Fund are priced as of 4:00 p.m., Eastern time
(the "Valuation Time") on each Business Day of the Fund. As used herein a
"Business Day" constitutes any day on which the New York Stock Exchange (the
"NYSE") is open for trading and the Federal Reserve Bank of
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<PAGE> 92
Atlanta is open, except days on which there are not sufficient changes in the
value of the Fund's portfolio securities that the Fund's net asset value might
be materially affected, or days during which no Shares are tendered for
redemption and no orders to purchase Shares are received. Currently, either the
NYSE or the Federal Reserve Bank of Atlanta is closed on the customary national
business holidays of New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veteran's Day, Thanksgiving Day and Christmas Day.
Valuation of the Money Market Funds
- - -----------------------------------
The Money Market Funds have elected to use the amortized cost method of
valuation pursuant to Rule 2a-7 under the 1940 Act. This involves valuing an
instrument at its cost initially and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. This method may result in
periods during which value, as determined by amortized cost, is higher or lower
than the price the Fund would receive if it sold the instrument. The value of
securities in these Funds can be expected to vary inversely with changes in
prevailing interest rates.
Pursuant to Rule 2a-7, each Money Market Fund will maintain a
dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per Share, provided that no Fund will
purchase any security with a remaining maturity of more than thirteen months
(securities subject to repurchase agreements may bear longer maturities) nor
maintain a dollar-weighted average portfolio maturity which exceeds 90 days. The
Trust's Board of Trustees has also undertaken to establish procedures reasonably
designed, taking into account current market conditions and the Fund's
investment objective, to stabilize the net asset value per Share of the Money
Market Funds for purposes of sales and redemptions at $1.00. These procedures
include review by the Trustees, at such intervals as they deem appropriate, to
determine the extent, if any, to which the net asset value per Share of each
Fund calculated by using available market quotations deviates from $1.00 per
Share. In the event such deviation exceeds one-half of one percent, Rule 2a-7
requires that the Board of Trustees promptly consider what action, if any,
should be initiated. If the Trustees believe that the extent of any deviation
from a Fund's $1.00 amortized cost price per Share may result in material
dilution or other unfair results to new or existing investors, they will take
such steps as they consider appropriate to eliminate or reduce to the extent
reasonably practicable any such dilution or unfair results. These steps may
include selling portfolio instruments prior to maturity, shortening the
dollar-weighted average portfolio maturity, withholding or reducing dividends,
reducing the number of a Fund's outstanding Shares without monetary
consideration, or utilizing a net asset value per Share determined by using
available market quotations.
B-17
<PAGE> 93
Valuation of the Capital Appreciation Funds and the Income Funds
- - ----------------------------------------------------------------
The value of the portfolio securities held by each of the Capital
Appreciation Funds and the Income Funds for purposes of determining such Fund's
net asset value per Share will be established on the basis of current valuations
provided by Muller Data Corporation or Kenny S&P Evaluation Services, whose
procedures shall be monitored by the Administrator, and which valuations shall
be the fair market value of such securities.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares in each of the Trust's Funds are sold on a continuous basis by
BISYS Fund Services, Limited Partnership ("BISYS"), and BISYS has agreed to use
appropriate efforts to solicit all purchase orders. In addition to purchasing
Shares directly from BISYS, Shares may be purchased through procedures
established by BISYS in connection with the requirements of accounts at AmSouth
or financial institutions that provide certain support services for their
customers or account holders ("Financial Institutions"). Customers purchasing
Shares of the Trust may include officers, directors, or employees of AmSouth or
AmSouth's correspondent banks.
Purchase of Shares
- - ------------------
As stated in the relevant Prospectuses, the public offering price of
Classic Shares of the Capital Appreciation Funds and the Income Funds is their
net asset value computed after the sale plus a sales charge which varies based
upon the quantity purchased. The public offering price of such Shares of the
Trust is calculated by dividing net asset value by the difference (expressed as
a decimal) between 100% and the sales charge percentage of the offering price
applicable to the purchase (see "How to Purchase and Redeem Shares" in the
relevant Prospectuses). The offering price is rounded to two decimal places each
time a computation is made. The sales charge scale set forth in a Fund's
Prospectus applies to purchases of Shares of such a Fund alone, by any person,
including members of a family unit (i.e., husband, wife and minor children) and
bona fide trustees and also applies to purchases made under a Rights of
Accumulation or a Letter of Intent.
Classic Shares of the Money Market Funds are sold at their net asset
value per share, as next computed after an order is received. However, as
discussed in the Classic and Class B Shares Prospectus, the Class B Shares are
subject to a Contingent Deferred Sales Charge if they are redeemed prior to the
sixth anniversary of purchase. Class B Shares of the Prime Obligations Fund only
are available to Shareholders of Class B Shares of another Fund who wish to
exchange their Class B Shares of such other Fund for Class B Shares of the Prime
Obligations Fund.
B-18
<PAGE> 94
Certain sales of Classic Shares are made without a sales charge, as
described in the relevant Prospectuses under the caption "Sales Charge Waivers",
to promote goodwill with employees and others with whom BISYS, AmSouth and/or
the Trust have business relationships, and because the sales effort, if any,
involved in making such sales is negligible.
As the Trust's principal underwriter, BISYS acts as principal in
selling Classic Shares and Class B Shares of the Trust to dealers. BISYS
re-allows a portion of the sales charge as dealer discounts and brokerage
commissions. Dealer allowances expressed as a percentage of the offering price
for all offering prices are set forth in the relevant Classic Shares and Class B
Shares Prospectuses (see "How to Purchase and Redeem Shares"). From time to
time, BISYS may make expense reimbursements for special training of a dealer's
registered representatives in group meetings or to help pay the expenses of
sales contests. In some instances, promotional incentives to dealers may be
offered only to certain dealers who have sold or may sell significant amounts of
Group shares. Neither BISYS nor dealers are permitted to delay the placement of
orders to benefit themselves by a price change.
Matters Affecting Redemption
- - ----------------------------
The Trust may suspend the right of redemption or postpone the date of
payment for Shares during any period when (a) trading on the New York Stock
Exchange (the "Exchange") is restricted by applicable rules and regulations of
the Securities and Exchange Commission, (b) the Exchange is closed for other
than customary weekend and holiday closings, (c) the Securities and Exchange
Commission has by order permitted such suspension, or (d) an emergency exists as
determined by the Securities and Exchange Commission.
The Trust may redeem any class of Shares involuntarily if redemption
appears appropriate in light of the Trust's responsibilities under the 1940 Act.
See "Valuation of the Money Market Funds" above.
Additional Tax Information
- - --------------------------
It is the policy of each of the Trust's Funds to qualify for the
favorable tax treatment accorded regulated investment companies under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"). By following
such policy, the Trust's Funds expect to eliminate or reduce to a nominal amount
the federal income taxes to which such Fund may be subject.
In order to qualify for the special tax treatment accorded regulated
investment companies and their Shareholders, a Fund must, among other things,
(a) derive at least 90% of its gross income from dividends, interest, payments
with respect to certain securities loans, and gains from the sale or other
disposition of stock, securities, and foreign currencies, or other income
(including but not limited to gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock, securities, or
currencies; (b) each year
B-19
<PAGE> 95
distribute at least 90% of the sum of its taxable net investment company income,
its net tax-exempt income, and the excess, if any, of its net short-term capital
gains over its net long-term capital losses; and (c) diversify its holdings so
that, at the end of each fiscal quarter (i) at least 50% of the market value of
its total assets is represented by cash, cash items (including receivables),
U.S. Government securities, securities of other regulated investment companies,
and other securities, limited in respect of any one issuer to a value not
greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities (other than those of the
U.S. government or other regulated investment companies) of any one issuer or of
two or more issuers which the Fund controls and which are engaged in the same,
similar, or related trades or businesses.
In addition, until the start of the Fund's first tax year beginning
after August 5, 1997, the Fund must derive less than 30% of its gross income
from the sale or other disposition of certain assets (including stock or
securities and certain options, futures contracts, forward contracts and foreign
currencies) held for less than three months in order to qualify as a regulated
investment company. This 30% of gross income test may restrict a Fund's ability
to sell certain assets held (or considered under Code rules to have been held)
for less than three months and to engage in certain hedging transactions
(including hedging transactions in options and futures) that in some
circumstances could cause certain Fund assets to be treated as held for less
than three months.
A non-deductible 4% excise tax is imposed on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they have a non-calendar taxable year) an amount equal to 98% of their "ordinary
income" (as defined) for the calendar year plus 98% of their capital gain net
income for the 1-year period ending on October 31 of such calendar year, plus
any undistributed amounts from the previous year. For the foregoing purposes, a
Fund is treated as having distributed the sum of (i) the deduction for dividends
paid (defined in Section 561 of the Code) during such calendar year, and (ii)
any amount on which it is subject to income tax for any taxable year ending in
such calendar year. If distributions during a calendar year by a Fund did not
meet the 98% thresholds, the Fund would be subject to the 4% excise tax on the
undistributed amounts. Each Fund intends generally to make distributions
sufficient to avoid imposition of this 4% excise tax.
Each of the Trust's Funds will be required in certain cases to withhold
and remit to the United States Treasury 31% of taxable dividends and other
distributions paid to any Shareholder who has provided either an incorrect
taxpayer identification number or no number at all, who is subject to
withholding by the Internal Revenue Service for failure properly to report
payments of interest or dividends, or who fails to provide a certified statement
that he or she is not subject to "backup withholding."
A Fund's transactions in options, foreign-currency-denominated
securities, and certain other investment and hedging activities of the Fund,
will be subject to special tax rules
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<PAGE> 96
(including "mark-to-market," "straddle," "wash sale," "constructive sale" and
"short sale" rules), the effect of which may be to accelerate income to the
Fund, defer losses to the Fund, cause adjustments in the holding periods of the
Fund's assets, convert short-term capital losses into long-term capital losses,
and otherwise affect the character of the Fund's income. These rules could
therefore affect the amount, timing, and character of distributions to
Shareholders. Income earned as a result of these transactions would, in general,
not be eligible for the dividends-received deduction or for treatment as
exempt-interest dividends when distributed to Shareholders. The Funds will
endeavor to make any available elections pertaining to these transactions in a
manner believed to be in the best interest of the Funds. The tax consequences of
certain hedging transactions have been modified by the Taxpayer Relief Act of
1997 (the "1997 Act").
The Funds each expect to qualify as a "regulated investment company"
and to be relieved of all or substantially all federal income taxes. Depending
upon the extent of their activities in states and localities in which their
offices are maintained, in which their agents or independent contractors are
located, or in which they are otherwise deemed to be conducting business, the
Funds may be subject to the tax laws of such states or localities.
However, if for any taxable year the Funds do not qualify for the
special federal tax treatment afforded regulated investment companies, all of
their taxable income will be subject to federal income tax at regular corporate
rates at the Fund level (without any deduction for distributions to their
Shareholders). In addition, distributions to Shareholders will be taxed as
ordinary income even if the distributions are attributable to capital gains or
exempt interest earned by the Fund.
Information set forth in the Prospectuses and this Statement of
Additional Information which relates to federal taxation is only a summary of
some of the important federal tax considerations generally affecting purchasers
of Shares of the Trust's Funds. No attempt has been made to present a detailed
explanation of the Federal income tax treatment of a Fund or its Shareholders
and this discussion is not intended as a substitute for careful tax planning.
Accordingly, potential purchasers of Shares of a Fund are urged to consult their
tax advisors with specific reference to their own tax situation. In addition,
the tax discussion in the Prospectuses and this Statement of Additional
Information is based on tax laws and regulations which are in effect on the date
of the Prospectuses and this Statement of Additional Information; such laws and
regulations may be changed by legislative or administrative action.
Additional Tax Information Concerning the Tax Exempt Fund and Tax-Free Funds
- - ----------------------------------------------------------------------------
As indicated in the Prospectuses of the Tax Exempt Fund and the
Tax-Free Funds, these Funds are designed to provide Shareholders with current
tax-exempt interest income. The Funds are not intended to constitute a balanced
investment program and are not designed for investors seeking capital
appreciation or maximum tax-exempt income irrespective of fluctuations in
principal. Shares of the Tax Exempt Fund and the Tax-Free Funds would not
B-21
<PAGE> 97
be suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, so-called Keogh or H.R. 10 plans,
and individual retirement accounts. Such plans and accounts are generally
tax-exempt and, therefore, would not gain any additional benefit from the
dividends of the Tax Exempt Fund and the Tax-Free Funds, being tax-exempt, and
such dividends would be ultimately taxable to the beneficiaries when distributed
to them.
In addition, the Tax Exempt Fund and the Tax-Free Funds may not be
appropriate investments for Shareholders that may be "substantial users" of
facilities financed by private activity bonds or "related persons" thereof.
"Substantial user" is defined under U.S. Treasury Regulations to include a
non-exempt person who regularly uses a part of such facilities in his trade or
business, and whose gross revenues derived with respect to the facilities
financed by the issuance of bonds represent more than 5% of the total revenues
derived by all users of such facilities, or who occupies more than 5% of the
usable area of such facilities, or for whom such facilities or a part thereof
were specifically constructed, reconstructed or acquired. "Related person"
includes certain related natural persons, affiliated corporations, a partnership
and its partners and an S Corporation and its shareholders. Each Shareholder
that may be considered a "substantial user" should consult a tax advisor with
respect to whether exempt-interest dividends would retain the exclusion under
Section 103 of the Code if the Shareholder were treated as a "substantial user"
or a "related person."
The Code permits a regulated investment company which invests at least
50% of its assets in tax-free Municipal Securities to pass through to its
investors, tax-free, net Municipal Securities interest income. The policy of the
Tax Exempt Fund and the Tax-Free Funds is to pay each year as dividends
substantially all such Fund's Municipal Securities interest income net of
certain deductions. An exempt-interest dividend is any dividend or part thereof
(other than a capital gain dividend) paid by the Tax Exempt Fund and the
Tax-Free Funds and designated as an exempt-interest dividend in a written notice
mailed to Shareholders after the close of such Fund's taxable year, but not to
exceed in the aggregate the net Municipal Securities interest received by the
Fund during the taxable year. The percentage of the total dividends paid for any
taxable year which qualifies as federal exempt-interest dividends will be the
same for all Shareholders receiving dividends from the Tax Exempt Fund and the
Tax-Free Funds during such year, regardless of the period for which the Shares
were held.
While the Tax Exempt Fund and the Tax-Free Funds do not expect to
realize any significant amount of long-term capital gains, any net realized
long-term capital gains will be distributed annually. The Tax Exempt Fund and
the Tax-Free Funds will have no tax liability with respect to such gains and the
distributions will be taxable to Shareholders as net gains on securities held
for more than one year but not more than 18 months and from net gains on
securities held for more than 18 months, regardless of how long a Shareholder
has held the Shares of the Funds. Such distributions will be designated as a
capital gains dividend in a written notice mailed by the Tax Exempt Fund and the
Tax-Free Funds to Shareholders after the close of the Fund's taxable year.
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<PAGE> 98
While the Tax Exempt Fund and the Tax-Free Funds do not expect to earn
any significant amount of investment company taxable income, taxable income
earned by the Funds will be distributed to Shareholders. In general, the
investment company taxable income will be the taxable income of the Fund (for
example, short-term capital gains) subject to certain adjustments and excluding
the excess of any net long-term capital gains for the taxable year over any net
short-term capital loss, if any, for such year. Any such income will be taxable
to Shareholders as ordinary income (whether paid in cash or additional Shares).
As indicated in the Prospectuses of the Tax Exempt Fund and the
Tax-Free Funds, the Funds may acquire puts with respect to Municipal Securities
(and in the case of the Florida Fund, Florida Municipal Securities) held in
their portfolios. See "INVESTMENT OBJECTIVES AND POLICIES - Additional
Information on Portfolio Instruments - Puts" in this Statement of Additional
Information. The policy of the Tax Exempt Fund and the Tax-Free Funds is to
limit their acquisition of puts to those under which the Fund will be treated
for federal income tax purposes as the owner of the Municipal Securities
acquired subject to the put and the interest on the Municipal Securities will be
tax-exempt to such Fund. Although the Internal Revenue Service has issued a
published ruling that provides some guidance regarding the tax consequences of
the purchase of puts, there is currently no guidance available from the Internal
Revenue Service that definitively establishes the tax consequences of many of
the types of puts that the Tax Exempt Fund and the Tax-Free Funds could acquire
under the 1940 Act. Therefore, although the Tax Exempt Fund and the Tax-Free
Funds will only acquire a put after concluding that it will have the tax
consequences described above, the Internal Revenue Service could reach a
different conclusion from that of the Funds. If the Tax Exempt Fund and the
Tax-Free Funds were not treated as the owner of the Municipal Securities, income
from such securities would probably not be tax-exempt.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting purchasers of Shares of the Tax Exempt Fund
and the Tax-Free Funds. No attempt has been made to present a detailed
explanation of the federal income tax treatment of the Tax Exempt Fund and the
Tax-Free Funds or their Shareholders and this discussion is not intended as a
substitute for careful tax planning. Accordingly, potential purchasers of Shares
of the Tax Exempt Fund and the Tax-Free Funds are urged to consult their tax
advisors with specific reference to their own tax situation. In addition, the
foregoing discussion is based on tax laws and regulations which are in effect on
the date of this Statement of Additional Information; such laws and regulations
may be changed by legislative or administrative action.
B-23
<PAGE> 99
MANAGEMENT OF THE TRUST
Officers
- - --------
The officers of each Fund of the Trust, their current addresses, and
principal occupations during the past five years are as follows (if no address
is listed, the address is 3435 Stelzer Road, Columbus, Ohio 43219):
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation
Name and Address Age With the Trust During Past 5 Years
- - ---------------- --- -------------- -------------------
<S> <C> <C> <C>
George R. Landreth Chairman and Vice President From December 1992 to present, employee of
BISYS Fund Services, Limited Partnership;
from July 1991 to December 1992, employee
of PNC Financial Corp.; from October 1984
to July 1991, employee of The Central
Trust Co., N.A.
Walter B. Grimm Vice President From June, 1992 to present, employee of
BISYS Fund Services, Limited Partnership;
from 1990 to 1992, President and CEO,
Security Bancshares; from July, 1981 to
present, President of Leigh Investments
Consulting (investments firm).
Charles Booth Treasurer From 1991 to present, employee of BISYS
Fund Services Limited Partnership.
John F. Calvano President From October, 1994 to present, employee of
BISYS Fund Services, Limited Partnership;
from July, 1992 to August, 1994,
investment representative, BA Investment
Services; and from October, 1986 to July,
1994, Marketing Manager, Great Western
Investment Management.
Robin Thomas Secretary From May 1997 to present, employee of
BISYS Fund Services Limited Partnership;
from April 1989 to May, 1997, employee of
AmSouth Bank.
James L. Smith Assistant Secretary From October 1996 to present, employee of
BISYS Fund Services Limited Partnership;
from June, 1994 to October, 1996,
Director of Legal and Compliance, ALPS
Mutual Fund Services, Inc.
Alaina V. Metz Assistant Secretary From June, 1995 to present, Chief
Administrator, Administrative and
Regulatory Services, BISYS Fund Services,
Limited Partnership; from May, 1989 to
June, 1995, Supervisor, Mutual Fund Legal
Department, Alliance Capital Management.
</TABLE>
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<PAGE> 100
The officers of the Trust receive no compensation directly from the
Trust for performing the duties of their offices. BISYS receives fees from the
Trust for acting as Administrator and BISYS Fund Services, Inc. receives fees
from the Trust for acting as Transfer Agent for and for providing fund
accounting services to the Trust. Messrs. Calvano, Landreth, Grimm, Booth and
Smith and Mmes. Thomas and Metz are employees of BISYS Fund Services, Limited
Partnership.
<TABLE>
COMPENSATION TABLE (1)
----------------------
<CAPTION>
Pension or Total
Aggregate Retirement Estimated Compensation
Compensation Benefits Accrued Annual from AmSouth
Name of from AmSouth As Part of Benefits Upon Mutual Funds
Position Fund Expenses Fund Expenses Retirement Paid to Trustee
- - -------- ------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
J. David Huber None None None None
James H. Woodward, Jr. $12,239 None None $12,239
Homer H. Turner $10,591 None None $10,591
Wendell D. Cleaver $11,806 None None $11,806
Dick D. Briggs, $10,420 None None $10,420
Jr., M.D.
</TABLE>
(1) Figures are for the Trust's fiscal year ended July 31, 1997.
Investment Advisor
- - ------------------
Investment advisory and management services are provided to the Money
Market Funds, the Capital Appreciation Funds and the Income Funds (except the
Limited Maturity Fund) by the Advisor pursuant to the Investment Advisory
Agreement dated as of August 1, 1988, as amended (the "First Investment Advisory
Agreement"). Investment advisory and management services are provided to the
Limited Maturity Fund by the Advisor pursuant to the Investment Advisory
Agreement dated as of January 20, 1989, as amended (the "Second Investment
Advisory Agreement"). The First Investment Advisory Agreement and the Second
Investment Advisory Agreement are collectively referred to as the "Advisory
Agreements."
In selecting investments for the Equity Fund, the Balanced Fund and the
Regional Equity Fund, the Advisor employs the "value investing" method. A
primary theory of value
B-25
<PAGE> 101
investing is that many investors tend to exaggerate both prosperity and problems
in market valuations. This method, which may conflict with the prevailing mood
of the market, involves the use of independent judgment backed by careful
analysis of market data. The Advisor's approach when selecting investments for
each of these Funds is to attempt to buy and sell securities that are
temporarily mispriced relative to long-term value.
In selecting investments for each of the Income Funds and the Balanced
Fund, the Advisor attempts to anticipate interest rates, thereby capitalizing on
cyclical movements in the bond markets. The Advisor seeks to achieve this goal
through active management of the buying and selling of fixed-income securities
in anticipation of changes in yields.
Under the Advisory Agreements, the fee payable to the Advisor by the
Funds for investment advisory services is the lesser of (a) such fee as may from
time to time be agreed upon in writing by the Trust and the Advisor or (b) a fee
computed daily and paid monthly based on the average daily net assets of each
Fund as follows: the Prime Obligations Fund -forty one-hundredths of one percent
(0.40%) annually; the U.S. Treasury Fund - forty one-hundredths of one percent
(0.40%) annually; the Equity Fund eighty one-hundredths of one percent (0.80%)
annually; the Regional Equity Fund - eighty one-hundredths of one percent
(0.80%) annually; the Tax Exempt Fund - forty one-hundredths of one percent
(0.40%) annually; the Bond Fund - sixty-five one-hundredths of one percent
(0.65%) annually; the Limited Maturity Fund - sixty-five one-hundredths of one
percent (0.65%) annually; the Balanced Fund - eighty one-hundredths of one
percent (0.80%) annually; the Government Income Fund - sixty-five one-hundredths
of one percent (0.65%) annually; the Florida Fund -sixty-five one-hundredths of
one percent (0.65%) annually; the Municipal Bond Fund - sixty-five
one-hundredths of one percent (0.65%) annually; the Equity Income Fund eighty
one-hundredths of one percent (0.80%) annually; the Capital Growth Fund - eighty
one-hundredths of one percent (0.80%) annually; the Small Cap Fund - one hundred
twenty one-hundredths of one percent (1.20%) annually, the Large Cap Growth Fund
- - - eighty one hundredths of one percent (.80%) annually and the Enhanced Market
Fund forty-five hundredths of one percent (.45%) annually. 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 such Fund
during the period when such lower fee is in effect.
For the fiscal years ended July 31, 1997, July 31, 1996, and July 31,
1995, the Advisor received $2,366,707, $2,459,885 and $2,184,158, respectively,
from the Prime Obligations Fund. For the fiscal years ended July 31, 1997, July
31, 1996, and July 31, 1995, the Advisor received $1,325,127, $1,588,850 and
$1,245,378, respectively, from the U.S. Treasury Fund. For the fiscal years
ended July 31, 1997, July 31, 1996, and July 31, 1995, the Advisor received
$160,785, $133,336 and $125,213 for the Tax Exempt Fund. For the fiscal years
ended July 31, 1997, July 31, 1996, and July 31, 1995, investment advisory fees
paid to the Advisor reflect voluntary reductions in investment advisory fees of
$160,785, $133,340 and $125,213, respectively, for the Tax Exempt Fund.
B-26
<PAGE> 102
For the fiscal year ended July 31, 1997, the Advisor received
$3,733,019, $953,375, $745,426, $247,500, $2,855,190, $41,620, and $156,820 from
the Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity
Fund, the Balanced Fund, the Government Income Fund and the Florida Fund,
respectively. For the period ended July 31, 1997, the Advisor received $111,117
and $36,130 from the Municipal Bond Fund and the Equity Income Fund,
respectively. For the fiscal year ended July 31, 1997, investment advisory fees
paid to the Advisor reflect voluntary fee reductions of $224,000, $74,000,
$48,000 and $183,000 for the Bond Fund, the Limited Maturity Fund, the
Government Income Fund and the Florida Fund, respectively. For the period ended
July 31, 1997, investment advisory fees paid to the Advisor reflect voluntary
fee reductions of $70,000 for the Municipal Bond Fund.
For the fiscal year ended July 31, 1996, the Advisor received
$2,706,627, $669,502, $547,123, $292,620, $2,429,049, $52,834, and $146,775 from
the Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity
Fund, the Balanced Fund, the Government Income Fund, and Florida Fund,
respectively. For the fiscal year ended July 31, 1996, investment advisory fees
paid to the Advisor reflect voluntary fee reductions of $962, $165,186, $87,670,
$169,405, $61,522, and $171,316, for the Regional Equity Fund, the Bond Fund,
the Limited Maturity Fund, the Balanced Fund, the Government Income Fund, and
Florida Fund, respectively.
For the fiscal year ended July 31, 1995, the Advisor received
$1,841,031, $478,789, $461,002, $253,511, $1,807,557, and $29,835 from the
Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund,
the Balanced Fund and the Government Income Fund, respectively. For the fiscal
year ended July 31, 1995, investment advisory fees paid to the Advisor reflect
voluntary fee reductions of $3,057, $302, $138,571, $76,328, $259,520, and
$66,952, for the Equity Fund, the Regional Equity Fund, the Bond Fund, the
Limited Maturity Fund, the Balanced Fund and the Government Income Fund. For the
period from commencement of operations (September 30, 1994) through July 31,
1995, the Advisor received $124,256 from the Florida Fund, which reflects a
voluntary reduction in fees of $111,697.
Each of the Advisory Agreements provides that the Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the performance of such Advisory Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Advisor in the performance of its
duties, or from reckless disregard by the Advisor of its duties and obligations
thereunder.
Unless sooner terminated, the First Investment Advisory Agreement will
continue in effect until January 31, 1999 as to each of the Money Market Funds,
the Capital Appreciation Funds, the Tax-Free Funds, the Bond Fund and the
Government Income Fund and for
B-27
<PAGE> 103
successive one-year periods if such continuance is approved at least annually by
the Trust's Board of Trustees or by vote of the holders of a majority of the
outstanding voting Shares of that Fund (as defined under "GENERAL INFORMATION
- - - Miscellaneous" in the respective Prospectus of the Money Market Funds, the
Capital Appreciation Funds and the Income Funds), and a majority of the Trustees
who are not parties to the First Investment Advisory Agreement or interested
persons (as defined in the 1940 Act) of any party to the First Investment
Advisory Agreement by votes cast in person at a meeting called for such purpose.
Unless sooner terminated, the Second Investment Advisory Agreement will
continue in effect as to the Limited Maturity Fund until January 31, 1999 and
for successive one-year periods thereafter if such continuance is approved at
least annually by the Trust's Board of Trustees or by vote of the holders of a
majority of the outstanding voting Shares of the Limited Maturity Fund (as
defined under "GENERAL INFORMATION - Miscellaneous" in the Prospectus of the
Income Funds), and a majority of the Trustees who are not parties to the Second
Investment Advisory Agreement or interested persons (as defined in the 1940 Act)
of any party to the Second Investment Advisory Agreement by votes cast in person
at a meeting called for such purpose. The Advisory Agreements are terminable as
to a particular Fund at any time on 60 days' written notice without penalty by
the Trustees, by vote of the holders of a majority of the outstanding voting
Shares of that Fund, or by the Advisor. The Advisory Agreements also terminate
automatically in the event of any assignment, as defined in the 1940 Act.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective shareholders of the Funds may
include descriptions of the investment advisor including, but not limited to,
(i) descriptions of the advisor's operations; and (ii) descriptions of certain
personnel and their functions; and (iii) statistics and rankings related to the
advisor's operations.
AmSouth also serves as Sub-Administrator for the Trust. See
"Sub-Administrator" below.
Investment Sub-Advisors
- - -----------------------
Investment sub-advisory services are provided to the Equity Income Fund
by Rockhaven Asset Management, LLC ("Rockhaven" or "Sub-Advisor") pursuant to a
Sub-Advisory Agreement dated as of March 12, 1997 between the Advisor and
Rockhaven ("Sub-Advisory Agreement"). Investment sub-advisory services are
provided to the Capital Growth Fund by Peachtree Asset Management ("Peachtree"
or "Sub-Advisor") pursuant to a Sub-Advisory Agreement dated July 31, 1997
between the Advisor and Peachtree. Investment sub-advisory services are provided
to the Small Cap Fund by Sawgrass Asset Management, LLC ("Sawgrass" or
"Sub-Advisor") pursuant to a Sub-Advisory Agreement dated as of March 2, 1998
between the Advisor and Sub-Advisor (a "Sub-Advisory Agreement"). Investment
sub-advisory services are provided to the Large Cap
B-28
<PAGE> 104
Growth Fund and the Enhanced Market Fund pursuant to a Sub-Advisory Agreement
dated as of _____________, 1998 between the Advisor and OakBrook Investments,
LLC ("OakBrook" or "Sub-Advisor").
The Sub-Advisors shall not be liable for any error of judgement or
mistake of law or for any loss suffered by the Advisor, the Trust or the Fund in
connection with the matters to which Agreement relates, except that a
Sub-Advisor shall be liable to the Advisor for a loss resulting from a breach of
fiduciary duty by the Sub-Advisor under the 1940 Act with respect to the receipt
of compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Sub-Advisor in the performance of
its duties or from reckless disregard by it of its obligations or duties
thereunder.
Unless sooner terminated, the Sub-Advisory Agreement shall continue
with respect to the Equity Income Fund until January 31, 1999, with respect to
the Capital Growth Fund until July 31, 1999, with respect to the Small Cap Fund
until January 31, 1999, and with respect to the Large Cap Growth Fund and
Enhanced Market Fund until January 31, 1999, and each Sub-Advisory Agreement
shall continue in effect for successive one-year periods if such continuance is
approved at least annually by the Board of Trustees of the Trust or by vote of
the holders of a majority of the outstanding voting Shares of the respective
Fund (as defined under "GENERAL INFORMATION - Miscellaneous" in the Prospectus
of the Capital Appreciation Funds) and a majority of the Trustees who are not
parties to the Sub-Advisory Agreement or interested persons (as defined in the
1940 Act) of any party to the Sub-Advisory Agreement by vote cast in person at a
meeting called for such purpose. Each Sub-Advisory Agreement may be terminated
with respect to a Fund by the Trust at any time without the payment of any
penalty by the Board of Trustees of the Trust, by vote of the holders of a
majority of the outstanding voting securities of the Fund, or by the Advisor or
Sub-Advisor on 60 days written notice. Each Sub-Advisory Agreement will also
immediately terminate in the event of its assignment.
From time to time, advertisements, supplemental sales literature and
information furnished to present or prospective Shareholders of the Trust may
include descriptions of a Sub-Advisor including, but not limited to, (i)
descriptions of the Sub-Advisor's operations; (ii) descriptions of certain
personnel and their functions; and (iii) statistics and rankings relating to the
Sub-Advisor's operations.
Portfolio Transactions
- - ----------------------
Pursuant to the Advisory Agreements, the Advisor or Sub-Advisor
determines, subject to the general supervision of the Board of Trustees of the
Trust and in accordance with each Fund's investment objective, policies and
restrictions, which securities are to be purchased and sold by a Fund, and which
brokers are to be eligible to execute such Fund's portfolio transactions.
Purchases and sales of portfolio securities with respect to the Money Market
Funds, the Income Funds and the Balanced Fund (with respect to its debt
securities) usually are
B-29
<PAGE> 105
principal transactions in which portfolio securities are normally purchased
directly from the issuer or from an underwriter or market maker for the
securities. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers may include the spread between the bid and
asked price. Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. Transactions in over-the-counter market are generally
principal transactions with dealers. With respect to over-the-counter market,
the Trust, where possible, will deal directly with dealers who make a market in
the securities involved except in those circumstances where better price and
execution are available elsewhere. While the Advisor and Sub-Advisor generally
seek competitive spreads or commissions, the Trust may not necessarily pay the
lowest spread or commission available on each transaction, for reasons discussed
below.
Allocation of transactions, including their frequency, to various
dealers is determined by the Advisor and the Sub-Advisor in their best judgment
and in a manner deemed fair and reasonable to Shareholders. The primary
consideration is prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, dealers who provide supplemental
investment research to the Advisor or Sub-Advisor may receive orders for
transactions on behalf of the Trust. Information so received is in addition to
and not in lieu of services required to be performed by the Advisor or
Sub-Advisor and does not reduce the advisory fees payable to the Advisor or the
Sub-Advisor. Such information may be useful to the Advisor or Sub-Advisor in
serving both the Trust and other clients and, conversely, supplemental
information obtained by the placement of business of other clients may be useful
to the Advisor or Sub-Advisor in carrying out their obligations to the Trust.
The Trust will not execute portfolio transactions through, acquire
portfolio securities issued by, make savings deposits in, or enter into
repurchase or reverse repurchase agreements with the Advisor, BISYS, the
Sub-Advisor, or their affiliates, and will not give preference to AmSouth's
correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements, and reverse repurchase agreements.
Investment decisions for each Fund of the Trust are made independently
from those for the other Funds or any other investment company or account
managed by the Advisor or Sub-Advisor. Any such other investment company or
account may also invest in the same securities as the Trust. When a purchase or
sale of the same security is made at substantially the same time on behalf of a
Fund and another Fund, investment company or account, the transaction will be
averaged as to price and available investments will be allocated as to amount in
a manner which the Advisor or Sub-Advisor believe to be equitable to the Fund(s)
and such other investment company or account. In some instances, this investment
procedure may adversely affect the price paid or received by a Fund or the size
of the position obtained by a Fund. To the extent permitted by law, the Advisor
or Sub-Advisor may aggregate the securities to be sold or purchased for a Fund
with those to be sold or purchased for the other Funds or for other investment
companies or accounts in order to obtain best execution. As
B-30
<PAGE> 106
provided by each of the Advisory Agreements and the Sub-Advisory Agreement, in
making investment recommendations for the Trust, the Advisor or Sub-Advisor will
not inquire or take into consideration whether an issuer of securities proposed
for purchase or sale by the Trust is a customer of the Advisor or Sub-Advisor,
its parent or its subsidiaries or affiliates and, in dealing with its customers,
the Advisor or Sub-Advisor, its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of such customers are held
by the Trust.
During the fiscal year ended July 31, 1997, the Equity Fund paid
aggregate brokerage commissions in the amount of $397,271. During the fiscal
year ended July 31, 1997, the Regional Equity Fund paid aggregate brokerage
commissions in the amount of $98,747. During the fiscal year ended July 31,
1997, the Balanced Fund paid aggregate brokerage commissions in the amount of
$145,513. During the period from March 20, 1997 to July 31, 1997, the Equity
Income Fund paid aggregate brokerage commissions in the amount of $28,462.
During the fiscal year ended July 31, 1996, the Equity Fund paid
aggregate brokerage commissions in the amount of $265,582. During the fiscal
year ended July 31, 1996, the Regional Equity Fund paid aggregate brokerage
commissions in the amount of $167,772. During the fiscal year ended July 31,
1996, the Balanced Fund paid aggregate brokerage commissions in the amount of
$489,565.
Glass-Steagall Act
- - ------------------
In 1971, the United States Supreme Court held in Investment Company
Institute v. Camp that the Federal statute commonly referred to as the
Glass-Steagall Act prohibits a national bank from operating a mutual fund for
the collective investment of managing agency accounts. Subsequently, the Board
of Governors of the Federal Reserve System (the "Board") issued a regulation and
interpretation to the effect that the Glass-Steagall Act and such decision: (a)
forbid a bank holding company registered under the Federal Bank Holding Company
Act of 1956 (the "Holding Company Act") or any non-bank affiliate thereof from
sponsoring, organizing, or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, but (b) do not prohibit such
a holding company or affiliate from acting as investment advisor, transfer
agent, and custodian to such an investment company. In 1981, the United States
Supreme Court held in Board of Governors of the Federal Reserve System v.
Investment Company Institute that the Board did not exceed its authority under
the Holding Company Act when it adopted its regulation and interpretation
authorizing bank holding companies and their non-bank affiliates to act as
investment advisors to registered closed-end investment companies. In the Board
of Governors case, the Supreme Court also stated that if a national bank
complied with the restrictions imposed by the Board in its regulation and
interpretation authorizing bank holding companies and their non-bank affiliates
to act as investment advisors to investment companies, a national bank
performing investment advisory services for an investment company would not
violate the Glass-Steagall Act.
B-31
<PAGE> 107
AmSouth believes that it possesses the legal authority to perform the
services for each Fund contemplated by the Advisory Agreements regarding that
Fund and described in the Prospectus of that Fund and this Statement of
Additional Information and has so represented in the Advisory Agreement
regarding that Fund. Future changes in either federal or state statutes and
regulations relating to the permissible activities of banks or bank holding
companies and the subsidiaries or affiliates of those entities, as well as
further judicial or administrative decisions or interpretations of present and
future statutes and regulations, could prevent or restrict AmSouth from
continuing to perform such services for the Trust. Depending upon the nature of
any changes in the services which could be provided by AmSouth, the Board of
Trustees of the Trust would review the Trust's relationship with AmSouth and
consider taking all action necessary in the circumstances.
Should future legislative, judicial, or administrative action prohibit
or restrict the proposed activities of AmSouth in connection with customer
purchases of Shares of the Trust, AmSouth might be required to alter materially
or discontinue the services offered by them to customers. It is not anticipated,
however, that any change in the Trust's method of operations would affect its
net asset value per Share or result in financial losses to any customer.
Administrator
- - -------------
ASO Services Company ("ASO") serves as administrator (the
"Administrator") to each Fund of the Trust pursuant to the Management and
Administration Agreement dated as of April 1, 1996 (the "Administration
Agreement"). ASO is a wholly-owned subsidiary of BISYS which is a wholly-owned
subsidiary of BISYS Group, Inc., a publicly held company which is a provider of
information processing, loan servicing and 401(k) administration and
record-keeping services to and through banking and other financial
organizations. The Administrator assists in supervising all operations of each
Fund (other than those performed by the Advisor under the Advisory Agreements,
the Sub-Advisors under the Sub-Advisory Agreements, those performed by AmSouth
under its custodial services agreement with the Trust and those performed by
BISYS Fund Services, Inc. under its transfer agency and fund accounting
agreements with the Trust).
Under the Administration Agreement, the Administrator has agreed to
monitor the net asset value per Share of the Money Market Funds, to maintain
office facilities for the Trust, to maintain the Trust's financial accounts and
records, and to furnish the Trust statistical and research data and certain
bookkeeping services, and certain other services required by the Trust. The
Administrator prepares annual and semi-annual reports to the Securities and
Exchange Commission, prepares federal and state tax returns, prepares filings
with state securities commissions, and generally assists in supervising all
aspects of the Trust's operations (other than those performed by the Advisor
under the Advisory Agreements, the Sub-Advisors under the Sub-Advisory
Agreements, those by AmSouth under its custodial services agreement with the
Trust and those performed by BISYS Fund Services, Inc. under its
B-32
<PAGE> 108
transfer agency and fund accounting agreements with the Trust). Under the
Administration Agreement, the Administrator may delegate all or any part of its
responsibilities thereunder.
Under the Administration Agreement for expenses assumed and services
provided as manager and administrator, the Administrator receives a fee from
each Fund equal to the lesser of (a) a fee computed at the annual rate of twenty
one-hundredths of one percent (0.20%) of such Fund's average daily net assets;
or (b) such fee as may from time to time be agreed upon in writing by the Trust
and the Administrator. A fee agreed to from time to time by the Trust and the
Administrator may be significantly lower than the fee calculated at the annual
rate and the effect of such lower fee would be to lower a Fund's expenses and
increase the net income of such Fund during the period when such lower fee is in
effect. Each Fund also bears expenses incurred in pricing securities owned by
the Fund.
For the fiscal year ended July 31, 1997, ASO received $1,183,357, for
the fiscal years ended July 31, 1996 and July 31, 1995, BISYS and ASO received
$1,229,842 and $1,092,079, respectively, from the Prime Obligations Fund. For
the fiscal year ended July 31, 1997, ASO received $662,565; for the fiscal years
ended July 31, 1996 and July 31, 1995, BISYS and ASO received $794,425 and
$622,689, respectively, from the U.S. Treasury Fund. For the fiscal year ended
July 31, 1997, ASO received $160,785; for the fiscal years ended July 31, 1996
and July 31, 1995, BISYS and ASO received $133,336 and $125,213, respectively,
from the Tax Exempt Fund. For the fiscal year ended July, 1996, management and
administration fees reflect voluntary reductions in management and
administration fees of $1,000 for the Tax Exempt Fund.
For the fiscal year ended July 31, 1997, ASO received $745,786,
$187,612, $178,921, $59,376, $549,167, $13,872 and $52,277 from the Equity Fund,
the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the Balanced
Fund, the Government Income Fund and the Florida Fund, respectively. For the
period ended July 31, 1997, ASO received $33,335 and $9,033 from the Municipal
Bond Fund and Equity Income Fund, respectively. For the fiscal year ended July
31, 1997, management and administration fees reflect voluntary fee reductions of
$188,000, $51,000, $119,000, $40,000, $165,000, $14,000 and $53,000 for the
Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund,
the Balanced Fund, Government Income Fund and the Florida Fund, respectively.
For the period ended July 31, 1997, management and administration fees reflect
voluntary fee reductions of $22,000 for the Municipal Bond Fund.
For the fiscal year ended July 31, 1996, BISYS and ASO received
$406,464, $100,491, $131,382, $70,255, $389,624, $17,620 and $48,936 from the
Equity Fund, the Regional Equity Fund, the Bond Fund, the Limited Maturity Fund,
the Balanced Fund, the Government Income Fund and the Florida Fund,
respectively. For the fiscal year ended July 31, 1996, management and
administration fees reflect voluntary fee reductions of $309,086, $67,125,
$87,790, $46,757, $259,990, $17,567, and $48,938 for the Equity Fund, the
Regional Equity
B-33
<PAGE> 109
Fund, the Bond Fund, the Limited Maturity Fund, the Balanced Fund, the
Government Income Fund and the Florida Fund, respectively.
For the fiscal year ended July 31, 1995, BISYS received $276,383,
$71,818, $110,640, $60,867, $308,216, and $6,300 from the Equity Fund, the
Regional Equity Fund, the Bond Fund, the Limited Maturity Fund, the Balanced
Fund and the Government Income Fund, respectively. For the fiscal year ended
July 31, 1995, management and administration fees paid to BISYS reflect
voluntary fee reductions of $184,639, $47,954, $73,844, $40,622, $208,553, and
$23,481 for the Equity Fund, the Regional Equity Fund, the Bond Fund, the
Limited Maturity Fund, the Balanced Fund and the Government Income Fund,
respectively. For the period from commencement of operations (September 30,
1994) through July 31, 1995, BISYS received $50,848 from the Florida Fund, which
reflects a voluntary reduction in fees of $21,753.
The Administration Agreement shall, unless sooner terminated as
provided in the Administration Agreement (described below), continue until
December 31, 2000. Thereafter, the Administration Agreement shall be renewed
automatically for successive five-year terms, unless written notice not to renew
is given by the non-renewing party to the other party at least 60 days' prior to
the expiration of the then-current term. The Administration Agreement is
terminable with respect to a particular Fund only upon mutual agreement of the
parties to the Administration Agreement and for cause (as defined in the
Administration Agreement) by the party alleging cause, on not less than 60 days'
notice by the Trust's Board of Trustees or by the Administrator.
The Administration Agreement provides that the Administrator shall not
be liable for any loss suffered by the Trust in connection with the matters to
which the Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
from the reckless disregard by the Administrator of its obligations and duties
thereunder.
Expenses
- - --------
Each Fund bears the following expenses relating to its operations:
taxes, interest, any brokerage fees and commissions, fees of the Trustees of the
Trust, Securities and Exchange Commission fees, state securities qualification
fees, costs of preparing and printing Prospectuses for regulatory purposes and
for distribution to current Shareholders, outside auditing and legal expenses,
advisory and administration fees, fees and out-of-pocket expenses of the
custodian and the transfer agent, dividend disbursing agents fees, fees and
out-of-pocket expenses for fund accounting services, expenses incurred for
pricing securities owned by it, certain insurance premiums, costs of maintenance
of its existence, costs of Shareholders' and Trustees' reports and meetings, and
any extraordinary expenses incurred in its operation.
B-34
<PAGE> 110
Sub-Administrators
- - ------------------
AmSouth is retained by BISYS as the Sub-Administrator to the Trust
pursuant to an agreement between the Administrator and AmSouth. On April 1,
1996, AmSouth entered into an Agreement with ASO as the Sub-Administrator of the
Trust. Pursuant to this agreement, AmSouth has assumed certain of the
Administrator's duties, for which AmSouth receives a fee, paid by the
Administrator, calculated at an annual rate of up to (0.10%) ten one-hundredths
of one percent of each Fund's average net assets. For the fiscal year ended July
31, 1997, AmSouth received $539,918.46 with respect to the Trust.
BISYS is retained by the Administrator as a Sub-Administrator to the
Trust. Pursuant to its agreement with the Administrator, BISYS Fund Services is
entitled to compensation as mutually agreed upon from time to time by it and the
Administrator.
Distributor
- - -----------
BISYS serves as distributor to each Fund of the Trust pursuant to the
Distribution Agreement dated as of July 16, 1997 (the "Distribution Agreement").
The Distribution Agreement provides that, unless sooner terminated it will
continue in effect until January 31, 1999, and from year to year thereafter if
such continuance is approved at least annually (i) by the Trust's Board of
Trustees or by the vote of a majority of the outstanding Shares of the Funds or
Fund subject to such Distribution Agreement, and (ii) by the vote of a majority
of the Trustees of the Trust who are not parties to such Distribution Agreement
or interested persons (as defined in the Investment Company Act of 1940) of any
party to such Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Distribution Agreement may be terminated
in the event of any assignment, as defined in the 1940 Act.
A Shareholder Servicing Plan regarding the Classic Shares for the Trust
was initially approved on December 6, 1995 by the Trust's Board of Trustees,
including a majority of the trustees who are not interested persons of the Trust
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the Shareholder Servicing Plan (the "Independent Trustees"). The
Shareholder Servicing Plan reflects the creation of the Classic Shares, and
provides for fees only upon that Class.
The Shareholder Servicing Plan may be terminated with respect to any
Fund by a vote of a majority of the Independent Trustees, or by a vote of a
majority of the outstanding Classic Shares of that Fund. The Shareholder
Servicing Plan may be amended by vote of the Trust's Board of Trustees,
including a majority of the Independent Trustees, cast in person at a meeting
called for such purpose, except that any change in the Shareholder Servicing
Plan that would materially increase the shareholder servicing fee with respect
to a Fund requires the approval of the holders of that Fund's Classic Class. The
Trust's Board of Trustees will review on a quarterly and annual basis written
reports of the amounts received and expended
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<PAGE> 111
under the Shareholder Servicing Plan (including amounts expended by the
Distributor to Participating Organizations pursuant to the Servicing Agreements
entered into under the Shareholder Servicing Plan) indicating the purposes for
which such expenditures were made.
The fee of 0.25% of average daily net assets of the Classic Shares of
each Fund payable under the Trust's Shareholder Servicing Plan, to which Classic
Shares of each Fund of the Trust are subject, is described in the Classic Shares
Prospectuses. For the fiscal year ended July 31, 1997, BISYS received $11,036
with respect to the Classic Shares of the U.S. Treasury Fund (which reflects a
fee reduction of $17,000); $122,328 with respect to the Classic Shares of the
Prime Obligations Fund (which reflects a fee reduction of $183,000); and $20,128
with respect to the Classic Shares of the Tax-Exempt Fund (which reflects a fee
reduction of $30,000).
The Shareholder Servicing and Distribution Plan regarding the Class B
Shares of the Funds (the "Distribution Plan") was initially approved on March
12, 1997 by the Trust's Board of Trustees, including a majority of the trustees
who are not interested persons of the Fund (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the Distribution Plan (the
"Independent Trustees"). The Distribution Plan provides for fees only upon the
Class B Shares of each Fund, as described in the Class B Shares Prospectuses.
In accordance with Rule 12b-1 under the 1940 Act, the Distribution Plan
may be terminated with respect to any Fund by a vote of a majority of the
Independent Trustees, or by a vote of a majority of the outstanding Class B
Shares of that Fund. The Distribution Plan may be amended by vote of the Fund's
Board of Trustees, including a majority of the Independent Trustees, cast in
person at a meeting called for such purpose, except that any change in the
Distribution Plan that would materially increase the distribution fee with
respect to a Fund requires the approval of the holders of that Fund's Class B
Shares. The Trust's Board of Trustees will review on a quarterly and annual
basis written reports of the amounts received and expended under the
Distribution Plan (including amounts expended by the Distributor to
Participating Organizations pursuant to the Servicing Agreements entered into
under the Distribution Plan) indicating the purposes for which such expenditures
were made.
Custodian
- - ---------
AmSouth serves as custodian of the Trust pursuant to a Custodial
Services Agreement with the Trust (the "Custodian"). The Custodian's
responsibilities include safeguarding and controlling the Trust's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments.
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<PAGE> 112
Transfer Agent and Fund Accounting Services
- - -------------------------------------------
BISYS Fund Services, Inc. ("Transfer Agent") serves as transfer agent
to each Fund of the Trust pursuant to a Transfer Agency and Shareholder Service
Agreement with the Trust. The Transfer Agent is a wholly-owned subsidiary of The
BISYS Group, Inc.
The Transfer Agent also provides fund accounting services to each of
the Funds pursuant to a Fund Accounting Agreement with the Trust. Under the Fund
Accounting Agreement, the Transfer Agent receives a fee from each Fund at the
annual rate of 0.03% of such Fund's average daily net assets, plus out-of-pocket
expenses, subject to a minimum annual fee of $40,000 for each tax exempt fund
and $30,000 for each taxable Fund and the Money Market Funds may be subject to
an additional fee of $10,000 for each Class.
Auditors
- - --------
The financial information appearing in the Prospectuses under
"FINANCIAL HIGHLIGHTS" has been derived from financial statements of the Trust
incorporated by reference into this Statement of Additional Information which
have been audited by Coopers & Lybrand L.L.P., independent accountants, as set
forth in their report incorporated by reference herein, and are included in
reliance upon such report and on the authority of such firm as experts in
auditing and accounting. Coopers & Lybrand L.L.P.'s address is 100 East Broad
Street, Columbus, Ohio 43215.
Legal Counsel
- - -------------
Ropes & Gray, One Franklin Square, 1301 K Street, N.W., Suite 800 East,
Washington, DC 20005-3333 are counsel to the Trust.
PERFORMANCE INFORMATION
General
- - -------
From time to time, the Trust may include the following types of
information in advertisements, supplemental sales literature and reports to
Shareholders: (1) discussions of general economic or financial principals (such
as the effects of inflation, the power of compounding and the benefits of
dollar-cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for one or more of the
Funds within the Trust; (5) descriptions of investment strategies for one or
more of such Funds; (6) descriptions or comparisons of various investment
products, which may or may not include the Funds; (7) comparisons of investment
products (including the Funds) with relevant market or industry
B-37
<PAGE> 113
indices or other appropriate benchmarks; and (8) discussions of fund rankings or
ratings by recognized rating organizations.
Yields of the Money Market Funds
- - --------------------------------
As summarized in the Prospectus of the Money Market Funds under the
heading "Performance Information," the "yield" of each of those Funds for a
seven-day period (a "base period") will be computed by determining the "net
change in value" (calculated as set forth below) of a hypothetical account
having a balance of one share at the beginning of the period, dividing the net
change in account value by the value of the account at the beginning of the base
period to obtain the base period return, and multiplying the base period return
by 365/7 with the resulting yield figure carried to the nearest hundredth of one
percent. Net changes in value of a hypothetical account will include the value
of additional shares purchased with dividends from the original share and
dividends declared on both the original share and any such additional shares,
but will not include realized gains or losses or unrealized appreciation or
depreciation on portfolio investments. Yield may also be calculated on a
compound basis (the "effective yield") which assumes that net income is
reinvested in Fund shares at the same rate as net income is earned for the base
period.
The Tax Exempt Fund may also advertise a "tax equivalent yield" and a
"tax equivalent effective yield." Tax equivalent yield will be computed by
dividing that portion of the Tax Exempt Fund's yield which is tax-exempt by the
difference between one and a stated income tax rate and adding the product to
that portion, if any, of the yield of the Fund that is not tax-exempt. The tax
equivalent effective yield for the Tax Exempt Fund is computed by dividing that
portion of the effective yield of the Tax Exempt Fund which is tax-exempt by the
difference between one and a stated income tax rate and adding the product to
that portion, if any, of the effective yield of the Fund that is not tax-exempt.
The yield and effective yield of each of the Money Market Funds and the
tax equivalent yield and the tax equivalent effective yield of the Tax Exempt
Fund will vary in response to fluctuations in interest rates and in the expenses
of the Fund. For comparative purposes the current and effective yields should be
compared to current and effective yields offered by competing financial
institutions for that base period only and calculated by the methods described
above.
For the seven-day period ended July 31, 1997, the yield, effective
yield, the tax equivalent yield and the tax equivalent effective yield of the
Premier Shares and Classic Shares of each Money Market Fund, calculated as
described, above was as follows:
B-38
<PAGE> 114
<TABLE>
<CAPTION>
Tax
Effective Equivalent Tax Equivalent
Fund Class Yield Yield Yield Effective Yield
---- ----- ----- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Prime Obligations Fund Premier 5.08% 5.21%
U.S. Treasury Fund Premier 4.72% 4.83%
Tax Exempt Fund Premier 3.18% 3.23% 5.28% 5.37%
Prime Obligations Fund Classic 4.98% 5.10%
U.S. Treasury Fund Classic 4.62% 4.72%
Tax Exempt Fund Classic 3.08% 3.13% 5.12% 5.20%
</TABLE>
Yield of the Capital Appreciation Funds, the Income Funds and the Tax-Free Funds
- - --------------------------------------------------------------------------------
As summarized in the Prospectuses under the heading "General
Information - Performance Information," the yield of each of the Capital
Appreciation Funds, the Income Funds and the Tax-Free Funds will be computed by
annualizing net investment income per share for a recent 30-day period and
dividing that amount by the maximum offering price per share (reduced by any
undeclared earned income expected to be paid shortly as a dividend) on the last
trading day of that period. Net investment income will reflect amortization of
any market value premium or discount of fixed-income securities (except for
obligations backed by mortgages or other assets) and may include recognition of
a pro rata portion of the stated dividend rate of dividend paying portfolio
securities. The yield of each of the Capital Appreciation Funds and the Income
Funds will vary from time to time depending upon market conditions, the
composition of the Fund's portfolios and operating expenses of the Trust
allocated to each Fund. These factors and possible differences in the methods
used in calculating yield should be considered when comparing a Fund's yield to
yields published for other investment companies and other investment vehicles.
Yield should also be considered relative to changes in the value of the Fund's
shares and to the relative risks associated with the investment objectives and
policies of the Capital Appreciation Funds and the Income Funds.
The Tax-Free Funds may also advertise a "tax equivalent yield" and a
"tax equivalent effective yield." Tax equivalent yield will be computed by
dividing that portion of each Fund's yield which is tax-exempt by the difference
between one and a stated income tax rate and adding the product to that portion,
if any, of the yield of the Fund that is not tax-exempt.
B-39
<PAGE> 115
The tax equivalent effective yield for the Tax-Free Funds is computed by
dividing that portion of the effective yield of the Fund which is tax-exempt by
the difference between one and a stated income tax rate and adding the product
to that portion, if any, of the effective yield of the Fund that is not
tax-exempt.
At any time in the future, yields and total return may be higher or
lower than past yields and there can be no assurance that any historical results
will continue.
Investors in the Capital Appreciation Funds and the Income Funds are
specifically advised that share prices, expressed as the net asset values per
share, will vary just as yields will vary.
For the 30-day period ending July 31, 1997, the yield and the tax
equivalent yield of the Income Funds was:
Tax
Equivalent
Fund Yield Yield
---- ----- ----------
Florida Fund 3.77% 6.26%
Municipal Bond Fund 3.49% 5.80%
Bond Fund 5.52%
Government Income Fund 6.05%
Limited Maturity Fund 5.19%
For the 30-day period ending January 31, 1998, the yield of the Capital
Appreciation Funds was:
Fund Class Yield
---- ----- -----
Equity Fund Premier 1.07%
Regional Equity Fund Premier 0.50%
Balanced Fund Premier 2.80%
Equity Income Fund Premier 2.12%
Capital Growth Fund Premier (0.12)%
Equity Fund Classic 0.80%
Regional Equity Fund Classic 0.24%
Balanced Fund Classic 2.44%
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<PAGE> 116
Equity Income Fund Classic 1.80%
Capital Growth Fund Classic (0.21)%
Equity Fund Class B 0.16%
Regional Equity Fund Class B (0.45)%
Balanced Fund Class B 1.85%
Equity Income Fund Class B 1.19%
Capital Growth Fund Class B (1.05)%
Calculation of Total Return
- - ---------------------------
Total Return is a measure of the change in value of an investment in a
Fund over the period covered, assuming the investor paid the current maximum
applicable sales charge on the investment and that any dividends or capital
gains distributions were reinvested in the Fund immediately rather than paid to
the investor in cash. The formula for calculating Total Return includes four
steps: (1) adding to the total number of shares purchased by a hypothetical
$1,000 investment in the Fund all additional shares which would have been
purchased if all dividends and distributions paid or distributed during the
period had been immediately reinvested; (2) calculating the value of the
hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares owned at the end of the period by the net
asset value per share on the last trading day of the period; (3) assuming
redemption at the end of the period; and (4) dividing this account value for the
hypothetical investor by the initial $1,000 investment and annualizing the
result for periods of less than one year.
For the one-year and five-year periods ended July 31, 1997, average
annual total return was as follows:
Fund Class One-Year Five-Year
---- ----- -------- ---------
Prime Obligations Fund Premier 5.00% 4.18%
U.S. Treasury Fund Premier 4.70% 4.00%
Tax Exempt Fund Premier 3.15% 2.72%
Prime Obligations Fund Classic 4.90% 4.15%
U.S. Treasury Fund Classic 4.60% 3.97%
Tax Exempt Fund Classic 3.04% 2.69%
Florida Fund N/A 2.61% N/A
Bond Fund N/A 6.05% 5.98%
Limited Maturity Fund N/A 2.96% 4.54%
Government Income Fund N/A 5.82% N/A
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<PAGE> 117
For the one-year and five-year periods ended January 31, 1998, average
annual total return was as follows:
Fund Class One-Year Five-Year
---- ----- -------- ---------
Equity Fund Premier 27.84% 17.77%
Regional Equity Fund Premier 18.08% 14.28%
Balanced Fund Premier 19.55% 13.02%
Equity Fund Classic 22.06% 16.69%
Regional Equity Fund Classic 12.69% 13.21%
Balanced Fund Classic 14.14% 11.98%
Equity Fund Class B 22.53% 17.51%
Regional Equity Fund Class B 12.65% 13.96%
Balanced Fund Class B 14.09% 12.68%
For the period from commencement of operations through July 31, 1997,
the average annual total return was as follows:
<TABLE>
<CAPTION>
Commencement of Operations Commencement
Fund Class through July 31, 1997 of Operations Date
---- ----- --------------------- ------------------
<S> <C> <C> <C>
Prime Obligations Fund Premier 5.43% August 8, 1988
U.S. Treasury Fund Premier 5.21% September 8, 1988
Tax Exempt Fund Premier 3.09% June 27, 1988
Prime Obligations Fund Classic 5.41% April 1, 1996
U.S. Treasury Fund Classic 5.20% April 1, 1996
Tax Exempt Fund Classic 3.07% April 1, 1996
Florida Fund N/A 4.70% September 30, 1994
Municipal Bond Fund N/A (2.25)% July 1, 1997
Bond Fund N/A 8.11% December 1, 1988
Limited Maturity Fund N/A 6.67% February 1, 1988
Government Income Fund N/A 4.87% October 1, 1993
</TABLE>
For the period from commencement of operations through January 31,
1998, the average annual total return was as follows:
<TABLE>
<CAPTION>
Commencement of Operations Commencement
Fund Class through January 31, 1998 of Operations Date
---- ----- ------------------------ ------------------
<S> <C> <C> <C>
Equity Fund Premier 15.24% December 1, 1988
Regional Equity Fund Premier 15.91% December 1, 1988
Balanced Fund Premier 13.60% December 19, 1991
Equity Income Fund Premier 21.34% March 20, 1997
Capital Growth Fund Premier 1.50% July 31, 1997
Equity Fund Class B 15.21% December 1, 1988
Regional Equity Fund Class B 15.87% December 1, 1988
Balanced Fund Class B 13.44% December 19, 1991
</TABLE>
B-42
<PAGE> 118
<TABLE>
<S> <C> <C> <C>
Equity Income Fund Class B 15.76% March 20, 1997
Capital Growth Fund Class B (3.90)% July 31, 1997
Equity Fund Classic 14.66% December 1, 1988
Regional Equity Fund Classic 15.33% December 1, 1988
Balanced Fund Classic 12.74% December 19, 1991
Equity Income Fund Classic 15.78% March 20, 1997
Capital Growth Fund Classic (3.16)% July 31, 1997
</TABLE>
Performance Comparisons
- - -----------------------
Yield and Total Return. From time to time, performance information for
the Funds showing their average annual total return and/or yield may be included
in advertisements or in information furnished to present or prospective
Shareholders and the ranking of those performance figures relative to such
figures for groups of mutual funds categorized by Lipper Analytical Services as
having the same investment objectives may be included in advertisements.
Total return and/or yield may also be used to compare the performance
of the Funds against certain widely acknowledged standards or indices for stock
and bond market performance. The Standard & Poor's Composite Index of 500 Stocks
(the "S&P 500") is a market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 Stocks relative to the base period
1941-43. The S&P 500 is composed almost entirely of common stocks of companies
listed on the New York Stock Exchange, although the common stocks of a few
companies listed on the American Stock Exchange or traded over-the-counter are
included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Price Index (the "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges are
excluded.
The Shearson Lehman Government Bond Index (the "SL Government Index")
is a measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
government. Mortgage backed securities, flower bonds and foreign targeted issues
are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/ Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face
B-43
<PAGE> 119
value currently in excess of $1.3 trillion. To be included in the SL
Government/Corporate Index, an issue must have amounts outstanding in excess of
$1 million, have at least one year to maturity and be rated "Baa" or higher
("investment grade") by a nationally recognized statistical rating agency.
All Funds. Current yields or performance will fluctuate from time to time and
are not necessarily representative of future results. Accordingly, a Fund's
yield or performance may not provide for comparison with bank deposits or other
investments that pay a fixed return for a stated period of time. Yield and
performance are functions of a quality, composition, and maturity, as well as
expenses allocated to the Fund. Fees imposed upon customer accounts by Financial
Institutions for cash management services will reduce a Fund's effective yield
to Customers.
ADDITIONAL INFORMATION
Organization and Description of Shares
- - --------------------------------------
The Trust was organized as a Massachusetts business trust by the
Agreement and Declaration of Trust, dated October 1, 1987, under the name "Shelf
Registration Trust IV." The Trust's name was changed to "The ASO Outlook Group"
as of April 12, 1988 and to "AmSouth Mutual Funds" as of August 19, 1993 by
amendments to the Agreement and Declaration of Trust. A copy of the Trust's
Agreement and Declaration of Trust, as amended (the "Declaration of Trust") is
on file with the Secretary of State of The Commonwealth of Massachusetts. The
Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of Shares, which are units of beneficial interest. The Trust presently
has sixteen series of Shares which represent interests in the Prime Obligations
Fund, the U.S. Treasury Fund, the Tax Exempt Fund, the Equity Fund, the Regional
Equity Fund, the Bond Fund, the Limited Maturity Fund, the Balanced Fund, the
Municipal Bond Fund, the Government Income Fund, the Florida Fund, the Capital
Growth Fund, the Small Cap Fund, the Equity Income Fund, the Large Cap Growth
Fund and the Enhanced Market Fund. The Trust's Declaration of Trust authorizes
the Board of Trustees to divide or redivide any unissued Shares of the Trust
into one or more additional series.
Shares have no subscription or preemptive rights and only such
conversion or exchange rights as the Board of Trustees may grant in its
discretion. When issued for payment as described in the Prospectuses and this
Statement of Additional Information, the Trust's Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of the Trust,
Shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general assets
not belonging to any particular Fund which are available for distribution.
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<PAGE> 120
As described in the text of the Prospectuses following the caption
"GENERAL INFORMATION -- Description of the Trust and its Shares," Shares of the
Trust are entitled to one vote per share (with proportional voting for
fractional shares) on such matters as Shareholders are entitled to vote.
Shareholders vote in the aggregate and not by series or class on all matters
except (i) when required by the 1940 Act, shares shall be voted by individual
series, (ii) when the Trustees have determined that the matter affects only the
interests of one or more series or class, then only Shareholders of such series
or class shall be entitled to vote thereon, (iii) only the holders of Classic
Shares will be entitled to vote on matters submitted to Shareholder vote with
regard to the Shareholder Servicing Plan, 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. There will normally be no meetings of
Shareholders for the purposes of electing Trustees unless and until such time as
less than a majority of the Trustees have been elected by the Shareholders, at
which time the Trustees then in office will call a Shareholders' meeting for the
election of Trustees. In addition, Trustees may be removed from office by a
written consent signed by the holders of two-thirds of the outstanding voting
Shares of the Trust and filed with the Trust's custodian or by vote of the
holders of two-thirds of the outstanding voting Shares of the Trust at a meeting
duly called for the purpose, which meeting shall be held upon the written
request of the holders of not less than 10% of the outstanding voting Shares of
any Fund. Except as set forth above, the Trustees shall continue to hold office
and may appoint their successors.
Shareholder Liability
- - ---------------------
Under Massachusetts law, Shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Trust's Declaration of Trust disclaims Shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in every agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for indemnification
out of a Fund's property for all loss and expense of any Shareholder of such
Fund held liable on account of being or having been a Shareholder. Thus, the
risk of a Shareholder incurring financial loss on account of Shareholder
liability is limited to circumstances in which a Fund would be unable to meet
its obligations.
The Trust is registered with the Securities and Exchange Commission as
a management investment company. Such registration does not involve supervision
by the Securities and Exchange Commission of the management or policies of the
Trust.
As of June 4, 1998, the trustees and officers of the Trust, as a group,
owned less than 1% of the Premier Shares, of the Classic Shares and of the Class
B Shares of any of the AmSouth Funds.
As of June 4, 1998, AmSouth, 1901 Sixth Avenue-North, Birmingham,
Alabama 35203 was the Shareholder of record of the outstanding voting shares of
the Premier
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<PAGE> 121
Shares of the Funds as follows: 90.72% of the Prime Obligations Fund, 98.48% of
the U.S. Treasury Fund, 99.99% of the Tax Exempt Fund, 95.01% of the Equity
Fund, 93.67% of the Regional Equity Fund, 95.27% of the Bond Fund, 98.35% of the
Limited Maturity Fund, 97.39% of the Balanced Fund, 96.55% of the Florida Fund,
99.99% of the Government Income Fund, 99.22% of the Municipal Bond Fund, 99.99%
of the Equity Income Fund, 95.70% of the Capital Growth Fund, and 100% of the
Small Cap Fund. Under the 1940 Act, AmSouth may be deemed to be a controlling
person of the Premier Class of each of the above-mentioned Funds. The ultimate
parent of AmSouth is AmSouth Bancorporation.
As of June 4, 1998 National Financial Services Corporation, One World
Financial Center, 200 Liberty Street, New York, New York 10281, was the
Shareholder of record of the outstanding voting Shares of the Classic Shares of
the Funds as follows: 98.34% of the Prime Obligations Fund, 86.98% of the
Treasury Fund, 91.83% of the Tax Exempt Fund, 18.12% of the Government Income
Fund, 18.82% of the Bond Fund, 25.00% of the Limited Maturity Fund, 30.84%of the
Municipal Bond Fund, 75.80% of the Florida Fund, and 33.11% of the Capital
Growth Fund. As of June 4, 1998 National Financial Services Corporation, One
World Financial Center, 200 Liberty Street, New York, New York 10281, was the
Shareholder of record of the outstanding voting Shares of the Class B Shares of
the Funds as follows: 81.05% of the Bond Fund, 6.61% of the Regional Equity
Fund, and 10.59% of the Small Cap Fund. National Financial Services Corporation
under the 1940 Act may be deemed to be a controlling person of the Classic
Shares of the Prime Obligations Fund, Treasury Fund, Tax Exempt Fund, Limited
Maturity Fund, Municipal Bond Fund, Florida Fund and Capital Growth Fund and the
Class B Shares of the Bond Fund.
The following table indicates each additional person known by the group
to own beneficially 5% or more of the Shares of a Fund of the Trust as of June
4, 1998:
U.S. Treasury Fund -- Classic Shares
------------------------------------
Number of
Name and Address Shares Percentage
- - ---------------- ------ ----------
Association of Edison 840,550.080 11.69%
Illumination
600 18th Street North
Birmingham, AL 35291
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<PAGE> 122
Equity Fund -- Classic Shares
-----------------------------
Number of
Name and Address Shares Percentage
- - ---------------- ------ ----------
National Bank of Commerce 209,018.061 7.26%
TRST Maynard Cooper
P.O. Box 10686
Birmingham, AL 35202-0686
Limited Maturity Fund -- Classic Shares
---------------------------------------
Number of
Name and Address Shares Percentage
- - ---------------- ------ ----------
Morgan Keegan CF Inc. 28,704.275 7.15%
Robert P. Hall DMD SEP IRA
19493 Scenic HWY 98
Fairhope, AL 36532
Alabama Symphony Foundation 103,037.604 25.67%
Attn: Edwina Britton
C/O Alabama Symphony Orchestra
P.O. Box 2125
Birmingham, AL 35201
Municipal Bond Fund -- Classic Shares
-------------------------------------
Number of
Name and Address Shares Percentage
- - ---------------- ------ ----------
Sterne Agee Leach Inc. 13,428.891 5.15%
AC 2432-0915
CMT Plaza Suite 100B
813 Shades Creek Parkway
Birmingham, AL 35209
Lynspen & Company 80,325.445 30.80%
P.O. Box 2554
Birmingham, AL 35290
JC Bradford Co Cust FBO 13,176.907 5.05%
Janet Haynes Revocable
330 Commerce St.
Nashville, TN 37201-1899
Sterne Agee Leach Inc. 17,980.206 6.89%
AC 8102-3199
CMT Plaza Suite 100B
813 Shades Creek Parkway
Birmingham, AL 35209
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<PAGE> 123
Prime Obligations Fund -- Class B Shares
----------------------------------------
Number of
Name and Address Shares Percentage
- - ---------------- ------ ----------
BISYS Fund Services 10.00 100.00%
3435 Stelzer Road
Columbus, OH 43219
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<PAGE> 124
The Prospectuses of the Funds and this Statement of Additional
Information omit certain of the information contained in the Registration
Statement filed with the Securities and Exchange Commission. Copies of such
information may be obtained from the Securities and Exchange Commission upon
payment of the prescribed fee.
The Prospectuses of the Funds and this Statement of Additional
Information are not an offering of the securities herein described in any state
in which such offering may not lawfully be made. No salesman, dealer, or other
person is authorized to give any information or make any representation other
than those contained in the Prospectuses of the Funds and this Statement of
Additional Information.
B-49
<PAGE> 125
FINANCIAL STATEMENTS
The Independent Accountant's Report for the year ended July 31, 1997,
Financial Statements for the AmSouth Mutual Funds for the period ended July 31,
1997, are all incorporated by reference to the Annual Report of the AmSouth
Mutual Funds, dated as of such dates, which has been previously sent to
Shareholders of each Fund pursuant to the 1940 Act and previously filed with the
Securities and Exchange Commission. Financial Statements (unaudited) for the
AmSouth Mutual Funds, Capital Appreciation Funds (Classic Shares and Class B
Shares) for the six-month period ended January 31, 1998, are all incorporated by
reference to the Semi-Annual Report of the AmSouth Mutual Funds, dated as of
such date which has been previously sent to Shareholders of each Fund pursuant
to the 1940 Act and previously filed with the Securities and Exchange
Commission. A copy of each such report may be obtained without charge by
contacting the Distributor, BISYS Fund Services at 3435 Stelzer Road, Columbus,
Ohio 43219 or by telephone toll-free at 800-451-8382.
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APPENDIX
Commercial Paper Ratings. Commercial paper ratings of Standard & Poor's
Corporation ("S&P") are current assessments of the likelihood of timely payment
of debt having an original maturity of no more than 365 days. Commercial paper
rated A-1 by S&P indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation. Commercial paper
rated A-2 by S&P indicates that capacity for timely payment on issues is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1. Commercial paper rated A-3 indicates adequate capacity
for timely payment. It is, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
Commercial paper rated B is regarded as having only speculative capacity for
timely payment. Commercial paper rated C is assigned to short-term debt
obligations with a doubtful capacity for payment. Commercial paper rated D
represents an issue in default or when interest payments or principal payments
are not made on the date due, even if the applicable grace period has not
expired unless Standard & Poor's believes such payments will be made during such
grace period.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Issuers rated Prime-1 (or related
supporting institutions) are considered to have a superior ability for repayment
of senior short-term debt obligations. Issuers rated Prime-2 (or related
supporting institutions) have a strong ability for repayment of senior
short-term promissory obligations. This will normally be evidenced by many of
the characteristics of Prime-1 rated issuers, but to a lesser degree. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained. Issuers rated
Prime-3 (or related supporting institutions) have an acceptable ability for
repayment of short-term obligations. The effect of industry characteristics and
market composition may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt protection measurements
and may require relatively high financial leverage. Adequate alternate liquidity
is maintained. Issuers rated Not Prime do not fall within any of the Prime
rating categories.
Commercial paper rated F-1 by Fitch Information Service ("Fitch") is
regarded as having a very strong degree of assurance for timely payments.
Commercial paper rated F-2 by Fitch is regarded as having a satisfactory degree
of assurance of timely payment, but that margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings. Commercial paper rated F-3 has an adequate
degree of assurance for timely payment but near-term adverse changes could cause
these securities to be rated below investment grade. Issues rated F-S have
characteristics suggesting a minimal degree of assurance for timely payment and
are vulnerable to near-term adverse changes in financial and economic
conditions. The plus (+) sign is used after a rating symbol to designate the
relative position of an issuer within the rating category.
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Corporate Debt and State and Municipal Bond Ratings
- - ---------------------------------------------------
Standard & Poor's Corporation. Debt rated AAA has the highest rating
assigned by S&P. Capacity to pay interest and repay principal is extremely
strong. Debt rated AA has a very strong capacity to pay interest and to repay
principal and differs from the highest rated issues only in small degree. Debt
rated A has a strong capacity to pay interest and repay principal although it is
somewhat more susceptible to adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories. Debt rated BBB is
regarded as having an adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
the higher rated categories.
BB -- Debt rated "BB" has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B -- Debt rated "B" has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal.
CCC -- Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal.
CC -- The rating "CC" is currently highly vulnerable to nonpayment.
C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are continued.
D -- Debt rated "D" is in payment default. The "D" rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The "D" rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
To provide more detailed indications of credit quality, the ratings
from AA to A may be modified by the addition of a plus or minus sign to show
relative standing within this major rating category.
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Moody's Investor Services. Bonds that are rated Aaa by Moody's are
judged to be of the best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues. Bonds that are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat larger
than in Aaa securities. Bonds that are rated A by Moody's possess many favorable
investment attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment some time in the future. Bonds that are rated Baa are considered
medium-grade obligations; they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
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Other Ratings of Municipal Obligations
- - --------------------------------------
The following summarizes the two highest ratings used by Moody's
ratings for state and municipal short-term obligations. Obligations bearing
MIG-1 and VMIG-1 designations are of the best quality, enjoying strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing. Obligations rated "MIG-2" or
"VMIG-2" denote high quality with ample margins of protection although not so
large as in the preceding rating group.
S&P SP-1 and SP-2 municipal note rating (the two highest ratings
assigned) are described as follows:
"SP-1" Strong capacity to pay principal and interest. Issues determined
to possess very strong characteristics are given a plus (+)
designation.
"SP-2" Satisfactory capacity to pay principal and interest with some
vulnerability to adverse financial and economic changes over the term
of the notes.
Preferred Stock Ratings
- - -----------------------
The following summarizes the ratings used by Moody's for preferred
stock:
"aaa" An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the
least risk of dividend impairment within the universe of preferred
stocks.
"aa" An issue which is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance that
earnings and asset protection will remain relatively well maintained in
the foreseeable future.
"a" An issue which is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat greater
than in the "aaa" and "aa" classification, earnings and asset
protection are, nevertheless, expected to be maintained at adequate
levels.
The following summarizes the ratings used by Standard & Poor's for
preferred stock:
"AAA" This is the highest rating that may be assigned by Standard &
Poor's to a preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.
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<PAGE> 130
"AA" A preferred stock issue rated "AA" also qualifies as a
high-quality, fixed income security. The capacity to pay preferred
stock obligations is very strong, although not as overwhelming as for
issues rated "AAA."
"A" An issue rated "A" is backed by a sound capacity to pay the
preferred stock obligations, although it is somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions.
"BBB" An issue rated "BBB" is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity
to make payments for a preferred stock in this category than for issues
in the "A" category.
"BB," "B," "CCC" Preferred stock rated "BB," "B," and "CCC" are
regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. "BB" indicates
the lowest degree of speculation and "CCC" the highest. While such
issues will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to
adverse conditions.
"CC" The rating "CC" is reserved for a preferred stock issue in arrears
on dividends or sinking fund payments but that is currently paying.
"C" A preferred stock rated "C" is a nonpaying issue.
"D" A preferred stock rated "D" is a nonpaying issue with the issuer in
default on debt instruments.
"N.R." This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.
"Plus (+) or minus (-)" To provide more detailed indications of
preferred stock quality, ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.
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<PAGE> 131
Part C of Post-Effective Amendment No. 27
to
Registration Statement
of
AMSOUTH MUTUAL FUNDS
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements.
Included in Part A:
-- The "Financial Highlights" for the AmSouth Income Funds,
AmSouth Money Market Funds and AmSouth Capital
Appreciation Funds have been incorporated by reference
from AmSouth Mutual Funds' Annual Report to Shareholders,
dated July 31, 1997.
-- The unaudited "Financial Highlights" for the Classic and
Class B Shares of the AmSouth Capital Appreciation Funds
are incorporated by reference from AmSouth Mutual Funds'
Semi-Annual Report to Shareholders, dated January 31,
1998.
Included in Part B:
-- The financial statements for the AmSouth Income Funds,
AmSouth Money Market Funds and AmSouth Capital
Appreciation Funds have been incorporated by reference
from AmSouth Mutual Funds' Annual Report to Shareholders,
dated July 31, 1997.
-- The unaudited financial statements for the Classic and
Class B Shares of the AmSouth Capital Appreciation Funds
are incorporated by reference to the Registrant's
Semi-Annual Report dated as of January 31, 1998 filed with
the Securities and Exchange Commission.
(b) Exhibits:
(1) Amended Declaration of Trust, dated as of June
25, 1993 and filed on August 19, 1993 --
incorporated by reference to Post-Effective
Amendment No. 11 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
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<PAGE> 132
(2) (a) By-laws -- incorporated by reference to
the Registrant's initial Registration
Statement on Form N-1A (File No.
33-21660).
(b) Amendment No. 1 to By-laws --
incorporated by reference to
Post-Effective Amendment No. 3 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(3) None.
(4) (a) Article III, Sections 4 and 5; Article
IV, Sections 1 and 6; Article V; Article
VIII, Section 4; and Article IX, Sections
1, 4 and 7 of the Amended Declaration of
Trust -- incorporated by reference to
Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(b) Article 11 of the By-laws -- incorporated
by reference to the Registrant's initial
Registration Statement on Form N-1A (File
No. 33-21660).
(c) Amendment No. 1 to By-laws --
incorporated by reference to
Post-Effective Amendment No. 3 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(5) (a) Investment Advisory Agreement dated as
of August 1, 1988 between the Registrant
and AmSouth Bank N.A. -- incorporated by
reference to Post-Effective Amendment No.
1 to the Registrant's Registration
Statement on Form N-1A (File No.
33-21660).
(b) Amendment No. 1 dated as of December 5,
1989 to Investment Advisory Agreement
dated as of August 1, 1988 between the
Registrant and AmSouth Bank N.A.
-- incorporated by reference to
Post-Effective Amendment No. 4 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(c) Amended Schedule A dated March 17, 1998
to the Investment Advisory Agreement
dated as of August 1, 1988 between the
Registrant and AmSouth Bank, N.A. --
incorporated by reference to Exhibit
5(c) to Post-Effective Amendment No. 26
to the Registrant's Registration
Statement on Form N-1A (filed May 22,
1998) (File No. 33-21660).
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<PAGE> 133
(d) Form of Amended Schedule A to the
Investment Advisory Agreement dated as of
August 1, 1998 between the Registrant and
AmSouth Bank, N.A. is filed herewith.
(e) Investment Advisory Agreement between the
Group and AmSouth Bank N.A. dated as of
January 20, 1989 with respect to The ASO
Outlook Group Limited Maturity Fund --
incorporated by reference to
Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(f) Amendment No. 1 dated as of December 5,
1989 to the Investment Advisory Agreement
dated as of January 20, 1989 between the
Registrant and AmSouth Bank, N.A.
-- incorporated by reference to
Post-Effective Amendment No. 4 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(g) Investment Sub-Advisory Agreement dated
as of March 12, 1997 between AmSouth Bank
and Rockhaven Asset Management --
incorporated by reference to Exhibit 5(f)
to Post-Effective Amendment No. 23 to the
Registrant's Registration Statement filed
on July 3, 1997 on Form N-1A (File No.
33-21660).
(h) Investment Sub-Advisory Agreement dated
July 31, 1997 between AmSouth Bank and
Peachtree Asset Management --incorporated
by reference to Exhibit 5(g) to
Post-Effective Amendment No. 25 to the
Registrant's Registration Statement filed
on November 26, 1997 on Form N-1A (File
No. 33-21660).
(i) Investment Sub-Advisory Agreement dated
as of March 2, 1998 between AmSouth Bank
and Sawgrass Asset Management, LLC --
incorporated by reference to Exhibit 5(h)
to Post-Effective Amendment No. 26 to the
Registrant's Registration Statement filed
on May __, 1998 on Form N-1A (File No.
33-21660)
(j) Form of Investment Sub-Advisory Agreement
between AmSouth Bank and OakBrook
Investments, LLC is filed herewith.
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<PAGE> 134
(6) (a) Distribution Agreement dated as of
July 16, 1997 between the Registrant and
BISYS Fund Services, Limited Partnership
is incorporated by reference to Exhibit
6(a) of Post-Effective Amendment No. 24
to the Registrant's Registration
Statement filed on August 27, 1997 on
Form N-1A (File No. 33-21660).
(b) Amended Schedules A, B and D dated March
17, 1998 to the Distribution Agreement
between the Registrant and BISYS Fund
Services Limited Partnership --
incorporated by reference to Exhibit 6(b)
to Post-Effective Amendment No. 26 to the
Registrant's Registration Statement filed
on May 22, 1998 on Form N-1A (File No.
33-21660).
(c) Form of Amended Schedules A, B and D to
the Distribution Agreement between the
Registrant and BISYS Fund Services, LP
are filed herewith.
(d) Dealer Agreement between The Winsbury
Company and AmSouth Investment Services,
Inc. -- incorporated by reference to
Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(e) Dealer Agreement between The Winsbury
Company and National Financial Services
Corporation -- incorporated by reference
to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(f) Dealer Agreement between The Winsbury
Company and AmSouth Bank N.A. --
incorporated by reference to Post-
Effective Amendment No. 5 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(7) None.
(8) (a) Custodian Agreement dated as of April 17,
1997 between the Registrant and AmSouth
Bank -- incorporated by reference to
Exhibit 8(a) to Post-Effective Amendment
No. 23 to the Registrant's Registration
Statement filed on July 3, 1997 on Form
N-1A (File No. 33-21660).
(b) Amended Schedule A dated March 17, 1998
to the Custodian Agreement between the
Registrant and AmSouth Bank --
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<PAGE> 135
incorporated by reference to Exhibit
8(b) to Post-Effective Amendment No. 26
to the Registrant's Registration
Statement filed on May 22, 1998 on Form
N-1A (File No. 33-21660).
(c) Form of Amended Schedule A to the
Custodian Agreement between the
Registrant and AmSouth Bank is filed
herewith.
(9) (a) Management and Administration
Agreement dated as of April 1, 1996
between the Registrant and ASO Services
Company -- incorporated by reference to
Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(b) Amended Schedule A dated March 17, 1998
to the Management and Administration
Agreement between the Registrant and ASO
Services Company -- incorporated by
reference to Exhibit 9(b) to
Post-Effective Amendment No. 26 to the
Registrant's Registration Statement filed
on May 22, 1998 on Form N-1a (File No.
33-21660).
(c) Form of Amended Schedule A to the
Management and Administration Agreement
between the Registrant and ASO Services
Company is filed herewith.
(d) Sub-Administration Agreement between ASO
Services Company and AmSouth Bank --
incorporated by reference to
Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(e) Form of Amended Schedules A and B to the
Sub-Administration Agreement between ASO
Services Company and AmSouth Bank are
filed herewith.
(f) Sub-Administration Agreement between ASO
Services Company and BISYS Fund Services,
LP -- incorporated by reference to
Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(g) Amended Schedules A and B to the
Sub-Administration Agreement between ASO
Services Company and BISYS Fund Services,
LP -- incorporated by reference to
Exhibit
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<PAGE> 136
9(g) to Post-Effective Amendment No. 26
to the Registrant's Registration
Statement filed on May 22, 1998 on Form
N-1A (File No. 33-21660).
(h) Form of Amended Schedules A and B to the
Sub-Administration Agreement between ASO
Services Company and BISYS Fund Services,
LP are filed herewith.
(i) Transfer Agency and Shareholder Service
Agreement dated as of July 16, 1989, as
amended October 3, 1997, between the
Registrant and BISYS Fund Services,
Inc. -- incorporated by reference to
Exhibit 9(g) to Post-Effective Amendment
No. 26 to the Registrant's Registration
Statement filed on May 22, 1998 on Form
N-1A (File No. 33-21660).
(j) Amended Schedule A dated March 17, 1998
to the Transfer Agency and Shareholder
Services Agreement between Registrant and
BISYS Fund Services, Inc. -- incorporated
by reference to Exhibit 9(h) to
Post-Effective Amendment No. 26 to the
Registrant's Registration Statement filed
on May 22, 1998 on Form N-1A (File No.
33-21660).
(k) Form of Amended Schedule A to the
Transfer Agency and Shareholder Services
Agreement between the Registrant and
BISYS Fund Services, Inc. is filed
herewith.
(l) Fund Accounting Agreement dated as of
April 1, 1996 between the Registrant and
BISYS Fund Services -- incorporated by
reference to Post-Effective Amendment No.
19 to the Registrant's Registration
Statement on Form N-1A (File No.
33-21660).
(10) Opinion of Ropes & Gray is filed herewith.
(11) (a) Consent of Coopers & Lybrand L.L.P. is
filed herewith.
(b) Consent of Ropes & Gray is filed
herewith.
(12) None.
(13) (a) Purchase Agreement between the
Registrant and Winsbury Associates
incorporated by reference to
Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
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<PAGE> 137
(b) Purchase Agreement between the Registrant
and Winsbury Associates dated October 31,
1991 incorporated by reference to
Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(c) Purchase Agreement between the Registrant
and Winsbury Associates relating to the
Alabama Tax-Free Fund and the Government
Income Fund is incorporated by reference
to Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(d) Purchase Agreement between the Registrant
and Winsbury Service Corporation relating
to the Florida Tax-Free Fund is
incorporated by reference to
Post-Effective Amendment No. 13 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(14) None.
(15) None.
(16) (a) Performance Calculation Schedules are
incorporated by reference to
Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(b) Performance Calculation Schedules for the
Municipal Bond Fund and Equity Income
Fund are incorporated by reference to
Exhibit 16(b) to Post-Effective Amendment
No. 24 to the Registrant's Registration
Statement filed on August 27, 1997 on
Form N-1A (File No. 33-21660).
(c) Performance Calculation Schedule for the
Capital Growth Fund is incorporated by
reference to Exhibit 16(c) to
Post-Effective Amendment No. 24 to the
Registrant's Registration Statement filed
on August 27, 1997 on Form N-1A (File No.
33-21660).
(17) (a) Financial Data Schedule for the Classic
Shares of the AmSouth Municipal Bond
Fund, for the period August 1, 1997 to
October 31, 1997, is filed herewith.
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<PAGE> 138
(b) Financial Data Schedule for the Premier
Shares of the AmSouth Municipal Bond
Fund, for the period August 1, 1997 to
October 31, 1997, is filed herewith.
(c) Financial Data Schedule for the Class B
Shares of the AmSouth Capital Growth Fund
is filed herewith.
(d) Financial Data Schedule for the Classic
Shares of the AmSouth Capital Growth Fund
is filed herewith.
(e) Financial Data Schedule for the Premier
Shares of the AmSouth Capital Growth Fund
is filed herewith.
(f) Financial Data Schedule for the AmSouth
Florida Tax-Free Fund is filed herewith.
(g) Financial Data Schedule for the Classic
Shares of the AmSouth Prime Obligations
Fund is filed herewith.
(h) Financial Data Schedule for the Premier
Shares of the AmSouth Prime Obligations
Fund is filed herewith.
(i) Financial Data Schedule for the AmSouth
Equity Income Fund for the period from
March 20, 1997 through July 31, 1997, is
filed herewith.
(j) Financial Data Schedule for the AmSouth
Municipal Bond Fund for the period from
July 1, 1997 through July 31, 1997, is
filed herewith.
(k) Financial Data Schedule for the Classic
Shares of the AmSouth U.S. Treasury Fund
is filed herewith.
(l) Financial Data Schedule for the Premier
Shares of the AmSouth U.S. Treasury Fund
is filed herewith.
(m) Financial Data Schedule for the AmSouth
Bond Fund is filed herewith.
(n) Financial Data Schedule for the AmSouth
Equity Fund, for the one-year period
ended July 31, 1997, is filed herewith.
(o) Financial Data Schedule for the AmSouth
Regional Equity Fund, for the one-year
period ended July 31, 1997, is filed
herewith.
(p) Financial Data Schedule for the AmSouth
Limited Maturity Fund is filed herewith.
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<PAGE> 139
(q) Financial Data Schedule for the Classic
Shares of the AmSouth Tax Exempt Fund is
filed herewith.
(r) Financial Data Schedule for the Premier
Shares of the AmSouth Tax Exempt Fund is
filed herewith.
(s) Financial Data Schedule for the AmSouth
Balanced Fund, for the one-year period
ended July 31, 1997, is filed herewith.
(t) Financial Data Schedule for the AmSouth
Government Income Fund is filed herewith.
(u) Financial Data Schedule for the Classic
Shares of the AmSouth Equity Fund, for
the six month period ended January 31,
1998, is filed herewith.
(v) Financial Data Schedule for the Class B
Shares of the AmSouth Equity Fund, for
the six month period ended January 31,
1998, is filed herewith.
(w) Financial Data Schedule for the Classic
Shares of the AmSouth Regional Equity
Fund, for the six month period ended
January 31, 1998, is filed herewith.
(x) Financial Data Schedule for the Class B
Shares of the AmSouth Regional Equity
Fund, for the six month period ended
January 31, 1998, is filed herewith.
(y) Financial Data Schedule for the Classic
Shares of the AmSouth Balanced Fund, for
the six month period ended January 31,
1998, is filed herewith.
(z) Financial Data Schedule for the Class B
Shares of the AmSouth Balanced Fund, for
the six month period ended January 31,
1998, is filed herewith.
(aa) Financial Data Schedule for the Classic
Shares of the AmSouth Equity Income Fund,
for the six month period ended January
31, 1998, is filed herewith.
(bb) Financial Data Schedule for the Class B
Shares of the AmSouth Equity Income Fund,
for the six month period ended January
31, 1998, is filed herewith.
(18) (a) Multiple Class Plan for AmSouth Mutual
Funds adopted by the Board of Trustees on
December 6, 1995, as amended and restated
as of July 16, 1997 and as of March 17,
1998 -- incorporated by reference to
Exhibit 18(a) to Post-Effective Amendment
No. 26 to the Registrant's Registration
Statement filed on May 22, 1998 on Form
N-1A (File No. 33-21660).
(b) Form of Amended Schedule I to the
Multiple Class Plan is filed herewith.
(c) Shareholder Servicing Plan for AmSouth
Mutual Funds adopted by the Board of
Trustees on December 6, 1995 is
incorporated by reference to Exhibit
18(b) to Post-Effective Amendment No. 18
to the Registrant's Registration
Statement on Form N-1A (File No.
33-21660).
(d) Amended Schedule I to the Shareholder
Servicing Plan -- incorporated by
reference to Exhibit 18(d) to
Post-Effective Amendment No. 23 to the
Registrant's Registration Statement filed
on July 3, 1997 on Form N-1A (File No.
33-21660).
(e) Form of Amended Schedule I to the
Shareholder Servicing Plan is filed
herewith.
(f) Model Shareholder Servicing Agreement for
AmSouth Mutual Funds adopted by the Board
of Trustees on December 6, 1995 is
incorporated by reference to Exhibit
18(c) to Post-Effective Amendment No. 18
to the Registrant's Registration
Statement on Form N-1A (File No.
33-21660).
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<PAGE> 140
(g) Distribution and Shareholder Services
Plan between the Registrant and BISYS
Fund Services, LP, dated as of March 12,
1997, as amended and restated as of March
18, 1998 -- incorporated by reference to
Exhibit 18(e) to Post-Effective
Amendment No. 26 to the Registrant's
Registration Statement filed on May 22,
1998 on Form N-1A (File No. 33-21660).
(h) Form of Amended Schedule A to the
Distribution and Shareholder Services
Plan is filed herewith.
- - -------------
Item 25. Persons Controlled By or Under Common Control with
Registrant
As of the effective date of this Registration Statement,
there are no persons controlled by or under common control
with the Registrant's Prime Obligations Fund, Equity Fund,
Regional Equity Fund, AmSouth U.S. Treasury Fund, Tax
Exempt Fund, Bond Fund, Limited Maturity Fund, Municipal
Bond Fund, Government Income Fund, Florida Tax-Free Fund,
Balanced Fund, Equity Income Fund, Capital Growth Fund and
Small Cap Fund.
Item 26. Number of Holders of Securities
As of April 30, 1998, the number of record holders of the
Registrant's respective series of shares were as follows:
<TABLE>
<CAPTION>
Number of
Title of Series Record Holders
--------------- --------------
<S> <C>
Prime Obligations Fund -- Premier Shares 11
Prime Obligations Fund -- Classic Shares 16
Prime Obligations Fund -- Class B Shares 1
U.S. Treasury Fund -- Premier Shares 9
U.S. Treasury Fund -- Classic Shares 7
Tax Exempt Fund -- Premier Shares 4
Tax-Exempt Fund -- Classic Shares 14
Equity Fund -- Premier Shares 6
Equity Fund -- Classic Shares 3,771
Equity Fund -- Class B Shares 755
</TABLE>
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<PAGE> 141
<TABLE>
<S> <C>
Regional Equity Fund -- Premier Shares 6
Regional Equity Fund -- Classic Shares 3,408
Regional Equity Fund -- Class B Shares 303
Equity Income Fund -- Premier Shares 4
Equity Income Fund -- Classic Shares 1,403
Equity Income Fund -- Class B Shares 671
Bond Fund -- Premier Shares 6
Bond Fund -- Classic Shares 325
Bond Fund -- Class B Shares 17
Capital Growth Fund -- Premier Shares 4
Capital Growth Fund -- Classic Shares 495
Capital Growth Fund -- Class B Shares 363
Balanced Fund -- Premier Shares 6
Balanced Fund -- Classic Shares 2,585
Balanced Fund -- Class B Shares 285
Small Cap Fund -- Premier Shares 1
Small Cap Fund -- Classic Shares 82
Small Cap Fund -- Class B Shares 74
Limited Maturity Fund -- Premier Shares 6
Limited Maturity Fund -- Classic Shares 104
Municipal Bond Fund -- Premier Shares 5
Municipal Bond Fund -- Classic Shares 18
Government Income Fund -- Premier Shares 3
Government Income Fund -- Classic Shares 343
Florida Tax-Free Fund -- Premier Shares 3
Florida Tax-Free Fund -- Classic Shares 55
</TABLE>
Item 27. Indemnification
Article VIII, Sections 1 and 2 of the Registrant's Declaration
of Trust provides as follows:
"Trustees, Officers, etc.
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Section 1. The Trust shall indemnify each of its Trustees and
officers (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in
which the Trust has any interest as a shareholder, creditor or
otherwise) (hereinafter referred to as a "Covered Person")
against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
reasonably incurred by any Covered Person in connection with
the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or
otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of
being or having been such a Covered Person except with respect
to any matter as to which such Covered Person shall have been
finally adjudicated in any such action, suit or other
proceeding to be liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
such Covered Person's office. Expenses, including counsel fees
so incurred by any such Covered Person (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines
or penalties), shall be paid from time to time by the Trust in
advance of the final disposition of any such action, suit or
proceeding upon receipt of an undertaking by or on behalf of
such Covered Person to repay amounts so paid to the Trust if
it is ultimately determined that indemnification of such
expenses is not authorized under this Article, provided,
however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b) the
Trust shall be insured against losses arising from any such
advance payments or (c) either a majority of the disinterested
Trustees acting on the matter (provided that a majority of the
disinterested Trustees then in office act on the matter), or
independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as
opposed to a full trial type inquiry) that there is reason to
believe that such Covered Person will be found entitled to
indemnification under this Article.
Compromise Payment
Section 2. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise)
without an adjudication by a court, or by any other body
before which the proceeding was brought, that such Covered
Person either (a) did not act in good faith in the reasonable
belief that his action was in the best interests of the Trust
or (b) is liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office, indemnification shall be provided if (a) approved as
in the best interests of the Trust, after notice that it
involves such indemnification, by at least a majority of the
disinterested Trustees acting on the matter (provided that a
majority of the
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<PAGE> 143
disinterested Trustees then in office act on the matter) upon
a determination, based upon a review of readily available
facts (as opposed to a full trial type inquiry) that such
Covered Person acted in good faith in the reasonable belief
that his action was in the best interests of the Trust and is
not liable to the Trust or its Shareholders by reasons of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office, or (b) there has been obtained an opinion in writing
of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry) to
the effect that such Covered Person appears to have acted in
good faith in the reasonable belief that his action was in the
best interests of the Trust and that such indemnification
would not protect such Person against any liability to the
Trust to which he would otherwise be subject by reason of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Any approval pursuant to this Section shall not prevent the
recovery from any Covered Person of any amount paid to such
Covered Person in accordance with this Section as
indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such Covered
Person's action was in the best interests of the Trust or to
have been liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
Covered Person's office."
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer, or controlling person
of Registrant in the successful defense of any action, suit,
or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Indemnification for the Group's principal underwriter is
provided for in the Distribution Agreement incorporated herein
by reference as Exhibits 6(a).
In addition, the Trust maintains a directors and officer
liability insurance policy with a maximum coverage of
$3,000,000.
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<PAGE> 144
Item 28. Business and Other Connections of Investment Advisor and
Investment Sub-Advisors.
AmSouth Bank
AmSouth Bank ("AmSouth") is the investment advisor of each
Fund of the Trust. AmSouth is the bank affiliate of AmSouth
Bancorporation, one of the largest banking institutions
headquartered in the mid-south region. AmSouth Bancorporation
reported assets as of March 31, 1998 of $19.4 billion and
operated 270 banking offices and over 600 ATM locations in
Alabama, Florida, Georgia and Tennessee. AmSouth has provided
investment management services through its Trust Investment
Department since 1915. As of March 31, 1998, AmSouth and its
affiliates had over $8.7 billion in assets under discretionary
management and provided custody services for an additional
$21.6 billion in securities. AmSouth is the largest provider
of trust services in Alabama, and its Trust Natural Resources
and Real Estate Department is a major manager of timberland,
mineral, oil and gas properties and other real estate
interests.
There is set forth below information as to any other business,
vocation or employment of a substantial nature (other than
service in wholly-owned subsidiaries or the parent corporation
of AmSouth Bank) in which each director or senior officer of
the Registrant's investment advisor is, or at any time during
the past two fiscal years has been, engaged for his own
account or in the capacity of director, officer, employee,
partner or trustee.
Name and Position with Other business, profession,
AmSouth Bank AmSouth Bank vocation, or employment
- - ------------ ------------------------------------
J. Harold Chandler Chairman, President & CEO
Director Provident Companies, Inc.
One Fountain Square
Chattanooga, Tennessee 37402
James E. Dalton, Jr. President and CEO
Director Quorum Health Group, Inc.
103 Continental Place
Brentwood, Tennessee 37027
Rodney C. Gilbert Chairman of the Board & CEO
Director Enfinity Corporation
3700 Old Leeds Road
Birmingham, Alabama 35213
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<PAGE> 145
Elmer B. Harris President and CEO
Director Alabama Power Company
600 North 18th Street
Birmingham, Alabama 35291
Victoria Jackson Gregorious President and CEO
Director DSS/ProDiesel, Inc.
922 Main Street
Nashville, Tennessee 37206
Ronald L. Kuehn, Jr. Chairman of the Board, President and CEO
Director Sonat Inc.
1900 Fifth Avenue North
Birmingham, Alabama 35203
James R. Malone Chairman and CEO
Director HMI Industries, Inc./Intok Capital, Inc.
8889 Pelican Bay Boulevard
Naples, Florida 34108
Claude B. Nielson President and CEO
Director Coca-Cola Bottling Company United, Inc.
4600 East Lake Boulevard
Birmingham, Alabama 35217
Dr. Benjamin F. Payton President
Director Tuskegee University
399 Montgomery Road
Tuskegee, Alabama 36083
C. Dowd Ritter AmSouth Bancorporation
Chairman, President and CEO AmSouth Bank
AmSouth-Sonat Tower
1900 Fifth Avenue North
Birmingham, Alabama 35203
Herbert A. Sklenar Chairman Emeritus
Director Vulcan Materials Company
Two Metroplex Drive
Birmingham, Alabama 35209
Michael C. Baker None
Senior Executive Vice President
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<PAGE> 146
O.B. Grayson Hall, Jr. None
Executive Vice President
David B. Edmonds None
Executive Vice President
Sloan D. Gibson, IV None
Senior Executive Vice President
and Chief Financial Officer
W. Charles Mayer, III None
Senior Executive Vice President
Candice W. Rogers None
Senior Executive Vice President
E.W. Stephenson, Jr. None
Senior Executive Vice President
Alfred W. Swan, Jr. None
Senior Executive Vice President
Stephen A. Yoder None
Executive Vice President
and General Counsel
Rockhaven
Rockhaven Asset Management, LLC ("Rockhaven") is the sub-advisor of the
AmSouth Equity Income Fund. Rockhaven is jointly owned by Christopher H. Wiles
(50%) and AmSouth Bank (50%), and is headquartered in Pittsburgh, Pennsylvania.
As of March 1, 1998, the AmSouth Equity Income Fund is by far the predominate
client of Rockhaven. In the future, Rockhaven intends to advise on other mutual
funds and separate accounts.
Set forth below is information as to any other business, vocation or
employment of a substantial nature (other than service in wholly-owned
subsidiaries or the parent corporation of AmSouth Bank) in which each director
or senior officer of the Registrant's sub-advisor is, or at any time during the
past two fiscal years has been, engaged for his own account or in the capacity
of director, officer, employee, partner or trustee.
C-16
<PAGE> 147
Name and Position with Other business, profession,
Rockhaven Asset Management vocation, or employment
- - -------------------------- -----------------------
Christopher H. Wiles. Prior to February 7, 1997, Senior Vice
President and Chief Investment President, Federated Investors, Pittsburgh, PA
Officer and Managing Partner
Michael C. Baker Senior Executive Vice President, AmSouth
Managing Partner Bank, Birmingham, Alabama
Peachtree
Peachtree Asset Management ("Peachtree") is the sub-adviser of the
AmSouth Capital Growth Fund. 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 February 28, 1998, SBMFM had
aggregate assets under management of approximately $100 billion.
Set forth below is information as to any other business, vocation or
employment of a substantial nature (other than service in wholly-owned
subsidiaries or the parent corporation) in which each director or senior officer
of the Registrant's sub-advisor is, or at any time during the past two fiscal
years has been, engaged for his own account or in the capacity of director,
officer, employee, partner or trustee.
Name and Position with Other business, profession,
Peachtree Asset Management vocation, or employment
- - -------------------------- -----------------------
Lamond Godwin N/A
Chairman & CEO
Dennis A. Johnson N/A
President & Chief Investment Officer
Sawgrass
Sawgrass Asset Management, LLC ("Sawgrass") serves as the investment
sub-advisor to the AmSouth Small Cap Fund. Sawgrass is 50% owned by AmSouth and
50% owned by Sawgrass Asset Management, Inc. Sawgrass Asset Management, Inc. is
controlled by Mr. Dean McQuiddy, Mr. Brian Monroe and Mr. Andrew Cantor.
Sawgrass was organized in
C-17
<PAGE> 148
January, 1998 to perform advisory services for investment companies and other
institutional clients and has its principal offices at 4337 Pablo Oaks Court,
Jacksonville, FL 32224.
Set forth below is information as to any other business, vocation or
employment of a substantial nature (other than service in wholly-owned
subsidiaries or the parent corporation of AmSouth Bank) in which each director
or senior officer of the Registrant's sub-advisor is, or at any time during the
past two fiscal years has been, engaged for his own account or in the capacity
of director, officer, employee, partner or trustee.
Name and Position with Other business, profession,
Sawgrass Asset Management, LLC vocation or employment
- - ------------------------------ ----------------------
Dean E. McQuiddy, Principal Barnett Capital Advisors
Andrew M. Cantor, Principal Barnett Capital Advisors
Brian K. Monroe, Principal Barnett Asset Management
OakBrook
OakBrook Investments, LLC ("OakBrook") serves as the investment
sub-advisor to the AmSouth Enhanced Market Fund and the AmSouth Large Cap Growth
Fund. OakBrook is 50% owned by AmSouth Bank and 50% jointly owned by Neil
Wright, Janna Sampson and Peter Jankovskis. OakBrook was organized in February,
1998 to perform advisory services for investment companies and other
institutional clients and has its principal offices at 701 Warrenville Road,
Suite 135, Lisle, IL 60532.
Set forth below is information as to any other business, vocation or
employment of a substantial nature (other than service in wholly-owned
subsidiaries or the parent corporation of AmSouth Bank) in which each director
or senior officer of the Registrant's sub-advisor is, or at any time during the
past two fiscal years has been, engaged for his own account or in the capacity
of director, officer, employee, partner or trustee.
Name and Position with Other business, profession,
OakBrook Investments, LLC vocation or employment
- - ------------------------- ----------------------
Neil R. Wright Prior to 1/1/98, Chief Investment Officer, ANB
Investment Management & Trust Co.; 1/1/98 -
2/25/98, Northern Trust Quantitative Advisors,
Inc.
Janna L. Sampson Prior to 1/1/98, Senior Portfolio Manager, ANB
Investment Management & Trust Co.; 1/1/98 -
2/25/98, Northern Trust Quantitative Advisors,
Inc.
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<PAGE> 149
Peter M. Jankovskis Prior to 1/1/98, Manager of Research, ANB
Investment Management & Trust Co.; 1/1/98 -
2/25/98, Northern Trust Quantitative Advisors,
Inc.
Item 29. Principal Underwriter.
(a) BISYS Fund Services, Limited Partnership ("BISYS Fund Services")
acts as distributor for the Registrant. BISYS Fund Services also
distributes the securities of American Performance Funds, The ARCH
Fund, Inc., The BB&T Mutual Funds Group, The Coventry Group, The Empire
Builder Tax Free Bond Fund, ESC Strategic Funds, Inc., The Eureka
Funds, Fountain Square Funds, Hirtle Callaghan Trust, HSBC Family of
Funds, The Infinity Mutual Funds, Inc., INTRUST Funds Trust, The Kent
Funds, Magna Funds, Meyers Investment Trust, MMA Praxis Mutual Funds,
M.S.D.&T. Funds, Pacific Capital Funds, Parkstone Group of Funds, The
Parkstone Advantage Fund, Pegasus Funds, The Republic Funds Trust, The
Republic Advisors Funds Trust, The Riverfront Funds, Inc., SBSF Funds,
Inc. dba Key Mutual Funds, Sefton Funds, The Sessions Group, Summit
Investment Trust, Variable Insurance Funds, The Victory Portfolios, The
Victory Variable Funds, and Vintage Mutual Funds, Inc. each of which is
a management investment company. The parent of BISYS Fund Services is
The BISYS Group, Inc.
(b) Partners of BISYS Fund Services as of the date of this filing are
as follows:
<TABLE>
<CAPTION>
Positions and Offices with Positions and
Name and Principal BISYS Fund Services, Offices with
Business Addresses Limited Partnership The Registrant
- - ------------------ ------------------- --------------
<S> <C> <C>
BISYS Fund Services, Sole General None
Limited Partnership Partner
3435 Stelzer Road
Columbus, OH 43219
WC Subsidiary Sole Limited None
Corporation Partner
150 Clove Road
Little Falls, NJ 07424
The BISYS Group, Inc. Sole Shareholder None
150 Clove Road
Little Falls, NJ 07424
</TABLE>
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<PAGE> 150
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and
other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the rules promulgated
thereunder are as follows:
(1) AmSouth Mutual Funds
3435 Stelzer Road
Columbus, Ohio 43219
Attention: Secretary
(Registrant)
(2) AmSouth Bank
1901 Sixth Avenue - North
Birmingham, Alabama 35203
Attention: Trust Investments
(Investment Advisor and Custodian)
(3) BISYS Fund Services, Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219
(Distributor)
(4) ASO Services Company
3435 Stelzer Road
Columbus, Ohio 43219
(Administrator)
(5) Rockhaven Asset Management, LLC
100 First Avenue, Suite 1050
Pittsburgh, Pennsylvania 15222
(Sub-Advisor to the Equity Income Fund)
(6) BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
(Transfer and Shareholder Servicing Agent, Provider
of Fund Accounting Services)
(7) Peachtree Asset Management
A Division of Smith Barney Mutual Funds Management Inc.
One Peachtree Center
Atlanta, Georgia 30308
(Sub-Advisor to the Capital Growth Fund)
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<PAGE> 151
(8) Sawgrass Asset Management, LLC
4337 Pablo Oaks Court
Jacksonville, Florida 32224
(Sub-Advisor to the Small Cap Fund)
(9) OakBrook Investments, LLC
701 Warrenville Road, Suite 135
Lisle, Illinois 60532
(Sub-Advisor to the Enhanced Market Fund
and the Large Cap Growth Fund)
Item 31. Management Services
None.
Item 32. Undertakings
The Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting upon the question
of removal of one or more trustees when requested to do so
by the holders of at least 10% of the outstanding voting
shares of any series of the Trust and will assist in
shareholder communication in connection with calling a
meeting for the purpose of removing one or more trustees.
The Registrant undertakes to furnish to each person to
whom a prospectus is delivered a copy of the Registrant's
latest annual report to shareholders upon request and
without charge.
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<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this Amendment
No. 27 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Washington, District of
Columbia on the 17th day of June, 1998.
AMSOUTH MUTUAL FUNDS,
Registrant
*/s/ GEORGE R. LANDRETH
----------------------
George R. Landreth
Chairman
Pursuant to the requirements of the Securities Act of 1933, this Amendment No.
27 to the Registration Statement of AmSouth Mutual Funds has been signed below
by the following persons in the capacities indicated on the 17th day of June,
1998.
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
*/s/ GEORGE R. LANDRETH Chairman June 17, 1998
- - ----------------------------------
George R. Landreth
*/s/ J. DAVID HUBER Trustee June 17, 1998
- - ----------------------------------
J. David Huber
*/s/ CHARLES L. BOOTH Treasurer June 17, 1998
- - ----------------------------------
Charles L. Booth
*/s/ JAMES H. WOODWARD, JR. Trustee June 17, 1998
- - ----------------------------------
James H. Woodward, Jr.
*/s/ HOMER H. TURNER, JR. Trustee June 17, 1998
- - ----------------------------------
Homer H. Turner, Jr.
*/s/ WENDELL D. CLEAVER Trustee June 17, 1998
- - ----------------------------------
Wendell D. Cleaver
*/s/ DICK D. BRIGGS, JR. Trustee June 17, 1998
- - ----------------------------------
Dick D. Briggs, Jr.
* By /s/ ALAN G. PRIEST June 17, 1998
- - ----------------------------------
Alan G. Priest,
Attorney-in-fact, pursuant to Powers of Attorney filed herewith
</TABLE>
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<PAGE> 153
POWER OF ATTORNEY
Dick D. Briggs, Jr. whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee Dick D. Briggs, Jr. and/or officer of the Trust any and
all such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 12 October 1993 /s/ DICK D. BRIGGS, JR.
---------------------------------- -----------------------
Dick D. Briggs, Jr.
<PAGE> 154
POWER OF ATTORNEY
Wendell D. Cleaver whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee Wendell D. Cleaver and/or officer of the Trust any and
all such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: October 7, 1993 /s/ WENDELL CLEAVER
-------------------------------- ---------------------------
Wendell D. Cleaver
<PAGE> 155
POWER OF ATTORNEY
J. David Huber whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A. Sheehan, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable AmSouth Mutual
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee J. David Huber and/or officer of the Trust any and all
such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 9/25/92 /s/ J. DAVID HUBER
-------------------------------- -------------------------
J. David Huber
<PAGE> 156
POWER OF ATTORNEY
George R. Landreth whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Maryellen M.
Lundquist, each individually, his true and lawful attorneys and agents, with
power of substitution or resubstitution, to do any and all acts and things and
to execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee George R. Landreth and/or officer of the Trust any and
all such amendments filed with the Securities and Exchange Commission under said
Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 6/10/97 /s/ GEORGE R. LANDRETH
-------------------------------- -------------------------
George R. Landreth
<PAGE> 157
POWER OF ATTORNEY
James H. Woodward, Jr. whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee James H. Woodward, Jr. and/or officer of the Trust any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: 9/25/92 /s/ JAMES H. WOODWARD, JR.
---------------------------------- --------------------------
James H. Woodward, Jr.
<PAGE> 158
POWER OF ATTORNEY
Homer H. Turner, Jr. whose signature appears below, does hereby
constitute and appoint Martin E. Lybecker, Alan G. Priest, and Margaret A.
Sheehan, each individually, his true and lawful attorneys and agents, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, each
individually, may deem necessary or advisable or which may be required to enable
AmSouth Mutual Funds (the "Trust"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee Homer H. Turner, Jr. and/or officer of the Trust any
and all such amendments filed with the Securities and Exchange Commission under
said Acts, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorneys and agents,
or either of them, shall do or cause to be done by virtue thereof.
Dated: September 25, 1992 /s/ HOMER H. TURNER, JR.
---------------------------------- ------------------------
Homer H. Turner, Jr.
<PAGE> 159
POWER OF ATTORNEY
Charles L. Booth, whose signature appears below, does hereby constitute
and appoint Martin E. Lybecker, Alan G. Priest, and Maryellen M. Lundquist, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable AmSouth Mutual
Funds (the "Trust"), to comply with the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended ("Acts"), and any rules,
regulations or requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing and effectiveness of any and all
amendments to the Trust's Registration Statement on Form N-1A pursuant to said
Acts, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign in the name and on behalf of the
undersigned as a trustee and/or officer of the Trust any and all such amendments
filed with the Securities and Exchange Commission under said Acts, and any other
instruments or documents related thereto, and the undersigned does hereby ratify
and confirm all that said attorneys and agents, or either of them, shall do or
cause to be done by virtue thereof.
Dated: February 26, 1998 /s/ CHARLES BOOTH
------------------------- ------------------
Charles Booth
<PAGE> 160
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- - ----------- ----------- ----
<S> <C> <C>
5(d) Form of Amended Schedule A to the Investment Advisory Agreement
5(j) Form of Investment Sub-Advisory Agreement between AmSouth Bank
and OakBrook Investments, LLC
6(c) Form of Amended Schedules A, B and D to the Distribution Agreement
8(c) Form of Amended Schedule A to the Custodian Agreement
9(c) Form of Amended Schedule A to the Management and Administration
Agreement
9(e) Form of Schedules A and B to the Sub-Administration Agreement
between ASO Services Company and AmSouth Bank
9(h) Form of Schedules A and B to the Sub-Administration Agreement
between ASO Services Company and BISYS Fund Services, LP
9(k) Form of Amended Schedule A to the Transfer Agency and
Shareholder Services Agreement
10 Opinion of Ropes & Gray
11(a) Consent of Coopers & Lybrand L.L.P.
11(b) Consent of Ropes & Gray
18(b) Form of Amended Schedule I to the Multiple Class Plan
18(e) Form of Amended Schedule I to the Shareholder Servicing Plan
18(h) Form of Amended Schedule A to the Distribution and Shareholder
Services Plan
27 Financial Data Schedules
(a) Financial Data Schedule for the Classic Shares of the AmSouth
Municipal Bond Fund, for the period August 1, 1997 to October 31,
1997, is filed herewith.
</TABLE>
-1-
<PAGE> 161
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- - ----------- ----------- ----
<S> <C> <C>
(b) Financial Data Schedule for the Premier Shares of the AmSouth
Municipal Bond Fund, for the period August 1, 1997 to October 31,
1997, is filed herewith.
(c) Financial Data Schedule for the Class B Shares of the AmSouth
Capital Growth Fund is filed herewith.
(d) Financial Data Schedule for the Classic Shares of the AmSouth
Capital Growth Fund is filed herewith.
(e) Financial Data Schedule for the Premier Shares of the AmSouth
Capital Growth Fund is filed herewith.
(f) Financial Data Schedule for the AmSouth Florida Tax-Free Fund is
filed herewith.
(g) Financial Data Schedule for the Classic Shares of the AmSouth
Prime Obligations Fund is filed herewith.
(h) Financial Data Schedule for the Premier Shares of the AmSouth
Prime Obligations Fund is filed herewith.
(i) Financial Data Schedule for the AmSouth Equity Income Fund, for
the period from March 20, 1997 through July 31, 1997, is filed
herewith.
(j) Financial Data Schedule for the AmSouth Municipal Bond Fund for
the period from July 1, 1997 through July 31, 1997, is filed
herewith.
(k) Financial Data Schedule for the Classic Shares of the AmSouth U.S.
Treasury Fund is filed herewith.
(l) Financial Data Schedule for the Premier Shares of the AmSouth U.S.
Treasury Fund is filed herewith.
(m) Financial Data Schedule for the AmSouth Bond Fund is filed
herewith.
(n) Financial Data Schedule for the AmSouth Equity Fund, for the
one-year period ended July 31, 1997, is filed herewith.
(o) Financial Data Schedule for the AmSouth Regional Equity Fund, for
the one-year period ended July 31, 1997, is filed herewith.
(p) Financial Data Schedule for the AmSouth Limited Maturity Fund is
filed herewith.
</TABLE>
-2-
<PAGE> 162
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- - ----------- ----------- ----
<S> <C> <C>
(q) Financial Data Schedule for the Classic Shares of the AmSouth Tax
Exempt Fund is filed herewith.
(r) Financial Data Schedule for the Premier Shares of the AmSouth Tax-
Exempt Fund is filed herewith.
(s) Financial Data Schedule for the AmSouth Balanced Fund, for the
one-year period ended July 31, 1997, is filed herewith.
(t) Financial Data Schedule for the AmSouth Government Income Fund is
filed herewith.
(u) Financial Data Schedule for the Classic Shares of the AmSouth
Equity Fund, for the six month period ended January 31, 1998, is
filed herewith.
(v) Financial Data Schedule for the Class B Shares of the AmSouth
Equity Fund, for the six month period ended January 31, 1998, is
filed herewith.
(w) Financial Data Schedule for the Classic Shares of the AmSouth
Regional Equity Fund, for the six month period ended January 31,
1998, is filed herewith.
(x) Financial Data Schedule for the Class B Shares of the AmSouth
Regional Equity Fund, for the six month period ended January 31,
1998, is filed herewith.
(y) Financial Data Schedule for the Classic Shares of the AmSouth
Balanced Fund, for the six month period ended January 31, 1998, is
filed herewith.
(z) Financial Data Schedule for the Class B Shares of the AmSouth
Balanced Fund, for the six month period ended January 31, 1998, is
filed herewith.
(aa) Financial Data Schedule for the Classic Shares of the AmSouth
Equity Income Fund, for the six month period ended January 31,
1998, is filed herewith.
(bb) Financial Data Schedule for the Class B Shares of the AmSouth
Equity Income Fund, for the six month period ended January 31,
1998, is filed herewith.
</TABLE>
-3-
<PAGE> 1
EXHIBIT 5(d)
Amended Schedule A
to the Investment Advisory Agreement
<PAGE> 2
DATED: __________, 1998
FORM OF
SCHEDULE A
TO THE INVESTMENT ADVISORY AGREEMENT
DATED AS OF AUGUST 1, 1988 BETWEEN
AMSOUTH MUTUAL FUNDS (FORMERLY THE ASO OUTLOOK GROUP)
AND
AMSOUTH BANK (FORMERLY AMSOUTH BANK, N.A.)
NAME OF FUND
- - ----------------------
AmSouth Mutual Funds Annual rate of forty one-hundredths of one percent
Prime Obligations Fund (.40%) of AmSouth Mutual Funds Prime Obligations
Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one
Equity Fund percent (.80%) of AmSouth Mutual Funds Equity
Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one
Regional Equity Fund percent (.80%) of AmSouth Mutual Funds Regional
Equity Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of forty one-hundredths of one percent
U.S. Treasury Fund (.40%) of AmSouth Mutual Funds U.S. Treasury
Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of forty one-hundredths of one percent
Tax Exempt Fund (.40%) of AmSouth Mutual Funds Tax Exempt Fund's
average daily net assets.
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one
Bond Fund percent (.65%) of AmSouth Mutual Funds Bond Fund's
average daily net assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one
Balanced Fund percent (.80%) of AmSouth Mutual Funds Balanced
Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one
Municipal Bond Fund percent (.65%) of AmSouth Mutual Funds Municipal
Bond Fund's average daily net assets.
A-1
<PAGE> 3
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one
Government Income Fund percent (.65%) of AmSouth Mutual Funds Government
Income Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of sixty-five one-hundredths of one
Florida Tax-Free Fund percent (.65%) of AmSouth Mutual Funds Florida
Tax-Free Fund's average daily net assets.
AmSouth Mutual Funds Annual Basic Rate of eighty one-hundredths of one
Capital Growth Fund percent (.80%) of AmSouth Mutual Funds Capital
Growth Fund's average daily net assets.
AmSouth Mutual Funds Annual Basic Rate of one hundred twenty
Small Cap Fund one-hundredths of one percent (1.20%) of AmSouth
Mutual Funds Small Cap Fund's average daily net
assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one
Equity Income Fund percent (.80%) of AmSouth Mutual Funds Equity
Income Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of twenty one-hundredths of one
Institutional Prime percent (.20%) of the AmSouth Mutual Funds
Obligations Fund Institutional Prime Obligations Fund
AmSouth Mutual Funds Annual rate of twenty one-hundredths of one
Institutional U.S. Treasury percent (.20%) of the AmSouth Mutual Funds
Fund Institutional U.S. Treasury Fund
AmSouth Mutual Funds Annual rate of forty-five one-hundredths of one
Enhanced Market Fund percent (.45%) of AmSouth Mutual Funds Enhanced
Market Fund's average daily net assets.
AmSouth Mutual Funds Annual rate of eighty one-hundredths of one
Large Cap Growth Fund percent (.80%) of AmSouth Mutual Funds Large Cap
Growth Fund's average daily net assets.
AMSOUTH BANK AMSOUTH MUTUAL FUNDS
By: By:
---------------------------------- ----------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
A-2
<PAGE> 1
EXHIBIT 5(j)
Form of Sub-Advisory Agreement
<PAGE> 2
Exhibit 5(j)
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT dated as of , 1998 between AmSouth Bank, an
Alabama banking association with its principal place of business in Alabama
(herein called the "Investment Adviser") and OakBrook Investments, LLC, a
corporation with its principal place of business in Illinois (herein called the
"Sub-Adviser").
WHEREAS, the Investment Adviser is the investment adviser to AmSouth
Mutual Funds, a Massachusetts business trust (herein called the "Trust"), an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("40 Act"); and
WHEREAS, the Investment Adviser wishes to retain the Sub-Adviser to
assist the Investment Adviser in providing investment advisory services in
connection with such portfolios of the Trust as now or hereafter may be
identified on Schedule A hereto as such Schedule may be amended from time to
time with the consent of the parties hereto (each herein called a "Fund"); and
WHEREAS, the Board of Trustees of the Trust has duly approved this
Agreement upon consideration of the Trust's existing contractual arrangements
and applicable law; and
WHEREAS, the Sub-Adviser is willing to provide such services to the
Investment Adviser upon the terms and conditions and for the compensation set
forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT. The Investment Adviser hereby appoints the Sub-Adviser
to act as sub-adviser with respect to the Fund. The Sub-Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Investment Adviser shall provide to the
Sub-Adviser copies of the Trust's most recent prospectus and statement of
additional information (including supplement thereto) which relate to any class
of shares representing interests in the Fund (each such prospectus and statement
of additional information as presently in effect, and as they shall from time to
time be amended and supplemented, is herein respectively called a "Prospectus"
and a "Statement of Additional Information").
<PAGE> 3
3. SUB-ADVISORY SERVICES TO THE FUNDS.
(a) Subject to the supervision of the Investment Adviser, the
Sub-Adviser will supervise the day-to-day operations of the Fund and perform the
following services: (i) provide investment research and credit analysis
concerning the Fund's investments; (ii) conduct a continual program of
investment of the Fund's assets; (iii) place orders for all purchases and sales
of the investments made for the Fund; (iv) maintain the books and records
required in connection with its duties hereunder; and (v) keep the Investment
Adviser informed of developments materially affecting the Fund.
(b) The Sub-Adviser will use the same skill and care in
providing such services as it uses in providing services to fiduciary accounts
for which it has investment responsibilities; provided that, notwithstanding
this Paragraph 3(b), the liability of the Sub-Adviser for actions taken and
non-actions with respect to the performance of services under this Agreement
shall be subject to the limitations set forth in Paragraph 11(a) of this
Agreement.
(c) The Sub-Adviser will communicate to the Investment Adviser
and to the Trust's custodian and Fund accountants as instructed by the
Investment Adviser on each day that a purchase or sale of a security is effected
for the Fund (i) the name of the issuer, (ii) the amount of the purchase or
sale, (iii) the name of the broker or dealer, if any, through which the purchase
or sale will be affected, (iv) the CUSIP number of the security, if any, and (v)
such other information as the Investment Adviser may reasonably require for
purposes of fulfilling its obligations to the Trust under its investment
advisory agreement.
(d) The Sub-Adviser will provide the services rendered by it
hereunder in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus and Statement of Additional
Information.
(e) The Sub-Adviser will maintain records of the information
set forth in Paragraph 3(c) hereof with respect to the securities transactions
of the Fund and will furnish the Trust's Board of Trustees with such periodic
and special reports as the Board may reasonably request.
(f) The Sub-Adviser will promptly review all (1) reports of
current security holdings in the Fund, (2) summary reports of transactions and
pending maturities (including the principal, cost and accrued interest on each
portfolio security in maturity date order) and (3) current cash position reports
(including cash available from portfolio sales and maturities and sales of the
Fund's shares less cash needed for redemptions and settlement of portfolio
purchases), all within a reasonable time after receipt thereof from the Trust
and will report any errors or discrepancies in such reports to the Trust or its
designee within three (3) business days after discovery of such discrepancies.
-2-
<PAGE> 4
4. BROKERAGE. The Sub-Adviser may place orders pursuant to its
investment determinations for the Fund either directly with the issuer or with
any broker or dealer. In placing orders, the Sub-Adviser will consider the
experience and skill of the firm's securities traders, as well as the firm's
financial responsibility and administrative efficiency. The Sub-Adviser will
attempt to obtain the best price and the most favorable execution of its orders.
Consistent with these obligations, the Sub-Adviser may, subject to the approval
of the Board of Trustees of the Trust, select brokers on the basis of the
research, statistical and pricing services they provide to the Fund. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that the
Sub-Adviser determines in good faith that such transaction is reasonable in
terms either of the transaction or the overall responsibility of the Sub-Adviser
to the Fund and its other clients and that the total commissions paid by the
Fund will be reasonable in relation to the benefits in the Fund over the long
term. In no instance will portfolio securities be purchased from or sold to the
Trust's principal distributor, the Investment Adviser or any affiliate thereof
(as the term "affiliate" is defined in the 40 Act), except to the extent
permitted by SEC exemptive order or by applicable law.
5. COMPLIANCE WITH LAWS: CONFIDENTIALITY: CONFLICTS OF INTEREST.
(a) The Sub-Adviser agrees that it will comply with all
applicable laws, rules and regulations of all federal and state regulatory
agencies having jurisdiction over the Sub-Adviser in performance of its duties
hereunder (herein called the "Rules").
(b) The Sub-Adviser will treat confidentially and as
proprietary information of the Trust all records and information relative to the
Trust and prior, present or potential shareholders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where the Sub-Adviser may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Trust.
(c) The Sub-Adviser will maintain a policy and practice of
conducting sub-advisory services hereunder independently of the banking
operations of its affiliates. In making investment recommendations for the Fund,
the Sub-Adviser's personnel will not inquire or take into consideration whether
the issuers of securities proposed for purchase or sale for the Fund's account
are bank customers of the Sub-Adviser's affiliates unless so required by
applicable law. In dealing with their bank customers, affiliates of Sub-Adviser
will not inquire or take into consideration whether securities of those
customers are held by the Fund. AmSouth Bank, upon request, will supply the
Sub-Adviser with a list of "affiliated persons" for purposes of the 1940 Act.
-3-
<PAGE> 5
6. CONTROL BY TRUST'S BOARD OF TRUSTEES. Any recommendations concerning
the Fund's investment program proposed by the Sub-Adviser to the Fund and the
Investment Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Fund pursuant thereto shall at
all times be subject to any applicable directives of the Board of Trustees of
the Trust.
7. SERVICES NOT EXCLUSIVE. The Sub-Adviser's services hereunder are not
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
dissimilar services to others so long as its services under this Agreement are
not impaired thereby.
8. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
of the Rules, and any other applicable Rule, the Sub-Adviser hereby agrees that
all records which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any such records upon the
Trust's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 and any other applicable Rule, the records required to
be maintained by the Sub-Adviser hereunder pursuant to Rule 31a-1 and any other
applicable Rule. The Sub-Adviser may retain a copy of Trust records solely for
the purpose of satisfying its record retention obligations under the 1940 Act
and the Investment Advisers Act of 1940, as amended.
9. EXPENSES. During the term of this Agreement, the Sub-Adviser will
bear all expenses incurred by it in connection with the performance of its
services under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund. Notwithstanding the
foregoing, the Sub-Adviser shall not bear expenses related to the operation of
the Trust or any Fund including, but not limited to, taxes, interest, brokerage
fees and commissions and any extraordinary expense items.
10. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Investment Adviser will pay the Sub-Adviser and
the Sub-Adviser will accept as full compensation therefor a fee computed daily
and paid monthly in arrears on the first business day of each month equal to the
lesser of (i) the fee at the applicable annual rates set forth on Schedule A
hereto or (ii) such fee as may from time to time be agreed upon in writing by
the Investment Adviser and the Sub-Adviser. If the fee payable to the
Sub-Adviser pursuant to this paragraph begins to accrue after the beginning of
any month or if this Agreement terminates before the end of any month, the fee
for the period from such date to the end of such month or from the beginning of
such month to the date of termination, as the case may be, shall be prorated
according to the proportion which such period bears to the full month in which
such effectiveness or termination occurs. For purposes of calculating fees, the
value of a Fund's net assets shall be computed in the manner specified in the
Prospectus and the Trust's Declaration of Trust for the computation of the value
of the Fund's net assets in connection with the determination of the net asset
value of the Fund's shares. Payment of said compensation shall be the sole
responsibility of the Investment Adviser and shall in no way be an obligation of
the Fund or of the Trust.
-4-
<PAGE> 6
11. LIMITATION OF LIABILITY.
(a) The Sub-Adviser shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Investment Adviser,
the Trust or the Fund in connection with the matters to which Agreement relates,
except that Sub-Adviser shall be liable to the Investment Adviser for a loss
resulting from a breach of fiduciary duty by Sub-Adviser under the 40 Act with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of Sub-Adviser in
the performance of its duties or from reckless disregard by it of its
obligations or duties under this Agreement. In no case shall the Sub-Adviser be
liable for actions taken or non-actions with respect to the performance of
services under this Agreement based upon specific information, instructions or
requests given or made to the Sub-Adviser by the Investment Adviser.
(b) The Investment Adviser shall be responsible at all times
for supervising the Sub-Adviser, and this Agreement does not in any way limit
the duties and responsibilities that the Investment Adviser has agreed to under
its investment advisory agreement.
12. DURATION AND TERMINATION. This Agreement shall become effective as
of the date hereof provided that it shall have been approved by vote of a
majority of the outstanding voting securities of the Fund and, unless sooner
terminated as provided herein, shall continue with respect to the Fund until
January 31, 1999. Thereafter, if not terminated, this Agreement shall continue
in effect for successive 12-month periods ending on January 31st of each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Board of Trustees of the Trust who
are not parties to this Agreement or interested persons of the Trust or any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Fund; provided, however, that this
Agreement may be terminated with respect to the Fund (i) by the Trust at any
time without the payment of any penalty by the Board of Trustees of the Trust,
(ii) by vote of a majority of the outstanding voting securities of the Fund,
(iii) by the Investment Adviser on 60 days written notice to the Sub-Adviser or
(iv) by the Sub-Adviser on 60 days written notice to the Investment Adviser.
This Agreement will also immediately terminate in the event of its assignment.
(As used in this Agreement, the terms "majority of the outstanding voting
securities", "interested person" and "assignment" shall have the same meaning as
such terms have in the 40 Act.)
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any provisions
hereof or otherwise affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a
-5-
<PAGE> 7
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be effected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties herein and their respective successors and
shall be governed by Alabama law.
The names "AmSouth Mutual Funds" and "Trustees of AmSouth Mutual Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended Agreement
and Declaration of Trust dated as of June 25, 1993 to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
The Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of
"AmSouth Mutual Funds" entered into in the name or on behalf thereof by any of
the Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement of any
claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
(SEAL) AMSOUTH BANK
By:
---------------------------------
Title:
------------------------------
(SEAL) OAKBROOK INVESTMENTS, LLC
By:
---------------------------------
Title:
------------------------------
-6-
<PAGE> 8
FORM OF
SCHEDULE A
To Sub-Advisory Agreement
dated as of , 1998
between AmSouth Bank and OakBrook Investments, LLC
NAME OF FUND COMPENSATION
- - ------------ ------------
AmSouth Large Cap Growth Fund Annual rate of fifty-six
one-hundredths of one percent (.56%)
of the AmSouth Large Cap Growth
Fund's average daily net assets
AmSouth Enhanced Market Fund Annual rate of thirty-two
one-hundredths of one percent (.32%)
of the AmSouth Enhanced Market
Fund's average daily net assets
Consented to by:
Date: AMSOUTH BANK
----------------
By:
---------------------------------
Date: OAKBROOK INVESTMENTS, LLC
----------------
By:
---------------------------------
A-1
<PAGE> 1
EXHIBIT 6(c)
Amended Schedules A, B and D to the Distribution Agreement
<PAGE> 2
Dated: ________, 1998
FORM OF SCHEDULE A
TO THE DISTRIBUTION AGREEMENT BETWEEN
AMSOUTH MUTUAL FUNDS
AND
BISYS FUND SERVICES, INC.
DATED JULY 16, 1997
NAME OF FUND
- - -----------------------------
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Bond Fund
AmSouth Limited Maturity Fund
AmSouth Municipal Bond Fund
AmSouth Balanced Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AmSouth Institutional Prime Obligations Fund
AmSouth Institutional U.S. Treasury Fund
AmSouth Enhanced Market Fund
AmSouth Large Cap Growth Fund
AMSOUTH MUTUAL FUNDS
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
General Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
B-1
<PAGE> 3
Dated: ____________, 1998
FORM OF SCHEDULE B
TO THE DISTRIBUTION AGREEMENT BETWEEN
AMSOUTH MUTUAL FUNDS
AND
BISYS FUND SERVICES, INC.
DATED JULY 16, 1997
Servicing Plan Funds
Classic Shares of the AmSouth Prime Obligations Fund
Classic Shares of the AmSouth U.S. Treasury Fund
Classic Shares of the AmSouth Tax Exempt Fund
Classic Shares of the AmSouth Equity Fund
Classic Shares of the AmSouth Regional Equity Fund
Classic Shares of the AmSouth Bond Fund
Classic Shares of the AmSouth Limited Maturity Fund
Classic Shares of the AmSouth Municipal Bond Fund
Classic Shares of the AmSouth Balanced Fund
Classic Shares of the AmSouth Government Income Fund
Classic Shares of the AmSouth Florida Tax-Free Fund
Classic Shares of the AmSouth Capital Growth Fund
Classic Shares of the AmSouth Small Cap Fund
Classic Shares of the AmSouth Equity Income Fund
Classic Shares of the AmSouth Enhanced Market Fund
Classic Shares of the AmSouth Large Cap Growth Fund
Distribution Plan Funds
Class B Shares of the AmSouth Prime Obligations Fund
Class B Shares of the AmSouth Equity Fund
Class B Shares of the AmSouth Regional Equity Fund
Class B Shares of the AmSouth Bond Fund
Class B Shares of the AmSouth Limited Maturity Fund
Class B Shares of the AmSouth Municipal Bond Fund
Class B Shares of the AmSouth Balanced Fund
Class B Shares of the AmSouth Government Income Fund
Class B Shares of the AmSouth Florida Tax-Free Fund
Class B Shares of the AmSouth Capital Growth Fund
Class B Shares of the AmSouth Small Cap Fund
Class B Shares of the AmSouth Equity Income Fund
Class B Shares of the AmSouth Enhanced Market Fund
Class B Shares of the AmSouth Large Cap Growth Fund
Class II Shares of the AmSouth Institutional Prime Obligations Fund
Class III Shares of the AmSouth Institutional Prime Obligations Fund
B-1
<PAGE> 4
Class II Shares of the AmSouth Institutional U.S. Treasury Fund
Class III Shares of the AmSouth Institutional U.S. Treasury Fund
AMSOUTH MUTUAL FUNDS
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
General Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
B-2
<PAGE> 5
Dated: __________, 1998
FORM OF SCHEDULE D
TO THE DISTRIBUTION AGREEMENT
BETWEEN
AMSOUTH MUTUAL FUNDS
AND
BISYS FUND SERVICES, INC.
DATED JULY 16, 1997
Class B Shares of the AmSouth
Prime Obligations Fund
Class B Shares of the AmSouth
Equity Fund
Class B Shares of the AmSouth
Regional Equity Fund
Class B Shares of the AmSouth
Bond Fund
Class B Shares of the AmSouth
Limited Maturity Fund
Class B Shares of the AmSouth
Municipal Bond Fund
Class B Shares of the AmSouth
Balanced Fund
Class B Shares of the AmSouth
Government Income Fund
Class B Shares of the AmSouth
Florida Tax-Free Fund
Class B Shares of the AmSouth
Capital Growth Fund
Class B Shares of the AmSouth
Small Cap Fund
Class B Shares of the AmSouth
Equity Income Fund
B-1
<PAGE> 6
Class B Shares of the AmSouth
Enhanced Market Fund
Class B Shares of the AmSouth
Large Cap Growth Fund
Class II Shares of the AmSouth
Institutional Prime Obligations Fund
Class III Shares of the AmSouth
Institutional Prime Obligations Fund
Class II Shares of the AmSouth
Institutional U.S. Treasury Fund
Class III Shares of the AmSouth
Institutional U.S. Treasury Fund
AMSOUTH MUTUAL FUNDS
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
General Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
D-2
<PAGE> 1
EXHIBIT 8(c)
Amended Schedule A to the Custodian Agreement
<PAGE> 2
Dated: __________, 1998
FORM OF
SCHEDULE A
TO THE CUSTODY AGREEMENT
BETWEEN
AMSOUTH MUTUAL FUNDS
AND
AMSOUTH BANK
DATED APRIL 17, 1997
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Bond Fund
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AmSouth Enhanced Market Fund
AmSouth Large Cap Growth Fund
AmSouth Institutional Prime Obligations Fund
AmSouth Institutional U.S. Treasury Fund
AMSOUTH MUTUAL FUNDS
By:
-----------------------------
Title:
--------------------------
AMSOUTH BANK
By:
-----------------------------
Title:
--------------------------
<PAGE> 1
EXHIBIT 9(c)
Amended Schedule A to the
Management and Administration Agreement
<PAGE> 2
Dated: ___________, 1998
FORM OF
SCHEDULE A
TO THE
MANAGEMENT AND ADMINISTRATION AGREEMENT
BETWEEN AMSOUTH MUTUAL FUNDS AND
ASO SERVICES COMPANY
<TABLE>
<CAPTION>
Name of Fund Compensation*
- - -------------------------------- --------------------------
<S> <C>
AmSouth Prime Obligations Fund, AmSouth Annual Rate of twenty one-hundredths
U.S. Treasury Fund, AmSouth Tax Exempt of one percent (0.20%) of each
Fund, AmSouth Equity Fund, AmSouth Regional such Fund's average daily net assets
Equity Fund, AmSouth Balanced Fund, AmSouth
Bond Fund, AmSouth Limited Maturity Fund,
AmSouth Municipal Bond Fund, AmSouth
Government Income Fund, AmSouth Florida
Tax-Free Fund, AmSouth Capital Growth Fund,
AmSouth Small Cap Fund, AmSouth Equity
Income Fund, AmSouth Enhanced Market Fund,
and AmSouth Large Cap Growth Fund
AmSouth Institutional Prime Obligations Fund Annual Rate of ten one-hundredths of one percent (0.10%)
and AmSouth Institutional U.S. Treasury Fund of each such Fund's average daily net assets
</TABLE>
AMSOUTH MUTUAL FUNDS
By:
-----------------------------
Title:
--------------------------
ASO SERVICES COMPANY
By:
-----------------------------
Title:
--------------------------
- - ------------
* All fees are computed daily and paid periodically.
<PAGE> 1
EXHIBIT 9(e)
Schedules A and B to the Sub-Administration Agreement
between ASO Services Company and AmSouth Bank
<PAGE> 2
Dated: ____________, 1998
FORM OF SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
AMSOUTH BANK
NAME OF FUND
- - ------------
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Bond Fund
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AmSouth Enhanced Market Fund
AmSouth Large Cap Growth Fund
AmSouth Institutional Prime Obligations Fund
AmSouth Institutional U.S. Treasury Fund
ASO SERVICES COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
AMSOUTH BANK
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
A-1
<PAGE> 3
Dated: ______________, 1998
FORM OF SCHEDULE B
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
AMSOUTH BANK
<TABLE>
<CAPTION>
Name of Fund Compensation*
- - -------------------------- ------------------------
<S> <C>
AmSouth Prime Obligations Fund Such percentage of ASO's
AmSouth U.S. Treasury Fund compensation received pursuant
AmSouth Tax Exempt Fund to the Management and
AmSouth Equity Fund Administration Agreement with
AmSouth Regional Equity Fund the Trust as shall be agreed
AmSouth Balanced Fund upon from time to time between
AmSouth Bond Fund the parties, but in no event
AmSouth Municipal Bond Fund to exceed an annual rate of
AmSouth Limited Maturity Fund ten one-hundredths of one
AmSouth Government Income Fund percent (.10%) of each such
AmSouth Florida Tax-Free Fund Fund's average daily net
AmSouth Capital Growth Fund assets.
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AmSouth Enhanced Market Fund
AmSouth Large Cap Growth Fund
AmSouth Institutional Prime
Obligations Fund
AmSouth Institutional U.S. Treasury Fund
</TABLE>
ASO SERVICES COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
AMSOUTH BANK
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
- - ------------
* All fees are computed daily and paid periodically
B-1
<PAGE> 1
EXHIBIT 9(h)
Schedules A and B to the Sub-Administration
Agreement between ASO Services Company and BISYS
Fund Services, LP
<PAGE> 2
Dated: _____________, 1998
FORM OF
SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
BISYS FUND SERVICES
NAME OF FUND
- - ------------
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Bond Fund
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AmSouth Enhanced Market Fund
AmSouth Large Cap Growth Fund
AmSouth Institutional Prime Obligations Fund
AmSouth Institutional U.S. Treasury Fund
ASO SERVICES COMPANY
By:
-----------------------------
Title:
--------------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
By:
-----------------------------
Title:
--------------------------
A-1
<PAGE> 3
Dated: ____________, 1998
FORM OF
SCHEDULE B
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
ASO SERVICES COMPANY
AND
BISYS FUND SERVICES
<TABLE>
<CAPTION>
Name of Fund Compensation*
- - ------------------------ ----------------------
<S> <C>
AmSouth Prime Obligations Fund Such percentage of ASO's
AmSouth U.S. Treasury Fund compensation received pursuant
AmSouth Tax Exempt Fund to the Management and
AmSouth Equity Fund Administration Agreement with
AmSouth Regional Equity Fund the Trust as shall be agreed
AmSouth Balanced Fund upon from time to time between
AmSouth Bond Fund the parties.
AmSouth Municipal Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AmSouth Enhanced Market Fund
AmSouth Large Cap Growth Fund
AmSouth Institutional Prime Obligations Fund
AmSouth Institutional U.S. Treasury Fund
</TABLE>
ASO SERVICES COMPANY
By:
-----------------------------
Title:
--------------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services, Inc., General Partner
By:
-----------------------------
Title:
--------------------------
- - ------------
* All fees are computed daily and paid periodically
B-1
<PAGE> 1
EXHIBIT 9(k)
Amended Schedule A to the
Transfer Agency and Shareholder Services Agreement
<PAGE> 2
DATED: ____________, 1998
FORM OF
SCHEDULE A
TO THE
TRANSFER AGENCY AGREEMENT
BETWEEN AMSOUTH MUTUAL FUNDS
AND BISYS FUND SERVICES, LIMITED PARTNERSHIP
Name of Fund
- - ---------------------
AmSouth Prime Obligations Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth U.S. Treasury Fund
Classic Shares
Premier Shares
AmSouth Tax Exempt Fund
Classic Shares
Premier Shares
AmSouth Equity Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Regional Equity Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Balanced Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Bond Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Limited Maturity Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Municipal Bond Fund
Classic Shares
Premier Shares
Class B Shares
A-1
<PAGE> 3
Name of Fund
- - ---------------------
AmSouth Government Income Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Florida Tax-Free Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Capital Growth Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Small Cap Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Equity Income Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Enhanced Market Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Large Cap Growth Fund
Classic Shares
Premier Shares
Class B Shares
AmSouth Institutional Prime Obligations Fund
Class I Shares
Class II Shares
Class III Shares
AmSouth Institutional U.S. Treasury Fund
Class I Shares
Class II Shares
Class III Shares
AMSOUTH MUTUAL FUNDS
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
A-2
<PAGE> 4
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
General Partner
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
A-3
<PAGE> 1
EXHIBIT 10
Opinion of Ropes & Gray
<PAGE> 2
ROPES & GRAY
ONE FRANKLIN SQUARE
1301 K STREET, N.W.
SUITE 800 EAST
WASHINGTON, DC 20005-3333
(202) 626-3900
FAX: (202) 626-3961
ONE INTERNATIONAL PLACE 30 KENNEDY PLAZA
BOSTON, MA 02110-2024 PROVIDENCE, RI 02903-2328
(617) 951-7000 (401) 455-4400
FAX: (617) 951-7050 FAX: (401) 455-4401
WRITER'S DIRECT DIAL NUMBER: (202) 626-3923
June 17, 1998
AmSouth Mutual Funds
3435 Stelzer Road
Columbus, Ohio 43219
Gentlemen:
You have registered under the Securities Act of 1933, as amended (the
"1933 Act") an indefinite number of shares of beneficial interest of the AmSouth
Mutual Funds ("Trust"), as permitted by Rule 24f-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"). You propose to file a post-effective
amendment on Form N-1A (the "Post-Effective Amendment") to your Registration
Statement as required by Section 10(a)(3) with respect to certain units of
beneficial interest of the Trust ("Shares").
We have examined your Agreement and Declaration of Trust on file in the
office of the Secretary of The Commonwealth of Massachusetts and the Clerk of
the City of Boston. We have also examined a copy of your Bylaws and such other
documents, receipts and records as we have deemed necessary for the purpose of
this opinion.
Based upon the foregoing, we are of the opinion that the issue and sale
of the Shares have been duly authorized under Massachusetts law. Upon the
original issue and sale of the Shares and upon receipt of the authorized
consideration therefor in an amount not less than the net asset value of the
Shares established and in force at the time of their sale, the Shares will be
validly issued, fully paid and non-assessable.
The AmSouth Mutual Funds is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders could,
under certain circumstances, be held personally liable for the obligations of
the Trust. However, the Agreement and Declaration of Trust provides for
indemnification out of the property of a particular series of Shares for all
loss and expenses of any shareholder of that series held personally liable
solely by reason of his being or having been a shareholder. Thus, the risk of
<PAGE> 3
AmSouth Mutual Funds
June 17, 1998
Page 2
shareholder liability is limited to circumstances in which that series of Shares
itself would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the
filing of the Post-Effective Amendment. We consent to the filing of this
opinion with and as part of your Post-Effective Amendment.
Sincerely,
/s/ Ropes & Gray
<PAGE> 1
EXHIBIT 11(a)
Consent of Coopers & Lybrand L.L.P.
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 27 to the Registration Statement on Form N-1A (File Nos. 33-21660) of the
AmSouth Mutual Funds, of our report dated September 25, 1997 on our audits of
the financial statements and financial highlights of the Prime Obligations Fund,
the U.S. Treasury Fund, the Tax-Exempt Fund, the Bond Fund, the Limited Maturity
Fund, the Government Income Fund, the Florida Tax-Free Fund, the Municipal Bond
Fund, the Equity Fund, the Regional Equity Fund, the Equity Income Fund, and the
Balanced Fund constituting the AmSouth Mutual Funds which report is incorporated
by reference in the Statement of Additional Information. We also consent to the
reference to our Firm under the captions "Financial Highlights" in the
Prospectus and "Auditors" in the Statement of Additional Information of AmSouth
Mutual Funds in Post-Effective Amendment No. 27 to the Registration Statement on
Form N-1A (File Nos. 33-21660).
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
June 15, 1998
<PAGE> 1
EXHIBIT 11(b)
Consent of Ropes & Gray
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the caption "Legal Counsel" included in or made a part of the
Post-Effective Amendment No. 27 to the Registration Statement of AmSouth Mutual
Funds on Form N-1A under the Securities Act of 1933, as amended.
/s/ ROPES & GRAY
Washington, D.C.
June 17, 1998
<PAGE> 1
EXHIBIT 18(b)
Amended Schedule I to the Multiple Class Plan
<PAGE> 2
Dated: ____________, 1998
FORM OF
SCHEDULE I
MULTIPLE CLASS PLAN
FOR AMSOUTH MUTUAL FUNDS
March 17, 1998
Retail Funds
------------
AmSouth Prime Obligations Fund
AmSouth U.S. Treasury Fund
AmSouth Tax Exempt Fund
AmSouth Equity Fund
AmSouth Regional Equity Fund
AmSouth Balanced Fund
AmSouth Capital Growth Fund
AmSouth Small Cap Fund
AmSouth Equity Income Fund
AmSouth Bond Fund
AmSouth Limited Maturity Fund
AmSouth Government Income Fund
AmSouth Florida Tax-Free Fund
AmSouth Municipal Bond Fund
AmSouth Enhanced Market Fund
AmSouth Large Cap Growth Fund
Institutional Funds
-------------------
AmSouth Institutional Prime Obligations Fund
AmSouth Institutional U.S. Treasury Fund
<PAGE> 1
EXHIBIT 18(e)
Amended Schedule I to the Shareholder Servicing Plan
<PAGE> 2
Dated: _________, 1998
FORM OF
SCHEDULE I
This Shareholder Servicing Plan shall be adopted with respect to the
following Funds (and Classes) of AmSouth Mutual Funds:
Name of Fund Class
- - --------------------- ---------
AmSouth Prime Obligations Fund Classic Class
AmSouth U.S. Treasury Fund Classic Class
AmSouth Tax Exempt Fund Classic Class
AmSouth Government Bond Fund Classic Class
AmSouth Bond Fund Classic Class
AmSouth Limited Maturity Fund Classic Class
AmSouth Municipal Bond Fund Classic Class
AmSouth Florida Tax-Free Fund Classic Class
AmSouth Equity Fund Classic Class
AmSouth Regional Equity Fund Classic Class
AmSouth Balanced Fund Classic Class
AmSouth Capital Growth Fund Classic Class
AmSouth Small Cap Fund Classic Class
AmSouth Equity Income Fund Classic Class
AmSouth Enhanced Market Fund Classic Class
AmSouth Large Cap Growth Fund Classic Class
<PAGE> 1
EXHIBIT 18(h)
Amended Schedule A to the Distribution and Shareholder Services Plan
<PAGE> 2
Dated: ____________, 1998
Form of
Schedule A to the
Distribution and Shareholder Services Plan
dated March 17, 1998
<TABLE>
<CAPTION>
Name of Funds Composition*
- - ------------------------------ -------------------------
<S> <C>
The AmSouth Prime Obligations Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Prime Obligations Fund.
The AmSouth Limited Maturity Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Limited Maturity Fund.
The AmSouth Bond Fund -- Class B Shares Annual rate of one percent
(1.00%) of the average daily
net assets of the AmSouth Bond
Fund.
The AmSouth Government Income Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Government Income Fund.
The AmSouth Florida Tax-Free Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Florida Tax-Free Fund.
The AmSouth Municipal Bond Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Municipal Bond Fund.
The AmSouth Equity Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Equity Fund.
The AmSouth Regional Equity Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Regional Equity Fund.
The AmSouth Balanced Fund-- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Balanced Fund.
</TABLE>
A-1
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
The AmSouth Capital Growth Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Capital Growth Fund.
The AmSouth Small Cap Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Small Cap Fund.
The AmSouth Equity Income Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Equity Income Fund.
The AmSouth Enhanced Market Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Enhanced Market Fund
The AmSouth Large Cap Fund -- Annual rate of one percent
Class B Shares (1.00%) of the average daily
net assets of the AmSouth
Large Cap Fund
The AmSouth Institutional Prime Annual rate of twenty-five
Obligations Fund -- Class II Shares one-hundredths of one percent
(0.25%) of the average daily
net assets of the AmSouth
Institutional Prime
Obligations Fund.
The AmSouth Institutional Prime Annual rate of fifty
Obligations Fund -- Class III Shares one-hundredths of one percent
(0.50%) of the average daily
net assets of the AmSouth
Institutional Prime
Obligations Fund.
The AmSouth Institutional U.S. Treasury Annual rate of twenty-five
Fund -- Class II Shares one-hundredths of one percent
(0.25%) of the average daily
net assets of the AmSouth
Institutional U.S. Treasury
Fund.
The AmSouth Institutional U.S. Treasury Annual rate of fifty
Fund -- Class III Shares one-hundredths of one percent
(0.50%) of the average daily
net assets of the AmSouth
Institutional U.S. Treasury
Fund.
</TABLE>
[SEAL]
AMSOUTH MUTUAL FUNDS
By:
-------------------------
A-2
<PAGE> 4
Name:
------------------------
Title:
------------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
General Partner
By:
--------------------------
Name:
------------------------
Title:
-----------------------
- - -----------
* All fees are computed and paid monthly.
A-3
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 05
<NAME> AMSOUTH MUNICIPAL BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 324557370
<INVESTMENTS-AT-VALUE> 335721036
<RECEIVABLES> 4811156
<ASSETS-OTHER> 91607
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 340623799
<PAYABLE-FOR-SECURITIES> 5246191
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 189486
<TOTAL-LIABILITIES> 5435677
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 323211509
<SHARES-COMMON-STOCK> 136061<F1>
<SHARES-COMMON-PRIOR> 33279<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 10589
<ACCUMULATED-NET-GAINS> 823536
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11163666
<NET-ASSETS> 335188122
<DIVIDEND-INCOME> 79825
<INTEREST-INCOME> 4114843
<OTHER-INCOME> 0
<EXPENSES-NET> 520441
<NET-INVESTMENT-INCOME> 3674227
<REALIZED-GAINS-CURRENT> 802792
<APPREC-INCREASE-CURRENT> (2297323)
<NET-CHANGE-FROM-OPS> 2179696
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7979<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 2052<F1>
<NUMBER-OF-SHARES-SOLD> 1667007
<NUMBER-OF-SHARES-REDEEMED> 1789171
<SHARES-REINVESTED> 1139
<NET-CHANGE-IN-ASSETS> (2744541)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 20743
<OVERDISTRIB-NII-PRIOR> 5325
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555375
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 803397
<AVERAGE-NET-ASSETS> 747478<F1>
<PER-SHARE-NAV-BEGIN> 10.15<F1>
<PER-SHARE-NII> .1<F1>
<PER-SHARE-GAIN-APPREC> (.03)<F1>
<PER-SHARE-DIVIDEND> .11<F1>
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.11<F1>
<EXPENSE-RATIO> .69<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>1 Classic Class
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 012
<NAME> MUNICIPAL BOND FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 324557370
<INVESTMENTS-AT-VALUE> 335721036
<RECEIVABLES> 4811156
<ASSETS-OTHER> 91607
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 340623799
<PAYABLE-FOR-SECURITIES> 5246191
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 189486
<TOTAL-LIABILITIES> 5435677
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 323211509
<SHARES-COMMON-STOCK> 33022290<F2>
<SHARES-COMMON-PRIOR> 0<F2>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 10589
<ACCUMULATED-NET-GAINS> 823536
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11163666
<NET-ASSETS> 335188122
<DIVIDEND-INCOME> 79825
<INTEREST-INCOME> 4114843
<OTHER-INCOME> 0
<EXPENSES-NET> 520441
<NET-INVESTMENT-INCOME> 3674227
<REALIZED-GAINS-CURRENT> 802792
<APPREC-INCREASE-CURRENT> (2297323)
<NET-CHANGE-FROM-OPS> 2179696
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3666249<F2>
<DISTRIBUTIONS-OF-GAINS> 0<F2>
<DISTRIBUTIONS-OTHER> 3212<F2>
<NUMBER-OF-SHARES-SOLD> 1667007
<NUMBER-OF-SHARES-REDEEMED> 1789171
<SHARES-REINVESTED> 1139
<NET-CHANGE-IN-ASSETS> (2744541)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 20743
<OVERDISTRIB-NII-PRIOR> 5325
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 555375
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 803397
<AVERAGE-NET-ASSETS> 338236122<F2>
<PER-SHARE-NAV-BEGIN> 10.15<F2>
<PER-SHARE-NII> .11<F2>
<PER-SHARE-GAIN-APPREC> (.04)<F2>
<PER-SHARE-DIVIDEND> .11<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 10.11<F2>
<EXPENSE-RATIO> .61<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F2>Premier shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 023
<NAME> CAPITAL GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> SEP-03-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 5672492
<INVESTMENTS-AT-VALUE> 5519850
<RECEIVABLES> 145660
<ASSETS-OTHER> 430657
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6096167
<PAYABLE-FOR-SECURITIES> 247836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11969
<TOTAL-LIABILITIES> 259805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6037795
<SHARES-COMMON-STOCK> 84908<F3>
<SHARES-COMMON-PRIOR> 0<F3>
<ACCUMULATED-NII-CURRENT> (8358)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (40433)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (152642)
<NET-ASSETS> 5836362
<DIVIDEND-INCOME> 10983
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 26530
<NET-INVESTMENT-INCOME> (8358)
<REALIZED-GAINS-CURRENT> (40433)
<APPREC-INCREASE-CURRENT> (152642)
<NET-CHANGE-FROM-OPS> (201433)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F3>
<DISTRIBUTIONS-OF-GAINS> 0<F3>
<DISTRIBUTIONS-OTHER> 0<F3>
<NUMBER-OF-SHARES-SOLD> 622515
<NUMBER-OF-SHARES-REDEEMED> 15427
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5836362
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8292
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26530
<AVERAGE-NET-ASSETS> 416252<F3>
<PER-SHARE-NAV-BEGIN> 9.8<F3>
<PER-SHARE-NII> (.01)<F3>
<PER-SHARE-GAIN-APPREC> (.19)<F3>
<PER-SHARE-DIVIDEND> 0<F3>
<PER-SHARE-DISTRIBUTIONS> 0<F3>
<RETURNS-OF-CAPITAL> 0<F3>
<PER-SHARE-NAV-END> 9.6<F3>
<EXPENSE-RATIO> 2.68<F3>
<AVG-DEBT-OUTSTANDING> 0<F3>
<AVG-DEBT-PER-SHARE> 0<F3>
<FN>
<F3>Class B shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 021
<NAME> CAPITAL GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-04-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 5672492
<INVESTMENTS-AT-VALUE> 5519850
<RECEIVABLES> 145660
<ASSETS-OTHER> 430657
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6096167
<PAYABLE-FOR-SECURITIES> 247836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11969
<TOTAL-LIABILITIES> 259805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6037795
<SHARES-COMMON-STOCK> 309403<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> (8358)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (40433)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (152642)
<NET-ASSETS> 5836362
<DIVIDEND-INCOME> 10983
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 26530
<NET-INVESTMENT-INCOME> (8358)
<REALIZED-GAINS-CURRENT> (40433)
<APPREC-INCREASE-CURRENT> (152642)
<NET-CHANGE-FROM-OPS> (201433)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 622515
<NUMBER-OF-SHARES-REDEEMED> 15427
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5836362
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8292
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26530
<AVERAGE-NET-ASSETS> 2092222<F1>
<PER-SHARE-NAV-BEGIN> 10<F1>
<PER-SHARE-NII> (.01)<F1>
<PER-SHARE-GAIN-APPREC> (.37)<F1>
<PER-SHARE-DIVIDEND> 0<F1>
<PER-SHARE-DISTRIBUTIONS> 0<F1>
<RETURNS-OF-CAPITAL> 0<F1>
<PER-SHARE-NAV-END> 9.62<F1>
<EXPENSE-RATIO> 1.86<F1>
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>Classic shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 022
<NAME> CAPITAL GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-04-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 5672492
<INVESTMENTS-AT-VALUE> 5519850
<RECEIVABLES> 145660
<ASSETS-OTHER> 430657
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6096167
<PAYABLE-FOR-SECURITIES> 247836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11969
<TOTAL-LIABILITIES> 259805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6037795
<SHARES-COMMON-STOCK> 212777<F2>
<SHARES-COMMON-PRIOR> 0<F2>
<ACCUMULATED-NII-CURRENT> (8358)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (40433)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (152642)
<NET-ASSETS> 5836362
<DIVIDEND-INCOME> 10983
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 26530
<NET-INVESTMENT-INCOME> (8358)
<REALIZED-GAINS-CURRENT> (40433)
<APPREC-INCREASE-CURRENT> (152642)
<NET-CHANGE-FROM-OPS> (201433)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F2>
<DISTRIBUTIONS-OF-GAINS> 0<F2>
<DISTRIBUTIONS-OTHER> 0<F2>
<NUMBER-OF-SHARES-SOLD> 622515
<NUMBER-OF-SHARES-REDEEMED> 15427
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5836362
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8292
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26530
<AVERAGE-NET-ASSETS> 1942397<F2>
<PER-SHARE-NAV-BEGIN> 10<F2>
<PER-SHARE-NII> (.01)<F2>
<PER-SHARE-GAIN-APPREC> (.37)<F2>
<PER-SHARE-DIVIDEND> 0<F2>
<PER-SHARE-DISTRIBUTIONS> 0<F2>
<RETURNS-OF-CAPITAL> 0<F2>
<PER-SHARE-NAV-END> 9.62<F2>
<EXPENSE-RATIO> 1.7<F2>
<AVG-DEBT-OUTSTANDING> 0<F2>
<AVG-DEBT-PER-SHARE> 0<F2>
<FN>
<F2>Premier shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 101
<NAME> AMSOUTH MUTUAL FUNDS FLORIDA TAX FREE FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 50949
<INVESTMENTS-AT-VALUE> 53231
<RECEIVABLES> 703
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53935
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 247
<TOTAL-LIABILITIES> 247
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51281
<SHARES-COMMON-STOCK> 5112
<SHARES-COMMON-PRIOR> 4745
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 6
<ACCUMULATED-NET-GAINS> 131
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2282
<NET-ASSETS> 53688
<DIVIDEND-INCOME> 82
<INTEREST-INCOME> 2495
<OTHER-INCOME> 0
<EXPENSES-NET> 299
<NET-INVESTMENT-INCOME> 2278
<REALIZED-GAINS-CURRENT> 135
<APPREC-INCREASE-CURRENT> 1102
<NET-CHANGE-FROM-OPS> 3515
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2402
<DISTRIBUTIONS-OF-GAINS> 74
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1240
<NUMBER-OF-SHARES-REDEEMED> 894
<SHARES-REINVESTED> 21
<NET-CHANGE-IN-ASSETS> 4819
<ACCUMULATED-NII-PRIOR> 124
<ACCUMULATED-GAINS-PRIOR> 70
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 340
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 555
<AVERAGE-NET-ASSETS> 52277
<PER-SHARE-NAV-BEGIN> 10.30
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 0.24
<PER-SHARE-DIVIDEND> 0.48
<PER-SHARE-DISTRIBUTIONS> 0.01
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.50
<EXPENSE-RATIO> 0.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 011
<NAME> AMSOUTH MUTUAL FUNDS PRIME OBLIGATIONS FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 528948
<INVESTMENTS-AT-VALUE> 528948
<RECEIVABLES> 1628
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 530578
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2585
<TOTAL-LIABILITIES> 2585
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 528002
<SHARES-COMMON-STOCK> 111033<F1>
<SHARES-COMMON-PRIOR> 125081<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 9
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 527993
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 32939
<OTHER-INCOME> 0
<EXPENSES-NET> 4141
<NET-INVESTMENT-INCOME> 28798
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 28798
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5860<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 568041<F1>
<NUMBER-OF-SHARES-REDEEMED> 587948<F1>
<SHARES-REINVESTED> 5860<F1>
<NET-CHANGE-IN-ASSETS> (75624)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 9
<GROSS-ADVISORY-FEES> 2367
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4324
<AVERAGE-NET-ASSETS> 122322<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> 0.048<F1>
<PER-SHARE-GAIN-APPREC> 0.000<F1>
<PER-SHARE-DIVIDEND> 0.048<F1>
<PER-SHARE-DISTRIBUTIONS> 0.000<F1>
<RETURNS-OF-CAPITAL> 0.000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> 0.78<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 012
<NAME> AMSOUTH MUTUAL FUNDS PRIME OBLIGATIONS FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 528948
<INVESTMENTS-AT-VALUE> 528948
<RECEIVABLES> 1628
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 530578
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2585
<TOTAL-LIABILITIES> 2585
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 528002
<SHARES-COMMON-STOCK> 416983<F1>
<SHARES-COMMON-PRIOR> 478560<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 9
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 527993
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 32939
<OTHER-INCOME> 0
<EXPENSES-NET> 4141
<NET-INVESTMENT-INCOME> 28798
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 28798
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 22938<F1>
<DISTRIBUTIONS-OF-GAINS> 0<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 1050377<F1>
<NUMBER-OF-SHARES-REDEEMED> 1113472<F1>
<SHARES-REINVESTED> 1518<F1>
<NET-CHANGE-IN-ASSETS> (75624)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 9
<GROSS-ADVISORY-FEES> 2367
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4324
<AVERAGE-NET-ASSETS> 469332<F1>
<PER-SHARE-NAV-BEGIN> 1.000<F1>
<PER-SHARE-NII> 0.049<F1>
<PER-SHARE-GAIN-APPREC> 0.000<F1>
<PER-SHARE-DIVIDEND> 0.049<F1>
<PER-SHARE-DISTRIBUTIONS> 0.000<F1>
<RETURNS-OF-CAPITAL> 0.000<F1>
<PER-SHARE-NAV-END> 1.000<F1>
<EXPENSE-RATIO> 0.68<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Premier Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 131
<NAME> AMSOUTH MUTUAL FUNDS EQUITY INCOME FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> MAR-20-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 20222
<INVESTMENTS-AT-VALUE> 22364
<RECEIVABLES> 168
<ASSETS-OTHER> 20
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22552
<PAYABLE-FOR-SECURITIES> 223
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56
<TOTAL-LIABILITIES> 279
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19868
<SHARES-COMMON-STOCK> 1900
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 15
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 248
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2142
<NET-ASSETS> 22273
<DIVIDEND-INCOME> 96
<INTEREST-INCOME> 59
<OTHER-INCOME> 0
<EXPENSES-NET> 59
<NET-INVESTMENT-INCOME> 96
<REALIZED-GAINS-CURRENT> 248
<APPREC-INCREASE-CURRENT> 2142
<NET-CHANGE-FROM-OPS> 2486
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 81
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1923
<NUMBER-OF-SHARES-REDEEMED> 27
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 22273
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 69
<AVERAGE-NET-ASSETS> 12302
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 1.71
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.72
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 121
<NAME> AMSOUTH MUTUAL FUNDS MUNICIPAL BOND FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 320443
<INVESTMENTS-AT-VALUE> 333904
<RECEIVABLES> 5381
<ASSETS-OTHER> 21
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 339306
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1373
<TOTAL-LIABILITIES> 1373
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 324456
<SHARES-COMMON-STOCK> 33279
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 5
<ACCUMULATED-NET-GAINS> 21
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13461
<NET-ASSETS> 337933
<DIVIDEND-INCOME> 28
<INTEREST-INCOME> 1365
<OTHER-INCOME> 0
<EXPENSES-NET> 197
<NET-INVESTMENT-INCOME> 1196
<REALIZED-GAINS-CURRENT> 21
<APPREC-INCREASE-CURRENT> 5152
<NET-CHANGE-FROM-OPS> 6369
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1201
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34283
<NUMBER-OF-SHARES-REDEEMED> 1004
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 337933
<ACCUMULATED-NII-PRIOR> 0
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<NAME> AMSOUTH MUTUAL FUNDS
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<NAME> AMSOUTH MUTUAL FUNDS
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<TOTAL-LIABILITIES> 1262
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 271394
<SHARES-COMMON-STOCK> 24504
<SHARES-COMMON-PRIOR> 25965
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 102
<ACCUMULATED-NET-GAINS> 13483
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 87994
<NET-ASSETS> 372769
<DIVIDEND-INCOME> 4868
<INTEREST-INCOME> 11321
<OTHER-INCOME> 0
<EXPENSES-NET> 3737
<NET-INVESTMENT-INCOME> 12452
<REALIZED-GAINS-CURRENT> 16168
<APPREC-INCREASE-CURRENT> 55439
<NET-CHANGE-FROM-OPS> 84059
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 13031
<DISTRIBUTIONS-OF-GAINS> 15072
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5836
<NUMBER-OF-SHARES-REDEEMED> 8820
<SHARES-REINVESTED> 1523
<NET-CHANGE-IN-ASSETS> 34344
<ACCUMULATED-NII-PRIOR> 659
<ACCUMULATED-GAINS-PRIOR> 12168
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2855
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3902
<AVERAGE-NET-ASSETS> 357172
<PER-SHARE-NAV-BEGIN> 13.03
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 2.78
<PER-SHARE-DIVIDEND> 0.50
<PER-SHARE-DISTRIBUTIONS> 0.58
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.21
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 091
<NAME> AMSOUTH MUTUAL FUNDS GOVERNMENT INCOME FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 11386
<INVESTMENTS-AT-VALUE> 11622
<RECEIVABLES> 94
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11716
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 94
<TOTAL-LIABILITIES> 94
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11938
<SHARES-COMMON-STOCK> 1192
<SHARES-COMMON-PRIOR> 1676
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 62
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 490
<ACCUM-APPREC-OR-DEPREC> 236
<NET-ASSETS> 11622
<DIVIDEND-INCOME> 11
<INTEREST-INCOME> 913
<OTHER-INCOME> 0
<EXPENSES-NET> 95
<NET-INVESTMENT-INCOME> 829
<REALIZED-GAINS-CURRENT> 41
<APPREC-INCREASE-CURRENT> 483
<NET-CHANGE-FROM-OPS> 1353
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 829
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 153
<NUMBER-OF-SHARES-REDEEMED> 680
<SHARES-REINVESTED> 43
<NET-CHANGE-IN-ASSETS> (4130)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 592
<GROSS-ADVISORY-FEES> 90
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 179
<AVERAGE-NET-ASSETS> 13872
<PER-SHARE-NAV-BEGIN> 9.40
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 0.35
<PER-SHARE-DIVIDEND> 0.58
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.75
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 041
<NAME> AMSOUTH MUTUAL FUNDS EQUITY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 618426
<INVESTMENTS-AT-VALUE> 943023
<RECEIVABLES> 4414
<ASSETS-OTHER> 80
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 947517
<PAYABLE-FOR-SECURITIES> 1468
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2078
<TOTAL-LIABILITIES> 3546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 595300
<SHARES-COMMON-STOCK> 2734<F1>
<SHARES-COMMON-PRIOR> 41750<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 46
<ACCUMULATED-NET-GAINS> 24120
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 324597
<NET-ASSETS> 943971
<DIVIDEND-INCOME> 9853
<INTEREST-INCOME> 98
<OTHER-INCOME> 0
<EXPENSES-NET> 5267
<NET-INVESTMENT-INCOME> 4684
<REALIZED-GAINS-CURRENT> 48685
<APPREC-INCREASE-CURRENT> (27934)
<NET-CHANGE-FROM-OPS> 25435
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1254<F1>
<DISTRIBUTIONS-OF-GAINS> 3043<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 4263
<NUMBER-OF-SHARES-REDEEMED> 4825
<SHARES-REINVESTED> 595
<NET-CHANGE-IN-ASSETS> (31014)
<ACCUMULATED-NII-PRIOR> 308
<ACCUMULATED-GAINS-PRIOR> 378723
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3846
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5267
<AVERAGE-NET-ASSETS> 206447<F1>
<PER-SHARE-NAV-BEGIN> 23.35<F1>
<PER-SHARE-NII> 0.06<F1>
<PER-SHARE-GAIN-APPREC> 0.55<F1>
<PER-SHARE-DIVIDEND> 0.10<F1>
<PER-SHARE-DISTRIBUTIONS> 1.25<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.61<F1>
<EXPENSE-RATIO> 1.16<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 043
<NAME> AMSOUTH MUTUAL FUNDS EQUITY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 618426
<INVESTMENTS-AT-VALUE> 943023
<RECEIVABLES> 4414
<ASSETS-OTHER> 80
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 947517
<PAYABLE-FOR-SECURITIES> 1468
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2078
<TOTAL-LIABILITIES> 3546
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 595300
<SHARES-COMMON-STOCK> 115<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 46
<ACCUMULATED-NET-GAINS> 24120
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 324597
<NET-ASSETS> 943971
<DIVIDEND-INCOME> 9853
<INTEREST-INCOME> 98
<OTHER-INCOME> 0
<EXPENSES-NET> 5267
<NET-INVESTMENT-INCOME> 4684
<REALIZED-GAINS-CURRENT> 48685
<APPREC-INCREASE-CURRENT> (27934)
<NET-CHANGE-FROM-OPS> 25435
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2<F1>
<DISTRIBUTIONS-OF-GAINS> 85<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 4263
<NUMBER-OF-SHARES-REDEEMED> 4825
<SHARES-REINVESTED> 595
<NET-CHANGE-IN-ASSETS> (31014)
<ACCUMULATED-NII-PRIOR> 308
<ACCUMULATED-GAINS-PRIOR> 378723
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3846
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5267
<AVERAGE-NET-ASSETS> 968<F1>
<PER-SHARE-NAV-BEGIN> 23.16<F1>
<PER-SHARE-NII> 0.04<F1>
<PER-SHARE-GAIN-APPREC> 0.71<F1>
<PER-SHARE-DIVIDEND> 0.06<F1>
<PER-SHARE-DISTRIBUTIONS> 1.25<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.60<F1>
<EXPENSE-RATIO> 2.07<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 051
<NAME> AMSOUTH MUTUAL FUNDS REGIONAL EQUITY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 96931
<INVESTMENTS-AT-VALUE> 147571
<RECEIVABLES> 206
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 147790
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 183
<TOTAL-LIABILITIES> 183
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95907
<SHARES-COMMON-STOCK> 1741<F1>
<SHARES-COMMON-PRIOR> 5307<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 8
<ACCUMULATED-NET-GAINS> 1068
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 50640
<NET-ASSETS> 147607
<DIVIDEND-INCOME> 1265
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 902
<NET-INVESTMENT-INCOME> 363
<REALIZED-GAINS-CURRENT> 2771
<APPREC-INCREASE-CURRENT> (1617)
<NET-CHANGE-FROM-OPS> 1517
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 91<F1>
<DISTRIBUTIONS-OF-GAINS> 1577<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 557
<NUMBER-OF-SHARES-REDEEMED> 608
<SHARES-REINVESTED> 102
<NET-CHANGE-IN-ASSETS> (2231)
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 55597
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 623
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 903
<AVERAGE-NET-ASSETS> 65877<F1>
<PER-SHARE-NAV-BEGIN> 28.23<F1>
<PER-SHARE-NII> 0.04<F1>
<PER-SHARE-GAIN-APPREC> 0.27<F1>
<PER-SHARE-DIVIDEND> 0.05<F1>
<PER-SHARE-DISTRIBUTIONS> 0.93<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 27.56<F1>
<EXPENSE-RATIO> 1.25<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 053
<NAME> AMSOUTH MUTUAL FUNDS REGIONAL EQUITY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 96931
<INVESTMENTS-AT-VALUE> 147571
<RECEIVABLES> 206
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 147790
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 183
<TOTAL-LIABILITIES> 183
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95907
<SHARES-COMMON-STOCK> 38<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 8
<ACCUMULATED-NET-GAINS> 1068
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 50640
<NET-ASSETS> 147607
<DIVIDEND-INCOME> 1265
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 902
<NET-INVESTMENT-INCOME> 363
<REALIZED-GAINS-CURRENT> 2771
<APPREC-INCREASE-CURRENT> (1617)
<NET-CHANGE-FROM-OPS> 1517
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0<F1>
<DISTRIBUTIONS-OF-GAINS> 26<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 557
<NUMBER-OF-SHARES-REDEEMED> 608
<SHARES-REINVESTED> 102
<NET-CHANGE-IN-ASSETS> (2231)
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 55597
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 623
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 903
<AVERAGE-NET-ASSETS> 467<F1>
<PER-SHARE-NAV-BEGIN> 28.50<F1>
<PER-SHARE-NII> (0.01)<F1>
<PER-SHARE-GAIN-APPREC> (0.03)<F1>
<PER-SHARE-DIVIDEND> 0.02<F1>
<PER-SHARE-DISTRIBUTIONS> 0.93<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 27.51<F1>
<EXPENSE-RATIO> 2.08<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 081
<NAME> AMSOUTH MUTUAL FUNDS BALANCED FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 282003
<INVESTMENTS-AT-VALUE> 361060
<RECEIVABLES> 4114
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 365187
<PAYABLE-FOR-SECURITIES> 489
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 767
<TOTAL-LIABILITIES> 1256
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 277850
<SHARES-COMMON-STOCK> 3375<F1>
<SHARES-COMMON-PRIOR> 24504<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 81
<ACCUMULATED-NET-GAINS> 7105
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79057
<NET-ASSETS> 363931
<DIVIDEND-INCOME> 2183
<INTEREST-INCOME> 5226
<OTHER-INCOME> 0
<EXPENSES-NET> 2030
<NET-INVESTMENT-INCOME> 5379
<REALIZED-GAINS-CURRENT> 16689
<APPREC-INCREASE-CURRENT> (8937)
<NET-CHANGE-FROM-OPS> 13131
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1482<F1>
<DISTRIBUTIONS-OF-GAINS> 3101<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 2986
<NUMBER-OF-SHARES-REDEEMED> 3831
<SHARES-REINVESTED> 1330
<NET-CHANGE-IN-ASSETS> (8838)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 101477
<OVERDISTRIB-NII-PRIOR> 102
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1455
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2030
<AVERAGE-NET-ASSETS> 101659<F1>
<PER-SHARE-NAV-BEGIN> 15.21<F1>
<PER-SHARE-NII> 0.18<F1>
<PER-SHARE-GAIN-APPREC> 0.36<F1>
<PER-SHARE-DIVIDEND> 0.21<F1>
<PER-SHARE-DISTRIBUTIONS> 0.97<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.57<F1>
<EXPENSE-RATIO> 1.20<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 083
<NAME> AMSOUTH MUTUAL FUNDS BALANCED FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 282003
<INVESTMENTS-AT-VALUE> 361060
<RECEIVABLES> 4114
<ASSETS-OTHER> 13
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 365187
<PAYABLE-FOR-SECURITIES> 489
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 767
<TOTAL-LIABILITIES> 1256
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 277850
<SHARES-COMMON-STOCK> 111<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 81
<ACCUMULATED-NET-GAINS> 7105
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 79057
<NET-ASSETS> 363931
<DIVIDEND-INCOME> 2183
<INTEREST-INCOME> 5226
<OTHER-INCOME> 0
<EXPENSES-NET> 2030
<NET-INVESTMENT-INCOME> 5379
<REALIZED-GAINS-CURRENT> 16689
<APPREC-INCREASE-CURRENT> (8937)
<NET-CHANGE-FROM-OPS> 13131
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7<F1>
<DISTRIBUTIONS-OF-GAINS> 71<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 2986
<NUMBER-OF-SHARES-REDEEMED> 3831
<SHARES-REINVESTED> 1330
<NET-CHANGE-IN-ASSETS> (8838)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 101477
<OVERDISTRIB-NII-PRIOR> 102
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1455
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2030
<AVERAGE-NET-ASSETS> 624<F1>
<PER-SHARE-NAV-BEGIN> 15.03<F1>
<PER-SHARE-NII> 0.16<F1>
<PER-SHARE-GAIN-APPREC> 0.51<F1>
<PER-SHARE-DIVIDEND> 0.18<F1>
<PER-SHARE-DISTRIBUTIONS> 0.97<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.55<F1>
<EXPENSE-RATIO> 2.08<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 131
<NAME> AMSOUTH MUTUAL FUNDS EQUITY INCOME FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 30114
<INVESTMENTS-AT-VALUE> 31946
<RECEIVABLES> 205
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32187
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 124
<TOTAL-LIABILITIES> 124
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30104
<SHARES-COMMON-STOCK> 2049<F1>
<SHARES-COMMON-PRIOR> 1900<F1>
<ACCUMULATED-NII-CURRENT> 12
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 115
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1832
<NET-ASSETS> 32063
<DIVIDEND-INCOME> 423
<INTEREST-INCOME> 73
<OTHER-INCOME> 0
<EXPENSES-NET> 192
<NET-INVESTMENT-INCOME> 304
<REALIZED-GAINS-CURRENT> 885
<APPREC-INCREASE-CURRENT> (310)
<NET-CHANGE-FROM-OPS> 879
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 242<F1>
<DISTRIBUTIONS-OF-GAINS> 762<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 933
<NUMBER-OF-SHARES-REDEEMED> 142
<SHARES-REINVESTED> 95
<NET-CHANGE-IN-ASSETS> 9790
<ACCUMULATED-NII-PRIOR> 15
<ACCUMULATED-GAINS-PRIOR> 2390
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 108
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 192
<AVERAGE-NET-ASSETS> 21379<F1>
<PER-SHARE-NAV-BEGIN> 11.72<F1>
<PER-SHARE-NII> 0.13<F1>
<PER-SHARE-GAIN-APPREC> 0.20<F1>
<PER-SHARE-DIVIDEND> 0.13<F1>
<PER-SHARE-DISTRIBUTIONS> 0.41<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.51<F1>
<EXPENSE-RATIO> 1.42<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Classic Shares
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000832544
<NAME> AMSOUTH MUTUAL FUNDS
<SERIES>
<NUMBER> 133
<NAME> AMSOUTH MUTUAL FUNDS EQUITY INCOME FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<INVESTMENTS-AT-COST> 30114
<INVESTMENTS-AT-VALUE> 31946
<RECEIVABLES> 205
<ASSETS-OTHER> 36
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32187
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 124
<TOTAL-LIABILITIES> 124
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30104
<SHARES-COMMON-STOCK> 259<F1>
<SHARES-COMMON-PRIOR> 0<F1>
<ACCUMULATED-NII-CURRENT> 12
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 115
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1832
<NET-ASSETS> 32063
<DIVIDEND-INCOME> 423
<INTEREST-INCOME> 73
<OTHER-INCOME> 0
<EXPENSES-NET> 192
<NET-INVESTMENT-INCOME> 304
<REALIZED-GAINS-CURRENT> 885
<APPREC-INCREASE-CURRENT> (310)
<NET-CHANGE-FROM-OPS> 879
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11<F1>
<DISTRIBUTIONS-OF-GAINS> 67<F1>
<DISTRIBUTIONS-OTHER> 0<F1>
<NUMBER-OF-SHARES-SOLD> 933
<NUMBER-OF-SHARES-REDEEMED> 142
<SHARES-REINVESTED> 95
<NET-CHANGE-IN-ASSETS> 9790
<ACCUMULATED-NII-PRIOR> 15
<ACCUMULATED-GAINS-PRIOR> 2390
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 108
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 192
<AVERAGE-NET-ASSETS> 1070<F1>
<PER-SHARE-NAV-BEGIN> 11.61<F1>
<PER-SHARE-NII> 0.09<F1>
<PER-SHARE-GAIN-APPREC> 0.30<F1>
<PER-SHARE-DIVIDEND> 0.10<F1>
<PER-SHARE-DISTRIBUTIONS> 0.41<F1>
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.49<F1>
<EXPENSE-RATIO> 2.18<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>Class B Shares
</FN>
</TABLE>
